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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-Q

            (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                       For the Quarter Ended June 30, 1998

                                       OR

            ( ) 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 333-11243

                          CAPITA PREFERRED FUNDING L.P.




     A DELAWARE                                   I.R.S. EMPLOYER IDENTIFICATION
 LIMITED PARTNERSHIP                                    No. 22-3467161


                          c/o AT&T Capital Corporation
               44 Whippany Road, Morristown, New Jersey 07962-1983
                          Telephone Number 973-397-3000

                               ------------------


THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT PURSUANT TO GENERAL INSTRUCTION I(2).

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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                         PART I - FINANCIAL INFORMATION

ITEM 1.  Financial statements.

                          CAPITA PREFERRED FUNDING L.P.
                              STATEMENTS OF INCOME
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                               For the three months    For the six months
                                  ended June 30,          ended June 30,

                                  1998      1997        1998         1997
                                 -----     -----       -----         ----

<S>                             <C>        <C>         <C>         <C>    
REVENUES-Interest Income        $5,360     $5,360      $10,722     $10,718
                                -------    ------      -------   ---------

Net income                      $5,360     $5,360      $10,722     $10,718
                                -------    ------      -------   ---------

</TABLE>

The accompanying notes are an integral part of these Financial Statements.






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                         CAPITA PREFERRED FUNDING L.P.
                                 BALANCE SHEETS
                             (Dollars in thousands)


<TABLE>
<CAPTION>

                                             June 30,       December 31,
                                               1998             1997
                                            (unaudited)
                                            -----------     ------------
<S>                                          <C>              <C>     

ASSETS:
  Debentures receivable from Affiliates      $240,146         $240,146
  Other assets                                  2,434            2,434
                                             --------         --------
Total Assets                                  242,580          242,580
                                             ========         ========

PARTNERS' CAPITAL:
   General Partner's Interest                  36,394           36,394
   Limited Partner's Interest                 206,186          206,186
                                             --------         --------
Total Partners' Capital                      $242,580          242,580
                                             ========         ========

</TABLE>



The accompanying notes are an integral part of these Financial Statements.






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                          CAPITA PREFERRED FUNDING L.P.
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                             For the six months
                                               ended June 30,

                                               1998       1997
                                               ----       ----

<S>                                          <C>          <C>     
Cash Flow from Operating Activities:

Net Income                                   $ 10,722     $ 10,718
                                              -------      -------
Increase in other assets                            -          (37)
Net Cash provided from Operating Activities    10,722       10,681
                                              -------      -------

Cash Flow from Financing Activities:

Distribution to Limited Partner                (9,340)     (9,340)
Distribution to General Partner                (1,382)     (1,341)
                                             ---------    --------
Net Cash provided by Financing
 activities                                   (10,722)    (10,681)
                                              -------     -------

Net change in cash and cash equivalents             0           0
Cash and cash equivalents at beginning
 of period                                          0           0
                                              -------      ------
Cash and cash equivalents at end
 of period                                   $      0    $      0
                                              =======     =======

</TABLE>


The accompanying notes are an integral part of these Financial Statements.




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                          CAPITA PREFERRED FUNDING L.P.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1.  Basis of Presentation

     The accompanying unaudited financial statements have been prepared by
Capita Preferred Funding L.P. (the "Partnership") pursuant to the rules and
regulations of the Securities and Exchange Commission and, in the opinion of
management, reflect all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the results of operations, financial
position and cash flows for each period shown. The results for interim periods
are not necessarily indicative of financial results for the full year. These
unaudited financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1997.

2. 1998 Sale of AT&T Capital

     On January 12, 1998, all of AT&T Capital Corporation's (the "General
Partner")outstanding shares of common stock were purchased by Newcourt Credit
Group Inc., an Ontario corporation ("Newcourt") in a transaction accounted for
under the purchase method of accounting. The General Partner currently is an
indirect wholly-owned subsidiary of Newcourt.

3. Subsequent Event

               On July 27, 1998, an Offer to Purchase and Consent Solicitation
(the "Offer") in connection with the 9.06% Trust Originated Preferred Securities
(the "TOPrS" or "Company-obligated preferred securities") of Capita Preferred
Trust, was announced to all of the holders of record of the TOPrS as of July 20,
1998. AT&T Capital invited all holders of the TOPrS to tender any and all of
their TOPrS for purchase. In conjunction with the Offer the Company solicited
consents from the holders to amend the Limited Partnership Agreement and the
indentures pursuant to which three debentures (the "Debentures") have been
issued by AT&T Capital and two of its wholly-owned subsidiaries. The proposed
amendments will provide for an early redemption of the Partnership Preferred
Securities and Debentures, which in turn will cause the optional redemption of
any and all TOPrS that have not been tendered in the Offer. Following the
successful consummation of the Offer and the Consent Solicitation in accordance
with their respective terms, there will not be any TOPrS that remain
outstanding.





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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS. (Dollars in thousands)

Results of Operations and Changes in Cash Flows

     On June 30, 1998 and June 30, 1997, Capita Preferred Funding L.P. (the
"Partnership") made its scheduled quarterly cash distributions of $4,670 (annual
rate of 9.06%) to Capita Preferred Trust, the Partnership's limited partner. On
those same dates, the Partnership received its scheduled debenture interest
income payments (annual rate of 8.88%) from AT&T Capital Corporation (the
"General Partner") and two wholly-owned subsidiaries of the General Partner
aggregating $5,331. During the second quarter of 1998 and 1997, the Partnership
earned interest income of approximately $29 and $29, respectively, on short-term
investments. The Partnership distributes the excess of the interest income on
debentures and short-term investments over cash distributions to the General
Partner. For the second quarter of 1998 and 1997, the Partnership distributed
$690 and $653, respectively, to the General Partner.

     For the six months ended June 30, 1998 and June 30,1997, the Partnership
made cash distributions of $9,340 to Capita Preferred Trust and received
debenture interest income payments from the General Partner and Subsidiaries
totaling $10,662. The Partnership earned $59 and $56 on short term investments
for the six months ended June 30, 1998 and June 30,1997, respectively. Cash
distributions of $1,382 and $1,341 were distributed to the General Partner for
the excess of interest income over cash distributions for 1998 and 1997.





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                                     PART II

                          CAPITA PREFERRED FUNDING L.P.
                           PART II - OTHER INFORMATION

Item 6. Exhibits and reports on Form 8-K.

        a)  Exhibits:
             Exhibit Number
               27   Financial Data Schedule

         b) Current Reports on Form 8-K:

              None





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                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                  CAPITA PREFERRED FUNDING L.P.

                                           By: AT&T Capital Corporation
                                               General Partner

                                               DANIEL A. JAUERNIG
                                               ------------------
                                           By: Daniel A. Jauernig
                                               Group President and
                                               Chief Financial Officer
                                               of AT&T Capital Corporation

August 12, 1998





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                                  EXHIBIT INDEX

EXHIBITS

<TABLE>
<CAPTION>
  Exhibit
   Number      Description
<C>            <S>

   27.         Financial Data Schedule

</TABLE>






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