<PAGE>
			   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 JUNE 30, 2001

					  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 814-00141
			   VENTURE LENDING & LEASING II, INC.
                  (Exact name of registrant as specified in its charter)

             MARYLAND                                             77-0456589
     (State or other jurisdiction of                         (I.R.S. Employer
      incorporation or organization)		            Identification No.)

                  2010 NORTH FIRST STREET, SUITE 310, SAN JOSE, CA 95131
                        (Address of principal executive offices)
	             			(Zip Code)

           Registrant's telephone number, including area code:  (408) 436-8577

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:  Common Stock,
							     $0.001 par value

	Indicate by check mark whether the registrant has (i) filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (ii) 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 be reference in Part II of this Form 10-K or any amendment to this
Form 10-K: X

As the registrant's shares are not publicly-traded, the aggregate market value
of the voting stock held by non-affiliates of the registrant cannot be
determined.

The number of shares outstanding of each of the issuer's classes of common
stock, as of September 15, 2001 was 101,159.12.


                       DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
DOCUMENT DESCRIPTION	                                        10-K PART
--------------------                                            ---------
<S>                                                                <C>
Specifically Identified Portions of the Registrant's               III
Proxy Statement for the Annual Meeting of Shareholders
to be held November 14, 2001
</TABLE>
<PAGE>

PART I

ITEM 1.	BUSINESS.

INTRODUCTION.

	Venture Lending & Leasing II, Inc. ("Fund") is a closed-end, non-
diversified management investment company electing status as a business
development company ("BDC") under the Investment Company Act of 1940("1940
Act").  The Fund's investment objective is to achieve a high total return.
The Fund provides asset-based financing to carefully selected venture
capital-backed companies, in the form of secured loans, installment sales
contracts or equipment leases.  The Fund receives warrants to acquire equity
securities in connection with its portfolio investments.  The Fund's Investment
Manager is Westech Investment Advisors, Inc. ("Westech Advisors" or the
"Manager"). Siguler Guff Advisers, LLC ("Adviser to the Manager") will act as
adviser to Westech Advisors with respect to its administrative duties to the
Fund.  The fund was incorporated in Maryland on May 19, 1997.

	The Fund's shares of Common Stock, $.001 par value ("Shares") were sold
to subscribers pursuant to capital calls made through August 18, 2001. Total
committed capital as of June 30, 2001 was $110 million; all of which has been
called and collected.

INVESTMENT PROGRAM.

	GENERAL.  As a BDC, the Fund will invest at least 70% of its total
assets ("qualifying assets") in securities of companies that qualify as
"eligible portfolio companies."  An eligible portfolio company generally is a
United States company that is not an investment company and that (i) does not
have a class of securities registered on an exchange or included in the Federal
Reserve Board's over-the-counter margin list; (ii) is actively controlled by a
BDC and has an affiliate of a BDC on its board of directors; or (iii) meets
such other criteria as may be established by the SEC.  See "Regulation."  The
Fund may invest up to 30% of its total assets in non-qualifying assets,
including companies that are not eligible portfolio companies (for example,
because the company's securities are listed on the National Association of
Securities Dealers' Automated Quotation System) and eligible portfolio
companies as to which the Fund does not offer to make available significant
managerial assistance.  The foregoing percentages are determined, in the case
of financings in which the Fund commits to provide financing prior to funding
the commitment, by the amount of the Fund's total assets represented by the
value of the maximum amount of securities to be issued by the borrower or
lessee to the Fund pursuant to such commitment.

	VENTURE LOANS AND LEASES.  Venture loans generally consist of a
promissory note secured by the equipment or other assets of the borrower.
The Fund generally obtains a security interest in the assets financed and
receives periodic payments of interest and principal, and generally receives
a final payment constituting additional interest at the end of the
transaction's term.  Venture leases consist of a lease from the Fund to the
lessee of the assets to be financed, with periodic payments of rent and, in
most cases, with a put option to sell the assets to the borrower at the end of
the lease term for a predetermined or formula price.  The interest rate and
amortization terms of venture loans, the rental rate and put provisions of
leases and all other transaction terms are individually negotiated between the
Fund and each borrower or lessee.  Because the Fund seeks to qualify as a
"regulated investment company" ("RIC") under the Internal Revenue Code of 1986
("Internal Revenue Code"), provisions of the Internal Revenue Code restrict the
terms upon which the Fund may enter into venture leases and the extent to which
venture leases may be used, and the Fund anticipates structuring the majority
of its transactions as venture loans.

	Typically, loans or leases are structured as commitments by the Fund to
finance assets of the borrower or lessee over a specified period of time.  The
commitment of the Fund to finance future asset acquisitions is typically
subject to the absence of any default under the loan or lease and compliance by
the borrower with requirements relating to, among other things, the type of
assets to be acquired.  Although the Fund's commitments generally provide that
the Fund is not required to continue to fund additional assets if there is a
material adverse change in the borrower's or lessee's financial condition, it
is possible that a borrower's or lessee's financial condition will not be as
strong at the time the Fund finances an asset acquisition as it was at the
time the commitment was entered into.

	WARRANTS AND EQUITY SECURITIES.  The Fund generally acquires warrants
to purchase equity securities of the borrower or lessee in connection with
asset financings.  The terms of the warrants, including the expiration date,
exercise price and terms of the equity security for which the warrant may be
exercised, are negotiated individually with each borrower or lessee.
Substantially all the warrants and underlying equity securities are restricted
securities under the 1933 Act at the time of issuance; the Fund generally
negotiates registration rights with the borrower or lessee that may provide (i)
"piggyback" registration rights, which permit the Fund under certain
circumstances to include some or all of the securities owned by it in a
registration statement filed by the borrower or lessee or (ii) under rare
circumstances, "demand" registration rights permitting the Fund under certain
circumstances to require the borrower or lessee to register the securities
under the 1933 Act (in some cases at the Fund's expense).

INVESTMENT POLICIES.

	For purposes of these investment policies and unless otherwise
specified, references to the percentage of the Fund's total assets "invested"
in securities of a company will be deemed to refer, in the case of financings
in which the Fund commits to provide financing prior to funding the commitment,
to the amount of the Fund's total assets represented by the value of the
maximum amount of securities to be issued by the borrower or lessee to the Fund
pursuant to such commitment; the Fund will not be required to divest securities
in its portfolio or decline to fund an existing commitment because of a
subsequent change in the value of securities the Fund has previously acquired
or committed to purchase.

	DIVERSIFICATION STANDARDS.  The Fund is classified as a "non-
diversified" closed-end investment company under the 1940 Act.  However the
Fund seeks to qualify as a RIC, and therefore must meet diversification
standards under the Internal Revenue Code.

	To qualify as a RIC, the Fund must meet the issuer diversification
standards under the Internal Revenue Code that require that, at the close of
each quarter of the Fund's taxable year in which the fund has an acquisition of
a security, (i) not more than 25% of the market value of its total assets is
invested in the securities of a single issuer and (ii) at least 50% of the
market value of its total assets is represented by cash, cash items, government
securities, securities of other RICs and other securities (with each investment
in such other securities limited so that not more than 5% of the market value
of the Fund's total assets is invested in the securities of a single issuer and
the Fund does not own more than 10% of the outstanding voting securities of a
single issuer).  For purposes of the diversification requirements under the
Internal Revenue Code, the percentage of the Fund's total assets "invested" in
securities of a company will be deemed to refer, in the case of financings in
which the Fund commits to provide financing prior to funding the commitment, to
the amount of the Fund's total assets represented by the value of the
securities issued by the borrower or lessee to the Fund at the time each
portion of the commitment is funded.

	The Fund will generally invest no more than 25% of its total assets in
securities of companies in any single industry.  The broad industry categories
in which the Fund anticipates that most of its investments will fall (and
within each of which there may be several "industries" for purposes of the
industry diversification policy) include computer and semiconductor-related,
medical/biotechnology and communications.

	INVESTMENT GUIDELINES.  In selecting investments for the Fund's
portfolio, the Manager will endeavor to meet the investment guidelines
established by the Fund's Board of Directors.  The Fund may, however,
make investments that do not conform to one or more of these guidelines when
deemed appropriate by the Manager.   Such investments might be made if the
Manager believes that a failure to conform in one area is offset by exceptional
strength in another or is compensated for by a higher yield, favorable warrant
issuance or other attractive transaction terms or features.

	LEVERAGE.  The Fund is permitted to borrow money from and issue debt
securities to banks, insurance companies and other lenders to obtain additional
funds to originate venture loans and leases.  Under the 1940 Act, the Fund may
not incur borrowings unless, immediately after the borrowing is incurred, such
borrowings would have "asset coverage" of at least 200 percent.  "Asset
coverage" means the ratio which the value of the Fund's total assets, less all
liabilities not represented by the borrowings and any other liabilities
constituting "senior securities" under the 1940 Act, bears to the aggregate
amount of such borrowings and senior securities.  The practical effect of this
limitation is to limit the Fund's borrowings and other senior securities to
50% of its total assets less its liabilities other than the borrowings and
other senior securities.

	The use of leverage increases investment risk.  The Fund's lenders
require that the Fund pledge portfolio assets as collateral for loans.  If the
Fund is unable to service the borrowings, the Fund may risk the loss of such
pledged assets.  Lenders also require that the Fund agree to loan covenants
limiting the Fund's ability to incur additional debt or otherwise limiting the
Fund's flexibility, and loan agreements may provide for acceleration of the
maturity of the indebtedness if certain financial tests are not met.

