##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



---



FORM 10-Q



(Mark
One)

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



For the quarterly period ended July 31, 2005



OR



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



For the transition period from
 to



Commission file number 000-22277



EXCELSIOR PRIVATE EQUITY FUND II, INC.

(Exact Name of Registrant as Specified in Its Charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|MARYLAND                                                       |  | 22-3510108                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|225 High Ridge Road Stamford, CT         |  | 06905     
|(Address of Principal Executive Offices) |  | (Zip Code)



Registrants
Telephone Number, Including Area Code (203) 352-4400



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

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



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



Indicate by check mark whether the Registrant is an accelerated filer (as
defined by Rule 12b-2 of the Act). Yes ̈No x



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



As of July 31, 2005, there were 195,730 shares of the Registrants Common Stock, $.01 par value per share, outstanding.



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##### Table of Contents

EXCELSIOR PRIVATE EQUITY FUND II, INC.



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



|         |  |                                                                                                      |  |         
|-------- |  | ---------------------------------------------------------------------------------------------------- |  | --------
|         |  | INDEX                                                                                                |  | PAGE NO.
|         |  |                                                                                                     
|PART I.  |  | FINANCIAL INFORMATION                                                                                |  |         
|         |  |                                                                                                     
|Item 1.  |  | Financial Statements                                                                                 |  | 1       
|         |  |                                                                                                     
|         |  | Portfolios of Investments as of July 31, 2005 and October 31, 2004                                   |  | 2       
|         |  |                                                                                                     
|         |  | Statements of Assets and Liabilities at July 31, 2005 and October 31, 2004                           |  | 6       
|         |  |                                                                                                     
|         |  | Statements of Operations for the nine-month periods ended July 31, 2005 and July 31, 2004            |  | 7       
|         |  |                                                                                                     
|         |  | Statements of Operations for the three-month periods ended July 31, 2005 and July 31, 2004           |  | 8       
|         |  |                                                                                                     
|         |  | Statements of Changes in Net Assets for the nine-month periods ended July 31, 2005 and July 31, 2004 |  | 9       
|         |  |                                                                                                     
|         |  | Statements of Cash Flows for the nine-month periods ended July 31, 2005 and July 31, 2004            |  | 10      
|         |  |                                                                                                     
|         |  | Financial Highlights for the nine month periods ended July 31, 2005 and July 31, 2004                |  | 11      
|         |  |                                                                                                     
|         |  | Notes to Financial Statements                                                                        |  | 12      
|         |  |                                                                                                     
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                |  | 18      
|         |  |                                                                                                     
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                           |  | 21      
|         |  |                                                                                                     
|Item 4.  |  | Controls and Procedures                                                                              |  | 21      
|         |  |                                                                                                     
|PART II. |  | OTHER INFORMATION                                                                                    |  |         
|         |  |                                                                                                     
|Item 1.  |  | Legal Proceedings                                                                                    |  | 21      
|         |  |                                                                                                     
|Item 2.  |  | Changes in Securities and Use of Proceeds                                                            |  | 21      
|         |  |                                                                                                     
|Item 3.  |  | Defaults Upon Senior Securities                                                                      |  | 21      
|         |  |                                                                                                     
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                  |  | 21      
|         |  |                                                                                                     
|Item 5.  |  | Other Information                                                                                    |  | 21      
|         |  |                                                                                                     
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                     |  | 22      



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##### Table of Contents

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



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



Excelsior Private Equity Fund II, Inc.

Portfolio of Investments
(Unaudited)



|                                 |  |               |            |                 |        |  
|-------------------------------- |  | ------------- | ---------- | --------------- | ------ | -
|                                 |  | July 31, 2005 |           
|                                 |  | Value         |            | % of Net Assets |       
|PORTFOLIO STRUCTURE              |  |               |            |                 |        |  
|                                 |  |              
|SHORT-TERM INVESTMENTS:          |  |               |            |                 |        |  
|MONEY MARKET INSTRUMENTS         |  | $             | 10,613,146 |                 | 24.15  | %
|INVESTMENT COMPANIES             |  |               | 960,523    |                 | 2.19   | %
|                                 |  |               |            |                 |        |  
|TOTAL SHORT-TERM INVESTMENTS     |  |               | 11,573,669 |                 | 26.34  | %
|PRIVATE INVESTMENT FUNDS         |  |               | 20,898,530 |                 | 47.55  | %
|PRIVATE COMPANIES                |  |               | 10,957,747 |                 | 24.93  | %
|                                 |  |               |            |                 |        |  
|TOTAL INVESTMENTS                |  |               | 43,429,946 |                 | 98.82  | %
|OTHER ASSETS & LIABILITIES (NET) |  |               | 519,230    |                 | 1.18   | %
|                                 |  |               |            |                 |        |  
|NET ASSETS                       |  | $             | 43,949,176 |                 | 100.00 | %
|                                 |  |               |            |                 |        |  



Excelsior Private Equity Fund II,
Inc.

Portfolio of Investments



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



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



1



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments July 31, 2005 (Unaudited)



|                    |                                        |  |                                                                         |                    |             |                |   |           
|------------------- | -------------------------------------- |  | ----------------------------------------------------------------------- | ------------------ | ----------- | -------------- | - | ----------
|Par Value           |                                        |  |                                                                         | Acquisition Date## |             | Value (Note 1)
|                    | MONEY MARKET INSTRUMENTS  24.15%     
|$                   | 1,000,000                              |  | Danske Commercial Paper, 3.26%, 8/1/05 (Cost $1,000,000)                |                    |             |                | $ | 1,000,000 
|                    | 845,000                                |  | UBS Financial Commercial Paper, 3.25%, 8/5/05 (Cost $844,695)           |                    |             |                |   | 844,695   
|                    | 1,000,000                              |  | First Tennessee Bank CD, 3.31%, 8/10/05 (Cost $1,000,000)               |                    |             |                |   | 1,000,000 
|                    | 1,000,000                              |  | Morgan Stanley Commercial Paper, 3.31%, 8/10/05 (Cost $999,172)         |                    |             |                |   | 999,172   
|                    | 1,000,000                              |  | Dexia Delaware Commercial Paper, 3.29%, 8/12/05 (Cost $998,995)         |                    |             |                |   | 998,995   
|                    | 1,000,000                              |  | Royal Bank of Scotland Commercial Paper, 3.28%, 8/12/05 (Cost $998,998) |                    |             |                |   | 998,998   
|                    | 3,775,000                              |  | Federal Home Loan Bank Discount Note, 3.22%, 8/12/05 (Cost $3,771,286)  |                    |             |                |   | 3,771,286 
|                    | 1,000,000                              |  | Washington Mutual Bank Note, 3.40%, 9/6/05 (Cost $1,000,000)            |                    |             |                |   | 1,000,000 
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    |                                        |  | TOTAL MONEY MARKET INSTRUMENTS (Cost $10,613,146)                       |                    |             |                |   | 10,613,146
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    | PRIVATE INVESTMENT FUNDS #, @  47.55%
|                    |                                        |  |                                                                        
|OwnershipPercentage |                                        |  |                                                                         |                    |             |               
|                    | 1.71%                                  |  | Advanced Technology Ventures V, LP                                      |                    | 09/98-10/02 |                |   | 681,062   
|                    | 2.63%                                  |  | Brand Equity Ventures I, LP                                             |                    | 03/98-10/01 |                |   | 603,232   
|                    | 0.93%                                  |  | Brentwood Associates III, LP                                            |                    | 06/99-10/02 |                |   | 5,062,399 
|                    | 1.98%                                  |  | Broadview Capital Partners, LP                                          |                    | 04/99-10/02 |                |   | 2,029,910 
|                    | 4.89%                                  |  | Commonwealth Capital Ventures II, LP                                    |                    | 01/99-10/02 |                |   | 2,013,875 
|                    | 3.96%                                  |  | Communications Ventures III, LP                                         |                    | 11/98-05/00 |                |   | 435,355   
|                    | 1.32%                                  |  | Friedman, Fleischer & Lowe Capital Partners, LP                         |                    | 01/99-10/02 |                |   | 2,894,800 
|                    | 1.21%                                  |  | Mayfield X, LP                                                          |                    | 06/99-05/02 |                |   | 829,170   
|                    | 0.62%                                  |  | Mayfield X, Annex                                                       |                    | 07/02-10/02 |                |   | 190,728   
|                    | 8.71%                                  |  | Mid-Atlantic Venture Fund III, LP                                      |                    | 04/98-02/01 |                |   | 2,121,068 
|                    | 2.64%                                  |  | Morgenthaler Venture Partners V, LP                                     |                    | 10/98-08/01 |                |   | 720,784   
|                    | 0.79%                                  |  | Quad-C Partners V, LP                                                   |                    | 04/98-10/02 |                |   | 1,878,187 
|                    | 1.36%                                  |  | Sevin Rosen Fund VI, LP                                                 |                    | 03/98-10/02 |                |   | 951,733   
|                    | 1.30%                                  |  | Trinity Ventures VI, LP                                                 |                    | 09/98-10/02 |                |   | 486,227   
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    |                                        |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $38,044,854)                       |                    |             |                |   | 20,898,530
|                    |                                        |  |                                                                         |                    |             |                |   |           
|Shares/ParValue     |                                        |  |                                                                         |                    |             |               
|                    | PRIVATE COMPANIES #  24.93%          
|                    | Preferred Stocks @  19.42%           
|                    | Educational Services  8.05%          
|                    | 75,059                                 |  | Mosaica Education, Inc., Series C                                      |                    | 08/01       |                |   | 3,537,722 
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    | Internet Services  Business  11.37% 
|                    | 1,428,572                              |  | Clear Orbit, Inc., Series A                                            |                    | 06/00       |                |   | 5,000,013 
|                    | 2,388,345                              |  | Firstsource Corp., Series A                                            |                    | 02/00       |                |   |          
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    |                                        |  |                                                                         |                    |             |                |   | 5,000,013 
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    |                                        |  | Total Preferred Stock (Cost $20,119,422)                                |                    |             |                |   | 8,537,735 
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    | Promissory Notes  5.51%              
|                    | Biotechnology  1.03%                 
|$                   | 451,412                                |  | Metrigen, Inc., 6.00%, 9/01/2009                                        |                    | 07/03       |                |   | 451,412   
|                    |                                        |  |                                                                         |                    |             |                |   |           
|                    | Educational Services  4.48%          
|$                   | 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.



