SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

[X]  Annual report  pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the fiscal year ended December 31, 2001

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

                         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 Number)


2750 South Wadsworth C-200, Denver, Colorado                           80227
  (Address of principal executive offices)                           (Zip Code)

       Registrant's telephone number, including area code: (720) 963-9600

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None


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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.

                        Exhibit Index Appears on Page 30

                               Page 1 of 31 Pages

<PAGE>
Item 1.  Business
         --------

Capital Preferred Yield Fund-II, L.P., a Delaware limited partnership (the
"Partnership"), was organized on November 19, 1991 for the purpose of owning and
leasing equipment. CAI Equipment Leasing III Corp. ("CAIEL-III"), a Colorado
corporation, is the general partner of the Partnership. CAIEL-III was a wholly
owned subsidiary of Capital Associates, Inc. ("CAI") until September 12, 2000,
the date it was purchased in its entirety by Mishawaka Leasing Company, Inc.
("MLC"). CAI discontinued its operations on December 15, 2000 and filed Chapter
11 Bankruptcy on October 15, 2001.

Capital Associates International, Inc. ("CAII") was the Class B limited partner
of the Partnership prior to September 12, 2000. In exchange for its Class B
limited partner interest, CAII contributed $330,000 (i.e., $10,000 for each
$1,000,000 contribution to the Partnership made by the Class A limited partners)
to the Partnership making it the largest single investor in the Partnership. The
contributions of CAII were made simultaneously with the purchase of equipment by
the Partnership. MLC became the Class B limited partner as of September 12,
2000.

The Partnership has no employees. Prior to September 12, 2000, the Partnership
relied upon the services of CAII for origination of leases, administrative and
accounting services, and remarketing of leases and equipment, among other
services. Since September 12, 2000, the general partner has contracted with MLC
to provide the above services. Many of the management and administrative
personnel of MLC formerly worked for CAII and serviced the Partnership leases.
The general partner is entitled to receive certain fees and expense
reimbursements in connection with the performance of these services. See Item 10
of this Report, "Directors and Executive Officers of the Partnership" and Item
13 of this Report, "Certain Relationships and Related Transactions".

Since its formation, the Partnership acquired equipment of various types under
lease to third parties on short-term leases (generally five years or less). All
of the equipment was purchased by CAII directly from manufacturers or from other
independent third parties and sold to the Partnership. The equipment generally
consisted of transportation and industrial equipment, computer equipment, office
furniture and medical equipment, among others. The Partnership entered its
liquidation stage, as defined in the Partnership Agreement, in July 1997. During
the liquidation stage, purchases of equipment ceased (other than for prior
commitments and equipment upgrades). The Partnership was required to dissolve
and distribute all of its assets no later than December 31, 2009.

During 2001, the Partnership liquidated all of its net assets and distributed
the related proceeds to the partners. In December 2001, the Partnership made a
final distribution to its Class A limited partners and distributed assets equal
to the estimated settlement value of all remaining liabilities to the general
partner. It is the intent of the general partner to settle all such liabilities.
Excess cash remaining after such settlement, if any, or additional cash
necessary for such settlement, if any, will be for the account of the general
partner or the general partner's obligation, respectively. The Partnership
ceased operations December 31, 2001.

Item 2.  Properties
         ----------

Per the Partnership Agreement, the Partnership does not own or lease any
physical properties other than the equipment discussed in Item 1 "Business", of
this report, which is incorporated herein by reference.

                                       2
<PAGE>
Item 3.  Legal Proceedings
         -----------------

Neither the Partnership nor any of the Partnership's equipment is the subject of
any material pending legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

No matters were submitted to a vote of the limited partners of the Partnership,
through the solicitation of proxies or otherwise, during the fourth quarter
ended December 31, 2001.


Item 5.  Market for the Partnership's Common Equity and Related Stockholder
         ------------------------------------------------------------------
         Matters
         -------

(a)     The Partnership's Class A limited partner units, Class B limited partner
        interest and general partner interest are not publicly traded. There is
        no established public trading market for such units and interests and
        none is expected to develop.

(b)     As of December 31, 2001, the date the Partnership ceased operations, the
        number of Class A limited partners was 1722.

(c)     Distributions
        -------------

        During 2001, the Partnership made four (4) distributions (a portion of
        which constituted a return of capital) to Class A limited partners, as
        follows:

<TABLE>
<CAPTION>
                                                   Distributions Per
                                                     $250 Class A
                                                  Limited Partner Unit
    For the                Payment                   (computed on               Total
  Month Ended              Made During             weighted average)        Distributions
  -----------              -----------             -----------------        -------------

<S>                       <C>                         <C>                   <C>
December 31, 2000         January 2001                $  1.31               $   174,240
January 31, 2001          February 2001                  0.23                    30,690
February 28, 2001         March 2001                     0.96                   127,512
December 30, 2001         December 2001                 12.63                 1,685,587
                                                      -------               -----------
                                                      $ 15.13               $ 2,018,029
                                                      =======               ===========
</TABLE>

                                       3
<PAGE>
Item 5.  Market for the Partnership's Common Equity and Related Stockholder
         ------------------------------------------------------------------
         Matters, continued
         ------------------

(c)      Distributions, continued
         -------------

         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 that 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 can only be determined after all
         residual cash flows (which include proceeds from the re-leasing and
         sale of equipment) have been realized at the termination of the
         Partnership.

         Distributions to the general partner and the Class B limited partner
         during 2001 are discussed in Item 13 of this Report, "Certain
         Relationships and Related Transactions."

         The Partnership declared a final distribution in December 2001. In
         calculating the amount of such distribution, the general partner
         considered the current as well as contingent liabilities incidental to
         the liquidation of the Partnership.