	TEMPORARY INVESTMENTS.  Pending investment in asset financing
transactions and pending distributions, the Fund invests excess cash in (i)
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, (ii) repurchase agreements fully collateralized by U.S.
government securities or (iii) short-term high-quality debt instruments of U.S.
corporations.  All such investments will mature in one year or less.  The U.S.
government securities in which the Fund may invest include U.S. government
securities backed by the full faith and credit of the U.S. government (such as
Treasury bills, notes and bonds) as well as securities backed only by the
credit of the issuing agency.  Corporate securities in which the Fund may
invest include commercial paper, bankers' acceptances and certificates of
deposit of domestic or foreign issuers.
	The Fund also may enter into repurchase agreements that are fully
collateralized by U.S. government securities with banks or recognized
securities dealers, in which the Fund purchases a U.S. government security from
the institution and simultaneously agrees to resell it to the seller at an
agreed-upon date and price.  The repurchase price is related to an agreed-upon
market rate of interest rather than the coupon of the debt security and, in
that sense, these agreements are analogous to secured loans from the Fund to
the seller.  Repurchase agreements carry certain risks not associated with
direct investments in securities, including possible declines in the market
value of the underlying securities and delays and costs to the Fund if the
other party to the transaction defaults.

	OTHER INVESTMENT POLICIES.  The Fund will not sell securities short,
purchase securities on margin (except to the extent the Fund's permitted
borrowings are deemed to constitute margin purchases), write puts or calls,
purchase or sell commodities or commodity contracts or purchase or sell real
estate.  The Fund will not underwrite the securities of other companies, except
to the extent the Fund may be deemed an underwriter upon the disposition of
restricted securities acquired in the ordinary course of the Fund's business.

	THE FUND'S INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND INVESTMENT
GUIDELINES (OTHER THAN ITS STATUS AS A BDC) ARE NOT FUNDAMENTAL POLICIES AND
MAY BE CHANGED BY THE FUND'S BOARD OF DIRECTORS AT ANY TIME WITHOUT SHAREHOLDER
APPROVAL.

REGULATION.

	Generally, to be eligible to elect BDC status, a company must engage in
the business of furnishing capital and offering significant managerial
assistance to "eligible portfolio companies," as defined below.  More
specifically, in order to qualify as a BDC, a company must (i) be a domestic
company; (ii) have registered as a class of its securities or have filed a
registration statement with the SEC pursuant to Section 12 of the Securities
Exchange Act of 1934; (iii) operate for the purpose of investing in the
securities of certain types of eligible portfolio companies; (iv) offer to
extend significant managerial assistance to such eligible portfolio companies;
(v) have a majority of disinterested directors; and (vi) file (or under certain
circumstances, intend to file) a proper notice of election with the SEC.

	"Making available significant managerial assistance" is defined under
the 1940 Act, in relevant part, as (i) an arrangement whereby the business
development company, through its officers, directors, employees or general
partners, offers to provide and, if accepted, does provide, significant
guidance and counsel concerning the management, operations or business
objectives of a portfolio company; or (ii) the exercise by a business
development company of a controlling influence over the management or polices
of the portfolio company by the business development company acting
individually or as part of a group acting together which controls the
portfolio company.  The officers of the Fund intend to offer to provide
managerial assistance, including advice on equipment acquisition and financing,
cash flow and expense management, general financing opportunities, acquisition
opportunities and opportunities to access the public securities markets, to the
great majority of companies to whom the Fund provides venture loans or leases.
In some instances, officers of the Fund might serve on the board of directors
of borrowers or lessees.

	An "eligible portfolio company" generally is a United States company
that is not an investment company and that (i) does not have a class of
securities registered on an exchange or included in the Federal Reserve Board's
over-the-counter margin list; (ii) is actively controlled by a BDC and has an
affiliate of a BDC on its board of directors; or (iii) meets such other
criteria as may be established by the SEC.  Control under the 1940 Act is
presumed to exist where a BDC owns more than 25% of the outstanding voting
securities of the eligible portfolio company.

	The 1940 Act prohibits or restricts companies subject to the 1940 Act
from investing in certain types of companies, such as brokerage firms,
insurance companies, investment banking firms, and investment companies.
Moreover, the 1940 Act limits the type of assets that BDCs may acquire to
certain prescribed qualifying assets and certain assets necessary for its
operations (such as office furniture, equipment, and facilities) if, at the
time of acquisition, less than 70% of the value of BDC's assets consist of
qualifying assets.  Qualifying assets include: (i) privately acquired
securities of companies that were eligible portfolio companies at the time
such BDC acquired their securities; (ii) securities of bankrupt or insolvent
companies; (iii) securities of eligible portfolio companies controlled by a
BDC; (iv) securities received in exchange for or distributed in or with
respect to any of the foregoing; and (v) cash items, government securities and
high-quality short-term debt.  The 1940 Act also places restrictions on the
nature of transactions in which, and the persons from whom, securities can be
purchased in order for the securities to be considered qualifying assets.  Such
restrictions include limiting purchases to transactions not involving a public
offering and the requirement that securities be acquired directly from either
the portfolio company or its officers, directors or affiliates.

	The Fund, as a BDC, may sell its securities at a price that is below
its net asset value per share, provided that a majority of the Fund's
disinterested directors has determined that such sale would be in the best
interests of the Fund and its shareholders and upon the approval by the
holders of a majority of its outstanding voting securities, including a
majority of the voting securities held by non-affiliated persons, of such
policy or practice within one year of such sale.  A majority of the
disinterested directors also must determine in good faith, in consultation with
the underwriters of the offering if the offering is underwritten, that the
price of the securities being sold is not less than a price which closely
approximates market value of the securities, less any distribution discounts
or commissions.  As defined in the 1940 Act, the term "majority of the
outstanding voting securities" of the Fund means the vote of (i) 67% or more of
the Fund's Shares present at a meeting, if the holders of more than 50% of the
outstanding Shares are present or represented by proxy, or (ii) more than 50%
of the Fund's outstanding Shares, whichever is less.

	Many of the transactions involving a company and its affiliates
(as well as affiliates of those affiliates) which were prohibited without the
prior approval of the SEC under the 1940 Act prior to its amendment by the 1980
Provisions are permissible for BDCs, including the Fund, upon the prior
pproval of a majority of the Fund's disinterested directors and a majority of
the directors having no financial interest in the transactions.  However,
certain transactions involving certain persons related to the Fund, including
its directors, officers, and the Managers, may still require the prior approval
of the SEC.  In general, (i) any person who owns, controls, or holds power to
vote, more than 5% of the Fund's outstanding Shares (ii) any director,
executive officer, or general partner of that person; and (iii) any person who
directly or indirectly controls, is controlled by, or is under common control
with, that person, must obtain the prior approval of a majority of the Fund's
disinterested directors, and, in some situations, the prior approval of the
SEC, before engaging in certain transactions involving the person or any
company controlled by the Fund.  The 1940 Act generally does not restrict
transactions between the Fund and its eligible portfolio companies.  While a
BDC may change the nature of its business so as to cease being a BDC (and in
connection therewith withdraw its election to be treated as a BDC) only if
authorized to do so by a majority vote (as defined by the 1940 Act) of its
outstanding voting securities, shareholder approval of changes in other
fundamental investment policies of a BDC is not required (in contrast to the
general 1940 Act requirement, which requires shareholder approval for a change
in any fundamental investment policy).

DIVIDENDS AND DISTRIBUTIONS.

	The Fund intends to distribute to shareholders substantially all of its
net investment income and net realized capital gains, if any, as determined for
income tax purposes.  Applicable law, including provisions of the 1940 Act, may
limit the amount of dividends and other distributions payable by the Fund.
Income dividends will generally be paid quarterly to shareholders of record on
the last day of each preceding calendar quarter end.  Substantially all of the
Fund's net capital gain (the excess of net long-term capital gain over net
short-term capital loss) and net short-term capital gain, if any, will be
distributed annually with the Fund's final quarterly dividend distribution for
the year.

	Until September 15, 2002, the Fund shall reinvest the proceeds of
matured, repaid or resold investments, net of required distributions to
shareholders, principal payments on borrowings and expenses or other
obligations of the Fund, in new loans or leases.  Following that date, the Fund
will begin to distribute to investors all proceeds received from principal
payments and sales of investments, net of reserves and expenses, principal
repayments on the Fund's borrowings, amounts required to fund financing
commitments entered into before such date, and any amounts paid on exercise of
warrants.  Distributions of such amounts are likely to cause annual
distributions to exceed the earnings and profits of the Fund available for
distribution, in which case such excess will be considered a tax free return of
capital to a shareholder to the extent of the shareholder's adjusted basis in
 his shares and then as capital gain. The Fund may borrow money to fund
shareholder distributions, to the extent consistent with the 1940 Act and a
prudent capital structure.

COMPETITION.

	Other entities and individuals compete for investments similar to those
proposed to be made by the Fund, some of whom may have greater resources than
the Fund.  Furthermore, the Fund's need to comply with provisions of the 1940
Act pertaining to BDCs and provisions of the Internal Revenue Code pertaining
to RICs might restrict the Fund's flexibility as compared with its competitors.
The need to compete for investment opportunities may make it necessary for the
Fund to offer borrowers or lessees more attractive transaction terms than
otherwise might be the case.

EMPLOYEES.

	The Fund has no employees; all of its officers are officers and
employees of the Manager or the Adviser to the Manager, and all of its required
services are performed by officers and employees of the Manager or the Adviser
to the Manager.

ITEM 2.	PROPERTIES.

	All of the Fund's office space is provided by the Manager.

ITEM 3.	LEGAL PROCEEDINGS.

	The Fund is not a party to any material legal proceedings.

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

	No matters were submitted to a vote of the Fund's security holders
during the last quarter of the fiscal year ended June 30, 2001.

EXECUTIVE OFFICERS OF THE FUND

	The following are the executive officers of the Fund.  All officers
serve at the pleasure of the Board.

<TABLE>
<CAPTION>
NAME AND POSITION WITH FUND  AGE  OCCUPATION DURING PAST FIVE YEARS
---------------------------  ---  ---------------------------------
<S>                          <C>  <C>
Ronald W. Swenson, Director, 56   President and Director, Westech Investment Advisors since 1994, and President and Director,
Chairman and Chief Executive      Western Technology Investments since 1980
Officer

Salvador O. Gutierrez,       58   Senior Vice President and Director, Westech Investment Advisors since 1994, and Senior Vice
Director, President               President, Western Technology Investment since 1987.