2



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments July 31, 2005 (Unaudited)  (continued)



|                                              |  |                                                              |  |                    |            |                |           
|--------------------------------------------- |  | ------------------------------------------------------------ |  | ------------------ | ---------- | -------------- | ----------
|Shares                                        |  |                                                              |  | Acquisition Date## |            | Value (Note 1)
|PRIVATE COMPANIES # (Continued)               |  |                                                              |  |                    |           
|Warrants  0.00%                              |  |                                                              |  |                    |           
|Biotechnology  0.00%                         |  |                                                              |  |                    |           
|62,326                                        |  | Metrigen, Inc., Warrant (Cost $0) (expiration date 12/20/12) |  | 07/03              |            |                |          
|                                              |  |                                                              |  |                    |            |                |           
|                                              |  | TOTAL PRIVATE COMPANIES (Cost $25,956,101)                   |  |                    |            |                | 10,957,747
|                                              |  |                                                              |  |                    |            |                |           
|INVESTMENT COMPANIES  2.19%                  |  |                                                              |  |                    |           
|960,523                                       |  | Dreyfus Government Cash Management Fund (Cost $960,523)      |  |                    |            |                | 960,523   
|                                              |  |                                                              |  |                    |            |                |           
|TOTAL INVESTMENTS (Cost $75,574,624)  98.82% |  |                                                              |  |                    | 43,429,946
|OTHER ASSETS & LIABILITIES (NET)  1.18%      |  |                                                              |  |                    | 519,230   
|                                              |  |                                                              |  |                    |            |                |           
|NET ASSETS  100.00%                          |  |                                                              |  | $                  | 43,949,176
|                                              |  |                                                              |  |                    |            |                |           

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| | At July 31, 2005, the Company owned 5% or more of the companys outstanding voting shares thereby making the company an affiliate as defined by the Investment Company Act of
1940. Total market value of affiliated securities owned at July 31, 2005 was $12,627,403.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|# | Restricted as to public resale. Acquired between March 1, 1998 and October 31, 2002. Total cost of restricted securities at July 31, 2005 aggregated to $64,000,955. Total value of
restricted securities owned at July 31, 2005 was $31,856,277 or 72.48% of net assets.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



3



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2004



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



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



4



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2004 - (continued)



|                 |                                               |  |                                                                    |                    |             |            |   |           
|---------------- | --------------------------------------------- |  | ------------------------------------------------------------------ | ------------------ | ----------- | ---------- | - | ----------
|Shares/Par Value |                                               |  |                                                                    | Acquisition Date## |             | Value     
|                 | PRIVATE COMPANIES #  21.19%                 
|                 | Preferred Stocks @  16.51%                  
|                 | Educational Services  6.84%                 
|                 | 75,059                                        |  | Mosaica Education, Inc., Series C                                 |                    | 08/01       |            | $ | 3,537,722 
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 | Internet Services  Business  9.67%         
|                 | 1,428,572                                     |  | Clear Orbit, Inc., Series A                                       |                    | 06/00       |            |   | 5,000,013 
|                 | 2,388,345                                     |  | Firstsource Corp., Series A                                       |                    | 02/00       |            |   |          
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 |                                               |  |                                                                    |                    |             |            |   | 5,000,013 
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 |                                               |  | Total Preferred Stock (Cost $20,119,425)                           |                    |             |            |   | 8,537,735 
|                 | Promissory Notes  4.68%                     
|                 | Biotechnology  0.87%                        
|$                | 451,412                                       |  | Metrigen, Inc., 6.00%, 9/01/2009 @                                 |                    | 07/03       |            |   | 451,412   
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 | Educational Services  3.81%                 
|$                | 686,415                                       |  | Mosaica Education, Inc. Bridge Notes, 13.00%, 8/24/2006           |                    | 02/01-08/01 |            |   | 686,415   
|$                | 1,025,748                                     |  | Mosaica Education, Inc. (Advantage Schools), 0.00%, 8/24/2006 @   |                    | 02/01-08/01 |            |   | 1,025,748 
|$                | 256,437                                       |  | Mosaica Education, Inc. (ASI Texas LLC ), 0.00%, 8/24/2006@       |                    | 02/01-08/01 |            |   | 256,437   
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 |                                               |  |                                                                    |                    |             |            |   | 1,968,600 
|                 | Internet Services  Business  0.00%         
|$                | 2,666,667                                     |  | Firstsource Corp., Promissory Note, 8.00%, 6/30/2001 @            |                    | 12/00       |            |   |          
|$                | 750,000                                       |  | Killerbiz, Inc., Promissory Note 8.00%, 6/10/2000 and 1/17/2001 @ |                    | 12/99-08/00 |            |   |          
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 |                                               |  |                                                                    |                    |             |            |   |          
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 |                                               |  | Total Promissory Notes (Cost $5,836,679)                           |                    |             |            |   | 2,420,012 
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 | Warrants  0.00%                             
|                 | Biotechnology  0.00%                         |  |                                                                    |                    |             |           
|                 | 62,326                                        |  | Metrigen, Inc.@                                                    |                    | 07/03       |            |   |          
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 |                                               |  | Total Warrants (Cost $0)                                           |                    |             |            |   |          
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 |                                               |  | TOTAL PRIVATE COMPANIES (Cost $25,956,104)                         |                    |             |            |   | 10,957,747
|                
|                 | INVESTMENT COMPANIES  3.68%                 
|                 | 1,904,389                                     |  | Dreyfus Government Cash Management Fund (Cost $1,904,389)          |                    |             |            |   | 1,904,389 
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 | TOTAL INVESTMENTS (Cost $84,650,447)  99.34% |  |                                                                    |                    |             | 51,378,686
|                 | OTHER ASSETS & LIABILITIES (NET)  0.66%      |  |                                                                    |                    |             | 338,868   
|                 |                                               |  |                                                                    |                    |             |            |   |           
|                 | NET ASSETS  100.00%                          |  |                                                                    |                    | $           | 51,717,554
|                 |                                               |  |                                                                    |                    |             |            |   |           



| | At October 31, 2004, the Company owned 5% or more of the companys outstanding voting shares thereby making the company an affiliate as defined by the Investment Company Act of
1940. Total market value of affiliated securities owned at October 31, 2004 was $12,185,944.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



