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, 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 11

                               Page 1 of 12 Pages



<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                          Quarterly Report on Form 10-Q
                              for the Quarter Ended
                                  June 30, 1997


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

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

             Balance Sheets - June 30, 1997 and December 31, 1996            3

             Statements of Income - Three and Six months ended
             June 30, 1997 and 1996                                          4

             Statements of Cash Flows - Six months ended
             June 30, 1997 and 1996                                          5

             Notes to Financial Statements                                   6

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


PART II. OTHER INFORMATION

    Item 1.  Legal Proceedings                                               11

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

             Signature                                                       12


                                        2

<PAGE>



                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                                 BALANCE SHEETS
                                   (Unaudited)


                                     ASSETS

                                                       June 30,     December 31,
                                                         1997           1996
                                                     -----------    ------------

Cash and cash equivalents                            $ 1,723,878     $ 1,768,824
Accounts receivable, net                                 141,786         149,316
Equipment held for sale or re-lease                      215,815         448,552
Net investment in direct finance leases                4,259,101       4,978,823
Leased equipment, net                                 22,712,041      26,171,270
                                                     -----------     -----------

         Total assets                                $29,052,621     $33,516,785
                                                     ===========     ===========

                        LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
     Accounts payable and accrued liabilities        $   705,760     $   611,147
     Payable to affiliates                                25,847          26,033
     Rents received in advance                           128,188         110,946
     Distributions payable to partners                   341,384         341,384
     Discounted lease rentals                         10,073,267      12,397,890
     Financed operating lease rentals                  2,631,666       3,161,139
                                                     -----------     -----------

         Total liabilities                            13,906,112      16,648,539
                                                     -----------     -----------

PARTNERS' CAPITAL:
     General partner                                           -               -
     Limited partners:
         Class A                                      14,931,286      16,637,978
         Class B                                         215,223         230,268
                                                     -----------     -----------
         Total partners' capital                      15,146,509      16,868,246
                                                     -----------     -----------

         Total liabilities and partners' capital     $29,052,621     $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)
<TABLE>
<CAPTION>


                                                              Three Months Ended                 Six Months Ended
                                                                   June 30,                          June 30,
                                                       -----------------------------       -----------------------------
                                                           1997             1996               1997             1996
                                                       ------------     ------------       ------------     ------------
<S>                                                   <C>               <C>               <C>              <C>        
REVENUE:
     Operating lease rentals                           $ 2,382,057       $ 2,356,429       $ 4,858,936      $ 4,649,123
     Direct finance lease income                           104,365           110,167           210,952          218,520
     Equipment sales margin                                 87,544            27,254            94,620           85,916
     Interest income                                        21,165            51,863            39,161          127,824
                                                       -----------       -----------       -----------      -----------

         Total revenue                                   2,595,131         2,545,713         5,203,669        5,081,383
                                                       -----------       -----------       -----------      -----------

EXPENSES:
     Depreciation and amortization                       1,898,596         1,827,361         3,869,628        3,666,019
     Interest on discounted lease rentals                  195,743           193,147           412,253          377,178
     Interest on financed operating lease rentals           29,289            68,997           100,413          156,354
     Management fees paid to general partner                53,255            50,191           107,229          181,449
     Direct services from general partner                   26,461            49,280            54,728           73,439
     General and administrative                             61,589            84,123           132,851          137,048
     Provision for losses                                  100,000           425,000           200,000          425,000
                                                       -----------       -----------       -----------      -----------

         Total expenses                                  2,364,933         2,698,099         4,877,102        5,016,487
                                                       -----------       -----------       -----------      -----------

NET INCOME (LOSS)                                      $   230,198       $  (152,386)      $   326,567      $    64,896
                                                       ===========       ===========       ===========      ===========

NET INCOME (LOSS) ALLOCATED:
     To the general partner                            $    10,242       $    10,258       $    20,484      $    20,520
     To the Class A limited partners                       217,729          (161,013)          302,978           43,910
     To the Class B limited partner                          2,227            (1,631)            3,105              466
                                                       -----------       -----------       -----------      -----------

                                                       $   230,198       $  (152,386)      $   326,567      $    64,896
                                                       ===========       ===========       ===========      ===========

