TableSECURITIES ofAND ContentsEXCHANGE COMMISSION WASHINGTON, D.C. 20549

SECURITIESFORM AND EXCHANGE COMMISSION 10-K

WASHINGTON,FOR D.C.ANNUAL 20549AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~FORM~~x ~~10-K~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FORFor ANNUALthe ANDfiscal TRANSITIONyear REPORTSended October 31, 2009

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

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

xFor ANNUALthe REPORTtransition PURSUANTperiod TOfrom SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934to

ForCommission thefile fiscalnumber: year ended October 31, 2008 000-29665

OREXCELSIOR VENTURE PARTNERS III, LLC

¨(Exact ~~TRANSITION~~Name ~~REPORT~~of ~~PURSUANT~~Registrant TOas ~~SECTION~~Specified 13in ORIts ~~15(d~~Charter) ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the transition period from to


DELAWARE		13-4102528
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

Commission225 fileHigh number:Ridge 000-29665Road Stamford, CT 06905

~~EXCELSIOR~~(Address ~~VENTURE~~of ~~PARTNERS~~Principal ~~III,~~Executive ~~LLC~~Offices)

~~(Exact Name of~~ Registrant’s astelephone ~~Specified~~number, ~~in Its~~including ~~Charter)~~area code: 1-866-921-7951

DELAWARE		13-4102528
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

Securities registered pursuant to Section 12(b) of the Act: NONE

~~225~~Securities ~~High~~registered ~~Ridge~~pursuant ~~Road~~to Section 12(g) of the Act:

~~Stamford,~~UNITS CTOF ~~06905~~MEMBERSHIP INTEREST WITHOUT PAR VALUE (Title of Class)

Indicate by check mark whether the registrant: (~~Address~~1) has filed all reports required to be filed by Section 13 or 15(d) of ~~Principal~~the ~~Executive~~Securities ~~Offices~~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 o

~~Registrant~~Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s ~~telephone number~~knowledge, ~~including~~in ~~area~~definitive ~~code:~~proxy ~~(203) 352~~or information statements incorporated by reference in Part III of this Form 10-~~4400~~K or any amendment to this Form 10-K. x

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark ~~Section 12~~whether the registrant is an accelerated filer (b)as defined in Rule 12b-2 of the Act:). ~~NONE~~Yes o No x

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark ~~Section 12(g)~~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):

~~UNITS~~Large OFaccelerated ~~MEMBERSHIP~~filer ~~INTEREST~~o ~~WITHOUT~~Accelerated ~~PAR~~file ~~VALUE~~ o Non-accelerated filer x

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

~~Indicate~~APPLICABLE byONLY ~~check~~TO ~~mark~~ISSUERS ~~whether the~~INVOLVED ~~registrant:~~IN ~~(1) has~~BANKRUPTCY ~~filed~~PROCEEDINGS ~~all~~DURING ~~reports~~THE ~~required~~PRECEEDING toFIVE beYEARS: 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 ifwhether ~~disclosure~~the ofregistrant ~~delinquent~~has ~~filers~~filed ~~pursuant~~all todocuments ~~Item 405 of Regulation S-K is not contained herein,~~ and ~~will~~reports ~~not~~required ~~be contained,~~ to ~~the~~be ~~best~~filed ofby ~~registrant’s~~Section ~~knowledge~~12, in13 ~~definitive~~or ~~proxy~~15(d) orof ~~information~~the ~~statements~~Securities ~~incorporated~~Exchange byAct ~~reference~~subsequent into ~~Part~~the ~~III~~distribution of ~~this~~securities ~~Form~~under ~~10-K~~a orplan ~~any~~confirmed ~~amendment~~by toa ~~this Form 10-K~~court. x Yes o No o

~~Indicate~~The byregistrant’s ~~check~~common ~~mark~~stock ~~whether~~is ~~the~~not ~~registrant~~listed ison anany ~~accelerated~~exchange ~~filer~~nor ~~(as~~does ~~defined~~it intrade ~~Rule~~on ~~12b-2~~any ofestablished ~~the~~securities ~~Act)~~market or other market. ~~Yes ¨ No x~~

~~Indicate~~TABLE byOF ~~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):~~ CONTENTS

LargeTABLE acceleratedOF filer ¨ Accelerated file ¨ Non-accelerated filer x CONTENTS

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


Item No.		Form 10-K Report Page
	PART I
1.	Business		1
2.	Properties		5
3.	Legal Proceedings		5
4.	Submission of Matters to a Vote of Security Holders		5
	PART II
5.	Market for Registrant’s Common Equity and Related Stockholder Matters		6
6.	Selected Financial Data		6
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		7
7A.	Quantitative and Qualitative Disclosures About Market Risk		9
8.	Financial Statements and Supplementary Data		10
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures		31
9A (T).	Controls and Procedures		31
9B.	Other Information		32
	PART III
10.	Directors and Executive Officers of the Registrant		33
11.	Executive Compensation		35
12.	Security Ownership of Certain Beneficial Owners and Management		36
13.	Certain Relationships and Related Transactions		36
14.	Principal Accountant Fees and Services		36
	PART IV
15.	Exhibits and Financial Statement Schedules		38

~~APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY~~ i

~~PROCEEDINGS~~TABLE ~~DURING~~OF ~~THE PRECEEDING FIVE YEARS:~~ CONTENTS

~~Indicate~~FACTORS byTHAT ~~check~~MAY ~~mark~~AFFECT ~~whether~~FUTURE RESULTS The Company’s prospects, including the ~~registrant~~prospects ~~has~~of ~~filed~~the ~~all documents~~underlying ~~and~~investments ~~reports~~are ~~required~~subject to becertain ~~filed~~uncertainties byand ~~Section 12,13~~risks. orThis ~~15(d)~~Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the ~~Securities~~federal ~~Exchange~~securities ~~Act~~laws ~~subsequent~~that also involve substantial uncertainties and risks. The Company’s future results may differ materially from its historical results and actual results of the Company and its underlying investments 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 ~~distribution~~considerations described in the section of ~~securities~~this ~~under~~report aentitled ~~plan~~“Management’s ~~confirmed~~Discussion byand aAnalysis ~~court~~of Financial Condition and Results of Operations. ~~Yes ¨ No ¨~~” 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.

~~The registrant’s common stock~~ ~~is not listed on any exchange nor does it trade on any established securities market or other market.~~ ii

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

TABLEPART OF CONTENTS I

Item No.		Form 10-KReport Page
	PART I
1.	Business	1
2.	Properties	6
3.	Legal Proceedings	6
4.	Submission of Matters to a Vote of Security Holders	6
	PART II
5.	Market for Registrant’s Common Equity and Related Stockholder Matters	7
6.	Selected Financial Data	7
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
7A.	Quantitative and Qualitative Disclosures About Market Risk	11
8.	Financial Statements and Supplementary Data	12
9.	Controls and Procedures	33
9A (T).	Controls and Procedures	33
	PART III
10.	Managers and Executive Officers of the Registrant	35
11.	Executive Compensation	38
12.	Security Ownership of Certain Beneficial Owners and Management	40
13.	Certain Relationships and Related Transactions	40
14.	Principal Accountant Fees and Services	41
	PART IV
15.	Exhibits and Financial Statement Schedules	42

ITEM 1. BUSINESS.

Table of ContentsOverview

~~FACTORS~~Excelsior ~~THAT~~Venture ~~MAY~~Partners ~~AFFECT~~III, ~~FUTURE~~LLC ~~RESULTS~~(the “Company”) is a Delaware limited liability company organized on February 18, 2000. The Company is a non-diversified, closed-end management investment company operating as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“Investment Company Act”) and, in connection with its initial offering of units, registered said offering of units under the Securities Act of 1933, as amended (the “Securities Act”). BDCs are a special type of investment company, as defined and regulated by the Investment Company Act, which focus primarily on investing in the privately issued securities of eligible portfolio companies, as defined by the Investment Company Act. A BDC must also make available significant managerial assistance to such companies. The Company’s investment objective is to achieve long-term capital appreciation primarily by investing in domestic venture capital and other private companies (“Private Companies”) and, to a lesser extent, domestic and international private investment funds (“Private Investment Funds”), negotiated private investments in public companies and international direct investments that the Investment Adviser (defined herein) believes offer significant long-term capital appreciation.

~~The~~Bank ~~Company’s~~of ~~prospects,~~America ~~including~~Capital ~~the~~Advisors, ~~prospects~~LLC of(“BACA” or the ~~underlying~~“Investment ~~investments~~Adviser”), ~~are~~which ~~subject~~has toits ~~certain~~principal ~~uncertainties~~offices ~~and~~at ~~risks.~~100 ~~This~~Federal ~~Annual~~Street, ~~Report~~Boston, ~~on Form~~MA ~~10-K~~02110, ~~contains~~serves ~~certain~~as ~~forward-looking statements within~~ the ~~meaning~~investment ofadviser to the ~~federal~~Company ~~securities~~and ~~laws~~is ~~that~~responsible ~~also~~for ~~involve~~identifying, ~~substantial~~evaluating, ~~uncertainties~~structuring, monitoring and ~~risks.~~disposing ~~The~~of the Company’s ~~future~~investments. ~~results~~BACA ~~may~~is ~~differ~~a ~~materially~~Delaware ~~from~~limited ~~its~~liability ~~historical~~company ~~results~~which ~~and actual~~is ~~results~~registered ofas an investment adviser under the ~~Company~~Investment ~~and~~Advisers ~~its~~Act ~~underlying~~of ~~investments~~1940, ~~could~~as ~~differ~~amended ~~materially~~(the ~~from~~“Advisers ~~those~~Act”). ~~projected~~The inInvestment ~~the~~Adviser ~~forward-looking~~is ~~statements~~an asindirect awholly-owned ~~result~~subsidiary of, ~~certain~~and ~~risk~~controlled ~~factors.~~by, ~~Readers~~Bank ~~should~~of ~~pay~~America ~~particular~~Corporation ~~attention~~(“Bank toof ~~the considerations~~America”), ~~described~~a inbank ~~the~~holding ~~section~~and ofa ~~this~~financial ~~report~~holding ~~entitled~~company ~~“Management’s~~which ~~Discussion~~has ~~and~~its ~~Analysis~~principal ofexecutive ~~Financial~~offices ~~Condition~~at ~~and~~101 ~~Results~~North ofTryon ~~Operations.”~~Street, ~~Readers~~Charlotte, ~~should~~NC ~~also~~28255. ~~carefully~~All ~~review~~officers of the ~~risk~~Company ~~factors~~are ~~described~~employees inand/or ~~the~~officers ~~other~~of ~~documents~~ the ~~Company~~ ~~files,~~Investment orAdviser. ~~has~~The ~~filed,~~Investment ~~from~~Adviser ~~time~~is toresponsible ~~time~~for ~~with~~performing the ~~Securities~~management and ~~Exchange~~administrative ~~Commission~~services necessary for the operation of the Company.

~~Table~~Prior to May 29, 2008, the Company’s investment adviser was UST Advisers, Inc. (“USTA”). On May 29, 2008, BACA assumed the responsibilities of ~~Contents~~the investment adviser to the Company as a result of a transfer (the “Transfer”) of USTA’s rights and obligations under the Advisory Agreement (as defined below) between the Company and USTA dated July 1, 2007. The Transfer was approved by the Company’s Board of Managers (the “Board” or “Board of Managers”) on March 11, 2008. This change was a product of corporate mergers resulting from the acquisition by Bank of America of U.S. Trust Corporation (“U.S. Trust Corp.”) in July 2007. The Transfer of the Advisory Agreement from USTA to BACA did not change (i) the way the Company is managed, including the level of services provided, (ii) the team of investment professionals providing services to the Company, or (iii) the management and incentive fees paid by the Company. Until July 1, 2007, United States Trust Company, National Association (“U.S. Trust”) acting through its registered investment advisory division, U.S. Trust-New York Asset Management Division had served as the investment sub-adviser to the Company (the “Investment Sub-Adviser”).

~~PART~~USTA, Ia Delaware corporation and registered investment adviser, had been an indirect wholly-owned subsidiary of, and controlled by, Bank of America, since July 1, 2007. Prior to that, USTA was an indirect subsidiary of U.S. Trust Corp., a registered financial holding company, which, in turn, was a wholly-owned subsidiary of The Charles Schwab Corporation (“Schwab”). USTA assumed the duties of the investment adviser from the previous investment adviser to the Company, U.S. Trust Company, N.A. (“UST-NA”), which was acting through its registered investment advisory division, U.S. Trust Asset Management Division, on December 16, 2005. UST-NA has served as the investment adviser to the Company pursuant to an investment advisory agreement.

~~ITEM~~On July 1, 2007, U.S. ~~BUSINESS~~Trust Corp. and its subsidiaries, including USTA and the Investment Sub-Adviser, were acquired by Bank of America (the “Sale”). USTA continued to serve as the Investment Adviser to the Company after the Sale (until May 29, 2008, as indicated above) pursuant to a new investment advisory agreement with the Company (the “Advisory Agreement”) that was approved at a special meeting of Members of the Company held on March 15, 2007 and was identical in all material respects except for the term and the date of effectiveness to the previous investment advisory agreement. The Investment Sub-Adviser ceased to serve as the investment sub-adviser to the Company after the Sale.

~~Overview~~ 1

~~Excelsior~~TABLE ~~Venture~~OF Partners III, LLC (the “Company”) is a Delaware limited liability company organized on February 18, 2000. The Company is a non-diversified, closed-end management investment company operating as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“Investment Company Act”) and, in connection with its initial offering of units, registered said offering of units under the Securities Act of 1933, as amended (the “Securities Act”). BDCs are a special type of investment company, as defined and regulated by the Investment Company Act, which focus primarily on investing in the privately issued securities of eligible portfolio companies, as defined by the Investment Company Act. A BDC must also make available significant managerial assistance to such companies. The Company’s investment objective is to achieve long-term capital appreciation by investing in domestic venture capital and other private companies and, to a lesser extent, domestic and international private funds, negotiated private investments in public companies and international direct investments that the Investment Adviser (defined herein) believes offer significant long-term capital appreciation. CONTENTS

~~Bank~~Pursuant ofto ~~America~~a ~~Capital~~Registration ~~Advisors~~Statement ~~LLC~~on ~~(“BACA”~~Form orN-2 ~~the~~(File ~~“Investment Adviser”~~333-30986), which ~~has~~was ~~its~~originally ~~principal~~declared ~~offices~~effective aton ~~100~~September ~~Federal Street~~7, ~~Boston~~2000, ~~MA 02110, serves as~~ the ~~investment adviser to the~~ Company. ~~BACA~~was isauthorized ato ~~Delaware limited~~offer ~~liability company which is registered as~~ an ~~investment~~unlimited ~~adviser~~number ~~under~~of ~~the~~units ~~Investment Advisers Act~~ of ~~1940,~~membership asinterest ~~amended~~with ~~(the~~no ~~“Advisers~~par ~~Act”)~~value. The ~~Investment~~Company ~~Adviser~~sold ~~is an indirect wholly-owned subsidiary of~~295,210 ~~and~~units ~~controlled~~via ~~by,~~a ~~Bank~~public ~~of America Corporation (“Bank of America”)~~offering, ~~a bank holding and a financial holding company~~ which ~~has~~closed ~~its~~on ~~principal~~May ~~executive~~11, ~~offices~~2001, atfor ~~101~~gross ~~North~~proceeds ~~Tryon~~totaling ~~Street~~$147, ~~Charlotte~~605, ~~North Carolina 28255~~000. ~~All~~Units ~~officers~~ of the Company ~~are~~were ~~employees~~made ~~and/or officers~~available ofthrough ~~the~~Charles ~~Investment~~Schwab ~~Adviser~~& Co., ~~The~~Inc., ~~Investment Adviser is responsible for performing~~ the ~~management~~Company’s ~~and~~principal ~~administrative~~distributor ~~services necessary for~~ (the ~~operation of the Company~~“Distributor”).

~~Prior~~The ~~to May 29, 2008, the~~ Company’s ~~investment~~incurred ~~adviser~~offering ~~was~~costs ~~UST~~associated ~~Advisers,~~with ~~Inc. (“USTA”). On May 29, 2008, BACA assumed~~ the ~~responsibilities~~ ofpublic ~~the~~offering ~~investment~~totaling ~~adviser to the Company as a result of a transfer (the “Transfer”) of USTA’s rights and obligations under the Advisory Agreement (as defined below) between the Company and USTA dated July~~ $1, ~~2007. The Transfer was approved by the Company’s Board of Managers on March 11~~468, ~~2008~~218. ~~This~~Net ~~change~~proceeds ~~was a product of corporate mergers resulting from the acquisition by Bank of America of U.S. Trust Corporation (“U.S. Trust Corp.”) in July 2007. The Transfer of the Advisory Agreement from USTA~~ to ~~BACA did not change (i)~~ the ~~way the~~ Company isfrom ~~managed, including~~ the ~~level~~public ~~of services provided~~offering, ~~(ii) the~~after ~~team~~offering ~~of investment professionals providing services to the Company~~costs, ortotaled ~~(iii) the management and incentive fees the Company pays. Until July 1~~$146, ~~2007~~136, ~~United States Trust Company, National Association (“U~~782.S. Trust”) acting through its registered investment advisory division, U.S. Trust-New York Asset Management Division had served as the investment sub-adviser to the Company (the “Investment Sub-Adviser”)

~~USTA,~~The ~~a Delaware~~Company’s ~~corporation~~Certificate ~~and registered investment adviser, had been an indirect wholly-owned subsidiary~~ of, ~~and~~Formation ~~controlled~~provides ~~by, Bank of America, since July 1, 2007. Prior to~~ that, ~~USTA~~the ~~was~~duration anof ~~indirect~~the ~~subsidiary~~Company ofwill ~~U.S.~~be ~~Trust~~ten ~~Corp.,~~years afrom ~~registered financial~~the ~~holding~~final ~~company,~~subscription ~~which,~~closing ~~in turn~~date, ~~was~~subject ato ~~wholly-owned~~the ~~subsidiary~~rights of ~~The Charles Schwab Corporation (“Schwab”). USTA assumed~~ the ~~duties~~Board of ~~the~~Managers ~~investment~~to ~~adviser~~extend ~~from~~ the ~~previous~~term ~~investment~~for ~~adviser~~up to ~~the~~two ~~Company,~~additional ~~U.S. Trust Company, N.A. (“UST~~two-~~NA”),~~year ~~which was acting through its registered investment advisory division, U~~periods.S. ~~Trust Asset Management Division, on December 16, 2005. UST-NA has served as the investment adviser to the Company pursuant to an investment advisory agreement.~~

OnThe ~~July 1,~~following ~~2007,~~is ~~U.S.~~a ~~Trust~~summary ~~Corp. and its subsidiaries, including USTA and the Investment Sub-Adviser, were acquired by Bank~~ of ~~America (~~the ~~“Sale”). USTA continued to serve as the Investment Adviser to the~~ Company’s ~~after the Sale (until May 29, 2008, as indicated above) pursuant to a new~~ investment ~~advisory~~portfolio.

1Company Portfolio of InvestmentsOctober 31, 2009

[GRAPHIC MISSING]

~~Table~~* This amount represents money market instruments and other cash equivalents held to fund follow-on investments in Private Companies, to meet contractual commitments to Private Investment Funds and operation expense requirements of ~~Contents~~the Company.

~~agreement~~Percentages ~~with~~are ~~the~~derived ~~Company~~by ~~(the~~taking ~~“Advisory~~each ~~Agreement”)~~investment’s ~~that~~fair ~~was~~value ~~approved~~within atan aindustry ~~special~~divided ~~meeting~~by ~~of Members of~~ the ~~Company~~total ~~held~~fair onvalue ~~March 15,~~of ~~2007 and was identical in all material respects except for~~ the ~~term~~Company’s ~~and~~portfolio ~~the~~investments; ~~date~~thus ~~of effectiveness to~~ the ~~previous~~percentages ~~investment~~are ~~advisory~~not ~~agreement.~~based ~~The~~on ~~Investment Sub-Adviser ceased to serve as~~ the ~~investment~~net ~~sub-adviser~~asset tovalue ~~the~~of ~~Company after~~ the ~~Sale~~Company.

~~Pursuant to a Registration Statement on Form N-~~2 (File 333-30986), which was originally declared effective on September 7, 2000, the Company was authorized to offer an unlimited number of units of membership interest with no par value. The Company sold 295,210 units via a public offering, which closed on May 11, 2001, for gross proceeds totaling $147,605,000. Units of the Company were made available through Charles Schwab & Co., Inc., the Company’s principal distributor (the “Distributor”).

~~The~~TABLE ~~Company~~OF ~~incurred offering costs associated with the public offering totaling $1,468,218. Net proceeds to the Company from the public offering, after offering costs, totaled $146,136,782.~~ CONTENTS

TheInvestments Company’sHeld Certificate— ofPrivate Formation provides that the duration of the Company will be ten years from the final subscription closing date, subject to the rights of the Board of Managers to extend the term for up to two additional two-year periods. Companies

TheArchemix followingCorporation is a summary of the Company’s investment portfolio. (“Archemix”)

*Description: Archemix ~~This~~is ~~amount~~a ~~represents~~biopharmaceutical ~~money~~company ~~market~~leading ~~instruments~~the development of aptamers as a new class of directed therapeutics for the prevention and ~~other~~treatment ~~cash~~of ~~equivalents~~chronic ~~held~~and toacute ~~fund~~disease. ~~follow-on~~Aptamers ~~investments~~can be used in ~~private~~a ~~companies~~wide range of disease areas, including many of those currently addressed by protein-based therapeutics, and can be produced quickly and economically. With a portfolio of over 300 patents and patent applications, Archemix holds the key to ~~meet~~the ~~contractual~~development ~~commitments~~of aptamer technology and its implications for the pharmaceutical industry. Archemix is focused on using its expertise to ~~private~~aggressively ~~investment~~pursue ~~funds~~drug discovery and development ~~operation~~in ~~expense~~a ~~requirements~~variety of areas. As of October 31, 2009, the Company has invested $2.7 million in Archemix and values its investment at $2.0 million.

~~Percentages~~2009 ~~are~~Activity ~~derived~~and byOutlook: In ~~taking~~May ~~each~~of ~~investment’s fair~~2009, ~~value~~Archemix ~~within~~hired anKen ~~industry~~Bate ~~divided~~as byPresident and CEO, the ~~total~~former ~~fair~~CEO ~~value~~of NitroMed, Inc. Mr. Bate has more than two decades of leadership experience in the ~~Company’s~~biotechnology ~~portfolio~~industry. ~~investments;~~Archemix ~~thus~~has advanced its lead program into hematology and is developing aptamer product candidates for rare hematological diseases. There is the ~~percentages~~potential ~~are~~that ~~not~~Archemix will have to shelve its most advanced aptamer which would put it back in the early stages of clinical trials. This investment has been written down 25% from the previous quarter based on ~~the~~Archemix ~~net~~choosing ~~asset~~to ~~value~~focus ofon compounds that are still early in the development ~~Company~~stage. This write down is consistent with a co-investors valuation.

2Ethertronics, Inc. (“Ethertronics”)

~~Table~~Description: Ethertronics designs and manufactures the industry’s only Isolated Magnetic DipoleTM (“IMD”) internal antennas for wireless devices. Used in cellular and wireless LAN applications — phones, notebooks, LAN cards, PDAs, Bluetooth devices and GPS receivers — IMD antennas provide longer-range, increased signal strength and improved voice/data quality inside buildings, particularly in noisy environments and in fringe network coverage areas. As of ~~Contents~~October 31, 2009, the Company has invested $10.3 million in Ethertronics and values its investment at $10.3 million.

~~Investments~~2009 ~~Held~~Activity —and ~~Private~~Outlook: In 2009, Ethertronics met key sales, operations and cash flow goals set by the investors and board. Ethertronics has become a key supplier to top tier vendors like Amoi, Casio, Compal, HP, Lenovo, Mobicom, Samsung, Symbol/Motorola and Techfaith. Ethertronics has been performing well and is working to become a foremost supplier in the industry. Ethertronics has enough cash to sustain itself and revenues are up. Ethertronics has succeeded in its prior year plan to generate meaningful revenues and cash flows.

ArchemixSOA CorporationSoftware, Inc. (“ArchemixSOA” f/k/a LogicLibrary, Inc.)

Description: SOA ~~Archemix~~Software is a ~~biopharmaceutical~~ ~~company~~ leading ~~the~~provider ~~development~~ of ~~aptamers~~unified asgovernance aautomation ~~new~~products ~~class~~that ofenable ~~directed~~organizations ~~therapeutics~~to ~~for~~successfully ~~the~~plan, ~~prevention~~build, and ~~treatment~~run ofenterprise ~~chronic and acute disease~~services. ~~Aptamers~~The ~~can~~world’s belargest ~~used~~companies inincluding aBank ~~wide range~~ of ~~disease areas~~America, ~~including many of those currently addressed by protein-based therapeutics~~Verizon, and ~~can~~Pfizer beuse ~~produced~~SOA ~~quickly~~Software ~~and~~solutions ~~economically.~~to ~~With~~transform atheir ~~portfolio~~business. As of ~~over~~October ~~300~~31, ~~patents and patent applications~~2009, ~~Archemix holds~~ the ~~key~~Company tohas ~~the~~invested ~~development~~$5.7 ofmillion ~~aptamer~~in ~~technology~~SOA and values its ~~implications~~investment ~~for the~~at ~~pharmaceutical industry~~zero. ~~Archemix~~As isthe ~~focused~~Company’s onequity ~~using~~position ~~its expertise to aggressively pursue drug discovery and development~~ in aSOA ~~variety~~is ofjunior ~~areas.~~to Asother ofpreferred ~~October 31~~shareholders, ~~2008,~~despite ~~the~~some ~~Company~~positive ~~has~~news ~~invested~~SOA ~~$2.7~~is ~~million~~valued ~~in Archemix and values its investment~~ at $2zero.2 ~~million.~~

~~2008~~2009 Activity and Outlook: The ~~Archemix~~merger ~~continues~~between toSOA ~~progress~~and LogicLibrary, Inc. was successfully completed in ~~terms~~May of2008. ~~development~~While ofSOA ~~aptamer~~Software ~~products, patents~~has ~~and~~outstanding ~~collaboration~~run-time ~~agreements.~~or ~~Archemix~~operationally ~~announced~~focused onservice-orientated ~~November 18th,~~architecture ~~2008~~governance asolution, ~~proposed~~the ~~merger~~addition ~~with~~of ~~NitroMed~~LogicLibrary, Inc.,’s ~~which~~core ~~trades~~strength onin ~~the~~development ~~NASDAQ~~and ~~under~~design ~~the~~time ~~symbol~~governance ~~NTMD,~~will ~~whereby~~expand ~~Archemix~~their ~~would~~product besuite. With the ~~surviving~~addition of Logidex, the combined company. ~~The~~can ~~proposed~~offer ~~merger~~differentiated ~~should allow~~governance ~~the~~solutions ~~company~~that start with Planning Governance (Logidex) flows to ~~grow~~LifeCycle ~~its~~Governance ~~business~~(Logidex ~~through~~and ~~this~~Workbench) ~~difficult~~and ~~financing~~finally ~~environment~~Run-time Governance (Service Manager). The ~~merger~~combination isof ~~subject~~these products tocreates ~~various~~a ~~shareholder~~broad ~~approvals~~ and isintegrated ~~expected~~governance tosuite bethat ~~completed~~can bybe ~~the~~managed ~~second~~from ~~quarter~~a ofsingle ~~2009~~focal point. ~~More~~The ~~information~~company ~~can~~has beseveral ~~found~~strategic oninitiatives ~~Form~~underway ~~8K regarding~~to ensure the ~~transaction~~SOA ~~filed~~can ~~by/on~~continue ~~behalf~~to ofgrow ~~NitroMed,~~during ~~Inc~~this difficult financing environment. onThe ~~December 8~~company has produced a conservative business plan for 2010, ~~2008~~which delivers growth, whilst maintaining cash levels of least $4m.

Ethertronics,Recorders Incand Medicare Systems (P) Ltd. (“EthertronicsRecorders and Medicare” f/k/a Tensys Medical, Inc.)

Description: RMS ~~Ethertronics~~acquired ~~designs~~Tensys ~~and~~Medical ~~manufactures~~in ~~the~~December ~~industry’s~~2008. ~~only~~RMS ~~Isolated~~is ~~Magnetic~~a ~~DipoleTM~~market ~~(“IMD”)~~leader ~~internal antennas~~in India for ~~wireless~~neurological, ~~devices.~~electro-neuropsychological ~~Used~~and inpulmonary ~~cellular~~diagnostic ~~and~~equipment. ~~wireless~~As ~~LAN~~of ~~applications—phones~~October 31, ~~notebooks~~2009, ~~LAN~~the ~~cards,~~Company ~~PDAs,~~has ~~Bluetooth~~invested ~~devices~~$0.38 ~~and~~million ~~GPS~~in ~~receivers—IMD~~Recorders ~~antennas~~and ~~provide~~Medicare ~~longer-range,~~and ~~increased~~values ~~signal~~its ~~strength~~investment ~~and~~at ~~improved~~zero. ~~voice/data quality~~As ~~inside~~the ~~buildings,~~Company’s ~~particularly~~equity position in ~~noisy~~Recorders ~~environments~~ and inMedicare ~~fringe~~is ~~network~~junior ~~coverage~~to ~~areas.~~other Aspreferred ~~of October 31~~shareholders, ~~2008,~~despite ~~the~~some ~~Company~~positive ~~has~~news ~~invested~~Recorders ~~$9.2~~and ~~million~~Medicare inis ~~Ethertronics~~valued ~~and~~at ~~values~~zero. ~~its~~Visit ~~investment~~www.rmsindia.com atfor ~~$9.2~~more ~~million~~information on this company.

