TEXTAINER FINANCIAL SERVICES CORPORATION
                        650 California Street, 16th Floor
                             San Francisco, CA 94108


May 14, 1998


Securities and Exchange Commission
Washington, DC  20549

Gentlemen:

Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  we are
submitting  herewith for filing on behalf of Textainer Equipment Income Fund II,
L.P. (the "Company") the Company's  Quarterly  Report on Form 10-Q for the First
Quarter ended March 31, 1998.

This filing is being effected by direct  transmission to the Commission's  EDGAR
System.

Sincerely,

Nadine Forsman
Controller




<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                               Washington DC 20549



                                    FORM 10Q



                 QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934



                  For the quarterly period ended March 31, 1998


                         Commission file number 0-19145


                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
             (Exact name of Registrant as specified in its charter)


              California                                          94-3097644
     (State or other jurisdiction                               (IRS Employer
   of incorporation or organization)                         Identification No.)

  650 California Street, 16th Floor
      San Francisco, California                                     94108
(Address of Principal Executive Offices)                          (ZIP Code)

                                 (415) 434-0551
               Registrant's telephone number, including area code



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes [X] No [ ]





<PAGE>



                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                       (A California Limited Partnership)

                      Quarterly Report on Form 10Q for the
                          Quarter Ended March 31, 1998

                                Table of Contents

<TABLE>
<CAPTION>

                                                                                                        Page

          Item 1.  Financial Statements
<S>                <C>                                                                                  <C>
                   Balance Sheets - March 31, 1998 (unaudited) and December 31, 1997....................    3

                   Statements of Earnings for the three months ended
                   March 31, 1998 and 1997 (unaudited)..................................................    4

                   Statements of Partners' Capital for the three months ended
                   March 31, 1998 and 1997 (unaudited)..................................................    5

                   Statements of Cash Flows for the three months
                   ended March 31, 1998 and 1997 (unaudited)............................................    6

                   Notes to Financial Statements (unaudited)............................................    8


          Item 2.  Management's Discussion and Analysis of Financial Condition
                   and Results of Operations............................................................   13




</TABLE>
<PAGE>



                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                       (a California Limited Partnership)

                                 Balance Sheets

                      March 31, 1998 and December 31, 1997
                             (Amounts in thousands)
<TABLE>
<CAPTION>


                                                                                1998                   1997
                                                                           ---------------        ---------------
                                                                            (unaudited)
<S>                                                                        <C>                    <C>
Assets
Container rental equipment, net of accumulated
    depreciation of $21,847 (1997:  $22,257)                                     $ 36,892               $ 38,315
Cash                                                                                1,773                    981
Net investment in direct financing leases (note 7)                                    606                    493
Accounts receivable, net of allowance for doubtful
     accounts of $431 (1997:  $1,024) (note 8)                                      2,602                  2,864
Due from affiliates, net (note 5)                                                     201                    117
Prepaid expenses                                                                       94                     95
                                                                           ---------------        ---------------


                                                                                 $ 42,168               $ 42,865
                                                                           ===============        ===============
Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                                 $ 264                  $ 254
   Accrued liabilities                                                                169                    229
   Accrued damage protection plan costs (note 2)                                      240                    226
   Warranty claims (note 3)                                                           545                    599
   Container purchases payable                                                        322                    342
                                                                           ---------------        ---------------

      Total liabilities                                                             1,540                  1,650
                                                                           ---------------        ---------------

Partners' capital:
   General partners                                                                   (90)                   (90)
   Limited partners                                                                40,718                 41,305
                                                                           ---------------        ---------------

      Total partners' capital                                                      40,628                 41,215
                                                                           ---------------        ---------------

Commitments (note 11)
                                                                                 $ 42,168               $ 42,865
                                                                           ===============        ===============

See accompanying notes to financial statements


</TABLE>
<PAGE>


                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                       (a California Limited Partnership)

                             Statements of Earnings

               For the three months ended March 31, 1998 and 1997
               (Amounts in thousands except for unit and per unit
                                    amounts)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                           1998                1997
                                                                      ---------------     ---------------
<S>                                                                  <C>                 <C>    
Rental income                                                             $    2,643          $    2,524
                                                                      ---------------     ---------------

Costs and expenses:
   Direct container expenses                                                     618                 396
   Bad debt benefit                                                              (21)                (11)
   Depreciation                                                                  867               1,007
   Professional fees                                                               6                   7
   Management fees to affiliates (note 5)                                        209                 237
   General and administrative costs to affiliates (note 5)                       166                 179
   Other general and administrative costs                                         32                  33
                                                                      ---------------     ---------------

                                                                               1,877               1,848
                                                                      ---------------     ---------------

