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


November 11, 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 Third
Quarter ended September 30, 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 10-Q



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


                For the quarterly period ended September 30, 1998


                         Commission file number 0-19145


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

<TABLE>
<CAPTION>

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

Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1998

Table of Contents
-------------------------------------------------------------------------------------------------------------------

<S><C>                                                                                                      <C>
                                                                                                             Page


Item 1.   Financial Statements

          Balance Sheets - September 30, 1998 (unaudited) and December 31, 1997.............................    3


          Statements of Earnings for the three and nine months
          ended September 30, 1998 and 1997 (unaudited).....................................................    4


          Statements of Partners' Capital for the nine months
          ended September 30, 1998 and 1997 (unaudited).....................................................    5


          Statements of Cash Flows for the nine months
          ended September 30, 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>

<TABLE>
<CAPTION>


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

Balance Sheets

September 30, 1998 and December 31, 1997
(Amounts in thousands)
----------------------------------------------------------------------------------------------------------------

<S><C>                                                                         <C>                 <C> 
                                                                                   1998                1997
                                                                               -------------       -------------
                                                                                (unaudited)
Assets
Container rental equipment, net of accumulated
    depreciation of $21,480 (1997:  $22,257)                                 $       35,472      $       38,315
Cash                                                                                  1,956                 981
Net investment in direct financing leases (note 7)                                      520                 493
Accounts receivable, net of allowance for doubtful
     accounts of $369 (1997:  $1,024) (note 8)                                        2,271               2,864
Due from affiliates, net (note 5)                                                       327                 117
Prepaid expenses                                                                         10                  95
                                                                               -------------       -------------


                                                                             $       40,556      $       42,865
                                                                               =============       =============
Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                          $          293      $          254
   Accrued liabilities                                                                  153                 152
   Accrued damage protection plan costs (note 2)                                        273                 226
   Warranty claims (note 3)                                                             439                 599
   Container purchases payable                                                          374                 342
   Deferred quarterly distributions                                                      69                  77
                                                                               -------------       -------------

      Total liabilities                                                               1,601               1,650
                                                                               -------------       -------------

Partners' capital:
   General partners                                                                     (90)                (90)
   Limited partners                                                                  39,045              41,305
                                                                               -------------       -------------

      Total partners' capital                                                        38,955              41,215
                                                                               -------------       -------------


                                                                             $       40,556      $       42,865
                                                                               =============       =============

See accompanying notes to financial statements
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

Statements of Earnings

For the three and nine months  ended  September  30,  1998 and 1997  
(Amounts in thousands except for unit and per unit amounts) 
(unaudited)
------------------------------------------------------------------------------------------------------------------------------------
<S><C>                                                    <C>                <C>                  <C>                <C>
                                                              Three months        Three months        Nine months        Nine months
                                                                     Ended               Ended              Ended              Ended
                                                            Sept. 30, 1998      Sept. 30, 1997     Sept. 30, 1998     Sept. 30, 1997
                                                         -----------------   -----------------   ----------------   ----------------
Rental income                                            $           2,524   $           2,698   $          7,700   $          7,770
                                                         -----------------   -----------------   ----------------   ----------------

Costs and expenses:
   Direct container expenses                                           531                 609              1,707              1,559
   Bad debt (benefit) expense                                           (6)                (19)               (81)                33
   Depreciation                                                        850                 896              2,582              3,180
   Professional fees                                                     8                   8                 25                 24
   Management fees to affiliates (note 5)                              240                 251                689                730
   General and administrative costs to affiliates (note 5)             129                 145                436                497
   Other general and administrative costs                               26                  35                 71                 98
                                                         -----------------   -----------------   ----------------   ----------------
                                                                     1,778               1,925              5,429              6,121
                                                         -----------------   -----------------   ----------------   ----------------
   Income from operations                                              746                 773              2,271              1,649
                                                         -----------------   -----------------   ----------------   ----------------

Other (expense) income:
   Interest income                                                      31                  16                 71                 58
   (Loss) gain on sale of containers                                  (106)                  9                (16)                90
                                                         -----------------   -----------------   ----------------   ----------------
                                                                       (75)                 25                 55                148
                                                         -----------------   -----------------   ----------------   ----------------
   Net earnings                                          $             671   $             798   $          2,326   $          1,797
                                                         =================   =================   ================   ================

Allocation of net earnings (note 5):
   General partners                                      $              16   $              16   $             47   $             47
   Limited partners                                                    655                 782              2,279              1,750
                                                         -----------------   -----------------   ----------------   ----------------
                                                         $             671   $             798   $          2,326   $          1,797
                                                         =================   =================   ================   ================

