SECURITIESTable ANDof EXCHANGE COMMISSION Contents

~~WASHINGTON,~~SECURITIES DCAND ~~20549~~EXCHANGE COMMISSION

~~FORM~~WASHINGTON, ~~10-Q~~DC 20549

~~(Mark~~FORM ~~One)~~10-Q

~~x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15~~(dMark One) ~~OF THE SECURITIES EXCHANGE ACT OF 1934.~~

~~For~~x ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~July 31,~~SECTION ~~2007~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

ORFor the quarterly period ended July 31, 2008

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

~~For~~¨ ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from to~~ TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

~~Commission file~~For ~~number~~the ~~000-29665~~transition period from to

~~EXCELSIOR~~Commission file ~~VENTURE~~number ~~PARTNERS~~000-29665 ~~III, LLC~~

~~(Exact~~EXCELSIOR ~~Name~~VENTURE ofPARTNERS ~~Registrant~~III, asLLC ~~Specified in Its Charter)~~

DELAWARE		13-4102528
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
225 High Ridge Road, Stamford, CT		06905
(Address of Principal Executive Offices)		(Zip Code)

(Exact Name of Registrant as Specified in Its Charter)

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


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

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

~~Former~~Registrant’s ~~Name,~~Telephone ~~Former Address and Former Fiscal Year~~Number, ifIncluding ~~Changed~~Area ~~Since~~Code ~~last~~(203) 352-4400 ~~Report.~~

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

Indicate by check mark whether the ~~Registrant~~registrant: is(1) has afiled ~~large~~all ~~accelerated~~reports ~~filer,~~required to be filed by Section 13 or a15(d) ~~non-accelerated~~of ~~filer. See~~the ~~definition~~Securities Exchange Act of ~~“accelerated~~1934 ~~filer~~during ~~and~~the ~~large~~preceding ~~filer~~12 inmonths ~~Rule~~(or ~~12b-2~~for ofsuch shorter period that the ~~Exchange~~registrant ~~Act.~~was ~~(check~~required ~~one~~to file such reports):, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

~~Large~~Indicate by check mark whether the Registrant is a large accelerated ~~filer ¨ Accelerated~~ filer ~~¨ Non~~, or a non-accelerated filer x. See definition of “accelerated filer and large filer in Rule 12b-2 of the Exchange Act. (check one):

~~Indicate~~Large byaccelerated ~~check~~filer ¨ Accelerated ~~mark whether the registrant is a shell company (as defined in Rule 12b~~file ¨ Non-2accelerated ~~of the Exchange Act). Yes~~filer ~~¨ No~~ x

~~APPLICABLE~~Indicate ~~ONLY~~by TOcheck ~~ISSUERS~~mark ~~INVOLVED~~whether INthe ~~BANKRUPTCY~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

~~PROCEEDINGS~~APPLICABLE ~~DURING~~ONLY ~~THE~~TO ~~PRECEEDING~~ISSUERS ~~FIVE~~INVOLVED ~~YEARS:~~IN BANKRUPTCY

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

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

ExcelsiorTable Venture Partners III, LLC’s (the “Company’s”) prospects, including the prospects of its underlying investments, are subject to certain uncertainties and risks. This Quarterly Report on Form10-Q contains certain forward-looking statements within the meaning of the federal securities laws that also involve substantial uncertainties and risks. The future results of the Company and its underlying investments may differ materially from its historical results and actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors. Readers should pay particular attention to the considerations described in the section of this report entitled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations.” Readers should also carefully review the risk factors described in the other documents the Company files, or has filed, from time to time with the Securities and Exchange Commission. Contents

	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Portfolio of Investments at July 31, 2007 and October 31, 2006	1
	Statements of Assets and Liabilities at July 31, 2007 and October 31, 2006	7
	Statements of Operations for the nine months ended July 31, 2007 and July 31, 2006	8
	Statements of Operations for the three months ended July 31, 2007 and July 31, 2006	9
	Statements of Changes in Net Assets for the nine months ended July 31, 2007 and July 31, 2006	10
	Statements of Cash Flows for the nine months ended July 31, 2007 and July 31, 2006	11
	Financial Highlights for the nine months ended July 31, 2007 and July 31, 2006	12
	Notes to Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 2.	Changes in Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Submission of Matters to a Vote of Security Holders	24
Item 5.	Other Information	24
Item 6.	Exhibits and Reports on Form 8-K	24

EXCELSIOR VENTURE PARTNERS III, LLC

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

Portfolio of Investments July 31, 2007 (Unaudited)


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Portfolio of Investments at July 31, 2008 and October 31, 2007	1

	Statements of Assets and Liabilities at July 31, 2008 and October 31, 2007	5

	Statements of Operations for the nine months ended July 31, 2008 and July 31, 2007	6

	Statements of Operations for the three months ended July 31, 2008 and July 31, 2007	7

	Statements of Changes in Net Assets for the nine months ended July 31, 2008 and July 31, 2007	8

	Statements of Cash Flows for the nine months ended July 31, 2008 and July 31, 2007	9

	Financial Highlights for the nine months ended July 31, 2008 and July 31, 2007	10

	Notes to Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23

Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION	25

Item 1.	Legal Proceedings	25

Item 2.	Changes in Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Submission of Matters to a Vote of Security Holders	25

Item 5.	Other Information	25

Item 6.	Exhibits and Reports on Form 8-K	25

PrincipalAmount/Shares		AcquisitionDate ##	Cost	FairValue (Note 1)	% of NetAssets ****
	MONEY MARKET INSTRUMENTS
9,825,000	Federal Home Loan Bank Discount Note 5.16%, 08/01/07		9,823,611	9,823,611	15.42	%
	PUBLIC COMPANIES
	Common Stocks
345	Akamai Tech, Inc. (AKAM)		6,465	11,716	0.02	%
5,346	Hansen Medical, Inc. (HNSN)		21,384	108,470	0.17	%
3,808	Acme Packet, Inc. (APKT)		5,293	42,078	0.07	%
	TOTAL - PUBLIC COMPANIES		33,142	162,264	0.26	%
	PRIVATE COMPANIES **
	Common Stocks #, @
	Capital Equipment
157,396	MIDAS Vision Systems, Inc.	03/03	4,000,000	—	0.00	%
	Enterprise Software
1,000,000	*** Cydelity, Inc.	08/03	1,000	—	0.00	%
	Life Sciences
46,860	Genoptix, Inc.	07/03	1,246,500	10,768	0.02	%
	Optical
1,079,541	OpVista, Inc.	06/06	9,184,031	1,280,541	2.01	%
	TOTAL COMMON STOCKS		14,431,531	1,291,309	2.03	%
	Preferred Stocks #
	Capital Equipment @
933,593	MIDAS Vision Systems, Inc., Series A-1	03/03	1,054,960	—	0.00	%
	Enterprise Software @
19,995,000	*** Cydelity, Inc. Series A	01/04	3,999,000	—	0.00	%
19,702,277	*** Cydelity, Inc. Series A-1	12/04	3,940,456	—	0.00	%
25,535,051	*** Cydelity, Inc. Series A-2	05/06	2,500,009	982,000	1.54	%
8,443,815	LogicLibrary, Inc., Series A	01/02-05/07	3,860,646	3,860,646	6.06	%
3,080,464	LogicLibrary, Inc., Series A-1	08/03-05/04	1,408,450	1,408,450	2.21	%
			15,708,561	6,251,096	9.81	%
	Life Sciences
1,999,999	Archemix Corporation, Series A	08/02-11/03	1,999,999	2,999,999	4.71	%
700,000	Archemix Corporation, Series B	03/04-12/05	700,000	1,050,001	1.65	%
942,481	Genoptix, Inc., Series 1-A @	08/04	1,253,500	1,471,285	2.31	%
1,403,696	Genoptix, Inc., Series 1-B @	08/04	1,253,500	1,576,424	2.47	%
620,580	Genoptix, Inc., Series 1-C @	08/04-01/05	554,178	696,778	1.09	%
728,413	Genoptix, Inc., Series 1-D @	05/05	461,814	631,446	0.99	%
			6,222,991	8,425,933	13.22	%
	Medical Technology @
4,166,667	Tensys Medical, Inc., Series C	03/02	5,000,000	534,354	0.84	%
1,187,500	Tensys Medical, Inc., Series D	05/04	1,425,000	152,291	0.24	%
96,629	Tensys Medical, Inc., Series E	07/06-03/07	115,955	333,166	0.52	%
			6,540,955	1,019,811	1.60	%
	Optical @
956,234	NanoOpto Corporation, Series A-1	10/01-03/02	2,231,212	—	0.00	%
3,023,399	NanoOpto Corporation, Series B	09/03-07/04	1,286,155	—	0.00	%
1,682,470	NanoOpto Corporation, Series C	03/05	733,389	—	0.00	%
1,234,263	NanoOpto Corporation, Series D	05/06	382,622	—	0.00	%
5,683,906	OpVista, Inc., Series AA	06/06-01/07	5,034,406	6,742,193	10.58	%
433,399	OpVista, Inc., Series BB	03/07	491,800	514,094	0.81	%
			10,159,584	7,256,287	11.39	%
	Semi Conductor @
7,000,000	Chips & Systems, Inc., Series A	03/04	3,500,000	—	0.00	%
	Wireless @
4,433,333	Ethertronics, Inc. Series B	06/01-05/04	6,650,000	6,650,000	10.44	%
1,697,957	Ethertronics, Inc. Series C	05/05-07/06	2,546,936	2,546,936	4.00	%
			9,196,936	9,196,936	14.44	%
	TOTAL PREFERRED STOCKS		52,383,987	32,150,063	50.46	%

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

1Portfolio of Investments July 31, 2008 (Unaudited)

Excelsior Venture Partners III, LLC


Principal Amount/ Shares		Acquisition Date ^##	Cost	Fair Value (Note 1)	% of Net Assets^***
	PUBLIC COMPANIES #
	Common Stocks
	Life Sciences
31,542	Genoptix, Inc. (GXDX)	07/03-05/05	94,989	919,449	1.46	%

	TOTAL COMMON STOCK - PUBLIC COMPANIES		94,989	919,449	1.46	%

	PRIVATE COMPANIES **
	Common Stocks #
	Optical @
6,025,312	OpVista, Inc.	06/06-12/07	13,649,206	—	0.00	%

	TOTAL COMMON STOCK - PRIVATE COMPANIES		13,649,206	—	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	2,499,999	3.97	%
700,000	Archemix Corporation, Series B	03/04 - 12/05	700,000	875,000	1.39	%

			2,699,999	3,374,999	5.36	%

	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	%

	Optical @
1,088,532	OpVista, Inc., Series AA	06/06 - 01/07	966,605	551,817	0.88	%
83,001	OpVista, Inc., Series BB	03/07 - 04/07	94,426	44,075	0.07	%
3,418,748	OpVista, Inc., Series CC	12/07	683,075	1,025,624	1.63	%

			1,744,106	1,621,516	2.58	%

	Wireless @
4,433,333	Ethertronics, Inc. Series B	06/01 - 05/04	6,650,000	6,650,000	10.57	%
1,697,957	Ethertronics, Inc. Series C	05/05 - 04/07	2,546,936	2,546,936	4.05	%

			9,196,936	9,196,936	14.62	%

	TOTAL PREFERRED STOCKS - PRIVATE COMPANIES		26,129,799	14,193,451	22.56	%

	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	675	0.00	%

	TOTAL WARRANTS		675	675	0.00	%

	TOTAL - PRIVATE COMPANIES		39,779,680	14,194,126	22.56	%

~~Portfolio~~The ofaccompanying ~~Investments~~notes ~~July 31,~~are ~~2007~~an ~~(Unaudited)~~integral part of these Financial Statements.

PrincipalAmount/Shares		AcquisitionDate ##	Cost	FairValue(Note 1)		% of NetAssets ****
	PRIVATE COMPANIES **, - (continued)
	Notes @
	Optical
237,321	NanoOpto Corp, Bridge Note		237,320		160,000	0.25	%
	Semi-Conductor
1,441,133	Chips & Systems, Inc., 6.00% Bridge Note, March 2005 #	11/04-02/05	1,441,133		—	0.00	%
	TOTAL NOTES		1,678,453		160,000	0.25	%
	Warrants #, @
	Optical
229,410	NanoOpto Corp. Series C (expiration date 12/09)	12/04	—		—	0.00	%
	Wireless
281,667	Ethertronics, Inc. Series B (expiration date 09/07)	09/02-08/03	—		—	0.00	%
214,073	Ethertronics, Inc. Series C (expiration date 01/09)	05/05-07/06	—		—	0.00	%
			—		—	0.00	%
	TOTAL WARRANTS		—		—	0.00	%
	TOTAL - PRIVATE COMPANIES		68,493,971		33,601,372	52.75	%
	PRIVATE INVESTMENT FUNDS **, #
	Advanced Technology Ventures VII, L.P.	08/01-05/07	1,704,664		1,801,658	2.83	%
	Burrill Life Sciences Capital Fund	12/02-06/07	1,895,106		1,629,459	2.56	%
	CHL Medical Partners II, L.P.	01/02-05/07	1,286,856		1,258,316	1.98	%
	CMEA Ventures VI, L.P.	12/03-06/07	1,620,000		2,186,514	3.43	%
	Morgenthaler Partners VII, L.P.	07/01-07/07	1,689,654		1,576,620	2.47	%
	Prosepect Venture Partners II, L.P.	06/01-05/07	1,647,365		2,020,641	3.17	%
	Sevin Rosen Fund IX, L.P.	10/04-06/07	1,680,000		1,359,101	2.13	%
	Tallwood II, L.P.	12/02-06/07	2,140,443		1,578,720	2.49	%
	Valhalla Partners, L.P.	10/03-07/07	2,284,016		1,732,150	2.72	%
	TOTAL PRIVATE INVESTMENT FUNDS		15,948,104		15,143,179	23.78	%
	INVESTMENT COMPANIES
	Dreyfus Government Cash Management Fund Institutional Shares		984,128		984,128	1.53	%
	TOTAL INVESTMENTS		95,282,956		59,714,554	93.74	%
	OTHER ASSETS & LIABILITIES (NET)				3,989,414	6.26	%
	NET ASSETS			$	63,703,968	100.00	%

**Table Restricted as to public resale. Total cost of restricted securities at July 31, 2007 aggregated $84,442,077. Total fair value of restricted securities owned at July 31, 2007 was $48,744,551 or 76.52% of net assets.Contents

#Excelsior ~~Non-income~~Venture ~~producing~~Partners ~~securities.~~III, LLC

@Portfolio ~~At July 31, 2007, the Company owned 5% or more~~ of ~~the~~Investments ~~company’s outstanding shares thereby making the company an affiliate as defined by the Investment Company Act of 1940, as amended. Total fair value of affiliated securities owned at~~ July 31, ~~2007~~2008 (~~including investments in controlled affiliates~~Unaudited) ~~was $29,551,372.~~

*** At July 31, 2007, the Company owned 25% or more of the company’s outstanding shares thereby making the company a controlled affiliate as defined by the Investment Company Act of 1940, as amended. Total fair value of controlled affiliated securities owned at July 31, 2007 was $982,000.


