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                   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 number                                0-19164
                       ---------------------------------------------------------

               Capital Preferred Yield Fund, A California Limited
       ------------------------------------------------------------------
       Partnership (Exact name of registrant as specified in its charter)


              California                                   68-0190817
       -----------------------              ------------------------------------
       (State of organization)              (I.R.S. Employer Identification No.)

7175 West Jefferson Avenue, Suite 4000
          Lakewood, Colorado                                  80235
----------------------------------------                    ----------
(Address of principal executive offices)                    (Zip Code)


        Registrant's telephone number, including area code (303) 980-1000


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  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      .
                                       -----     ----- 

                        Exhibit Index appears on Page 12

                               Page 1 of 13 Pages




<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                          Quarterly Report on Form 10-Q
                              For the Quarter Ended
                                 March 31, 1997


                                Table of Contents
                                -----------------


PART I.   FINANCIAL INFORMATION                                           PAGE
                                                                          ----

     Item 1.  Financial Statements (Unaudited)

              Balance Sheets-March 31, 1997 and December 31, 1996           3

              Statements of Income - Three  months ended
              March 31, 1997 and 1996                                       4

              Statements of Cash Flows - Three months ended
              March 31, 1997 and 1996                                       5

              Notes to Financial Statements                                 6

     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations                8-11


PART II.  OTHER INFORMATION


     Item 1.  Legal Proceedings                                             12

     Item 6.  Exhibits and Reports on Form 8-K                              12

              Signature                                                     13

                                        2

<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                                 BALANCE SHEETS
                                   (Unaudited)

                                     ASSETS

                                                         March 31,  December 31,
                                                           1997         1996
                                                       -----------   -----------

Cash and cash equivalents                              $ 2,502,653   $ 2,672,112
Accounts receivable, net                                   356,988       390,607
Equipment held for sale or re-lease                      1,540,135     1,081,841
Net investment in direct finance leases                  4,577,934     5,316,787
Leased equipment, net                                   10,944,706    13,519,836
                                                       -----------   -----------

         Total assets                                  $19,922,416   $22,981,183
                                                       ===========   ===========

                       LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
     Payable to affiliates                             $    70,003   $    65,370
     Accounts payable and accrued liabilities              710,270       821,791
     Rents received in advance                             140,871       230,501
     Distributions payable to partners                   1,058,795     1,317,409
     Discounted lease rentals                            3,654,949     4,363,104
     Financed operating lease rentals                    1,287,078     1,329,087
                                                       -----------   -----------

         Total liabilities                               6,921,966     8,127,262
                                                       -----------   -----------

Partners' capital:
     General partner                                             -             -
     Limited partners:
         Class A                                        10,469,580    12,199,688
         Class B                                         2,530,870     2,654,233
                                                       -----------   -----------

         Total partners' capital                        13,000,450    14,853,921
                                                       -----------   -----------

         Total liabilities and partners' capital       $19,922,416   $22,981,183
                                                       ===========   ===========

   The accompanying notes are an integral part of these financial statements.

                                        3

<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                              STATEMENTS OF INCOME
                                   (Unaudited)

                                                            Three Months Ended
                                                                 March 31,
                                                         -----------------------
                                                            1997        1996
                                                         ----------   ----------
Revenue:
  Operating lease rentals                                $1,562,212   $2,546,405
  Direct finance lease income                               249,422      254,425
  Equipment sales margin                                    127,494      169,537
  Interest income                                            20,068       52,187
                                                         ----------   ----------
         Total revenue                                    1,959,196    3,022,554
                                                         ----------   ----------

Expenses:
  Depreciation and amortization                           1,008,536    1,888,279
  Management fees paid to general partner                   113,104      182,140
  Direct services from general partner                       45,091       25,723
  Interest on discounted lease rentals                       70,192      163,324
  Interest on financed operating lease rentals               13,157       29,170
  General and administrative                                 65,909       63,724
  Provision for losses                                      125,000      375,000
                                                         ----------   ----------
         Total expenses                                   1,440,989    2,727,360
                                                         ----------   ----------

Net income                                               $  518,207   $  295,194
                                                         ==========   ==========

Net income allocated:
  To the general partner                                 $  106,168   $  103,416
  To the Class A limited partners                           383,084      178,297
  To the Class B limited partner                             28,955       13,481
                                                         ----------   ----------

                                                         $  518,207   $  295,194
                                                         ==========   ==========
  Net income per weighted average Class A
      limited partner units outstanding                  $     1.52   $      .70
                                                         ==========   ==========

  Weighted average Class A limited partner
       unit outstanding                                     251,709      253,163
                                                         ==========   ==========



   The accompanying notes are an integral part of these financial statements.

