SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

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

For the fiscal year ended October 31, ~~2004~~2008

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

For the transition period from to

Commission file number: 000-29665

EXCELSIOR VENTURE PARTNERS III, LLC

(Exact Name of Registrant as Specified in Its Charter)


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

225 High Ridge Road

Stamford, CT 06905

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (203) 352-4400

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

Securities registered pursuant to Section 12(g) of the Act:

UNITS OF MEMBERSHIP INTEREST WITHOUT PAR VALUE

(Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

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

Large accelerated filer ¨ Accelerated file ¨ Non-accelerated filer x

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

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

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

TABLE OF ~~CON TENTS~~CONTENTS

Item No.		Form 10-KKReport ~~Report~~ Page
	PART I
1.	Business	1
2.	Properties	76
3.	Legal Proceedings	76
4.	Submission of Matters to a Vote of Security Holders	76
	PART II
5.	Market for Registrant’s Common Equity and Related Stockholder Matters	7
6.	Selected Financial Data	7
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
7A.	Quantitative and Qualitative Disclosures About Market Risk	1011
8.	Financial Statements and Supplementary Data	1112
9.	~~Changes~~Controls in and ~~Disagreements with Accountants on Accounting and Financial Disclosure~~Procedures	3033
9A	Controls and Procedures	30
9A (T).	Controls and Procedures	33
	PART III
10.	Managers and Executive Officers of the Registrant	3035
11.	Executive Compensation	3338
12.	Security Ownership of Certain Beneficial Owners and Management	3340
13.	Certain Relationships and Related Transactions	3440
14.	Principal Accountant Fees and Services	3441
	PART IV
15.	Exhibits and Financial Statement Schedules	3542

FACTORS THAT MAY AFFECT FUTURE RESULTS

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

PART I

ITEM 1.

BUSINESS.

Overview

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

~~U.S.~~Bank ~~Trust~~of ~~Company,~~America ~~N.A.~~Capital Advisors LLC (“BACA” or the “Investment Adviser”), ~~acting~~which ~~through~~has its ~~registered investment~~principal ~~advisory~~offices ~~division,~~at ~~U.S.~~100 ~~Trust~~Federal ~~Company~~Street, ~~N.A.~~Boston, ~~Asset~~MA ~~Management Division~~02110, serves as ~~Investment~~the ~~Adviser~~investment adviser to the Company. ~~United~~BACA ~~States~~is ~~Trust~~a ~~Company~~Delaware limited ofliability ~~New~~company ~~York,~~which ~~acting~~is ~~through~~registered ~~its~~as ~~registered~~an investment ~~advisory~~adviser ~~division,~~under ~~U.S.~~the ~~Trust~~Investment -Advisers ~~New~~Act ~~York Asset~~of ~~Management Division~~1940, ~~serves~~as ~~Investment~~amended ~~Sub-Adviser to the Company~~ (~~together,~~ the “~~Investment~~ Advisers Act”). The Investment ~~Advisers~~Adviser ~~provide~~is ~~investment management services to the Company pursuant to~~ an ~~investment~~indirect ~~advisory~~wholly-owned ~~agreement~~subsidiary ~~dated September 8~~of, ~~2000~~ and ancontrolled ~~investment sub-advisory agreement dated September 8~~by, ~~2000~~Bank ~~(together~~of America ~~the~~Corporation (“~~Investment~~Bank ~~Agreements~~of America”)~~. U.S. Trust Company~~, ~~N.A. and United States Trust Company of New York are each~~ a ~~wholly-owned~~bank ~~subsidiary~~holding ofand ~~U.S. Trust Corporation,~~ a ~~registered~~financial ~~bank~~ holding company. ~~U.S.~~which ~~Trust~~has ~~Corporation~~its isprincipal anexecutive ~~indirect~~offices ~~wholly-owned~~at ~~subsidiary~~101 ofNorth ~~The~~Tryon ~~Charles~~Street, ~~Schwab~~Charlotte, ~~Corporation~~North Carolina 28255. All officers of the Company are employees and/or officers of the Investment ~~Advisers~~Adviser. The Investment ~~Advisers~~Adviser ~~are~~is responsible for performing the management and administrative services necessary for the operation of the Company.

