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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10-Q



(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, 2005



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



EXCELSIOR PRIVATE EQUITY FUND II, INC.

(Exact Name of Registrant as Specified in Its Charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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 (203) 352-4400



114
West 47th Street, New York, NY 10036-1532

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



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 an accelerated filer (as
defined by Rule 12b-2 of the Act). Yes ̈No x



As of June 1, 2005, there were 195,730 shares of the Registrants Common Stock, $.01 par value per share, outstanding.



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EXCELSIOR PRIVATE EQUITY FUND II, INC.



This Quarterly Report on Form 10-Q contains historical information and forward-looking statements. Statements looking
forward in time are included in this Form 10-Q pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may causeExcelsior Private Equity
Fund II, Inc.s (the Companys) actual results to differ from future performance suggested herein.



|         |  |                                                                                                       |  |         
|-------- |  | ----------------------------------------------------------------------------------------------------- |  | --------
|         |  | INDEX                                                                                                 |  | PAGE NO.
|         |  |                                                                                                      
|PART I.  |  | FINANCIAL INFORMATION                                                                                 |  |         
|         |  |                                                                                                      
|Item 1.  |  | Financial Statements                                                                                  |  | 1       
|         |  |                                                                                                      
|         |  | Portfolios of Investments as of April 30, 2005 and October 31, 2004                                   |  | 2       
|         |  |                                                                                                      
|         |  | Statements of Assets and Liabilities at April 30, 2005 and October 31, 2004                           |  | 6       
|         |  |                                                                                                      
|         |  | Statements of Operations for the six-month periods ended April 30, 2005 and April 30, 2004            |  | 7       
|         |  |                                                                                                      
|         |  | Statements of Operations for the three-month periods ended April 30, 2005 and April 30, 2004          |  | 8       
|         |  |                                                                                                      
|         |  | Statements of Changes in Net Assets for the six-month periods ended April 30, 2005 and April 30, 2004 |  | 9       
|         |  |                                                                                                      
|         |  | Statements of Cash Flows for the six-month periods ended April 30, 2005 and April 30, 2004            |  | 10      
|         |  |                                                                                                      
|         |  | Financial Highlights at April 30, 2005 and April 30, 2004                                             |  | 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                                                   |  | 20      
|         |  |                                                                                                      
|Item 5.  |  | Other Information                                                                                     |  | 20      
|         |  |                                                                                                      
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                      |  | 21      



---

|PART I. | FINANCIAL INFORMATION
|------- | ---------------------



|Item 1. | Financial Statements.
|------- | ---------------------



Excelsior Private Equity Fund II, Inc.

Portfolio of Investments (Unaudited)



|                                 |  |                |            |                 |        |  
|-------------------------------- |  | -------------- | ---------- | --------------- | ------ | -
|                                 |  | April 30, 2005 |           
|                                 |  | Value          |            | % of Net Assets |       
|PORTFOLIO STRUCTURE              |  |                |            |                 |        |  
|                                 |  |               
|SHORT-TERM INVESTMENTS:          |  |                |            |                 |        |  
|MONEY MARKET INSTRUMENTS         |  | $              | 7,373,242  |                 | 16.47  | %
|INVESTMENT COMPANIES             |  |                | 993,418    |                 | 2.22   | %
|PRIVATE INVESTMENT FUNDS         |  |                | 23,397,524 |                 | 52.26  | %
|PRIVATE COMPANIES                |  |                | 10,957,747 |                 | 24.47  | %
|                                 |  |                |            |                 |        |  
|TOTAL INVESTMENTS                |  |                | 42,721,931 |                 | 95.42  | %
|OTHER ASSETS & LIABILITIES (NET) |  |                | 2,052,741  |                 | 4.58   | %
|                                 |  |                |            |                 |        |  
|NET ASSETS                       |  | $              | 44,774,672 |                 | 100.00 | %
|                                 |  |                |            |                 |        |  



Excelsior Private Equity Fund II,
Inc.

Portfolio of Investments



|                                 |  |                  |            |                 |        |  
|-------------------------------- |  | ---------------- | ---------- | --------------- | ------ | -
|                                 |  | October 31, 2004 |           
|                                 |  | Value            |            | % of Net Assets |       
|PORTFOLIO STRUCTURE              |  |                  |            |                 |        |  
|                                 |  |                 
|SHORT-TERM INVESTMENTS:          |  |                  |            |                 |        |  
|MONEY MARKET INSTRUMENTS         |  | $                | 11,147,099 |                 | 21.55  | %
|INVESTMENT COMPANIES             |  |                  | 1,904,389  |                 | 3.68   | %
|PRIVATE INVESTMENT FUNDS         |  |                  | 27,369,451 |                 | 52.92  | %
|PRIVATE COMPANIES                |  |                  | 10,957,747 |                 | 21.19  | %
|                                 |  |                  |            |                 |        |  
|TOTAL INVESTMENTS                |  |                  | 51,378,686 |                 | 99.34  | %
|OTHER ASSETS & LIABILITIES (NET) |  |                  | 338,868    |                 | 0.66   | %
|                                 |  |                  |            |                 |        |  
|NET ASSETS                       |  | $                | 51,717,554 |                 | 100.00 | %
|                                 |  |                  |            |                 |        |  



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



1



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Excelsior Private Equity Fund II, Inc.

Portfolio of Investments April 30, 2005 (Unaudited)



