UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------
                                    FORM 10-K


     [X]    Annual  Report   Pursuant  to  Section  13  or  15(d)  of  the
            Securities  Exchange  Act of 1934 For the  fiscal  year  ended
            December 31, 1995.

     [  ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
            Exchange Act of 1934
            For the transition period from              to

                         Commission file number 1-10553
                             -----------------------

                          PLM EQUIPMENT GROWTH FUND II
             (Exact name of registrant as specified in its charter)

         California                                            94-3041013
 (State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)

    One Market, Steuart Street Tower
     Suite 900, San Francisco, CA                                94105-1301
  (Address of principal executive offices)                       (Zip code)

        Registrant's telephone number, including area code (415) 974-1399
                             -----------------------
         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 ______

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,
and will not be contained,  to the best of registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

         Aggregate   market   value  of  Limited   Partnership   Units  held  by
non-affiliates of the Registrant as of March 19, 1996 was $61,446,000.

         Indicate  the  number  of  units  outstanding  of each of the  issuer's
classes of partnership units, as of the latest practicable date:

                           Class                 Outstanding at March 14, 1996

Limited Partnership Depositary Units                           7,385,605

General Partnership Units:                                             1

An index of  exhibits  filed with this Form 10-K is located at page 45.
Total number of pages in this report:  48


<PAGE>


                                     PART I

ITEM 1.  BUSINESS

(A)  Background

On April 2, 1987, PLM Financial Services,  Inc. (FSI or the General Partner),  a
wholly-owned subsidiary of PLM International, Inc. (PLM International),  filed a
Registration  Statement on Form S-1 with the Securities and Exchange  Commission
with respect to a proposed offering of 7,500,000 limited  partnership units (the
Units) in PLM Equipment  Growth Fund II, a California  limited  partnership (the
Partnership,  the  Registrant  or EGF II).  The  Partnership's  offering  became
effective on June 5, 1987.  FSI, as General  Partner,  owns a 5% interest in the
Partnership.  The  Partnership  engages in the  business  of owning and  leasing
transportation equipment to be operated by and/or leased to various shippers and
transportation companies.

     The Partnership was formed to engage in the business of owning and managing
a diversified pool of used and new transportation-related  equipment and certain
other items of equipment. The Partnership's primary objectives are:

     (i) to acquire and maintain,  a diversified  portfolio of  long-lived,  low
obsolescence, high residual value equipment with the net proceeds of the initial
partnership  offering,  supplemented by debt financing,  until the conclusion of
the reinvestment phase of Partnership operations on December 31, 1995;

     (ii)to generate sufficient net operating cash flow from lease operations to
meet existing  liquidity  requirements and to generate cash distributions to the
Limited  Partners until such time as the General  Partner  commences the orderly
liquidation of the  Partnership  assets or unless the  Partnership is terminated
earlier upon sale of all Partnership property or by certain other events;

     (iii) to  selectively  sell  and  purchase  (until  the  conclusion  of the
reinvestment  phase, which ended on December 31, 1995) other equipment to add to
the Partnership's  initial equipment  portfolio.  The General Partner intends to
sell equipment when it believes  that, due to market  conditions,  market prices
for equipment exceed inherent equipment values; or when expected future benefits
from  continued  ownership of a particular  asset will not equal or exceed other
equipment investment  opportunities.  Proceeds from sales,  together with excess
net cash flow from  operations that remained after cash  distributions  had been
made to the partners,  were used to acquire additional  equipment throughout the
seven year  reinvestment  phase of the Partnership,  which concluded on December
31, 1995;

     (iv)to  preserve  and protect the value of the  portfolio  through  quality
management,  maintaining  the  portfolio's  diversity and constantly  monitoring
equipment markets.

     The offering of the Units of the  Partnership  closed on March 18, 1988. On
November 20, 1990,  the Units of the  Partnership  began trading on the American
Stock  Exchange.   Thereupon  each  Unitholder  received  a  depositary  receipt
representing  ownership of the number of Units owned by such  Unitholder.  As of
December 31, 1995,  there were 7,426,305  depositary  units  (Depositary  Units)
outstanding (including 1,150 Depositary Units held in the Treasury). The General
Partner contributed $100 for its 5% general partner interest in the Partnership.

     It  is  anticipated  that  in  the  eleventh  year  of  operations  of  the
Partnership the General  Partner will commence  liquidation of the assets of the
Partnership in an orderly fashion,  unless the Partnership is terminated earlier
upon sale of all Partnership  property or by certain other events.  Beginning in
the seventh year of operations, cash flow and surplus funds, if any, will not be
reinvested and will be distributed to the partners,  used to repay Partnership's
debt, or held as  Partnership  working  capital.  The seventh year of operations
ended December 31, 1995.


<PAGE>


     Table 1, below,  lists the  equipment  and the cost of the equipment in the
Partnership portfolio at December 31, 1995 (thousands of dollars):
<TABLE>

                                                      TABLE 1

<CAPTION>
 Units                   Type                                        Manufacturer                           Cost
----------------------------------------------------------------------------------------------------------------------

   <S>      <C>                                                 <C>                                     <C>        
      1     727-100C commercial aircraft                        Boeing                                  $     6,986
      2     727-200 commercial aircraft                         Boeing                                       18,021
   1.50     737-200 commercial aircraft                         Boeing                                       15,899<F1>
      1     340A commuter aircraft                              Saab-Fairchild                                5,041
    814     Refrigerated marine containers                      Various                                      12,468
     45     Dry marine containers                               Various                                         121
    308     Open top marine containers                          Various                                         810
    210     Refrigerated trailers                               Trailmobile                                   6,840
    213     Dry trailers                                        Various                                       2,803
    821     Dry piggyback trailers                              Various                                      12,079
    125     Refrigerated piggyback trailers                     Various                                       1,192
      2     Cartage trailers                                    Various                                          18
    463     Box cars                                            Various                                       7,844
    184     Tank cars                                           Various                                       4,810
    115     Covered hopper cars                                 Various                                       2,634
    193     Mill gondolas                                       Various                                       4,459
   0.55     Mobile offshore drilling unit                       Ingalls Shipbuilding                         12,658<F1>
                                                                                                       ---------------

            Total equipment                                                                             $   114,683<F2>
                                                                                                       ===============
<FN>

<F1> Jointly owned by EGF II and an affiliated partnership.

<F2> Includes  proceeds from capital  contributions,  operations and partnership
     borrowings invested in equipment. Includes costs capitalized, subsequent to
     the  date  of  acquisition,  and  equipment  acquisition  fees  paid to PLM
     Transportation  Equipment Corporation.  All equipment was used equipment at
     the time of purchase,  except 165  refrigerated  trailers and 636 piggyback
     dry trailers.

</FN>

</TABLE>

     The equipment is generally  leased under operating leases with terms of one
to six  years.  Some  of the  Partnership's  marine  containers  are  leased  to
operators of  utilization-type  leasing pools which include  equipment  owned by
unaffiliated  parties.  In such instances,  revenues received by the Partnership
consist of a specified percentage of revenues generated by leasing the equipment
to sub-lessees,  after deducting certain direct operating expenses of the pooled
equipment.

     At December 31, 1995, 31% of the Partnership's  trailer equipment  operated
in rental yards owned and maintained by PLM Rental, Inc., the short-term trailer
rental  subsidiary of PLM  International.  Revenues  collected under  short-term
rental  agreements with the rental yards'  customers are distributed  monthly to
the  owners  of the  related  equipment.  Direct  expenses  associated  with the
equipment,  and an  allocation  of other  direct  expenses  of the  rental  yard
operations, are billed to the Partnership.

     The lessees of the  equipment  include,  but are not  limited to:  Carnival
Airlines,  Inc., DHL Airways,  Inc.,  Trans Ocean Ltd.,  Union Pacific  Railroad
Company,  Burlington  Northern,  and Cargill  International.  As of December 31,
1995, all of the equipment was either operating in short-term rental facilities,
on lease, or under other contractual  agreements except an aircraft,  a railcar,
and 115 containers.


<PAGE>


(B)  Management of Partnership Equipment

The  Partnership  has entered into an equipment  management  agreement  with PLM
Investment  Management,  Inc.  (IMI), a wholly-owned  subsidiary of FSI, for the
management  of the  equipment.  IMI agreed to perform all services  necessary to
manage the transportation  equipment on behalf of the Partnership and to perform
or contract  for the  performance  of all  obligations  of the lessor  under the
Partnership's  leases.  In  consideration  for its  services and pursuant to the
Partnership  Agreement,  IMI  is  entitled  to a  monthly  management  fee  (see
Financial Statements, footnotes 1 and 2).

(C)  Competition

(1)  Operating Leases vs. Full Payout Leases

Generally,  the equipment owned by the Partnership is leased out on an operating
lease basis wherein the rents owed during the initial  noncancelable term of the
lease are  insufficient  to  recover  the  Partnership's  purchase  price of the
equipment.  The shortto mid-term nature of operating leases generally commands a
higher  rental rate than longer  term,  full  payout  leases and offers  lessees
relative  flexibility in their  equipment  commitment.  In addition,  the rental
obligation  under the operating  lease need not be  capitalized  on the lessee's
balance sheet.

     The Partnership encounters considerable  competition from lessors utilizing
full payout leases on new equipment,  i.e., leases which have terms equal to the
expected  economic  life of the  equipment.  Full payout  leases are written for
longer terms and for lower rates than the Partnership offers. While some lessees
prefer the flexibility  offered by a shorter term operating lease, other lessees
prefer the rate advantages possible with a full payout lease. Competitors of the
Partnership may write full payout leases at considerably  lower rates, or larger
competitors  with a lower cost of capital  may offer  operating  leases at lower
rates, and as a result, the Partnership may be at a competitive disadvantage.

(2)  Manufacturers and Equipment Lessors

The Partnership also competes with equipment  manufacturers  who offer operating
leases and full payout  leases.  Manufacturers  may provide  ancillary  services
which the  Partnership  cannot offer,  such as specialized  maintenance  service
(including possible substitution of equipment), training, warranty services, and
trade-in privileges.

     The  Partnership  competes  with  many  equipment  lessors,  including  ACF
Industries, Inc. (Shippers Car Line Division), General Electric Railcar Services
Corporation,  Greenbrier  Leasing  Company,  Polaris Aircraft Leasing Corp., GPA
Group  Plc,  and  other  limited  partnerships  which  lease  the same  types of
equipment.

(D)  Demand

The  Partnership  invests  in  transportation,   transportation-related  capital
equipment, and in "relocatable  environments."  "Relocatable environments" refer
to  capital   equipment   constructed  to  be  self-contained  in  function  but
transportable,  example of which  includes  mobile  offshore  drilling  units. A
general  distinction  can be drawn between  equipment  used for the transport of
either  materials  and  commodities  or people.  With the  exception of aircraft
leased to passenger air carriers, the Partnership's  equipment is used primarily
for the transport of materials.

The following describe the markets for the Partnership's equipment:

(1)  Commercial Aircraft

International airlines are expected to post an aggregate $5.7 billion profit for
1995,  an  indication  that the world air  transport  industry  made a  dramatic
turnaround  during the year.  While U.S. air traffic  growth slowed during 1995,
capacity levels decreased,  resulting in higher load factors,  lower unit costs,
and improved yields.  Worldwide,  airlines took delivery of 517 commercial jets,
the lowest  number  since 1988.  A  continuing  decrease in 1996  deliveries  is
expected to improve the supply-demand balance.

     Several factors have favorably impacted the market for "second  generation"
commercial jets, the type owned by the  Partnership,  including Boeing 727s, and
737-200s.  In addition to fewer  deliveries,  the new  generation  of narrowbody
aircraft  has as yet  failed to produce  any  significant  savings in  carriers'
direct  operating  costs,  and there are clear  indications  of further  carrier
consolidation  within the U.S. and European markets.  These trends,  expected to
continue through 1996, have led to increases in demand, rental rates, and market
values for "second generation" commercial aircraft.

     The Partnership owns  predominantly  aircraft that are affected by the U.S.
Federal Aviation Administration (FAA) regulatory requirements. However, the bulk
of this  equipment  is on  long-term  leases  in  foreign  markets  and has been
commanding  lease rates higher than those  available in the U.S.  Those aircraft
operating in the U.S. that are affected by the FAA regulatory  requirements will
either be moved into foreign markets,  as applicable,  or remain on lease in the
U.S.  maximizing  what economic  value is attainable  until they must be retired
from service.

(2)  Marine Containers

The container market ended 1994 with expectations that the strengthening  market
experienced  late in the year would continue into 1995. Such was not the case as
the usual  seasonal  slowdown  during the  post-Christmas  time period  extended
longer than expected, and utilization in 1995 did not achieve 1994 levels. While
per diem rates increased somewhat by summertime, they did not fully recover from
the 8-12%  decrease  experienced  during the  preceding  two  years.  Aggressive
pricing by several major leasing companies  attempting to capture greater market
share is expected to put further pressure on refrigerated  container utilization
and per diem rates. On the secondary markets,  there continues to be significant
increases  in supply as  primary  operators  dispose  of large  numbers of older
equipment.  Since the Partnership owns predominately  older containers,  it will
continue to be impacted by these industry trends.

     During 1996,  major leasing  companies are expected to reduce  purchases of
new equipment in response to soft market conditions.  This anticipated reduction
in supply should lead to a strengthening in utilization and per diem rates later
in the year as demand catches up to supply.

(3)  Railcars

Nearly all the major railroads  reported  substantial  revenue  increases during
1995. As additional  industry  consolidation  is expected in 1996, these mergers
should produce further operating  efficiencies leading to continued increases in
revenues  and  profits.  Car  loadings  rose  approximately  3% during 1995 with
chemicals,  metals,  and grain  experiencing  the largest gains.  Car demand for
liquefied petroleum gas and liquid fertilizer service was also strong throughout
the year.

     The Partnership's  fleet experienced  almost 100% utilization  during 1995.
The few cars out of service were undergoing scheduled maintenance or repair. The
General Partner believes rates are at the top of the cycle for all types of cars
owned by the Partnership.  With demand  continuing  high,  rental rates for most
types of cars owned by the Partnership are expected to remain  relatively strong
during 1996.

     On the supply side, industry experts predict  approximately  55,000 new car
builds  and  40,000  retirements  for a net gain of about 1.2% in the total U.S.
fleet during 1996.  While car builders are still busy,  orders are not coming in
as  rapidly  as in the  last  two  years,  so it is  likely  additions  will not
significantly outpace retirements this year.