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



5



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Assets and Liabilities



|                                                                                               |  |               |             |   |                  |   |             |  
|---------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                               |  | July 31, 2005 |             |   | October 31, 2004 |  
|                                                                                               |  | (Unaudited)   |             |   |                  |  
|ASSETS:                                                                                        |  |               |             |   |                  |   |             |  
|Investments in unaffiliated issuers, at value (Cost $45,711,814 and $54,436,176, respectively) |  | $             | 30,802,543  |   |                  | $ | 39,192,742  |  
|Investments in affiliated issuers, at value (Cost $29,862,810 and $30,214,271, respectively)   |  |               | 12,627,403  |   |                  |   | 12,185,944  |  
|                                                                                               |  |               |             |   |                  |   |             |  
|Investments, at value (Cost $75,574,624 and $84,650,447, respectively) (Note 1)                |  | $             | 43,429,946  |   |                  | $ | 51,378,686  |  
|Cash                                                                                           |  |               | 3,053       |   |                  |   | 328,296     |  
|Receivable from investment advisor (Note 2)                                                    |  |               | 78,548      |   |                  |   | 141,397     |  
|Interest receivable                                                                            |  |               | 357,506     |   |                  |   | 286,687     |  
|Receivable for security sold                                                                   |  |               | 265,015     |   |                  |   |            |  
|Other assets                                                                                   |  |               | 7,477       |   |                  |   | 1,640       |  
|                                                                                               |  |               |             |   |                  |   |             |  
|Total Assets                                                                                   |  |               | 44,141,545  |   |                  |   | 52,136,706  |  
|                                                                                               |  |              
|LIABILITIES:                                                                                   |  |               |             |   |                  |   |             |  
|Management fees payable (Note 2)                                                               |  |               | 135,703     |   |                  |   | 161,438     |  
|Administration fees payable (Note 2)                                                           |  |               | 17,843      |   |                  |   | 25,236      |  
|Professional fees payable                                                                      |  |               | 32,933      |   |                  |   | 152,969     |  
|Board of Directors fees payable (Note 2)                                                       |  |               |            |   |                  |   | 66,000      |  
|Accrued expenses and other payables                                                            |  |               | 5,890       |   |                  |   | 13,509      |  
|                                                                                               |  |               |             |   |                  |   |             |  
|Total Liabilities                                                                              |  |               | 192,369     |   |                  |   | 419,152     |  
|                                                                                               |  |               |             |   |                  |   |             |  
|NET ASSETS                                                                                     |  | $             | 43,949,176  |   |                  | $ | 51,717,554  |  
|                                                                                               |  |               |             |   |                  |   |             |  
|NET ASSETS consist of:                                                                         |  |               |             |   |                  |   |             |  
|Accumulated net investment loss                                                                |  | $             | (273,990    | ) |                  | $ |            |  
|Accumulated net realized loss on investments                                                   |  |               | (28,483,919 | ) |                  |   | (31,623,864 | )
|Net unrealized (depreciation) on investments                                                   |  |               | (32,144,678 | ) |                  |   | (33,271,761 | )
|Par value                                                                                      |  |               | 1,957       |   |                  |   | 1,957       |  
|Paid-in capital in excess of par value                                                         |  |               | 104,849,806 |   |                  |   | 116,611,222 |  
|                                                                                               |  |               |             |   |                  |   |             |  
|Total Net Assets                                                                               |  | $             | 43,949,176  |   |                  | $ | 51,717,554  |  
|                                                                                               |  |               |             |   |                  |   |             |  
|Shares of Common Stock Outstanding ($0.01 par value, 200,000 authorized)                       |  |               | 195,730     |   |                  |   | 195,730     |  
|NET ASSET VALUE PER SHARE                                                                      |  | $             | 224.54      |   |                  | $ | 264.23      |  
|                                                                                               |  |               |             |   |                  |   |             |  



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



6



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                 |  |                            |           |   |      |   |          |  
|---------------------------------------------------------------- |  | -------------------------- | --------- | - | ---- | - | -------- | -
|                                                                 |  | Nine Months Ended July 31, |          
|                                                                 |  | 2005                       |           |   | 2004 |  
|INVESTMENT INCOME:                                               |  |                            |           |   |      |   |          |  
|Interest income from affiliated investments                      |  | $                          | 66,559    |   |      | $ | 66,779   |  
|Interest income from unaffiliated investments                    |  |                            | 142,294   |   |      |   | 33,494   |  
|Dividend income                                                  |  |                            | 23,808    |   |      |   | 13,908   |  
|                                                                 |  |                            |           |   |      |   |          |  
|Total Investment Income                                          |  |                            | 232,661   |   |      |   | 114,181  |  
|                                                                 |  |                            |           |   |      |   |          |  
|EXPENSES:                                                        |  |                            |           |   |      |   |          |  
|Managing Investment Adviser fees (Note 2)                        |  |                            | 421,683   |   |      |   | 511,965  |  
|Administration fees (Note 2)                                     |  |                            | 74,664    |   |      |   | 97,577   |  
|Professional fees                                                |  |                            | 181,588   |   |      |   | 93,630   |  
|Board of Directors fees and expenses (Note 2)                    |  |                            | 46,500    |   |      |   | 44,959   |  
|Insurance expense                                                |  |                            | 20,689    |   |      |   | 23,435   |  
|Miscellaneous expenses                                           |  |                            | 27,894    |   |      |   | 7,028    |  
|                                                                 |  |                            |           |   |      |   |          |  
|Total Expenses                                                   |  |                            | 773,018   |   |      |   | 778,594  |  
|                                                                 |  |                            |           |   |      |   |          |  
|Expenses reimbursed by Managing Investment Adviser (Note 2)      |  |                            | (266,367  | ) |      |   | (171,748 | )
|                                                                 |  |                            |           |   |      |   |          |  
|Net Expenses                                                     |  |                            | 506,651   |   |      |   | 606,846  |  
|                                                                 |  |                            |           |   |      |   |          |  
|NET INVESTMENT LOSS                                              |  |                            | (273,990  | ) |      |   | (492,665 | )
|                                                                 |  |                            |           |   |      |   |          |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 1) |  |                            |           |   |      |   |          |  
|Net realized gain on affiliated investments                      |  |                            |          |   |      |   | 10,146   |  
|Net realized gain / (loss) on unaffiliated investments           |  |                            | 3,139,945 |   |      |   | (22,857  | )
|Net change in unrealized depreciation on investments             |  |                            | 1,127,083 |   |      |   | 82,716   |  
|                                                                 |  |                            |           |   |      |   |          |  
|NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS                  |  |                            | 4,267,028 |   |      |   | 70,005   |  
|                                                                 |  |                            |           |   |      |   |          |  
|NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS  |  | $                          | 3,993,038 |   |      | $ | (422,660 | )
|                                                                 |  |                            |           |   |      |   |          |  