|                     |                                        |  |                                                                  |                    |             |                |   |           
|-------------------- | -------------------------------------- |  | ---------------------------------------------------------------- | ------------------ | ----------- | -------------- | - | ----------
|Par Value            |                                        |  |                                                                  | Acquisition Date## |             | Value (Note 1)
|                     | MONEY MARKET INSTRUMENTS 16.47%       |  |                                                                  |                    |             |               
|$                    | 1,475,000                              |  | Federal Home Loan Bank, 2.75%, 5/02/05 (Cost $1,474,775)         |                    |             |                | $ | 1,474,775 
|                     | 5,000,000                              |  | Federal Farm Credit Bureau, 2.65%, 5/03/05 (Cost $4,998,817)     |                    |             |                |   | 4,998,817 
|                     | 900,000                                |  | Morgan Stanley Commercial Paper, 2.80%, 5/05/05 (Cost $899,650)  |                    |             |                |   | 899,650   
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        |  | TOTAL MONEY MARKET INSTRUMENTS (Cost $7,373,242)                 |                    |             |                |   | 7,373,242 
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        | 
|                     | PRIVATE INVESTMENT FUNDS #, @  52.26% |  |                                                                  |                    |             |               
|                     |                                        |  |                                                                 
|Ownership Percentage |                                        |  |                                                                  |                    |             |               
|                     | 1.89%                                  |  | Advanced Technology Ventures V, LP                               |                    | 09/98-10/02 |                |   | 710,634   
|                     | 2.63%                                  |  | Brand Equity Ventures I, LP                                      |                    | 03/98-10/01 |                |   | 628,438   
|                     | 0.96%                                  |  | Brentwood Associates III, LP                                     |                    | 06/99-10/02 |                |   | 4,864,718 
|                     | 1.98%                                  |  | Broadview Capital Partners, LP                                   |                    | 04/99-10/02 |                |   | 2,362,935 
|                     | 4.89%                                  |  | Commonwealth Capital Ventures II, LP                             |                    | 01/99-10/02 |                |   | 1,829,657 
|                     | 3.96%                                  |  | Communications Ventures III, LP                                  |                    | 11/98-05/00 |                |   | 961,214   
|                     | 1.34%                                  |  | Friedman, Fleischer & Lowe Capital Partners, LP                  |                    | 01/99-10/02 |                |   | 4,095,498 
|                     | 1.30%                                  |  | Mayfield X, LP                                                   |                    | 06/99-05/02 |                |   | 765,568   
|                     | 0.62%                                  |  | Mayfield X, Annex                                                |                    | 07/02-10/02 |                |   | 191,898   
|                     | 8.70%                                  |  | Mid-Atlantic Venture Fund III, LP                               |                    | 04/98-02/01 |                |   | 2,376,804 
|                     | 2.64%                                  |  | Morgenthaler Venture Partners V, LP                              |                    | 10/98-08/01 |                |   | 903,764   
|                     | 1.67%                                  |  | Quad-C Partners V, LP                                            |                    | 04/98-10/02 |                |   | 2,353,423 
|                     | 1.34%                                  |  | Sevin Rosen Fund VI, LP                                          |                    | 03/98-10/02 |                |   | 859,452   
|                     | 2.12%                                  |  | Trinity Ventures VI, LP                                          |                    | 09/98-10/02 |                |   | 493,521   
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $39,096,636)                |                    |             |                |   | 23,397,524
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        |  |                                                                 
|Shares/Par Value     |                                        |  |                                                                  |                    |             |               
|                     | PRIVATE COMPANIES #  24.47%           |  |                                                                  |                    |             |               
|                     | Preferred Stocks @  19.07%            |  |                                                                  |                    |             |               
|                     | Educational Services  7.90%           |  |                                                                  |                    |             |               
|                     | 75,059                                 |  | Mosaica Education, Inc., Series C                               |                    | 08/01       |                |   | 3,537,722 
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     | Internet Services  Business  11.17%  |  |                                                                  |                    |             |               
|                     | 1,428,572                              |  | Clear Orbit, Inc., Series A                                     |                    | 06/00       |                |   | 5,000,013 
|                     | 2,388,345                              |  | Firstsource Corp., Series A                                     |                    | 02/00       |                |   |          
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        |  |                                                                  |                    |             |                |   | 5,000,013 
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        |  | Total Preferred Stock (Cost $20,119,422)                         |                    |             |                |   | 8,537,735 
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     | Promissory Notes  5.40%               |  |                                                                  |                    |             |               
|                     | Biotechnology  1.00%                  |  |                                                                  |                    |             |               
|$                    | 451,412                                |  | Metrigen, Inc., 6.00%, 9/01/2009 @                               |                    | 07/03       |                |   | 451,412   
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     | Educational Services  4.40%           |  |                                                                  |                    |             |               
|$                    | 686,415                                |  | Mosaica Education, Inc. Bridge Notes, 13.00%, 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 
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     | Internet Services  Business  0.00%   |  |                                                                  |                    |             |               
|$                    | 2,666,667                              |  | Firstsource Corp., 8.00%, 6/30/2001 @                           |                    | 12/00       |                |   |          
|$                    | 750,000                                |  | Killerbiz, Inc., 8.00%, 6/10/2000 and 1/17/2001 @               |                    | 12/99-08/00 |                |   |          
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        |  |                                                                  |                    |             |                |   |          
|                     |                                        |  |                                                                  |                    |             |                |   |           
|                     |                                        |  | Total Promissory Notes (Cost $5,836,679)                         |                    |             |                |   | 2,420,012 
|                     |                                        |  |                                                                  |                    |             |                |   |           



2



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Excelsior Private Equity Fund II, Inc.

Portfolio of Investments April 30, 2005 (Unaudited)  (continued)



|                                              |  |                                                         |  |                    |            |                |           
|--------------------------------------------- |  | ------------------------------------------------------- |  | ------------------ | ---------- | -------------- | ----------
|Shares                                        |  |                                                         |  | Acquisition Date## |            | Value (Note 1)
|PRIVATE COMPANIES # (Continued)               |  |                                                         |  |                    |           
|Warrants  0.00%                              |  |                                                         |  |                    |           
|Biotechnology  0.00%                         |  |                                                         |  |                    |           
|62,326                                        |  | Metrigen, Inc.@                                         |  | 07/03              |            | $              |          
|                                              |  |                                                         |  |                    |            |                |           
|                                              |  | Total Warrants (Cost $0)                                |  |                    |            |                |          
|                                              |  |                                                         |  |                    |            |                |           
|                                              |  | TOTAL PRIVATE COMPANIES (Cost $25,956,101)              |  |                    |            |                | 10,957,747
|                                              |  |                                                         |  |                    |            |                |           
|INVESTMENT COMPANIES  2.22%                  |  |                                                         |  |                    |           
|993,418                                       |  | Dreyfus Government Cash Management Fund (Cost $993,418) |  |                    |            |                | 993,418   
|                                              |  |                                                         |  |                    |            |                |           
|TOTAL INVESTMENTS (Cost $73,419,397)  95.42% |  |                                                         |  |                    | 42,721,931
|OTHER ASSETS & LIABILITIES (NET)  4.58%      |  |                                                         |  |                    | 2,052,741 
|                                              |  |                                                         |  |                    |            |                |           
|NET ASSETS  100.00%                          |  |                                                         |  | $                  | 44,774,672
|                                              |  |                                                         |  |                    |            |                |           

---

| | At April 30, 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. Total market value of affiliated securities owned at April 30, 2005 was $12,883,139.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|# | Restricted as to public resale. Acquired between March 1, 1998 and October 31, 2002. Total cost of restricted securities at April 30, 2005 aggregated $65,052,737. Total value of
restricted securities owned at April 30, 2005 was $34,355,271 or 76.73% of net assets.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|## | Required disclosure for restricted securities only.
|-- | ---------------------------------------------------



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



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



3



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Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2004