         During 2000, the Partnership made eleven (11) distributions (a portion
         of which constituted a return of capital) to Class A limited partners,
         as follows:

<TABLE>
<CAPTION>
                                                                              Distributions Per
                                                                                $250 Class A
                                                                              Limited Partner Unit
            For the                                Payment                    (computed on                     Total
          Month Ended                             Made During                 weighted average)            Distributions
          -----------                             -----------                 -----------------            -------------

         <S>                                     <C>                             <C>                        <C>
         January 31, 2000                        February 2000                   $  5.64                    $   752,895
         February 28, 2000                       March 2000                         2.71                        361,350
         March 31, 2000                          April 2000                         1.11                        148,500
         April 30, 2000                          May 2000                           0.74                         99,000
         May 31, 2000                            June 2000                          1.93                        257,400
         June 30, 2000                           July 2000                          3.34                        445,500
         July 31, 2000                           August 2000                        0.55                         73,755
         August 31, 2000                         September 2000                     1.31                        174,240
         September 30, 2000                      October 2000                       1.24                        165,330
         October 31, 2000                        November 2000                      1.25                        166,320
         November 30, 2000                       December 2000                      0.84                        112,365
                                                                                 -------                    -----------
                                                                                 $ 20.66                    $ 2,756,655
                                                                                 =======                    ===========
</TABLE>

         The following represents annual and cumulative distributions per Class
         A limited partner unit, as described in note 1 to Notes to Consolidated
         Financial Statement.

                                       4
<PAGE>
Item 5.  Market for the Partnership's Common Equity and Related Stockholder
         ------------------------------------------------------------------
         Matters, continued
         --------

(c)      Distributions, continued
         --------------

                           Distribution Amount          Distribution % per
                            per $250 Class A               $250 Class A
                           Limited Partner Unit        Limited Partner Unit
       Payment                (computed on                (computed on
     Made During           weighted average)           weighted average) (1)
     -----------           -----------------           ---------------------

         1992                 $ 15.00                          12%
         1993                   30.00                          12%
         1994                   30.00                          12%
         1995                   30.00                          12%
         1996                   30.00                          12%
         1997                   35.45                          14%
         1998                   48.15                          19%
         1999                   26.71                          11%
         2000                   20.66                           8%
         2001                   15.13                           6%
                              -------
                              $281.10
                              =======

         (1) Cumulative distributions, as described in note 1 to Notes to
Consolidated Financial Statements began July 1992.


Item 6.  Selected Financial Data
         -----------------------

The following selected financial data relates to the years ended December 31,
1997 through 2001 and should be read in conjunction with Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and notes thereto appearing with Item 8 herein.

<TABLE>
<CAPTION>
                                                                            Years Ended December 31,
                                                   ---------------------------------------------------------------------
                                                       2001           2000           1999          1998          1997
                                                       ----           ----           ----          ----          ----
<S>                                                <C>            <C>            <C>           <C>           <C>
Total revenue                                      $ 1,473,696    $ 2,172,896    $ 4,668,842   $ 7,578,793   $10,309,337
Net income (loss)                                      134,697       (100,952)       408,915     1,035,755     1,456,778
Net income  (loss) per weighted  average Class
Alimited partner unit outstanding                        (1.33)         (0.97)          2.80          7.19         10.40
Total assets                                              --        4,196,381      8,593,113    14,344,900    25,032,730
Discounted and financed operating
  lease rentals                                           --          763,794      2,321,818     4,612,151    10,218,917
Distributions declared to partners                   1,845,387      2,960,500      3,099,217     6,537,374     4,995,930
Distributions declared per monthly weighted
   average Class A limited partner unit                  13.82          21.97          22.97         48.18         36.69
</TABLE>

                                       5
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial Condition and
          ---------------------------------------------------------------
          Results of Operations
          ---------------------

I.        Results of Operations
          ---------------------

Presented below are schedules (prepared solely to facilitate the discussion of
results of operations that follows) showing condensed income statements
categories and analyses of changes in those condensed categories derived from
the Statements of Income:

<TABLE>
<CAPTION>
                                              Years Ended December 31,               Years Ended December 31,
                                       -----------------------------------    ------------------------------------

                                          2001         2000        Change        2000         1999         Change
                                          ----         ----        ------        ----         ----         ------
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>
Leasing margin                         $ 400,254    $ 550,991    $(150,737)   $ 550,991    $ 986,528    $(435,537)
Equipment sales margin                   473,462      293,428      180,034      293,428      480,241     (186,813)
Liquidation                              265,242         --        265,242         --           --           --
Interest income                           32,816       51,701      (18,885)      51,701       30,932       20,769
Management fees paid to general
  partner                                (29,603)     (61,544)      31,941      (61,544)    (103,977)      42,433
Direct services from general partner     (69,277)     (51,942)     (17,335)     (51,942)     (90,393)      38,451
General and administrative              (431,792)    (233,286)    (198,506)    (233,286)    (183,548)     (49,738)
Provision for losses                    (241,163)    (650,300)     409,137     (650,300)    (710,868)      60,568
                                       ---------    ---------    ---------    ---------    ---------    ---------
 Net income(loss)                      $ 399,939    $(100,952)   $ 500,891    $(100,952)   $ 408,915    $(509,867)
                                       =========    =========    =========    =========    =========    =========
</TABLE>

The Partnership has liquidated, as defined in the Partnership Agreement. Initial
leases have expired and all remaining equipment has been sold. As a result, both
the size of the Partnership's leasing portfolio and the amount of leasing
revenue declined.

Leasing Margin

Leasing margin consists of the following:

<TABLE>
<CAPTION>
                                                          Years Ended December 31,
                                                          ------------------------
                                                    2001           2000            1999
                                                    ----           ----            ----

<S>                                            <C>             <C>             <C>
Operating lease rentals                        $   919,034     $ 1,701,438     $ 3,924,612
Direct finance lease income                         48,384         126,329         233,057
Depreciation                                      (556,217)     (1,167,438)     (2,919,980)
Interest expense on discounted lease rentals       (10,947)       (109,338)       (251,161)
                                               -----------     -----------     -----------
     Leasing margin                            $   400,254     $   550,991     $   986,528
                                               ===========     ===========     ===========

     Leasing margin ratio                               41%             30%             24%
                                                        ==              ==              ==
</TABLE>

As previously stated, the Partnership has liquidated, as defined in the
Partnership Agreement. Initial leases have expired and all remaining equipment
has been sold. As a result, both the size of the Partnership's leasing portfolio
and the amount of leasing revenue declined.

