SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

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


For the quarterly period ended                  March 31, 1997
                               -------------------------------------------------

                                       OR

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

For the transition period from                         to
                               -----------------------    ----------------------

Commission file number                              0-21382
                       ---------------------------------------------------------

                      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 12

                               Page 1 of 13 Pages


<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

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


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

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

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

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

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

              Notes to Financial Statements                                 6

     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations                7-11


PART II. OTHER INFORMATION

     Item 1.  Legal Proceedings                                            12

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

              Signature                                                    13


                                        2

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                                 BALANCE SHEETS
                                   (Unaudited)


                                     ASSETS

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

Cash and cash equivalents                            $ 1,525,951     $ 1,768,824
Accounts receivable, net                                 155,410         149,316
Equipment held for sale or re-lease                      398,614         448,552
Net investment in direct finance leases                4,484,981       4,978,823
Leased equipment, net                                 24,356,991      26,171,270
                                                     -----------     -----------

         Total assets                                $30,921,947     $33,516,785
                                                     ===========     ===========

                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
  Accounts payable and accrued liabilities           $   388,691   $   611,147
  Payable to affiliates                                   36,203        26,033
  Rents received in advance                              154,765       110,946
  Distributions payable to partners                      341,384       341,384
  Discounted lease rentals                            11,141,493    12,397,890
  Financed operating lease rentals                     2,918,948     3,161,139
                                                     -----------   -----------

         Total liabilities                            14,981,484    16,648,539
                                                     -----------   -----------

Partners' capital:
  General partner                                              -             -
  Limited partners:
    Class A                                           15,718,392    16,637,978
    Class B                                              222,071       230,268
                                                     -----------   -----------
         Total partners' capital                      15,940,463    16,868,246
                                                     -----------   -----------

         Total liabilities and partners' capital     $30,921,947   $33,516,785
                                                     ===========   ===========



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

                                        3

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                              STATEMENTS OF INCOME
                                   (Unaudited)

                                                           Three Months Ended
                                                                March 31,
                                                         -----------------------
                                                            1997         1996
                                                         ----------   ----------
Revenue:
     Operating lease rentals                             $2,476,879   $2,292,694
     Direct finance lease income                            106,587      108,353
     Equipment sales margin                                   7,076       58,662
     Interest income                                         17,996       75,961
                                                         ----------   ----------
         Total revenue                                    2,608,538    2,535,670
                                                         ----------   ----------

Expenses:
     Depreciation and amortization                        1,971,032    1,838,658
     Interest on discounted lease rentals                   216,510      184,031
     Interest on financed operating lease rentals            71,124       87,357
     Management fees paid to general partner                 53,974      131,258
     Direct services from general partner                    28,267       24,159
     General and administrative                              71,262       52,925
     Provision for losses                                   100,000            -
                                                         ----------   ----------

         Total expenses                                   2,512,169    2,318,388
                                                         ----------   ----------

Net income                                               $   96,369   $  217,282
                                                         ==========   ==========

Net income allocated:
     To the general partner                              $   10,242   $   10,262
     To the Class A limited partners                         85,249      204,923
     To the Class B limited partner                             878        2,097
                                                         ----------   ----------

                                                         $   96,369   $  217,282
                                                         ==========   ==========

  Net income per weighted average
      Class A limited partner unit outstanding           $     0.63   $     1.52
                                                         ==========   ==========

  Weighted average Class A
       limited partner units outstanding                    134,298      134,582
                                                         ==========   ==========


   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>


                                                                      Three Months Ended
                                                                           March 31,
                                                                   --------------------------
                                                                       1997         1996
                                                                   -----------    -----------

<S>                                                               <C>            <C>        
Net cash provided by operating activities                          $ 2,324,118    $ 2,498,805
                                                                   -----------    -----------

Cash flows from investing activities:
  Purchases from affiliate of equipment on operating leases           (226,696)    (1,452,685)
  Investment in direct financing leases, acquired from affiliate       (22,469)       (29,264)
                                                                   -----------    -----------

Net cash used in investing activities                                 (249,165)    (1,481,949)
                                                                   -----------    -----------

Cash flows from financing activities:
  Principal payments on discounted lease rentals                    (1,051,483)      (950,138)
  Principal payments on financed operating lease rentals              (242,191)      (292,601)
  Proceeds from financing of operating lease rentals                         -      4,272,658
  Distributions to partners                                         (1,024,152)    (1,027,914)
  Redemptions of Class A limited partner units                               -        (95,156)
                                                                   -----------    -----------