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



7



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                 |  |                             |            |   |      |   |            |  
|---------------------------------------------------------------- |  | --------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                 |  | Three Months Ended July 31, |           
|                                                                 |  | 2005                        |            |   | 2004 |  
|INVESTMENT INCOME:                                               |  |                             |            |   |      |   |            |  
|Interest income from affiliated investments                      |  | $                           | 22,492     |   |      | $ | 22,308     |  
|Interest income from unaffiliated investments                    |  |                             | 75,802     |   |      |   | 16,796     |  
|Dividend income                                                  |  |                             | 7,108      |   |      |   | 5,378      |  
|                                                                 |  |                             |            |   |      |   |            |  
|Total Investment Income                                          |  |                             | 105,402    |   |      |   | 44,482     |  
|                                                                 |  |                             |            |   |      |   |            |  
|EXPENSES:                                                        |  |                             |            |   |      |   |            |  
|Managing Investment Adviser fees (Note 2)                        |  |                             | 135,703    |   |      |   | 159,369    |  
|Administration fees (Note 2)                                     |  |                             | 25,278     |   |      |   | 24,872     |  
|Professional fees                                                |  |                             | 46,548     |   |      |   | 31,420     |  
|Board of Directors fees and expenses (Note 2)                    |  |                             | 16,746     |   |      |   | 15,082     |  
|Insurance expense                                                |  |                             | 6,686      |   |      |   | 7,812      |  
|Miscellaneous expenses                                           |  |                             | 10,294     |   |      |   | 5,522      |  
|                                                                 |  |                             |            |   |      |   |            |  
|Total Expenses                                                   |  |                             | 241,255    |   |      |   | 244,077    |  
|                                                                 |  |                             |            |   |      |   |            |  
|Expenses reimbursed by Managing Investment Adviser (Note 2)      |  |                             | (77,690    | ) |      |   | (53,627    | )
|                                                                 |  |                             |            |   |      |   |            |  
|Net Expenses                                                     |  |                             | 163,565    |   |      |   | 190,450    |  
|                                                                 |  |                             |            |   |      |   |            |  
|NET INVESTMENT LOSS                                              |  |                             | (58,163    | ) |      |   | (145,968   | )
|                                                                 |  |                             |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 1) |  |                             |            |   |      |   |            |  
|Net realized gain on affiliated investments                      |  |                             |           |   |      |   | 10,146     |  
|Net realized gain / (loss) on unaffiliated investments           |  |                             | 679,880    |   |      |   | (22,857    | )
|Net change in unrealized (depreciation) on investments           |  |                             | (1,447,213 | ) |      |   | (1,350,490 | )
|                                                                 |  |                             |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS                  |  |                             | (767,333   | ) |      |   | (1,363,201 | )
|                                                                 |  |                             |            |   |      |   |            |  
|NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS             |  | $                           | (825,496   | ) |      | $ | (1,509,169 | )
|                                                                 |  |                             |            |   |      |   |            |  



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



8



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Changes in Net Assets (Unaudited)



|                                                                                                     |  |                            |             |   |      |   |            |  
|---------------------------------------------------------------------------------------------------- |  | -------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                                                     |  | Nine Months Ended July 31, |            
|                                                                                                     |  | 2005                       |             |   | 2004 |  
|OPERATIONS:                                                                                          |  |                            |             |   |      |   |            |  
|Net investment loss                                                                                  |  | $                          | (273,990    | ) |      | $ | (492,665   | )
|Net realized gain/(loss) on investments                                                              |  |                            | 3,139,945   |   |      |   | (12,711    | )
|Net change in unrealized appreciation on investments                                                 |  |                            | 1,127,083   |   |      |   | 82,716     |  
|                                                                                                     |  |                            |             |   |      |   |            |  
|Net increase/(decrease) in net assets resulting from operations                                      |  |                            | 3,993,038   |   |      |   | (422,660   | )
|                                                                                                     |  |                           
|DISTRIBUTIONS TO SHAREHOLDERS:                                                                       |  |                            |             |   |      |   |            |  
|Distributions                                                                                        |  |                            | (11,761,416 | ) |      |   |           |  
|                                                                                                     |  |                            |             |   |      |   |            |  
|NET DECREASE IN NET ASSETS                                                                           |  |                            | (7,768,378  | ) |      |   | (422,660   | )
|                                                                                                     |  |                           
|NET ASSETS:                                                                                          |  |                            |             |   |      |   |            |  
|Beginning of period                                                                                  |  |                            | 51,717,554  |   |      |   | 49,716,188 |  
|                                                                                                     |  |                            |             |   |      |   |            |  
|End of period (including accumulated net investment loss of $(273,990) and $(492,665), respectively) |  | $                          | 43,949,176  |   |      | $ | 49,293,528 |  
|                                                                                                     |  |                            |             |   |      |   |            |  



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



9



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Cash Flows (Unaudited)



|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                                                                                                 |  | Nine Months Ended July 31, |            
|                                                                                                                                                 |  | 2005                       |             |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                            |  |                            |             |   |      |   |            |  
|Net increase/(decrease) in net assets resulting from operations                                                                                  |  | $                          | 3,993,038   |   |      | $ | (422,660   | )
|Adjustments to reconcile net increase/(decrease) in net assets resulting from operations to net cash provided by (used in) operating
activities: |  |                            |             |   |      |   |            |  
|Net change in unrealized (appreciation) on investments                                                                                           |  |                            | (1,127,083  | ) |      |   | (82,716    | )
|Sale/(purchase) of short-term investments  net                                                                                                  |  |                            | 1,477,819   |   |      |   | (7,440,798 | )
|Proceeds received from the sale of investments and distributions received from private investment funds                                          |  |                            | 10,737,949  |   |      |   | 5,187,625  |  
|Net realized (gain)/loss on investments                                                                                                          |  |                            | (3,139,945  | ) |      |   | 12,711     |  
|Decrease in receivable from investment adviser                                                                                                   |  |                            | 62,849      |   |      |   | 32,206     |  
|Increase in interest receivable                                                                                                                  |  |                            | (70,819     | ) |      |   | (66,538    | )
|Increase in other assets                                                                                                                         |  |                            | (270,852    | ) |      |   | (22,931    | )
|Decrease in management fee payable                                                                                                               |  |                            | (25,735     | ) |      |   | (19,296    | )
|Decrease in Board of Directors fees payable                                                                                                      |  |                            | (66,000     | ) |      |   | (21,041    | )
|Decrease in other expenses payable                                                                                                               |  |                            | (135,048    | ) |      |   | (8,651     | )
|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|Net cash provided by (used in) operating activities                                                                                              |  |                            | 11,436,173  |   |      |   | (2,852,089 | )
|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                            |  |                            |             |   |      |   |            |  
|Cash Distributions to Shareholders                                                                                                               |  |                            | (11,761,416 | ) |      |   |           |  
|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|Net Cash used in Financing Activities                                                                                                            |  |                            | (11,761,416 | ) |      |   |           |  
|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|Net decrease in cash                                                                                                                             |  |                            | (325,243    | ) |      |   | (2,852,089 | )
|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|Cash at beginning of period                                                                                                                      |  |                            | 328,296     |   |      |   | 2,852,110  |  
|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|Cash at end of period                                                                                                                            |  | $                          | 3,053       |   |      | $ | 21         |  
|                                                                                                                                                 |  |                            |             |   |      |   |            |  
|SUPPLMENTAL INFORMATION:                                                                                                                         |  |                            |             |   |      |   |            |  
|Non-cash distributions received from private investments funds:                                                                                  |  | $                          | 4,229,268   |   |      | $ | 508,171    |  
|                                                                                                                                                 |  |                            |             |   |      |   |            |  



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



10



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##### Table of Contents

Excelsior Private Equity Fund II, Inc.