(4)  Mobile Offshore Drilling Units (Rigs)

Demand for offshore drilling services  utilizing jack-up rigs increased slightly
in 1995 over the prior two years due  principally  to continued  demand for U.S.
natural gas and improved returns from  international  oil drilling.  Utilization
and day rates have been bolstered by a continued  decline in the supply of rigs.
In 1995,  seven of the 264 rigs in service were retired from the active drilling
fleet  and only one rig was  added.  Another  factor  contributing  to  stronger
contract day rates has been the continued consolidation in rig ownership through
corporate   mergers  and  rig  acquisitions  by  larger  market  players.   This
consolidation has had a recognizable effect on stabilizing day rates in times of
low  utilization  and  increasing  day  rates  faster  in  times  of  increasing
utilization.

     Demand in the U.S. Gulf of Mexico,  the largest market for jack-up rigs, is
expected to continue at existing levels, while demand in international  markets,
primarily  the North Sea and offshore  India,  should  increase.  On a long-term
basis,  overall  demand is expected to continue at the present  level and supply
should  continue to decline as older rigs are  retired.  The  overall  effect of
these trends should be increased  utilization,  day rates, and rig market values
as demand and supply reach  equilibrium.  Some industry  experts predict that by
the  year  2000,   day  rates  will   increase  to  levels   which  will  induce
limitedbuilding of new rigs.

(5)  Intermodal Trailers

After three robust years,  growth in the  intermodal  trailer market was flat in
1995. This lack of growth  resulted from several factors  including a lackluster
domestic economy,  environmental  issues, the peso devaluation,  a new teamsters
agreement  allowing  more  aggressive  pricing,  and  consolidation  among  U.S.
railroads.  Industry  experts  believe  these  factors  may lead to an  improved
balance in supply and demand and encourage  suppliers to retire older,  obsolete
equipment in 1996. The  Partnership's  piggyback trailer fleet, with the average
age of 7 years  compared to the industry  norm of 10 years,  experienced  better
utilization  than  that of its  competitors,  averaging  near 80%  during  1995.
Expansion and  utilization  levels in the intermodal  market are  anticipated to
improve in 1996 and trailer  loadings  are  expected  to increase  3-4% per year
throughout the rest of the decade.

(6)  Over-the-Road Dry Trailers

The  over-the-road  dry  trailer  market  remained  strong in 1995 due to record
freight  movements  and  equipment  utilization.  The General  Partner  achieved
excellent  utilization  levels in 1995 averaging  over 85%.  Current levels show
some signs of softening  demand in  comparison to the  record-setting  levels of
1994,  when users  encountered  backlogs  of up to 18 months  for new  equipment
delivery.  While new  production is expected to decline over the next few years,
this should not  dramatically  affect  utilization  levels,  as plenty of older,
obsolete equipment needs to be retired.

     The General  Partner  continues to transfer  trailers with  expiring  lease
terms to the short-term trailer rental facilities  operated by PLM Rental,  Inc.
The General  Partner  believes the strong  performance  of units in these rental
facilities reflects the demand for short-term leases mentioned above and expects
this trend to continue as long as the current shortage of trailers exists.

(7)  Over-the-Road Refrigerated Trailers

After a record year in 1994, demand for refrigerated  trailers softened in 1995.
This softened  demand  affected  overall  performance in 1995.  Adverse  weather
conditions  reduced  the  volume  of  fresh  fruit  and  produce  available,  so
refrigerated  equipment operators focused on hauling generic freight,  adding to
the   dry   freight   market   while    reducing    capacity   and   demand   in
temperature-controlled markets.

     Heavy  consolidation in the trucking  industry induced carriers to work off
excess equipment inventory from 1994 levels.  However,  inventory is expected to
return to more normal  levels in 1996 and  continue  throughout  the rest of the
decade, as excess capacity is retired, newer refrigeration  technology standards
become more defined, and environmentally-damaging refrigerants are phased out of
service.

(E)  Government Regulations

The use, maintenance, and ownership of equipment is regulated by federal, state,
local,  and/or foreign  governmental  authorities.  Such  regulations may impose
restrictions and financial burdens on the Partnership's  ownership and operation
of  equipment.  Changes  in  government  regulations,   industry  standards,  or
deregulation  may also  affect  the  ownership,  operation,  and  resale  of the
equipment.  Substantial  portions of the Partnership's  equipment  portfolio are
either registered or operated internationally.  Such equipment may be subject to
adverse  political,   government,  or  legal  actions,  including  the  risk  of
expropriation  or loss arising from  hostilities.  Certain of the  Partnership's
equipment is subject to extensive  safety and  operating  regulations  which may
require the removal from service or extensive  modification of such equipment to
meet these regulations at considerable cost to the Partnership. Such regulations
include (but are not limited to):

     (1) the U.S. Oil  Pollution  Act of 1990 (which  established  liability for
operators  and owners of vessels,  mobile  offshore  drilling  units,  etc. that
create environmental pollution);

     (2) the U.S. Department of  Transportation's  Aircraft Capacity Act of 1990
(which  limits or eliminates  the  operation of commercial  aircraft in the U.S.
that do not meet certain noise, aging, and corrosion criteria);

     (3) the Montreal  Protocol on  Substances  That Deplete the Ozone Layer and
the U.S.  Clean Air Act  Amendments  of 1990  (which  call for the  control  and
eventual  replacement of substances  that have been found to cause or contribute
significantly to harmful effects on the stratospheric  ozone layer and which are
used  extensively  as  refrigerants  in  refrigerated  marine cargo  containers,
over-the-road trailers, etc.);

     (4) the U.S. Department of Transportation's Hazardous Materials Regulations
(which regulate the  classification of and packaging  requirements for hazardous
materials and which apply particularly to the Partnership's tank cars).

ITEM 2. PROPERTIES

The Partnership  neither owns nor leases any properties other than the equipment
it has purchased for leasing  purposes.  At December 31, 1995,  the  partnership
owned a portfolio of transportation equipment as described in Part I, Table 1.

     The  Partnership  maintains  its  principal  office at One Market,  Steuart
Street  Tower,  Suite 900,  San  Francisco,  California  94105-1301.  All office
facilities are provided by FSI without reimbursement by the Partnership.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 1995.


<PAGE>


                                     Part II

ITEM 5. MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED DEPOSITARY UNIT MATTERS

The  Partnership's  Depositary Units began trading (under the ticker symbol GFY)
on November 20, 1990, on the American  Stock  Exchange  (AMEX).  As of March 14,
1996,  there  were  7,385,605  Depositary  Units  outstanding  (including  1,150
Depositary Units held in the Treasury). There are approximately 9,900 Depositary
Unitholders of record as of the date of this report.

      Pursuant to the terms of the Partnership Agreement, the General Partner is
generally  entitled to a 5% interest in the profits and losses and distributions
of the Partnership. The General Partner also is entitled to a special allocation
of any gains from sale of the Partnership's  assets during the liquidation phase
in an amount  sufficient  to  eliminate  any  negative  balance  in the  General
Partner's capital account.

The  Partnership  depositary  units are listed and traded on the American  Stock
Exchange under the symbol GFY. Under the Internal  Revenue Code (the Code),  the
Partnership is classified as a Master Limited  Partnership.  The Code treats all
Publicly  Traded  Partnerships  as  corporations  if they remain publicly traded
after December 31, 1997. Treating the Partnership as a corporation will mean the
Partnership  itself will become a taxable,  rather than a "flow through" entity.
As a taxable entity,  the income of the  Partnership  will be subject to federal
taxation at both the  partnership  level and at the investor level to the extent
that income is  distributed  to an investor.  In addition,  the General  Partner
believes that the trading price of the  Depositary  Units may be distorted  when
the  Partnership  begins  the  final  liquidation  of the  underlying  equipment
portfolio. In order to avoid taxation of the Partnership as a corporation and to
prevent  unfairness to Unitholders,  the General Partner has requested to delist
the  Partnership's  Depositary  Units from the AMEX prior to March 29, 1996. The
last day for trading on the AMEX will be March 22, 1996. While the Partnership's
Depositary Units will no longer be publicly traded on a national stock exchange,
the General Partner will continue to manage the equipment of the Partnership and
prepare and  distribute  quarterly and annual reports and Forms 10-Q and 10-K in
accordance  with  the  Securities  and  Exchange  Commission  requirements.   In
addition,  the General Partner will continue to provide  pertinent tax reporting
forms and  information to  Unitholders.  The General  Partner  anticipates  that
following delisting,  an informal market for the Partnership's units may develop
in the  secondary  marketplace  similar  to  that  which  currently  exists  for
non-publicly traded partnerships.


<PAGE>


     Table  2,  below,  sets  forth  the  high and low  reported  prices  of the
Partnership's Depositary Units for 1994 and 1993 as reported by the AMEX as well
as cash distributions paid per Depositary Unit.
<TABLE>

                                                      TABLE 2
<CAPTION>

                                                                              Cash
                                                                         Distributions
                                                                            Paid Per
                                                    Reported Trade         Depositary
                                                        Prices                Unit
                                              -------------------------------------------

  Calendar Period                                 High            Low

  1995

  <S>                                          <C>             <C>                <C>   
  1st Quarter                                  $   8.500       $   7.000          $ 0.40
  2nd Quarter                                  $   8.563       $   7.250          $ 0.40
  3rd Quarter                                  $   8.000       $   6.250          $ 0.40
  4th Quarter                                  $   6.625       $   4.563          $ 0.40

  1994

  1st Quarter                                  $  12.250       $  10.125          $ 0.40
  2nd Quarter                                  $  11.625       $  10.125          $ 0.40
  3rd Quarter                                  $  10.625       $   9.375          $ 0.40
  4th Quarter                                  $   9.875       $   7.250          $ 0.40

</TABLE>


     The  Partnership  has engaged in a plan to  repurchase up to 250,000 of the
outstanding  Depositary  Units.  During 1995, the  Partnership  repurchased  and
canceled 46,400 Depositary Units at a total cost of $345,000.  During the fourth
quarter of 1994, the Partnership  repurchased 20,200 Depositary Units at a total
cost of $156,000.  During the first quarter of 1993, the Partnership repurchased
6,700 Depositary Units at a total cost of $70,000.  As of December 31, 1995, the
Partnership had purchased and canceled a cumulative  total of 73,300  Depositary
units at a cost of $571,000.



<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

     Table 3, below, lists selected financial data for the Partnership:
<TABLE>

                                                      TABLE 3

                                                For the years ended
                                   December 31, 1995, 1994, 1993, 1992, and 1991
                                  (thousands of dollars except per unit amounts)
<CAPTION>

                                                 1995           1994            1993           1992            1991
                                              --------------------------------------------------------------------------

  <S>                                          <C>           <C>             <C>            <C>             <C>       
  Operating results:
    Total revenues                             $ 18,983      $  26,326       $  36,901      $  34,508       $   44,519
    Net gain (loss) on
      disposition of equipment                    1,485          2,347           6,704           (329)           5,173
    Loss on revaluation of
      equipment                                    (667)          (887)           (161)        (6,876)            (300)
    Net income (loss)                               937             67           5,596        (10,489)           1,447

  At year-end:
    Total assets                               $ 49,161      $  69,485       $  84,206      $  92,928       $  124,422
    Total liabilities                            30,965         39,332          41,344         42,928           46,562
    Notes payable                                27,000         35,000          35,000         38,218           41,724

  Cash distributions                           $ 12,549      $  12,620       $  12,665      $  17,371       $   17,369

  Cash distributions which represent a return  $ 11,847         11,989       $   7,563      $  16,502       $   16,256
  of capital                                                 $

  Per Depositary Unit:

  Net income (loss)                            $   0.01<F1>  $   (0.12)<F1>  $    0.60<F1>  $   (1.53)<F1>  $     0.03<F1>

  Cash distributions                           $   1.60      $    1.60       $    1.60      $    2.20       $     2.20

  Cash distributions which represent a return  $                             $                              $
  of capital                                       1.60      $    1.60            1.01      $    2.20             2.17

<FN>

<F1> After reduction of income of $815 ($0.11 per Depositary Unit) in 1995, $963
     ($0.13 per Depositary  Unit) in 1994,  $845 ($0.11 per Depositary  Unit) in
     1993,  $1,495 ($0.20 per  Depositary  Unit) in 1992,  and $1,130 (%0.15 per
     Depositary Unit) in 1991  representing  special  allocations to the General
     Partner resulting from an amendment to the Partnership  Agreement (see Note
     1 to the financial statements).

</FN>

</TABLE>

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Introduction

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  relates to the Financial  Statements of PLM Equipment Growth Fund II
(the Partnership).  The following  discussion and analysis of operations focuses
on the  performance  of the  Partnership's  equipment in various  sectors of the
transportation  industry and its effect on the  Partnership's  overall financial
condition.

     The analysis is organized in the following manner:

-    Results of Operations - Year Over Year Summary and Factors Affecting 
     Performance
-    Financial Condition - Capital Resources, Liquidity, and Distributions
-    Outlook for the Future
-    Results of Operations - Year to Year Detail Comparison

(A)  Results of Operations

(1)  Year Over Year Summary

The Partnership's  operating  contribution  before  depreciation,  amortization,
gain/loss on sales,  and loss on revaluation  declined by  approximately  11% in
1995 from 1994,  primarily  due to the sale of certain  equipment,  reduction in
lease  rates  for  certain   equipment   re-leased  during  the  year,  and  the
Partnership's  use  of  sales  proceeds  for  debt  reduction  rather  than  the
acquisition  of  additional   equipment.   Interest  expense  decreased  as  the
Partnership  prepaid  two  annual  principal  payments,   thereby  reducing  its
outstanding  debt  balance,  while  management  fees  decreased as a function of
decreased lease revenues.

(2)  Factors Affecting Performance

(a)  Re-leasing Activity and Repricing Exposure to Current Economic Conditions

The exposure of the Partnership's  equipment  portfolio to repricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed.  Major factors influencing the current market rate
for transportation equipment include supply and demand for similar or comparable
types or kinds of transport capacity, desirability of the equipment in the lease
market,  market  conditions  for the  particular  industry  segment in which the
equipment is to be leased,  overall  economic  conditions,  various  regulations
concerning the use of the equipment,  and others.  The  Partnership  experienced
re-pricing exposure in 1995 primarily in its rig and trailer portfolios.