2008 Activity and Outlook: In 2008, Ethertronics met key sales, operations and cash flow goals set by the investors and board. Ethertronics has become a key supplier to top tier vendors like Amoi, Casio, Compal, HP, Lenovo, Mobicom, Samsung, Symbol/Motorola and Techfaith. Ethertronics’ plan for next year includes a meaningful increase in revenue and cash flow. 3

~~SOA~~TABLE ~~Software,~~OF ~~Inc. (“SOA” f/k/a LogicLibrary, Inc.)~~ CONTENTS

Description: SOA is the leading provider of a software system that enables the management and reuse of software development assets for large enterprises and IT environments. SOA’s patent-pending technology provides a comprehensive and collaborative approach for creating, migrating and integrating enterprise applications for use in service-oriented architecture, web services and other software development initiatives. As of October 31, 2008, the Company has invested $5.7 million in SOA and values its investment at zero. As the Company’s equity position in SOA is junior to other preferred shareholders, despite some positive news SOA is valued at zero. Exits

~~2008 Activity and Outlook:~~ The ~~merger~~Company ~~between~~liquidated ~~SOA~~its ~~and~~interest ~~LogicLibrary,~~in ~~Inc.~~twelve ~~was~~of ~~successfully~~its ~~completed~~portfolio incompanies ~~May~~since ~~2008~~inception. ~~While~~As ~~SOA~~a ~~Software~~result ~~has outstanding~~of ~~run-time~~these ~~or operationally focused service-orientated architecture governance solution~~exits, the ~~addition~~Company ofrealized ~~LogicLibrary,~~proceeds ~~Inc.’s~~of ~~core strength in development and design time governance will expand their product suite~~$64.0 With the addition of Logidex, the combined company can offer differentiated governance solutions that start with Planning Governance (Logidex) flows to LifeCycle Governance (Logidex and Workbench) and finally Run-time Governance (Service Manager)million. ~~The~~Total ~~combination~~cost of for these ~~products~~twelve ~~creates~~companies awas ~~broad and integrated governance suite that can be managed from a single focal point~~$65.7 ~~The company has several strategic initiatives underway to ensure the SOA can continue to grow during this difficult financing environment~~million.

3Investments Held — Third Party Investment Funds

~~Table~~Advanced Technology Ventures VII, L.P. (“ATV”) is a $700 million venture capital fund targeting multi-stage information technology, communications and life sciences companies. As of ~~Contents~~October 31, 2009, ATV has drawn approximately $2.6 million of the Company’s $2.7 million capital commitment. At October 31, 2009, the total value (fair market value plus distributions) of this investment was $1.9 million.

~~OpVista,~~Burrill ~~Inc.~~Life Sciences Capital Fund (“~~OpVista~~Burrill”) is a $200 million venture capital fund established to invest primarily in innovative, early-stage life science venture opportunities. As of October 31, 2009, Burrill has drawn approximately $2.7 million of the Company’s $3.0 million capital commitment. At October 31, 2009, the total value (fair market value plus distributions) of this investment was $1.7 million.

~~Description:~~CHL ~~Description:~~Medical ~~OpVista~~Partners ~~provides~~II, ~~advanced optical network solutions for advanced video and IP services~~L.P. ~~OpVista’s reconfigurable~~(“CHL”) ~~optical~~is ~~transport~~a ~~systems~~$125 ~~are~~million ~~uniquely~~venture ~~suited~~capital tofund ~~deliver~~targeting ~~triple~~start-up ~~play convergence, especially advanced video~~ and IPearly-stage ~~services,~~medical ~~for~~technology ~~cable~~ and ~~communications~~life ~~service~~sciences ~~providers~~companies. As of October 31, ~~2008~~2009, ~~the~~CHL ~~Company~~ has ~~invested~~drawn ~~$15.4 million~~100% inof ~~OpVista and values its investment at zero. As~~ the Company’s ~~equity~~$2.0 ~~position~~million incapital ~~OpVista~~commitment. isAt ~~junior~~October to31, ~~other~~2009, ~~preferred~~the ~~shareholders,~~total ~~despite~~value ~~some~~(fair ~~positive~~market ~~news~~value ~~OpVista~~plus isdistributions) ~~valued~~of atthis ~~zero~~investment was $1.2 million.

~~2008~~CMEA ~~Activity~~Ventures ~~and~~VI, ~~Outlook:~~L.P. ~~OpVista~~(“CMEA”) is ~~going~~a ~~into~~$100 ~~telecom~~million ~~equipment~~venture ~~markets~~capital ~~because~~fund ~~the~~targeting ~~opportunities~~both inearly ~~the~~life ~~Company’s~~science ~~previous~~and ~~markets~~information ~~for cable~~technology ~~equipment have declined during 2007~~companies. ~~Due~~As toof ~~this~~October ~~decline~~31, in2009, ~~business~~CMEA ~~relative~~has todrawn ~~the~~approximately ~~business~~$2.7 ~~plan~~million ~~and~~of the ~~change in marketing, the~~ Company’s ~~needed~~$3.0 tomillion ~~raise~~capital ~~additional equity~~commitment. ~~There~~At isOctober a31, ~~long~~2009, ~~time~~the ~~horizon~~total ~~needed~~value to(fair ~~achieve~~market ~~significant~~value ~~revenue progress~~plus innet ~~telecom~~distributions) ~~markets~~of sothis weinvestment dowas ~~not~~$2.7 ~~expect rapid growth in revenues for 2008-2009~~million.

~~Tensys~~Morgenthaler ~~Medical~~Venture Partners VII, ~~Inc~~L.P. (“~~Tensys~~Morgenthaler”) is an $850 million venture capital fund targeting multi-stage information technology, communications and health care companies. As of October 31, 2009, Morgenthaler has drawn approximately $2.9 million of the Company’s $3.0 million capital commitment. At October 31, 2009, the total value (fair market value plus distributions) of this investment was $1.2 million.

~~Description:~~Prospect ~~Tensys~~Venture ~~designs,~~Partners ~~develops~~II, ~~manufactures~~L.P. ~~and~~(“Prospect”) ~~markets~~is a ~~continuous,~~$500 ~~non-invasive~~million ~~arterial~~venture ~~blood~~capital ~~pressure~~fund ~~management system.~~targeting ~~This method is more effective than intermittent cuff~~multi-~~based~~stage ~~systems~~life ~~and~~sciences ~~far less invasive than arterial cannulation~~companies. As of October 31, ~~2008~~2009, ~~the~~Prospect ~~Company~~ has ~~invested~~drawn approximately $62.87 million inof ~~Tensys~~the ~~and~~Company’s ~~values~~$3.0 ~~its~~million ~~investment~~capital ~~at zero~~commitment. AsAt ~~the Company’s~~October ~~equity~~31, ~~position~~2009, inthe ~~Tensys~~total isvalue ~~junior~~(fair tomarket ~~other~~value ~~preferred~~plus ~~shareholders,~~distributions) ~~despite~~of ~~some~~this ~~positive~~investment ~~news~~was ~~Tensys~~$1.1 ~~is valued at zero~~million.

~~2008~~Sevin ~~Activity~~Rosen ~~and~~IX, ~~Outlook:~~L.P. ~~Tensys~~(“Sevin ~~continues~~Rosen”) tois ~~invest~~a intop-tier ~~research~~early-stage ~~and~~venture ~~development~~capital tofirm, ~~refine~~which ~~its~~closed ~~non-invasive~~a ~~blood-pressure-monitoring~~$305 ~~products~~million toventure ~~improve~~capital ~~market~~fund ~~acceptance.~~dedicated ~~Feedback~~to ~~from~~early-stage ~~customers~~technology ~~and~~investments. ~~increased~~As ~~usability~~ of ~~Tensys’~~ ~~new~~October ~~products~~31, ~~indicate that earlier usability issues~~2009, ~~which~~Sevin ~~were~~Rosen ahas ~~key~~drawn ~~stumbling~~approximately ~~block, have been addressed successfully~~$2.6 ~~Tensys~~million ~~and its board~~ of ~~directors~~the ~~agreed~~Company’s to$3.0 amillion ~~merger~~capital ~~and acquisition transaction with a privately held company~~commitment. ~~This~~ ~~transaction~~At ~~will~~October ~~not~~31, ~~provide~~2009, ~~any~~the ~~liquidity~~total tovalue ~~the~~(fair ~~Company~~market ~~and~~value isplus ~~expected~~distributions) toof ~~occur~~this ininvestment ~~first~~was ~~quarter~~$1.7 ~~2009~~million.

~~Investments~~Tallwood ~~Held~~II, —L.P. ~~Public~~ (“Tallwood”) is a $150 million venture capital fund established to invest in attractive, early-stage growth companies possessing leading-edge technology in the semiconductor industry. As of October 31, 2009, Tallwood has drawn 100% of the Company’s $3.0 million capital commitment. At October 31, 2009, the total value (fair market value plus distributions) of this investment was $1.2 million.

~~Genoptix~~Valhalla Partners, ~~Inc~~L.P. (“~~Genoptix~~Valhalla”) is a $200 million venture capital fund established to invest in attractive early-stage venture capital investments in information technology companies in the Mid-Atlantic region. As of October 31, 2009, Valhalla has drawn approximately $2.7 million of the Company’s $3.0 million capital commitment. At October 31, 2009, the total value (fair market value plus net distributions) of this investment was $1.6 million.

~~Description:~~The ~~Genoptix~~Company ~~provides~~continues ~~Personalized Medicine Services~~ to ~~hematologists~~monitor ~~and~~the ~~oncologists~~progress ~~and~~of ~~their~~the ~~patients~~Company’s ~~through~~investments ~~its CLIA- and CAP-certified testing laboratory to aid~~ in ~~the~~light ~~treatment~~ of ~~blood~~the ~~and bone-marrow~~current ~~malignancies~~economic environment. ~~Genoptix’s~~While ~~Personalized~~our ~~Medicine~~short-term ~~Services~~outlook ~~combines~~for ~~proprietary~~liquidity ~~and~~appears ~~exclusive~~challenging, ~~tests~~there ~~with~~is ~~advanced~~still ~~clinical~~value ~~techniques~~in tothe ~~provide~~investments ~~comprehensive~~the ~~evaluation~~Company ~~to individual patients~~owns. ~~Genoptix~~Thus, ~~tests~~the ~~monitor an individual patient~~Company’s ~~response~~commitment to ~~chemotherapeutic~~maximize ~~agents~~the invalue ~~leukemia~~from ~~and~~the ~~other~~investments ~~blood-related~~is ~~cancers.~~our ~~These~~highest ~~services~~priority. ~~help~~Lastly, ~~physicians~~the ~~deliver~~Company ~~personalized~~is ~~patient~~managing ~~management~~the ~~which~~liquidity ~~results~~it possesses in ~~accurate~~a ~~diagnoses,~~judicious ~~more~~manner ~~effective~~in ~~treatment,~~light ~~reduced~~of ~~adverse effects,~~the ~~enhanced~~challenging ~~monitoring~~financing environment and ~~improved~~intends ~~outcomes~~to Asdedicate ofits ~~October 31,~~resources ~~2008,~~to ~~the~~those ~~Company~~opportunities ~~has~~that ~~liquidated~~possess ~~its~~the ~~position~~greatest ~~in Genoptix~~potential.

~~2008~~For ~~Activity~~additional ~~and~~information ~~Outlook:~~concerning ~~Genoptix which trades on~~ the ~~NASDAQ~~Company’s ~~under the symbol GXDX~~investments, ~~was~~see ~~sold down strategically over~~ the ~~course~~financial ofstatements abeginning ~~ten~~on ~~month~~page ~~period.~~10 ~~The Company invested $4.8 million in Genoptix and generated proceeds~~ of ~~$21.5 million~~this ~~through the sales for a 4~~report.5X ~~return on its investment with an IRR of 31%.~~

~~Exits~~ 4

~~The~~TABLE ~~Company~~OF liquidated its interest in eleven of its portfolio companies since inception. As a result of these exits, the Company realized proceeds of $64.0 million. Total cost for these eleven companies was $64.6 million. CONTENTS

The Company made a $4.8 million investment in Genoptix in July 2003. After Genoptix went public in late 2007, the Company began to strategically liquidate its position and as a result generated proceeds of $21.5 million for a 4.5X return on its investment with an IRR of 31%. Competition

4The Company encounters competition from other entities and individuals having similar investment objectives. Primary competition for desirable investments comes from investment partnerships, venture capital affiliates of large industrial and financial companies, investment companies and wealthy individuals. Some of the competing entities and individuals have investment managers or advisers with greater experience, resources and managerial capabilities than the Company and may therefore be in a stronger position than the Company to obtain access to attractive investments. To the extent that the Company can compete for such investments, it may not be able to do so on terms as favorable as those obtained by larger, more established investors.

Table of ContentsEmployees

~~Investments~~At ~~Held~~October —31, ~~Third~~2009, ~~Party~~the Company had no full-time employees. All personnel of the Company are employed by and compensated by the Investment ~~Funds~~Adviser pursuant to the Advisory Agreement.

AdvancedRisk Technology Ventures VII, L.P. (“ATV”) is a $700 million venture capital fund targeting multistage information technology, communications and life sciences companies. As of October 31, 2008, ATV has drawn approximately $2.5 million of the Company’s $2.7 million capital commitment. At October 31, 2008, the total value (fair market value plus distributions) of this investment was $2.0 million. Factors

~~Burrill~~An ~~Life~~investment ~~Sciences~~in ~~Capital~~the ~~Fund~~securities ~~(“Burrill”)~~of is a ~~$200~~business ~~million~~development ~~venture~~company, ~~capital fund~~such ~~established~~as tothe ~~invest primarily in innovative~~Company, ~~early-stage~~involves ~~life~~certain ~~science~~risks ~~venture~~not ~~opportunities.~~present Asin ofan ~~October 31,~~investment ~~2008,~~in ~~Burrill~~the ~~has~~securities ~~drawn approximately $2.3 million~~ of ~~the~~other ~~Company’s $3.0 million capital commitment. At October 31~~companies, ~~2008,~~ ~~the~~including ~~total~~other ~~value~~types ~~(fair market value plus distributions)~~ of ~~this~~management investment ~~was $1~~companies.6 ~~million.~~

~~CHL~~Portfolio ~~Medical~~Investment ~~Partners~~Risk. Under ~~II,~~the ~~L.P. (“CHL”)~~Investment isCompany Act, a ~~$125~~business ~~million~~development ~~venture~~company ~~capital~~generally ~~fund~~must ~~targeting~~be ~~start-up~~operated ~~and~~for ~~early-stage~~the ~~medical~~purpose ~~technology~~of investing in the securities of certain present and ~~life~~former ~~sciences~~“eligible portfolio companies” or certain bankrupt or insolvent companies. AsGenerally, eligible portfolio companies include companies that at the time of ~~October 31,~~initial ~~2008,~~investment ~~CHL~~(i) ~~has~~do ~~drawn~~not ~~approximately~~have ~~$1.9~~a ~~million~~class of securities included in the ~~Company~~Federal Reserve Board’s $2over-the-counter margin list (i.0e., unregistered, private companies) or (ii) have total assets of less than $4 million ~~capital~~, ~~commitment~~among other things. AtAlthough ~~October 31,~~investing ~~2008,~~in such private or “small” companies offers the ~~total~~opportunity ~~value~~for ~~(fair~~significant ~~market~~capital ~~value~~gains, ~~plus~~such ~~distributions)~~investments also involve a high degree of ~~this~~business ~~investment~~and ~~was~~financial ~~$1.5~~risk ~~million~~that can result in substantial losses.

~~CMEA~~The ~~Ventures~~portfolio ~~VI,~~investments Lof the Company consist principally of securities of Private Companies that have been purchased in offerings not registered under the Securities Act or any state’s securities laws and may not be resold by the Company without registration or pursuant to an exemption.P. (In addition, the securities of portfolio companies that are “~~CMEA~~public”) iscompanies amay ~~$100~~also ~~million~~be ~~venture~~subject ~~capital~~to ~~fund~~restrictions ~~targeting~~on ~~both~~resale ~~early~~because ~~life~~they ~~science~~were ~~and~~acquired ~~information~~from ~~technology~~the ~~companies.~~issuer Asin a “private placement” transaction or because the Company is deemed to be an affiliate of ~~October 31~~the issuer. Generally, ~~2008~~the Company will not be able to sell these securities publicly without the expense and time required to register the securities under the Securities Act and applicable state securities laws, ~~CMEA~~unless ~~has~~an ~~drawn~~exemption ~~approximately~~from $2such registration requirements is available.3 ~~million~~In ofaddition, contractual or practical limitations may restrict the Company’s ~~$3.0~~ability ~~million~~to ~~capital~~liquidate ~~commitment~~its securities in portfolio companies. AtThese ~~October 31,~~limitations ~~2008,~~on liquidity of the ~~total~~Company’s ~~value~~investments ~~(fair~~could ~~market~~preclude ~~value~~or ~~plus~~delay ~~net~~any ~~distributions)~~disposition of ~~this~~such ~~investment~~securities ~~was~~or ~~$2.8~~reduce ~~million~~the amount of proceeds that might otherwise be realized.

MorgenthalerITEM Venture Partners VII, L.P. (“Morgenthaler”) is an $850 million venture capital fund targeting multi-stage information technology, communications and health care companies. As of October 31, 2008, Morgenthaler has drawn approximately $2.9 million of the Company’s $3PROPERTIES.0 million capital commitment. At October 31, 2008, the total value (fair market value plus distributions) of this investment was $1.8 million.

~~Prospect~~The Venture Partners II, L.P. (“Prospect”) is a $500 million venture capital fund targeting multi-stage life sciences companies. As of October 31, 2008, Prospect has drawn approximately $2.6 million of the Company’s ~~$3.0~~does ~~million~~not ~~capital~~own ~~commitment.~~or Atlease ~~October 31,~~any ~~2008,~~physical ~~the total value (fair market value plus distributions) of this investment was $1~~properties.6 ~~million.~~

SevinITEM Rosen IX, L.P. (“Sevin Rosen”) is a top-tier early-stage venture capital firm, which closed a $305 million venture capital fund dedicated to early-stage technology investments. As of October 31, 2008, Sevin Rosen has drawn approximately $2.3 million of the Company’s $3.0 millionLEGAL capital commitmentPROCEEDINGS. At October 31, 2008, the total value (fair market value plus distributions) of this investment was $1.7 million.

~~Tallwood II, L~~None.P. (“Tallwood”) is a $150 million venture capital fund established to invest in attractive, early-stage growth companies possessing leading-edge technology in the semiconductor industry. As of October 31, 2008, Tallwood has approximately $3.0 million of the Company’s $3.0 million capital commitment. At October 31, 2008, the total value (fair market value plus distributions) of this investment was $2.0 million.

ValhallaITEM Partners, L4.P. (“Valhalla”)SUBMISSION isOF aMATTERS $200TO millionA ventureVOTE capitalOF fundSECURITY established to invest in attractive early-stage venture capital investments in information technology companies in the Mid-Atlantic regionHOLDERS. As of October 31, 2008, Valhalla has drawn approximately $2.6 million of the Company’s $3.0 million capital commitment. At October 31, 2008, the total value (fair market value plus net distributions) of this investment was $2.4 million.

~~The Company continues to monitor the progress of the Company’s investments in light of the current economic environment~~None. While our short-term outlook for liquidity appears challenging, there is still value in the investments the Company owns. Thus, the Company’s commitment to maximize the value from the investments is our highest priority. Lastly, the Company is managing the liquidity it possess in a judicious manner in light of the challenging financing environment and intends to dedicate its resources to those opportunities that possess the greatest potential.

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

ForPART additional information concerning the Company’s investments, see the financial statements beginning on page 12 of this report. II

TheMarket Company encounters competition from other entities and individuals having similar investment objectives. Primary competition for desirable investments comes from investment partnerships, venture capital affiliates of large industrial and financial companies, investment companies and wealthy individuals. Some of the competing entities and individuals have investment managers or advisers with greater experience, resources and managerial capabilities than the Company and may therefore be in a stronger position than the Company to obtain access to attractive investments. To the extent that the Company can compete for such investments, it may not be able to do so on terms as favorable as those obtained by larger, more established investors. Information

~~Employees~~The Company has an unlimited number of no par value units authorized. As of October 31, 2009, 295,210 units of membership interest were issued and outstanding. There is no established public trading market for the Company’s units of membership interest.

At October 31, 2008, the Company had no full-time employees. All personnel of the Company are employed by and compensated by the Investment Adviser pursuant to the Advisory Agreement. Holders

~~Risk~~There ~~Factors~~were 264 holders of units of membership interest as of October 31, 2009.

AnDividends investmentand in the securities of a business development company, such as the Company, involves certain risks not present in an investment in the securities of other companies, including other types of management investment companies. Distributions

~~Portfolio~~Fiscal ~~Investment~~Year ~~Risk.~~Ended ~~Under~~October ~~the Investment Company Act~~31, a business development company generally must be operated for the purpose of investing in the securities of certain present and former “eligible portfolio companies” or certain bankrupt or insolvent companies2009. Distributions ~~Generally, eligible portfolio companies include companies that at the time~~ of initial investment (i) do not have a class of securities included in the Federal Reserve Board’s over-the-counter margin list (i.e., unregistered, private companies) or (ii) have total assets of less than $~~4 million, among other things~~7.00 ~~Although investing~~per inshare ~~such~~were ~~private~~made orto ~~“small”~~unit ~~companies~~holders ~~offers~~during ~~the~~fiscal ~~opportunity~~year ~~for significant capital gains, such investments also involve a high degree of business and financial risk that can result in substantial losses~~2009.

~~The~~Fiscal ~~portfolio~~Year ~~investments~~Ended ofOctober ~~the~~31, ~~Company~~2008. Distributions ~~consist principally~~ of securities of private companies that have been purchased in offerings not registered under the Securities Act or any state’s securities laws and may not be resold by the Company without registration or pursuant to an exemption$71.50 Inper ~~addition,~~share ~~the securities of portfolio companies that are “public” companies may also be subject to restrictions on resale because they~~ were ~~acquired~~made ~~from the issuer in a “private placement” transaction or because the Company is deemed~~ to beunit anholders ~~affiliate~~during offiscal ~~the~~year ~~issuer~~2008. Generally, the Company will not be able to sell these securities publicly without the expense and time required to register the securities under the Securities Act and applicable state securities laws, unless an exemption from such registration requirements is available. In addition, contractual or practical limitations may restrict the Company’s ability to liquidate its securities in portfolio companies. These limitations on liquidity of the Company’s investments could preclude or delay any disposition of such securities or reduce the amount of proceeds that might otherwise be realized.

~~ITEM~~Fiscal 2Year Ended October 31, 2007. A ~~PROPERTIES~~distribution of $28.00 per share was made to unit holders during fiscal year 2007.

~~The~~Fiscal ~~Company~~Year ~~does~~Ended ~~not~~October ~~own~~31, or2006. There ~~lease~~were ~~any physical~~no ~~properties~~distributions paid during fiscal year 2006.

~~ITEM~~Fiscal 3Year Ended October 31, 2005. A ~~LEGAL~~distribution ~~PROCEEDINGS~~of $36.84 per share was made to unit holders during fiscal year 2005.

~~None~~For additional information concerning the payment of distributions, see “Significant Accounting Policies” in the notes to the financial statements of the Company included in Item 8 hereof.

ITEM 46. SUBMISSIONSELECTED OFFINANCIAL MATTERS TO A VOTE OF SECURITY HOLDERSDATA.

~~None.~~($ in 000’s except for per unit data)


Fiscal Year Ended	10/31/09			10/31/08			10/31/07			10/31/06			10/31/05
Financial Position
Investments in securities	$	27,594		$	29,798		$	68,038		$	75,889		$	92,593
All Other Assets		6,100			10,835			4,980			31			1,362
Total Assets		33,694			40,633			73,018			75,920			93,955
Liabilities		232			354			676			358			606
Net Assets		33,462			40,279			72,342			75,562			93,349
Changes in Net Assets
Net investment income (loss)		(1,088	)		(988	)		(615	)		(638	)		(1,311	)
Net (loss)/gain on investments		(3,662	)		(9,967	)		5,661			(17,148	)		(10,544	)
Distributions		2,066			21,108			8,266			—			10,876
Per Unit Data
Net Assets	$	113.35		$	136.44		$	245.05		$	255.96		$	316.21
Distributions Paid		7.00			71.50			28.00			—			36.84

~~Table of Contents~~6

~~PART~~TABLE IIOF CONTENTS

ITEM 57. MARKET FOR REGISTRANTMANAGEMENT’S COMMONDISCUSSION EQUITYAND ANALYSIS OF FINANCIAL CONDITION AND RELATEDRESULTS STOCKHOLDEROF MATTERSOPERATIONS.

MarketLiquidity Informationand Capital Resources

The Company ~~has~~focuses anits ~~unlimited~~investments ~~number~~in the securities of noprivately-held ~~par~~venture ~~value~~capital ~~units~~companies, ~~authorized.~~and Asto ofa ~~October 31,~~lesser ~~2008,~~extent ~~295~~in venture capital,~~210 units~~ ofbuyout ~~membership~~and ~~interest~~other ~~were~~private ~~issued~~equity ~~and~~funds ~~outstanding~~managed by third parties. ~~There~~The isCompany nomay ~~established~~offer ~~public~~managerial ~~trading~~assistance ~~market~~to ~~for~~certain ~~the~~of such privately-held venture capital companies. The Company’s ~~units~~invests its available cash in short-term investments of ~~membership~~marketable ~~interest~~securities pending follow-on investments in portfolio companies and distribution to investors.

~~Holders~~At October 31, 2009, the Company held $6,085,116 in cash and cash equivalents and $984,128 short-term investments, as compared to $10,693,165 in cash and cash equivalents and $984,128 in short-term investments respectively, at October 31, 2008. The overall decrease in cash was primarily due to cash used for follow-on investments and distributions to Members. At October 31, 2009, the Company did not invest in any short-term notes. The Company funded capital commitments to its Private Investment Funds in the amount of $1,411,046 for the fiscal year ended October 31, 2009. In connection with the Company’s total commitments to Private Investment Funds in the amount of $25,700,000 since inception, the Company, through October 31, 2009, has contributed $23,712,872 or 92.27% of the total capital committed to nine Private Investment Funds. During the fiscal year ended October 31, 2009, the Company also participated in follow-on financing rounds for several of its Private Companies totaling $1,137,813.

~~There~~The ~~were~~Company ~~263~~believes ~~holders~~that ofits ~~units~~liquidity ofand ~~membership~~capital ~~interest~~resources are adequate to satisfy its operational needs as well as the continuation of ~~October 31,~~its ~~2008~~investment program.

DividendsResults andof Distributions Operations

FiscalInvestment YearIncome Ended October 31,and 2008. Distributions of $71.50 per share were made to unit holders during fiscal year 2008. Expenses

~~Fiscal~~For ~~Year~~the ~~Ended~~fiscal year ended October 31, 2009, the Company had investment income of $12,371, primarily from investments in short-term securities, and operating expenses of $1,100,180, resulting in a net investment loss of ($1,087,809). For the fiscal year ended October 31, 2008, the Company had investment income of $408,721, primarily from investments in short-term securities, and operating expenses of $1,396,703, resulting in a net investment loss of ($987,982). For the fiscal year ended October 31, 2007, the Company had investment income of $714,577, primarily from investments in short-term securities, and operating expenses of $1,329,691, resulting in a net investment loss of ($615,114). The decrease in investment income for the year ended October 31, 2009 was due to decreases in interest income from investments in the Private Companies as well as decreases in money market rates. The decrease in operating expenses was primarily due to lower management fees charged to the Company as a result of lower net assets. The decrease in investment income for the year ended October 31, 2008 was due to decreases in interest income from investments in the Private Companies as well as decreases in money market rates. The increase in operating expenses was due primarily to increased legal costs which were partially offset by a decline in management fees as a result of reduced net assets under management. Additionally, during 2007 the management fees were at a 2.00% Arate ~~distribution~~for a quarter of ~~$28~~the year while the rate for fiscal year 2008 was consistently at 1.00% ~~per~~for ~~share~~the full fiscal year. The increase in investment income for the year ended October 31, 2007 was ~~made~~due to ~~unit~~an ~~holders~~increase ~~during~~in interest income from investments in the Private Companies and from an increase in interest earned on short-term securities. The decrease in operating expenses for the fiscal year ended October 31, 2007 was primarily due to a decline in management fees which resulted from a reduced level of net assets under management during the period and a decrease in the management fee rate from 2.00% to 1.00% during 2007.

~~Fiscal~~For ~~Year~~the ~~Ended~~ fiscal years ended October 31, ~~2006.~~2009, ~~There~~2008 ~~were~~and no2007, ~~distributions~~USTA ~~paid~~and the Investment Adviser earned $357,813, $597,448 and $691,823 in management fees, respectively. Management fees recorded during ~~fiscal~~the ~~year~~period ~~2006~~ended October 31, 2009 decreased over the period ended October 31, 2008 due to a decrease in net assets. The decrease in 2008 and 2007 was due to a decrease in net assets and the change in the management fee at an annual rate equal of 2.00% to 1.00% of net assets during 2007.

~~Fiscal~~The ~~Year~~Investment ~~Ended~~Adviser ~~October 31,~~provides ~~2005.~~investment ~~A distribution~~management and administrative services required for the operation of ~~$36~~the Company.84 ~~per~~In ~~share~~consideration ~~was~~of ~~made~~the toservices ~~unit~~rendered ~~holders~~by ~~during~~the ~~fiscal~~Investment ~~year~~Adviser, ~~2005~~the Company pays a management fee based upon a percentage of the net assets of the Company. This fee is determined and payable quarterly.

~~For additional information concerning the payment of distributions, see “Significant Accounting Policies” in the notes to the financial statements of the Company included in Item 8 hereof.~~ 7

~~ITEM~~TABLE 6.OF ~~SELECTED FINANCIAL DATA.~~CONTENTS

($Net in 000’s except for per unit data) Assets

Fiscal Year Ended	10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Financial Position
Investments in securities	$	29,798		$	68,038		$	75,889		$	92,593		$	115,731
All Other Assets		10,835			4,980			31			1,362			1,258
Total Assets		40,633			73,018			75,920			93,955			116,989
Liabilities		354			676			358			606			910
Net Assets		40,279			72,342			75,562			93,349			116,079
Changes in Net Assets
Net investment income (loss)		(988	)		(615	)		(638	)		(1,311	)		(2,318	)
Net (loss)/gain on investments		(9,967	)		5,661			(17,148	)		(10,544	)		(4,060	)
Distributions		21,108			8,266			—			10,876			—
Per Unit Data
Net Assets	$	136.44		$	245.05		$	255.96		$	316.21		$	393.21
Distributions Paid		71.50			28.00			—			36.84			—

The Company’s net assets were $33,462,426, or a net asset value per unit of $113.35, at October 31, 2009. This represents a decline of ($6,816,582), or ($23.09) per unit, from net assets of $40,279,008, or $136.44 per unit, at October 31, 2008. The net decrease resulted principally from (i) a net decrease in net assets from operations of ($4,750,112) or ($16.09) per unit and (ii) a distribution of ($2,066,470) or ($7.00) per unit to unit holders.

