SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[ X ]    Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

For the Fiscal Year Ended December 31, 2000

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 0-14217


                          ML VENTURE PARTNERS II, L.P.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


Delaware                                                          13-3324232
--------------------------------------------------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

4 World Financial Center, 26th Floor
New York, New York                                                        10080
--------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)

Registrant's telephone number, including area code:  (212) 449-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class               Name of each exchange on which registered
-------------------               -----------------------------------------
    None                                           None

Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
--------------------------------------------------------------------------------
                                (Title of class)


<PAGE>


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. [X]

As of March 15, 2001,  119,636 units of limited  partnership  interest ("Units")
were held by  non-affiliates of the registrant.  There is no established  public
trading market for such Units.





                       DOCUMENTS INCORPORATED BY REFERENCE


Portions of the  Prospectus  of the  Registrant  dated  February  10,  1987,  as
supplemented by a supplement  thereto dated April 21, 1987, are  incorporated by
reference in Part I and Part II hereof.



<PAGE>


                                     PART I

Item 1.       Business.
              --------

Formation

ML Venture Partners II, L.P. (the  "Partnership" or the  "Registrant") is a
Delaware limited partnership organized on February 4, 1986. The General Partners
of the  Partnership  consist  of  three  individuals  (the  "Individual  General
Partners") and MLVPII Co., L.P. (the  "Managing  General  Partner"),  a New York
limited partnership in which Merrill Lynch Venture Capital Inc. (the "Management
Company")  is  the  general  partner.  The  Management  Company  is an  indirect
subsidiary  of Merrill  Lynch & Co.,  Inc. and an  affiliate  of Merrill  Lynch,
Pierce,  Fenner & Smith Incorporated  ("Merrill Lynch").  DLJ Capital Management
Corporation  (the  "Sub-Manager"),  an affiliate  of Credit  Suisse First Boston
(USA), Inc., is the sub-manager pursuant to a sub-management agreement among the
Partnership,  the  Managing  General  Partner,  the  Management  Company and the
Sub-Manager.

The Partnership  operates as a business development company under the Investment
Company Act of 1940. The Partnership's investment objective is to seek long-term
capital  appreciation  from its portfolio of venture  capital  investments.  The
Partnership considers this activity to constitute the single industry segment of
venture capital investing.

Through Merrill Lynch, the Partnership publicly offered 120,000 units of limited
partnership interest (the "Units") at $1,000 per Unit. The Units were registered
under the Securities  Act of 1933 pursuant to a  Registration  Statement on Form
N-2 (File No. 33-3220),  which was declared  effective on February 10, 1987. The
Partnership  held its initial and final  closings on March 31, 1987 and June 10,
1987, respectively.  A total of 120,000 Units were accepted at such closings and
the additional  limited  partners (the "Limited  Partners") were admitted to the
Partnership.

The information set forth under the captions "Risk and Other Important  Factors"
(pages 8 through 11), "Investment Objective and Policies" (pages 14 through 16),
"Venture  Capital  Operations"  (pages 17 through 20) and "Portfolio  Valuation"
(pages 27 and 28) in the prospectus of the Partnership  dated February 10, 1987,
filed with the Securities and Exchange  Commission pursuant to Rule 424(b) under
the Securities Act of 1933, as supplemented by a supplement  thereto dated April
21, 1987 and filed pursuant to Rule 424(c) under the Securities Act of 1933 (the
"Prospectus"), is incorporated herein by reference.

The Venture Capital Investments

The Partnership  has fully invested the net proceeds  received from the offering
of Units  and will not make  investments  in any new  portfolio  companies.  The
Partnership made no new or follow-on investments during the years ended December
31, 2000 and 1999.

As of December 31, 2000, the Partnership's only remaining portfolio  investment,
Raytel Medical  Corporation  had a cost of $241,639 and a fair value of $40,625.
During the year ended  December 31, 2000,  the  Partnership  liquidated  certain
portfolio  investments,  realizing a net return of $10,360,859 and a net gain of
$7,638,492.  Portfolio  investments sold and written-off  during 2000 are listed
below:



<PAGE>


Portfolio Liquidations for the
<TABLE>
<S>                 <C> <C>
Year Ended December 31, 2000 (a):
                                                           Shares                              Realized
Investment                                                  Sold              Cost            Gain (Loss)           Return
------------------------------------------------------------------------------------------------------------------------------

ReGen Biologics, Inc. (Sanderling)                             135,200    $     114,764      $      (52,410)   $         62,354
Stereotaxis, Inc. (Sanderling)                                 156,306           62,900              35,613              98,513
Burns International Services Corporation                       500,000        2,500,000           7,619,992          10,119,992
Brightware, Inc. - write-off                                       n/a           44,703             (44,703)                  0
Research Applications, Inc.                                        n/a                -              80,000              80,000
                                                                           ------------       -------------    ----------------
Total                                                                     $   2,722,367      $    7,638,492    $     10,360,859
                                                                          =============      ==============    ================
</TABLE>

(a)  See  Schedule of  Portfolio  Investments  included in the December 31, 2000
     audited  financial  statements for cumulative  results of  liquidations  of
     these investments.

As of December 31,  2000,  the  Partnership  had  invested  $116,532,996  in its
portfolio of venture capital  investments.  From its inception  through December
31, 2000,  the  Partnership  had liquidated  investments  with an aggregate cost
basis of $116,291,357. These liquidated investments returned $241,234,244 to the
Partnership, resulting in a net realized gain of $124,942,887. Additionally, the
Partnership  earned  interest  and  dividend  income  from its  venture  capital
investments totaling $4,258,728 from inception to December 31, 2000.

Termination

In March 2001,  the  Partnership  completed  the  liquidation  of its  portfolio
investments  with the sale of its  holdings of Raytel  Medical  Corporation  for
$28,866,  which  resulted  in a  realized  loss of  $212,773.  As a result,  the
Partnership  terminated its operations and made its final cash  distribution  to
partners on March 29, 2001.

Competition

The  Partnership  encounters  competition  from other  entities  having  similar
investment objectives,  including other entities affiliated with Merrill Lynch &
Co., Inc.  Primary  competition  for venture  capital  investments has been from
venture capital partnerships, venture capital affiliates of large industrial and
financial   companies,   small   business   investment   companies  and  wealthy
individuals.  Competition  has also been from foreign  investors  and from large
industrial  and  financial  companies  investing  directly  rather than  through
venture capital  affiliates.  The Partnership was frequently a co-investor  with
other professional  venture capital investors and these relationships  generally
had expanded the Partnership's access to investment  opportunities.  However, as
discussed above, the Partnership will not make any new portfolio investments.

Employees

The Partnership has no employees.  The Partnership  Agreement  provides that the
Managing General Partner,  subject to the supervision of the Individual  General
Partners,  manages and controls the Partnership's  venture capital  investments.
The  Management  Company is responsible  for the  management and  administrative
services  necessary for the operation of the Partnership  including managing the
Partnership's   short-term   investments.   The  Sub-Manager,   subject  to  the
supervision of the Management Company and Individual General Partners,  provides
management  services  in  connection  with  the  Partnership's  venture  capital
investments.


<PAGE>


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

The Partnership does not own or lease physical properties.

Item 3.  Legal Proceedings.
         -----------------

The Partnership is not a party to any material pending legal proceedings.

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

No matter was submitted  during the fourth quarter of the fiscal year covered by
this report to a vote of security holders.

                                     PART II

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

The  information  with  respect to the market for the Units set forth  under the
subcaption  "Substituted  Limited Partners" on pages 30 and 31 of the Prospectus
is  incorporated   herein  by  reference.   An  established  public  market  for
Registrant's  Units does not now exist,  and it is not  anticipated  that such a
market will develop in the future.  Accordingly,  accurate information as to the
market  value of a Unit at any  given  date is not  available.  The  approximate
number of holders of Units as of March 15, 2001 was 12,415. The Managing General
Partner  and the  Individual  General  Partners  of the  Partnership  also  hold
interests in the Partnership.

Merrill Lynch has implemented  guidelines pursuant to which it reports estimated
values of limited partnership  interests  originally sold by Merrill Lynch (such
as  Registrant's  Units)  two times  per year.  Such  estimated  values  will be
provided to Merrill Lynch by independent  valuation  services based on financial
and other  information  available to the  independent  services on (i) the prior
August 15th for reporting on December  year-end and  subsequent  client  account
statements through the following May's month-end client account statements,  and
on (ii) the prior March 31st for  reporting  on June  month-end  and  subsequent
client  account   statements  through  the  November  month-end  client  account
statements of the same year.

As of December 31,  2000,  the Managing  General  Partner's  estimate of the net
asset value of the Partnership is $3 per Unit,  including an assumed  allocation
of net unrealized  depreciation of investments.  The Managing General  Partner's
estimate of net asset value as set forth  above  reflects  the fair value of the
Partnership's  underlying  assets  remaining  at  year-end,  whereas  the  value
provided by the independent  valuation  services reflects the estimated value of
the Partnership  Units themselves based on information that was available on the
prior  August  15th  as  stated  above.  The  estimated  value  provided  by the
independent  valuation services and the Registrant's current net asset value are
not  market  values  and Unit  holders  may not be able to sell  their  Units or
realize either amount upon a sale of their Units. In addition,  Unit holders may
not realize the  independent  estimated  value or the  Registrant's  current net
asset value amount upon the  liquidation  of Registrant.  Since the  Partnership
terminated and made its final cash  distribution  to Partners on March 29, 2001,
the net asset value of the Partnership is zero.