                                       6
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations, continued
         --------------


I.   Results of Operations, continued
     ---------------------

Equipment Sales Margin

Equipment sales margin consists of the following:

                                    Years Ended December 31,
                          ------------------------------------------

                              2001            2000          1999
                              ----            ----          ----
Equipment sales revenue   $ 3,037,912    $ 1,112,166    $ 2,114,523
Cost of equipment sales    (2,564,450)      (818,738)    (1,634,282)
                          -----------    -----------    -----------
Equipment sales margin    $   473,462    $   293,428    $   480,241
                          ===========    ===========    ===========

The Partnership ceased operations as of December 31, 2001. All remaining
equipment was sold to the original lessee or to third parties.

Liquidation

The Partnership liquidated (as defined in the Partnership Agreement) and a final
distribution was issued in December 2001. When calculating the amount of the
final distribution, the Partnership distributed assets to the general partner
representing the estimated settlement value of all remaining Partnership
liabilities. Since the general partner assumed the obligation for these
liabilities, the Liquidation amount in the accompanying Statements of Income
represents the net liabilities assumed by the general partner that were accrued
on the Partnership's books prior to its liquidation.

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 general partner decreased due to portfolio run-off.

Direct services from the general partner increased in 2001 compared to 2000
primarily due to activities related to converting the Partnership's assets from
the CAI computer systems to the MLC computer systems. Direct services from the
general partner decreased in 2000 compared to 1999 primarily due to portfolio
runoff.

General and administrative expenses increased in 2001 compared to 2000 primarily
due to insurance and audit costs, and consulting costs related to converting the
Partnership's assets from the CAII computer systems to the MLC computer systems.

                                       7
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations, continued
         --------------

I.   Results of Operations, continued
     ---------------------

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 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 will incur losses from those exposures in
the ordinary course of business. The Partnership performs assessments of the
estimated residual values of its assets to identify other-than-temporary losses
in value.

The provision for losses recorded during 2001 related to declines in the net
realizable value of equipment either sold to lessees or returned to the
Partnership, and subsequently sold. The fair market value of this equipment was
lower than anticipated.

The provision for losses recorded during 2000 related to the following:

*    $299,600 related to declines in the net realizable value of off-lease
     computer and industrial equipment.

*    $171,700 related primarily to lessees returning certain industrial and
     medical 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
     lessees. The fair market value of the equipment re-leased or sold to third
     parties was less than anticipated.

*    $126,000 related to computer equipment returned to the Partnership. The
     fair market value of this equipment was lower than anticipated.

*    $53,000 related to declines in the realizable value of on-lease
     transportation and industrial equipment.

The provision for losses recorded during 1999 related to the following:

*    $79,000 related to declines in the net realizable value of off-lease
     forklifts

o    $456,868 related primarily to lessees returning certain semiconductor,
     manufacturing and mining 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
     lessees. The fair market value of the equipment re-leases or sold to third
     parties was less than anticipated.

o    $175,000 related to declines in the realizable value of on-lease computer
     and manufacturing equipment.

                                       8
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations, continued
         --------------

II. Liquidity and Capital Resources
    -------------------------------

During 2001, 2000 and 1999, the Partnership declared distributions to the
partners of $1,845,387, $2,960,500, and $3,099,217, respectively. 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 that 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 Partnership liquidated (as defined in the Partnership Agreement) and a final
distribution was issued in December 2001. When calculating the amount of the
final distribution, the Partnership distributed $577,397 to the general partner
representing the estimated settlement value of all remaining Partnership
liabilities. It is the intent of the general partner to settle all such
liabilities. Excess cash remaining after such settlement, if any, or additional
cash necessary for such settlement, if any, will be for the account of the
general partner or the general partner's obligation, respectively. The
Partnership ceased operations December 31, 2001.

III. New Accounting Pronouncements
     -----------------------------

The Partnership ceased operations as of December 31, 2001. Therefore, new
accounting pronouncements with an effective date subsequent to December 31, 2001
will not affect the Partnership.

IV.  "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.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
          ----------------------------------------------------------

The Partnership ceased operations as of December 31, 2001. Consequently, the
Partnership has no market risk exposure.

                                       9
<PAGE>
Item 8.  Financial Statements and Supplementary Data
         -------------------------------------------

           Index to Financial Statements and
           Financial Statement Schedule

                                                                         Page
           Financial Statements                                         Number
           --------------------                                         ------

                  Independent Auditors' Report                            11

                  Balance Sheets as of December 31, 2001 and 2000         12

                  Statements of Income for the years ended
                    December 31, 2001, 2000 and 1999                      13

                  Statements of Partners' Capital for the years ended
                    December 31, 2001, 2000 and 1999                      14

                  Statements of Cash Flows for the years ended
                    December 31, 2001, 2000 and 1999                      15

                  Notes to Financial Statements                           16-24



          Financial Statement Schedule
          ----------------------------

                  Independent Auditors' Report                            25

                  Schedule II - Valuation and Qualifying Accounts         26


                                       10
<PAGE>

                          Independent Auditor's Report
                          ----------------------------




The Partners
Capital Preferred Yield Fund-II, L.P.:

We have audited the accompanying balance sheets of Capital Preferred Yield
Fund-II, L.P. as of December 31, 2001 and 2000, and the related statements of
income, partners' capital, and cash flows for each of the years in the
three-year period ended December 31, 2001. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in Note 1, the Partnership has liquidated and ceased operations as
of December 31, 2001, whereby all remaining cash has been distributed to both
the Class A limited partners and the general partner.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Capital Preferred Yield
Fund-II, L.P. as of December 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.