Percent Owned ^&			Acquisition Date ^##	Cost	Fair Value (Note 1)		% of Net Assets ^***
		PRIVATE INVESTMENT FUNDS , #**
0.37	%	Advanced Technology Ventures VII, L.P.	08/01-07/08	1,852,904		2,007,214	3.19	%
1.55	%	Burrill Life Sciences Capital Fund	12/02-05/08	2,077,902		1,760,175	2.80	%
1.34	%	CHL Medical Partners II, L.P.	01/02-03/08	1,541,857		1,635,364	2.60	%
1.02	%	CMEA Ventures VI, L.P. (Note 9)	12/03-06/08	2,133,017		4,154,109	6.60	%
0.35	%	Morgenthaler Partners VII, L.P.	07/01-10/07	1,733,167		1,664,042	2.64	%
0.57	%	Prospect Venture Partners II, L.P.	06/01-03/08	1,414,275		1,704,793	2.71	%
0.97	%	Sevin Rosen Fund IX, L.P.	10/04-07/08	1,596,609		1,681,259	2.67	%
2.36	%	Tallwood II, L.P.	12/02-05/08	2,740,443		2,362,292	3.76	%
1.64	%	Valhalla Partners, L.P.	10/03-07/08	2,074,835		2,363,363	3.76	%

		TOTAL PRIVATE INVESTMENT FUNDS		17,165,009		19,332,611	30.73	%


Shares
		INVESTMENT COMPANIES
984,128		Dreyfus Government Cash Management Fund Institutional Shares		984,128		984,128	1.56	%

		TOTAL INVESTMENTS		58,023,806		35,430,314	56.31	%

		OTHER ASSETS & LIABILITIES (NET)				27,489,432	43.69	%

		NET ASSETS			$	62,919,746	100.00	%

##* ~~Disclosure~~LogicLibrary, isInc. ~~required~~merged with SOA Software, Inc. on May 1, 2008. Shares of 4,542,763 include 4,088,487 held by the Company and 454,276 held in escrow for ~~restricted~~the ~~securities~~benefit ~~only~~of the Company.

**** ~~Based~~Restricted onas ~~Fair~~to ~~Value~~public resale and illiquid securities. Total cost of restricted and illiquid securities at July 31, 2008 was $56,944,689. Total fair value of restricted and illiquid securities owned at July 31, 2008 was $33,526,737 or 53.29% of net assets.

~~The~~*** ~~accompanying~~Based ~~notes~~on ~~are~~fair ~~an integral part of these Financial Statements~~value.

2@ At July 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 July 31, 2008 (including investments in controlled affiliates) was $10,819,127 or 17.20% of Net Assets.

~~Excelsior~~# ~~Venture~~Non-income ~~Partners~~producing ~~III, LLC~~ securities.

~~Portfolio~~## ofDisclosure ~~Investments~~is atfor ~~October 31,~~restricted ~~2006~~securities ~~(Audited)~~ only.

PrincipalAmount/Shares		AcquisitionDate ##	Value (Note 1)
	MONEY MARKET INSTRUMENTS — 17.71%
$1,500,000	Federal Farm Credit Bank Discount Note 5.07%, 11/01/06		$	1,500,000
6,890,000	Federal Farm Credit Bank Discount Note 5.09%, 11/13/06			6,878,310
2,000,000	Federal Home Loan Bank Discount Note 5.09%, 11/01/06			2,000,000
3,000,000	Federal Home Loan Bank Discount Note 5.065%, 11/01/06			3,000,000
	TOTAL MONEY MARKET INSTRUMENTS (Cost $ 13,378,310)			13,378,310
	PRIVATE COMPANIES ** — 64.82%
	Common Stocks #, @— 1.50%
	Capital Equipment — 0.00%
157,396	MIDAS Vision Systems, Inc.	03/03		—
	Enterprise Software – 0.00%
1,000,000	***Cydelity, Inc.	01/04		—
	Life Sciences – 0.00%
46,860	Genoptix, Inc.	07/03		—
	Optical – 1.50%
1,079,541	OpVista, Inc,.	06/06		1,138,542
	Semiconductor – 0.00%
40,026	Silverback Systems, Inc.	04/06		—
	TOTAL COMMON STOCKS (Cost $ 19,190,611)			1,138,542
	Preferred Stocks # — 61.39%
	Capital Equipment @ — 0.00%
933,593	MIDAS Vision Systems, Inc., Series A-1
		03/03		—
	Enterprise Software @ — 25.82%
19,995,000	***Cydelity, Inc., Series A	01/04		—
19,702,277	***Cydelity, Inc., Series A-1	05/06		3,940,456
25,535,051	***Cydelity, Inc., Series A-2	05/06		2,500,009
7,762,821	***LogicLibrary, Inc., Series A	01/02,12/04,02/05,08/05,03/06,08/06,09/06		3,549,296
3,080,464	***LogicLibrary, Inc., Series A-1	08/03 & 05/04		1,408,450
46,362,656	***Pilot Software Inc., Series A	05/02, 04/03, 06/05		8,110,096
				19,508,307

&	Represents fair value of the Fund’s investment as a percentage of Underlying Fund’s total capital.

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

ExcelsiorTable Ventureof Partners III, LLC Contents

~~Portfolio~~Excelsior ofVenture ~~Investments~~Partners ~~at October 31~~III, ~~2006~~LLC ~~(Audited)(continued)~~

Shares/PrincipalAmount		AcquisitionDate ##	Value(Note 1)
	PRIVATE COMPANIES **, — (continued)
	Preferred Stocks # — (continued)
	Life Sciences — 7.43%
1,999,999	Archemix Corporation, Series A	08/02, 01/03, 11/03	1,999,999
700,000	Archemix Corporation, Series B	03/04, 09/04, 12/05	700,000
942,481	Genoptix, Inc., Series 1-A @	08/04	950,822
1,403,696	Genoptix, Inc., Series 1-B @	08/04	950,822
620,580	Genoptix, Inc., Series 1-C @	08/04,01/05	554,178
728,413	Genoptix, Inc., Series 1-D @	05/05	461,815
			5,617,636
	Medical Technology @ — 3.21%
4,166,667	Tensys Medical, Inc., Series C	03/02	1,887,160
1,187,500	Tensys Medical, Inc., Series D	05/04	537,840
			2,425,000
	Optical @ — 11.40%
956,234	NanoOpto Corporation, Series A-1	10/01&3/02	840,912
		09/03, 11/03,
3,023,399	NanoOpto Corporation, Series B	01/04, 07/04	1,286,155
1,682,470	NanoOpto Corporation, Series C	03/05	733,389
1,234,263	NanoOpto Corporation, Series D	05/06	382,622
5,089,790	OpVista, Inc., Series AA	06/06, 08/06	5,367,967
			8,611,045
	Semi-Conductor @ — 2.12%
7,000,000	Chips & Systems, Inc., Series A	03/04	—
772,503	Silverback Systems, Inc., Series A-2	04/06	—
559,993	Silverback Systems, Inc., Series B	04/06	1,600,000
			1,600,000
	Wireless @ — 11.41%
4,433,333	Ethertronics, Inc., Series B	06/01, 09/02,07/03, 05/04	6,650,000
1,316,793	Ethertronics, Inc., Series C	05/05, 10/05, 07/06	1,975,190
			8,625,190
	TOTAL PREFERRED STOCKS (COST $62,048,095)		46,387,178

Portfolio of Investments October 31, 2007 (Audited)

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


Principal Amount/ Shares		Acquisition Date ^##	Cost	Fair Value (Note 1)	% of Net Assets ^***
	MONEY MARKET INSTRUMENTS
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 - PUBLIC COMPANIES COMMON STOCK		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	%

4The accompanying notes are an integral part of these Financial Statements.

~~Excelsior~~3 ~~Venture Partners III, LLC~~

PortfolioTable of Investments October 31, 2006 — (Audited)(continued) Contents

Shares/PrincipalAmount		AcquisitionDate ##	Value (Note 1)
	PRIVATE COMPANIES **, — (continued)
	Notes@ — 1.93%
	Enterprise Software — 1.86%
$1,404,600	***Pilot Software Inc., 9.00% Bridge Note	08/06, 10/06	1,404,600
	Medical Technology — 0.07%
$52,017	Tensys Medical, Inc., 8.00% Bridge Note	07/06	52,017
	Semi-Conductor — 0.00%
$1,441,133	Chips & Systems, Inc., 6.00% Bridge Note, March 2005 #	11/04, 01/05, 02/05	—
	TOTAL NOTES (COST $2,897,750)		1,456,617
	Warrants #, @ — 0.00%
	Optical — 0.00%
229,410	NanoOpto Corp. Series C (expiration date 12/09)	12/04	—
	Wireless — 0.00%
281,667	Ethertronics, Inc. Series B (expiration date 09/07)	09/02, 07/03, 08/03	—
214,073	Ethertronics, Inc. Series C (expiration date 01/09)	05/05, 10/05, 07/06	—
	TOTAL WARRANTS (Cost $0)		—
	TOTAL — PRIVATE COMPANIES (Cost $84,136,456)		48,982,337
Percent Owned
	PRIVATE INVESTMENT FUNDS **, # — 16.52%
0.39%	Advanced Technology Ventures VII, L.P.	08/01-09/06	1,342,895
1.58%	Burrill Life Sciences Capital Fund	12/02-09/06	1,311,766
1.35%	CHL Medical Partners II, L.P.	01/02-10/06	1,024,130
1.04%	CMEA Ventures VI, L.P.	12/03-08/06	1,086,085
0.36%	Morgenthaler Partners VII, L.P.	07/01-10/06	1,620,474
0.58%	Prospect Ventures Partners II, L.P.	06/01-10/06	1,801,556
0.98%	Sevin Rosen Fund IX, L.P.	10/04-09/06	1,151,676
2.36%	Tallwood II, L.P.	12/02-05/06	1,513,112
1.70%	Valhalla Partners, L.P.	10/03-06/06	1,632,346
	TOTAL PRIVATE INVESTMENT FUNDS (Cost $13,780,450)		12,484,040

Excelsior Venture Partners III, LLC

~~The~~Portfolio ~~accompanying notes are an integral part~~ of ~~these~~Investments ~~Financial~~October 31, ~~Statements.~~2007 (Audited)


Principal Amount/ Shares			Acquisition Date ^##	Cost	Fair Value (Note 1)		% of Net Assets ^***
		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	%


Percent Owned
		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 COMPANIES
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	%

~~Excelsior~~** ~~Venture~~Restricted ~~Partners~~as ~~III~~to public resale and illiquid securities. Total cost of restricted and illiquid securities at October 31, ~~LLC~~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.

~~Portfolio~~# ofNon-income ~~Investments~~producing ~~October 31, 2006 — (Audited)(continued)~~ securities.

Shares/PrincipalAmount		AcquisitionDate ##	Value (Note 1)
	INVESTMENT COMPANIES – 1.38%
1,044,128	Dreyfus Government Cash Management Fund Institutional Shares (Cost $1,044,128)		1,044,128
	TOTAL INVESTMENTS (Cost $112,339,344) – 100.43%		75,888,815
	OTHER ASSETS & LIABILITIES (NET) –(0.43%)		(326,723)
	NET ASSETS – 100.00%		$75,562,092

At October 31, 2007, 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. Total fair value of affiliated securities owned at October 31, 2007 (including investments in controlled affiliates) was $25,066,204 or 34.64% of Net Assets

**## ~~Restricted~~Disclosure asis torequired ~~public~~for ~~resale. Acquired between June 1, 2001 and October 31, 2006. Total cost of~~ restricted securities ~~at October 31, 2006 aggregated $97,916,906~~only. ~~Total value of restricted securities owned at October 31, 2006 was $61,466,377 or 81.35% of net assets.~~

#*** ~~Non-income~~Based ~~producing~~on ~~securities~~fair value.

@The accompanying Atnotes ~~October~~are ~~31, 2006, the Company owned 5% or more of the company’s outstanding voting shares thereby making the company~~ an ~~affiliate~~integral aspart ~~defined by the Investment Company Act~~ of ~~1940,~~these asFinancial ~~amended~~Statements. ~~Total value of affiliated securities owned at October 31, 2006 (including investments in controlled affiliates) was $46,282,338.~~

~~***~~4 At October 31, 2006, the Company owned 25% or more of the company’s outstanding voting shares or a controlling interest thereby making the company a controlled affiliate as defined by the Investment Company Act of 1940. Total value of controlled affiliated securities owned at October 31, 2006 was $20,912,907.

##Table Disclosureof is required for restricted securities only.Contents

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

6Statements of Assets and Liabilities

Excelsior Venture Partners III, LLC


	July 31, 2008 (Unaudited)			October 31, 2007 (Audited)
ASSETS:
Unaffiliated Issuers at fair value (Cost $26,625,260 and $33,138,256 respectively)	$	24,611,187		$	42,971,731
Non-Controlled Affiliated Issuers at fair value (Cost $31,398,546 and $41,826,339 respectively)		10,819,127			25,066,204

Investments, at fair value (Cost $58,023,806 and $74,964,595 respectively) (Note 2)		35,430,314			68,037,935

Cash and cash equivalents (Note 2)		21,130,822			26,240
Restricted cash (Note 2)		2,986,779			2,672,393
Receivables from sale of investments		3,939,128			2,275,482
Interest receivable		13,695			4,019
Prepaid insurance		7,046			—
Other assets		—			1,945

Total Assets		63,507,784			73,018,014

LIABILITIES:
Management fees payable (Note 3)		158,150			182,802
Professional fees payable		171,414			153,475
Deferred income (Note 2)		203,277			258,809
Administration fees payable (Note 3)		19,167			28,750
Board of Managers’ fees payable (Note 3)		11,000			19,500
Custody fees payable (Note 3)		8,942			17,002
Other payables		16,088			15,477

Total Liabilities		588,038			675,815

NET ASSETS	$	62,919,746		$	72,342,199

NET ASSETS consist of:
Members’ Capital ⁽¹⁾	$	85,513,238		$	79,268,859
Accumulated unrealized (depreciation) on investments		(22,593,492	)		(6,926,660	)

Total Net Assets	$	62,919,746		$	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	$	213.14		$	245.05

~~Statement~~(1) ofMembers’ ~~Assets~~Capital includes the accumulated net investment (loss), accumulated realized losses, contributions from and ~~Liabilities~~distributions to Members.