7The Company’s net assets were $40,279,008, or a net asset value per unit of $136.44, at October 31, 2008. This represents a decline of ($32,063,191), or ($108.61) per unit, from net assets of $72,342,199, or $245.05 per unit, at October 31, 2007. The net decrease resulted principally from (i) a net decrease in net assets from operations of ($10,955,676) or ($37.11) per unit and (ii) a distribution of ($21,107,515) or ($71.50) per unit to unit holders.

TableRealized ofand ContentsUnrealized Gains and Losses from Portfolio Investments

~~ITEM~~The 7net realized loss of ($21,827,037) for the fiscal year ended October 31, 2009 was comprised of losses from: (i) the Company’s write off of OpVista, Inc. ~~MANAGEMENT~~of ($15,393,987); (ii) the Company’Ss ~~DISCUSSION~~write ~~AND~~off ~~ANALYSIS~~of OFTensys ~~FINANCIAL~~Medical, ~~CONDITION~~Inc. ~~AND~~of ~~RESULTS~~($6,425,000); OFand ~~OPERATIONS~~(iii) the realized loss of ($8,050) on Cydelity, Inc., each a private company (“Private Company”) investment. The Tensys Medical, Inc. write off is a result of the merger with Recorders and Medicare Systems (P) Ltd., due to which Series C and D preferred stock were not ascribed any value.

~~Liquidity~~The net decrease/(increase) in unrealized depreciation on investments of $18,164,734 for the fiscal year ended October 31, 2009 was principally the combination of the reversal of unrealized depreciation due to a write off of OpVista, Inc. in the amount of $15,393,987 and a sale of Tensys Medical, Inc., in the amount of $6,425,000. This unrealized appreciation was partially offset by the combination of (i) the unrealized depreciation on CMEA Ventures VI, L.P. in the amount of ($496,801); (ii) the unrealized depreciation on Tallwood II, L.P. of ($845,018); (iii) the unrealized depreciation on Morgenthaler Partners VII, L.P. of ($525,305); (iv) the unrealized depreciation of ($550,743) on Valhalla Partners, L.P.; (v) the unrealized depreciation on Burrill Life Sciences Capital ~~Resources~~Fund, L.P. in the amount of ($327,221), and (vi) the unrealized depreciation on CHL Medical Partners II, L.P. in the amount of ($348,360), which are all Private Investment Funds. The remaining Private Investment Funds resulted in a net unrealized depreciation of ($385,804) and the remaining Private Company investments resulted in unrealized depreciation on Archemix Corporation in the amount of ($175,001).

The ~~Company~~net ~~focuses~~realized ~~its~~gain ~~investments~~of in$11,649,815 for the ~~securities~~fiscal ~~of privately-held~~year ~~venture~~ended ~~capital~~October ~~companies~~31, ~~and~~2008 towas comprised of a ~~lesser~~gain ~~extent~~from inthe ~~venture~~Company’s ~~capital~~sale of Genoptix, ~~buyout~~Inc. ~~and~~in ~~other~~the ~~private~~amount ~~equity~~of ~~funds~~$17,248,158. ~~managed~~This bygain ~~third~~was ~~parties.~~partially ~~The~~offset ~~Company~~by ~~may~~the ~~offer~~realized ~~managerial~~losses ~~assistance~~from tothe ~~certain~~Company’s write off of ~~such~~Midas ~~privately-held~~Vision ~~venture~~Systems, ~~capital companies~~Inc. ~~The~~and ~~Company~~NanoOpto ~~invests~~Corporation, ~~its~~which ~~available~~resulted ~~cash~~ in ~~short-term~~a ~~investments~~realized loss of ~~marketable~~($5,054,960) ~~securities~~and ~~pending~~($143,937), ~~follow-on~~respectively. ~~investments~~All inother ~~portfolio~~remaining ~~companies~~Private Companies and ~~distribution~~Private toInvestment ~~investors~~Funds resulted in a net realized loss of ($399,446).

AtThe ~~October 31,~~net ~~2008,~~(increase) ~~the Company held $10,693,165~~ in ~~cash~~unrealized ~~and~~depreciation ~~cash~~on ~~equivalents~~investments ~~and~~of ($~~984~~21,~~128~~617,509) ~~short-term~~for ~~investments,~~the asfiscal ~~compared~~year toended ~~$26~~October 31,~~240~~ in2008 ~~cash and~~was ~~cash~~principally ~~equivalents~~the ~~and~~combination ~~$11,367,859~~of: in(i) ~~short-term~~the ~~investments~~unrealized ~~respectively,~~loss aton ~~October 31~~OpVista, ~~2007~~Inc. ~~The~~of ~~marginal~~($9,272,998); ~~increase~~(ii) inreversal ~~cash~~of ~~and~~unrealized ~~short-term~~gains ~~investments from October 31, 2007 was primarily~~ due to ~~cash received from~~ the sale of Genoptix, Inc. ~~and~~of ~~other~~($7,469,920); ~~investments~~(iii) ofan ~~which~~unrealized ~~the~~loss ~~Company~~on ~~distributed~~SOA ~~approximately~~Software, ~~98%~~Inc. ofin the ~~gross~~amount ~~proceeds~~of ~~generated~~($5,681,135); ~~during~~(iv) the ~~fiscal~~unrealized ~~year~~loss ~~ended~~on ~~October 31~~Archemix Corporation, ~~2008~~Inc. ~~The~~of ~~remaining~~($1,850,000); ~~proceeds~~and ~~were~~(v) ~~used~~an tounrealized ~~fund~~loss ~~expenses~~of ~~and~~($1,300,757) ~~invest~~on inTensys ~~portfolio~~Medical, ~~investments~~Inc. ~~The~~ ~~Company~~Systems, ~~during~~Inc. ~~this~~This ~~period~~unrealized ~~funded~~loss ~~additional~~was ~~capital~~partially ~~per~~offset ~~its~~by: ~~commitments~~the toreversal ~~all~~ of ~~its~~unrealized ~~private~~losses ~~investment~~due ~~funds. In connection with the Company’s total commitments~~ to ~~private~~write ~~funds~~off ~~in the amount~~ of ~~$25,700,000~~Midas ~~since~~Vision ~~inception~~Systems, ~~the Company,~~Inc. ~~through~~of ~~October 31, 2008, has contributed~~ $225,~~301~~054,~~825~~960 orand 86NanoOpto Corp.~~78%~~ of ~~the~~$77,321, ~~total capital committed to nine private investment funds~~respectively. ~~During~~The ~~the~~remaining ~~fiscal~~Private ~~year~~Companies ~~ended~~and ~~October 31,~~Private ~~2008,~~Investment ~~the~~Funds ~~Company~~resulted ~~also participated~~ in ~~follow-on~~a ~~financing~~net ~~rounds~~unrealized ~~for several~~loss of ~~its private companies totaling~~ ($~~536~~1,~~176~~174,980).

The ~~Company~~realized ~~believes~~loss ~~that~~of ~~its~~($23,862,768) ~~liquidity~~for the fiscal year ended October 31, 2007 is comprised of losses from Cydelity, Inc. of ($9,438,783), NanoOpto Corp. of ($4,633,377), Silverback Systems, Inc. of ($7,580,196), Chips and ~~capital~~Systems, ~~resources~~Inc. ~~are~~of ~~adequate~~($4,941,133). toThese ~~satisfy its~~losses ~~operational~~were ~~needs~~partially asoffset ~~well~~by asgains ~~the~~on ~~continuation~~Pilot Software Inc. of ~~its~~$2,977,789. ~~investment~~The ~~program~~remaining net loss of ($247,068) is comprised of all other gains/(losses) of the remaining Private Companies and Private Investment Funds.

~~Results~~The net decrease in unrealized depreciation on investments of ~~Operations~~$29,523,869 for the fiscal year ended October 31, 2007 is comprised of (i) reversal of unrealized losses due to dispositions of investments of Cydelity, Inc. of $4,000,000, NanoOpto Corp. of $1,312,978, Silverback Systems, Inc. of $6,730,172 and Chips and Systems, Inc. of $4,941,133 for a total of $16,984,283; (ii) appreciation on Archemix Corporation of $1,350,001 and OpVista, Inc. of $1,064,711; (iii) the initial public offering of Genoptix Inc. resulting in an increase of $9,321,777; and (iv) Private Investment Funds of $2,309,964. This unrealized gain was partially offset by the unrealized loss on Tensys Systems Inc. of $1,506,867.

~~Investment Income and Expenses~~ 8

~~For~~TABLE ~~the~~OF fiscal year ended October 31, 2008, the Company had investment income of $408,721, primarily from investments in short-term securities, and operating expenses of $1,396,703, resulting in a net investment loss of ($987,982). For the fiscal year ended October 31, 2007, the Company had investment income of $714,577, primarily from investments in short-term securities, and operating expenses of $1,329,691, resulting in a net investment loss of ($615,114). For the fiscal year ended October 31, 2006, the Company had investment income of $1,238,630, primarily from investments in short-term securities, and operating expenses of $1,876,947, resulting in a net investment loss of ($638,317). The decrease in investment income for the year ended October 31, 2008 is due to decreases in interest income from investments in the private companies as well as decreases in money market rates. The increase in operating expenses was due primarily to increased legal costs which were partially offset by a decline in management fees as a result of reduced net assets under management. Additionally, during 2007 the management fees were at a 2.00% rate for a quarter of the year while the rate for fiscal year 2008 was consistently at 1.00% for the full fiscal year. The increase in investment income for the year ended October 31, 2007 in comparison to the year ended October 31, 2006 is due to an increase in interest income from investments in the private companies and from an increase in interest earned on short-term securities. The decrease in operating expenses, in comparing to the fiscal year ended October 31, 2007 and October 31, 2006, was primarily due to a decline in management fees which resulted from a reduced level of net assets under management during the period and a decrease in the management fee rate from 2.00% to 1.00% during 2007, while for 2006 the rate was at 2.00%. CONTENTS

ForApplication the fiscal years ended October 31, 2008, 2007 and 2006, USTA and the Investment Adviser earned $597,448, $691,823 and $1,231,320 in management fees, respectively. Management fees recorded during the period ended October 31, 2008 decreased over the period ended October 31, 2007 due to a decrease in net assets and the change in the management fee annual rate of 2.00%Critical toAccounting 1.00% of net assets during 2007. The decrease in 2007 and 2006 is due to a decrease in net assets and the change in the management fee at an annual rate equal of 2.00% to 1.00% of net assets during 2007. Policies

8Under the supervision of the Valuation and Audit Committees of the Company’s Board of Managers, consisting of the Managers who are not “interested persons,” as defined in Section 2(a)(19) of the Investment Company Act (the “Independent Managers”), of the Company, the Investment Adviser makes certain critical accounting estimates with respect to the valuation of private portfolio investments, including Private Investment Funds. These estimates could have a material impact on the presentation of the Company’s financial condition because in total, they currently represent 79.52% of the Company’s net assets. For the private investments held at October 31, 2009, changes to these estimates and realizations resulted in a $2.2 million decrease in net asset value from October 31, 2008.

~~Table~~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 ~~Contents~~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.

~~The~~Initially, ~~Investment~~Private ~~Adviser~~Company ~~provides~~investments ~~investment~~are ~~management~~valued ~~and~~based ~~administrative~~upon ~~services~~their ~~required~~original ~~for~~cost except that original cost valuation will be adjusted, upon approval by the ~~operation~~ Valuation Committee on the advice of the ~~Company.~~Valuation InAgent, ~~consideration~~based on either a private market or appraisal method of ~~the~~valuation. ~~services~~The ~~rendered~~private bymarket ~~the~~method ~~Investment~~shall ~~Adviser~~only be used with respect to reliable third party transactions by sophisticated, ~~the~~independent ~~Company~~investors. ~~pays~~The aappraisal ~~management~~method ~~fee~~shall be based upon asuch ~~percentage~~factors ofaffecting the company such as earnings, net ~~assets~~worth, reliable private sale prices of the ~~Company.~~company’s ~~This~~securities, ~~fee~~the ismarket ~~determined~~prices ~~and~~for ~~payable~~similar ~~quarterly.~~securities ~~Effective~~of comparable companies, an ~~July 1~~assessment of the company’s future prospects or, ~~2007~~if appropriate, ~~the~~liquidation ~~Investment~~value. ~~Sub-Adviser~~The ~~ceased~~values for the investments referred to ~~serve~~in asthis paragraph will be estimated regularly by the Investment ~~Sub-~~Adviser toor a committee of the Board of Managers, or 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.

~~Net~~The ~~Assets~~valuation of the Company’s private funds is based upon the 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 Investment Adviser, the 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 ~~Company’s~~Investment ~~net~~Adviser ~~assets~~also ~~were~~makes ~~$40,279,008,~~estimates orregarding adiscounts ~~net~~on ~~asset~~market ~~value~~prices ~~per unit~~ of ~~$136.44,~~publicly attraded ~~October 31,~~securities ~~2008.~~where ~~This~~appropriate ~~represents~~and aallowable ~~decline~~under ~~of ($32,063,191), or ($108~~GAAP.~~61)~~ ~~per~~For ~~unit,~~securities ~~from~~which ~~net~~have ~~assets~~legal ~~of $72,342,199,~~ or ~~$245.05~~contractual ~~per~~restrictions ~~unit,~~on ~~at October 31~~transfer, ~~2007. The net decrease resulted principally from i)~~ a ~~net~~discount ~~decrease in net assets from operations~~ of ($10~~,955,676)~~% orto ~~($37.11)~~40% ~~per~~from ~~unit~~the ~~and ii)~~public amarket ~~distribution~~price ofmay ~~($21,107,515)~~be ~~or ($71~~applied.~~50)~~ ~~per unit to unit holders.~~

TheITEM Company’s net assets were $72,342,199, or a net asset value per unit of $2457A.05, atQUANTITATIVE October 31,AND 2007.QUALITATIVE ThisDISCLOSURES representsABOUT aMARKET decline of ($3,219,893), or ($10RISK.91) per unit, from net assets of $75,562,092, or $255.96 per unit, at October 31, 2006. The net decrease resulted principally from i) a net increase in net assets from operations of $5,045,987 or $17.09 per unit and ii) a distribution of ($8,265,880) or ($28.00) per unit to unit holders.

RealizedEquity andPrice Unrealized Gains and Losses from Portfolio Investments Risk

The ~~net~~Company ~~realized~~anticipates ~~gain~~that a majority of ~~$11,649,815~~its ~~for~~investment ~~the~~portfolio ~~fiscal year~~will ~~ended~~consist ~~October 31,~~of ~~2008~~securities ~~was~~in ~~comprised~~Private Companies and Private Investment Funds. As of aOctober ~~gain~~31, ~~from~~2009, 79.52% of the Company’s ~~sale~~net ofassets ~~Genoptix,~~are ~~Inc~~not publicly traded. These investments are recorded at fair value as determined by the Investment Adviser in accordance with valuation guidelines adopted by the ~~amount~~Board of ~~$17,248,158~~Managers. This ~~gain~~method ~~was~~of ~~partially~~valuation ~~offset~~does bynot ~~the~~result ~~realized~~in ~~losses~~increases ~~from~~or ~~the~~decreases ~~Company’s~~in ~~write~~the ~~off~~fair value of ~~Midas~~these ~~Vision~~securities ~~Systems~~in response to changes in market prices. Thus, these securities are not subject to equity price risk normally associated with public equity markets, except ~~Inc.~~that ~~and~~to ~~NanoOpto~~the ~~Corporation~~extent that the Private Investment Funds hold underlying public securities, ~~which~~the ~~resulted~~Company inis aindirectly ~~realized~~exposed ~~loss~~to ofequity ~~($5~~price risk associated with the public markets. At October 31,~~054,960)~~ 2009 and ~~($143~~October 31,~~937)~~ 2008, ~~respectively.~~the ~~All~~Company ~~other~~was ~~remaining~~not ~~direct~~subject ~~investments~~to ~~and~~equity price risk normally associated with public equity markets, except to the extent that the Private Investment Funds ~~resulted~~that inthe aCompany ~~net~~has ~~realized~~invested ~~loss~~in ofhold, ~~($399~~from time to time,~~446).~~ interests in securities which may be publicly traded.

~~The net change in unrealized (losses) of ($21,617,509) for the fiscal year ended October 31, 2008 was principally the combination of: i) the unrealized loss on OpVista, Inc. of ($~~9,272,998); ii) reversal of unrealized gains due to the sale of Genoptix, Inc. of ($7,469,920); iii) an unrealized loss on SOA Software, Inc. in the amount of ($5,681,135); iv) the unrealized loss on Archemix Corporation, Inc. of ($1,850,000); and v) an unrealized loss of ($1,300,757) on Tensys Medical, Inc. Systems, Inc. This unrealized loss was partially offset by: the reversal of unrealized losses due to write off of Midas Vision Systems, Inc. of $5,054,960 and NanoOpto Corp. of $77,321, respectively. The remaining direct investments and Private Investment Funds resulted in a net unrealized loss of ($1,174,980).

~~The~~TABLE ~~realized~~OF loss of ($23,862,768) for the fiscal year ended October 31, 2007 is comprised of losses from Cydelity, Inc. of ($9,438,783), NanoOpto Corp. of ($4,633,377), Silverback Systems, Inc. of ($7,580,196), Chips and Systems, Inc. of ($4,941,133). These losses were partially offset by gains on Pilot Software Inc. of $2,977,789. The remaining net loss of ($247,068) is comprised of all other gains/(losses) of the remaining direct investments and private investment funds. CONTENTS

TheITEM unrealized gain of $29,523,869 for the fiscal year ended October 31, 2007 is comprised of i) reversal of unrealized losses due to dispositions of investments of Cydelity, Inc8. ofFINANCIAL $4,000,000,STATEMENTS NanoOptoAND Corp.SUPPLEMENTARY of $1,312,978, Silverback Systems, IncDATA. of $6,730,172 and Chips and Systems, Inc. of $4,941,133 for a total of $16,984,283; ii) appreciation on Archemix Corporation of $1,350,001 and OpVista, Inc. of $1,064,711; iii) the initial public offering of Genoptix Inc. resulting in an increase of $9,321,777; and iv) Private Investment Funds of $2,309,964. This unrealized gain was partially offset by the unrealized loss on Tensys Systems Inc. of $1,506,867.

The realized loss of ($4,513,734) for the fiscal year ended October 31, 2006 was principally the result of the Company’s sale of LightConnect Inc, a private company investment which resulted in a loss of ($4,519,334).


Report of Independent Registered Public Accounting Firm			11
Portfolios of Investments at October 31, 2009 and October 31, 2008			12
Statements of Assets and Liabilities at October 31, 2009, and October 31, 2008			16
Statements of Operations for the years ended October 31, 2009, October 31, 2008 and October 31, 2007			17
Statements of Changes in Net Assets for the years ended October 31, 2009, October 31, 2008 and October 31, 2007			18
Statements of Cash Flows for the years ended October 31, 2009, October 31, 2008 and October 31, 2007			19
Financial Highlights for the years ended October 31, 2009, October 31, 2008, October 31, 2007, October 31, 2006 and October 31, 2005			20
Notes to Financial Statements			21

9 10

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

TheReport net change in unrealized depreciation of ($12,634,704)Independent forRegistered thePublic yearAccounting ended October 31, 2006 was principally the result of a decrease in the valuation of Silverback Systems, Inc of ($6,720,039) and OpVista Inc of ($5,685,700) both private company investments. Firm

~~Application~~To the Board of ~~Critical~~Managers ~~Accounting~~and ~~Policies~~Members of Excelsior Venture Partners III, LLC:

~~Under~~In our opinion, the ~~supervision~~accompanying statements of assets and liabilities, including the ~~Valuation~~portfolios of investments, and ~~Audit~~the ~~Committees~~related statements of operations, of changes in net assets and of cash flows and the ~~Company’s~~ ~~Board~~financial highlights present fairly, in all material respects, the financial position of ~~Managers~~Excelsior Venture Partners III, LLC (the “~~Board~~Fund”) orat ~~“Board~~October 31, 2009 and 2008, and the results of ~~Managers”)~~its operations, ~~consisting~~the changes in its net assets, the cash flows and financial highlights for each of the ~~Managers~~three ~~who~~years ~~are~~in ~~not~~the ~~“interested~~period ~~persons~~then ended,” asin ~~defined~~conformity with accounting principles generally accepted in ~~Section 2(a)(19)~~the United States of ~~the~~America. ~~Investment~~These ~~Company~~financial statements ~~Act~~and financial highlights (~~the~~ hereafter referred to as “~~Independent~~financial ~~Managers~~statements”), ofare the ~~Company,~~responsibility of the ~~Investment~~Fund's ~~Adviser~~management. ~~makes~~Our ~~certain~~responsibility ~~critical~~is ~~accounting~~to ~~estimates~~express ~~with~~an ~~respect~~opinion toon ~~the~~these ~~valuation~~financial ofstatements ~~private~~based ~~portfolio~~on ~~investments,~~our ~~including~~audits. ~~private~~We ~~investment~~conducted ~~funds.~~our ~~These~~audits ~~estimates~~of ~~could~~these ~~have~~financial ~~a material~~statements ~~impact~~in onaccordance with the ~~presentation~~standards of the Public Company’s Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial ~~condition~~statements ~~because~~are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in ~~total~~the financial statements, ~~they~~assessing ~~currently~~the ~~represent~~accounting ~~71.54%~~principles ofused and significant estimates made by management, and evaluating the ~~Company’s~~overall ~~net~~financial ~~assets~~statement presentation. ~~For~~We ~~the~~believe ~~private~~that ~~investments~~our ~~held~~audits, which included confirmation of investments at October 31, ~~2008,~~2009 ~~changes~~by tocorrespondence ~~these~~with ~~estimates~~ the custodian and ~~realizations~~portfolio ~~resulted~~funds, inprovide a ~~$18~~reasonable basis for our opinion.4 ~~million~~The ~~decrease~~financial inhighlights ~~net~~of ~~asset~~the ~~value~~Fund ~~from~~as of October 31, ~~2007~~2006 and 2005 and for each of the periods then ended, were audited by other auditors whose report dated December 21, 2006 expressed an unqualified opinion on those statements.

~~The~~As ~~value~~explained ~~for~~in ~~securities~~Note ~~for~~1, ~~which~~the ~~no public~~financial ~~market~~statements ~~exists~~include isinvestments ~~difficult~~held toby ~~determine.~~the ~~Generally~~Fund ~~speaking,~~valued ~~such~~at ~~investments~~$26,610,453 ~~will~~(80% beof ~~valued~~the onFund's anet ~~“going~~assets) ~~concern”~~at ~~basis~~October ~~without~~31, ~~giving~~2009, ~~effect~~the tovalues ~~any~~of ~~disposition~~which ~~costs.~~have ~~There~~been isfair avalued ~~range~~by ofthe ~~values~~Investment ~~that~~Manager, isunder ~~reasonable~~the ~~for~~general ~~such investments~~supervision atof ~~any~~the ~~particular~~Board ~~time.~~of ~~Because~~Managers, ofin the ~~inherent~~absence ~~uncertainty~~ of ~~valuation,~~readily ~~the~~ascertainable market values. These estimated values may differ significantly from the values that would have been used had a ready market for the ~~securities~~investment existed, and the differences could be material.

~~Initially,~~December 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 valuation28, ~~direct~~2009 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 Investment Adviser or a committee of the Board of Managers, or 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 the 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 Investment Adviser, the 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. 11

~~The~~TABLE ~~Investment~~OF 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 may be applied. CONTENTS

10Excelsior Venture Partners III, LLC Portfolio of Investments October 31, 2009



Principal Amount/Shares		Acquisition Date##		Cost		Fair Value ( Note 2)		% of Net Assets****
	Private Companies***
	Common Stock#
	Medical Technology
7,882	Recorders and Medicare Systems (P) Ltd. *		12/08		382,623		—		0.00	%
					382,623		—		0.00	%
	Total Common Stock – Private Companies				382,623		—		0.00	%
	Preferred Stocks#
	Enterprise Software
4,542,763	SOA Software, Inc., Series F Junior**		05/08		5,681,135		—		0.00	%
					5,681,135		—		0.00	%
	Life Sciences
1,999,999	Archemix Corporation, Series A		08/02 – 11/03		1,999,999		1,499,999		4.48	%
700,000	Archemix Corporation, Series B		03/04 – 12/05		700,000		525,000		1.57	%
					2,699,999		2,024,999		6.05	%
	Wireless @
4,433,333	Ethertronics, Inc. Series B		06/01 – 05/04		6,650,000		6,650,000		19.87	%
1,697,957	Ethertronics, Inc. Series C		05/05 – 04/07		2,546,937		2,546,937		7.61	%
758,542	Ethertronics, Inc. Series D		3/09		1,137,813		1,137,813		3.40	%
					10,334,750		10,334,750		30.88	%
	Total Preferred Stocks – Private Companies				18,715,884		12,359,749		36.93	%
	Warrants#, @
	Wireless
271,248	Ethertronics, Inc. Series C (expiration date 03/10)		3/09		—		—		0.00	%
	Total Warrants				—		—		0.00	%
	Total – Private Companies			$	19,098,507	$	12,359,749		36.93	%

~~ITEM~~ The ~~7A.~~accompanying ~~QUANTITATIVE~~notes ~~AND~~are ~~QUALITATIVE~~an ~~DISCLOSURES~~integral ~~ABOUT~~part ~~MARKET~~of ~~RISK~~these Financial Statements.

~~Equity Price Risk~~ 12

~~The~~TABLE ~~Company~~OF anticipates that a majority of its investment portfolio will consist of securities in private companies and private investment funds. As of October 31, 2008, 71.54% of the Company’s net assets are not publicly traded. These investments are recorded at fair value as determined by the Investment Adviser in accordance with valuation guidelines adopted by the Board of Managers. This method of valuation does not result in increases or decreases in the fair value of these securities in response to changes in market prices. Thus, these securities are not subject to equity price risk normally associated with public equity markets, except that to the extent that the private investment funds hold underlying public securities, the Company is indirectly exposed to equity price risk associated with the public markets. At October 31, 2008 and October 31, 2007, 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 hold, from time to time, interests in securities which may be publicly traded. CONTENTS

11Excelsior Venture Partners III, LLC Portfolio of Investments October 31, 2009 (continued)



Percent Owned^&		Acquisition Date##		Commitment		Cost		Fair Value (Note 2)		% of Net Assets****
	Private Investment Funds, #*
Early-Stage Information Technology
0.98%	Sevin Rosen Fund IX, L.P. (Note 8)		10/04 – 09/09	$	3,000,000	$	1,956,608	$	1,743,354		5.21	%
2.36%	Tallwood II, L.P.		12/02 – 05/08		3,000,000		2,890,443		1,175,001		3.51	%
1.70%	Valhalla Partners, L.P.		10/03 – 07/09		3,000,000		1,764,359		1,551,445		4.64	%
					9,000,000		6,611,410		4,469,800		13.36	%
Early-Stage Life Sciences and Technology
1.55%	Burrill Life Sciences Capital Fund, L.P. (Note 8)		12/02 – 10/09		3,000,000		2,454,593		1,698,265		5.07	%
1.35%	CHL Medical Partners II, L.P.		01/02 – 05/09		2,000,000		1,641,817		1,193,094		3.57	%
1.02%	CMEA Ventures VI, L.P. (Note 8)		12/03 – 10/09		3,000,000		2,613,017		2,739,798		8.19	%
					8,000,000		6,709,427		5,631,157		16.83	%
Multi-Stage Life Sciences, Communications and Health Care
0.38%	Advanced Technology Ventures VII, L.P. (Note 8)		08/01 – 12/08		2,700,000		1,920,405		1,853,720		5.54	%
0.37%	Morgenthaler Partners VII, L.P.		07/01 – 10/08		3,000,000		1,883,167		1,244,818		3.72	%
0.56%	Prospect Venture Partners II, L.P.		06/01 – 04/09		3,000,000		766,971		1,051,209		3.14	%
					8,700,000		4,570,543		4,149,747		12.40	%
Total Private Investment Funds					25,700,000		17,891,380		14,250,704		42.59	%
Shares	Investment Company
984,128	Dreyfus Government Cash Management Fund Institutional Shares						984,128		984,128		2.94	%
	TOTAL INVESTMENTS			$	25,700,000	$	37,974,015		27,594,581		82.46	%
	OTHER ASSETS & LIABILITIES (NET)								5,867,845		17.54	%
	NET ASSETS							$	33,462,426		100.00	%

~~ITEM~~* 8Tensys Medical, Inc. ~~FINANCIAL~~merged ~~STATEMENTS~~with ~~AND~~Recorders ~~SUPPLEMENTARY~~and ~~DATA~~Medicare Systems (P) Ltd. on December 19, 2008. Recorders and Medicare Systems (P) Ltd. is based in India.

Report of Independent Registered Public Accounting Firm		13
Portfolios of Investments at October 31, 2008 and October 31, 2007		14
Statements of Assets and Liabilities at October 31, 2008, and October 31, 2007		18
Statements of Operations for the years ended October 31, 2008, October 31, 2007 and October 31, 2006		19
Statements of Changes in Net Assets for the years ended October 31, 2008, October 31, 2007 andOctober 31, 2006		20
Statements of Cash Flows for the years ended October 31, 2008, October 31, 2007 and October 31, 2006		21
Financial Highlights for the years ended October 31, 2008, October 31, 2007, October 31, 2006, October 31, 2005 and October 31, 2004.		22
Notes to Financial Statements		23

LogicLibrary, Inc. merged with SOA Software, Inc. on May 1, 2008. Shares of 4,542,763 include 4,239,912 shares held by the Company and 302,851 shares held in escrow for the benefit of the Company.

12*** Restricted as to public resale and illiquid securities or investments. Total cost of restricted and illiquid securities or investments at October 31, 2009 was $36,989,887. Total fair value of restricted and illiquid securities or investments owned at October 31, 2009 was $26,610,453 or 79.52% of net assets.