|                    |                                        |  |                                                                     |                  |             |                |   |           
|------------------- | -------------------------------------- |  | ------------------------------------------------------------------- | ---------------- | ----------- | -------------- | - | ----------
|Par Value           |                                        |  |                                                                     | Acquisition Date |             | Value (Note 1)
|                    | MONEY MARKET INSTRUMENTS  21.55%      |  |                                                                     |                  |             |               
|$                   | 1,000,000                              |  | UBS Financial Commercial Paper 1.75%, 11/01/04                      |                  |             |                | $ | 999,951   
|                    | 1,000,000                              |  | Morgan Stanley Commercial Paper 1.79%, 11/02/04                     |                  |             |                |   | 999,901   
|                    | 1,000,000                              |  | Federal Home Loan Mortgage Corp. Discount Note 1.75%, 11/02/04      |                  |             |                |   | 999,903   
|                    | 1,000,000                              |  | Danske Bank Commercial Paper 1.76%, 11/03/04                        |                  |             |                |   | 999,853   
|                    | 3,150,000                              |  | Federal Home Loan Bank Discount Note 1.70%, 11/04/04                |                  |             |                |   | 3,149,405 
|                    | 1,000,000                              |  | Caterpillar Finance Commercial Paper 1.73%, 11/10/04                |                  |             |                |   | 999,519   
|                    | 3,000,000                              |  | Federal National Mortgage Association Discount Note 1.72%, 11/10/04 |                  |             |                |   | 2,998,567 
|                    |                                        |  |                                                                     |                  |             |                |   |           
|                    |                                        |  | TOTAL MONEY MARKET INSTRUMENTS (Cost $11,147,099)                   |                  |             |                |   | 11,147,099
|                    |                                        |  |                                                                     |                  |             |                |   |           
|                    |                                        | 
|                    | PRIVATE INVESTMENT FUNDS #, @  52.92% |  |                                                                     |                  |             |               
|                    |                                        |  |                                                                    
|OwnershipPercentage |                                        |  |                                                                     |                  |             |               
|                    |                                        |  | Buyout Funds  32.32%                                               |                  |             |                |   |           
|                    | 0.97%                                  |  | Brentwood Associates III, LP                                        |                  | 06/99-10/02 |                |   | 3,792,759 
|                    | 1.88%                                  |  | Broadview Capital Partners, LP                                      |                  | 04/99-10/02 |                |   | 2,235,400 
|                    | 1.32%                                  |  | Friedman, Fleischer & Lowe Capital Partners, LP                     |                  | 01/99-10/02 |                |   | 7,277,896 
|                    | 1.66%                                  |  | Quad-C Partners V, LP                                               |                  | 04/98-10/02 |                |   | 3,407,375 
|                    |                                        |  |                                                                     |                  |             |                |   |           
|                    |                                        |  |                                                                     |                  |             |                |   | 16,713,430
|                    |                                        |  | Early Stage Venture Funds  16.68%                                  |                  |             |                |   |           
|                    | 1.71%                                  |  | Advanced Technology Ventures V, LP                                  |                  | 09/98-10/02 |                |   | 655,265   
|                    | 4.90%                                  |  | Commonwealth Capital Ventures II, LP                                |                  | 01/99-10/02 |                |   | 1,870,855 
|                    | 3.96%                                  |  | Communications Ventures III, LP                                     |                  | 11/98-05/00 |                |   | 700,754   
|                    | 1.30%                                  |  | Mayfield X, LP                                                      |                  | 06/99-05/02 |                |   | 886,719   
|                    | 0.62%                                  |  | Mayfield X, Annex                                                   |                  | 07/02-10/02 |                |   | 204,067   
|                    | 8.70%                                  |  | Mid-Atlantic Venture Fund III, LP                                  |                  | 04/98-02/01 |                |   | 1,679,609 
|                    | 1.32%                                  |  | Sevin Rosen Fund VI, LP                                             |                  | 03/98-10/02 |                |   | 1,148,139 
|                    | 2.12%                                  |  | Trinity Ventures VI, LP                                             |                  | 09/98-10/02 |                |   | 1,483,588 
|                    |                                        |  |                                                                     |                  |             |                |   |           
|                    |                                        |  |                                                                     |                  |             |                |   | 8,628,996 
|                    |                                        |  | Varied Stage Venture Funds  3.92%                                  |                  |             |                |   |           
|                    | 2.63%                                  |  | Brand Equity Ventures, LP                                           |                  | 03/98-10/01 |                |   | 506,775   
|                    | 2.64%                                  |  | Morgenthaler Venture Partners V, LP                                 |                  | 10/98-08/01 |                |   | 1,520,250 
|                    |                                        |  |                                                                     |                  |             |                |   |           
|                    |                                        |  |                                                                     |                  |             |                |   | 2,027,025 
|                    |                                        |  |                                                                     |                  |             |                |   |           
|                    |                                        |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $45,642,855)                   |                  |             |                |   | 27,369,451
|                    |                                        |  |                                                                     |                  |             |                |   |           



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



4



---

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2004 - (continued)



|                 |                                               |  |                                                                    |                  |             |            |   |           
|---------------- | --------------------------------------------- |  | ------------------------------------------------------------------ | ---------------- | ----------- | ---------- | - | ----------
|Shares/Par Value |                                               |  |                                                                    | Acquisition Date |             | Value     
|                 | PRIVATE COMPANIES #  21.19%                  |  |                                                                    |                  |             |           
|                 | Preferred Stocks @  16.51%                   |  |                                                                    |                  |             |           
|                 | Educational Services  6.84%                  |  |                                                                    |                  |             |           
|                 | 75,059                                        |  | Mosaica Education, Inc., Series C                                 |                  | 08/01       |            | $ | 3,537,722 
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 | Internet Services  Business  9.67%          |  |                                                                    |                  |             |           
|                 | 1,428,572                                     |  | Clear Orbit, Inc., Series A                                       |                  | 06/00       |            |   | 5,000,013 
|                 | 2,388,345                                     |  | Firstsource Corp., Series A                                       |                  | 02/00       |            |   |          
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 |                                               |  |                                                                    |                  |             |            |   | 5,000,013 
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 |                                               |  | Total Preferred Stock (Cost $20,119,425)                           |                  |             |            |   | 8,537,735 
|                 | Promissory Notes  4.68%                      |  |                                                                    |                  |             |           
|                 | Biotechnology  0.87%                         |  |                                                                    |                  |             |           
|$                | 451,412                                       |  | Metrigen, Inc., 6.00%, 9/01/2009 @                                 |                  | 07/03       |            |   | 451,412   
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 | Educational Services  3.81%                  |  |                                                                    |                  |             |           
|$                | 686,415                                       |  | Mosaica Education, Inc. Bridge Notes, 13.00%, 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 
|                 | Internet Services  Business  0.00%          |  |                                                                    |                  |             |           
|$                | 2,666,667                                     |  | Firstsource Corp., Promissory Note, 8.00%, 6/30/2001 @            |                  | 12/00       |            |   |          
|$                | 750,000                                       |  | Killerbiz, Inc., Promissory Note 8.00%, 6/10/2000 and 1/17/2001 @ |                  | 12/99-08/00 |            |   |          
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 |                                               |  |                                                                    |                  |             |            |   |          
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 |                                               |  | Total Promissory Notes (Cost $5,836,679)                           |                  |             |            |   | 2,420,012 
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 | Warrants  0.00%                              |  |                                                                    |                  |             |           
|                 | Biotechnology  0.00%                         |  |                                                                    |                  |             |           
|                 | 62,326                                        |  | Metrigen, Inc.@                                                    |                  | 07/03       |            |   |          
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 |                                               |  | Total Warrants (Cost $0)                                           |                  |             |            |   |          
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 |                                               |  | TOTAL PRIVATE COMPANIES (Cost $25,956,104)                         |                  |             |            |   | 10,957,747
|                 |                                               | 
|                 | INVESTMENT COMPANIES  3.68%                  |  |                                                                    |                  |             |           
|                 | 1,904,389                                     |  | Dreyfus Government Cash Management Fund (Cost $1,904,389)          |                  |             |            |   | 1,904,389 
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 | TOTAL INVESTMENTS (Cost $84,650,447)  99.34% |  |                                                                    |                  |             | 51,378,686
|                 | OTHER ASSETS & LIABILITIES (NET)  0.66%      |  |                                                                    |                  |             | 338,868   
|                 |                                               |  |                                                                    |                  |             |            |   |           
|                 | NET ASSETS  100.00%                          |  |                                                                    |                  | $           | 51,717,554
|                 |                                               |  |                                                                    |                  |             |            |   |           



| | At October 31, 2004, 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. Total market value of affiliated securities owned at October 31, 2004 was $12,185,944.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|# | Restricted as to public resale. Acquired between March 1, 1998 and October 31, 2003. Total cost of restricted securities at October 31, 2004 aggregated $71,598,959. Total value of
restricted securities owned at October 31, 2004 was $38,327,198 or 74.11% of net assets.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



5



---

Excelsior Private Equity Fund II, Inc.