   Income from operations                                                        766                 676
                                                                      ---------------     ---------------

Other income:
   Interest income                                                                17                  25
   Gain on sale of containers (note 9)                                           137                   6
                                                                      ---------------     ---------------

                                                                                 154                  31
                                                                      ---------------     ---------------

   Net earnings                                                           $      920          $      707
                                                                      ===============     ===============

Allocation of net earnings (note 5):
   General partners                                                       $       15          $       15
   Limited partners                                                              905                 692
                                                                      ---------------     ---------------

                                                                          $      920          $      707
                                                                      ===============     ===============

Limited partners' per unit share
   of net earnings                                                        $     0.24          $     0.19
                                                                      ===============     ===============

Limited partners' per unit share
   of distributions                                                       $     0.40          $     0.40
                                                                      ===============     ===============

Weighted average number of limited
   partnership units outstanding                                           3,726,977           3,726,977
                                                                      ===============     ===============


See accompanying notes to financial statements


</TABLE>
<PAGE>


                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                       (a California Limited Partnership)

                         Statements of Partners' Capital

               For the three months ended March 31, 1998 and 1997
                             (Amounts in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                        Partners' Capital
                                                    ----------------------------------------------------------
                                                      General               Limited                Total
                                                    -------------       ----------------       ---------------
<S>                                                  <C>                 <C>                   <C>     
Balances at January 1, 1997                                $ (90)              $ 44,617              $ 44,527

Distributions                                                (15)                (1,491)               (1,506)

Redemptions (note 10)                                          -                     (1)                   (1)

Net earnings                                                  15                    692                   707
                                                    -------------       ----------------       ---------------

Balances at March 31, 1997                                 $ (90)              $ 43,817              $ 43,727
                                                    =============       ================       ===============

Balances at January 1, 1998                                $ (90)              $ 41,305              $ 41,215

Distributions                                                (15)                (1,492)               (1,507)

Net earnings                                                  15                    905                   920
                                                    -------------       ----------------       ---------------

Balances at March 31, 1998                                 $ (90)              $ 40,718              $ 40,628
                                                    =============       ================       ===============


See accompanying notes to financial statements


</TABLE>
<PAGE>


                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                       (a California Limited Partnership)

                            Statements of Cash Flows

               For the three months ended March 31, 1998 and 1997
                             (Amounts in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                          1998             1997
                                                                                     ---------------   --------------
<S>                                                                                  <C>               <C>
Cash flows from operating activities:
   Net earnings                                                                               $ 920            $ 707
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
        Depreciation                                                                            867            1,007
        Decrease in allowance for doubtful accounts, excluding
            write off (note 8)                                                                  (77)             (43)
        Gain on sale of containers (note 9)                                                    (137)              (6)
        Changes in assets and liabilities:
           Proceeds from principal payments of direct financing leases                           53               69
           Decrease in accounts receivable, excluding write off (note 8)                        339              289
           (Increase) decrease in due from affiliates, net                                     (190)           1,209
           Decrease in prepaid expenses                                                           1                6
           Decrease in accounts payable and accrued liabilities                                 (50)             (66)
           Increase (decrease) in accrued damage protection plan costs                           14              (40)
           Decrease in warranty claims                                                          (54)             (53)
                                                                                     ---------------   --------------


              Net cash provided by operating activities                                       1,686            3,079
                                                                                     ---------------   --------------

Cash flows from investing activities:
   Proceeds from sale of containers                                                             963              486
   Container purchases                                                                         (350)          (2,128)
                                                                                     ---------------   --------------

              Net cash provided by (used in) investing activities                               613           (1,642)
                                                                                     ---------------   --------------

Cash flows from financing activities:
   Redemptions of limited partnership units                                                       -               (1)
   Distributions to partners                                                                 (1,507)          (1,513)
                                                                                     ---------------   --------------

              Net cash used in financing activities                                          (1,507)          (1,514)
                                                                                     ---------------   --------------

Net increase (decrease) in cash                                                                 792              (77)

Cash at beginning of period                                                                     981            1,655
                                                                                     ---------------   --------------

Cash at end of period                                                                       $ 1,773          $ 1,578
                                                                                     ===============   ==============


See accompanying notes to financial statements


</TABLE>
<PAGE>




                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                       (A California Limited Partnership)

                       Statements of Cash Flows--Continued

               For the three months ended March 31, 1998 and 1997
                             (Amounts in thousands)
                                   (unaudited)


Supplemental Disclosures:

Supplemental schedule of non-cash investing and financing activities:

The following table summarizes the amounts of container purchases, distributions
to partners  and  proceeds  from sale of  containers  which had not been paid or
received by the Partnership as of March 31, 1998 and 1997, and December 31, 1997
and 1996,  resulting  in  differences  in amounts  recorded  and amounts of cash
disbursed or received by the  Partnership,  as shown in the  Statements  of Cash
Flows for the three-month periods ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>