                                   /s/KPMG LLP
                                   -----------
                                   KPMG LLP



Denver, Colorado
March 22, 2002


                                       11
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                                 BALANCE SHEETS
                           December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                     ASSETS

                                                                           2001        2000
                                                                           ----        ----

<S>                                                                     <C>        <C>
Cash and cash equivalents                                               $   --     $  758,682
Accounts receivable, net                                                    --        119,034
Equipment held for sale                                                     --         74,996
Net investment in direct finance leases                                     --      1,246,976
Leased equipment, net                                                       --      1,996,693
                                                                        ------     ----------

          Total assets                                                  $   --     $4,196,381
                                                                        ======     ==========
                        LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
     Accounts payable and accrued liabilities                           $   --     $1,091,170
     Payable to affiliates                                                  --         82,588
     Rents received in advance                                              --         57,169
     Distributions payable to partners                                      --        178,815
     Discounted lease rentals                                               --        763,794
                                                                        ------     ----------
          Total liabilities                                                 --      2,173,536
                                                                        ------     ----------
Partners' capital:
     General partner                                                        --           --
     Limited partners:
          Class A 260,000 units authorized; 133,418 and 133,418 units
               issued and outstanding in 2001 and 2000, respectively        --      1,841,515
          Class B                                                           --        181,330
                                                                        ------     ----------
     Total partners' capital                                                --      2,022,845
                                                                        ------     ----------
     Total liabilities and partners' capital                            $   --     $4,196,381
                                                                        ======     ==========
</TABLE>

                 See accompanying notes to financial statements.

                                       12
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                              STATEMENTS OF INCOME
                  Years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                    2001           2000           1999
                                                    ----           ----           ----
Revenue:
<S>                                            <C>            <C>            <C>
     Operating lease rentals                   $   919,034    $ 1,701,438    $ 3,924,612
     Direct finance lease income                    48,384        126,329        233,057
     Equipment sales margin                        473,462        293,428        480,241
     Liquidation                                   265,242           --             --
     Interest income                                32,816         51,701         30,932
                                               -----------    -----------    -----------

          Total revenue                          1,738,938      2,172,896      4,668,842
                                               -----------    -----------    -----------

Expenses:
     Depreciation                                  556,217      1,167,438      2,919,980
     Interest on discounted lease rentals           10,947        109,338        251,161
     Management fees paid to general partner        29,603         61,544        103,977
     Direct services from general partner           69,277         51,942         90,393
     General and administrative                    431,792        233,286        183,548
     Provision for losses                          241,163        650,300        710,868

          Total expenses                         1,338,999      2,273,848      4,259,927
                                               -----------    -----------    -----------

Net income (loss)                              $   399,939    $  (100,952)   $   408,915
                                               ===========    ===========    ===========

Net income (loss) allocated:
     To the general partner                    $   578,995    $    29,605    $    30,994
     To the Class A limited partners              (177,265)      (129,304)       374,059
     To the Class B limited partner                 (1,791)        (1,253)         3,862
                                               -----------    -----------    -----------

                                               $   399,939    $  (100,952)   $   408,915
                                               ===========    ===========    ===========

Net income (loss) per weighted average Class
     A limited partner unit outstanding        $     (1.33)   $     (0.97)   $      2.80
                                               ===========    ===========    ===========

Weighted average Class A limited partner
     units outstanding                             133,418        133,418        133,425
                                               ===========    ===========    ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       13
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                         STATEMENTS OF PARTNERS' CAPITAL
                  Years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                          Class A
                                                          Limited      Class A         Class B
                                          General         Partner      Limited         Limited
                                          Partner          Units       Partners        Partner        Total
                                          -------          -----       --------        -------        -----

<S>                                    <C>                <C>        <C>            <C>            <C>
Partners' capital, January 1, 1999     $      --          133,518    $ 7,601,001    $   181,746    $ 7,782,747

Redemptions                                   --             (100)        (8,148)          --           (8,148)
Net income                                  30,994           --          374,059          3,862        408,915
Distributions declared to partners         (30,994)          --       (3,065,198)        (3,025)    (3,099,217)
                                       -----------        -------    -----------    -----------    -----------

Partners' capital, December 31, 1999          --          133,418      4,901,714        182,583      5,094,297

Net income (loss)                           29,605           --         (129,304)        (1,253)      (100,952)
Distributions declared to partners         (29,605)          --       (2,930,895)          --       (2,960,500)
                                       -----------        -------    -----------    -----------    -----------

Partners' capital, December 31, 2000          --          133,418      1,841,515        181,330      2,022,845

Net income                                 578,995           --         (177,265)        (1,791)       399,939
Transfer adjustments                          --             --          179,539       (179,539)          --
Distributions declared to partners        (578,995)          --       (1,843,789)          --       (2,422,784)
                                       -----------        -------    -----------    -----------    -----------


Partners' capital, December 31, 2001   $      --          133,418    $      --      $      --      $      --
                                       ==========         =======    ===========    ===========    ============
</TABLE>

                 See accompanying notes to financial statements.

                                       14
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                            STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2001, 2000 and 1999
<TABLE>
<CAPTION>
                                                                          2001           2000           1999
                                                                          ----           ----           ----
<S>                                                                  <C>            <C>            <C>
Cash flows from operating activities:
     Net income (Loss)                                               $   399,939    $  (100,952)   $   408,915
     Adjustments to reconcile net income to net
         cash provided by operating activities:
         Depreciation                                                    556,217      1,167,438      2,919,980
         Provision for losses                                            241,163        650,300        710,868
         Gain on liquidation                                            (265,242)          --             --
         Cost of equipment sales                                       2,564,450        818,738      1,634,282
         Recovery of investment in direct finance leases                 222,077        747,466        874,706
         Purchases of equipment on operating leases from affiliate          --             --           (3,364)
         Changes in assets and liabilities:
           Decrease in accounts receivable, net                          119,034        426,184        419,322
           Increase (decrease) in payables to affiliates                 (82,588)        69,933       (233,073)
           Decrease in accounts payable and accrued liabilities       (1,091,170)       (79,870)      (163,384)
           Increase (decrease) in rents received in advance              (57,169)        55,866       (104,029)
                                                                     -----------    -----------    -----------
     Net cash provided by operating activities                         2,606,711      3,755,103      6,464,223
                                                                     -----------    -----------    -----------
Cash flows from financing activities:
     Principal payments on discounted lease rentals                     (763,794)    (1,558,024)    (2,290,333)
     Distributions to partners                                        (2,601,599)    (2,783,685)    (3,605,321)
     Redemptions of Class A limited partner units                           --             --           (8,148)
                                                                     -----------    -----------    -----------
     Net cash used in financing activities                            (3,365,393)    (4,341,709)    (5,903,802)
                                                                     -----------    -----------    -----------

Net increase (decrease) in cash and cash equivalents                    (758,682)      (586,606)       560,421
Cash and cash equivalents at beginning of year                           758,682      1,345,288        784,867
                                                                     -----------    -----------    -----------
Cash and cash equivalents at end of year                             $      --      $   758,682    $ 1,345,288
                                                                     ===========    ===========    ===========
Supplemental disclosure of cash flow information:
     Interest paid on discounted lease rentals                       $    10,947    $   109,338    $   251,161
</TABLE>

                 See accompanying notes to financial statements.

