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                September 30, 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                              0-21382
                       ---------------------------------------------------------

                      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 14

                               Page 1 of 15 Pages



<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                          Quarterly Report on Form 10-Q
                              for the Quarter Ended
                               September 30, 1998


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

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

                Balance Sheets - September 30, 1998 and December 31, 1997    3

                Statements of Income - Three and Nine Months Ended
                September 30, 1998 and 1997                                  4

                Statements of Cash Flows - Nine Months Ended
                September 30, 1998 and 1997                                  5

                Notes to Financial Statements                               6-7

     Item 2.    Management's Discussion and Analysis of Financial
                Condition and Results of Operations                         8-12


PART II.      OTHER INFORMATION

     Item 1.    Legal Proceedings                                           13

     Item 6.    Exhibits and Reports on Form 8-K                            13

                Exhibit Index                                               14

                Signature                                                   15


                                        2

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                                 BALANCE SHEETS



                                     ASSETS
                                                   September 30,    December 31,
                                                       1998            1997
                                                    -----------     ------------
                                                    (Unaudited)

Cash and cash equivalents                           $ 1,110,941      $ 1,897,763
Accounts receivable, net                                403,497          620,453
Equipment held for sale or re-lease                     437,409          646,787
Net investment in direct finance leases               3,114,092        3,839,687
Leased equipment, net                                11,348,541       18,028,040
                                                    -----------      -----------

Total assets                                        $16,414,480      $25,032,730
                                                    ===========      ===========

                       LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
     Accounts payable and accrued liabilities       $   943,307      $   882,678
     Payables to affiliates                              48,276           20,257
     Rents received in advance                          120,373          102,410
     Distributions payable to partners                  609,116          508,106
     Discounted lease rentals                         5,462,591        7,961,882
     Financed operating lease rentals                         -        2,257,035
                                                    -----------      -----------

Total liabilities                                     7,183,663       11,732,368
                                                    -----------      -----------

Partners' capital:
     General partner                                          -                -
     Limited partners:
         Class A                                      9,037,963       13,092,164
         Class B                                        192,854          208,198
                                                    -----------      -----------

Total partners' capital                               9,230,817       13,300,362
                                                    -----------      -----------

Total liabilities and partners' capital             $16,414,480      $25,032,730
                                                    ===========      ===========



   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               Nine Months Ended
                                                           September 30,                   September 30,
                                                     ---------------------------     ----------------------------
                                                       1998             1997           1998               1997    
                                                     ----------       ----------     ----------        ----------
<S>                                                 <C>              <C>            <C>               <C>       
REVENUE:
     Operating lease rentals                         $1,723,946       $2,324,022     $5,221,617        $7,182,958
     Direct finance lease income                         86,926           98,048        282,120           309,000
     Equipment sales margin                             444,344          118,458        679,714           213,078
     Interest income                                     13,939           19,443         62,996            58,604
                                                     ----------       ----------     ----------        ----------

         Total revenue                                2,269,155        2,559,971      6,246,447         7,763,640
                                                     ----------       ----------     ----------        ----------

EXPENSES:
     Depreciation                                     1,249,768        1,704,436      4,001,604         5,574,064
     Interest on discounted lease rentals               109,600          176,326        372,514           588,579
     Interest on financed operating lease rentals        29,167           42,262         98,976           142,675
     Management fees to general partner                  37,988           48,464        115,646           155,693
     Direct services from general partner                59,438           24,022        121,986            78,750
     General and administrative                          44,943           45,997        159,244           178,848
     Provision for losses                                25,000           25,000        150,000           225,000
                                                     ----------       ----------     ----------        ----------

         Total expenses                               1,555,904        2,066,507      5,019,970         6,943,609
                                                     ----------       ----------     ----------        ----------

NET INCOME                                           $  713,251       $  493,464     $1,226,477        $  820,031
                                                     ==========       ==========     ==========        ==========

NET INCOME ALLOCATED:
     To the general partner                          $   15,244       $   14,233     $   52,801        $   34,717
     To the Class A limited partners                    690,956          474,386      1,161,795           777,364
     To the Class B limited partner                       7,051            4,845         11,881             7,950
                                                     ----------       ----------     ----------        ----------

                                                     $  713,251       $  493,464     $1,226,477        $  820,031
                                                     ==========       ==========     ==========        ==========

  Net income per weighted average
      Class A limited partner unit outstanding       $     5.17       $     3.54     $     8.70        $     5.79
                                                     ==========       ==========     ==========        ==========

  Weighted average Class A
       limited partner units outstanding                133,528          134,178        133,600           134,258
                                                     ==========       ==========     ==========        ==========
</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>
                                                                            Nine Months Ended
                                                                   ------------------------------------
                                                                   September 30,          September 30,
                                                                       1998                   1997       
                                                                   -------------          -------------

<S>                                                               <C>                     <C>        
NET CASH PROVIDED BY OPERATING ACTIVITIES                          $ 9,164,516             $ 8,186,146
                                                                   -----------             -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of equipment on operating leases from affiliate                  -              (1,062,284)
  Investment in direct financing leases, acquired from affiliate             -                 (22,469)
                                                                   -----------             -----------