<PAGE>


Cash Distributions
Cash  distributions  paid or accrued  during the three years ended  December 31,
2000 and cumulative  cash  distributions  paid to partners from inception of the
Partnership  through  December  31,  2000 and  through  March 29,  2001 (date of
termination) are listed below:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                      Managing          Individual                                    Per
                                                       General            General              Limited              $1,000
Distribution Date                                      Partner           Partners             Partners               Unit
------------------------------------              ---------------      -------------     -----------------       -------------

Inception to December 31, 1997                    $    24,133,864        $    6,100      $     183,000,000      $     1,525.00
January 26, 1999 (accrued as of 12/31/98)                 314,632               140              4,200,000               35.00
October 7, 1999                                           180,589               140              4,200,000               35.00
January 25, 2000 (accrued as of 12/31/99)               1,384,720               244              7,320,000               61.00
October 5, 2000                                         1,747,212               284              8,520,000               71.00
                                                  ---------------        ----------      -----------------      --------------

Cumulative totals as of December 31, 2000              27,761,017             6,908            207,240,000            1,727.00

March 29, 2001                                            132,595                 7                201,600                1.68
                                                  ---------------        ----------      -----------------      --------------
Cumulative totals as of March 29, 2001
  (Date of termination)                           $    27,893,612        $    6,915      $     207,441,600      $     1,728.68
                                                  ===============        ==========      =================      ==============

Item 6.       Selected Financial Data.
              -----------------------
($ In Thousands, Except For Per Unit Information)
                                                                           Years Ended December 31,
                                                           2000           1999            1998           1997           1996
                                                       -----------     -----------    -----------    -----------    -----------
Net realized gain (loss) from investments              $     7,638     $     6,026    $    (2,166)   $    15,606    $    46,879

Net change in unrealized appreciation
   of investments                                           (2,651)         (2,322)           765         (5,873)       (25,245)

Net increase (decrease) in net assets
   resulting from operations                                 4,738           3,430         (1,554)         9,786         20,947

Cash distributions - paid or accrued                        10,267          13,086          4,515         30,002         59,366

Cumulative cash distributions - paid or accrued            235,008         224,741        211,655        207,140        177,138

Total assets                                                   716          14,946         20,359         21,919         42,268

Net unrealized appreciation (depreciation)
   of investments                                             (201)          2,450          4,773          4,008          9,880

Per unit of limited partnership interest:
Net realized gain (loss) from investments                 $     50         $    40       $    (14)       $   103       $    309

Net increase (decrease) in net assets
   resulting from operations                                    31              22            (10)            64            137

Cash distributions - paid or accrued                            71              96             35            225            410

Cumulative cash distributions - paid or accrued              1,727           1,656          1,560          1,525          1,300

Net unrealized appreciation (depreciation) of
   investments                                                  (1)             16             32             26             65

Net asset value                                                  3              43            117            162            323

</TABLE>

<PAGE>


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


Liquidity and Capital Resources

The  Partnership  invests  its cash  balances  in  short-term  investments  with
maturities of less than one year and in an interest-bearing  cash account. As of
December 31, 2000, the  Partnership  held $675,009 in an  interest-bearing  cash
account and had no  short-term  investments.  For the years ended  December  31,
2000,  1999 and 1998,  the  Partnership  earned  interest from such  investments
totaling  $181,090,  $202,271 and  $280,896,  respectively.  Interest  earned in
future  periods is subject to  fluctuations  in  short-term  interest  rates and
changes in amounts available for investment in such securities.  Funds needed to
cover  future  operating  expenses  will be obtained  from these  existing  cash
reserves and from interest,  other investment  income and proceeds from the sale
of the Partnership's remaining portfolio investments.

During the year ended  December 31, 2000,  the  Partnership  liquidated  certain
portfolio investments, realizing a net return of $10,360,859, resulting in a net
realized  gain  of  $7,638,492.   The  Partnership's  only  remaining  portfolio
investment  as of December  31, 2000 was Raytel  Medical  Corporation.  In March
2001, the  Partnership  completed the  liquidation of its portfolio  investments
with the sale of its Raytel  holdings for $28,866,  which resulted in a realized
loss of $212,773.

On  October  5, 2000,  the  Partnership  made a cash  distribution  to  partners
totaling $10,267,496.  Limited partners of record on September 30, 2000 received
$8,520,000,  or $71 per Unit, the Individual  General Partners received $284 and
the Managing General Partner received $1,747,212.  In addition,  the Partnership
made its final cash  distribution to partners  totaling  $334,202,  on March 29,
2001.  Limited  Partners  received  $201,600 or $1.68 per Unit,  the  Individual
General Partners received $7 and the Managing General Partner received $132,595.

Results of Operations

For the year ended  December 31, 2000, the  Partnership  had a net realized gain
from  operations of $7,389,031.  For the years ended December 31, 1999 and 1998,
the  Partnership  had a net realized gain from  operations of a $5,752,709 and a
net realized loss from operations of $2,319,244, respectively. Net realized gain
or loss  from  operations  is  comprised  of 1) net  realized  gain or loss from
portfolio  investments and 2) net investment income or loss (interest,  dividend
and other income less operating expenses).

Realized  Gains and  Losses  from  Portfolio  Investments  - For the year  ended
December 31, 2000, the  Partnership  had a $7,638,492 net realized gain from its
portfolio  investments.  During 2000,  the  Partnership  sold its 500,000 common
shares of Burns  International  Services  Corporation for net proceeds  totaling
$10,119,992 compared to a cost of $2,500,000, for a realized gain of $7,619,992.
Also, during 2000, the Partnership received $80,000 from Research  Applications,
Inc., a portfolio  investment that had been previously written off, resulting in
a realized gain for the entire amount.  Additionally,  the Partnership  sold its
investments  in  Stereotaxis,  Inc.  and  ReGen  Biologics,  Inc.  in a  private
transaction for $160,867,  resulting in a net realized loss of $16,797. Finally,
the  Partnership  wrote-off its investment in  Brightware,  Inc. on December 31,
2000, which resulted in a realized loss of $44,703.

For the year ended  December  31, 1999,  the  Partnership  had a $6,025,590  net
realized gain from its portfolio investments.  During 1999, the Partnership sold
its 809,704  common  shares of Diatide,  Inc. in  connection  with a cash tender
offer of the company's  outstanding  shares for $7,692,188,  or $9.50 per share,
resulting in a realized gain of $4,706,165.  Also during 1999,  the  Partnership
sold the following  securities in the public  market:  428,879  common shares of
Photon  Dynamics,  Inc. for $4,567,021,  realizing a gain of $2,114,795;  19,063
common shares of CoCensys,  Inc. for $19,071,  realizing a loss of $173,433; and
60,000 common shares of Corporate Express,  Inc. for $582,000,  realizing a gain
of  $570,000.  Also during  1999,  the  Partnership  realized a gain of $389,118
reflecting the receipt of the final  liquidation  payment from Horizon  Cellular
Telephone Company,  L.P. The Partnership  realized  additional gains during 1999
resulting from the receipt of $8,304 from the sale of its remaining  interest in
Ogle Resources,  Inc., an investment that had been previously  written-off,  and
$1,567 from a final liquidating  distribution payment from MLMS Cancer Research,
Inc.  Finally  during  1999,  the  Partnership  realized  losses of  $1,000,548,
$227,000 and $363,378 resulting from the write-off of its remaining  investments
in  Clarus  Medical   Systems,   Inc.,  IDE  Corporation  and  Neocrin  Company,
respectively,  due to continued  business and  financial  difficulties  at these
companies.

For the year ended  December  31, 1998,  the  Partnership  had a $2,166,356  net
realized  loss  from  its  portfolio   investments.   During  1998,   Sanderling
Biomedical,   L.P.   completed  the  liquidation  of  its  remaining   portfolio
investments,  resulting in the  termination  of Sanderling in December 1998. The
Partnership,  which  had an 80%  limited  partnership  interest  in  Sanderling,
received   three  in-kind   liquidating   distributions   and  a  $325,567  cash
distribution  from Sanderling  during 1998. The in-kind  distributions  included
93,745 shares of Depotech Corp. Inc., a public company. The Partnership sold its
shares of Depotech in November 1998 for  $136,878,  resulting in a realized gain
of  $79,822.  The  Partnership  also  realized a loss of  $775,338  during  1998
resulting  from  the  write-off  of  the  unreturned   cost  of  its  Sanderling
investment. Also during 1998, the Partnership received $187,194 plus interest of
$13,069  from  Horizon  Cellular  Telephone  Company,  L.P.,   representing  the
liquidation  payments  relating to the sale of the  Partnership's  investment in
Horizon.  These payments and the corresponding  write-off of the unreturned cost
of the  Partnership's  investment in Horizon  resulted in a net realized loss of
$18,044 for 1998.  Finally,  during  1998,  the  Partnership  realized a loss of
$1,488,884  from  the  write-off  of its  remaining  investment  in  Biocircuits
Corporation, which ceased operations during the year.

Investment Income and Expenses - For the years ended December 31, 2000, 1999 and
1998  the  Partnership  had a net  investment  loss of  $249,461,  $272,881  and
$152,888, respectively.

The favorable  change in net investment  loss for 2000 compared to 1999 resulted
from a decrease in operating expenses of $44,982, partially offset by a decrease
in investment income of $21,562.  The decline in investment income primarily was
due to a  $21,181  decrease  in  interest  income  from  short-term  investments
resulting from a decrease in funds  available for investment in such  securities
during 2000  compared to 1999.  The  reduction  in  operating  expenses for 2000
compared  to 1999,  includes a $25,500  decline in fees paid to the  Independent
General  Partners  ("IGPs"),  resulting  from the change  from three to two IGPs
beginning in the second  quarter of 2000.  The  reduction in operating  expenses
also  reflects  declines in  professional  fees,  mailing and printing and other
operating  expenses.  The decline in professional fees is due to lower legal and
outside  accounting  fees,  reflecting  the  decreased  level of activity as the
Partnership  proceeds with the  liquidation  of its remaining  investments.  The
decline  in  mailing  and  printing  expenses  is due  to  costs  incurred  from
additional limited partner  notifications  mailed during 1999 and the decline in
other  operating  expenses  primarily  resulted from a one-time  insurance costs
incurred during 1999.

The  unfavorable  change in net  investment  income  for 1999  compared  to 1998
resulted  from a decrease  in  investment  income of $91,022  and an increase in
operating  expenses of $28,971.  The decline in investment  income primarily was
due to a  $78,625  decrease  in  interest  income  from  short-term  investments
resulting from a decrease in funds  available for investment in such  securities
during 1999 compared to 1998. The small increase in operating  expenses reflects
increases in professional fees of $14,331,  fees paid to the Independent General
Partners  of $9,000  and small  increases  in  mailing  and  printing  and other
expenses.