	July 31, 2007(Unaudited)			October 31, 2006(Audited)
ASSETS:
Unaffiliated Issuers at value (Cost $29,488,984 and $30,902,887 respectively)	$	30,163,182		$	29,606,477
Controlled Affiliated Issuers at value (Cost $10,440,465 and $24,912,907 respectively)		982,000			20,912,907
Non-Controlled Affiliated Issuers at value (Cost $55,353,507 and $56,523,550 respectively)		28,569,372			25,369,431
Investments, at value (Cost $95,282,956 and $112,339,344 respectively) (Note 1)		59,714,554			75,888,815
Cash and cash equivalents (Note 1)		2,571			2,934
Investment proceeds receivable		1,897,928			—
Restricted cash (Note 1)		2,672,394			—
Interest receivable		4,274			24,939
Prepaid insurance		8,838			1,378
Receivable from affiliates		4,242			—
Other receivables		1,945			1,945
Total Assets		64,306,746			75,920,011
LIABILITIES:
Deferred income (Note 1)		258,809			—
Management fees payable (Note 2)		160,975			190,458
Professional fees payable		128,185			87,000
Administration fees payable (Note 2)		30,944			53,961
Board of Managers’ fees payable (Note 2)		16,000			22,000
Other payables		7,865			4,500
Total Liabilities		602,778			357,919
NET ASSETS	$	63,703,968		$	75,562,092
NET ASSETS consist of:
Accumulated net realized (loss)	$	(19,399,620	)	$	—
Accumulated net investment (loss)		(7,836,225	)		—
Members’ Capital, net of distributions		126,508,215			112,012,621
Accumulated net unrealized (depreciation) on investments		(35,568,402	)		(36,450,529	)
Total Net Assets	$	63,703,968		$	75,562,092
Units of Membership Interest Outstanding (Unlimited Number of no par value units authorized)		295,210			295,210
NET ASSET VALUE PER UNIT	$	215.79		$	255.96

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

~~The~~5 ~~accompanying notes are an integral part of these Financial Statements.~~

7Table of Contents

Excelsior Venture Partners III, LLC

~~Statement~~Statements of Operations (Unaudited)

	Nine Months Ended
	Nine Months Ended July 31,
	July 31, 2007			July 31, 2006
	2008			2007
INVESTMENT INCOME:
Interest income from unaffiliated investments	$	(7,538	)	$	792,312
Interest income/(loss) from unaffiliated investments (1)	$	218,090		$	(7,538	)
Interest income from short-term investments		484,578			—
Interest income from affiliated investments		9,518			484,578
Interest income from affiliated investments		—			198,447
Dividend income from unaffiliated investments		23,321			38,997
Dividend income from short-term investments		38,997			28,137
Total Investment Income		250,929			516,037
Total Investment Income		516,037			1,018,896
EXPENSES:
Management fees (Note 2)		509,020			1,040,862
Management Investment Adviser fees (Note 3)		495,945			509,020
Professional fees		~~287~~311,~~621~~402			~~196~~287,~~637~~621
Board of Managers’ fees (Note 2)		66,000			68,500
Administration fees (Note 3)		86,250			86,250
Administration fees (Note 2)		86,250			103,507
Board of Managers’ fees (Note 3)		67,500			66,000
Insurance expense		23,459			33,117
Custodian fees (Note 3)		21,034			22,500
Custodian fees (Note 2)		22,500			25,401
Insurance expense		19,111			23,459
Miscellaneous fees		23,488			22,150
Miscellaneous expenses		30,279			23,488
Total Expenses		1,~~018~~031,~~338~~521			1,~~490~~018,~~174~~338
NET INVESTMENT (LOSS)		(~~502~~780,~~301~~592	)		(~~471~~502,~~278~~301	)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 1)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 2)
Net realized (loss) on affiliated investments		(45,~~377~~143,~~728~~365	)		(64,~~548~~377,728	)
Net realized gain/(loss) on unaffiliated investments		405,658			(4,611,520	)
Net realized gain on unaffiliated investments		15,884,672			405,658
Net change in unrealized appreciation/(depreciation) on investments		882,127			(9,806,680	)
Net realized gain from payments by affiliates (Note 3)		268,999			—
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS		(3,089,943	)		(14,424,748	)
Net change in unrealized (depreciation)/appreciation on investments		(15,666,832	)		882,127
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(3,592,244	)	$	(14,896,026	)
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS		(4,656,526	)		(3,089,943	)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(5,437,118	)	$	(3,592,244	)

~~The~~(1) ~~accompanying~~Includes ~~notes~~interest ~~are~~from anshort-term ~~integral part of these Financial Statements~~investments.

8The accompanying notes are an integral part of these Financial Statements.

~~Excelsior~~6 ~~Venture Partners III, LLC~~

StatementTable of Operations (Unaudited) Contents

	Three Months Ended
	July 31, 2007			July 31, 2006
INVESTMENT INCOME:
Interest income from unaffiliated investments	$	(7,538	)	$	225,022
Interest income from short-term investments		131,096			—
Interest income from affiliated investments		—			1,780
Dividend income from short-term investments		12,402			12,821
Total Investment Income		135,960			239,623
EXPENSES:
Management fees (Note 2)		160,975			197,744
Professional fees		77,682			80,246
Board of Managers’ fees (Note 2)		22,000			38,747
Administration fees (Note 2)		28,750			38,073
Insurance expense		7,906			11,052
Custodian fees		7,500			7,500
Miscellaneous fees		8,488			5,750
Total Expenses		313,301			379,112
NET INVESTMENT (LOSS)		(177,341	)		(139,489	)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 1)
Net realized (loss) on affiliated investments		(258,809	)		(4,627,916	)
Net realized gain on unaffiliated investments		396,333			2
Net change in unrealized (depreciation) on investments		(2,859,433	)		(6,867,910	)
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS		(2,721,909	)		(11,495,824	)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(2,899,250	)	$	(11,635,313	)

Excelsior Venture Partners III, LLC

~~The~~Statements ~~accompanying notes are an integral part~~ of ~~these~~Operations ~~Financial~~(Unaudited) ~~Statements.~~


	Three Months Ended July 31,
	2008			2007
INVESTMENT INCOME:
Interest income from unaffiliated investments ⁽¹⁾	$	34,577		$	123,558
Dividend income from unaffiliated investments		5,490			12,402

Total Investment Income		40,067			135,960

EXPENSES:
Management Investment Adviser fees (Note 3)		158,150			160,975
Professional fees		138,514			77,682
Administration fees (Note 3)		28,750			28,750
Board of Managers’ fees (Note 3)		21,500			22,000
Custodian fees (Note 3)		6,401			7,500
Insurance expense		6,647			7,906
Miscellaneous expenses		7,924			8,488

Total Expenses		367,886			313,301

NET INVESTMENT (LOSS)		(327,819	)		(177,341	)

NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 2)
Net realized (loss) on affiliated investments		(117,008	)		(258,809	)
Net realized gain on unaffiliated investments		13,521,982			396,333
Net realized gain from payments by affiliates (Note 3)		268,999			—
Net change in unrealized (depreciation) on investments		(10,673,963	)		(2,859,433	)

NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS		3,000,010			(2,721,909	)

NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	2,672,191		$	(2,899,250	)

~~Excelsior~~(1) ~~Venture~~Includes ~~Partners~~interest ~~III,~~from ~~LLC~~short-term investments.

~~Statement~~The accompanying ofnotes ~~Changes~~are inan ~~Net~~integral ~~Assets~~part ~~(Unaudited)~~of these Financial Statements.

	Nine Months Ended
	July 31, 2007			July 31, 2006
OPERATIONS:
Net investment (loss)	$	(502,301	)	$	(471,278	)
Net realized (loss) on investments		(3,972,070	)		(4,618,068	)
Net change in unrealized appreciation/(depreciation) on investments		882,127			(9,806,680	)
Net (decrease) in net assets resulting from operations		(3,592,244	)		(14,896,026	)
DISTRIBUTION TO MEMBERS:
Distribution to Members		(8,265,880	)		—
Total Distributions		(8,265,880	)		—
NET (DECREASE) IN NET ASSETS		(11,858,124	)		(14,896,026	)
NET ASSETS:
Beginning of period		75,562,092			93,348,847
End of period		63,703,968		$	78,452,821

TheTable accompanying notes are an integral part of these Financial Statements. Contents

10Excelsior Venture Partners III, LLC

~~Excelsior~~Statements ~~Venture~~of ~~Partners~~Changes ~~III,~~in ~~LLC~~Net Assets (Unaudited)

Statement of Cash Flows (Unaudited)


	Nine Months Ended July 31,
	2008			2007
OPERATIONS:
Net investment (loss)	$	(780,592	)	$	(502,301	)
Net realized gain/(loss) on investments		11,010,306			(3,972,070	)
Net change in unrealized (depreciation)/appreciation on investments		(15,666,832	)		882,127

Net (decrease) in net assets resulting from operations		(5,437,118	)		(3,592,244	)

DISTRIBUTION TO MEMBERS:
Distribution to Members		(3,985,335	)		(8,265,880	)

Total Distributions		(3,985,335	)		(8,265,880	)

Net (decrease) in Net Assets		(9,422,453	)		(11,858,124	)

NET ASSETS:
Beginning of period		72,342,199			75,562,092

End of period	$	62,919,746		$	63,703,968

	Nine Months Ended
	July 31, 2007			July 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (decrease) in net assets resulting from operations	$	(3,592,244	)	$	(14,896,026	)
Adjustments to reconcile net (decrease) in net assets resulting from operations to net cash provided by/(used in) operating activities:
Net change in unrealized (appreciation)/depreciation on investments		(882,127	)		9,806,680
Purchase of investments		(5,507,172	)		(13,712,456	)
Proceeds received from the sale of investments and distributions received from private investment funds		14,976,791			2,202,944
Proceeds from short-term investments - Net		3,614,699			11,311,332
Net realized loss on investments		3,972,070			4,618,068
(Increase) in investment proceeds receivable		(1,897,928	)		—
(Increase) in restricted cash		(2,672,394	)		—
Decrease in interest receivable		20,665			167,761
(Increase) in receivable from affiliates		(4,242	)		—
Decrease in other receivable		—			213,571
(Increase) in prepaid insurance		(7,460	)		(9,914	)
Increase in deferred income payable		258,809			—
(Decrease) in management fee payable		(29,483	)		(271,551	)
Increase in professional fees payable		41,185			—
(Decrease)/increase in Board of Manager’s fees payable		(6,000	)		4,000
(Decrease) in administration fees payable		(23,017	)		—
Increase/(decrease) in other payable		3,365			(7,333	)
Net cash provided by/(used in) operating activities		8,265,517			(572,924	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash distributions to unitholders		(8,265,880	)		—
Net cash (used in) financing activities		(8,265,880	)		—
Net (decrease) in cash		(363	)		(572,924	)
Cash and cash equivalents at beginning of period		2,934			574,146
Cash and cash equivalents at end of period	$	2,571		$	1,222
SUPPLIMENTAL INFORMATION
Non-cash distributions received from private investment funds	$	171,233			—

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

~~The~~8 ~~accompanying notes are an integral part of these Financial Statements.~~

11Table of Contents

Excelsior Venture Partners III, LLC

~~Financial~~Statements ~~Highlights~~of Cash Flows (Unaudited)

Per Unit Operating Performance: (1)


	Nine Months Ended July 31,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (decrease) in net assets resulting from operations	$	(5,437,118	)	$	(3,592,244	)
Adjustments to reconcile net increase/(decrease) in net assets resulting from operations to net cash provided by operating activities:
Net change in unrealized depreciation/(appreciation) on investments		15,666,832			(882,127	)
Purchase of investments		(3,037,411	)		(5,507,172	)
Proceeds received from the sale of investments and distributions received from private investment funds		20,606,720			14,976,791
Net realized loss on investments		(11,010,306	)		3,972,070
Proceeds from short-term investments maturing, net		10,383,731			3,614,699
(Increase) in restricted cash		(314,386	)		(2,672,394	)
(Increase) in receivables from sale of investments		(1,663,646	)		(1,897,928	)
(Increase)/decrease in interest receivable		(9,676	)		20,665
(Increase) in receivable from affiliates		—			(4,242	)
(Increase) in prepaid insurance		(7,046	)		(7,460	)
(Decrease)/increase in deferred income		(55,532	)		258,809
(Decrease) in management fee payable		(24,652	)		(29,483	)
Increase in professional fee payable		17,939			41,185
(Decrease) in Board of Managers’ fees payable		(8,500	)		(6,000	)
(Decrease) in administration fees payable		(9,583	)		(23,017	)
(Decrease) in custody fees payable		(8,060	)		—
Increase in other payables		611			3,365

Net cash provided by operating activities		25,089,917			8,265,517

CASH FLOWS FOR FINANCING ACTIVITIES
Cash distributions to Members		(3,985,335	)		(8,265,880	)

Net cash (used in) financing activities		(3,985,335	)		(8,265,880	)

Net increase/(decrease) in cash		21,104,582			(363	)

Cash and cash equivalents at beginning of period		26,240			2,934

Cash and cash equivalents at end of period	$	21,130,822		$	2,571

SUPPLEMENTAL INFORMATION
Non-cash distributions received from private investment funds	$	563,864		$	171,233

	Nine Months Ended
	July 31, 2007			July 31, 2006
NET ASSET VALUE, BEGINNING OF PERIOD	$	255.96		$	316.21
INCOME FROM INVESTMENT OPERATIONS:
Net investment (loss)		(1.70	)		(1.60	)
Net realized and unrealized (loss) on investment transactions		(10.47	)		(48.86	)
Net (decrease) in net assets resulting from operations		(12.17	)		(50.46	)
DISTRIBUTION TO MEMBERS:
Distribution to Members		(28.00	)		—
NET DECREASE IN NET ASSETS:		(40.17	)		(50.46	)
NET ASSET VALUE, END OF PERIOD	$	215.79		$	265.75
TOTAL NET ASSET VALUE RETURN (3),(4)		(5.04	)%		(15.96	)%
RATIOS AND SUPPLEMENTAL DATA (5)
Net Assets, End of Period (000’s)	$	63,704		$	78,453
Ratios to Average Net Assets: (2)
Expenses		1.92	%		2.24	%
Net Investment (loss)		(0.95	)%		(0.71	)%
Portfolio Turnover Rate (3)		9.94	%		3.42	%

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

~~(1)~~9 ~~Selected data for a unit of membership interest outstanding throughout each period.~~

(2)Table Annualizedof for period less than a year.Contents

~~(3)~~Excelsior ~~Not~~Venture ~~annualized~~Partners ~~for~~III, ~~periods~~LLC ~~less than a year.~~

Financial Highlights (4Unaudited) Total net asset 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 value of total investment return is not presented.

(5) Income and expense ratios do not reflect the Company’s proportionate share of net investment income/(loss) and expenses, including any performance-based fees, of the Private Investment Funds.


	Nine Months Ended July 31,
	2008	2007
Per Unit Operating Performance: (1)
NET ASSET VALUE, BEGINNING OF PERIOD	$245.05	$255.96
INCOME FROM INVESTMENT OPERATIONS:
Net investment (loss)	(2.64)	(1.70)
Net realized and unrealized (loss) on investment transactions	(15.77)	(10.47)

Net (decrease) in net assets resulting from operations	(18.41)	(12.17)

Total Distributions to Members	(13.50)	(28.00)

NET ASSET VALUE, END OF PERIOD	$213.14	$215.79

TOTAL NET ASSET VALUE RETURN (2), (5)	(7.27)%	(5.04)%
RATIOS AND SUPPLEMENTAL DATA (3)
Net Assets, End of Period (000’s)	$62,920	$63,704
Ratios to Average Net Assets: (4)
Gross Expenses	1.98 %	1.92 %
Net Expenses	1.98 %	1.92 %
Net Investment (loss)	(1.50)%	(0.95)%
Portfolio Turnover Rate (5), (6)	6.18 %	9.94 %

~~The~~(1) ~~accompanying~~Selected ~~notes~~data ~~are~~for ana ~~integral~~unit ~~part~~ of ~~these~~membership ~~Financial~~interest ~~Statements.~~outstanding throughout each period.

12(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. In the nine months ended July 31, 2008, 0.40% of the Company’s total net asset value 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 (7.67)%.

~~EXCELSIOR~~(3) ~~VENTURE~~Income ~~PARTNERS~~and ~~III~~expense ratios do not reflect the Company’s proportionate share of net investment income/(loss) and expenses, ~~LLC~~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. 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.

~~NOTES~~(4) TOAnnualized ~~FINANCIAL~~for ~~STATEMENTS~~a ~~(Unaudited)~~period less than a year.

~~July 31,~~(5) ~~2007~~Not annualized for a period less than a year.

~~Note~~(6) 1Distributions —from ~~Organization~~Private ~~and Significant~~Investment ~~Accounting~~Funds ~~Policies~~are included in the portfolio turnover rate.

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 of 1940, as amended (the “1940 Act”). The ~~Company~~accompanying ~~was~~notes ~~established~~are asan aintegral ~~Delaware~~part ~~limited liability company on February 18, 2000. The Company commenced operations on April 5, 2001. The duration~~ of ~~the~~these ~~Company~~Financial 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 practicableStatements.