                                                                  Mar. 31        Dec. 31        Mar. 31     Dec. 31
                                                                     1998           1997           1997        1996
                                                                  -------        -------        -------     -------
<S>                                                              <C>           <C>            <C>            <C>
Container purchases included in:
   Due (from) to affiliates, net..............................    $    (1)     $    (3)       $    63        $    27
   Containers purchases payable................................        322          342            761            426

Distributions to partners included in:
   Due to affiliates..........................................          6            6              6             10
   Accounts payable and accrued liabilities...................         77           77             74             77

Proceeds from sale of containers included in:
   Due from affiliates........................................        462          566            585            498

The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers recorded by the Partnership and
the amounts  paid or received as shown in the  Statements  of Cash Flows for the
three-month periods ended March 31, 1998 and 1997.

                                                                                                  1998         1997

Container purchases recorded..........................................................         $   332    $   2,499
Container purchases paid..............................................................             350        2,128

Distributions to partners declared....................................................           1,507        1,506
Distributions to partners paid........................................................           1,507        1,513

Proceeds from sale of containers recorded.............................................             859          573
Proceeds from sale of containers received.............................................             963          486


See accompanying notes to financial statements


</TABLE>
<PAGE>



                    TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                       (A California Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998
               (Amounts in thousands except for per unit amounts)
                                   (unaudited)

Note 1.  General

     Textainer  Equipment Income Fund II, L.P. (the  Partnership),  a California
     Limited  Partnership  with a maximum life of 20 years,  was formed in 1989.
     The  Partnership  owns  and  leases  a fleet  of  intermodal  marine  cargo
     containers which are leased to international shipping lines.

     The accompanying  interim  comparative  financial  statements have not been
     audited by an  independent  public  accountant.  However,  all  adjustments
     (which  were only  normal and  recurring  adjustments),  which are,  in the
     opinion of management,  necessary to fairly present the financial  position
     of the  Partnership  as of March 31, 1998 and December  31,  1997,  and the
     results of its operations, changes in partners' capital, and cash flows for
     the three-month periods ended March 31, 1998 and 1997, have been made.

     The financial  information  presented  herein should be read in conjunction
     with the audited financial  statements and the accompanying  Notes included
     in the Partnership's  audited financial statements as of December 31, 1997,
     in the Annual Report filed on Form 10K.

     Certain estimates and assumptions were made by the Partnership's management
     that affect the reported  amounts of assets and liabilities and disclosures
     of  contingent  assets  and  liabilities  at  the  date  of  the  financial
     statements  and the  reported  amounts of revenue and  expenses  during the
     reporting period. Actual results could differ from those estimates.

Note 2.  Damage Protection Plan

     The  Partnership  offers a Damage  Protection  Plan (DPP) to lessees of its
     containers.  Under  the  terms of DPP,  the  Partnership  earns  additional
     revenues on a daily basis and, in return, has agreed to bear certain repair
     costs. It is the Partnership's  policy to recognize revenue when earned and
     to provide a reserve  sufficient to cover the Partnership's  obligation for
     estimated  future  repair  costs.  DPP  expenses  are  included  in  direct
     container expenses in the Statements of Earnings and the related reserve at
     March 31, 1998 and December 31, 1997, was $240 and $226, respectively.


Note 3.  Warranty Claims

     During 1992, 1993 and 1995, the Partnership settled warranty claims against
     an equipment  manufacturer relating to certain containers.  The Partnership
     is amortizing the settlement  amounts over the remaining  estimated  useful
     lives of the  these  containers  (between  six and seven  years),  reducing
     maintenance and repair costs over that time. At March 31, 1998 and December
     31, 1997, the  unamortized  portion of the settlement  amounts was equal to
     $545 and $599, respectively.

Note 4.  Acquisition of Containers

     During  the  three-month  periods  ended  March  31,  1998  and  1997,  the
     Partnership   purchased   containers  with  a  cost  of  $332  and  $2,499,
     respectively.


Note 5.  Transactions with Affiliates

     Textainer  Financial  Services  Corporation  (TFS) is the managing  general
     partner of the Partnership.  TFS is a wholly-owned  subsidiary of Textainer
     Capital Corporation (TCC). Textainer Equipment Management Limited (TEM) and
     Textainer  Limited (TL) are associate  general partners of the Partnership.
     The  managing  general  partner  and the  associate  general  partners  are
     collectively referred to as the General Partners. The General Partners also
     act in this capacity for other limited partnerships.  Textainer Acquisition
     Services  Limited  (TAS) is an  affiliate  of the  General  Partners  which
     performs  services  relative to the  acquisition of containers  outside the
     United  States on  behalf  of the  Partnership.  TCC,  TEM,  TL and TAS are
     subsidiaries  of  Textainer  Group  Holdings  Limited  (TGH).  The  General
     Partners manage and control the affairs of the Partnership.