George W. Siguler,           54   Managing Director, Siguler Guff Advisers & affiliates since 1995; Managing Director of Mitchell
President and Advisory            Hutchins Institutional Investors from 1991 to 1995.  Director and President, Associated Capital
Director                          Advisers, Inc. (investment management firm) from 1990 to 1991, Vice Chairman and a director of
                                  Monarch Capital Corporation (financial services holding company) from 1984 to 1991.

Brian R. Best                35   Vice President, Westech Investment Advisors since 1999; Associate, Westech Investment Advisors
Vice President, CFO, and          since 1997
Secretary

Donald P. Spencer,           46   Managing Director, Siguler Guff Advisers and affiliates since 1995; Senior Vice President (and
Vice President                    other positions), Mitchell Hutchins Institutional Investors and affiliates from 1989 to 1995.
and Assistant Secretary
</TABLE>

PART II.

ITEM 5.	MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

	The Fund's Common Stock is not listed on any securities exchange, and
all holders of the Fund's Common Stock are subject to agreements significantly
restricting the transferability of their shares.

	The approximate number of holders of record of the Fund's Common Stock
at September 15, 2001 was 108.

	The Fund has established a policy of declaring dividends on a quarterly
basis, with the most recent dividend being paid on July 3, 2001 to holders of
record on May 31, 2001, in the amount of $395.42 per share.  See "Dividends and
Distributions" under Item 1 for a description of the Fund's dividend policies.

ITEM 6.	SELECTED FINANCIAL DATA.

	The following table summarizes certain financial data and should be
read in conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and notes
thereto included elsewhere in this Form 10-K. The selected financial data set
forth below have been derived from the audited financial statements.

<TABLE>
<CAPTION>
                                           For the Year Ended     For the Year Ended     For the Year Ended     From Inception,
                                              June 30, 2001          June 30, 2000          June 30, 1999       September 15, 1997
                                                                                                                to June 30,1998
<S>                                        <C>                    <C>                    <C>                    <C>
Statement of Operations Data:
Investment Income:

	Interest on Loans                         $26,853,551            $16,526,496             $7,412,772             $945,610
	Interest on Short - Term                    1,108,927                810,453                384,656              270,369
                                                 -------------           ------------            -----------          -----------
		Total Investment Income            27,962,478             17,336,949              7,797,428            1,215,979

Expenses:

	Management Fee                              5,672,500              3,655,548              2,750,000            2,183,048
	Interest Expense                            5,707,375              3,358,265              1,469,923              195,143
	Other Operating Expense                       565,326                944,296                409,764              245,173
                                                  ------------            -----------            -----------          -----------
		Total Expenses                     11,945,201              7,958,109              4,629,687            2,623,364
                                                  ------------            -----------            -----------          -----------
Net Investment Income (Loss)                       16,017,277              9,378,840              3,167,741           (1,407,385)
Net Change in Unrealized Gain  From Investment    (11,262,938)             2,559,583             10,205,281              643,692
Transactions
Net Realized Gain From Investment Transactions     30,962,536             82,956,596              1,623,458              278,655
Incentive Fee                                      (7,106,854)           (18,779,301)                     -                    -
                                                  ------------           ------------           ------------          -----------
  Income (Loss) before cumulative effect of        28,610,021             76,115,718             14,996,480             (485,038)
change in accounting principle                    ============           ============           ============          ============
Cumulative effect of change in accounting                   -             (2,174,665)                     -                    -
principle
                                                  ------------           ------------           ------------          ------------
Net Income (Loss)                                 $28,610,021            $73,941,053            $14,996,480             (485,038)
                                                  ============           ============           ============          ============

AMOUNTS PER COMMON SHARE:
 Income (Loss) before cumulative effect of            $286.87              $1,183.35                $442.32               (38.70)
change in accounting principle
 Cumulative effect of change in accounting                  -                 (33.81)                     -                    -
principle                                         ============           ============           ============          ============
      Net Income (Loss)                               $286.87              $1,149.54                $442.32               (38.70)
                                                   ============           ============           ============         ============
Weighted Average Shares Outstanding                    99,732                 64,322                 33,904               12,534
                                                   ============           ============           ============         ============

Balance Sheet Data:                       As of June 30, 2001    As of June 30, 2000    As of June 30, 1999   As of June 30, 1998
                                         --------------------   --------------------   --------------------  --------------------

Total Assets                                    $203,992,064           $183,131,473            $94,847,182           $31,603,724
Bank Loans                                       $64,386,884            $65,024,316            $37,208,210            $9,008,210
</TABLE>

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

RESULTS OF OPERATIONS -- YEARS ENDED JUNE 30, 2001 AND 2000

	Total investment income for the years ended June 30, 2001 and June 30,
2000 was $28.0 million and $17.3 million, respectively, of which $26.9 million
and $16.5 million, respectively, consisted of interest on venture loans
outstanding.  A majority of the remaining income consisted of interest on the
temporary investment of cash, pending investment in venture loans,
distributions to shareholders or application to the Fund's expenses.  The
increase in investment income reflects the increase in average performing loans
outstanding from fiscal year ended June 30, 2000 to fiscal year end June 30,
2001 of approximately $50 million as well as an additional $3.2 million
interest premium paid by several clients in order to pay off their loans
earlier than had been scheduled.  The average performing loans outstanding is
based on a monthly average of performing loans.

	Expenses for the years ended June 30, 2001 and 2000 were $11.9 million
and $8.0 million, respectively.  Management fees are calculated based on
committed capital for the first two years of the Fund's life and thereafter
as a percentage of Fund assets.  Management fees increased from $3.7 million
to $5.6 million because of the increased asset base from which management fees
were calculated.  Average assets increased approximately $80 million dollars on
a quarterly basis from fiscal year end June 30, 2000 to fiscal year end June
30, 2001.  Interest expense increased to $5.7 million in the year ended June
30, 2001 from $3.4 million in the prior year. This increase was due mostly to
an increase in the average monthly debt outstanding.  Other operating expenses
decreased to $0.6 million in the year ended June 30, 2001 from $0.9 million in
the prior year. This decrease was due primarily to decreased legal costs.

	The Fund had unrealized losses from investments of $11.3 million for
the year ended June 30, 2001 as opposed to an unrealized gain of $2.6 million
in the prior year. This was predominately due to the realization of previously
unrealized warrant gains through exercising the warrants and ultimate sale of
the securities as well as a decrease in market value of several securities.

	Included in net change in unrealized gain from investments for the year
ended June 30, 2001, is an unrealized loss on loans of $4.2 million.  This
amount represents a reduction in the estimated fair value of loans determined
by the Fund's Managers in accordance with the procedures established by the
Fund's Board of Directors.  The Fund's policy is to place a loan on nonaccrual
status when either principal or interest has become past due for 90 days or
more. When a loan is placed on nonaccrual status, all interest previously
accrued for the quarter but not collected is reversed. As of June 30, 2001 and
2000 the Fund had loan balances outstanding with a cost basis of $11.7 million
and $3.5 million and a fair value of $3.2 million and $1.1 million respectively
from borrowers that were carried on a nonaccrual basis.  Also included in net
change in unrealized gain from investments is a loss of $1.0 million due to the
decreased value of the company's hedge positions.

The Fund experienced a realized gain from investments during the year ended
June 30, 2001 of  $31.0 million , which was down from  the June 30, 2000
realized gain of $83.0 million.  This reduction in realized gain was
predominately due to decreased activity in  the Fund's sale of stock in various
companies.  The decreased activity reflected a tightening of the IPO market in
general.  In addition, activity for the year ended June 30, 2000 had been
unusually high due to the strength of the IPO market at that time.  Included in
the realized gain figures was a realized loss on loans for $3.2 million and
$2.9 million for the years ended June 30, 2001 and 2000 respectively.

Incentive fee decreased from $18.8 million for the year ended June 30, 2000 to
$7.1 million for the year ended June 30, 2001.  The decrease is almost entirely
due to the decreased net income figure from $73.9 million for the year ended
June 30, 2000 to $28.6 million for the year ended June 30, 2001. is used to
calculate the incentive fee.

	Net income for the period ended June 30, 2001 decreased to $28.6
million from the year ended June 30, 2000 of $73.9 million. On a per share
basis, for the years ended June 30, 2001 and 2000 net income before cumulative
effect of change in accounting principle was $287 and $1,183 respectively, and
net income was $287 and $1,150 respectively.

LIQUIDITY AND CAPITAL RESOURCES --          JUNE 30,2001 AND JUNE 30, 2000

	Total capital committed to the purchase of Shares pursuant to
subscription agreements was approximately $110 million at June 30, 2001 and
2000.  As of June 30, 2000 all of this committed capital had been called to
fund investments in venture loans and to meet the Fund's expenses.

	The Fund has in place a $43 million revolving debt facility
("Warehouse") to finance the acquisition of asset-based loans. As of June 30,
2001, $25.0 million was outstanding under this facility, compared with
$15.0 million as of June 30, 2000. The Fund also has in place a $50 million
securitzation debt facility.  As of June 30, 2001 and June 30, 2000,
$39.4 million and $50 million respectively were outstanding on this facility.
The Fund entered into interest rate swap transactions to hedge its interest
rate on the securitization debt facility. At June 30, 2001 and June 30, 2000
the fund had entered into interest swap and cap transactions with a total
notional principal of $50 million. The effect of swap transactions is to
convert the variable commercial paper rate into a fixed rate on the contract
notional value.  The over-hedging of this facility allows the Fund to hedge
some of its debt under the Warehouse facility; which otherwise would remain
completely unhedged.

	As of June 30, 2001, 28% of the Fund's assets consisted of cash and
cash equivalents, compared with 3% as of June 30, 2000.  The Fund continued to
invest its assets in venture loans during the year.  Amounts disbursed under
the Fund's loan commitments increased by approximately $79.3 million during the
year ended June 30, 2001. Net loan amounts outstanding after amortization
decreased by approximately $25.6 million. Unfunded commitments decreased by
approximately $64.8 million.