     (i) Mobile Offshore Drilling Unit (Rigs): Effective in the first quarter of
1995, the lease of the  Partnership's  rig reached the end of that period of the
lease  term in which  rents  were paid on a fixed  daily  rate,  and began a new
portion  of the  lease  term in  which  the  fixed  daily  rate was  reduced  by
approximately  30% with the provision for sharing 50% of any profits realized by
the charterer operating the rig calculated on a quarterly basis. During 1995, no
profit sharing was realized. For a more thorough discussion of market conditions
and those factors  impacting rates for rigs, see the "Demand"  section on Mobile
Offshore Drilling Units.

     (ii)Trailers:  The majority of the Partnership's trailer portfolio operates
in short-term rental facilities or short-line  railroad systems.  The relatively
short  duration  of most  leases in these  operations  exposes  the  trailers to
considerable  re-leasing  activity.  While a year  over year  comparison  of the
Partnership's  trailer  portfolio  shows an  increase in net  contribution,  the
impact of trailer  purchases in late 1994 had far greater  impact on performance
than changing rates, as approximately 77% of the Partnership's  total intermodal
trailers used in  short-line  railroad  service were  purchased in the third and
fourth  quarters  of 1994.  Net  contributions  for the  Partnership's  trailers
operated in short-term  rental  facilities  declined slightly from 1994 to 1995,
for reasons described in the "Demand" section on trailers.

     Of the  Partnership's  remaining  equipment,  other factors,  such as those
described in the next section,  had far greater impact on net contribution  than
changing rates.

(b)  Equipment Liquidations,  Nonperforming Lessees, and Off-lease Time

The Partnership's  exposure to meeting its objective of generating net operating
cash flow from lease  operations to meet  existing  liquidity  requirements  and
generate cash distributions lies in its ability to keep its equipment  portfolio
on-lease and for lessees to perform under the terms of those leases prior to the
liquidation  phase of Partnership  operations.  The previous  section  described
risks  involved in  re-leasing  equipment  in  changing  markets.  Risk  factors
involving equipment lease operations are:
     -liquidation of Partnership  equipment  without  subsequent  replacement by
additional  equipment  (see below in  Reinvestment  Risk),  which  represents  a
reduction in the size of the equipment portfolio, and may result in reduction of
net contributions to the partnership;
     - lessees not  performing  under the terms of their  leases,  either by not
paying rent, not  maintaining or operating the equipment in accordance  with the
conditions of the leases, or other possible departures from the leases which can
not only  result in  reductions  in net  contribution,  but also may require the
Partnership  to assume  additional  costs to  protect  its  interests  under the
leases, such as repossession, legal fees, etc.
     - equipment  that is idle or out of service  between the  expiration of one
lease and the  assumption  of a subsequent  one can result in a reduction of net
contribution  to  the  Partnership,  not  only  through  the  loss  of  economic
productivity  of such  equipment,  but  also  through  the  assumption  of costs
involved in maintaining or refitting the equipment as new leases are sought.

     The Partnership experienced the following in 1995:

     (i) Liquidations:  During 1995, the Partnership sold its remaining interest
in a marine vessel, 2,278 marine containers, its interest in a McDonnell-Douglas
DC-9 aircraft,  1 railcar,  11 trailers and 1 tractor. A portion of the proceeds
from  the sale of this  equipment  was  used to  prepay  the  first  two  annual
installments of the Partnership's  outstanding debt,  totaling $8 million. As no
additional  equipment  was  purchased in 1995,  these  liquidations  represent a
permanent reduction in the Partnership's equipment portfolio.  The net result of
all sales,  liquidations,  and no reinvestment  has been a reduction in the cost
basis of the Partnership's equipment portfolio of approximately $14.1 million.

     (ii)  Nonperforming   Lessees:  The  Partnership   purchased  1,959  marine
containers for approximately $2.2 million between the first and third quarter of
1994. The lessee of this equipment  encountered  financial  difficulties  in the
fourth quarter of 1994. The Partnership established reserves against receivables
invoiced  for  these  units  due to the  General  Partner's  determination  that
ultimate collection of this revenue was uncertain. Additionally, the Partnership
accrued legal and other costs  necessary to protect its interests under the term
of the lease. The General Partner reached an agreement with the lessee resulting
in the sale of the units to the  lessee for $2.2  million  in the third  quarter
1995.  The  Partnership  recovered  the  purchase  cost  of the  containers  and
approximately $0.2 million in unpaid receivables,  but was required to write-off
approximately $0.3 million in receivables that will not be collected as a result
of the sale.

     In the fourth  quarter of 1995,  the  Partnership  established  reserves of
approximately    $0.2    million    against    invoices    for    one   of   its
internationally-operated  aircraft  due to the General  Partner's  determination
that ultimate collection of this rent is uncertain.

     (iii)  Off-lease Time: One of the  Partnership's  aircraft was off-lease in
the first  quarter  and for part of the second  quarter of 1995 as it  underwent
repairs and retrofits in accordance with the  manufacturer's  Aging-Aircraft and
Corrosion directives.  These modifications were more extensive than anticipated,
costing  approximately  $0.8  million,  and slowing  delivery to a new lessee by
approximately one month.  During the fourth quarter of 1995, the lease of one of
the Partnership's aircraft expired, and the aircraft is presently being marketed
for  sale.  As stated  previously,  it may be  difficult  to  quantify  the true
economic loss to the Partnership  resulting from the aircraft being off-lease in
the fourth quarter;  however, at previous lease rates, the net contribution from
the aircraft declined by approximately $0.13 million from 1994 to 1995.

(c)  Reinvestment Risk

Reinvestment  risk occurs when 1) the  Partnership  cannot  generate  sufficient
surplus cash after  fulfillment of operating  obligations and  distributions  to
reinvest in additional  equipment during the  reinvestment  phase of Partnership
operations;  2) equipment is sold or liquidated for less than threshold amounts;
3) proceeds  from sales,  losses,  or surplus cash  available  for  reinvestment
cannot be  reinvested  at  threshold  lease  rates;  or 4) proceeds  from sales,
losses,  or surplus  cash  available  for  reinvestment  cannot be deployed in a
timely manner.

      During the first seven years of operations,  the  Partnership  intended to
increase  its  equipment  portfolio  by  investing  surplus  cash in  additional
equipment after fulfilling  operating  requirements and paying  distributions to
the partners.  Subsequent to the end of the reinvestment  period which concluded
on December 31, 1995, the Partnership will continue to operate for an additional
three years,  then begin an orderly  liquidation  over an  anticipated  two-year
period.

     For the year ended December 31, 1995, the Partnership  generated sufficient
operating  revenues  to  meet  its  operating  obligations,  including  interest
expense.  Cash distributions of $12.5 million included both funds generated from
current period operations and cash available,  but not distributed,  in previous
periods.  During the year, the Partnership  received  proceeds of  approximately
$7.0  million  from the  liquidation  or sale of  marine  containers,  trailers,
railcars,  its 50% interest in an aircraft, and 50% interest in a marine vessel.
The Partnership reinvested approximately $0.6 million in aircraft modifications,
but did not purchase any additional equipment in 1995. The Reinvestment phase of
Partnership operations ended on December 31, 1995.

     The Partnership began the year with approximately $12.6 million in cash and
restricted cash, of which approximately $8.0 million was reserved by the General
Partner for  prepayment  of the first two annual  payments of the  Partnership's
outstanding  debt.  A $7.0  million  payment  was  made at the end of the  first
quarter, and an additional $1.0 million was paid in the third quarter.


(d)  Equipment Valuation and Write-downs

In March 1995, the Financial  Accounting Standards Board (FASB) issued statement
No. 121,  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed  Of" (SFAS 121).  This  standard  is  effective  for years
beginning after December 15, 1995. The Partnership adopted SFAS 121 during 1995,
the effect of which was not  material as the method  previously  employed by the
Partnership  was  consistent  with SFAS 121. In  accordance  with SFAS 121,  the
Partnership  reviews the carrying  value of its  equipment at least  annually in
relation to expected  future market  conditions for the purpose of assessing the
recoverability of the recorded  amounts.  If projected future lease revenue plus
residual  values are less than the carrying  value of the  equipment,  a loss on
revaluation  is  recorded.  The  carrying  value of an  aircraft  was reduced by
approximately $0.7 million in 1995.

     As of December 31, 1995,  the General  Partner  estimated  the current fair
market value of the Partnership's  equipment portfolio to be approximately $61.4
million.

(B)  Financial Condition - Capital Resources, Liquidity, and Distributions

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further  capital  contributions  from original  partners are permitted under the
terms  of  the   Partnership's   Limited   Partnership   Agreement,   while  the
Partnership's total outstanding indebtedness,  currently $27.0 million, has been
reduced  from its  previous  level of $35  million.  The  Partnership  relies on
operating cash flow to meet its operating  obligations,  make cash distributions
to Limited Partners, and increase the Partnership's equipment portfolio with any
remaining surplus cash.

     For the year ended December 31, 1995, the Partnership  generated sufficient
operating  revenues to meet its operating  obligations,  but used  undistributed
available cash from prior periods of approximately  $1.3 million to maintain the
current level of distributions (total of $12.5 million in 1995) to the partners.
During the year,  the General  Partner sold  equipment  for  approximately  $7.0
million and used these proceeds to prepay $8.0 million in principal  payments on
its outstanding debt.

(C)  Outlook for the Future

Several factors may affect the Partnership's  operating  performance in 1996 and
beyond,  including  changes  in the  markets  for the  Partnership's  equipment,
changes in the  regulatory  environment in which that  equipment  operates,  and
general economic conditions in each year.

(1)  Repricing and Reinvestment Risk

Certain of the  Partnership's  aircraft,  railcars,  rig, and  trailers  will be
remarketed  in 1996 as existing  leases  expire,  exposing  the  Partnership  to
considerable repricing risk/opportunity.  Additionally,  the General Partner may
select  to  be  sold  certain  underperforming  equipment,  or  equipment  whose
continued  operation may become  prohibitively  expensive.  As the  reinvestment
phase of Partnership  operations ended December 31, 1995, and proceeds from sold
or liquidated equipment cannot subsequently be used for investment in additional
equipment,  such  sales will  result in a smaller  equipment  portfolio  and may
result in a reduction in net income available for distribution.

(2)  Impact of Government Regulations on Future Operations

The General  Partner  operates the  Partnership's  equipment in accordance  with
current applicable  regulations (see Item 1, Section E Government  Regulations).
However, the continuing implementation of new or modified regulations by some of
the  authorities  mentioned  previously,  or others,  may  adversely  affect the
Partnership's  ability to continue to own or operate equipment in its portfolio.
Additionally,  regulatory  systems  vary  from  country  to  country,  which may
increase the burden to the Partnership of meeting regulatory  compliance for the
same equipment  operated between countries.  Currently,  the General Partner has
observed  rising  insurance  costs to operate  certain  vessels into U.S.  ports
resulting  from  implementation  of the U.S. Oil Pollution Act of 1990.  Ongoing
changes in the  regulatory  environment,  both in the U.S. and  internationally,
cannot be predicted  with any  accuracy,  and preclude the General  Partner from
determining the impact of such changes on Partnership operations,  purchases, or
sale of equipment.

(3)  Additional Capital Resources and Distribution Levels

The Partnership's initial contributed capital was comprised of the proceeds from
its initial offering,  supplemented later by permanent debt in the amount of $35
million.  The General Partner has not planned any expenditures,  nor is it aware
of any  contingencies  that would cause it to require any additional  capital to
that mentioned above.

     Pursuant to the Limited  Partnership  Agreement,  the Partnership ceased to
reinvest in  additional  equipment  beginning  in its eighth year of  operations
which  commenced  on January 1, 1996.  The General  Partner  intends to pursue a
strategy of selectively  re-leasing equipment to achieve competitive returns, or
selling   equipment  that  is   underperforming   or  whose  operation   becomes
prohibitively  expensive,  in the period prior to the final  liquidation  of the
Partnership.  During this time, the Partnership will use operating cash flow and
proceeds from the sale of equipment to meet its operating  obligations  and make
distributions to the partners.  Although the General Partner intends to maintain
a  sustainable  level  of  distributions  prior  to  final  liquidation  of  the
Partnership, actual Partnership performance and other considerations may require
adjustments to then-existing  distribution  levels.  In the long term,  changing
market  conditions and  used-equipment  values may preclude the General  Partner
from  accurately  determining  the  impact of  future  re-leasing  activity  and
equipment  sales on Partnership  performance  and liquidity.  Consequently,  the
General Partner cannot establish future  distribution  levels with any certainty
at this time.

     In the first quarter of 1994, the General Partner completed the refinancing
of a bank  loan  which  was due to  mature  September  30,  1995.  The new  debt
comprised notes payable of $35.0 million,  and the corresponding loan agreements
require the  Partnership  to maintain a minimum debt coverage ratio based on the
fair market value of  equipment,  a minimum  fixed charge  coverage  ratio,  and
limits  the  concentration  of any one type of  equipment  in the  Partnership's
equipment  portfolio.  The  refinanced  debt begins to mature in March 1996. The
General  Partner  prepaid the first two annual  installments of principal due on
the debt in the  first  and  third  quarters  of  1995.  The  maturities  of the
remaining principal installments on the debt coincide with the liquidation phase
of the  Partnership  and will be repaid with  proceeds  from sales of  equipment
during that phase.

     As of the  first  quarter  of  1996,  the cash  distribution  rate has been
reduced  to more  closely  reflect  current  and  expected  net cash  flows from
operations.  Continued weak market  conditions in certain  equipment sectors and
equipment  sales have reduced  overall lease revenues in the  Partnership to the
point where  reductions in distribution  levels are now necessary.  In addition,
with the Partnership expected to enter the liquidation phase in the near future,
the size of the Partnership's  remaining equipment portfolio,  and, in turn, the
amount of net cash flows from operations,  will continue to become progressively
smaller  as assets  are sold.  Although  distribution  levels  will be  reduced,
significant  asset  sales  may  result in  potential  special  distributions  to
Unitholders.

