##### Table of Contents

---

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 April 30, 2007

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 (302) 352-4400



---

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

Large accelerated filer ̈Accelerated
file ̈Non-accelerated filer  x

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

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

As of April 30, 2007, there were 195,730 shares of the Registrants Common Stock, $.01 par value per share, outstanding.



---



---

##### Table of Contents

EXCELSIOR PRIVATE EQUITY FUND II, INC.

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



|         |  |                                                                                                |  |         
|-------- |  | ---------------------------------------------------------------------------------------------- |  | --------
|         |  | INDEX                                                                                          |  | PAGE NO.
|PART I.  |  | FINANCIAL INFORMATION                                                                          |  |         
|         |  |                                                                                               
|Item 1.  |  | Financial Statements                                                                           |  | 1       
|         |  |                                                                                               
|         |  | Portfolios of Investments as of April 30, 2007 and October 31, 2006                            |  | 2       
|         |  |                                                                                               
|         |  | Statements of Assets and Liabilities at April 30, 2007 and October 31, 2006                    |  | 6       
|         |  |                                                                                               
|         |  | Statements of Operations for the six months ended April 30, 2007 and April 30, 2006            |  | 7       
|         |  |                                                                                               
|         |  | Statements of Operations for the three months ended April 30, 2007 and April 30, 2006          |  | 8       
|         |  |                                                                                               
|         |  | Statements of Changes in Net Assets for the six months ended April 30, 2007 and April 30, 2006 |  | 9       
|         |  |                                                                                               
|         |  | Statements of Cash Flows for the six months ended April 30, 2007 and April 30, 2006            |  | 10      
|         |  |                                                                                               
|         |  | Financial Highlights at April 30, 2007 and April 30, 2006                                      |  | 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                                     |  | 20      
|         |  |                                                                                               
|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                                                                              |  | 22      
|         |  |                                                                                               
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                               |  | 22      



---

##### Table of Contents

PART I. FINANCIAL INFORMATION



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

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments (Unaudited)



|                                 |  |                |            |                 |        |  
|-------------------------------- |  | -------------- | ---------- | --------------- | ------ | -
|                                 |  | April 30, 2007 |           
|PORTFOLIO STRUCTURE              |  | Value          |            | % of Net Assets |       
|SHORT-TERM INVESTMENTS:          |  |                |            |                 |        |  
|MONEY MARKET INVESTMENTS         |  | $              | 29,133,729 |                 | 54.53  | %
|INVESTMENT COMPANIES             |  |                | 790,698    |                 | 1.48   | %
|PRIVATE INVESTMENT FUNDS         |  |                | 15,252,281 |                 | 28.54  | %
|PRIVATE COMPANIES                |  |                | 7,420,025  |                 | 13.89  | %
|                                 |  |                |            |                 |        |  
|TOTAL INVESTMENTS                |  |                | 52,596,733 |                 | 98.44  | %
|OTHER ASSETS & LIABILITIES (NET) |  |                | 833,268    |                 | 1.56   | %
|                                 |  |                |            |                 |        |  
|NET ASSETS                       |  | $              | 53,430,001 |                 | 100.00 | %
|                                 |  |                |            |                 |        |  

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments (Audited)



|                                 |  |                  |            |                 |        |  
|-------------------------------- |  | ---------------- | ---------- | --------------- | ------ | -
|                                 |  | October 31, 2006 |           
|PORTFOLIO STRUCTURE              |  | Value            |            | % of Net Assets |       
|SHORT-TERM INVESTMENTS:          |  |                  |            |                 |        |  
|MONEY MARKET INVESTMENTS         |  | $                | 23,003,123 |                 | 46.72  | %
|INVESTMENT COMPANIES             |  |                  | 790,698    |                 | 1.61   | %
|PRIVATE INVESTMENT FUNDS         |  |                  | 17,582,236 |                 | 35.72  | %
|PRIVATE COMPANIES                |  |                  | 7,420,025  |                 | 15.07  | %
|                                 |  |                  |            |                 |        |  
|TOTAL INVESTMENTS                |  |                  | 48,796,082 |                 | 99.12  | %
|OTHER ASSETS & LIABILITIES (NET) |  |                  | 433,522    |                 | 0.88   | %
|                                 |  |                  |            |                 |        |  
|NET ASSETS                       |  | $                | 49,229,604 |                 | 100.00 | %
|                                 |  |                  |            |                 |        |  

The accompanying notes are an integral part of these Financial Statements.



1



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments April 30, 2007 (Unaudited)



|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|------------------- | -------------------------------------- | - |  | --------------------------------------------------------------- | --------------------- | ----------- | -------------- | - | ----------
|PrincipalAmount     |                                        |   |  |                                                                 | AcquisitionDate(s) ## |             | Value (Note 1)
|                    | MONEY MARKET INSTRUMENTS  54.53%      |   |  |                                                                 |                       |            
|$                   | 6,000,000                              |   |  | Federal Home Loan Bank Discount Note 5.14%, 05/09/07            |                       |             |                | $ | 5,993,147 
|$                   | 11,000,000                             |   |  | Federal Home Loan Bank Discount Note 5.12%, 05/23/07            |                       |             |                |   | 10,965,582
|$                   | 12,175,000                             |   |  | Federal Home Loan Bank Discount Note 5.06%, 05/01/07            |                       |             |                |   | 12,175,000
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    |                                        |   |  | TOTAL MONEY MARKET INSTRUMENTS (Cost $29,133,729)               |                       |             |                |   | 29,133,729
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|OwnershipPercentage |                                        |   |  |                                                                 |                       |             |               
|                    | PRIVATE INVESTMENT FUNDS #, @  28.54% |   |  |                                                                 |                       |            
|                    |                                        |   |  | Buyout Funds  10.95%                                           |                       |             |                |   |           
|                    | 0.96                                   | % |  | Brentwood Associates III, LP                                    |                       | 06/99-07/06 |                |   | 2,627,179 
|                    | 1.98                                   | % |  | Broadview Capital Partners, LP                                  |                       | 04/99-10/02 |                |   | 839,403   
|                    | 1.39                                   | % |  | Friedman, Fleischer & Lowe Capital Partners, LP                 |                       | 01/99-10/02 |                |   | 1,411,882 
|                    | 1.39                                   | % |  | Quad-C Partners V, LP                                           |                       | 04/98-10/02 |                |   | 973,460   
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    |                                        |   |  |                                                                 |                       |             |                |   | 5,851,924 
|                    |                                        |   |  | Early Stage Venture Funds  7.86%                               |                       |             |                |   |           
|                    | 1.71                                   | % |  | Advanced Technology Ventures V, LP                              |                       | 09/98-10/02 |                |   | 585,042   
|                    | 3.85                                   | % |  | Communications Ventures III, LP                                 |                       | 11/98-05/00 |                |   | 646,106   
|                    | 1.24                                   | % |  | Mayfield X, LP                                                  |                       | 06/99-05/02 |                |   | 900,584   
|                    | 0.62                                   | % |  | Mayfield X, Annex                                               |                       | 07/02-10/02 |                |   | 115,367   
|                    | 8.66                                   | % |  | Mid-Atlantic Venture Fund III, LP                              |                       | 04/98-02/01 |                |   | 1,216,476 
|                    | 1.27                                   | % |  | Sevin Rosen Fund VI, LP                                         |                       | 03/98-10/02 |                |   | 630,434   
|                    | 2.08                                   | % |  | Trinity Ventures VI, LP                                         |                       | 09/98-10/02 |                |   | 108,242   
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    |                                        |   |  |                                                                 |                       |             |                |   | 4,202,251 
|                    |                                        |   |  | Varied Stage Venture Funds  9.73%                              |                       |             |                |   |           
|                    | 2.34                                   | % |  | Morgenthaler Venture Partners V, LP                             |                       | 10/98-08/01 |                |   | 4,746,768 
|                    | 2.58                                   | % |  | Brand Equity Ventures I, LP                                     |                       | 03/98-10/01 |                |   | 451,338   
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    |                                        |   |  |                                                                 |                       |             |                |   | 5,198,106 
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    |                                        |   |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $26,048,142)               |                       |             |                |   | 15,252,281
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|Shares/Par Value    |                                        |   |  |                                                                 |                       |             |               
|                    | PRIVATE COMPANIES #  13.89%           |   |  |                                                                 |                       |            
|                    | Preferred Stocks @ 9.36%              |   |  |                                                                 |                       |            
|                    | Educational Services  0.00%           |   |  |                                                                 |                       |            
|                    | 75,059                                 |   |  | Mosaica Education, Inc., Series C                               |                       | 08/01       |                |   |          
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    | Internet Services Business  9.36%     |   |  |                                                                 |                       |            
|                    | 1,428,572                              |   |  | Clear Orbit, Inc., Series A                                    |                       | 06/00       |                |   | 5,000,013 
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    |                                        |   |  | Total Preferred Stock (Cost $10,119,422)                        |                       |             |                |   | 5,000,013 
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    | Promissory Notes  4.53%               |   |  |                                                                 |                       |            
|                    | Biotechnology  0.85%                  |   |  |                                                                 |                       |            
|$                   | 451,412                                |   |  | Metrigen, Inc., 6.00%, 9/01/2009                                |                       | 07/03       |                |   | 451,412   
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    | Educational Services  3.68%           |   |  |                                                                 |                       |            
|$                   | 686,415                                |   |  | Mosaica Education, Inc. Bridge Notes, 15.00%, 12/30/2007        |                       | 02/01-08/01 |                |   | 686,415   
|$                   | 1,025,748                              |   |  | Mosaica Education, Inc. (Advantage Schools), 0.00%, 12/31/2007@ |                       | 02/01-08/01 |                |   | 1,025,748 
|$                   | 256,437                                |   |  | Mosaica Education, Inc. (ASI Texas LLC), 0.00%, 12/31/2007@     |                       | 02/01-08/01 |                |   | 256,437   
|                    |                                        |   |  |                                                                 |                       |             |                |   |           
|                    |                                        |   |  |                                                                 |                       |             |                |   | 1,968,600 
|                    |                                        |   |  | Total Promissory Notes (Cost $2,420,012)                        |                       |             |                |   | 2,420,012 
|                    |                                        |   |  |                                                                 |                       |             |                |   |           