Statements of Assets and Liabilities



|                                                                               |  |                |             |   |                  |   |             |  
|------------------------------------------------------------------------------ |  | -------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                               |  | April 30, 2005 |             |   | October 31, 2004 |  
|                                                                               |  | (Unaudited)    |             |   |                  |  
|ASSETS:                                                                        |  |                |             |   |                  |   |             |  
|Unaffiliated issuers, at value (Cost $43,556,587 and $54,436,176 respectively) |  | $              | 29,838,792  |   |                  | $ | 39,192,742  |  
|Affiliated issuers, at value (Cost $29,862,810 and $30,214,271 respectively)   |  |                | 12,883,139  |   |                  |   | 12,185,944  |  
|                                                                               |  |                |             |   |                  |   |             |  
|Investments, at value (Cost $73,419,397 and $84,650,447 respectively) (Note 1) |  | $              | 42,721,931  |   |                  | $ | 51,378,686  |  
|Cash                                                                           |  |                | 260         |   |                  |   | 328,296     |  
|Receivable from investment advisor (Note 2)                                    |  |                | 227,935     |   |                  |   | 141,397     |  
|Interest receivable                                                            |  |                | 330,527     |   |                  |   | 286,687     |  
|Receivable from underlying fund                                                |  |                | 1,759,029   |   |                  |   |            |  
|Other assets                                                                   |  |                | 14,162      |   |                  |   | 1,640       |  
|                                                                               |  |                |             |   |                  |   |             |  
|Total Assets                                                                   |  |                | 45,053,844  |   |                  |   | 52,136,706  |  
|                                                                               |  |               
|LIABILITIES:                                                                   |  |                |             |   |                  |   |             |  
|Management fees payable (Note 2)                                               |  |                | 202,722     |   |                  |   | 161,438     |  
|Administration fees payable (Note 2)                                           |  |                | 24,958      |   |                  |   | 25,236      |  
|Professional fees payable                                                      |  |                | 25,239      |   |                  |   | 152,969     |  
|Board of Directors fees payable (Note 2)                                       |  |                | 25,253      |   |                  |   | 66,000      |  
|Accrued expenses and other payables                                            |  |                | 1,000       |   |                  |   | 13,509      |  
|                                                                               |  |                |             |   |                  |   |             |  
|Total Liabilities                                                              |  |                | 279,172     |   |                  |   | 419,152     |  
|                                                                               |  |                |             |   |                  |   |             |  
|NET ASSETS                                                                     |  | $              | 44,774,672  |   |                  | $ | 51,717,554  |  
|                                                                               |  |                |             |   |                  |   |             |  
|NET ASSETS consist of:                                                         |  |                |             |   |                  |   |             |  
|Accumulated net investment loss                                                |  | $              | (215,826    | ) |                  | $ |            |  
|Accumulated net realized loss on investments                                   |  |                | (29,163,799 | ) |                  |   | (31,623,864 | )
|Net unrealized (depreciation) on investments                                   |  |                | (30,697,466 | ) |                  |   | (33,271,761 | )
|Par value                                                                      |  |                | 1,957       |   |                  |   | 1,957       |  
|Paid-in capital in excess of par value                                         |  |                | 104,849,806 |   |                  |   | 116,611,222 |  
|                                                                               |  |                |             |   |                  |   |             |  
|Total Net Assets                                                               |  | $              | 44,774,672  |   |                  | $ | 51,717,554  |  
|                                                                               |  |                |             |   |                  |   |             |  
|Shares of Common Stock Outstanding ($0.01 par value, 200,000 authorized)       |  |                | 195,730     |   |                  |   | 195,730     |  
|NET ASSET VALUE PER SHARE                                                      |  | $              | 228.76      |   |                  | $ | 264.23      |  
|                                                                               |  |                |             |   |                  |   |             |  



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



6



---

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                            |  |                            |           |   |      |   |           |  
|----------------------------------------------------------- |  | -------------------------- | --------- | - | ---- | - | --------- | -
|                                                            |  | Six Months Ended April 30, |          
|                                                            |  | 2005                       |           |   | 2004 |  
|INVESTMENT INCOME:                                          |  |                            |           |   |      |   |           |  
|Interest income from affiliated investments                 |  | $                          | 44,067    |   |      | $ | 44,471    |  
|Interest income from unaffiliated investments               |  |                            | 66,492    |   |      |   | 16,698    |  
|Dividend income                                             |  |                            | 16,700    |   |      |   | 8,530     |  
|                                                            |  |                            |           |   |      |   |           |  
|Total Investment Income                                     |  |                            | 127,259   |   |      |   | 69,699    |  
|                                                            |  |                            |           |   |      |   |           |  
|EXPENSES:                                                   |  |                            |           |   |      |   |           |  
|Managing investment adviser fees (Note 2)                   |  |                            | 285,981   |   |      |   | 352,596   |  
|Administration fees (Note 2)                                |  |                            | 49,385    |   |      |   | 72,705    |  
|Professional fees                                           |  |                            | 135,040   |   |      |   | 62,210    |  
|Board of Directors fees and expenses (Note 2)               |  |                            | 29,754    |   |      |   | 29,877    |  
|Insurance expense                                           |  |                            | 14,003    |   |      |   | 15,623    |  
|Miscellaneous expenses                                      |  |                            | 17,599    |   |      |   | 1,506     |  
|                                                            |  |                            |           |   |      |   |           |  
|Total Expenses                                              |  |                            | 531,762   |   |      |   | 534,517   |  
|                                                            |  |                            |           |   |      |   |           |  
|Expenses reimbursed by Managing Investment Adviser (Note 2) |  |                            | (188,677  | ) |      |   | (118,121  | )
|                                                            |  |                            |           |   |      |   |           |  
|Net Expenses                                                |  |                            | 343,085   |   |      |   | 416,396   |  
|                                                            |  |                            |           |   |      |   |           |  
|NET INVESTMENT (LOSS)                                       |  |                            | (215,826  | ) |      |   | (346,697  | )
|                                                            |  |                            |           |   |      |   |           |  
|NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: (Note 1)   |  |                            |           |   |      |   |           |  
|Net realized gain on unaffiliated investments               |  |                            | 2,460,065 |   |      |   |          |  
|Net change in unrealized depreciation on investments        |  |                            | 2,574,295 |   |      |   | 1,433,206 |  
|                                                            |  |                            |           |   |      |   |           |  
|NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS             |  |                            | 5,034,360 |   |      |   | 1,433,206 |  
|                                                            |  |                            |           |   |      |   |           |  
|NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS        |  | $                          | 4,818,534 |   |      | $ | 1,086,509 |  
|                                                            |  |                            |           |   |      |   |           |  



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



7



---

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                 |  |                              |           |   |      |   |            |  
|---------------------------------------------------------------- |  | ---------------------------- | --------- | - | ---- | - | ---------- | -
|                                                                 |  | Three Months Ended April 30, |          
|                                                                 |  | 2005                         |           |   | 2004 |  
|INVESTMENT INCOME:                                               |  |                              |           |   |      |   |            |  
|Interest income from affiliated investments                      |  | $                            | 21,758    |   |      | $ | 22,236     |  
|Interest income from unaffiliated investments                    |  |                              | 39,379    |   |      |   | 9,768      |  
|Dividend income                                                  |  |                              | 8,016     |   |      |   | 4,188      |  
|                                                                 |  |                              |           |   |      |   |            |  
|Total Investment Income                                          |  |                              | 69,153    |   |      |   | 36,192     |  
|                                                                 |  |                              |           |   |      |   |            |  
|EXPENSES:                                                        |  |                              |           |   |      |   |            |  
|Managing investment adviser fees (Note 2)                        |  |                              | 146,823   |   |      |   | 167,085    |  
|Administration fees (Note 2)                                     |  |                              | 24,135    |   |      |   | 29,736     |  
|Professional fees                                                |  |                              | 98,492    |   |      |   | 30,738     |  
|Board of Directors fees and expenses (Note 2)                    |  |                              | 14,631    |   |      |   | 14,754     |  
|Insurance expense                                                |  |                              | 7,799     |   |      |   | 7,701      |  
|Miscellaneous expenses                                           |  |                              | 12,307    |   |      |   | (3,959     | )
|                                                                 |  |                              |           |   |      |   |            |  
|Total Expenses                                                   |  |                              | 304,187   |   |      |   | 246,055    |  
|                                                                 |  |                              |           |   |      |   |            |  
|Expenses reimbursed by Managing Investment Adviser (Note 2)      |  |                              | (132,778  | ) |      |   | (47,145    | )
|                                                                 |  |                              |           |   |      |   |            |  
|Net Expenses                                                     |  |                              | 171,409   |   |      |   | 198,910    |  
|                                                                 |  |                              |           |   |      |   |            |  
|NET INVESTMENT (LOSS)                                            |  |                              | (102,256  | ) |      |   | (162,718   | )
|                                                                 |  |                              |           |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: (Note 1) |  |                              |           |   |      |   |            |  
|Net realized gain on unaffiliated investments                    |  |                              | 2,582,848 |   |      |   |           |  
|Net change in unrealized depreciation on investments             |  |                              | 1,469,736 |   |      |   | (1,949,253 | )
|                                                                 |  |                              |           |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS           |  |                              | 4,052,584 |   |      |   | (1,949,253 | )
|                                                                 |  |                              |           |   |      |   |            |  
|Net change in allowance for management incentive fee             |  |                              |          |   |      |   | 316,003    |  
|                                                                 |  |                              |           |   |      |   |            |  
|NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS  |  | $                            | 3,950,328 |   |      | $ | (1,795,968 | )
|                                                                 |  |                              |           |   |      |   |            |  



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



8



---

Excelsior Private Equity Fund II, Inc.