(D)  Results of Operations - Year to Year Detail Comparison

Comparison of the Partnership's Operating Results for the Years Ended December 
31, 1995 and 1994

(A)  Revenues

Total  revenues  for the years  ended  December  31,  1995 and 1994,  were $19.0
million and $26.3  million,  respectively.  The  decrease in 1995  revenues  was
primarily  attributable  to lower lease revenue and reduced gains on disposition
of equipment.  Lower lease revenue resulted from the  Partnership's  sales of an
interest in a marine vessel, and an aircraft,  a railcar,  trailers,  and marine
containers  during 1995 and 1994 sales. The  Partnership's  ability to liquidate
assets,  secure leases, and re-lease those assets whose leases expire during the
duration of the  Partnership  is subject to many  factors and the  Partnership's
performance in 1995 is not necessarily indicative of future periods.

     (1) Lease  revenue  declined to $16.8 million in 1995 from $23.3 million in
1994.  The  following  table lists lease  revenue  earned by equipment  type (in
thousands):
<TABLE>
<CAPTION>

                                                        For the year ended December 31,
                                                          1995               1994
                                                       -------------------------------
  <S>                                                  <C>                <C>      
  Trailers and tractors                                $   4,972          $   3,885
  Rail equipment                                           4,785              4,823
  Aircraft                                                 3,666              4,935
  Marine containers                                        1,580              1,826
  Mobile offshore drilling units                           1,436              2,488
  Marine vessels                                             391              5,294
                                                       ===============================
                                                       $  16,830          $  23,251
                                                       ===============================
</TABLE>

     Significant revenue component changes resulted primarily from:

     (a) Declines of $4.9 million in marine  vessel  revenues due to the sale of
two marine  vessels during the third quarter of 1994 and the  Partnership's  50%
interest in another marine vessel in the second quarter of 1995;

     (b)  Declines of $1.3  million in  aircraft  revenue due to the sale of the
Partnership's  50% interest in a DC-9 aircraft during the second quarter of 1995
and another aircraft being off-lease during part of the fourth quarter of 1995;

     (c) A decrease  of $1.2  million  in mobile  offshore  drilling  unit (rig)
revenue  due to the sale of one rig in the fourth  quarter of 1994,  and a lower
re-lease rate on another rig;

     (d) A decrease of $0.2 million in marine container  revenue due to the sale
of 2,278 marine containers during 1995;

     (e) An increase of $1.1  million in trailer and tractor  revenue due to the
purchase of 649 trailers in the third and fourth quarters of 1994.

     (2) Interest and other income  decreased by $0.1 million due  primarily due
to lower cash balances available for investment,  offset slightly by an increase
in the interest rate earned on cash investments.

     (3) Net gain on disposition  of equipment  during 1995 totaled $1.5 million
from the sale or disposal of the  Partnership's 50% interest in a DC-9 aircraft,
11  trailers,   1  tractor,   2,278  marine  containers,   1  railcar,  and  the
Partnership's  50% interest in a marine  vessel with an aggregate net book value
of $5.8 million and unused  drydock  reserves of $0.3  million,  for proceeds of
$7.0 million.  Net gains on  disposition  of equipment  during 1994 totaled $2.3
million from the sale or disposal of 2 marine vessels, 2 railcars, 267 trailers,
423 marine  containers,  and a 12% interest in a mobile offshore  drilling unit.
The equipment  sold had an aggregate net book value of $13.5 million and accrued
drydock reserves of $2.2 million for proceeds of $13.6 million.

(B)  Expenses

Total  expenses  for the years  ended  December  31,  1995 and 1994,  were $18.0
million and $26.3  million,  respectively.  The  decrease in 1995  expenses  was
primarily   attributable  to  decreased  marine  equipment  operating  expenses,
depreciation expense,  repairs and maintenance,  insurance, and management fees,
offset by a slight increase in bad debt expense.

     (1)  Direct  operating   expenses  (defined  as  repairs  and  maintenance,
insurance, and marine equipment operating expenses) decreased to $3.3 million in
1995 from $8.3 million in 1994. This change resulted from:

     (a)  Decreases  of $2.9  million  in  marine  equipment  operating  expense
resulted  from the sale of two marine  vessels in the third  quarter of 1994 and
the Partnership's 50% interest in another marine vessel in the second quarter of
1995;

     (b)  Decreases of $1.4 million in repairs and  maintenance  costs from 1994
levels resulted from the sale of two marine vessels in the third quarter of 1994
and a 50% interest in another marine vessel in the second quarter of 1995. These
declines were offset slightly by increases in aircraft  expenses  resulting from
the refurbishment of an aircraft prior to being re-leased;

     (c) Decreases of $0.7 million in insurance  expenses resulted from the sale
of two marine vessels in the second quarter of 1994. The 1994 expenses include a
$0.2 million  refund from an insurance  pool in which the  Partnership's  marine
vessels participate,  due to lower than expected insurance claims in the pool. A
similar refund was not received in 1995.

     (2) Indirect  operating  expenses (defined as depreciation and amortization
expense, management fees, interest expense, general and administrative expenses,
and bad debt  expense)  decreased to $14.1 million in 1995 from $17.1 million in
1994. This change resulted from:

     (a)  Decreases  of $2.6 million in  depreciation  expense from 1994 levels,
reflecting the Partnership's  double-declining  balance  depreciation method and
the effect of asset sales in 1994 and 1995,  partially offset by the purchase of
equipment during the later part of 1994;

     (b) Decreases of $0.3 million in management fees to affiliates,  reflecting
the lower levels of lease revenues in 1995 as compared to 1994;

     (c)  Decreases  of $0.2  million in interest  expense  from a $0.3  million
write-off in 1994 of unamortized loan  origination  costs due to the refinancing
of the  Partnership's  debt in 1994,  offset by a $0.1 million increase due to a
higher base rate of interest  charged on the  Partnership's  floating  rate debt
during 1995;

     (d) Decreases of $0.1 million in general and  administrative  expenses from
1994 levels,  resulting from the write-off of accrued legal and other  expenses,
offset by increased  administrative  costs associated with the short-term rental
facilities  due to an additional 636 trailers now operating in the facilities in
1995 when compared to the same period in 1994;

     (e)  Increases  of $0.2  million in bad debt  expense  reflect  the General
Partner's  evaluation of the  collectibility of receivables due from an aircraft
lessee that encountered financial difficulties.

     (3) Loss on  revaluation of equipment of $0.7 million in 1995 resulted from
the Partnership  reducing the net book value of an aircraft to its estimated net
realizable value.

(C)  Net Income

The  Partnership's  net income of $937,000 for the year ended December 31, 1995,
increased  from net income of $67,000 for 1994.  During  1995,  the  Partnership
distributed $11.9 million to the Limited Partners, or $1.60 per Depositary Unit.



<PAGE>


Comparison of the Partnership's Operating Results for the Years Ended 
December 31, 1994 and 1993

(A)  Revenues

Total  revenues  for the years  ended  December  31,  1994 and 1993,  were $26.3
million and $36.9  million,  respectively.  The  decrease in 1994  revenues  was
primarily  attributable  to lower lease revenue and reduced gains on disposition
of Partnership  marine vessels,  a mobile offshore  drilling unit,  trailers and
marine containers during 1994. The Partnership's ability to acquire or liquidate
assets,  secure leases, and re-lease those assets whose leases expire during the
duration of the  Partnership  is subject to many  factors and the  Partnership's
performance in 1994 is not necessarily indicative of future periods.

     (1) Lease  revenue  declined to $23.3 million in 1994 from $30.0 million in
1993.  The  following  table lists lease  revenue  earned by equipment  type (in
thousands):
<TABLE>
<CAPTION>

                                                        For the year ended December 31,
                                                          1994               1993
                                                       -------------------------------
  <S>                                                  <C>                <C>      
  Marine vessels                                       $   5,294          $  12,050
  Rail equipment                                           4,823              5,336
  Aircraft                                                 4,935              5,051
  Trailers and tractors                                    3,885              3,590
  Mobile offshore drilling unit                            2,488              1,418
  Marine containers                                        1,826              2,506
                                                       ===============================
                                                       $  23,251          $  29,951
                                                       ===============================
</TABLE>

     Significant revenue component changes resulted primarily from:

     (a)  Declines of $6.8 million in marine  vessel  revenue due to the sale of
five on-lease  marine vessels  during the first and fourth  quarters of 1993 and
the third quarter of 1994;

     (b) Declines of $0.7 million in marine container  revenues primarily due to
a group of marine containers which were on-lease in 1993, but off-lease in 1994,
offset, in part, by revenue earned on 1,959 marine  containers  purchased during
1994;

     (c) Declines of $0.5 million in rail equipment  revenues due to the sale of
639 railcars during 1993 and two railcars in 1994;

     (d)  Declines of $0.1  million in aircraft  revenues  due to the sale of an
aircraft in the fourth  quarter of 1993 and a  significant  rate  reduction on a
renewed lease for another aircraft;

     (e)  Increases  of $1.1  million  in mobile  offshore  drilling  unit (rig)
revenues due to the acquisition and lease of a 55% interest in a rig during July
of 1993;

     (f) Increases of $0.3 million in trailer  revenue due to the acquisition of
649 trailers during the third and fourth quarters of 1994.

     (2) Net gains on disposition of equipment  during 1994 totaled $2.3 million
from the sale or disposal of 2 marine  vessels,  2 railcars,  267 trailers,  423
marine  containers,  and a 12% interest in a mobile offshore  drilling unit. The
equipment  sold had an  aggregate  net book value of $13.5  million  and accrued
drydock reserves of $2.2 million and proceeds  totaled $13.6 million.  Net gains
on  disposition  of equipment  during 1993 totaled $6.7 million from the sale or
disposal of 3 marine  vessels,  639  railcars,  1  aircraft,  124  tractors  and
trailers,  and 305 marine  containers  with an aggregate net book value of $16.0
million  and accrued  drydock  reserves  of $1.5  million for  proceeds of $21.2
million (see Note 3 to the Financial Statements).

(B)  Expenses

Total  expenses  for the years  ended  December  31,  1994 and 1993,  were $26.2
million and $31.3  million,  respectively.  The  decrease in 1994  expenses  was
primarily  attributable  to decreased  depreciation  expense,  marine  equipment
operating expenses, and repairs and maintenance,  offset by increases in loss on
revaluation of equipment and interest expense.

     (1)  Direct  operating   expenses  (defined  as  repairs  and  maintenance,
insurance, and marine equipment operating expenses) decreased to $8.2 million in
1994 from $12.3 million in 1993. This change resulted from:

     (a) Declines of $2.1 million in marine equipment operating costs due to the
sale of three  marine  vessels  in 1993 and two  marine  vessels  in 1994.  This
decrease was offset by  increased  operating  cost for three marine  vessels (of
which two were  sold at the end of the third  quarter  of 1994)  which  operated
under leases (voyage  charters and utilization  based pooling  arrangements)  in
which the  Partnership  paid costs not incurred when the vessels  operated under
time charter in the similar period one year earlier;

     (b) Declines of $1.2 million in insurance expense which resulted  primarily
from the sale of three marine  vessels in 1993 and a refund of $0.2 million from
an insurance pool in which the Partnership's marine vessels participate,  due to
lower than expected insurance claims in the pool;

     (c)  declines of $0.7 million in repairs and  maintenance  costs due to the
sale of three  marine  vessels  in 1993,  and two  marine  vessels  in the third
quarter of 1994.  These  declines  were offset by increases in trailer  expenses
resulting  from the  increased  number of trailers  coming off term leases which
required  refurbishment  prior to transitioning to short-term  rental facilities
operated by an affiliate of the General Partner.

     (2) Indirect  operating  expenses (defined as depreciation and amortization
expense, management fees, interest expense, general and administrative expenses,
and bad debt  expense)  decreased to $17.1 million in 1994 from $18.9 million in
1993. This change resulted from:

     (a)  Declines  in  depreciation  expense  of $2.4  million  reflecting  the
Partnership's double-declining depreciation method and the effect of asset sales
in 1993 and 1994, partially offset by the acquisition of the rig in July 1993;

     (b) Declines of $0.4 million in management  fees to affiliates,  reflecting
the lower levels of lease revenue in 1994 as compared to 1993;

     (c)  Declines in general and  administrative  expenses of $0.1 million from
1993 levels due to reduced professional services required by the Partnership and
lower storage expenses for two aircraft (one sold in the fourth quarter of 1993)
which were off-lease for most of 1993.  These declines were offset,  by a slight
increase in legal and other expenses  necessary to repossess  containers  from a
lessee that encountered financial difficulties in the fourth quarter of 1994;

     (d)  Increases  in interest  expense of $0.8  million  consisted  of a $0.3
million  write-off of unamortized loan origination  costs due to the refinancing
of the Partnership's  debt and a $0.5 million increase due to a higher base rate
of interest charged on the Partnership's floating rate debt during 1994;

     (e)  Increases  of $0.2  million  in bad debt  expense  due to the  General
Partner's  evaluation of the  collectability  of trade  receivables due from the
trailer rental yard lessees,  and a container lessee that encountered  financial
difficulties in the fourth quarter of 1994.

(3) Loss on revaluation of equipment of $0.9 million in 1994 which resulted from
the  Partnership  reducing the carrying value of two aircraft to their estimated
net realizable values.

(C)  Net Income

The  Partnership's  net income of $67,000 for the year ended  December 31, 1994,
decreased  from a net  income  of  $5.6  million  for  1993.  During  1994,  the
Partnership  distributed  $12.0  million to the Limited  Partners,  or $1.60 per
Depositary Unit.

Geographic Information

The Partnership  operates its equipment in international  markets.  As such, the
Partnership is exposed to a variety of currency, political, credit, and economic
risks. Currency risks are at a minimum because all invoicing, with the exception
of a small number of railcars operating in Canada, is conducted in U.S. dollars.
Political risks are minimized  generally  through the avoidance of operations in
countries that do not have a stable judicial  system and established  commercial
business  laws.  Credit  support  strategies  for lessees  range from letters of
credit  supported by U.S. banks to cash deposits.  Although these credit support
mechanisms  generally allow the  Partnership to maintain its lease yield,  there
are risks associated with  slow-to-respond  judicial systems when legal remedies
are  required  to secure  payment or  repossess  equipment.  Economic  risks are
inherent  in all  international  markets  and the  General  Partner  strives  to
minimize  this risk with market  analysis  prior to  committing  equipment  to a
particular  geographic area. Refer to the notes to the financial  statements for
information on the revenues, income, and assets in various geographic regions.

Inflation

There was no significant  impact on the Partnership's  operations as a result of
inflation during 1995, 1994, or 1993.