                                        4

<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>



                                                                    Three months ended
                                                                         March 31,
                                                                 --------------------------
                                                                    1997           1996
                                                                 -----------    -----------

<S>                                                             <C>            <C>        
Net cash provided by operating activities                        $ 3,210,879    $ 3,957,563
                                                                 -----------    -----------

Cash flows from investing activities:

  Purchases from affiliate of equipment on operating leases                -        (28,500)
  Investment in direct finance leases, acquired from affiliate             -        (11,945)
                                                                 -----------    -----------

Net cash used in investing activities                                      -        (40,445)
                                                                 -----------    -----------

Cash flows from financing activities:

  Principal payments on financed operating lease rentals             (42,009)       (78,874)
  Principal payments on discounted lease rentals                    (708,155)    (1,580,154)
  Distributions to partners                                       (2,617,780)    (2,303,708)
  Redemptions of limited partner units                               (12,394)       (71,346)
                                                                 -----------    -----------

Net cash used in financing activities                             (3,380,338)    (4,034,082)
                                                                 -----------    -----------

Net decrease in cash and cash equivalents                           (169,459)      (116,964)

Cash and cash equivalents at beginning of period                   2,672,112      4,492,487
                                                                 -----------    -----------

Cash and cash equivalents at end of period                       $ 2,502,653    $ 4,375,523
                                                                 ===========    ===========

Supplemental disclosure of cash flow information:
         Interest paid on discounted lease rentals               $    70,192    $   163,324
         Interest paid on financed operating lease rentals            13,157         29,170

</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                        5

<PAGE>


                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1.   Basis of Presentation
     ---------------------

     The  accompanying  unaudited  financial  statements  have been  prepared in
     accordance  with  generally  accepted  accounting  principles  for  interim
     financial  information and the  instructions to Form 10-Q and Rule 10-01 of
     Regulation S-X. Accordingly, they do not include all of the information and
     disclosures required by generally accepted accounting principles for annual
     financial   statements.   In  the  opinion  of  the  general  partner,  all
     adjustments  (consisting only of normal recurring  adjustments)  considered
     necessary for a fair presentation have been included.  The balance sheet at
     December 31, 1996 has been derived  from the audited  financial  statements
     included in the Partnership's 10-K. For further  information,  refer to the
     financial  statements of Capital Preferred Yield Fund, A California Limited
     Partnership  (the  "Partnership"),  and the related notes,  included in the
     Partnership's  Annual  Report on Form 10-K for the year ended  December 31,
     1996, previously filed with the Securities and Exchange Commission.



                                        6

<PAGE>


                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

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

Results of Operations
---------------------

Presented below are schedules  (prepared  solely to facilitate the discussion of
results of  operations  that  follows)  showing  condensed  statements of income
categories and analyses of changes in those  condensed  categories  derived from
the Statements of Income.

                                     Condensed Statements of  
                                   Income for the three months    The effect on
                                       ended March 31,            net income of
                                   ---------------------------   changes between
                                       1997          1996            periods
                                   -----------  --------------   ---------------

Leasing margin                     $ 719,749      $ 720,057        $    (308)
Equipment sales margin               127,494        169,537          (42,043)
Interest income                       20,068         52,187          (32,119)
Management fees paid to general
  partner                           (113,104)      (182,140)          69,036
Direct services from general
  partner                            (45,091)       (25,723)         (19,368)
General and administrative           (65,909)       (63,724)          (2,185)
Provision for losses                (125,000)      (375,000)         250,000
                                   ---------      ---------        ---------
Net income                         $ 518,207      $ 295,194        $ 223,013
                                   =========      =========        =========

The  Partnership  is in its  liquidation  period as defined  in the  Partnership
Agreement  and,  as  expected,  the  Partnership  is not  purchasing  additional
equipment,  initial  leases are expiring and the  equipment is being  remarketed
(i.e.,  re-leased,  renewed,  or  sold).  As a  result,  both  the  size  of the
Partnership's  leasing portfolio and the amount of leasing revenue are declining
(referred to in this discussion as "portfolio runoff").

