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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-Q
                     QUARTERLY REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 26, 1999

                    Merrill Lynch Preferred Capital Trust II
      (Exact name of Registrant as specified in its certificate of trust)

                         Commission File No.: 1-7182-04

                Delaware                                     13-7108354
    (State or other jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                        Identification No.)
   
        World Financial Center
              North Tower
          New York, New York                                    10281
(Address of principal executive offices)                      (Zip Code)

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

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

Title of each class                   Name of each exchange on which registered
-------------------                   -----------------------------------------
8% Trust Originated                   New York Stock Exchange
Preferred Securities ("TOPrS")
(and the related guarantee)

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

                    Merrill Lynch Preferred Funding II, L.P.
                  (Exact name of Registrant as specified in its
                      certificate of limited partnership)

                         Commission File No.: 1-7182-03

               Delaware                                       13-3926165
    (State or other jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                        Identification No.)

       World Financial Center
             North Tower
          New York, New York                                     10281
(Address of principal executive offices)                       (Zip Code)

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

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

Title of each class                   Name of each exchange on which registered 
-------------------                   ----------------------------------------- 
8% Partnership Preferred Securities   New York Stock Exchange 
(and the related guarantee)

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

Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such requirements for the past 90 days. Yes |X| No |_|

As of March 26, 1999, no voting stock was held by non-affiliates of the
Registrants.

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<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MERRILL LYNCH PREFERRED CAPITAL TRUST II
BALANCE SHEETS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        MARCH 26, 1999     DECEMBER 25, 1998
                                                        --------------     -----------------
<S>                                                       <C>                   <C>         
ASSETS

Investment in partnership preferred securities            $309,278,400          $309,278,400

Income receivable                                            6,185,568             6,185,568
                                                          ------------          ------------

Total Assets                                              $315,463,968          $315,463,968
                                                          ============          ============

LIABILITY AND STOCKHOLDERS' EQUITY

Distributions payable                                     $  6,185,568          $  6,185,568
                                                          ------------          ------------

Stockholders' equity:

  Preferred securities (8% Trust Originated
    Preferred Securities; 12,000,000 authorized,
    issued, and outstanding; $25 liquidation
    amount per security)                                   300,000,000           300,000,000

  Common securities (8% Trust Common Securities;
    371,136 authorized, issued, and outstanding;
    $25 liquidation amount per security)                     9,278,400             9,278,400
                                                          ------------          ------------

  Total stockholders' equity                               309,278,400           309,278,400
                                                          ------------          ------------

Total Liability and Stockholders' Equity                  $315,463,968          $315,463,968
                                                          ============          ============
</TABLE>

See Note to Financial Statements


                                       2
<PAGE>

MERRILL LYNCH PREFERRED CAPITAL TRUST II
STATEMENTS OF EARNINGS (UNAUDITED)
--------------------------------------------------------------------------------

                                                    FOR THE THREE MONTHS ENDED
                                                 -------------------------------
                                                 MARCH 26, 1999   MARCH 27, 1998
                                                 --------------   --------------
EARNINGS

Income on partnership preferred securities           $6,185,568       $6,185,568
                                                     ==========       ==========

See Note to Financial Statements


                                       3
<PAGE>

MERRILL LYNCH PREFERRED CAPITAL TRUST II
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
--------------------------------------------------------------------------------

                                                 FOR THE THREE MONTHS ENDED
                                             ----------------------------------
                                             MARCH 26, 1999      MARCH 27, 1998
                                             --------------      --------------

PREFERRED SECURITIES

Balance, beginning and end of period          $ 300,000,000       $ 300,000,000
                                              -------------       -------------

COMMON SECURITIES

Balance, beginning and end of period              9,278,400           9,278,400
                                              -------------       -------------

UNDISTRIBUTED EARNINGS

Balance, beginning of period                             --                  --

Earnings                                          6,185,568           6,185,568

Distributions payable                            (6,185,568)         (6,185,568)
                                              -------------       -------------

Balance, end of period                                   --                  --
                                              -------------       -------------

Total Stockholders' Equity                    $ 309,278,400       $ 309,278,400
                                              =============       =============