Trends

The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is  intended  to reduce its  exposure  to  volatility  in  individual
equipment sectors.  In 1995, market conditions,  supply and demand  equilibrium,
and other factors varied in several  markets.  In the container and refrigerated
over-the-road trailer markets,  oversupply conditions,  industry consolidations,
and other  factors  resulted  in  falling  rates and lower  returns.  In the dry
over-the-road  trailer  markets,  strong  demand and a backlog of new  equipment
deliveries produced high utilization and returns.  The marine vessel,  rail, and
mobile  offshore  drilling  unit  markets  could  be  generally  categorized  by
increasing  rates as the demand for  equipment  is  increasing  faster  than new
additions net of retirements.  Finally, demand for narrowbody stage II aircraft,
such as those owned by the  Partnership,  has increased as expected savings from
newer  narrowbody  aircraft have not  materialized  and  deliveries of the newer
aircraft have slowed down. These different  markets have had individual  effects
on the  performance  of  Partnership  equipment  - in some  cases  resulting  in
declining performance, and in others, in improved performance.

     The ability of the  Partnership  to realize  acceptable  lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
governmental or other regulations,  and others. The  unpredictability of some of
these  factors,  or of their  occurrence,  makes it  difficult  for the  General
Partner to clearly define trends or influences  that may impact the  performance
of the Partnership's  equipment.  The General Partner continuously monitors both
the equipment  markets and the  performance  of the  Partnership's  equipment in
these  markets.  The  General  Partner  may make an  evaluation  to  reduce  the
Partnership's  exposure  to  equipment  markets in which it  determines  that it
cannot operate equipment and achieve acceptable rates of return.  Alternatively,
the General Partner may make a determination to enter equipment markets in which
it perceives  opportunities to profit from supply-demand  instabilities or other
market imperfections.

     The  Partnership  intends to use cash flow from  operations  to satisfy its
operating  requirements,  pay loan principal on debt, and pay cash distributions
to the investors.


<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  for the  Partnership  are  listed  in the  Index  to
Financial Statements and Financial Statement Schedules included in Item 14(a) of
this Annual Report.

     Table 4, below,  is a summary of the results of  operations  on a quarterly
basis for the  Partnership  for the years ended  December  31, 1995 and 1994 (in
thousands of dollars except per unit amount):

<TABLE>

                                                      TABLE 4
                                                Three months ended:
                                    (thousands of dollars, except unit amounts)


<CAPTION>

  1995                                                  March 31          June 30          Sept. 30          Dec. 31
  ---------------------------------------------------------------------------------------------------------------------

  <S>                                                  <C>               <C>               <C>               <C>     
  Total revenues                                       $  4,726          $  5,315          $  4,653          $  4,289

  Net (loss) gain on disposition
    of equipment                                       $     50          $    804          $    496          $    135

  Loss on revaluation of equipment                     $     --          $     --          $   (667)<F1>        $     --

  Net income (loss)                                    $    248          $    683          $   (104)         $    110

  Net gain (loss) per Depositary Unit<F2>              $   0.01          $   0.08          $  (0.08)         $  (0.02)

  Cash distributions                                   $  3,146          $  3,138          $  3,132          $  3,133

  Cash distributions per Depositary Unit               $   0.40          $   0.40          $   0.40          $   0.40

  Number of Depositary Units at end
    of quarter<F3>                                        7,453             7,439             7,439             7,426

<FN>

<F1> At December  31, 1995,  the  Partnership  reduced the carrying  value of an
     aircraft.

<F2> After reduction of $815 ($0.11 per Depositary Unit)  representing a special
     allocation to the General Partner (see Note 1 to financial statements).

<F3> Includes 1,150 Depositary Units held in the Treasury.

</FN>

</TABLE>


<PAGE>

<TABLE>


                                                      TABLE 4
                                                Three months ended:
                                    (thousands of dollars, except unit amounts)

<CAPTION>

  1994                                                  March 31          June 30          Sept. 30          Dec. 31
  ---------------------------------------------------------------------------------------------------------------------

  <S>                                                  <C>               <C>               <C>              <C>     
  Total revenues                                       $  6,863          $  6,413          $  6,283         $  6,767

  Net (loss) gain on disposition
    of equipment                                       $    581          $     59          $    125         $  1,582

  Loss on revaluation of equipment                     $     --          $     --          $     --         $   (887)<F1>

  Net income (loss)                                    $    766          $   (816)         $    184         $    (67)

  Net gain (loss) per Depositary Unit<F2>              $   0.08          $  (0.14)         $  (0.03)        $  (0.03)

  Cash distributions                                   $  3,155          $  3,155          $  3,155         $  3,155

  Cash distributions per Depositary Unit               $   0.40          $   0.40          $   0.40         $   0.40

  Number of Depositary Units at end
    of quarter<F3>                                        7,493             7,493             7,493            7,473

<FN>

<F1> At December  31, 1994,  the  Partnership  reduced the  carrying  value of 2
     aircraft.

<F2> After reduction of $963 ($0.13 per Depositary Unit)  representing a special
     allocation to the General partner (see Note 1 to the financial statements).

<F3> Includes 1,150 Depositary Units held in the Treasury.

</FN>


</TABLE>


<PAGE>



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.







                                      (This space intentionally left blank.)


<PAGE>


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

As of the date of this Annual  Report,  the directors and executive  officers of
PLM  International  (and key  executive  officers  of its  subsidiaries)  are as
follows:
<TABLE>
<CAPTION>

Name                                   Age                 Position
-------------------------------------- ------------------- -------------------------------------------------------

<S>                                    <C>                 <C>                                                   
J. Alec Merriam                        60                  Director, Chairman of the Board, PLM International,
                                                           Inc.; Director, PLM Financial Services, Inc.

Allen V. Hirsch                        42                  Director, Vice Chairman of the Board, Executive Vice
                                                           President of PLM International, Inc.; Director and
                                                           President, PLM Financial Services, Inc.; President,
                                                           PLM Securities Corp., and PLM Transportation
                                                           Equipment Corporation.

Walter E. Hoadley                      79                  Director, PLM International, Inc.

Robert L. Pagel                        59                  Director, Chairman of the Executive Committee, PLM
                                                           International, Inc.; Director, PLM Financial
                                                           Services, Inc.

Harold R. Somerset                     61                  Director, PLM International, Inc.

Robert N. Tidball                      57                  Director, President and Chief Executive Officer, PLM
                                                           International, Inc.

J. Michael Allgood                     47                  Vice President and Chief Financial Officer, PLM
                                                           International, Inc. and PLM Financial Services, Inc.

Stephen M. Bess                        49                  President, PLM Investment Management, Inc.; Vice
                                                           President, PLM Financial Services, Inc.

David J. Davis                         39                  Vice President and Corporate Controller, PLM
                                                           International and PLM Financial Services, Inc.

Frank Diodati                          41                  President, PLM Railcar Management Services Canada
                                                           Limited.

Douglas P. Goodrich                    49                  Senior Vice President, PLM International,
                                                           PLM Transportation Equipment Corporation;
                                                           President PLM Railcar Management Services, Inc.

Steven O. Layne                        41                  Vice President, PLM Transportation Equipment
                                                           Corporation.

Stephen Peary                          47                  Senior Vice President, General Counsel and Secretary,
                                                           PLM International, Inc. and PLM Financial Services, Inc.; 
                                                           Vice President, PLM Investment Management, Inc., PLM Transportation
                                                           Equipment Corporation, PLM Securities, Corp.

Thomas L. Wilmore                      53                  Vice President, PLM Transportation Equipment
                                                           Corporation; Vice President, PLM Railcar Management
                                                           Services, Inc.

</TABLE>

     J. Alec  Merriam was  appointed  Chairman of the Board of  Directors of PLM
International  in September  1990,  having served as a director  since  February
1988. In October 1988 he became a member of the Executive Committee of the Board
of Directors of PLM  International.  From 1972 to 1988 Mr. Merriam was Executive
Vice President and Chief Financial  Officer of Crowley Maritime  Corporation,  a
San Francisco area-based company engaged in maritime shipping and transportation
services.  Previously,  he  was  Chairman  of the  Board  and  Treasurer  of LOA
Corporation of Omaha,  Nebraska and served in various  financial  positions with
Northern Natural Gas Company, also of Omaha.

     Allen V.  Hirsch  became  Vice  Chairman of the Board and a Director of PLM
International  in  April  1989.  He  is  an  Executive  Vice  President  of  PLM
International  and  President of PLM  Securities  Corp.  Mr.  Hirsch  became the
President of PLM Financial  Services,  Inc. in January 1986 and President of PLM
Investment  Management,  Inc. and PLM  Transportation  Equipment  Corporation in
August 1985, having served as a Vice President of PLM Financial  Services,  Inc.
and Senior Vice President of PLM Transportation  Equipment Corporation beginning
in  August  1984,  and  as a Vice  President  of  PLM  Transportation  Equipment
Corporation beginning in July 1982 and of PLM Securities Corp. from July 1982 to
October 1, 1987. He joined PLM, Inc. in July 1981, as Assistant to the Chairman.
Prior to joining PLM, Inc.,  Mr. Hirsch was a Research  Associate at the Harvard
Business  School.  From January 1977 through  September  1978,  Mr. Hirsch was a
consultant with the Booz, Allen and Hamilton Transportation Consulting Division,
leaving   that   employment   to  obtain  his   master's   degree  in   business
administration.

     Dr. Hoadley joined PLM International's Board of Directors and its Executive
Committee in September, 1989. He served as a Director of PLM, Inc. from November
1982 to June 1984 and PLM  Companies,  Inc. from October 1985 to February  1988.
Dr.  Hoadley has been a Senior  Research  Fellow at the Hoover  Institute  since
1981.  He was  Executive  Vice  President  and Chief  Economist  for the Bank of
America  from  1968  to  1981  and  Chairman  of the  Federal  Reserve  Bank  of
Philadelphia  from  1962 to 1966.  Dr.  Hoadley  had  served  as a  Director  of
Transcisco Industries, Inc. from February 1988 through August 1995.

     Robert L. Pagel was appointed  Chairman of the  Executive  Committee of the
Board of Directors of PLM  International  in September 1990,  having served as a
director  since  February  1988.  In  October  1988 he  became a  member  of the
Executive  Committee of the Board of Directors of PLM  International.  From June
1990 to April 1991 Mr. Pagel was President and Co-Chief Executive Officer of The
Diana Corporation,  a holding company traded on the New York Stock Exchange.  He
is the former President and Chief Executive Officer of FanFair Corporation which
specializes  in sports fans' gift shops.  He previously  served as President and
Chief  Executive  Officer of Super Sky  International,  Inc., a publicly  traded
company,  located in Mequon,  Wisconsin,  engaged in the manufacture of skylight
systems.  He was formerly Chairman and Chief Executive Officer of Blunt, Ellis &
Loewi,  Inc., a  Milwaukee-based  investment firm. Mr. Pagel retired from Blunt,
Ellis & Loewi in 1985  after a career  spanning  20 years in all  phases  of the
brokerage  and financial  industries.  Mr. Pagel has also served on the Board of
Governors of the Midwest Stock Exchange.

     Harold  R.   Somerset  was  elected  to  the  Board  of  Directors  of  PLM
International  in July 1994.  From February 1988 to December 1993, Mr.  Somerset
was  President  and Chief  Executive  Officer of  California  &  Hawaiian  Sugar
Corporation (C&H), a recently-acquired  subsidiary of Alexander & Baldwin,  Inc.
Mr.  Somerset joined C&H in 1984 as Executive Vice President and Chief Operating
Officer, having served on its Board of Directors since 1978, a position in which
he continues to serve.  Between 1972 and 1984,  Mr.  Somerset  served in various
capacities with Alexander & Baldwin,  Inc., a publicly-held land and agriculture
company headquartered in Honolulu,  Hawaii, including Executive Vice President -
Agricultures,  Vice President,  General Counsel and Secretary.  In addition to a
law degree from Harvard Law School,  Mr.  Somerset  also holds  degrees in civil
engineering from the Rensselaer  Polytechnic Institute and in marine engineering
from the U.S. Naval Academy. Mr. Somerset also serves on the Boards of Directors
for various other  companies  and  organizations,  including  Longs Drug Stores,
Inc., a publicly-held company headquartered in Maryland.

     Robert N. Tidball was appointed  President and Chief  Executive  Officer of
PLM  International  in  March  1989.  At the  time  of his  appointment,  he was
Executive Vice President of PLM International.  Mr. Tidball became a director of
PLM  International in April 1989 and a member of the Executive  Committee of the
Board of  Directors of PLM  International  in September  1990.  Mr.  Tidball was
elected President of PLM Railcar Management Services,  Inc. in January 1986. Mr.
Tidball was Executive Vice President of Hunter Keith, Inc., a  Minneapolis-based
investment banking firm, from March 1984 to January 1986. Prior to Hunter Keith,
Inc., he was Vice President,  a General Manager and a Director of North American
Car  Corporation,  and a Director  of the  American  Railcar  Institute  and the
Railway Supply Association.

     J. Michael Allgood was appointed Vice President and Chief Financial Officer
of PLM  International  in October 1992.  Between July 1991 and October 1992, Mr.
Allgood was a consultant  to various  private and public  sector  companies  and
institutions  specializing  in financial  operational  systems  development.  In
October 1987, Mr. Allgood  co-founded  Electra  Aviation Limited and its holding
company,  Aviation  Holdings  Plc of London  where he served as Chief  Financial
Officer until July 1991.  Between June 1981 and October 1987, Mr. Allgood served
as a First Vice President with American Express Bank, Ltd. In February 1978, Mr.
Allgood  founded  and until June 1981,  served as a director  of Trade  Projects
International/Philadelphia  Overseas  Finance  Company,  a  joint  venture  with
Philadelphia National Bank. From March 1975 to February 1978, Mr. Allgood served
in various capacities with Citibank, N.A.

     Stephen M. Bess was appointed President of PLM Investment Management,  Inc.
in August  1989,  having  served  as Senior  Vice  President  of PLM  Investment
Management,  Inc. beginning in February 1984 and as Corporate  Controller of PLM
Financial Services, Inc. beginning in October 1983. Mr. Bess served as Corporate
Controller  of PLM,  Inc.,  beginning  in  December  1982.  Mr.  Bess  was  Vice
President-Controller  of Trans Ocean Leasing  Corporation,  a container  leasing
company, from November 1978 to November 1982, and Group Finance Manager with the
Field Operations  Group of Memorex Corp., a manufacturer of computer  peripheral
equipment, from October 1975 to November 1978.

