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, 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                                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 11

                               Page 1 of 12 Pages



<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                          Quarterly Report on Form 10-Q
                              For the Quarter Ended
                                 March 31, 1998


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

                                                                            PAGE
PART I.  FINANCIAL INFORMATION                                              ----

     Item 1.  Financial Statements (Unaudited)

              Balance Sheets-March 31, 1998 and December 31, 1997            3

              Statements of Income - Three Months Ended
              March 31, 1998 and 1997                                        4

              Statements of Cash Flows - Three Months Ended
              March 31, 1998 and 1997                                        5

              Notes to Financial Statements                                  6

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                           7-10


PART II. OTHER INFORMATION


     Item 1.  Legal Proceedings                                              11

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

              Signature                                                      12

                                        2

<PAGE>



                          CAPITAL PREFERRED YIELD FUND
                        A California Limited Partnership

                                 BALANCE SHEETS


                                     ASSETS

                                                       (Unaudited)
                                                         March 31,  December 31,
                                                           1998         1997
                                                       -----------   -----------
Cash and cash equivalents                              $   308,900   $ 2,839,510
Accounts receivable, net                                 7,559,905     7,579,737
Receivable from related party                               20,000             -
Equipment held for sale or re-lease                        776,656       887,865
Net investment in direct finance leases                    390,413       229,696
Leased equipment, net                                      605,006     1,074,600
                                                       -----------   -----------

Total assets                                           $ 9,660,880   $12,611,408
                                                       ===========   ===========

                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
     Payable to affiliate                              $    11,165   $    44,916
     Accounts payable and accrued liabilities              855,797       905,979
     Rents received in advance                              92,801       162,931
     Distributions payable to partners                     604,994     1,241,334
     Discounted lease rentals                                    -         7,835
     Financed operating lease rentals                      520,238     1,123,270
                                                       -----------   -----------

Total liabilities                                        2,084,995     3,486,265
                                                       -----------   -----------

Partners' capital:
     General partner                                             -             -
     Limited partners:
         Class A                                         5,506,897     6,923,098
         Class B                                         2,068,988     2,202,045
                                                       -----------   -----------

Total partners' capital                                  7,575,885     9,125,143
                                                       -----------   -----------

Total liabilities and partners' capital                $ 9,660,880   $12,611,408
                                                       ===========   ===========


   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,
                                                         -----------------------
                                                            1998         1997
                                                         ----------   ----------
REVENUE:
  Operating lease rentals                                $  110,173   $1,562,212
  Direct finance lease income                                94,714      249,422
  Equipment sales margin                                    392,662      127,494
  Interest income                                            19,139       20,068
                                                         ----------   ----------
Total revenue                                               616,688    1,959,196
                                                         ----------   ----------

EXPENSES:
  Depreciation and amortization                             106,316    1,008,536
  Management fees paid to general partner                     8,570      113,104
  Direct services from general partner                       23,783       45,091
  Interest on discounted lease rentals                           28       70,192
  Interest on financed operating lease rentals               12,639       13,157
  General and administrative                                 55,378       65,909
  Provision for losses                                       50,000      125,000
                                                         ----------   ----------
Total expenses                                              256,714    1,440,989
                                                         ----------   ----------

NET INCOME                                               $  359,974   $  518,207
                                                         ==========   ==========

NET INCOME ALLOCATED:
  To the general partner                                 $   85,916   $  106,168
  To the Class A limited partners                           254,798      383,084
  To the Class B limited partner                             19,260       28,955
                                                         ----------   ----------

                                                         $  359,974   $  518,207
                                                         ==========   ==========
  Net income per weighted average Class A
      limited partner units outstanding                  $     1.01   $     1.52
                                                         ==========   ==========

  Weighted average Class A limited partner
       unit outstanding                                     251,388      251,709
                                                         ==========   ==========


   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,
                                                                 --------------------------
                                                                    1998            1997
                                                                 -----------    -----------

<S>                                                             <C>            <C>        
NET CASH PROVIDED BY OPERATING ACTIVITIES                        $   625,828    $ 3,210,879
                                                                 -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on financed operating lease rentals            (603,032)       (42,009)
  Principal payments on discounted lease rentals                      (7,835)      (708,155)
  Distributions to partners                                       (2,545,571)    (2,617,780)
  Redemptions of limited partner units                                     -        (12,394)
                                                                 -----------    -----------

Net cash used in financing activities                             (3,156,438)    (3,380,338)
                                                                 -----------    -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                         (2,530,610)      (169,459)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   2,839,510      2,672,112
                                                                 -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                       $   308,900    $ 2,502,653
                                                                 ===========    ===========

