##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended April 30, 2006

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 000-22277



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EXCELSIOR PRIVATE EQUITY FUND
II, INC.

(Exact Name of Registrant as Specified in Its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|MARYLAND                                                       |  | 22-3510108                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|225 High Ridge Road Stamford, CT                               |  | 06905                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

Registrants Telephone Number, Including Area Code (302) 352-4400



Former Name, Former Address and Former Fiscal Year, if Changed Since last Report.



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Indicate by
check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the
Registrant is a large accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large filer in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12,13 or 15(d) of the Securities
Exchange Act subsequent to the distribution of securities under a plan confirmed by a court.    Yes ̈No ̈

As of March 1, 2006, there were 195,730 shares of the Registrants Common Stock, $.01 par value per share, outstanding.



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##### Table of Contents

EXCELSIOR PRIVATE EQUITY FUND II, INC.

Excelsior Private Equity Fund II, Inc.s (the Companys)
prospects, including the prospects of its underlying investments, are subject to certain uncertainties and risks. This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the federal securities laws that
also involve substantial uncertainties and risks. The future results of the Company and its underlying investments, may differ materially from its historical results and actual results could differ materially from those projected in the
forward-looking statements as a result of certain risk factors.Readers should pay particular attention to the considerations described in the section of this report entitled Managements Discussion and Analysis of Financial Condition
and Results of Operations. Readers should also carefully review the risk factors described in the other documents the Company files, or has filed, from time to time with the Securities and Exchange Commission.



|         |  |                                                                                                        |  |         
|-------- |  | ------------------------------------------------------------------------------------------------------ |  | --------
|         |  | INDEX                                                                                                  |  | PAGE NO.
|PART I.  |  | FINANCIAL INFORMATION                                                                                  |  |         
|         |  |                                                                                                       
|Item 1.  |  | Financial Statements.                                                                                  |  | 1       
|         |  |                                                                                                       
|         |  | Portfolios of Investments as of April 30, 2006 and October 31, 2005.                                   |  | 2       
|         |  |                                                                                                       
|         |  | Statements of Assets and Liabilities at April 30, 2006 and October 31, 2005.                           |  | 6       
|         |  |                                                                                                       
|         |  | Statement of Operations for the six month periods ended April 30, 2006 and April 30, 2005              |  | 7       
|         |  |                                                                                                       
|         |  | Statements of Operations for the three-month periods ended April 30, 2006 and April 30, 2005.          |  | 8       
|         |  |                                                                                                       
|         |  | Statements of Changes in Net Assets for the six-month periods ended April 30, 2006 and April 30, 2005. |  | 9       
|         |  |                                                                                                       
|         |  | Statements of Cash Flows for the six-month periods ended April 30, 2006 and April 30, 2005.            |  | 10      
|         |  |                                                                                                       
|         |  | Financial Highlights at April 30, 2006 and April 30, 2005.                                             |  | 11      
|         |  |                                                                                                       
|         |  | Notes to Financial Statements.                                                                         |  | 12      
|         |  |                                                                                                       
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations.                 |  | 17      
|         |  |                                                                                                       
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk.                                            |  | 20      
|         |  |                                                                                                       
|Item 4.  |  | Controls and Procedures.                                                                               |  | 20      
|         |  |                                                                                                       
|PART II. |  | OTHER INFORMATION                                                                                      |  |         
|         |  |                                                                                                       
|Item 1.  |  | Legal Proceedings.                                                                                     |  | 20      
|         |  |                                                                                                       
|Item 2.  |  | Changes in Securities and Use of Proceeds.                                                             |  | 20      
|         |  |                                                                                                       
|Item 3.  |  | Defaults Upon Senior Securities.                                                                       |  | 20      
|         |  |                                                                                                       
|Item 4.  |  | Submission of Matters to a Vote of Security Holders.                                                   |  | 21      
|         |  |                                                                                                       
|Item 5.  |  | Other Information.                                                                                     |  | 21      
|         |  |                                                                                                       
|Item 6.  |  | Exhibits and Reports on Form 8-K.                                                                      |  | 21      



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments (Unaudited)



|                                 |  |                |            |                 |        |  
|-------------------------------- |  | -------------- | ---------- | --------------- | ------ | -
|                                 |  | April 30, 2006 |           
|                                 |  | Value          |            | % of Net Assets |       
|PORTFOLIO STRUCTURE              |  |                |            |                 |        |  
|SHORT-TERM INVESTMENTS:          |  |                |            |                 |        |  
|MONEY MARKET INVESTMENTS         |  | $              | 15,535,539 |                 | 35.50  | %
|INVESTMENT COMPANIES             |  |                | 790,698    |                 | 1.81   | %
|PRIVATE INVESTMENT FUNDS         |  |                | 19,621,268 |                 | 44.83  | %
|PRIVATE COMPANIES                |  |                | 7,420,025  |                 | 16.96  | %
|                                 |  |                |            |                 |        |  
|TOTAL INVESTMENTS                |  |                | 43,367,530 |                 | 99.10  | %
|OTHER ASSETS & LIABILITIES (NET) |  |                | 395,828    |                 | 0.90   | %
|                                 |  |                |            |                 |        |  
|NET ASSETS                       |  | $              | 43,763,358 |                 | 100.00 | %
|                                 |  |                |            |                 |        |  

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments



|                                 |  |                  |            |                 |        |  
|-------------------------------- |  | ---------------- | ---------- | --------------- | ------ | -
|                                 |  | October 31, 2005 |           
|                                 |  | Value            |            | % of Net Assets |       
|PORTFOLIO STRUCTURE              |  |                  |            |                 |        |  
|SHORT-TERM INVESTMENTS:          |  |                  |            |                 |        |  
|MONEY MARKET INVESTMENTS         |  | $                | 11,793,385 |                 | 25.82  | %
|INVESTMENT COMPANIES             |  |                  | 982,247    |                 | 2.15   | %
|PRIVATE INVESTMENT FUNDS         |  |                  | 20,929,058 |                 | 45.82  | %
|PRIVATE COMPANIES                |  |                  | 10,957,747 |                 | 23.99  | %
|                                 |  |                  |            |                 |        |  
|TOTAL INVESTMENTS                |  |                  | 44,662,437 |                 | 97.78  | %
|OTHER ASSETS & LIABILITIES (NET) |  |                  | 1,014,708  |                 | 2.22   | %
|                                 |  |                  |            |                 |        |  
|NET ASSETS                       |  | $                | 45,677,145 |                 | 100.00 | %
|                                 |  |                  |            |                 |        |  

Notes to Financial Statements are an integral part of these Financial Statements.



1



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments April 30, 2006 (Unaudited)