     In accordance  with the Partnership  Agreement,  and subject to the special
     allocations  described  therein,  net  earnings  or losses and  partnership
     distributions are generally allocated 1% to the General Partners and 99% to
     the limited partners with the exception of gross income,  as defined in the
     Partnership Agreement. Gross income is allocated to the General Partners to
     the extent  that  their  partners'  capital  accounts  deficits  exceed the
     portion of syndication and offering costs allocated to them. On termination
     of the  Partnership,  the General  Partners shall be allocated gross income
     equal to their allocations of syndication and offering costs.

     As part of the operation of the  Partnership,  the Partnership is to pay to
     the General  Partners or TAS an  acquisition  fee, an incentive  management
     fee, an equipment  management fee and an equipment  liquidation  fee. These
     fees  are  for   various   services   provided  in   connection   with  the
     administration   and  management  of  the   Partnership.   The  Partnership
     capitalized $17 and $103 of equipment acquisition fees as part of container
     rental equipment costs for the three-month periods ended March 31, 1998 and
     1997,  respectively,  and incurred $63 of incentive management fees in both
     periods. No equipment liquidation fees were incurred in either period.

     The  Partnership's  container  fleet  is  managed  by TEM.  In its  role as
     manager,  TEM has  authority  to acquire,  hold,  manage,  lease,  sell and
     dispose of the Partnership's  containers.  TEM holds, for payment of direct
     operating  expenses,  a  reserve  of cash  that  has  been  collected  from
     container leasing operations;  such cash is included in the amount due from
     affiliates, net at March 31, 1998 and December 31,1997.

     Subject to certain reductions,  TEM receives a monthly equipment management
     fee equal to 7% of gross lease revenues  attributable  to operating  leases
     and 2% of gross lease revenues  attributable to full payout net leases. For
     the  three-month  periods  ended March 31, 1998 and 1997 these fees totaled
     $146 and $174, respectively. The Partnership's container fleet is leased by
     TEM to third party lessees on operating  master leases,  spot leases,  term
     leases and direct finance  leases.  The majority of the container  fleet is
     leased under  operating  master  leases with limited  terms and no purchase
     option.

     Certain  indirect  general  and  administrative  costs  such  as  salaries,
     employee  benefits,   taxes  and  insurance  are  incurred   in  performing
     administrative  services  necessary to the  operation of  the  Partnership.
     These  costs  are  incurred  and paid  by TFS and TEM.  Total  general  and
     administrative  costs allocated to the Partnership  were $166 and  $179 for
     the three-month  periods ended  March 31, 1998 and 1997,  respectively,  of
     which $79 and $91 were for salaries.

     TEM allocates these general and administrative costs based on the ratio  of
     the   Partnership's  interest  in  the  managed  containers  to  the  total
     container  fleet  managed by TEM during the period.   TFS  allocates  these
     costs  based on the  ratio of the  Partnership's  containers  to the  total
     container fleet of all limited  partnerships  managed by TFS.  General  and
     administrative  costs  allocated to the  Partnership  by TEM were  $151 and
     $157  for  the  three-month   periods  ended  March  31,  1998  and   1997,
     respectively.  TFS  allocated  $15 and $22 of  general  and  administrative
     costs to the Partnership during the same periods.

     The General  Partners or TAS may acquire  containers  in their own name and
     hold  title on a  temporary  basis  for the  purpose  of  facilitating  the
     acquisition of such containers for the Partnership. The containers may then
     be resold to the  Partnership  on an all-cash basis at a price equal to the
     actual cost,  as defined in the  Partnership  Agreement.  In addition,  the
     General  Partners  or TAS  are  entitled  to an  acquisition  fee  for  any
     containers resold to the Partnership.

     At March 31,  1998 and  December  31,  1997,  due from  affiliates,  net is
     comprised of:

                                                         1998               1997
                                                         ----               ----
     Due from affiliates:
      Due from TEM.............................         $ 241              $ 152
                                                         ----               ----

     Due to affiliates:
      Due to TFS...............................            25                 25
      Due to TL................................             1                  1
      Due to TCC...............................            14                  9
                                                        -----               ----
                                                           40                 35
                                                        -----               ----

     Due from affiliates, net....................       $ 201              $ 117
                                                         ====               ====

     These amounts  receivable  from and payable to affiliates  were incurred in
     the ordinary course of business  between the Partnership and its affiliates
     and represent timing differences in the accrual and payment of expenses and
     fees  described  above  or in the  accrual  and  remittance  of net  rental
     revenues from TEM.