Statements of Changes in Net Assets (Unaudited)



|                                                                                                     |  |                            |             |   |      |   |            |  
|---------------------------------------------------------------------------------------------------- |  | -------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                                                     |  | Six Months Ended April 30, |            
|                                                                                                     |  | 2005                       |             |   | 2004 |  
|OPERATIONS:                                                                                          |  |                            |             |   |      |   |            |  
|Net investment loss                                                                                  |  | $                          | (215,826    | ) |      | $ | (346,697   | )
|Net realized gain on investments                                                                     |  |                            | 2,460,065   |   |      |   |           |  
|Net change in unrealized (depreciation) on investments                                               |  |                            | 2,574,295   |   |      |   | 1,433,206  |  
|                                                                                                     |  |                            |             |   |      |   |            |  
|Net increase in net assets resulting from operations                                                 |  |                            | 4,818,534   |   |      |   | 1,086,509  |  
|                                                                                                     |  |                           
|DISTRIBUTIONS TO SHAREHOLDERS:                                                                       |  |                            |             |   |      |   |            |  
|Distributions                                                                                        |  |                            | (11,761,416 | ) |      |   |           |  
|                                                                                                     |  |                            |             |   |      |   |            |  
|NET INCREASE/DECREASE IN NET ASSETS                                                                  |  |                            | (6,942,882  | ) |      |   | 1,086,509  |  
|                                                                                                     |  |                           
|NET ASSETS:                                                                                          |  |                            |             |   |      |   |            |  
|Beginning of period                                                                                  |  |                            | 51,717,554  |   |      |   | 49,716,188 |  
|                                                                                                     |  |                            |             |   |      |   |            |  
|End of period (including accumulated net investment loss of $(215,826) and $(346,697), respectively) |  | $                          | 44,774,672  |   |      | $ | 50,802,697 |  
|                                                                                                     |  |                            |             |   |      |   |            |  



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



9



---

Excelsior Private Equity Fund II, Inc.

Statements of Cash Flows (Unaudited)



|                                                                                                                                                 |  |                           |             |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                                                                                                 |  | Six Months EndedApril 30, |            
|                                                                                                                                                 |  | 2005                      |             |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                            |  |                           |             |   |      |   |            |  
|Net increase in net assets resulting from operations                                                                                             |  | $                         | 4,818,534   |   |      | $ | 1,086,509  |  
|Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating
activities: |  |                           |             |   |      |   |            |  
|Net change in unrealized (depreciation) on investments                                                                                           |  |                           | (2,574,295  | ) |      |   | (1,433,206 | )
|Sale/ (purchase) of short-term investments  net                                                                                                 |  |                           | 4,684,828   |   |      |   | (5,699,563 | )
|Proceeds received from the sale of investments and distributions received from private investment funds                                          |  |                           | 7,247,259   |   |      |   | 3,287,498  |  
|Net realized gain on investments                                                                                                                 |  |                           | (2,460,065  | ) |      |   |           |  
|(Increase)/decrease in receivable from investment adviser                                                                                        |  |                           | (86,538     | ) |      |   | 38,689     |  
|Increase in interest receivable                                                                                                                  |  |                           | (43,840     | ) |      |   | (44,372    | )
|Increase in other assets                                                                                                                         |  |                           | (12,522     | ) |      |   | (16,056    | )
|Increase/(decrease) in management fee payable                                                                                                    |  |                           | 41,284      |   |      |   | (14,699    | )
|Decrease in Board of Directors fees payable                                                                                                      |  |                           | (40,747     | ) |      |   | (36,123    | )
|(Decrease)/increase in other expenses payable                                                                                                    |  |                           | (140,518    | ) |      |   | 16,666     |  
|                                                                                                                                                 |  |                           |             |   |      |   |            |  
|Net cash provided by (used in) operating activities                                                                                              |  |                           | 11,433,380  |   |      |   | (2,814,657 | )
|                                                                                                                                                 |  |                           |             |   |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                            |  |                           |             |   |      |   |            |  
|Cash Distributions to Shareholders                                                                                                               |  |                           | (11,761,416 | ) |      |   |           |  
|                                                                                                                                                 |  |                           |             |   |      |   |            |  
|Net Cash used in Financing Activities                                                                                                            |  |                           | (11,761,416 | ) |      |   |           |  
|                                                                                                                                                 |  |                           |             |   |      |   |            |  
|Net increase (decrease) in cash                                                                                                                  |  |                           | 328,036     |   |      |   | (2,814,657 | )
|                                                                                                                                                 |  |                           |             |   |      |   |            |  
|Cash at beginning of period                                                                                                                      |  |                           | 328,296     |   |      |   | 2,852,110  |  
|                                                                                                                                                 |  |                           |             |   |      |   |            |  
|Cash at end of period                                                                                                                            |  | $                         | 260         |   |      | $ | 37,453     |  
|                                                                                                                                                 |  |                           |             |   |      |   |            |  



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



10



---

Excelsior Private Equity Fund II, Inc.

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



Per Share Operating Performance (1)



|                                                       |  |                                |        |    |                                 |   |        |   
|------------------------------------------------------ |  | ------------------------------ | ------ | -- | ------------------------------- | - | ------ | --
|                                                       |  | Six Months EndedApril 30, 2005 |        |    | Six Months Ended April 30, 2004 |  
|NET ASSET VALUE, BEGINNING OF PERIOD                   |  | $                              | 264.23 |    |                                 | $ | 254.00 |   
|INCOME FROM INVESTMENT OPERATIONS:                     |  |                                |        |    |                                 |   |        |   
|Net investment loss                                    |  |                                | (1.10  | )  |                                 |   | (1.77  | ) 
|Net realized and unrealized gain (loss) on investments |  |                                | 25.72  |    |                                 |   | 7.32   |   
|                                                       |  |                                |        |    |                                 |   |        |   
|Total from Investment Operations                       |  |                                | 24.62  |    |                                 |   | 5.55   |   
|                                                       |  |                                |        |    |                                 |   |        |   
|DISTRIBUTIONS TO SHAREHOLDERS:                         |  |                                |        |    |                                 |   |        |   
|Return of Capital Distribution                         |  |                                | (60.09 | )  |                                 |   |       |   
|                                                       |  |                                |        |    |                                 |   |        |   
|NET INCREASE/DECREASE IN NET ASSETS                    |  |                                | (35.47 | )  |                                 |   | 5.55   |   
|NET ASSET VALUE, END OF PERIOD                         |  | $                              | 228.76 |    |                                 | $ | 259.55 |   
|                                                       |  |                                |        |    |                                 |   |        |   
|TOTAL NET ASSET VALUE RETURN (3) (4)                   |  |                                | 11.52  | %  |                                 |   | 2.19   | % 
|Ratios and supplemental data:                          |  |                                |        |    |                                 |   |        |   
|Net assets, end of period (thousands)                  |  | $                              | 44,775 |    |                                 | $ | 50,803 |   
|Ratios to average net assets (2)                       |  |                                |        |    |                                 |   |        |   
|Gross expenses (5)                                     |  |                                | (2.32  | )% |                                 |   | 2.09   | % 
|Net expenses                                           |  |                                | (1.50  | )% |                                 |   | 1.63   | % 
|Net investment loss                                    |  |                                | (0.94  | )% |                                 |   | (1.36  | )%
|Portfolio turnover (3)                                 |  |                                | 0.00   | %  |                                 |   | 0.00   | % 



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



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



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



|(4) | Total investment 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
|--- | ------------------------------------------------------------------------------------------------



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



11



---

EXCELSIOR PRIVATE EQUITY FUND II, INC.