|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|------------------- | -------------------------------------- | - |  | --------------------------------------------------------------------- | ------------------ | ----------- | -------------- | - | ----------
|Principal Amout     |                                        |   |  |                                                                       | AcquisitionDate ## |             | Value (Note 1)
|                    | MONEY MARKET INSTRUMENTS  35.50%      |   |  |                                                                       |                    |            
|$                   | 2,770,000                              |   |  | Federal Home Loan Bank Discount Note 4.71%, 05/01/06                  |                    |             |                | $ | 2,770,000 
|                    | 1,000,000                              |   |  | UBS Financial Commercial Paper 4.74%, 05/05/06                        |                    |             |                |   | 999,473   
|                    | 1,000,000                              |   |  | Bank of New York Commercial Paper 4.72%, 05/11/06                     |                    |             |                |   | 998,689   
|                    | 1,000,000                              |   |  | Washington Mutual Certificate of Deposit 4.80%, 05/11/06              |                    |             |                |   | 1,000,000 
|                    | 2,000,000                              |   |  | Federal Home Loan Bank Discount Note 4.70%, 05/17/06                  |                    |             |                |   | 1,995,823 
|                    | 2,788,000                              |   |  | Federal Farm Credit Bureau Discount Note 4.70%, 05/17/06              |                    |             |                |   | 2,782,176 
|                    | 2,000,000                              |   |  | International Lease Finance Discount Commercial Paper 4.80%, 05/18/06 |                    |             |                |   | 1,995,467 
|                    | 1,000,000                              |   |  | Wells Fargo Certificate of Deposit 4.78%, 05/18/06                    |                    |             |                |   | 1,000,000 
|                    | 2,000,000                              |   |  | Federal Home Loan Bank Discount Note 4.77%, 05/24/06                  |                    |             |                |   | 1,993,911 
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|                    |                                        |   |  | TOTAL MONEY MARKET INSTRUMENTS (Cost $15,535,539)                     |                    |             |                |   | 15,535,539
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|OwnershipPercentage |                                        |   |  |                                                                       |                    |             |               
|                    | PRIVATE INVESTMENT FUNDS #, @  44.83% |   |  |                                                                       |                    |            
|                    | 1.71                                   | % |  | Advanced Technology Ventures V, LP                                    |                    | 09/98-10/02 |                |   | 695,653   
|                    | 2.63                                   | % |  | Brand Equity Ventures I, LP                                           |                    | 03/98-10/01 |                |   | 552,628   
|                    | 0.84                                   | % |  | Brentwood Associates III, LP                                          |                    | 06/99-01/06 |                |   | 4,659,483 
|                    | 1.98                                   | % |  | Broadview Capital Partners, LP                                        |                    | 04/99-10/02 |                |   | 1,882,937 
|                    | 4.67                                   | % |  | Commonwealth Capital Ventures II, LP                                  |                    | 01/99-10/02 |                |   | 1,210,837 
|                    | 3.96                                   | % |  | Communications Ventures III, LP                                       |                    | 11/98-05/00 |                |   | 435,295   
|                    | 1.32                                   | % |  | Friedman, Fleischer & Lowe Capital Partners, LP                       |                    | 01/99-10/02 |                |   | 1,842,038 
|                    | 1.24                                   | % |  | Mayfield X, LP                                                        |                    | 06/99-05/02 |                |   | 686,299   
|                    | 0.62                                   | % |  | Mayfield X, Annex                                                     |                    | 07/02-10/02 |                |   | 186,195   
|                    | 8.69                                   | % |  | Mid-Atlantic Venture Fund III, LP                                    |                    | 04/98-02/01 |                |   | 1,311,877 
|                    | 2.58                                   | % |  | Morgenthaler Venture Partners V, LP                                   |                    | 10/98-08/01 |                |   | 3,056,408 
|                    | 1.35                                   | % |  | Quad-C Partners V, LP                                                 |                    | 04/98-10/02 |                |   | 1,815,259 
|                    | 1.32                                   | % |  | Sevin Rosen Fund VI, LP                                               |                    | 03/98-10/02 |                |   | 947,750   
|                    | 1.16                                   | % |  | Trinity Ventures VI, LP                                               |                    | 09/98-10/02 |                |   | 338,609   
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|                    |                                        |   |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $35,022,612)                     |                    |             |                |   | 19,621,268
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|Shares/Par Value    |                                        |   |  |                                                                       |                    |             |               
|                    | PRIVATE COMPANIES #  16.96%           |   |  |                                                                       |                    |            
|                    | Preferred Stocks @ 11.43%             |   |  |                                                                       |                    |            
|                    | Educational Services  0.00%           |   |  |                                                                       |                    |            
|                    | 75,059                                 |   |  | Mosaica Education, Inc., Series C                                     |                    | 08/01       |                |   |          
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|                    | Internet Services  Business  11.43%  |   |  |                                                                       |                    |            
|                    | 1,428,572                              |   |  | Clear Orbit, Inc., Series A                                          |                    | 06/00       |                |   | 5,000,013 
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|                    |                                        |   |  | Total Preferred Stock (Cost $10,119,422)                              |                    |             |                |   | 5,000,013 
|                    |                                        |  
|                    | Promissory Notes  5.53%               |   |  |                                                                       |                    |            
|                    | Biotechnology  1.03%                  |   |  |                                                                       |                    |            
|$                   | 451,412                                |   |  | Metrigen, Inc., 6.00%, 9/01/2009 @                                    |                    | 07/03       |                |   | 451,412   
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|                    | Educational Services  4.50%           |   |  |                                                                       |                    |            
|$                   | 686,415                                |   |  | Mosaica Education, Inc. Bridge Notes, 15.00%, 8/23/2006               |                    | 02/01-08/01 |                |   | 686,415   
|$                   | 1,025,748                              |   |  | Mosaica Education, Inc. (Advantage Schools), 0.00%, 8/24/2006 @       |                    | 02/01-08/01 |                |   | 1,025,748 
|$                   | 256,437                                |   |  | Mosaica Education, Inc. (ASI Texas LLC), 0.00%, 8/24/2006 @           |                    | 02/01-08/01 |                |   | 256,437   
|                    |                                        |   |  |                                                                       |                    |             |                |   |           
|                    |                                        |   |  |                                                                       |                    |             |                |   | 1,968,600 
|                    |                                        |   | 
|                    |                                        |   |  | Total Promissory Notes (Cost $2,420,012)                              |                    |             |                |   | 2,420,012 
|                    |                                        |   |  |                                                                       |                    |             |                |   |           

Notes to Financial Statements are an integral part of these Financial Statements.



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments April 30, 2006 (Unaudited)  (continued)



|                                             |  |                                                             |  |                   |            |                |          
|-------------------------------------------- |  | ----------------------------------------------------------- |  | ----------------- | ---------- | -------------- | ---------
|Shares                                       |  |                                                             |  | AcquisitionDate## |            | Value (Note 1)
|Warrants @  0.00%                           |  |                                                             |  |                   |           
|Biotechnology   0.00%                       |  |                                                             |  |                  
|62,326                                       |  | Metrigen, Inc. (expiration December 2012)                   |  | 07/03             |            | $              |         
|                                             |  |                                                             |  |                   |            |                |          
|                                             |  | Total Warrants (Cost $0)                                    |  |                   |            |                |         
|                                             |  |                                                             |  |                   |            |                |          
|                                             |  | TOTAL PRIVATE COMPANIES (Cost $12,539,434)                  |  |                   |            |                | 7,420,025
|                                             |  |                                                             |  |                   |            |                |          
|PUBLIC COMPANIES @, #  0.00%                |  |                                                             |  |                   |           
|Warrants  0.00%                             |  |                                                             |  |                   |           
|Biotechnology  0.00%                        |  |                                                             |  |                   |           
|76,950                                       |  | Curon Medical Inc. Warrants (expiration May 2007) (cost $0) |  | 08/00             |            |                |         
|INVESTMENT COMPANIES 1.81%                  |  |                                                             |  |                   |           
|790,698                                      |  | Dreyfus Government Cash Management Fund (Cost $790,698)     |  |                   |            |                | 790,698  
|                                             |  |                                                             |  |                   |            |                |          
|TOTAL INVESTMENTS (Cost $63,888,283) 99.10% |  |                                                             |  |                   | 43,367,530
|OTHER ASSETS & LIABILITIES (NET)  0.90%     |  |                                                             |  |                   | 395,828   
|                                             |  |                                                             |  |                   |            |                |          
|NET ASSETS 100.00%                          |  |                                                             |  | $                 | 43,763,358
|                                             |  |                                                             |  |                   |            |                |          

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| | At April 30, 2006, the Company owned 5% or more of the companys outstanding voting shares thereby making the company an affiliate as defined by the Investment Company Act
of 1940, as amended. Total market value of affiliated securities owned at April 30, 2006 was $6,311,890.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|# | Restricted as to public resale. Acquired between March 1998 and January 2006. Total cost of restricted securities at April 30, 2006 aggregated $ 47,562,046. Total market value
of restricted securities owned at April 30, 2006 was $27,041,293 or 61.79% of net assets.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|@ | Non-income producing security.
|- | ------------------------------

|## | Disclosure required for restricted securities.
|-- | ----------------------------------------------

Notes to
Financial Statements are an integral part of these Financial Statements.



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2005



|                                       |  |                                                          |  |                   |  |                |           
|-------------------------------------- |  | -------------------------------------------------------- |  | ----------------- |  | -------------- | ----------
|Principal Amount/Shares                |  |                                                          |  | AcquisitionDate## |  | Value (Note 1)
|MONEY MARKET INSTRUMENTS 25.82%       |  |                                                          |  |                   | 
|$1,000,000                             |  | First Tennessee Bank Note 3.77%, 11/01/05                |  |                   |  | $              | 1,000,000 
|1,400,000                              |  | Federal Farm Credit Bank Discount Note 3.67%, 11/02/05   |  |                   |  |                | 1,399,857 
|1,000,000                              |  | Danske Bank Commercial Paper 3.82%, 11/07/05             |  |                   |  |                | 999,363   
|2,400,000                              |  | Federal Home Loan Bank Discount Note 3.68%, 11/07/05     |  |                   |  |                | 2,398,528 
|1,000,000                              |  | Morgan Stanley Commercial Paper 3.84%, 11/08/05          |  |                   |  |                | 999,253   
|5,000,000                              |  | Federal Home Loan Mortgage Discount Note 3.72%, 11/08/05 |  |                   |  |                | 4,996,384 
|                                       |  |                                                          |  |                   |  |                |           
|                                       |  | TOTAL MONEY MARKET INSTRUMENTS (Cost $11,793,385)        |  |                   |  |                | 11,793,385
|                                       |  |                                                          |  |                   |  |                |           
|                                      
|PRIVATE INVESTMENT FUNDS #, @  45.82%
|OwnershipPercentage                    |  |                                                          |  |                   |  |               
|                                       |  | Buyout Funds  23.01%                                    |  |                   |  |                |           
|                                       |  |                                                          | 
|0.93%                                  |  | Brentwood Associates III, LP                             |  | 06/99-10/02       |  |                | 5,049,982 
|1.98%                                  |  | Broadview Capital Partners, LP                           |  | 04/99-10/02       |  |                | 1,650,395 
|1.34%                                  |  | Friedman, Fleischer & Lowe Capital Partners, LP          |  | 01/99-10/02       |  |                | 1,890,965 
|1.32%                                  |  | Quad-C Partners V, LP                                    |  | 04/98-10/02       |  |                | 1,918,744 
|                                       |  |                                                          |  |                   |  |                |           
|                                       |  |                                                          |  |                   |  |                | 10,510,086
|                                       |  |                                                          | 
|                                       |  | Early Stage Venture Funds  15.06%                       |  |                   |  |                |           
|                                       |  |                                                          | 
|1.71%                                  |  | Advanced Technology Ventures V, LP                       |  | 09/98-10/02       |  |                | 694,538   
|4.88%                                  |  | Commonwealth Capital Ventures II, LP                     |  | 01/99-10/02       |  |                | 1,719,612 
|3.96%                                  |  | Communications Ventures III, LP                          |  | 11/98-05/00       |  |                | 435,925   
|1.24%                                  |  | Mayfield X, LP                                           |  | 06/99-05/02       |  |                | 697,580   
|0.62%                                  |  | Mayfield X, Annex                                        |  | 07/02-10/02       |  |                | 194,800   
|8.69%                                  |  | Mid-Atlantic Venture Fund III, LP                       |  | 04/98-02/01       |  |                | 1,660,025 
|1.31%                                  |  | Sevin Rosen Fund VI, LP                                  |  | 03/98-10/02       |  |                | 992,573   
|1.29%                                  |  | Trinity Ventures VI, LP                                  |  | 09/98-10/02       |  |                | 484,557   
|                                       |  |                                                          |  |                   |  |                |           
|                                       |  |                                                          |  |                   |  |                | 6,879,610 
|                                       |  |                                                          | 
|                                       |  | Varied Stage Venture Funds  7.75%                       |  |                   |  |                |           
|                                       |  |                                                          | 
|2.63%                                  |  | Brand Equity Ventures, LP                                |  | 03/98-10/01       |  |                | 569,013   
|2.60%                                  |  | Morgenthaler Venture Partners V, LP                      |  | 10/98-08/01       |  |                | 2,970,349 
|                                       |  |                                                          |  |                   |  |                |           
|                                       |  |                                                          |  |                   |  |                | 3,539,362 
|                                       |  |                                                          |  |                   |  |                |           
|                                       |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $37,111,990)        |  |                   |  |                | 20,929,058
|                                       |  |                                                          |  |                   |  |                |           

Notes to Financial Statements are an integral part of these Financial Statements.



