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                  June 30, 1999
                              --------------------------------------------------

                                       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                            0-21382
                      ----------------------------------------------------------

                      Capital Preferred Yield Fund-II, L.P.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                  84-1184628
       -----------------------              ------------------------------------
       (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 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      .
                                        -----    -----

                        Exhibit Index appears on Page 15

                               Page 1 of 16 Pages


<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                          Quarterly Report on Form 10-Q
                              for the Quarter Ended
                                  June 30, 1999


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

PART I.  FINANCIAL INFORMATION                                              PAGE
                                                                            ----
  Item 1.  Financial Statements (Unaudited)

           Balance Sheets - June 30, 1999 and December 31, 1998               3

           Statements of Income - Three and Six Months Ended
           June 30, 1999 and 1998                                             4

           Statements of Cash Flows - Six Months Ended
           June 30, 1999 and 1998                                             5

           Notes to Financial Statements                                     6-8

  Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations                    9-14


PART II. OTHER INFORMATION

  Item 1.  Legal Proceedings                                                 15

  Item 6.  Exhibits and Reports on Form 8-K                                  15

           Signature                                                         16


                                        2

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                                 BALANCE SHEETS



                                     ASSETS

                                                        June 30,    December 31,
                                                          1999         1998
                                                       -----------  ------------
                                                       (Unaudited)

Cash and cash equivalents                              $   809,920   $   784,867
Accounts receivable, net                                   135,811       771,076
Receivable from affiliates                                  42,060             -
Equipment held for sale or re-lease                        313,000       285,299
Net investment in direct finance leases                  2,381,044     2,865,887
Leased equipment, net                                    7,037,090     9,637,771
                                                       -----------   -----------

Total assets                                           $10,718,925   $14,344,900
                                                       ===========   ===========

                       LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
     Accounts payable and accrued liabilities          $   893,632   $ 1,334,422
     Payables to affiliates                                 29,256         2,142
     Rents received in advance                              99,895       105,332
     Distributions payable to partners                     184,500       508,106
     Discounted lease rentals                            3,274,552     4,612,151
                                                       -----------   -----------

Total liabilities                                        4,481,835     6,562,153
                                                       -----------   -----------

Partners' capital:
     General partner                                             -             -
     Limited partners:
         Class A                                         6,064,880     7,601,001
         Class B                                           172,210       181,746
                                                       -----------   -----------

Total partners' capital                                  6,237,090     7,782,747
                                                       -----------   -----------

Total liabilities and partners' capital                $10,718,925   $14,344,900
                                                       ===========   ===========



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

                                        3

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                              STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                        Three Months Ended         Six Months Ended
                                                               June 30,                June 30,
                                                      -----------------------   -----------------------
                                                         1999         1998         1999         1998
                                                      ----------   ----------   ----------   ----------

<S>                                                  <C>          <C>          <C>          <C>
Revenue:
     Operating lease rentals                          $1,141,089   $1,686,865   $2,279,555   $3,497,671
     Direct finance lease income                          61,685       98,928      130,079      195,194
     Equipment sales margin                              103,196       55,503      379,520      235,370
     Interest income                                       8,347       19,509       13,899       49,057
                                                      ----------   ----------   ----------   ----------

         Total revenue                                 1,314,317    1,860,805    2,803,053    3,977,292
                                                      ----------   ----------   ----------   ----------

Expenses:
     Depreciation                                        861,871    1,320,252    1,768,559    2,751,836
     Management fees paid to general partner              29,447       38,298       65,500       77,658
     Direct services from general partner                 35,187       31,127       65,901       62,548
     General and administrative                           54,333       62,300      108,488      114,301
     Interest on discounted lease rentals                 67,019      124,007      146,197      262,914
     Interest on financed operating lease rentals              -       34,203            -       69,809
     Provision for losses                                 25,000      100,000       75,000      125,000
                                                      ----------   ----------   ----------   ----------

         Total expenses                                1,072,857    1,710,187    2,229,645    3,464,066
                                                      ----------   ----------   ----------   ----------

Net income                                            $  241,460   $  150,618   $  573,408   $  513,226
                                                      ==========   ==========   ==========   ==========