<TABLE>
<CAPTION>
========================= ========================= ========================= ========================== ========================
<S>                       <C>                       <C>                       <C>                        <C>
Year Ending                       Amount Disbursed    Principal Amortization        Balance Outstanding      Unfunded Commitments
------------------------- ------------------------- ------------------------- -------------------------- ------------------------
June 30, 2001                        $314.5million            $183.8 million             $130.7 million            $106.5 million
------------------------- ------------------------- ------------------------- -------------------------- ------------------------
June 30, 2000                       $235.2 million             $78.9 million             $156.3 million            $171.3 million
========================= ========================= ========================= ========================== ========================
</TABLE>

	Because venture loans are privately negotiated transactions,
investments in these assets are relatively illiquid.  It is the company's
experience that not all unfunded commitments will be used by borrowers. Only
$27.0 million of the unfunded commitments were unexpired as of June 30, 2001.

	The Fund seeks to meet the requirements to qualify for the special
pass-through status available to "regulated investment companies" ("RICs")
under the Internal Revenue Code, and thus to be relieved of federal income tax
on that part of its net investment income and realized capital gains that it
distributes to shareholders.   To qualify as a RIC, the Fund must distribute to
its shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income and net short-
Term capital gain) ("Distribution Requirement").  To the extent that the terms
of the Fund's venture loans provide for the receipt by the Fund of additional
interest at the end of the loan term or the terms of venture leases provide for
the receipt by the Fund of a purchase price for the asset at the end of the
lease term ("residual income"), the Fund would be required to accrue such
residual income over the life of the loan or lease, and to include such accrued
income in its gross income for each taxable year even if it receives no portion
of such residual income in that year.  Thus, in order to meet the Distribution
Requirement and avoid payment of income taxes or an excise tax on undistributed
income, the Fund may be required in a particular year to distribute as a
dividend an amount in excess of the total amount of income it actually
receives.  Those distributions will be made from the Fund's cash assets, from
amounts received through amortization of loans or leases or from borrowed
funds.

QUARTERLY RESULTS
	This information has been derived from unaudited financial statements
that, in the opinion of management, include all normal recurring adjustments
necessary for a fair presentation of such information. The operating results
for any quarter are not necessarily indicative of results for any future
period.

June 30, 2001 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                               -------------------  -------------------  -------------------  -------------------
                                                September 30, 2000    December 31, 2000       March 31, 2001        June 30, 2001
                                               -------------------  -------------------  -------------------  -------------------
<S>                                            <C>                   <C>                  <C>                 <C>
Investment Income:
  Interest on Loans                                     $6,070,648           $7,238,375           $6,974,328           $6,570,200
  Interest on Short -Term Investments                      241,145              271,772              189,025              406,985
                                                        ----------           ----------           ----------           ----------
	Total Investment Income                          6,311,793            7,510,147            7,163,353            6,977,185
                                                        ----------           ----------           ----------           ----------
Expenses:
   Management Fee                                        1,707,688            1,402,086            1,289,088            1,273,638
   Interest Expense                                      1,571,159            1,595,619            1,323,829            1,216,768
   Other Operating Expense                                 126,756              147,806              169,455              121,309
                                                        ----------           ----------           ----------           ----------
      Total Expenses                                     3,405,603            3,145,511            2,782,372            2,611,715
                                                        ----------           ----------           ----------           ----------
Net Investment Income                                   $2,906,190           $4,364,636           $4,380,981           $4,365,470
Net Change in Unrealized Gain  From                     53,220,095          (31,503,329)         (15,874,556)         (17,105,148)
Investment Transactions
Net Realized Gain (Loss) From                            9,973,118             (305,787)          (1,991,861)          23,287,066
Investment Transactions
Incentive Fee                                          (13,172,292)           5,477,828            2,697,087           (2,109,477)
                                                       ------------         ------------         -----------           -----------
Net Income (Loss)                                      $52,927,111         $(21,966,652)        $(10,788,349)          $8,437,911
                                                       ============         ============         ===========           ===========
Net Income (Loss) Per Share                                $554.22             $(217.15)            $(106.65)              $83.41
                                                       ============         ============         ===========           ===========
Weighted Average Shares Outstanding                         95,498               101,159             101,159              101,159
                                                       ============         ============         ===========           ===========
</TABLE>

JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                -------------------  -------------------  -------------------  -------------------
                                                 September 30, 1999    December 31, 1999       March 31, 2000        June 30, 2000
                                                -------------------  -------------------  -------------------  -------------------
<S>                                              <C>                  <C>                  <C>                  <C>
Investment Income:
  Interest on Loans                                      $2,996,175           $3,854,559           $4,711,040           $4,964,722
  Interest on Short -Term Investments                        92,464              193,310              320,365              204,314
                                                         ----------           ----------           ----------           ----------
	Total Investment Income                           3,088,639            4,047,869            5,031,405            5,169,036
                                                         ----------           ----------           ----------           ----------
Expenses:
  Management Fee                                            693,151              801,022            1,016,803            1,144,572
   Interest Expense                                         635,281              710,227              926,962            1,085,795
   Other Operating Expense                                  239,002              255,308              153,486              296,500
                                                         ----------           ----------           ----------           ----------
      Total Expenses                                      1,567,434            1,766,557            2,097,251            2,526,867
                                                         ----------           ----------           ----------           ----------
Net Investment Income                                    $1,521,205           $2,281,312           $2,934,154           $2,642,169
Net Change in Unrealized Gain  From                         873,427           (1,555,427)          (1,207,625)           4,449,208
Investment Transactions
Net Realized Gain From Investment                         6,181,041           67,761,009            5,664,263            3,350,283
Transactions
Incentive Fee                                            (1,572,288)         (13,671,282)          (1,395,537)          (2,140,194)
                                                         -----------         ------------          -----------          -----------
Income before cumulative effect of                        7,003,385           54,815,612            5,995,255            8,301,466
change in accounting principle                           (2,174,665)                   -                    -                    -
                                                         -----------         ------------          -----------          ----------
Cumulative Effect of change in
accounting principle
Net Income                                               $4,828,720          $54,815,612           $5,995,255           $8,301,466
                                                         -----------         ------------          -----------          ----------
Amount per common share:

Income before cumulative effect of                          $134.78            $1,013.54               $90.56               $97.34
change in accounting principle
Cumulative Effect of change in                               (41.85)                   -                    -                    -
accounting principle                                     -----------          -----------          -----------          ----------
Net Income Per Share                                         $92.93            $1,013.54               $90.56               $97.34
                                                         ===========          ===========          ===========          ==========
Weighted Average Shares Outstanding                          51,960               54,083               66,205               85,286
                                                         ===========          ===========          ===========          ==========
</TABLE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Fund's business activities contain elements of risk. The Fund considers the
principal types of market risk to be interest rate risk and valuation risk. The
Fund considers the management of risk essential to conducting its businesses
and to maintaining profitability. Accordingly, the Fund's risk management
procedures are designed to identify and analyze the Fund's risks, to set
appropriate policies and limits and to continually monitor these risks and
limits by means of reliable administrative and information systems and other
policies and programs.

The Fund manages its market risk by maintaining a portfolio that is diverse by
industry, size of investment, stage of development, and borrower.  The Fund has
limited exposure to public market price fluctuations as the Fund primarily
invests in private business enterprises. Since there is typically no public
market for the equity interests of the companies in which the Fund invests, the
valuation of the equity interests in the Fund's portfolio is subject to the
estimate of the Fund's management. In the absence of a readily ascertainable
market value, the estimated value of the Fund's portfolio of equity interests
may differ significantly from the values that would be placed on the portfolio
if a ready market for the equity interests existed. Any changes in estimated
value are recorded in the Fund's statement of operations as "Net change in
unrealized gain from investments". Each hypothetical 1% increase or decrease
in value of the Fund's portfolio of equity interests of $15.6 million at June
30, 2001 would have resulted in unrealized gains or losses and would have
increased or decreased net income for year by 0.5%.

         The Fund's sensitivity to changes in interest rates is regularly
monitored and analyzed by measuring the characteristics of assets and
liabilities. The Fund utilizes various methods to assess interest rate risk
in terms of the potential effect on interest income net of interest expense,
the value of net assets and the value at risk in an effort to ensure that the
Fund is insulated from any significant adverse effects from changes in interest
rates.

Based on the model used for the sensitivity of interest income net of interest
expense, if the balance sheet were to remain constant and no actions were taken
to alter the existing interest rate sensitivity, a hypothetical immediate 100
basis point change in interest rates would have affected net income by less
than 1% during the year. Although management believes that this measure is
indicative of the Fund's sensitivity to interest rate changes, it does not
adjust for potential changes in credit quality, size and composition of the
balance sheet and other business developments that could affect net income.
Accordingly, no assurances can be given that actual results would not differ
materially from the potential outcome simulated by this estimate.


ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	See Item 14

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

	Not applicable.

PART III

ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

	The information required by this item is contained in part under the
caption "Executive Officers of the Fund" in Part I hereof, and the remainder is
contained in the Fund's Proxy Statement for the Annual Meeting of Shareholders
to be held November 14, 2001 ("2001 Proxy Statement") under the caption
"Proposal 2 -- To Elect Seven Directors of the Fund" and is incorporated herein
by reference.

ITEM 11.	EXECUTIVE COMPENSATION

	The information required by this item is contained in the Fund's 2001
Proxy Statement under the caption "Proposal 2 -- To Elect Seven Directors of
the Fund" and is incorporated herein by reference.

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

	The information required by this item is contained in the Fund's 2001
Proxy Statement under the caption "Annex A -- Beneficial Ownership of Fund
Shares" and is incorporated herein by reference.

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

	The information required by this item is contained in the Fund's
2001 Proxy Statement under the captions: "Other Information -- Managers" and is
incorporated herein by reference.

PART IV.

ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)	1.     Index to Financials Statements and Financial Statement Schedules

<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                        ------
<S>                                                                                                     <C>
Report of Independent Public Accountants                                                                 F-1

Statements of Financial Position as of June 30, 2001 and 2000                                            F-2

Statements of Operations for the Years ended June 30, 2001 and 2000                                      F-3

Statements of Changes in Shareholders' Equity for the Years ended June 30, 2001                          F-4
and 2000

Statements of Cash Flows for the Years ended June 30, 2001 and 2000                                      F-5

Notes to Financial Statements                                                                            F-6
</TABLE>

Financial Statement Schedules for the Years Ended June 30, 2001 and 2000
included in Item 14(d):

No schedules are required because the required information is not present or
not present in amounts sufficient to require submission of the schedule, or
because the required information is included in the financial statements and
the notes thereto.

(a)	2.	EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number	        Exhibit Title
--------        ---------------------------------
<S>             <C>
3(i)    	Articles of Incorporation of the Company filed with the Maryland Secretary of State on May 19, 1997, Incorporated
                by reference to the Funds Registration Statement on Form 10 filed with the Securities and Exchange Commission on
                July 2, 1997.

3(ii)   	Bylaws of the Company, Incorporated by reference to the Funds Registration Statement on Form 10 filed with the
                Securities and Exchange Commission on July 2, 1997.

4.1     	Form of Subscription Agreement between the Company and Individual Investors, Incorporated by reference to the
                Funds Registration Statement on Form 10 filed with the Securities and Exchange Commission on July 2, 1997.

4.2     	Form of Subscription Agreement between the Company and Institutional Investors, Incorporated by reference to the
                Funds Registration Statement on Form 10 filed with the Securities and Exchange Commission on July 2, 1997.

4.3     	Form of Subscriptions Agreement between the Company and Individual Investors Purchasing Through the Placement
                Agent (including Investor Questionnaire), Incorporated by reference to the Funds Registration Statement on Form
                10 filed with the Securities and Exchange Commission on July 2, 1997.

4.4     	Form of Subscription Agreement between the Company and Institutional Investors Purchasing Through the Placement
                Agent (including Investor Questionnaire), Incorporated by reference to the Funds Registration Statement on Form
                10 filed with the Securities and Exchange Commission on July 2, 1997.

10.1    	Form of Custodian Agreement between the Company and BankBoston, N.A., Incorporated by reference to the Funds
                Registration Statement on Form 10 filed with the Securities and Exchange Commission on July 2, 1997.

10.2    	Form of Stock Transfer Agent Fee Services Agreement between the Company and BankBoston, N.A., Incorporated by
                reference to the Funds Registration Statement on Form 10 filed with the Securities and Exchange Commission on
                July 2, 1997.

10.3    	Form of Intercreditor Agreement between the Company and Venture Lending & Leasing, Inc., Incorporated by reference
                to the Funds Registration Statement on Form 10 filed with the Securities and Exchange Commission on July 2, 1997.

10.4	        Form of Management Agreement between the Company, Westech Investment Advisors, Inc. and Siguler Guff Advisers,
                LLC., Incorporated by reference to the Funds Registration Statement on Form 10 filed with the Securities and
                Exchange Commission on July 2, 1997.

10.5	        Form of Engagement Letter between Robertson, Stephens & Company LLC and Westech Investment Advisors, Inc.,
                Incorporated by reference to the Funds Registration Statement on Form 10 filed with the Securities and Exchange
                Commission on July 2, 1997.
</TABLE>

(b)	REPORTS ON FORM 8-K
The Fund filed no reports on Form 8-K with the Commission during the fiscal
quarter ended June 30, 2001.

                                   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.

VENTURE LENDING & LEASING II, INC.
(Registrant)

By:	/S/ Ronald W. Swenson		    By:	     /S/ Brian R. Best
       ---------------------------                   -----------------------
Ronald W. Swenson		            Brian R. Best
Chairman and Chief Executive Officer        Chief Financial Officer
Date:	September 28, 2001		    Date:   September 28, 2001

	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 and on the dates indicated.

<TABLE>
<CAPTION>
                NAME                                  TITLE                                 DATE
<S>                                   <C>                                   <C>

By:	/S/ Arthur Aeder                            Director                        September 28, 2001
       ------------------------------
Arthur Aeder

By:	/S/ John F. Cogan                           Director                        September 28, 2001
       ------------------------------
John F. Cogan

By:	/S/ Salvador O. Gutierrez             President & Director                  September 28, 2001
        -----------------------------
Salvador O. Gutierrez

By:	/S/ S. Allan Johnson                        Director                        September 28, 2001
        -----------------------------
S. Allan Johnson

By:	/S/ Louis Moelchert                         Director                        September 28, 2001
        -----------------------------
Louis Moelchert

By:	/S/ Ronald W. Swenson                    CEO & Director                     September 28, 2001
        -----------------------------
Ronald W. Swenson

By:	/S/ George H. Von Gehr                      Director                        September 28, 2001
        -----------------------------
George H. Von Gehr
</TABLE>




REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Shareholders of
Venture Lending & Leasing II, Inc.:

We have audited the accompanying statements of financial position of Venture
Lending & Leasing II, Inc. (a Maryland corporation) as of June 30, 2001 and
2000, and the related statements of operations, changes in shareholders' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Fund'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. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Venture Lending & Leasing II,
Inc. as of June 30, 2001 and 2000, and the results of its operations and its
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States.

As explained in Note 10 to the financial statements, effective October 1, 1999,
the Fund changed its method of accounting for incentive management fees.



/S/Arthur Andersen LLP

San Francisco, California,
August 10, 2001
<PAGE>



                       VENTURE LENDING & LEASING II, INC.

                       STATEMENTS OF FINANCIAL POSITION
                         AS OF JUNE 30, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                          2001               2000
                                                                                    --------------      --------------
<S>                                                                                  <C>                <C>
                                         ASSETS

Loans, at estimated fair value (cost: $139,174,204 and $158,723,975 in               $ 130,696,313       $ 156,293,975
2001 and 2000, respectively)
Investments in securities, at estimated fair value (cost: $3,605,714 and                15,633,551          19,919,042
$4,080,486 in 2001 and 2000, respectively)
Cash and cash equivalents                                                               57,333,474           6,226,455
Other assets                                                                               328,726             692,001
                                                                                    ---------------     ---------------
	Total assets                                                                 $ 203,992,064       $ 183,131,473
                                                                                    ===============     ===============

                          LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Bank loans                                                                           $ 64,386,884         $ 65,024,316
Accrued management and incentive fees                                                  28,438,432           22,107,359
Accounts payable and other accrued liabilities                                          2,482,481            2,312,625
                                                                                    ---------------     ---------------
	Total liabilities                                                              95,307,797           89,444,300
                                                                                    ---------------     ---------------
Shareholders' equity:
Common stock, $0.001 par value:
  Authorized-200,000 shares
  Issued and outstanding-101,159 and 90,530 shares in 2001 and 2000,
   respectively                                                                               101                   91
Capital in excess of par value                                                        109,999,899           98,999,909
Accumulated distributions                                                            (118,378,249)         (93,765,322)
Accumulated earnings                                                                  117,062,516           88,452,495
                                                                                    --------------       -------------
	Total shareholders' equity                                                    108,684,267           93,687,173
                                                                                    --------------       -------------
	Total liabilities and shareholders' equity                                  $ 203,992,064        $ 183,131,473
                                                                                    ==============       =============
</TABLE>
	The accompanying notes are an integral part of these statements.
<PAGE>

                       VENTURE LENDING & LEASING II, INC.

                           STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED JUNE 30, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                        2001                  2000
                                                                                  ----------------      ---------------
<S>                                                                               <C>                   <C>
INVESTMENT INCOME:
  Interest on loans                                                                   $26,853,551          $16,526,496
  Interest on short-term investments                                                    1,108,927              810,453
                                                                                  ----------------      ---------------
	Total investment income                                                        27,962,478           17,336,949
                                                                                  ----------------      ---------------
EXPENSES:
  Management fees                                                                       5,672,500            3,655,548
  Interest expense                                                                      5,707,375            3,358,265
  Other operating expenses                                                                565,326              944,296
                                                                                  ----------------      ---------------
	Total expenses                                                                 11,945,201            7,958,109
                                                                                  ----------------      ---------------
	Net investment income                                                          16,017,277            9,378,840

NET CHANGE IN UNREALIZED GAIN FROM INVESTMENTS                                        (11,262,938)           2,559,583

NET REALIZED GAIN FROM INVESTMENTS                                                     30,962,536           82,956,596

INCENTIVE FEE                                                                          (7,106,854)         (18,779,301)
                                                                                  ----------------      ---------------
	Income before cumulative effect on prior years of a change in
	accounting principle                                                           28,610,021           76,115,718

CUMULATIVE EFFECT ON PRIOR YEARS OF A CHANGE IN ACCOUNTING
PRINCIPLE (Note 10)                                                                             -           (2,174,665)
                                                                                  ----------------      ---------------
	Net income                                                                   $ 28,610,021         $ 73,941,053
                                                                                  ================      ===============
AMOUNTS PER COMMON SHARE:
  Income before cumulative effect of a change in accounting principle                     $286.87            $1,183.35
  Cumulative effect on prior years of a change in accounting principle (Note 10)                -               (33.81)
                                                                                  ----------------      ---------------
	Net income                                                                        $286.87            $1,149.54
                                                                                  ================      ===============
WEIGHTED AVERAGE SHARES OUTSTANDING                                                        99,732               64,322

PRO FORMA AMOUNTS ASSUMING THE NEW METHOD IS APPLIED
  RETROACTIVELY (Note 10):
     Net income                                                                       $28,610,021          $76,115,718
     Net income per common share                                                          $286.87            $1,183.35
</TABLE>
	The accompanying notes are an integral part of these statements.
<PAGE>

                       VENTURE LENDING & LEASING II, INC.