Limited partners' per unit share
   of net earnings                                       $            0.18   $            0.21   $           0.61   $           0.47
                                                         =================   =================   ================   ================
Limited partners' per unit share
   of distributions                                      $            0.40   $            0.40   $           1.20   $           1.20
                                                         =================   =================   ================   ================
Weighted average number of limited
   partnership units outstanding                                 3,719,808           3,726,977          3,726,021          3,726,977
                                                         =================   =================   ================   ================


See accompanying notes to financial statements
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

Statements of Partners' Capital

For the nine months ended September 30, 1998 and 1997
(Amounts in thousands)
(unaudited)
------------------------------------------------------------------------------------------------------------
<S><C>                                             <C>                 <C>                   <C>
                                                                      Partners' Capital
                                                    --------------------------------------------------------
                                                      General              Limited               Total
                                                    -------------       ---------------      ---------------

Balances at January 1, 1997                       $          (90)     $         44,617     $         44,527

Distributions                                                (47)               (4,472)              (4,519)

Redemptions (note 9)                                           -                    (1)                  (1)

Net earnings                                                  47                 1,750                1,797
                                                    -------------       ---------------      ---------------

Balances at September 30, 1997                    $          (90)     $         41,894     $         41,804
                                                    =============       ===============      ===============

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

Distributions                                                (47)               (4,470)              (4,517)

Redemptions (note 9)                                           -                   (69)                 (69)

Net earnings                                                  47                 2,279                2,326
                                                    -------------       ---------------      ---------------

Balances at September 30, 1998                    $          (90)     $         39,045     $         38,955
                                                    =============       ===============      ===============


See accompanying notes to financial statements
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

Statements of Cash Flows

For the nine months ended September 30, 1998 and 1997
(Amounts in thousands)
(unaudited)
------------------------------------------------------------------------------------------------------------------------
<S><C>                                                                               <C>                  <C>
                                                                                          1998                 1997
                                                                                      -------------        -------------
Cash flows from operating activities:
   Net earnings                                                                     $        2,326       $        1,797
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
        Depreciation                                                                         2,582                3,180
        Decrease in allowance for doubtful accounts, excluding
            write-off (note 8)                                                                (139)                 (26)
        Loss (gain) on sale of containers                                                       16                  (90)
        (Increase) decrease in:
           Net investment in direct financing leases                                           166                  185
           Accounts receivable, excluding write-off (note 8)                                   732                  259
           Due from affiliates, net                                                           (441)               1,354
           Prepaid expenses                                                                     85                   20
        Increase (decrease) in:
           Accounts payable and accrued liabilities                                             40                  125
           Accrued damage protection plan costs                                                 47                  (46)
           Warranty claims                                                                    (160)                (160)
                                                                                      -------------        -------------


              Net cash provided by operating activities                                      5,254                6,598
                                                                                      -------------        -------------

Cash flows from investing activities:
   Proceeds from sale of containers                                                          2,562                2,521
   Container purchases                                                                      (2,247)              (5,135)
                                                                                      -------------        -------------

              Net cash provided by (used in) investing activities                              315               (2,614)
                                                                                      -------------        -------------

Cash flows from financing activities:
   Redemptions of limited partnership units                                                    (69)                  (1)
   Distributions to partners                                                                (4,525)              (4,528)
                                                                                      -------------        -------------

              Net cash used in financing activities                                         (4,594)              (4,529)
                                                                                      -------------        -------------

Net increase (decrease) in cash                                                                975                 (545)

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

Cash at end of period                                                               $        1,956       $        1,110
                                                                                      =============        =============


See accompanying notes to financial statements
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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


Statements Of Cash Flows--Continued

For the nine months ended September 30, 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 as of  September  30, 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
nine-month periods ended September 30, 1998 and 1997.

<S><C>                                                        <C>           <C>              <C>            <C>
                                                                Sept. 30       Dec. 31         Sept. 30        Dec. 31
                                                                   1998           1997             1997          1996
                                                             -----------    -----------    -------------    ----------

Container purchases included in:
     Due to affiliates..............................              $  15          $ (3)             $  3         $  27
     Container purchases payable....................                374            342              503           426

Distributions to partners included in:
     Due to affiliates..............................                  6              6                6            10
     Deferred quarterly distributions...............                 69             77               72            77

Proceeds from sale of containers included in:
     Due from affiliates............................                353            566              338           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
nine-month periods ended September 30, 1998 and 1997.