Net income allocated:
     To the general partner                           $   10,111   $   17,768   $   20,989   $   37,557
     To the Class A limited partners                     229,007      131,494      546,830      470,839
     To the Class B limited partner                        2,342        1,356        5,589        4,830
                                                      ----------   ----------   ----------   ----------

                                                      $  241,460   $  150,618   $  573,408   $  513,226
                                                      ==========   ==========   ==========   ==========

  Net income per weighted average
      Class A limited partner unit outstanding        $     1.72   $     0.98   $     4.10   $     3.52
                                                      ==========   ==========   ==========   ==========

  Weighted average Class A
       limited partner units outstanding                 133,418      133,579      133,432      133,636
                                                      ==========   ==========   ==========   ==========

</TABLE>


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

                                        4

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                          Six Months Ended
                                                                    ----------------------------
                                                                      June 30,         June 30,
                                                                        1999            1998
                                                                    -----------      -----------

<S>                                                                <C>              <C>
Net cash provided by operating activities                           $ 3,810,187      $ 5,339,410
                                                                    -----------      -----------

Cash flows from investing activities:
  Upgrade of equipment on operating lease from affiliate                 (4,864)               -
  Investment in direct financing leases, acquired from affiliate             -                 -
                                                                    -----------      -----------

Net cash used in investing activities                                    (4,864)               -
                                                                    -----------      -----------

Cash flows from financing activities:
  Principal payments on discounted lease rentals                     (1,337,599)      (1,765,575)
  Principal payments on financed operating lease rentals                      -         (382,407)
  Distributions to partners                                          (2,434,521)      (3,947,097)
  Redemptions of Class A limited partner units                           (8,150)         (13,095)
                                                                    -----------      -----------

Net cash used in financing activities                                (3,780,270)      (6,108,174)
                                                                    -----------      -----------

Net increase/(decrease) in cash and cash equivalents                     25,053         (768,764)

Cash and cash equivalents at beginning of period                        784,867        1,897,763
                                                                    -----------      -----------

Cash and cash equivalents at end of period                              809,920        1,128,999
                                                                    ===========      ===========

Supplemental disclosure of cash flow information:
  Interest paid on discounted lease rentals                         $   146,197      $   262,914
  Interest paid on financed operating lease rentals                           -           69,809

</TABLE>









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

                                        5

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                             (Unaudited), continued


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  of  normal  recurring  adjustments)   considered
     necessary for a fair presentation have been included.  The balance sheet at
     December  31,  1998 was  derived  from  the  audited  financial  statements
     included  in the  Partnership's  Annual  Report on Form 10-K.  For  further
     information  refer to the financial  statements of Capital  Preferred Yield
     Fund-II,  L.P. (the  "Partnership") and the related notes,  included in the
     Partnership's  Annual  Report on Form 10-K for the year ended  December 31,
     1998,  (the "1998 Form  10-K")  previously  filed with the  Securities  and
     Exchange Commission.

     RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     Accounting for Derivative  Instruments and Hedging  Activities  ("Statement
     133").  Statement 133  establishes  accounting and reporting  standards for
     derivative  instruments  and for hedging  activities.  It requires  that an
     entity  recognize all  derivatives  as either assets or  liabilities in the
     statement  of  financial  position and measure  those  instruments  at fair
     value. Statement 133 is effective for fiscal years beginning after June 15,
     1999, with earlier application permitted. The Partnership adopted Statement
     133 in the first quarter of 1999.  The General  Partner does not expect the
     adoption to have an impact on its financial reporting.

     In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
     Accounting for Derivative  Instruments and Hedging Activities - Deferral of
     the Effective  Date of FASB  Statement  133, an Amendment of FASB Statement
     133.  Statement  137  effectively  extends  the  required   application  of
     Statement 133 to fiscal years  beginning  after June 15, 2000, with earlier
     application  permitted.  The Partnership adopted Statement 133 in the first
     quarter of 1999.  The  General  Partner  does not expect  the  adoption  of
     Statement  133 or  Statement  137  to  have  an  impact  on  its  financial
     reporting.