As10 a BDC, the Company must be primarily engaged in the business of furnishing capital and making available managerial assistance to companies that generally do not have ready access to capital through conventional financial channels. The Company’s investment objective is to achieve long-term capital appreciation primarily by investing in 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 (as defined below) believes offer significant long-term capital appreciation potential. Venture capital and private investment 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.

CostsTable incurred in connection with the initial offering of units totaled $1,468,218. Each member’s pro rata share of these costs was deducted from his, her or its initial capital contribution. Contents

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

~~The~~NOTES ~~interim~~TO ~~financial~~FINANCIAL ~~data~~STATEMENTS as of July 31, 2007 and for the three and nine months ended July 31, 2007 and July 31, 2006 is unaudited; however, in the opinion of the Company, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods.

A.July 31, ~~Cash~~2008 ~~and Cash Equivalents:~~

~~Cash~~Note ~~and~~1 ~~cash~~— ~~equivalents~~Organization ~~consist of deposits with banks. All highly liquid investments are listed separately on the Portfolio of Investments.~~

BExcelsior 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”). ~~Restricted~~The ~~Cash:~~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.

~~Restricted~~As ~~cash~~a BDC, ifthe ~~any,~~Company ~~consisted~~must ofbe ~~proceeds~~primarily ~~from~~engaged in the ~~sales~~ business of furnishing capital and making available managerial assistance to companies that generally do not have ready access to capital through conventional financial channels. The Company’s investment objective is to achieve long-term capital ~~investments~~appreciation ~~held~~primarily by ~~counterparties~~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 (as ~~collateral~~defined ~~for~~below) ~~certain~~believes ~~contingent~~offer ~~claims~~significant ~~for~~long-term capital appreciation potential. Venture capital and private investment companies are companies in which the equity is closely held by company founders, management and/or a ~~specified~~limited ~~period~~number of ~~time~~institutional investors. The Company does not have the right to demand that such equity securities be registered.

13Note 2 — Significant Accounting Policies

~~Note~~Costs incurred in connection with the initial offering of units totaled $1,468,218. —Each ~~Organization~~member’s ~~and~~pro ~~Significant~~rata ~~Accounting~~share ~~Policies~~of ~~(continued)~~these costs was deducted from his, her or its initial capital contribution.

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

The ~~Company~~interim ~~values~~financial ~~portfolio~~data ~~securities quarterly and at such other times~~ as, ~~in the Company’s Board~~ of ~~Managers’ (the “Board” or “Board of Managers” or “Managers”) view~~July 31, ~~circumstances~~2008 ~~warrant. Securities~~and for ~~which market quotations are readily available generally will be valued at~~ the ~~last~~nine ~~sale~~and ~~price~~three onmonths ~~the~~ended ~~date~~July 31, of2008 and ~~valuation or~~July 31, if2007 nois ~~sale~~unaudited; ~~occurred~~however, atin the ~~mean~~opinion of the ~~latest bid and ask prices; provided that~~Company, asthe tointerim ~~such~~data ~~securities~~includes ~~that may~~all ~~have legal~~adjustments, ~~contractual~~consisting oronly ~~practical~~of ~~restrictions~~normal onrecurring ~~transfer~~adjustments, anecessary ~~discount of 10% to 40% from the public market price will be applied. Securities~~ for ~~which~~a ~~no public market exists and other assets will be valued at~~ fair ~~value~~statement ~~as determined in good faith by the Investment Adviser or a committee~~ of the ~~Board~~results offor ~~Managers or both under~~ the ~~supervision~~interim ~~of the Board of Managers pursuant to certain valuation procedures summarized below~~periods. ~~Securities having remaining maturities of 60 days or less~~ ~~from the date of purchase are valued at amortized cost.~~

~~The value for securities for which no public market exists is difficult to determine~~A. ~~Generally,~~Cash such investments will be valued on a “going concern” basis without giving effect to any disposition costs. There is a range of values that is reasonable for such investments at any particular time. Initially, direct investments are valued based upon their original cost until developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued by the “private market” or “appraisal” methods of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. The appraisal method shall be based upon such factors affecting the investee company such as earnings, net worth, reliable private sale prices of the investee company’s securities, the market prices for similar securities of comparable companies, an assessment of the investee 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 under the supervision of the Board of Managers and, inCash ~~any~~Equivalents: ~~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~~Cash ~~valuation~~and ofcash ~~the~~equivalents ~~Company’s~~consist ~~Private Investment Funds is based upon its pro-rata share~~ of ~~the~~deposits ~~value of the net assets of the Private Investment Fund at fair value as determined by such Private Investment Fund, in accordance~~ with ~~its~~PNC ~~partnership agreement~~Bank, ~~constitutional or other documents governing such valuation, on the valuation date~~N.A. IfAll ~~such~~highly ~~valuation~~liquid ~~with respect to the Company’s~~ investments inare ~~Private~~listed ~~Investment~~separately ~~Funds is not available by reason of timing or other event~~ on the ~~valuation~~Portfolio ~~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~~Investments.

~~At July 31, 2007 and October 31, 2006, market quotations were not readily available for securities valued at $48,744,551 or 76~~B.~~52%~~ ofRestricted ~~net~~Cash: assets and $61,466,377 or 81.35% 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.

D.Restricted ~~Security~~cash, ~~transactions~~if ~~and~~any, ~~investment~~consisted ~~income:~~of proceeds from the sales of investments held by counterparties as collateral for certain contingent claims for a specified period of time.

~~Security~~11 transactions are recorded on a trade date basis. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income, adjusted for amortization of premiums and discounts on fixed income investments, is earned from settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date.

14Table of Contents

Note 12 — ~~Organization and~~ Significant Accounting Policies (continued)

EC. ~~Income~~Investment ~~taxes~~Valuation:

~~Under~~The ~~current~~Company ~~law~~values ~~and~~portfolio ~~based~~securities onquarterly ~~certain assumptions~~ and ~~representations,~~at ~~the~~such ~~Company~~other ~~intends~~times ~~to be treated~~ as ~~a partnership for federal~~, ~~state~~in ~~and~~the ~~local~~Company’s ~~income~~Board ~~tax purposes. By reason~~ of ~~this~~Managers’ ~~treatment,~~ (the ~~Company~~“Board” ~~will itself not be subject to income tax. Rather, each member, in computing income tax, will include his, her~~ or ~~its~~“Board ~~allocable share~~ of ~~Company~~Managers”) ~~items of income~~view, ~~gain,~~circumstances ~~loss, deduction and expense~~warrant. Securities ~~The~~for ~~cost~~which ofmarket ~~the~~quotations ~~Private~~are ~~Investment~~readily ~~Funds~~available ~~for~~generally ~~federal~~will ~~tax~~be ~~purposes~~valued isat ~~based~~the ~~on amounts~~last ~~reported~~sale toprice ~~the Company~~ on ~~Schedule K-1 from~~ the ~~Private~~date ~~Investment Funds. As~~ of ~~July 31~~valuation or, ~~2007~~if ~~and~~no ~~October 31,~~sale ~~2006~~occurred, ~~the~~at ~~Company had not received information to determine~~ the ~~tax~~mean ~~cost~~ of the ~~Private~~latest ~~Investment~~bid ~~Funds~~and asask ofprices; ~~those dates.~~provided ~~The~~that, ~~cost~~as ~~basis~~to ~~for~~such ~~federal~~securities ~~tax~~that may ~~purposes~~have ~~of the Company’s other investments at July 31~~legal, ~~2007~~contractual ~~was~~or ~~$79,329,952,~~practical ~~and~~restrictions ~~those investments had net depreciation~~ on ~~a tax basis at July 31~~transfer, ~~2007~~a discount of ~~$34,758,577.~~10% ~~The~~to ~~cost~~40% ~~basis~~from ~~for federal tax purposes of~~ the ~~Company’s~~public ~~other~~market ~~investments~~price atwill ~~October 31,~~be ~~2006 was $100,558,894 and those investments had net depreciation on a tax basis at October 31, 2006 of $38,794,561~~applied.

FSecurities for which no public market exists and other assets will be valued at fair value as determined in good faith by the Investment Adviser or a committee of the Board of Managers or both under the supervision of the Board of Managers pursuant to certain valuation procedures summarized below. ~~Deferred~~Securities ~~income:~~having remaining maturities of 60 days or less from the date of purchase are valued at amortized cost.

~~Deferred~~The ~~income~~value ~~represents~~for ~~gains~~securities onfor ~~investments~~which ~~that~~no ~~are~~public ~~deferred~~market ~~until~~exists ais ~~subsequent~~difficult ~~period due~~ to ~~contingencies~~determine. ~~relating~~Generally, tosuch ~~the~~investments ~~sale~~will ofbe valued anon ~~investment.~~a As“going ofconcern” ~~July 31,~~basis ~~2007,~~without ~~there~~giving ~~was~~effect ~~approximately~~to aany ~~gross~~disposition $4costs.31 ~~million~~There is a range of ~~proceeds~~values ~~held in~~that anis ~~escrow~~reasonable ~~account~~for ~~relating~~such toinvestments ~~the~~at ~~Pilot~~any ~~Software~~particular ~~transaction~~time. ~~These~~Initially, ~~proceeds~~direct investments are ~~subject~~valued tobased ~~certain~~upon ~~transfer~~their ~~restrictions~~original cost ~~and~~until ~~could~~developments beprovide ~~used~~a tosufficient ~~indemnify~~basis ~~the~~for ~~buyer~~use ~~for~~of ~~contingent~~a ~~losses~~valuation ~~relating~~other tothan cost. Upon the ~~acquisition~~occurrence of ~~Pilot~~developments ~~Software.~~providing ~~During~~a ~~the three~~sufficient ~~months~~basis ~~ended~~for ~~July 31,~~a ~~2007~~change in valuation, adirect ~~potential~~investments ~~claim~~will be valued by the “private market” or “appraisal” methods of $0valuation.30 ~~million~~The ~~against~~private ~~the~~market ~~escrow~~method ~~account~~shall ~~was~~only ~~filed~~be used with ~~the~~respect ~~escrow~~to ~~agent.~~reliable ~~Therefore,~~third ~~the~~party ~~Company~~transactions ~~has~~by ~~deferred~~sophisticated, ~~income~~independent ~~of $0~~investors.26 ~~million,~~The ~~which~~appraisal ismethod ~~the~~shall ~~Company’s~~be ~~share~~based ofupon such factors affecting the ~~claim.~~investee ~~This claim~~company ~~relates~~such toas aearnings, ~~legal~~net ~~matter~~worth, ~~involving~~reliable ~~Pilot~~private ~~Software~~sale ~~and~~prices of the ~~buyer.~~investee Ascompany’s ~~such~~securities, itthe ismarket ~~subject~~prices tofor ~~certain~~similar ~~risks~~securities ~~and~~of iscomparable ~~merely~~companies, an ~~estimate~~assessment of the ~~potential~~investee ~~claim~~company’s ~~against~~future prospects ~~the~~or, ~~escrow~~if ~~account~~appropriate, liquidation value. The ~~end~~values ~~result~~for of the ~~legal~~investments ~~matter~~referred ~~may~~to ~~result~~ in this paragraph will be estimated regularly by the Investment Adviser or a ~~claim against~~committee of the ~~escrow~~Board ~~account~~under ~~greater~~the ~~than~~supervision of the ~~current~~Board ~~accrual~~of Managers and, in any event, not toless ~~exceed~~frequently $4than quarterly.31 ~~million~~However, orthere itcan ~~may~~be ~~result~~no inassurance athat ~~claim~~such ~~amount~~value ~~smaller~~will ~~than~~represent ~~$0.30~~the ~~million~~return ~~estimated~~that asmight ofultimately ~~July 31,~~be ~~2007~~realized by the Company from the investments.

~~Note~~The 2valuation —of the Company’s Private Investment ~~Advisory~~Funds ~~Fee~~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 Fund, ~~Administration~~in ~~Fee~~accordance ~~and~~with ~~Related~~its ~~Party~~partnership ~~Transactions~~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.

~~UST~~At ~~Advisers~~July 31, ~~Inc.~~2008 ~~(“USTA”)~~and ~~which has its principal offices at 225 High Ridge Road~~October 31, ~~Stamford~~2007, ~~Connecticut~~market ~~06905,~~quotations iswere anot ~~Delaware~~readily ~~corporation~~available ~~and registered~~for ~~investment~~the ~~adviser~~Company’s ~~(the~~portfolio ~~“Investment~~of ~~Adviser”).~~securities ~~Since~~valued ~~July 1,~~at ~~2007~~$33,526,737 ~~the~~or ~~Investment~~53.29% ~~Adviser~~of isnet anassets ~~indirect wholly-owned subsidiary,~~ and ~~controlled by~~$56,267,427 ~~Bank~~or of77.78% ~~America Corporation (“Bank~~ of net ~~America”)~~assets, arespectively. ~~bank~~Such ~~holding and~~securities awere ~~financial~~valued ~~holding~~by ~~company~~the ~~which~~Investment ~~has~~Adviser, ~~its~~under ~~principal~~the ~~executive~~supervision ~~offices~~of atthe ~~101~~Board ~~North~~of ~~Tryon~~Managers. ~~Street,~~Because ~~Charlotte,~~of ~~North~~the ~~Carolina~~inherent ~~28255.~~uncertainty ~~Prior~~of ~~to July 1~~valuation, ~~2007,~~ the ~~Investment~~estimated ~~Adviser~~values ~~was~~may andiffer ~~indirect~~significantly ~~subsidiary~~from ofthe ~~U.S.~~values ~~Trust Corporation (“U.S.~~that ~~Trust”),~~would ahave ~~registered~~been ~~financial~~used ~~holding~~had ~~company,~~a ~~which,~~ready inmarket ~~turn,~~for ~~was~~the asecurities ~~wholly-owned~~existed, ~~subsidiary~~and ofthe ~~The~~differences ~~Charles~~could ~~Schwab~~be ~~Corporation (“Schwab”)~~material.

~~Prior~~12 to December 16, 2005, U.S. Trust Company, N.A. (“UST-NA”), on behalf of its Asset Management Division served as the investment adviser to the Company (the “former Investment Adviser”) pursuant to an Investment Advisory Agreement (the “Agreement”). Effective December 16, 2005, USTA assumed the duties of the former Investment Adviser.

UnderTable the Agreement for the services provided, the Investment Adviser was 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. Prior to December 16, 2005 and pursuant to a sub-advisory agreement (the “Sub-Advisory Agreement”) among the Company, the former Investment Adviser, and United States Trust Company of New York (“U.S. Trust NY”), U.S. Trust NY served as the investment sub-adviser (the “Investment Sub-Adviser”) to the Company and received an investment management fee from the former Investment Adviser and Investment Adviser. As of July 31, 2007 and October 31, 2006, $160,975 and $190,458 were incurred and payable to the Investment Adviser and former Investment Adviser, respectively. Contents

15Note 2 — Significant Accounting Policies (continued)

~~Note~~D. 2Security —transactions ~~Investment Advisory Fee, Administration Fee~~ and ~~Related~~investment ~~Party~~income: ~~Transactions (continued)~~

~~Prior~~Private ~~to March 31, 2006, USTA was a wholly owned subsidiary of UST-NA~~ and ~~UST-NA~~Public ~~and~~Companies U.S. Trust NY were wholly-owned subsidiaries of U.S. Trust. Effective March 31, 2006, U.S. Trust NY converted into a national bank named United States Trust Company, National Association (USTC-NA) and UST-NA merged into USTC-NA. USTC-NA was the surviving entity and remained a wholly-owned subsidiary of U.S. Trust.

