<PAGE>
 
                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  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 March 31, 1997

                                       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 No. 2-78751


                         AMERICAN CABLE TV INVESTORS 2
            ------------------------------------------------------
            (Exact name of Registrant as specified in its charter)


               State of California                         84-0904982
          -------------------------------             ------------------- 
          (State or other jurisdiction of              (I.R.S. Employer
           incorporation or organization)             Identification No.)
 
 
        5619 DTC Parkway
      Englewood, Colorado                                    80111
----------------------------------------              ------------------
(Address of principal executive offices)                 (Zip Code)
 
   Registrant's telephone number, including area code:  (303) 267-5500


   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, and (2) has been subject to such filing
requirements for the past 90 days.     Yes   X       No
                                           --------    ------

                                      I-1
<PAGE>
 
PART I - FINANCIAL INFORMATION


                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)

                                 Balance Sheets
                                  (unaudited)
<TABLE>
<CAPTION>
 
                                          March 31,   December 31,
                                             1997         1996
                                          ---------   ------------
Assets                                      amounts in thousands
------
 
<S>                                       <C>         <C>
Cash and cash equivalents                    $2,031          2,238
                                             ======          =====
 
Liabilities and Partners' Equity
--------------------------------
 
Accounts payable and accrued expenses        $   25             62
 
Amounts due to related parties (note 4)          29            181
                                             ------          -----
 
   Total liabilities                             54            243
                                             ------          -----
 
Partners' equity (deficit):
 General partners                             1,986          1,991
 Initial limited partner                       (272)          (272)
 Limited partners                               263            276
                                             ------          -----
 
   Total partners' equity                     1,977          1,995
                                             ------          -----
 
Contingency (note 5)
 
                                             $2,031          2,238
                                             ======          =====
 
</TABLE>

See accompanying notes to financial statements.

                                      I-2
<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)

                            Statements of Operations
                                  (unaudited)

<TABLE>
<CAPTION>
 
 
                                           Three months ended
                                                March 31,
                                          ----------------------
                                             1997        1996
                                          -----------  ---------
                                          amounts in thousands,
                                          except unit amounts
<S>                                      <C>           <C> 
Selling, general and administrative
expenses (note 5)                             $   (31)     (118)
 
Interest income                                    13        43
                                              -------    ------
 
    Net loss                                  $   (18)      (75)
                                              =======    ======
 
Loss per limited partnership unit
(note 2)                                      $ (0.43)    (1.78)
                                              =======    ======
 
Limited partnership units outstanding          30,772    30,772
                                              =======    ======
 
</TABLE>


See accompanying notes to financial statements.

                                      I-3
<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)

                         Statement of Partners' Equity

                       Three months ended March 31, 1997
                                  (unaudited)

<TABLE>
<CAPTION>
 
 
                                         Initial
                               General   limited    Limited
                              partners   partner   partners   Total
                              --------   -------   --------   ----- 
<S>                           <C>        <C>       <C>        <C>
                                      amounts in thousands
 
Balance at January 1, 1997      $1,991      (272)       276   1,995
 
 Net loss                           (5)       --        (13)    (18)
                                ------   -------        ---   -----
 
Balance at March 31, 1997       $1,986      (272)       263   1,977
                                ======   =======        ===   =====
 
 
</TABLE>


See accompanying notes to financial statements.

                                      I-4

<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)

                            Statements of Cash Flows
                                  (unaudited)
<TABLE>
<CAPTION>
 
 
                                            Three months ended
                                                March 31,
                                          ----------------------
                                             1997        1996
                                          -----------  ---------
<S>                                       <C>          <C>
                                          amounts in thousands
                                              (see note 3)
 
Cash flows from operating activities:
 Net loss                                     $  (18)       (75)
 Adjustments to reconcile net loss to
  net cash provided by (used in)
  operating activities:
    Change in accounts payable, accrued
     expenses and amounts due to related            
     parties                                    (189)       119
                                              ------      -----
       
       Net cash provided by (used in)
        operating activities                    (207)        44
                                              ------      -----
 
Cash flows from investing activities -
 Distribution to minority owner of
  American Cable TV of Redlands              
  Joint Venture ("Redlands")                      --       (210)
                                              ------      -----
 
 
Cash flows from financing activities              --         --
                                              ------      -----
 
       Net decrease in cash and
        cash equivalents                        (207)      (166)
 
       Cash and cash equivalents:
         Beginning of period                   2,238      3,045
                                              ------      -----
 
         End of period                        $2,031      2,879
                                              ======      =====
 
 
</TABLE>
See accompanying notes to financial statements.