The accompanying notes are an integral part of these Financial Statements.



2



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments April 30, 2007 (Unaudited)  (continued)



|                                              |  |                                                             |  |                        |            |                |          
|--------------------------------------------- |  | ----------------------------------------------------------- |  | ---------------------- | ---------- | -------------- | ---------
|Shares                                        |  |                                                             |  | Acquisition Date(s) ## |            | Value (Note 1)
|Warrants @ 0.00%                             |  |                                                             |  |                        |           
|Biotechnology  0.00%                         |  |                                                             |  |                        |           
|62,326                                        |  | Metrigen, Inc. (expiration December 2012)                   |  | 07/03                  |            | $              |         
|                                              |  |                                                             |  |                        |            |                |          
|                                              |  | Total Warrants (Cost $0)                                    |  |                        |            |                |         
|                                              |  |                                                             |  |                        |            |                |          
|                                              |  | TOTAL PRIVATE COMPANIES (Cost $12,539,434)                  |  |                        |            |                | 7,420,025
|                                              |  |                                                             |  |                        |            |                |          
|PUBLIC COMPANIES @, #  0.00%                 |  |                                                             |  |                        |           
|Warrants  0.00%                              |  |                                                             |  |                        |           
|Biotechnology  0.00%                         |  |                                                             |  |                        |           
|76,950                                        |  | Curon Medical Inc. Warrants (expiration May 2007) (cost $0) |  | 08/00                  |            |                |         
|                                              |  |                                                            
|INVESTMENT COMPANIES 1.48%                   |  |                                                             |  |                        |           
|790,698                                       |  | Dreyfus Government Cash Management Fund (Cost $790,698)     |  |                        |            |                | 790,698  
|                                              |  |                                                             |  |                        |            |                |          
|TOTAL INVESTMENTS (Cost $68,512,003)  98.44% |  |                                                             |  |                        | 52,596,733
|OTHER ASSETS & LIABILITIES (NET)  1.56%      |  |                                                             |  |                        | 833,268   
|                                              |  |                                                             |  |                        |            |                |          
|NET ASSETS  100.00%                          |  |                                                             |  | $                      | 53,430,001
|                                              |  |                                                             |  |                        |            |                |          

---

| | At April 30, 2007, the Company owned 5% or more of the companys outstanding voting shares thereby making the company an affiliate as defined by the Investment Company Act
of 1940, as amended. Total value of affiliated securities owned at April 30, 2007 was $6,216,489.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|# | Restricted as to public resale. Total cost of restricted securities at April 30, 2007 aggregated $38,587,576.
|- | -------------------------------------------------------------------------------------------------------------



| | Total value of restricted securities owned at April 30, 2007 was $22,672,306 or 42.43% of net assets.
| | -----------------------------------------------------------------------------------------------------



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



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

The
accompanying notes are an integral part of these Financial Statements.



3



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments October 31, 2006 (Audited)



|                    |                                        |   |  |                                                        |                        |             |                |   |           
|------------------- | -------------------------------------- | - |  | ------------------------------------------------------ | ---------------------- | ----------- | -------------- | - | ----------
|PrincipalAmount     |                                        |   |  |                                                        | Acquisition Date(s) ## |             | Value (Note 1)
|                    | MONEY MARKET INSTRUMENTS  46.72%      |   |  |                                                        |                        |            
|$                   | 7,000,000                              |   |  | Federal Farm Credit Bank Discount Note 5.09%, 11/13/06 |                        |             |                | $ | 6,988,123 
|$                   | 2,000,000                              |   |  | Federal Farm Credit Bank Discount Note 5.07%, 11/01/06 |                        |             |                |   | 2,000,000 
|$                   | 4,000,000                              |   |  | Federal Home Loan Bank Discount Note 5.09%, 11/01/06   |                        |             |                |   | 4,000,000 
|$                   | 5,000,000                              |   |  | Federal Home Loan Bank Discount Note 5.07%, 11/01/06   |                        |             |                |   | 5,000,000 
|$                   | 5,015,000                              |   |  | Federal Home Loan Bank Discount Note 4.98%, 11/01/06   |                        |             |                |   | 5,015,000 
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|                    |                                        |   |  | TOTAL MONEY MARKET INSTRUMENTS (Cost $23,003,123)      |                        |             |                |   | 23,003,123
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|OwnershipPercentage |                                        |   |  |                                                        |                        |             |               
|                    | PRIVATE INVESTMENT FUNDS #, @  35.72% |   |  |                                                        |                        |            
|                    |                                        |   |  | Buyout Funds  16.39%                                  |                        |             |                |   |           
|                    | 0.96                                   | % |  | Brentwood Associates III, LP                           |                        | 06/99-07/06 |                |   | 3,321,996 
|                    | 1.98                                   | % |  | Broadview Capital Partners, LP*                        |                        | 04/99-10/02 |                |   | 1,620,886 
|                    | 1.39                                   | % |  | Friedman, Fleischer & Lowe Capital Partners, LP        |                        | 01/99-10/02 |                |   | 1,399,395 
|                    | 1.32                                   | % |  | Quad-C Partners V, LP*                                 |                        | 04/98-10/02 |                |   | 1,728,415 
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|                    |                                        |   |  |                                                        |                        |             |                |   | 8,070,692 
|                    |                                        |   |  | Early Stage Venture Funds  12.97%                     |                        |             |                |   |           
|                    | 1.71                                   | % |  | Advanced Technology Ventures V, LP                     |                        | 09/98-10/02 |                |   | 580,307   
|                    | 4.29                                   | % |  | Commonwealth Capital Ventures II, LP                   |                        | 01/99-10/02 |                |   | 1,476,739 
|                    | 3.96                                   | % |  | Communications Ventures III, LP                        |                        | 11/98-05/00 |                |   | 439,331   
|                    | 1.24                                   | % |  | Mayfield X, LP                                         |                        | 06/99-05/02 |                |   | 867,697   
|                    | 0.62                                   | % |  | Mayfield X, Annex*                                     |                        | 07/02-10/02 |                |   | 181,672   
|                    | 8.67                                   | % |  | Mid-Atlantic Venture Fund III, LP                     |                        | 04/98-02/01 |                |   | 1,231,096 
|                    | 1.29                                   | % |  | Sevin Rosen Fund VI, LP                                |                        | 03/98-10/02 |                |   | 608,313   
|                    | 2.12                                   | % |  | Trinity Ventures VI, LP*                               |                        | 09/98-10/02 |                |   | 998,697   
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|                    |                                        |   |  |                                                        |                        |             |                |   | 6,383,852 
|                    |                                        |   |  | Varied Stage Venture Funds  6.36%                     |                        |             |                |   |           
|                    | 2.63                                   | % |  | Brand Equity Ventures, LP                              |                        | 03/98-10/01 |                |   | 481,902   
|                    | 2.55                                   | % |  | Morgenthaler Venture Partners V, LP                    |                        | 10/98-08/01 |                |   | 2,645,790 
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|                    |                                        |   |  |                                                        |                        |             |                |   | 3,127,692 
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|                    |                                        |   |  | TOTAL PRIVATE INVESTMENT FUNDS (Cost $29,246,072)      |                        |             |                |   | 17,582,236
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|Shares              |                                        |   |  |                                                        |                        |             |               
|                    | PRIVATE COMPANIES #  15.07%           |   |  |                                                        |                        |            
|                    | Preferred Stocks @  10.15%            |   |  |                                                        |                        |            
|                    | Educational Services  0.00%           |   |  |                                                        |                        |            
|                    | 75,059                                 |   |  | Mosaica Education, Inc., Series C                      |                        | 08/01       |                |   |          
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|                    | Internet Services  Business  10.15%  |   |  |                                                        |                        |            
|                    | 1,428,572                              |   |  | Clear Orbit, Inc., Series A                           |                        | 06/00       |                |   | 5,000,013 
|                    |                                        |   |  |                                                        |                        |             |                |   |           
|                    |                                        |   |  | Total Preferred Stock (Cost $10,119,422)               |                        |             |                |   | 5,000,013 