Net cash provided by (used in) financing activities                 (2,317,826)     1,906,849
                                                                   -----------    -----------

Net increase (decrease) in cash and cash equivalents                  (242,873)     2,923,705
Cash and cash equivalents at beginning of period                     1,768,824      2,092,691
                                                                   -----------    -----------
Cash and cash equivalents at end of period                         $ 1,525,951    $ 5,016,396
                                                                   ===========    ===========

Supplemental disclosure of cash flow information:
  Interest paid on discounted lease rentals                        $   216,510    $   184,031
  Interest paid on financed operating lease rentals                     71,124         87,357

</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 only of normal recurring  adjustments)  considered
     necessary for a fair presentation have been included.  The balance sheet at
     December 31, 1996 has been derived  from the audited  financial  statements
     included in the Partnership's Annual Report on Form 10-K for the year ended
     December  31,  1996,  (the  "1996  Form  10-K")  previously  filed with the
     Securities and Exchange Commission.

2.   Equipment Purchases
     -------------------

     During the three months ended  March 31, 1997, the Partnership acquired the
     equipment  described  below  from  Capital  Associates  International, Inc.
     ("CAII").
<TABLE>
<CAPTION>



                                Equipment            Cost of    Acquisition Fees   Total Equipment
            Lessee             Description          Equipment  and Reimbursements  Purchase Price
      -------------------    ------------------     ---------  ------------------  ---------------
 
     <S>                    <C>                    <C>             <C>              <C>
      System One             Network equipment      $ 126,250       $ 5,050          $ 131,300
      Consolidated Diesel    Furniture                 23,035           921             23,956
      Owens Corning          Desktop PC                   163             0                163
      General Motors         Transport - Trucks        20,947           838             21,785
      General Motors         FF & E                    32,425         1,297             33,722
      General Motors         FF & E                    15,163           607             15,770
      Consolidated Diesel    Office Automation         21,605           864             22,469
                                                    ---------       -------          ---------

                                 Total              $ 239,588       $ 9,576          $ 249,165
                                                    =========       =======          =========
</TABLE>

      At March 31,  1997,  the general  partner had  identified  $1.2 million of
      additional   equipment  that  satisfied  the   Partnership's   acquisition
      criteria.  The  Partnership  expects to acquire this equipment  during the
      remainder of 1997.



                                        6

<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:

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

Leasing margin                          $ 324,800    $  291,001    $   33,799
Equipment sales margin                      7,076        58,662       (51,586)
Interest income                            17,996        75,961       (57,965)
Management fees paid to general partner   (53,974)     (131,258)       77,284
Direct services from general partner      (28,267)      (24,159)       (4,108)
General and administrative expenses       (71,262)      (52,925)      (18,337)
Provision for losses                     (100,000)            -      (100,000)
                                        ---------    ----------    ----------
  Net income                            $  96,369    $ 217,282     $ (120,913)
                                        =========    ==========    ==========

The Partnership is in the latter stages of its reinvestment period (scheduled to
end in June 1997, as defined in the Partnership Agreement).  As the reinvestment
period  progresses,  purchases of equipment under lease are decreasing,  initial
leases  are  expiring  and the  amount  of  equipment  being  remarketed  (i.e.,
re-leased, renewed, or sold) is increasing.

LEASING MARGIN

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

Operating lease rentals                                $ 2,476,879  $ 2,292,694
Direct finance lease income                                106,587      108,353
Leasing costs and expenses                              (1,971,032)  (1,838,658)
Interest expense on discounted lease rentals              (216,510)    (184,031)
Interest expense on financed operating lease rentals       (71,124)     (87,357)
                                                       -----------  -----------
     Leasing margin                                    $   324,800  $   291,001
                                                       ===========  ===========

     Leasing margin ratio                                       13%          12%
                                                                ==           ==

                                        7

<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

Leasing  margin ratio  increased and is expected to increase  further  primarily
because a portion of the  Partnership's  portfolio  consists of operating leases
financed with non-recourse  debt.  Leasing margin and the related leasing margin
ratio for an operating lease financed with  non-recourse  debt increases  during
the term of the lease since rents and  depreciation  are  typically  fixed while
interest expense declines as the related non-recourse debt is repaid.