     David  J.  Davis  was  appointed  Vice  President  and  Controller  of  PLM
International  in January 1994.  From March 1993 through January 1994, Mr. Davis
was engaged as a consultant for various firms,  including PLM. Prior to that Mr.
Davis was Chief Financial Officer of LB Credit Corporation in San Francisco from
July  1991 to March  1993.  From  April  1989 to May  1991,  Mr.  Davis was Vice
President and Controller for ITEL Containers International Corporation which was
located  in San  Francisco.  Between  May 1978 and April  1989,  Mr.  Davis held
various positions with Transamerica Leasing Inc., in New York, including that of
Assistant Controller for their rail leasing division.

     Frank Diodati was appointed  President of PLM Railcar  Management  Services
Canada  Limited in 1986.  Previously,  Mr.  Diodati was Manager of Marketing and
Sales for G.E. Railcar Services Canada Limited.

     Douglas  P.   Goodrich  was   appointed   Senior  Vice   President  of  PLM
International  in March  1994.  Mr.  Goodrich  has also  serve  as  Senior  Vice
President of PLM  Transportation  Equipment  Corporation since July 1989, and as
President of PLM Railcar Management Services,  Inc. since September 1992, having
been a Senior Vice President since June 1987. Mr. Goodrich was an Executive Vice
President of G.I.C.  Financial  Services  Corporation,  a subsidiary of Guardian
Industries Corp. of Chicago, Illinois from December 1980 to September 1985.

     Steven O. Layne was appointed Vice President,  PLM Transportation Equipment
Corporation's  Air Group in November  1992.  Mr.  Layne was its Vice  President,
Commuter and Corporate  Aircraft  beginning in July 1990.  Prior to joining PLM,
Mr.  Layne  was  the  Director,   Commercial   Marketing  for  Bromon   Aircraft
Corporation,  a joint venture of General Electric Corporation and the Government
Development  Bank of Puerto Rico.  Mr. Layne is a major in the United States Air
Force Reserves and senior pilot with 13 years of accumulated service.

     Stephen Peary became Vice President,  Secretary, and General Counsel of PLM
International  in February  1988 and Senior Vice  President  in March 1994.  Mr.
Peary was Assistant General Counsel of PLM Financial Services,  Inc. from August
1987  through  January  1988.  Previously,  Mr. Peary was engaged in the private
practice of law in San  Francisco.  Mr. Peary is a graduate of the University of
Illinois,  Georgetown  University Law Center, and Boston University  (Masters of
Taxation Program).

     Thomas L. Wilmore was appointed Vice  President - Rail, PLM  Transportation
Equipment Corporation, in March 1994 and has served as Vice President, Marketing
for PLM Railcar Management Services,  Inc. since May 1988. Prior to joining PLM,
Mr. Wilmore was Assistant Vice President  Regional Manager for MNC Leasing Corp.
in Towson, Maryland from February 1987 to April 1988. From July 1985 to February
1987,  he was  President  and Co-Owner of Guardian  Industries  Corp.,  Chicago,
Illinois and between  December 1980 and July 1985,  Mr. Wilmore was an Executive
Vice President for its subsidiary,  G.I.C.  Financial Services Corporation.  Mr.
Wilmore  also served as Vice  President  of Sales for Gould  Financial  Services
located in Rolling Meadows, Illinois from June 1978 to December 1980.

     The  directors  of the General  Partner are elected for a one-year  term or
until  their  successors  are  elected  and  qualified.   There  are  no  family
relationships  between  any  director  or any  executive  officer of the General
Partner.











                     (This space intentionally left blank.)


<PAGE>


ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no directors,  officers or employees. The Partnership has no
pension,  profit-sharing,  retirement,  or similar  benefit plan in effect as of
December 31, 1995.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)      Security Ownership of Certain Beneficial Owners
         The General Partner is generally entitled to 5% interest in the profits
         and losses and distributions of the Partnership.  At December 31, 1995,
         no investor was known by the General Partner to  beneficially  own more
         than 5% of the Depositary Units of the Partnership.

(b)      Security Ownership of Management
         Table 5, below,  sets forth, as of the date of this report,  the amount
         and the  percent  of the  Partnership's  outstanding  Depositary  Units
         beneficially  owned by each  director  and  executive  officer  and all
         directors and executive  officers as a group of the General Partner and
         its affiliates:

                                     TABLE 5


Name                                       Depositary Units   Percent of Units

J. Alec Merriam                                    1,000            *
Robert N. Tidball                                    400            *
Allen V. Hirsch                                      749            *

All directors and officers
as a group (3 people)                              2,149            *

                                                                               -

* Represents less than 1 percent of the Depositary Units outstanding.



<PAGE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)  Transactions with Management and Others

During 1995,  management fees to IMI were $818,000.  The General Partner and its
affiliates were  reimbursed  $1,026,000 for  administrative  and data processing
services  performed on behalf of the Partnership in 1995. The  Partnership  paid
Transportation   Equipment   Indemnity  Company  Ltd.  (TEI),  a  wholly  owned,
Bermuda-based  subsidiary of PLM International,  $87,000 for insurance coverages
during 1995 which  amounts were paid  substantially  to third party  reinsurance
underwriters  or placed in risk  pools  managed  by TEI on behalf of  affiliated
partnerships and PLM International  which provide threshold  coverages on marine
vessel loss of hire and hull and machinery damage. All pooling arrangement funds
are either paid out to cover applicable losses or refunded pro rata by TEI.

(b)  Certain Business Relationships

None.

(c)  Indebtedness of Management

None.

(d)  Transactions with Promoters

None.


<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) 1.       Financial Statements
                  The financial  statements listed in the accompanying  Index to
                  Financial Statements are filed as part of this Annual Report.

     (b)      Reports on Form 8-K

                  None.

     (c)      Exhibits

         4.       Limited Partnership  Agreement of Registrant.  Incorporated by
                  reference to the Partnership's  Registration Statement on Form
                  S-1  (Reg.  No.  33-13113)  which  became  effective  with the
                  Securities and Exchange Commission on June 5, 1987.

         4.1      Amendment, dated November 18, 1991, to Limited 
                  Partnership Agreement of Partnership.

         10.1     Management  Agreement  between  Registrant  and PLM Investment
                  Management,    Inc.   Incorporated   by   reference   to   the
                  Partnership's  Registration  Statement  on Form S-1 (Reg.  No.
                  33-13113)  which  became  effective  with the  Securities  and
                  Exchange Commission on June 5, 1987.

          10.2    $35,000,000  Note  Agreement,  dated  as  of  March  1,  1994.
                  Incorporated by reference to the  Partnership's  Annual Report
                  on Form 10-K to the Securities and Exchange  Commission  dated
                  March 24, 1995.

          10.3    Amended and Restated Warehousing Credit Agreement, dated as of
                  September  27, 1995,  with First Union  National Bank of North
                  Carolina.  Incorporated  by  reference  to  the  Partnership's
                  Quarterly  Report on Form 10-Q to the  Securities and Exchange
                  Commission dated November 10, 1995.

         25.      Powers of Attorney.


<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the  Partnership  has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

     The  Partnership  has no  directors or  officers.  The General  Partner has
signed on behalf of the Partnership by duly authorized officers.


Date:  March 20, 1996                PLM EQUIPMENT GROWTH FUND II
                                     Partnership

                                     By:      PLM Financial Services, Inc.
                                              General Partner



                                     By:      *_____________________
                                               Allen V. Hirsch
                                               President



                                     By:      /s/ David J. Davis
                                              -----------------------
                                              David J. Davis
                                              Vice President and
                                              Controller



* Stephen Peary,  by signing his name hereto,  does sign this document on behalf
of the persons  indicated  above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.


                                                        /s/Stephen Peary
                                                        ---------------------
                                                        Stephen Peary
                                                        Attorney-in-Fact



<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following  directors of the  Partnership's  General
Partner on the dates indicated.


Name                            Capacity                        Date


*_____________________
Allen V. Hirsch             Director - FSI                   March 20, 1996


*_____________________
J. Alec Merriam             Director - FSI                   March 20, 1996


*_____________________
Robert L. Pagel             Director - FSI                   March 20, 1996



* Stephen Peary, by signing his name hereto does sign this document on behalf of
the persons indicated above pursuant to powers of attorney duly executed by such
persons and filed with the Securities and Exchange Commission.



/s/ Stephen Peary
---------------------
Stephen Peary
Attorney-in-Fact



<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)

                          INDEX TO FINANCIAL STATEMENTS

                                  (Item 14(a))


                                                                            Page

Report of Independent Auditors                                                32

Balance sheets as of December 31, 1995 and 1994                               33

Statements of income for the years ended December 31, 1995,
1994, and 1993                                                                34

Statements of changes in partners' capital for the years
ended December 31, 1995, 1994, and 1993                                       35

Statements of cash flows for the years ended December 31,
1995, 1994, and 1993                                                          36

Notes to financial statements                                              37-44


All other  financial  statement  schedules  have been  omitted  as the  required
information  is not pertinent to the  Registrant or is not material,  or because
the  information  required  is included in the  financial  statements  and notes
thereto.


<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



The Partners
PLM Equipment Growth Fund II:

We have audited the  financial  statements  of PLM  Equipment  Growth Fund II as
listed  in  the   accompanying   index  These   financial   statements  are  the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of PLM Equipment Growth Fund II as
of December 31, 1995 and 1994,  and the results of its  operations  and its cash
flows for each of the years in the three-year period ended December 31, 1995, in
conformity with generally accepted accounting principles.

/S/KPMG PEAT MARWICK, LLP


SAN FRANCISCO, CALIFORNIA
March 14, 1996



<PAGE>

<TABLE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)

                                 BALANCE SHEETS
                                  December 31,
                (in thousands of dollars except per unit amounts)



                                     ASSETS

<CAPTION>

                                                                                     1995                 1994
                                                                                 ----------------------------------

  <S>                                                                             <C>                  <C>       
  Equipment held for operating leases, at cost                                    $  114,683           $  128,784
  Less accumulated depreciation                                                      (75,431)             (74,672)
                                                                                 ----------------------------------
      Net equipment                                                                   39,252               54,112

  Cash and cash equivalents                                                            6,624               12,348
  Restricted cash                                                                        548                  296
  Accounts receivable, less allowance for doubtful
    accounts of $520 in 1995 and $427 in 1994                                          2,424                2,258
  Lease negotiation fees to affiliate, net of accumulated
    amortization of $1,401 in 1995 and $1,669 in 1994                                     94                  178
  Debt issuance costs, net of accumulated amortization
    of $69 in 1995 and $79 in 1994                                                       167                  207
  Prepaid expenses and other assets                                                       52                   86
                                                                                 ----------------------------------
      Total assets                                                                $   49,161           $   69,485
                                                                                 ==================================

                                         LIABILITIES AND PARTNERS' CAPITAL

  Liabilities:

    Accounts payable and accrued expenses                                         $      409           $      867
    Due to affiliates                                                                    544                  236
    Notes payable                                                                     27,000               35,000
    Prepaid deposits and reserve for repairs                                           3,012                3,229
                                                                                 ----------------------------------
      Total liabilities                                                               30,965               39,332
                                                                                 ----------------------------------

  Partners' capital (deficit):

    Limited Partners  (7,426,305 and 7,472,705  Depositary Units including 1,150
     Depositary Units held in the Treasury at
     December 31, 1995 and 1994 respectively)                                         18,658               30,850
    General Partner                                                                     (462)                (697)
                                                                                 ----------------------------------
      Total partners' capital                                                         18,196               30,153
                                                                                 ----------------------------------
      Total liabilities and partners' capital                                     $   49,161           $   69,485
                                                                                 ==================================
</TABLE>

                       See accompanying notes to financial
                                  statements.


<PAGE>

<TABLE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)

                              STATEMENTS OF INCOME
                        For the years ended December 31,
                (in thousands of dollars except per unit amounts)

<CAPTION>


                                                                            1995           1994          1993
                                                                        ------------------------------------------
  <S>                                                                    <C>            <C>            <C>     
  Revenues:

    Lease revenue                                                        $  16,830      $  23,251      $ 29,951
    Interest and other income                                                  668            728           246
    Net gain on disposition of equipment                                     1,485          2,347         6,704
                                                                        ------------------------------------------
      Total revenues                                                        18,983         26,326        36,901

  Expenses:

    Depreciation and amortization                                            8,552         11,141        13,504
    Management fees to affiliate                                               818          1,150         1,523
    Interest expense                                                         2,349          2,550         1,708
    Insurance expense to affiliate                                              87            299         1,082
    Other insurance expense                                                    171            618         1,030
    Repairs and maintenance                                                  2,867          4,307         4,970
    Marine equipment operating expenses                                        152          3,033         5,185
    General and administrative expenses
      to affiliates                                                          1,026            732           736
    Other general and administrative expenses                                  895          1,298         1,388
    Bad debt expense                                                           462            244            18
    Loss on revaluation of equipment                                           667            887           161
                                                                        ------------------------------------------
      Total expenses                                                        18,046         26,259        31,305
                                                                        ------------------------------------------

      Net income                                                         $     937      $      67      $  5,596
                                                                        ==========================================

  Partners' share of net income (loss):

    Limited Partners                                                     $      75      $    (899)     $  4,471
    General Partner                                                            862            966         1,125
                                                                        ==========================================
      Total                                                              $     937      $      67      $  5,596
                                                                        ==========================================

  Net income (loss) per Depositary  Unit  (7,426,305,  7,472,705,  
  and 7,492,905 Depositary  Units (including 1,150 Depositary Units 
  held in the Treasury) at December 31, 1995, 1994, and 1993             $    0.01      $   (0.12)     $   0.60
                                                                        ==========================================

  Cash distributions                                                     $  12,549      $  12,620      $ 12,665
                                                                        ==========================================

  Cash distribution per Depositary Unit                                  $    1.60      $    1.60      $   1.60
                                                                        ==========================================
</TABLE>

                       See accompanying notes to financial
                                  statements.