     It is the policy of the  Partnership  and the  General  Partners  to charge
     interest on amounts due to the General  Partners which are  outstanding for
     more  than one  month,  to the  extent  such  balances  relate to loans for
     container  purchases.  Interest is charged at a rate not  greater  than the
     General  Partners' or affiliates' own cost of funds.  There was no interest
     charged on amounts due to the General Partners for the three-month  periods
     ended March 31, 1998 or 1997.

Note 6.  Rentals Under Operating Leases

     The following are the future  minimum rent  receivables  under  cancelable
     long-term  operating  leases at March 31,  1998.  Although  the leases are
     generally  cancelable  at  the  end of  each  twelve-month  period  with a
     penalty,  the  following  schedule  assumes  that the  leases  will not be
     terminated.

                  Year ending March 31:

                  1999.............................................        $ 288
                  2000.............................................           23
                  2001.............................................            9
                                                                            ----

                  Total minimum future rentals receivable..........        $ 320
                                                                            ====

Note 7.  Direct Financing Leases

     The  components of the net investment in direct  financing  leases at March
     31, 1998 and December 31, 1997 are as follows:

                                                             1998          1997
                                                             ----          ----
     Future minimum lease payments receivable..........     $ 798         $ 650
     Residual value ...................................         -             -
     Less: unearned income ............................      (192)         (157)
                                                            -----         -----

     Net investment in direct financing leases ........     $ 606         $ 493
                                                             ====          ====

     The  following is a schedule by year of minimum lease  payments  receivable
     under the eight direct financing leases as of March 31, 1998:

       Year ending March 31:

       1999.................................................             $   344
       2000.................................................                 316
       2001.................................................                 138
                                                                            ----

       Total minimum lease payments receivable..............             $   798
                                                                            ====

     Rental  income for  the three-month  periods ended  March 31, 1998 and 1997
     includes $32 and $64, respectively, of income from direct financing leases.

Note 8.   Accounts Receivable Write-Off

     During  the  three-month  period  ending  March 31, 1998,  the  Partnership
     wrote-off $516 of delinquent  receivables  from two lessees  against  which
     reserves were recorded in 1994 and 1995.

Note 9.   Insurance Proceeds

     In February 1998, the Partnership wrote-off 32 containers held by a  lessee
     that were deemed  unrecoverable.  These containers had a net book value  of
     $175  for  which  the  Partnership  received  insurance  proceeds  of  $202
     resulting in a gain of $27.

Note 10.  Redemptions

     The following  redemption  offerings were  consummated  by the  Partnership
     during the three-month period ended March 31, 1997:
<TABLE>
<CAPTION>

                                                      Units                Average
                                                     Redeemed          Redemption Price             Amount Paid

<S>                                                 <C>              <C>                           <C>   
       Balance at December 31, 1996                    22,897               $11.56                    $  265

       Quarter ended:
       March 31, 1997........................             126               $ 8.71                         1
                                                       ------                                          -----
       

       Partnership to date...................          23,023               $11.54                    $  266
                                                       ======                                          =====
</TABLE>
       

     There were no  redemptions  during the  three-month  period ended March 31,
     1998. The redemption price is fixed by formula.

Note 11.  Commitments

     At March 31,  1998,  the  Partnership  has  committed  to purchase  110 new
     containers at an  approximate  total  purchase price of $370 which includes
     acquisition  fees of $18. These  commitments were made to TAS which, as the
     contracting  party,  has in turn committed to purchase these  containers on
     behalf of the Partnership.




<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

           (Amounts in thousands except for unit and per unit amounts)

The Financial Statements contain information which will assist in evaluating the
financial  condition of the Partnership for the three-month  periods ended March
31, 1998 and 1997. Please refer to the Financial Statements and Notes thereto in
connection with the following discussion.

Liquidity and Capital Resources

From November 8, 1989 until January 15, 1991, the  Partnership  offered  limited
partnership  interests  to the  public.  The  Partnership  received  its minimum
subscription  amount of $1,000 on December 19, 1989, and on January 15, 1991 the
Partnership had received its maximum subscription amount of $75,000.

From time to time,  the  Partnership  redeems units from limited  partners for a
specified   redemption  value  which  is  set  by  formula.  Up  to  2%  of  the
Partnership's outstanding units may be redeemed each year, although the 2% limit
may be exceeded at the managing general  partner's  discretion.  All redemptions
are subject to the managing  general  partner's  good faith  determination  that
payment for the redeemed units will not (i) cause the Partnership to be taxed as
a  corporation,  (ii) impair the capital or  operations of the  Partnership,  or
(iii) impair the ability of the Partnership to pay  distributions  in accordance
with its distribution policy. During the three-month period ended March 31, 1998
the Partnership did not redeem any units.