  Net income (loss) per weighted average
      Class A limited partner unit outstanding         $      1.62       $     (1.20)      $      2.26      $       .33
                                                       ===========       ===========       ===========      ===========

  Weighted average Class A
       limited partner units outstanding                   134,298           134,513           134,298          134,548

                                                       ===========       ===========       ===========      ===========

</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,
                                                                                                      1997                  1996
                                                                                                  -----------           ------------

<S>                                                                                              <C>                   <C>        
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                         $ 5,336,015           $ 5,503,990
                                                                                                  -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases from affiliate of equipment on operating leases                                       (749,703)           (2,921,746)
     Investment in direct financing leases, acquired from affiliate                                   (22,469)             (115,445)
                                                                                                  -----------           -----------

Net cash used in investing activities                                                                (772,172)           (3,037,191)
                                                                                                  -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on discounted lease rentals                                                (2,119,709)           (1,873,004)
     Principal payments on financed operating lease rentals                                          (440,777)             (561,139)
     Proceeds from financing of operating lease rentals                                                     -             4,272,657
     Distributions to partners                                                                     (2,048,303)           (2,053,813)
     Redemptions of Class A limited partner units                                                           -              (101,346)
                                                                                                  -----------           -----------

Net cash used in financing activities                                                              (4,608,789)             (316,645)
                                                                                                  -----------           -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                  (44,946)            2,150,154

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                    1,768,824             2,092,691
                                                                                                  -----------           -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                        $ 1,723,878           $ 4,242,845
                                                                                                  ===========           ===========

Supplemental disclosure of cash flow information:
     Interest paid on discounted lease rentals                                                    $   412,253           $   377,178
     Interest paid on financed operating lease rentals                                                154,413               156,354


</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 six months ended June 30,  1997,  the  Partnership  acquired the
     equipment  described  below from  Capital  Associates  International,  Inc.
     ("CAII").

<TABLE>
<CAPTION>


                                                                                        Acquisition              Total
                                          Equipment                   Cost of             Fees and              Equipment
            Lessee                       Description                 Equipment         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
     E Trade                          Desktop PC                      496,279              16,712                512,991
     General Motors                   FF & E                            9,631                 385                 10,016
     Consolidated Diesel              Office automation                21,605                 864                 22,469
                                                                     --------            --------               --------

                                                                     $745,498            $ 26,674               $772,172
                                                                     ========            ========               ========

</TABLE>




                                        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:

<TABLE>
<CAPTION>


                                                  Condensed Statements                         Condensed Statements
                                                     of Income for          The effect on          of Income for       The effect on
                                                    the three months          net income           the six months        net income
                                                     ended June 30,           of changes           ended June 30,        of changes
                                               --------------------------       between     --------------------------     between 
                                                   1997          1996           periods         1997          1996         periods
                                               ------------  ------------   -------------   ------------  ------------   -----------

<S>                                           <C>            <C>            <C>            <C>            <C>            <C>      
Leasing margin                                 $ 362,794      $ 377,091      $ (14,297)     $ 687,594      $ 668,092      $  19,502
Equipment sales margin                            87,544         27,254         60,290         94,620         85,916          8,704
Interest income                                   21,165         51,863        (30,698)        39,161        127,824        (88,663)
Management fees paid to general partner          (53,255)       (50,191)        (3,064)      (107,229)      (181,449)        74,220
Direct services from general partner             (26,461)       (49,280)        22,819        (54,728)       (73,439)        18,711
General and administrative                       (61,589)       (84,123)        22,534       (132,851)      (137,048)         4,197
Provision for losses                            (100,000)      (425,000)       325,000       (200,000)      (425,000)       225,000
                                               ---------      ---------      ---------      ---------      ---------      ---------

Net income (loss)                              $ 230,198      $(152,386)     $ 382,584      $ 326,567      $  64,896      $ 261,671
                                               =========      =========      =========      =========      =========      =========

</TABLE>

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:

<TABLE>
<CAPTION>


                                                                       Three months ended                   Six months ended
                                                                           June 30,                             June 30,
                                                                 ------------------------------      ------------------------------
                                                                     1997              1996              1997              1996
                                                                 ------------      ------------      ------------      ------------ 