The  Management  Company is responsible  for the  management and  administrative
services necessary for the operation of the Partnership.  The Management Company
receives  a  management  fee at an  annual  rate of 2.5%  of the  gross  capital
contributions to the Partnership, reduced by selling commissions, organizational
and offering  expenses paid by the  Partnership,  return of capital and realized
capital  losses,  with a minimum annual fee of $200,000.  Such fee is determined
and payable  quarterly.  The management fee for each of the years ended December
31, 2000, 1999 and 1998,  reflected the $200,000 minimum fee. The management fee
and other  operating  expenses are paid with funds provided from  operations and
from existing cash  reserves.  Funds  provided from  operations  for the periods
presented  were  obtained from interest  received from  short-term  investments,
interest and other income from portfolio  investments and proceeds from the sale
of certain portfolio investments.

Unrealized Gains and Losses and Changes in Unrealized  Appreciation of Portfolio
Investments - During the year ended December 31, 2000, the Partnership increased
the fair  value of its  portfolio  of  investments  on a net basis by  $533,692.
Additionally  during 2000,  $3,185,049 was  transferred  from unrealized gain to
realized gain relating to portfolio  investments  sold during 2000, as discussed
above.  As a result,  unrealized  appreciation  of  investments  was  reduced by
$2,651,357 for 2000.

During the year ended December 31, 1999, the Partnership  reduced the fair value
of its  portfolio  of  investments  on a net basis by  $2,723,316.  Additionally
during 1999, a net $5,045,561 was  transferred  from unrealized gain to realized
gain relating to portfolio  investments  liquidated and written-off during 1999,
as  discussed  above.  As  a  result,  unrealized  appreciation  of  investments
decreased by $2,322,245 for 1999.

During the year ended December 31, 1998, the Partnership  reduced the fair value
of its  portfolio  of  investments  on a net basis by  $1,209,743.  Additionally
during 1998, a net $1,974,768 was  transferred  from unrealized loss to realized
loss relating to portfolio  investments  liquidated and written-off during 1998,
as  discussed  above.  As  a  result,  unrealized  appreciation  of  investments
increased by $765,025 for 1998.

Net Assets - Changes to net assets resulting from operations are comprised of 1)
net  realized  gain or loss from  operations  and 2) changes  to net  unrealized
appreciation or depreciation of portfolio investments.

For the year ended December 31, 2000, the Partnership had a $4,737,674  increase
in net  assets  resulting  from  operations,  comprised  of the  $7,389,031  net
realized gain from  operations  offset by the $2,651,357  decrease in unrealized
appreciation  of  investments  for  the  2000.  As of  December  31,  2000,  the
Partnership's net assets were $453,151, reflecting a decrease of $5,529,822 from
net assets of $5,982,973 as of December 31, 1999. This decrease is the result of
the  $10,267,496  cash  distribution  paid to partners during 2000 exceeding the
$4,737,674 increase in net assets from operations for 2000.

For the year ended December 31, 1999, the Partnership had a $3,430,464  increase
in net  assets  resulting  from  operations,  comprised  of the  $5,752,709  net
realized gain from  operations  offset by the $2,322,245  decrease in unrealized
appreciation of investments for 1999. As of December 31, 1999, the Partnership's
net assets were  $5,982,973  reflecting a decrease of $9,655,229 from net assets
of  $15,638,202  as of December  31,  1998.  This  decrease is the result of the
$13,085,693  of cash  distributions  paid or accrued  to  partners  during  1999
exceeding the $3,430,464 increase in net assets from operations for 1999.

For the year ended  December  31, 1998,  the  Partnership  had a $1,554,219  net
decrease in net assets  resulting from  operations,  comprised of the $2,319,244
net realized loss from operations  partially offset by the $765,025  increase in
unrealized  appreciation  of investments  for the year. As of December 31, 1998,
the  Partnership's  net  assets  were  $15,638,202,  reflecting  a  decrease  of
$6,068,991 from net assets of $21,707,193 as of December 31, 1997. This decrease
is the result of the $4,514,772 cash distribution to partners, which was accrued
as of  December  31,  1998  and  the  $1,554,219  decrease  in net  assets  from
operations for 1998.

Gains and losses from  investments are allocated to partners'  capital  accounts
when realized, in accordance with the Partnership Agreement (see Note 3 of Notes
to Financial  Statements).  However,  for purposes of calculating  the net asset
value per unit of limited partnership interest,  net unrealized  appreciation of
investments  has been included as if the net  unrealized  appreciation  had been
realized  and  allocated  to  the  limited   partners  in  accordance  with  the
Partnership  Agreement.  Pursuant to such  calculation,  the net asset value per
$1,000  Unit as of  December  31,  2000,  1999 and 1998,  was $3,  $43 and $117,
respectively.  Cumulative  cash  distributions  paid to  limited  partners  from
inception to December 31, 2000,  1999,  and 1998  totaled  $1,727,  $1,656,  and
$1,560 per Unit, respectively.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

The  Partnership  is subject to market risk arising from changes in the value of
its portfolio  investments,  short-term  investments and  interest-bearing  cash
equivalents,  which may result from  fluctuations  in interest  rates and equity
prices.  The  Partnership has calculated its market risk related to its holdings
of these  investments  based on changes  in  interest  rates and  equity  prices
utilizing  a  sensitivity  analysis.  The  sensitivity  analysis  estimates  the
hypothetical  change in fair values, cash flows and earnings based on an assumed
10% change  (increase  or  decrease)  in interest  rates and equity  prices.  To
perform the  sensitivity  analysis,  the assumed 10% change is applied to market
rates  and  prices  on  investments  held by the  Partnership  at the end of the
accounting period.

The Partnership's  remaining portfolio investment had an aggregate fair value of
$40,625 as of December  31,  2000.  An assumed 10% decline from such fair value,
including an assumed 10% decline of the per share market price of the  security,
would  result  in a  reduction  to the  fair  value  of such  investment  and an
unrealized loss of $4,063.  As noted above,  the Partnership  sold its portfolio
investment in Raytel Medical Corporation in March 2001 for $28,866,  realizing a
loss of $212,773.

The  Partnership  had no short-term  investments as of December 31, 2000 and the
market risk relating to the Partnership's interest-bearing cash equivalents held
as of December 31, 2000 is considered to be immaterial.


<PAGE>



Item 8.       Financial Statements and Supplementary Data.
              -------------------------------------------


                     ML VENTURE PARTNERS II, L.P.
                               INDEX

Independent Auditors' Report

Balance Sheets as of December 31, 2000 and 1999

Schedule of Portfolio Investments as of December 31, 2000

Schedule of Portfolio Investments as of December 31, 1999

Statements of Operations for the years ended December 31, 2000, 1999 and 1998

Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998

Statements of Changes in Partners' Capital for the years ended December 31,
1998, 1999 and 2000

Notes to Financial Statements

NOTE - All other  schedules  are omitted  because of the  absence of  conditions
under which they are required or because the required information is included in
the financial statements or the notes thereto.



<PAGE>


INDEPENDENT AUDITORS' REPORT


ML Venture Partners II, L.P.:

We have audited the accompanying  balance sheets of ML Venture Partners II, L.P.
(the  "Partnership"),  including the schedules of portfolio  investments,  as of
December  31, 2000 and 1999,  and the related  statements  of  operations,  cash
flows,  and  changes in  partners'  capital  for each of the three  years in the
period  ended   December  31,  2000.   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. Our procedures included confirmation of securities owned at December
31, 2000 and 1999 by correspondence  with the custodian;  where confirmation was
not  possible,  we  performed  other audit  procedures.  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.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial position of ML Venture Partners II, L.P. as of December
31,  2000 and 1999,  and the results of its  operations,  its cash flows and the
changes in its partners' capital for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.

As explained in Note 2, the financial  statements  include  securities valued at
$40,625  and  $5,414,349  as  of  December  31,  2000  and  1999,  respectively,
representing  9% and 90% of net  assets,  respectively,  whose  values have been
estimated by the  Sub-Manager  under the  supervision of the Individual  General
Partners   and  the  Managing   General   Partner  in  the  absence  of  readily
ascertainable  market  values.  We  have  reviewed  the  procedures  used by the
Sub-Manager  in arriving at its  estimate of value of such  securities  and have
inspected underlying  documentation,  and, in the circumstances,  we believe the
procedures are reasonable and the documentation appropriate. However, because of
the  inherent  uncertainty  of  valuation,  those  estimated  values  may differ
significantly  from the values that would have been used had a ready  market for
the securities existed, and the differences could be material.





Deloitte & Touche LLP

New York, New York
February 28, 2001
(March 29, 2001 as to Note 9)


<PAGE>


ML VENTURE PARTNERS II, L.P.
BALANCE SHEETS
As of December 31,
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>



                                                                                                2000                 1999
                                                                                          ----------------     ----------------
ASSETS

Portfolio investments, at fair value (cost $241,639 as of
   December 31, 2000 and $2,964,006 as of December 31, 1999)                              $         40,625     $      5,414,349
Short-term investments, at amortized cost                                                                -            8,471,368
Cash and cash equivalents                                                                          675,009            1,059,973
                                                                                          ----------------     ----------------

TOTAL ASSETS                                                                              $        715,634     $     14,945,690
                                                                                          ================     ================

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Cash distribution payable                                                                 $              -     $      8,704,964
Accounts payable and accrued expenses                                                              100,483               91,518
Due to Management Company                                                                          162,000              166,235
                                                                                          ----------------     ----------------
   Total liabilities                                                                               262,483            8,962,717
                                                                                          ----------------     ----------------

Partners' Capital:
Managing General Partner                                                                  $        177,350              338,194
Individual General Partners                                                                             17                  107
Limited Partners (120,000 Units)                                                                   476,798            3,194,329
Unallocated net unrealized (depreciation) appreciation of investments                             (201,014)           2,450,343
                                                                                          ----------------     ----------------
   Total partners' capital                                                                         453,151            5,982,973
                                                                                          ----------------     ----------------

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                                   $        715,634     $     14,945,690
                                                                                          ================     ================

</TABLE>




See notes to financial statements.