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



Per Share Operating Performance (1)



|                                                |  |                                |        |    |                                 |   |        |   
|----------------------------------------------- |  | ------------------------------ | ------ | -- | ------------------------------- | - | ------ | --
|                                                |  | Nine Months EndedJuly 31, 2005 |        |    | Nine Months Ended July 31, 2004 |  
|NET ASSET VALUE, BEGINNING OF PERIOD            |  | $                              | 264.23 |    |                                 | $ | 254.00 |   
|INCOME FROM INVESTMENT OPERATIONS:              |  |                                |        |    |                                 |   |        |   
|Net investment loss                             |  |                                | (1.40  | )  |                                 |   | (2.52  | ) 
|Net realized and unrealized gain on investments |  |                                | 21.80  |    |                                 |   | 0.36   |   
|                                                |  |                                |        |    |                                 |   |        |   
|Total from Investment Operations                |  |                                | 20.40  |    |                                 |   | (2.16  | ) 
|                                                |  |                                |        |    |                                 |   |        |   
|DISTRIBUTIONS TO SHAREHOLDERS:                  |  |                                |        |    |                                 |   |        |   
|Return of Capital Distribution                  |  |                                | (60.09 | )  |                                 |   |       |   
|                                                |  |                                |        |    |                                 |   |        |   
|NET DECREASE IN NET ASSETS                      |  |                                | (39.69 | )  |                                 |   | (2.16  | ) 
|NET ASSET VALUE, END OF PERIOD                  |  | $                              | 224.54 |    |                                 | $ | 251.84 |   
|                                                |  |                                |        |    |                                 |   |        |   
|TOTAL NET ASSET VALUE RETURN (3) (4)            |  |                                | 9.46   | %  |                                 |   | (0.85  | )%
|Ratios and supplemental data:                   |  |                                |        |    |                                 |   |        |   
|Net assets, end of period (thousands)           |  | $                              | 43,949 |    |                                 | $ | 49,294 |   
|Ratios to average net assets (2)                |  |                                |        |    |                                 |   |        |   
|Gross expenses (5)                              |  |                                | 2.27   | %  |                                 |   | 2.05   | % 
|Net expenses                                    |  |                                | 1.49   | %  |                                 |   | 1.60   | % 
|Net investment loss                             |  |                                | (0.81  | )% |                                 |   | (1.30  | )%
|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



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##### Table of Contents

EXCELSIOR PRIVATE EQUITY FUND II, INC.



NOTES TO FINANCIAL STATEMENTS



July 31, 2005
(Unaudited)



Note 1  Significant Accounting Policies



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



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



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



The following is a summary of the Companys significant accounting policies. Such policies are in conformity with
generally accepted accounting principles in the United States of America for investment companies and are consistently followed in the preparation of the financial statements. Generally accepted accounting principles in the United States of America
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 or contractual restrictions on transfer, a
discount of 10% to 40% from the public market price will be applied. Securities and other assets for which no public market exists will be valued at fair value as determined in good faith by the Managing Investment Adviser (as defined below) or a
committee of the Board of Directors or both under the supervision of the Board of Directors pursuant to certain valuation procedures summarized below. Securities having remaining maturities of 60 days or less from the date of purchase are valued at
amortized cost.



The value for securities for
which no public market exists is difficult to determine. Generally, such investments will be valued on a going concern basis without giving effect to any disposition costs. There is a range of values that is reasonable for such
investments at any particular time. Initially, direct investments are valued based upon their original cost, until developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments providing a
sufficient basis for a change in valuation, direct investments will be valued by the private market or appraisal methods of valuation. The private market method shall only be used with respect to reliable third party
transactions by sophisticated, independent investors. The appraisal method shall be based upon such factors affecting the investee such as earnings, net worth, reliable private sale prices of the investees securities, the market prices for
similar securities of comparable companies, an assessment of the investees future prospects or, if appropriate, liquidation value. The values for the investments referred to in this paragraph will be estimated regularly by the Managing
Investment Adviser or a committee of the Board of Directors under the supervision of the Board of Directors and, in any event, not less frequently than quarterly. However, there can be no assurance that such values will represent the return that
might ultimately be realized by the Company from the investments.



The valuation of the Companys private investment funds is based upon its pro-rata share of the value of the net assets of a private investment fund as determined by such private investment fund, in accordance
with its partnership agreement, constitutional or other documents governing such valuation, on the valuation date. If such valuation with respect to the Companys investments in private investment funds is not available by reason of timing or
other event on the valuation date, or are deemed to be unreliable by



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the Managing Investment Adviser, the Managing Investment Adviser, under the supervision of the Board of Directors, shall determine such value based on its
judgment of fair value on the appropriate date, less applicable charges, if any. The valuation of the Companys private investment funds also includes capital contributions to such private investment funds made in advance of remaining capital
commitments being called by the private investment funds respective general partners. At July 31, 2005 and October 31, 2004, these contributions paid in advance totaled $1,664,227 and $2,134,459 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, 2005 and October 31, 2004, market quotations were not readily available for securities valued at $31,856,277 or 72.48% of net
assets and $38,327,198 or 74.11% of net assets, respectively. Such securities were valued by the Managing Investment Adviser under the supervision of the Board of Directors. Because of the inherent uncertainty of valuation, the estimated values may
differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material.



(b) Security transactions and investment income:



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



(c) Repurchase agreements:



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



d)
Federal income taxes:



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



Dividends from net
investment income are declared and paid at least annually. Any net realized capital gains, unless offset by any available capital loss carryforwards, are distributed to shareholders at least annually. Dividends and distributions are determined in
accordance with federal income tax regulations that may differ from the generally accepted accounting principles of the United States of America. These book/tax differences are either considered temporary or permanent and may be
reclassified within the capital accounts based on their federal tax basis treatment. At October 31, 2004, the Company has reclassified certain amounts of net investment loss and net realized loss on investments to paid-in capital due to net
operating losses and investment partnership adjustments.



The Company has unused capital loss carryforwards of approximately $46,650,580 available for income tax purposes, to be applied against future net realized gains, if any, after October 31, 2004. If not applied,
$8,602,181 of the carryover will expire in 2009, $13,721,421 will expire in 2010, and $18,471,137 will expire in 2011, and $5,855,841 will expire in 2012.



The tax character of distributions paid may differ from the character of distributions shown on the statement of changes in net assets due
to tax treatment of certain distributions. No distributions were made in the quarters ended July 31, 2005 and July 31, 2004.



The cost of the private investment funds for federal tax purposes is based on amounts reported to the Company on Schedule K-1 from the
private investment funds. As of October 31, 2004 and July 31, 2005, the Company had not received information to determine the tax cost of the private investment funds as of October 31, 2004 and July 31, 2005, and therefore to determine the
Companys unrealized gain or loss on a tax basis. At July 31, 2005, the cost of all other investments for federal tax purposes was $37,529,770, and those investments had a tax basis net unrealized depreciation of $14,998,354, consisting of
gross appreciation of $16 and gross depreciation of $14,998,370. At October 31, 2004, the cost of all other investments for federal tax purposes was $39,007,592, and those investments had a tax basis net unrealized depreciation of $14,998,357,
consisting of gross appreciation of $13 and gross depreciation of $14,998,370.



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



Prior to June 1, 2003, and pursuant to an Investment Management Agreement (Agreement), United States Trust Company of New



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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. As of July 31, 2005 and October 31, 2004, $135,703 and $161,438, respectively, were payable to
the Managing Investment Adviser.



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



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, 2005 and
July 31, 2004, no incentive fee was earned by and payable to the Managing Investment Adviser.



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



The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses of the Company,
exclusive of management fees, to the extent they exceed 0.25% of the Companys average net assets. This reimbursement amounted to $266,367 and $171,748, for the nine-month periods ended July 31, 2005 and July 31, 2004, respectively.



