<PAGE>

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

(Mark One)

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

                  For the quarterly period ended March 31, 2001

                                       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 0-22300

                        PW PREFERRED YIELD FUND II, L.P.
                        --------------------------------
             (Exact name of registrant as specified in its charter)

             DELAWARE                              84-1180783
      (State of organization)                     (IRS Employer
                                                Identification No.)

          88 BROAD STREET
       BOSTON, MASSACHUSETTS                          02110
       (Address of principal                        (Zip Code)
        executive offices)




        Registrant's telephone number, including area code (617)854-5800

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
<PAGE>

                        PW PREFERRED YIELD FUND II, L.P.
                      QUARTERLY REPORT ON FORM 10-Q FOR THE
                          QUARTER ENDED MARCH 31, 2001

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE

<S>        <C>               <C>                                                             <C>
PART I.    FINANCIAL INFORMATION

           Item 1.           Financial Statements

                             Balance Sheets - March 31, 2001 and December 31,
                             2000 (unaudited)                                                   3

                             Statements of Income for the three months ended
                             March 31, 2001 and 2000 (unaudited)                                4

                             Statements of Partners' Equity for the three
                             months ended March 31, 2001 and 2000 (unaudited)                   5

                             Statements of Cash Flows for the three months
                             ended March 31, 2001 and 2000 (unaudited)                          6

                             Notes to Financial Statements (unaudited)                        7-8

           Item 2.           Management's Discussion and Analysis of Financial
                             Condition and Results of Operations                             9-10

PART II.   OTHER INFORMATION

           Item 1.           Legal Proceedings                                                 11

           Item 5.           Other Information                                                 11

           Item 6.           Exhibits and Reports on Form 8-K                                  11

                             Signatures                                                        12
</TABLE>


                                       2
<PAGE>


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                        PW PREFERRED YIELD FUND II, L.P.

                                 BALANCE SHEETS
                      MARCH 31, 2001 AND DECEMBER 31, 2000
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 MARCH 31,   DECEMBER 31,
                                                                                  2001          2000
                                                                                 ----------   -----------

<S>                                                                              <C>          <C>
                                                           ASSETS

Cash and cash equivalents                                                        $1,472,495   $ 1,403,646
Rents and other receivables, net of allowance for doubtful
   accounts of $33,000 at March 31, 2001 and
   December 31, 2000, respectively                                                  222,093       200,515
Receivable from general partner                                                   1,255,923       149,843
Equipment at cost, net of accumulated depreciation of
   $11,870,376 and $12,589,684 at March 31, 2001 and
   December 31, 2000, respectively                                                6,733,903     8,450,576
                                                                                 ----------   -----------

              Total Assets                                                       $9,684,414   $10,204,580
                                                                                 ==========   ===========


                                              LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:

   Accounts payable and accrued liabilities                                      $   45,325   $    54,000
   Payable to affiliates                                                            121,768        96,505
   Deferred rental income                                                            82,715        51,598
   Distributions payable to partners                                                318,785       318,785
                                                                                 ----------   -----------

      Total Liabilities                                                             568,593       520,888
                                                                                 ----------   -----------


PARTNERS' EQUITY:

   General Partners                                                                 440,418       468,812
   Limited Partners:
     Class A (54,027 Units outstanding)                                           7,590,222     8,062,265
     Class B                                                                      1,085,181     1,152,615
                                                                                 ----------   -----------

       Total Partners' Equity                                                     9,115,821     9,683,692
                                                                                 ----------   -----------

              Total Liabilities and Partners' Equity                             $9,684,414   $10,204,580
                                                                                 ==========   ===========
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.
                                       3
<PAGE>

                        PW PREFERRED YIELD FUND II, L.P.