                                                                                                   1998          1997
                                                                                                   ----          ----

Container purchases recorded......................................................               $2,297        $5,188
Container purchases paid..........................................................                2,247         5,135

Distributions to partners declared................................................                4,517         4,519
Distributions to partners paid....................................................                4,525         4,528

Proceeds from sale of containers recorded.........................................                2,349         2,361
Proceeds from sale of containers received.........................................                2,562         2,521


See accompanying notes to financial statements
</TABLE>

<PAGE>


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

Notes To Financial Statements

For the three and nine months  ended  September  30,  1998 and 1997  
(Amounts in thousands except for unit and 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 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 September 30, 1998 and December 31, 1997, and the
      results of its operations, changes in partners' capital and cash flows for
      the three- and nine-month  periods ended September 30, 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 10-K.

      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
      reserves at September 30, 1998 and December 31, 1997,  were $273 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 life of these  containers  (between six and seven years),
      reducing  maintenance  and repair costs over that time.  At September  30,
      1998 and December  31, 1997,  the  unamortized  portion of the  settlement
      amount was $439 and $599, respectively.

Note 4.   Acquisition of Containers

      During the  nine-month  periods  ended  September  30, 1998 and 1997,  the
      Partnership  purchased  containers  with  a cost  of  $2,297  and  $5,188,
      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,  net earnings or losses and
      partnership distributions are 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 equipment management
      fee, an incentive  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  $109  and  $243  of  equipment  acquisition  fees  as part of
      container  rental  equipment  costs during the  nine-month  periods  ended
      September  30, 1998 and 1997.  The  Partnership  incurred  $63 and $188 of
      incentive  management fees during the three- and nine-month  periods ended
      September 30, 1998 and $62 and $188 during the comparable periods in 1997.
      No equipment liquidation fees were incurred during these periods.

      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 the 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 September 30, 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.
      These fees  totaled  $177 and $501 for the three- and  nine-month  periods
      ended  September 30, 1998 and $189 and $542 for the comparable  periods in
      1997. 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.   General  and
      administrative costs allocated to the Partnership were as follows:

                                 Three months ended            Nine months ended
                                    September 30,                 September 30,
                                    -------------                 -------------
                                   1998       1997               1998      1997
                                   ----       ----               ----      ----

      Salaries                    $  59      $  84               $188      $273
      Other                          70         61                248       224
                                    ---        ---                ---       ---
      Total general and
       administrative costs        $129       $145               $436      $497
                                    ===        ===                ===       ===

      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. The General
      Partners allocated the following general and  administrative  costs to the
      Partnership:

                                 Three months ended            Nine months ended
                                    September 30,                 September 30,
                                    -------------                 -------------
                                  1998        1997               1998      1997
                                  ----        ----               ----      ----

      TEM                         $117        $131               $394      $435
      TFS                           12          14                 42        62
                                   ---         ---                ---       ---
      Total general and
       administrative costs       $129        $145               $436      $497
                                   ===         ===                ===       ===

      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 September 30, 1998 and December 31, 1997, due from  affiliates,  net is
      comprised of:

                                                            1998            1997
                                                            ----            ----
      Due from affiliates:
        Due from TEM...................................   $  378          $  152
                                                            ----            ----

      Due to affiliates:
        Due to TFS.....................................       25              25
        Due to TL......................................        1               1
        Due to TAS.....................................       15               -
        Due to TCC.....................................       10               9
                                                            ----            ----
                                                              51              35
                                                            ----            ----
      Due from affiliates, net                            $  327          $  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 remittance of expenses
      and fees  described  above and 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
      expense incurred on amounts due to the General Partners for the three- and
      nine-month periods ended September 30, 1998 or 1997.

Note 6.   Rentals Under Long-Term Operating Leases

      The following are the future  minimum rent  receivables  under  cancelable
      long-term  operating leases at September 30, 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 September 30:

              1999.............................................           $  379
              2000.............................................               56
              2001.............................................               22
                                                                            ----

              Total minimum future rentals receivable..........           $  457
                                                                            ====

Note 7.   Direct Financing Leases

      The components of  the  net  investment  in  direct  financing  leases  at
      September 30, 1998 and December 31, 1997 are as follows:

                                                            1998           1997
                                                            ----           ----

      Future minimum lease payments receivable............ $ 658          $ 650
      Residual value......................................     1              -
      Less:  unearned income..............................  (139)          (157)
                                                            ----           ----

      Net investment in direct financing leases........... $ 520          $ 493
                                                            ====           ====

      The following is a schedule by year of minimum lease  payments  receivable
      under the eighteen direct financing leases as of September 30, 1998:

             Year ending September 30:

             1999...............................................          $  355
             2000...............................................             287
             2001...............................................              16
                                                                            ----

             Total minimum lease payments receivable............          $  658
                                                                            ====

      Rental income for the three- and  nine-month  periods ended  September 30,
      1998  and 1997  includes  $24 and $94 and $31 and  $92,  respectively,  of
      income from direct financing leases.