~~Table~~**** ofCalculated ~~Contents~~as fair value divided by the Company's net assets.

~~Report~~@ At October 31, 2009, the Company owned 5% or more of ~~Independent~~the ~~Registered~~Private ~~Public~~Company's ~~Accounting~~outstanding ~~Firm~~shares thereby making the Private Company an affiliate as defined by the Investment Company Act of 1940, as amended (the “Investment Company Act”). Total fair value of affiliated securities owned at October 31, 2009 (including investments in controlled affiliates) was $10,334,749 or 30.88% of net assets.

To# ~~the~~Non-income ~~Board~~producing ~~of Managers and Members of~~ securities.

~~Excelsior~~## ~~Venture~~Disclosure ~~Partners~~is ~~III, LLC:~~for restricted securities only.

In& ~~our~~Represents ~~opinion,~~capital ~~the~~balance ~~accompanying statement~~ of ~~assets and liabilities, including~~ the ~~portfolio~~Company's ofinvestment investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Excelsior Venture Partners III, LLC (the “Fund”) at October 31, 2008 and October 31, 2007, and the results of its operations, the changes in its net assets, its cash flows and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a ~~test~~percentage basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of ~~investments~~Private atInvestment ~~October 31, 2008 by correspondence with the custodian and portfolio funds, provide a reasonable basis for our opinion. The financial statements of the~~ Fund's astotal of October 31, 2006 and for the year then ended, including the financial highlights for each of the periods in the three years then ended, were audited by other auditors whose report dated December 21, 2006 expressed an unqualified opinion on those statementscapital.

As The ~~explained~~accompanying innotes ~~Note~~are 1,an ~~the~~integral ~~financial~~part ~~statements include investments held by the Fund valued at $28,814,304 (71.54%~~ of ~~the~~these ~~Fund’s~~Financial net assets) at October 31, 2008, the values of which have been fair valued by the Investment Manager, under the general supervision of the Board of Managers, in the absence of readily ascertainable market valuesStatements. ~~These estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.~~

~~/s/ PricewaterhouseCoopers LLP~~ 13

~~PricewaterhouseCoopers~~TABLE ~~LLP~~OF CONTENTS

NewExcelsior YorkVenture Partners III, NewLLC YorkPortfolio of Investments October 31, 2008

December 24, 2008



Principal Amount/Shares		Acquisition Date##		Cost		Fair Value (Note 2)		% of Net Assets***
	Private Companies**
	Common Stock#
	Optical @
10,615,593	OpVista, Inc.		06/06 – 10/08	$	15,393,312	$	—		0.00	%
	Total Common Stock – Private Companies				15,393,312		—		0.00	%
	Preferred Stocks#
	Enterprise Software
4,542,763	SOA Software, Inc., Series F Junior *		05/08		5,681,135		—		0.00	%
					5,681,135		—		0.00	%
	Life Sciences
1,999,999	Archemix Corporation, Series A		08/02 – 11/03		1,999,999		1,629,629		4.05	%
700,000	Archemix Corporation, Series B		03/04 – 12/05		700,000		570,371		1.42	%
					2,699,999		2,200,000		5.47	%
	Medical Technology@
4,166,667	Tensys Medical, Inc., Series C		03/02		5,000,000		—		0.00	%
1,187,500	Tensys Medical, Inc., Series D		05/04		1,425,000		—		0.00	%
318,845	Tensys Medical, Inc., Series E		07/06 – 12/07		382,623		—		0.00	%
					6,807,623		—		0.00	%
	Wireless@
4,433,333	Ethertronics, Inc. Series B		06/01 – 05/04		6,650,000		6,650,000		16.51	%
1,697,957	Ethertronics, Inc. Series C		05/05 – 04/07		2,546,937		2,546,937		6.32	%
					9,196,937		9,196,937		22.83	%
	Total Preferred Stocks – Private Companies				24,385,694		11,396,937		28.30	%
	Warrants#, @
	Wireless
271,247	Ethertronics, Inc. Series C (expiration date 01/09)		05/05 – 07/06		—		—		0.00	%
	Optical
675,313	OpVista, Inc., Series CC (expiration date 10/12)		10/07		675		—		0.00	%
	Total Warrants				675		—		0.00	%
	Total – Private Companies			$	39,779,681	$	11,396,937		28.30	%

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

~~Table of Contents~~14

~~Excelsior~~TABLE ~~Venture~~OF ~~Partners III, LLC~~ CONTENTS

Excelsior Venture Partners III, LLC Portfolio of Investments October 31, 2008 (continued)

PrincipalAmount/Shares			AcquisitionDate ##	Cost		FairValue (Note 1)			% of NetAssets ***
Percent Owned&				Acquisition Date##			Cost				Fair Value (Note 2)		% of Net Assets***
	Private Companies **
		Private Investment Funds**, #
	Common Stock #
0.37%		Advanced Technology Ventures VII, L.P.			08/01 – 07/08		$	1,852,904			$	1,995,953		4.96	%
	Optical @
1.55%		Burrill Life Sciences Capital Fund			12/02 – 05/08			2,077,902				1,648,795		4.09	%
10,615,593	OpVista, Inc.		06/06 - 10/08	$	15,393,312	$	—		0.00	%
1.34%		CHL Medical Partners II, L.P.			01/02 – 03/08			1,571,857				1,471,494		3.65	%
	Total Common Stock — Private Companies				15,393,312		—		0.00	%
1.02%		CMEA Ventures VI, L.P.			12/03 – 06/08			2,193,017				2,816,599		6.99	%
	Preferred Stocks #
0.34%		Morgenthaler Partners VII, L.P.			07/01 – 10/08			1,883,167				1,770,123		4.39	%
	Enterprise Software
0.57%		Prospect Venture Partners II, L.P.			06/01 – 03/08			1,408,668				1,575,441		3.91	%
4,542,763	SOA Software, Inc., Series F Junior *		05/08		5,681,135		—		0.00	%
0.97%		Sevin Rosen Fund IX, L.P.			10/04 – 07/08			1,626,609				1,706,890		4.24	%
					5,681,135		—		0.00	%
2.36%		Tallwood II, L.P.			12/02 – 05/08			2,890,443				2,020,019		5.02	%
	Life Sciences
1.64%		Valhalla Partners, L.P.			10/03 – 07/08			2,074,224				2,412,053		5.99	%
1,999,999	Archemix Corporation, Series A		08/02 - 11/03		1,999,999		1,629,629		4.05	%
		Total Private Investment Funds						17,578,791				17,417,367		43.24	%
700,000	Archemix Corporation, Series B		03/04 - 12/05		700,000		570,371		1.42	%
Shares		Investment Company
					2,699,999		2,200,000		5.47	%
984,128		Dreyfus Government Cash Management Fund Institutional Shares						984,128				984,128		2.44	%
	Medical Technology @
		TOTAL INVESTMENTS					$	58,342,600				29,798,432		73.98	%
4,166,667	Tensys Medical, Inc., Series C		03/02		5,000,000		—		0.00	%
		OTHER ASSETS & LIABILITIES (NET)										10,480,576		26.02	%
1,187,500	Tensys Medical, Inc., Series D		05/04		1,425,000		—		0.00	%
		NET ASSETS									$	40,279,008		100.00	%
318,845	Tensys Medical, Inc., Series E		07/06 - 12/07		382,623		—		0.00	%
					6,807,623		—		0.00	%
	Wireless @
4,433,333	Ethertronics, Inc. Series B		06/01 - 05/04		6,650,000		6,650,000		16.51	%
1,697,957	Ethertronics, Inc. Series C		05/05 - 04/07		2,546,937		2,546,937		6.32	%
					9,196,937		9,196,937		22.83	%
	Total Preferred Stocks — Private Companies				24,385,694		11,396,937		28.30	%
	Warrants #, @
	Wireless
271,247	Ethertronics, Inc. Series C (expirationdate 01/09)		05/05 - 07/06		—		—		0.00	%
	Optical
675,313	OpVista, Inc., Series CC (expirationdate 10/12)		10/07		675		—		0.00	%
	Total Warrants				675		—		0.00	%
	Total — Private Companies				$ 39,779,681	$	11,396,937		28.30	%

~~The~~* ~~accompanying~~LogicLibrary, ~~notes~~Inc. ~~are~~merged anwith ~~integral~~SOA ~~part~~Software, ofInc. ~~these~~on ~~Financial~~May ~~Statements~~1, 2008. Shares of 4,542,763 include 4,088,487 shares held by the Company and 454,276 shares held in escrow for the benefit of the Company.

14** Restricted as to public resale and illiquid securities. Total cost of restricted and illiquid securities at October 31, 2008 was $57,358,472. Total fair value of restricted and illiquid securities owned at October 31, 2008 was $28,814,304 or 71.54% of net assets.

~~Table~~*** ofCalculated ~~Contents~~as fair value divided by the Company's net assets.

~~Excelsior~~@ ~~Venture~~At ~~Partners~~October ~~III~~31, ~~LLC~~2008, the Company owned 5% or more of the Private Company's outstanding shares thereby making the Private Company an affiliate as defined by the Investment Company Act of 1940, as amended, (the “Investment Company Act”). Total fair value of affiliated securities owned at October 31, 2008 (including investments in controlled affiliates) was $9,196,937 or 22.83% of net assets.

~~Portfolio~~# ofNon-income ~~Investments~~producing ~~October 31, 2008 — (continued)~~ securities.

PercentOwned &		AcquisitionDate ##	Cost		FairValue (Note 1)		% of NetAssets ***
	Private Investment Funds **, #
0.37%	Advanced Technology Ventures VII, L.P.	08/01 - 07/08	$	1,852,904	$	1,995,953	4.96	%
1.55%	Burrill Life Sciences Capital Fund	12/02 - 05/08		2,077,902		1,648,795	4.09	%
1.34%	CHL Medical Partners II, L.P.	01/02 - 03/08		1,571,857		1,471,494	3.65	%
1.02%	CMEA Ventures VI, L.P. (Note 9)	12/03 - 06/08		2,193,017		2,816,599	6.99	%
0.34%	Morgenthaler Partners VII, L.P.	07/01 - 10/07		1,883,167		1,770,123	4.39	%
0.57%	Prospect Venture Partners II, L.P.	06/01 - 03/08		1,408,668		1,575,441	3.91	%
0.97%	Sevin Rosen Fund IX, L.P.	10/04 - 07/08		1,626,609		1,706,890	4.24	%
2.36%	Tallwood II, L.P. (Note 9)	12/02 - 05/08		2,890,443		2,020,019	5.02	%
1.64%	Valhalla Partners, L.P. (Note 9)	10/03 - 07/08		2,074,224		2,412,053	5.99	%
	Total Private Investment Funds			17,578,791		17,417,367	43.24	%
Shares
	Investment Company
984,128	Dreyfus Government Cash Management Fund Institutional Shares			984,128		984,128	2.44	%
	Total Investments		$	58,342,600		29,798,432	73.98	%
	Other Assets & Liabilities (Net)					10,480,576	26.02	%
	Net Assets				$	40,279,008	100.00	%

Disclosure is for restricted securities only.

*& ~~LogicLibrary,~~Represents ~~Inc.~~fair ~~merged~~value ~~with SOA Software, Inc. on May 1, 2008. Shares~~ of ~~4,542,763 include 4,088,487 held by~~ the Company's ~~and~~investment ~~454,276~~as ~~held~~a inpercentage ~~escrow~~of ~~for~~Private ~~the~~Investment ~~benefit~~Fund's oftotal ~~the Company~~capital.

** The ~~Restricted~~accompanying asnotes toare ~~public~~an ~~resale~~integral ~~and~~part ~~illiquid securities. Total cost~~ of ~~restricted~~these ~~and~~Financial ~~illiquid securities at October 31, 2008 was $57,358,472~~Statements. ~~Total fair value of restricted and illiquid securities owned at October 31, 2008 was $28,814,304 or 71.54% of net assets.~~

*** Calculated as fair value divided by the Company’s Net Assets.15

@TABLE AtOF October 31, 2008, the Company owned 5% or more of the company’s outstanding shares thereby making the company an affiliate as defined by the Investment Company Act of 1940, as amended, (the “Investment Company Act”). Total fair value of affiliated securities owned at October 31, 2008 (including investments in controlled affiliates) was $9,196,937 or 22.83% of Net Assets.CONTENTS

#Excelsior Non-incomeVenture producingPartners securities.III, LLC Statements of Assets and Liabilities

## Disclosure is for restricted securities only.


	October 31, 2009			October 31, 2008
ASSETS:
Unaffiliated Issuers at fair value (Cost $27,639,265 and $21,262,919, respectively)	$	17,259,831		$	20,601,495
Non-Controlled Affiliated Issuers at fair value (Cost $10,334,750 and $37,079,681, respectively)		10,334,750			9,196,937
Investments, at fair value (Cost $37,974,015 and $58,342,600, respectively) (Note 2)		27,594,581			29,798,432
Cash and cash equivalents (Note 2)		6,085,116			10,693,165
Distribution receivable		14,388			—
Restricted cash (Note 2)		—			131,617
Interest and dividends receivable		299			9,681
Prepaid insurance		362			470
Total Assets		33,694,746			40,633,365
LIABILITIES:
Management fees payable (Note 3)		84,557			101,503
Audit fees payable		—			56,750
Legal fees payable		92,880			103,142
Tax preparation fees payable		25,436			32,365
Board of Managers' fees payable (Note 3)		—			19,500
Administration fees payable (Note 3)		19,167			19,167
Custody fees payable (Note 3)		1,063			4,233
Other payables		9,217			17,697
Total Liabilities		232,320			354,357
NET ASSETS	$	33,462,426		$	40,279,008
NET ASSETS consist of:
Members' Contributions*	$	146,136,782		$	146,136,782
Members' Distributions		(42,802,552	)		(40,736,082	)
Inception-to-date realized (loss) and net investment (loss)		(59,492,370	)		(36,577,523	)
Accumulated unrealized (depreciation) on investments		(10,379,434	)		(28,544,169	)
Total Net Assets	$	33,462,426		$	40,279,008
Units of Membership Interest Outstanding
(Unlimited number of no par value units authorized)		295,210			295,210
NET ASSET VALUE PER UNIT	$	113.35		$	136.44

&* ~~Represents~~Members' ~~fair~~Contributions ~~value~~consist of ~~the~~contributions ~~Company’s~~from ~~investment~~Members asnet ~~a percentage~~ of ~~Private~~offering ~~Investment~~costs ~~Fund’s~~charged ~~total~~to ~~capital~~Members.

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

15 16

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

Excelsior Venture Partners III, LLC Statements of Operations

Portfolio of Investments October 31, 2007


	Year Ended October 31, 2009			Year Ended October 31, 2008			Year Ended October 31, 2007
INVESTMENT INCOME:
Interest income from unaffiliated investments⁽¹⁾	$	8,529		$	255,827		$	614,813
Interest income from affiliated investments (Note 6)		—			89,433			48,658
Dividend income from unaffiliated investments		3,842			63,461			51,106
Total investment income		12,371			408,721			714,577
EXPENSES:
Management Investment Adviser fees (Note 3)		357,813			597,448			691,823
Legal fees		268,516			322,349			129,932
Audit fees		125,500			141,265			178,676
Administration fees (Note 3)		115,000			115,000			115,000
Board of Managers' fees (Note 3)		77,500			90,000			82,000
Tax preparation fees		87,293			39,646			36,667
Custodian fees (Note 3)		21,278			26,463			30,000
Insurance expense		31,608			25,687			32,297
Other expenses		15,672			38,845			33,296
Total expenses		1,100,180			1,396,703			1,329,691
NET INVESTMENT (LOSS)		(1,087,809	)		(987,982	)		(615,114	)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (NOTE 2)
Net realized (loss) on affiliated investments (Note 6)		(21,827,037	)		(5,390,478	)		(23,447,216	)
Net realized gain/(loss) on unaffiliated investments		—			16,771,294			(415,552	)
Net realized gain from payments by affiliates (Note 3)		—			268,999			—
Net decrease/(increase) in unrealized depreciation on investments		18,164,734			(21,617,509	)		29,523,869
NET REALIZED AND UNREALIZED (LOSS)/GAIN ON INVESTMENTS		(3,662,303	)		(9,967,694	)		5,661,101
NET (DECREASE)/INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(4,750,112	)	$	(10,955,676	)	$	5,045,987
Weighted average units outstanding		295,210			295,210			295,210
Net (decrease)/increase in net assets resulting from operations per unit	$	(16.09	)	$	(37.11	)	$	17.09

PrincipalAmount/Shares		AcquisitionDate ##	Cost		Fair Value(Note 1)		% of NetAssets ***
	Money Market Instrument
10,385,000	Federal Home Loan Bank Discount Note 4.40%, 11/01/07			$ 10,383,731	$	10,383,731	14.35	%
	Public Companies #
	Common Stocks
	Wireless
5,338	Citrix Systems, Inc. (CTXS)			226,011		229,481	0.32	%
	Capital Equipment
12,059	Acme Packet, Inc. (APKT)			160,803		173,168	0.24	%
	Life Sciences **
714,870	Genoptix, Inc. (GXDX)	07/03 - 05/05		3,124,453		10,594,373	14.64	%
	Total Common Stocks - Public Companies			3,511,267		10,997,022	15.20	%
	Private Companies **
	Common Stocks #
	Capital Equipment @
157,396	MIDAS Vision Systems, Inc.	03/03		4,000,000		—	0.00	%
	Optical @
1,079,541	OpVista, Inc.	06/06		9,184,030		1,184,567	1.64	%
	Total Common Stocks - Private Companies			13,184,030		1,184,567	1.64	%
	Preferred Stocks #
	Capital Equipment @
933,593	MIDAS Vision Systems, Inc., Series A-1	03/03		1,054,960		—	0.00	%
	Enterprise Software @
8,751,782	LogicLibrary, Inc., Series A	01/02 - 09/07		4,001,492		4,001,492	5.53	%
3,080,464	LogicLibrary, Inc., Series A-1	08/03 - 05/04		1,408,450		1,408,450	1.95	%
				5,409,942		5,409,942	7.48	%
	Life Sciences
1,999,999	Archemix Corporation, Series A	08/02 - 11/03		1,999,999		2,999,999	4.15	%
700,000	Archemix Corporation, Series B	03/04 - 12/05		700,000		1,050,001	1.45	%
				2,699,999		4,050,000	5.60	%
	Medical Technology @
4,166,667	Tensys Medical, Inc., Series C	03/02		5,000,000		534,026	0.74	%
1,187,500	Tensys Medical, Inc., Series D	05/04		1,425,000		152,197	0.21	%
96,629	Tensys Medical, Inc., Series E	07/06 - 04/07		115,954		347,865	0.48	%
				6,540,954		1,034,088	1.43	%
	Optical @
5,683,906	OpVista, Inc., Series AA	06/06 - 01/07		5,034,407		6,236,892	8.62	%
433,400	OpVista, Inc., Series BB	03/07 - 04/07		491,800		491,800	0.68	%
				5,526,207		6,728,692	9.30	%
	Wireless @
4,433,333	Ethertronics, Inc. Series B	06/01 - 05/04		6,650,000		6,650,000	9.19	%
1,697,957	Ethertronics, Inc. Series C	05/05 - 04/07		2,546,936		2,546,937	3.52	%
				9,196,936		9,196,937	12.71	%
	Total Preferred Stocks		$	30,428,998	$	26,419,659	36.52	%

(1)

Includes interest from short-term investments.

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

16 17

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

Excelsior Venture Partners III, LLC Statements of Changes in Net Assets

Portfolio of Investments October 31, 2007 — (continued)


	Year Ended October 31, 2009			Year Ended October 31, 2008			Year Ended October 31, 2007
OPERATIONS:
Net investment (loss)	$	(1,087,809	)	$	(987,982	)	$	(615,114	)
Net realized (loss)/gain on investments		(21,827,037	)		11,649,815			(23,862,768	)
Net decrease/(increase) in unrealized depreciation on investments		18,164,734			(21,617,509	)		29,523,869
Net (decrease)/increase in net assets resulting from operations		(4,750,112	)		(10,955,676	)		5,045,987
DISTRIBUTIONS TO MEMBERS:
Distributions to Members		(2,066,470	)		(21,107,515	)		(8,265,880	)
Total Distributions		(2,066,470	)		(21,107,515	)		(8,265,880	)
Net (decrease) in net assets		(6,816,582	)		(32,063,191	)		(3,219,893	)
NET ASSETS:
Beginning of year		40,279,008			72,342,199			75,562,092
End of year	$	33,462,426		$	40,279,008		$	72,342,199

PrincipalAmount/Shares		AcquisitionDate ##	Cost		Fair Value(Note 1)		% of NetAssets ***
	Private Companies ** — (continued)
	Notes @
	Optical
237,321	NanoOpto Corp, 10% Bridge Note, in default	03/07	$	237,321	$	160,000	0.22	%
	Optical @
675,989	OpVista, Inc., 8% Bridge Note, April 2008, #	10/07		675,989		1,351,978	1.87	%
	Total Notes			913,310		1,511,978	2.09	%
	Warrants #, @
	Wireless
271,247	Ethertronics, Inc. Series C (expiration date 01/09)	05/05 - 07/06		—		—	0.00	%
	Optical @
675,313	OpVista, Inc., Series CC (expiration date 10/12)			—		—	0.00	%
	Total Warrants			—		—	0.00	%
	Total — Private Companies			44,526,338		29,116,204	40.25	%
PercentOwned
	Private Investment Funds **, #
0.39%	Advanced Technology Ventures VII, L.P.	08/01 - 09/07		1,650,405		1,986,022	2.75	%
1.58%	Burrill Life Sciences Capital Fund	12/02 - 10/07		1,920,303		1,722,901	2.38	%
1.35%	CHL Medical Partners II, L.P.	01/02 - 10/07		1,326,857		1,432,494	1.98	%
1.04%	CMEA Ventures VI, L.P.	12/03 - 06/07		1,563,017		2,114,538	2.92	%
0.36%	Morgenthaler Partners VII, L.P.	07/01 - 10/07		1,749,476		1,697,580	2.35	%
0.58%	Prospect Venture Partners II, L.P.	06/01 - 05/07		1,561,766		2,194,662	3.03	%
0.98%	Sevin Rosen Fund IX, L.P.	10/04 - 08/07		1,528,989		1,734,616	2.40	%
2.36%	Tallwood II, L.P.	12/02 - 08/07		2,290,443		1,683,388	2.33	%
1.70%	Valhalla Partners, L.P.	10/03 - 07/07		1,967,875		1,990,649	2.75	%
	Total Private Investment Funds			15,559,131		16,556,850	22.89	%
Shares
	Investment Company
984,128	Dreyfus Government Cash Management Fund Institutional Shares			984,128		984,128	1.36	%
	Total Investments		$	74,964,595		68,037,935	94.05	%
	Other Assets & Liabilities (Net)					4,304,264	5.95	%
	Net Assets				$	72,342,199	100.00	%

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

** Restricted as to public resale and illiquid securities. Total cost of restricted and illiquid securities at October 31, 2007 was $63,209,922. Total fair value of restricted and illiquid securities owned at October 31, 2007 was $56,267,427 or 77.78% of net assets.18

~~***~~TABLE ~~Based~~OF ~~on fair value.~~CONTENTS

#Excelsior Non-incomeVenture producingPartners securities.III, LLC Statements of Cash Flows

## Disclosure is required for restricted securities only.


	Year Ended October 31, 2009			Year Ended October 31, 2008			Year Ended October 31, 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (decrease)/increase in net assets resulting from operations	$	(4,750,112	)	$	(10,955,676	)	$	5,045,987
Adjustments to reconcile net (decrease)/increase in net assets resulting from operations to net cash (used in)/provided by operating activities:
Net (decrease)/increase in unrealized depreciation on investments		(18,164,734	)		21,617,509			(29,523,869	)
Purchase of investments		(2,548,860	)		(3,567,909	)		(6,885,181	)
Proceeds received from the sale of investments and distributions received from Private Investment Funds		1,090,409			21,457,932			17,342,583
Net realized loss/(gain) on investments		21,827,037			(11,649,815	)		23,862,768
Proceeds from short-term investments maturing, net		—			10,383,731			3,054,579
Decrease/(increase) in distribution receivable		(14,388	)		2,275,482			(2,275,482	)
Decrease/(increase) in restricted cash		131,617			2,540,776			(2,672,393	)
Decrease/(increase) in interest and dividends receivable		9,382			(5,662	)		20,920
Decrease/(increase) in prepaid insurance		108			(470	)		1,378
(Decrease)/increase in deferred income		—			(258,809	)		258,809
(Decrease) in management fees payable		(16,946	)		(81,299	)		(7,656	)
(Decrease)/increase in audit fees payable		(56,750	)		(18,545	)		3,295
(Decrease)/increase in legal fees payable		(10,262	)		73,852			14,290
(Decrease)/increase in tax preparation fees payable		(6,929	)		(16,525	)		48,890
(Decrease) in Board of Managers' fees payable		(19,500	)		—			(2,500	)
(Decrease) in administration fees payable		—			(9,583	)		(25,211	)
(Decrease)/increase in custody fees payable		(3,170	)		(12,769	)		17,002
(Decrease)/increase in other payables		(8,481	)		2,220			10,977
Net cash (used in)/provided by operating activities		(2,541,579	)		31,774,440			8,289,186
CASH FLOWS FOR FINANCING ACTIVITIES
Cash distributions to Members		(2,066,470	)		(21,107,515	)		(8,265,880	)
Net cash (used in) financing activities		(2,066,470	)		(21,107,515	)		(8,265,880	)
Net (decrease)/increase in cash		(4,608,049	)		10,666,925			23,306
Cash and cash equivalents at beginning of year		10,693,165			26,240			2,934
Cash and cash equivalents at end of year	$	6,085,116		$	10,693,165		$	26,240
SUPPLEMENTAL INFORMATION
Non-cash distributions received from Private Investment Funds	$	—		$	563,864		$	614,956

@ The Ataccompanying ~~October~~notes ~~31,~~are ~~2007, the Company owned 5% or more of the company’s outstanding shares thereby making the company~~ an ~~affiliate~~integral aspart ~~defined by the Investment Company Act. Total fair value~~ of ~~affiliated~~these ~~securities~~Financial ~~owned at October 31, 2007 (including investments in controlled affiliates) was $25,066,204 or 34~~Statements.~~64%~~ ~~of Net Assets~~

~~The accompanying notes are an integral part of these Financial Statements.~~ 19

17TABLE OF CONTENTS

TableExcelsior ofVenture ContentsPartners III, LLC Financial Highlights

Excelsior Venture Partners III, LLC



	Year Ended October 31, 2009			Year Ended October 31, 2008			Year Ended October 31, 2007			Year Ended October 31, 2006			Year Ended October 31, 2005
Per Unit Operating Performance: (1)
NET ASSET VALUE, BEGINNING OF YEAR	$	136.44		$	245.05		$	255.96		$	316.21		$	393.21
INCOME FROM INVESTMENT OPERATIONS:
Net investment (loss)		(3.68	)		(3.35	)		(2.08	)		(2.16	)		(4.44	)
Net realized and unrealized (loss)/gain on investments		(12.41	)		(33.76	)		19.17			(58.09	)		(35.72	)
Net (decrease)/increase in net assets resulting from operations		(16.09	)		(37.11	)		17.09			(60.25	)		(40.16	)
Total Distributions to Members		(7.00	)		(71.50	)		(28.00	)		—			(36.84	)
NET ASSET VALUE, END OF YEAR	$	113.35		$	136.44		$	245.05		$	255.96		$	316.21
TOTAL NET ASSET VALUE RETURN (2)		(11.99	)%		(15.41	)%		7.84	%		(19.05	)%		(11.24	)%
RATIOS AND SUPPLEMENTAL DATA (3)
Net Assets, End of Year (000’s)	$	33,462		$	40,279		$	72,342		$	75,562		$	93,349
Ratios to Average Net Assets:
Gross expenses		2.97	%		2.11	%		1.91	%		2.18	%		2.45	%
Net expenses		2.97	%		2.11	%		1.91	%		2.18	%		2.45	%
Net investment (loss)		(2.94	)%		(1.49	)%		(0.88	)%		(0.74	)%		(1.23	)%
Portfolio Turnover Rate (4)		3.97	%		7.91	%		12.37	%		4.00	%		24.00	%

~~Statements~~(1) Selected data for a unit of ~~Assets~~membership ~~and~~interest ~~Liabilities~~outstanding throughout each year.

	October 31, 2008			October 31, 2007
Assets:
Unaffiliated Issuers at fair value (Cost $21,262,919 and $33,138,256 respectively)	$	20,601,495		$	42,971,731
Non-Controlled Affiliated Issuers at fair value (Cost $37,079,681 and $41,826,339 respectively)		9,196,937			25,066,204
Investments, at fair value (Cost $58,342,600 and $74,964,595 respectively) (Note 2)		29,798,432			68,037,935
Cash and cash equivalents (Note 2)		10,693,165			26,240
Restricted cash (Note 2)		131,617			2,672,393
Receivables from sale of investments		—			2,275,482
Interest and dividends receivable		9,681			4,019
Prepaid insurance		470			—
Other assets		—			1,945
Total Assets		40,633,365			73,018,014
Liabilities:
Deferred income		—			258,809
Management fees payable (Note 3)		101,503			182,802
Audit fees payable		56,750			75,295
Legal fees payable		103,142			29,290
Tax preparation fees payable		32,365			48,890
Board of Managers’ fees payable (Note 3)		19,500			19,500
Administration fees payable (Note 3)		19,167			28,750
Custody fees payable (Note 3)		4,233			17,002
Other payables		17,697			15,477
Total Liabilities		354,357			675,815
Net Assets	$	40,279,008		$	72,342,199
Net Assets consist of:
Members’ Capital (1)	$	68,823,176		$	79,268,859
Accumulated unrealized (depreciation) on investments		(28,544,168	)		(6,926,660	)
Total Net Assets	$	40,279,008		$	72,342,199
Units of Membership Interest Outstanding
(Unlimited number of no par value units authorized)		295,210			295,210
Net Asset Value Per Unit	$	136.44		$	245.05

(2)

Total investment value return based on per unit 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 units were issued in a private placement and are not traded. Therefore, the market value of total investment return is not presented. For the year ended October 31, 2008, the impact on the Company’s total net asset value return of a voluntary reimbursement by BACA (as defined) for the matter discussed in Note 3 is 0.39%. Excluding this item, total net asset value return would have been (15.80)% for the year ended October 31, 2008.