                              STATEMENTS OF INCOME

               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                           2001          2000
                                        -----------    ----------
<S>                                     <C>            <C>
REVENUE:
    Lease revenue                       $ 1,499,106    $1,065,705
    (Loss) gain on sale of equipment       (515,660)       23,573
    Interest income                          13,014        14,208
                                        -----------    ----------

         Total Revenue                      996,460     1,103,486
                                        -----------    ----------

EXPENSES:
    Depreciation                            596,019       714,650
    Management fees (Note 2)                 65,624        43,868
    General and administrative               34,262        44,318
                                        -----------    ----------

         Total Expenses                     695,905       802,836
                                        -----------    ----------

NET INCOME                              $   300,555    $  300,650
                                        ===========    ==========

NET INCOME ALLOCATED:
   To the General Partners              $    15,027    $   15,033
   To the Class A Limited Partners          270,828       270,907
   To the Class B Limited Partner            14,700        14,710
                                        -----------    ----------

                                        $   300,555    $  300,650
                                        ===========    ==========

NET INCOME PER WEIGHTED AVERAGE
   NUMBER OF UNITS OF CLASS A LIMITED
   PARTNER INTEREST OUTSTANDING         $      5.01    $     5.01
                                        ===========    ==========

WEIGHTED AVERAGE NUMBER OF
   UNITS OF CLASS A LIMITED PARTNER
   INTEREST OUTSTANDING                      54,027        54,027
                                        ===========    ==========
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.
                                       4
<PAGE>

                        PW PREFERRED YIELD FUND II, L.P.

                         STATEMENTS OF PARTNERS' EQUITY

               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                    CLASS A       CLASS B
                                     GENERAL        LIMITED       LIMITED
                                     PARTNERS       PARTNERS      PARTNER          TOTAL
                                     ---------    -----------    -----------    ------------

<S>                                  <C>          <C>            <C>            <C>
Balance, January 1, 2001             $ 468,812    $ 8,062,265    $ 1,152,615    $  9,683,692
Net income                              15,027        270,828         14,700         300,555
Distributions declared to partners     (43,421)      (742,871)       (82,134)       (868,426)
                                     ---------    -----------    -----------    ------------

Balance, March 31, 2001              $ 440,418    $ 7,590,222    $ 1,085,181    $  9,115,821
                                     =========    ===========    ===========    ============

Balance, January 1, 2000             $ 568,137    $ 9,713,555    $ 1,388,514    $ 11,670,206
Net income                              15,033        270,907         14,710         300,650
Distributions declared to partners     (43,421)      (742,871)       (82,134)       (868,426)
                                     ---------    -----------    -----------    ------------

Balance, March 31, 2000              $ 539,749    $ 9,241,591    $ 1,321,090    $ 11,102,430
                                     =========    ===========    ===========    ============
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.
                                       5
<PAGE>

                        PW PREFERRED YIELD FUND II, L.P.

                            STATEMENTS OF CASH FLOWS

               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              2001           2000
                                                           -----------    -----------
<S>                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                            $   300,555    $   300,650
     Adjustments to reconcile net income to net cash
       from operating activities:
         Depreciation                                          596,019        714,650
         Loss (gain) on sale of equipment                      515,660        (23,573)
      Change in assets and liabilities:
          Rents and other receivables                          (21,578)        86,866
          Receivable from general partner                   (1,106,080)       113,194
          Allowance for doubtful accounts                         --          (14,000)
          Accounts payable and accrued liabilities              (8,675)        (7,600)
          Payable to affiliates                                 25,263            527
          Deferred rental income                                31,117         (4,966)
                                                           -----------    -----------

             Net cash from operating activities                332,281      1,165,748
                                                           -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of equipment                                          --         (152,049)
   Proceeds from equipment sales                               604,994         38,130
                                                           -----------    -----------

            Net cash from (used in) investing activities       604,994       (113,919)
                                                           -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions paid to partners                             (868,426)      (868,426)
                                                           -----------    -----------

            Net cash used in financing activities             (868,426)      (868,426)
                                                           -----------    -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                       68,849        183,403

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             1,403,646      1,926,081
                                                           -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $ 1,472,495    $ 2,109,484
                                                           ===========    ===========
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.
                                       6
<PAGE>

                        PW PREFERRED YIELD FUND II, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                 MARCH 31, 2001
                                   (UNAUDITED)

1.       GENERAL

         The financial statements presented herein are prepared in conformity
with generally accepted accounting principles for interim financial information
and the instructions for preparing Form 10-Q under Rule 10-01 of Regulation S-X
of the Securities and Exchange Commission and are unaudited. As such, these
financial statements do not include all information and footnote disclosures
required under generally accepted accounting principles for complete financial
statements and, accordingly, the accompanying financial statements should be
read in conjunction with the footnotes presented in the 2000 Annual Report.
Except as disclosed herein, there has been no material change to the information
presented in the footnotes to the 2000 Annual Report.