Note 8.   Accounts Receivable Write-Off

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

Note 9.   Redemptions

      The following  redemption  offerings were  consummated by the  Partnership
      during the nine-month period ended September 30, 1998:

<TABLE>
<CAPTION>
                                                               Units              Average
                                                              Redeemed        Redemption Price          Amount Paid
                                                              --------        ----------------          ------------
<S>     <C>                                                   <C>                <C>                      <C>  
        Inception through December 31, 1997                    23,023             $11.55                   $ 266

        Quarter ended:
        September 30, 1998.......................               7,169              $9.62                      69
                                                               ------                                       ----

        Partnership to date......................              30,192             $11.11                  $  335
                                                               ======                                       ====

     The redemption price is fixed by formula.
</TABLE>

<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- and nine-month  periods
ended September 30, 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 nine-month period ended September 30,
1998, the Partnership redeemed 7,169 units for a total dollar amount of $69. The
Partnership used cash flow from operations to pay for the redeemed 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 nine-month period ended September 30, 1998, the Partnership  declared
cash  distributions to limited  partners  pertaining to the period from December
1997 through August 1998 in the amount of $4,470. 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,  $2,191  of these  distributions  was a return of  capital  and the
balance was from net income.

At September 30, 1998 the Partnership had no commitments to purchase containers.

Net cash provided by operating  activities  for the  nine-month  periods  ending
September 30, 1998 and 1997, was $5,254 and $6,598,  respectively.  The decrease
of $1,344,  or 20%,  was  primarily  attributable  to  fluctuations  in due from
affiliates,  net offset by the  fluctuation  in accounts  receivable,  excluding
write-off.  Due from affiliates,  net decreased $1,354 in the nine-month  period
ending  September  30, 1997  compared  to an increase of $441 in the  comparable
period in 1998. The fluctuation  resulted from timing  differences in payment of
expenses and fees and in the  remittance  of net rental  revenues  from TEM. The
decrease in accounts receivable, excluding write-off, of $732, in the nine-month
period  ending  September  30,  1998  compared  to a  decrease  of  $259  in the
comparable  period in 1997,  was  primarily  due to a  decrease  in the  average
collection period of accounts receivable,  the decrease in rental income and due
to the resolution of payment issues with one lessee.

For the  nine-month  period  ending  September  30, 1998,  net cash  provided by
investing  activities (the purchase and sale of containers) was $315 compared to
net cash used in investing  activities  of $2,614 for the  comparable  period in
1997. Net cash provided by investing  activities  increased $2,929 primarily due
to the Partnership having purchased more containers during the nine-month period
ended  September  30, 1997 than in the  comparable  period in 1998.  The General
Partners believe that these differences reflect normal fluctuations in container
sales and purchases.  Consistent with its investment objectives, the Partnership
intends to reinvest  all or a  significant  amount of the  proceeds  from future
container sales in additional  containers.  However,  recent container purchases
(reinvestment) are currently lower than anticipated due to the adverse effect of
market  conditions on cash  available for  reinvestment.  Market  conditions are
discussed  more  fully  under  "Results  of   Operations".   Additionally,   TEM
anticipates  selling certain older containers in surplus  locations where demand
is weak, rather than incurring  additional  storage  charges  while  waiting for
market  conditions  to  improve  or  incurring  expensive   repositioning  costs
transporting the containers to demand locations.  Due to the difference  between
sales  proceeds and new  container  prices,  and to the  Partnership  purchasing
larger more expensive types of containers,  the number of additional  containers
purchased may not equal the number of containers sold.

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 nine-month periods ended September 30, 1998 and 1997,
as well as certain other factors as discussed  below. The following is a summary
of the container fleet (in units) available for lease during those periods:

                                                               1998        1997
                                                               ----        ----

                 Beginning container fleet...............     17,697      18,016
                 Ending container fleet..................     16,845      17,872
                 Average container fleet.................     17,271      17,944

The  decline in the average  container  fleet of 4% from the  nine-month  period
ending  September  30,  1997 to the  equivalent  period  in 1998  was due to the
Partnership  having sold more  containers  than it purchased since September 30,
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 trend, which
is expected to continue,  has contributed to a slower rate of reinvestment  than
had been expected by the General Partners. The Partnership also expects that the
size of its  container  fleet  will  decline  due to the  Partnership's  sale of
certain containers in low demand locations,  as discussed above under "Liquidity
and Capital Resources".  This decline is expected to be limited by the fact that
only 7% of the Partnership's container fleet was in these lower demand locations
as of October 15, 1998.