                                      I-5
<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)

                         Notes to Financial Statements

                                 March 31, 1997
                                  (unaudited)


(1)  Basis of Financial Statement Preparation
     ----------------------------------------
     The accompanying unaudited financial statements include the accounts of
     American Cable TV Investors 2 ("ACT 2" or the "Partnership").  Through
     December 31, 1995, ACT 2 had a 65% ownership interest in Redlands, a joint
     venture which was formed to acquire, develop and operate cable television
     systems in and around Redlands, California.  American Cable TV Investors 3
     ("ACT 3"), an affiliate owned the 35% minority interest in Redlands.  In
     connection with a dissolution, indemnification and contribution agreement
     (the "Dissolution Agreement"), Redlands was dissolved as of January 1,
     1996.  In accordance with the terms of the Dissolution Agreement, Redlands'
     net assets were distributed to ACT 2 and ACT 3 based on their respective
     ownership interests.

     TCI Cablevision Associates, Inc. ("Cablevision"), an indirect subsidiary of
     Tele-Communications, Inc. ("TCI"), is the managing agent of ACT 2.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities at
     the date of the financial statements and the reported amounts of revenue
     and expenses during the reporting period. Actual results could differ from
     those estimates.

     The accompanying financial statements of the Partnership are unaudited. In
     the opinion of management, all adjustments (consisting only of normal
     recurring accruals) have been made which are necessary to present fairly
     the financial position of the Partnership as of March 31, 1997 and the
     results of its operations for the three months ended March 31, 1997 and
     1996. The results of operations for any interim period are not necessarily
     indicative of the results for the entire year.

     These financial statements should be read in conjunction with the financial
     statements and related notes thereto included in the Partnership's December
     31, 1996 Annual Report on Form 10-K.

(2)  Allocation of Net Earnings and Net Losses
     -----------------------------------------
     Pursuant to ACT 2's limited partnership agreement, net earnings and net
     losses of ACT 2 are to be allocated 1% to the general partners, 2% to the
     initial limited partner and 97% to the limited partners until the limited
     partners have received cumulative distributions equal to their original
     capital contributions ("Payback"). After the limited partners have received
     distributions equal to Payback, the allocations of net earnings and net
     losses shall be 25% to the general partners, 2% to the initial limited
     partner and 73% to the limited partners.

                                                                     (continued)

                                      I-6
<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)

                         Notes to Financial Statements


     Net loss per limited partnership unit is calculated by dividing the net
     loss attributable to the limited partners by the number of limited
     partnership units outstanding during the period. The limited partners
     achieved Payback in 1994. Accordingly, the Partnership's losses for the
     three months ended March 31, 1997 and 1996 have been allocated using the
     post-Payback percentages set forth above.

(3)  Supplemental Disclosure of Cash Flow Information
     ------------------------------------------------
     ACT 2 considers investments with initial maturities of six months or less
     to be cash equivalents. At March 31, 1997, $1,992,000 of money market funds
     was included in cash and cash equivalents. ACT 2 is exposed to credit loss
     in the event of non-performance by the other parties to such financial
     instruments. However, ACT 2 does not anticipate non-performance by the
     other parties.

(4)  Transactions with Related Parties
     ---------------------------------
     ACT 2 reimburses Cablevision for direct out-of-pocket and indirect expenses
     allocable to ACT 2 and for certain personnel employed on a full- or part-
     time basis to perform accounting or other services.  Such reimbursements
     amounted to $9,000 for both the three month periods ended March 31, 1997
     and 1996.

     Amounts due to related parties represent non-interest-bearing payables to
     TCI and its affiliates consisting of (i) the net effect of cash advances
     and certain expense allocations and (ii) the advancement of legal and other
     fees and expenses associated with the litigation described in note 5.

(5)  Litigation
     ----------
     On September 30, 1994, a limited partner of ACT 2 filed suit in United
     States District Court for the District of Colorado (the "District Court")
     against the managing general partner of ACT 2. A similar suit was filed
     against the managing general partner of ACT 3. The lawsuit, as amended,
     also names certain affiliates of the managing general partner as
     defendants. The lawsuit, as amended, alleges that the defendants violated
     disclosure requirements under the Securities Exchange Act of 1934 and that
     certain defendants breached a fiduciary duty to the plaintiffs in
     connection with the sale of the Redlands, California cable television
     system. The defendants believe that the claims asserted are without merit
     and are vigorously defending the actions. The defendants moved to dismiss
     various claims asserted in the complaint and the plaintiff opposed such
     motions. The defendants' motion was denied by the District Court on March
     24, 1995.