The accompanying notes are an integral part of these Financial Statements.



4



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Portfolio of Investments at October 31, 2006 (Audited)  (continued)



|                  |                                               |  |                                                                  |                       |             |                |   |          
|----------------- | --------------------------------------------- |  | ---------------------------------------------------------------- | --------------------- | ----------- | -------------- | - | ---------
|Shares / ParValue |                                               |  |                                                                  | AcquisitionDate(s) ## |             | Value (Note 1)
|                  | Promissory Notes 4.92%                       |  |                                                                  |                       |             |               
|                  | Biotechnology  0.92%                         |  |                                                                  |                       |             |               
|$                 | 451,412                                       |  | Metrigen, Inc., 6.00%, 9/01/2009                                 |                       | 07/03       |                | $ | 451,412  
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  | Educational Services  4.00%                  |  |                                                                  |                       |             |               
|$                 | 686,415                                       |  | Mosaica Education, Inc. Bridge Notes, 15.00%, 12/30/2007         |                       | 02/01-08/01 |                |   | 686,415  
|$                 | 1,025,748                                     |  | Mosaica Education, Inc. (Advantage Schools), 0.00%, 12/31/2007 @ |                       | 02/01-08/01 |                |   | 1,025,748
|$                 | 256,437                                       |  | Mosaica Education, Inc. (ASI Texas LLC ), 0.00%, 12/31/2007 @    |                       | 02/01-08/01 |                |   | 256,437  
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  |                                               |  |                                                                  |                       |             |                |   | 1,968,600
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  |                                               |  | Total Promissory Notes (Cost $2,420,012)                         |                       |             |                |   | 2,420,012
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  | Warrants @  0.00%                            |  |                                                                  |                       |             |               
|                  | Biotechnology  0.00%                         |  |                                                                  |                       |             |               
|                  | 62,326                                        |  | Metrigen, Inc. (expiration December, 2012)                       |                       | 07/03       |                |   |         
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  |                                               |  | Total Warrants (Cost $0)                                         |                       |             |                |   |         
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  |                                               |  | TOTAL PRIVATE COMPANIES (Cost $12,539,434)                       |                       |             |                |   | 7,420,025
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  | PUBLIC COMPANIES @, #,  0.00%                |  |                                                                  |                       |             |               
|                  | Biotechnology  0.00%                         |  |                                                                  |                       |             |               
|                  | 76,950                                        |  | Curon Medical Inc. Warrants (expiration May, 2007) (Cost $0)     |                       | 08/00       |                |   |         
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  | INVESTMENT COMPANIES 1.61%                   |  |                                                                  |                       |             |               
|                  | 790,698                                       |  | Dreyfus Government Cash Management Fund (Cost $790,698)          |                       |             |                |   | 790,698  
|                  | TOTAL INVESTMENTS (Cost $65,579,327)  99.12% |  |                                                                  |                       |             | 48,796,082    
|                  | OTHER ASSETS & LIABILITIES (NET)  0.88%      |  |                                                                  |                       |             | 433,522       
|                  |                                               |  |                                                                  |                       |             |                |   |          
|                  | NET ASSETS 100.00%                           |  |                                                                  |                       | $           | 49,229,604    
|                  |                                               |  |                                                                  |                       |             |                |   |          

| | At October 31, 2006, the Company owned 5% or more of the companys outstanding voting shares thereby making the company an affiliate as defined by the Investment Company
Act of 1940, as amended. Total market value of affiliated securities owned at October 31, 2006 was $6,231,109.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|# | Restricted as to public resale. Acquired between March 1998 and July, 2006. Total cost of restricted securities at October 31, 2006 aggregated $41,785,506. Total market value
of restricted securities owned at October 31, 2006 was $25,002,261 or 50.79% of net assets.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | Contributions paid in advance as of 10/31/06 (Broadview Capital Partners L.P. - $342,914, Mayfield X Annex - $87,500, Quad-C Partners V, L.P. - $716,565, Trinity Ventures VI, L.P. -
$86,249).
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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

The
accompanying notes are an integral part of these Financial Statements.