Rental income and direct container expenses are also affected by the utilization
of the container  fleet,  which was 78% and 76% on average during the nine-month
periods ended  September 30, 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
nine-month periods ended September 30, 1998 and 1997.

The  Partnership's  income from  operations  for the  nine-month  periods ending
September  30,  1998 and 1997 was $2,271  and  $1,649,  respectively,  on rental
income of $7,700 and $7,770, respectively. The decrease in rental income of $70,
or 1%, from the  nine-month  period ended  September 30, 1997 to the  comparable
period in 1998 was primarily attributable to a decrease in income from container
rentals,  partially  offset by an increase in other rental  income.  Income from
container rentals, the major component of total revenue,  decreased $326, or 5%,
primarily  due to the  decrease  in the  average  container  fleet of 4% and the
decrease  in  average  rental  rates of 3%,  offset by the  increase  in average
on-hire (utilization) percentage of 3% and the decrease in leasing incentives of
38%.

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, and caused leasing companies to offer higher
leasing  incentives and other  discounts to shipping  lines.  The decline in the
purchase price of new containers during this period,  which continued into 1998,
has also caused additional downward pressure on rental rates.

Additionally,  the weakening of many Asian  currencies in 1998 has resulted in a
significant  increase  in exports  from Asia to North  America  and Europe and a
corresponding  decrease in imports into Asia from North America and Europe. This
trade  imbalance has created a strong  demand for  containers in Asia and a weak
demand for  containers in North America and Europe.  This imbalance has resulted
in  the  stabilization  of  average  utilization  and  the  decline  in  leasing
incentives,  but also  resulted in an unusually  high  build-up of containers in
lower demand  locations  during the nine-month  period ended  September 30, 1998
compared to the equivalent  period in 1997.  Although average  utilization rates
have stabilized,  utilization rates have been slowly decling since late 1997. In
order to improve utilization and alleviate the container build-up, TEM has begun
an aggressive  effort to  reposition  newer  containers to demand  locations and
anticipates  selling certain older  containers in these lower demand  locations,
where  repositioning  costs  are  high.  The Partnership  anticipates  incurring
increased direct container expenses and some losses on the sale of containers as
a  result  of  repositioning  and  selling  containers  in  these  lower  demand
locations.  These losses are  anticipated to be limited by the fact that only 7%
of the  Partnership's  container fleet was in these lower demand locations as of
October 15, 1998. However, the expected increase in repositioning costs may have
a material negative effect on the Partnership's  results of operations.  For the
near term,  the General  Partners do not  foresee  material  changes in existing
market  conditions  and  caution  that both  utilization  and lease  rates could
decline, 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
September  30,  1998 and 1997,  there were 214 and 81  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 dropping off containers in surplus
locations less credits  granted to lessees for leasing  containers  from surplus
locations  (location  income),  income from  charges to lessees for handling and
returning  containers (handling income) and income from charges to lessees for a
Damage  Protection Plan (DPP). For the nine months ended September 30, 1998, the
total of these other rental  income  items was $1,115,  an increase of $256 from
the equivalent  period in 1997. The increase was primarily due to an increase in
location  income  of $281,  offset  by a  decrease  in  handling  income of $47.
Location  income  increased  primarily  due to a decrease  in  credits  given to
lessees  for  picking  up  containers  from  certain  locations  and  due to the
inclusion  of  certain  credits  received  during  1997 and 1998  which had been
previously  applied against  repositioning  expense.  Handling income  decreased
primarily due to a decrease in container movement.

Direct  container  expenses  increased  $148, or 9%, from the nine-month  period
ending  September 30, 1997 to the  equivalent  period in 1998.  The increase was
primarily  due to increases in  repositioning  and DPP expenses of $161 and $90,
respectively,  offset by a decrease  in storage  expense of $112.  Repositioning
expense  increased  primarily  due to an  increase  in the number of  containers
repositioned at a higher average repositioning cost per container and due to the
removal of certain  credits from  repositioning  costs to other rental income as
discussed above. DPP expense increased due to an increase in the number of units
requiring repair, offset by a decrease in the average repair cost per container.
Storage expense decreased due to the increase in utilization noted above.

Bad debt  expense  decreased  from an expense of $33 for the nine  months  ended
September  30, 1997 to a benefit of $81 in the  comparable  period in 1998.  The
benefit  recorded for the period  ending  September  30, 1998  resulted from the
effect of the receipt of insurance proceeds covering certain receivables against
which  reserves had been recorded in 1994 and 1995, as well as the resolution of
payment issues with one lessee.