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



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



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



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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.



Note 3 
Purchases and Sales of Securities



Excluding short-term
investments, the Companys purchases and sales of securities including distributions received for the nine-month periods ended July 31, 2005, and July 31, 2004 were as follows:



|                                 |  |               |  |             
|-------------------------------- |  | ------------- |  | ------------
|Nine-Month Period Ended July 31, |  | Purchases ($) |  | Proceeds ($)
|2005                             |  |              |  | 10,737,949  
|2004                             |  |              |  | 5,187,625   



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



|                                                                |  |                                                            |                |   |                          |   |                                         |  |                                                          |   |  |                              |         |  |   |        |  |   |   |  |   |           |   |  |   |           
|--------------------------------------------------------------- |  | ---------------------------------------------------------- | -------------- | - | ------------------------ | - | --------------------------------------- |  | -------------------------------------------------------- | - |  | ---------------------------- | ------- |  | - | ------ |  | - | - |  | - | --------- | - |  | - | ----------
|Name of Investment                                              |  | Shares/ PrincipalAmount/Percentage Held at October 31,2004 |                |   | October 31,2004 Value    |   | For the Nine Months Ended July 31, 2005 |  | Shares/ PrincipalAmount/Percentage Held at July 31, 2005 |   |  | July 31, 2005 Value (Note 1)
|                                                                |  |                                                            | ConversionCost |   | Sales/ConversionProceeds |   | Interest                                |  | RealizedGain (Loss)                                      |   | 
|Affiliated Companies                                            |  |                                                            |                |   |                          |   |                                         |  |                                                          |   |  |                              |         |  |   |        |  |   |   |  |   |           |   |  |   |           
|Mid - Atlantic Venture Fund III, LP                             |  |                                                            | 8.70           | % |                          | $ | 1,679,609                               |  | $                                                        |  |  | $                            | 351,461 |  | $ |       |  | $ |  |  |   | 8.70      | % |  | $ | 2,121,068 
|Clear Orbit Inc., Preferred Series A                            |  |                                                            | 1,428,572      |   |                          |   | 5,000,013                               |  |                                                          |  |  |                              |        |  |   |       |  |   |  |  |   | 1,428,572 |   |  |   | 5,000,013 
|Firstsource Corp., Preferred Series A                           |  |                                                            | 2,388,345      |   |                          |   |                                        |  |                                                          |  |  |                              |        |  |   |       |  |   |  |  |   | 2,388,345 |   |  |   |          
|Firstsource Corp., Promissory Note 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                                 |  |                                                          |  |  |                              |        |  |   | 66,559 |  |   |  |  | $ | 686,415   |   |  |   | 686,415   
|Mosaica Education, Inc. (Advantage Schools), 0.00%, 8/24/2006   |  | $                                                          | 1,025,748      |   |                          |   | 1,025,748                               |  |                                                          |  |  |                              |        |  |   |       |  |   |  |  | $ | 1,025,748 |   |  |   | 1,025,748 
|Mosaica Education, Inc. (ASI Texas LLC), 0.00%, 8/24/2006       |  | $                                                          | 256,437        |   |                          |   | 256,437                                 |  |                                                          |  |  |                              |        |  |   |       |  |   |  |  | $ | 256,437   |   |  |   | 256,437   
|                                                                |  |                                                            |                |   |                          |   |                                         |  |                                                          |   |  |                              |         |  |   |        |  |   |   |  |   |           |   |  |   |           
|Total Non Controlled Affiliates                                 |  |                                                            |                |   |                          | $ | 12,185,944                              |  | $                                                        |  |  | $                            | 351,461 |  | $ | 66,559 |  | $ |  |  |   |           |   |  | $ | 12,627,403



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|                                                                |  |                                                            |                |   |                          |   |                                     |  |                      |                                                           |  |   |                                |  |   |        |  |   |            |   |  |           |   |  |   |            |  
|--------------------------------------------------------------- |  | ---------------------------------------------------------- | -------------- | - | ------------------------ | - | ----------------------------------- |  | -------------------- | --------------------------------------------------------- |  | - | ------------------------------ |  | - | ------ |  | - | ---------- | - |  | --------- | - |  | - | ---------- | -
|Name of Investment                                              |  | Shares/ PrincipalAmount/Percentage Held at October 31,2003 |                |   | October 31,2003 Value    |   | For the Year Ended October 31, 2004 |  |                      | Shares/ PrincipalAmount/Percentage Held atOctober 31,2004 |  |   | October 31,2004 Value (Note 1) | 
|                                                                |  |                                                            | ConversionCost |   | Sales/ConversionProceeds |   | Interest                            |  | Realized Gain (Loss) |                                                           |  |  
|Affiliated Companies                                            |  |                                                            |                |   |                          |   |                                     |  |                      |                                                           |  |   |                                |  |   |        |  |   |            |   |  |           |   |  |   |            |  
|Mid - Atlantic Venture Fund III, LP                             |  |                                                            | 8.71           | % |                          | $ | 1,774,031                           |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 8.70      | % |  | $ | 1,679,609  |  
|Clear Orbit Inc., Preferred Series A                            |  |                                                            | 1,428,572      |   |                          |   | 5,000,013                           |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 1,428,572 |   |  |   | 5,000,013  |  
|Commonwealth Capital Ventures II, LLP                           |  |                                                            | 5.73           | % |                          |   | 1,925,198                           |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 4.90      | % |  |   | 1,870,855  | *
|Curon Medical, Inc., Common Stock                               |  |                                                            | 2,381,088      |   |                          |   | 4,243,099                           |  |                      |                                                          |  |   | 2,825,829                      |  |   |       |  |   | (4,246,672 | ) |  |          |   |  |   |           |  
|Curon Medical, Inc., Warrants                                   |  |                                                            | 76,950         |   |                          |   |                                    |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  |          |   |  |   |           |  
|Firstsource Corp., Preferred Series A                           |  |                                                            | 2,388,345      |   |                          |   |                                    |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 2,388,345 |   |  |   |           |  
|Firstsource Corp., Promissory Note 8.00%, 6/30/2001             |  | $                                                          | 2,666,667      |   |                          |   |                                    |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 2,666,667 |   |  |   |           |  
|Killerbiz, Inc., Promissory Note 8.00%, 6/10/2000 and 1/17/2001 |  | $                                                          | 750,000        |   |                          |   |                                    |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 750,000   |   |  |   |           |  
|Mosaica Education, Inc., Preferred Series C                     |  |                                                            | 75,059         |   |                          |   | 3,537,722                           |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 75,059    |   |  |   | 3,537,722  |  
|Mosaica Education, Inc. Bridge Notes, 13.00%, 8/24/2006         |  | $                                                          | 686,415        |   |                          |   | 686,415                             |  |                      |                                                          |  |   |                               |  |   | 89,087 |  |   |           |   |  | 686,415   |   |  |   | 686,415    |  
|Mosaica Education, Inc. (Advantage Schools), 0.00%, 8/24/2006   |  | $                                                          | 1,025,748      |   |                          |   | 1,025,748                           |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 1,025,748 |   |  |   | 1,025,748  |  
|Mosaica Education, Inc. (ASI Texas LLC), 0.00%, 8/24/2006       |  | $                                                          | 256,437        |   |                          |   | 256,437                             |  |                      |                                                          |  |   |                               |  |   |       |  |   |           |   |  | 256,437   |   |  |   | 256,437    |  
|                                                                |  |                                                            |                |   |                          |   |                                     |  |                      |                                                           |  |   |                                |  |   |        |  |   |            |   |  |           |   |  |   |            |  
|Total Non Controlled Affiliates                                 |  |                                                            |                |   |                          | $ | 18,448,663                          |  | $                    |                                                          |  | $ | 2,825,829                      |  | $ | 89,087 |  | $ | (4,246,672 | ) |  |           |   |  | $ | 14,056,799 |  
|                                                                |  |                                                            |                |   |                          |   |                                     |  |                      |                                                           |  |   |                                |  |   |        |  |   |            |   |  |           |   |  |   |            |  