NOTES TO FINANCIAL STATEMENTS



April 30, 2005
(Unaudited)



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 such any investee securities be registered.



The financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for
the fair statement of the results for the interim period. The results of operations for interim periods are not necessarily indicative of results for the entire year.



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. Certain amounts in the prior years financial statements have been reclassified to
conform to the current years financial statements.



(a) Portfolio valuation:



The
Company values portfolio securities quarterly and at such other times as, in the 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 regularly by the Managing Investment Adviser 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, 2005 and October 31, 2004, these contributions paid in advance totaled $2,134,459, and are included in investments on the statement of assets and liabilities. These contributions paid in advance are non-income producing.



12



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At April 30, 2005 and October 31, 2004, market quotations were not readily available for
securities valued at $34,355,271 or 76.73% of net assets and $38,327,198 or 74.11% 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.



(b) 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.



(c)
Repurchase agreements:



The Company may
enter 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.



d) 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. At October 31, 2004, the Company has reclassified certain amounts of
net investment loss and net realized loss on investments to paid-in capital due to net operating losses and investment partnership adjustments.



The Company has unused capital loss carryforwards of approximately $46,650,580 available for income tax purposes, to be applied against
future net realized gains, if any, after October 31, 2004. 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.



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, 2005 and April 30, 2004.



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, 2004 and April 30, 2005, the Company had not received information to determine the tax cost of the private investment funds as
of October 31, 2004 and April 30, 2005, and therefore to determine the Companys unrealized gain or loss on a tax basis. At April 30, 2005, the cost of all other investments for federal tax purposes was $34,322,761, and those investments had a
tax basis net unrealized depreciation of $14,998,354, consisting of gross appreciation of $16 and gross depreciation of $14,998,370. At October 31, 2004, the cost of all other investments for federal tax purposes was $39,007,592, and those
investments had a tax basis net unrealized depreciation of $14,998,357, consisting of gross appreciation of $13 and gross depreciation of $14,998,370.



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



Prior to June 1, 2003, and pursuant to an Investment Management Agreement (Agreement), United States Trust
Company of New York (U.S. Trust NY) and U.S. Trust Company (U.S. Trust) served as the Managing Investment Adviser to the Company. Under the Agreement, for the services provided, the Managing Investment Adviser is entitled to
receive a management fee at the annual rate of 1.50% of the net assets of the Company, determined as of the end of each calendar quarter, that are invested or committed to be invested in Private Companies or private investment funds and equal to an
annual rate of 0.50% of the net assets of the Company, determined as of the end of each calendar quarter, that are invested in short-term investments and are not committed to Private Companies or private investment funds. Prior to June 1, 2003, and
pursuant to a sub-advisory agreement (the Sub-Advisory Agreement) among the



13



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Company, U.S. Trust NY, U.S. Trust and U.S. Trust Company, N.A., U.S. Trust Company, N.A. served as the investment sub-adviser to the Company and received an
investment management fee from the Managing Investment Adviser. As of April 30, 2005 and October 31, 2004, $202,722 and $161,438, respectively, were payable to the Managing Investment Adviser.



In addition to the management fee, the Company has agreed to pay the Managing
Investment Adviser an incentive fee in an amount equal to 20% of the cumulative realized capital gains (net of realized capital losses and unrealized net capital depreciation) on investments other than private investment funds, less the aggregate
amount of incentive fee payments in prior years. If the amount of the incentive fee in any year is a negative number, or cumulative net realized gains less net unrealized capital depreciation at the end of any year is less than such amount
calculated at the end of the previous year, the Managing Investment Adviser will be required to repay the Company all or a portion of the incentive fee previously paid. During the six months ended April 30, 2005 and April 30, 2004, no incentive fee
was earned by and payable to the Managing Investment Adviser.



U.S. Trust NY is a New York state-chartered bank and trust company and a member bank of the Federal Reserve System. Effective June 1, 2003, U.S. Trust merged into U.S. Trust Company, N.A., a nationally chartered bank. Pursuant to an
assumption agreement dated June 1, 2003, U.S. Trust Company, N.A. assumed the duties and obligations of U.S. Trust under the Agreement. Pursuant to a termination agreement among the Company, U.S. Trust NY, U.S. Trust and U.S. Trust Company, N.A.,
the Sub-Advisory Agreement terminated on June 1, 2003. As a result, U.S. Trust Company, N.A., acting through its registered investment advisory division, U.S. Trust Company, N.A. Asset Management Division, now serves with U.S. Trust NY, acting
through its registered investment advisory division, U.S. TrustNew York Asset Management Division, as Managing Investment Adviser to the Company. The merger had no impact on the management or operations of the investment advisory functions
performed for the Company, and did not constitute a change in control. U.S. Trust NY and U.S. Trust Company, N.A. are each a wholly-owned subsidiary of U.S. Trust Corporation, a registered bank holding company. U.S. Trust Corporation is a
wholly-owned subsidiary of The Charles Schwab Corporation.



PFPC, Inc. (PFPC), a majority-owned subsidiary of The PNC Financial Services Group, 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.



The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses of the Companys, exclusive of management fees,
to the extent they exceed 0.25% of the Companys average net assets. This reimbursement amounted to $188,677 and $118,121, for the six month periods ended April 30, 2005 and April 30, 2004, 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 Registered Public Accounting Firm for the fiscal year ended October 31, 2004, 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, Charles
Schwab Corporation (Schwab) entered into an agreement with the Company and other funds managed by the Managing Investment Adviser whereby Schwab will fund 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.



As a result of the agreement with Schwab,
the Company has recorded a reimbursement amount of $89,275 in the Statement of Operations for the year ended October 31, 2004 as a reduction of expenses. This $89,275 amount reflects the reimbursement of certain expenses recorded in the Statement of
Operations for the year ended October 31, 2004 which relate to termination of E&Y costs paid and accrued. These costs include legal fees, audit fees (related to re-audit and re-review services of D&T), and directors fees and expenses of
$14,000, $69,275, and $6,000, respectively.



14



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On December, 9, 2004, the Company paid a dividend of $60.09 per share, or $11,761,416, to shareholders of
record on December 6, 2004.