Net cash used in investing activities                                        -              (1,084,753)
                                                                   -----------             -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on discounted lease rentals                    (2,499,291)             (3,304,770)
  Principal payments on financed operating lease rentals            (2,257,035)               (715,168)
  Distributions to partners                                         (5,179,015)             (3,304,889)
  Redemptions of Class A limited partner units                         (15,997)                (13,673)
                                                                   -----------             -----------

Net cash used in financing activities                               (9,951,338)             (7,338,500)
                                                                   -----------             -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                             (786,822)               (237,107)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                     1,897,763               1,768,824
                                                                   -----------             -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                           1,110,941             $ 1,531,717
                                                                   ===========             ===========

Supplemental disclosure of cash flow information:
  Interest paid on discounted lease rentals                        $   372,514             $   588,579
  Interest paid on financed operating lease rentals                     98,976                 142,675

</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)


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,  1997 was  derived  from  the  audited  financial  statements
     included in the Partnership's Annual Report on Form 10-K for the year ended
     December  31,  1997,  (the  "1997  Form  10-K")  previously  filed with the
     Securities and Exchange Commission.

     RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

     In June 1997, the Financial  Accounting Standards Board issued Statement of
     Financial  Accounting  Standards No. 130,  Reporting  Comprehensive  Income
     ("Statement  130"),  which  requires  comprehensive  income to be displayed
     prominently  within  the  financial  statements.  Comprehensive  income  is
     defined  as  all  recognized   changes  in  equity  during  a  period  from
     transactions and other events and circumstances except those resulting from
     investments  by owners and  distributions  to owners.  Net income and items
     that  previously  have been  recorded  directly  in equity are  included in
     comprehensive  income.   Statement  130  affects  only  the  reporting  and
     disclosure  of  comprehensive  income  but does not affect  recognition  or
     measurement  of  income.  Statement  130  is  effective  for  fiscal  years
     beginning after December 15, 1997, with earlier application permitted.  The
     Partnership  adopted  Statement  130 in the  first  quarter  of  1998.  The
     adoption did not have an impact on its financial reporting.

     In June 1997, the Financial  Accounting Standards Board issued Statement of
     Financial  Accounting  Standards No. 131,  Disclosures about Segments of an
     Enterprise  and  Related  Information   ("Statement  131").  Statement  131
     provides  guidance for reporting  information  about operating  segments in
     annual financial  statements and requires reporting of selected information
     about operating  segments in interim financial reports of public companies.
     An operating  segment is defined as a component of a business  that engages
     in business activities from which it may earn revenue and incur expenses, a
     component whose operating  results are regularly  reviewed by the company's
     chief  operating  decision  maker,  and  a  component  for  which  discrete
     financial information is available.  Statement 131 establishes quantitative
     thresholds for determining  operating segments of a company.  Statement 131
     is  effective  for fiscal years  beginning  after  December 15, 1997,  with
     earlier application permitted. The Partnership adopted Statement 131 in the
     first quarter of 1998. The adoption did not have an impact on its financial
     reporting.



                                        6

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                          NOTES TO FINANCIAL STATEMENTS
                             (Unaudited), continued

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

     MANAGEMENT FEES 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 September 30, 1998,  management  fees of $9,028 are
     included in payables to affiliates.

     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 September 30, 1998,  direct  services from
     General  Partner in the amount of  $39,247  are  included  in  payables  to
     affiliates.

     GENERAL AND ADMINISTRATIVE EXPENSES

     The General  Partner and an affiliate are reimbursed for the actual cost of
     administrative  expenses paid on behalf of Partnership per the terms of the
     Partnership Agreement.



                                        7

<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  condensed  statements of income
categories and analyses of changes in those  condensed  categories  derived from
the Statements of Income:

<TABLE>
<CAPTION>

                                          Condensed Statements                       Condensed Statements
                                             of Income for         The Effect on         of Income for        The Effect on
                                           the Three Months         Net Income          the Nine Months         Net Income
                                          Ended September 30,       of Changes        Ended September 30,       of Changes
                                      ---------------------------    Between      --------------------------     Between
                                          1998           1997        Periods         1998          1997          Periods
                                      ------------   ------------  -------------  -----------  -------------  -------------

<S>                                  <C>             <C>           <C>           <C>           <C>            <C>        
Leasing margin                        $  422,337      $ 499,046     $ (76,709)    $ 1,030,643   $ 1,186,640    $ (155,997)
Equipment sales margin                   444,344        118,458       325,886         679,714       213,078       466,636
Interest income                           13,939         19,443        (5,504)         62,996        58,604         4,392
Management fees to general partner       (37,988)       (48,464)       10,476        (115,646)     (155,693)       40,047
Direct services from general partner     (59,438)       (24,022)      (35,416)       (121,986)      (78,750)      (43,236)
General and administrative               (44,943)       (45,997)        1,054        (159,244)     (178,848)       19,604
Provision for losses                     (25,000)       (25,000)            -        (150,000)     (225,000)       75,000
                                      ----------      ---------     ----------    -----------   -----------    ----------