<PAGE>


ML VENTURE PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
As of December 31, 2000
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                                             Initial
                                                                           Investment
Company / Position                                                            Date                 Cost              Fair Value
-------------------------------------------------------------------------------------------------------------------------------
Raytel Medical Corporation (A)
Pacemaker monitoring service and MRI centers
62,500 shares of Common Stock                                             Feb. 1990                  241,639             40,625
Options to purchase 27,969 shares of Common Stock
   at $1.42 per share, expiring on 10/31/01                                                                0                  0
-------------------------------------------------------------------------------------------------------------------------------
Total Portfolio Investments (B)                                                               $      241,639    $        40,625
                                                                                              ---------------------------------

Supplemental Information:  Liquidated Portfolio Investments (C)

                                                      Liquidation                              Realized
Company                                                  Date               Cost              Gain (Loss)                Return
Allez, Inc.                                           1992            $     1,781,320       $   (1,781,320)     $             0
-------------------------------------------------------------------------------------------------------------------------------
Amdahl Corporation                                    1989                    729,742            1,837,787            2,567,529
Aqua Group, Inc.                                      1990                  2,000,000           (1,999,999)                   1
-------------------------------------------------------------------------------------------------------------------------------
BBN Advanced Computer Partners, L.P.                  1990                    868,428             (864,028)               4,400
-------------------------------------------------------------------------------------------------------------------------------
BBN Integrated Switch Partners, L.P.                  1990-1992             5,022,380           (4,822,797)             199,583
-------------------------------------------------------------------------------------------------------------------------------
Biocircuits Corporation                               1997-1998             2,653,751           (2,653,751)                   0
Borg-Warner Automotive, Inc.                          1994-1997             2,500,000           14,628,202           17,128,202
-------------------------------------------------------------------------------------------------------------------------------
Brightware, Inc. (B)                                  2000                     44,703              (44,703)                   0
Burns International Services Corporation (B)          2000                  2,500,000            7,619,992           10,119,992
Business Depot, Ltd.                                  1994                  1,214,184            1,539,476            2,753,660
-------------------------------------------------------------------------------------------------------------------------------
CellPro, Incorporated                                 1994-1996             1,560,944           15,999,505           17,560,449
-------------------------------------------------------------------------------------------------------------------------------
Children's Discovery Centers of America, Inc.         1995                  2,000,259             (236,187)           1,764,072
Clarus Medical Systems, Inc.                          1997-1999             2,389,168           (2,389,168)                   0
Communications International, Inc.                    1992-1994             1,819,332           (1,819,331)                   1
Computer-Aided Design Group                           1990-1991             1,131,070           (1,131,069)                   1
Corporate Express, Inc.                               1994-1999             2,999,912           26,069,494           29,069,406
-------------------------------------------------------------------------------------------------------------------------------
Data Recording Systems, Inc.                          1988                  1,615,129           (1,499,999)             115,130
-------------------------------------------------------------------------------------------------------------------------------
Diatide, Inc.                                         1999                  2,986,023            4,706,165            7,692,188
Eckerd Corporation                                    1995                    857,004            2,019,272            2,876,276
-------------------------------------------------------------------------------------------------------------------------------
Elantec, Inc.                                         1993-1997             1,412,118            2,105,168            3,517,286
Everex Systems, Inc.                                  1991-1992               750,000              447,606            1,197,606
-------------------------------------------------------------------------------------------------------------------------------
Hoffman & Company, L.P.                               1993                     40,000              (40,000)                   0
-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>


ML VENTURE PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS, continued
As of December 31, 2000
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                      Liquidation                              Realized
Company                                               Date                       Cost          Gain (Loss)              Return
-------------------------------------------------------------------------------------------------------------------------------
Home Express, Inc.                                    1995             $    1,822,751     $     (1,822,751)     $             0
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone Company, L.P.              1996-1999             3,678,926            2,091,744            5,770,670
-------------------------------------------------------------------------------------------------------------------------------
I.D.E Corporation                                     1996-1999             1,110,909           (1,110,909)                   0
IDEC Pharmaceuticals Corporation                      1994-1997             4,261,036            8,378,635           12,639,671
Inference Corporation                                 1995-1996               849,362            3,280,433            4,129,795
-------------------------------------------------------------------------------------------------------------------------------
In-Store Advertising, Inc.                            1992                  2,259,741           (2,259,741)                   0
InteLock Corporation                                  1992                  1,254,125           (1,251,274)               2,851
Komag, Incorporated                                   1991-1995             2,365,237            4,477,842            6,843,079
Ligand Pharmaceuticals Inc.                           1992-1996             1,414,435            4,227,245            5,641,680
-------------------------------------------------------------------------------------------------------------------------------
Magnesys                                              1989                  1,440,997           (1,412,049)              28,948
Meteor Message Corporation                            1990                  1,501,048           (1,501,047)                   1
-------------------------------------------------------------------------------------------------------------------------------
Micro Linear Corporation                              1994-1995             1,120,300            2,897,886            4,018,186
-------------------------------------------------------------------------------------------------------------------------------
Mobile Telecommunications
-------------------------------------------------------------------------------------------------------------------------------
   Technologies Corporation                           1995                  1,558,155            3,439,923            4,998,078
-------------------------------------------------------------------------------------------------------------------------------
Neocrin Company                                       1996-1999             4,203,938           (4,203,938)                   0
OccuSystems, Inc.                                     1994-1996             2,657,000            9,353,722           12,010,722
Ogle Resources, Inc.                                  1993-1999             1,974,286           (1,965,882)               8,404
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Pandora Industries, Inc.                              1990                  2,060,139           (2,060,138)                   1
-------------------------------------------------------------------------------------------------------------------------------
Photon Dynamics, Inc.                                 1999                  2,452,226            2,114,795            4,567,021
-------------------------------------------------------------------------------------------------------------------------------
Pyxis Corporation                                     1993                    634,598            7,169,424            7,804,022
Raytel Medical Corporation                            1996-1997             1,807,664            4,370,155            6,177,819
-------------------------------------------------------------------------------------------------------------------------------
R-Byte Inc.                                           1992-1994             1,991,098             (443,566)           1,547,532
Regeneron Pharmaceuticals, Inc.                       1991-1995             2,678,135           30,203,091           32,881,226
Research Applications, Inc. (B)                       1994-2000               100,000              (20,000)              80,000
Ringer Corporation                                    1991-1994             3,029,652           (2,208,012)             821,640
S & J Industries, Inc.                                1991-1992             1,600,150           (1,555,149)              45,001
Sanderling Biomedical, L.P. (B)                       1995-2000             2,000,000            1,058,315            3,058,315
-------------------------------------------------------------------------------------------------------------------------------
Saxpy Computer Corporation                            1988                  2,000,000           (2,000,000)                   0
-------------------------------------------------------------------------------------------------------------------------------
SDL, Inc.                                             1993-1996             4,757,265           10,502,531           15,259,796
SF2 Corporation                                       1991-1994             2,193,293           (1,856,570)             336,723
Shared Resource Exchange, Inc.                        1990-1994               999,999             (999,998)                   1

</TABLE>


<PAGE>


ML VENTURE PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS, continued
As of December 31, 2000
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                      Liquidation                              Realized
Company                                               Date                       Cost          Gain (Loss)              Return
-------------------------------------------------------------------------------------------------------------------------------
Special Situations, Inc.                              1988            $       215,000       $     (187,175)     $        27,825
Storage Technology Corporation                        1990                  2,174,000            1,466,802            3,640,802
-------------------------------------------------------------------------------------------------------------------------------
Target Vision, Inc.                                   1992-1995             1,500,000           (1,253,750)             246,250
-------------------------------------------------------------------------------------------------------------------------------
TCOM Systems, Inc.                                    1990-1992             4,715,384           (4,711,536)               3,848
-------------------------------------------------------------------------------------------------------------------------------
Telecom USA, Inc.                                     1989                  5,000,000            3,361,778            8,361,778
Touch Communications Incorporated                     1991                  1,119,693           (1,119,693)                   0
Viasoft, Inc.                                         1995-1996               915,348            2,801,429            3,716,777

Totals from Liquidated Portfolio Investments                          $   116,291,357       $  124,942,887     $    241,234,244
                                                                      ---------------------------------------------------------

                                                                                            Combined Net               Combined
                                                                                           Unrealized and            Fair Value
                                                                            Cost            Realized Gain            and Return

Totals from Active and Liquidated Portfolio Investments               $   116,532,996       $  124,741,873     $    241,274,869
                                                                      =========================================================
</TABLE>

(A)  Public company

(B) See Note 5 of Notes to Financial  Statements for portfolio  investments sold
or written-off during 2000.

(C)  Amounts  provided  for  "Supplemental  Information:   Liquidated  Portfolio
     Investments" are cumulative from inception through December 31, 2000.





See notes to financial statements.


<PAGE>


ML VENTURE PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
As of December 31, 1999
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                       Initial Investment
Company / Position                                                            Date                 Cost              Fair Value
Burns International Services Corporation* (A)
Protective services
500,000 shares of Common Stock                                            Sept. 1988          $    2,500,000    $     4,325,000
-------------------------------------------------------------------------------------------------------------------------------
Brightware, Inc.
Client/server and internet software development tools
and services
200,057 shares of Common Stock                                            May 1995                    44,703            300,086
-------------------------------------------------------------------------------------------------------------------------------
Raytel Medical Corporation(A)
Pacemaker monitoring service and MRI centers
62,500 shares of Common Stock                                             Feb. 1990                  241,639            153,125
Options to purchase 27,969 shares of Common Stock
   at $1.42 per share, expiring on 10/31/01                                                                0             28,808
-------------------------------------------------------------------------------------------------------------------------------
ReGen Biologics, Inc.
Joint and spine regeneration products
72,800 shares of Common Stock                                             Apr. 1991                      364            263,900
62,400 shares of Preferred Stock                                                                     114,400            226,200
-------------------------------------------------------------------------------------------------------------------------------
Stereotaxis, Inc.
Drug delivery and brain surgery systems
21,632 shares of Common Stock                                             Apr. 1990                      216             16,224
134,674 shares of Preferred Stock                                                                     62,684            101,006
-------------------------------------------------------------------------------------------------------------------------------
Total Portfolio Investments (B)                                                               $    2,964,006    $     5,414,349
                                                                                              ---------------------------------

                                                                                                 Net
Supplemental Information:                                                   Cost            Realized Gain            Return
                                                                      ---------------------------------------------------------
Liquidated Portfolio Investments (C)                                  $   113,568,990       $117,304,395           $230,873,385
                                                                      =========================================================

                                                                                            Combined Net               Combined
                                                                                           Unrealized and            Fair Value
                                                                            Cost            Realized Gain            and Return

Totals from Active and Liquidated Portfolio Investments               $   116,532,996       $  119,754,738         $236,287,734
                                                                      =========================================================
</TABLE>

(A)  Public company

(B) See Note 5 of Notes to Financial  Statements for portfolio  investments sold
or written-off during 1999.