LEASING MARGIN

Leasing margin consists of the following:
                                                        Three months ended
                                                             March 31,
                                                    ----------------------------
                                                       1997             1996
                                                    -----------     ------------

Operating lease rentals                             $ 1,562,212     $ 2,546,405
Direct finance lease income                             249,422         254,425
Depreciation and amortization                        (1,008,536)     (1,888,279)
Interest expense on related financed operating
  lease rentals                                         (13,157)       (29, 170)
Interest expense on related discounted
  lease rentals                                         (70,192)       (163,324)
                                                    -----------     -----------
     Leasing margin                                 $   719,749     $   720,057
                                                    ===========     ===========

     Leasing margin ratio                                    40%             26%
                                                    ===========     ===========

                                        7

<PAGE>


                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

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

Results of Operations, continued
---------------------

LEASING MARGIN, continued

The  components  of leasing  margin have  declined  and are  expected to decline
further due to portfolio run-off.  Leasing margin ratio increased  primarily due
to (i) remarketing  activities,  and (ii) because a portion of the Partnership's
portfolio   consists  of  operating  leases  financed  with   non-recourse  debt
(including both discounted lease rentals and financed  operating lease rentals).
Leasing  margin and the related  leasing  margin  ratio for an  operating  lease
financed with  non-recourse  debt  increases  during the term of the lease since
rents and  depreciation  are typically fixed while interest  expense declines as
the related non-recourse debt is repaid.

The ultimate rate of return on leases depends,  in part, on the general level of
interest  rates at the time the leases  are  originated.  Because  leasing is an
alternative to financing equipment purchases with debt, lease rates tend to rise
and fall with  interest  rates  (although  lease rate  movements  generally  lag
interest rate changes in the capital markets). Interest rates declined from 1990
until the early part of 1994.  The lease  rates on  equipment  purchased  by the
Partnership during this period reflect this low interest rate environment.  This
will result in  corresponding  reductions in the ultimate  overall yields to the
partners.  Annual average 5-year U.S.  Treasury  yields for the past seven years
were as follows:

Annual average 5-year U.S. Treasury Yield

         Year                               Yield
         ----                               -----

         1990                                8.37
         1991                                7.37
         1992                                6.19
         1993                                5.14
         1994                                6.69
         1995                                6.53
         1996                                6.18

EQUIPMENT SALES MARGIN

Equipment sales margin consists of the following:

                                                        Three months ended
                                                             March 31,
                                                   -----------------------------
                                                      1997              1996
                                                   -----------      ------------

Equipment sales revenue                            $ 1,257,201      $   571,076
Cost of equipment sales                             (1,129,707)        (401,539)
                                                   -----------      -----------
   Equipment sales margin                          $   127,494      $   169,537
                                                   ===========      ===========

                                       8

<PAGE>


                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

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

Results of Operations, continued
---------------------

EQUIPMENT SALES MARGIN, continued

The Partnership is in it's liquidation period. During the liquidation period, as
initial leases terminate,  the equipment is being remarketed (i.e., re-leased or
sold to either the  original  lessee or a third  party)  and,  accordingly,  the
timing and amount of equipment sales cannot be projected accurately.

INTEREST INCOME

Interest income  decreased due to a decrease in cash available for investment as
the Partnership is in liquidation and therefore  distributing excess cash to the
limited partners.

PROVISION FOR LOSSES

The  remarketing  of  equipment  for an amount  greater  than its book  value is
reported as equipment  sales margin (if the equipment is sold) or leasing margin
(if the equipment is re-leased). The realization of less than the carrying value
of equipment (which is typically not known until  remarketing  subsequent to the
initial lease termination has occurred) is recorded as provision for losses.

Residual values are established equal to the estimated value to be received from
the equipment following termination of the lease. In estimating such values, the
Partnership considers all relevant facts regarding the equipment and the lessee,
including,  for  example,  the  likelihood  that the lessee  will  re-lease  the
equipment.  The nature of the  Partnership's  leasing  activities is that it has
credit  exposure and residual value exposure and,  accordingly,  in the ordinary
course of business,  it will incur losses from those exposures.  The Partnership
performs   ongoing   quarterly   assessments   of   its   assets   to   identify
other-than-temporary losses.

The provision for losses  recorded for the three months ended March 31, 1997 was
primarily  related to lessees  returning mining equipment and material  handling
equipment to the Partnership. The Partnership had previously expected to realize
the carrying  value of this  equipment  through lease renewals and proceeds from
the sale of the equipment to the original lessees.  The fair market value of the
equipment re-leased or sold to a third party was less than anticipated.

