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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


     (Mark One)

     [X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

     For the quarterly period ended September 30, 1996

                                       OR

     [ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

     For the transition period from

     Commission file number 
                            ---------------------

           NAFCO Auto Trust-1, NAFCO Auto Trust-2, NAFCO Auto Trust-3
                            Auto Funding II, L.P., as Seller
             (Exact name of registrant as specified in its charter)

              Delaware                                  13-908584
  (State or other jurisdiction                       (I.R.S. Employer
of incorporation or organization)                    Identification No.)

 51 Madison Avenue, New York, New York                     10010
 -------------------------------------                     -----
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code (212) 576-7309

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 [ ]



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                                TABLE OF CONTENTS


                                                                        Page No.
                                                                        --------
Part I       Financial Information

Item 1.      Financial Statements                                          3
Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations Properties                3

Part II      Other Information

Item 1.      Legal Proceedings                                             4
Item 2.      Changes in Securities                                         4
Item 3.      Defaults Upon Senior Securities                               4
Item 4.      Submission of Matters to a Vote of Security Holders           4
Item 5.      Other Information                                             4
Item 6.      Exhibits and Reports on Form 8-K                              4-5

Signatures                                                                 6














                                       2
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                                     PART I

Item 1.   Financial Statements

Not applicable.

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

Not applicable.


Item 5.   Other Information

          On August 15, 1996, in accordance with the provisions of Section 
6.03 of the Pooling and Servicing Agreements with respect to the NAFCO Auto 
Trusts, NAFCO Auto Funding, L.P. transferred the Seller Certificates relating 
to the NAFCO Auto Trusts to Auto Funding II, L.P., another indirect, 
wholly-owned subsidiary of New York Life Insurance Company. The sole general 
partner and the sole limited partner of Auto Funding II, L.P. are NYLIFE 
Depositary Corporation and NYLIFE SFD Holding Inc. (formerly NAFCO Inc.). In 
connection therewith NYLIFE SFD Holding Inc. (formerly NAFCO Inc.), as Master 
Administrator of the NAFCO Trusts agreed to prepare and file the periodic 
reports required to be filed relating to NAFCO Auto Trust-1, NAFCO Auto 
Trust-2 and NAFCO Auto Trust-3.





                                       3
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                                     PART II

Item 1.   Legal Proceedings

None.

Item 2.   Changes in Securities

None.

Item 3.   Defaults on Senior Securities

None.

Item 4.   Submission of Matters to a Vote of Security Holders

None.

Item 5.   Other Information

None.

Item 6.   Exhibits and Reports on Form 8-K

(a)       Exhibits

          The following reflects all applicable Exhibits required under Item 601
          of Regulation S-K;

          (99)   Additional Exhibits

          (99.1) Trust - 1

          Master Administrator Report dated August 20, 1996 for the Due Period
          beginning on May 1, 1996 and ending on July 31, 1996, (ii)
          Servicer Report for the period beginning August 1, 1996 and ending 
          on August 31, 1996 (iii) Servicer Report for the period beginning
          September 1, 1996 and ending on September 30, 1996.

          (99.2) Trust - 2

          Master Administrator Report dated August 20, 1996 for the Due Period
          beginning on July 1, 1996 and ending on July 31, 1996, (ii)
          September 20, 1996 for the Due period beginning on August 1, 1996 and
          ending on August 31, 1996, (iii) October 21, 1996 for the Due Period
          beginning on September 1, 1996 and ending on September 30, 1996.


                                       4
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          (99.3) Trust - 3

          Master Administrator Report dated August 20, 1996 for the Due Period
          beginning on July 1, 1996 and ending on July 31, 1996, (ii)
          September 20, 1996 for the Due Period beginning on August 1, 1996 and
          ending on August 31, 1996, (iii) October 21, 1996 for the Due Period
          beginning on September 1, 1996 and ending on September 30, 1996.

(b)       Reports on Form 8-K

          None.













                                       5
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                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on November 14, 1996.



                            NYLIFE SFD Holding Inc. as Master Administrator for
                            NAFCO Auto Trust-1, NAFCO Auto Trust-2, and 
                            NAFCO Auto Trust-3


                                   By:  /s/ Kevin M. Micucci
                                        -----------------------------------
                                            Kevin M. Micucci
                                             Principal Executive Officer

                                   By:  /s/ Scott J. Drath
                                        -----------------------------------
                                            Scott J. Drath
                                             VP and Controller of the 
                                             General Partner


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                            INDEX TO EXHIBITS



Exhibit No.                Description                            Page #

99.1                       Master Administrator Reports            8-31
                           for Trust - 1
                           Master Administrator Report dated 
                           August 20, 1996 for the Due Period
                           beginning on May 1, 1996 and ending
                           July 31, 1996, (ii) Servicer Report
                           for the period beginning August 1, 1996
                           and ending on August 31, 1996 (iii) 
                           Servicer Report for the period beginning
                           September 1, 1996 and ending on 
                           September 30, 1996.
                           
99.2                       Master Administrator Reports           32-67 
                           for Trust - 2
                           Master Administrator Report dated
                           August 20, 1996 for the Due Period
                           beginning on July 1, 1996 and ending
                           on July 31, 1996, (ii) September 20,
                           1996 for the Due Period beginning on 
                           August 1, 1996 and ending on August 31,
                           1996, (iii) October 21, 1996 for the
                           Due Period beginning on September 1, 1996
                           and ending on September 30, 1996.

99.3                       Master Administrator Reports           68-103
                           for Trust - 3
                           Master Administrator Report dated  
                           August 20, 1996 for the Due Period
                           beginning on July 1, 1996 and ending
                           on July 31, 1996, (ii) September 20,
                           1996 for the Due Period beginning on 
                           August 1, 1996 and ending on August 31,
                           1996, (iii) October 21, 1996 for the Due
                           Period beginning on September 1, 1996
                           and ending on September 30, 1996.