         In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary for a fair presentation have been
included.

         Certain 2000 amounts have be reclassified to conform to the current
year presentation.

2.       TRANSACTIONS WITH AFFILIATES

                        ACQUISITION AND OPERATING STAGES

         ACQUISITION OF EQUIPMENT Pursuant to its investment objectives, the
Partnership acquired, on an all-cash basis, certain leased equipment from Equis
Financial Group L.P. ("EFG") (formerly American Finance Group or AFG), an
affiliate of the Managing General Partner.

         The purchase price of the equipment acquired from EFG is equal to the
lesser of the adjusted cost of the equipment or the appraised value of the
equipment at the time of its acquisition by the Partnership ("EFG carrying
value"). The adjusted cost of the equipment is equal to the price paid by EFG,
plus the cost of an appraisal, EFG's cost of interim financing for the equipment
and any taxes paid by EFG, less certain interim rentals received by EFG with
respect to the equipment.

         ACQUISITION FEE The Managing General Partner, or its affiliates,
received or was entitled to receive a fee equal to (i) 2.25% of the purchase
price of equipment purchased with net offering proceeds from the sale of Units,
and (ii) 3% of the purchase price of equipment purchased with reinvested
Partnership cash flow as compensation for evaluating, selecting, negotiating and
consummating the acquisition of the equipment.


                                       7
<PAGE>

                        PW PREFERRED YIELD FUND II, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                   (CONTINUED)

         MANAGEMENT FEES The General Partners are entitled to receive a monthly
fee in an amount equal to 2% of gross rentals for Full Payout Leases, as defined
in the Partnership Agreement and 5% of gross rentals for Operating Leases
(payable 66.67% to the Managing General Partner and 33.33% to the Administrative
General Partner) as compensation for services rendered in connection with the
management of the equipment. Management fees of $65,624 and $43,868 were earned
by the General Partners during the three months ended March 31, 2001 and 2000,
respectively. Effective July 1, 1998, the Managing General Partner agreed to
perform certain administrative functions on behalf of the Partnership that
previously had been performed by the Administrative General Partner. For these
services, the Administrative General Partner pays the Managing General Partner
an amount equivalent to the fees otherwise due the Administrative General
Partner.

         DISPOSITION FEES The General Partners, or their affiliates, were
entitled to receive a subordinated disposition fee in an amount equal to the
lesser of (i) 50% of the fee that would be charged by an unaffiliated party, or
(ii) 3% of the gross contract price relating to each sale of equipment (payable
50% to the Managing General Partner or its affiliates and 50% to the
Administrative General Partner) as compensation for negotiating and consummating
sales of equipment. During the fourth quarter of 1998, the Partnership reversed
previously accrued subordinated disposition fees because the General Partners
concluded that it was no longer probable that these subordinated disposition
fees would be paid. The Partnership has not accrued for subordinated disposition
fees during 1999, 2000 or 2001.


                                       8
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The following discussion should be read in conjunction with the Financial
Statements of the Partnership and the Notes thereto. This Report contains, in
addition to historical information, forward-looking statements that include
risks and other uncertainties. The Partnership's actual results may differ
materially from those anticipated in these forward-looking statements. Factors
that might cause such a difference include those discussed below, as well as
general economic and business conditions, competition and other factors
discussed elsewhere in this report. The Partnership undertakes no obligation to
release publicly any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
anticipated or unanticipated events.

LIQUIDITY AND CAPITAL RESOURCES

     The Partnership invests working capital and cash flow from operations prior
to its distribution to the partners in short-term highly liquid investments.
These investments are primarily short-term commercial paper issued by large
domestic corporations. At March 31, 2001, the Partnership had approximately
$879,000 invested in a money market fund that invests in commercial paper and
similar instruments.

     Cash and cash equivalents increased $68,849 from $1,403,646 at December 31,
2000 to $1,472,495 at March 31, 2001. This increase primarily represents the
amount by which cash generated by operating activities and equipment sales
exceeded distributions to partners.

     During the three months ended March 31, 2001, the Partnership declared
distributions of cash flow received from operations in the amount of $868,426.
All distributions to the Class A Limited Partners represented an annualized
distribution rate of 11% of their contributed capital and all distributions to
the Class B Limited Partner represented an annualized distribution rate of 10%
of its contributed capital.