                 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                   FOR THE YEARS ENDED JUNE 30, 2001 AND 2000
<TABLE>
<CAPTION>
                                   COMMON STOCK        CAPITAL IN                       ACCUMULATED
                              ---------- ----------    EXCESS OF                        EARNINGS
                               SHARES      AMOUNT      PAR VALUE       DISTRIBUTION     (DEFICIT)        TOTAL
                              ----------  ----------  ---------------  ---------------  ---------------  ---------------
<S>                           <C>         <C>         <C>              <C>              <C>              <C>
BALANCE, JUNE 30, 1999          44,000         $44       $43,999,956      $(3,047,110)     $14,511,442      $55,464,332

  Sales of common stock         46,530          47        54,999,953                -                -       55,000,000
  Net income                         -           -                 -                -       73,941,053       73,941,053
  Distributions                      -           -                 -       (90,718,212)              -      (90,718,212)
                              ----------  ----------  ---------------  ---------------  ---------------  ---------------
BALANCE, JUNE 30, 2000          90,530          91        98,999,909       (93,765,322)     88,452,495       93,687,173
  Sales of common stock         10,629          10        10,999,990                -                -       11,000,000
  Net income                         -           -                 -                -       28,610,021       28,610,021
  Distributions                      -           -                 -       (24,612,927)              -      (24,612,927)
                              ----------  ----------  ---------------  ---------------  ---------------  ---------------
BALANCE, JUNE 30, 2001         101,159        $101      $109,999,899     $(118,378,249)    $117,062,516    $108,684,267
                              ==========  ==========  ===============  ===============  ===============  ===============
</TABLE>
	The accompanying notes are an integral part of these statements.
<PAGE>


                     VENTURE LENDING & LEASING II, INC.

                         STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                             2001            2000
                                                                                        ---------------  ---------------
<S>                                                                                     <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                              $28,610,021       $73,941,053
   Adjustments to reconcile net income to net cash provided by operating activities:
     Amortization of deferred assets, net of additions                                          93,543           (40,302)
     Net realized gain from investments                                                    (30,962,536)      (82,956,596)
     Net change in unrealized gain from investments                                         11,262,938        (2,559,583)
     Increase in other assets                                                                 (147,139)         (462,519)
     Net increase in accounts payable, other accrued liabilities and management fees         5,513,472        22,245,345
                                                                                        ----------------  ---------------
		Net cash provided by operating activities                                   14,370,299        10,167,398
                                                                                        ----------------  ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of loans                                                                     (79,348,494)     (134,976,136)
  Principal payments on loans                                                               95,703,783        53,754,169
  Acquisition of warrants and stocks                                                        (1,908,842)       (5,731,754)
  Proceeds from sale of securities                                                          36,540,632        49,623,594
                                                                                        ----------------  ---------------
		Net cash provided by (used in) investing activities                         50,987,079       (37,330,127)
                                                                                        ----------------  ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Sales of common stock                                                                     11,000,000        55,000,000
  Cash distributions to shareholders                                                       (24,612,927)      (51,296,830)
  Loan from bank                                                                            30,974,005        39,946,234
  Repayment of bank loans                                                                  (31,611,437)      (12,130,128)
                                                                                        ----------------  ---------------
		Net cash provided by (used in) financing activities                        (14,250,359)       31,519,276
                                                                                        ----------------  ---------------
		Net increase in cash and cash equivalents                                   51,107,019         4,356,547
CASH AND CASH EQUIVALENTS:
Beginning of year                                                                            6,226,455         1,869,908
                                                                                        ----------------  ---------------
End of year                                                                               $ 57,333,474       $ 6,226,455
                                                                                        ================  ===============
CASH PAID DURING THE YEAR FOR INTEREST                                                      $5,690,189        $3,348,938

NONCASH TRANSACTIONS: Distributions of investment securities to shareholders                         -        39,421,382
</TABLE>

	The accompanying notes are an integral part of these statements.
<PAGE>

                    VENTURE LENDING & LEASING II, INC.

                      NOTES TO FINANCIAL STATEMENTS



1. ORGANIZATION AND OPERATIONS OF THE COMPANY:

Venture Lending & Leasing, II, Inc. (the Fund) was incorporated in Maryland
on May 19, 1997, as a nondiversified closed-end management investment company
electing status as a business development company under the Investment Company
Act of 1940. Prior to commencing its operations on September 15, 1997, the
Fund had no operations other than the sale to Westech Investment Advisors, Inc.
(Westech Advisors) of 50 shares of common stock, $0.001 par value, for $50,000.
As of June 30, 2001, the Fund has met the requirements, including
diversification requirements, to qualify as a regulated investment company
(RIC) under the Internal Revenue Code of 1986 and filed for such registration.

A portion of the costs incurred in connection with the organization of the
Fund were paid initially by Westech Advisors; however, the Fund reimbursed
Westech Advisors for such costs and paid other organizational costs directly,
which totaled $198,202 as of June 30, 1998. This amount was deferred and is
being amortized on the straight-line basis over a period of 60 months from the
date the Fund commenced operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF ACCOUNTING

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand and demand deposits in banks
with original maturities of 90 days or less.

VALUATION OF LOANS AND INVESTMENTS

Venture loans are privately negotiated transactions, and there is no
established trading market in which such loans can be sold. Investments in
loans are valued at their original purchase price less amortization of
principal unless, pursuant to procedures established by the Fund's Board of
Directors, the Fund's managers determine that amortized cost does not
represent fair value.

Substantially all of the Fund's investment securities are warrants and stock.
Most of the Fund's securities are restricted and cannot be sold publicly
without prior agreement with the issuer to register the securities under the
Securities and Exchange Act of 1933 (the 1933 Act), or by selling the
securities under Rule 144 or other rules under the 1933 Act, which permit only
limited sales under specified conditions.

Warrants that are received in connection with loan transactions generally will
be assigned a minimal value at the time of acquisition. Thereafter, warrants
on equity securities with readily ascertainable market values will be assigned
a fair value based on the difference, if any, between the exercise price of
the warrant and the market value of the equity securities for which the
warrant may be exercised, adjusted for illiquidity.

Restricted equity securities for which a public market exists are valued at a
discount with reference to the market price for unrestricted equity securities
of the same issuers. The discount for these equity securities takes into
consideration the following factors: the nature of the market in which the
securities are traded, the existence and terms of any registration rights, the
proportion of the issuer's securities held by the Fund, and other factors that
may affect their fair value. As the restriction period and other restrictive
factors decrease, the discount applied to the securities also decreases.

NONACCRUAL LOANS

The Fund's policy is to place a loan on nonaccrual status when either principal
or interest has become past due for 90 days or more. When a loan is placed on
nonaccrual status, all interest previously accrued but not collected is
reversed for the quarter in which the loan was placed on nonaccrual status.
Any uncollected interest related to quarters prior to when the loan was placed
on nonaccrual status is added to the principal balance, and the aggregate
balance of the principal and interest is evaluated in accordance with the
valuation of loans.
Loans with a fair value of $3,232,126 and $1,100,372 and
a cost of $11,710,017 and $3,530,372 have been classified as nonaccrual at
June 30, 2001 and 2000, respectively.

COMMITMENT FEES

Unearned income and commitment fees on loans are recognized using the
effective-interest method over the term of the loan. Commitment fees are
carried as liabilities when received for commitments upon which no draws have
been made.  When the first draw is made, the fee is included in unearned
income and is recognized as described above.

INTEREST RATE SWAPS

The Financial Accounting Standards Board (FASB) Statement of Accounting
Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 138,
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. For investment companies such as the Fund, SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings. The Fund adopted SFAS No. 133 effective July 1, 2000.

The fund enters into interest rate swap and interest rate cap transactions to
hedge its interest rate on its bank loans. The net interest received or paid
on the transactions is included in interest expense. The fair value of the
swap is recorded in other assets or other liabilities and the change in the
fair value is recorded as a change in unrealized gain (loss) from investments.

TAX STATUS

As long as the Fund qualifies as a RIC, it will not pay any federal or state
corporate income tax on income that is distributed to shareholders (pass-
through status). Should the Fund lose its qualification as a RIC, it could be
taxed as an ordinary corporation on its taxable income for that year (even if
that income is distributed to its shareholders), and all distributions out
of its earnings and profits will be taxable to shareholders as ordinary income.

RECLASSIFICATIONS

Certain amounts in the prior year financial statements have been reclassified
to conform to the current financial statement presentation. These
reclassifications had no impact on previously reported net income or
shareholders' equity.

3. SUMMARY OF INVESTMENTS:

Loans generally are made to borrowers pursuant to commitments whereby the Fund
commits to finance the borrower up to a specified amount for the term of the
commitments, upon the terms and subject to the conditions specified by such
commitment. As of June 30, 2001 and 2000, the Fund's investments in loans are
entirely within the United States and are diversified among the following
industries. The percentage of net assets (shareholders' equity) that each
industry group represents is shown with the industry totals below. (The sum of
the percentages does not equal 100 percent because the percentages are based
on net assets as opposed to total loans. Also, the sum of the percentages of
net assets is greater than 100 percent due to the Fund's use of leverage
(debt) as a means of financing investments.)