                                       15
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                          NOTES TO FINANCIAL STATEMENTS

1.   Organization and Summary of Significant Accounting Policies
     -----------------------------------------------------------

     Organization

     Capital Preferred Yield Fund-II, L.P. (the "Partnership"), was organized on
     November 19, 1991 as a limited partnership under the laws of the State of
     Delaware pursuant to an Agreement of Limited Partnership (the "Partnership
     Agreement"). The Partnership was formed for the purpose of acquiring and
     leasing a diversified portfolio of equipment to unaffiliated third parties.
     The general partner of the Partnership is CAI Equipment Leasing III Corp.,
     a wholly owned subsidiary of Mishawaka Leasing Company, Inc. ("MLC"). The
     general partner manages the Partnership, including investment of funds,
     purchase and sale of equipment, lease negotiation and other administrative
     duties.

     The Partnership initially sold 135,774 Class A limited partner units to
     1,796 investors at a price of $250 per Class A limited partner unit.

     Mishawaka Leasing Company, Inc. is the Class B limited partner. The Class B
     limited partner was required to contribute cash, upon acquisition of
     equipment; in an amount equal to 1% of gross offering proceeds received
     from the sale of Class A limited partner units. The Class B limited partner
     contributed $330,000 to the Partnership. The Class B limited partner has no
     remaining obligation to contribute cash to the Partnership.

     During 2001, the Partnership liquidated and sold all remaining equipment. A
     final distribution was declared in accordance with the liquidation
     provisions of the Partnership Agreement. During December 2001, the
     Partnership made a final distribution to its Class A limited partners and
     distributed assets equal to the estimated settlement value of all remaining
     liabilities to the general partner. It is the intent of the general partner
     to settle all such liabilities. Excess cash remaining after such
     settlement, if any, or additional cash necessary for such settlement, if
     any, will be for the account of the general partner or the general
     partner's obligation, respectively. The Partnership ceased operation as of
     December 31, 2001.

     Use of Estimates

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenue and expenses during the reporting period. For leasing
     entities, this includes the estimate of residual values, as discussed
     below. Actual results could differ from those estimates.

                                       16
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued

     1.  Organization and Summary of Significant Accounting Policies, continued
         ------------------------------------------------------------

     Partnership Cash Distributions and Allocations of Profit and Loss

     Cash Distributions
     ------------------

     During the Reinvestment Period (as defined in the Partnership Agreement),
     available cash was distributed to the partners as follows:

         First, 1.0% to the general partner and 99.0% to the Class A limited
         partners until the Class A limited partners received annual,
         non-compounded cumulative distributions equal to 12% of their
         contributed capital.

         Second, 1.0% to the general partner and 99.0% to the Class B limited
         partner until the Class B limited partner received annual
         non-compounded cumulative distributions equal to 11% of its contributed
         capital.

         Third, any remaining available cash was reinvested or distributed to
         the partners as specified in the Partnership Agreement.

After the Reinvestment Period, as defined in the Partnership Agreement,
available cash is distributed to the partners as follows:

         First, in accordance with the first and second allocations during the
         Reinvestment Period as described above.

         Second, 99.0% to the Class A limited partners and 1.0% to the general
         partner, until the Class A limited partners achieve Payout, as defined
         in the Partnership Agreement.

         Third, 99.0% to the Class B limited partner and 1.0% to the general
         partner, until the Class B limited partner achieves Payout, as defined
         in the Partnership Agreement.

         Fourth, 99.0% to the Class A and Class B limited partners (as a class)
         and 1.0% to the general partner, until the Class A and Class B limited
         partners receive cash distributions equal to 170% of their capital
         contributions.

         Thereafter, 90% to the Class A and Class B limited partners (as a
         class) and 10% to the general partner.

     Federal Income Tax Basis Profits and Losses

     There are several special allocations that precede the general allocations
     of profits and losses to the partners. The most significant special
     allocations are as follows:

                                       17
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued

1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

     Partnership Cash Distributions and Allocations of Profit and Loss,
     continued

     Federal Income Tax Basis Profits and Losses, continued
     -------------------------------------------

         First, commissions and expenses paid in connection with the sale of
         Class A limited partner units are allocated 1.0% to the general partner
         and 99.0% to the Class A limited partners.

         Second, depreciation relating to Partnership equipment and any losses
         resulting from the sale of equipment are generally allocated 1.0% to
         the general partner and 99.0% to the limited partners (shared
         99.0%/1.0% by the Class A and Class B limited partners, respectively)
         until the cumulative amount of such depreciation and such losses
         allocated to each limited partner equals such limited partner's
         contributed capital reduced by commissions and other expenses paid in
         connection with the sale of Class A limited partner units allocated to
         such partner. Thereafter, gain on sale of equipment, if any, will be
         allocated to the general partner in an amount equal to the sum of
         depreciation and loss on sale of equipment previously allocated to the
         general partner.

         Third, notwithstanding anything in the Partnership Agreement to the
         contrary, and before any other allocation is made, items of income and
         gain for the current year (or period) shall be allocated, as quickly as
         possible, to the general partner to the extent of any deficit balance
         existing in the general partner's capital account as of the close of
         the immediately preceding year, in order to restore the balance in the
         general partner's capital account to zero.

     After giving effect to special allocations, profits, as defined in the
     Partnership Agreement, are first allocated in proportion to, and to the
     extent of, any previous losses, in reverse chronological order and
     priority. Any remaining profits are allocated in the same order and
     priority as cash distributions.