Depreciation  expense  decreased $598, or 19%, from the nine-month  period ended
September  30,  1997 to the same  period  in 1998  primarily  due to a charge to
depreciation expense of $343 during the second quarter of 1997 to write down the
value of the  refrigerated  containers  owned by the  Partnership and due to the
decrease in average fleet size.

Management fees to affiliates  decreased $41, or 6%, from the nine-month  period
ended  September 30, 1997 to the comparable  period in 1998 due to a decrease in
equipment  management fees. The decrease in equipment management fees was due to
an adjustment resulting from the write-off of receivables for two lessees.

General and administrative  costs to affiliates  decreased $61, or 12%, from the
nine-month  period ended September 30, 1997 to the comparable period in 1998 due
to the decrease in overhead costs allocated by TFS and TEM.

Other income provided $55 of additional  income for the nine-month period ending
September 30, 1998, a decrease of $93 from the  equivalent  period in 1997.  The
decrease was primarily due to the fluctuation of loss/gain on sale of containers
from a gain of $90 in the nine-month  period ending September 30, 1997 to a loss
of $16 in the  comparable  period in 1998.  The loss on sale of  containers  was
primarily due to the Partnership  selling newer containers in certain low demand
locations.

Net earnings per limited partnership unit increased from $0.47 to $0.61 from the
nine-month  period  ending  September  30,  1997 to the  same  period  in  1998,
reflecting  the increase in net  earnings  allocated  to limited  partners  from
$1,750 to $2,279, respectively.


The  following is a comparative  analysis of the results of  operations  for the
three-month periods ended September 30, 1998 and 1997.

The  Partnership's  income from  operations for the  three-month  periods ending
September 30, 1998 and 1997 was $746 and $773, respectively, on rental income of
$2,524 and  $2,698,  respectively.  Income  from  container  rentals,  the major
component  of  rental  income,  decreased  $246,  or 10%,  primarily  due to the
decreases in average utilization, average fleet size and average rental rates of
6%, 5% and 1%, respectively, offset by a decrease in leasing incentives of 50%.

The balance of other rental income for the  three-month  period ended  September
30, 1998 was $367, an increase of $72 from the  comparable  period in 1997.  The
increase was primarily due to an increase in location income of $102,  offset by
a decrease in handling income of $45. Location income increased primarily due to
a decrease in credits  given to lessees for picking up  containers  from certain
locations.  Handling income decreased primarily due to the decrease in container
movement.

Direct  container  expenses  decreased $78, or 13%, from the three-month  period
ending  September 30, 1997 to the  equivalent  period in 1998.  The decrease was
primarily due to a decrease in  repositioning  and handling  expenses of $50 and
$41,  respectively,  offset by an increase in DPP expense of $31.  Repositioning
expense  decreased due to a decrease in the number of units being  repositioned.
Handling expense decreased  primarily due to the decrease in container movement.
DPP expense  increased  primarily due to an increase in the number of containers
requiring  repairs,  offset  by a  decrease  in  the  average  repair  cost  per
container.

Bad debt benefit  decreased $13 from the three-month  period ended September 30,
1997 to a benefit of $6 in the comparable  period in 1998. The benefit  recorded
in 1997 and in 1998 was primarily due to lower reserve requirements.

Depreciation  expense  decreased  $46 or 5% from the  three-month  period  ended
September  30,  1997  to the  comparable  period  in 1998  primarily  due to the
decrease in fleet size.

Management fees to affiliates  decreased $11, or 4%, from the three-month period
ended  September 30, 1997 to the equivalent  period in 1998, due to decreases in
equipment  management fees. The decrease in equipment management fees was due to
the  decrease in rental  income  upon which the  management  fees are  primarily
based.

General and administrative  costs to affiliates  decreased $16, or 11%, from the
three-month period ended September 30, 1997 to the comparable period in 1998 due
to the decrease in overhead costs allocated by TFS and TEM.

Other  income  decreased  from income of $25 for the  three-month  period  ended
September 30, 1997 to an expense of $75 for the  comparable  period in 1998. The
decrease was primarily due to the fluctuation of loss/gain on sale of containers
from a gain of $9 for the nine-month  period ending September 30, 1997 to a loss
of $106 for the comparable period ending in 1998. The loss on sale of containers
was primarily  due to the  Partnership  selling newer  containers in certain low
demand locations.

Net earnings per limited partnership unit decreased from $0.21 to $0.18 from the
three-month  period  ending  September  30,  1997 to the  same  period  in 1998,
reflecting the decrease in net earnings  allocated to limited partners from $782
to $655, respectively.

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 its 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 September 30, 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 the Partnership's business.