<TABLE>
<CAPTION>
                                                                                ESTIMATED FAIR VALUE
                                                                     --------------------  --------------------
                                                                              2001                 2000
                                                                     --------------------  --------------------
<S>                                                                  <C>                   <C>
Application service providers:
  Agilera                                                                        $721,888            $1,125,574
  Jamcracker                                                                    3,275,039             3,090,862
                                                                     --------------------  --------------------
	Total application service providers
        (3.7% and 4.5% of net assets)                                           3,996,927             4,216,436
                                                                     --------------------  --------------------
Biotech:
  Aesgen, Inc.                                                                 $1,978,271            $1,737,299
  Cellgate, Inc.                                                                  547,334               941,617
  Ceres, Inc.                                                                   1,413,230             2,083,664
  Genteric, Inc.                                                                   95,818               178,709
  Nobex Corporation                                                               552,535               769,012
  Origen Therapeutics, Inc.                                                       646,477               443,226
  Zyomyx, Inc.                                                                  3,957,349             1,690,040
                                                                     --------------------  --------------------

	Total biotech (8.5% and 8.4% of net assets)                             9,191,014             7,843,567
                                                                     --------------------  --------------------
Communications equipment:
  Amber Networks, Inc.                                                          2,397,193             2,031,887
  Astral Point Communications                                                     778,224                     -
  Calient Networks                                                                608,477                     -
  Cisco Systems (Cerent Corporation)                                            1,004,881             2,337,260
  Cisco Systems (Jetcell, Inc.)                                                   441,933               603,647
  Corvis Corporation                                                                    -             6,329,606
  Cosine Communications, Inc.                                                     906,303             1,963,665
  Cyras Systems, Inc.                                                                   -             4,237,707
  Longboard                                                                       340,986               680,940
  Metro-Optix, Inc.                                                             4,198,273             3,148,898
  Nexsi                                                                         2,718,778                     -
  Nishan Systems, Inc.                                                          3,716,482             2,722,886
  Optical Solutions, Inc.                                                       3,934,927             3,320,862
  Procket Networks                                                              1,193,118                     -
  Ramp Networks, Inc.                                                                   -             4,301,897
  Taqua Systems, Inc.                                                           2,112,262             2,913,934
  Terawave Communications                                                       4,395,073                     -
                                                                     --------------------  --------------------
	Total communications equipment
                      (26.4% and 36.9%)                                        28,746,910            34,593,189
                                                                     --------------------  --------------------

Communications service providers:
  Colo.com                                                                        240,617               296,126
  Equinix, Inc.                                                                 4,413,516             5,891,032
  Exodus Communications, Inc.                                                     619,826             1,688,299
  IASIA Works, Inc.                                                                     -               355,549
  NewEdge Networks Corp.                                                                -             3,752,776
  Telera, Inc.                                                                  3,875,179             2,308,729
  Totality                                                                        490,238                     -
  UM Communications, Inc.                                                       2,025,093             9,278,082
  USInternetworking, Inc.                                                               -             5,723,121
                                                                     --------------------  --------------------
	Total communications service providers
        (10.7% and 31.3%)                                                      11,664,469            29,293,714
                                                                     --------------------  --------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                     --------------------  --------------------
                                                                              2001                 2000
                                                                     --------------------  --------------------
<S>                                                                  <C>                   <C>
Computers and peripherals:
  Andes Networks                                                                  232,234                     -
  Applied Magnetics Corporation (DAS Devices, Inc.)                                     -                60,000
  Intera Systems, Inc.                                                                  -               208,403
  Quantum 3D                                                                            -                87,664
  Zayante, Inc.                                                                    49,790                74,999
                                                                     --------------------  --------------------
	Total computers and peripherals
        (0.3% and 0.5%)                                                           282,024               431,066
                                                                     --------------------  --------------------
Internet:
  Adforce                                                                         $51,169              $144,336
  Be Vocal, Inc.                                                                2,026,465             2,773,904
  Bridgespan                                                                    1,889,887                     -
  Coremetrics                                                                   1,564,860                     -
  Do Dots, Inc.                                                                         -             1,108,656
  Ectone                                                                          503,292                     -
  Eletter, Inc.                                                                    79,878             1,325,289
  Google                                                                        6,822,899             5,144,393
  Intanda (Backflip, Inc.)                                                      1,624,316             1,267,541
  Keynote Systems Incorporated                                                    139,797               293,690
  Netratings                                                                      114,931               209,928
  Postini                                                                         785,035                     -
  Private Express.com                                                             352,160               375,600
  Quin Street, Inc.                                                             2,907,947               475,824
  RivalWatch                                                                       65,681                     -
  Slam Dunk Networks                                                              194,178                     -
  Tradec.com                                                                      224,043               317,966
  Viquity                                                                         326,894                     -
  Vividence Corporation                                                         3,487,995               195,575
                                                                     --------------------  --------------------
	Total Internet (21.3% and 14.6%)                                       23,161,427            13,632,702
                                                                     --------------------  --------------------
Medical devices:
  Aerogen, Inc.                                                                         -               134,198
  Heartstent Corporation                                                           42,288                76,618
  Intratherapeutics, Inc.                                                               -             1,500,437
  Pi Medical, Inc.                                                                 63,632                23,894
  Spinal Concepts, Inc.                                                                 -               215,712
  Survivalink Corporation                                                         244,194               664,789
  Vascular Innovations, Inc.                                                      729,744               338,373
  Visionary BioMedical (Myelotec, Inc.)                                            87,619               207,650
  Volumetrics Medical Imaging, Inc.                                                     -               692,449
                                                                     --------------------  --------------------
	Total medical devices (1.1% and 4.1%)                                   1,167,477             3,854,120
                                                                     --------------------  --------------------
Photonics:
  LightLogic, Inc.                                                                      -             4,917,608
  Lightwave Microsystems Corporation                                               84,027               221,240
  New Focus, Inc.                                                                 235,959               472,949
  Newport Communications, Inc.                                                          -             1,902,753
  Novalux, Inc.                                                                 4,849,403             1,583,761
  Tsunami Optics                                                                  705,253                     -
                                                                     --------------------  --------------------
	Total photonics (5.4% and 9.7%)                                         5,874,642             9,098,311
                                                                     --------------------  --------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                     --------------------  --------------------
                                                                              2001                 2000
                                                                     --------------------  --------------------
<S>                                                                  <C>                   <C>
Semiconductors:
  Abrizio                                                                        $616,039              $985,688
  Catamaran Communications                                                      1,654,065                     -
  Chameleon Systems, Inc.                                                       2,886,890             2,554,727
  Hot Rail, Inc.                                                                  260,900               718,041
  Icompression, Inc.                                                            1,798,759             2,615,481
  Ishoni Networks                                                               4,336,061             4,344,341
  Matrix Semiconductor, Inc.                                                    3,239,625               875,548
  nDSP Corporation                                                              1,266,844               959,454
  Nucore Technology, Inc.                                                         793,850             1,094,617
  Quantum Effect Design, Inc.                                                           -             1,410,938
  Sandcraft, Inc.                                                               1,780,286             3,322,575
  Telecruz Technology, Inc.                                                     1,677,203             1,741,824
  Transmeta Corporation                                                         1,045,104             1,692,610
  Triscend Corporation                                                            532,285               751,839
  VxTel, Inc.                                                                   1,101,277               515,232
                                                                     --------------------  --------------------
	Total semiconductors (21.2% and 25.2%)                                 22,989,188            23,582,915
                                                                     --------------------  --------------------
Semiconductor equipment:
  Abpac, Inc.                                                                           -               347,924
  Brooks Automations, Inc. (Smart Machines, Inc.)                                 449,594               908,780
  Primaxx Corporation                                                             292,643               394,324
  Silicon Genesis Corporation                                                   4,664,951             6,100,001
  Torrex Equipment Corporation                                                  3,110,060               857,334
                                                                     --------------------  --------------------
  	Total semiconductor equipment
	(7.8% and 9.2%)                                                         8,517,248             8,608,363
                                                                     --------------------  --------------------
Software:
  Believe                                                                       1,089,970                     -
  Broad Daylight, Inc.                                                            623,927               872,943
  CoWare, Inc.                                                                    712,637               368,971
  di Carta, Inc.                                                                  658,115               716,756
  E.piphany                                                                       277,648               448,865
  Mineshare, Inc.                                                                 173,708               300,439
  North Systems                                                                    77,521                     -
  On Demand, Inc.                                                               1,966,857             1,108,301
  Open Telephone Networks, Inc.                                                   145,871               195,741
  Optimal Networks                                                                      -               321,883
  Personic Software, Inc.                                                       1,116,158             1,607,782
  Steeleye Technology, Inc.                                                     2,573,538             2,784,051
  Sycon Design, Inc.                                                              120,934               203,616
  Taviz Technology, Inc.                                                        1,078,517             1,746,226
  Ten North, Inc.                                                                       -               793,913
  0-in Design Automation Inc.                                                     357,075               249,318
  Xpede, Inc.                                                                           -             4,984,918
  Zoneworks, Inc.                                                                 348,444             1,009,130
                                                                     --------------------  --------------------
	Total software (10.4% and 18.9%)                                       11,320,920            17,712,853
                                                                     --------------------  --------------------
Other:
  AtomicTangerine                                                               1,453,616                     -
  Lumenare                                                                        406,972               489,455
  Offroad Capital                                                                 409,404               570,162
  WebVan-Bay Area, Inc.                                                         1,514,075             2,367,122
                                                                     --------------------  --------------------
	Total other (3.5% and 3.7%)                                             3,784,067             3,426,739
                                                                     --------------------  --------------------
	Total loans (cost: $139,174,204
        and $158,723,975)                                                    $130,696,313          $156,293,975
                                                                     ====================  ====================
</TABLE>

The Fund provides asset-based financing primarily to start-up and emerging
growth venture-capital-backed companies.  As a result, the Fund is subject to
general credit risk associated with such companies. At June 30, 2001 and 2000,
the Fund has unfunded commitments to borrowers of $106,558,962 and
$171,334,762, respectively. At June 30, 2001, $26,957,824 of these commitments
remain unexpired.

Included in the net change in unrealized gain from investment transactions for
the years ended June 30, 2001 and 2000, is an unrealized loss on loans of
$6,047,891 and $309,125, respectively. This amount represents a reduction in
the estimated fair value of loans determined by the Fund's Managers in
accordance with the procedures established by the Fund's Board of Directors.