(C)  Amounts  provided  for  "Supplemental  Information:   Liquidated  Portfolio
     Investments" are cumulative from inception through December 31, 1999.

* May be deemed  an  affiliated  person of the  Partnership  as  defined  in the
Investment Company Act of 1940.


See notes to financial statements.


<PAGE>


ML VENTURE PARTNERS II, L.P.
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                               2000               1999               1998
                                                                         ---------------     ---------------    ---------------

INVESTMENT INCOME AND EXPENSES

   Income:
   Interest from short-term investments                                  $       181,090     $       202,271   $        280,896
   Interest and other income from portfolio investments                              291                 672             13,069
                                                                         ---------------     ---------------   ----------------
   Total investment income                                                       181,381             202,943            293,965
                                                                         ---------------     ---------------   ----------------

   Expenses:
   Management fee                                                                200,000             200,000            200,000
   Professional fees                                                              90,975              92,921             78,590
   Mailing and printing                                                           70,116              80,953             77,897
   Independent General Partners' fees                                             66,000              91,500             82,500
   Custodial fees                                                                  2,863               2,222              2,198
   Other                                                                             888               8,228              5,668
                                                                         ---------------     ---------------   ----------------
   Total investment expenses                                                     430,842             475,824            446,853
                                                                         ---------------     ---------------   ----------------

NET INVESTMENT LOSS                                                             (249,461)           (272,881)          (152,888)

Net realized gain (loss) from portfolio investments                            7,638,492           6,025,590         (2,166,356)
                                                                         ---------------     ---------------   ----------------

NET REALIZED GAIN (LOSS) FROM OPERATIONS                                       7,389,031           5,752,709         (2,319,244)

Change in unrealized appreciation of investments                              (2,651,357)         (2,322,245)           765,025
                                                                         ---------------     ---------------   ----------------

NET INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS                                             $     4,737,674     $     3,430,464   $     (1,554,219)
                                                                         ===============     ===============   ================




</TABLE>

See notes to financial statements.


<PAGE>


ML VENTURE PARTNERS II, L.P.
STATEMENTS OF CASH FLOWS
Years Ended December 31,
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                                               2000               1999                1998
                                                                         ---------------     ---------------   ----------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net investment loss                                                      $      (249,461)    $      (272,881)  $       (152,888)

Adjustments  to  reconcile  net  investment  loss to  cash  used  for  operating
   activities:

Decrease (increase) in accrued interest from short-term
   investments                                                                    46,538             (13,201)            (8,895)
Decrease (increase) in accrued interest receivable                                     -               1,291             (1,291)
Increase (decrease) in payables, net                                               4,730              51,599             (5,783)
                                                                         ---------------     ---------------   ----------------
Cash used for operating activities                                              (198,193)           (233,192)          (168,857)
                                                                         ---------------     ---------------   ----------------

CASH FLOWS FROM INVESTING ACTIVITIES

Net return (purchase) of short-term investments                                8,424,830          (3,969,713)        (1,500,007)
Net proceeds from the sale of portfolio investments                           10,360,859          13,734,704            174,204
                                                                         ---------------     ---------------   ----------------
Cash provided from (used for) investing activities                            18,785,689           9,764,991         (1,325,803)
                                                                         ---------------     ---------------   ----------------

CASH FLOWS FROM FINANCING ACTIVITIES

Cash distributions paid to Partners                                          (18,972,460)         (8,895,501)                 -
                                                                         ---------------     ---------------   ----------------

(Decrease) increase in cash and cash equivalents                                (384,964)            636,298         (1,494,660)
Cash and cash equivalents at beginning of year                                 1,059,973             423,675          1,918,335
                                                                         ---------------     ---------------   ----------------

CASH AND CASH EQUIVALENTS AT END
   OF YEAR                                                               $       675,009     $     1,059,973   $        423,675
                                                                         ===============     ===============   ================


</TABLE>



See notes to financial statements.


<PAGE>


ML VENTURE PARTNERS II, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
Years Ended December 31, 1998, 1999 and 2000
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                                              Unallocated
                                         Managing        Individual                         Net Unrealized
                                          General          General           Limited        Appreciation of
                                          Partner         Partners          Partners          Investments           Total
------------------------------------------------------------------------------------------------------------   ----------------
Balance as of December 31, 1997        $   1,416,952      $   543       $   16,282,135      $    4,007,563     $     21,707,193
Cash distributions                          (314,632)        (140)          (4,200,000)                  -           (4,514,772)
Net investment income (loss)                   1,059           (5)            (153,942)                  -             (152,888)
Net realized loss on investments            (450,602)         (57)          (1,715,697)                  -           (2,166,356)
Change in unrealized
   appreciation on investments                     -            -                    -             765,025              765,025
                                       -------------      -------       --------------      --------------     ----------------
Balance as of December 31, 1998              652,777          341           10,212,496(A)        4,772,588           15,638,202
Cash distributions                        (1,565,309)        (384)         (11,520,000)                  -          (13,085,693)
Net investment loss                           (2,597)          (9)            (270,275)                  -             (272,881)
Net realized gain on investments           1,253,323          159            4,772,108                   -            6,025,590
Change in unrealized
   appreciation on investments                     -            -                    -          (2,322,245)          (2,322,245)
                                       -------------      -------       --------------      --------------     ----------------
Balance as of December 31, 1999              338,194          107            3,194,329(A)        2,450,343            5,982,973
Cash distributions                        (1,747,212)        (284)          (8,520,000)                  -          (10,267,496)
Net investment loss                           (2,438)          (8)            (247,015)                  -             (249,461)
Net realized gain on investments           1,588,806          202            6,049,484                   -            7,638,492
Change in unrealized
   appreciation on investments                     -            -                    -          (2,651,357)          (2,651,357)
                                       -------------      -------       --------------      --------------     ----------------
Balance as of December 31, 2000        $     177,350      $    17       $      476,798(A)   $     (201,014)    $        453,151
                                       =============      =======       ==============      ==============     ================
</TABLE>


(A)  The net  asset  value  per  $1,000  unit of  limited  partnership  interest
     ("Unit"), including an assumed allocation of net unrealized appreciation or
     depreciation of investments, was $3, $43, and $117 as of December 31, 2000,
     1999, and 1998, respectively. Cumulative cash distributions paid or accrued
     to limited  partners from  inception to December 31, 2000,  1999,  and 1998
     totaled $1,727, $1,656, and $1,560 per Unit, respectively.





See notes to financial statements.


<PAGE>


ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS

1.     Organization and Purpose

ML Venture  Partners II, L.P.  (the  "Partnership")  is a Delaware  limited
partnership  formed on February 4, 1986.  MLVPII Co., L.P., the managing general
partner  of  the  Partnership  (the  "Managing  General   Partner"),   and  four
individuals (the "Individual  General Partners") are the general partners of the
Partnership.  The general  partner of MLVPII Co.,  L.P. is Merrill Lynch Venture
Capital Inc. (the "Management Company"), an indirect subsidiary of Merrill Lynch
& Co., Inc. DLJ Capital Management Corporation (the "Sub-Manager"),  an indirect
subsidiary of Credit Suisse First Boston (USA),  Inc., is the sub-manager of the
Partnership,  pursuant to a sub-management agreement among the Partnership,  the
Management Company, the Managing General Partner and the Sub-Manager.
The Partnership's  objective is to achieve  long-term capital  appreciation from
its portfolio of venture capital investments in new and developing companies and
other special  investment  situations.  The  Partnership  does not engage in any
other business or activity.  As a result of the sale of the  Partnership's  last
portfolio  investment in March 2001, the  Partnership  terminated its operations
and made its final cash  distribution  to Partners on March 29, 2001. See Note 9
below.

2.     Significant Accounting Policies

Valuation of Investments - Short-term investments are carried at amortized cost,
which approximates market.  Portfolio  investments are carried at fair value, as
determined  quarterly by the Sub-Manager under the supervision of the Individual
General  Partners  and the Managing  General  Partner.  Publicly-held  portfolio
securities are valued at the closing public market price on the valuation  date,
discounted  by a factor of up to 50% for  sales  restrictions,  if any.  Factors
considered in the determination of an appropriate discount include,  underwriter
lock-up or Rule 144 trading  restrictions,  insider status where the Partnership
either has a  representative  serving on the company's  Board of Directors or is
greater than a 10% shareholder,  and other liquidity factors such as the size of
the Partnership's position in a given company compared to the trading history of
the public  security.  Privately-held  portfolio  securities are carried at cost
until significant  developments  affecting the portfolio company provide a basis
for change in  valuation.  The fair value of private  securities  is adjusted to
reflect 1)  meaningful  third-party  transactions  in the  private  market or 2)
significant  progress or slippage in the  development of the company's  business
such that cost is no  longer  reflective  of fair  value.  As a venture  capital
investment fund, the Partnership's  portfolio  investments involve a high degree
of  business  and  financial  risk that can result in  substantial  losses.  The
Sub-Manager   considers  such  risks  in  determining  the  fair  value  of  the
Partnership's portfolio investments.

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
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.


<PAGE>


ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS, continued

Investment  Transactions - Investment  transactions  are recorded on the accrual
method.  Portfolio  investments  are  recorded on the trade  date,  the date the
Partnership  obtains an  enforceable  right to demand the  securities or payment
therefor.  Realized  gains and  losses on  investments  sold are  computed  on a
specific identification basis.