5



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Assets and Liabilities



|                                                                               |  |                           |             |   |                           |   |             |  
|------------------------------------------------------------------------------ |  | ------------------------- | ----------- | - | ------------------------- | - | ----------- | -
|                                                                               |  | April 30, 2007(Unaudited) |             |   | October 31, 2006(Audited) |  
|ASSETS:                                                                        |  |                           |             |   |                           |   |             |  
|Unaffiliated Issuers, at value (Cost $59,730,845 and $56,798,169 respectively) |  | $                         | 46,380,244  |   |                           | $ | 42,564,973  |  
|Affiliated Issuers, at value (Cost $8,781,158 and $8,781,158 respectively)     |  |                           | 6,216,489   |   |                           |   | 6,231,109   |  
|                                                                               |  |                           |             |   |                           |   |             |  
|Investments, at value (Cost $68,512,003 and $65,579,327 respectively) (Note 1) |  |                           | 52,596,733  |   |                           |   | 48,796,082  |  
|Cash and cash equivalents (Note 1)                                             |  |                           | 2,833       |   |                           |   | 3,843       |  
|Receivable from Managing Investment Adviser (Note 2)                           |  |                           | 494,348     |   |                           |   | 193,634     |  
|Receivable for securities sold                                                 |  |                           | 177,164     |   |                           |   |            |  
|Interest receivable                                                            |  |                           | 547,457     |   |                           |   | 496,286     |  
|Other assets                                                                   |  |                           | 12,003      |   |                           |   | 1,458       |  
|                                                                               |  |                           |             |   |                           |   |             |  
|Total Assets                                                                   |  |                           | 53,830,538  |   |                           |   | 49,491,303  |  
|                                                                               |  |                           |             |   |                           |   |             |  
|LIABILITIES:                                                                   |  |                           |             |   |                           |   |             |  
|Management fees payable (Note 2)                                               |  |                           | 245,840     |   |                           |   | 124,418     |  
|Professional fees payable                                                      |  |                           | 77,370      |   |                           |   | 80,000      |  
|Administration fees payable (Note 2)                                           |  |                           | 23,701      |   |                           |   | 15,086      |  
|Directors fees payable (Note 2)                                               |  |                           | 31,500      |   |                           |   | 22,000      |  
|Accrued expenses and other payables                                            |  |                           | 22,126      |   |                           |   | 20,195      |  
|                                                                               |  |                           |             |   |                           |   |             |  
|Total Liabilities                                                              |  |                           | 400,537     |   |                           |   | 261,699     |  
|                                                                               |  |                           |             |   |                           |   |             |  
|NET ASSETS                                                                     |  | $                         | 53,430,001  |   |                           | $ | 49,229,604  |  
|                                                                               |  |                           |             |   |                           |   |             |  
|NET ASSETS consist of:                                                         |  |                           |             |   |                           |   |             |  
|Accumulated net realized (loss) on investments                                 |  |                           | (35,760,092 | ) |                           |   | (38,684,984 | )
|Accumulated net unrealized (depreciation) on investments                       |  |                           | (15,915,270 | ) |                           |   | (16,783,245 | )
|Accumulated net investment income                                              |  |                           | 407,530     |   |                           |   |            |  
|Par value                                                                      |  |                           | 1,957       |   |                           |   | 1,957       |  
|Paid-in capital in excess of par value                                         |  |                           | 104,695,876 |   |                           |   | 104,695,876 |  
|                                                                               |  |                           |             |   |                           |   |             |  
|Total Net Assets                                                               |  | $                         | 53,430,001  |   |                           | $ | 49,229,604  |  
|                                                                               |  |                           |             |   |                           |   |             |  
|Shares of Common Stock Outstanding ($0.01 par value, 200,000 authorized)       |  |                           | 195,730     |   |                           |   | 195,730     |  
|NET ASSET VALUE PER SHARE                                                      |  | $                         | 272.98      |   |                           | $ | 251.52      |  
|                                                                               |  |                           |             |   |                           |   |             |  

The accompanying notes are an integral part of these Financial Statements.



6



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                    |  |                            |           |   |      |   |            |  
|------------------------------------------------------------------- |  | -------------------------- | --------- | - | ---- | - | ---------- | -
|                                                                    |  | Six Months Ended April 30, |          
|                                                                    |  | 2007                       |           |   | 2006 |  
|INVESTMENT INCOME:                                                  |  |                            |           |   |      |   |            |  
|Interest income from unaffiliated investments                       |  | $                          | 696,581   |   |      | $ | 351,943    |  
|Dividend income                                                     |  |                            | 20,198    |   |      |   | 17,882     |  
|                                                                    |  |                            |           |   |      |   |            |  
|Total Investment Income                                             |  |                            | 716,779   |   |      |   | 369,825    |  
|                                                                    |  |                            |           |   |      |   |            |  
|EXPENSES:                                                           |  |                            |           |   |      |   |            |  
|Managing Investment Adviser fees (Note 2)                           |  |                            | 245,840   |   |      |   | 255,949    |  
|Administration fees (Note 2)                                        |  |                            | 51,000    |   |      |   | 49,000     |  
|Professional fees                                                   |  |                            | 426,682   |   |      |   | 121,834    |  
|Directors fees and expenses (Note 2)                               |  |                            | 44,000    |   |      |   | 34,130     |  
|Insurance expense                                                   |  |                            | 10,075    |   |      |   | 10,661     |  
|Miscellaneous expenses                                              |  |                            | 26,000    |   |      |   | 26,665     |  
|                                                                    |  |                            |           |   |      |   |            |  
|Total Expenses                                                      |  |                            | 803,597   |   |      |   | 498,239    |  
|                                                                    |  |                            |           |   |      |   |            |  
|Expenses reimbursed by Managing Investment Adviser                  |  |                            | (494,348  | ) |      |   | (186,079   | )
|                                                                    |  |                            |           |   |      |   |            |  
|Net Expenses                                                        |  |                            | 309,249   |   |      |   | 312,160    |  
|                                                                    |  |                            |           |   |      |   |            |  
|NET INVESTMENT INCOME                                               |  |                            | 407,530   |   |      |   | 57,665     |  
|                                                                    |  |                            |           |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 1)    |  |                            |           |   |      |   |            |  
|Net realized gain on unaffiliated investments                       |  |                            | 2,924,892 |   |      |   | 784,682    |  
|Net change in unrealized appreciation/(depreciation) on investments |  |                            | 867,975   |   |      |   | (2,756,134 | )
|                                                                    |  |                            |           |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS              |  |                            | 3,792,867 |   |      |   | (1,971,452 | )
|                                                                    |  |                            |           |   |      |   |            |  
|NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS     |  | $                          | 4,200,397 |   |      | $ | (1,913,787 | )
|                                                                    |  |                            |           |   |      |   |            |  

The accompanying notes are an integral part of these Financial Statements.



7



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Operations (Unaudited)



|                                                                    |  |                              |           |   |      |   |            |  
|------------------------------------------------------------------- |  | ---------------------------- | --------- | - | ---- | - | ---------- | -
|                                                                    |  | Three Months Ended April 30, |          
|                                                                    |  | 2007                         |           |   | 2006 |  
|INVESTMENT INCOME:                                                  |  |                              |           |   |      |   |            |  
|Interest income from unaffiliated investments                       |  | $                            | 358,875   |   |      | $ | 191,623    |  
|Dividend income                                                     |  |                              | 10,025    |   |      |   | 7,946      |  
|                                                                    |  |                              |           |   |      |   |            |  
|Total Investment Income                                             |  |                              | 368,900   |   |      |   | 199,569    |  
|                                                                    |  |                              |           |   |      |   |            |  
|EXPENSES:                                                           |  |                              |           |   |      |   |            |  
|Managing Investment Adviser fees (Note 2)                           |  |                              | 123,857   |   |      |   | 122,945    |  
|Administration fees (Note 2)                                        |  |                              | 25,500    |   |      |   | 24,250     |  
|Professional fees                                                   |  |                              | 308,299   |   |      |   | 78,246     |  
|Directors fees and expenses (Note 2)                               |  |                              | 22,000    |   |      |   | 14,630     |  
|Insurance expense                                                   |  |                              | 4,954     |   |      |   | 5,242      |  
|Miscellaneous expenses                                              |  |                              | 13,000    |   |      |   | 19,832     |  
|                                                                    |  |                              |           |   |      |   |            |  
|Total Expenses                                                      |  |                              | 497,610   |   |      |   | 265,145    |  
|                                                                    |  |                              |           |   |      |   |            |  
|Expenses reimbursed by Managing Investment Adviser                  |  |                              | (341,204  | ) |      |   | (114,468   | )
|                                                                    |  |                              |           |   |      |   |            |  
|Net Expenses                                                        |  |                              | 156,406   |   |      |   | 150,677    |  
|                                                                    |  |                              |           |   |      |   |            |  
|NET INVESTMENT INCOME                                               |  |                              | 212,494   |   |      |   | 48,892     |  
|                                                                    |  |                              |           |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:(Note 1)     |  |                              |           |   |      |   |            |  
|Net realized gain on unaffiliated investments                       |  |                              | 2,219,041 |   |      |   | 786,426    |  
|Net change in unrealized appreciation/(depreciation) on investments |  |                              | 1,476,865 |   |      |   | (2,566,768 | )
|                                                                    |  |                              |           |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS              |  |                              | 3,695,906 |   |      |   | (1,780,342 | )
|                                                                    |  |                              |           |   |      |   |            |  
|NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS     |  | $                            | 3,908,400 |   |      | $ | (1,731,450 | )
|                                                                    |  |                              |           |   |      |   |            |  

The accompanying notes are an integral part of these Financial Statements.