(13) ~~Members’~~Income ~~Capital~~and ~~includes~~expense ratios do not reflect the ~~accumulated~~Company's proportionate share of net investment income/(loss) and expenses, ~~accumulated~~including ~~realized~~any ~~losses~~performance-based fees, ~~contributions~~of the Private Investment Funds. The Private Investment Funds expense ratios have been obtained from ~~and~~their ~~distributions~~audited tofinancial ~~Members~~statements for the period ended December 31, 2008, but are unaudited information in these Financial Statements.The range for these ratios is given below:

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


Private Investment Funds' Ratios	Ratio Range
Expense excluding incentive carried interest		1.99% – 4.10%
Incentive Carried interest		(3.80)% – 0.04%
Expenses plus incentive carried interest		0.30% – 3.85%

18The Private Investment Funds management fees range from 2.00% to 2.50% on committed capital during the initial investment period and typically decrease over time as the Private Investment Funds seek to exit investments. The Private Investment Funds incentive fees range from 20% to 25% of profit generated by the Private Investment Funds.

~~Table~~(4) ofDistributions ~~Contents~~received from Private Investment Funds are included in the portfolio turnover rate.

~~Excelsior~~ The ~~Venture~~accompanying ~~Partners~~notes ~~III,~~are ~~LLC~~an integral part of these Financial Statements.

~~Statements of Operations~~ 20

	Year EndedOctober 31, 2008			Year EndedOctober 31, 2007			Year EndedOctober 31, 2006
Investment Income:
Interest income from unaffiliated investments (1)	$	255,827		$	614,813		$	978,408
Interest income from affiliated investments (Note 6)		89,433			48,658			218,652
Dividend income from unaffiliated investments		63,461			51,106			41,570
Total investment income		408,721			714,577			1,238,630
Expenses:
Management Investment Adviser fees (Note 3)		597,448			691,823			1,231,320
Legal fees		322,349			129,932			142,600
Audit fees		141,265			178,676			153,151
Administration fees (Note 3)		115,000			115,000			115,000
Board of Managers’ fees (Note 3)		90,000			82,000			98,500
Tax preparation fees		39,646			36,667			31,003
Custodian fees (Note 3)		26,463			30,000			32,901
Insurance expense		25,687			32,297			44,032
Other expenses		38,845			33,296			28,440
Total expenses		1,396,703			1,329,691			1,876,947
Net investment (loss)		(987,982	)		(615,114	)		(638,317	)
Net Realized and Unrealized Gain/(Loss) on Investments: (Note 2)
Net realized (loss) on affiliated investments		(5,390,478	)		(23,447,216	)		(4,507,186	)
Net realized gain/(loss) on unaffiliated investments		16,771,294			(415,552	)		(6,548	)
Net realized gain from payments by affiliates (Note 3)		268,999			—			—
Net (increase)/decrease in unrealized depreciation on investments		(21,617,509	)		29,523,869			(12,634,704	)
Net realized and unrealized (loss)/gain on investments		(9,967,694	)		5,661,101			(17,148,438	)
Net (decrease)/increase in net assets resulting from operations	$	(10,955,676	)	$	5,045,987		$	(17,786,755	)

TABLE OF CONTENTS

(1)EXCELSIOR IncludesVENTURE interestPARTNERS fromIII, short-termLLC investments.NOTES TO FINANCIAL STATEMENTS October 31, 2009

The accompanyingNote notes1 are— an integral part of these Financial Statements. Organization

19Excelsior Venture Partners III, LLC (the “Company”) is a non-diversified, closed-end management investment company which has elected to be treated as a business development company or “BDC” under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company was established as a Delaware limited liability company on February 18, 2000. The Company commenced operations on April 5, 2001. The duration of the Company is ten years (subject to two 2-year extensions) from the final subscription closing which occurred on May 11, 2001, at which time the affairs of the Company will be wound up and its assets distributed pro rata to members of the Company (“Members”) as soon as is practicable.

~~Table~~As a BDC, the Company must be primarily engaged in the business of ~~Contents~~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 domestic venture capital and other private companies (“Private Companies”) and, to a lesser extent, domestic and international private investment funds (“Private Investment Funds”), negotiated private investments in public companies and international direct investments that the Investment Adviser believes offer significant long-term capital appreciation. Venture capital and Private Companies are companies in which the equity is closely held by company founders, management and/or a limited number of institutional investors. The Company does not have the right to demand that such equity securities be registered.

ExcelsiorNote Venture2 Partners— III,Significant LLCAccounting Policies

StatementsA. Basis of ChangesPresentation inand NetUse Assetsof Estimates:

	Year EndedOctober 31, 2008			Year EndedOctober 31, 2007			Year EndedOctober 31, 2006
Operations:
Net investment (loss)	$	(987,982	)	$	(615,114	)	$	(638,317	)
Net realized gain/(loss) on investments		11,649,815			(23,862,768	)		(4,513,734	)
Net (increase)/decrease in unrealized depreciation on investments		(21,617,509	)		29,523,869			(12,634,704	)
Net (decrease)/increase in net assets resulting from operations		(10,955,676	)		5,045,987			(17,786,755	)
Distributions to Members:
Distributions to Members		(21,107,515	)		(8,265,880	)		—
Total Distributions		(21,107,515	)		(8,265,880	)		—
Net (decrease) in Net Assets		(32,063,191	)		(3,219,893	)		(17,786,755	)
Net Assets:
Beginning of year		72,342,199			75,562,092			93,348,847
End of year	$	40,279,008		$	72,342,199		$	75,562,092

The following is a summary of the Company’s significant accounting policies. Such policies are in conformity with U.S. generally accepted accounting principles (“GAAP”) for investment companies and are consistently followed in the preparation of the financial statements. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates and the differences could be material.

TheB. accompanyingCash notesand areCash an integral part of these Financial Statements. Equivalents:

20Cash and cash equivalents consist of deposits with PNC Bank, N.A. All highly liquid investments are listed separately on the Portfolio of Investments.

TableC. ofRestricted ContentsCash:

~~Excelsior~~Restricted ~~Venture~~cash, ~~Partners~~if ~~III~~any, ~~LLC~~consists of proceeds from the sales of investments held by counterparties as collateral for certain contingent claims for a specified period of time.

StatementsD. ofInvestment Cash Flows Valuation:

	Year EndedOctober 31, 2008			Year EndedOctober 31, 2007			Year EndedOctober 31, 2006
Cash Flows from Operating Activities:
Net (decrease)/increase in net assets resulting from operations	$	(10,955,676	)	$	5,045,987		$	(17,786,755	)
Adjustments to reconcile net (decrease)/increase in net assets resulting from operations to net cash provided by/(used in) operating activities:
Net increase/(decrease) in unrealized depreciation on investments		21,617,509			(29,523,869	)		12,634,704
Purchase of investments		(3,567,909	)		(6,885,181	)		(17,056,870	)
Proceeds received from the sale of investments and distributions received from Private Investment Funds		21,457,932			17,342,583			2,436,843
Net realized (gain)/loss on investments		(11,649,815	)		23,862,768			4,513,734
Proceeds from short-term investments maturing, net		10,383,731			3,054,579			14,175,856
Decrease/(increase) in restricted cash		2,540,776			(2,672,393	)		—
Decrease/(increase) in receivables from sale of investments		2,275,482			(2,275,482	)		600,031
(Increase)/decrease in interest and dividends receivable		(5,662	)		20,920			157,921
(Increase)/decrease in prepaid insurance		(470	)		1,378			1,002
(Decrease)/increase in deferred income		(258,809	)		258,809			—
(Decrease) in management fees payable		(81,299	)		(7,656	)		(278,837	)
(Decrease)/increase in audit fees payable		(18,545	)		3,295			—
Increase in legal fees payable		73,852			14,290			—
(Decrease)/increase in tax preparation fees payable		(16,525	)		48,890			—
(Decrease) in Board of Managers’ fees payable		—			(2,500	)		14,000
(Decrease) in administration fees payable		(9,583	)		(25,211	)		—
(Decrease)/increase in custody fees payable		(12,769	)		17,002			—
Increase in other payables		2,220			10,977			17,159
Net cash provided by/(used in) operating activities		31,774,440			8,289,186			(571,212	)
Cash Flows for Financing Activities
Cash distributions to Members		(21,107,515	)		(8,265,880	)		—
Net cash (used in) financing activities		(21,107,515	)		(8,265,880	)		—
Net increase/(decrease) in cash		10,666,925			23,306			(571,212	)
Cash and cash equivalents at beginning of year		26,240			2,934			574,146
Cash and cash equivalents at end of year	$	10,693,165		$	26,240		$	2,934
Supplimental Information
Non-cash distributions received from Private Investment Funds	$	563,864		$	614,956		$	—

The Company values portfolio securities quarterly and at such other times as, in the Company’s Board of Managers’ (“Board” or “Board of Managers”) view, circumstances warrant. Securities for which market quotations are readily available generally will be valued at the last sale price on the date of valuation or, if no sale occurred, at the mean of the latest bid and ask prices; provided that, as to such securities that may have legal or contractual restrictions on transfer, a discount from the public market price may be applied.

~~The~~Securities ~~accompanying~~for ~~notes~~which ~~are~~no anpublic ~~integral~~market ~~part~~exists and other assets will be valued at fair value as determined in good faith by the Investment Adviser (as defined below) or a committee of ~~these~~the ~~Financial~~Board ~~Statements~~of Managers (the “Valuation Committee”) or both under the supervision of the Board of Managers 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.

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

~~Excelsior~~The ~~Venture~~value ~~Partners~~for ~~III~~securities for which no public market exists is difficult to determine. Generally, ~~LLC~~such investments will be valued on a “going concern” basis and in conformity with GAAP. Accordingly, the fair value measurement is determined based on the estimated price a seller would receive in an orderly transaction at the measurement date. For venture capital companies there are a range of values that is reasonable for such investments at any particular time. Initially, Private Companies are valued based upon their original cost except that original cost valuation will be adjusted, upon approval by the Valuation Committee on the advice of the Valuation Agent, based on either a market or appraisal method 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 inputs 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 Investment Adviser (as defined below) or the Valuation Committee under the supervision of the Board of Managers 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.

~~Financial~~The ~~Highlights~~Company’s investments are reported at fair value. The Board and Valuation Committee have approved procedures pursuant to which the Company values its investments in Private Investment Funds, subject to the review and supervision of the Board and Valuation Committee. In accordance with these procedures, fair value of investments in the Private Investment Funds takes into consideration information reasonably available at the time the valuation is made and other factors that the Board and Valuation Committee deems pertinent. Generally, the Board and Valuation Committee will use valuations reported to the Company by the managers of these Private Investment Funds as an input, and the Company, Board or Valuation Committee may reasonably determine that additional factors should be considered that were not reflected. The value of the Company’s investments determined using the Company’s procedures may differ from the value reported by the manager of the Private Investment Funds.

~~Per~~At ~~Unit~~October ~~Operating~~31, ~~Performance:~~2009 ~~(1)~~and October 31, 2008, market quotations were not readily available for the Company’s portfolio of securities valued at $26,610,453 or 79.52% of net assets and $28,814,304 or 71.54% of net assets, respectively. Such securities were valued by the Investment Adviser, under the supervision of the Board of Managers. 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.

	YearEndedOctober 31,2008			YearEndedOctober 31,2007			YearEndedOctober 31,2006			YearEndedOctober 31,2005			YearEndedOctober 31,2004
Net Asset Value, Beginning of Year	$	245.05		$	255.96		$	316.21		$	393.21		$	414.82
Income from Investment Operations:
Net investment (loss)		(3.35	)		(2.08	)		(2.16	)		(4.44	)		(7.85	)
Net realized and unrealized (loss)/gain on investments		(33.76	)		19.17			(58.09	)		(35.72	)		(13.76	)
Net (decrease)/increase in net assets resulting from operations		(37.11	)		17.09			(60.25	)		(40.16	)		(21.61	)
Total Distributions to Members		(71.50	)		(28.00	)		—			(36.84	)		—
Net Asset Value, End of Year	$	136.44		$	245.05		$	255.96		$	316.21		$	393.21
Total Net Asset Value Return (2)		(15.41	)%		7.84	%		(19.05	)%		(11.24	)%		(5.21	)%
Ratios and Supplemental Data (3)
Net Assets, End of Year (000’s)	$	40,279		$	72,342		$	75,562		$	93,349		$	116,079
Ratios to Average Net Assets:
Gross expenses		2.11	%		1.91	%		2.18	%		2.45	%		2.45	%
Net expenses		2.11	%		1.91	%		2.18	%		2.45	%		2.37	%
Net investment (loss)		(1.49	)%		(0.88	)%		(0.74	)%		(1.23	)%		(1.92	)%
Portfolio Turnover Rate (4)		7.91	%		12.37	%		4.00	%		24.00	%		11.00	%

Fair value measurements establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

(• Level 1) ~~Selected~~— ~~data~~Inputs that reflect unadjusted quoted prices in active markets for aidentical ~~unit~~assets ofor ~~membership~~liabilities ~~interest~~that ~~outstanding~~the ~~throughout~~Company ~~each~~has ~~period.~~the ability to access at the measurement date;

~~(2)~~• ~~Total~~Level ~~investment~~2 ~~value~~— ~~return~~Inputs ~~based~~other onthan ~~per~~quoted ~~unit~~prices ~~net~~that ~~asset~~are ~~value~~observable ~~reflects~~for the ~~effects of changes in net~~ asset ~~value~~or ~~based~~liability oneither ~~the~~directly ~~performance~~or ~~of the Company during the period~~indirectly, ~~and~~including ~~assumes~~inputs ~~dividends and distributions, if any, were reinvested. The Company’s units were issued~~ in amarkets ~~private~~that ~~placement and~~ are not ~~traded.~~considered ~~Therefore,~~to ~~the~~be market value of total investment return is not presented. For the year ended October 31, 2008, 0.39% of the Company’s total net asset value return consists of a voluntary reimbursement by BACA for a net realized gain from payments by affiliates. Excluding this item, total net asset value return would have been (15.80%) for the year ended October 31, 2008.active;

~~(3)~~• ~~Income~~Level ~~and~~3 ~~expense~~— ~~ratios~~Inputs dothat 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 Private Investment Funds expense ratios have been obtained from audited financials for the period ended December 31, 2007 but are ~~unaudited information in these Financial Statements~~unobservable. The Private Investment Funds expense ratios excluding incentive carried interest, incentive carried interest and expenses plus incentive carried interest range from 0.34% to 3.14%, 1.46% to 4.31% and 2.34% to 7.45%, respectively. The Private Investment Funds management fees range from 2.00% to 2.50% on committed capital during the initial investment period and typically decrease over time as the Private Investment Funds seek to exit investments. The Private Investment Funds incentive fees range from 20% to 25% of profit generated by the Private Investment Funds.

~~(4)~~Inputs ~~Distributions~~broadly ~~from~~refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. The Company generally uses the capital balance reported by the Private Investment Funds ~~are~~as ~~included~~the primary input in its valuation; however, adjustments to the reported capital balance may be made based on various factors, including, but not limited to, the attributes of the interest held, including the rights and obligations, any restrictions or illiquidity on such interests, any potential clawbacks by the Private Investment Funds and the fair value of the Private Investment Fund's investment portfolio ~~turnover~~or ~~rate~~other assets and liabilities.

An individual Private Investment Fund’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company, Board and Valuation Committee. The ~~accompanying~~Company, ~~notes~~Board and Valuation Committee considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are anactively ~~integral~~involved ~~part~~in the relevant market. The categorization of ~~these~~the ~~Financial~~Private ~~Statements~~Investment Fund within the hierarchy is based upon the pricing transparency of that Private Investment Fund and does not necessarily correspond to the Company's perceived risk of that Private Investment Fund.

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

~~EXCELSIOR~~Substantially ~~VENTURE~~all ~~PARTNERS~~of ~~III~~the Company's investments in the Private Companies and Private Investment Funds have been classified within Level 3. The Private Investment Funds generally do not provide redemption options for investors and, ~~LLC~~subsequent to final closing, do not permit subscriptions by new or existing investors. Accordingly, the Company generally holds interests in such Private Investment Funds for which there is no active market. The Companies interests in Private Companies and Private Investment Funds, in the absence of a recent and relevant secondary market transaction, are generally classified as Level 3. Assumptions used by the Company, Board or Valuation Committee due to the lack of observable inputs may significantly impact the resulting fair value and, therefore, the Company’s results of operations.

~~NOTES~~The TOtable ~~FINANCIAL~~below ~~STATEMENTS~~sets forth information about the level within the fair value hierarchy at which the Company’s investments are measured at October 31, 2009:

October 31, 2008


	Level 1		Level 2		Level 3		Total
Assets:
Investments in Private Companies	$	—	$	—	$	12,359,748	$	12,359,748
Investments in Private Investment Funds		—		—		14,250,705		14,250,705
Investment in Investment Company		984,128		—		—		984,128
Totals	$	984,128	$	—	$	26,610,453	$	27,594,581

~~Note~~The 1following —is ~~Organization~~a reconciliation of the investments in securities within Level 3 used in determining value:

Excelsior Venture Partners III, LLC (the “Company”) is a non-diversified, closed-end management investment company which has elected to be treated as a business development company or “BDC” under the Investment Company Act. The Company was established as a Delaware limited liability company on February 18, 2000. The Company commenced operations on April 5, 2001. The duration of the Company is ten years (subject to two 2-year extensions) from the final subscription closing which occurred on May 11, 2001, at which time the affairs of the Company will be wound up and its assets distributed pro rata to members as soon as is practicable.


	Level 3
Balance as of 10/31/08	$	28,814,304
Net realized gain/(loss) on investments		(21,827,037	)
Net decrease in unrealized depreciation on investments		18,164,736
Net purchases/(sales proceeds)		1,458,450
Net transfers in and out of Level 3^*		—
Balance as of 10/31/09	$	26,610,453

As* aTransfers ~~BDC, the Company must be primarily engaged~~ in ~~the~~and ~~business~~out of ~~furnishing~~Level ~~capital~~3 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 domestic venture capital and other private companies and, to a lesser extent, domestic and international private funds, negotiated private investments in public companies and international direct investments that the Investment Adviser believes offer significant long-term capital appreciation. Venture capital and private investment companies are ~~companies~~valued inat ~~which~~ the ~~equity~~beginning ~~is closely held by company founders, management and/or a limited number~~ of ~~institutional investors. The Company does not have~~ the ~~right~~period ~~to demand that such equity securities be registered~~value.

~~Note~~The 2unrealized —gains/(losses) ~~Significant~~in ~~Accounting~~the ~~Policies~~table above are reflected in the accompanying Statements of Operations. Net unrealized gains (losses) relate to investments held by the Company at October 31, 2009.

A.The ~~Basis~~Company must determine whether there has been a significant decrease in the volume and level of ~~Presentation~~activity for an asset or liability when compared with normal market activity for such asset or liability (or similar assets or liabilities). The Company must also provide guidance on identifying circumstances that indicate whether or not a transaction, with regards to such an asset or liability, is orderly. In its consideration, the Company must consider inputs and ~~Use~~valuation techniques used for each major category of ~~Estimates:~~investments with “major category” being defined as investment type. Refer to the Company’s Portfolio of Investments for additional information on the Company’s investments in Private Companies and Private Investment Funds.

Costs incurred in connection with the initial offering of units totaled $1,468,218E. EachSecurity member’stransactions proand ratainvestment share of these costs was deducted from his, her or its initial capital contribution. income:

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

BSecurity transactions are recorded on a trade date basis or in the case of private investments or securities transactions are recorded when the Company has a legal and enforceable right to demand payment. ~~Cash~~Realized gains and ~~Cash~~losses ~~Equivalents:~~on investments sold are recorded on the basis of identified cost. Interest income, adjusted for amortization of premiums and discounts, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date.

CashPrivate andInvestment cash equivalents consist of deposits with PNC Bank, N.A. All highly liquid investments are listed separately on the Portfolio of Investments. As of October 31, 2008, the Company did not hold any short-term investments. Funds

CDistributions of cash or in-kind securities from the Private Investment Funds are recorded at fair value as a return of capital to reduce the cost basis of the Private Investment Funds. ~~Restricted~~In-kind ~~Cash:~~securities received from the Private Investment Funds are recorded at fair value. Distributions are recorded when they are received from the Private Investment Funds as there are no redemption rights with respect to the Private Investment Funds. Contributions to Private Investment Funds are recorded when there is a legal and enforceable right to demand payment by the Private Investment Fund and serve to increase the cost basis.

Restricted cash, if any, consists of proceeds from the sales of investments held by counterparties as collateral for certain contingent claims for a specified period of time. At October 31, 2008, the Company held $131,617 as restricted cash. 23

23TABLE OF CONTENTS

TableF. of ContentsExpenses:

~~Note~~The 2Company —records ~~Significant~~expenses ~~Accounting~~on ~~Policies~~an ~~(continued)~~accrual basis. Such accruals require management to make estimates and assumptions that affect the reported amounts, which is consistent with GAAP.

DG. InvestmentIncome Valuationtaxes:

~~The~~Under ~~Company~~current ~~values portfolio~~law ~~securities quarterly~~ and atbased ~~such~~on ~~other~~certain ~~times~~assumptions asand representations, in the Company’s ~~Board~~intends ofto ~~Managers’~~be ~~view,~~treated ~~circumstances~~as ~~warrant.~~a ~~Securities~~partnership for ~~which~~federal, ~~market~~state ~~quotations~~and ~~are~~local ~~readily~~income ~~available~~tax ~~generally~~purposes. ~~will~~By bereason ~~valued~~of atthis treatment, the ~~last~~Company ~~sale~~will ~~price~~itself onnot ~~the date~~be ofsubject ~~valuation~~to orincome tax. Rather, ifMembers, noin ~~sale~~computing ~~occurred~~income tax, atwill ~~the~~include ~~mean~~their allocable share of the ~~latest~~Company’s ~~bid~~income, ~~and~~gain, ~~ask~~loss, ~~prices;~~deduction ~~provided~~and ~~that,~~expense. asThere towere ~~such~~neither ~~securities~~liabilities ~~that~~nor ~~may~~deferred ~~have~~tax ~~legal,~~assets ~~contractual~~relating orto ~~practical~~uncertain ~~restrictions~~income ontax ~~transfer,~~positions ataken ~~discount~~or ofexpected ~~10%~~ to ~~40%~~be ~~from~~taken on the ~~public~~tax ~~market price~~return ~~may~~as beof ~~applied~~December 31, 2008.

~~Securities~~The cost of the Private Investment Funds for ~~which~~federal notax ~~public~~purposes ~~market~~is ~~exists~~based ~~and~~on ~~other~~amounts ~~assets~~reported ~~will~~to bethe ~~valued~~Company aton ~~fair~~Schedule ~~value~~K-1 asfrom ~~determined~~the inPrivate ~~good faith~~Investment byFunds. As of October 31, 2009, the Company has not received information to determine the tax cost of the Private Investment ~~Adviser~~Funds. orAt December 31, 2008 and December 31, 2007, the Private Investment Funds had a ~~committee~~cost basis for tax purposes of $14,677,567 and $13,695,895, respectively. After adjusting the ~~Board~~tax ofcost ~~Managers~~for orpurchases ~~both~~and ~~under~~sales for the ~~supervision~~period ofbetween December 31, 2008 and October 31, 2009, the ~~Board~~adjusted ofcost ~~Managers~~for ~~pursuant~~tax topurposes ~~certain~~is ~~valuation~~$15,470,226. ~~procedures~~This ~~summarized~~results ~~below~~in net unrealized depreciation for tax purposes on the Private Investment Funds of $1,219,521. ~~Securities~~The ~~having~~cost ~~remaining~~basis ~~maturities~~for federal tax purposes of 60the ~~days~~Company’s orother ~~less~~investments ~~from~~ is $22,082,635, and those investments had net depreciation on a tax basis at October 31, 2009 of $9,722,887. The cost basis for federal tax purposes of the ~~date~~Company’s other investments at October 31, 2008, was $42,763,809, and those investments had net depreciation on a tax basis at October 31, 2008 of ~~purchase~~$31,366,872. The book/tax differences are ~~valued~~primarily atrelated ~~amortized~~to ~~cost~~the recognition of distributions.

~~The~~Management ~~value~~has ~~for~~analyzed ~~securities~~the ~~for~~Company’s ~~which~~tax nopositions ~~public~~taken ~~market exists is difficult to determine. Generally, such investments will be valued~~ on afederal ~~“going~~income ~~concern”~~tax ~~basis~~returns ~~without~~for ~~giving~~all ~~effect~~open totax ~~any~~years ~~disposition~~(current ~~costs.~~and ~~There~~prior isthree atax ~~range of values that is reasonable for such investments at any particular time. Initially~~years), ~~direct~~and ~~investments are~~has ~~valued~~concluded ~~based~~that ~~upon~~no ~~their~~provision ~~original cost until developments provide a sufficient basis~~ for ~~use~~federal ofincome atax ~~valuation~~is ~~other~~required ~~than cost. Upon the occurrence of developments providing a sufficient basis for a change~~ in ~~valuation, direct investments will be valued by~~ the ~~“private~~Company’s ~~market”~~financial ~~or “appraisal” methods of valuation~~statements. 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 company such as earnings, net worth, reliable private sale prices of the investee companyCompany’s ~~securities,~~federal ~~the~~and ~~market~~state ~~prices~~income ~~for~~and ~~similar~~federal ~~securities~~excise oftax ~~comparable~~returns ~~companies,~~for antax ~~assessment~~years ~~of the investee company’s future prospects or, if appropriate, liquidation value. The values~~ for ~~the~~which ~~investments referred to in this paragraph will be estimated regularly by~~ the ~~Investment~~applicable ~~Adviser~~statutes ~~or a committee~~ of ~~the~~limitations ~~Board~~have ~~under the supervision of the Board of Managers and, in any event,~~ not ~~less~~expired ~~frequently~~are ~~than~~subject ~~quarterly.~~to ~~However,~~examination ~~there~~by ~~can be no assurance that such value will represent~~ the ~~return~~Internal ~~that~~Revenue ~~might~~Service ~~ultimately~~and bestate ~~realized~~departments byof ~~the Company from the investments~~revenue.

TheNote valuation3 of— the Company’s Private Investment FundsAdvisory is based upon its pro-rata share of the value of the net assets of the Private Investment Fund as determined by such Private Investment FundFee, inAdministration accordanceFee withand itsRelated partnershipParty agreement, constitutional or other documents governing such valuation, on the valuation date. If such valuation with respect to the Company’s investments in Private Investment Funds is not available by reason of timing or other event on the valuation date, or is deemed to be unreliable by the Investment Adviser, the Investment Adviser, under supervision of the Board of Managers, shall determine such value based on its judgment of fair value on the appropriate date, less applicable charges, if any. Transactions

AtBank ~~October 31,~~of ~~2008~~America ~~and October 31,~~Capital ~~2007~~Advisors, ~~market~~LLC ~~quotations~~(“BACA” ~~were~~or ~~not~~the ~~readily~~“Investment ~~available~~Adviser”), ~~for~~which ~~the~~has ~~Company’s~~its ~~portfolio~~principal ofoffices ~~securities~~at ~~valued~~100 atFederal ~~$28~~Street,~~814~~ Boston,~~304~~ orMA ~~71.54%~~02110, ofserves ~~net~~as ~~assets~~the investment adviser to the Company and ~~$56~~is responsible for identifying,~~267~~ evaluating,~~427~~ orstructuring, ~~77.78%~~monitoring and disposing of ~~net~~the ~~assets,~~Company’s ~~respectively~~investments. ~~Such~~BACA ~~securities~~is ~~were~~a ~~valued~~Delaware ~~by the~~limited ~~Investment~~liability ~~Adviser,~~company which is registered as an investment adviser under the ~~supervision~~Investment Advisers Act of ~~the~~1940, ~~Board~~as ofamended ~~Managers~~(the “Advisers Act”). ~~Because~~The ofInvestment ~~the~~Adviser ~~inherent~~is ~~uncertainty~~an ofindirect ~~valuation~~wholly-owned subsidiary of, ~~the~~and ~~estimated~~controlled ~~values~~by, ~~may~~Bank ~~differ~~of ~~significantly~~America, ~~from~~a ~~the~~bank ~~values~~holding ~~that~~and ~~would~~a ~~have~~financial ~~been~~holding company ~~used~~which ~~had~~has aits ~~ready~~principal ~~market~~executive ~~for~~offices ~~the~~at ~~securities existed,~~101 ~~and~~North ~~the~~Tryon ~~differences~~Street, ~~could~~Charlotte, beNC ~~material~~28255.

EPrior to May 29, 2008, the Company’s investment adviser was USTA. ~~Security~~On ~~transactions~~May 29, 2008, BACA assumed the responsibilities of the investment adviser to the Company as a result of the Transfer of USTA’s rights and obligations under the Advisory Agreement (as defined below) between the Company and USTA dated July 1, 2007. The Transfer was approved by the Company’s Board of Managers on March 11, 2008. This change was a product of corporate mergers resulting from the acquisition by Bank of America of U.S. Trust Corp. in July 2007. The Transfer of the Advisory Agreement from USTA to BACA did not change (i) the way the Company is managed, including the level of services provided, (ii) the team of investment ~~income:~~professionals providing services to the Company, or (iii) the management and incentive fees paid by the Company.

~~Private~~USTA, a Delaware corporation and ~~Public~~registered ~~Companies~~investment adviser, had been an indirect wholly-owned subsidiary of, and controlled by, Bank of America, since July 1, 2007. Prior to that, USTA was an indirect subsidiary of U.S. Trust Corp., a registered financial holding company, which, in turn, was a wholly-owned subsidiary of The Charles Schwab Corporation. USTA assumed the duties of the investment adviser from the previous investment adviser to the Company, U.S. Trust Company, N.A. (“UST-NA”), which was acting through its registered investment advisory division, U.S. Trust Asset Management Division, on December 16, 2005. UST-NA has served as the investment adviser to the Company pursuant to an investment advisory agreement.