Readiness for Year 2000

Many computer systems may experience difficulty processing dates beyond the year
1999; as a  consequence,  some computer  hardware and software at most companies
will need to be modified  or replaced  prior to the year 2000 in order to remain
functional.  The  Partnership  relies on the  financial  and  operating  systems
provided  by the  General  Partners;  these  systems  include  both  information
technology (IT) systems as well as non-information  technology (non-IT) systems.
For  IT  and   non-IT   systems   developed   by   independent   third   parties
(externally-developed)  the General Partners have obtained  representations from
their vendors and suppliers  that these systems are Year 2000 compliant and have
internally tested significant systems as operational.  The General Partners have
reviewed all internally-developed IT and non-IT systems for Year 2000 issues and
identified  certain  of these  systems  which  required  revision.  The  General
Partners have  completed the revision and testing of these  identified  systems,
and these revised systems are now operational.

The cost of the revisions and testing  relating to these systems was incurred by
TEM and a  portion  of the  cost was  allocated  to the  Partnership  as part of
general and administrative costs allocated from TEM. While Year 2000 remediation
costs were not  specifically  identified,  it is estimated  that total Year 2000
related expenses included in allocated overhead from TEM were less than $15. The
Partnership  and the General  Partners do not anticipate  incurring  significant
additional  remediation costs related to the Year 2000 issue.  There has been no
material  effect  on  the  Partnership's  financial  condition  and  results  of
operations as a result of TEM's delay in routine maintenance and repair projects
as a result of Year 2000 remediation.

Year 2000  compliance  testing was  undertaken  by the General  Partners on both
externally-  and  internally-developed   systems.   Standard  transactions  were
processed under simulated  operating  conditions for dates crossing over January
1, 2000 as well as for other  critical  dates such as February 29, 2000.  In the
standard business  scenarios tested, the identified systems appeared to function
correctly. Under nonstandard conditions or unforeseen scenarios, the results may
be different.  Therefore,  these tests,  regardless  of how carefully  they were
conducted,  cannot  guarantee that the General  Partners'  systems will function
without error in the Year 2000 and beyond.  If these systems are not operational
in the Year 2000,  the General  Partners have  determined  that they can operate
manually  for  approximately  two to three months  while  correcting  the system
problems before  experiencing  material adverse effects on the Partnership's and
the General  Partners'  business and results of  operations.  However,  shifting
portions of the daily  operations to manual  processes may result in time delays
and  increased  processing  costs.  Additionally,  the  Partnership  and General
Partners  may  not  be  able  to  provide  lessees  with  timely  and  pertinent
information,  which may  negatively  affect  customer  relations and lead to the
potential loss of lessees,  even though the immediate  monetary  consequences of
this would be limited by the standard  Partnership lease agreements  between the
lessees and the Partnership.

The Partnership and the General Partners are also continuing their assessment of
Year 2000  issues  with third  parties,  comprised  of  lessees,  manufacturers,
depots,  and other  vendors and  suppliers,  with whom the  Partnership  and the
General  Partners  have  a  material  business   relationship  (Third  Parties).
Currently,   the  Partnership  and  the  General  Partners  believe  that  if  a
significant  portion of its lessees is non-compliant for a substantial length of
time, the Partnership's  operations and financial  condition would be materially
adversely  affected.  Non-compliance  by other Third  Parties is not expected to
have a material effect on the Partnership's  results of operations and financial
condition.  The General  Partners  have sent  letters to lessees and other Third
Parties  requesting  representations  on their Year 2000 readiness.  The General
Partners  have  received  responses to fewer than 50% of the letters  sent.  The
General  Partners  will  follow up with  non-respondents  and will  continue  to
identify  additional Third Parties whose Year 2000 readiness should be assessed.
As this  assessment has not been  completed,  the General  Partners have not yet
assumed that a lack of response means that the Third Party will not be Year 2000
compliant.