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



Note 5  Pending Litigation



The Managing Investment Adviser was contacted in September 2003 by the Office of the New York State Attorney General (the NYAG) and the Securities and Exchange Commission (the SEC) in
connection with their investigations of practices in the mutual fund industry identified as market timing and late trading of mutual fund shares (the Investigations). The Managing Investment Adviser has cooperated
with respect to these Investigations. As disclosed previously by the Managing Investment Adviser, these Investigations have focused 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, and certain of its
affiliates, have also been named in five class actions which allege that the Managing Investment Adviser, certain of its affiliates, and others allowed certain parties to engage in illegal and improper mutual fund trading practices, which allegedly
caused financial injury to the shareholders of certain mutual funds managed by the Managing Investment Adviser. Each seeks unspecified monetary damages and related equitable relief. The Managing Investment Adviser, and certain of its affiliates,
have also been named in two derivative actions alleging breach of fiduciary duty in relation to allegedly illegal and improper mutual fund trading practices.



The class and derivative actions described above have been transferred to the United States District Court for the District of Maryland for coordinated
and consolidated pre-trial proceedings in a matter styled In Re Mutual Funds Investment Litigation, MDL Docket No. 1586. The five class actions were then consolidated and a single amended complaint was filed on or about September 29, 2004.
The two derivative actions were also consolidated into a new amended complaint, also filed on or about September 29, 2004. The defendants in the consolidated actions have moved to dismiss such actions. The defendants will not be required to answer
the complaints until such motions have been decided and discovery in the actions is currently stayed.



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



Note 6  Guarantees



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







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



Nine-month and Three-month Periods Ended July 31, 2005 as Compared to the Similar Periods in 2004



Realized and Unrealized Gains and Losses from Portfolio Investments



For the nine-month periods ended July 31, 2005 and 2004, the Company had a
net realized gain/(loss) on security transactions of $3,139,945 and ($12,711), respectively. For the nine-month periods ended July 31, 2005 and 2004, the Company had a net change in unrealized appreciation on investments of $1,127,083 and $82,716,
respectively. The net realized gain for the period ended July 31, 2005 was primarily the result of distributions by Friedman, Fleischer and Lowe Capital Partners, LP which is one of the Companys private investment funds. The net realized loss
for the period ended July 31, 2004 was driven by the sales of Ciena Corp. and Curon Medical common stock. The net change in unrealized appreciation on investments for the nine-month period ended July 31, 2005 is the result of an increase in the
overall valuation of the private investment funds. The net change in unrealized appreciation on investments of $82,716 for the nine-month period ended July 31, 2004 is primarily the result of of an increase in the valuation of the Companys
private investment funds of $1,906,483, offset by a decline of $1,860,054 in the value of Curon Medical, Inc. (NASDAQ: CURN), a publicly-traded common stock held by the Company. The Company utilized a discount of 20% in the valuation of Curon
Medical, Inc. as of July 31, 2004 and a discount of 40% as of October 31, 2003. The reduction in the discount utilized reflects the ability of the Company to sell its shares of Curon Medical, Inc. with less restriction than it had as of October 31,
2003.



For the three-month periods ended July 31, 2005 and
2004, the Company had a net realized gain/(loss) on security transactions of $679,880 and ($12,711), respectively. For the three-month periods ended July 31, 2005 and 2004, the Company had a net change in unrealized depreciation on investments of
($1,447,213) and ($1,350,490), respectively. The net realized gain for the period ended July 31, 2005 was primarily the result of distributions by Friedman, Fleischer and Lowe Capital Partners, LP which is one of the Companys private
investment funds. The net change in unrealized depreciation on investments for the three-month period ended July 31, 2005 is the result of a decrease in the overall valuation of the private investment funds. The net change in unrealized depreciation
on investments for the three-month period ended July 31, 2004 is primarily the result of a decline in the value of Curon Medical, Inc.



Investment Income and Expenses



For the nine-month periods ended July 31, 2005, the Company had investment income of $232,661 and net operating expenses, net of expenses reimbursed by
the Managing Investment Adviser (as defined below), of $506,651, resulting in a net investment loss of ($273,990). In comparison, the Company had investment income of $114,181 and net operating expenses, net of expenses reimbursed by the Managing
Investment Adviser, of $606,846, resulting in net investment loss of ($492,665) for the nine-month period ended July 31, 2004. The primary reason for the decrease in investment loss was an increase in short-term securities held by the Company as a
result of distributions paid to the Company by its private investment funds and a reduction in net expenses. The reduction in net expenses is principally attributable to lower managing investment adviser and administrative fees which results from a
decrease in net assets under management. This was partially offset by an increase in professional fees and other expenses.



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For the three-month period ended July 31, 2005, the Company had investment income of $105,402 and net
operating expenses, net of expenses reimbursed by the Managing Investment Adviser of $163,565, resulting in a net investment loss of ($58,163). In comparison, the Company had investment income of $44,482 and net operating expenses, net of expenses
reimbursed by the Managing Investment Adviser, of $190,450, resulting in a net investment loss of ($145,968) for the similar period ended July 31, 2004. The primary reason for the decrease in investment loss was an increase in interest income due to
an increase in the amount of short-term securities held. Total expenses decreased due to lower managing investment adviser fees which resulted from a lower level of assets under management. Net expenses decreased as a result of a higher level of
adjusted expense reimbursement by the Managing Investment Adviser for the period ended July 31, 2005.



United States Trust Company of New York, acting through its registered investment advisory division, U.S. TrustNew York Asset Management Division,
and U.S. Trust Company, N.A., acting through its registered investment advisory division, U.S. Trust Company, N.A. Asset Management Division (together, the Managing Investment Adviser), provide investment management and administrative
services required for the operation of the Company. The term Managing Investment Adviser includes, where applicable, U.S. Trust Company, the entity that merged into U.S. Trust Company, N.A. on June 1, 2003 as described in Note 2 to Item 1 above. In
consideration of the services rendered by the Managing Investment Adviser, the Company pays a management fee based upon a percentage of the net assets of the Company invested or committed to be invested in certain types of investments and an
incentive fee based in part on a percentage of realized capital gains of the Company. Such management fee is determined and payable quarterly.



For the nine-month periods ended July 31, 2005 and 2004, the Managing Investment Adviser earned $421,683 and $511,965 in management fees, respectively.
This decrease is due to a decline in net assets under management. In addition, for the nine-month periods ended July 31, 2005 and 2004, there was no incentive fee payable to the Managing Investment Adviser. The Managing Investment Adviser has
voluntarily agreed to waive or reimburse other operating expenses of the Company, exclusive of management fees, to the extent they exceed 0.25%, on an annual basis, of the Companys average net assets. For the nine-month periods ended July 31,
2005 and 2004, the Managing Investment Adviser reimbursed other operating expenses of the Company in the amounts of $266,367and $171,748, respectively, as a result of expenses incurred in excess of these limits.



For the three-month periods ended July 31, 2005 and 2004, the Managing
Investment Adviser earned $135,703 and $159,369 in management fees, respectively. This decrease is due to a decline in net assets under management. There is no change in allowance for the management incentive fee for the three-month period ended
July 31, 2005. In addition, for the three-month period ended July 31, 2004 , there was no incentive fee payable to the Managing Investment Adviser. The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses
of the Company, exclusive of management fees, to the extent they exceed 0.25%, on an annual basis, of the Companys average net assets. For the three-month periods ended July 31,2005 and 2004, the Managing Investment Adviser reimbursed other
operating expenses of the Company in the amounts of $77,690 and $53,627, respectively, as a result of expenses incurred in excess of these limits.