4



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2005  (continued)

PRIVATE COMPANIES
#  23.99%



|                  |                                               |  |                                                                 |                   |             |                |   |           
|----------------- | --------------------------------------------- |  | --------------------------------------------------------------- | ----------------- | ----------- | -------------- | - | ----------
|Shares            |                                               |  |                                                                 |                   |             |               
|                  | Preferred Stocks @  18.69%                   |  |                                                                 |                   |             |               
|                  | Educational Services  7.75%                  |  |                                                                 |                   |             |               
|                  | 75,059                                        |  | Mosaica Education, Inc., Series C                               |                   | 08/01       |                |   | 3,537,722 
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  | Internet Services  Business 10.94%          |  |                                                                 |                   |             |               
|                  | 1,428,572                                     |  | Clear Orbit, Inc., Series A                                    |                   | 06/00       |                |   | 5,000,013 
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  |                                               |  | Total Preferred Stock (Cost $10,119,422)                        |                   |             |                |   | 8,537,735 
|                  |                                               |  |                                                                
|Shares/ Par Value |                                               |  |                                                                 | AcquisitionDate## |             | Value (Note 1)
|                  | Promissory Notes  5.30%                      |  |                                                                 |                   |             |               
|                  | Biotechnology  0.99%                         |  |                                                                 |                   |             |               
|$                 | 451,412                                       |  | Metrigen, Inc., 6.00%, 9/01/2009 @                              |                   | 07/03       |                | $ | 451,412   
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  |                                               | 
|                  | Educational Services  4.31%                  |  |                                                                 |                   |             |               
|$                 | 686,415                                       |  | Mosaica Education, Inc. Bridge Notes, 15.00%, 8/24/2006         |                   | 02/01-08/01 |                |   | 686,415   
|$                 | 1,025,748                                     |  | Mosaica Education, Inc. (Advantage Schools), 0.00%, 8/24/2006 @ |                   | 02/01-08/01 |                |   | 1,025,748 
|$                 | 256,437                                       |  | Mosaica Education, Inc. (ASI Texas LLC), 0.00%, 8/24/2006 @     |                   | 02/01-08/01 |                |   | 256,437   
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  |                                               |  |                                                                 |                   |             |                |   | 1,968,600 
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  |                                               |  | Total Promissory Notes (Cost $2,420,012)                        |                   |             |                |   | 2,420,012 
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  | Warrants @  0.00%                            |  |                                                                 |                   |             |               
|                  | Biotechnology  0.00%                         |  |                                                                 |                   |             |               
|                  | 62,326                                        |  | Metrigen, Inc. (expiration December 2012)                       |                   | 07/03       |                |   |          
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  |                                               |  | Total Warrants (Cost $0)                                        |                   |             |                |   |          
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  |                                               |  | TOTAL PRIVATE COMPANIES (Cost $12,539,434)                      |                   |             |                |   | 10,957,747
|                  |                                               | 
|                  | PUBLIC COMPANIES @, #  0.00%                 |  |                                                                 |                   |             |               
|                  | Biotechnology  0.00%                         |  |                                                                 |                   |             |               
|                  | 76,950                                        |  | Curon Medical Inc. Warrants (expiration May 2007) (Cost $0)     |                   | 08/00       |                |   |          
|                  |                                               | 
|                  | INVESTMENT COMPANIES  2.15%                  |  |                                                                 |                   |             |               
|                  | 982,247                                       |  | Dreyfus Government Cash Management Fund (Cost $982,247)         |                   |             |                |   | 982,247   
|                  |                                               | 
|                  | TOTAL INVESTMENTS (Cost $62,427,056)  97.78% |  |                                                                 |                   |             | 44,662,437    
|                  | OTHER ASSETS & LIABILITIES (NET)  2.22%      |  |                                                                 |                   |             | 1,014,708     
|                  |                                               |  |                                                                 |                   |             |                |   |           
|                  | NET ASSETS  100.00%                          |  |                                                                 |                   | $           | 45,677,145    
|                  |                                               |  |                                                                 |                   |             |                |   |           

---

| | At October 31, 2005, the Company owned 5% or more of the companys outstanding voting shares thereby making the company an affiliate as defined by the Investment Company
Act of 1940, as amended. Total market value of affiliated securities owned at October 31, 2005 was $6,660,038.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|# | Restricted as to public resale. Acquired between March 1998 and July, 2003. Total cost of restricted securities at October 31, 2005 aggregated $ 49,651,424. Total value of
restricted securities owned at October 31, 2005 was $31,886,805 or 69.81% of net assets.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|@ | Non-income producing security.
|- | ------------------------------

|## | Disclosure required for restricted securities.
|-- | ----------------------------------------------

Notes to
Financial Statements are an integral part of these Financial Statements.



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Assets and Liabilities



|                                                                               |  |                            |             |   |                  |   |             |  
|------------------------------------------------------------------------------ |  | -------------------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                               |  | April 30, 2006 (Unaudited) |             |   | October 31, 2005 |  
|ASSETS:                                                                        |  |                            |             |   |                  |   |             |  
|Unaffiliated Issuers, at value (Cost $54,967,255 and $53,068,935 respectively) |  | $                          | 37,055,640  |   |                  | $ | 38,002,399  |  
|Affiliated Issuers, at value (Cost $8,921,028 and $9,358,121 respectively)     |  |                            | 6,311,890   |   |                  |   | 6,660,038   |  
|                                                                               |  |                            |             |   |                  |   |             |  
|Investments, at value (Cost $63,888,283 and $62,427,056 respectively) (Note 1) |  |                            | 43,367,530  |   |                  |   | 44,662,437  |  
|Cash and cash equivalents (Note 1)                                             |  |                            | 1,983       |   |                  |   |            |  
|Receivable from Managing Investment Adviser (Note 2)                           |  |                            | 114,469     |   |                  |   | 83,214      |  
|Receivable for securities sold                                                 |  |                            |            |   |                  |   | 760,138     |  
|Interest receivable                                                            |  |                            | 451,027     |   |                  |   | 397,221     |  
|Other assets                                                                   |  |                            | 10,497      |   |                  |   | 1,569       |  
|                                                                               |  |                            |             |   |                  |   |             |  
|Total Assets                                                                   |  |                            | 43,945,506  |   |                  |   | 45,904,579  |  
|                                                                               |  |                            |             |   |                  |   |             |  
|LIABILITIES:                                                                   |  |                            |             |   |                  |   |             |  
|Management fees payable (Note 2)                                               |  |                            | 122,945     |   |                  |   | 138,793     |  
|Professional fees payable                                                      |  |                            | 30,250      |   |                  |   | 59,937      |  
|Administration fees payable (Note 2)                                           |  |                            | 17,303      |   |                  |   | 17,885      |  
|Directors fees payable (Note 2)                                               |  |                            | 5,630       |   |                  |   | 1,500       |  
|Accrued expenses and other payables                                            |  |                            | 6,020       |   |                  |   | 9,319       |  
|                                                                               |  |                            |             |   |                  |   |             |  
|Total Liabilities                                                              |  |                            | 182,148     |   |                  |   | 227,434     |  
|                                                                               |  |                            |             |   |                  |   |             |  
|NET ASSETS                                                                     |  | $                          | 43,763,358  |   |                  | $ | 45,677,145  |  
|                                                                               |  |                            |             |   |                  |   |             |  
|NET ASSETS consist of:                                                         |  |                            |             |   |                  |   |             |  
|Accumulated net realized (loss) on investments                                 |  |                            | (40,156,410 | ) |                  |   | (40,941,092 | )
|Net unrealized (depreciation) on investments                                   |  |                            | (20,520,753 | ) |                  |   | (17,764,619 | )
|Undistributed net investment gain                                              |  |                            | 57,665      |   |                  |   |            |  
|Par value                                                                      |  |                            | 1,957       |   |                  |   | 1,957       |  
|Paid-in capital in excess of par value                                         |  |                            | 104,380,899 |   |                  |   | 104,380,899 |  
|                                                                               |  |                            |             |   |                  |   |             |  
|Total Net Assets                                                               |  | $                          | 43,763,358  |   |                  | $ | 45,677,145  |  
|                                                                               |  |                            |             |   |                  |   |             |  
|Shares of Common Stock Outstanding ($0.01 par value, 200,000 authorized)       |  |                            | 195,730     |   |                  |   | 195,730     |  
|                                                                               |  |                           
|NET ASSET VALUE PER SHARE                                                      |  | $                          | 223.59      |   |                  | $ | 233.37      |  
|                                                                               |  |                            |             |   |                  |   |             |  

Notes to Financial Statements are an integral part of these Financial Statements.