OnSecurity ~~July 1,~~transactions ~~2007,~~are ~~U.S.~~recorded ~~Trust~~on ~~and~~a trade ~~its~~date ~~subsidiaries, including USTA, was acquired by Bank of America (the “Sale”)~~basis. ~~USTA~~ ~~continued~~Realized togains ~~serve~~and aslosses ~~the~~on ~~Investment~~investments ~~Adviser~~sold toare ~~the~~recorded ~~Company~~on ~~after~~ the ~~Sale~~basis ~~pursuant~~of toidentified acost. ~~new~~Interest ~~investment~~income, ~~advisory~~adjusted ~~agreement~~for ~~with~~amortization ~~the Company (the “New Advisory Agreement”) that was approved at a special meeting~~ of ~~members~~premiums ofand ~~the Company~~discounts ~~held~~ on ~~March 15,~~fixed ~~2007.~~income ~~The~~investments, ~~New Advisory Agreement~~ is ~~identical~~earned infrom ~~all~~settlement ~~material~~date ~~respects except for the term~~ and ~~the~~is recorded ~~date~~on ~~of effectiveness to~~ the ~~Agreement.~~accrual Ubasis.S. ~~Trust~~Dividend ~~N.Y.~~income ~~ceased~~is torecorded ~~serve~~on as the ~~Investment Sub~~ex-~~Adviser~~dividend ~~to the Company after the Sale~~date.

InPrivate ~~addition to the management fee, the~~ Investment ~~Adviser~~Funds 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 cumulative realized capital gains on Direct Investments, over the sum of (a) cumulative realized capital losses on investments of any type (b) cumulative gross unrealized capital depreciation on investments of any type (c) cumulative net expenses. Direct Investments means Company investments in domestic and foreign companies in which the equity is closely held by company founders, management, and/or a limited number of institutional investors and negotiated private investments in public companies. As of July 31, 2007 and October 31, 2006, there was no Incentive Carried Interest earned by the Investment Adviser.

~~Pursuant~~Distributions tofrom ana ~~Administration,~~Private ~~Accounting~~Investment ~~and~~Fund ~~Investor~~are ~~Services~~recorded ~~Agreement,~~as ~~the Company retains PFPC Inc. (“PFPC”),~~ a ~~majority-owned~~return ~~subsidiary~~ of ~~The~~capital ~~PNC Financial Services Group, as administrator, accounting~~ and ~~investor~~serve ~~services~~to ~~agent.~~reduce Inthe ~~addition,~~cost ~~PFPC~~basis ~~Trust~~of ~~Company serves as~~ the Private ~~Company’s~~Investment ~~custodian~~Fund. InDistributions ~~consideration~~received ~~for~~in ~~its~~excess ~~services,~~ of the ~~Company~~cost ~~(i) pays~~basis ~~PFPC~~are arecognized ~~variable~~as ~~fee~~realized ~~between 0~~gains.~~105%~~ ~~and~~Distributions ~~0.07%,~~are ~~based~~recorded onwhen ~~average~~they ~~quarterly~~are ~~net~~received ~~assets,~~from ~~payable~~the ~~monthly,~~Private ~~subject~~Investment ~~to a minimum quarterly fee of approximately $30,000, (ii) pays annual fees of approximately $36,667 for taxation services and (iii) reimburses PFPC for out-of-pocket expenses~~Fund.

~~Charles Schwab & Co~~E., ~~Inc.~~Income ~~(the “Distributor”),~~taxes: the principal subsidiary of Schwab, serves as the Company’s distributor for the offering of units. The Investment Adviser paid the Distributor from its own assets an amount equal to 0.02% of the total of all subscriptions received in the offering. The Investment Adviser or an affiliate will pay 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 6.5% of the gross proceeds received by the Company from the offering.

~~Each~~Under ~~member~~current oflaw ~~the~~and ~~Board~~based ~~of Managers~~on ~~receives~~certain aassumptions ~~$10,000 annual retainer~~ and ~~the Chairman of the Board receives an additional $1~~representations,~~000~~ ~~annual retainer. Also, each member of~~ the ~~Board~~Company ~~will~~intends ~~receive~~to ~~$2,000~~be ~~per~~treated ~~quarterly~~as ~~meeting~~a ~~attended.~~partnership Infor ~~addition~~federal, ~~each~~state ~~Board member will receive $500 per quarterly telephonic meeting~~ and ~~$500~~local ~~for~~income ~~any~~tax ~~telephonic special meeting~~purposes. ~~For~~By ~~each~~reason ~~audit~~of ~~committee~~this ~~meeting attended~~treatment, ~~Board~~the ~~members~~ Company will ~~receive~~itself ~~$1,500,~~not ~~while~~be ~~the~~subject ~~Chairman~~to ofincome ~~the~~tax. ~~Audit Committee will receive an additional $1~~Rather,~~000~~ ~~retainer. Each~~each member, ofin ~~the~~computing ~~Board~~income istax, ~~reimbursed~~will ~~for~~include ~~expenses incurred for attending meetings. No person who is an officer~~his, ~~manager~~her or ~~employee~~its ofallocable ~~Bank~~share of ~~America,~~Company oritems ~~its~~of ~~subsidiaries~~income, ~~who~~gain, ~~serves as an officer~~loss, ~~manager~~deduction orand ~~employee of the Company receives any compensation from the Company~~expense.

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 July 31, 2008, the Company has not received information to determine the tax cost of the Private Investment Funds. At December 31, 2007 and ~~October~~December 31, 2006, ~~Excelsior~~the ~~Venture~~Private ~~Investors~~Investment ~~III,~~Funds had ~~LLC~~a cost basis for tax purposes of $14,367,291 ~~a non-diversified~~and $12,465,650, ~~closed~~respectively. ~~–end~~Based ~~feeder~~on ~~fund~~values toof the ~~company~~Private Investment Funds as of July 31, ~~had~~2008, anand ~~investment~~after adjustment for purchases and sales between December 31, 2007 and July 31, 2008, this results in net unrealized appreciation for tax purposes on the ~~Company~~Private Investment Funds of $404,~~439~~045,~~279~~593. ~~and~~The cost basis for federal tax purposes of the Company’s other investments at July 31, 2008 is $4742,~~969~~858,~~297~~798, ~~respectively.~~and ~~This~~those investments ~~represents~~had annet ~~ownership~~depreciation ~~interest~~on a tax basis at July 31, 2008 of 63$26,761,095.~~48%~~ inThe cost basis for federal tax purposes of the Company’s asother ofinvestments ~~both~~at ~~dates~~October 31, 2007, was $61,405,464, and those investments had net depreciation on a tax basis at October 31, 2007 of $9,924,379.

16F. Deferred income:

~~Note~~Deferred 2income —represents ~~Investment~~certain ~~Advisory~~amounts ~~Fee~~not received by the Company until a subsequent period due to contingencies relating to the sale of an investment. As of July 31, ~~Administration~~2008, ~~Fee~~there was approximately $203,277 of proceeds not released from an escrow account relating to a prior year transaction. These proceeds are subject to certain claims. As such, it is subject to certain risks and ~~Related~~is ~~Party~~merely ~~Transactions~~an ~~(continued)~~estimate of the potential claim against the escrow account. The end result of the legal matter may result in a claim against the escrow account greater than the current accrual or it may result in a claim amount smaller than the current estimate and those differences can be material.

On13 December 16, 2004, Schwab entered into an agreement with the Company and other funds managed by the former Investment Adviser whereby Schwab has funded a reserve account to be held by the Investment Adviser or its affiliate. This reserve account was established so that the Company and other funds managed by the Investment Adviser will be able to draw upon it to pay in full all costs incurred related to the termination of Ernst & Young LLP (“E&Y”), the Company’s independent public accountants prior to October 28, 2004, as a result of concerns regarding their independence at the time of issuance of their report on the Company’s October 31, 2003 financial statements. This agreement was executed in order to ensure that these costs related to the termination of E&Y are not borne by the Company, the other funds managed by the Investment Adviser or their respective shareholders. Schwab is an affiliate of the Company’s Investment Adviser. In consideration of the funding of the reserve account, the Company and the other funds managed by the Investment Adviser subrogated all of their claims, causes of action and rights against E&Y for payment of these expenses to Schwab.

NoteTable 3 — Purchases and Sales of Securities Contents

~~Excluding~~Note ~~short-term~~3 ~~investments,~~— ~~the~~Investment ~~Company’s~~Advisory ~~purchases and sales of securities for the nine months ended July 31~~Fee, ~~2007,~~Administration Fee and ~~July 31,~~Related ~~2006~~Party ~~were~~Transactions ~~as follows:~~

Nine Month EndedJuly 31,	Purchases ($)	Proceeds ($)
2007	5,507,172	14,976,791
2006	13,712,456	2,202,944

Bank of America Capital Advisors LLC (“BACA” or the “Investment Adviser”), 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 Investment Advisers Act of 1940, as amended. The Investment Adviser is an indirect wholly-owned subsidiary of, and controlled by, Bank of America Corporation (“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.

~~Note~~Prior 4to —May 29, ~~Commitments~~2008, the Company’s investment adviser was UST Advisers, Inc. (“USTA”). On May 29, 2008, BACA assumed the responsibilities of the investment adviser to the Company as a result of a transfer (the “Transfer”) of USTA’s rights and obligations under the New 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 Corporation in July 2007. The Transfer of the New 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.

AsUSTA, a Delaware corporation and registered investment adviser, has been an indirect wholly-owned subsidiary of, and controlled by, Bank of America, since July 311, 2007. Prior to that, ~~the~~USTA ~~Company~~was ~~had~~an ~~outstanding~~indirect ~~investment~~subsidiary ~~commitments~~of ~~totaling~~U.S. $7Trust Corporation (“U.S. Trust Corp.”),~~006~~ a registered financial holding company,~~904~~ which, in turn, was a wholly-owned subsidiary of The Charles Schwab Corporation (“Schwab”).

~~[This~~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 (the “Agreement”). Under the 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, ~~intentionally~~2001, ~~blank]~~and 1.00% of net assets thereafter.

17Prior 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 subadviser to the Company and received an investment management fee from UST-NA and USTA.

~~Note~~On 5March 31, —2006, ~~Transactions~~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 ~~Affiliated~~U.S. ~~Companies~~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 (the “Investment Sub-Adviser”), was serving as investment sub-adviser to the Company pursuant to an investment sub-advisory agreement.

AnOn ~~affiliated~~July 1, ~~company~~2007, isU.S. aTrust ~~company~~Corp. inand ~~which~~its subsidiaries, including USTA and the ~~Company~~Investment ~~has~~Sub-Adviser, ~~ownership~~were acquired by Bank of ~~more~~America ~~than~~(the 5%“Sale”). ofUSTA continued to serve as the ~~voting~~Investment ~~securities.~~Adviser ~~The~~to the Company ~~did~~after ~~not~~the Sale ~~receive~~(until ~~dividends~~May 29, ~~from affiliated~~2008, ~~companies~~as ~~during~~indicated above) pursuant to a new investment advisory agreement with the ~~nine~~Company ~~months~~(the ~~ended~~“New ~~July~~Advisory Agreement”) that was approved at a special meeting of members of the Company held on March 3115, 2007 and was identical in all material respects except for the term and the ~~year~~date ~~ended~~of ~~October 31,~~effectiveness ~~2006~~to the Agreement. ~~Transactions~~The ~~with~~Investment ~~companies,~~Sub-Adviser ~~which~~ceased ~~are~~to orserve ~~were~~as ~~affiliates,~~the ~~were~~investment assub-adviser ~~follows:~~to the Company after the Sale.

						For the Nine Months Ended July 31, 2007 (Unaudited)
Name of Investment	Shares/PrincipalAmount Held atOctober 31, 2006	October 31,2006 Value		Purchases/ConversionAcquisition		SalesProceeds/Conversion			InterestReceived		RealizedGain/(Loss)			Shares/PrincipalAmount Held atJuly 31, 2007		July 31, 2007Value (Note 1)
Controlled Affiliates
Pilot Software Inc., Series A Preferred	46,362,656	$	8,110,096	$	—	$	11,450,000		$	—	$	2,684,952		$	—	$	—
Pilot Software Inc., Bridge Note, 9%	1,404,600		1,404,600		—		1,357,489			—		349,032			—		—
Cydelity Inc. Series A Preferred	19,995,000		—		—		—			—		—			19,995,000		—
Cydelity Inc. Series A-1 Preferred	19,702,277		3,940,456		—		—			—		—			19,702,277		—
Cydelity Inc. Series A-2 Preferred	25,535,051		2,500,009		—		—			—		—			25,535,051		982,000
Cydelity Inc., Common Stock	1,000,000		—		—		—			—		—			1,000,000		—
Total Controlled Affiliates		$	15,955,161	$	—	$	12,807,489		$	—	$	3,033,984				$	982,000
Non-Controlled Affiliates
Chips & Systems, Inc., Series A Preferred	7,000,000		—		—		—			—		—			7,000,000		—
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		—		—		—			—		—			281,667		—
Ethertronics, Inc., Series C Warrants	214,073		—		—		—			—		—			214,073		—
Ethertronics, Inc., Series C Preferred	1,316,793		1,975,190		571,746		—			—		—			1,697,957		2,546,936
Genoptix, Inc., Series 1-A Preferred	942,481		950,822		—		—			—		—			942,481		1,471,285
Genoptix, Inc., Series 1-B Preferred	1,403,696		950,822		—		—			—		—			1,403,696		1,576,424
Genoptix, Inc., Common Stock	46,860		—		—		—			—		—			46,860		10,768
Genoptix, Inc., Series 1-C Preferred	620,580		554,178		—		—			—		—			620,580		696,778
Genoptix, Inc., Series 1-D Preferred	728,413		461,815		—		—			—		—			728,413		631,446
LightConnect, Inc., Series C Preferred	—		—		—		—			—		168,484			—		—
LogicLibrary, Inc., Series A Preferred	7,762,821		3,549,296		311,351		—			—		—			8,443,815		3,860,646
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		—		—		—			—		—			—		—
MIDAS Vision Systems, Inc., Common Stock	157,396		—		—		—			—		—			—		—
NanoOpto Corp., Series A-1 Preferred	956,234		840,912		—		—			—		—			—		—
NanoOpto Corp., Series B Preferred	3,023,399		1,286,155		—		—			—		—			—		—
NanoOpto Corp., Series C Preferred	1,682,470		733,389		—		—			—		—			—		—
NanoOpto Corp., Series C Warrants	229,410		—		—		—			—		—			—		—
NanoOpto Corp., Series D Preferred	1,234,263		382,622		—		—			—		—			—		—
NanoOpto Corp., Bridge Note	—		—		237,321		—			—		—			—		160,000
OpVista, Inc., Series AA Preferred	5,089,790		5,367,967		526,227		—			—		—			—		6,742,193
OpVista, Inc., Common Stock	1,079,541		1,138,542		—		—			—		—			—		1,280,541
OpVista, Inc., Series BB Convertible Preferred	—		—		491,800		—			—		—			—		514,094
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 E Preferred	—		—		—		111,056			—		—			96,629		333,166
Tensys Medical, Inc., Series C Preferred	4,166,667		1,887,160		—		—			—		—			4,166,667		534,354
Tensys Medical, Inc., Series D Preferred	1,187,500		537,840		—		—			—		—			1,187,500		152,291
Tensys Medical, Inc., Bridge Note	52,017		52,017		59,039		(111,056	)		—		—			—		—
Total Non -Controlled Affiliates		$	30,327,177	$	2,197,484	$	749,976		$	—	$	(7,411,712	)			$	28,569,372

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

18As of July 31, 2008 and October 31, 2007, $158,150 and $182,802, respectively, were payable to the Investment Adviser and USTA, respectively.