Income Taxes - No provision  for income taxes has been made since all income and
losses are  allocable  to the partners for  inclusion  in their  respective  tax
returns.  The Partnership's net assets for financial  reporting  purposes differ
from its net assets for tax purposes. Net unrealized depreciation of investments
of $201,014 as of December  31,  2000,  was  recorded  for  financial  statement
purposes,  but was not  recognized for tax purposes.  Additionally,  syndication
costs relating to the offering of limited  partnership  interests totaling $11.3
million were charged to partners'  capital on the  financial  statements.  These
amounts  have not been  deducted or charged  against  partners'  capital for tax
purposes.

Statements of Cash Flows - The Partnership  considers its interest-bearing  cash
account to be a cash equivalent.

3.     Allocation of Partnership Profits and Losses

Pursuant  to  the  Partnership  Agreement,   the  Managing  General  Partner  is
allocated,  on a cumulative basis over the life of the  Partnership,  20% of the
Partnership's aggregate investment income and net realized gains and losses from
venture capital investments,  provided such amount is positive.  All other gains
and losses of the Partnership  are allocated  among all partners  (including the
Managing  General  Partner) in proportion to each partners'  respective  capital
contribution  to the  Partnership.  From its  inception to December 31, 2000 and
March 29, 2001 (date of  termination),  the  Partnership  had net realized gains
from its venture  capital  investments  of $129.2  million  and $129.0  million,
respectively,  including  interest and other income from  portfolio  investments
totaling $4.3 million.

4.     Related Party Transactions

The  Management  Company is responsible  for the  management and  administrative
services  necessary  for  the  operation  of  the  Partnership  and  receives  a
management fee at the annual rate of 2.5% of the gross capital  contributions to
the Partnership,  reduced by selling  commissions,  organizational  and offering
expenses  paid by the  Partnership,  capital  distributed  and realized  capital
losses with a minimum annual fee of $200,000.

Each of the Independent  General Partners receives $20,000 annually in quarterly
installments,  $1,500 for each meeting of the General  Partners  attended or for
each other  meeting,  conference or engagement  in connection  with  Partnership
activities at which attendance by an Independent General Partner is required and
$1,500 for each audit  committee  meeting  attended ($500 if an audit  committee
meeting  is  held  on the  same  day as a  meeting  of the  Independent  General
Partners).  The Independent  General  Partners agreed to waive fees for meetings
held subsequent to December 31, 2000.



<PAGE>


ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS, continued

5.       Portfolio Investments

Portfolio  investments  liquidated  during the years ended December 31, 2000 and
1999 are shown below:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                           Shares                              Realized
Investment                                                  Sold              Cost            Gain (Loss)           Return
------------------------------------------------------------------------------------------------------------------------------

Year Ended December 31, 2000 (a):
ReGen Biologics, Inc. (Sanderling)                             135,200    $     114,764      $      (52,410)   $         62,354
Stereotaxis, Inc. (Sanderling)                                 156,306           62,900              35,613              98,513
Burns International Services Corporation                       500,000        2,500,000           7,619,992          10,119,992
Brightware, Inc. - write-off                                       n/a           44,703             (44,703)                  0
Research Applications, Inc.                                        n/a                -              80,000              80,000
                                                                           ------------       -------------    ----------------
Total                                                                     $   2,722,367      $    7,638,492    $     10,360,859
                                                                          =============      ==============    ================

Year Ended December 31, 1999:
Clarus Medical Systems, Inc. - write-off                           n/a    $   1,000,548      $   (1,000,548)   $              0
CoCensys, Inc. (Sanderling)                                   19,063 (b)        192,504            (173,433)             19,071
Corporate Express, Inc.                                         60,000           12,000             570,000             582,000
Diatide, Inc.                                                  809,704        2,986,023           4,706,165           7,692,188
Horizon Cellular Telephone
   Company, L.P. - liquidation                                     n/a                0             389,118             389,118
IDE Corporation - write-off                                        n/a          227,000            (227,000)                  0
MLMS Cancer Research, Inc. - liquidation                           n/a                0               1,567               1,567
Neocrin Company - write-off                                        n/a          363,378            (363,378)                  0
Ogle Resources, Inc.                                               n/a                0               8,304               8,304
Photon Dynamics, Inc.                                         428,879 (c)     2,452,226           2,114,795           4,567,021
                                                                          -------------      --------------    ----------------
Total                                                                     $   7,233,679      $    6,025,590    $     13,259,269
                                                                          =============      ==============    ================
</TABLE>

(a) See Schedule of Portfolio Investments for cumulative results of liquidations
    of these investments.
(b) Adjusted for a 1-for-8 reverse stock split effective in April 1999.
(c) Includes 3,643 shares received in a non-cash exchange for the Partnership's
    warrant to purchase 6,062 shares.

6.       Cash Distributions

Cash  distributions  paid or accrued  during the three years ended  December 31,
2000 and  cumulative  cash  distributions  to  partners  from  inception  of the
Partnership  through  December  31,  2000 and  through  March 29,  2001 (date of
termination) listed below:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                       Managing          Individual                                      Per
                                                        General            General              Limited                $1,000
Distribution Date                                       Partner           Partners             Partners                  Unit
------------------------------------               ---------------      -------------     -----------------        --------------
Inception to December 31, 1997                     $    24,133,864        $   6,100       $     183,000,000        $     1,525.00
January 26, 1999 (accrued as of 12/31/98)                  314,632              140               4,200,000                 35.00
October 7, 1999                                            180,589              140               4,200,000                 35.00
January 25, 2000 (accrued as of 12/31/99)                1,384,720              244               7,320,000                 61.00
October 5, 2000                                          1,747,212              284               8,520,000                 71.00
                                                   ---------------        ---------       -----------------        --------------

Cumulative totals as of December 31, 2000               27,761,017            6,908             207,240,000              1,727.00

March 29, 2001                                             132,595                7                 201,600                  1.68
                                                   ---------------        ---------       -----------------        --------------
Cumulative totals as of March 29, 2001
  (Date of termination)                            $    27,893,612        $   6,915       $     207,441,600        $     1,728.68
                                                   ===============        =========       =================        ==============
</TABLE>



<PAGE>


ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS, continued

7.     Classification of Portfolio Investments

The  Partnership's  investments  in  portfolio  companies  were  categorized  as
follows, as of December 31, 2000 and December 31, 1999:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

December 31, 2000:
                                                                                               % of
Type of Investments                                   Cost                 Fair Value       Net Assets*
-------------------                               ------------           ------------      ------------
Common Stock and Warrants                         $    241,639           $     40,625          8.97%
                                                  ============           ============          =====

Country/Geographic Region
Western U.S.                                      $    241,639           $     40,625          8.97%
                                                  ============           ============          =====

Industry
Medical Devices and Services                      $    241,639           $     40,625          8.97%
                                                  ============           ============          =====

December 31, 1999:

Type of Investments
Common Stock and Warrants                         $  2,786,922           $  5,087,143         85.03%
Preferred Stock                                        177,084                327,206          5.47%
                                                  ------------           ------------        -------
Total                                             $  2,964,006           $  5,414,349         90.50%
                                                  ============           ============         ======

Country/Geographic Region
Midwestern U.S.                                   $  2,562,900           $  4,442,230         74.25%
Western U.S.                                           401,106                972,119         16.25%
                                                  ------------           ------------         ------
Total                                             $  2,964,006           $  5,414,349         90.50%
                                                  ============           ============         ======

Industry
Business Services                                 $  2,500,000           $  4,325,000         72.29%
Biotechnology                                          177,664                607,330         10.15%
Medical Devices and Services                           241,639                181,933          3.04%
Computer Hardware/Software                              44,703                300,086          5.02%
                                                  ------------           ------------        -------
Total                                             $  2,964,006           $  5,414,349         90.50%
                                                  ============           ============         ======
</TABLE>

* Percentage of net assets is based on fair value.

8.     Short-Term Investments

The  Partnership  had no short-term  investments  as of December 31, 2000. As of
December 31, 1999,  the  Partnership  had  short-term  investments in commercial
paper as detailed below.
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                           Maturity          Purchase          Amortized            Value at
Issuer                                          Yield        Date              Price             Cost               Maturity
-------------------------------------------------------------------------------------------------------------------------------

December 31, 1999:

Lexington Parker Capital Corp.                 6.10%        1/20/00     $       492,884     $       498,306    $        500,000
Golden Crown Managers                          6.38%        1/19/00           7,931,947           7,973,062           8,000,000
                                                                        ---------------     ---------------    ----------------
Total as of December 31, 1999                                           $     8,424,831     $     8,471,368    $      8,500,000
                                                                        ===============     ===============    ================
</TABLE>


<PAGE>


ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS, continued

9.      Subsequent Events

In March 2001, the Partnership  sold its holdings of Raytel Medical  Corporation
for $28,866, which resulted in a realized loss of $212,773 in 2001.

As a  result  of the  sale  of the  Partnership's  holdings  of  Raytel  Medical
Corporation,  the Partnership terminated its operations by making its final cash
distribution to partners totaling  $334,202 on March 29, 2001.  Limited Partners
received  $201,600,  or $1.68 per Unit, the Individual General Partners received
$7 and the Managing General Partner received $132,595.



<PAGE>


 Item 9.      Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosures.
              ----------------------------------------------------------------

None
                                    PART III

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

The General Partners
The General Partners of the Partnership  consist of the three Individual General
Partners  and the  Managing  General  Partner.  The four  General  Partners  are
responsible  for  the  management  and  administration  of the  Partnership.  As
required by the  Investment  Company Act of 1940 (the "1940 Act"), a majority of
the Individual General Partners are individuals who are not "interested persons"
of the  Partnership  as defined in the 1940 Act.  In 1987,  the  Securities  and
Exchange  Commission  (the "SEC") issued an order declaring that the Independent
General Partners of the Partnership (the "Independent General Partners") are not
"interested  persons"  of the  Partnership  as defined in the 1940 Act solely by
reason of their being general partners of the Partnership.