6



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                    |  |                            |            |   |      |   |           |  
|------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---- | - | --------- | -
|                                                                    |  | Six Months Ended April 30, |           
|                                                                    |  | 2006                       |            |   | 2005 |  
|INVESTMENT INCOME:                                                  |  |                            |            |   |      |   |           |  
|Interest income from affiliated investments                         |  | $                          |           |   |      | $ | 44,067    |  
|Interest income from unaffiliated investments                       |  |                            | 351,943    |   |      |   | 66,492    |  
|Dividend income                                                     |  |                            | 17,882     |   |      |   | 16,700    |  
|                                                                    |  |                            |            |   |      |   |           |  
|Total Investment Income                                             |  |                            | 369,825    |   |      |   | 127,259   |  
|                                                                    |  |                            |            |   |      |   |           |  
|EXPENSES:                                                           |  |                            |            |   |      |   |           |  
|Managing Investment Adviser fees (Note 2)                           |  |                            | 255,949    |   |      |   | 285,981   |  
|Administration fees (Note 2)                                        |  |                            | 49,000     |   |      |   | 49,385    |  
|Professional fees                                                   |  |                            | 121,834    |   |      |   | 135,040   |  
|Directors fees and expenses (Note 2)                               |  |                            | 34,130     |   |      |   | 29,754    |  
|Insurance expense                                                   |  |                            | 10,661     |   |      |   | 14,003    |  
|Miscellaneous expenses                                              |  |                            | 26,665     |   |      |   | 17,599    |  
|                                                                    |  |                            |            |   |      |   |           |  
|Total Expenses                                                      |  |                            | 498,239    |   |      |   | 531,762   |  
|Expenses reimbursed by Managing Investment Adviser                  |  |                            | (186,079   | ) |      |   | (188,677  | )
|                                                                    |  |                            |            |   |      |   |           |  
|Net Expenses                                                        |  |                            | 312,160    |   |      |   | 343,085   |  
|                                                                    |  |                            |            |   |      |   |           |  
|NET INVESTMENT INCOME                                               |  |                            | 57,665     |   |      |   | (215,826  | )
|                                                                    |  |                            |            |   |      |   |           |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: (Note 1)    |  |                            |            |   |      |   |           |  
|Net realized gain on unaffiliated investments                       |  |                            | 784,682    |   |      |   | 2,460,065 |  
|Net change in unrealized appreciation (depreciation) on investments |  |                            | (2,756,134 | ) |      |   | 2,574,295 |  
|                                                                    |  |                            |            |   |      |   |           |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS              |  |                            | (1,971,452 | ) |      |   | 5,034,360 |  
|                                                                    |  |                            |            |   |      |   |           |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS     |  | $                          | (1,913,787 | ) |      | $ | 4,818,534 |  
|                                                                    |  |                            |            |   |      |   |           |  

Notes to Financial Statements are an integral part of these Financial Statements.



7



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                 |  |                             |            |   |      |   |           |  
|---------------------------------------------------------------- |  | --------------------------- | ---------- | - | ---- | - | --------- | -
|                                                                 |  | Three Months EndedApril 30, |           
|                                                                 |  | 2006                        |            |   | 2005 |  
|INVESTMENT INCOME:                                               |  |                             |            |   |      |   |           |  
|Interest income from affiliated investments                      |  | $                           |           |   |      | $ | 21,758    |  
|Interest income from unaffiliated investments                    |  |                             | 191,623    |   |      |   | 39,379    |  
|Dividend income                                                  |  |                             | 7,946      |   |      |   | 8,016     |  
|                                                                 |  |                             |            |   |      |   |           |  
|Total Investment Income                                          |  |                             | 199,569    |   |      |   | 69,153    |  
|                                                                 |  |                             |            |   |      |   |           |  
|EXPENSES:                                                        |  |                             |            |   |      |   |           |  
|Managing Investment Adviser fees (Note 2)                        |  |                             | 122,945    |   |      |   | 146,823   |  
|Administration fees (Note 2)                                     |  |                             | 24,250     |   |      |   | 24,135    |  
|Professional fees                                                |  |                             | 78,246     |   |      |   | 98,492    |  
|Directors fees and expenses (Note 2)                            |  |                             | 14,630     |   |      |   | 14,631    |  
|Insurance expense                                                |  |                             | 5,242      |   |      |   | 7,799     |  
|Miscellaneous expenses                                           |  |                             | 19,832     |   |      |   | 12,307    |  
|                                                                 |  |                             |            |   |      |   |           |  
|Total Expenses                                                   |  |                             | 265,145    |   |      |   | 304,187   |  
|Expenses reimbursed by Managing Investment Adviser               |  |                             | (114,468   | ) |      |   | (132,778  | )
|                                                                 |  |                             |            |   |      |   |           |  
|Net Expenses                                                     |  |                             | 150,677    |   |      |   | 171,407   |  
|                                                                 |  |                             |            |   |      |   |           |  
|NET INVESTMENT GAIN (LOSS)                                       |  |                             | 48,892     |   |      |   | (102,256  | )
|                                                                 |  |                             |            |   |      |   |           |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: (Note 1) |  |                             |            |   |      |   |           |  
|Net realized gain on unaffiliated investments                    |  |                             | 786,426    |   |      |   | 2,582,848 |  
|Net change in unrealized depreciation on investments             |  |                             | (2,566,768 | ) |      |   | 1,469,736 |  
|                                                                 |  |                             |            |   |      |   |           |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS           |  |                             | (1,780,342 | ) |      |   | 4,052,584 |  
|                                                                 |  |                             |            |   |      |   |           |  
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS  |  | $                           | (1,731,450 | ) |      | $ | 3,950,328 |  
|                                                                 |  |                             |            |   |      |   |           |  

Notes to Financial Statements are an integral part of these Financial Statements.



8



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statement of Changes in Net Assets (Unaudited)



|                                                                                                         |  |                            |            |   |      |   |             |  
|-------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---- | - | ----------- | -
|                                                                                                         |  | Six Months Ended April 30, |           
|                                                                                                         |  | 2006                       |            |   | 2005 |  
|OPERATIONS:                                                                                              |  |                            |            |   |      |   |             |  
|                                                                                                         |  |                           
|Net investment gain (loss)                                                                               |  | $                          | 57,665     |   |      | $ | (215,826    | )
|Net realized gain on investments                                                                         |  |                            | 784,682    |   |      |   | 2,460,065   |  
|Net change in unrealized depreciation on investments                                                     |  |                            | (2,756,134 | ) |      |   | 2,574,295   |  
|                                                                                                         |  |                            |            |   |      |   |             |  
|Net increase/(decrease) in net assets resulting from operations                                          |  |                            | (1,913,787 | ) |      |   | 4,818,534   |  
|                                                                                                         |  |                           
|DISTRIBUTIONS TO SHAREHOLDERS:                                                                           |  |                            |            |   |      |   |             |  
|                                                                                                         |  |                           
|Distributions                                                                                            |  |                            |           |   |      |   | (11,761,416 | )
|                                                                                                         |  |                            |            |   |      |   |             |  
|NET (DECREASE) IN NET ASSETS                                                                             |  |                            | (1,913,787 | ) |      |   | (6,942,882  | )
|                                                                                                         |  |                           
|NET ASSETS:                                                                                              |  |                            |            |   |      |   |             |  
|                                                                                                         |  |                           
|Beginning of period                                                                                      |  |                            | 45,677,145 |   |      |   | 51,717,554  |  
|                                                                                                         |  |                            |            |   |      |   |             |  
|End of period (including accumulated net investment gain/(loss) of $57,665 and ($215,826), respectively) |  | $                          | 43,763,358 |   |      | $ | 44,774,672  |  
|                                                                                                         |  |                            |            |   |      |   |             |  

Notes to Financial Statements are an integral part of these Financial Statements.



9



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statement of Cash Flows (Unaudited)



|                                                                                                                                       |  |                            |            |   |      |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---- | - | ----------- | -
|                                                                                                                                       |  | Six Months Ended April 30, |           
|                                                                                                                                       |  | 2006                       |            |   | 2005 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                  |  |                            |            |   |      |   |             |  
|Net increase/(decrease) in net assets resulting from operations                                                                        |  | $                          | (1,913,787 | ) |      | $ | 4,818,534   |  
|Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: |  |                            |           |   |      |   |            |  
|Net change in unrealized depreciation on investments                                                                                   |  |                            | 2,756,134  |   |      |   | (2,574,295  | )
|Sale/(purchase) of short-term investments  Net                                                                                        |  |                            | (3,550,605 | ) |      |   | 4,684,828   |  
|Purchase of investments                                                                                                                |  |                            | (288,119   | ) |      |   |            |  
|Proceeds received from the sale of investments and distributions received from private investment funds                                |  |                            | 3,162,178  |   |      |   | 7,247,259   |  
|Net realized gain on investments                                                                                                       |  |                            | (784,682   | ) |      |   | (2,460,065  | )
|Increase in receivable from managing investment adviser                                                                                |  |                            | (31,255    | ) |      |   | (86,538     | )
|Increase in interest receivable                                                                                                        |  |                            | (53,806    | ) |      |   | (43,840     | )
|(Increase)/Decrease in other assets                                                                                                    |  |                            | 751,210    |   |      |   | (12,522     | )
|Increase/(Decrease) in management fee payable                                                                                          |  |                            | (15,848    | ) |      |   | 41,284      |  
|Increase/(Decrease) in directors fees payable                                                                                         |  |                            | 4,130      |   |      |   | (40,747     | )
|Decrease in other expenses payable                                                                                                     |  |                            | (33,567    | ) |      |   | (140,518    | )
|                                                                                                                                       |  |                            |            |   |      |   |             |  
|Net cash provided by operating activities                                                                                              |  |                            | 1,983      |   |      |   | 11,433,380  |  
|                                                                                                                                       |  |                            |            |   |      |   |             |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                  |  |                            |            |   |      |   |             |  
|Cash Distribution to Shareholders                                                                                                      |  |                            |           |   |      |   | (11,761,416 | )
|                                                                                                                                       |  |                            |            |   |      |   |             |  
|Net cash used in financing activities                                                                                                  |  |                            |           |   |      |   | (11,761,416 | )
|                                                                                                                                       |  |                            |            |   |      |   |             |  
|Net Increase/(decrease) in cash                                                                                                        |  |                            | 1,983      |   |      |   | 328,036     |  
|                                                                                                                                       |  |                            |            |   |      |   |             |  
|Cash at beginning of period                                                                                                            |  |                            |           |   |      |   | 328,296     |  
|                                                                                                                                       |  |                            |            |   |      |   |             |  
|Cash at end of period                                                                                                                  |  | $                          | 1,983      |   |      | $ | 260         |  
|                                                                                                                                       |  |                            |            |   |      |   |             |  

Notes to Financial Statements are an integral part of these Financial Statements.