						For the Year Ended October 31, 2006
Name of Investment	Shares/PrincipalAmount Held atOctober 31, 2005	October 31,2005 Value		Purchases/ConversionAcquisitions		Sale/ConversionProceeds			InterestReceived		RealizedGain/(Loss)			Shares/PrincipalAmount Held atOctober 31, 2006	October 31,2006 Value(Note 1)
Controlled Affiliates
Pilot Software Inc., Series A Preferred	46,362,656	$	8,110,096	$	—	$	—		$	—	$	—		46,362,656	$	8,110,096
Pilot Software Inc., Bridge Note, 9%	—		—		1,404,600		—			—		—		1,404,600		1,404,600
LogicLibrary, Inc., Series A Preferred	6,530,581		2,985,916		563,380		—			—		—		7,762,821		3,549,296
LogicLibrary, Inc., Series A-1 Preferred	3,080,464		1,408,450		—		—			—		—		3,080,464		1,408,450
Cydelity Inc. Series A Preferred	19,995,000		—		—		—			—		—		19,995,000		—
Cydelity Inc. Series A-1 Preferred	—		—		3,940,456		—			—		—		19,702,277		3,940,456
Cydelity Inc. Series A-2 Preferred	—		—		2,500,009		—			—		—		25,535,051		2,500,009
Cydelity Inc. Common Stock	1,000,000		—		—		—			—		—		1,000,000		—
Cydelity Inc. Series A Warrants	7,500,000		—		—		—			—		—		—		—
Cydelity Inc., Bridge Note, 8%	3,000,000		3,000,000		700,000		(3,700,000	)		—		—		—		—
Total Controlled Affiliates		$	15,504,462	$	9,108,445	$	(3,700,000	)	$	—	$	—			$	20,912,907
Non-Controlled Affiliates
Chips & Systems, Inc., Series A Preferred	7,000,000		—		—		—			—		—		7,000,000		—
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		—		—		—			—		—		281,667		—
Ethertronics, Inc., Series C Warrants	163,580		—		—		—			—		—		214,073		—
Ethertronics, Inc., Bridge Note	—		—		500,000		(500,000	)		—		—		—		—
Ethertronics, Inc., Series C Preferred	980,172		1,470,258		504,932		—			—		—		1,316,793		1,975,190
Genoptix, Inc., Series 1-A Preferred	942,481		950,822		—		—			—		—		942,481		950,822
Genoptix, Inc., Series 1-B Preferred	1,403,696		950,822		—		—			—		—		1,403,696		950,822
Genoptix, Inc., Common Stock	46,860		—		—		—			—		—		46,860		—
Genoptix, Inc., Series 1-C Preferred	620,580		554,178		—		—			—		—		620,580		554,178
Genoptix, Inc., Series 1-D Preferred	728,413		461,815		—		—			—		—		728,413		461,815
LightConnect, Inc., Series B Preferred	4,330,504		5,000,000		—		(5,000,000	)		—		(3,771,140	)	—		—
LightConnect, Inc., Series C Preferred	12,292,441		992,000		—		(992,000	)		—		(748,194	)	—		—
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		1,116,350		—		—			—		—		956,234		840,912
NanoOpto Corp., Series B Preferred	3,023,399		1,286,155		—		—			—		—		3,023,399		1,286,155
NanoOpto Corp., Series C Preferred	1,682,470		733,389		—		—			—		—		1,682,470		733,389
NanoOpto Corp., Series C Warrants	229,410		—		—		—			—		—		229,410		—
NanoOpto Corp., Series D Preferred	—		—		382,622		—			—		—		1,234,263		382,622
OpVista, Inc., Series AA Preferred	—		—		4,508,179		—			—		—		5,089,790		5,367,967
OpVista, Inc., Series B Preferred	5,333,333		—		—		(4,000,000	)		—		—		—		—
OpVista, Inc., Series C Preferred	12,671,059		5,000,000		—		(2,500,000	)		—		—		—		—
OpVista, Inc., Series D Preferred	10,368,483		1,058,000		1,058,000		(1,058,000	)		—		—		—		—
OpVista, Inc., Series E Preferred	15,935,224		1,626,030		1,626,030		(1,626,031	)		—		—		—		—
OpVista, Inc., Common Stock	—		—		9,184,031		—			—		—		1,079,541		1,138,542
OpVista, Inc. 8% Bridge Note	—		—		1,727,599		(1,727,599	)		—		—		—		—
OpVista, Inc., Warrants	—		—		8,681		(8,681	)		—		(8,681	)	—		—
Silverback Systems, Inc., Common	—		—		4,759,081		—			—		—		40,026		—
Silverback Systems, Inc., Series B	—		—		1,500,781		—			—		—		559,993		1,600,000
Silverback Systems, Inc., Series A-2 Preferred	—		—		2,070,310		—			—		—		772,503		—
Silverback Systems, Inc., Series B-1 Preferred	2,211,898		1,415,615		—		(1,415,615	)		—		—		—		—
Silverback Systems, Inc., Series C Preferred	34,364,257		3,333,333		—		(3,343,467	)		—		—		—		—
Silverback Systems, Inc., 5% Bridge Notes	1,969,206		1,969,206		300,000		(2,269,206	)		—		—		—		—
Silverback Systems, Inc., Series C Warrant	4,173,033		196		—		(196	)		—		(195	)	—		—
Tensys Medical, Inc., Bridge Note	—		—		52,017		—			—		—		52,017		52,017
Tensys Medical, Inc., Series C Preferred	4,166,667		1,887,160		—		—			—		—		4,166,667		1,887,160
Tensys Medical, Inc., Series D Preferred	1,187,500		537,840		—		—			—		—		1,187,500		537,840
Total Non -Controlled Affiliates		$	36,993,169	$	28,182,263	$	(24,440,795	)	$	—	$	(4,528,210	)		$	25,369,431

19Table of Contents

Note 63 — ~~Pending~~Investment ~~Litigation~~Advisory Fee, Administration Fee and Related Party Transactions (continued)

~~The~~On ~~former~~July 31, ~~Investment Adviser~~2008, ~~certain~~the ofCompany ~~its~~received ~~affiliates~~$268,999 ~~including~~from UBACA as a reimbursement for fees associated with the sale of Genoptix, Inc.S. During ~~Trust~~the period, ~~and~~the ~~others~~Company ~~were~~through ~~named~~its inown ~~four~~internal ~~shareholder~~controls ~~class~~identified ~~action~~a ~~lawsuits~~potential ~~and~~violation ~~two~~of ~~derivative~~the ~~actions~~Investment ~~which~~Company ~~allege~~Act ~~that~~involving the ~~former~~sale ~~Managing Investment~~of ~~Adviser~~Genoptix, ~~certain~~Inc. through an affiliate of ~~its~~USTA. ~~affiliates~~BACA and ~~others~~its ~~allowed~~affiliate ~~certain~~believe ~~parties~~that tothe ~~engage~~sale of Genoptix, Inc. in ~~illegal~~the initial public offering and ~~improper~~secondary ~~mutual~~offering ~~fund~~was ~~trading~~at ~~practices~~arms-length. However, ~~which~~to ~~allegedly~~ensure ~~caused~~the ~~financial~~Company ~~injury~~and toits ~~the~~investors ~~shareholders~~are ofnot ~~certain~~detrimented ~~mutual~~and ~~funds~~in ~~managed~~its byfiduciary capacity as the ~~former~~ Investment Adviser., ~~Each~~BACA ~~seeks~~decided ~~unspecified~~to ~~monetary~~reimburse ~~damages~~the Company ~~and~~for ~~related~~the ~~equitable~~fees ~~relief~~paid to its affiliate.

~~The~~In ~~class~~addition ~~and~~to ~~derivative~~the ~~actions described~~management ~~above~~fee, ~~were~~the ~~transferred~~Investment toAdviser ~~the~~is ~~United~~entitled ~~States~~to allocations ~~District~~and ~~Court~~distributions ~~for~~equal to the ~~District~~Incentive ofCarried ~~Maryland~~Interest. ~~for~~The ~~coordinated~~Incentive ~~and~~Carried ~~consolidated~~Interest ~~pre-trial~~is ~~proceedings.~~an Inamount ~~November~~equal ~~2005,~~to ~~the~~20% ~~Maryland~~of ~~court~~the ~~dismissed~~excess, ~~many~~if any, of the ~~plaintiffs~~Company’s ~~claims~~cumulative inrealized ~~both~~capital ~~the class~~gains ~~action~~on ~~and~~Direct ~~derivative~~Investments, ~~lawsuits.~~over ~~Several~~the ~~affiliates~~sum of (a) cumulative ~~the~~realized ~~former~~capital ~~Investment~~losses ~~Adviser~~on ~~and~~investments ~~individual~~of ~~defendants~~any ~~have~~type ~~also~~(b) cumulative ~~been~~gross ~~dismissed.~~unrealized ~~Plaintiffs’~~capital ~~claims~~depreciation ~~under~~on ~~Sections~~investments ~~10(b)~~of any type and 20(ac) cumulative ofnet expenses. Direct Investments means Company investments in domestic and foreign companies in which the ~~Securities~~equity ~~Exchange~~is ~~Act~~closely ofheld ~~1934,~~by ascompany ~~amended~~founders, management, and/or ~~under~~a ~~Section 36(b)~~limited number of institutional investors and ~~48(a)~~negotiated private investments in public companies. As of ~~the~~July 31, ~~1940~~2008 ~~Act~~and October 31, ~~however~~2007, ~~have~~there ~~not~~was ~~been~~no ~~dismissed~~Incentive Carried Interest earned by the Investment Adviser.

~~While~~Pursuant to an Administration, Accounting and Investor Services Agreement, the ~~ultimate~~Company ~~outcome~~retains ofPNC ~~these~~Global ~~matters cannot~~Investment beServicing ~~predicted~~(“PNC ~~with~~GIS”) ~~any~~(formerly ~~certainty~~known atas ~~this~~PFPC ~~time~~Inc.), ~~based~~a onmajority-owned ~~currently~~subsidiary ~~available~~of ~~information~~The PNC Financial Services Group, as administrator, accounting and ~~consultation~~investor ~~with~~services ~~counsel~~agent. In addition, ~~the~~PFPC ~~Investment~~Trust ~~Adviser~~Company ~~believes~~serves ~~that~~as the ~~likelihood~~Company’s iscustodian. ~~remote~~In ~~that~~consideration for its services, the ~~pending~~Company ~~litigation~~(i) pays ~~will~~PNC ~~materially~~GIS ~~affect~~a ~~the~~variable fee between 0.105% and 0.07%, based on average quarterly ~~Investment~~net ~~Adviser’s~~assets, ~~ability~~payable monthly, subject to ~~provide~~a ~~investment~~minimum ~~management~~quarterly ~~services~~fee toof ~~the~~approximately ~~Company.~~$30,000, ~~Neither~~(ii) pays ~~the~~annual ~~Investment~~fees ~~Adviser~~of ~~nor~~approximately ~~the~~$36,667 ~~Company~~for istaxation aservices ~~party~~and to(iii) reimburses ~~the~~PNC ~~lawsuits~~GIS ~~described~~for ~~above~~out-of-pocket expenses.

~~Note~~Charles 7Schwab & —Co., ~~Guarantees~~Inc. (the “Distributor”), the principal subsidiary of Schwab, served as the Company’s distributor for the offering of units. The former Investment Adviser paid the Distributor from its own assets an amount equal to 0.02% of the total of all subscriptions received in the offering. The Investment Adviser 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 6.5% of the gross proceeds received by the Company from the offering.

InEach ~~the~~member ~~normal~~of ~~course~~the Board of ~~business~~Managers receives $10,000 ~~the~~as ~~Company~~an ~~enters~~annual ~~into~~retainer ~~contracts~~and ~~that~~the Chairman of the Board ~~provide~~receives ~~general~~an ~~indemnifications~~additional $1,000 annual retainer. ~~The~~Also, ~~Company’s~~each ~~maximum~~member ~~exposure~~of ~~under~~the ~~these~~Board ~~agreements~~receives is$2,000 ~~dependent~~per onquarterly ~~future~~meeting ~~claims~~attended. ~~that~~In ~~may~~addition, beeach ~~made~~Board ~~against~~member ~~the~~receives ~~Company,~~$500 per quarterly telephonic meeting and ~~therefore~~$500 ~~cannot~~for beany ~~established;~~other ~~however~~telephonic special meeting. For each audit committee meeting attended, ~~based~~Board onmembers ~~experience~~receive $1,500, while the ~~risk~~Chairman of ~~loss~~the ~~from~~Audit Committee receives an additional $1,000 retainer. Each member of the Board is reimbursed for expenses incurred for attending meetings. ~~such~~No ~~claims~~person who is ~~considered~~an ~~remote~~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.

~~Note~~As 8of —July 31, ~~New~~2008 ~~Accounting~~and ~~Pronouncements~~October 31, 2007, Excelsior Venture Investors III, LLC had an investment in the Company of $39,943,520 and $45,925,203, respectively. This represents an ownership interest of 63.48% in the Company as of both dates.

The Financial Accounting Standards Board (FASB) issued Interpretation 48 in July 2006, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, ~~2006. The Company has determined, that FIN48 will not impact the financial statements since the Company is in a partnership for federal, state, and local tax purposes.~~

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

~~FASB~~Note ~~issued~~4 ~~Statement~~— ~~No. 159~~Purchases ~~in February 2007, the Fair Value Option for Financial Assets~~ and ~~Financial~~Sales ~~Liabilities,~~of ~~which~~Securities is effective for Financial Statements issued for fiscal year beginning after November 15, 2007. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with changes in fair value recognized in earnings. The Company is reviewing the statement and its impact on the financial statements.

20Excluding short-term investments, the Company’s purchases and proceeds from sales of securities for the nine months ended July 31, 2008 and July 31, 2007 were as follows:

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. For the Nine months and Three months Ended July 31, 2007 as Compared to the Similar Periods in 2006


Nine Months Ended July 31,	Purchases ($)	Proceeds ($)
2008	3,037,411	20,606,720
2007	5,507,172	14,976,791

~~Realized~~Note ~~and~~5 ~~Unrealized~~— ~~Gains~~Commitments ~~and Losses from Portfolio Investments~~

~~For~~As ~~the~~of ~~nine months ended~~ July 31, ~~2007 and 2006~~2008, ~~respectively~~ the Company had aunfunded net realized (loss) on security transactions of ($3,972,070) and ($4,618,068), respectively. The net realized loss for the nine months ended July 31, 2007 was principally the result of the Company’s sale of Silverback Systems, Inc, a private company investment ~~which~~commitments ~~resulted~~to inPrivate aInvestment ~~realized~~Funds ~~loss~~totaling ~~of (~~$~~7,580,196). This loss was partially offset by a realized gain of $~~3,~~033~~928,~~984 from the Company’s sale of Pilot Software Inc~~672., ~~another private company investment, net realizations from other private company investments of $187,271, and net gain distributions from the private investment funds of $386,871.~~ The ~~net realized (loss) for the nine months ended July 31, 2006 was principally the result of the~~ Company’s ~~sale~~also ~~of LightConnect Inc, a private company investment which resulted in a (loss) of ($4,619,235). For the nine months ended July 31, 2007 and 2006, respectively the Company~~ had acommitments net change in unrealized appreciation/(depreciation) on investments of $882,127 and ($9,806,680), respectively. The net change in unrealized appreciation for the nine months ended July 31, 2007 was principally the combination of: i) the sale of Silverback Systems Inc., which resulted in a decrease in unrealized depreciation of $6,730,172 due to the reclassification from anits ~~unrealized loss~~investors ~~to realized loss; ii) a decrease~~ of ($~~4,840,466) due to the write-down of Cydelity, Inc~~148.;8 ~~iii) an increase of $1~~million,~~012,291 due to the write-up of OpVista, Inc.; iv) a decrease of ($3,320,399) due to a write-down of NanoOpto Corporation; v) an~~ ~~increase~~ of ~~$1,350,001~~which ~~due to a write-up of Archemix Corporation; vi) a decrease of (~~$~~1,521,144) due to a write-down on Tensys Medical, Inc~~2.;7 ~~and~~million ~~vii)~~remains ~~an increase of $1,469,065 due to a write-up of Genoptix, Inc~~uncalled. The remaining change was a result of changes in the private investment funds and public stocks. The net change in unrealized depreciation for the period ended July 31, 2006 was principally the result of a decrease in the valuation of Nano Opto Corporation of ($873,732), Silverback Systems, Inc of ($2,134,094) and OpVista Inc of ($ 6,727,848) all private company investments.