~~Pursuant~~Prior to aMay 29, ~~Registration~~2008, ~~Statement~~the onCompany’s ~~Form~~investment ~~N-2~~adviser ~~(File~~was ~~333-30986)~~UST Advisers, ~~which~~Inc. ~~was~~(“USTA”). ~~originally~~On ~~declared~~May 29, ~~effective~~2008, onBACA ~~September~~assumed 7,the responsibilities ~~2000,~~of the ~~Company~~investment ~~was authorized~~adviser to ~~offer~~the anCompany ~~unlimited~~as ~~number~~a result of ~~units~~a transfer (the “Transfer”) of ~~membership~~USTA’s ~~interest~~rights ~~with~~and noobligations ~~par~~under ~~value~~the Advisory Agreement (as defined below) between the Company and USTA dated July 1, 2007. The Transfer was approved by the Company’s ~~sold~~Board ~~295~~of Managers on March 11,~~210~~ ~~units~~2008. ~~via~~This change was a ~~public~~product ~~offering,~~of ~~which~~corporate ~~closed~~mergers onresulting ~~May~~from ~~11,~~the ~~2001,~~acquisition ~~for~~by ~~gross~~Bank ~~proceeds~~of ~~totaling~~America ~~$147,605,000~~of ~~(including~~U.S. ~~one~~Trust ~~share~~Corporation ~~purchased~~(“U.S. Trust Corp.”) ~~for~~in ~~$500~~July as2007. The Transfer of ~~July~~the 7,Advisory ~~2000~~Agreement byfrom ~~David~~USTA I.to ~~Fann,~~BACA ~~who~~did ~~was~~not atchange (i) the ~~time~~way the Company’s ~~President~~is ~~and~~managed, ~~Co-Chief~~including ~~Executive~~the ~~Officer~~level of services provided, (ii). the ~~Units~~team of ~~the~~investment professionals providing services to the Company, ~~were~~or ~~made~~(iii) the ~~available~~management ~~through~~and ~~Charles~~incentive ~~Schwab~~fees &the CoCompany pays. Until July 1, ~~Inc.~~2007, ~~the~~United States Trust Company’s, ~~principal~~National ~~distributor~~Association (“U.S. Trust”) acting through its registered investment advisory division, U.S. Trust-New York Asset Management Division had served as the investment sub-adviser to the Company (the “~~Distributor~~Investment Sub-Adviser”).

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

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

agreement with the Company (the “Advisory Agreement”) that was approved at a special meeting of Members of the Company held on March 15, 2007 and was identical in all material respects except for the term and the date of effectiveness to the previous investment advisory agreement. The Investment Sub-Adviser ceased to serve as the investment sub-adviser to the Company after the Sale.

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

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

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

The following is a summary of the Company’s investment portfolio.

LOGO

1* This amount represents money market instruments and other cash equivalents held to fund follow-on investments in private companies, to meet contractual commitments to private investment funds and operation expense requirements of the Company.

~~Table~~Percentages are derived by taking each investment’s fair value within an industry divided by the total fair value of ~~Contents~~the Company’s portfolio investments; thus the percentages are not based on the net asset value of the Company.

(a) This amount represents money market instruments held to fund follow-on investments in private companies and operational expense requirements of the Fund.

(b) This amount represents money market instruments held to meet contractual commitments to Private Investment Funds.

INVESTMENTS HELD—PRIVATE

• Adeza Biomedical Corporation

Description: Develops, manufactures, and markets diagnostic products for women’s reproductive healthcare. The company’s primary focus is on proprietary diagnostic tests to help physicians and patients determine the likelihood of pre-term delivery. The company’s product, the ffN test, is considered the “Gold Standard of Care” by the American College of Obstetricians and Gynecologists, and is now used in over 1000 U.S. hospitals.