     After giving effect to special allocations, losses, as defined in the
     Partnership Agreement, are allocated in proportion to, and to the extent
     of, any previous profits, in reverse chronological order and priority. Any
     remaining losses are allocated 1.0% to the general partner and 99.0% to the
     limited partners (shared 99.0%/1.0% by the Class A and Class B limited
     partners, respectively).

     Financial Reporting - Profits and Losses
     ----------------------------------------

     For financial reporting purposes, net income is allocated to the partners
     in a manner consistent with the allocation of cash distributions.

     Recently Issued Financial Accounting Standards

     The Partnership ceased operations as of December 31, 2001. Therefore, new
     accounting pronouncements with an effective date subsequent to December 31,
     2001 will not affect the Partnership.

                                       18
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued

     Long-Lived Assets

     The Partnership accounts for long-lived assets under the provisions of
     Statements of Accounting Standards No. 121, Accounting for the Impairment
     of Long-lived Assets and for Long-lived assets to be Disposed Of ("SFAS No.
     121"). SFAS No. 121 requires that long-lived assets, including equipment
     subject to operating leases and certain identifiable intangibles to be held
     and used by an entity, be reviewed for impairment whenever events or
     changes in circumstances indicate that the carrying amount of an asset may
     not be recoverable. In performing the review for recoverability, the entity
     should estimate the future net cash flows expected to result from the use
     of the asset and its eventual disposition. If the sum of the expected
     future net cash flows (undiscounted and without interest charges) is less
     than the carrying amount of the asset, an impairment loss is recognized.
     Measurement of an impairment loss for long-lived assets, including
     equipment subject to operating lease and identifiable intangibles held by
     the Partnership, is based on the fair value of the asset. The fair value of
     the asset may be calculated by discounting the expected future net cash
     flows at an appropriate discount rate.

     Lease Accounting

     Statement of Financial Accounting Standards No. 13, Accounting for Leases,
     requires that a lessor account for each lease by the direct finance,
     sales-type or operating lease method. The Partnership currently utilizes
     the direct financing and operating methods for all of the Partnership's
     equipment under lease. Direct finance leases are defined as those leases
     that transfer substantially all of the benefits and risks of ownership of
     the equipment to the lessee. For all types of leases, the determination of
     profit considers the estimated value of the equipment at lease termination,
     referred to as the residual value. After the inception of a lease, the
     Partnership may engage in financing of lease receivables on a non-recourse
     basis (i.e., "non-recourse debt" or "discounted lease rentals") and/or
     equipment sale transactions to reduce or recover its investment in the
     equipment.

     The Partnership's accounting methods and their financial reporting effects
     are described below.

     Net Investment in Direct Finance Leases ("DFLs")

     The cost of the equipment, including acquisition fees paid to the general
     partner, is recorded as net investment in DFLs on the accompanying balance
     sheet. Leasing revenue, which is recognized over the term of the lease,
     consists of the excess of lease payments plus the estimated residual value
     over the equipment's cost. Earned income is recognized monthly to provide a
     constant yield and is recorded as direct finance lease income on the
     accompanying income statements. Residual values are established at lease
     inception equal to the estimated value to be received from the equipment
     following termination of the initial lease as determined by the general
     partner. In estimating such values, the general partner considers all
     relevant information regarding the equipment and the lessee.

                                       19
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued


1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

     Equipment on Operating Leases ("OLs")

     The cost of equipment, including acquisition fees paid to the general
     partner, is recorded as leased equipment in the accompanying balance sheets
     and is depreciated on a straight-line basis over the lease term to an
     amount equal to the estimated residual value at the lease termination date.
     Leasing revenue consists principally of monthly rents and is recognized as
     operating lease rentals in the accompanying income statements. Residual
     values are established at lease inception equal to the estimated value to
     be received from the equipment following termination of the initial lease
     as determined by the general partner. In estimating such values, the
     general partner considers all relevant information and circumstances
     regarding the equipment and the lessee. Because revenue, depreciation
     expense and the resultant profit margin, before interest expense, are
     recorded on a straight-line basis, and interest expense on discounted lease
     rentals is recorded on the interest method, lower returns are realized in
     the early years of the term of an OL and higher returns in later years.

     Non-recourse Discounting of Rentals

     The Partnership may assign the future rentals from leases to financial
     institutions, or acquire leases subject to such assignments, at fixed
     interest rates on a non-recourse basis. In return for such assigned future
     rentals, the Partnership receives the discounted value of the rentals in
     cash. In the event of default by a lessee, the financial institution has a
     first lien on the underlying leased equipment, with no further recourse
     against the Partnership. Cash proceeds from such financings, or the
     assumption of such financings, are recorded on the balance sheet as
     discounted lease rentals. As lessees make payments to financial
     institutions, leasing revenue and interest expense are recorded.

     Transactions Subsequent to Initial Lease Termination

     After the initial term of equipment under lease expires, the equipment is
     either sold or re-leased to the existing lessee or another third party. The
     remaining net book value of equipment sold is removed and gain
      or loss recorded when equipment is sold. The accounting for re-leased
     equipment is consistent with the accounting described under "Net Investment
     in Direct Financing Leases" and "Equipment on Operating Leases" above.

                                       20
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued

1.   Organization and Summary of Significant Accounting Policies, continued
      -----------------------------------------------------------

     Income Taxes

     No provision for income taxes has been made in the financial statements
     since taxable income or loss is recorded in the tax returns of the
     individual partners.

     Cash Equivalents

     The Partnership considers short-term, highly liquid investments that are
     readily convertible to known amounts of cash to be cash equivalents. Cash
     equivalents of approximately $754,000 at December 31, 2000 are comprised of
     investments in a money market fund that invests solely in U.S. Government
     securities having maturities of 90 days or less.

     Equipment Held for Sale

     Equipment held for sale, recorded at the lower of cost or market value
     expected to be realized, consists of equipment previously leased to end
     users which has been returned to the Partnership following lease
     expiration.

     Net Income Per Class A Limited Partner Unit

     Net income per Class A limited partner unit is computed by dividing the net
     income allocated to the Class A limited partners by the weighted average
     number of Class A limited partner units outstanding during the period.