The Partnership  invests working capital and cash flow from operations  prior to
its  distribution  to  the  partners  in  short-term,  liquid  investments.  The
Partnership's  cash is  affected  by  cash  provided  by or  used in  operating,
investing and financing  activities.  These  activities  are discussed in detail
below.

During the  three-month  period ended March 31, 1998, the  Partnership  declared
cash  distributions to limited  partners  pertaining to the period from December
1997  through  February  1998,  in the  amount of  $1,492.  These  distributions
represent a return of 8% on original capital  (measured on an annualized  basis)
on each unit. On a cash basis, all of these  distributions were from operations.
On a GAAP  basis,  $587 of these  distributions  was a return of capital and the
balance was from net earnings.

Net cash provided by operating  activities  for the  three-month  periods ending
March 31, 1998 and 1997,  was $1,686 and $3,079,  respectively.  The decrease of
$1,393,  or 45%,  is  primarily  attributable  to the $190  increase in due from
affiliates,  net for the three month period  ended March 31, 1998  compared to a
$1,209  decrease in due from  affiliates,  net during the  comparable  period in
1997. Fluctuations in due from affiliates, net result from timing differences in
the  payment  of  expenses  and  fees  and or in the  remittance  of net  rental
revenues.

For the three-month period ending March 31, 1998, net cash provided by investing
activities (the purchase and sale of containers) was $613,  compared to net cash
used in  investing  activities  of  $1,642  for the same  period  in  1997.  The
difference  of $2,255  is  primarily  due to the  Partnership  having  purchased
significantly more containers during the three-month period ended March 31, 1997
than in the comparable  period in 1998. The General  Partners believe that these
differences  reflect  normal  fluctuations  in  container  sales and  purchases.
However,  recent  container  purchases   (reinvestment)  have  been  lower  than
anticipated due to the adverse effect of market conditions on cash available for
reinvestment. Market conditions are discussed more fully below under "Results of
Operations". Consistent with its investment objectives and the General Partners'
determination  that containers can be profitably sold or bought at any time, the
Partnership  intends to reinvest all or a  significant  amount of proceeds  from
future  container  sales  in  additional   containers.   The  Partnership  sells
containers  as they  reach  the end of  their  estimated  useful  life  however,
additional containers purchased may not equal the number of containers sold.

At March 31, 1998, the  Partnership has committed to purchase 110 new containers
at an approximate  total purchase price of $370 which includes  acquisition fees
of $18. These commitments were made to TAS which, as the contracting  party, has
in turn committed to purchase these containers on behalf of the Partnership.  At
March  31,  1998  the  Partnership  had  sufficient  cash on hand to meet  these
commitments.  In  the  event  the  Partnership  decides  not to  purchase  these
containers,  one of the General Partners or an affiliate of the General Partners
will retain the containers for its own account.

Results of Operations

The  Partnership's  income from operations,  which consists  primarily of rental
income, container depreciation,  direct container expenses, management fees, and
reimbursement of administrative expenses was directly related to the size of the
container fleet during the three-month periods ended March 31, 1998 and 1997, as
well as certain other factors as discussed  below. The following is a summary of
the size of the  container  fleet (in units)  available  for lease  during those
periods:

                                                         1998           1997
                                                         ----           ----

               Opening container fleet.............     17,697         18,016
               Closing container fleet.............     17,297         18,081
               Average container fleet.............     17,497         18,049


The decline in the average  inventory from the  three-month  period ending March
31, 1997 to the equivalent period in 1998 was due to the Partnership having sold
more containers than it purchased since March 31, 1997.  Although sales proceeds
were used to purchase additional  containers,  fewer containers were bought than
sold,  resulting  in a net  decrease in the size of the  container  fleet.  When
containers  are  sold  in the  future,  sales  proceeds  are  not  likely  to be
sufficient to replace all of the containers sold. This factor has contributed to
a slower rate of  reinvestment  than had been expected by the General  Partners.
This trend is expected to continue.

Rental income and direct container  expenses are also affected by utilization of
the containers,  which was 79% and 74% on average during the three-month periods
ended March 31,  1998 and 1997,  respectively.  In  addition,  rental  income is
affected by daily rental rates and leasing incentives.

The  following is a comparative  analysis of the results of  operations  for the
three-month periods ended March 31, 1998 and 1997.