2004 Activity: As of December, 2004, Adeza has had nine consecutive positive quarters. The company held its IPO on December 10, 2004, settling with a gain of 23.1 percent at $19.70 per share after pricing $16. UBS Investment Bank is the lead underwriter for the IPO. Adeza’s primary business of predictive pre-term delivery continues to grow. The company is developing several other products in order to expand its product platform to other areas, including cancer detection.

Investment: The Fund invested $3.0 million in September 2001. Enterprise Partners and Sprout Asset Management are also investors in Adeza.

• Archemix Corporation

Description: seeks to discover aptamer-based therapeutics in the inflammation and oncology areas using proprietary selected nucleic acid technology. The company expects to have its first product in clinical trials in 2004. In 2003, the company brought on a world class biotechnology entrepreneur, Errol De Souza, to further advance the company’s development.

2004 Activity: Cardiac drug Nuvelo’s development continues to progress and is currently (as of mid-December 2004) in a Phase I safety trial. The company expects to file several New Drug Applications (NDA) for newly developed classes of drugs. These drugs use aptamers to treat chronic diseases in the cardiac, pain and opthamology areas.

Investment: The Fund’s investment was staged into four tranches. The first tranche of $0.6 million was invested in August 2002 and the second tranche of $0.7 million was drawn in January 2003. In the 2004 fiscal year, a third tranche of $0.7 million was invested in November 2003. The fourth tranche of $0.2 million was drawn in March 2004. Schroder Ventures Life Sciences, Atlas Venture, Prospect Venture Partners, Care Capital, MDS Capital, and POSCO Bio Venture also invested in Archemix.

• Chips & Systems

Description: Chips & Systems, founded in 2004, is positioned to lead the first significant integrated circuit (IC) technology development to market in 15 years. CHIPS is designing and developing the revolutionary “adaptive silicon platform”; the ideal IC solution for the high-growth multimedia market. Managed by a team

ofInvestments ~~professionals,~~Held ~~CHIPS~~— ~~will~~Private launch adaptive silicon hardware platforms enabled by unique computing technology architecture. The CHIPS platforms offer greater flexibility, higher performance, low power, a faster time-to-market and a substantial lowering of cost for new, state-of-the-art, feature-rich products.

~~2004~~Archemix ~~Activity:~~Corporation ~~The company was founded by industry veteran Gordon Campbell on July 6, 2004. Its headquarters were established in Santa Clara, CA.~~ (“Archemix”)

~~Investment~~Description: ~~The~~Archemix ~~Fund~~is a ~~invested~~biopharmaceutical $3company leading the development of aptamers as a new class of directed therapeutics for the prevention and treatment of chronic and acute disease.5 ~~million~~Aptamers can be used in ~~March~~a wide range of disease areas, ~~2004~~including inmany of those currently addressed by protein-based therapeutics, and can be produced quickly and economically. With a portfolio of over 300 patents and patent applications, Archemix holds the ~~Series~~key Ato ~~preferred~~the ~~round~~development of ~~financing~~aptamer technology and its implications for the pharmaceutical industry. Archemix is focused on using its expertise to aggressively pursue drug discovery and development in a variety of areas. As of October 31, 2008, the Company has invested $2.7 million in Archemix and values its investment at $2.2 million.

•2008 ~~Datanautics~~Activity and Outlook: Archemix continues to progress in terms of development of aptamer products, patents and collaboration agreements. Archemix announced on November 18th, 2008 a proposed merger with NitroMed, Inc., which trades on the NASDAQ under the symbol NTMD, whereby Archemix would be the surviving company. The proposed merger should allow the company to grow its business through this difficult financing environment. The merger is subject to various shareholder approvals and is expected to be completed by the second quarter of 2009. More information can be found on Form 8K regarding the transaction filed by/on behalf of NitroMed, Inc. on December 8, 2008.