Note 3  Purchases and Sales of Securities



Excluding short-term investments, the Companys
purchases and sales of securities including distributions received for the six-month periods ended April 30, 2005, and April 30, 2004 were as follows:



|                                 |  |               |  |             
|-------------------------------- |  | ------------- |  | ------------
|Six-Month Period Ended April 30, |  | Purchases ($) |  | Proceeds ($)
|2005                             |  |              |  | 7,247,259   
|2004                             |  |              |  | 3,287,498   



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 six months ended April 30, 2005 and 2004 and the year ended October 31, 2004. Transactions with
companies which are or were affiliates are as follows:



|                                                                |  |                                                            |                |   |                          |   |                                        |  |                                                         |   |  |                             |         |  |   |        |  |   |   |  |   |           |   |  |   |           
|--------------------------------------------------------------- |  | ---------------------------------------------------------- | -------------- | - | ------------------------ | - | -------------------------------------- |  | ------------------------------------------------------- | - |  | --------------------------- | ------- |  | - | ------ |  | - | - |  | - | --------- | - |  | - | ----------
|Name of Investment                                              |  | Shares/ PrincipalAmount/Percentage Held at October 31,2004 |                |   | October 31,2004 Value    |   | For the Six Months EndedApril 30, 2005 |  | Shares/ PrincipalAmount/Percentage Held atApril 30,2005 |   |  | April 30,2005Value (Note 1)
|                                                                |  |                                                            | ConversionCost |   | Sales/ConversionProceeds |   | Interest                               |  | RealizedGain (Loss)                                     |   | 
|Affiliated Companies                                            |  |                                                            |                |   |                          |   |                                        |  |                                                         |   |  |                             |         |  |   |        |  |   |   |  |   |           |   |  |   |           
|Mid-Atlantic Venture Fund III, LP                               |  |                                                            | 8.70           | % |                          | $ | 1,679,609                              |  | $                                                       |  |  | $                           | 351,461 |  | $ |       |  | $ |  |  |   | 8.70      | % |  | $ | 2,376,804 
|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      |   |                          |   |                                       |  |                                                         |  |  |                             |        |  |   |       |  |   |  |  |   | 2,388,345 |   |  |   |          
|Firstsource Corp., Promissory Note 12.00%, 6/30/2001            |  | $                                                          | 2,666,667      |   |                          |   |                                       |  |                                                         |  |  |                             |        |  |   |        |  |   |  |  | $ | 2,666,667 |   |  |   |          
|Killerbiz, Inc., Promissory Note 8.00%, 6/10/2000 and 1/17/2001 |  | $                                                          | 750,000        |   |                          |   |                                       |  |                                                         |  |  |                             |        |  |   |        |  |   |  |  | $ | 750,000   |   |  |   |          
|Mosaica Education, Inc., Preferred Series C                     |  |                                                            | 75,059         |   |                          |   | 3,537,722                              |  |                                                         |  |  |                             |        |  |   |        |  |   |  |  |   | 75,059    |   |  |   | 3,537,722 
|Mosaica Education, Inc. Bridge Notes, 13.00%, 8/24/2006         |  | $                                                          | 686,415        |   |                          |   | 686,415                                |  |                                                         |  |  |                             |        |  |   | 44,067 |  |   |  |  | $ | 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 |  | $ | 44,067 |  | $ |  |  |   |           |   |  | $ | 12,883,139



15



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|                                                                |  |                                                            |                |  |                          |            |                                     |   |                     |                                                           |   |           |                               |   |        |  |   |            |   |  |           |   |  |   |            |  
|--------------------------------------------------------------- |  | ---------------------------------------------------------- | -------------- |  | ------------------------ | ---------- | ----------------------------------- | - | ------------------- | --------------------------------------------------------- | - | --------- | ----------------------------- | - | ------ |  | - | ---------- | - |  | --------- | - |  | - | ---------- | -
|Name of Investment                                              |  | Shares/ PrincipalAmount/Percentage Held at October 31,2003 |                |  | October 31,2003 Value    |            | For the Year Ended October 31, 2004 |   |                     | Shares/ PrincipalAmount/Percentage Held atOctober 31,2004 |   |           | October 31,2004Value (Note 1) |  
|                                                                |  |                                                            | ConversionCost |  | Sales/ConversionProceeds |            | Interest                            |   | RealizedGain (Loss) |                                                           |   |          
|Affiliated Companies                                            |  |                                                            |                |  |                          |            |                                     |   |                     |                                                           |   |           |                               |   |        |  |   |            |   |  |           |   |  |   |            |  
|Mid-Atlantic Venture Fund III, LP                               |  | 8.71                                                       | %              |  | $                        | 1,774,031  |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  | 8.70      | % |  | $ | 1,679,609  |  
|Clear Orbit Inc., Preferred Series A                            |  | 1,428,572                                                  |                |  |                          | 5,000,013  |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  | 1,428,572 |   |  |   | 5,000,013  |  
|Commonwealth Capital Ventures II, LLP                           |  | 5.73                                                       | %              |  |                          | 1,925,198  |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  | 4.90      | % |  |   | 1,870,855  | *
|Curon Medical, Inc., Common Stock                               |  | 2,381,088                                                  |                |  |                          | 4,243,099  |                                     |   |                    |                                                           |   | 2,825,829 |                               |   |       |  |   | (4,246,672 | ) |  |          |   |  |   |           |  
|Curon Medical, Inc., Warrants                                   |  | 76,950                                                     |                |  |                          |           |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  |          |   |  |   |           |  
|Firstsource Corp., Preferred Series A                           |  | 2,388,345                                                  |                |  |                          |           |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  | 2,388,345 |   |  |   |           |  
|Firstsource Corp., Promissory Note 8.00%, 6/30/2001             |  | 2,666,667                                                  |                |  |                          |           |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  | 2,666,667 |   |  |   |           |  
|Killerbiz, Inc., Promissory Note 8.00%, 6/10/2000 and 1/17/2001 |  | 750,000                                                    |                |  |                          |           |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  | 750,000   |   |  |   |           |  
|Mosaica Education, Inc., Preferred Series C                     |  | 75,059                                                     |                |  |                          | 3,537,722  |                                     |   |                    |                                                           |   |          |                               |   |       |  |   |           |   |  | 75,059    |   |  |   | 3,537,722  |  
|Mosaica Education, Inc. Bridge Notes, 13.00%, 8/24/2006         |  | 686,415                                                    |                |  |                          | 686,415    |                                     |   |                    |                                                           |   |          |                               |   | 89,087 |  |   |           |   |  | 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                                 |  |                                                            |                |  | $                        | 18,448,663 |                                     | $ |                    |                                                           | $ | 2,825,829 |                               | $ | 89,087 |  | $ | (4,246,672 | ) |  |           |   |  | $ | 14,056,799 |  
|                                                                |  |                                                            |                |  |                          |            |                                     |   |                     |                                                           |   |           |                               |   |        |  |   |            |   |  |           |   |  |   |            |  



|* | - security was not an affiliate as of October 31, 2004 and so is not denoted as such on the October 31, 2004 Portfolio of Investments or included in the cost and market value of
affiliated issuers on the October 31, 2004 statement of assets and liabilities.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note 5  Pending Litigation



The 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 Managing Investment Adviser has been providing full cooperation with respect to these Investigations and continues to review the facts and circumstances relevant to the Investigations. As disclosed previously by the
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 certain mutual funds managed by the Managing Investment Advisor. The
short-term trading activities permitted under these arrangements have been terminated and the Managing Investment Adviser has strengthened its policies and procedures to deter frequent trading.



The Managing Investment Adviser, and certain of its affiliates, has also been
named in five class action lawsuits which allege that the 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 Managing Investment Advisor. Each seeks unspecified monetary damages and related equitable relief. The Managing Investment Adviser and certain affiliates have also been named in two
derivative actions alleging breach of fiduciary duty in relation to allegedly illegal and improper mutual fund trading practices.



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. The Maryland court is expected to hear oral argument on the defendants motions to dismiss in mid-June, 2005. The defendants will not be required to answer the complaints until such motions have been
decided. In addition, the Maryland court ruled in March 2005 that discovery with respect to all claims in the consolidated actions should be stayed until the court has ruled on the pending motions to dismiss the consolidated complaints.



16



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While the ultimate outcome of these matters cannot be predicted with any certainty at this time, based on
currently available information, the Managing Investment Adviser believes that the pending Investigations and private lawsuits are not likely to materially affect the Investment Advisers ability to provide investment management services to the
Company. The Company is not a subject of the Investigations or party to the lawsuits described above.



Note 6  Guarantees



In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such
agreements. The Company has had no prior claims or payments pursuant to such agreements. The Companys individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company
that have not yet occurred. However, based on experience, the Company expects the risk of loss to be remote.