Net Assets



At July 31, 2005, the Companys net assets were $43,949,176 or a net asset value per common share of $224.54. This represents a decrease of
$7,768,378, or $39.69 per share, from net assets of $51,717,554, or a net asset value per common share of $264.23, at October 31, 2004. The decrease in net assets during the period is principally due to the distribution of $11,761,416, or $60.09 per
share, paid on December 9, 2004 to shareholders. This decrease was partially offset by realized gain and unrealized appreciation primarily related to the Companys private investment funds.



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Liquidity and Capital Resources



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



At July 31, 2005, the Company held $3,053 in cash and $11,573,669 in short-term investments as compared to $328,296 in cash
and $13,051,488 in short-term investments at October 31, 2004. The decrease in cash and short-term investments during the period is primarily the result of a distribution of $11,761,416, or $60.09 per share, paid on December 9, 2004 to shareholders
of record as of December 6, 2004. During the nine-month period ended July 31, 2005, the Company received proceeds from distributions from its private investment funds and sales of investments totaling approximately $10.7 million. In connection with
the Companys commitments to private investment funds, a total of $58,250,000 has been contributed by the Company through July 31, 2005. The Company has no additional capital commitment obligations to the private funds it has invested in. The
Company made no follow-on investments during the nine-month period ended July 31, 2005.



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



Application of Critical Accounting Policies



Under the supervision of the Companys Valuation and Audit Committees, consisting of the independent directors of the Company, the Managing
Investment Adviser makes certain critical accounting estimates with respect to the valuation of private portfolio investments. These estimates could have a material impact on the presentation of the Companys financial condition because in
total, they currently represent 72.48% of the Companys net assets at July 31, 2005. For the private investments held at July 31, 2005, changes to these estimates, i.e. changes in the valuations of these private investments, resulted in a $4.5
million increase in net asset value.



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



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



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



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



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|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk.
|------- |  | -----------------------------------------------------------



Equity Price Risk



A majority of the Companys investment portfolio consists of equity securities in private companies and private investment funds, representing 72.48%
of the Companys net assets, which are not publicly traded. These investments are recorded at fair value as determined by the Managing Investment Adviser in accordance with valuation guidelines adopted by the Board of Directors. This method of
valuation does not result in increases or decreases in the fair value of these equity securities in response to changes in market prices. Thus, these equity securities are not subject to equity price risk normally associated with public equity
markets. At July 31, 2005 and at October 31, 2004, the Company was not subject to equity price risk normally associated with public equity markets, except to the extent that the private investment funds that the Company has invested in has, from
time to time, interests in securities which may be publicly traded.



|Item 4. |  | Controls and Procedures.
|------- |  | ------------------------



(a) Evaluation of Disclosure Controls and Procedures. As of July 31, 2005 (the end of the period covered by this report), the Companys principal
executive officers and principal financial officer evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the
Companys disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company was made known to them by others within those entities.



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



|PART II.    OTHER |  | INFORMATION
|----------------- |  | -----------



|Item 1. |  | Legal Proceedings.
|------- |  | ------------------



None.



|Item 2. |  | Changes in Securities and Use of Proceeds.
|------- |  | ------------------------------------------



None.



|Item 3. |  | Defaults Upon Senior Securities.
|------- |  | --------------------------------



None.



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



None.



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



The following information is provided herein although it is not required to be filed on the Form 8-K.



At a meeting held on June 9, 2005, the Board of Directors (the
Board) of the Company, and those Directors (the Independent Directors) who are not interested persons of the Company as defined in the Investment Company Act of 1940, as amended, (the Act), voting
separately, approved the extension of the Companys investment advisory contract with the Managing Investment Adviser. In connection with such action, the Managing Investment Adviser presented detailed information to the Board requested by the
Independent Directors through their counsel. Such information included (i) information confirming the financial condition of the Managing Investment Adviser and the Managing Investment Advisers profitability derived from its relationship with
the Company; (ii) a description of the personnel and services provided by the Managing Investment Adviser; (iii) comparative information on investment performance; and (iv) information regarding brokerage and portfolio transactions.



The Board reviewed and discussed financial information provided by the
Managing Investment Adviser which included an annual report and financial statements for both U.S. Trust and its parent. The Board reviewed and considered the Managing Investment Advisers profitability derived from its relationship with the
Company. Specifically, the Board reviewed and considered a profit contribution analysis of the Managing Investment Adviser showing its fees, income, and expenses in connection with the Company and the methodology used in the analysis. The Board
determined that the Managing Investment Adviser is solvent and sufficiently well capitalized to perform the ongoing responsibilities to the Company and to satisfy its obligations under the Act and the advisory agreement.



The Board reviewed the advisory fee and the effective investment advisory fee
rate paid by the Company and the appropriateness of such advisory fee. The Board reviewed and considered any economies of scale realized by the Company and how the current advisory fee for the Company reflects the economies of scale for the benefit
of the shareholders of the Company, noting that as a closed-end fund at the end of its investment period and distributing its assets economies of scale were not a significant factor.



The Board also reviewed and considered the fees or other payments received by the Managing Investment Adviser. Specifically,
the Board reviewed and considered comparison of fees charged by investment advisers to fund peers of the Company, noting that the Investment Advisers fees were at the lower end of a narrow range. The Board also considered and reviewed
information regarding brokerage, observing that the Company only occasionally engages in transactions in the public securities markets.



The Board reviewed and considered the qualifications of the current and anticipated portfolio managers to manage the portfolio of the Company, including
their history managing private equity investments generally and their prior involvement with companies in the Companys investment portfolio, and the background and expertise of the key personnel and amount of time they would be able to devote
to the affairs of the Company. The Board concluded, in light of the particular requirements of the Company and the late stage of the investment program, that it was satisfied with the professional qualifications and overall commitment to the Company
of the anticipated portfolio management team.



The Board
considered the nature, extent and quality of services rendered to the Company by the Managing Investment Adviser and the investment performance of the Company based on the data provided which included comparisons with the public markets as evidenced
by NASDAQ data, venture economics data, and data concerning performance relative to other venture and private equity funds with generally similar objectives and management policies that had commenced investment operations at about the same time and
for which detailed information was available. The Board determined that in light of the data taken as a whole and the nature and stages of the investment program of the Company, the investment performance was reasonable and acceptable. The Board
discussed the Managing Investment Advisers profitability, and it was noted that the profitability percentage was within ranges generally determined to be reasonable, given the services rendered and the Companys performance and services
provided. The Board concluded that the Companys fees paid to the Managing Investment Adviser were reasonable in light of comparative performance and advisory fee information, costs of the services provided and profits to be realized and
benefits derived by the Managing Investment Adviser from the relationship with the Company.







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



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



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



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



|    |  |                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | On June 22, 2005, the Company filed a Current Report on Form 8-K to report under Item 5.02 a departure of the chief executive officer and the appointment of co-chief executive
officers.



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SIGNATURES



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



|                         |  |     |  |                                                
|------------------------ |  | --- |  | -----------------------------------------------
|                         |  |     |  | EXCELSIOR PRIVATE EQUITY FUND II, INC.         
|                         |  |    
|Date: September 14, 2005 |  | By: |  | /s/ Timothy Leach                              
|                         |  |     |  | Timothy Leach Co-Chief Executive
Officer       
|                         |  |    
|Date: September 14, 2005 |  | By: |  | /s/ Raghav V. Nandagopal                       
|                         |  |     |  | Raghav V. Nandagopal Co-Chief Executive
Officer
|                         |  |    
|Date: September 14, 2005 |  | By: |  | /s/ Robert F. Aufenanger                       
|                         |  |     |  | Robert F. Aufenanger Treasurer                 
|                         |  |     |  | (Principal Financial Officer)