The Individual  General  Partners have full authority over the management of the
Partnership  and provide overall  guidance and  supervision  with respect to the
operations  of the  Partnership  and perform the various  duties  imposed on the
directors  of  business  development  companies  by the 1940 Act. In addition to
general fiduciary duties, the Individual  General Partners,  among other things,
supervise the management arrangements of the Partnership.

The Managing General Partner,  subject to the supervision of the Individual
General  Partners,  has  authority to provide,  or arrange for the provision of,
management  services in connection with the venture  capital  investments of the
Partnership.  The general  partner of the  Managing  General  Partner is Merrill
Lynch Venture Capital Inc. (the "Management Company"). The Management Company is
an indirect subsidiary of Merrill Lynch & Co., Inc. ("ML & Co.").

Individual General Partners
---------------------------
Jerome Jacobson (1)
4200 Massachusetts Avenue, N.W.
Washington, D.C. 20016
Age 79
Individual General Partner since 1987
Units    of the Partnership  beneficially  owned as of March 15, 2001 - None (3)
         President of Economic Studies Inc., an economic  consulting firm, since
         1984.

William M. Kelly (1)
500 Fifth Ave, 50th Floor
New York, New York 10110
Age 57
Individual General Partner since 1991
Units of the Partnership beneficially owned as of March 15, 2001 - None (3)
         Managing Associate of Lingold Associates, since 1980; Vice President of
         National  Aviation and  Technology  Company,  a  registered  investment
         company,  from 1977 to 1980;  Director  of First  Eagle Fund of America
         since 1998, First Eagle International Fund from 1994 to present,  First
         Eagle Sogen Funds from 1999 to present.

Kevin K. Albert (2)
4 World Financial Center - 26th Floor
New York, New York 10080
Age 48
Individual General Partner since 1990
Units of the Partnership beneficially owned as of March 15, 2001 - None (3)
         Director and President of the Management Company;  Managing Director of
         Merrill Lynch Investment Banking Division ("MLIBK") since 1988.

(1)  Independent General Partner and member of the Audit Committee.
(2)  Interested person of the Partnership as defined by the 1940 Act.
(3)  Messrs.  Kelly and Albert  succeeded  to the  interest of prior  Individual
     General  Partners  who  each  contributed  $1,000  to  the  capital  of the
     Partnership.

The Management Company
Merrill Lynch  Venture  Capital Inc. (the  "Management  Company")  serves as the
Partnership's  management company and performs,  or arranges for the performance
of, the management and  administrative  services necessary for the operations of
the  Partnership  pursuant  to a  management  agreement  dated May 23, 1991 (the
"Management  Agreement").  The  Management  Company has served as the management
company for the Partnership since the Partnership commenced operations in 1987.

The  Management  Company is a  wholly-owned  subsidiary of ML Leasing  Equipment
Corp.,  which  is an  indirect  subsidiary  of  Merrill  Lynch & Co.,  Inc.  The
Management  Company,  which was  incorporated  under Delaware law on January 25,
1982,  maintains its principal  office at 4 World Financial Center - 26th Floor,
New York, New York 10080.

On  May  23,  1991,  the  limited   partners  of  the  Partnership   approved  a
sub-management  agreement among the  Partnership,  the Management  Company,  the
Managing   General  Partner  and  DLJ  Capital   Management   Corporation   (the
"Sub-Manager").   Under  the  terms  of  such  sub-management   agreement,   the
Sub-Manager  agreed to  provide,  subject  to the  supervision  of the  Managing
General Partner,  the Management  Company and the Individual  General  Partners,
certain  of the  management  services  previously  provided  by  the  Management
Company.  Due  to  certain   transactions   involving  The  Equitable  Companies
Incorporated,  the indirect parent of the Sub-Manager,  a substantially  similar
sub-management  agreement (the  "Sub-Management  Agreement") was approved by the
limited partners of the Partnership at their 1992 annual meeting held on May 26,
1992.

The Management Company has arranged for Palmeri Fund Administrators,  Inc.,
an  independent  administrative  services  company,  to  provide  administrative
services to the  Partnership.  Fees for such  services are paid  directly by the
Management Company.

The following table sets forth information  concerning the directors of the
Management Company and the executive officers of the Management Company involved
with the  Partnership.  Information  concerning  Kevin K.  Albert,  Director and
President of the  Management  Company,  is set forth under  "General  Partners -

Individual General Partners". The address of Mr. Caruso, Ms. Herte and Mr. Bruno
is 2 World Financial Center, New York, New York 10281.
James V. Caruso
Executive Vice President and Director
Age 49
Officer or Director since 1998
         Director of MLIBK,  joined Merrill Lynch in January 1975. Mr. Caruso is
         the director of Technology for the Global Investment  Banking Group. He
         is responsible for ensuring that the business requirements of MLIBK are
         supported by managing the development of new technologies and enhancing
         existing systems.

Diane T. Herte
Vice President and Director
Age 40
Officer or Director since 2000
        Director of Merrill Lynch  Investment  Managers  ("MLIM") joined Merrill
        Lynch in 1984.  Ms. Herte's  responsibilities  include the management of
        the  Partnership  Analysis  and  Finance  Group  with   responsibilities
        including  controllership,   financial  management,  administrative  and
        operational  functions for certain  partnerships  and other entities for
        which subsidiaries of Merrill Lynch are the general partner or manager.

James V. Bruno
Vice President and Treasurer
Age 34
Officer or Director since 1998
         Vice  President of MLIM,  joined  Merrill  Lynch in 1997.  Mr.  Bruno's
         responsibilities   include   controllership  and  financial  management
         functions  for  certain  partnerships  and  other  entities  for  which
         subsidiaries of Merrill Lynch are the general partner or manager.

The directors of the Management  Company will serve as directors  until the next
annual  meeting of  stockholders  and until  their  successors  are  elected and
qualify.  The officers of the Management Company will hold office until the next
annual  meeting of the Board of  Directors of the  Management  Company and until
their successors are elected and qualify.

There are no family  relationships  among any of the Individual General Partners
of the Partnership and the officers and directors of the Management Company.

The Sub-Management Company
DLJ Capital Management Corporation (the "Sub-Manager"),  a Delaware corporation,
is an indirect wholly-owned subsidiary of Credit Suisse First Boston (USA), Inc.
("CSFB"),  a holding  company  which  through  its  subsidiaries  engages in the
following  activities:  investment  banking,  merchant banking,  public finance,
trading,  distribution  and research.  The  Sub-Manager  maintains its principal
office at 277 Park  Avenue,  New York,  New York  10172.  The  Sub-Manager  is a
wholly-owned subsidiary of DLJ Capital Corporation ("DLJ Capital"). DLJ Capital,
which was founded in 1969, has established  institutional  venture capital funds
("Sprout Funds") and several other smaller funds,  with total committed  capital
of over $3.0 billion.  Seven of such institutional funds, with capital exceeding
$2.7 billion,  are currently  operating.  As of December 31, 2000, DLJ Capital's
most  recent  limited   partnership  is  Sprout  Capital  IX,  L.P.,  which  was
established  in 2000 with an excess of 56 percent of its $1.44  billion  capital
provided by participants in earlier Sprout Funds. DLJ Capital's principal office
is located at 277 Park  Avenue,  New York,  New York 10172,  and it maintains an
additional  office in Menlo Park,  California.  The  following  table sets forth
information  concerning the directors,  principal  executive  officers and other
officers of the  Sub-Manager.  Unless  otherwise noted, the address of each such
person is 277 Park Avenue, New York, New York 10172.

Richard E. Kroon
President, Chief Executive Officer and Director
Age 58
Officer or Director since 1977
         Chairman of Sprout Group, the venture capital  affiliate of CSFB, since
1981.

Dr. Robert E. Curry (1)
Vice President
Age 54
Officer or Director since 1991
         President  and  Director of the  Management  Company from 1989 to 1991;
         Managing  Director  of MLIBK  from 1990 to 1991;  President  of Merrill
         Lynch R&D Management  Inc. ("ML R&D") from 1990 to 1991, Vice President
         of ML R&D from 1984 to 1990 and  Director  of ML R&D from 1987 to 1991;
         General Partner of Sprout Group since 1991.

Robert Finzi (1)
Vice President
Age 47
Officer or Director since 1991
         Vice President of the Management  Company from 1985 to 1991;  Associate
         with Menlo Ventures from 1983 to 1984;  General Partner of Sprout Group
         since 1991.

Anthony F. Daddino
Senior Vice President and Director
Age 60
Officer  or Director since 1989 Chief Administrative Officer of CSFB.

(1)   The address of these officers is 3000 Sand Hill Road, Menlo Park,
      California 94025.

The Managing General Partner
MLVPII Co.,  L.P.  (the  "Managing  General  Partner") is a limited  partnership
organized  on  February  4, 1986  under  the laws of the State of New York.  The
Managing  General  Partner  maintains its principal  office at 4 World Financial
Center - 26th Floor,  New York, New York 10080. The Managing General Partner has
acted as the managing  general partner of the Partnership  since the Partnership
commenced  operations.  The  Managing  General  Partner  is  engaged in no other
activities at the date hereof.

The  general  partner of the  Managing  General  Partner is the  Management
Company.  The  limited  partners of the  Managing  General  Partner  include DLJ
Capital Management  Corporation  ("DLJ"),  Dr. Robert E. Curry and Robert Finzi.
Messrs.  Curry and  Finzi  are  currently  officers  of DLJ and were  previously
officers of the Management Company.

The Partnership  Agreement  obligates the Managing General Partner to contribute
cash to the capital of the  Partnership so that the Managing  General  Partner's
capital  contribution  at all  times  will be equal to one  percent  (1%) of the
aggregate capital contributions of all partners of the Partnership. The Managing
General Partner has contributed $1,212,162 to the capital of the Partnership.

