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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10-Q/A

(Amendment No. 1)



(Mark One)

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



For the quarterly period ended July 31, 2004



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



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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 December 31, 2004, there were 195,730 shares of the Registrants Common Stock, $.01 par value per share, outstanding.



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EXPLANATORY NOTE



THE PURPOSE OF THIS AMENDMENT NO. 1 (THE AMENDMENT) TO THE
QUARTERLY REPORT ON FORM 10-Q OF EXCELSIOR PRIVATE EQUITY FUND II, INC. (THE REGISTRANT) FOR THE QUARTER ENDED JULY 31, 2004 (THE ORIGINAL FORM 10-Q) IS TO REFLECT THE RE-REVIEW OF THE REGISTRANTS FINANCIAL STATEMENTS FOR THE
QUARTER ENDED JULY 31, 2004, AND TO REVISE RELATED DISCLOSURE IN THE ORIGINAL FORM 10-Q. THE RE-REVIEW IS DESCRIBED IN NOTE 7 TO THE FINANCIAL STATEMENTS ACCOMPANYING THIS AMENDMENT. EXCEPT FOR ITEMS 1 OF PART I AND ITEM 6 OF PART II, NO OTHER
INFORMATION INCLUDED IN THE ORIGINAL FORM 10-Q IS AMENDED BY THIS AMENDMENT.



|         |  |                                                                                                       |  |         
|-------- |  | ----------------------------------------------------------------------------------------------------- |  | --------
|         |  | INDEX                                                                                                 |  | PAGE NO.
|PART I.  |  | FINANCIAL INFORMATION                                                                                 |  |         
|         |  |                                                                                                      
|Item 1.  |  | Financial Statements                                                                                  |  | 1       
|         |  |                                                                                                      
|         |  | Portfolio of Investments as of July 31, 2004 and October 31, 2003                                     |  | 2       
|         |  |                                                                                                      
|         |  | Statements of Assets and Liabilities at July 31, 2004 and October 31, 2003                            |  | 6       
|         |  |                                                                                                      
|         |  | Statements of Operations for the nine-month periods ended July 31, 2004 and July 31, 2003             |  | 7       
|         |  |                                                                                                      
|         |  | Statements of Operations for the three-month periods ended July 31, 2004 and July 31, 2003            |  | 8       
|         |  |                                                                                                      
|         |  | Statements of Changes in Net Assets for the three-month periods ended July 31, 2004 and July 31, 2003 |  | 9       
|         |  |                                                                                                      
|         |  | Statements of Cash Flows for the three-month periods ended July 31, 2004 and July 31, 2003            |  | 10      
|         |  |                                                                                                      
|         |  | Financial Highlights at July 31, 2004 and July 31, 2003                                               |  | 11      
|         |  |                                                                                                      
|         |  | Notes to Financial Statements                                                                         |  | 12      
|         |  |                                                                                                      
|PART II. |  | OTHER INFORMATION                                                                                     |  |         
|         |  |                                                                                                      
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                      |  | 17      





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PART I. FINANCIAL INFORMATION



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



Excelsior Private Equity Fund II, Inc.

Summarized Portfolio of
Investments (Unaudited)



|                                 |  |               |            |                 |        |  
|-------------------------------- |  | ------------- | ---------- | --------------- | ------ | -
|                                 |  | July 31, 2004 |           
|PORTFOLIO STRUCTURE              |  | Value         |            | % of Net Assets |       
|SHORT-TERM INVESTMENTS:          |  |               |            |                 |        |  
|AGENCY OBLIGATIONS               |  | $             | 7,348,755  |                 | 14.91  | %
|INVESTMENT COMPANIES             |  |               | 1,980,026  |                 | 4.02   | %
|PRIVATE INVESTMENT FUNDS         |  |               | 26,601,195 |                 | 53.96  | %
|PRIVATE AND PUBLIC COMPANIES     |  |               | 13,310,335 |                 | 27.00  | %
|                                 |  |               |            |                 |        |  
|TOTAL INVESTMENTS                |  |               | 49,240,311 |                 | 99.89  | %
|OTHER ASSETS & LIABILITIES (NET) |  |               | 53,217     |                 | 0.11   | %
|                                 |  |               |            |                 |        |  
|NET ASSETS                       |  | $             | 49,293,528 |                 | 100.00 | %
|                                 |  |               |            |                 |        |  



Excelsior Private Equity Fund II,
Inc.

Summarized Portfolio of Investments



|                                 |  |                  |            |                 |        |  
|-------------------------------- |  | ---------------- | ---------- | --------------- | ------ | -
|                                 |  | October 31, 2003 |           
|PORTFOLIO STRUCTURE              |  | Value            |            | % of Net Assets |       
|SHORT-TERM INVESTMENTS:          |  |                  |            |                 |        |  
|AGENCY OBLIGATIONS               |  | $                |           |                 | 0.00   | %
|INVESTMENT COMPANIES             |  |                  | 1,887,983  |                 | 3.80   | %
|PRIVATE INVESTMENT FUNDS         |  |                  | 29,828,304 |                 | 60.00  | %
|PRIVATE AND PUBLIC COMPANIES     |  |                  | 15,200,846 |                 | 30.57  | %
|                                 |  |                  |            |                 |        |  
|TOTAL INVESTMENTS                |  |                  | 46,917,133 |                 | 94.37  | %
|OTHER ASSETS & LIABILITIES (NET) |  |                  | 2,799,055  |                 | 5.63   | %
|                                 |  |                  |            |                 |        |  
|NET ASSETS                       |  | $                | 49,716,188 |                 | 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 July 31, 2004 (Unaudited)