The provision for losses  recorded  during the three months ended March 31, 1996
was primarily related to the following:

-   $150,000 related to a lessee returning an aircraft to the Partnership,
-   $130,000  related to equipment  under lease returned to the Partnership by a
    lessee experiencing severe financial difficulties,
-   $95,000  related  to  lessees  returning  modular   buildings,   computer
    equipment, a telephone system and hospital equipment to the Partnership.

                                        9

<PAGE>


                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

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

Results of Operations, continued
---------------------

PROVISION FOR LOSSES, continued

The  Partnership  had previously  expected to realize the carrying value of this
equipment  through lease renewals and proceeds from sale of the equipment to the
original lessee.  The fair market value of the equipment  re-leased or sold to a
third party was considerably less than anticipated.


EXPENSES

Management fees paid to the general partner  decreased  primarily as a result of
portfolio run-off.

Direct   services  from  the  general   partner   increased   primarily  due  to
administrative  costs  incurred by the  general  partner in the  remarketing  of
warehoused equipment.


Liquidity and Capital Resources
-------------------------------

The Partnership funds its operating activities principally with cash from rents,
non-recourse debt, interest income and sales of off-lease  equipment.  Available
cash and cash reserves of the Partnership are invested in interest  bearing cash
accounts and short-term U.S. Government  securities pending distributions to the
partners.

During  the  three  months  ended  March  31,  1997,  the  Partnership  declared
distributions to the partners of $2,359,166 ($1,058,795 of which was paid during
April 1997). A substantial portion of such distributions constituted a return of
capital for accounting  purposes.  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. However, the
total percentage of a partnership's return on capital over it's life can only be
determined  after all  residual  cash flows  (which  include  proceeds  from the
re-leasing and sale of equipment after the initial lease terms expire) have been
realized at the termination of the Partnership.

The general  partners  currently  anticipate that the Partnership  will generate
cash flow from  operations  and  equipment  sales  during the  remainder of 1997
which,  when  added  to cash  and  cash  equivalents  on  hand,  should  provide
sufficient  cash to  enable  the  Partnership  to  meet  its  current  operating
requirements.



                                       10

<PAGE>


                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

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

Liquidity and Capital Resources, continued
-------------------------------

The Partnership  anticipates that it will fund the remaining 1997  distributions
to the  limited  partners  (a  substantial  portion  of  which  is  expected  to
constitute  returns  of  capital  for  accounting  purposes)  out of  cash  from
operations  and cash  from  sales  during  the  remainder  of 1997.  Because  of
portfolio  runoff,  it is  anticipated  that cash from  operations  in 1997 will
decrease relative to cash from operations in 1996. Therefore, the Partnership is
not  expected  to have  sufficient  cash  available  in 1997 to fully  fund cash
distributions  to the Class A limited  partners at annualized  rates of 13% (see
discussion  below).  The Partnership is in its liquidation period (as defined in
the Partnership  Agreement) and distributions during the liquidation period will
be based upon cash availability and will vary and all distributions are expected
bo be a return of capital for economic purposes.

The Class B distributions  of cash from operations are subordinated to the Class
A limited partners receiving distributions of cash from operations, as scheduled
in the Partnership Agreement (i.e., 13%). Therefore,  because of the anticipated
decrease in distributions to the Class A limited partners,  CAII, the sole Class
B limited partner, will cease receiving distributions of cash from operations at
some point during 1997. The general partners currently anticipate that CAII will
receive total future Class B  distributions  equal to  approximately  25% of the
Class B limited partner's capital shown on the accompanying Balance Sheets.

                                       11

<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                                    PART II.

                                OTHER INFORMATION


Item 1.        Legal Proceedings

               The   Partnership  is  involved  in  routine  legal   proceedings
               incidental  to the conduct of its business.  The general  partner
               believes  none of these  legal  proceedings  will have a material
               adverse  effect on the  financial  condition or operations of the
               Partnership.


Item 6.        Exhibits and Reports on Form 8-K

               (a) None

               (b) The  Partnership did not file any  reports on Form 8-K during
                   the three months ended March 31, 1997

                                       12

<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                                    Signature



Pursuant  to the  requirements  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.




                                    CAPITAL PREFERRED YIELD FUND
                                    A California Limited Partnership

                                    By:      CAI Partners Management Company


Dated:  May 6, 1997                 By:      /s/Anthony M. DiPaolo
                                             ---------------------
                                             Anthony M. DiPaolo
                                             Senior Vice President


                                       13