8



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Changes in Net Assets (Unaudited)



|                                                                                                  |  |                            |            |      |   |            |  
|------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | ---- | - | ---------- | -
|                                                                                                  |  | Six Months Ended April 30, |           
|                                                                                                  |  | 2007                       |            | 2006 |  
|OPERATIONS:                                                                                       |  |                            |            |      |   |            |  
|Net investment income                                                                             |  | $                          | 407,530    |      | $ | 57,665     |  
|Net realized gain on unaffiliated investments                                                     |  |                            | 2,924,892  |      |   | 784,682    |  
|Net change in unrealized appreciation/(depreciation) on investments                               |  |                            | 867,975    |      |   | (2,756,134 | )
|                                                                                                  |  |                            |            |      |   |            |  
|Net increase/(decrease) in net assets resulting from operations                                   |  |                            | 4,200,397  |      |   | (1,913,787 | )
|DISTRIBUTIONS TO SHAREHOLDERS:                                                                    |  |                            |            |      |   |            |  
|Distributions                                                                                     |  |                            |           |      |   |           |  
|                                                                                                  |  |                            |            |      |   |            |  
|NET INCREASE/(DECREASE) IN NET ASSETS                                                             |  |                            | 4,200,397  |      |   | (1,913,787 | )
|NET ASSETS:                                                                                       |  |                            |            |      |   |            |  
|Beginning of period                                                                               |  |                            | 49,229,604 |      |   | 45,677,145 |  
|                                                                                                  |  |                            |            |      |   |            |  
|End of period (including accumulated net investment income of $407,530 and $57,665, respectively) |  | $                          | 53,430,001 |      | $ | 43,763,358 |  
|                                                                                                  |  |                            |            |      |   |            |  

The accompanying notes are an integral part of these Financial Statements.



9



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

Statements of Cash Flows (Unaudited)



|                                                                                                                                                 |  |                            |            |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                                 |  | Six Months Ended April 30, |           
|                                                                                                                                                 |  | 2007                       |            |   | 2006 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                            |  |                            |            |   |      |   |            |  
|Net increase/(decrease) in net assets resulting from operations                                                                                  |  | $                          | 4,200,397  |   |      | $ | (1,913,787 | )
|Adjustments to reconcile net increase/(decrease) in net assets resulting from operations to net cash (used in)/provided by operating
activities: |  |                            |            |   |      |   |            |  
|Net change in unrealized (appreciation)/depreciation on investments                                                                              |  |                            | (867,975   | ) |      |   | 2,756,134  |  
|Purchase of short-term investments - Net                                                                                                         |  |                            | (6,130,606 | ) |      |   | (3,550,605 | )
|Purchase of investments                                                                                                                          |  |                            | (15,615    | ) |      |   | (288,119   | )
|Proceeds received from the sale of investments and distributions received from private investment funds                                          |  |                            | 6,138,436  |   |      |   | 3,162,178  |  
|Net realized (gain) on investments                                                                                                               |  |                            | (2,924,891 | ) |      |   | (784,682   | )
|(Increase)/decrease in receivable from managing investment adviser                                                                               |  |                            | (300,714   | ) |      |   | (31,255    | )
|(Increase)/decrease in interest receivable                                                                                                       |  |                            | (51,171    | ) |      |   | (53,806    | )
|(Increase)/decrease in receivable for securities sold                                                                                            |  |                            | (177,164   | ) |      |   | 760,138    |  
|(Increase)/decrease in other assets                                                                                                              |  |                            | (10,545    | ) |      |   | (8,928     | )
|Increase/(decrease) in management fee payable                                                                                                    |  |                            | 121,422    |   |      |   | (15,848    | )
|(Decrease) in professional fees payable                                                                                                          |  |                            | (2,630     | ) |      |   | (29,687    | )
|Increase/(decrease) in administration fees payable                                                                                               |  |                            | 8,615      |   |      |   | (582       | )
|Increase in directors fees payable                                                                                                              |  |                            | 9,500      |   |      |   | 4,130      |  
|Increase/(decrease) in other expenses payable                                                                                                    |  |                            | 1,931      |   |      |   | (3,298     | )
|                                                                                                                                                 |  |                            |            |   |      |   |            |  
|Net cash (used in)/provided by operating activities                                                                                              |  |                            | (1,010     | ) |      |   | 1,983      |  
|                                                                                                                                                 |  |                            |            |   |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                            |  |                            |            |   |      |   |            |  
|Cash distribution                                                                                                                                |  |                            |           |   |      |   |           |  
|                                                                                                                                                 |  |                            |            |   |      |   |            |  
|Net cash used in financing activities                                                                                                            |  |                            |           |   |      |   |           |  
|                                                                                                                                                 |  |                            |            |   |      |   |            |  
|Net (decrease)/ increase in cash                                                                                                                 |  |                            | (1,010     | ) |      |   | 1,983      |  
|                                                                                                                                                 |  |                            |            |   |      |   |            |  
|Cash and cash equivalents at beginning of period                                                                                                 |  |                            | 3,843      |   |      |   |           |  
|                                                                                                                                                 |  |                            |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                                                                                       |  | $                          | 2,833      |   |      | $ | 1,983      |  
|                                                                                                                                                 |  |                            |            |   |      |   |            |  

The accompanying notes are an integral part of these Financial Statements.



10



---

##### Table of Contents

Excelsior Private Equity Fund II, Inc.

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

Per Share Operating Performance (1)



|                                                                         |  |                                 |        |   |                                 |   |        |   
|------------------------------------------------------------------------ |  | ------------------------------- | ------ | - | ------------------------------- | - | ------ | --
|                                                                         |  | Six Months Ended April 30, 2007 |        |   | Six Months Ended April 30, 2006 |  
|NET ASSET VALUE, BEGINNING OF PERIOD                                     |  | $                               | 251.52 |   |                                 | $ | 233.37 |   
|INCOME FROM INVESTMENT OPERATIONS:                                       |  |                                 |        |   |                                 |   |        |   
|Net investment income                                                    |  |                                 | 2.08   |   |                                 |   | 0.29   |   
|Net realized and unrealized gain/(loss) on investments                   |  |                                 | 19.38  |   |                                 |   | (10.07 | ) 
|                                                                         |  |                                 |        |   |                                 |   |        |   
|Net increase/(decrease) per unit in net assets resulting from operations |  |                                 | 21.46  |   |                                 |   | (9.78  | ) 
|                                                                         |  |                                 |        |   |                                 |   |        |   
|FINANCING ACTIVITIES                                                     |  |                                 |        |   |                                 |   |        |   
|Distribution to Members                                                  |  |                                 |       |   |                                 |   |       |   
|                                                                         |  |                                 |        |   |                                 |   |        |   
|NET INCREASE/(DECREASE) IN NET ASSETS:                                   |  |                                 | 21.46  |   |                                 |   | (9.78  | ) 
|                                                                         |  |                                 |        |   |                                 |   |        |   
|NET ASSET VALUE, END OF PERIOD                                           |  | $                               | 272.98 |   |                                 | $ | 223.59 |   
|                                                                         |  |                                 |        |   |                                 |   |        |   
|TOTAL NET ASSET VALUE RETURN (3),(4)                                     |  |                                 | 8.53   | % |                                 |   | (4.19  | )%
|                                                                         |  |                                
|Ratios and supplemental data: (6)                                        |  |                                 |        |   |                                 |   |        |   
|Net assets, end of period (thousands)                                    |  | $                               | 53,430 |   |                                 | $ | 43,763 |   
|Ratios to average net assets (2)                                         |  |                                 |        |   |                                 |   |        |   
|Gross expenses (5)                                                       |  |                                 | 3.17   | % |                                 |   | 2.22   | % 
|Net expenses                                                             |  |                                 | 1.22   | % |                                 |   | 1.39   | % 
|Net investment gain/loss                                                 |  |                                 | 1.61   | % |                                 |   | 0.26   | % 
|Portfolio turnover (3)                                                   |  |                                 | 0.00   | % |                                 |   | 0.00   | % 



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



|(2) | Annualized for periods less than a year.
|--- | ----------------------------------------



|(3) | Not annualized for periods less than a year.
|--- | --------------------------------------------



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



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



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

The accompanying notes are an integral part of these Financial Statements.



11



---

##### Table of Contents

EXCELSIOR PRIVATE EQUITY FUND II, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

April 30, 2007

Note
1  Organization and 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. The duration of the Company is ten years (subject to two 2-year extensions) from the final subscription closing, which occurred on November 19, 1997.