Supplemental disclosure of cash flow information:
         Interest paid on discounted lease rentals               $        28    $    70,192
         Interest paid on financed operating lease rentals            12,639         13,157




</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, 1997 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,
     1997, 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     The Effect
                                           for the Three Months    on Net Income
                                             Ended March 31,         of Changes
                                         -----------------------      Between
                                            1998        1997          Periods
                                         ----------  -----------   -------------

Leasing margin                           $  85,904    $ 719,749     $(633,845)
Equipment sales margin                     392,662      127,494       265,168
Interest income                             19,139       20,068          (929)
Management fees paid to general partner     (8,570)    (113,104)      104,534
Direct services from general partner       (23,783)     (45,091)       21,308
General and administrative                 (55,378)     (65,909)       10,531
Provision for losses                       (50,000)    (125,000)       75,000
                                         ---------    ---------     ---------
Net income                               $ 359,974    $ 518,207     $(158,233)
                                         =========    =========     =========

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  amount of  equipment  being
remarketed (i.e., re-leased,  renewed, or sold) will increase. As a result, both
the size of the  Partnership's  leasing  portfolio  and the  amount  of  leasing
revenue are declining.

LEASING MARGIN

Leasing margin consists of the following:

                                                         Three Months Ended
                                                             March 31,
                                                   -----------------------------
                                                       1998            1997
                                                   -----------     -------------

Operating lease rentals                            $   110,173     $ 1,562,212
Direct financing lease income                           94,714         249,422
Depreciation and amortization                         (106,316)     (1,008,536)
Interest expense on related financed
  operating lease rentals                              (12,639)        (13,157)
Interest expense on related discounted
  lease rentals                                            (28)        (70,192)
                                                   -----------     -----------
     Leasing margin                                $    85,904     $   719,749
                                                   ===========     ===========

     Leasing margin ratio                                   42%             40%
                                                   ===========     ===========

                                        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.

The ultimate rate of return on leases depends, in part, on interest rates at the
time the leases are originated,  as well as future equipment values and on-going
lessee  creditworthiness.   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).

EQUIPMENT SALES MARGIN

Equipment sales margin consists of the following:

                                                         Three Months Ended
                                                             March 31,
                                                   -----------------------------
                                                       1998            1997
                                                   -----------     -------------

Equipment sales revenue                            $   740,425      $ 1,257,201
Cost of equipment sales                               (347,763)      (1,129,707)
                                                   -----------      -----------
   Equipment sales margin                          $   392,662      $   127,494
                                                   ===========      ===========

The  Partnership is in it's  liquidation  period (as defined in the  Partnership
Agreement).  Currently,  a  portion  of the  Partnership's  initial  leases  are
expiring  and  equipment  is being  remarketed  (i.e.,  re-leased or sold to the
original  lessee or third  parties).  Equipment  sales  margin  increased as the
Partnership was successful in realizing  amounts on equipment greater than their
net book values.

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
partners.


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

PROVISION FOR LOSSES

The  remarketing  of  equipment  for an amount  greater  than its book  value is
reported  with  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 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, 1998 and
for the same period in 1997 was primarily related to lessees returning equipment
to the  Partnership.  The  Partnership  had  previously  expected to realize the
carrying  value of this  equipment  through lease renewals and proceeds from the
sales  of  equipment  to the  original  lessees.  The fair  market  value of the
equipment re-leased or sold to a third party was 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 and general and administrative expenses
decreased  primarily  due  to  a  decrease  in  administrative   costs  for  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.




                                        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


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

During  the  three  months  ended  March  31,  1998,  the  Partnership  declared
distributions  to the partners of  $1,909,232  ($71,382 of which was paid during
April 1998).  The  Partnership is in its  liquidation  period (as defined in the
Partnership Agreement) and distributions during the liquidation period will vary
based upon cash  availability.  All distributions are expected to be a return of
capital for economic purposes.

The general partner  currently  anticipates  that the Partnership  will generate
cash flow from  operations  and  equipment  sales  during the  remainder of 1998
which,  when  added  to cash  and  cash  equivalents  on  hand,  should  provide
sufficient  cash to  enable  the  Partnership  to  meet  its  current  operating
requirements.

The  Class  B  limited  partner   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,  ceased  receiving
distributions  of cash from  operations as of August 1997.  The general  partner
believes these cumulative  distributions will be paid when the proceeds from the
sale of certain equipment become available for  distribution.  Such proceeds are
currently recorded in accounts receivable.

                                       10

<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, 1998

                                       11

<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 14, 1998                   By:  /s/Anthony M. DiPaolo
                                            ---------------------
                                            Anthony M. DiPaolo
                                            Senior Vice President


                                       12