The Fund's investments in warrants are entirely within the United States and
are diversified among the following industries.  The percentage of net assets
that each industry group represents is shown with the industry totals:

<TABLE>
<CAPTION>
                                                            2001
                                              ---------------- ----------------
                                                Estimated        Percentage of
                                                Fair Value       Net Assets
                                              ---------------- ----------------
<S>                                           <C>              <C>
Communication equipment                             $4,793,351            4.41%
Other warrants                                       2,709,430            2.49
                                              ---------------- ----------------
	Total warrants (cost: $2,583,275)           $7,502,781            6.90%
                                              ================ ================
</TABLE>

<TABLE>
<CAPTION>
                                                            2000
                                              ---------------- ----------------
                                                Estimated        Percentage of
                                                Fair Value       Net Assets
                                              ---------------- ----------------
<S>                                           <C>              <C>
Photonics:
  New Focus                                         $5,988,168             6.4%
  Other photonics                                      160,900             0.2
                                               --------------- ----------------
	Total photonics                              6,149,068             6.6

Communications service providers                       633,919             0.7
Other warrants                                       4,249,484             4.5
                                               --------------- ----------------
	Total warrants (cost: $2,531,400)          $11,032,471             11.8%
                                               --------------- ----------------
</TABLE>

The Fund's investments in stock are entirely within the United States and are
diversified among the following industries.  The percentage of net assets
that each industry group represents is shown with the industry totals, as
follows:

<TABLE>
<CAPTION>
                                                                   2001
                                               --------------- --------------- ---------------
                                                  SHARES          ESTIMATED     PERCENTAGE OF
                                                                  FAIR VALUE    NET ASSETS
                                               --------------- --------------- ---------------
<S>                                            <C>             <C>             <C>
Photonics                                              310,009      $5,141,284           4.73%
Other common stock                                     347,668       2,989,486           2.75
                                               --------------- --------------- ---------------
	Total common stock (cost: $1,022,439)          657,677      $8,130,770           7.48%
                                               =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                                                                   2000
                                               --------------- --------------- ---------------
                                                  SHARES          ESTIMATED     PERCENTAGE OF
                                                                  FAIR VALUE    NET ASSETS
                                               --------------- --------------- ---------------
<S>                                            <C>             <C>             <C>
Semiconductors                                         115,303      $5,763,508            6.2%
Software                                               166,064       3,123,063            3.3
                                               --------------- --------------- ----------------
	Total common stock (cost: $1,549,086)          281,367      $8,886,571            9.5%
                                               =============== =============== ================
</TABLE>

4. WARRANTS AND STOCK:

At June 30, 2001 and 2000, the Fund held warrants to purchase shares of common
and preferred stock in 85 and 87 companies, respectively, of which 10 and 5,
respectively, were publicly traded. The warrants issued by private companies
whose equity securities do not have a readily ascertainable market value are
carried at a minimal value assigned at the time of acquisition. These privat
warrants had a value of $2,192,475 and $2,378,400 at June 30, 2001 and 2000,
respectively. The following is a summary of the activity for investments in
warrants and investments in stocks for the years ended June 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                                    2001           2000
                                                ------------  ------------
<S>                                             <C>           <C>
Investments in warrants:
  Balance, beginning of year                     $11,032,471   $14,390,205
    Net acquisition of warrants                      556,275     1,835,100
    Conversion of warrants to stock                 (239,500)     (680,750)
    Write-off of warrants                           (264,900)     (124,000)
    Net change in unrealized gain                 (3,581,565)   (4,388,084)
                                                ------------  ------------
  Balance, end of year                            $7,502,781   $11,032,471
                                                ============  ============

Investments in stocks:
  Balance, beginning of year                      $8,886,571      $104,658
    Net acquisition of stock                       1,352,567     3,896,657
    Conversion of warrants to stock                  239,500       680,750
    Cost basis of stock sold                      (2,112,048)   (3,052,286)
    Write-off of stock                                (6,666)            -
    Net change in unrealized gain                   (229,154)    7,256,792
                                                 ------------  ------------
  Balance, end of year                            $8,130,770    $8,886,571
                                                 ============  ============
</TABLE>
5. LONG-TERM DEBT FACILITY:

As of June 30, 2001 and 2000, the Fund had in place a revolving credit
warehouse facility to finance the acquisition of asset-based loans. The Fund
was eligible to borrow up to $43 million and $52 million as of June 30, 2001
and 2000 respectively. Outstanding balances bear interest at either the
financial institution's prime rate or 1.75 percent above LIBOR for 2001 and
1.25 percent above LIBOR for 2000, which at June 30, 2001 and 2000, was 5.584
percent and 6.684 percent, respectively. The Fund pays a commitment fee of
0.25 percent annually on the total average amount of unused commitment with
respect to this facility. The facility is due to expire on March 23, 2002.

Borrowings under the facility are collateralized by the receivables under
loans with assignment to the financial institution plus other assets of the
Fund.

As of June 30, 2001 and 2000, the Fund had $25.0 million and $15.0 million,
respectively, outstanding under this facility.
The Fund also has in place a $50.0 million securitization debt facility to
finance the acquisition of asset-based loans. The principal balance is a
40-month term loan. Additional amounts can be drawn on the credit facility by
a minimum of $5 million and in $1 million increments in excess thereof. The
balance amortizes on a monthly basis.  At June 30, 2001 and 2000, were $39.4
million and $50.0 million, respectively, outstanding under this facility. The
interest rate on this facility varies monthly and is calculated as the bank's
rate for commercial paper on the date of reconciliation plus .55 percent. At
June 30, 2001 and 2000, this rate was 4.3325 percent and 6.7875 percent,
respectively.

The required aggregate debt principal payments for the remaining four years are
as follows:
<TABLE>
<CAPTION>
                                   YEAR           PRINCIPAL
                                                  PAYMENTS
                                  ----------   -------------
<S>                               <C>          <C>
                                  2002           $20,239,658
                                  2003            15,911,416
                                  2004             3,011,840
                                  2005               199,654
                                               -------------
                                                 $39,362,568
                                               =============
</TABLE>

6. INTEREST RATE SWAPS:

At June 30, 2001, the Fund had an interest swap and an interest rate cap
transaction outstanding with total notional principal amounts of $45 million
and $5 million, respectively, to convert floating rate liabilities to fixed
rates as follows:

- An interest rate swap with a notional amount of $45 million whereby the Fund
pays a fixed rate of 6.38 percent and receives from the counterparty a floating
30-day commercial paper rate. Payments are made monthly and terminate on July
26, 2004.

- An interest rate cap with a notional amount of $5 million whereby the Fund
pays a fixed rate of 6.38 percent and receives from the counterparty a floating
30-day H5 commercial paper rate. The counterparty is only obligated to pay
the Fund when the variable rate exceeds the fixed rate. When interest rates are
lower than 6.38 percent, no extra interest is paid by the Fund. Payments are
made monthly and terminate on July 26, 2004.

7. CAPITAL STOCK:

As of June 30, 2001 and 2000, there are 200,000 shares of $0.001 par value
common stock authorized, and 101,159 and 90,530 shares are issued and
outstanding, respectively.

The Fund has subscription agreements in effect with its shareholders
under which shareholders will purchase shares of the Fund, up to their
full committed capital amount, upon capital calls delivered at least 15 days
before payment is due. Based on $110 million of subscriptions received by the
final closing during December 1997, all commitments have been funded and no
uncalled capital commitments remained outstanding as of June 30, 2001.

8. EARNINGS PER SHARE:

Basic earnings per share are computed by dividing net income by the weighted-
average common shares outstanding.  Diluted earnings per share are computed by
dividing net income by the weighted-average common shares outstanding,
including the dilutive effects of potential common shares (e.g., stock
options). The Fund has no options, preferred stock or other instruments that
would be potential common shares; thus, reported basic and diluted earnings
are the same.

9. MANAGEMENT:

Westech Advisors serves as the Fund's investment manager, and Siguler Guff
Advisers, L.L.C. (the Adviser) serves as adviser to Westech Advisors with
respect to Westech Advisors' administrative duties to the Fund. As compensation
for their services to the Fund, Westech Advisors and the Adviser, together,
will receive a management fee (the Management Fee) at an annual rate of 2.5
percent of the Fund's committed capital, computed and paid quarterly for the
first two years following the Fund's initial private offering and at an annual
rate of 2.5 percent of the Fund's total assets (including amounts derived from
borrowed funds) as of the last day of each fiscal quarter thereafter. Fees of
$5,672,500 and $3,655,548 were recognized for the years ended June 30, 2001 and
2000, respectively.

In addition to the Management Fee, Westech Advisors and the Adviser (the
Managers) will together receive a monthly incentive fee (the Incentive Fee)
after shareholders have received a return of funds (Payout) equal to the
following: (a) cumulative dividends and distributions equal to 100 percent of
all amounts paid, as of the date of calculation, by shareholders to the Fund
(and not including placement fees paid to the placement agent by certain of
the shareholders) for the purchase of shares plus (b) a preferred return on
all amounts contributed, as of the date of calculation, equal to an 8 percent
cumulative noncompounded annual return on such amounts. After Payout has been
achieved, all amounts available to be paid as dividends and distributions to
shareholders in accordance with the Fund's distribution policies will be
distributed as follows: 80 percent as dividends to the Fund's shareholders and
20 percent to the Managers as the Incentive Fee. The Incentive Fee shall not
be paid until the Fund is no longer permitted to make capital calls under the
subscription agreements or irrevocably waives any right to do so. The Incentive
Fee expense for the years ended June 30, 2001 and 2000, was $7,106,854 and
$20,953,966, respectively (see Note 10). The amounts paid to the Managers
based on the Funds' distribution policies were $889,754 and $0 for the years
ended June 30, 2001 and 2000, respectively.

Certain officers and directors of the Fund also serve as officers and
directors of Westech Advisors and Siguler Guff Advisers, L.L.C.

10. CHANGE IN ACCOUNTING PRINCIPLE:

In the second quarter of the fiscal year ended June 30, 2000, the Fund changed
its method of accounting for its Incentive Fee. The previous method was to
record the Incentive Fee as the Fund became legally obligated. The new method
is to record the Incentive Fee based on the Fund's current income. According
to the management of the Fund, this change was made to more closely match the
Incentive Fee to current performance. The new method has been applied to
Incentive Fee calculations of prior years. The $2,174,665 cumulative effect of
the change on prior years is included in net income for the year ended June
30, 2000. The effect of the change on the year ended June 30, 2000, was to
decrease income before cumulative effect of a change in accounting principle
by $18,779,301 ($291.96 per share).

The pro forma amounts presented with the results of operations for the year
ended June 30, 2000, reflect the effect of retroactive application of the
Incentive Fee had the provision for Incentive Fees been made during prior
years.

11. SUBSEQUENT EVENT:

On July 23, 2001, the Fund distributed $40,000,339 to shareholders. This
distribution represents 36.4 percent of total capital invested in the Fund.