10



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Financial HighlightsSelected Per Share Data and Ratios (Unaudited)

Per Share Operating Performance (1)



|                                                       |  |                                |        |    |                                 |   |        |   
|------------------------------------------------------ |  | ------------------------------ | ------ | -- | ------------------------------- | - | ------ | --
|                                                       |  | Six Months EndedApril 30, 2006 |        |    | Six Months Ended April 30, 2005 |  
|NET ASSET VALUE, BEGINNING OF PERIOD.                  |  | $                              | 233.37 |    |                                 | $ | 264.23 |   
|                                                       |  |                               
|INCOME FROM INVESTMENT OPERATIONS:                     |  |                                |        |    |                                 |   |        |   
|Net investment gain/(loss)                             |  |                                | 0.29   |    |                                 |   | (1.10  | ) 
|                                                       |  |                               
|Net realized and unrealized gain (loss) on investments |  |                                | (10.07 | )  |                                 |   | 25.72  |   
|                                                       |  |                                |        |    |                                 |   |        |   
|Total from investment operations                       |  |                                | (9.78  | )  |                                 |   | 24.62  |   
|                                                       |  |                                |        |    |                                 |   |        |   
|DISTRIBUTIONS TO SHAREHOLDERS:                         |  |                                |        |    |                                 |   |        |   
|                                                       |  |                               
|Return of Capital Distribution                         |  |                                |       |    |                                 |   | (60.09 | ) 
|                                                       |  |                                |        |    |                                 |   |        |   
|NET DECREASE IN NET ASSETS:                            |  |                                | (9.78  | )  |                                 |   | (35.47 | ) 
|                                                       |  |                                |        |    |                                 |   |        |   
|NET ASSET VALUE, END OF PERIOD                         |  | $                              | 223.59 |    |                                 | $ | 228.76 |   
|                                                       |  |                                |        |    |                                 |   |        |   
|TOTAL NET ASSET VALUE RETURN (3) (4).                  |  |                                | (4.19  | )% |                                 |   | 11.52  | % 
|                                                       |  |                               
|Ratios and supplemental data: (6)                      |  |                                |        |    |                                 |   |        |   
|Net assets, end of period (thousands)                  |  | $                              | 43,763 |    |                                 | $ | 44,775 |   
|Ratios to average net assets (2)                       |  |                                |        |    |                                 |   |        |   
|Gross expenses (5)                                     |  |                                | (2.22  | )% |                                 |   | (2.32  | )%
|Net expenses                                           |  |                                | (1.39  | )% |                                 |   | (1.50  | )%
|Net investment gain/loss                               |  |                                | 0.26   | %  |                                 |   | (0.94  | )%
|Portfolio turnover (3)                                 |  |                                | 0.00   | %  |                                 |   | 0.00   | % 

---

|(1) | For a share outstanding throughout the period
|--- | ---------------------------------------------

|(2) | Annualized
|--- | ----------

|(3) | Not annualized
|--- | --------------

|(4) | Total net asset value return based on per share net asset value reflects the effects of changes in net asset value based on the performance of the Company during the period, and
assumes dividends and distributions, if any, were reinvested. The Companys shares were issued in a private placement and are not traded. Therefore, market value total investment return is not presented
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Expense ratio before waiver of fees and reimbursement of expenses by Managing Investment Adviser
|--- | ------------------------------------------------------------------------------------------------

|(6) | Income and expense ratio do not reflect the Companys proportionate share of net investment income (loss) and expenses, including any performance-based fees, of the Private
Investment Funds.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Notes to Financial Statements are an integral part of these Financial Statements.



11



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##### Table of Contents

EXCELSIOR PRIVATE EQUITY FUND II, INC.

NOTES TO FINANCIAL STATEMENTS

April 30, 2006

Note
1  Significant Accounting Policies

Excelsior Private Equity Fund II, Inc. (the Company) was incorporated
under the laws of the State of Maryland on March 20, 1997, and is a non-diversified, closed-end management investment company that has elected to be treated as a business development company or BDC under the Investment Company Act
of 1940, as amended.

As a BDC, the Company must be primarily engaged in the business of furnishing capital and making available managerial
assistance to companies that generally do not have ready access to capital through conventional financial channels. The Companys investment objective is to achieve long-term capital appreciation primarily by investing in private later-stage
venture capital companies and private middle-market companies in which the equity is closely held by company founders, management and/or a limited number of institutional investors and, to a lesser extent, privately offered venture capital, buyout
and private equity funds managed by third parties which have attractive investment return prospects and offer compelling strategic benefits to the Company. The Company does not have the right to demand that any such investee securities be
registered.

The following is a summary of the Companys significant accounting policies. Such policies are in conformity with
generally accepted accounting principles in the United States for investment companies and are consistently followed in the preparation of the financial statements. Generally accepted accounting principles in the United States require management to
make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.

(a) Cash and Cash Equivalents:

Cash and cash equivalents consist of deposits
with banks and highly liquid investments with original maturities of 90 days or less.

(b) Portfolio valuation:

The Company values portfolio securities quarterly and at such other times as, in the Companys Board of Directors (the
Board or Board of Directors) view, circumstances warrant. Investments in securities for which market quotations are readily available generally will be valued at the last sale price on the date of valuation or, if no sale
occurred, at the mean of the latest bid and ask prices; provided that, as to such securities that may have legal, contractual or practical restrictions on transfer, a discount of 10% to 40% from the public market price will be applied. Securities
for which no public market exists and other assets will be valued at fair value as determined in good faith by the Managing Investment Adviser (as defined below) or a committee of the Board of Directors or both under the supervision of the Board of
Directors pursuant to certain valuation procedures summarized below. Securities having remaining maturities of 60 days or less from the date of purchase are valued at amortized cost.

The value for securities for which no public market exists is difficult to determine. Generally, such investments will be valued on a
going concern basis without giving effect to any disposition costs. There is a range of values that is reasonable for such investments at any particular time. Initially, direct investments are valued based upon their original cost, until
developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued by the private market or
appraisal methods of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. The appraisal method shall be based upon such factors affecting the
investee such as earnings, net worth, reliable private sale prices of the investees securities, the market prices for similar securities of comparable companies, an assessment of the investees future prospects or, if appropriate,
liquidation value. The values for the investments referred to in this paragraph will be estimated



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regularly by the Managing Investment Adviser (as defined below) or a committee of the Board of Directors under the supervision of the Board of Directors and,
in any event, not less frequently than quarterly. However, there can be no assurance that such values will represent the return that might ultimately be realized by the Company from the investments.

The valuation of the Companys Private Investment Funds is based upon its pro-rata share of the value of the net assets of a Private
Investment Fund as determined by such Private Investment Fund, in accordance with its partnership agreement, constitutional or other documents governing such valuation, on the valuation date. If such valuation with respect to the Companys
investments in Private Investment Funds is not available by reason of timing or other event on the valuation date, or are deemed to be unreliable by the Managing Investment Adviser, the Managing Investment Adviser, under the supervision of the Board
of Directors, shall determine such value based on its judgment of fair value on the appropriate date, less applicable charges, if any. The valuation of the Companys Private Investment Funds also includes capital contributions to such Private
Investment Funds made in advance of remaining capital commitments being called by the Private Investment Funds respective general partners. At April 30, 2006 and October 31, 2005, these contributions paid in advance totaled
$1,347,937 and $1,554,432, and are included in investments on the statement of assets and liabilities. These contributions paid in advance are non-income producing.

At April 30, 2006 and October 31, 2005, market quotations were not readily available for securities valued at $27,041,293 or
61.79% of net assets and $31,886,805 or 69.81% of net assets, respectively. Such securities were valued by the Managing Investment Adviser under the supervision of the Board of Directors. Because of the inherent uncertainty of valuation, the
estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material.

(c) Security transactions and investment income:

Security transactions are recorded
on a trade date basis. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income, adjusted for amortization of premiums and discounts on investments, is earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date.

(d) Repurchase agreements:

The Company enters into agreements to purchase securities and to resell them at a future date. It is the Companys policy to take
receipt of securities purchased and to ensure that the market value of the collateral including accrued interest is sufficient to protect the Company from losses incurred in the event the counterparty does not repurchase the securities. If the
counterparty defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Company may be delayed or limited.

(e) Federal income taxes:

It is the policy of the Company to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute substantially all of its taxable income to its
shareholders. Therefore, no federal income or excise tax provision is required.