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 and offer compelling strategic benefits to the Company.

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

The interim financial data as of April 30, 2007 and for the three and six months ended April 30, 2007 and April 30, 2006 is unaudited;
however, in the opinion of the Company, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods.

(a) Cash and Cash Equivalents:

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

(b) Portfolio valuation:

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

The value for securities for which no public market exists is difficult to determine. Generally, such investments
will be valued on a going concern basis without giving effect to any disposition costs. There is a range of values that is reasonable for such investments at any particular time. Initially, direct investments are valued based upon their
original cost, until developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued by the private



12



---

##### Table of Contents

Note 1  Organization and Significant Accounting Policies (continued)

(b) Portfolio valuation (continued)



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 at fair value as determined by such Private Investment Fund, constitutional or other documents governing such valuation, on the valuation date. If such valuation with
respect to the Companys investments in Private Investment Funds is not available by reason of timing or other event on the valuation date, or are deemed to be unreliable by the Managing Investment Adviser, then the Managing Investment Adviser,
under the supervision of the Board of Directors, shall determine such value based on its judgment of fair value on the appropriate date, less applicable charges, if any. The valuation of the Companys Private Investment Funds also includes
capital contributions to such Private Investment Funds made in advance of remaining capital commitments being called by the Private Investment Funds respective general partners. At April 30, 2007 and October 31, 2006, these
contributions paid in advance totaled $0 and $1,233,228, and are included in investments on the statement of assets and liabilities. These contributions paid in advance are non-income producing.

At April 30, 2007 and October 31, 2006, market quotations were not readily available for securities valued at $22,672,306 or
42.43% of net assets and $25,002,261 or 50.79% 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 these differences could be material.

(c) Security transactions and investment income:

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

(d) Repurchase agreements:

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

e) Federal income taxes:

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

Dividends from net investment income are declared and paid at least annually. Any net realized capital gains, unless offset by any available capital loss carryforwards, are distributed to shareholders at least
annually subject to certain limitations imposed by complying with the provisions of Subchapter M of the Internal Revenue Code.



13



---

##### Table of Contents

Note 1  Organization and Significant Accounting Policies (continued)

(e) Federal income taxes (continued)



Dividends and distributions are determined in accordance with federal income tax regulations that may
differ from generally accepted accounting principles. These book/tax differences are either considered temporary or permanent and may be reclassified within the capital accounts based on their federal tax basis treatment.

The Company has unused capital loss carryforwards of approximately $57,037,828 available for income tax purposes, to be applied against
future net realized gains, if any, after October 31, 2006. If not applied, $8,378,322 of the carryover will expire in 2009, $13,721,421 will expire in 2010, and $18,471,137 will expire in 2011, and $5,855,841 will expire in 2012 and $10,611,106
will expire in 2013.

The tax character of distributions paid may differ from the character of distributions shown on the
statement of changes in net assets due to tax treatment of certain distributions. No distributions were made in the quarters ended April 30, 2007 and April 30, 2006.

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, 2006 and April 30, 2007, the Company had not received information to determine the tax cost of the Private Investment Funds as of October 31, 2006 and April 30, 2007, and therefore to
determine the Companys unrealized gain or loss on a tax basis. At April 30, 2007, the cost of all other investments for federal tax purposes was $42,551,887, and those investments had a tax basis net unrealized depreciation of $5,207,435,
consisting of gross appreciation of $13 and gross depreciation of $5,207,448. At October 31, 2006, the cost of all other investments for federal tax purposes was $36,421,281, and those investments had a tax basis net unrealized depreciation of
$5,207,435, consisting of gross appreciation of $13 and gross depreciation of $5,207,448.

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

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

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

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



14



---

##### Table of Contents

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



invested in short-term investments and are not committed to Private Companies or Private Investment Funds. As of April 30, 2007 and October 31,
2006, $245,840 and $124,418, respectively, were payable to the Managing Investment Adviser.

In addition to the management fee, the Company
has agreed to pay the Managing Investment Adviser an incentive fee in an amount equal to 20% of the cumulative realized capital gains (net of realized capital losses and unrealized 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 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 quarters ended April 30, 2007 and October 31,
2006, respectively, no incentive fee was earned by the Managing Investment Adviser.

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

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 $494,348 and $186,079, for the
periods ended April 30, 2007 and April 30, 2006, respectively.

Each member of the Board of Directors receives a $10,000 annual
retainer and the Chairman of the Board receives an additional $1,000 annual retainer. Also, each member of the Board of Directors will receive $2,000 per quarterly meeting attended. In addition, each Board member will receive $500 per quarterly
telephonic meeting and $500 for any other telephonic special meeting. For each audit committee meeting attended, Board members will receive $1,500, while the Chairman of the Audit Committee will receive an additional $1,000 retainer. Each member of
the Board is reimbursed for expenses incurred for attending meetings. No person who is an officer, manager or employee of the U.S. Trust, or its subsidiaries, who serves as an officer, manager or employee of the Company receives any compensation
from the Company.

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

On November 20, 2006, Schwab announced an agreement to sell U.S. Trust, a wholly-owned subsidiary of Schwab, to Bank of America (the Sale). The Sale of U.S. Trust includes all of U.S. Trusts
subsidiaries, including UST Advisers, Inc., the Companys Managing Investment Adviser. The Sale is subject to Federal Reserve Board and other regulatory approvals.

UST Advisers, Inc. will continue to serve as the Managing Investment Adviser to the Company after the Sale. However, due to the change in ownership of the UST Advisers, Inc., the Sale may have the effect of
terminating the existing



15



---

##### Table of Contents

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



investment advisory agreement between the Company and UST Advisers, Inc. Accordingly, it is anticipated that UST Advisers, Inc. will enter into a new
investment advisory agreement with the Company upon consummation of the Sale (the New Advisory Agreement). The Board of Directors approved the New Advisory Agreement at its special meeting held on January 11, 2007. At the annual
shareholder meeting held on March 15, 2007, the shareholders of the Company approved the New Advisory Agreement and reelected the current members of the Board of Directors.

Note 3  Purchases and Sales of Securities

Excluding short-term investments, the Companys
purchases and sales of securities for the six months ended April 30, 2007, and April 30, 2006 were as follows:



|                           |  |               |  |             
|-------------------------- |  | ------------- |  | ------------
|Six Months Ended April 30, |  | Purchases ($) |  | Proceeds ($)
|2007                       |  | 15,615        |  | 6,138,437   
|2006                       |  | 288,119       |  | 3,162,178   

Note 4  Transactions with Affiliated Portfolio Companies

An affiliated company is a company in which the Company has ownership of over 5% of the voting securities. No dividend income was received from affiliated
companies during the six months ended April 30, 2007 and the year ended October 31, 2006. Transactions with companies which are or were affiliates are as follows:



|                                     |  |                                                            |   |                 |                       |                          |                                                     |          |                                                           |                     |   |                                 |  |   |   |  |   |   |  |           |   |  |   |          
|------------------------------------ |  | ---------------------------------------------------------- | - | --------------- | --------------------- | ------------------------ | --------------------------------------------------- | -------- | --------------------------------------------------------- | ------------------- | - | ------------------------------- |  | - | - |  | - | - |  | --------- | - |  | - | ---------
|                                     |  | Shares/ PrincipalAmount/Percentage Held at October 31,2006 |   |                 | October 31,2006 Value |                          | For the Six Months Ended April 30, 2007 (Unaudited) |          | Shares/ PrincipalAmount/Percentage Held atApril 30,2007   |                     |   | April 30, 2007 Value (Note 1)  
|Name of Investment                   |  |                                                            |   | Conversion Cost |                       | Sales/ConversionProceeds |                                                     | Interest |                                                           | RealizedGain (Loss) |   |                                
|Affiliated Companies                 |  |                                                            |   |                 |                       |                          |                                                     |          |                                                           |                     |   |                                 |  |   |   |  |   |   |  |           |   |  |   |          
|Mid-Atlantic Venture Fund III, LP    |  | 8.67                                                       | % |                 | $                     | 1,231,096                |                                                     | $        |                                                          |                     | $ |                                |  | $ |  |  | $ |  |  | 8.66      | % |  | $ | 1,216,476
|Clear Orbit Inc., Preferred Series A |  | 1,428,572                                                  |   |                 |                       | 5,000,013                |                                                     |          |                                                          |                     |   |                                |  |   |  |  |   |  |  | 1,428,572 |   |  |   | 5,000,013
|                                     |  |                                                            |   |                 |                       |                          |                                                     |          |                                                           |                     |   |                                 |  |   |   |  |   |   |  |           |   |  |   |          
|Total Non Controlled Affiliates      |  |                                                            |   |                 | $                     | 6,231,109                |                                                     | $        |                                                          |                     | $ |                                |  | $ |  |  | $ |  |  |           |   |  | $ | 6,216,489
|                                     |  |                                                            |   |                 |                       |                          |                                                     |          |                                                           |                     |   |                                 |  |   |   |  |   |   |  |           |   |  |   |          
|                                     |  |                                                            |   |                 |                      
|                                     |  | Shares/ PrincipalAmount/Percentage Held at October 31,2005 |   |                 | October 31,2005 Value |                          | For the Year Ended October 31, 2006 (Audited)       |          | Shares/ PrincipalAmount/Percentage Held atOctober 31,2006 |                     |   | October 31, 2006 Value (Note 1)
|Name of Investment                   |  |                                                            |   | Conversion Cost |                       | Sales/ConversionProceeds |                                                     | Interest |                                                           | RealizedGain (Loss) |   |                                
|Affiliated Companies                 |  |                                                            |   |                 |                       |                          |                                                     |          |                                                           |                     |   |                                 |  |   |   |  |   |   |  |           |   |  |   |          
|Mid- Atlantic Venture Fund III, LP   |  | 8.69                                                       | % |                 | $                     | 1,660,025                |                                                     | $        |                                                          |                     | $ | 576,963                         |  | $ |  |  | $ |  |  | 8.67      | % |  | $ | 1,231,096
|Clear Orbit Inc., Preferred Series A |  | 1,428,572                                                  |   |                 |                       | 5,000,013                |                                                     |          |                                                          |                     |   |                                |  |   |  |  |   |  |  | 1,428,572 |   |  |   | 5,000,013
|Total Non Controlled Affiliates      |  |                                                            |   |                 | $                     | 6,660,038                |                                                     | $        |                                                          |                     | $ | 576,963                         |  | $ |  |  | $ |  |  |           |   |  | $ | 6,231,109
|                                     |  |                                                            |   |                 |                       |                          |                                                     |          |                                                           |                     |   |                                 |  |   |   |  |   |   |  |           |   |  |   |          



16



---

##### Table of Contents

Note 5  Pending Litigation

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

The class and derivative actions described above
were transferred to the United States District Court for the District of Maryland for coordinated and consolidated pre-trial proceedings. In November 2005, the Maryland court dismissed many of the plaintiffs claims in both the class action and
derivative lawsuits. Several affiliates of the former Managing Investment Adviser and individual defendants have also been dismissed. Plaintiffs claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and
under Section 36(b) and 48(a) of the Investment Company Act of 1940, as amended, however, have not been dismissed.

While the ultimate outcome of
these matters cannot be predicted with any certainty at this time, based on currently available information and consultation with counsel, U. S. Trust believes that the likelihood is remote that the pending litigation will materially
affect the Managing Investment Advisers ability to provide investment management services to the Fund. Neither the Managing Investment Adviser nor the Company is a party to the lawsuits described above.

Note 6  Guarantees

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

Note 7  New Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes
 an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Company is in the process of evaluating the effects of the adoption of FIN 48 on the financial statements.

FASB issued Statement No. 157 in September 2006, Fair Value Measurements, which is effective for financial statements issued for fiscal years
beginning after November 15, 2007. This statement provides enhanced guidance for using fair value to measure assets and liabilities. It clarifies fair value, establishes a framework for measuring fair value in generally accepted accounting
principles (GAAP), and expands disclosures about fair value measurements. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any
new circumstances. The Company is reviewing the statement and its impact on the financial statements.

FASB issued Statement No. 159
in February 2007, the Fair Value Option for Financial Assets and Financial Liabilities, which is effective for financial statements issued for fiscal year beginning after November 15, 2007. SFAS 159 permits entities to choose to measure many
financial instruments and certain other items at fair value, with changes in fair value recognized in earnings. The Company is reviewing the statement and its impact on the financial statements.

Note 8  Liquidity and Potential Sale Transaction

On March 30, 2007, the Companys Board approved the sale of substantially all of the non-cash investment assets remaining in the Company (the Asset Sale) pursuant to a Purchase and Sale Agreement
between the Company and AIG PineStar Capital II, L.P. (the Purchase Agreement) The proposed sale price would be equal to approximately the net asset value of these assets as of September 30, 2006 subject to various adjustments until
closing. The Asset Sale is subject to approval of the Companys shareholders.



17



---

##### Table of Contents

Note 8  Liquidity and Potential Sale Transaction (continued)



If the Asset Sale is approved by the Companys shareholders, then the Company will be liquidated
and all of its cash will be distributed to its shareholders. The liquidating distribution, after payment of closing expenses, is estimated to equal approximately $49 million or $250 per share. This would represent, over the life of the Registrant,
total distributions to the Companys shareholders of approximately $1,017 per each $1,000 share.

The Asset Sale and the Purchase
Agreement and the proposed plan of liquidation and dissolution of the Company (the Liquidation and Dissolution Plan) were submitted to the shareholders for approval and a proxy statement with more detail regarding the Asset Sale and the
Liquidation and Dissolution Plan was mailed to the Companys shareholders on May 22, 2007. If the Asset Sale is approved by the Companys shareholders, the liquidation of the Company is expected to occur in the beginning of the third
quarter of 2007. A two-thirds (67%) affirmative shareholder vote is required for the Asset Sale to be approved.



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

Six months and Three months ended April 30, 2007 as Compared to the Similar Periods in 2006

Realized and
Unrealized Gains and Losses from Portfolio Investments

For the six months ended April 30, 2007 and 2006, the Company had a net
realized gain on security transactions of $2,924,891 and $784,682, respectively. For the six months ended April 30, 2007 and 2006, the Company had a net change in unrealized appreciation and depreciation on investments of $867,976 and
($2,756,134), respectively. The net realized gains for the six months ended April 30, 2007 and April 30, 2006 were both primarily the result of realized gains on the sale of stock distributed by the Companys private investment funds.
The net change in unrealized appreciation on investments for the six months ended April 30, 2007 was the result of an increase in the overall valuation of the private investment funds.The net change in unrealized depreciation on
investments for the six months ended April 30, 2006 was the result of a decrease in the valuation of Mosaica Education, Inc, a private company investment, of ($3,537,722), which was partially offset by an increase in the overall valuation of
the private investment funds.

For the three months ended April 30, 2007 and 2006, the Company had a net realized gain on security
transactions of $2,219,041 and $786,426, respectively. For the three months ended April 30, 2007 and 2006, the Company had a net change in unrealized appreciation (depreciation) on investments of $1,476,865 and ($2,566,768), respectively. The
net realized gains for the three months ended April 30, 2007 and April 30, 2006 were both primarily the result of realized gains on the sale of stock distributed by the Companys private investment funds. The net change in unrealized
appreciation on investments for the three months ended April 30, 2007 was the result of an increase in the overall valuation of the private investment funds. The net change in unrealized depreciation on investments for the three months ended
April 30, 2006 was the result of a decrease in the valuation of Mosaica Education, Inc, a private company investment of ($3,537,722), which was partially offset by an increase in the overall valuation of the private investment funds.