For the three months ended July 31, 2007 and 2006, respectively the Company had a net realized gain/(loss) on security transactions of $137,524 and ($4,627,914), respectively. The net realized gain for the three-months ended July 31, 2007 was principally the result of a net gain distribution of $396,333 from the private investment funds, that was offset by a contingent loss accrual relating to the Pilot Software sale of ($258,809). The net realized loss for the three months ended July 31, 2006 was principally the result of the Company’s sale of LightConnect Inc, a private company investment which resulted in a loss of ($4,619,235). For the three months ended July 31, 2007 and 2006, respectively the Company had a net change in unrealized (depreciation) on investments of ($2,859,433) and ($6,867,910), respectively. The net change in unrealized depreciation for the period ended July 31, 2007 was principally the result of the combination of: i) an increase of $1,350,001 and $1,469,065 due to write-ups on Archemix Corporation and Genoptix, Inc., respectively and ii) a decrease of ($3,320,399), ($1,521,144), and ($618,000) due to write-downs of NanoOpto Corporation, Tensys Medical, Inc., and Cydelity, Inc., respectively. The remaining change was a result of changes in the private investment funds and public stocks. The net change in unrealized depreciation for the three months ended July 31, 2006 was principally the result of a decrease in the valuation of OpVista, Inc. of ($6,727,848), a private company investment.


Private Investment Funds	Commitment		Unfunded Commitment
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		99,960
CMEA Ventures VI, L.P.		3,000,000		810,000
Morgenthaler Partners VII, L.P.		3,000,000		300,000
Prospect Venture Partners II, L.P.		3,000,000		435,000
Sevin Rosen Fund IX, L.P.		3,000,000		780,000
Tallwood II, L.P.		3,000,000		150,000
Valhalla Partners, L.P.		3,000,000		433,363

Total	$	25,700,000	$	3,928,672

~~Investment~~16 ~~Income and Expenses~~

ForTable the nine months ended July 31, 2007, the Company had investment income of $516,037 and operating expenses of $1,018,338, resulting in a net investment loss of ($502,301). In comparison, for the similar period ended July 31, 2006, the Company had investment income of $1,018,896 and operating expenses of $1,490,174, resulting in a net investment loss of ($471,278). The decrease in net investment income resulted from a decrease in short-term investments purchased and matured during the period in addition to having less debt securities within the portfolio. The Company continues its investment program in venture capital companies and private equity funds. The decrease in operating expenses was due primarily to a decline in management fees as a result of reduced net assets under management during the period and a decrease in the management fee rate from 2% to 1%. This decrease in management fees was slightly offset by increases in other operating expenses. Contents

~~For~~Note ~~the~~6 ~~three~~— ~~months~~Transactions ~~ended~~with ~~July 31,~~Affiliated ~~2007,~~Companies the Company had investment income of $135,960 and net operating expenses of $313,301 resulting in a net investment loss of ($177,341). In comparison, for the similar period ended July 31, 2006, the Company had investment income of $239,623 and net operating expenses of $379,112, resulting in a net investment loss of ($139,489). The decrease in net investment income for the three months ended July 31, 2007 was a result of a decrease in short-term interest income. The decrease in operating expenses was primarily due to a decline in management fees which resulted from a reduced level of net assets under management during the period and was slightly offset by increases in other operating expenses.

21An affiliated company is a company in which the Company has ownership of more than 5% of the voting securities. The Company did not receive dividends from affiliated companies during the nine months ended July 31, 2008 and October 31, 2007. Transactions with companies, which are or were affiliates, were as follows:

Investment Income and Expenses (continued)


							For Nine Months Ended July 31, 2008 (Unaudited)
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 July 31, 2008	July 31, 2008 Fair Value (Note 1)
Controlled Affiliates
Pilot Software Inc., Series A Preferred	—		—		—			—		—		75,463		—		—

Total Controlled Affiliates		$	—	$	—		$	—	$	—	$	75,463			$	—
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		2,546,936
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		(4,067,801	)		—		—		—		1,088,532		551,817
OpVista, Inc., Common Stock	1,079,541		1,184,567		4,465,175			—		—		—		6,025,312		—
OpVista, Inc., Series BB Convertible Preferred	433,400		491,800		(397,374	)		—		—		—		83,001		44,075
OpVista, Inc., Series CC Convertible Preferred	—		—		683,075			—		—		—		3,418,748		1,025,624
OpVista, Inc., Bridge Note	675,989		1,351,978		(683,075	)		—		7,760		—		—		—
OpVista, Inc., Series CC Warrants	675,313		—		—			—		—		—		675,313		675
Silverback Systems, Inc., Escrow	—		—		—			—		—		(19,931	)	—		—
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		—			—		—		—		318,845		—

Total Non-Controlled Affiliates		$	25,066,204	$	(5,496,135	)	$	93,384	$	9,518	$	(5,218,828	)		$	10,819,127

Total Non-Controlled and Controlled Affiliates		$	25,066,204	$	(5,496,135	)	$	93,384	$	9,518	$	(5,143,365	)		$	10,819,127

~~USTA~~17 provides investment management and administrative services required for the operation of the Company. In consideration of the services rendered by the Investment Adviser and, prior to the sale by the Investment Sub-Adviser, the Company pays a management fee based upon a percentage of the net assets of the Company invested or committed to be invested in certain types of investments and an incentive fee based in part on a percentage of realized capital gains of the Company as described in Note 2 to Item 1 above. Such fee is determined and payable quarterly. For the nine months ended July 31, 2007 and 2006, the Investment Adviser, the former Investment Adviser and the Investment Sub-Adviser (collectively, the “Advisors”) earned $509,020 and $1,040,862 in management fees, respectively. Management fees, recorded during the nine months ended July 31, 2007 decreased over the nine months ended July 31, 2006 due to a decrease in net assets. For the three months ended July 31, 2007 and 2006, the Advisers earned $160,975 and $197,744 in management fees, respectively. Management fees recorded during the three months ended July 31, 2007 decreased over the three months ended July 31, 2006 due to a decline in net assets under management.

NetTable Assetsof Contents

At July 31, 2007, the Company’s net assets were $63,703,968, or a net asset value per unit of membership interest of $215.79. This represents a decrease of $11,858,124 from the beginning net assets of $75,562,092, or a net asset value per unit of membership interest of $255.96, at October 31, 2006. The decrease resulted principally from a distribution to shareholders of $28.00 per share, which ultimately reduced net assets by $8,265,880 and unrealized losses on Direct Private Investments.


							For the Year Ended October 31, 2007 (Audited)
Name of Investment	Shares/Principal Amount Held at October 31, 2006	October 31, 2006 Fair Value		Purchases/ Conversion Acquisition			Sales Proceeds/ Conversion			Interest Received		Realized Gain/(Loss)			Shares/Principal Amount Held at October 31, 2007		October 31, 2007 Fair 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	)		—		—
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

~~Liquidity~~18 ~~and Capital Resources~~

TheTable Company will focus 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 distribution to investors. Contents

AtNote ~~July 31,~~7 ~~2007,~~— ~~the~~Pending ~~Company held~~Litigation $2,571 in cash and cash equivalents and $10,807,739 in short-term investments as compared to $2,934 held in cash and cash equivalents and $14,422,438 in short-term investments at October 31, 2006. The decrease in short-term investments from October 31, 2006 was principally due to follow-on investments in private companies as well as capital calls for private investment funds. The Company, during this period funded additional capital, totaling $3,371,731, per its commitments to the private investment funds. In connection with the Company’s total commitments to private funds in the amount of $25,700,000 since inception, the Company, through July 31, 2007, has contributed $18,693,096 or 72.70% of the total capital committed since inception. The Company also participated in follow-on financing rounds, totaling $2,130,539, for several of its private companies.

The ~~Company~~former ~~believes~~Investment Adviser, certain of its affiliates, including U.S. Trust, and others were named in four shareholder class action lawsuits and two derivative actions which allege that the former Investment Adviser, certain of its ~~liquidity~~affiliates and ~~capital~~others ~~resources~~allowed ~~are~~certain ~~adequate~~parties to ~~satisfy~~engage ~~its~~in ~~operational~~illegal ~~needs~~and asimproper ~~well~~mutual asfund trading practices, which allegedly caused financial injury to the ~~continuation~~shareholders of ~~its~~certain ~~investment~~mutual ~~program~~funds managed by the former Investment Adviser. Each seeks unspecified monetary damages and related equitable relief.

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

~~Under the~~While ~~supervision of~~ the ~~Company’s~~ultimate ~~Valuation~~outcome ~~and~~of ~~Audit~~these ~~Committees,~~matters ~~consisting~~cannot ofbe ~~the~~predicted ~~independent~~with ~~Managers~~any ofcertainty ~~the~~at ~~Company~~this time, ~~the~~based ~~Investment~~on ~~Adviser~~currently ~~makes~~available ~~certain~~information ~~critical~~and ~~accounting~~consultation ~~estimates~~ with ~~respect~~counsel, toBANA ~~the~~believes ~~valuation~~that ofthe ~~private~~likelihood ~~portfolio investments.~~is ~~These~~remote ~~estimates~~that ~~could~~the ~~have~~pending alitigation will ~~material~~materially ~~impact~~affect on the ~~presentation~~Investment ~~of the Company~~Adviser’s ~~financial~~ability ~~condition~~to ~~because~~provide ininvestment ~~total,~~management ~~they~~services ~~currently~~to ~~represent 76.52% of~~ the Company~~’s net assets~~. ~~For~~Neither the ~~private~~Investment ~~investments~~Adviser ~~held~~nor ~~at July 31, 2007, changes to these estimates, i.e. changes in~~ the ~~valuations~~Company ofis ~~these private investments, resulted in~~ a ~~$3,741,560~~party ~~increase~~to inthe ~~net~~lawsuits ~~asset~~described ~~value from October 31, 2006~~above.

~~The~~Note ~~value~~8 ~~for~~— ~~securities~~Guarantees for which no public market exists is difficult to determine. Generally speaking, such investments will be valued on a “going concern” basis without giving effect to any disposition costs. There is a range of values that is reasonable for such investments at any particular time. Because of the inherent uncertainty of valuation, the estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material.

22In the normal course of business, the Company enters into contracts that provide general indemnifications. The Company’s maximum exposure under these agreements is dependent on future claims that may be made against the Company, and therefore cannot be established; however, based on experience, the risk of loss from such claims is considered remote.

~~Application~~Note of9 ~~Critical~~— ~~Accounting~~Disclosure ~~Policies~~regarding ~~(continued)~~Private Investment Funds over 5% of Net Assets

~~Initially,~~CMEA ~~direct~~Ventures ~~private~~VI, ~~company~~L.P. ~~investments~~represents ~~are~~6.60% ~~valued~~of ~~based~~Net ~~upon~~Assets ~~their~~at ~~original~~July 31, ~~cost~~2008. ~~until~~The investment ~~developments~~objective ~~provide a sufficient basis for use~~ of ~~a valuation~~CMEA ~~other~~Ventures ~~than~~VI, ~~cost~~L.P. ~~Upon~~is ~~the~~to ~~occurrence~~invest ofin ~~developments~~and ~~providing~~assist anew ~~sufficient~~and ~~basis~~emerging ~~for~~growth-oriented abusiness ~~change~~that inare ~~valuation,~~involved ~~direct~~in ~~private company investments will be valued by~~ the ~~“private~~areas ~~market” or “appraisal” methods~~ of ~~valuation. The~~life ~~private~~science ~~market method shall only be used with respect to reliable third party transactions by sophisticated~~technology, ~~independent~~human ~~investors.~~healthcare ~~The~~and ~~appraisal~~high ~~method~~technology ~~shall~~companies bein ~~based~~order ~~upon~~to ~~such~~achieve ~~factors affecting the company such as earnings,~~ net ~~worth, reliable~~ ~~private~~rates ~~sale~~of ~~prices~~return ofon ~~the~~invested ~~company’s~~capital ~~securities,~~in the ~~market~~top ~~prices~~quartile ~~for similar securities~~ of ~~comparable~~venture ~~companies,~~capital anfunds ~~assessment~~ of the ~~company’s~~same ~~future~~vintage ~~prospects~~year. ~~or,~~CMEA ifVentures ~~appropriate~~VI, ~~liquidation value~~L.P. ~~The~~does ~~values~~not ~~for~~provide ~~the~~liquidity ~~investments referred~~ to inits ~~this~~partners ~~paragraph~~in ~~will~~the beform ~~estimated~~of ~~regularly~~redemptions byand ~~the~~explicitly ~~Investment~~states ~~Adviser~~that orno apartner ~~committee~~can withdraw ofits ~~the~~capital ~~Board,~~or ~~both~~profits. ~~under~~Liquidity ~~the~~is ~~supervision~~provided ofat the ~~Board,~~general ~~and,~~partner’s discretion in ~~any~~the ~~event,~~form ~~not~~of ~~less~~distributions ~~frequently~~in ~~than~~either ~~quarterly.~~cash ~~However,~~or ~~there~~marketable ~~can~~securities. beAdditionally, nothe ~~assurance~~general ~~that such~~partner ~~value~~of ~~will~~CMEA ~~represent~~Ventures ~~the~~VI, ~~return~~L.P. ~~that~~may ~~might~~approve ~~ultimately~~transfers; however, beit ~~realized~~is byat ~~the~~its ~~Company~~sole ~~from the investments~~discretion.

~~The~~Note ~~valuation~~10 of— ~~the Company’s~~New ~~private~~Accounting ~~funds~~Pronouncements is based upon its pro-rata share of the value of the assets of a private fund as determined by such private fund, in accordance with its partnership agreement, constitutional or other documents governing such valuation, on the valuation date. If such valuation with respect to the Company’s investments in private funds is not available by reason of timing or other event on the valuation date, or are deemed to be unreliable by the 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~~Effective ~~Investment~~November 1, ~~Adviser~~2007, ~~also~~the ~~makes~~Company ~~estimates~~adopted ~~regarding~~the ~~discounts~~Financial onAccounting ~~market~~Standards ~~prices~~Board of(“FASB”) ~~publicly~~interpretation No. 48, ~~traded~~“Accounting ~~securities~~for ~~where~~Uncertainty ~~appropriate~~in Income Taxes” (“FIN 48”). ~~For~~FIN ~~securities~~48 ~~which~~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 to be taken in the course of preparing the Company’s tax 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 it does not have ~~legal,~~a material ~~contractual~~impact on the Company’s financial statements. There are neither tax liabilities nor deferred tax assets relating to uncertain income tax positions taken or ~~practical~~expected ~~restrictions~~to be taken on ~~transfer~~the tax return for the year ended December 31, 2007. aThe ~~discount~~statute of ~~10%~~limitations toon ~~40%~~the ~~from~~Company’s U.S. Federal tax returns remains open for the ~~public~~years ~~market~~ended ~~price~~December 31, ~~will~~2005 bethrough ~~applied~~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.