|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|------------------- | -------------------------------------- | - |  | ---------------------------------------------------------------------------------------- | ----------------- | ----------- | ------------- | - | ----------
|Par Value           |                                        |   |  |                                                                                          | AcquisitionDate## |             | Value(Note 1)
|                    | AGENCY OBLIGATIONS 14.91%             |   |  |                                                                                          |                   |            
|$                   | 7,350,000                              |   |  | Federal National Mortgage Association Discount Note, 1.22%, 08/05/2004 (Cost $7,348,755) |                   |             |               | $ | 7,348,755 
|                    | PRIVATE INVESTMENT FUNDS #, @  53.96% |   |  |                                                                                          |                   |            
|                    |                                        |   | 
|OwnershipPercentage |                                        |   |  |                                                                                          |                   |             |              
|                    |                                        |   |  | Buyout Funds  33.11%                                                                    |                   |             |               |   |           
|                    | 0.97                                   | % |  | Brentwood Associates III, LP                                                             |                   | 06/99-10/02 |               |   | 4,041,896 
|                    | 1.88                                   | % |  | Broadview Capital Partners, LP                                                           |                   | 04/99-10/02 |               |   | 2,237,984 
|                    | 1.32                                   | % |  | Friedman, Fleischer & Lowe Capital Partners, LP                                          |                   | 01/99-10/02 |               |   | 5,745,516 
|                    | 1.66                                   | % |  | Quad-C Partners V, LP                                                                    |                   | 04/98-10/02 |               |   | 4,295,028 
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |   |  |                                                                                          |                   |             |               |   | 16,320,424
|                    |                                        |   |  | Early Stage Venture Funds  16.28%                                                       |                   |             |               |   |           
|                    | 1.71                                   | % |  | Advanced Technology Ventures V, LP                                                       |                   | 09/98-10/02 |               |   | 750,958   
|                    | 4.90                                   | % |  | Commonwealth Capital Ventures II, LP                                                    |                   | 01/99-10/02 |               |   | 1,848,567 
|                    | 3.96                                   | % |  | Communications Ventures III, LP                                                          |                   | 11/98-05/00 |               |   | 799,776   
|                    | 1.30                                   | % |  | Mayfield X, LP                                                                           |                   | 06/99-05/02 |               |   | 935,160   
|                    | 0.62                                   | % |  | Mayfield X, Annex                                                                        |                   | 07/02-10/02 |               |   | 209,989   
|                    | 8.70                                   | % |  | Mid-Atlantic Venture Fund III, LP                                                       |                   | 04/98-02/01 |               |   | 1,550,414 
|                    | 1.32                                   | % |  | Sevin Rosen Fund VI, LP                                                                  |                   | 03/98-10/02 |               |   | 1,161,534 
|                    | 2.12                                   | % |  | Trinity Ventures VI, LP                                                                  |                   | 09/98-10/02 |               |   | 769,850   
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |   |  |                                                                                          |                   |             |               |   | 8,026,248 
|                    |                                        |   |  | Varied Stage Venture Funds  4.57%                                                       |                   |             |               |   |           
|                    | 2.63                                   | % |  | Brand Equity Ventures, LP                                                                |                   | 03/98-10/01 |               |   | 532,498   
|                    | 2.64                                   | % |  | Morgenthaler Venture Partners V, LP                                                      |                   | 10/98-08/01 |               |   | 1,722,025 
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |   |  |                                                                                          |                   |             |               |   | 2,254,523 
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |   |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $47,944,925)                                        |                   |             |               |   | 26,601,195
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |   | 
|Shares/ParValue     |                                        |   |  |                                                                                          |                   |             |              
|                    | PRIVATE COMPANIES #  22.23%           |   |  |                                                                                          |                   |            
|                    | Preferred Stock @  17.32%             |   |  |                                                                                          |                   |            
|                    | Educational Services  7.18%           |   |  |                                                                                          |                   |            
|                    | 75,059                                 |   |  | Mosaica Education, Inc., Series C                                                       |                   | 08/01       |               |   | 3,537,722 
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |  
|                    | Internet Services  Business  10.14%  |   |  |                                                                                          |                   |            
|                    | 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 $20,119,425)                                                 |                   |             |               |   | 8,537,735 
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |  
|                    | Promissory Notes  4.91%               |   |  |                                                                                          |                   |            
|                    | Biotechnology  0.92%                  |   |  |                                                                                          |                   |            
|$                   | 451,412                                |   |  | Metrigen, Inc., 6.00%, 9/01/2009 @                                                       |                   | 07/03       |               |   | 451,412   
|                    |                                        |   |  |                                                                                          |                   |             |               |   |           
|                    |                                        |  
|                    | Educational Services  3.99%           |   |  |                                                                                          |                   |            
|$                   | 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   



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





2



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Excelsior Private Equity Fund II, Inc.

Portfolio of Investments July 31, 2004 (Unaudited)  (continued)



|                |                                               |  |                                                           |                   |               |                |   |           
|--------------- | --------------------------------------------- |  | --------------------------------------------------------- | ----------------- | ------------- | -------------- | - | ----------
|Shares/ParValue |                                               |  |                                                           | AcquisitionDate## |               | Value (Note 1)
|                |                                               |  |                                                           |                   |               |                | $ | 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 
|                |                                               |  |                                                           |                   |               |                |   |           
|                | PRIVATE COMPANIES # (Continued)               |  |                                                           |                   |               |               
|                | Warrants  0.00%                              |  |                                                           |                   |               |               
|                | Biotechnology  0.00%                         |  |                                                           |                   |               |               
|                | 62,326                                        |  | Metrigen, Inc.@                                           |                   | 07/03         |                | $ |          
|                |                                               |  |                                                           |                   |               |                |   |           
|                |                                               |  | Total Warrants (Cost $0)                                  |                   |               |                |   |          
|                |                                               |  |                                                           |                   |               |                |   |           
|                |                                               |  | TOTAL PRIVATE COMPANIES (Cost $25,956,104)                |                   |               |                |   | 10,957,747
|                |                                               |  |                                                           |                   |               |                |   |           
|                | PUBLIC COMPANIES @,,#  4.77%                |  |                                                           |                   |               |               
|                | Common Stock 4.77%                           |  |                                                           |                   |               |               
|                | Medical Devices  4.77%                       |  |                                                           |                   |               |               
|                | 2,352,588                                     |  | Curon Medical, Inc. *                                     |                   | 08/99 & 12/99 |                |   | 2,352,588 
|                |                                               |  |                                                           |                   |               |                |   |           
|                |                                               |  | Total Common Stock (Cost $6,089,144)                      |                   |               |                |   | 2,352,588 
|                |                                               |  |                                                           |                   |               |                |   |           
|                | Warrants  0.00%                              |  |                                                           |                   |               |               
|                | Medical Devices  0.00%                       |  |                                                           |                   |               |               
|                | 76,950                                        |  | Curon Medical, Inc.                                       |                   | 08/00         |                |   |          
|                |                                               |  |                                                           |                   |               |                |   |           
|                |                                               |  | Total Warrants (Cost $0)                                  |                   |               |                |   |          
|                |                                               |  |                                                           |                   |               |                |   |           
|                |                                               |  | TOTAL PUBLIC COMPANIES (Cost $6,089,144)                  |                   |               |                |   | 2,352,588 
|                |                                               |  |                                                           |                   |               |                |   |           
|                | INVESTMENT COMPANIES  4.02%                  |  |                                                           |                   |               |               
|                | 1,980,026                                     |  | Dreyfus Government Cash Management Fund (Cost $1,980,026) |                   |               |                |   | 1,980,026 
|                |                                               |  |                                                           |                   |               |                |   |           
|                | TOTAL INVESTMENTS (Cost $89,318,954)  99.89% |  |                                                           |                   |               | 49,240,311    
|                | OTHER ASSETS & LIABILITIES (NET)  0.11%      |  |                                                           |                   |               | 53,217        
|                |                                               |  |                                                           |                   |               |                |   |           
|                | NET ASSETS  100.00%                          |  |                                                           |                   | $             | 49,293,528    
|                |                                               |  |                                                           |                   |               |                |   |           