                                                                     (continued)

                                      I-7
<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)

                         Notes to Financial Statements


 On November 3, 1995, the District Court granted the plaintiff's motion for
 certification of this case as a class action. The class has been defined to
 include all persons who were limited partners of ACT 2 as of the close of
 business on October 1, 1993, excluding, however, the defendants, their parent
 corporations, subsidiaries, and affiliates. On August 5, 1996, the defendants
 filed a motion for summary judgment on all of the plaintiff's claims, as well
 as separate partial summary judgment motions with respect to certain of the
 plaintiff's claims. The plaintiff filed a cross-motion for partial summary
 judgment on one aspect of the case. The motions have been fully briefed,
 however, the District Court has not yet ruled on such motions. On January 7,
 1997, the District Court issued an order consolidating this case with a similar
 case filed against the managing general partner of ACT 3 (the "Consolidated
 Cases"). The Consolidated Cases have been set for a four week jury trial
 beginning September 29, 1997.

 Section 21 of the Partnership Agreement provides that the General Partners and
 their affiliates, subject to certain conditions set forth in more detail in the
 Partnership Agreement, are entitled to be indemnified for any liability or loss
 incurred by them by reason of any act performed or omitted to be performed by
 them in connection with the business of ACT 2, provided that the General
 Partners determine, in good faith, that such course of conduct was in the best
 interests of ACT 2 and did not constitute proven fraud, negligence, breach of
 fiduciary duty or misconduct.

 Through March 31, 1997, ACT 2 and ACT 3 have received requests from the General
 Partners and certain of their affiliates for the advancement of legal and other
 fees and expenses associated with the above-described lawsuit totaling $1.9
 million. Consistent with the terms of the Partnership Agreement, this amount
 has been advanced by ACT 2 and ACT 3. ACT 2's 50% share of such fees and
 expenses for the three months ended March 31, 1997 and 1996, which total
 $12,000 and $102,000, respectively, has been included in selling, general, and
 administrative expenses in the accompanying financial statements. Fees and
 expenses incurred by the defendants will continue to be paid in equal shares by
 ACT 2 and ACT 3 as they are incurred and approved.

 The litigation will have the effect of delaying ACT 2's final cash
 distributions. In addition, any successful indemnification claims by the
 defendants would have the effect of reducing the amount of such final cash
 distributions.

                                      I-8
<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)


Management's Discussion and Analysis of
---------------------------------------
 Financial Condition and Results of Operations
 ---------------------------------------------

     Material Changes in Results of Operations
     -----------------------------------------

     ACT 2 is no longer engaged in the cable television business and is
currently seeking to make a final determination of its liabilities so that
liquidating distributions can be made in connection with its dissolution.
Accordingly, the Partnership's results of operations for the three month periods
ended March 31, 1997 and 1996 include (i) $12,000 and $102,000, respectively,
for the advancement of legal and other fees and expenses associated with the
litigation described in note 5 to the accompanying financial statements, (ii)
costs associated with the administration of the Partnership and (iii) interest
income earned on the Partnership's invested cash and cash equivalents.

     Material Changes in Financial Condition
     ---------------------------------------

     ACT 2 anticipates that it will make liquidating distributions in connection
with its dissolution as soon as possible following the final determination and
satisfaction of ACT 2's liabilities.  However, ACT 2 currently is unable to
predict the timing or amount of such final cash distributions due primarily to
the existence of the litigation described in note 5 to the accompanying
financial statements.

                                      I-9
<PAGE>
 
                         AMERICAN CABLE TV INVESTORS 2
                            (A Limited Partnership)


PART II - OTHER INFORMATION

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

     (a) Exhibits:

         (27)  Financial Data Schedule

     (b) Reports on Form 8-K filed during the quarter ended March 31, 1997
         - none

                                      II-1
<PAGE>
 
                                   SIGNATURES
                                   ----------


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

 
                            AMERICAN CABLE TV INVESTORS 2
                               (A Limited Partnership)
 
                       By:  IR-TCI PARTNERS II,
                            Its Managing General Partner
 
                       By:  TCI VENTURES, INC.,
                            A General Partner
 
 
 
Date: May 13, 1997     By:  /s/ Gary K. Bracken
                            ------------------------------
                            Gary K. Bracken
                            Vice President and Controller
                            (Principal Accounting Officer)
 

                                      II-2