Dividends from net investment income are
declared and paid at least annually. Any net realized capital gains, unless offset by any available capital loss carryforwards, are distributed to shareholders at least annually. Dividends and distributions are determined in accordance with federal
income tax regulations that may differ from generally accepted accounting principles. These book/tax differences are either considered temporary or permanent and may be reclassified within the capital accounts based on their federal tax
basis treatment.

The Company has unused capital loss carryforwards of approximately $56,647,188 available for income tax
purposes, to be applied against future net realized gains, if any, after October 31, 2005. If not applied, $8,602,181 of the carryover will expire in 2009, $13,721,421 will expire in 2010, and $18,471,137 will expire in 2011, and $5,855,841
will expire in 2012 and $9,996,608 will expire in 2013.



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The tax character of distributions paid may differ from the character of distributions
shown on the statement of changes in net assets due to tax treatment of certain distributions. No distributions were made in the quarters ended April 30, 2006 and April 30, 2005.

The cost of the Private Investment Funds for federal tax purposes is based on amounts reported to the Company on Schedule K-1 from the
Private Investment Funds. As of October 31, 2005 and April 30, 2006, the Company had not received information to determine the tax cost of the Private Investment Funds as of October 31, 2005 and April 30, 2006, and therefore to
determine the Companys unrealized gain or loss on a tax basis. At April 30, 2006, the cost of all other investments for federal tax purposes was $28,865,671, and those investments had a tax basis net unrealized depreciation of $5,119,409,
consisting of gross appreciation of $13 and gross depreciation of $5,119,422. At October 31, 2005, the cost of all other investments for federal tax purposes was $25,315,066, and those investments had a tax basis net unrealized depreciation of
$1,581,687, consisting of gross appreciation of $13 and gross depreciation of $1,581,700.

Note 2  Investment Advisory Fee, Administration Fee and
Related Party Transactions

UST Advisers, Inc. (USTA), which has its principal offices at 225 High Ridge Road, Stamford,
Connecticut 06905, is a Delaware corporation and registered investment adviser (the Managing Investment Adviser). The Managing Investment Adviser is a wholly-owned subsidiary of United States Trust Company, National Association
(USTC-NA). USTC-NA is a wholly-owned subsidiary of U. S. Trust Corporation (U.S. Trust), a registered bank holding company, which has its principal offices at 114 West 47thStreet, New York, New York 10036-1532, and which is, in turn, a wholly-owned subsidiary of The Charles Schwab Corporation (Schwab), which has its
principal offices at 120 Kearney Street, San Francisco, California 94108.

Prior to December 16, 2005, United States Trust Company of New
York, acting through its registered investment advisory division, New York Asset Management Division (NYAMD) and U.S. Trust Company, N.A. acting through its registered investment advisory division, U. S. Trust Asset Management Division
(USTAMD), served as co-investment advisers (together the former Managing Investment Adviser) to the Company under an investment advisory agreement with the Company (the Agreement). Effective December 16, 2005,
USTA assumed the duties of NYAMD and USTAMD under the Agreement pursuant to an assumption agreement. Prior to March 31, 2006, USTA was a wholly owned subsidiary of U.S. Trust Company, N.A. (UST-NA) and UST-NA and United States Trust
Company of New York were wholly-owned subsidiaries of U.S. Trust. Effective March 31, 2006, United States Trust Company of New York converted into a national bank named United States Trust Company, National Association (USTC-NA) and U.S. Trust
Company, N.A. merged into USTC-NA. USTC-NA is the surviving entity and remains a wholly-owned subsidiary of U.S. Trust.

PFPC, Inc., a
majority owned subsidiary of the PNC Financial Services Group, (PFPC) provides administrative and accounting services to the Company pursuant to an Administration and Accounting Services Agreement. PFPC Trust Company provides custodian
services to the Company pursuant to a Custodian Services Agreement. Also, PFPC provides transfer agency services to the Company pursuant to a Transfer Agency Agreement. For the services provided to the Company by PFPC and its affiliates, PFPC is
entitled to an annual fee of 0.02% of average net assets plus reimbursement of reasonable expenses, and a base fee, payable monthly.



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The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses of
the Company, exclusive of management fees, to the extent they exceed 0.25% of the Companys average net assets. This reimbursement amounted to $186,079 and $188,677, for the periods ended April 30, 2006 and April 30, 2005,
respectively.

Each director of the Company receives an annual fee of $9,000, plus a meeting fee of $1,500 for each meeting attended, and
is reimbursed for expenses incurred for attending meetings. No person who is an officer, director or employee of the Managing Investment Adviser, or U.S. Trust Corporation or its subsidiaries, who serves as an officer, director or employee of the
Company receives any compensation from the Company.

On November 23, 2004, the Company engaged Deloitte & Touche LLP
(D&T) as the Companys Independent Registered Public Accounting Firm for the fiscal year ended October 31, 2005, replacing Ernst & Young LLP (E&Y), the Companys prior independent public
accountants. E&Y was terminated by the Company on October 28, 2004 as a result of concerns regarding their independence at the time of issuance of their report on the Companys October 31, 2003 financial statements. These concerns
are the result of certain real estate consulting services performed by E&Y on a contingent fee basis for Charles Schwab & Co., Inc., an affiliate of the Companys Managing Investment Adviser.

On December 16, 2004, Schwab entered into an agreement with the Company and other funds managed by the former Managing Investment Adviser whereby
Schwab has funded a reserve account to be held by the Managing Investment Adviser or its affiliate. This reserve account was established so that the Company and other funds managed by the Managing Investment Adviser will be able to draw upon it to
pay in full all costs incurred related to the termination of E&Y. This agreement was executed in order to ensure that these costs related to the termination of E&Y are not borne by the Company, the other funds managed by the Managing
Investment Adviser or their respective shareholders. Schwab is an affiliate of the Companys Managing Investment Adviser. In consideration of the funding of the reserve account, the Company and the other funds managed by the Managing Investment
Adviser subrogated all of their claims, causes of action and rights against E&Y for payment of these expenses to Schwab.

Note 3  Purchases
and Sales of Securities

Excluding short-term investments, the Companys purchases and sales of securities for the six month
periods ended April 30, 2006, and April 30, 2005 were as follows:



|                                 |  |               |  |             
|-------------------------------- |  | ------------- |  | ------------
|Six-Month Period Ended April 30, |  | Purchases ($) |  | Proceeds ($)
|2006                             |  | 288,119       |  | 3,162,178   
|2005                             |  |              |  | 7,247,259   

Note 4  Transactions with Affiliated Portfolio Companies

An affiliated company is a company in which the Company has ownership of over 5% of the voting securities. No dividend income was received from affiliated
companies during the quarter ended April 30, 2006 and the year ended October 31, 2005. Transactions with companies which are or were affiliates are as follows:



|                                     |  |                                                            |   |                 |                       |                          |                                         |          |                                                         |                     |   |                               |  |   |   |  |   |   |  |           |   |  |   |          
|------------------------------------ |  | ---------------------------------------------------------- | - | --------------- | --------------------- | ------------------------ | --------------------------------------- | -------- | ------------------------------------------------------- | ------------------- | - | ----------------------------- |  | - | - |  | - | - |  | --------- | - |  | - | ---------
|                                     |  | Shares/ PrincipalAmount/Percentage Held at October 31,2005 |   |                 | October 31,2005 Value |                          | For the Six Months Ended April 30, 2006 |          | Shares/ PrincipalAmount/Percentage Held atApril 30,2006 |                     |   | April 30, 2006 Value (Note 1)
|                                     |  |                                                            |   |                 |                      
|Name of Investment                   |  |                                                            |   | Conversion Cost |                       | Sales/ConversionProceeds |                                         | Interest |                                                         | RealizedGain (Loss) |   |                              
|Affiliated Companies                 |  |                                                            |   |                 |                       |                          |                                         |          |                                                         |                     |   |                               |  |   |   |  |   |   |  |           |   |  |   |          
|Mid-Atlantic Venture Fund III, LP    |  | 8.69                                                       | % |                 | $                     | 1,660,025                |                                         | $        |                                                        |                     | $ |                              |  | $ |  |  | $ |  |  | 8.69      | % |  | $ | 1,311,877
|Clear Orbit Inc., Preferred Series A |  | 1,428,572                                                  |   |                 |                       | 5,000,013                |                                         |          |                                                        |                     |   |                              |  |   |  |  |   |  |  | 1,428,572 |   |  |   | 5,000,013
|                                     |  |                                                            |   |                 |                       |                          |                                         |          |                                                         |                     |   |                               |  |   |   |  |   |   |  |           |   |  |   |          
|Total Non Controlled Affiliates      |  |                                                            |   |                 | $                     | 6,660,038                |                                         | $        |                                                        |                     | $ |                              |  | $ |  |  | $ |  |  |           |   |  | $ | 6,311,890
|                                     |  |                                                            |   |                 |                       |                          |                                         |          |                                                         |                     |   |                               |  |   |   |  |   |   |  |           |   |  |   |          