The  Partnership's  income from  operations for the  three-month  periods ending
March 31,  1998 and 1997 was $766 and $676,  respectively,  on rental  income of
$2,643 and $2,524,  respectively.  The increase in rental income of $119, or 5%,
from the  three-month  period ended March 31, 1997 to the  comparable  period in
1998 was primarily  attributable  to an increase in other rental income which is
discussed  below.  Income from container  rentals,  the major component of total
revenue, decreased $74, or 3%, from the three-month period ending March 31, 1997
to the same period in 1998.  This  decrease was primarily due to the decrease in
average rental rates of 4% and the decrease in containers available for lease of
3%,  offset by the  increase in average  utilization  of 7%, and the decrease in
average leasing incentives of 14%.

Container  utilization  and rental rates declined during 1996 and 1997 primarily
due to decreased  demand for leased  containers and increased  competition.  The
decrease in demand for leased  containers  resulted from changes in the business
of shipping line customers consisting  primarily of (i) over-capacity  resulting
from the 1995 and 1996 additions of new, larger ships to the existing  container
ship fleet at a rate in excess of the growth rate in containerized  cargo trade;
(ii) shipping  line  alliances and other  operational  consolidations  that have
allowed  shipping  lines to operate with fewer  containers;  and (iii)  shipping
lines  reducing  their ratio of leased  versus owned  containers  by  purchasing
containers.  This decreased demand,  along with the entry of new leasing company
competitors  offering low container rental rates to shipping lines,  resulted in
downward pressure on rental rates, also caused leasing companies to offer higher
leasing incentives and other discounts to shipping lines. Rental rates were also
adversely  affected  by a drop in the  purchase  price of new  containers  which
resulted in additional downward pressure on rental rates.

Utilization  increased  during the second and third  quarters  of 1997 and began
declining  again during the fourth quarter of 1997 and into the first quarter of
1998.  Despite  these  declines,  utilization  for the first quarter of 1998 was
greater than the average  first  quarter 1997  utilization  and greater than the
average  utilization  for  the  year  ended  December  31,  1997.  Rental  rates
stabilized during the later half of the first quarter of 1998 and, overall, were
comparable to fourth  quarter 1997 rental rates.  Leasing  incentives  reached a
high during  mid-1997,  began declining during the second half of 1997, and have
stabilized  during the first quarter of 1998. The improvement in utilization and
the  stabilization  in rental rates and leasing  incentives are primarily due to
increased demand in Asia. The weakening of many Asian  currencies  resulted in a
significant increase in exports which has created a strong demand for containers
in Asia. The General Partners believe that market conditions have stabilized and
may be slowly improving; however, for the near term, the General Partners do not
foresee any material changes in existing market conditions and caution that both
utilization  and lease  rates  could  decline  again,  adversely  affecting  the
Partnership's operating results.

Substantially  all of the  Partnership's  rental income was  generated  from the
leasing of the  Partnership's containers under short-term  operating  leases. At
March 31, 1998 and 1997, there were 209 and 75 containers under direct financing
leases, respectively.

The  balance of other  rental  income  consists  of other  lease-related  items,
primarily  income from charges to lessees for picking up containers from surplus
locations  less  credits  granted to lessees  for leasing  containers  from less
desirable  locations  (location  income),  income  for  handling  and  returning
containers  and income  from  charges to lessees  for a Damage  Protection  Plan
(DPP).  For the three  months  ended  March 31,  1998,  the total of these other
rental income items was $437,  an increase of $193, or 79%, from the  equivalent
period in 1997.  The  primary  component  of this  increase  was an  increase in
location  income of $162 which increased due to the inclusion of certain credits
received  during  1997  and 1998  which  had  previously  been  applied  against
repositioning expense and also due to an increase in the average drop-off charge
per  container  and a decrease in credits given to lessees to pick up containers
from certain locations.

Direct  container  expenses  increased $222, or 56%, for the three-month  period
ending March 31, 1998 compared to the  equivalent  period in 1997.  The increase
was  primarily  due to increases in  repositioning  and DPP expenses of $154 and
$65, respectively. Repositioning expense increased due to the removal of certain
credits from repositioning  costs to other rental income as discussed above, and
due to a greater number of containers being  transported from surplus  locations
to demand locations. DPP expense increased due to a greater number of containers
requiring repair, offset by a lower average repair cost per container.

Bad debt benefit for the three-month  periods ending March 31, 1998 and 1997 was
$21 and $11, respectively. The benefit recorded in 1998 was primarily due to the
Partnership  writing-off  certain receivables that had reserves in excess of the
receivable.

Depreciation  expense  decreased $140, or 14%,  between the three-month  periods
ending March 31, 1998 and 1997  primarily due to the smaller  average fleet size
and due to certain  containers  having been acquired  used,  which have now been
fully depreciated.