See Note to Financial Statements


                                       4
<PAGE>

MERRILL LYNCH PREFERRED CAPITAL TRUST II
STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------

                                                  FOR THE THREE MONTHS ENDED
                                               --------------------------------
                                               MARCH 26, 1999    MARCH 27, 1998
                                               --------------    --------------

CASH FLOWS FROM OPERATING ACTIVITIES:

  Earnings                                        $ 6,185,568       $ 6,185,568
                                                  -----------       -----------
                                                                  
    Cash provided by operating activities           6,185,568         6,185,568
                                                  -----------       -----------
                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:                             
                                                                  
  Distributions                                    (6,185,568)       (6,185,568)
                                                  -----------       -----------
    Cash used for financing activities             (6,185,568)       (6,185,568)
                                                  -----------       -----------
NET CHANGE IN CASH                                         --                --
                                                                  
CASH, BEGINNING OF PERIOD                                  --                --
                                                  -----------       -----------
                                                                  
CASH, END OF PERIOD                               $        --       $        --
                                                  ===========       ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Preferred and common distributions of $6,000,000 and $185,568, respectively,
were accrued at March 26, 1999 and March 27, 1998.

See Note to Financial Statements


                                       5
<PAGE>

MERRILL LYNCH PREFERRED CAPITAL TRUST II
NOTE TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 26, 1999
--------------------------------------------------------------------------------

BASIS OF PRESENTATION

These unaudited financial statements should be read in conjunction with the
audited financial statements included in the Annual Report on Form 10-K of
Merrill Lynch Preferred Capital Trust II (the "Trust") for the year ended
December 25, 1998. The December 25, 1998 balance sheet was derived from the
audited financial statements. The interim financial statements for the
three-month periods are unaudited; however, in the opinion of the Regular
Trustees of the Trust, all adjustments, consisting only of normal recurring
accruals necessary for a fair statement of the results of operations, have been
included.


                                       6
<PAGE>

MERRILL LYNCH PREFERRED FUNDING II, L.P.
BALANCE SHEETS (UNAUDITED)
--------------------------------------------------------------------------------

                                              MARCH 26, 1999   DECEMBER 25, 1998
                                              --------------   -----------------
ASSETS

Investments:
  Affiliate debentures                          $360,218,400        $360,218,400
  U.S. Treasury bills                              3,821,358           3,771,466
                                                ------------        ------------
  Total investments                              364,039,758         363,989,866
                                                                  
Interest receivable                                7,204,368           7,204,368
                                                ------------        ------------
Total Assets                                    $371,244,126        $371,194,234
                                                ============        ============
                                                                  
LIABILITY AND PARTNERS' CAPITAL                                   
                                                                  
Distributions payable                           $  7,204,368        $  7,204,368
                                                ------------        ------------
                                                                  
Partners' capital:                                                
  Limited partnership interest                   309,278,400         309,278,400
  General partnership interest                    54,761,358          54,711,466
                                                ------------        ------------
  Total partners' capital                        364,039,758         363,989,866
                                                ------------        ------------
                                                                  
Total Liability and Partners' Capital           $371,244,126        $371,194,234
                                                ============        ============

See Note to Financial Statements


                                       7
<PAGE>

MERRILL LYNCH PREFERRED FUNDING II, L.P.
STATEMENTS OF EARNINGS (UNAUDITED)
--------------------------------------------------------------------------------

                                                  FOR THE THREE MONTHS ENDED
                                             -----------------------------------
                                             MARCH 26, 1999       MARCH 27, 1998
                                             --------------       --------------
EARNINGS

Interest income:
  Affiliate debentures                           $7,204,368           $7,204,368
  U.S. Treasury bills                                49,892               49,145
                                                 ----------           ----------
                                                 
Earnings                                         $7,254,260           $7,253,513
                                                 ==========           ==========

See Note to Financial Statements


                                       8
<PAGE>

MERRILL LYNCH PREFERRED FUNDING II, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED)
--------------------------------------------------------------------------------

                                                  FOR THE THREE MONTHS ENDED
                                             ----------------------------------
                                             MARCH 26, 1999      MARCH 27, 1998
                                             --------------      --------------