Net income                            $  713,251      $ 493,464     $  219,787    $ 1,226,477   $   820,031    $  406,446
                                      ==========      =========     ==========    ===========   ===========    ==========

</TABLE>

The  Partnership  is in its  liquidation  stage,  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) is increasing. 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:

<TABLE>
<CAPTION>

                                     Three Months Ended                Nine Months Ended
                                        September 30,                     September 30,
                                -----------------------------    -----------------------------
                                   1998             1997             1998             1997 
                                ------------    ------------     ------------     ------------


<S>                            <C>             <C>              <C>              <C>        
Operating lease rentals         $ 1,723,946     $ 2,324,022      $ 5,221,617      $ 7,182,958
Direct finance lease income          86,926          98,048          282,120          309,000
Depreciation                     (1,249,768)     (1,704,436)      (4,001,604)      (5,574,064)
Interest expense                   (138,767)       (218,588)        (471,490)        (731,254)
                                -----------     -----------      -----------      -----------
   Leasing margin               $   422,337     $   499,046      $ 1,030,643      $ 1,186,640
                                ===========     ===========      ===========      ===========

   Leasing margin ratio                  23%             21%              19%              16%
                                ===========     ===========      ===========      ===========

</TABLE>


                                        8

<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 nine months ended
September  30, 1998  compared to the three and nine months ended  September  30,
1997 due to portfolio runoff.  Leasing margin ratio increased and is expected to
increase  further until all  non-recourse  debt is repaid.  Leasing margin ratio
will vary 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 is repaid.

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         Nine Months Ended
                                   September 30,              September 30,
                           --------------------------  -------------------------
                              1998           1997         1998          1997 
                           ------------   -----------  -----------  ------------

Equipment sales revenue    $ 2,031,273    $  407,449   $ 3,356,042  $   896,871
Cost of equipment sales     (1,586,929)     (288,991)   (2,676,328)    (683,793)
                           -----------    ----------   -----------  -----------
   Equipment sales margin  $   444,344    $  118,458   $   679,714  $   213,078
                           ===========    ==========   ===========  ===========

Equipment  sales margin  increased for the three and nine months ended September
30, 1998  compared to the three and nine months  ended  September  30, 1997 as a
result of  increasing  amounts  of  equipment  available  for sale  because  the
Partnership  is  in  its  liquidation  phase  (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).





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

INTEREST INCOME

Interest  income  varies based on the amount of cash  available  for  investment
(pending distribution) and the interest rate on such invested cash.

EXPENSES

Management  fees paid to the General  Partner  and  general  and  administrative
expenses  decreased  for the three and nine months  ended  September  30,  1998,
compared to the corresponding periods in 1997, due to portfolio run-off.

Direct services from the General Partner increased compared to the corresponding
periods  in  1997  primarily  due  to  an  increase  in  costs  associated  with
warehousing and selling equipment returned to the Partnership.


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 in value.

The provision  for losses  recorded  during the nine months ended  September 30,
1998 related  primarily to lessees returning  equipment to the Partnership.  The
Partnership  had  previously  expected  to realize  the  carrying  value of that
equipment  through lease renewals and proceeds from the sale of the equipment to
the original lessee. The fair market value of the equipment re-leased or sold to
a third party is less than was anticipated.



                                       10

<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  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) is increasing. As a result, both
the size of the  Partnership's  leasing  portfolio  and the  amount  of  leasing
revenue are declining.

The Partnership funds its operating activities principally with cash from rents,
discounted lease rentals  (non-recourse  debt),  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 nine months  ended  September  30,  1998,  the  Partnership  declared
distributions  to the  partners of  $5,280,025,  ($609,116  of which was paid in
October 1998). 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 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 a  partnership's  return  on  capital  over its life will 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 1998 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.

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 programs which have  time-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 updated to correctly account for the Year
2000  issue.  In  addition,  the  affiliate  is engaged in a system  conversion,
whereby the affiliate's  primary lease tracking and accounting software is being
replaced  with new systems which will account for the Year 2000  correctly.  The
affiliate  expects that the new system will be fully operational by December 31,
1999,  and therefore 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
conversion to a new system by December 31, 1999. In addition, 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.

                                       11

<PAGE>


                      CAPITAL PREFERRED YIELD FUND-II, L.P.

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

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  will adopt  Statement  133 in the first  quarter of 1999.  The
General  Partner does not expect the adoption to have an impact on its financial
reporting.

"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 1997 Form 10-K when and where applicable.


                                       12

<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)  Exhibits

           (b)  The  Partnership did not file any reports on Form 8-K during the
                quarter ended September 30, 1998.


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<PAGE>



Item No.                              Exhibit Index
--------                              -------------

27             Financial Data Schedule


  
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<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:    November 13, 1998       By:  /s/Anthony M. DiPaolo
                                       ---------------------------------
                                       Anthony M. DiPaolo
                                       Senior Vice President



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