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|                                                               |  |                                                            |           |                |                       |                          |                                     |          |   |                                                           |  |   |                                |  |   |         |  |   |             |   |  |   |           |   |  |   |           
|-------------------------------------------------------------- |  | ---------------------------------------------------------- | --------- | -------------- | --------------------- | ------------------------ | ----------------------------------- | -------- | - | --------------------------------------------------------- |  | - | ------------------------------ |  | - | ------- |  | - | ----------- | - |  | - | --------- | - |  | - | ----------
|                                                               |  | Shares/ PrincipalAmount/Percentage Held at October 31,2004 |           |                | October 31,2004 Value |                          | For the Year Ended October 31, 2005 |          |   | Shares/ PrincipalAmount/Percentage Held atOctober 31,2005 |  |   | October 31,2005 Value (Note
1)
|                                                               |  |                                                            |           |                |                      
|                                                               |  |                                                            |           |                |                      
|Name of Investment                                             |  |                                                            |           | ConversionCost |                       | Sales/ConversionProceeds |                                     | Interest |   | Realized Gain (Loss)                                      |  |   |                               
|Affiliated Companies                                           |  |                                                            |           |                |                       |                          |                                     |          |   |                                                           |  |   |                                |  |   |         |  |   |             |   |  |   |           |   |  |   |           
|Mid-Atlantic VentureFund III, LP                               |  |                                                            | 8.70      | %              |                       | $                        | 1,679,609                           |          | $ |                                                          |  | $ | 351,461                        |  | $ |        |  | $ |            |   |  |   | 8.69      | % |  | $ | 1,660,025 
|Clear Orbit Inc.,Preferred Series A                            |  |                                                            | 1,428,572 |                |                       |                          | 5,000,013                           |          |   |                                                          |  |   |                               |  |   |        |  |   |            |   |  |   | 1,428,572 |   |  |   | 5,000,013 
|Firstsource Corp.,Preferred Series A                           |  |                                                            | 2,388,345 |                |                       |                          |                                    |          |   |                                                          |  |   |                               |  |   |        |  |   | (10,000,000 | ) |  |   |          |   |  |   |          
|Firstsource Corp.,Promissory Note 8.00%,6/30/2001              |  | $                                                          | 2,666,667 |                |                       |                          |                                    |          |   |                                                          |  |   |                               |  |   |        |  |   | (2,666,667  | ) |  |   |          |   |  |   |          
|Killerbiz, Inc., PromissoryNote 8.00%, 6/10/2000 and 1/17/2001 |  | $                                                          | 750,000   |                |                       |                          |                                    |          |   |                                                          |  |   |                               |  |   |        |  |   | (750000     | ) |  |   |          |   |  |   |          
|Mosaica Education, Inc.,Preferred Series C                     |  |                                                            | 75,059    |                |                       |                          | 3,537,722                           |          |   |                                                          |  |   |                               |  |   |        |  |   |            |   |  |   | 75,059    |   |  |   | 3,537,722 
|Mosaica Education, Inc.Bridge Notes, 15.00%, 8/24/2006         |  | $                                                          | 686,415   |                |                       |                          | 686,415                             |          |   |                                                          |  |   |                               |  |   | 105,588 |  |   |            |   |  | $ | 686,415   |   |  |   | 686,415   
|Mosaica Education, Inc.(Advantage Schools), 0.00%,8/24/2006    |  | $                                                          | 1,025,748 |                |                       |                          | 1,025,748                           |          |   |                                                          |  |   |                               |  |   |        |  |   |            |   |  | $ | 1,025,748 |   |  |   | 1,025,748 
|Mosaica Education, Inc.(ASI Texas LLC ), 0.00%, 8/24/2006      |  | $                                                          | 256,437   |                |                       |                          | 256,437                             |          |   |                                                          |  |   |                               |  |   |        |  |   |            |   |  | $ | 256,437   |   |  |   | 256,437   
|                                                               |  |                                                            |           |                |                       |                          |                                     |          |   |                                                           |  |   |                                |  |   |         |  |   |             |   |  |   |           |   |  |   |           
|Total Non Controlled Affiliates                                |  |                                                            |           |                |                       | $                        | 12,185,944                          |          | $ |                                                          |  | $ | 351,461                        |  | $ | 105,588 |  | $ | (13,416,667 | ) |  |   |           |   |  | $ | 12,166,360
|                                                               |  |                                                            |           |                |                       |                          |                                     |          |   |                                                           |  |   |                                |  |   |         |  |   |             |   |  |   |           |   |  |   |           

Note that, although Mosaica Education, Inc. was an affiliated company in prior fiscal years, as of
October 31, 2005 the Company holds less than 5% of its shares. Therefore, Mosaica Education, Inc. is not included as an affiliated company on the October 31, 2005 schedule of investments or statement of assets and liabilities, and interest
earned on Mosaica Education Inc. notes is not presented as interest income from affiliates on the October 31, 2005 statement of operations.

Note
5  Pending Litigation

The former Managing Investment Adviser was contacted in September 2003 by the Office of the New
York State Attorney General (the NYAG), and the Securities and Exchange Commission (the SEC) and later by the Attorney General of the State of West Virginia in connection with their investigations of practices in the mutual
fund industry identified as market timing and late trading of mutual fund shares (the Investigations). The former Managing Investment Adviser has provided full cooperation with respect to these Investigations and
continues to review the facts and circumstances relevant to the Investigations. As disclosed previously by the former Managing Investment Adviser and its affiliates, with respect to the former Managing Investment Adviser, these investigations have
been focusing on circumstances in which a small number of parties were permitted to engage in short-term trading of shares of certain mutual funds managed by the former Managing Investment Adviser. The short-term trading activities permitted under
these arrangements have been terminated and the former Managing Investment Adviser has strengthened its policies and procedures to deter frequent trading.

The former Managing Investment Adviser, certain of its affiliates and others have also been named in several class action and derivative lawsuits which allege that the former Managing Investment Adviser, certain of
its affiliates and others allowed certain parties to engage in illegal and improper mutual fund trading practices, which allegedly caused financial injury to the shareholders of certain mutual funds managed by the former Managing Investment Adviser.
Each seeks unspecified monetary damages and related equitable relief.

The class and derivative actions described above have been
transferred to the United States District Court for the District of Maryland for coordinated and consolidated pre-trial proceedings. In November 2005, the Maryland court



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dismissed many of the plaintiffs claims in both the investor class action suits and in the derivative suits. Plaintiffs claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as amended and under Section 36(b) and 48(a) of the Investment Company Act of 1940, as amended, however, have not been dismissed. Discovery has commenced with respect to plaintiffs
remaining claims.

While the ultimate outcome of these matters cannot be predicted with any certainty at this time, based on currently
available information and consultation with counsel, the Managing Investment Adviser believes that the pending Investigations and private lawsuits are not likely to materially affect the Managing Investment Advisers ability to provide
investment management services to the Company. Neither the Managing Investment Adviser nor the Company are a subject of the Investigations nor a party to the lawsuits described above.

Note 6  Guarantees

In the normal course of business, the Company enters into
contracts that provide general indemnifications. The Companys maximum exposure under these agreements is dependent on future claims that may be made against the Company, and therefore cannot be established; however, based on experience, the
risk of loss from such claims is considered remote.

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

Six-month and
Three-month Periods Ended April 30, 2006 as Compared to the Similar Periods in 2005

Realized and Unrealized Gains and Losses from Portfolio
Investments

For the six-month periods ended April 30, 2006 and 2005, the Company had a net realized gain on security transactions
of $784,682 and $2,460,065, respectively. For the six-month periods ended April 30, 2006 and 2005, the Company had a net change in unrealized appreciation/(depreciation) on investments of ($2,756,134) and $2,574,295, respectively. The net
realized gain for the period ended April 30, 2006 was primarily the result of realized gains on the sale of stock distributed by the Companys private investment funds. The net realized gain for the period ended April 30, 2005 was
primarily the result of realized gains on the sale of stock distributed by the Companys private investment funds. The net change in unrealized depreciation on investments for the six-month period ended April 30, 2006 is the result of a
decrease in the valuation of Mosaica Education, Inc, a private company investment of ($3,537,722), which was partially offset by an increase in the overall valuation of the private investment funds. The net change in unrealized appreciation on
investments for the six-month period ended April 30, 2005 is the result of an increase in the overall valuation of the private investment funds.

For the three-month periods ended April 30, 2006 and 2005, the Company had a net realized gain on security transactions of $786,426 and $2,582,848, respectively. For the three-month periods ended April 30,
2006 and 2005, the Company had a net change in unrealized appreciation/(depreciation) on investments of ($2,566,768) and $1,469,736, respectively. The net realized gain for the period ended April 30, 2006 was primarily the result of realized
gains on the sale of stock distributed by the Companys private investment funds. The net realized gain for the period ended April 30, 2005 was primarily the result of realized gains on the sale of stock distributed by the Companys
private investment funds. The net change in unrealized depreciation on investments for the three-month period ended April 30, 2006 is the result of a decrease in the valuation of Mosaica Education, Inc, a private company investment of
($3,537,722), which was partially offset by an increase in the overall valuation of the private investment funds. The net change in unrealized appreciation on investments for the three-month period ended April 30, 2005 is the result of an
increase in the overall valuation of the private investment funds.

Investment Income and Expenses

For the six-month periods ended April 30, 2006, the Company had investment income of $369,825 and net operating expenses, net of expenses reimbursed
by the Managing Investment Adviser, of $312,160, resulting in a net investment gain of $57,665. In comparison, the Company had investment income of $127,259 and net operating



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expenses, net of expenses reimbursed by the Managing Investment Adviser of $343,085, resulting in net investment loss of ($215,826) for the six-month period
ended April 30, 2005. The primary reason for the increase in investment income was an increase in interest income paid by short-term securities held by the Company. The reduction in net expenses is principally attributable to lower Managing
Investment Adviser fee and a decrease in professional fees. Management fees declined during the period ended April 30, 2006 due to a decline in net assets.