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| | At July 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 value of affiliated securities owned at July 31, 2004 was $16,257,904.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|# | Restricted as to public resale. Acquired between March 1, 1998 and July 31, 2004. Total cost of restricted securities at July 31, 2004 aggregated $79,990,173. Total value of
restricted securities owned at July 31, 2004 was $39,911,530 or 80.97% of net assets.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|* | Carrying value per unit reflects a 20% discount to the closing price.
|- | ---------------------------------------------------------------------



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, 2003



|                    |                                        |   |  |                                                                  |                   |             |                |   |           
|------------------- | -------------------------------------- | - |  | ---------------------------------------------------------------- | ----------------- | ----------- | -------------- | - | ----------
|OwnershipPercentage |                                        |   |  |                                                                  | AcquisitionDate## |             | Value (Note 1)
|                    | PRIVATE INVESTMENT FUNDS #, @  60.00% |   |  |                                                                  |                   |            
|                    | 1.83                                   | % |  | Advanced Technology Ventures V, LP                               |                   | 09/98-10/02 |                | $ | 1,170,894 
|                    | 2.63                                   | % |  | Brand Equity Ventures I, LP                                      |                   | 03/98-10/01 |                |   | 554,765   
|                    | 1.37                                   | % |  | Brentwood Associates III, LP                                     |                   | 06/99-10/02 |                |   | 4,725,483 
|                    | 2.51                                   | % |  | Broadview Capital Partners, LP                                   |                   | 04/99-10/02 |                |   | 2,253,166 
|                    | 5.73                                   | % |  | Commonwealth Capital Ventures II, LP                            |                   | 01/99-10/02 |                |   | 1,925,198 
|                    | 3.96                                   | % |  | Communications Ventures III, LP                                  |                   | 11/98-05/00 |                |   | 801,800   
|                    | 1.53                                   | % |  | Friedman, Fleischer & Lowe Capital Partners, LP                  |                   | 01/99-10/02 |                |   | 5,664,450 
|                    | 1.30                                   | % |  | Mayfield X, LP                                                   |                   | 06/99-05/02 |                |   | 882,768   
|                    | 1.42                                   | % |  | Mayfield X, Annex                                                |                   | 07/02-10/02 |                |   | 223,002   
|                    | 8.71                                   | % |  | Mid-Atlantic Venture Fund III, LP                               |                   | 04/98-02/01 |                |   | 1,774,031 
|                    | 2.64                                   | % |  | Morgenthaler Venture Partners V, LP                              |                   | 10/98-08/01 |                |   | 2,614,572 
|                    | 1.67                                   | % |  | Quad-C Partners V, LP                                            |                   | 04/98-10/02 |                |   | 5,177,939 
|                    | 1.34                                   | % |  | Sevin Rosen Fund VI, LP                                          |                   | 03/98-10/02 |                |   | 1,161,370 
|                    | 3.01                                   | % |  | Trinity Ventures VI, LP                                          |                   | 09/98-10/02 |                |   | 898,866   
|                    |                                        |   |  |                                                                  |                   |             |                |   |           
|                    |                                        |   |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $53,110,261)                |                   |             |                |   | 29,828,304
|                    |                                        |   |  |                                                                  |                   |             |                |   |           
|                    |                                        |   | 
|Shares/Par Value    |                                        |   |  |                                                                  |                   |             |               
|                    | PRIVATE COMPANIES #  22.04%           |   |  |                                                                  |                   |            
|                    | Preferred Stocks @  17.17%            |   |  |                                                                  |                   |            
|                    | Educational Services  7.11%           |   |  |                                                                  |                   |            
|                    | 75,059                                 |   |  | Mosaica Education, Inc., Series C                               |                   | 08/01       |                |   | 3,537,722 
|                    |                                        |   |  |                                                                  |                   |             |                |   |           
|                    | Internet Services  Business  10.06%  |   |  |                                                                  |                   |            
|                    | 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 $20,119,425)                         |                   |             |                |   | 8,537,735 
|                    | Promissory Notes  4.87%               |   |  |                                                                  |                   |            
|                    | Biotechnology  0.91%                  |   |  |                                                                  |                   |            
|$                   | 451,412                                |   |  | Metrigen, Inc., 6.00%, 9/01/2009 @                               |                   | 07/03       |                |   | 451,412   
|                    |                                        |   |  |                                                                  |                   |             |                |   |           
|                    | Educational Services  3.96%           |   |  |                                                                  |                   |            
|$                   | 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 
|                    |                                        |   |  |                                                                  |                   |             |                |   |           