     Distributions may be characterized for tax, accounting and economic
purposes as a return of capital, a return on capital or both. The portion of
each cash distribution by a partnership, which exceeds its net income for the
fiscal period, may be deemed a return of capital. Based upon the amount of net
income reported by the Partnership for accounting purposes, approximately 64% of
the 11% cash distributions to the Class A Limited Partners for the three months
ended March 31, 2001 constituted a return of capital. Additionally, since
inception, approximately 69% of the Class A Limited Partner's 11% cash
distributions constituted a return of capital. However, the total actual return
on capital over a leasing partnership's life can only be determined at the
termination of the Partnership after all residual cash flows (which include
proceeds from the re-leasing and sale of equipment after initial lease terms
expire) have been realized.

RESULTS OF OPERATIONS

     For the three months ended March 31, 2001, the Partnership recognized lease
revenue of $1,499,106 compared to $1,065,705 for the same period in 2000. The
increase in lease revenue from 2000 to 2001 is due principally to the receipt of
lease termination proceeds in 2001 from a lessee of the Partnership. In March
2001, the lessee paid $513,479 as part of an agreement to early terminate its
lease. In future, lease revenue is expected to decline as a result of primary
lease term expirations and the sale of equipment. The Partnership also earns
interest income from temporary investments of rental receipts and equipment
sales proceeds in short-term instruments.


                                       9
<PAGE>

     During the three months ended March 31, 2001, the Partnership sold
equipment having a net book value of $1,120,654 to existing lessees and third
parties. These sales resulted in a net loss, for financial statement purposes,
of $515,660 compared to a net gain in 2000 of $23,573 on equipment having a net
book value of $14,557.

     It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.

     The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.

     The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenues generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Partnership classifies
such residual rental payments as lease revenue. Consequently, the amount of gain
or loss reported in the financial statements is not necessarily indicative of
the total residual value the Partnership achieved from leasing the equipment.

     Depreciation expense was $596,019 and $714,650 for the three months ended
March 31, 2001 and 2000, respectively. For financial reporting purposes, to the
extent that an asset is held on primary lease term, the Partnership depreciates
the difference between (i) the cost of the asset and (ii) the estimated residual
value of the asset on a straight-line basis over such term. For purposes of this
policy, estimated residual values represent estimates of equipment values at the
date of primary lease expiration. To the extent that an asset is held beyond its
primary lease term, the Partnership continues to depreciate the remaining net
book value of the asset on a straight-line basis over the asset's remaining
economic life.

     Management fees were approximately 4.4% and 4.1% of lease revenue during
the three months ended March 31, 2001 and 2000, respectively. Management fees
are based on 5% of gross lease revenue generated by operating leases and 2% of
gross lease revenue generated by full payout leases.

     The General Partners, or their affiliates, were entitled to receive a
subordinated disposition fee in an amount equal to the lesser of (i) 50% of the
fee that would be charged by an unaffiliated party, or (ii) 3% of the gross
contract price relating to each sale of equipment (payable 50% to the Managing
General Partner or its affiliates and 50% to the Administrative General Partner)
as compensation for negotiating and consummating sales of equipment. During the
fourth quarter of 1998, the Partnership reversed previously accrued subordinated
disposition fees because the General Partners concluded that it was no longer
probable that these subordinated disposition fees would be paid. The Partnership
has not accrued for subordinated disposition fees during 1999, 2000 or 2001.

     General and administrative expenses consisted primarily of investor
reporting expenses, transfer agent fees, audit and tax fees.


                                       10
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.


ITEM 5.  OTHER INFORMATION

         None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      None.

         (b) The Partnership did not file any Forms 8-K during the first quarter
of the fiscal year ending December 31, 2001.


                                       11
<PAGE>

                                    SIGNATURE

         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.

                                  PW Preferred Yield Fund II, L.P.
                                  (Registrant)

                                  By:      General Equipment Management II, Inc.
                                           A General Partner

Date: May 15, 2001                By:      /s/ Carmine Fusco
                                           Carmine Fusco
                                           VICE PRESIDENT, SECRETARY,
                                           TREASURER AND CHIEF FINANCIAL
                                           AND ACCOUNTING OFFICER


                                       12