LIMITED PARTNER'S CAPITAL

Balance, beginning of period                  $ 309,278,400       $ 309,278,400

Net income allocated to limited partner           6,185,568           6,185,568

Distribution payable                             (6,185,568)         (6,185,568)
                                              -------------       -------------

Balance, end of period                          309,278,400         309,278,400
                                              -------------       -------------

GENERAL PARTNER'S CAPITAL

Balance, beginning of period                     54,711,466          54,755,078

Net income allocated to general partner           1,068,692           1,067,945

Distribution payable                             (1,018,800)         (1,027,133)
                                              -------------       -------------

Balance, end of period                           54,761,358          54,795,890
                                              -------------       -------------

TOTAL PARTNERS' CAPITAL                       $ 364,039,758       $ 364,074,290
                                              =============       =============

See Note to Financial Statements


                                       9
<PAGE>

MERRILL LYNCH PREFERRED FUNDING II, L.P.
STATEMENTS OF CASH FLOWS  (UNAUDITED)
--------------------------------------------------------------------------------

                                                  FOR THE THREE MONTHS ENDED
                                               --------------------------------
                                               MARCH 26, 1999    MARCH 27, 1998
                                               --------------    --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Earnings                                        $ 7,254,260       $ 7,253,513
  Accretion of U.S. Treasury bills                    (49,892)          (49,145)
                                                  -----------       -----------
    Cash provided by operating activities           7,204,368         7,204,368
                                                  -----------       -----------
                                                 
CASH FLOWS FROM INVESTING ACTIVITIES:            
  Purchases of investment securities                       --        (3,829,287)
  Maturities of investment securities                      --         3,837,620
                                                  -----------       -----------
    Cash provided by investing activities                  --             8,333
                                                  -----------       -----------
                                                 
CASH FLOWS FROM FINANCING ACTIVITIES:            
  Distributions to limited partner                 (6,185,568)       (6,185,568)
  Distributions to general partner                 (1,018,800)       (1,018,800)
                                                  -----------       -----------
    Cash used for financing activities             (7,204,368)       (7,204,368)
                                                  -----------       -----------
                                                 
NET CHANGE IN CASH                                         --             8,333
                                                 
CASH, BEGINNING OF PERIOD                                  --                --
                                                  -----------       -----------
                                                 
CASH, END OF PERIOD                               $        --       $     8,333
                                                  ===========       ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Distributions of $7,204,368 and $7,212,701 were accrued at March 26, 1999 and
March 27, 1998, respectively.

See Note to Financial Statements


                                       10
<PAGE>

MERRILL LYNCH PREFERRED FUNDING II, L.P.
NOTE TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 26, 1999
--------------------------------------------------------------------------------

BASIS OF PRESENTATION

These unaudited financial statements should be read in conjunction with the
audited financial statements included in the Annual Report on Form 10-K of
Merrill Lynch Preferred Funding II, L.P. (the "Partnership") for the year ended
December 25, 1998. The December 25, 1998 balance sheet was derived from the
audited financial statements. The interim financial statements for the
three-month periods are unaudited; however, in the opinion of the General
Partner of the Partnership, all adjustments, consisting only of normal recurring
accruals necessary for a fair statement of the results of operations, have been
included.


                                       11

<PAGE>

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

      Merrill Lynch Preferred Capital Trust II (the "Trust") is a statutory
business trust formed under the Delaware Business Trust Act, as amended,
pursuant to a declaration of trust and the filing of a certificate of trust with
the Secretary of State on January 16, 1997, which was subsequently amended by an
amended and restated declaration of trust dated as of February 4, 1997. The
Trust exists for the exclusive purposes of (i) issuing trust securities,
consisting of 8% Trust Originated Preferred Securities (the "TOPrS") and trust
common securities (the "Trust Common Securities"), representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the trust securities in 8% Partnership Preferred Securities
(the "Partnership Preferred Securities") issued by Merrill Lynch Preferred
Funding II, L.P. (the "Partnership"), and (iii) engaging in only those other
activities necessary or incidental thereto.