<PAGE>


<TABLE>


                                         PLM EQUIPMENT GROWTH FUND II
                                           (A Limited Partnership)

                                  STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                            For the years ended December 31, 1995, 1994, and 1993
                                            (thousands of dollars)
<CAPTION>


                                                                 Limited            General
                                                                 Partners           Partner            Total
                                                               --------------------------------------------------

  <S>                                                           <C>                <C>               <C>      
  Partners' capital (deficit) at December 31, 1992              $   51,527         $ (1,526)         $  50,001

  Net income                                                         4,471            1,125              5,596

  Cash distributions                                               (12,034)            (631)           (12,665)

  Repurchase of Depositary Units                                       (70)              --                (70)
                                                               --------------------------------------------------

  Partners' capital (deficit) at December 31, 1993                  43,894           (1,032)            42,862

  Net income (loss)                                                   (899)             966                 67

  Cash distributions                                               (11,989)            (631)           (12,620)

  Repurchase of Depositary Units                                      (156)              --               (156)
                                                               --------------------------------------------------

  Partners' capital (deficit) at December 31, 1994                  30,850            (697)             30,153

  Net income                                                            75              862                937

  Cash distributions                                               (11,922)            (627)           (12,549)

  Repurchase of Depositary Units                                      (345)              --               (345)
                                                               --------------------------------------------------

  Partners' capital (deficit) at December 31, 1995              $   18,658         $   (462)         $  18,196
                                                               ==================================================

</TABLE>

                       See accompanying notes to financial
                                  statements.


<PAGE>

<TABLE>


                                         PLM EQUIPMENT GROWTH FUND II
                                           (A Limited Partnership)
                                           STATEMENTS OF CASH FLOWS
                                       for the years ended December 31,
                                            (thousands of dollars)
<CAPTION>

                                                                            1995            1994            1993
                                                                        ---------------------------------------------
  <S>                                                                    <C>             <C>             <C>       
  Operating activities:
    Net income                                                           $      937      $       67      $    5,596
    Adjustments to reconcile net income (loss)
        to net cash provided by operating activities:
      Net gain on disposition of equipment                                   (1,485)         (2,347)         (6,704)
      Write-off of unamortized loan origination
        cost and debt placement fees                                             --             305              --
      Loss on revaluation of equipment                                          667             887             161
      Depreciation and amortization                                           8,552          11,141          13,504
      Changes in operating assets and liabilities:
        Restricted cash                                                        (252)            150            (162)
        Accounts receivable, net                                               (166)            644          (1,209)
        Insurance reimbursement receivable                                       --              --           2,810
        Prepaid expenses                                                         34             234             201
        Accounts payable and accrued expenses                                  (473)           (863)            501
        Due to affiliates                                                       308            (121)             46
        Accrued drydock expenses                                                271           2,201           1,458
        Prepaid deposits and reserves for repairs                              (217)           (988)          1,088
                                                                        ---------------------------------------------
  Net cash provided by operating activities                                   8,176          11,310          17,290
                                                                        ---------------------------------------------

  Investing activities:
    Proceeds from disposition of equipment                                    7,005          13,558          21,229
    Payments of acquisition-related fees to affiliate                            --            (534)           (565)
    Payments for purchase of equipment                                           --         (11,856)        (12,345)
    Payment for capital improvements                                            (11)           (727)             --
    Decrease in restricted cash                                                               7,378          (5,852)
    Payments of lease negotiation fees to affiliate                              --            (119)           (126)
                                                                        ---------------------------------------------
  Net cash provided by investing activities                                   6,994           7,700           2,341
                                                                        ---------------------------------------------

  Financing activities:
    Proceeds from notes payable                                                  --          35,000              --
    Principal payments on notes payable                                      (8,000)        (35,000)         (3,218)
    Payments of debt issuance costs                                              --            (236)            (50)
    Cash distributions paid to partners                                     (12,549)        (12,620)        (12,665)
    Repurchase of Depositary Units                                             (345)           (156)            (70)
                                                                        ---------------------------------------------
  Net cash used in financing activities                                     (20,894)        (13,012)        (16,003)
                                                                        ---------------------------------------------

  Cash and cash equivalents:
  Net (decrease) increase in cash and cash
      equivalents                                                            (5,724)          5,998           3,628

  Cash and cash equivalents at beginning of year                             12,348           6,350           2,722
                                                                        ---------------------------------------------
  Cash and cash equivalents at end of year                               $    6,624      $   12,348      $    6,350
                                                                        =============================================
  Supplemental information:
      Interest paid                                                      $    2,302      $    2,246      $    1,708
                                                                        =============================================
</TABLE>

                       See accompanying notes to financial
                                  statements.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

1.       Basis of Presentation

         Organization

         PLM Equipment  Growth Fund II, a California  limited  partnership  (the
         Partnership)  was formed on March 30, 1987. The Partnership  engages in
         the  business  of owning  and  leasing  primarily  used  transportation
         equipment.  The Partnership commenced  significant  operations in June,
         1987. PLM Financial Services, Inc. (FSI) is the General Partner. FSI is
         a   wholly-owned   subsidiary   of   PLM   International,   Inc.   (PLM
         International).

              The  Partnership  will  terminate  on December  31,  2006,  unless
         terminated  earlier  upon sale of all  equipment  or by  certain  other
         events.  At  the  conclusion  of  the  Partnership's  seventh  year  of
         operations  on  December  31,  1995,   the  General   Partner   stopped
         reinvesting excess cash and will start distributing any funds remaining
         to the Partners.  Beginning in the eleventh year,  the General  Partner
         intends to begin an orderly liquidation of the Partnership's assets.

              FSI manages the affairs of the Partnership.  The net income (loss)
         and distributions of the Partnership are generally allocated 95% to the
         Limited  Partners and 5% to the General  Partner (see Net Income (Loss)
         and Distributions per Depositary Unit,  below).  The General Partner is
         entitled to an incentive fee equal to 7.5% of Surplus  Distributions as
         defined  in the  Limited  Partnership  Agreement  remaining  after  the
         Limited Partners have received a certain minimum rate of return.

              These financial statements have been prepared on the accrual basis
         of  accounting  in  accordance  with  generally   accepted   accounting
         principles.  This requires management to make estimates and assumptions
         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 revenues and expenses
         during the  reporting  period.  Actual  results could differ from those
         estimates.

         Operations

         The  equipment  of  the  Partnership  is  managed  under  a  continuing
         management  agreement  by PLM  Investment  Management,  Inc.  (IMI),  a
         wholly-owned  subsidiary of FSI. IMI receives a monthly  management fee
         from the  Partnership  for managing the equipment (see Note 2). FSI, in
         conjunction with its subsidiaries,  syndicates investor programs, sells
         transportation  equipment  to  investor  programs  and  third  parties,
         manages pools of  transportation  equipment  under  agreements with the
         investor   programs,   and  is  a  General  Partner  of  other  Limited
         Partnerships.

         Accounting for Leases

         The  Partnership's  leasing  operations  generally consist of operating
         leases.  Under the  operating  lease method of  accounting,  the leased
         asset is recorded at cost and  depreciated  over its  estimated  useful
         life.  Rental  payments  are  recorded as revenue  over the lease term.
         Lease  origination costs are capitalized and amortized over the term of
         the lease.

         Translation of Foreign Currency Transactions

         The Partnership is a domestic partnership, however, a limited number of
         the  Partnership's  transactions are denominated in a foreign currency.
         The Partnership's asset and liability accounts denominated in a foreign
         currency were  translated  into U.S.  dollars at the rates in effect at
         the balance sheet dates,  and revenue and expense items were translated
         at  average  rates  during  the year.  Gains or losses  resulting  from
         foreign currency transactions are included in the results of operations
         and are not material.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

1.       Basis of Presentation (continued)

         Depreciation and Amortization (continued)

         Depreciation of equipment held for operating  leases is computed on the
         200% declining balance method taking a full month's depreciation in the
         month of acquisition, based upon estimated useful lives of 15 years for
         railcars  and  12  years  for  all  other  types  of   equipment.   The
         depreciation  method changes to straight line when annual  depreciation
         expense using the straight line method  exceeds that  calculated by the
         200% declining  balance method.  Acquisition fees have been capitalized
         as part of the cost of the  equipment.  Major  expenditures  which  are
         expected to extend the useful lives or reduce future operating expenses
         of equipment are capitalized. Lease negotiation fees are amortized over
         the initial  equipment  lease term.  Debt issuance  costs are amortized
         over the term of the loan for which they are paid.

         Transportation Equipment

         In March 1995, the Financial  Accounting  Standards Board (FASB) issued
         statement No. 121,  "Accounting for the Impairment of Long-Lived Assets
         and for Long-Lived  Assets to be Disposed Of" (SFAS 121). This standard
         is  effective  for  years   beginning  after  December  15,  1995.  The
         Partnership  adopted SFAS 121 during 1995,  the effect of which was not
         material  as the method  previously  employed  by the  Partnership  was
         consistent  with SFAS 121. In accordance with SFAS 121, the Partnership
         reviews  the  carrying  value of its  equipment  at least  annually  in
         relation  to  expected  future  market  conditions  for the  purpose of
         assessing  the  recoverability  of the recorded  amounts.  If projected
         future lease  revenue plus  residual  values are less than the carrying
         value of the equipment, a loss on revaluation is recorded.

              Equipment held for operating leases is stated at cost.

         Repairs and Maintenance

         Maintenance costs are usually the obligation of the lessee. If they are
         not  covered by the  lessee,  they are charged  against  operations  as
         incurred.  To meet the  maintenance  obligations  of  certain  aircraft
         airframes  and engines,  escrow  accounts are prefunded by the lessees.
         Estimated costs  associated with marine vessel  drydockings,  which are
         included in repairs and maintenance expense, are accrued and charged to
         income  ratably over the period prior to such  drydocking.  The reserve
         accounts  are  included in the balance  sheet as prepaid  deposits  and
         reserve for repairs.

         Net Income (Loss) and Distributions per Depositary Unit

         The  net  income  (loss)  and  distributions  of  the  Partnership  are
         generally  allocated 95% to the Limited  Partners and 5% to the General
         Partner. During 1995, the General Partner received a special allocation
         of income of $815,000  ($963,000  in 1994 and  $845,000  in 1993).  The
         Limited  Partners' net income or loss and  distributions  are allocated
         among the  Limited  Partners  based on the number of  Depository  Units
         owned by each Limited  Partner.  Cash  distributions  are recorded when
         paid.  Cash  distributions  of $3,127,000,  $3,146,000,  and $3,155,000
         ($0.40 per Depositary  Unit) were declared on December 31, 1995,  1994,
         and 1993 and paid on February 15, 1996,  1995, and 1994,  respectively,
         to the  unitholders of record as of December 31, 1995,  1994, and 1993,
         respectively.  Cash  distributions to investors in excess of net income
         are considered to represent a return of capital on a Generally Accepted
         Accounting  Principles  (GAAP)  basis.  Cash  distributions  to Limited
         Partners of $11,847,000, $11,989,000, and $7,563,000 in 1995, 1994, and
         1993, respectively, were deemed to be a return of capital.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

1.       Basis of Presentation (continued)

         Cash and Cash Equivalents

         The Partnership  considers  highly liquid  investments that are readily
         convertible to known amounts of cash with original  maturities of three
         months or less as cash  equivalents.  Lessee security  deposits held by
         the Partnership are considered restricted cash.

         Reclassifications

         Certain  amounts in the 1994 and 1993  financial  statements  have been
         reclassified  to  conform  with the 1995  presentation.  Transportation
         equipment  held for  operating  leases at  December  31, 1995 and 1994,
         includes equipment previously reported as held for sale.

2.       General Partner and Transactions with Affiliates

         An  officer  of  FSI  contributed  $100  of the  Partnership's  initial
         capital.  Under the  equipment  management  agreement,  IMI  receives a
         monthly management fee equal to the greater of (i) 5% of Gross Revenues
         (as defined in the agreement) prior to the payment of any principal and
         interest incurred in connection with any indebtedness,  or (ii) 1/12 of
         1/2% of the net  book  value  of the  equipment  portfolio  subject  to
         certain adjustments.  Management fees of $195,000,  and $542,000,  were
         payable at December 31, 1995, and 1994,  respectively.  The Partnership
         reimbursed FSI and its affiliates  $1,026,000,  $732,000,  and $736,000
         for administrative and data processing  services performed on behalf of
         the Partnership in 1995, 1994, and 1993,  respectively.  Debt placement
         fees are charged by the General Partner in an amount equal to 1% of the
         Partnership's borrowings less amounts paid to third parties in relation
         to the debt  placement.  No debt placement fees were paid or payable to
         FSI during 1995, 1994, and 1993.

              The Partnership paid lease  negotiation and equipment  acquisition
         fees of $653,000,  and $691,000 in 1994,  and 1993,  respectively,  and
         none in 1995, to PLM Transportation Equipment Corporation (TEC). TEC is
         a wholly owned subsidiary of FSI.

              The Partnership  paid $87,000,  $299,000,  and $1,082,000 in 1995,
         1994 and  1993  respectively,  to  Transportation  Equipment  Indemnity
         Company Ltd. (TEI) which provides  insurance  coverage for  Partnership
         equipment and other insurance  brokerage  services to the  Partnership.
         TEI is an affiliate of the General  Partner.  A substantial  portion of
         these  amounts  was paid to third  party  reinsurance  underwriters  or
         placed  in  risk  pools   managed  by  TEI  on  behalf  of   affiliated
         partnerships and PLM International which provide threshold coverages on
         marine vessel loss of hire and hull and machinery  damage.  All pooling
         arrangement  funds are either  paid out to cover  applicable  losses or
         refunded pro rata by TEI.

              At  December  31,  1995,  approximately  31% of the  Partnership's
         trailer equipment had been transferred into rental yards operated by an
         affiliate of the General Partner.  Revenues  collected under short-term
         rental  agreements  with the rental yards'  customers  are  distributed
         monthly  to  the  owners  of the  related  equipment.  Direct  expenses
         associated  with  the  equipment  and an  allocation  of  other  direct
         expenses of the rental yard operations are billed to the Partnership.

              The  Partnership  owns certain  equipment for lease in conjunction
         with  affiliated  partnerships.  In 1995,  this equipment  included one
         commercial  aircraft (50% owned) and one mobile offshore  drilling unit
         (55% owned).