~~Security~~Under ~~transactions are~~that ~~recorded~~investment onadvisory aagreement ~~trade~~for ~~date~~the ~~basis.~~services ~~Realized~~provided, ~~gains~~the ~~and~~Investment ~~losses~~Adviser onwas ~~investments~~entitled ~~sold~~to ~~are~~receive ~~recorded~~a onmanagement ~~the~~fee ~~basis~~at ofan ~~identified~~annual ~~cost.~~rate ~~Interest~~equal ~~income,~~to ~~adjusted~~2.00% ~~for~~of ~~amortization~~the Company’s end of ~~premiums~~the ~~and~~quarter ~~discounts~~net isassets ~~recorded~~through onthe fifth anniversary of the ~~accrual~~first ~~basis.~~closing ~~Dividend~~date ~~income~~of ~~is recorded~~April on5, ~~the~~2001, ~~ex-dividend~~and ~~date~~1.00% of net assets thereafter.

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

~~Note~~Prior 2to —March ~~Significant~~31, ~~Accounting~~2006 ~~Policies~~and pursuant to a sub-advisory agreement among the Company, UST-NA, and United States Trust Company of New York (~~continued~~“U.S. Trust NY”), U.S. Trust NY served as the investment sub-adviser to the Company and received an investment management fee from UST-NA and USTA. On March 31, 2006, U.S. Trust NY converted into a national bank named United States Trust Company, National Association (“U.S. Trust”) and UST-NA merged into U.S. Trust, with U.S. Trust as the surviving entity. After the merger, U.S Trust, acting through its registered investment advisory division, U.S. Trust-New York Asset Management Division, was serving as the Investment Sub-Adviser to the Company pursuant to an investment sub-advisory agreement.

EOn July 1, 2007, U.S. ~~Security~~Trust ~~transactions~~Corp. and ~~investment~~its ~~income:~~subsidiaries, including USTA, were acquired by Bank of America (the “Sale”). USTA continued to serve as the Investment Adviser to the Company after the Sale (until May 29, 2008) pursuant to the advisory agreement (the “Advisory Agreement”) that was approved at a special meeting of Members of the Company held on March 15, 2007. The Advisory Agreement was identical in all material respects except for the term and the date of effectiveness to the previous investment advisory agreement. The Investment Sub-Adviser ceased to serve as the investment sub-adviser to the Company after the Sale.

~~Private~~On ~~Investment~~February ~~Funds~~22, 2008, U.S. Trust merged into Bank of America, N.A. (“BANA”), an indirect wholly-owned subsidiary of Bank of America.

~~Distributions~~As of ~~cash~~October or31, ~~in-kind~~2009 ~~from~~and aOctober ~~Private~~31, ~~Investment~~2008, ~~Fund~~$84,557 ~~are~~and ~~recorded~~$101,503, asrespectively, awere ~~return~~payable ~~of capital and serve~~ to ~~reduce~~BACA ~~the~~for ~~cost~~management ~~basis of the Private Investment Fund~~fees. ~~Distributions received in excess of the cost basis are recognized as realized gains. Distributions are recorded when they are received from the Private Investment Fund.~~

FOn July 31, 2008, the Company received $268,999 from BACA as a reimbursement for fees associated with the sale of Genoptix, Inc. ~~Expenses:~~The Company, through its own internal controls, identified a potential violation of the Investment Company Act involving the sale of Genoptix, Inc. through an affiliate of USTA. BACA and its affiliate believe that the sale of Genoptix, Inc. in the initial public offering and secondary offering was at arms-length. However, to ensure the Company and its investors are made whole and in its fiduciary capacity as the Investment Adviser, BACA decided to reimburse the Company for the fees paid to its affiliate.

In addition to the management fee, the Investment Adviser is entitled to allocations and distributions equal to the Incentive Carried Interest. The Incentive Carried Interest is an amount equal to 20% of the excess, if any, of the Company’s ~~records expenses~~cumulative realized capital gains on anPrivate ~~accrual~~Companies, ~~basis~~over the sum of (i) cumulative realized capital losses on investments of any type (ii) cumulative gross unrealized capital depreciation on investments of any type and (iii) cumulative net expenses. ~~Such~~Private ~~accruals~~Companies ~~require~~means ~~management~~Company toinvestments ~~make~~in ~~estimates~~domestic and ~~assumptions~~foreign ~~that~~companies ~~affect~~in which the ~~reported~~equity ~~amounts~~is closely held by company founders, ~~which~~management, isand/or ~~consistent~~a limited ~~with~~number Uof institutional investors and negotiated private investments in public companies.S. ~~generally~~As ~~accepted~~of ~~accounting~~October ~~principles~~31, 2009 and October 31, 2008, there was no Incentive Carried Interest earned by BACA.

GPursuant to an Administration, Accounting and Investor Services Agreement, the Company retains PNC Global Investment Servicing (U.S.), ~~Income~~Inc. ~~taxes:~~(“PNCGIS”) (formerly PFPC Inc.), a majority-owned subsidiary of The PNC Financial Services Group, as administrator, accounting and investor services agent. In consideration for its services, the Company (i) pays PNCGIS a variable fee between 0.105% and 0.07%, based on average quarterly net assets, payable monthly, subject to a minimum quarterly fee of approximately $28,750, (ii) pays annual fees of approximately $37,040 for taxation services and (iii) reimburses PNCGIS for out-of-pocket expenses. In addition, PFPC Trust Company serves as the Company’s custodian.

~~Under~~Each ~~current~~member ~~law~~of ~~and~~the ~~based~~Board ~~on certain~~of ~~assumptions~~Managers ~~and~~receives ~~representations~~$10,000 as an annual retainer and the ~~Company~~Chairman ~~intends~~of tothe beBoard ~~treated~~receives asan aadditional ~~partnership~~$1,000 ~~for~~annual ~~federal~~retainer. Also, ~~state~~each ~~and~~member ~~local~~of ~~income~~the ~~tax~~Board ~~purposes.~~receives By$2,000 ~~reason~~per ofquarterly ~~this~~meeting ~~treatment~~attended. In addition, ~~the~~each ~~Company~~Board ~~will~~member ~~itself~~receives ~~not~~$500 beper ~~subject~~quarterly totelephonic ~~income~~meeting ~~tax~~and $500 for any other telephonic special meeting. ~~Rather,~~For each ~~member,~~audit ~~in computing~~committee ~~income~~meeting ~~tax~~attended, ~~will~~Board ~~include~~members ~~their~~receive ~~allocable~~$1,500, ~~share~~while the Chairman of the ~~Company’s~~Audit ~~income,~~Committee ~~gain,~~receives ~~loss,~~an ~~deduction~~additional ~~and~~$1,000 ~~expense~~retainer. ~~There~~Each ~~were~~member ~~neither~~of ~~liabilities~~the ~~nor~~Board ~~deferred~~is ~~tax~~reimbursed ~~assets~~for ~~relating~~expenses toincurred ~~uncertain~~for ~~income~~attending ~~tax~~meetings. ~~positions~~No ~~taken~~person orwho ~~expected~~is toan beofficer, ~~taken~~manager or employee of Bank onof ~~the~~America, ~~tax~~or ~~return~~its subsidiaries, who serves as an officer, manager or employee of ~~December 31~~the Company, ~~2007~~receives any compensation from the Company.

~~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, ~~2008,~~2009 ~~the~~and ~~Company~~October ~~has not received information to determine the tax cost of the Private Investment Funds. At December~~ 31, ~~2007 and December 31~~2008, ~~2006,~~Excelsior ~~the~~Venture ~~Private~~Investors ~~Investment~~III, ~~Funds~~LLC had aan ~~cost~~investment ~~basis~~in ~~for~~the ~~tax~~Company ~~purposes~~ of $1321,~~695~~243,~~895~~047 and $1225,~~465~~570,~~650~~437, respectively. ~~After rolling forward the tax cost for purchases and sales for the period between December 31, 2007 and October 31, 2008, the adjusted cost for tax purposes is $15,700,801.~~ This ~~results~~represents inan ~~net~~ownership ~~unrealized~~interest ~~appreciation for tax purposes on the Private Investment Funds~~ of ~~$1,716,566~~63.48% ~~The~~in ~~cost basis for federal tax purposes of~~ the Company’s ~~other investments~~as ~~is $42,763,809, and those investments had net depreciation on a tax basis at October 31, 2008~~ of ~~$31,366,872.~~both The cost basis for federal tax purposes of the Company’s other investments at October 31, 2007, was $61,405,464, and those investments had net depreciation on a tax basis at October 31, 2007 of $9,924,379dates.

~~Note~~Affiliates 3of —the Investment ~~Advisory~~Adviser ~~Fee~~may have banking, ~~Administration Fee~~underwriting, lending, brokerage, or other business relationships with Private Investment Funds or Private Companies in which the Company invests and ~~Related~~with ~~Party~~companies ~~Transactions~~in which the Private Investment Funds invest.

BACA which has its principal offices at 100 Federal Street, Boston, MA 02110, serves as the investment adviser to the Company. BACA is a Delaware limited liability company which is registered as an investment adviser under the Advisers Act. The Investment Adviser is an indirect wholly-owned subsidiary of, and controlled by, Bank of America, a bank holding and a financial holding company which has its principal executive offices at 101 North Tryon Street, Charlotte, North Carolina 28255. 25

~~Prior~~TABLE toOF May 29, 2008, the Company’s investment adviser was USTA. On May 29, 2008, BACA assumed the responsibilities of the investment adviser to the Company as a result of the Transfer of USTA’s rights and obligations under the Advisory Agreement between the Company and USTA dated July 1, 2007. The Transfer was approved by the Company’s Board of Managers on March 11, 2008. This change was a product of corporate mergers resulting from the acquisition by Bank of America of U.S. Trust Corp. in July 2007. The Transfer of the Advisory Agreement from USTA to BACA did not change (i) the way the Company is managed, including the level of services provided, (ii) the team of investment professionals providing services to the Company, or (iii) the management and incentive fees the Company pays. CONTENTS

25Note 4 — Purchases and Sales of Securities

~~Table~~Excluding short-term investments, the Company's purchases and proceeds received from the sale of ~~Contents~~investments and distributions received from Private Investment Funds for the years ended October 31, 2009, October 31, 2008, and October 31, 2007 were as follows:

Note 3 — Investment Advisory Fee, Administration Fee and Related Party Transactions (continued)


Year Ended October 31,	Purchases ($)		Proceeds ($)
2009		2,548,859		1,090,409
2008		3,567,909		21,457,932
2007		6,885,181		17,342,583

USTA,Note a5 Delaware— corporation and registered investment adviser, has been an indirect wholly-owned subsidiary of, and controlled by, Bank of America, since July 1, 2007. Prior to that, USTA was an indirect subsidiary of U.S. Trust Corp., a registered financial holding company, which, in turn, was a wholly-owned subsidiary of Schwab. Commitments

~~USTA~~As ~~assumed the duties~~ of ~~the~~October ~~investment~~31, ~~adviser~~2009, ~~from~~ the ~~previous investment adviser to the~~ Company, ~~UST-NA,~~had ~~which~~unfunded ~~was acting through its registered~~ investment ~~advisory~~commitments ~~division,~~to ~~U.S.~~Private ~~Trust~~Investment ~~Asset~~Funds ~~Management~~totaling ~~Division~~$1, ~~on December 16~~987, ~~2005~~128. ~~UST-NA~~The ~~has~~Company ~~served~~had astotal ~~the~~commitments ~~investment~~from ~~adviser~~its toinvestors ~~the~~of ~~Company~~$147.6 ~~pursuant~~million, tonone anof ~~investment~~which ~~advisory~~remains ~~agreement~~uncalled.

Under the New Advisory Agreement for the services provided, the Investment Adviser is entitled to receive a management fee at an annual rate equal to 2.00% of the Company’s end of the quarter net assets through the fifth anniversary of the first closing date of April 5, 2001, and 1.00% of net assets thereafter.


Private Investment Funds	Unfunded Commitment
Advanced Technology Ventures VII, L.P.	$	121,500
Burrill Life Sciences Capital Fund, L.P.		349,905
CHL Medical Partners II, L.P.		—
CMEA Ventures VI, L.P.		330,000
Morgenthaler Partners VII, L.P.		150,000
Prospect Venture Partners II, L.P.		345,000
Sevin Rosen Fund IX, L.P.		420,000
Tallwood II, L.P.		—
Valhalla Partners, L.P.		270,723
Total	$	1,987,128

Prior to March 31, 2006 and pursuant to a sub-advisory agreement among the Company, UST-NA, and United States Trust Company of New York (“U.S. Trust NY”), U.S. Trust NY served as the investment sub-adviser to the Company and received an investment management fee from UST-NA and USTA. 26

OnTABLE ~~March 31,~~OF 2006, U.S. Trust NY converted into a national bank named U.S. Trust and UST-NA merged into U.S. Trust, with U.S. Trust as the surviving entity. After the merger, U.S Trust, acting through its registered investment advisory division, U.S. Trust-New York Asset Management Division, was serving as the Investment Sub-Adviser to the Company pursuant to an investment sub-advisory agreement. CONTENTS

OnNote July 1,6 2007,— U.S.Transactions Trustwith Corp.Affiliated and its subsidiaries, including USTA, were acquired by Bank of America (the “Sale”). USTA continued to serve as the Investment Adviser to the Company after the Sale (until May 29, 2008) pursuant to the Advisory Agreement that was approved at a special meeting of members of the Company held on March 15, 2007. The Advisory Agreement was identical in all material respects except for the term and the date of effectiveness to the previous investment advisory agreement. The Investment Sub-Adviser ceased to serve as the investment sub-adviser to the Company after the Sale. Companies

OnAn ~~February 22,~~affiliated ~~2008,~~company ~~U.S.~~is ~~Trust~~a ~~merged~~company ~~into~~in ~~Bank~~which the Company has ownership of ~~America~~more than 5% of the voting securities. The Company did not receive dividends from affiliated companies during the year ended October 31, N2009 and October 31, 2008.A. ~~(“BANA”)~~Transactions with companies, anwhich ~~indirect~~are ~~wholly-owned~~or ~~subsidiary~~were ofaffiliates, ~~Bank~~were ofas ~~America.~~follows:

As of October 31, 2008 and October 31, 2007, $101,503 and $182,802, respectively, were payable to BACA and USTA, respectively.



Name of Investment	Shares/Principal Amount Held at October 31, 2008		October 31, 2008 Fair Value		Purchases/ Conversion Acquisition		For the Year Ended October 31, 2009
Name of Investment	Shares/Principal Amount Held at October 31, 2008		October 31, 2008 Fair Value		Purchases/ Conversion Acquisition		Sales Proceeds/ Conversion			Interest Received		Realized Gain/(Loss)			Shares/Principal Amount Held at October 31, 2009		October 31, 2009 Fair Value (Note 2)
Controlled Affiliates
Cydelity Inc., Series A-2 Preferred*		—	$	—	$	—	$	—		$	—	$	(8,050	)		—	$	—
Total Controlled Affiliates		—	$	—	$	—	$	—		$	—	$	(8,050	)		—	$	—
Non-Controlled Affiliates
Ethertronics, Inc., Series B Preferred		4,433,333		6,650,000		—		—			—		—			4,433,333		6,650,000
Ethertronics, Inc., Series C Warrants		271,247		—		—		—			—		—			271,248		—
Ethertronics, Inc., Series C Preferred		1,697,957		2,546,937		—		—			—		—			1,697,957		2,546,937
Ethertronics, Inc., Series D Preferred		—		—		1,137,813		—			—		—			758,542		1,137,813
OpVista, Inc., Common Stock		10,615,593		—		—		—			—		(15,393,311	)		—		—
OpVista, Inc., Series CC Warrants		675,313		—		—		—			—		(676	)		—		—
Tensys Medical, Inc., Series C Preferred		4,166,667		—		—		—			—		(5,000,000	)		—		—
Tensys Medical, Inc., Series D Preferred		1,187,500		—		—		—			—		(1,425,000	)		—		—
Tensys Medical, Inc., Series E Preferred		318,845		—		—		(382,623	)		—		—			—		—
Total Non-Controlled Affiliates			$	9,196,937	$	1,137,813	$	(382,623	)	$	—	$	(21,818,988	)			$	10,334,750
Total Non-Controlled and Controlled Affiliates			$	9,196,937	$	1,137,813	$	(382,623	)	$	—	$	(21,827,037	)			$	10,334,750

On* July 31, 2008, the Company received $268,999 from BACA as a reimbursement for fees associated with the sale of Genoptix, Inc. During the period, the Company, through its own internal controls, identified a potential violation of the Investment ~~Company Act involving the sale of Genoptix, Inc. through an affiliate of USTA. BACA and its affiliate believe that the sale of Genoptix, Inc. in the initial public offering and secondary offering~~ was atliquidated ~~arms-length. However, to ensure the Company and its investors are made whole and~~ in ~~its~~a ~~fiduciary~~prior ~~capacity~~year asbut ~~the~~had ~~Investment~~an ~~Adviser,~~adjustment ~~BACA decided~~ to ~~reimburse~~an ~~the~~escrow ~~Company for the fees paid to its affiliate~~release.

26TABLE OF CONTENTS



Name of Investment	Shares/Principal Amount Held at October 31, 2007		October 31, 2007 Fair Value		Purchases/ Conversion Acquisition			For the Year Ended October 31, 2008
Name of Investment	Shares/Principal Amount Held at October 31, 2007		October 31, 2007 Fair Value		Purchases/ Conversion Acquisition			Sales Proceeds/ Conversion		Interest Received		Realized Gain/(Loss)			Shares/Principal Amount Held at October 31, 2008		October 31, 2008 Fair Value (Note 2)
Controlled Affiliates
Pilot Software Inc., Escrow		—	$	—	$	—		$	2,079,801	$	76,123	$	(152,497	)		—	$	—
Total Controlled Affiliates		—	$	—	$	—		$	2,079,801	$	76,123	$	(152,497	)		—	$	—
Non-Controlled Affiliates
Ethertronics, Inc., Series B Preferred		4,433,333		6,650,000		—			—		—		—			4,433,333		6,650,000
Ethertronics, Inc., Series C Warrants		271,247		—		—			—		—		—			271,247		—
Ethertronics, Inc., Series C Preferred		1,697,957		2,546,937		—			—		—		—			1,697,957		2,546,937
LogicLibrary, Inc., Series A Preferred		8,751,782		4,001,492		(4,087,685	)		—		1,758		—			—		—
LogicLibrary, Inc., Series A-1 Preferred		3,080,464		1,408,450		(1,408,450	)		—		—		—			—		—
MIDAS Vision Systems, Inc., Series A-1 Preferred		933,593		—		—			—		—		(1,054,960	)		—		—
MIDAS Vision Systems, Inc., Common Stock		157,396		—		—			—		—		(4,000,000	)		—		—
NanoOpto Corp., Bridge Note		237,321		160,000		—			93,384		—		(143,937	)		—		—
OpVista, Inc., Series AA Preferred		5,683,906		6,236,892		(6,236,892	)		—		—		—			—		—
OpVista, Inc., Common Stock		1,079,541		1,184,567		7,411,767			—		—		—			10,615,593		—
OpVista, Inc., Series BB Convertible Preferred		433,400		491,800		(491,800	)		—		—		—			—		—
OpVista, Inc., Bridge Note		675,989		1,351,978		(683,075	)		—		7,760		—			—		—
OpVista, Inc., Series CC Warrants		675,313		—		—			—		—		—			675,313		—
Silverback Systems, Inc., Escrow		—		—		—			217,763		—		(39,084	)		—		—
Tensys Medical, Inc., Series C Preferred		4,166,667		534,026		—			—		—		—			4,166,667		—
Tensys Medical, Inc., Series D Preferred		1,187,500		152,197		—			—		—		—			1,187,500		—
Tensys Medical, Inc., Series E Preferred		96,629		347,865		266,669			—		3,792		—			318,845		—
Total Non-Controlled Affiliates			$	25,066,204	$	(5,229,466	)	$	311,147	$	13,310	$	(5,237,981	)			$	9,196,937
Total Non-Controlled and Controlled Affiliates			$	25,066,204	$	(5,229,466	)	$	2,390,948	$	89,433	$	(5,390,478	)			$	9,196,937

Note 37 — Investment Advisory Fee, Administration Fee and Related Party Transactions (continued) Guarantees

~~limited~~In ~~number~~the normal course of ~~institutional~~business, ~~investors~~the ~~and~~Company ~~negotiated~~enters ~~private~~into ~~investments~~contracts inthat ~~public~~provide ~~companies~~general indemnifications. AsThe ofCompany’s ~~October 31,~~maximum ~~2008~~exposure ~~and~~under ~~October 31~~these agreements is dependent on future claims that may be made against the Company, ~~2007~~and therefore cannot be established; however, ~~there~~based ~~was~~on ~~no Incentive~~experience, ~~Carried~~the ~~Interest~~risk ~~earned~~of byloss ~~BACA~~from orsuch ~~USTA,~~claims ~~respectively~~is considered remote.

~~Pursuant~~Many toof ~~an Administration, Accounting and Investor Services Agreement,~~ the ~~Company~~Private ~~retains PNC Global~~ Investment ~~Servicing~~Funds ~~(“PNCGIS”)~~partnership ~~(formerly~~agreements ~~known~~contain asprovisions ~~PFPC~~that ~~Inc.),~~allow athem ~~majority-owned~~to ~~subsidiary~~recycle ofor ~~The~~recall ~~PNC~~distributions ~~Financial~~made ~~Services~~to ~~Group, as administrator, accounting and investor services agent. In addition, PFPC Trust Company serves as~~ the Company~~’s custodian~~. ~~In consideration for its services~~Accordingly, the ~~Company~~unfunded ~~(i) pays~~commitments ~~PNCGIS~~disclosed aunder ~~variable~~Note ~~fee~~5 ~~between~~reflect ~~0.105%~~both ~~and~~amounts ~~0.07%,~~undrawn ~~based on average quarterly net assets, payable monthly, subject~~ to ~~a minimum~~satisfy ~~quarterly~~commitments ~~fee of approximately $30,000, (ii) pays annual fees of approximately $36,667 for taxation services~~ and ~~(iii) reimburses~~distributions ~~PNCGIS~~that ~~for~~are ~~out-of-pocket expenses~~recallable.

Charles Schwab & Co., Inc. (the “Distributor”), the principal subsidiary of Schwab, served as the Company’s distributor for the offering of units. UST-NA, and subsequently USTA, paid the Distributor from its own assets an amount equal to 0.02% of the total of all subscriptions received in the offering. UST-NA or an affiliate paid the Distributor an on-going fee for the sale of units and the provision of ongoing investor services in an amount equal to the annual rate of 0.45% of the average quarterly net asset value of all outstanding units held by investors introduced to the Company by the Distributor through the fifth anniversary of the final subscription closing date and at the annual rate of 0.22% thereafter, subject to elimination upon all such fees totaling 6.50% of the gross proceeds received by the Company from the offering. Since the fifth anniversary has expired, no further fees have been paid by the Company or its affiliates to the Distributor. 28

~~Each~~TABLE ~~member~~OF of the Board of Managers receives $10,000 as an annual retainer and the Chairman of the Board receives an additional $1,000 annual retainer. Also, each member of the Board receives $2,000 per quarterly meeting attended. In addition, each Board member receives $500 per quarterly telephonic meeting and $500 for any other telephonic special meeting. For each audit committee meeting attended, Board members receive $1,500, while the Chairman of the Audit Committee receives 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 Bank of America, or its subsidiaries, who serves as an officer, manager or employee of the Company, receives any compensation from the Company. CONTENTS

AsNote of8 October 31,— 2008,Concentration and October 31, 2007 Excelsior Venture Investors III, LLC had an investment in the Company of $25,570,437 and $45,925,203, respectively. This represents an ownership interest of 63.48% in the Company as of both dates. Risk

~~Note~~The 4Company —invests ~~Purchases~~in Private Investment Funds and ~~Sales~~ Private Companies. This portfolio strategy presents a high degree of ~~Securities~~business and financial risk due to the nature of the Private Companies and the underlying companies in which the Private Investment Funds invest, which many include entities with little operating history, minimal capitalization, or operations in new or developing industries.

ExcludingNote short-term9 investments,— theLiquidity Company’s purchases and proceeds received from the sale of investments and distributions received from Private Investment Funds for the years ended October 31, 2008, October 31, 2007, and October 31, 2006 were as follows: Risk

Year Ended October 31,	Purchases ($)	Proceeds ($)
2008	3,567,909	21,457,932
2007	6,885,181	17,342,583
2006	17,056,870	2,436,843

The Company focuses its investments in the securities of privately-held venture capital companies, and to a lesser extent in venture capital, buyout and other private equity funds managed by third parties. The Company may offer managerial assistance to certain of such privately-held venture capital companies. The Company invests its available cash in short-term investments of marketable securities pending follow-on investments in portfolio companies and distribution to investors.

27The Company believes that its liquidity and capital resources are adequate to satisfy its operational needs as well as the continuation of its investment program.

TableNote 10 — Disclosure regarding Private Investment Funds over 5% of ContentsNet Assets

~~Note~~Advanced Technology Ventures VII, L.P. represents 5.54% —of ~~Commitments~~the Company’s net assets at October 31, 2009. The investment objective of Advanced Technology Ventures VII, L.P. is to invest in multistage information technology, communications and life sciences companies in order to achieve capital appreciation. Advanced Technology Ventures VII, L.P. does not provide liquidity to its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partner’s discretion in the form of distributions in either cash or marketable securities. Additionally, the general partner of Advanced Technology Ventures VII, L.P. may approve transfers at its sole discretion.

AsBurrill Life Sciences Capital Fund, L.P. represents 5.07% of the Company’s net assets at October 31, ~~2008~~2009. The investment objective of Burrill Life Sciences Capital Fund, ~~the~~L.P. ~~Company~~is ~~had~~to ~~unfunded~~invest ~~investment~~primarily ~~commitments~~in innovative, early-stage life science venture opportunities in order to ~~Private~~achieve ~~Investment~~capital ~~Funds~~appreciation. ~~totaling~~Burrill $3Life Sciences Capital Fund,~~398,175~~ L.P. ~~The~~does ~~Company~~not ~~also~~provide ~~had~~liquidity ~~commitments~~to ~~from~~its partners in the form of redemptions and explicitly states that no partner can withdraw its ~~investors~~capital or profits. Liquidity is provided at the general partner’s discretion in the form of ~~$147~~distributions in either cash or marketable securities.6 ~~million~~Additionally, ~~none~~the general partner of ~~which remains~~Burrill ~~uncalled~~Life Sciences Capital Fund, L.P. may approve transfers at its sole discretion.

Private Investment Funds	Commitment		UnfundedCommitment
Advanced Technology Ventures VII, L.P.	$	2,700,000	$	189,000
Burrill Life Sciences Capital Fund		3,000,000		731,349
CHL Medical Partners II, L.P.		2,000,000		69,960
CMEA Ventures VI, L.P.		3,000,000		750,000
Morgenthaler Partners VII, L.P.		3,000,000		150,000
Prosepect Venture Partners II, L.P.		3,000,000		390,000
Sevin Rosen Fund IX, L.P.		3,000,000		750,000
Tallwood II, L.P.		3,000,000		—
Valhalla Partners, L.P.		3,000,000		367,866
Total	$	25,700,000	$	3,398,175

CMEA Ventures VI, L.P. represents 8.19% of the Company’s net assets at October 31, 2009. The investment objective of CMEA Ventures VI, L.P. is to invest in and assist new and emerging growth-oriented business that are involved in the areas of life science technology, human healthcare and high technology companies in order to achieve net rates of return on invested capital in the top quartile of venture capital funds of the same vintage year. CMEA Ventures VI, L.P. does not provide liquidity to its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partner’s discretion in the form of distributions in either cash or marketable securities. Additionally, the general partner of CMEA Ventures VI, L.P. may approve transfers at its sole discretion.

28Sevin Rosen Fund IX, L.P. represents 5.21% of the Company’s net assets at October 31, 2009. The investment objective of Sevin Rosen Fund IX, L.P. is to develop, negotiate and acquire equity positions primarily in early stage start-up and emerging companies in the technology area in order to achieve net rates of return on invested capital. Sevin Rosen Fund IX, L.P. does not provide liquidity to its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partner’s discretion in the form of distributions in either cash or marketable securities. Additionally, the general partner of Sevin Rosen Fund IX, L.P. may approve transfers at its sole discretion.