     MANAGEMENT FEES PAID TO GENERAL PARTNER

     In accordance with the Partnership  Agreement,  the General Partner earns a
     management  fee  in  connection  with  its  management  of  the  equipment,
     calculated as a percentage of the monthly gross rentals received,  and paid
     monthly  in  arrears.  At June 30,  1999,  management  fees of  $7,440  are
     included in payables to affiliates.



                                        6

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                             (Unaudited), continued

1.   Basis of Presentation, continued
     ---------------------

     DIRECT SERVICES FROM GENERAL PARTNER

     The  General  Partner  and  an  affiliate  provide   accounting,   investor
     relations,  billing, collecting, asset management, and other administrative
     services to the Partnership. The Partnership reimburses the General Partner
     for these services  performed on its behalf as permitted under the terms of
     the  Partnership  Agreement.  At June 30, 1999,  direct  services  from the
     General  Partner in the amount of  $21,000  are  included  in  payables  to
     affiliates.

2.   Transactions With the General Partner and Affiliates
     ----------------------------------------------------

     GENERAL AND ADMINISTRATIVE EXPENSES

     The General  Partner and an affiliate are reimbursed for the actual cost of
     administrative  expenses incurred on behalf of Partnership per the terms of
     the Partnership Agreement. At June 30, 1999, administrative expenses in the
     amount of $816 are included in payables to affiliates.

     RECEIVABLE FROM AFFILIATES

     The General  Partner  collects  rents from lessees and applies these rental
     payments to the lessee's account with the Partnership.  The General Partner
     then  transfers  the  collected   rental   payments  to  the   Partnership,
     eliminating the receivable from affiliate  balance.  At the end of June 30,
     1999,  $42,060 of rents had been  applied by the General  Partner that were
     transferred to the Partnership in July 1999.

3.   Year 2000
     ---------

     An  affiliate  provides  accounting  and  other  administrative   services,
     including data processing  services to the  Partnership.  The affiliate has
     conducted  a  comprehensive  review of its  computer  systems  to  identify
     systems that could be affected by the Year 2000 issue.  The Year 2000 issue
     results from computer  programs  being written using two digits rather than
     four to define the applicable year.  Certain  computer  programs which have
     date-sensitive  software could recognize a date using "00" as the year 1900
     rather than the year 2000.  This could result in major  system  failures or
     miscalculations.  Certain of the  affiliate's  software  has  already  been
     upgraded to  correctly  account for the Year 2000 issue.  The  affiliate is
     implementing  additional  upgrades  whereby the  affiliate's  primary lease
     tracking and accounting  software will account for the Year 2000 correctly.
     The affiliate  expects that the new upgrades will be fully  operational  by
     December 31, 1999,  and  therefore  expects that it will be fully Year 2000
     compliant. The affiliate does not expect any other changes required for the
     Year 2000 to have a material effect on its financial position or results of
     operations.   As  such,  the  affiliate  has  not  developed  any  specific
     contingency  plans  in the  event  it fails to  complete  the  upgrades  by
     December 31, 1999.

                                        7

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                             (Unaudited), continued

3.   Year 2000, continued
     ---------

     However,  should the affiliate be  unsuccessful in completing the necessary
     upgrades by December 31, 1999,  it does not expect there will be a material
     adverse  effect on the  Partnership's  financial  position  or  results  of
     operations.  There could be a negative impact on the Partnership's  ability
     to realize  expected  cash flows from leased  equipment on a timely  basis.
     While it is expected that the Partnership's  ability to ultimately  realize
     all expected  cash flows will not be impacted,  delays in  collecting  cash
     flows  would  have a  negative  impact on the  timing of  distributions  to
     partners.  The affiliate  does not expect any Year 2000 issues  relating to
     its  customers  and  vendors  to have a  material  effect on its  financial
     position or results of operations.