2.   Net Investment in Direct Finance Leases

     The components of net investment in direct finance leases as of December
     31, 2000 were:

                                                           2000
                                                           ----

      Minimum lease payments receivable              $   420,708
      Estimated residual values                          879,576
      Less unearned income                               (53,308)
                                                     -----------

                                                     $ 1,246,976
                                                     ===========

                                       21
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued

3.    Leased Equipment
      ----------------

      The Partnership's investments in equipment on operating leases by major
      classes as of December 31, 2000 were:

                                                             2000
                                                             ----
      Transportation and industrial equipment          $   6,322,388
      Computers and peripherals                               63,167
      Office furniture and equipment                         424,896
                                                       -------------
                                                           6,810,451
      Less:
         Accumulated depreciation                         (4,813,758)
                                                       -------------
                                                       $   1,996,693
                                                       =============


      Depreciation expense for 2001, 2000 and 1999 was $556,217, $1,167,438 and
      $2,919,980, respectively.

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

      Management Fees Paid to General Partner
      ---------------------------------------

      The general partner earns management fees as compensation for services
      performed in connection with managing the Partnership's equipment equal to
      2% of gross rentals received as permitted under terms of the Partnership
      Agreement. The general partner earned approximately $30,000, $62,000 and
      $104,000 of management fees during 2001, 2000 and 1999, respectively.

      Direct Services from General Partner
      ------------------------------------

      The general partner and its affiliates 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. The Partnership recorded approximately
      $69,000, $52,000 and $90,000 of direct services from the general partner
      during 2001, 2000 and 1999, respectively.

      Equipment Purchases
      -------------------

      The equipment purchase in 1999 represented an upgrade to an existing lease

      Payables to Affiliates
      ----------------------

      Payables to affiliates for December 31, 2000 consist of $5,094 for
      management fees to the general partner and $77,494 for general and
      administrative expenses.

                                       22
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued

5.    Tax Information, (unaudited)
      ---------------

      The following reconciles net income for financial reporting purposes to
      the income (loss) for federal income tax purposes for the years ended
      December 31,:

<TABLE>
<CAPTION>
                                                          2001          2000           1999
                                                          ----          ----           ----
<S>                                                  <C>           <C>            <C>
Net income (loss) per financial statements           $   134,697   $  (100,952)   $   408,915
Differences due to:
  Direct finance leases                                  558,304       754,121        871,084
  Depreciation                                           203,219      (453,768)       (72,828)
  Provision for losses                                   241,163       650,300        710,868
  Gain/loss on sale of assets                            685,603       207,893         (6,743)
  Other                                                   14,844       (40,395)       (64,350)
                                                     -----------   -----------    -----------
Partnership income for federal income tax purposes   $ 1,837,830   $ 1,017,289    $ 1,846,946
                                                     ===========   ===========    ===========
</TABLE>

      The following reconciles partners' capital for financial reporting
      purposes to partners' capital for federal income tax purposes for the
      years ended December 31,:

<TABLE>
<CAPTION>
                                                    2001          2000            1999
                                                    ----          ----            ----

<S>                                                 <C>      <C>             <C>
Partners' capital per financial statements          $ --     $  2,022,845    $  5,084,297
Differences due to:
   Commissions and offering costs                     --        4,868,944       4,868,944
Direct finance leases                                 --        7,375,057       6,620,936
   Depreciation                                       --      (12,841,505)    (12,387,737)
   Provision for losses                               --        1,871,168       1,220,868
  Gain/loss on sale of assets                         --          207,983          (6,743)
  Other                                               --        1,694,429       1,694,567
                                                    -----    ------------    ------------
Partners' capital for federal income tax purposes   $ --     $  5,151,421    $  7,095,132
                                                    =====    ============    ============
</TABLE>

                                       23
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.
                    NOTES TO FINANCIAL STATEMENTS, Continued


  6.  Concentration of Credit Risk
      ----------------------------

      Approximately 71% of the Partnership's equipment under lease was leased to
      investment grade lessees. Pursuant to the Partnership Agreement, an
      investment grade lessee is a company (i) with net worth in excess of $100
      million (and no debt issues that are rated), or (ii) with a credit rating
      of not less than Baa as determined by Moody's Investor Service, Inc., or
      comparable credit rating as determined by another recognized credit rating
      service; or (iii) a lessee, all of whose lease payments have been
      unconditionally guaranteed or supported by a letter of credit issued by a
      company meeting one of the above requirements.

      The Partnership's cash balance is maintained with a high credit quality
      financial institution. At times such balances may exceed the FDIC
      insurance limit due to receipt of lockbox amounts that have not cleared
      the presentment bank (generally for less than two days). As the funds
      become available, they are invested in a money market mutual fund.

                                       24
<PAGE>


                          Independent Auditors' Report
                          ----------------------------



The Partners
Capital Preferred Yield Fund-II, L.P.:

Under date of March 22, 2002, we reported on the balance sheets of Capital
Preferred Yield Fund-II, L.P. as of December 31, 2001 and 2000, and the related
statements of income, partners' capital, and cash flows for each of the years in
the three-year period ended December 31, 2001, as contained in the Partnership's
annual report on Form 10-K for the year 2001. In connection with our audits of
the aforementioned financial statements, we also audited the related financial
statement Schedule II. This financial statement schedule is the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

                                   /s/KPMG LLP
                                   -----------
                                    KPMG LLP

Denver, Colorado
March 22, 2002



                                       25
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-II, L.P.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              for the years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
      COLUMN A                COLUMN B           COLUMN C            COLUMN D             COLUMN E
---------------------        -----------         ---------         --------------         --------
                              Balance at         Additions                                Balance
                              Beginning         Charged to                                at End
Classification                 of Year           Expenses          Deductions (1)         of Year
--------------               -----------        ----------         --------------         --------

       2001
       ----
<S>                          <C>                 <C>              <C>                   <C>
Allowance for losses:
  Accounts receivable        $ 25,000            $  -             $ (25,000)            $   -

       2000
       ----
Allowance for losses:
  Accounts receivable        $ 25,000            $  -             $    -                $ 25,000

       1999
       ----
Allowance for losses:
  Accounts receivable        $ 25,000            $  -             $    -                $ 25,000
</TABLE>


1) Principally charge-offs of assets against the established allowances.