TableNote of11 Contents— Subsequent Events

~~Note~~The 6Company —has ~~Transactions~~evaluated ~~with~~all ~~Affiliated~~events ~~Companies~~subsequent to the balance sheet date of October 31, 2009, through December 28, 2009, which is the date these financial statements were available to be issued. For the period November 1, 2009 to December 28, 2009, the Company has noted the following:

AnA ~~affiliated~~special ~~company~~meeting isof aMembers ~~company~~(the in“Meeting”) ~~which~~was held on December 12, 2009 for the ~~Company~~following ~~has~~purposes: ~~ownership~~(i) ofto ~~more~~authorize ~~than~~the 5%Board of ~~the~~Managers ~~voting~~to ~~securities.~~withdraw ~~The~~the Company’s ~~did~~election ~~not~~to ~~receive~~be ~~dividends~~treated ~~from affiliated~~as ~~companies~~BDC ~~during~~ (the ~~year~~“BDC ~~ended~~Election”) ~~October 31,~~under ~~2008~~the Investment Company Act and ~~October 31,~~to ~~2007.~~continue ~~Transactions~~the ~~with~~Company’s ~~companies,~~operations ~~which~~as ~~are~~a orclosed-end ~~were~~management ~~affiliates,~~investment ~~were~~company asregistered ~~follows:~~under the Investment Company Act (“Proposal 1”); and (ii) to approve an amendment to the Company’s Limited

Name of Investment							For the Year Ended October 31, 2008
	Shares/PrincipalAmountHeld atOctober 31,2007	October 31,2007Fair Value		Purchases/ConversionAcquisition			SalesProceeds/Conversion		InterestReceived		RealizedGain/(Loss)			Shares/PrincipalAmountHeld atOctober 31,2008	October 31,2008Fair Value(Note 1)
Controlled Affiliates
Pilot Software Inc., Escrow	—	$	—	$	—		$	2,079,801	$	76,123	$	(152,497	)	—	$	—
Total Controlled Affiliates	—	$	—	$	—		$	2,079,801	$	76,123	$	(152,497	)	—	$	—
Non-Controlled Affiliates
Ethertronics, Inc., Series B Preferred	4,433,333		6,650,000		—			—		—		—		4,433,333		6,650,000
Ethertronics, Inc., Series C Warrants	271,247		—		—			—		—		—		271,247		—
Ethertronics, Inc., Series C Preferred	1,697,957		2,546,937		—			—		—		—		1,697,957		2,546,937
LogicLibrary, Inc., Series A Preferred	8,751,782		4,001,492		(4,087,685	)		—		1,758		—		—		—
LogicLibrary, Inc., Series A-1 Preferred	3,080,464		1,408,450		(1,408,450	)		—		—		—		—		—
MIDAS Vision Systems, Inc., Series A-1 Preferred	933,593		—		—			—		—		(1,054,960	)	—		—
MIDAS Vision Systems, Inc., Common Stock	157,396		—		—			—		—		(4,000,000	)	—		—
NanoOpto Corp., Bridge Note	237,321		160,000		—			93,384		—		(143,937	)	—		—
OpVista, Inc., Series AA Preferred	5,683,906		6,236,892		(6,236,892	)		—		—		—		—		—
OpVista, Inc., Common Stock	1,079,541		1,184,567		7,411,767			—		—		—		10,615,593		—
OpVista, Inc., Series BB Convertible Preferred	433,400		491,800		(491,800	)		—		—		—		—		—
OpVista, Inc., Series CC Convertible Preferred	—		—		—			—		—		—		—		—
OpVista, Inc., Bridge Note	675,989		1,351,978		(683,075	)		—		7,760		—		—		—
OpVista, Inc., Series CC Warrants	675,313		—		—			—		—		—		675,313		—
Silverback Systems, Inc., Escrow	—		—		—			217,763		—		(39,084	)	—		—
Tensys Medical, Inc., Series C Preferred	4,166,667		534,026		—			—		—		—		4,166,667		—
Tensys Medical, Inc., Series D Preferred	1,187,500		152,197		—			—		—		—		1,187,500		—
Tensys Medical, Inc., Series E Preferred	96,629		347,865		266,669			—		3,792		—		318,845		—
Total Non-Controlled Affiliates		$	25,066,204	$	(5,229,466	)	$	311,147	$	13,310	$	(5,237,981	)		$	9,196,937
Total Non-Controlled and Controlled Affiliates		$	25,066,204	$	(5,229,466	)	$	2,390,948	$	89,433	$	(5,390,478	)		$	9,196,937

29TABLE OF CONTENTS

~~Table~~Liability Company Operating Agreement in order to eliminate the incentive carried interest payment and to make such other changes as the officers of ~~Contents~~the Company, upon consultation with counsel, deem necessary to reflect the withdrawal of the BDC Election, provided that the withdrawal of the Company’s BDC Election is approved by the Members of the Company (“Proposal 2” and together with Proposal 1, the “Proposals”).

~~Note~~The 6proposal —was ~~Transactions~~approved ~~with~~on ~~Affiliated~~December ~~Companies~~10, ~~(continued)~~2009 by the Members holding a requisite number of votes. The contemplated transactions are expected to take place on or about December 31, 2009.

							For the Year Ended October 31, 2007
Name of Investment	Shares/PrincipalAmountHeld atOctober 31,2006	October 31,2006Fair Value		Purchases/ConversionAcquisition			SalesProceeds/Conversion		InterestReceived		RealizedGain/(Loss)			Shares/PrincipalAmountHeld atOctober 31,2007	October 31,2007Fair Value(Note 1)
Controlled Affiliates
Pilot Software Inc., Series A Preferred	46,362,656	$	8,110,096	$	—		$	9,942,786	$	—	$	1,573,881		—	$	—
Pilot Software Inc., Bridge Note, 9%	1,404,600		1,404,600		—			2,864,704		36,712		1,403,907		—		—
Cydelity Inc., Series A Preferred	19,995,000		—		—			—		—		(3,999,000	)	—		—
Cydelity Inc., Series A-1 Preferred	19,702,277		3,940,456		—			—		—		(3,940,455	)	—		—
Cydelity Inc., Series A-2 Preferred	25,535,051		2,500,009		—			1,001,681		—		(1,498,327	)	—		—
Cydelity Inc., Common Stock	1,000,000		—		—			—		—		(1,000	)	—		—
Total Controlled Affiliates		$	15,955,161	$	—		$	13,809,171	$	36,712	$	(6,460,994	)		$	—
Non-Controlled Affiliates
Chips & Systems, Inc., Series A Preferred	7,000,000		—		—			—		—		(3,500,000	)	—		—
Chips & Systems, Inc. Bridge Note	1,441,133		—		—			—		—		(1,441,133	)	—		—
Ethertronics, Inc., Series B Preferred	4,433,333		6,650,000		—			—		—		—		4,433,333		6,650,000
Ethertronics, Inc., Series B Warrants	281,667		—		—			—		—		—		—		—
Ethertronics, Inc., Series C Warrants	214,073		—		—			—		—		—		271,247		—
Ethertronics, Inc., Series C Preferred	1,316,793		1,975,190		571,746			—		—		—		1,697,957		2,546,937
Genoptix, Inc., Series 1-A Preferred	942,481		950,822		(950,822	)		—		—		—		—		—
Genoptix, Inc., Series 1-B Preferred	1,403,696		950,822		(950,822	)		—		—		—		—		—
Genoptix, Inc., Common Stock	46,860		—		—			—		—		—		—		—
Genoptix, Inc., Series 1-C Preferred	620,580		554,178		(554,178	)		—		—		—		—		—
Genoptix, Inc., Series 1-D Preferred	728,413		461,815		(461,815	)		—		—		—		—		—
LightConnect, Inc., Series C Preferred	—		—		—			—		—		168,484		—		—
LogicLibrary, Inc., Series A Preferred	7,762,821		3,549,296		452,196			—		—		—		8,751,782		4,001,492
LogicLibrary, Inc., Series A-1 Preferred	3,080,464		1,408,450		—			—		—		—		3,080,464		1,408,450
MIDAS Vision Systems, Inc., Series A-1 Preferred	933,593		—		—			—		—		—		933,593		—
MIDAS Vision Systems, Inc., Common Stock	157,396		—		—			—		—		—		157,396		—
NanoOpto Corp., Series A-1 Preferred	956,234		840,912		—			—		—		(2,231,212	)	—		—
NanoOpto Corp., Series B Preferred	3,023,399		1,286,155		—			—		—		(1,286,154	)	—		—
NanoOpto Corp., Series C Preferred	1,682,470		733,389		—			—		—		(733,389	)	—		—
NanoOpto Corp., Series C Warrants	229,410		—		—			—		—		—		—		—
NanoOpto Corp., Series D Preferred	1,234,263		382,622		—			—		—		(382,622	)	—		—

Supplemental Information (Unaudited)

30Mr. Gene M. Bernstein, a member of the Board of Managers, resigned from the Board on September 24, 2009.

~~Table of Contents~~30

~~Note~~TABLE 6OF ~~— Transactions with Affiliated Companies (continued)~~ CONTENTS

						For the Year Ended October 31, 2007
Name of Investment	Shares/PrincipalAmountHeld atOctober 31,2006	October 31,2006Fair Value		Purchases/ConversionAcquisition		SalesProceeds/Conversion			InterestReceived		RealizedGain/(Loss)			Shares/PrincipalAmountHeld atOctober 31,2007	October 31,2007Fair Value(Note 1)
NanoOpto Corp., Bridge Note	—		—		237,321		—			—		—		237,321		160,000
OpVista, Inc., Series AA Preferred	5,089,790		5,367,967		526,227		—			—		—		5,683,906		6,236,892
OpVista, Inc., Common Stock	1,079,541		1,138,542		—		—			—		—		1,079,541		1,184,567
OpVista, Inc., Series BB Convertible Preferred	—		—		491,800		—			—		—		433,400		491,800
OpVista, Inc., Bridge Note	—		—		675,989		—			—		—		675,989		1,351,978
OpVista, Inc., Series CC Warrants	—		—		—		—			—		—		675,313		—
Silverback Systems, Inc., Common	40,026		—		—		—			—		(4,759,081	)	—		—
Silverback Systems, Inc., Series B	559,993		1,600,000		—		749,976			—		(750,805	)	—		—
Silverback Systems, Inc., Series A-2 Preferred	772,503		—		—		—			—		(2,070,310	)	—		—
Tensys Medical, Inc., Series C Preferred	4,166,667		1,887,160		—		—			—		—		4,166,667		534,026
Tensys Medical, Inc., Series D Preferred	1,187,500		537,840		—		—			—		—		1,187,500		152,197
Tensys Medical, Inc., Series E Preferred	—		—		—		115,954			—		—		96,629		347,865
Tensys Medical, Inc., Bridge Note	52,017		52,017		59,039		(115,954	)		4,898		—		—		—
Total Non-Controlled Affiliates		$	30,327,177	$	96,681	$	749,976		$	4,898	$	(16,986,222	)		$	25,066,204
Total Non-Controlled and Controlled Affiliates		$	46,282,338	$	96,681	$	14,559,147		$	41,610	$	(23,447,216	)		$	25,066,204

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~Note~~None. ~~7 — Guarantees~~

InITEM the normal course of business, the Company enters into contracts that provide general indemnifications9A. TheCONTROLS Company’sAND 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 remotePROCEDURES.

~~Note~~(a) ~~8 —~~Evaluation of Disclosure ~~regarding~~Controls ~~Private~~and ~~Investment~~Procedures. ~~Funds~~As ~~over~~of 5%October 31, 2009 (the end of ~~Net~~the ~~Assets~~period covered by this report), the Company’s principal executive officer and principal financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company was made known to them by others within those entities.

~~CMEA~~(b) ~~Ventures~~Changes ~~VI,~~in ~~L.P.~~Internal ~~represents 6~~Controls.~~99%~~ ofThere ~~the Company’s~~were ~~Net~~no ~~Assets~~significant atchanges ~~October 31,~~in ~~2008.~~the ~~The~~Company’s ~~investment~~internal ~~objective~~controls ofover ~~CMEA~~financial ~~Ventures~~reporting ~~VI,~~or ~~L.P. is to invest~~ in ~~and~~other ~~assist~~factors ~~new and emerging growth-oriented business~~ that ~~are~~could ~~involved~~significantly inaffect ~~the~~these ~~areas~~controls ofsubsequent ~~life science technology, human healthcare and high technology companies in order~~ to ~~achieve net rates of return on invested capital in~~ the ~~top~~date ~~quartile~~ of ~~venture~~their ~~capital funds of the same vintage year. CMEA Ventures VI~~evaluation, ~~L.P.~~nor ~~does~~were ~~not~~there ~~provide~~any ~~liquidity~~significant todeficiencies ~~its partners in the form of redemptions and explicitly states that no partner can withdraw its capital~~ or ~~profits.~~material ~~Liquidity~~weaknesses isin ~~provided at~~ the ~~general partner~~Company’s ~~discretion~~internal incontrols ~~the~~over ~~form~~financial ~~of distributions in either cash or marketable securities~~reporting. ~~Additionally~~Accordingly, ~~the~~no ~~general partner~~corrective ofactions ~~CMEA~~were ~~Ventures~~required ~~VI,~~or Lundertaken.P. ~~may approve transfers at its sole discretion.~~

TallwoodITEM II,9A L(T).P. representsCONTROLS 5.02%AND of the Company’s Net Assets at October 31, 2008PROCEDURES. The investment objective of Tallwood II, L.P. is to invest in attractive, early-stage growth companies possessing leading-edge technology in the semiconductor industry in order to achieve capital appreciation. Tallwood II, L.P. does not

31Disclosure Controls and Procedures.

~~Table~~The Company’s management, with the participation of ~~Contents~~the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information is recorded, processed, summarized and reported accurately and on a timely basis. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.

NoteManagement’s 8Report —on DisclosureInternal regardingControl Private Investment Funds over 5%Financial of Net Assets (continued) Reporting

~~provide~~Management ~~liquidity~~of tothe ~~its~~Company ~~partners~~is inresponsible ~~the~~for ~~form~~establishing ofand ~~redemptions~~maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and ~~explicitly~~15d-15(f) ~~states~~under ~~that~~the noSecurities ~~partner~~Exchange ~~can~~Act ~~withdraw~~of ~~its~~1934, ~~capital~~as oramended, ~~profits.~~as ~~Liquidity~~a isprocess ~~provided~~designed atby, or under the ~~general~~ ~~partner~~supervision of, the Company’s ~~discretion~~principal inexecutive and principal financial officers and effected by the ~~form~~Company’s board of ~~distributions~~directors, inmanagement ~~either~~and ~~cash~~other orpersonnel ~~marketable~~to ~~securities.~~provide ~~Additionally,~~reasonable assurance regarding the ~~general~~reliability ~~partner~~of financial reporting and the preparation of ~~Tallwood~~financial ~~II,~~statements ~~L.P.~~for ~~may~~external ~~approve~~purposes ~~transfers~~in ataccordance ~~its~~with ~~sole~~GAAP ~~discretion.~~and includes those policies and procedures that:

~~Valhalla~~• ~~Partners,~~pertain ~~L.P. represents 5.99% of the Company’s Net Assets at October 31, 2008. The investment objective of Valhalla Partners, L.P. is~~ to ~~invest in attractive early-stage venture capital investments in information technology companies in~~ the ~~Mid-Atlantic~~maintenance ~~region in order to achieve superior rates~~ of ~~return~~records onthat ~~invested capital. Valhalla Partners, L.P. does not provide liquidity to its partners~~ in ~~the~~reasonable ~~form~~detail ofaccurately ~~redemptions~~ and ~~explicitly~~fairly ~~states~~reflect ~~that no partner can withdraw its capital or profits. Liquidity is provided at~~ the ~~general~~transactions ~~partner’s~~and ~~discretion~~dispositions inof the ~~form~~assets of ~~distributions in either cash or marketable securities. Additionally,~~ the ~~general partner of Valhalla Partners, L.P. may approve transfers at its sole discretion.~~ Company;

~~Note~~• 9provide —reasonable ~~New~~assurance ~~Accounting~~that ~~Pronouncements~~ transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

~~Effective~~• ~~November 1,~~provide ~~2007,~~reasonable ~~the~~assurance ~~Company~~regarding ~~adopted~~prevention ~~the~~or ~~Financial~~timely ~~Accounting~~detection ~~Standards~~of ~~Board~~unauthorized ~~(“FASB”) FASB interpretation No. 48~~acquisition, ~~“Accounting~~use for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or ~~expected~~disposition ~~to be taken in the course~~ of ~~preparing~~ the Company’s ~~tax~~assets returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current year. The Company has evaluated the application of FIN 48 and has determined that itcould ~~does not~~ have a material ~~impact~~effect on the ~~Company’s~~ financial statements. There are neither tax liabilities nor deferred tax assets relating to uncertain income tax positions taken or expected to be taken on the tax return for the year ended December 31, 2007. The statute of limitations on the Company’s U.S. Federal tax returns remains open for the years ended December 31, 2005 through December 31, 2007. The statute of limitations on the Company’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

~~FASB~~Because ~~issued~~of ~~Statement~~its ~~No. 157~~inherent ~~(“SFAS 157”) in September 2006~~limitations, ~~“Fair~~internal ~~Value~~control ~~Measurements”,~~over ~~which is effective for~~ financial ~~statements~~reporting ~~issued~~may ~~for~~not ~~fiscal~~prevent ~~years~~or ~~beginning~~detect ~~after~~all ~~November 15, 2007, and interim periods within those fiscal years~~misstatements. ~~This~~Projections ~~statement~~of ~~provides~~any ~~enhanced~~evaluation ~~guidance~~of ~~for~~effectiveness ~~using fair value~~ to ~~measure~~future ~~assets~~periods ~~and~~are ~~liabilities.~~subject Itto ~~clarifies~~the ~~fair~~risks ~~value,~~that ~~establishes~~controls amay ~~framework~~become ~~for~~inadequate ~~measuring~~because ~~fair~~of ~~value~~changes in ~~generally accepted accounting principles (“GAAP”)~~conditions, ~~and expands disclosures about fair value measurements. The standard applies whenever other standards require (~~or ~~permit)~~that ~~assets or liabilities to be measured at fair value. The standard does not expand~~ the ~~use~~degree of ~~fair~~compliance ~~value~~with ~~in any new circumstances. The Company is reviewing~~ the ~~statement~~policies ~~and~~or ~~its~~procedures ~~impact~~may ~~on the financial statements~~deteriorate.

~~Note~~Management 10assessed —the ~~Subsequent~~effectiveness ~~Events~~of the Company’s internal control over financial reporting as of October 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.

In November 2008, Archemix announced a proposed merger with NitroMed, Inc., which trades on the NASDAQ under the symbol NTMD. The merger is subject to various shareholder approvals and is expected to be completed by the second quarter of 2009. 31

InTABLE ~~November~~OF 2008, Tensys Medical, Inc. and its board of directors agreed to a merger and acquisition transaction with a privately held company. This transaction will not provide any liquidity to the Company, and is expected to occur in first quarter 2009. CONTENTS

32Based on this assessment, management concluded that, as of October 31, 2009, the Company’s internal control over financial reporting was effective.

~~Table~~By:/s/ ofJames ~~Contents~~D. BowdenJames D. Bowden Chief Executive Officer and President By:/s/ Steve L. SussSteve L. Suss Chief Financial Officer and Treasurer

~~Note~~This 10annual —report ~~Subsequent~~does ~~Events~~not ~~(continued)~~include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

SupplementalITEM Information9B. (Unaudited)OTHER INFORMATION.

~~Effective November 14, 2008, Mr~~None. Matthew Ahern replaced Mr. Raghav Nandagopal as the portfolio manager (the “Portfolio Manager”) primarily responsible for the day-to-day management of the Company’s portfolio, subject to such policies as may be adopted by the Board.

Mr. Ahern joined the Investment Adviser in 2004 via Fleet Bank’s Private Equity Portfolio (“PEP”) Fund Group, which he joined in 2002. His responsibilities include evaluating potential private equity fund investments, documenting and closing new investments, and actively managing numerous Investment Adviser relationships for the benefit of third party investors. Mr. Ahern also has a leading role in assessing the performance, and providing key analysis regarding, the Investment Adviser’s current and prospective underlying funds and direct investments. In addition, he serves on the BACA Investment Committee. Prior to joining Fleet Bank, Mr. Ahern was a Director of Capitalyst Ventures, a seed stage venture capital fund with offices in Boston and Washington D.C., where he led the firm’s investment strategy efforts and was a member of the investment committee. Prior to launching that firm, he spent a year as a financial analyst in an M.B.A. private equity training program at HarbourVest Partners, an international private equity fund of funds group. Mr. Ahern holds a B.A. from Boston University and an M.B.A in Entrepreneurship and Finance from Babson College, summa cum laude. 32

~~ITEM~~TABLE 9.OF ~~CONTROLS AND PROCEDURES.~~CONTENTS

(a)PART Evaluation of Disclosure Controls and Procedures. As of October 31, 2008 (the end of the period covered by this report), the Company’s principal executive officer and principal financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company was made known to them by others within those entities. III

(b)ITEM Changes in Internal Controls10. There wereDIRECTORS noAND significantEXECUTIVE changesOFFICERS inOF theTHE Company’s internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in the Company’s internal controls over financial reportingREGISTRANT. Accordingly, no corrective actions were required or undertaken.

~~ITEM~~Set 9Aforth ~~(T).~~below ~~CONTROLS~~are ~~AND~~names, ~~PROCEDURES~~ages, positions and certain other information concerning the current managers and certain officers of the Company as of October 31, 2009.

Disclosure Controls and Procedures.


Name, Address and Age	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation During Past Five Years	Number of Portfolios in Fund Complex Overseen by Manager*
Disinterested Managers
Victor F. Imbimbo, Jr. Bank of America 114 West 47th Street New York, NY 10036 (Born 1952)	Manager and Member of the Audit and Valuation Committees	Since Company inception	Mr. Imbimbo is the President and CEO of Caring Today, LLC., the publisher of Caring Today Magazine, the leading information resource within the family caregivers market. Prior to this, Mr. Imbimbo, was Executive Vice President of TBWA\New York and President for North America with TBWA/WorldHealth, a division of TBWA Worldwide where he directed consumer marketing program development for healthcare companies primarily within the pharmaceutical industry. Mr. Imbimbo serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC. Mr. Imbimbo is a Board member for Vertical Branding, Inc, a public company specializing in direct response branding and marketing.	7
Stephen V. Murphy Bank of America 114 West 47th Street New York, NY 10036 (Born 1945)	Manager and Member of the Audit and Valuation Committees	Since Company inception	Mr. Murphy is President of S.V. Murphy & Co., an investment banking firm. Mr. Murphy serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC. He also serves on the board of directors of The First of Long Island Corporation, The First National Bank of Long Island and Bowne & Co., Inc.	7
John C. Hover II Bank of America 114 West 47th Street New York, NY 10036 (Born 1943)	Manager and Chairman of the Board and Member of the Audit and Valuation Committees	Since Company inception. Serves on Audit and Valuation Committees since July 1, 2007	Mr. Hover was an Executive Vice President of U.S. Trust Company (retired since 1998). Mr. Hover serves as chairman of the board of managers of Excelsior Venture Investors III, LLC. He also serves on the board of directors of Tweedy, Browne Fund, Inc.	7

* The ~~Company’s~~“Fund ~~management,~~Complex” ~~with~~consists ~~the participation~~ of ~~the~~Excelsior ~~Company’s~~Venture ~~Chief~~Partners ~~Executive~~III, ~~Officer~~LLC, ~~and~~Excelsior ~~Chief~~Venture ~~Financial~~Investors ~~Officer~~III, ~~has evaluated~~LLC, ~~the~~Excelsior ~~effectiveness~~Multi-Strategy ofHedge ~~the~~Fund ~~Company’s~~of ~~disclosure~~Funds ~~controls~~Master ~~and~~Fund, ~~procedures~~LLC, ~~(as~~Excelsior ~~such~~Directional ~~term~~Hedge isFund ~~defined~~of inFunds ~~Rules 13a-15~~(eTI), ~~and~~LLC, ~~15d-15(e)~~Excelsior ~~under~~Directional ~~the~~Hedge ~~Securities~~Fund ~~Exchange Act~~ of ~~1934,~~Funds ~~as amended~~ (~~the “Exchange Act”~~TE)~~) as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information is recorded~~, ~~processed~~LLC, ~~summarized~~Excelsior ~~and~~Multi-Strategy ~~reported~~Hedge ~~accurately~~Fund ~~and~~of onFunds a(TI ~~timely basis. Based on such evaluation~~2), ~~the~~LLC ~~Company’s Chief Executive Officer~~ and ~~Chief~~Excelsior ~~Financial~~Multi-Strategy ~~Officer~~Hedge ~~have~~Fund ~~concluded that, as~~ of ~~the~~Funds ~~end~~(TE ~~of such period~~2), ~~the Company’s disclosure controls and procedures were effective~~LLC.

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

Management’s Report on Internal Control over Financial Reporting Officers

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that:


Name, Address and Age	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation During Past Five Years
James D. Bowden Bank of America Capital Advisors, LLC 100 Federal Street Boston, MA 02110 (Born 1953)	Chief Executive Officer and President	Since July, 2008	Managing Director and Senior Vice President, Bank of America Capital Advisors, LLC (since 1998).
Steve L. Suss Bank of America Capital Advisors, LLC 225 High Ridge Road Stamford, CT 06905 (Born 1960)	Chief Financial Officer and Treasurer	Since April 2007	Managing Director, Alternative Investments, Bank of America (7/07 to present); Director (4/07 to 5/08), Senior Vice President (7/07 to 5/08), and President (4/07 to 6/07) of UST Advisers, Inc.; Senior Vice President of U.S. Trust’s Alternative Investment Division (4/07 to 6/07); Chief Financial Officer and Chief Compliance Officer, Heirloom Capital Management, L.P. (5/02 to 9/06); Vice President and Chief Financial Officer, Westway Capital LLC (9/97 to 1/02).
Mathew J. Ahern Bank of America Capital Advisors, LLC 100 Federal Street Boston, MA 02110 (Born 1967)	Senior Vice President	Since June 2008	Senior Vice President and Director, Alternative Investment Asset Management, Bank of America (12/02 to present).
Marina Belaya Bank of America Capital Advisors, LLC 114 W. 47th Street New York, NY 10036 (Born 1967)	Secretary	Since April 2007	Assistant General Counsel, Bank of America (7/07 to present); Vice President and Senior Attorney of U.S. Trust (2/06 to 6/07); Vice President, Corporate Counsel, Prudential Financial (4/05 to 01/06); Associate, Schulte Roth & Zabel LLP (09/02 to 03/05).
Robert M. Zakem Bank of America Capital Advisors LLC 2 World Financial Center New York, NY 10281 (Born 1958)	Chief Compliance Officer	Since June 2009	GWIM Risk and Compliance Senior Executive, Bank of America Corp. (3/09 to present); Managing Director, Business Risk Management, Merrill Lynch & Co., Inc. (8/06 to 2/09); Executive Director, Head of Fund Services – US, UBS Financial Services, Inc. (12/04 to 07/06); Senior Vice President and General Counsel, AIG SunAmerica Asset Management Corp. (04/93 to 12/04).

•All ~~pertain~~officers toof the ~~maintenance~~Company ofare ~~records~~employees ~~that in reasonable detail accurately~~ and/or ~~fairly~~officers ~~reflect the transactions and dispositions~~ of the ~~assets~~Investment ofAdviser. ~~the Company;~~

•Officers ~~provide~~of ~~reasonable~~the ~~assurance~~Company ~~that transactions~~ are ~~recorded~~elected asby ~~necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in~~ the ~~United~~Managers ~~States,~~ and ~~that~~hold ~~receipts~~office ~~and~~until ~~expenditures~~they ofresign, ~~the Company~~ are ~~being~~removed ~~made~~or ~~only~~are inotherwise ~~accordance~~disqualified ~~with~~to ~~authorizations~~serve. ~~of management and directors of the Company; and~~

•Audit provideCommittee reasonableFinancial assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.Expert

~~Because~~Mr. ofMurphy ~~its~~is ~~inherent~~the ~~limitations,~~audit ~~internal~~committee ~~control over~~ financial ~~reporting~~ ~~may~~expert ~~not~~as ~~prevent~~defined orby ~~detect~~the ~~all~~Securities ~~misstatements.~~and ~~Projections~~Exchange ofCommission ~~any~~(“SEC”) ~~evaluation~~rules ofand ~~effectiveness~~is to“independent,” ~~future~~as ~~periods are subject to~~ the ~~risks~~term ~~that~~is ~~controls~~used ~~may~~in ~~become~~Item ~~inadequate~~7(d)(3)(iv) ~~because~~ of ~~changes~~Schedule in14A ~~conditions,~~under orthe ~~that~~Securities ~~the~~Exchange ~~degree~~Act of ~~compliance with the policies or procedures may deteriorate~~1934.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of October 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. 34

~~Based~~TABLE onOF ~~this assessment, management concluded that, as of October 31, 2008, the Company’s internal control over financial reporting was effective.~~ CONTENTS

By:Code /S/of JAMES D. BOWDEN James D. Bowden Chief Executive Officer and President By: /S/ STEVE L. SUSS Steve L. Suss Chief Financial Officer and TreasurerEthics

~~This~~As ~~annual~~of ~~report~~the ~~does~~end ~~not~~of ~~include~~the anperiod, ~~attestation~~October ~~report~~31, of2009, the Company’s ~~independent registered~~has ~~public~~adopted ~~accounting~~a ~~firm~~code ~~regarding~~of ~~internal~~ethics, ~~control~~which ~~over~~complies ~~financial~~with ~~reporting.~~the ~~Management’s~~criteria ~~report~~provided ~~was~~in ~~not~~the ~~subject~~SEC rules, and applies to ~~attestation~~its byprincipal ~~the~~executive ~~Company’s~~officer, ~~independent~~the ~~registered~~principal ~~public~~financial ~~accounting~~officer ~~firm~~and ~~pursuant~~any toother ~~temporary~~officers ~~rules~~who ofserve ~~the Securities~~a ~~and~~similar ~~Exchange~~function. ~~Commission~~A ~~that~~copy ~~permit~~of the ~~Company~~code toof ~~provide~~ethics ~~only~~is ~~management’s~~incorporated ~~report~~herein by reference in Item 15 of this ~~annual~~Form ~~report~~10-K.

34Section 16(a) Beneficial Ownership Reporting Compliance

~~Table~~Under the federal securities laws, the Company’s managers and executive officers and any persons holding more than 10% of ~~Contents~~the Company’s outstanding units are required to report their ownership of units and any changes in the ownership of the Company’s units to the Company and the SEC. To the best of the Company’s knowledge, the Company’s managers and executive officers have satisfied these filings.

PARTITEM III11. EXECUTIVE COMPENSATION.

~~ITEM~~The 10Company has no full-time employees. ~~DIRECTORS~~Pursuant ~~AND~~to ~~EXECUTIVE~~the ~~OFFICERS~~Advisory OFAgreement, ~~THE~~the ~~REGISTRANT~~Investment Adviser employs and compensates all of the personnel of the Company, and also furnishes all office facilities, equipment, management and other administrative services required for the operation of the Company. In consideration of the services rendered by the Investment Adviser, the Company will pay a management fee based upon average quarterly net assets and an incentive fee based in part on a percentage of realized capital gains of the Company.

~~Set~~Managers ~~forth~~receive ~~below~~compensation ~~are~~of ~~names~~$10,000 ~~ages~~as an annual retainer and the Chairman of the Board receives an additional $1,000 ~~positions~~annual retainer. Also, each member of the Board will receive $2,000 per quarterly meeting attended. In addition, each Board member will receive $500 per quarterly telephonic meeting and ~~certain~~$500 for any other ~~information~~telephonic ~~concerning~~special meeting. For each audit committee meeting attended, Board members will receive $1,500, while the ~~current~~Chairman ~~managers~~of ~~and~~the ~~certain~~Audit ~~officers~~Committee will receive an additional $1,000 retainer. Each member of the Board is reimbursed for expenses incurred for attending meetings. The Company asdoes ofnot ~~October 31~~have a stock option plan, ~~2008~~other long-term incentive plan, retirement plan or other retirement benefits.