                                        8

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

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  items of income and expense and
changes in those items derived from the Statements of Income:

<TABLE>
<CAPTION>

                                                Three Months                            Six Months
                                               Ended June 30,                         Ended June 30,
                                         ------------------------                -------------------------
                                             1999        1998          Change       1999          1998          Change
                                         -----------  -----------    ----------  -----------   -----------    ----------

<S>                                     <C>          <C>            <C>         <C>           <C>            <C>
Leasing margin                           $  273,884   $  307,331     $ (33,447)  $  494,878    $  608,306     $ (113,428)
Equipment sales margin                      103,196       55,503        47,693      379,520       235,370        144,150
Interest income                               8,347       19,509       (11,162)      13,899        49,057        (35,158)
Management fees paid to general partner     (29,447)     (38,298)        8,851      (65,500)      (77,658)        12,158
Direct services from general partner        (35,187)     (31,127)       (4,060)     (65,901)      (62,548)        (3,353)
General and administrative expenses         (54,333)     (62,300)        7,967     (108,488)     (114,301)         5,813
Provision for losses                        (25,000)    (100,000)       75,000      (75,000)     (125,000)        50,000
                                         ----------   ----------     ---------   ----------    ----------     ----------

Net income                               $  241,460   $  150,618     $  90,842   $  573,408    $  513,226     $   60,182
                                         ==========   ==========     =========   ==========    ==========     ==========

</TABLE>

The  Partnership  is in its  liquidation  stage,  as defined in the  Partnership
Agreement.  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) is increasing.  As a result, both the size of the
Partnership's lease portfolio and the amount of leasing revenue are declining.

LEASING MARGIN

Leasing margin consists of the following:

<TABLE>
<CAPTION>

                                                  Three Months Ended              Six Months Ended
                                                      June 30,                        June 30,
                                              ---------------------------    ----------------------------
                                                  1999          1998             1999            1998
                                              ------------   ------------    ------------    ------------

<S>                                          <C>            <C>             <C>             <C>
Operating lease rentals                       $ 1,141,089    $  1,686,865    $  2,279,555    $  3,497,671
Direct finance lease income                        61,685          98,928         130,079         195,194
Depreciation                                     (861,871)     (1,320,252)     (1,768,559)     (2,751,836)
Interest expense on discounted lease rentals      (67,019)       (124,007)       (146,197)       (262,914)
Interest expense on financed operating
   lease rentals                                        -         (34,203)              -         (69,809)
                                              -----------    ------------    ------------    ------------
   Leasing margin                             $   273,884    $    307,331    $    494,878    $    608,306
                                              ===========    ============    ============    ============

   Leasing margin ratio                                23%             17%             21%             16%
                                              ===========    ============    ============    ============

</TABLE>


                                        9

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

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

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

LEASING MARGIN, continued

All  components of leasing  margin  decreased for the three and six months ended
June 30, 1999  compared  to the three and six months  ended June 30, 1998 due to
portfolio runoff.

Leasing  margin ratio varies due to changes in the portfolio,  including,  among
other things,  the mix of operating  leases versus direct  finance  leases,  the
average maturity of leases comprising the portfolio,  the average residual value
of leases in the portfolio, and the amount of discounted lease rentals financing
the  portfolio.  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 principal is repaid.

The ultimate rate of return on leases depends, in part, on interest rates at the
time the leases are originated,  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           Six Months Ended
                                   June 30,                    June 30,
                           ------------------------   -------------------------
                              1999         1998           1999         1998
                           ----------   -----------   -----------   -----------

Equipment sales revenue    $  261,607   $  393,374    $ 1,155,457   $ 1,324,769
Cost of equipment sales      (158,411)    (337,871)      (775,937)   (1,089,399)
                           ----------   ----------    -----------   -----------
  Equipment sales margin   $  103,196   $   55,503    $   379,520   $   235,370
                           ==========   ==========    ===========   ===========

Equipment  sales  margin  fluctuates  based  on  the  composition  of  equipment
available for sale.  Currently,  the Partnership is in its liquidation phase (as
defined in the Partnership Agreement). Initial leases are expiring and equipment
is being remarketed (i.e.,  re-leased or sold to the original lessee or to third
parties).  Equipment  sold during the six months  ended June 30,  1999  included
locomotives  with a margin of $154,500,  machine tools with a margin of $125,889
and manufacturing equipment with a margin of $74,470.  Equipment sold during the
six months ended June 30, 1998 included tractors with a margin of $59,159, glass
packaging equipment with a margin of $93,594, and manufacturing equipment with a
margin of $60,830.