                  See accompanying independent auditors' report

                                       26
<PAGE>
Item 9.  Disagreements on Accounting and Financial Disclosures
         ------------------------------------------------------

None

Item 10. Directors and Executive Officers of the Partnership
         ---------------------------------------------------

The Partnership has no officers and directors. The general partner manages and
controls the affairs of the Partnership and has general responsibility and
authority in all matters affecting its business. Information concerning the
directors and executive officers of the general partner is as follows:

                      CAI Equipment Leasing III Corporation

              Name                     Positions Held
              ----                     --------------

         John F. Olmstead           President and Director

John F. Olmstead, age 58, is President of Mishawaka Leasing Co. since its
formation in September 2000. He was Senior Vice President of CAI from December
1998 until June 2000. He has served as Chairman of the Board for Neo-kam
Industries, Inc., Matchless Metal Polish Company, Inc. and ACL, Inc. since 1983.
He has over 30 years of experience holding various positions of responsibility
in the leasing industry. Mr. Olmstead holds a Bachelor of Science degree from
Indiana University and a Juris Doctorate degree from Indiana Law School.

Item 11. Executive Compensation
         ----------------------

No compensation was paid by the Partnership to the officers and directors of the
general partner. See Item 13 of this Report, "Certain Relationships and Related
Transactions", for a description of the compensation and fees paid to the
general partner and its affiliates by the Partnership during 2001.

Item 12. Security Ownership of Certain Beneficial Owners and Management
         --------------------------------------------------------------

    (a)  As of the date hereof, no person is known by the Partnership to be the
         beneficial owner of more than 5% of the Class A limited partner units
         of the Partnership. The Partnership has no directors or officers, and
         neither the general partner nor the Class B limited partner of the
         Partnership own any Class A limited partner units.

         MLC is the Class B limited partner.

                                       27
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management,
         --------------------------------------------------------------
         continued

         CAI Equipment Leasing III Corp. is the general partner.

         The names and addresses of the general partner and the Class B limited
         partner are as follows:

         General partner
         ---------------

         CAI Equipment Leasing III Corp.
         2750 South Wadsworth
         C-200
         Denver, Colorado 80227

         Class B Limited Partner

         Mishawaka Leasing Company, Inc.
         2750 South Wadsworth
         C-200
         Denver, Colorado 80227

     (b) No directors or officers of the general partner or the Class B limited
         partner owned any Class A limited partner units as of December 31,
         2001.

     (c) The Partnership knows of no arrangements, the operation of which may at
         a subsequent date result in a change in control of the Partnership.

Item 13. Certain Relationships and Related Transactions
         ----------------------------------------------

The general partner and its affiliates receive certain types of compensation,
fees or other distributions in connection with the operations of the
Partnership.

Following is a summary of the amounts paid or payable to the general partner and
its affiliates during 2001:

Management Fees
---------------

The general partner earns management fees as compensation for services rendered
in connection with managing the Partnership's equipment equal to 2% of gross
rentals received. Such fees totaled approximately $30,000 for 2001.

                                       28
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued

Accountable General and Administrative Expenses
-----------------------------------------------

The general partner is entitled to reimbursement of certain expenses paid on
behalf of the Partnership that are incurred in connection with the Partnership's
operations. Such reimbursable expenses amounted to approximately $69,000 during
2001.

General partner Distributions
-----------------------------

The general partner is allocated 1% of Partnership cash distributions and net
income relating to its general partner interest in the Partnership.
Distributions and net income allocated to the general partner totaled $578,995
and $1,548, respectively, for 2001. Net income allocated to the Class B limited
partner totaled $1,351 for 2001.

The Partnership liquidated (as defined in the Partnership Agreement) and a final
distribution was issued in December 2001. When calculating the amount of the
final distribution, the Partnership distributed assets equal to the estimated
settlement value of all remaining liabilities to the general partner. It is the
intent of the general partner to settle all such liabilities. Excess cash
remaining after such settlement, if any, or additional cash necessary for such
settlement, if any, will be for the account of the general partner or the
general partner's obligation, respectively. The Partnership ceased operations as
of December 31, 2001.

                                       29
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) and (d)   The following documents are filed as part of this Report:

         1.  Financial Statements: (Incorporated by reference to Item 8 of this
             Report, "Financial Statements and Supplementary Data").

         2.  Financial Statement Schedule: (Incorporated by reference to Item 8
             of this Report, "Financial Statements and Supplementary Data").

        (b)    The Partnership did not file any reports on Form 8-K during the
              quarter ended December 31, 2001.

        (c)    Exhibits required to be filed.


       Exhibit                           Exhibit
       Number                             Name
       ------                             ----

        4.1*    Capital Preferred Yield Fund-II Limited Partnership Agreement

        4.2*    First Amendment to Limited Partnership Agreement dated June 12,
                1992

        4.3*    Amended and Restated Agreement of Limited Partnership of Capital
                Preferred Yield Fund-II, L.P.

        *       Not filed herewith. In accordance with Rule 12b-32 of the
                General Rules and Regulations under the Securities Exchange Act
                of 1934, reference is made to the document previously filed with
                the Commission.


                                       30
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: April 1, 2002                Capital Preferred Yield Fund-II, L.P.

                                    By: CAI Equipment Leasing III Corporation

                                    By:
                                        Joseph F. Bukofski
                                        Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the general partner
of the Partnership and in the capacities indicated on April 1, 2002.

Signature                                   Title
---------                                   -----


John F. Olmstead                    President and Director

                                       31
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: April 1, 2002                Capital Preferred Yield Fund-II, L.P.

                                    By: CAI Equipment Leasing III Corporation

                                    By: /s/Joseph F. Bukofski
                                        ---------------------
                                        Joseph F. Bukofski
                                        Chief Accounting Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the general partner
of the Partnership and in the capacities indicated on April 1 2002.

Signature                                  Title
---------                                  -----


/s/John F. Olmstead
-------------------
John F. Olmstead                    President and Director

                                       31