For the three-month period ended April 30, 2006, the Company had investment income of $199,569 and net operating expenses, net of expenses reimbursed by the Managing Investment Adviser, of $150,677, resulting in
a net investment gain of $48,892. In comparison, the Company had investment income of $69,153 and net operating expenses, net of expenses reimbursed by the Managing Investment Adviser, of $171,407, resulting in a net investment loss of ($102,256)
for the similar period ended April 30, 2005. The primary reason for the increase in investment income was an increase in interest income paid by short-term securities held by the Company. The reduction in net expenses is principally
attributable to lower Managing Investment Adviser fee and a decrease in professional fees. Management fees declined during the period ended April 30, 2006 due to a decline in net assets.

The Managing Investment Adviser provides investment management and administrative services required for the operation of the Company. In consideration of
the services rendered by the Managing Investment Adviser, the Company pays a management fee based upon a percentage of the net assets of the Company invested or committed to be invested in certain types of investments and an incentive fee based in
part on a percentage of realized capital gains of the Company. Such management fee is determined and payable quarterly.

For the six-month
periods ended April 30, 2006 and 2005, the Managing Investment Adviser and the former Managing Investment Adviser earned $255,949 and $285,981 in management fees, respectively. In addition, for the six-month periods ended April 30, 2006
and 2005, the change in allowance for the management incentive fee was $0 and $0, respectively. The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses of the Company, exclusive of management fees, to
the extent they exceed 0.25%, on an annual basis, of the Companys average net assets. For the six-month periods ended April 30, 2006 and 2005, the Managing Investment Adviser and the former Managing Investment Adviser reimbursed other
operating expenses of the Company in the amounts of $186,079 and $188,677, respectively, as a result of expenses incurred in excess of these limits.

For the three-month periods ended April 30, 2006 and 2005, the Managing Investment Adviser and the former Managing Investment Adviser earned $122,945 and $146,823 in management fees, respectively. In addition,
for the six-month periods ended April 30, 2006 and 2005, the change in allowance for the management incentive fee was $0 and $0, respectively. The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses
of the Company, exclusive of management fees, to the extent they exceed 0.25%, on an annual basis, of the Companys average net assets. For the three-month periods ended April 30, 2006 and 2005, the Managing Investment Adviser and the
former Managing Investment Adviser reimbursed other operating expenses of the Company in the amounts of $114,468 and $132,778, respectively, as a result of expenses incurred in excess of these limits.

Net Assets

At April 30, 2006, the
Companys net assets were $43,763,358 or a net asset value per common share of $ 223.59. This represents a decrease of ($1,913,787) from net assets of $45,677,145, or a net asset value per common share of $233.37, at October 31, 2005. The
decrease in net assets during the period is principally due to the net change in unrealized depreciation of ($2,756,134) on investments, as describe above and partially offset by net realized gain of $784,682 as describe above.

Liquidity and Capital Resources

The Company has
focused its investments in the private equity securities of expansion and later-stage venture capital companies and middle-market companies that the Company believes offer significant long-term capital appreciation. The Company may offer managerial
assistance to certain of these companies. The Company invests its available cash in short-term investments of marketable securities pending distributions to shareholders or to provide the liquidity necessary to make portfolio investments as
investment opportunities arise.



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At April 30, 2006, the Company held $1,983 in cash and $16,326,237 in short-term investments as
compared to $0 in cash and $12,775,632 in short-term investments at October 31, 2005. The increase in cash and short-term investments during the period is the result of distributions received in the form of both cash and stock from its private
investment funds during the period ended April 30, 2006. Proceeds from the distributions totaled $3,162,178. In connection with the Companys commitments to private investment funds, a total of $58,250,000 has been contributed by the
Company through April 30, 2006 and an additional contribution of $288,119 during this period which is a recallable distribution from one of its private investment funds, Brentwood Associates III, LP. The Company has no additional capital
commitment obligations to the private funds it has invested in.

The Company believes that its liquidity and capital resources are adequate
to satisfy its operational needs.

The Company has qualified as a regulated investment company under Subchapter M of the
Internal Revenue Code for the fiscal year ended October 31, 2005 and intends to continue to so quality. As such, the Company is required to adhere to various tax requirements which may impact its ability to pay dividends to its shareholders. Due to
these requirements the Company has not paid dividends in this fiscal year and is presently evaluating its ability to pay dividends later this year. The Company is also evaluating other opportunities to enhance shareholder value and liquidity,
including an evaluation of a potential sale of its assets in the future.

Application of Critical Accounting Policies

Under the supervision of the Companys Valuation and Audit Committees, consisting of the independent directors of the Company, the Managing
Investment Adviser makes certain critical accounting estimates with respect to the valuation of private portfolio investments. These estimates could have a material impact on the presentation of the Companys financial condition because in
total, they currently represent 61.79% of the Companys net assets at April 30, 2006. For the private investments held at April 30, 2006, changes to these estimates, i.e. changes in the valuations of these private investments,
resulted in a $2.8 million decrease in net asset value.

The value for securities for which no public market exists is difficult to
determine. Generally speaking, such investments will be valued on a going concern basis without giving effect to any disposition costs. There is a range of values that is reasonable for such investments at any particular time. Because of
the inherent uncertainty of valuation, the estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material.

Initially, direct private company investments are valued based upon their original cost until developments provide a sufficient basis for use of a
valuation other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct private company investments will be valued by the private market or appraisal methods of valuation.
The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. The appraisal method shall be based upon such factors affecting the company such as earnings, net worth, reliable
private sale prices of the companys securities, the market prices for similar securities of comparable companies, an assessment of the companys future prospects or, if appropriate, liquidation value. The values for the investments
referred to in this paragraph will be estimated regularly by the Managing Investment Adviser or a committee of the Board, both under the supervision of the Board, and, in any event, not less frequently than quarterly. However, there can be no
assurance that such value will represent the return that might ultimately be realized by the Company from the investments.

The valuation
of the Companys private funds is based upon its pro-rata share of the value of the assets of a private fund as determined by such private fund, in accordance with its partnership agreement, constitutional or other documents governing such
valuation, on the valuation date. If such valuation with respect to the Companys investments in private funds is not available by reason of timing or other event on the valuation date, or are deemed to be unreliable by the Managing Investment
Adviser, the Managing Investment Adviser, under supervision of the Board, shall determine such value based on its judgment of fair value on the appropriate date, less applicable charges, if any.



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The Managing Investment Adviser also makes estimates regarding discounts on market prices of publicly
traded securities where appropriate. For securities which have legal, contractual or practical restrictions on transfer, a discount of 10% to 40% from the public market price will be applied.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Equity Price Risk

A majority of the Companys investment portfolio consists of equity securities in private companies and private investment funds, representing
61.79% of the Companys net assets, which are not publicly traded. These investments are recorded at fair value as determined by the Managing Investment Adviser in accordance with valuation guidelines adopted by the Board of Directors. This
method of valuation does not result in increases or decreases in the fair value of these equity securities in response to changes in market prices. Thus, these equity securities are not subject to equity price risk normally associated with public
equity markets. At April 30, 2006 and at October 31, 2005, the Company was not subject to equity price risk normally associated with public equity markets, except to the extent that the private investment funds that the Company has
invested in has, from time to time, interests in securities which may be publicly traded.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. As of
January 31, 2006 (the end of the period covered by this report), the Companys principal executive officers and principal financial officer evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in
the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Companys disclosure controls and procedures were adequate and effective to ensure that material information relating to
the Company was made known to them by others within those entities.

(b) Changes in Internal Controls. There were no changes in
the Companys internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during the Companys last fiscal quarter, that have materially affected, or are reasonably likely
to materially affect, the Companys internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Changes in Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.



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

The annual meeting of shareholders of the Company was held
at the offices of U.S. Trust Corporation, 114 West 47thStreet, New York, New York 10036 at 10:00 a.m. (New York
time) on March 23, 2006 (the Meeting). Of the 195,730 shares outstanding as of January 27, 2006, the record date for the Meeting, 109,820 were present or represented by proxy at the Meeting. The shareholders of the Company
approved the following matter: to elect each of Mr. Hover, Mr. Bernstein, Mr. Murphy and Mr. Imbimbo as Directors of the Company. The results of the voting for this proposal were as follows:



|                       |  |         |  |         
|---------------------- |  | ------- |  | --------
|                       |  | For     |  | Withheld
|Gene M. Bernstein      |  | 108,452 |  | 1,368   
|John C. Hover          |  | 108,427 |  | 1,393   
|Stephen V. Murphy      |  | 108,452 |  | 1,368   
|Victor F. Imbimbo, Jr. |  | 108,427 |  | 1,393   

Item 5. Other Information.

None.

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



|(a) | Exhibits.
|--- | ---------



|     |  |                                                                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|     | 
|31.2 |  | Certification of Treasurer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.              
|     | 
|32   |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                           



|(b) | Reports on Form 8-K.
|--- | --------------------

None.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                    |  |                                        |  |                              
|------------------- |  | -------------------------------------- |  | -----------------------------
|                    |  | EXCELSIOR PRIVATE EQUITY FUND II, INC.
|                    |  |                                       
|Date: June 14, 2006 |  | By:                                    |  | /s/ Leo P. Grohowski         
|                    |  |                                        |  | Leo P. Grohowski             
|                    |  |                                        |  | Co-Chief Executive Officer   
|                    |  |                                       
|Date: June 14, 2006 |  | By:                                    |  | /s/ Raghav V. Nandagopal     
|                    |  |                                        |  | Raghav V. Nandagopal         
|                    |  |                                        |  | Co-Chief Executive Officer   
|                    |  |                                       
|Date: June 14, 2006 |  | By:                                    |  | /s/ Robert F. Aufenanger     
|                    |  |                                        |  | Robert F. Aufenanger         
|                    |  |                                        |  | Treasurer                    
|                    |  |                                        |  | (Principal Financial Officer)



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