Name, Address and Age	Position(s)Held withthe Company	Term ofOffice andLength ofTime Served	Principal Occupation During Past Five Years	Number ofPortfolios inFundComplexOverseenby Manager*
Disinterested Managers
Gene M. Bernstein Bank of America 114 West 47th Street New York, NY 10036 (Born 1947)	Manager and Member of theAudit andValuationCommittees	SinceCompanyinception	Mr. Bernstein is Director of NIC Holding Corp. He was Dean of the Skodneck Business Development Center at Hofstra University from 2000-2001. Prior to that, Mr. Bernstein was President and Vice Chairman at Northville Industries, a petroleum marketing, distribution, trading and storage company and wholly-owned subsidiary of NIC Holding Corp. Mr. Bernstein also serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC.	5
Victor F. Imbimbo Bank of America 114 West 47th Street New York, NY 10036 (Born 1952)	Manager andMember of the Auditand ValuationCommittees	SinceCompanyinception	Mr. Imbimbo is the President and CEO of Caring Today, LLC., the publisher of Caring Today Magazine, the leading information resource within the family caregivers market. Prior to this, Mr. Imbimbo, was Executive Vice President of TBWA\New York and President for North America with TBWA/WorldHealth, a division of TBWA Worldwide where he directed consumer marketing program development for healthcare companies primarily within the pharmaceutical industry. Mr. Imbimbo serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC.Mr. Imbimbo is a Board member for Vertical Branding, Inc, a public company specializing in direct response branding and marketing.	5

The following chart provides certain information about the fees received by the managers in the fiscal year ended October 31, 2009.


Name of Person/Position	Aggregate Compensation From the Company		Total Compensation From the Company and Fund Complex* Paid to Managers
John C. Hover II Manager	$	26,500	$	35,250 (7 Funds)
Gene M. Bernstein** Manager	$	18,500	$	46,750 (5 Funds)
Stephen V. Murphy Manager	$	26,500	$	59,750 (7 Funds)
Victor F. Imbimbo, Jr. Manager	$	25,500	$	58,750 (7 Funds)

~~Table~~* The “Fund Complex” includes Excelsior Venture Partners III, LLC, Excelsior Venture Investors III, LLC, Excelsior Multi-Strategy Hedge Fund of ~~Contents~~Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC, Excelsior Directional Hedge Fund of Funds (TE), LLC, Excelsior Multi-Strategy Hedge Fund of Funds (TI 2), LLC and Excelsior Multi-Strategy Hedge Fund of Funds (TE 2), LLC. The parenthetical number represents the number of investment companies (including the Company) from which such person receives compensation that is considered a part of the same Fund Complex as the Company, and the compensation is as of December 31, 2009.

Name, Address and Age	Position(s)Held withthe Company	Term ofOffice andLength ofTime Served	Principal Occupation During Past Five Years	Number ofPortfolios inFundComplexOverseenby Manager*
Stephen V. Murphy Bank of America 114 West 47th Street New York, NY 10036 (Born 1945)	ManagerandMember of the AuditandValuationCommittees	SinceCompanyinception	Mr. Murphy is President of S.V. Murphy & Co., an investment banking firm. Mr. Murphy serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC. He also serves on the board of directors of The First of Long Island Corporation, The First National Bank of Long Island and Bowne & Co., Inc.	5
John C. Hover II Bank of America 114 West 47th Street New York, NY 10036 (Born 1943)	ManagerandChairmanof theBoard andMember of the AuditandValuationCommittees	SinceCompanyinception.Served onAudit andValuationCommitteessince July1, 2007	Mr. Hover was an Executive Vice President of U.S. Trust Company (retired since 1998). Mr. Hover serves as chairman of the board of managers of Excelsior Venture Investors III, LLC. He also serves on the board of directors of Tweedy, Browne Fund, Inc.	2

Mr. Bernstein resigned from the Board on September 24, 2009.

* The “Fund Complex” consists of Excelsior Venture Partners III, LLC, Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC.35

36TABLE OF CONTENTS

TableITEM of12. ContentsSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

~~Officers~~As of October 31, 2009, certain beneficial owners, the managers, the Chief Executive Officer and the managers and executive officers as a group held of record the following shares. Except as set forth below, to the Company’s knowledge and based solely on a review of Forms 13D and 13G filed with the SEC (or the lack of such filings, as the case may be), no other person beneficially owned more than 5% of the Company’s shares.

Name, Address and Age	Position(s)Held withthe Company	Term ofOffice andLength ofTime Served	Principal Occupation DuringPast Five Years
Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
James D. Bowden Bank of America Capital Advisors, LLC One Financial Center Boston, MA 02111 (Born 1953)	Chief Executive Officerand President	Since July, 2008	Managing Director and Senior Vice President, Bank of America Capital Advisors, LLC (since 1998).
Units of membership Interest	Excelsior Venture Investors III, LLC 225 High Ridge Road Stamford, CT 06905	187,409 units	63.5%
Steve L. Suss Bank of America Capital Advisors, LLC One Financial Center Boston, MA 02111 (Born 1960)	Chief Financial Officerand Treasurer	Since April, 2007	Managing Director, Alternative Investment Solutions, Bank of America (7/07 to present); Director (4/07 to 5/08), Senior Vice President (7/07 to 5/08), and President (4/07 to 6/07) of UST Advisers, Inc.; Senior Vice President of U.S. Trust’s Alternative Investment Division (4/07 to 6/07); Chief Financial Officer and Chief Compliance Officer, Heirloom Capital Management, L.P. (5/02 to 9/06); Vice President and Chief Financial Officer, Westway Capital LLC (9/97 to 1/02).
Units of membership Interest	John C. Hover II c/o Bank of America 114 West 47th Street New York, NY 10036-1532	200 units	*
Benjamin Tanen Bank of America Capital Advisors, LLC One Financial Center Boston, MA 02111 (Born 1976)	Vice President	Since April, 2007	Vice President, Alternative Investment Solutions, Bank of America (7/07 to present); Vice President, UST Advisers, Inc. (9/05 to 5/08); Associate and Vice President at Dawntreader Ventures (formerly SoundView Ventures), a venture capital firm (2000 to 2005); Associate Analyst at Giga Information Group (now Forrester Research), a technology research and advisory firm (1997 to 1999).
Units of membership Interest	Victor F. Imbimbo, Jr. c/o Bank of America 114 West 47th Street New York, NY 10036-1532	-0- units	*
Marina Belaya Bank of America 114 W. 47th Street New York, NY 10036 (Born 1967)	Secretary	Since April, 2007	Assistant General Counsel, Bank of America (7/07 to present); Vice President and Senior Attorney of U.S. Trust (2/06 to 6/07); Vice President, Corporate Counsel, Prudential Financial (4/05 to 01/06); Associate, Schulte Roth & Zabel LLP (09/02 to 03/05).
Units of membership Interest	Stephen V. Murphy c/o Bank of America 114 West 47th Street New York, NY 10036-1532	200 units	*
Linda Wondrack Bank of America One Financial Center Boston, MA 02111 (Born 1964)	Chief ComplianceOfficer	Since August, 2007	Director (Columbia Management Group LLC and Investment Product Group Compliance), Bank of America (6/05 to present); Director of Corporate Compliance and Conflicts Officer, MFS Investment Management (8/04 to 5/05; Managing Director, Deutsche Asset Management (prior to 8/04).
Units of membership Interest	James D. Bowden Bank of America Capital Advisors, LLC 100 Federal Street Boston, MA 02110	-0- units	*
Units of membership Interest	Steve L. Suss Bank of America Capital Advisors, LLC 225 High Ridge RoadStamford, CT 06905	-0- units	*
Units of membership Interest	Managers and executive officers as a group(5 persons)	400 units	*

37* Less than one percent.

~~All~~The ~~officers~~Company ofhas ~~the~~engaged ~~Company~~in ~~are~~no ~~employees~~transactions ~~and/~~with the managers or executive officers ofother than as described above or in the ~~Investment~~notes ~~Adviser~~to the financial statements.

OfficersITEM of14. thePRINCIPAL CompanyACCOUNTANT areFEES electedAND by the Managers and hold office until they resign, are removed or are otherwise disqualified to serveSERVICES.

Audit Committee Financial Expert Fees

~~Mr. Murphy~~(a) is The aggregate fees billed for each of the ~~audit~~last ~~committee~~two ~~financial~~fiscal ~~expert~~years asfor ~~defined~~professional services rendered by the ~~Securities~~registered ~~and~~public ~~Exchange~~accountant ~~Commission~~for ~~(“SEC”)~~the ~~rules~~audit ~~and~~of isthe ~~“independent,”~~Company’s asannual ~~the~~financial ~~term~~statements isor ~~used~~services that are normally provided by the accountant in ~~Item 7(d)(3)(iv)~~connection ofwith ~~Schedule~~statutory ~~14A~~and ~~under~~regulatory ~~the~~filings ~~Securities~~or ~~Exchange~~engagements ~~Act~~for ofthose ~~1934~~fiscal years are $113,500 for 2008 and $100,000 for 2009.

As(b) ofThe ~~the~~aggregate ~~end~~fees ofbilled ~~the period,~~in ~~October 31,~~each ~~2008,~~of the ~~Company~~last ~~has~~two ~~adopted~~fiscal ayears ~~code~~for ofassurance ~~ethics,~~and ~~which~~related ~~complies~~services ~~with~~by the ~~criteria~~registered ~~provided~~public inaccountant ~~the~~that ~~SEC~~are ~~rules,~~reasonably ~~and~~related ~~applies~~ to ~~its~~the ~~principal~~performance ~~executive~~of ~~officer,~~the audit of the ~~principal~~Company’s financial ~~officer~~statements and ~~any~~are ~~other~~not ~~officers~~reported ~~who~~under ~~serve~~paragraph (a ~~similar~~) ~~function. A copy~~ of ~~the~~this ~~code~~Item ofare ~~ethics~~$25,500 isfor ~~incorporated~~2008 ~~herein~~and by$25,500 ~~reference~~for ~~in Item 15 of this Form 10-K~~2009.

~~Section 16(a) Beneficial Ownership Reporting Compliance~~ 36

~~Under~~TABLE ~~the~~OF federal securities laws, the Company’s managers and executive officers and any persons holding more than 10% of the Company’s outstanding units are required to report their ownership of units and any changes in the ownership of the Company’s units to the Company and the SEC. To the best of the Company’s knowledge, the Company’s managers and executive officers have satisfied these filings. CONTENTS

ITEMTax 11. EXECUTIVE COMPENSATION.Fees

(c) The ~~Company~~aggregate ~~has~~fees ~~no full-time~~billed ~~employees.~~in ~~Pursuant~~each ~~to the Advisory Agreement, the Investment Adviser employs and compensates all~~ of the ~~personnel~~last oftwo ~~the~~fiscal ~~Company,~~years ~~and also furnishes all office facilities, equipment, management and other administrative services required~~ for ~~the~~professional ~~operation of the Company. In consideration of the~~ services rendered by the ~~Investment~~registered ~~Adviser,~~public ~~the~~accountant ~~Company~~for ~~will~~tax ~~pay~~compliance, atax ~~management~~advice, ~~fee~~and ~~based~~tax ~~upon~~planning ~~average~~are ~~quarterly~~$0 ~~net~~for ~~assets~~2008 and an$55,682 ~~incentive~~for ~~fee based in part on a percentage of realized capital gains of the Company~~2009.

ManagersAll receiveOther compensation of $10,000 as an annual retainer and the Chairman of the Board receives an additional $1,000 annual retainer. Also, each member of the Board 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. The Company does not have a stock option plan, other long-term incentive plan, retirement plan or other retirement benefits. Fees

38(d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the registered public accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2008 and $0 for 2009.

~~Table of Contents~~37

~~The~~TABLE ~~following~~OF ~~chart provides certain information about the fees received by the managers in the fiscal year ended October 31, 2008.~~ CONTENTS

Name of Person/Position	AggregateCompensationFromThe Company		Total CompensationFrom the CompanyAnd Fund Complex *Paid to Managers
John C. Hover II Manager	$	23,500		$27,750 (2 Funds)
Gene M. Bernstein Manager	$	20,500		$45,750 (5 Funds)
Stephen V. Murphy Manager	$	23,500		$52,250 (5 Funds)
Victor F. Imbimbo, Jr. Manager	$	22,500	$	51,250 (5 Funds)

PART IV

*ITEM The “Fund Complex” includes Excelsior Venture Partners III, LLC, Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC15. TheEXHIBITS parentheticalAND numberFINANCIAL representsSTATEMENT the number of investment companies (including the Company) from which such person receives compensation that is considered a part of the same Fund Complex as the Company, and the compensation is as of December 31, 2008SCHEDULES.

39(a) 1.Financial Statements

~~Table~~The financial statements listed in Item 8, “Financial Statements and Supplementary Data,” beginning on page 10 are filed as part of ~~Contents~~this report.

~~ITEM 12~~2. ~~SECURITY~~Financial ~~OWNERSHIP~~Statement ~~OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.~~Schedules

AsThe offinancial ~~October 31,~~statement ~~2008,~~schedules ~~certain~~listed ~~beneficial~~in ~~owners,~~Item ~~the managers~~8, ~~the~~“Financial ~~Chief~~Statements ~~Executive Officer~~ and ~~the~~Supplementary ~~managers and executive officers as a group held of record the following shares. Except as set forth below~~Data,” ~~to the~~beginning ~~Company’s knowledge and based solely~~ on apage ~~review~~10 ofare ~~Forms 13D and 13G~~ filed ~~with the SEC (or the lack of such filings,~~ as ~~the~~part ~~case may be), no other person beneficially owned more than 5%~~ of ~~the~~this ~~Company’s shares~~report.

Title of Class	Name and Address of Beneficial Owner	Amount andNatureof BeneficialOwnership	PercentofClass
Units of membership Interest	Excelsior Venture Investors III, LLC 225 High Ridge Road Stamford, CT 06905	187,409 units	63.5	%
Units of membership Interest	John C. Hover II c/o Bank of America 114 West 47th Street, New York, NY 10036-1532.	200 units	*
Units of membership Interest	Gene M. Bernstein c/o Bank of America 114 West 47th Street, New York, NY 10036-1532.	300 units	*
Units of membership Interest	Stephen V. Murphy c/o Bank of America 114 West 47th Street, New York, NY 10036-1532.	200 units	*
Units of membership Interest	Managers and executive officers as a group (3 persons)	700 units	*

Exhibits

*(3)(a) ~~Less~~Certificate ~~than~~of ~~one~~Formation ~~percent~~of Limited Liability Company.(1)

~~ITEM~~(3)(b) ~~13.~~Certificate ~~CERTAIN~~of ~~RELATIONSHIPS AND RELATED TRANSACTIONS~~Amendment.(1)

~~The~~(3)(c) ~~Company~~Form ~~has~~of ~~engaged~~Limited inLiability noCompany ~~transactions~~Operating ~~with the managers or executive officers other than as described above or in the notes to the financial statements~~Agreement. (1)

40(4) For instruments defining the rights of security holders see Exhibits (3)(a), (b) and (c), (10)(h),(i),(j) and (k) hereto and the Specimen Certificate of the Company’s units.(1)

~~Table~~(10)(a)(i) Form of ~~Contents~~Investment Advisory Agreement for former Investment Adviser.(1)

~~ITEM~~(10)(a)(ii) ~~14.~~Form ~~PRINCIPAL~~of ~~ACCOUNTANT~~Investment ~~FEES~~Advisory ~~AND~~Agreement ~~SERVICES~~for Investment Adviser.(4)

~~Audit~~(10)(b) ~~Fees~~Form of Investment Sub-Advisory Agreement.(1)

(a10)(c) ~~The~~Form ~~aggregate fees billed for each~~ of ~~the~~Distribution last two fiscal years for professional services rendered by the registered public accountant for the audit of the Company’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $107,060 for 2007 and $113,500 for 2008Agreement.(1)

~~Audit-Related~~(10)(d) ~~Fees~~Form of Selling Agent Agreement.(1)

(b10) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the registered public accountant that are reasonably related to the performance of the audit of the Company’s financial statements and are not reported under paragraph (ae) Form of ~~this~~Custodian ~~Item are $23,000 for 2007 and $25,500 for 2008~~Agreement.(1)

~~Tax~~(10)(f) ~~Fees~~Form of Administration, Accounting and Investor Services Agreement.(1)

(c10)(g) ~~The~~Form ~~aggregate fees billed in each~~ of ~~the~~Escrow ~~last two fiscal years for professional services rendered by the registered public accountant for tax compliance, tax advice, and tax planning are $0 for 2007 and $0 for 2008~~Agreement.(1)

~~All~~(10)(h) ~~Other~~Form ~~Fees~~of Subscription Agreement for investment in units of the Company.(1)

(d10)(i) ~~The~~Form ~~aggregate fees billed in each~~ of ~~the~~Subscription ~~last~~Agreement ~~two~~with ~~fiscal~~Charles ~~years~~Schwab ~~for~~& ~~products and services provided by the registered public accountant~~Co., ~~other~~Inc. ~~than~~for ~~the~~investment ~~services reported~~ in ~~paragraphs~~units ~~(a) through (c)~~ of ~~this~~the ~~Item are $0 for 2007 and $0 for 2008~~Company.(1)

41(10)(j) Amended and Restated Agreement with respect to Seed Capital.(2)

~~Table~~(10)(k) Form of ~~Contents~~Subscription Agreement between the Company and Excelsior Venture Investors III, LLC.(1)

~~PART~~(10)(l) IVInvestment Sub-Advisory Agreement dated December 21, 2001 among the Company, U.S. Trust Company and U.S. Trust Company, N.A.(3)

~~ITEM~~(14) ~~15.~~Code ~~EXHIBITS~~of ~~AND FINANCIAL STATEMENT SCHEDULES~~Ethics.

(a31.1) 1.Certification ~~Financial~~of ~~Statements~~Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~The~~(31.2) ~~financial~~Certification ~~statements listed~~of inTreasurer ~~Item 8,~~pursuant ~~“Financial~~to ~~Statements~~Section ~~and~~302 ~~Supplementary~~of ~~Data,”~~the ~~beginning~~Sarbanes-Oxley onAct ~~page 12 are filed as part~~ of ~~this report~~2002.

2(32.1) ~~Financial~~Certification ~~Statement~~Pursuant ~~Schedules~~to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~The~~(99)(a) ~~financial statement~~Audit ~~schedules~~Committee ~~listed~~Charter. in— ~~Item 8,~~No ~~“Financial Statements and Supplementary Data,” beginning on page 12 are filed as part of this report~~Change.

3(1) Incorporated by reference to the Company’s Registration Statement on Form N-2/A as filed with the Securities and Exchange Commission on August 10, 2000 (File No. ~~Exhibits~~333-30986).

		(3)(a)		Certificate of Formation of Limited Liability Company. 1
		(3)(b)		Certificate of Amendment. 1
		(3)(c)		Form of Limited Liability Company Operating Agreement. 1
		(4)		For instruments defining the rights of security holders see Exhibits (3)(a), (b) and (c), (10)(h),(i),(j) and (k) hereto and the Specimen Certificate of the Company’s units. 1
		(10)(a)(i)		Form of Investment Advisory Agreement for former Investment Adviser. 1
		(10)(a)(ii)		Form of Investment Advisory Agreement for Investment Adviser.
		(10)(b)		Form of Investment Sub-Advisory Agreement. 1
		(10)(c)		Form of Distribution Agreement. 1
		(10)(d)		Form of Selling Agent Agreement. 1
		(10)(e)		Form of Custodian Agreement. 1
		(10)(f)		Form of Administration, Accounting and Investor Services Agreement. 1
		(10)(g)		Form of Escrow Agreement. 1
		(10)(h)		Form of Subscription Agreement for investment in units of the Company. 1
		(10)(i)		Form of Subscription Agreement with Charles Schwab & Co., Inc. for investment in units of the Company. 1
		(10)(j)		Amended and Restated Agreement with respect to Seed Capital. 2
		(10)(k)		Form of Subscription Agreement between the Company and Excelsior Venture Investors III, LLC. 1
		(10)(l)		Investment Sub-Advisory Agreement dated December 21, 2001 among the Company, U.S. Trust Company and U.S. Trust Company, N.A. 3
		(14)		Code of Ethics.
		(31.1)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		(31.2)		Certification of Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		(32.1)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		(99)(a)		Audit Committee Charter. – No Change.

(2)

Incorporated by reference to the Company’s Registration Statement on Form N-2/A as filed with the Securities and Exchange Commission on November 14, 2000 (File No. 333-30986).

1(3) Incorporated by reference to the Company’s ~~Registration~~Quarterly ~~Statement~~Report on Form N10-~~2/A~~Q as filed with the Securities and Exchange Commission on ~~August~~March 1018, ~~2000 (File No~~2002. ~~333-30986).~~

2(4) Incorporated by reference to the Company’s ~~Registration~~Annual ~~Statement~~Report on Form N10-~~2/A~~K as filed with the Securities and Exchange Commission on ~~November~~January 1425, ~~2000 (File No~~2008. ~~333-30986).~~

~~3 Incorporated by reference to the Company’s Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission on March 18, 2002.~~38

42TABLE OF CONTENTS

Table of ContentsSIGNATURES

~~SIGNATURES~~Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		EXCELSIOR VENTURE PARTNERS III, LLC
Date: 01/29/10		By: /s/ James D. Bowden James D. Bowden Chief Executive Officer and President
Date: 01/29/10		By: /s/ Steve L. Suss Steven L. Suss Chief Financial Officer and Treasurer

	EXCELSIOR VENTURE PARTNERS III, LLC
Date: 01/30/09	By:	/S/ JAMES D. BOWDEN
		James D. Bowden
		Chief Executive Officer and President
Date: 01/30/09	By:	/S/ STEVEN L. SUSS
		Steven L. Suss
		Chief Financial Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:


Signature	Title	Date
/s/ James D. Bowden James D. Bowden	Chief Executive Officer and President	01/29/10
/s/ Steve L. Suss Steve L. Suss	Chief Financial Officer and Treasurer	01/29/10
/s/ John C. Hover II John C. Hover II	Chairman of the Board and Director	01/29/10
/s/ Stephen V. Murphy Stephen V. Murphy	Director	01/29/10
/s/ Victor F. Imbimbo, Jr. Victor F. Imbimbo, Jr.	Director	01/29/10

Signature	Title	Date
/S/ JAMES D. BOWDEN James D. Bowden	Chief Executive Officer and President	01/30/09
/S/ STEVE L. SUSS Steve L. Suss	Chief Financial Officer and Treasurer	01/30/09
/S/ JOHN C. HOVER II John C. Hover II	Chairman of the Board and Director	01/30/09
/S/ GENE M. BERNSTEIN Gene M. Bernstein	Director	01/30/09
/S/ STEPHEN V. MURPHY Stephen V. Murphy	Director	01/30/09
/S/ VICTOR F. IMBIMBO, JR. Victor F. Imbimbo, Jr.	Director	01/30/09

TableSECURITIES ofAND ContentsEXCHANGE COMMISSION WASHINGTON, D.C. 20549

SECURITIESFORM AND EXCHANGE COMMISSION 10-K

WASHINGTON,FOR D.C.ANNUAL 20549AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FORFor ANNUALthe ANDfiscal TRANSITIONyear REPORTSended October 31, 2009

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

xFor ANNUALthe REPORTtransition PURSUANTperiod TOfrom SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934to

ForCommission thefile fiscalnumber: year ended October 31, 2008 000-29665

OREXCELSIOR VENTURE PARTNERS III, LLC

Commission225 fileHigh number:Ridge 000-29665Road Stamford, CT 06905

LargeTABLE acceleratedOF filer ¨ Accelerated file ¨ Non-accelerated filer x CONTENTS

TABLEPART OF CONTENTS I

ITEM 1. BUSINESS.

Table of ContentsOverview

1Company Portfolio of InvestmentsOctober 31, 2009

TheInvestments Company’sHeld Certificate— ofPrivate Formation provides that the duration of the Company will be ten years from the final subscription closing date, subject to the rights of the Board of Managers to extend the term for up to two additional two-year periods. Companies

TheArchemix followingCorporation is a summary of the Company’s investment portfolio. (“Archemix”)

2Ethertronics, Inc. (“Ethertronics”)

ArchemixSOA CorporationSoftware, Inc. (“ArchemixSOA” f/k/a LogicLibrary, Inc.)

Ethertronics,Recorders Incand Medicare Systems (P) Ltd. (“EthertronicsRecorders and Medicare” f/k/a Tensys Medical, Inc.)

3Investments Held — Third Party Investment Funds

The Company made a $4.8 million investment in Genoptix in July 2003. After Genoptix went public in late 2007, the Company began to strategically liquidate its position and as a result generated proceeds of $21.5 million for a 4.5X return on its investment with an IRR of 31%. Competition

Table of ContentsEmployees

ForPART additional information concerning the Company’s investments, see the financial statements beginning on page 12 of this report. II

CompetitionITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

At October 31, 2008, the Company had no full-time employees. All personnel of the Company are employed by and compensated by the Investment Adviser pursuant to the Advisory Agreement. Holders

AnDividends investmentand in the securities of a business development company, such as the Company, involves certain risks not present in an investment in the securities of other companies, including other types of management investment companies. Distributions

ITEM 46. SUBMISSIONSELECTED OFFINANCIAL MATTERS TO A VOTE OF SECURITY HOLDERSDATA.

ITEM 57. MARKET FOR REGISTRANTMANAGEMENT’S COMMONDISCUSSION EQUITYAND ANALYSIS OF FINANCIAL CONDITION AND RELATEDRESULTS STOCKHOLDEROF MATTERSOPERATIONS.

MarketLiquidity Informationand Capital Resources

DividendsResults andof Distributions Operations

FiscalInvestment YearIncome Ended October 31,and 2008. Distributions of $71.50 per share were made to unit holders during fiscal year 2008. Expenses

($Net in 000’s except for per unit data) Assets

TableRealized ofand ContentsUnrealized Gains and Losses from Portfolio Investments

RealizedEquity andPrice Unrealized Gains and Losses from Portfolio Investments Risk

10Excelsior Venture Partners III, LLC Portfolio of Investments October 31, 2009

Table of Contents

11Excelsior Venture Partners III, LLC Portfolio of Investments October 31, 2009 (continued)

Table of Contents

NewExcelsior YorkVenture Partners III, NewLLC YorkPortfolio of Investments October 31, 2008

Excelsior Venture Partners III, LLC Portfolio of Investments October 31, 2008 (continued)

#Excelsior Non-incomeVenture producingPartners securities.III, LLC Statements of Assets and Liabilities

Excelsior Venture Partners III, LLC Statements of Operations

Excelsior Venture Partners III, LLC Statements of Changes in Net Assets

#Excelsior Non-incomeVenture producingPartners securities.III, LLC Statements of Cash Flows

TableExcelsior ofVenture ContentsPartners III, LLC Financial Highlights

(1)EXCELSIOR IncludesVENTURE interestPARTNERS fromIII, short-termLLC investments.NOTES TO FINANCIAL STATEMENTS October 31, 2009

The accompanyingNote notes1 are— an integral part of these Financial Statements. Organization

ExcelsiorNote Venture2 Partners— III,Significant LLCAccounting Policies

StatementsA. Basis of ChangesPresentation inand NetUse Assetsof Estimates:

TheB. accompanyingCash notesand areCash an integral part of these Financial Statements. Equivalents:

TableC. ofRestricted ContentsCash:

StatementsD. ofInvestment Cash Flows Valuation:

Costs incurred in connection with the initial offering of units totaled $1,468,218E. EachSecurity member’stransactions proand ratainvestment share of these costs was deducted from his, her or its initial capital contribution. income:

CashPrivate andInvestment cash equivalents consist of deposits with PNC Bank, N.A. All highly liquid investments are listed separately on the Portfolio of Investments. As of October 31, 2008, the Company did not hold any short-term investments. Funds

TableF. of ContentsExpenses:

DG. InvestmentIncome Valuationtaxes:

25Note 4 — Purchases and Sales of Securities

Table of Contents

Note 37 — Investment Advisory Fee, Administration Fee and Related Party Transactions (continued) Guarantees

AsNote of8 October 31,— 2008,Concentration and October 31, 2007 Excelsior Venture Investors III, LLC had an investment in the Company of $25,570,437 and $45,925,203, respectively. This represents an ownership interest of 63.48% in the Company as of both dates. Risk

ExcludingNote short-term9 investments,— theLiquidity Company’s purchases and proceeds received from the sale of investments and distributions received from Private Investment Funds for the years ended October 31, 2008, October 31, 2007, and October 31, 2006 were as follows: Risk

TableNote 10 — Disclosure regarding Private Investment Funds over 5% of ContentsNet Assets

TableNote of11 Contents— Subsequent Events

Supplemental Information (Unaudited)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

31Disclosure Controls and Procedures.

NoteManagement’s 8Report —on DisclosureInternal regardingControl Private Investment Funds over 5%Financial of Net Assets (continued) Reporting

SupplementalITEM Information9B. (Unaudited)OTHER INFORMATION.

Management’s Report on Internal Control over Financial Reporting Officers

•Audit provideCommittee reasonableFinancial assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.Expert

By:Code /S/of JAMES D. BOWDEN James D. Bowden Chief Executive Officer and President By: /S/ STEVE L. SUSS Steve L. Suss Chief Financial Officer and TreasurerEthics

34Section 16(a) Beneficial Ownership Reporting Compliance

PARTITEM III11. EXECUTIVE COMPENSATION.

TableITEM of12. ContentsSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

TableITEM of13. ContentsCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

OfficersITEM of14. thePRINCIPAL CompanyACCOUNTANT areFEES electedAND by the Managers and hold office until they resign, are removed or are otherwise disqualified to serveSERVICES.

Audit Committee Financial Expert Fees

CodeAudit-Related of Ethics Fees

ITEMTax 11. EXECUTIVE COMPENSATION.Fees

PART IV

Filing Compare · EXCELSIOR VENTURE PARTNERS III LLC