Investment Income and Expenses

For
the six months ended April 30, 2007, the Company had total investment income of $716,779 and net operating expenses, net of expenses reimbursed by the Managing Investment Adviser, of $309,249, resulting in a net investment income of
$407,530.In comparison, the Company had total investment income of $369,825 and net operating expenses, net of expenses reimbursed by the Managing Investment Adviser, of $312,160, resulting in a net investment income of $57,665 for the six
months ended April 30, 2006. The primary reason for the increase in total investment income was an increase in interest income paid by short-term securities held by the Company. The slight reduction in net expenses was principally attributable
to a decrease in management fees as all other operating expense increases were offset by a proportional increase in reimbursements from the Managing Investment Adviser. For the three months ended April 30, 2007, the Company had total investment
income of $368,901 and net operating expenses, net of expenses reimbursed by the Managing Investment Adviser, of $156,407, resulting in a net investment income of $212,494. In comparison, the Company had total investment income of $199,569 and net
operating expenses, net of expenses reimbursed by the Managing Investment Adviser, of



18



---

##### Table of Contents

Investment Income and Expenses (continued)



$150,677, resulting in a net investment income of $48,892 for the similar period ended April 30, 2006. The primary reason for the increase in investment
income was an increase in interest income paid by short-term securities held by the Company. The increase in net expenses was principally attributable to a slight increase in management fees as a result of increased net assets since January 31,
2007.

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

For the six months
ended April 30, 2007 and 2006, the Managing Investment Adviser and the former Managing Investment Adviser earned $245,840 and $255,949 in management fees, respectively. In addition, for the six months ended April 30, 2007 and 2006, there
were no changes in allowance for the management incentive fee. The Managing Investment Adviser has voluntarily agreed to waive or reimburse other operating expenses of the Company, exclusive of management fees, to the extent they exceed 0.25%, on an
annual basis, of the Companys average net assets. For the six months ended April 30, 2007 and 2006, the Managing Investment Adviser and the former Managing Investment Adviser agreed to reimburse other operating expenses of the Company in
the amounts of $494,348 and $186,079, respectively, as a result of expenses incurred in excess of these limits.

For the three months ended
April 30, 2007 and 2006, the Managing Investment Adviser and the former Managing Investment Adviser earned $123,857 and $122,945 in management fees, respectively. In addition, for the threes months ended April 30, 2007 and 2006, there were
no changes in allowance for the management incentive fee. 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 months ended April 30, 2007 and 2006, the Managing Investment Adviser and the former Managing Investment Adviser agreed to reimburse other operating expenses of the Company
in the amounts of $341,204 and $114,468, respectively, as a result of expenses incurred in excess of these limits.

Net Assets

At April 30, 2007, the Companys net assets were $53,430,001 or a net asset value per common share of $272.98. This represents an increase of
$4,200,397, or $21.46 per common share, from net assets of $49,229,604, or a net asset value per common share of $251.52, at October 31, 2006. The increase in net assets during the period was primarily due to the net change in unrealized
appreciation on investments of $867,975 and net realized gain of $2,924,892 as described above.

Liquidity and Capital Resources

On March 30, 2007, the Companys Board approved the Asset Sale pursuant to the Purchase Agreement. The proposed sale price would be equal to
approximately the net asset value of these assets as of September 30, 2006. The Asset Sale is subject to approval of the Companys shareholders.

If the Asset Sale is approved by the Companys shareholders, the Company will be liquidated and all of its cash will be distributed to its shareholders. The liquidating distribution, after payment of closing
expenses, is estimated to equal approximately $49 Million or $250 per share. This would represent, over the life of the Company, total distributions to the Companys shareholders of approximately $1,017 per each $1,000 share.

The Asset Sale and the Purchase Agreement and the Liquidation and Dissolution Plan were submitted to the shareholders for approval and a proxy statement
with more detail regarding the Asset Sale and the Liquidation and Dissolution Plan was mailed to the Companys shareholders on May 22, 2007. If the Asset Sale is approved by the Companys shareholders, the liquidation of the Company
is expected to occur in the beginning of the third quarter of 2007. A two-thirds (67%) affirmative shareholder vote is required for the Asset Sale to be approved.



19



---

##### Table of Contents

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 42.44% of the Companys net assets at April 30, 2007. For the private investments held at April 30, 2007, changes to these estimates, i.e. changes in the valuations of these private investments,
resulted in a $3.9 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, both under the supervision of the Board, and, in any event, not less frequently than quarterly. However, there can be no
assurance that such value will represent the return that might ultimately be realized by the Company from the investments.

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

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



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

Equity Price Risk

A majority of the Companys investment portfolio consists of equity securities in private companies
and private investment funds, representing 42.43% of the Companys net assets, which are not publicly traded. These investments are recorded at fair value as determined by the Managing Investment Adviser in accordance with valuation guidelines
adopted by the Board of Directors. This method of valuation does not result in increases or decreases in the fair value of these equity securities in response to changes in market prices. Thus, these equity securities are not subject to equity price
risk normally associated with public equity markets. At April 30, 2007 and at October 31, 2006, 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.



20



---

##### Table of Contents

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

(a) Evaluation of
Disclosure Controls and Procedures. As of April 30, 2007 (the end of the period covered by this report), the Companys principal executive officers and principal financial officer evaluated the effectiveness of the Companys
disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Companys disclosure controls and procedures were adequate and effective
to ensure that material information relating to the Company was made known to them by others within those entities.

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

PART II. OTHER
INFORMATION



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

None.



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

None.



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

None.



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

The annual meeting of shareholders of the Company was held at the offices of the Company, 225 High Ridge Road, Stamford, Connecticut 06905 on March 15, 2007 (the Meeting). Of the 195,730 shares outstanding as of
January 12, 2007, the record date for the Meeting, 116,356 were present or represented by proxy at the Meeting. The shareholders of the Company approved the following matters: (1) election of each of Mr. Hover, Mr. Bernstein,
Mr. Murphy and Mr. Imbimbo as Directors of the Company, and (2) the New Advisory Agreement. The results of the voting for these proposals were as follows:

Proposal 1: Election of Directors



|                       |  |         |  |         
|---------------------- |  | ------- |  | --------
|                       |  | For     |  | Withheld
|Gene M. Bernstein      |  | 115,699 |  | 657     
|John C. Hover II       |  | 115,584 |  | 772     
|Stephen V. Murphy      |  | 116,003 |  | 353     
|Victor F. Imbimbo, Jr. |  | 116,003 |  | 353     



21



---

##### Table of Contents

Proposal 2: Approval of the New Advisory Agreement



|        |  |         |  |         |  |                 
|------- |  | ------- |  | ------- |  | ----------------
|For     |  | Against |  | Abstain |  | Broker Non-Votes
|114,494 |  | 733     |  | 470     |  | 659             



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

None.



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



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



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



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

On February 2, 2007, the Company filed a
Current Report on Form 8-K to report under Item 4.01 certain disclosures.

On February 2, 2007, the Company filed a Current Report on Form 8-K to
report under Item 4.01 certain disclosures.

On February 16, 2007, the Company filed a Current Report on Form 8-K to report under Items 4.01
and 9.01 certain disclosures.

On March 29, 2007, the Company filed a Current Report on Form 8-K to report under Item 5.02 a departure of the
chief financial officer.

On April 3, 2007, the Company filed a Current Report on Form 8-K to report under Item 1.01 certain disclosures.

On April 17, 2007, the Company filed a Current Report on Form 8-K to report under Item 5.02 the appointment of a chief financial officer.



22



---

##### Table of Contents

SIGNATURES

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



|                    |  |  |  |                                        |  |                          |  |                                                
|------------------- |  |  |  | -------------------------------------- |  | ------------------------ |  | -----------------------------------------------
|                    |  |  |  | EXCELSIOR PRIVATE EQUITY FUND II, INC.
|                    |  |  | 
|Date: June 14, 2007 |  |  |  | By:                                    |  | /s/ David R. Bailin     
|                    |  |  |  |                                        |  |                          |  | David R. Bailin Co-Chief Executive
Officer     
|                    |  |  | 
|Date: June 14, 2007 |  |  |  | By:                                    |  | /s/ Raghav V. Nandagopal
|                    |  |  |  |                                        |  |                          |  | Raghav V. Nandagopal Co-Chief Executive
Officer
|                    |  |  | 
|Date: June 14, 2007 |  |  |  | By:                                    |  | /s/ Steven L. Suss      
|                    |  |  |  |                                        |  |                          |  | Steven L. Suss Principal Financial
Officer     



23