Nevertheless,  the  Partnership and the General  Partners  believe that they are
likely to encounter  Year 2000 problems with Third Parties,  particularly  those
with significant  operations  within  countries that are not actively  promoting
correction  of Year 2000  issues.  In the event that the  systems of these Third
Parties  are not Year 2000  compliant  by  January 1,  2000,  the  Partnership's
business may be disrupted and results of operations  may be adversely  affected.
Possible  consequences of Year 2000 non-compliance  among Third Parties include,
but are not limited to, (i) TEM's  inability to provide service to certain areas
of the world,  (ii) delays in container  movement,  (iii) payment and collection
difficulties,  and (iv) invoicing  errors due to late reporting of transactions.
These types of problems could result in additional  operating  costs and loss of
lessee business.  As discussed above, the General Partners are prepared to shift
portions of their daily  operations  to manual  processes  in the event of Third
Party  non-compliance.   With  respect  to  manufacturers,   vendors  and  other
suppliers, the General Partners would also attempt to find alternate sources for
goods and  services.  With  respect to depots and agents who handle,  inspect or
repair  containers,  if the majority of the computer systems and networks of TEM
are  operational,  the  General  Partners  believe  that  they  will  be able to
compensate  manually for these Third Parties'  failures (e.g.,  one field office
performing data entry for another,  communication  with depots conducted without
computers), using temporary personnel at additional cost. Although costs will be
incurred to pay for the temporary  personnel,  the  Partnership  and the General
Partners  do not expect  these costs to be  material  to the  Partnership.  With
respect to lessees'  non-compliance,  the General  Partners would compensate for
communications failures manually. If a lessee's noncompliance is broad enough to
disrupt  significantly  the operations of its shipping  business,  the resulting
loss of revenue could result in the lessee renting fewer  containers,  adversely
affecting the Partnership's  business.  The Partnership and the General Partners
are unable to estimate the financial impact of these problems, but to the extent
that  lessees   problems  result  in  weakening   demand  for  containers,   the
Partnership's  results of operations would likely be adversely affected. If Year
2000 problems result in delays in collections,  either because of the additional
time  required  to  communicate  with  lessees or because  of  lessees'  loss of
revenues,  the  Partnership's  cash flow could be affected and  distributions to
general and limited  partners could be reduced.  The Partnership and the General
Partners  believe  that these  risks are  inherent in the  industry  and are not
specific to the Partnership or General Partners.

Forward-Looking Statements and Other Risk Factors

The foregoing analysis of Year 2000 issues includes  forward-looking  statements
and  predictions  about  possible or future  events,  results of operations  and
financial condition. As such, this analysis may prove to be inaccurate,  because
of the  assumptions  made by the  Partnership  and the  General  Partners or the
actual development of future events. No assurance can be given that any of these
forward-looking  statements and predictions  will ultimately prove to be correct
or  even  substantially  correct.  Some  of the  risks  relating  to  Year  2000
compliance are described above. In addition,  in analyzing Year 2000 issues, the
Partnership and the General Partners have assumed that the infrastructure of the
United States and most other  countries,  including  ports and customs,  remains
intact.  If the  infrastructure  of one or  more  countries  were to  fail,  the
resulting  business  disruption  would  likely  have an  adverse  effect  on the
Partnership and the General Partners.

Various  other risks and  uncertainties  could also affect the  Partnership  and
could affect the Year 2000 analysis  causing the effect on the Partnership to be
more severe than discussed above. These risks and uncertainties include, but are
not limited to, the following. As noted above, the Partnerships' and the General
Partners'  Year 2000  compliance  testing  cannot  guarantee  that all  computer
systems  will  function  without  error  beyond the Year  2000.  Tests were only
conducted of normal  business  scenarios,  and no  independent  verification  or
testing was used. Risks also exist with respect to Year 2000 compliance by Third
Parties,  such as the risk that an external party,  who may have no relationship
to the Partnership or General Partners,  but who has a significant  relationship
with one or more Third Parties, may have a system failure that adversely affects
the Partnership's ability to conduct its business. While the Partnership and the
General Partners are attempting to identify such external parties,  no assurance
can be given that they will be able to do so.  Furthermore,  Third  Parties with
direct relationships with the Partnership, whose systems have been identified as
likely to be Year 2000  compliant,  may  suffer a  breakdown  due to  unforeseen
circumstances. It is also possible that the information collected by the General
Partners  from these Third Parties  regarding  their  compliance  with Year 2000
issues  may be  incorrect.  Finally,  it  should  be noted  that  the  foregoing
discussion of Year 2000 issues assumes that to the extent the General  Partners'
systems fail,  either  because of unforeseen  complications  or because of Third
Parties  failure,  switching to manual  operations will allow the Partnership to
continue to conduct its business. While the Partnership and the General Partners
believe this assumption to be reasonable,  if it is incorrect, the Partnership's
results of operations would likely be adversely affected.

<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:  November 11, 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>                                           <C>
________________________                 Executive Vice President,                      November 11, 1998
John R. Rhodes                           (Principal Financial and
                                         Accounting Officer) and
                                         Secretary




________________________                 President (Principal Executive                 November 11, 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: November 11, 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>                                            <C>

/s/John R. Rhodes                        Executive Vice President,                      November 11, 1998
________________________                 (Principal Financial and
John R. Rhodes                           Accounting Officer) and
                                         Secretary



/s/Philip K. Brewer                      President (Principal Executive                 November 11, 1998
________________________                 Officer)
Philip K. Brewer                         

</TABLE>