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





4



---

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2003  (continued)



|                                              |  |                                                           |  |                   |            |                |           
|--------------------------------------------- |  | --------------------------------------------------------- |  | ----------------- | ---------- | -------------- | ----------
|Shares                                        |  |                                                           |  | AcquisitionDate## |            | 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 $25,956,104)                |  |                   |            |                | 10,957,747
|                                              |  |                                                           |  |                   |            |                |           
|PUBLIC COMPANIES @,#,  8.53%                |  |                                                           |  |                   |           
|Common Stock  8.53%                          |  |                                                           |  |                   |           
|Medical Devices  8.53%                       |  |                                                           |  |                   |           
|2,381,088                                     |  | Curon Medical, Inc. *                                     |  | 08/99             |            |                | 4,243,099 
|                                              |  |                                                           |  |                   |            |                |           
|                                              |  | Total Common Stock (Cost $6,124,144)                      |  |                   |            |                | 4,243,099 
|                                              |  |                                                           |  |                   |            |                |           
|Warrants  0.00%                              |  |                                                           |  |                   |           
|Medical Devices  0.00%                       |  |                                                           |  |                   |           
|76,950                                        |  | Curon Medical, Inc.                                       |  | 08/00             |            |                |          
|                                              |  |                                                           |  |                   |            |                |           
|                                              |  | Total Warrants (Cost $0)                                  |  |                   |            |                |          
|                                              |  |                                                           |  |                   |            |                |           
|                                              |  | TOTAL PUBLIC COMPANIES (Cost $6,124,144)                  |  |                   |            |                | 4,243,099 
|                                              |  |                                                           |  |                   |            |                |           
|INVESTMENT COMPANIES  3.80%                  |  |                                                           |  |                   |           
|1,887,983                                     |  | Dreyfus Government Cash Management Fund (Cost $1,887,983) |  |                   |            |                | 1,887,983 
|                                              |  |                                                           |  |                   |            |                |           
|TOTAL INVESTMENTS (Cost $87,078,492)  94.37% |  |                                                           |  |                   | 46,917,133
|OTHER ASSETS & LIABILITIES (NET)  5.63%      |  |                                                           |  |                   | 2,799,055 
|                                              |  |                                                           |  |                   |            |                |           
|NET ASSETS  100.00%                          |  |                                                           |  | $                 | 49,716,188
|                                              |  |                                                           |  |                   |            |                |           

---

| | At October 31, 2003, 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, 2003 was $18,448,663.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|# | Restricted as to public resale. Acquired between March 1, 1998 and July 31, 2003. Total cost of restricted securities at October 31, 2003 aggregated $85,190,509. Total value of
restricted securities owned at October 31, 2003 was $45,029,150 or 90.57% of net assets.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|* | Carrying value per unit reflects a 40% discount to the closing price.
|- | ---------------------------------------------------------------------



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



5



---

Excelsior Private Equity Fund II, Inc.

Statements of Assets and Liabilities



|                                                                                              |  |               |             |   |                 |   |             |  
|--------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | --------------- | - | ----------- | -
|                                                                                              |  | July 31, 2004 |             |   | October 31,2003 |  
|                                                                                              |  | (Unaudited)   |             |   |                 |  
|ASSETS:                                                                                       |  |               |             |   |                 |   |             |  
|Investments in unaffiliated issuers, at value (Cost $49,040,448 and $46,764,966 respectively) |  | $             | 32,982,402  |   |                 | $ | 28,468,470  |  
|Investments in affiliated issuers, at value (Cost $40,278,506 and $40,313,526 respectively)   |  |               | 16,257,909  |   |                 |   | 18,448,663  |  
|                                                                                              |  |               |             |   |                 |   |             |  
|Investments, at value (Cost $89,318,954 and $87,078,492 respectively) (Note 1)                |  | $             | 49,240,311  |   |                 | $ | 46,917,133  |  
|Cash                                                                                          |  |               | 21          |   |                 |   | 2,852,110   |  
|Receivable from investment advisor (Note 2)                                                   |  |               | 53,627      |   |                 |   | 85,833      |  
|Interest receivable                                                                           |  |               | 263,244     |   |                 |   | 196,706     |  
|Other assets                                                                                  |  |               | 24,223      |   |                 |   | 1,292       |  
|                                                                                              |  |               |             |   |                 |   |             |  
|Total Assets                                                                                  |  |               | 49,581,426  |   |                 |   | 50,053,074  |  
|LIABILITIES:                                                                                  |  |               |             |   |                 |   |             |  
|Management fees payable (Note 2)                                                              |  |               | 162,488     |   |                 |   | 181,784     |  
|Administration fees payable (Note 2)                                                          |  |               | 32,639      |   |                 |   | 14,318      |  
|Professional fees payable                                                                     |  |               | 43,548      |   |                 |   | 60,000      |  
|Directors fees payable (Note 2)                                                              |  |               | 44,959      |   |                 |   | 66,000      |  
|Accrued expenses and other payables                                                           |  |               | 4,264       |   |                 |   | 14,784      |  
|                                                                                              |  |               |             |   |                 |   |             |  
|Total Liabilities                                                                             |  |               | 287,898     |   |                 |   | 336,886     |  
|                                                                                              |  |               |             |   |                 |   |             |  
|NET ASSETS                                                                                    |  | $             | 49,293,528  |   |                 | $ | 49,716,188  |  
|                                                                                              |  |               |             |   |                 |   |             |  
|NET ASSETS consist of:                                                                        |  |               |             |   |                 |   |             |  
|Undistributed net investment loss                                                             |  | $             | (492,665    | ) |                 | $ |            |  
|Accumulated net realized loss on investments                                                  |  |               | (27,426,933 | ) |                 |   | (27,414,222 | )
|Net unrealized (depreciation) on investments                                                  |  |               | (40,078,643 | ) |                 |   | (40,161,359 | )
|Par value                                                                                     |  |               | 1,957       |   |                 |   | 1,957       |  
|Paid-in capital in excess of par value                                                        |  |               | 117,289,812 |   |                 |   | 117,289,812 |  
|                                                                                              |  |               |             |   |                 |   |             |  
|Total Net Assets                                                                              |  | $             | 49,293,528  |   |                 | $ | 49,716,188  |  
|                                                                                              |  |               |             |   |                 |   |             |  
|Shares of Common Stock Outstanding ($0.01 par value, 200,000 authorized)                      |  |               | 195,730     |   |                 |   | 195,730     |  
|NET ASSET VALUE PER SHARE                                                                     |  | $             | 251.84      |   |                 | $ | 254.00      |  
|                                                                                              |  |               |             |   |                 |   |             |  