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

Compensation  - Through  December 31,  2000,  the  Partnership  paid each of the
Independent General Partners an annual fee of $20,000 in quarterly  installments
plus $1,500 for each meeting of the Individual  General Partners attended or for
each other  meeting,  conference or engagement  in connection  with  Partnership
activities at which  attendance by the Individual  General  Partner is required.
The  Partnership  pays  all  actual  out-of-pocket   expenses  incurred  by  the
Independent  General Partners  relating to attendance at such meetings.  Through
December 31, 2000, the  Independent  General  Partners  received $1,500 for each
meeting of the Audit Committee  attended unless such committee  meeting was held
on the same day as a meeting of the Individual  General Partners.  In such case,
the  Independent  General  Partners  received $500 for each meeting of the Audit
Committee  attended.  For the year ended  December 31, 2000,  the aggregate fees
paid by the Partnership to the Independent General Partners totaled $66,000. The
Independent  General  Partners agreed to waive fees for meetings held subsequent
to December 31, 2000.

Allocations  and  Distributions  - Profits  and  losses of the  Partnership  are
determined and allocated as of the end of and within sixty days after the end of
each calendar year. If the aggregate of the  investment  income and net realized
capital  gains  and  losses  from  venture  capital   investments  is  positive,
calculated on a cumulative  basis over the life of the Partnership  through such
year,  the  Managing  General  Partner is  allocated  investment  income and net
realized capital gains or losses from venture capital  investments for such year
so that,  together with all  investment  income and gains and losses  previously
allocated to the Managing General Partner,  it has received 20% of the aggregate
of such income and gains  calculated on a cumulative  basis over the life of the
Partnership  through  such year.  Such  allocation  is referred to herein as the
"Managing General Partner's Allocation" and is applicable only to the investment
income and net realized  capital gains and losses resulting from venture capital
investments.  The Partnership's investment income and net realized capital gains
and losses in excess of the Managing General Partner's  Allocation and all other
profits and losses,  including interest or other income on funds not invested in
venture capital investments, are allocated among all the Partners (including the
Managing General Partner) in proportion to their capital contributions.  Cash or
other assets  otherwise  distributable  to the Managing  General Partner are not
distributed to the Managing  General Partner to the extent that the net realized
gains allocated to the Managing General Partner are offset by an amount equal to
20% of the net unrealized losses of the Partnership.

For its fiscal year ended December 31, 2000, the  Partnership had a net realized
gain of $7,638,492 from the liquidation of certain portfolio  investments.  On a
cumulative  basis,  from  inception to December 31, 2000,  the  Partnership  had
$129,201,615  of net realized gains and investment  income from its portfolio of
venture capital  investments.  On October 5, 2000, the  Partnership  made a cash
distribution to partners  totaling  $10,267,496.  Limited  partners of record on
September 30, 2000 received $8,520,000,  or $71 per Unit, the Individual General
Partners received $284 and the Managing General Partner received $1,747,212.

Management Fee - Pursuant to the Management Agreement,  the Partnership pays the
Management  Company a  management  fee at the  annual  rate of 2.5% of the gross
capital  contributions  to the  Partnership  (net  of  selling  commissions  and
organizational  and  offering  expenses  paid by the  Partnership),  reduced  by
capital  distributed to the Partners and realized capital losses, with a minimum
annual fee of  $200,000.  Such fee is payable  quarterly  based on the  adjusted
capital contributions,  as described above, at the end of the preceding calendar
quarter.  As described  previously,  the  Management  Company has entered into a
Sub-Management  Agreement  with DLJ,  pursuant to which the  Management  Company
compensates DLJ for management  services  provided to the  Partnership.  For the
year ended December 31, 2000, management fees incurred by the Partnership to the
Management Company aggregated $200,000.

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

Reference  is  made  to  Item  10  "Individual   General  Partners"   concerning
information with respect to security ownership.

As of March 15, 2001, no person or group is known by the  Partnership  to be the
beneficial  owner of more than 5 percent  of the Units.  Mark Clein and  Stephen
Warner,  limited partners of the Managing  General Partner,  own an aggregate of
134  Units  of  the  Partnership  and  Merrill  Lynch  Pierce  Fenner  &  Smith,
Incorporated  owns 230 Units. The Individual  General Partners and the directors
and officers of the Management Company do not own any Units.

The Partnership is not aware of any arrangement  that may, at a subsequent date,
result in a change of control of the Partnership.

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

Kevin K.  Albert,  a Director  and  President  of the  Management  Company and a
Managing  Director of Merrill Lynch  Investment  Banking  Group ("ML  Investment
Banking"),  joined  Merrill  Lynch in 1981.  James V.  Caruso,  a  Director  and
Executive  Vice  President  of  the  Management  Company  and a  Director  of ML
Investment Banking,  joined Merrill Lynch in 1975. Diane T. Herte,  Director and
Vice President of the Management  Company and a Director of MLIM, joined Merrill
Lynch in 1984.  James V. Bruno, a Vice President and Treasurer of the Management
Company and a Vice  President of MLIM,  joined  Merrill  Lynch in 1997.  Messrs.
Albert, Caruso, and Bruno and Ms. Herte are involved with certain other entities
affiliated with Merrill Lynch or its affiliates.


<PAGE>


                                     PART IV


Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K.
              ---------------------------------------------------------------

(a)           1.    Financial Statements

                     Balance Sheets as of December 31, 2000 and 1999

                     Schedule of Portfolio Investments as of December 31, 2000

                     Schedule of Portfolio Investments as of December 31, 1999

                     Statements of Operations for the years ended December 31,
                     2000, 1999 and 1998

                     Statements of Cash Flows for the years ended December 31,
                     2000, 1999 and 1998

                    Statements of Changes in Partners' Capital for the years
                    ended December 31, 1998, 1999 and 2000

                    Notes to Financial Statements

              2.    Exhibits

                    (3)   (a)  Amended and Restated  Certificate of Limited
                               Partnership of the  Partnership,  dated as of
                               January 12, 1987.
                               (1)

                    (3)   (b)  Amended and Restated Certificate of Limited
                               Partnership of the Partnership, dated July 27,
                               1990. (2)

                    (3)   (c)  Amended and Restated Certificate of Limited
                               Partnership of the Partnership, dated March 25,
                               1991. (3)

                    (3)   (d)  Amended and Restated Agreement of Limited
                               Partnership of the Partnership, dated as of
                               May 4, 1987. (4)

                    (3)   (e)  Amendment  No. 1 dated  February 14, 1989 to
                               Amended and Restated  Agreement of Limited
                               Partnership  of the Partnership. (5)

                    (3)   (f)  Amendment  No. 2 dated July 27, 1990 to Amended
                               and Restated Agreement of Limited Partnership
                               of the Partnership. (2)

                    (3)   (g)  Amendment  No. 3 dated March 25, 1991 to Amended
                               and  Restated  Agreement of Limited Partnership
                               of the Partnership. (3)

                    (3)   (h)  Amendment  No. 4 dated  May 23, 1991 to Amended
                               and Restated Agreement of Limited Partnership
                               of the Partnership. (6)

                    (10)  (a)  Management  Agreement  dated as of May 23, 1991
                               among the Partnership, Management Company and
                               the Managing General Partner. (6)

                    (10)  (b)  Form of  Sub-Management Agreement among the
                               Partnership, Management Company, the Managing
                               General Partner and the Sub-Manager. (8)

                    (28)       Prospectus of the Partnership  dated February 10,
                               1987  filed  with  the  Securities  and  Exchange
                               Commission  pursuant  to Rule  424(b)  under  the
                               Securities  Act of  1933,  as  supplemented  by a
                               supplement  thereto  dated  April 21,  1987 filed
                               pursuant to Rule 424(c) under the  Securities Act
                               of 1933. (7)

(b)                 No reports on Form 8-K have been filed since the  beginning
                    of the last quarter of the period for which this report is
                    filed.

(1)    Incorporated  by  reference  to the  Partnership's  Annual  Report on
       Form 10-K for the year ended  December  31, 1988 filed with the
       Securities and Exchange Commission on March 27, 1989.

(2)    Incorporated  by reference to the  Partnership's  Quarterly  Report on
       Form 10-Q for the quarter ended  September 30, 1990 filed with
       the Securities and Exchange Commission on November 14, 1990.

(3)    Incorporated  by  reference  to the  Partnership's  Annual  Report on
       Form 10-K for the year ended  December  31, 1990 filed with the
       Securities and Exchange Commission on March 28, 1991.

(4)    Incorporated  by  reference to the  Partnership's  Quarterly  Report on
       Form 10-Q for the quarter  ended June 30, 1987 filed with the
       Securities and Exchange Commission on August 14, 1987.

(5)    Incorporated  by reference to the  Partnership's  Quarterly  Report on
       Form 10-Q for the quarter  ended March 31, 1989 filed with the
       Securities and Exchange Commission on May 15, 1989.

(6)    Incorporated  by  reference to the  Partnership's  Quarterly  Report on
       Form 10-Q for the quarter  ended June 30, 1991 filed with the
       Securities and Exchange Commission on August 14, 1991.

(7)    Incorporated  by reference to the  Partnership's  Quarterly  Report on
       Form 10-Q for the quarter  ended March 31, 1987 filed with the
       Securities and Exchange Commission on May 15, 1987.

(8)    Incorporated  by  reference  to the  Partnership's  Annual  Report on
       Form 10-K for the year ended  December  31, 1992 filed with the
       Securities and Exchange Commission on March 26, 1993.


<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto duly  authorized on the 30th day of March
2001.


         ML VENTURE PARTNERS II, L.P.


         /s/   Kevin K. Albert
         -------------------------------------------------
By:      Kevin K. Albert
         Individual General Partner


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  Registrant and
in the capacities indicated on the 30th day of March 2001.




By:      MLVPII Co., L.P.
         its Managing General Partner

By:      Merrill Lynch Venture Capital Inc.
         its General Partner



By:      /s/   Kevin K. Albert                   By:     /s/   Jerome Jacobson
         -----------------------------           -----------------------------
         Kevin K. Albert                         Jerome Jacobson
         President                               Individual General Partner
         (Principal Executive Officer)           ML Venture Partners II, L.P.


By:      /s/   James V. Bruno                    By:     /s/   William M. Kelly
         ------------------------------          ------------------------------
         James V. Bruno                          William M. Kelly
         Vice President and Treasurer            Individual General Partner
         (Principal Financial and                ML Venture Partners II, L.P.
         Accounting Officer)

By:      /s/ Diane T. Herte
         -----------------------------
         Diane T. Herte
         Vice President