                                       10

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

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

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

INTEREST INCOME

Interest  income  varies based on the amount of cash  available  for  investment
pending  distribution to partners,  and the interest rate on such invested cash.
As  the  Partnership  is  in  its  liquidation  period,  excess  cash  is  being
distributed to the partners.  Therefore, interest income decreased for the three
and six months ended June 30, 1999 as compared to the three and six months ended
June 30, 1998.

EXPENSES

Management  fees paid to the  General  Partner  decreased  for the three and six
months  ended June 30,  1999 as  compared  to the  corresponding  period in 1998
primarily  due  to  portfolio  run-off.  Management  fees  are  calculated  as a
percentage of rents collected.

General and administrative expenses and direct services from the General Partner
for the  three  and six  months  ended  June 30,  1999  were  comparable  to the
corresponding   period  in  1998.   The  primary   components   of  general  and
administrative  expenses  for the three and six months  ended June 30,  1999 and
June 30,  1998  were data  processing,  advertising,  audit  and tax fees,  bank
charges, legal and state income taxes.

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  occurs when the  equipment  is  remarketed
subsequent to initial lease termination) 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 such that it
has  credit  and  residual  value  exposure  and will  incur  losses  from those
exposures in the ordinary course of business. The Partnership performs quarterly
assessments  of  the  estimated  residual  values  of  its  assets  to  identify
other-than-temporary losses in value.

The provision for losses recorded during the three and six months ended June 30,
1999 related  primarily to lessees  returning  equipment to the  Partnership  at
lease maturity,  and identification of other-than- temporary losses in value for
assets currently on lease.

                                       11

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

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

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

The  Partnership  is in its  liquidation  stage,  as defined in the  Partnership
Agreement.  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) is increasing.  As a result, both the size of the
Partnership's lease portfolio and the amount of leasing revenue are declining.

The Partnership funds its operating activities principally with cash from rents,
interest  income,  and sales of  off-lease  equipment.  Available  cash and cash
reserves of the  Partnership  are invested in short-term  government  securities
pending distributions to the partners.

During  the  six  months  ended  June  30,  1999,   the   Partnership   declared
distributions to the partners of $2,098,815, ($184,500 of which was paid in July
1999).  A  substantial  portion of such  distributions  constituted  a return of
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  partners'  cash  distribution  which exceeds its net income for the fiscal
period may be deemed a return of capital for accounting  purposes.  However, the
total percentage of the  partnership's  return on capital over its life can only
be  determined  after all residual cash flows (which  include  proceeds from the
re-leasing  and sale of equipment  after  initial  lease terms expire) have been
realized at the termination of the partnership.

The General Partner believes that the Partnership will generate  sufficient cash
flow from operations  during the remainder of 1999 to (1) meet current operating
requirements and (2) fund cash  distributions to the Class A limited partners in
accordance with the Partnership Agreement.  Distributions during the liquidation
phase will vary based upon cash availability.  All distributions are expected to
be a return of capital for economic purposes.

The  Class  B  limited  partner   distributions  of  cash  from  operations  are
subordinated to the Class A limited partners cumulative  preferred  distribution
of 12% per  annum  per the  Partnership  Agreement.  The  Partnership  is in the
liquidation  stage,  and  distributions  are based on excess cash available from
operations. Although on a monthly basis the distributions to the Class A limited
partners  has varied from an  annualized  rate of 6 percent to 24  percent,  the
cumulative  distributions  during the six months  ended June 30,  1999 have been
paid at the preferred annualized rate of 12%. Consequently,  the Class B limited
partner  will  receive  distributions  for five of the six months ended June 30,
1999.