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



6



---

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                 |  |                            |          |   |      |   |             |  
|---------------------------------------------------------------- |  | -------------------------- | -------- | - | ---- | - | ----------- | -
|                                                                 |  | Nine Months Ended July 31, |         
|                                                                 |  | 2004                       |          |   | 2003 |  
|INVESTMENT INCOME:                                               |  |                            |          |   |      |   |             |  
|Interest income from affiliated investments                      |  | $                          | 66,779   |   |      | $ | 66,779      |  
|Interest income from unaffiliated investments                    |  |                            | 33,494   |   |      |   | 91,756      |  
|Dividend income                                                  |  |                            | 13,908   |   |      |   | 17,603      |  
|                                                                 |  |                            |          |   |      |   |             |  
|Total Investment Income                                          |  |                            | 114,181  |   |      |   | 176,138     |  
|EXPENSES:                                                        |  |                            |          |   |      |   |             |  
|Managing investment adviser fees (Note 2)                        |  |                            | 511,965  |   |      |   | 540,053     |  
|Administration fees (Note 2)                                     |  |                            | 97,577   |   |      |   | 125,813     |  
|Professional fees                                                |  |                            | 93,630   |   |      |   | 99,246      |  
|Directors fees and expenses (Note 2)                            |  |                            | 44,959   |   |      |   | 44,876      |  
|Insurance expense                                                |  |                            | 23,435   |   |      |   | 45,967      |  
|Miscellaneous expenses                                           |  |                            | 7,028    |   |      |   | 27,939      |  
|                                                                 |  |                            |          |   |      |   |             |  
|Total Expenses                                                   |  |                            | 778,594  |   |      |   | 883,894     |  
|                                                                 |  |                            |          |   |      |   |             |  
|Expenses reimbursed by Managing Investment Adviser (Note 2)      |  |                            | (171,748 | ) |      |   | (236,884    | )
|                                                                 |  |                            |          |   |      |   |             |  
|Net Expenses                                                     |  |                            | 606,846  |   |      |   | 647,010     |  
|                                                                 |  |                            |          |   |      |   |             |  
|NET INVESTMENT (LOSS)                                            |  |                            | (492,665 | ) |      |   | (470,872    | )
|                                                                 |  |                            |          |   |      |   |             |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: (Note 1) |  |                            |          |   |      |   |             |  
|Net realized gain (loss) on affiliated investments               |  |                            | 10,146   |   |      |   | (13,552,184 | )
|Net realized (loss) on unaffiliated investments                  |  |                            | (22,857  | ) |      |   |            |  
|Net change in unrealized appreciation on investments             |  |                            | 82,716   |   |      |   | 13,881,932  |  
|                                                                 |  |                            |          |   |      |   |             |  
|NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS                  |  |                            | 70,005   |   |      |   | 329,748     |  
|                                                                 |  |                            |          |   |      |   |             |  
|NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS           |  | $                          | (422,660 | ) |      | $ | (141,124    | )
|                                                                 |  |                            |          |   |      |   |             |  



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 EndedJuly 31, |           
|                                                                    |  | 2004                       |            |   | 2003 |  
|INVESTMENT INCOME:                                                  |  |                            |            |   |      |   |            |  
|Interest income from affiliated investments                         |  | $                          | 22,308     |   |      | $ | 22,308     |  
|Interest income from unaffiliated investments                       |  |                            | 16,796     |   |      |   | 33,198     |  
|Dividend income                                                     |  |                            | 5,378      |   |      |   | 5,062      |  
|                                                                    |  |                            |            |   |      |   |            |  
|Total Investment Income                                             |  |                            | 44,482     |   |      |   | 60,568     |  
|                                                                    |  |                           
|EXPENSES:                                                           |  |                            |            |   |      |   |            |  
|Managing investment adviser fees (Note 2)                           |  |                            | 159,369    |   |      |   | 179,985    |  
|Administration fees (Note 2)                                        |  |                            | 24,872     |   |      |   | 42,087     |  
|Professional fees                                                   |  |                            | 31,420     |   |      |   | 18,415     |  
|Directors fees and expenses (Note 2)                               |  |                            | 15,082     |   |      |   | 15,123     |  
|Insurance expense                                                   |  |                            | 7,812      |   |      |   | 13,640     |  
|Miscellaneous expenses                                              |  |                            | 5,522      |   |      |   | 9,195      |  
|                                                                    |  |                            |            |   |      |   |            |  
|Total Expenses                                                      |  |                            | 244,077    |   |      |   | 278,445    |  
|                                                                    |  |                            |            |   |      |   |            |  
|Expenses reimbursed by Managing Investment Adviser (Note 2)         |  |                            | (53,627    | ) |      |   | (62,505    | )
|                                                                    |  |                            |            |   |      |   |            |  
|Net Expenses                                                        |  |                            | 190,450    |   |      |   | 215,940    |  
|                                                                    |  |                            |            |   |      |   |            |  
|NET INVESTMENT (LOSS)                                               |  |                            | (145,968   | ) |      |   | (155,372   | )
|                                                                    |  |                            |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: (Note 1)    |  |                            |            |   |      |   |            |  
|Net realized gain (loss) on affiliated investments                  |  |                            | 10,146     |   |      |   | (6,229,306 | )
|Net realized (loss) on unaffiliated investments                     |  |                            | (22,857    | ) |      |   |           |  
|Net change in unrealized (depreciation) appreciation on investments |  |                            | (1,350,490 | ) |      |   | 8,090,276  |  
|                                                                    |  |                            |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS              |  |                            | (1,363,201 | ) |      |   | 1,860,970  |  
|                                                                    |  |                            |            |   |      |   |            |  
|NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS     |  | $                          | (1,509,169 | ) |      | $ | 1,705,598  |  
|                                                                    |  |                            |            |   |      |   |            |  



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)



|                                                                                                     |  |                           |            |   |      |   |             |  
|---------------------------------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ---- | - | ----------- | -
|                                                                                                     |  | Nine Months EndedJuly 31, |           
|                                                                                                     |  | 2004                      |            |   | 2003 |  
|OPERATIONS:                                                                                          |  |                           |            |   |      |   |             |  
|Net investment loss                                                                                  |  | $                         | (492,665   | ) |      | $ | (470,872    | )
|Net realized (loss) on investments                                                                   |  |                           | (12,711    | ) |      |   | (13,552,184 | )
|Net change in unrealized appreciation on investments                                                 |  |                           | 82,716     |   |      |   | 13,881,932  |  
|                                                                                                     |  |                           |            |   |      |   |             |  
|Net (decrease) in net assets resulting from operations                                               |  |                           | (422,660   | ) |      |   | (141,124    | )
|                                                                                                     |  |                           |            |   |      |   |             |  
|Net increase (decrease) in net assets                                                                |  |                           | (422,660   | ) |      |   | (141,124    | )
|                                                                                                     |  |                           |            |   |      |   |             |  
|NET ASSETS:                                                                                          |  |                           |            |   |      |   |             |  
|Beginning of period                                                                                  |  |                           | 49,716,188 |   |      |   | 57,683,842  |  
|                                                                                                     |  |                           |            |   |      |   |             |  
|End of period (including accumulated net investment loss of $(492,665) and $(470,872), respectively) |  | $                         | 49,293,528 |   |      | $ | 57,542,718  |  
|                                                                                                     |  |                           |            |   |      |   |             |  



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



9



---

Excelsior Private Equity Fund II, Inc.