~~Item~~19 ~~3. Quantitative and Qualitative Disclosures about Market Risk.~~

EquityTable Priceof Risk Contents

~~The~~Note ~~Company~~10 ~~anticipates~~— ~~that~~New aAccounting ~~majority~~Pronouncements of(continued) its investment portfolio will consist of securities in private companies and private investment funds, currently representing 76.52% of net assets, which 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 July 31, 2007 and October 31, 2006 the Company was not subject to equity price risk normally associated with public equity markets, except to the extent that the private investment funds that the Company has invested in has, from time to time, interests in securities which may be publicly traded.

~~Item~~FASB 4issued Statement No. 157 ~~Controls~~in September 2006, “Fair Value Measurements,” which is effective for financial statements issued for fiscal years beginning after November 15, 2007, and ~~Procedures~~interim periods within those fiscal years. This statement provides enhanced guidance for using fair value to measure assets and liabilities. It clarifies fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurements. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. The Company is reviewing the statement and its impact on the financial statements.

~~(a)~~FASB ~~Evaluation~~issued ~~of Disclosure~~Statement ~~Controls and Procedures~~No. ~~As of July~~ ~~31,~~159 ~~2007~~ (~~the~~“SFAS ~~end~~159”) ofin ~~the~~February ~~period~~2007, ~~covered~~“The byFair ~~this~~Value ~~report),~~Option ~~the~~for ~~Company’s~~Financial ~~principal~~Assets ~~executive officers~~ and Financial ~~principal~~Liabilities,” ~~financial~~which ~~officer~~is ~~evaluated~~effective ~~the~~for ~~effectiveness~~Financial ofStatements ~~the~~issued ~~Company’s~~for ~~disclosure controls~~fiscal ~~and~~year ~~procedures~~beginning ~~(as~~after ~~defined~~November 15, in2007. ~~the~~SFAS ~~Securities~~159 ~~Exchange~~permits ~~Act~~entities ofto ~~1934~~choose ~~Rules~~to ~~13a-15(e)~~measure ~~and~~many ~~15d-15(e))~~financial instruments and ~~have~~certain ~~concluded~~other ~~that,~~items ~~based~~at onfair ~~such evaluation~~value, with ~~the~~changes ~~Company’s~~in ~~disclosure~~fair ~~controls~~value ~~and~~recognized ~~procedures~~in ~~were~~earnings. ~~adequate~~The ~~and~~Company ~~effective~~is toreviewing ~~ensure that material information relating to~~ the ~~Company~~statement ~~was~~and ~~made~~its ~~known~~impact toon ~~them~~the byfinancial ~~others within those entities~~statements.

~~(b)~~Note ~~Changes~~11 ~~in Internal~~— ~~Controls.~~Subsequent ~~There~~Events were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

23Deferred income from the sale of investments has been increased from the period ending April 30, 2008 through July 31, 2008 due to a claim against the escrow account that occurred during the period. These escrowed monies have not been paid to the Company at August 29, 2008, which is the month in which the release was expected to occur. Hence, the provision for any claim against the escrow, is merely an estimate at July 31, 2008. The claims may result in a loss greater or less than the current estimate and those differences could be material relative to the estimate.

~~PART~~The IIremaining Genoptix, Inc. ~~OTHER~~shares ~~INFORMATION~~were sold subsequent to the period ending July 31, 2008. The sale generated proceeds of $981,610, net of commissions and selling costs. Additionally, the stock sales receivable of $3,939,128 as of July 31, 2008 was settled in August 2008.

~~Item~~20 ~~1. Legal Proceedings.~~

None.Table of Contents

Item 2. ~~Changes~~Management’s inDiscussion ~~Securities~~and Analysis of Financial Condition and ~~Use~~Results of ~~Proceeds~~Operations. For the Nine and Three months ended July 31, 2008 as Compared to the Similar Periods in 2007

~~None.~~ Realized and Unrealized Gains and Losses from Portfolio Investments

~~Item~~For the nine months ended July 31, 2008 and 2007, the Company had a net realized gain/(loss) on security transactions of $11,010,306 and ($3,972,070), respectively. ~~Defaults~~The ~~Upon~~realized ~~Senior~~gain ~~Securities~~of $11,010,306 for the nine months ended July 31, 2008 is comprised of gains from the Company’s partial sale of Genoptix, Inc. and the Company’s sale of Pilot Software Inc., which resulted in a realized gain of $16,361,537 and $75,463, respectively. This gain was partially offset by the realized losses from the Company’s write off of Midas Vision Systems, Inc. and NanoOpto Corporation, which resulted in a realized loss of ($5,054,960) and ($143,937), respectively. All other remaining direct investments and Private Investment Funds resulted in a net realized loss of ($227,797). The net realized (loss) for the nine months ended July 31, 2007 was principally the result of the Company’s sale of Silverback Systems, Inc, which resulted in a realized loss of ($7,580,196). This loss was partially offset by a realized gain of $3,033,984 from the Company’s sale of Pilot Software Inc. All other remaining direct investments and Private Investment Funds resulted in a net realized gain of $574,142 for the period ended July 31, 2007.

~~None~~For the nine months ended July 31, 2008 and 2007, the Company had a net change in unrealized (depreciation)/appreciation on investments of ($15,666,832) and $882,127, respectively. The net change in unrealized (depreciation) for the nine months ended July 31, 2008 was principally the combination of: i) the unrealized loss on OpVista, Inc. of ($7,650,806); ii) an unrealized loss on SOA Software, Inc. in the amount of ($5,681,135); iii) reversal of unrealized gains due to the sale of Genoptix, Inc. of ($6,645,429); and iv) an unrealized loss of ($1,300,748) on Tensys Medical, 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 the appreciation of CMEA Ventures VI, L.P. of $1,469,571. The remaining direct investments and Private Investment Funds resulted in a net unrealized loss of ($913,245). The net change in unrealized appreciation for the nine months ended July 31, 2007 was principally the combination of: i) the sale of Silverback Systems Inc. which resulted in a reversal in unrealized depreciation of $6,730,172 due to the reclassification from an unrealized loss to realized loss; ii) a decrease of ($4,840,466) due to the write-down of Cydelity, Inc., a private company investment; iii) an increase of $1,012,291 due to the write-up of OpVista Inc.; and iv) a decrease of ($3,320,399) due to a write-down of NanoOpto Corporation ; v) an increase of $1,350,001 due to a write-up of Archemix Corporation; vi) a decrease of ($1,521,144) due to a write-down on Tensys Medical, Inc.; and vii) an increase of $1,469,065 due to a write-up of Genoptix, Inc. The remaining change was a result of changes in the private investment funds and public stocks.

~~Item~~For 4the three months ended July 31, 2008 and 2007, the Company had a net realized gain on security transactions of $13,673,973 and $137,524, respectively. ~~Submission~~The net realized gain for the three-month period ended July 31, 2008 was principally the result of ~~Matters~~the toCompany’s partial sale of Genoptix, Inc. of $13,792,926. For the three months ended July 31, 2007, the net realized gain was principally the result of a ~~Vote~~net gain distribution of ~~Security~~$396,333 ~~Holders~~from the Private Investment Funds, that was offset by a contingent loss accrual relating to the Pilot Software, Inc. sale of ($258,809).

~~None~~For the three months ended July 31, 2008 and 2007, the Company had a net change in unrealized (depreciation) on investments of ($10,673,963) and ($2,859,433), respectively. The net change in unrealized depreciation for the three months ended July 31, 2008 was principally the combination of: i) the reclassification from unrealized appreciation to realized gain of Genoptix, Inc. of ($11,801,901); ii) the write-down of SOA Software, Inc. of ($185,000); and iii) the appreciation of CMEA Ventures VI, L.P. of $1,072,957, an overall increase in the valuation of the Company’s Private Investment Funds in the amount of $239,981. The net change in unrealized depreciation for the period ended July 31, 2007 was principally the result of the combination of: i) an increase of $1,350,001 and $1,469,065 due to write-ups on Archemix Corporation and Genoptix, Inc., respectively and ii) a decrease of ($3,320,399), ($1,521,144), and ($618,000) due to write-downs of NanoOpto Corporation, Tensys Medical, Inc., and Cydelity, Inc., respectively. The remaining change was a result of changes in the Private Investment Funds and public stocks.

~~Item~~21 ~~5. Other Information.~~

None.Table of Contents

~~Item~~Investment 6.Income ~~Exhibits~~ and ~~Reports~~Expenses ~~on Form 8-K.~~

For the nine months ended July 31, 2008, the Company had investment income of $250,929, primarily from investments in short-term securities, and net operating expenses of $1,031,521, resulting in a net investment loss of ($780,592). In comparison, for the similar period ended July 31, 2007, the Company had investment income of $516,037, primarily from investments in short-term securities, and net operating expenses of $1,018,338, resulting in a net investment loss of ($502,301). ~~Exhibits~~The decrease in investment income for the nine months ended July 31, 2008 is primarily due to decreases in interest income due to declines in short-term interest rates. For the nine months ended July 31, 2008, expenses increased due to higher professional fees charged to the Company.

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

For the three months ended July 31, 2008, the Company had investment income of $40,067 and net operating expenses of $367,886 resulting in a net investment loss of ($327,819). In comparison, for the similar period ended July 31, 2007, the Company had investment income of $135,960 and net operating expenses of $313,301, resulting in a net investment loss of ($177,341). The decrease in net investment income for the three months ended July 31, 2008 was a result of a decrease in short-term interest income. The increase in operating expenses was primarily due to higher professional fees charged to the Company.

~~(b)~~For ~~Reports~~the onnine ~~Form~~months ~~8-K~~ended July 31, 2008 and 2007, the Investment Adviser earned $495,945 and $509,020 in management fees, respectively. For the three months ended July 31, 2008 and 2007, the Investment Adviser earned $158,150 and $160,975 in management fees, respectively. Management fees recorded during the periods ended July 31, 2008 and July 31, 2007 are at an annual rate of 1.00% of net assets. The decrease in management fees coincides with the overall decreases in net asset over the comparable periods.

OnNet ~~July 2,~~Assets ~~2007, the Company filed a Current Report on Form 8-K to report under Item 8.01 certain disclosures.~~

24The Company’s net assets were $62,919,746, or a net asset value per unit of $213.14, at July 31, 2008. This represents a decrease of $9,422,453, or $31.91 per unit, from net assets of $72,342,199, or $245.05 per unit, at October 31, 2007. The net decrease resulted principally from a net decrease in net assets from operations of $5,437,188, or $18.41 per unit, and distributions to members of $3,985,335, or $13.50 per unit.

~~SIGNATURES~~Liquidity and Capital Resources

~~Pursuant~~The Company tofocuses ~~the~~its ~~requirements~~investments ofin the ~~Securities~~securities ~~Exchange~~of ~~Act~~privately-held ofventure ~~1934~~capital companies, asand ~~amended~~to a lesser extent in venture capital, ~~the~~buyout ~~registrant~~and ~~has~~other ~~duly~~private ~~caused~~equity ~~this~~funds ~~report~~managed by third parties. The Company may offer managerial assistance to certain beof ~~signed~~such onprivately-held venture capital companies. The Company invests its ~~behalf~~available bycash ~~the~~in ~~undersigned~~short-term ~~thereunto~~investments ~~duly~~of ~~authorized~~marketable securities pending follow-on investments in portfolio companies and distribution to investors.

	EXCELSIOR VENTURE PARTNERS III, LLC
Date: September 14, 2007	By:	/s/ David R. Bailin
	David R. Bailin
	Co-Chief Executive Officer
Date: September 14, 2007	By:	/s/ Raghav V. Nandagopal
	Raghav V. Nandagopal
	Co-Chief Executive Officer
Date: September 14, 2007	By:	/s/ Steven L. Suss
	Steven L. Suss
	Principal Financial Officer

At July 31, 2008, the Company held $21,130,822 in cash and cash equivalents and $984,128 short-term investments, as compared to $26,240 in cash and cash equivalents and $11,367,859 in short-term investments, at October 31, 2007. The overall increase in cash and short-term investments was primarily due to cash received from the sale of Genoptix, Inc. At July 31, 2008, the Company did not invest in any short-term notes. The Company funded additional capital per its commitments to its Private Investment Funds in the amount of $2,467,188 for the nine months ended July 31, 2008. In connection with the Company’s total commitments to private funds in the amount of $25,700,000 since inception, the Company, through July 31, 2008, has contributed $21,771,328 or 84.71% of the total capital committed to nine Private Investment Funds. During the nine months ended July 31, 2008, the Company also participated in follow-on financing rounds for several of its private companies totaling $570,223.

25The Company believes that its liquidity and capital resources are adequate to satisfy its operational needs as well as the continuation of its investment program.

Application of Critical Accounting Policies

Under 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. These estimates could have a material impact on the presentation of the Company’s financial condition because in total, they currently represent 53.29% of the Company’s net assets. For the private investments held at July 31, 2008, changes to these estimates and realizations resulted in a $5.6 million decrease in net asset value from October 31, 2007.

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

Initially, direct private company investments are valued based upon their original cost until developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct private company investments will be valued by the “private market” or “appraisal” methods of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. The appraisal method shall be based upon such factors affecting the company such as earnings, net worth, reliable private sale prices of the company’s securities, the market prices for similar securities of comparable companies, an assessment of the company’s future prospects or, if appropriate, liquidation value. The values for the investments referred to in this paragraph will be estimated regularly by the 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 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 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 Investment Adviser also makes estimates regarding discounts on market prices of publicly traded securities where appropriate. For securities which have legal, contractual or practical restrictions on transfer, a discount of 10% to 40% from the public market price will be applied.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

Equity Price Risk

The Company anticipates that a majority of its investment portfolio will consist of securities in private companies and Private Investment Funds. As of July 31, 2008, 53.29% 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 July 31, 2008 and July 31, 2007, the Company was not subject to equity price risk normally associated with public equity markets, except for Genoptix, Inc. and 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.

Item 4.

Controls and Procedures.

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

(b) Changes in Internal Controls. There were no significant changes in the 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 reporting. Accordingly, no corrective actions were required or undertaken.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

None.

Item 2.

Changes in Securities and Use of Proceeds.

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Submission of Matters to a Vote of Security Holders.

None.

Item 5.

Other Information.

None.

Item 6.

Exhibits and Reports on Form 8-K.

(a)

Exhibits.


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

31.2		Certification of Treasurer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

Reports on Form 8-K.

On May 30, 2008, the Company filed a Current Report on Form 8-K to report under Item 8.01 certain disclosures.

On July 16, 2008, the Company filed a Current Report on Form 8-K to report under Item 5.02 certain disclosures.

SIGNATURES

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


	EXCELSIOR VENTURE PARTNERS III, LLC

Date: September 15, 2008		By:	/s/ James D. Bowden
		James D. Bowden
		President and Chief Executive Officer

Date: September 15, 2008		By:	/s/ Steven L. Suss
		Steven L. Suss
		Treasurer and Chief Financial Officer

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