The ultimate rate of return on leases depends,  in part, on the general level of
interest  rates at the time the leases  are  originated.  Because  leasing is an
alternative to financing equipment purchases with debt, lease rates tend to rise
and fall with  interest  rates  (although  lease rate  movements  generally  lag
interest rate changes in the capital  markets).  Interest rates have  fluctuated
over the past several years as follows:  (i) rates decreased from 1990 until the
early part of 1994, (ii) rates then increased through the early part of 1995 and
(iii) rates have decreased to the present time. It is unclear  whether  interest
rates will  continue to decrease,  and what effect,  if any,  such interest rate
decreases will have on lease rates. Annual average 5-year U.S.
Treasury yields for the past seven years were as follows:

Annual average 5-year U.S. Treasury Yield

         Year                               Yield
         ----                               -----

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

EQUIPMENT SALES MARGIN

Equipment sales margin consists of the following:

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

Equipment sales revenue                                $ 110,179      $ 374,211
Cost of equipment sales                                 (103,103)      (315,549)
                                                       ---------      ---------
     Equipment sales margin                            $   7,076      $  58,662
                                                       =========      =========

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

INTEREST INCOME

Interest  income varies due to (i) the amount of cash  available for  investment
(pending distribution or equipment purchases) and (ii) the interest rate on such
invested cash.

EXPENSES

Management fees decreased during the three months ended March 31, 1997, compared
to the  corresponding  period in 1996,  due to the financing of operating  lease
rentals that occurred  during first quarter of 1996.  Under  generally  accepted
accounting principles the transaction was accounted for as a financing.  Per the
Partnership  Agreement,  proceeds  received from the  transaction are defined as
prepaid  rents and,  accordingly,  management  fees of $85,453  were paid on the
prepaid rents.

General and administrative expenses and direct services from the general partner
increased  primarily  due to  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 as equipment  sales margin (if the equipment is sold) or leasing margin
(if the equipment is re-leased). The realization of less than the carrying value
of equipment (which is typically not known until  remarketing  subsequent to the
initial lease termination has occurred) is recorded as provision for losses.

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

The provision for losses  recorded  during the three months ended March 31, 1997
related to the following two items:

*    $80,000  for a  deficiency  related to a lease with  Ernst Home  Center,  a
     lessee that filed for Chapter 11  bankruptcy  protection  on July 12, 1996.
     The lease was funded with  non-recourse  debt and the  lending  institution
     repossessed  and liquidated the equipment  during March 1997 resulting in a
     deficiency to the Partnership.  Accordingly,  the Partnership  recorded the
     provision for losses during the first quarter of 1997.

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

PROVISION FOR LOSSES, continued

*    $20,000  related to equipment  which has been returned to the  Partnership.
     The  Partnership  had previously  expected to realize the carrying value of
     this  equipment  through  lease  renewals and proceeds from the sale of the
     equipment to the original  lessees.  The fair market value of the equipment
     re-leased or sold to a third party was less than anticipated.

No provision  for losses were recorded for the three months ended March 31, 1996
because  no  other-than-  temporary  losses  in  the  value  of  equipment  were
identified the quarterly assessments of the Partnership's assets.


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

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  the  acquisition  of
equipment or distributions to the partners.

During the three months ended March 31, 1997, the Partnership acquired equipment
subject to leases with a total  equipment  purchase price of $249,165.  At March
31,  1997,  the  general  partner  had  identified  $1.2  million of  additional
equipment that satisfied the Partnership's acquisition criteria. The Partnership
expects to acquire this equipment during the remainder of 1997.

During  the  three  months  ended  March  31,  1997,  the  Partnership  declared
distributions  to the  partners of  $1,024,152,  ($341,384  of which was paid in
April 1997). 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  by a  Partnership  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 the  Partnership's  reinvestment
period (as defined in the Partnership Agreement) during 1997 to (1) meet current
operating requirements,  (2) enable it to fund cash distributions to the Class A
and Class B limited  partners at  annualized  rates of 12% and 11%  (substantial
portions of which are expected to constitute returns of capital),  respectively,
on their capital  contributions  and (3) reinvest in additional  equipment under
leases, provided that suitable equipment can be identified and acquired.


                                       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, continued
-------------------------------

The Partnership will enter its liquidation period (as defined in the Partnership
Agreement) in June 1997. During the liquidation  period,  available cash will be
distributed per items (2) and (3) described in the preceding paragraph. However,
reinvestment  will cease and the excess cash, if any, will be distributed to the
partners  in  accordance  with  the  Partnership  Agreement.  Therefore,  it  is
anticipated that during the liquidation  period, cash distributions to the Class
A limited  partners will be based upon cash  availability  and will vary and all
distributions are expected to be a return of capital for economic purposes.

                                       11

<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 March 31, 1997.


                                       12

<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:    May 5, 1997          By:      /s/Anthony M. DiPaolo
                                        ---------------------
                                        Anthony M. DiPaolo
                                        Senior Vice President



















                                       13