Statements of Cash Flows (Unaudited)



|                                                                                                                                        |  |                           |            |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ---- | - | ----------- | -
|                                                                                                                                        |  | Nine Months EndedJuly 31, |           
|                                                                                                                                        |  | 2004                      |            |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                   |  |                           |            |   |      |   |             |  
|Net (decrease) in net assets resulting from operations                                                                                  |  | $                         | (422,660   | ) |      | $ | (141,124    | )
|Adjustments to reconcile net (decrease) in net assets resulting from operations to net cash provided by (used in) operating
activities: |  |                           |            |   |      |   |             |  
|Net change in unrealized (appreciation) on investments                                                                                  |  |                           | (82,716    | ) |      |   | (13,881,932 | )
|Net increase in short-term investments                                                                                                  |  |                           | (7,440,798 | ) |      |   | (4,375,635  | )
|Proceeds received from the sale of investments and distributions received from private investment funds                                 |  |                           | 5,187,625  |   |      |   | 3,820,946   |  
|Net realized loss on investments                                                                                                        |  |                           | 12,711     |   |      |   | 13,552,184  |  
|Decrease in receivable from investment adviser                                                                                          |  |                           | 32,206     |   |      |   | 1,379,448   |  
|Increase in interest receivable                                                                                                         |  |                           | (66,538    | ) |      |   | (64,586     | )
|Liquidation of escrow receivable                                                                                                        |  |                           |           |   |      |   | 1,710,325   |  
|Increase in other assets                                                                                                                |  |                           | (22,931    | ) |      |   | 37,896      |  
|Decrease in management fees payable                                                                                                     |  |                           | (19,296    | ) |      |   | (11,643     | )
|Decrease in directors fees payable                                                                                                     |  |                           | (21,041    | ) |      |   | (15,124     | )
|Decrease in other expenses payable                                                                                                      |  |                           | (8,651     | ) |      |   | (131,788    | )
|                                                                                                                                        |  |                           |            |   |      |   |             |  
|Net cash provided by (used in) operating activities                                                                                     |  |                           | (2,852,089 | ) |      |   | 1,878,967   |  
|                                                                                                                                        |  |                           |            |   |      |   |             |  
|Net increase (decrease) in cash                                                                                                         |  |                           | (2,852,089 | ) |      |   | 1,878,967   |  
|                                                                                                                                        |  |                           |            |   |      |   |             |  
|Cash at beginning of period                                                                                                             |  |                           | 2,852,110  |   |      |   |            |  
|                                                                                                                                        |  |                           |            |   |      |   |             |  
|Cash at end of period                                                                                                                   |  | $                         | 21         |   |      | $ | 1,878,967   |  
|                                                                                                                                        |  |                           |            |   |      |   |             |  
|SUPPLEMENTAL INFORMATION:                                                                                                               |  |                           |            |   |      |   |             |  
|Non-cash distributions received from private investments funds:                                                                         |  | $                         | 508,171    |   |      | $ | 0           |  



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)



|                                                |  |                                |        |    |                                 |   |        |   
|----------------------------------------------- |  | ------------------------------ | ------ | -- | ------------------------------- | - | ------ | --
|                                                |  | Nine Months EndedJuly 31, 2004 |        |    | Nine Months Ended July 31, 2003 |  
|NET ASSET VALUE, BEGINNING OF PERIOD.           |  | $                              | 254.00 |    |                                 | $ | 294.71 |   
|NET INCOME (LOSS) FROM INVESTMENT OPERATIONS    |  |                                |        |    |                                 |   |        |   
|Net investment loss                             |  |                                | (2.52  | )  |                                 |   | (2.41  | ) 
|Net realized and unrealized gain on investments |  |                                | 0.36   |    |                                 |   | 1.69   |   
|                                                |  |                                |        |    |                                 |   |        |   
|Total from Investment Operations                |  |                                | (2.16  | )  |                                 |   | (0.72  | ) 
|                                                |  |                                |        |    |                                 |   |        |   
|NET ASSET VALUE, END OF PERIOD                  |  | $                              | 251.84 |    |                                 | $ | 293.99 |   
|                                                |  |                                |        |    |                                 |   |        |   
|TOTAL NET ASSET VALUE RETURN (3) (4)            |  |                                | (0.85  | %) |                                 |   | (0.24  | )%
|                                                |  |                               
|Ratios and supplemental data:                   |  |                                |        |    |                                 |   |        |   
|Net assets, end of period (thousands)           |  | $                              | 49,294 |    |                                 | $ | 57,543 |   
|Ratios to average net assets (2)                |  |                                |        |    |                                 |   |        |   
|Gross expenses (5)                              |  |                                | 2.05   | %  |                                 |   | 2.07   | % 
|Net expenses                                    |  |                                | 1.60   | %  |                                 |   | 1.51   | % 
|Net investment loss                             |  |                                | (1.30  | )% |                                 |   | (1.10  | )%
|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



July 31, 2004 (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 any such investee securities be registered.



The following is a summary of the Companys significant accounting policies. Such policies are in conformity with U.S. generally accepted accounting
principles for investment companies and are consistently followed in the preparation of the financial statements. U.S. generally accepted accounting principles 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, 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 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



12



---

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 July 31, 2004 and October 31, 2003, these contributions paid in advance totaled $4,679,968, or 9.5% and 9.4% of net assets, respectively, and are included in investments on the statement of assets and
liabilities. These contributions paid in advance are non-income producing.