YEAR 2000 ISSUES

An affiliate provides accounting and other  administrative  services,  including
data  processing  services to the  Partnership.  The  affiliate  has conducted a
comprehensive  review of its computer  systems to identify systems that could be
affected  by the Year 2000  issue.  The Year 2000 issue  results  from  computer
programs  being  written  using  two  digits  rather  than  four to  define  the
applicable year. Certain computer

                                       12

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

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

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

YEAR 2000 ISSUES, continued

programs which have date-sensitive software could recognize a date using "00" as
the year 1900  rather  than the year  2000.  This could  result in major  system
failures or  miscalculations.  Certain of the  affiliate's  software has already
been  upgraded to correctly  account for the Year 2000 issue.  The  affiliate is
implementing  additional upgrades whereby the affiliate's primary lease tracking
and accounting software will account for the Year 2000 correctly.  The affiliate
expects that the new upgrades  will be fully  operational  by December 31, 1999,
and therefore  expects that it will be fully Year 2000 compliant.  The affiliate
does not expect any other changes  required for the Year 2000 to have a material
effect  on its  financial  position  or  results  of  operations.  As such,  the
affiliate has not developed any specific contingency plans in the event it fails
to complete the upgrades by December 31, 1999. However,  should the affiliate be
unsuccessful in completing the necessary  upgrades by December 31, 1999, it does
not  expect  there  will  be a  material  adverse  effect  on the  Partnership's
financial position or results of operations. There could be a negative impact on
the  Partnership's  ability to realize expected cash flows from leased equipment
on a timely  basis.  While it is  expected  that the  Partnership's  ability  to
ultimately  realize  all  expected  cash flows will not be  impacted,  delays in
collecting   cash  flows  would  have  a  negative   impact  on  the  timing  of
distributions  to partners.  The affiliate  does not expect any Year 2000 issues
relating to its customers and vendors to have a material effect on its financial
position or results of operations.

New Accounting Pronouncements
-----------------------------

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
Accounting for Derivative  Instruments and Hedging Activities ("Statement 133").
Statement 133  establishes  accounting  and reporting  standards for  derivative
instruments and for hedging activities. It requires that an entity recognize all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position and measure those instruments at fair value. Statement 133 is effective
for  fiscal  years  beginning  after June 15,  1999,  with  earlier  application
permitted.  The Partnership  adopted Statement 133 in the first quarter of 1999.
The  General  Partner  does not  expect  the  adoption  to have an impact on its
financial reporting.

In June 1999,  the  Financial  Accounting  Standards  Board issued SFAS No. 137,
Accounting for Derivative  Instruments and Hedging  Activities - Deferral of the
Effective  Date of FASB  Statement  133, an  Amendment  of FASB  Statement  133.
Statement 137 effectively  extends the required  application of Statement 133 to
fiscal years beginning after June 15, 2000, with earlier application  permitted.
The Partnership  adopted Statement 133 in the first quarter of 1999. The General
Partner does not expect the adoption of Statement  133 or Statement  137 to have
an impact on its financial reporting.

                                       13

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.


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

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

"Safe Harbor"  Statement Under the Private  Securities  Litigation Reform Act of
--------------------------------------------------------------------------------
1995
----

The statements  contained in this report which are not  historical  facts may be
deemed to contain  forward-  looking  statements  with  respect  to events,  the
occurrence of which involve risks and uncertainties,  and are subject to factors
that could cause actual future  results to differ both  adversely and materially
from currently anticipated results, including,  without limitation, the level of
lease originations, realization of residual values, the availability and cost of
financing  sources and the ultimate  outcome of any contract  disputes.  Certain
specific risks associated with particular aspects of the Partnership's  business
are  discussed  under  Results of Operations in this report and under Results of
Operations in the 1998 Form 10-K when and where applicable.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

The  partnership  is in the  liquidation  stage (as  defined in the  Partnership
Agreement).  Consequently,  the partnership is no longer originating new leases.
The partnership's  existing leases are non-cancelable,  have fixed rates and are
financed with fixed rate debt.  Therefore,  the  partnership  has no exposure to
fluctuations in interest rates or other market risk exposure.


                                       14

<PAGE>




                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                                    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
                quarter ended June 30, 1999.


                                       15

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                                    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-II, L.P.

                                   By: CAI Equipment Leasing III Corp.


Dated:  August 16, 1999            By: /s/Anthony M. DiPaolo
                                       -----------------------------------------
                                       Anthony M. DiPaolo
                                       Senior Vice President



















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