<S>                                                             <C>               <C>               <C>               <C>        
Operating lease rentals                                          $ 2,382,057       $ 2,356,429       $ 4,858,936       $ 4,649,123
Direct finance lease income                                          104,365           110,167           210,952           218,520
Leasing costs and expenses                                        (1,898,596)       (1,827,361)       (3,869,628)       (3,666,019)
Interest expense on discounted lease rentals                        (195,743)         (193,147)         (412,253)         (377,178)
Interest expense on financed operating
   lease rentals                                                     (29,289)          (68,997)         (100,413)         (156,354)
                                                                 -----------       -----------       -----------       -----------
   Leasing margin                                                $   362,794       $   377,091       $   687,594       $   668,092
                                                                 ===========       ===========       ===========       ===========

   Leasing margin ratio                                                   15%               15%               14%               14%
                                                                 ===========       ===========       ===========       ===========
</TABLE>


                                        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

The ultimate rate of return on leases depends,  in part, on the general level of
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).  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:

<TABLE>
<CAPTION>

                                                                       Three months ended                   Six months ended
                                                                           June 30,                             June 30,
                                                                 ------------------------------      ------------------------------
                                                                     1997              1996              1997              1996
                                                                 ------------      ------------      ------------      ------------ 

<S>                                                              <C>               <C>               <C>                <C>      
Equipment sales revenue                                           $ 379,243         $ 613,968         $ 489,422          $ 988,179
Cost of equipment sales                                            (291,699)         (586,714)         (394,802)          (902,263)
                                                                  ---------         ---------         ---------          ---------
   Equipment sales margin                                         $  87,544         $  27,254         $  94,620          $  85,916
                                                                  =========         =========         =========          =========

</TABLE>

INTEREST INCOME

Interest income  decreased due to a decrease in the amount of cash available for
investment.

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

EXPENSES

Management fees decreased during the six months ended June 30, 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
decreased  primarily due to a reduction 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 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 six months  ended June 30, 1997
related to the following:

*      $100,000 related 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  considerably  less  than  was
       anticipated.

The  provision  for losses  recorded  during the six months  ended June 30, 1996
related to the following items:

*      $245,000  related to  Barney's,  Inc., a lessee that filed for Chapter 11
       bankruptcy  protection  on January 10, 1996.  In July 1996,  negotiations
       were finalized and a settlement was received for the Partnership's claim.


                                        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

*      $180,000 related to Norcross Footwear, a lessee that filed for Chapter 11
       bankruptcy  protection on February 9, 1996. The lease was rejected during
       second  quarter 1996 and the  equipment  has been sold or returned to the
       Partnership.  The fair market value of the equipment re-leased or sold to
       a third party was considerably less than anticipated.

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 six months ended June 30, 1997, the  Partnership  acquired  equipment
subject to leases with a total equipment purchase price of $772,172. At June 30,
1997, the general partner had identified  $300,000 of additional  equipment that
satisfied the Partnership's  acquisition  criteria.  The Partnership  expects to
acquire this equipment during the remainder of 1997.

During  the  six  months  ended  June  30,  1997,   the   Partnership   declared
distributions to the partners of $2,048,303, ($341,384 of which was paid in July
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  partners  currently  anticipate that the Partnership  will generate
cash flow from  operations  and  equipment  sales  during the  remainder of 1997
which,  when  added  to cash  and  cash  equivalents  on  hand,  should  provide
sufficient  cash to  enable  the  Partnership  to  meet  its  current  operating
requirements.

The Partnership  anticipates that it will fund the remaining 1997  distributions
to the  limited  partners  (a  substantial  portion  of  which  is  expected  to
constitute  returns  of  capital  for  accounting  purposes)  out of  cash  from
operations  and cash from sales during the  remainder of 1997.  The  Partnership
entered its liquidation period (as defined in the Partnership  Agreement) during
June 1997, and  distributions  during the liquidation  period will be based upon
cash  availability  and will vary and all  distributions  are  expected  to be a
return of capital for economic purposes.

                                       10

<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, 1997.


                                       11

<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 8, 1997       By:      /s/Anthony M. DiPaolo
                                        ---------------------
                                        Anthony M. DiPaolo
                                        Senior Vice President



















                                       12