At July 31, 2004 and October 31, 2003, market quotations were not readily available for securities valued at $37,558,942 or 76.19% of net assets and $40,786,051 or 82.04% 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 enters into agreements to purchase securities
and to resell them at a future date. It is the Companys policy to take receipt of securities purchased and to ensure that the market value of the collateral including accrued interest is sufficient to protect the Company from losses incurred
in the event the counterparty does not repurchase the securities. If the counterparty defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the
collateral by the Company may be delayed or limited.



(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, 2003, 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 $40,794,739 available for income tax purposes, to be applied against future net realized gains, if any, after October 31, 2003. 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.



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 nine-month periods ended
July 31, 2004 and July 31, 2003.



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, 2003 and July 31, 2004, the Company had not received information to determine the
tax cost of the Private Investment Funds as of October 31, 2003 and July 31, 2004, and therefore to determine the Companys unrealized gain or loss on a tax basis. At July 31, 2004, the cost of all other investments for federal tax purposes was
$41,374,029, and those investments had a tax basis net unrealized depreciation of $18,734,913, consisting of gross appreciation of $13 and gross depreciation of $18,734,926. At October 31, 2003, the cost of all other investments for federal tax
purposes was $33,968,231, and those investments had a tax basis net unrealized depreciation of $16,879,402, consisting of gross appreciation of $13 and gross depreciation of $16,879,415. There is no appreciation or depreciation for tax purposes on
the Investment Companies.



13



---

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 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.



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. As of July 31, 2004 and October 31, 2003, $162,488 and $181,784, 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 nine months ended July 31, 2004 and
July 31, 2003, no incentive fee was earned by and payable to the Managing Investment Adviser.



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



The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses of the Company, exclusive of management fees, to the
extent they exceed 0.25% of the Companys average net assets. This reimbursement amounted to $171,748 and $236,884, for the nine month periods ended July 31, 2004 and July 31, 2003, 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.



During the year ended October 31, 2003, the Company executed a sale of 94,430 shares of Pivotal Corporation common stock through Charles Schwab Strategic Trading Group (CSSTG), an affiliate of the Company.
As part of this transaction, CSSTG received $1,889 in brokerage commissions.



14



---

Note 3  Purchases and Sales of Securities



Excluding short-term investments, the Companys purchases and sales of securities, including distributions received
from Private Investment Funds, for the nine-month periods ended July 31, 2004, and July 31, 2003 were as follows:



|                                 |  |               |  |             
|-------------------------------- |  | ------------- |  | ------------
|Nine-Month Period Ended July
31, |  | Purchases ($) |  | Proceeds ($)
|2004                             |  |              |  | 5,187,625   
|2003                             |  |              |  | 3,820,946   



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 nine-month period ended July 31, 2004 and the year ended October 31, 2003. Transactions with
companies which are or were affiliates are as follows:



|                                                                |  |                                                            |           |   |                       |   |                                         |  |                          |   |          |   |                    |  |                                                         |        |  |                             |        |  |   |           |   |  |   |           
|--------------------------------------------------------------- |  | ---------------------------------------------------------- | --------- | - | --------------------- | - | --------------------------------------- |  | ------------------------ | - | -------- | - | ------------------ |  | ------------------------------------------------------- | ------ |  | --------------------------- | ------ |  | - | --------- | - |  | - | ----------
|                                                                |  |                                                            |           |   |                       |   | For the Nine Months Ended July 31, 2004 |  |                          |   |          |  
|Name of Investment                                              |  | Shares/ PrincipalAmount/Percentage Held at October 31,2003 |           |   | October 31,2003 Value |   | ConversionCost                          |  | Sales/ConversionProceeds |   | Interest |   | RealizedGain(Loss) |  | Shares/ PrincipalAmount/Percentage Held atJuly 31, 2004 |        |  | July 31, 2004Value (Note 1)
|Affiliated Companies                                            |  |                                                            |           |   |                       |   |                                         |  |                          |   |          |   |                    |  |                                                         |        |  |                             |        |  |   |           |   |  |   |           
|Mid - Atlantic Venture Fund III, LP                             |  |                                                            | 8.71      | % |                       | $ | 1,774,031                               |  | $                        |  |          | $ |                   |  | $                                                       |       |  | $                           |       |  |   | 8.70      | % |  | $ | 1,550,414 
|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      | % |  |   | 1,848,567 
|Curon Medical, Inc., Common Stock                               |  |                                                            | 2,381,088 |   |                       |   | 4,243,099                               |  |                          |  |          |   | 14,687             |  |                                                         |       |  |                             | 10,146 |  |   | 2,352,588 |   |  |   | 2,352,588 
|Curon Medical, Inc., Warrants                                   |  |                                                            | 76,950    |   |                       |   |                                        |  |                          |  |          |   |                   |  |                                                         |       |  |                             |       |  |   | 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                                 |  |                          |  |          |   |                   |  |                                                         | 66,779 |  |                             |       |  | $ | 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                              |  | $                        |  |          | $ | 14,687             |  | $                                                       | 66,779 |  | $                           | 10,146 |  |   |           |   |  | $ | 16,257,904