<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

3.       Equipment

         The  components  of  equipment  at December  31, 1995 and 1994,  are as
follows (in thousands):
<TABLE>
<CAPTION>

  Equipment held for operating leases                      1995              1994
                                                       --------------------------------

  <S>                                                  <C>                <C>       
  Rail equipment                                       $    19,747        $   19,749
  Marine containers                                         13,399            17,939
  Marine vessels                                                --             4,702
  Aircraft                                                  45,947            50,644
  Trailers and tractors                                     22,932            23,092
  Mobile offshore drilling unit                             12,658            12,658
                                                       --------------------------------
                                                           114,683           128,784
  Less accumulated depreciation                            (75,431)          (74,672)
                                                       --------------------------------
  Net equipment                                        $    39,252        $   54,112
                                                       ================================
</TABLE>

              Revenues  are  earned by placing  the  equipment  under  operating
         leases which are generally  billed  monthly or  quarterly.  Some of the
         Partnership's   marine   containers   are   leased  to   operators   of
         utilization-type   leasing  pools  which  include  equipment  owned  by
         unaffiliated  parties.  In  such  instances  revenues  received  by the
         Partnership consist of a specified  percentage of revenues generated by
         leasing the equipment to  sublessees,  after  deducting  certain direct
         operating  expenses of the pooled  equipment.  Rents for  railcars  are
         based  on  mileage  traveled  or a fixed  rate;  rents  for  all  other
         equipment are based on fixed rates.

              As  of  December  31,  1995,  all  equipment  in  the  Partnership
         portfolio was either  operating in short-term  rental  facilities or on
         lease,  except an aircraft,  a railcar,  and 115 marine containers.  At
         December  31, 1994,  all  equipment in the  Partnership  portfolio  was
         either  on lease or  operating  in  PLM-affiliated  short-term  trailer
         rental facilities,  with the exception of 266 marine containers and one
         tractor.  The aggregate carrying value of equipment  off-lease was $2.0
         million and $1.1 million at December 31, 1995, and 1994, respectively.

              During 1994, the Partnership purchased 1,959 marine containers and
         649 trailers at a cost of $11.9 million and paid  acquisition and lease
         negotiation  fees of $0.6  million to TEC (see Note 2 to the  Financial
         Statements).

              During 1995, the Partnership  sold or disposed of its 50% interest
         in a DC-9 aircraft, 2,278 marine containers,  11 trailers, 1 tractor, 1
         railcar, and its 50% interest in a marine vessel, with an aggregate net
         book value of $5.8 million and unused drydock reserves of $0.3 million,
         for proceeds of $7.0  million.  During 1994,  the  Partnership  sold or
         disposed of 423 marine containers,  267 trailers,  2 railcars, 2 marine
         vessels,  and a 12% interest in a mobile offshore drilling unit with an
         aggregate net book value of $13.5 million and accrued drydock  reserves
         of $2.2 million for aggregate proceeds of $13.6 million.

              The  Partnership  reduced the  carrying  value of one  aircraft by
         $667,000 during 1995 and reduced the carrying values of two aircraft by
         $887,000 during 1994 to their estimated net realizable value.

              All leases are being  accounted  for as operating  leases.  Future
         minimum rentals receivable under  noncancelable  leases at December 31,
         1995, during each of the next five years are approximately $4,518,000 -
         1996;  $1,756,000 - 1997; $520,000 - 1998; $463,000 - 1999; and $18,000
         - 2000.  Contingent  rentals based upon utilization were  approximately
         $2,047,000,   $2,821,000,  and  $2,077,000  in  1995,  1994  and  1993,
         respectively.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

3.       Equipment (continued)

         The  Partnership  owns certain  equipment  which is leased and operated
     internationally.  All leases relating to this equipment were denominated in
     U.S. dollars.

         The Partnership  leases its aircraft,  railcars and trailers to lessees
     domiciled in five geographic regions:  North America,  Middle East, Europe,
     Asia, and South Asia.  Marine  vessels and marine  containers are leased to
     multiple  lessees in different  regions who operate the marine  vessels and
     marine  containers  worldwide.  The  tables  below  sets  forth  geographic
     information  about the  Partnership's  equipment grouped by domicile of the
     lessee as of and for the year ended  December 31, 1995,  1994, and 1993 (in
     thousands):
<TABLE>
<CAPTION>

                                           Region               1995           1994           1993
                                                             ------------------------------------------
   <S>                                     <C>               <C>            <C>            <C>       
   Revenues:
     Marine vessels                        Various           $     391      $   5,294      $   12,050
     Marine containers                     Various               1,580          1,826           2,506
     Mobile offshore drilling units        South Asia            1,436          1,904             827
                                           Middle East              --            584             591
     Railcars                              North America         4,785          4,823           5,336
     Trailers                              North America         4,972          3,885           3,590
     Aircraft                              Asia                    630            756             126
                                           South Asia              756            756             761
                                           North America         1,594          1,727           2,228
                                           Europe                  686          1,696           1,936

                                                             ==========================================
   Total revenues                                            $  16,830      $  23,251      $   29,951
                                                             ==========================================
</TABLE>

     The following table sets forth  Identifiable net income (loss)  information
     by equipment type by region for the year ended December 31, 1995, 1994, and
     1993 (in thousands):
<TABLE>
<CAPTION>

                                          Region               1995           1994           1993
                                                            -------------------------------------------
  <S>                                     <C>                <C>            <C>           <C>       
  Income (loss):
    Marine vessels                        Various            $    302       $ (2,038)     $    2,402
    Marine containers                     Various               1,143            399           1,022
    Mobile offshore drilling units        South Asia             (247)          (137)           (276)
                                          Middle East              --          1,447              34
    Railcars                              North America         1,937          1,826           9,130
    Trailers                              North America         1,376          1,551             808
    Aircraft                              Asia                    173            217             (37)
                                          South Asia              237            155             (17)
                                          North America           460            516             955
                                          Europe                 (728)          (468)            197

                                                            -------------------------------------------
  Total identifiable net income                                 4,653          3,468          14,218
    Administrative and other                                   (3,716)        (3,401)         (8,622)
                                                            ===========================================
  Total net income                                           $    937       $     67      $    5,596
                                                            ===========================================

</TABLE>


<PAGE>


                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

3.       Equipment (continued)

     The net book value of these assets at December 31,  1995,  1994,  and 1993,
are as follows (in thousands):
<TABLE>
<CAPTION>

                                          Region               1995           1994           1993
                                                            -------------------------------------------

    <S>                                   <C>                <C>            <C>           <C>       
    Marine vessels                        Various            $     --       $  2,173      $   13,295
    Marine containers                     Various               3,951          7,533           7,220
    Mobile offshore drilling units        North America         8,058          9,669          11,601
                                          Middle East              --             --           2,625
    Railcars                              North America         6,380          7,382           8,567
    Trailers                              North America        11,064         13,120           5,662
    Aircraft                              Asia                  1,641          2,046           2,455
                                          South Asia            2,214          2,665           3,198
                                          North America         4,100          5,091           5,547
                                          Europe                1,844          4,433           6,246

                                                            ===========================================
  Total Equipment                                            $ 39,252       $ 54,112      $   66,416
                                                            ===========================================
</TABLE>

         There were no lessees that  accounted for 10% or more of total revenues
for 1995, 1994, and 1993.

4.      Notes Payable
<TABLE>
<CAPTION>

                                                                                         1995            1994
                                                                                   ---------------------------------

         <S>                                                                            <C>             <C>        
         Notes payable to insurance companies under a $35 million Loan facility,
         bearing  interest  at LIBOR + 1.55% per annum  (7.24% at  December  31,
         1995, and 8.05% at December 31,
         1994) payable quarterly in arrears                                             $27,000,000     $35,000,000
                                                                                   ---------------------------------

         Total notes payable                                                            $27,000,000     $35,000,000
                                                                                   =================================
</TABLE>

              On March 31, 1994, the Partnership  completed a refinancing of its
         $35 million bank loan which was  originally  due on September 30, 1995.
         The new loan facility is unsecured and nonrecourse,  limits  additional
         borrowings,  and specifies  covenants  related to collateral  coverage,
         fixed charge coverage,  ratios for market value, and composition of the
         equipment owned by the Partnership. The loan facility bears interest at
         LIBOR + 1.55%  per annum  (7.24% at  December  31,  1995,  and 8.05% at
         December  31, 1994) and is payable  quarterly in arrears.  Principal is
         payable in annual  installments of $4 million due on March 31, 1996 and
         1997, $9 million on March 31, 1998 and 1999,  and a final payment of $9
         million on March 31,  2000.  The  Partnership  paid a  facility  fee of
         $236,000 to the lender in connection with this credit  facility.  As of
         December  31,  1995,  the   Partnership   prepaid   $8,000,000  of  the
         outstanding note payable  representing the principal payments due March
         31, 1996 and 1997.

              The  General  Partner  believes  that the book  value of the notes
         payable approximates fair value due to its variable interest rate.

              The General  Partner has entered  into a joint $25 million  credit
         facility (the Committed  Bridge Facility) on behalf of the Partnership,
         PLM  Equipment  Growth  Fund III,  PLM  Equipment  Growth  Fund IV, PLM
         Equipment  Growth Fund V, PLM  Equipment  Growth Fund VI, PLM Equipment
         Growth & Income Fund VII, and Professional Lease Management Income Fund
         I (Fund I), all affiliated investment programs, and TEC Acquisub,  Inc.
         (TECAI),  an indirect  wholly-owned  subsidiary of the General Partner,
         which may be used to provide interim financing of up to (i)

<PAGE>



                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

4.      Notes Payable (continued)

         70% of the aggregate book value or 50% of the aggregate net fair market
         value of eligible  equipment owned by the Partnership,  Fund I (ii) 50%
         of  unrestricted  cash  held  by the  borrower.  The  Committed  Bridge
         Facility  became  available  to EGF VII and TECAI on December 20, 1993,
         and became  available to the Company on May 8, 1995 and was amended and
         restated to include the above  mentioned  Partnership  on September 27,
         1995,  and to  expire on  September  30,  1996.  The  Committed  Bridge
         Facility also provides for a $5 million  Letter of Credit  Facility for
         the eligible borrowers. Outstanding borrowings by Fund I, TECAI, or PLM
         Equipment  Growth  Funds II through VII reduce the amount  available to
         each other under the Committed Bridge Facility.  Individual  borrowings
         may be outstanding  for no more than 179 days, with all advances due no
         later than September 30, 1996. The Committed Bridge Facility  prohibits
         the Partnership  from incurring any additional  indebtedness.  Interest
         accrues  at either the prime  rate or  adjusted  LIBOR plus 2.5% at the
         borrower's  option and is set at the time of an advance of funds. As of
         December  31,  1995,  neither  the  Partnership,   nor  TECAI  had  any
         outstanding  borrowings under the Committed Bridge Facility. Due to the
         loan covenants of the senior debt, the  Partnership  cannot access this
         line of credit at this time.

              The  General  Partner  believes  that the book  value of the Notes
         Payable  approximates  fair market value due to its  variable  interest
         rate.

5.       Income Taxes

         The Partnership is not subject to income taxes as any income or loss is
         included in the tax returns of the individual Partners. Accordingly, no
         provision for income taxes has been made in the financial statements of
         the Partnership.

              As of December  31,  1995,  there were  temporary  differences  of
         approximately  $14,704,000  between the  financial  statement  carrying
         values of certain  assets and  liabilities  and the income tax bases of
         such  assets  and  liabilities,  primarily  due to the  differences  in
         depreciation  methods  and in the  method  of  providing  reserves  for
         repairs.

6.       Repurchase of Depositary Units

         On  December  28,  1992,  the  Partnership  engaged  in  a  program  to
         repurchase up to 200,000 Depositary Units. In 1995, the Partnership had
         purchased  and  canceled  46,400  Depositary  Units  at a cost  of $0.3
         million.  As of December 31, 1995,  the  Partnership  had  cumulatively
         repurchased 73,300 Depositary Units at a cost of $0.6 million.

7.       Future Delisting of Partnership Units

         The Partnership  depositary units are listed and traded on the American
         Stock Exchange  under the symbol GFY.  Under the Internal  Revenue Code
         (the  Code),   the  Partnership  is  classified  as  a  Master  Limited
         Partnership.  The Code  treats  all  Publicly  Traded  Partnerships  as
         corporations  if they remain  publicly  traded after December 31, 1997.
         Treating the  Partnership  as a corporation  will mean the  Partnership
         itself will become a taxable, rather than a "flow through" entity. As a
         taxable  entity,  the  income of the  Partnership  will be  subject  to
         federal  taxation  at both the  partnership  level and at the  investor
         level to the extent  that  income is  distributed  to an  investor.  In
         addition,  the General  Partner  believes that the trading price of the
         Depositary Units may be distorted when the Partnership begins the final
         liquidation of the underlying  equipment  portfolio.  In order to avoid
         taxation of the Partnership as a corporation and to prevent  unfairness
         to  Unitholders,  the  General  Partner  has  requested  to delist  the
         Partnership's  Depositary  Units from the AMEX prior to March 29, 1996.
         The last day for trading on the AMEX will be March 22, 1996.  While the
         Partnership's  Depositary  Units will no longer be publicly traded on a
         national stock  exchange,  the General  Partner will continue to manage
         the equipment of the Partnership and

<PAGE>

                          PLM EQUIPMENT GROWTH FUND II
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1995

7.       Future Delisting of Partnership Units (continued)

         prepare and distribute  quarterly and annual reports and Forms 10-Q and
         10-K  in  accordance  with  the  Securities  and  Exchange   Commission
         requirements. In addition, the General Partner will continue to provide
         pertinent tax  reporting  forms and  information  to  Unitholders.  The
         General  Partner  anticipates  that  following  delisting,  an informal
         market  for  the  Partnership's  units  may  develop  in the  secondary
         marketplace  similar to that which  currently  exists for  non-publicly
         traded partnerships.

8.       Subsequent Events

         On March 11, 1996, the Partnership declared quarterly  distributions of
         $0.25  per  outstanding  depositary  unit,  payable  May  15,  1996  to
         Unitholders of record as of March 29, 1996.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND II

                                INDEX OF EXHIBITS

<TABLE>
<CAPTION>

  Exhibit                                                                                    Page

   <S>     <C>                                                                              <C>       
    4.     Limited Partnership Agreement of Partnership                                       *

    4.1    Amendment to Limited Partnership Agreement of Registrant                           *

   10.1    Management Agreement between Partnership and PLM Investment                        *
           Management, Inc.

   10.2    $35,000,000 Note Agreement dated as of March 1, 1994                               *

   10.3    $25,000,000 Warehousing Credit Agreement, dated as of 
           September 27, 1995, with
           First Union National Bank of North Carolina.                                       *

   25.     Powers of Attorney.                                                              46-48

</TABLE>

*  Incorporated by reference.  See page 26 of this report.