Management fees to affiliates decreased $28, or 12%, from the three-month period
ended March 31, 1997 to the comparable period ending in 1998 primarily due to an
adjustment made to reduce equipment management fees resulting from the write-off
of receivables for two lessees.

General and  administrative  costs to affiliates  decreased $13, or 7%, from the
three-month  period ended March 31, 1997 to the comparable period in 1998 due to
a decrease in overhead costs allocated by TFS and TEM.

Other  income  increased  $123  primarily  due to an increase in gain on sale of
containers between the three-month  periods ending March 31, 1998 and 1997. Gain
on sale of  containers  increased  primarily  due to the  write-off  of  certain
containers  held by a lessee  that  were  deemed  unrecoverable  for  which  the
Partnership  received insurance proceeds for these containers in excess of their
net book value.

Net earnings per limited partnership unit increased from $0.19 to $0.24 from the
three-month  period  ending March 31, 1997  compared to the same period in 1998,
reflecting  the increase in limited  partners  net  earnings  from $692 to $905,
respectively.

Many computer systems may experience difficulty processing dates beyond the year
1999 and, as such, some computer  hardware and software will need to be modified
prior to the year 2000 to remain  functional.  Certain of the  Partnership's and
General  Partner's core internal systems that have recently been implemented are
year 2000  compliant.  The remaining  core internal  systems are scheduled to be
revised  to be year  2000  compliant  by the end of 1998.  Based on its  initial
evaluation,  the  Partnership  and the General  Partners do not believe that the
cost of remedial  actions relating to these systems will have a material adverse
effect on the  Partnership's  results of  operations  and  financial  condition.
Additionally,  the  Partnership  and the General  Partners are also completing a
preliminary  assessment  of year 2000  issues not  related to its core  systems,
including issues surrounding systems that interface with external third parties.

Although  substantially  all of the  Partnership's  income  from  operations  is
derived from assets employed in foreign operations, virtually all of this income
is  denominated  in United  States  dollars.  The  Partnership's  customers  are
international  shipping  lines  which  transport  goods on  international  trade
routes.  The  domicile  of the lessee is not  indicative  of where the lessee is
transporting  the  containers.  The  Partnership's  business risk in its foreign
operations lies with the  creditworthiness of the lessees, and the Partnership's
ability to keep the containers under lease,  rather than the geographic location
of the  containers or the domicile of the lessees.  The containers are generally
operated on the international high seas rather than on domestic  waterways.  The
containers are subject to the risk of war or other political, economic or social
occurrence  where  the  containers  are used,  which  may  result in the loss of
containers,  which,  in turn,  may have a material  impact on the  Partnership's
results of operations  and  financial  condition.  The General  Partners are not
aware of any  conditions  as of March 31, 1998 which would result in such a risk
materializing.

Other risks of the Partnership's  leasing  operations include  competition,  the
cost of  repositioning  containers  after  they come  off-lease,  the risk of an
uninsured  loss,  increases in maintenance  expenses or other costs of operating
the  containers,  and the effect of world trade,  industry trends and/or general
business and economic cycles on the Partnership's operations. See "Risk Factors"
in the Partnership's Prospectus, as supplemented,  for additional information on
risks of Partnership's business.



<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                     TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                                     (A California Limited Partnership)

                                     By Textainer Financial Services Corporation
                                     The Managing General Partner


                                     By  ________________________________
                                         John R. Rhodes
                                         Executive Vice President



Date:   May 14, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer  Financial
Services  Corporation,  the Managing  General Partner of the Registrant,  in the
capacities and on the dates indicated:


<TABLE>
<CAPTION>
Signature                                Title                                      Date



<S>                                      <C>                                       <C>
_____________________                    Executive Vice President                   May 14, 1998
John R. Rhodes                           (Principal Financial and
                                         Accounting Officer) and
                                         Secretary


_____________________                    President (Principal Executive             May 14, 1998
Philip K. Brewer                         Officer)



</TABLE>
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                     TEXTAINER EQUIPMENT INCOME FUND II, L.P.
                                     (A California Limited Partnership)

                                     By Textainer Financial Services Corporation
                                     The Managing General Partner


                                     By    /s/ John R. Rhodes
                                          ________________________________
                                          John R. Rhodes
                                          Executive Vice President



Date:    May 14, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer  Financial
Services  Corporation,  the Managing  General Partner of the Registrant,  in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature                                Title                                        Date



<S>                                      <C>                                         <C>
/s/ John R. Rhodes                       Executive Vice President                     May 14, 1998
_____________________                    (Principal Financial and
John R. Rhodes                           Accounting Officer) and
                                         Secretary


/s/ Philip K. Brewer                     President (Principal Executive               May 14, 1998
_____________________                    Officer)
Philip K. Brewer


</TABLE>