15



---

|                                                                |  |                                                            |           |   |                       |   |                                     |  |                          |   |          |   |                     |  |   |                                                           |  |   |                               |   |  |   |           |   |  |   |           
|--------------------------------------------------------------- |  | ---------------------------------------------------------- | --------- | - | --------------------- | - | ----------------------------------- |  | ------------------------ | - | -------- | - | ------------------- |  | - | --------------------------------------------------------- |  | - | ----------------------------- | - |  | - | --------- | - |  | - | ----------
|                                                                |  |                                                            |           |   |                       |   | For the Year Ended October 31, 2003 |  |                          |   |          |   |                    
|Name of Investment                                              |  | Shares/ PrincipalAmount/Percentage Held at October 31,2002 |           |   | October 31,2002 Value |   | ConversionCost                      |  | Sales/ConversionProceeds |   | Interest |   | Realized Gain(Loss) |  |   | Shares/ PrincipalAmount/Percentage Held atOctober 31,2003 |  |   | October 31,2003 Value(Note 1)
|Affiliated Companies                                            |  |                                                            |           |   |                       |   |                                     |  |                          |   |          |   |                     |  |   |                                                           |  |   |                               |   |  |   |           |   |  |   |           
|Cardiac Science, Inc., Common Stock *                           |  |                                                            | 840,484   |   |                       | $ | 1,421,986                           |  | $                        |  |          | $ | 1,776,246           |  | $ |                                                          |  | $ | 538,331                       |   |  |   |          |   |  | $ |          
|Mid - Atlantic Venture Fund III, LP                             |  |                                                            | 8.71      | % |                       |   | 2,337,915                           |  |                          |  |          |   | 87,418              |  |   |                                                          |  |   |                              |   |  |   | 8.71      | % |  |   | 1,774,031 
|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      | % |                       |   | 2,019,502                           |  |                          |  |          |   |                    |  |   |                                                          |  |   |                              |   |  |   | 5.73      | % |  |   | 1,925,198 
|Curon Medical, Inc., Common Stock                               |  |                                                            | 2,381,088 |   |                       |   | 928,624                             |  |                          |  |          |   |                    |  |   |                                                          |  |   |                              |   |  |   | 2,381,088 |   |  |   | 4,243,099 
|Curon Medical, Inc., Warrants                                   |  |                                                            | 76,950    |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   |                              |   |  |   | 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                             |  |                          |  |          |   |                    |  |   | 89,196                                                    |  |   |                              |   |  | $ | 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   
|Protogene Laboratories, Inc., Preferred Series B                |  |                                                            | 7,100,000 |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   | (5,122,497                    | ) |  |   |          |   |  |   |          
|Protogene Laboratories, Inc., Promissory Note                   |  | $                                                          | 2,140,000 |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   | (2,140,000                    | ) |  |   |          |   |  |   |          
|ReleaseNow, Inc. /Release Software Corp. Series D               |  |                                                            | 1,676,229 |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   | (5,850,039                    | ) |  |   |          |   |  |   |          
|ReleaseNow, Inc., Preferred Series E                            |  |                                                            | 115,000   |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   | (460,000                      | ) |  |   |          |   |  |   |          
|ReleaseNow, Inc., Preferred Series F                            |  |                                                            | 100,000   |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   | (500,000                      | ) |  |   |          |   |  |   |          
|ReleaseNow, Inc., Preferred Series G                            |  |                                                            | 176,000   |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   | (880,000                      | ) |  |   |          |   |  |   |          
|ReleaseNow, Inc., Promissory Note                               |  | $                                                          | 133,333   |   |                       |   |                                    |  |                          |  |          |   | 65,850              |  |   |                                                          |  |   | (67,483                       | ) |  |   |          |   |  |   |          
|ReleaseNow, Inc., Promissory Note                               |  | $                                                          | 133,333   |   |                       |   |                                    |  |                          |  |          |   |                    |  |   |                                                          |  |   | (133,333                      | ) |  |   |          |   |  |   |          
|                                                                |  |                                                            |           |   |                       |   |                                     |  |                          |   |          |   |                     |  |   |                                                           |  |   |                               |   |  |   |           |   |  |   |           
|Total Non Controlled Affiliates                                 |  |                                                            |           |   |                       | $ | 17,214,362                          |  | $                        |  |          | $ | 1,929,514           |  | $ | 89,196                                                    |  | $ | (14,615,021                   | ) |  |   |           |   |  | $ | 18,448,663



|* | Cardiac Science, Inc. was an affiliated company prior to October 31, 2002 but was not an affiliated company as of October 31, 2002.
|- | -----------------------------------------------------------------------------------------------------------------------------------



Note 5  Pending Litigation



The Managing Investment Adviser was contacted in September, 2003 by the
Office of the New York State Attorney General and the Securities and Exchange Commission in connection with the investigation of market timing and late trading practices in the mutual fund industry. The Managing Investment
Adviser has also been contacted by the Attorney General of the State of West Virginia with inquiries regarding the same subject matter. As disclosed previously by the Managing Investment Adviser and its affiliates, 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 Adviser. 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, with certain of its affiliates, has also been named in five class action lawsuits which allege that the Managing
Investment Adviser allowed certain parties to engage in illegal and improper trading practices which have caused financial injury to the shareholders of certain mutual funds managed by the Managing Investment Adviser. 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 actions have all been transferred by the Judicial Panel on
Multi-District Litigation to the United States District Court for the District of Maryland, for coordinated or consolidated pre-trial proceedings. The Managing Investment Adviser expects that the derivative actions will ultimately also be
consolidated in the same matter before the District Court.



While the ultimate outcome of these matters cannot be predicted with any certainty at this time, based upon currently available information, the Managing Investment Adviser believes that the pending private lawsuits and the pending
investigations are not likely to materially affect its ability to provide investment management services to the Company. The Company is not a subject of the investigations nor party to the lawsuits described above.



Note 6  Guarantees



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



16



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Note 7  Subsequent Events



Between August 24 and August 30, 2004, the Company liquidated all of its remaining shares of Curon Medical Inc. common
stock, receiving net proceeds of $1,847,012. A realized loss in the amount of $4,253,235 was recorded in August 2004.



On November 23, 2004, the Company engaged Deloitte & Touche, LLP (D&T) as the Companys independent public accountants 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 Adviser.



On December 16, 2004, Charles Schwab Corporation (Schwab) entered into an agreement with the Company and other funds managed by the Adviser whereby Schwab will fund a reserve account to be held by the Adviser or its affiliate.
This reserve account was established so that the Company and other funds managed by the 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 Adviser or their respective shareholders. Schwab is an affiliate of the Companys Adviser. In consideration of the funding of the
reserve account, the Company and the other funds managed by the 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.



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.



PART II. OTHER INFORMATION



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



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



|     |  |                                                                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|15   |  | Report of Independent Registered Public Accounting Firm.                                                                                          
|     | 
|31.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|     | 
|31.2 |  | Certification of Treasurer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.              
|     | 
|32   |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                           



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



None.



17



---

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: February 4, 2005 |  |  |  | By:                                    |  | /s/ Douglas A. Lindgren 
|                       |  |  |  |                                        |  |                          |  | Douglas A. Lindgren          
|                       |  |  |  |                                        |  |                          |  | Chief Executive Officer      
|                       |  |  | 
|Date: February 4, 2005 |  |  |  | By:                                    |  | /s/ Robert F. Aufenanger
|                       |  |  |  |                                        |  |                          |  | Robert F. Aufenanger         
|                       |  |  |  |                                        |  |                          |  | Treasurer                    
|                       |  |  |  |                                        |  |                          |  | (Principal Financial Officer)