      The Partnership is a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, as amended, pursuant to an agreement of limited
partnership and the filing of a certificate of limited partnership with the
Secretary of State on January 16, 1997, which was subsequently amended by an
amended and restated agreement of limited partnership dated February 6, 1997.
Merrill Lynch & Co., Inc. (the "Company") is the sole general partner of the
Partnership. The Partnership is managed by the general partner and exists for
the exclusive purposes of (i) issuing its partnership interests, consisting of
the Company's general partner interest and the Partnership Preferred Securities,
(ii) investing the proceeds thereof in certain eligible securities of the
Company and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") and certain eligible debt securities, and (iii) engaging in only
those other activities necessary or incidental thereto.

      The Registrants' activities are limited to issuing securities and
investing the proceeds as described above. Since the Trust was organized on
January 16, 1997, its activities, as specified in its declaration of trust, have
been limited to the issuance of the TOPrS and the Trust Common Securities, the
investing of the proceeds in the Partnership Preferred Securities, and the
payment of distributions on the TOPrS and the Trust Common Securities in
accordance with their terms. Since the Partnership was organized on January 16,
1997, its activities, as specified in its agreement of limited partnership, have
been limited to the issuance of the Partnership Preferred Securities, the
receipt of a capital contribution from the Company, as general partner, the
investment of the proceeds in Affiliate Investment Instruments and certain
eligible debt securities, and the payment of distributions on the Partnership
Preferred Securities.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

      On February 6, 1997, the Trust invested the gross proceeds from the sale
of the Trust Common Securities and the TOPrS in the Partnership Preferred
Securities (the "Trust Assets"). The Partnership, in turn, invested the proceeds
from the sale of the Partnership Preferred Securities and a capital contribution
from the Company in certain Affiliate Investment Instruments and eligible
securities (the "Partnership Assets"). To the extent the Partnership has funds
available from the Partnership Assets, the general partner of the Partnership
may declare distributions to the Trust, as holder of the Partnership Preferred
Securities. The Trust's ability to pay distributions to the holders of the TOPrS
is dependent on its receipt of distributions on the Trust Assets from the
Partnership. Therefore, upon the receipt by the Partnership of payments from the
Partnership Assets and the distribution thereof to the Trust, the Trust will
pass through such payments to the holders of the TOPrS.


                                       12
<PAGE>

                           PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)   Exhibits

      12    Computation of Ratios of Earnings to Combined Fixed Charges and
            Preferred Securities Distributions

      27    Financial Data Schedules*

(b)   Reports on Form 8-K

      None. 

------------- 
* The Financial Data Schedules to be contained in Exhibit 27 are required to be
submitted only in the Registrants' electronic filing of this Form 10-Q by means
of the EDGAR system.


                                       13
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed on their
behalf by the undersigned, thereunto duly authorized on the 6th day of May,
1999.


                                    MERRILL LYNCH PREFERRED CAPITAL TRUST II*

                                    By: /s/ RAYMOND M. DISCO
                                        ----------------------------------------
                                    Name:  Raymond M. Disco
                                    Title: Regular Trustee

                                    By: /s/ STANLEY SCHAEFER
                                        ----------------------------------------
                                    Name:  Stanley Schaefer
                                    Title: Regular Trustee


                                    MERRILL LYNCH PREFERRED FUNDING II, L.P.*

                                    By: MERRILL LYNCH & CO., INC., as General
                                        Partner

                                    By: /s/ JOHN C. STOMBER
                                        ----------------------------------------
                                    Name:  John C. Stomber
                                    Title: Senior Vice President and Treasurer

------------
*     There is no principal executive officer(s), principal financial officer,
      controller, principal accounting officer or board of directors of the
      Registrants. The Trustees of the Trust (which include the Regular
      Trustees, the Property Trustee and the Delaware Trustee) together exercise
      all powers and perform all functions with respect to the Trust.


                                       14
<PAGE>

                                INDEX TO EXHIBITS

Exhibits

12    Computation of Ratios of Earnings to Combined Fixed Charges and Preferred
      Securities Distributions

27    Financial Data Schedules


                                       15