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



Six-month and Three-month Periods Ended April 30, 2005 as Compared to the Similar Periods in 2004



Realized and Unrealized Gains and Losses from Portfolio Investments



For the six-month periods ended April 30, 2005 and 2004, the Company had a
net realized gain on security transactions of $2,460,065 and $0, respectively. For the six-month periods ended April 30, 2005 and 2004, the Company had a net change in unrealized depreciation on investments of $2,574,295 and $1,433,206,
respectively. 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, 2005 is the result of an increase in the overall valuation of the private investment funds. The net change in unrealized depreciation on investments for the six-month period ended April 30, 2004
is the result of an increase in the valuation of the Companys private investment funds. This was offset partially by the decline in the value of Curon Medical, Inc. (NASDAQ: CURN), a publicly-traded common stock held by the Company, which was
net of the effect of the decrease in discount rate applied to this security from 40% to 30% at October 31, 2003 and April 30, 2004, respectively.



For the three-month periods ended April 30, 2005 and 2004, the Company had a net realized gain on security transactions of $2,582,848 and $0,
respectively. For the three-month periods ended April 30, 2005 and 2004, the Company had a net change in unrealized depreciation on investments of $1,469,736 and ($1,949,253), respectively. 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, 2005 is the result of an
increase in the overall valuation of the private investment funds. The net change in unrealized depreciation on investments for the three-month period ended April 30, 2004 is the result of a decline in the value of Curon Medical, Inc. (NASDAQ:
CURN), a publicly-traded common stock held by the Company. This decline was partially offset by an increase in the overall valuation of the Companys private investment funds.



Investment Income and Expenses



For the six-month periods ended April 30, 2005, the Company had investment income of $127,259 and net operating expenses, net of expenses reimbursed by
the Managing Investment Adviser (as defined below), of $343,085, resulting in a net investment loss of ($215,826). In comparison, the Company had investment income of $69,699 and net operating expenses, net of expenses reimbursed by the Managing
Investment Adviser, of $416,396, resulting in net investment loss of ($346,697) for the six-month period ended April 30, 2004. The primary reason for the increase in investment income was an increase in short-term securities held by the Company as a
result of distributions paid to the Company by its private investment funds and a reduction in net expenses. The reduction in net expenses is principally



17



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attributable to lower managing investment adviser and administrative fees due to a decrease in net assets under management. This was partially offset by an
increase in professional fees and other expenses.



For the
three-month period ended April 30, 2005, the Company had investment income of $69,153 and net operating expenses, net of expenses reimbursed by the Managing Investment Adviser (as defined below), of $171,409, resulting in a net investment loss of
($102,256). In comparison, the Company had investment income of $36,192 and net operating expenses, net of expenses reimbursed by the Managing Investment Adviser, of $198,910, resulting in a net investment loss of ($162,718) for the similar period
ended April 30, 2004. The primary reason for the increase in investment income was an increase in interest income due to an increase in the amount of short-term securities held. Total expenses increased due to an increase in professional fees and
other expenses. This was partially offset by lower managing investment adviser fees and administration fees which resulted from a lower level of assets under management. Net expenses decreased as a result of a higher level of adjusted expense
reimbursement by the Managing Investment Adviser for the period ended April 30, 2005.



United States Trust Company of New York, acting through its registered investment advisory division, U.S. TrustNew York Asset Management Division, and U.S. Trust Company, N.A., acting through its registered
investment advisory division, U.S. Trust Company, N.A. Asset Management Division (together, the Managing Investment Adviser), provide investment management and administrative services required for the operation of the Company. The term
Managing Investment Adviser includes, where applicable, U.S. Trust Company, the entity that merged into U.S. Trust Company, N.A. on June 1, 2003 as described in Note 2 to Item 1 above. 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, 2005 and 2004, the Managing Investment Adviser earned $285,981 and $352,596 in management fees, respectively. This decrease is due to a decline in net assets under management.
In addition, for the six-month periods ended April 30, 2005 and 2004, there was no incentive fee payable by the Managing Investment Adviser. 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, 2005 and 2004, the Managing Investment Adviser reimbursed other operating
expenses of the Company in the amounts of $188,677 and $118,121, respectively, as a result of expenses incurred in excess of these limits.



For the three-month periods ended April 30, 2005 and 2004, the Managing Investment Adviser earned $146,823 and $167,085 in management fees, respectively.
This decrease is due to a decline in net assets under management. In addition, for the three-month periods ended April 30, 2005 and 2004, there was a decrease in allowance for the management incentive fee of $0 and $316,003, respectively. There is
no change in allowance for the management incentive fee for the three-month period ended April 30, 2005. There was a reversal of the incentive fee payable to the Company by the Managing Investment Adviser of $316,003 during the period ended April
30, 2004 due to a decrease in the value of the Companys portfolio company investments as of April 30, 2004. 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 30,2005 and 2004, the Managing Investment Adviser reimbursed other operating expenses of the
Company in the amounts of $132,778 and $47,145, respectively, as a result of expenses incurred in excess of these limits.



Net Assets



At April 30, 2005, the Companys net assets were $44,774,672 or a net asset value per common share of $228.76. This represents a decrease of
$6,942,882, or $35.47 per share, from net assets of $51,717,554, or a net asset value per common share of $264.23, at October 31, 2004. The decrease in net assets during the period is principally due to the distribution of $11,761,416, or $60.09 per
share, paid on December 9, 2004 to shareholders. This decrease was offset by an increase in realized gain and a decrease in unrealized depreciation primarily related to the Companys private investment funds.



18



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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.



At April 30, 2005, the Company held $260 in cash and $8,366,660 in short-term investments as compared to $328,296 in cash
and $13,051,488 in short-term investments at October 31, 2004. The decrease in cash and short-term investments during the period is primarily the result of a distribution of $11,761,416, or $60.09 per share, paid on December 9, 2004 to shareholders
of record as of December 6, 2004. During the six-month period ended April 30, 2005, the Company received proceeds from distributions from its private investment funds totaling approximately $7.2 million. 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, 2005. The Company has no additional capital commitment obligations to the private funds it has invested in. The Company made no
follow-on investments during the six-month period ended April 30, 2005.



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



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 76.7% of the Companys net assets at April 30, 2005. For the private investments held at April 30, 2005, changes to these estimates, i.e. changes in the valuations of these private investments, resulted in a $5.0
million increase 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 of
Directors, both 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 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 of Directors, shall determine such value based on its judgment of fair value on the appropriate date, less applicable charges, if any.



19



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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 76.7%
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, 2005 and at October 31, 2004, 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 April 30, 2005 (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 Exchange Act 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.



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



None.



|Item 5. | Other Information.
|------- | ------------------



None.



20



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|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.
|--- | --------------------



|    |  |                                                                                                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | On November 2, 2004, the Company filed a Current Report on Form 8-K to report under Item 4.01 a change in the Companys certifying accountant.                                                                                                                              
|    | 
|(2) |  | On November 4, 2004, the Company filed a Current Report on Form 8-K/A to report under Items 4.01 and 9.01 that the Company filed as an Exhibit the response of Ernst & Young LLP to the
disclosures made in the report on Form 8-K filed by the Company on November 2, 2004.
|    | 
|(3) |  | On November 29, 2004, the Company filed a Current Report on Form 8-K to report under Item 4.01 that Deloitte & Touche LLP was the Companys certifying accountant.                                                                                                          



21



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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, 2005 |  |  |  | By:                                    |  | /s/ Douglas A. Lindgren 
|                    |  |  |  |                                        |  |                          |  | Douglas A. Lindgren          
|                    |  |  |  |                                        |  |                          |  | Chief Executive Officer      
|                    |  |  | 
|Date: June 14, 2005 |  |  |  | By:                                    |  | /s/ Robert F. Aufenanger
|                    |  |  |  |                                        |  |                          |  | Robert F. Aufenanger         
|                    |  |  |  |                                        |  |                          |  | Treasurer                    
|                    |  |  |  |                                        |  |                          |  | (Principal Financial Officer)