~~Description: Developer and marketer of web analytics and data management software that provides detailed information about visitors on corporate or commercial websites~~Ethertronics, ~~including paths taken and usage behavior~~Inc. ~~The company has over forty active customers including Citibank, Knight Ridder, and Macy’s.~~ (“Ethertronics”)

~~2004 Activity~~Description: ~~The~~Ethertronics ~~company~~designs ~~has~~and ~~expanded~~manufactures ~~its~~the ~~offerings~~industry’s toonly ~~online~~Isolated ~~fraud~~Magnetic ~~management~~DipoleTM (“IMD”) internal antennas for wireless devices. Used in cellular and ~~Web~~wireless ~~forensics~~LAN asapplications—phones, anotebooks, ~~growth~~LAN ~~strategy.~~cards, ~~The~~PDAs, ~~company released~~Bluetooth adevices ~~new~~and ~~product~~GPS toreceivers—IMD ~~the~~antennas ~~financial~~provide ~~services~~longer-range, ~~industry~~increased signal strength and improved voice/data quality inside buildings, particularly in ~~Dec~~noisy ~~2004~~environments and ~~currently~~in isfringe network coverage areas. As of October 31, 2008, the Company has invested $9.2 million in ~~beta~~Ethertronics ~~testing~~and ~~with~~values ~~select~~its ~~customers~~investment at $9.2 million.

~~Investment~~2008 Activity and Outlook: ~~The~~In ~~Fund~~2008, ~~invested~~Ethertronics $0met key sales, operations and cash flow goals set by the investors and board.5 ~~million~~Ethertronics inhas become ~~August~~a ~~2003~~key supplier to top tier vendors like Amoi, Casio, Compal, HP, Lenovo, Mobicom, Samsung, Symbol/Motorola and $3Techfaith.5 ~~million~~Ethertronics’ plan for next year includes a meaningful increase in ~~September~~revenue ~~2003~~and cash flow.

•SOA ~~Ethertronics~~Software, Inc. (“SOA” f/k/a LogicLibrary, Inc.)

Description: ~~Developer~~SOA is the leading provider of a software system that enables the management and ~~manufacturer~~reuse of ~~embedded~~software ~~antennas~~development assets for ~~personal~~large ~~mobile~~enterprises ~~devices~~and IT environments. ~~Its~~SOA’s ~~internal~~patent-pending ~~antenna~~technology provides ~~technologies~~a ~~significantly~~comprehensive ~~enhance the~~and ~~signal~~collaborative ~~quality~~approach for creating, ~~increase~~migrating ~~the~~and ~~range~~integrating enterprise applications for use in service-oriented architecture, web services and ~~help~~other ~~extend~~software ~~the~~development ~~battery~~initiatives. ~~life~~As of ~~mobile~~October 31, ~~devices~~2008, the Company has invested $5.7 ~~Embedded~~million ~~antennas~~in ~~are~~SOA ~~used~~and byvalues ~~mobile~~its ~~phone,~~investment ~~PDA,~~at ~~laptop,~~zero. ~~GPS~~As the Company’s equity position in SOA is junior to other preferred shareholders, ~~Bluetooth~~despite ~~and~~some ~~Wireless~~positive ~~LAN~~news ~~device~~SOA ~~manufacturers~~is valued at zero.

~~2004~~2008 Activity and Outlook: The ~~company~~merger ~~has~~between ~~set~~SOA upand aLogicLibrary, ~~new~~Inc. ~~design~~was ~~center~~successfully completed in May 2008. While SOA Software has ~~Korea~~outstanding ~~and~~run-time isor ~~establishing~~operationally ~~some~~focused ~~manufacturing~~service-orientated ~~capabilities~~architecture ingovernance ~~China~~solution, the addition of LogicLibrary, Inc.’s Itcore ~~has~~strength ~~also~~in ~~completed~~development ~~beta~~and ~~testing~~design time governance will expand their product suite. With the addition of ~~its~~Logidex, ~~next-generation~~the ~~antenna~~combined ~~technologies~~company can offer differentiated governance solutions that ~~will~~start ~~improve~~with ~~performance~~Planning upGovernance (Logidex) flows to ~~2x,~~LifeCycle asGovernance ~~compared~~(Logidex toand ~~current~~Workbench) ~~solutions.~~and ~~These~~finally ~~new~~Run-time ~~technologies~~Governance ~~are~~(Service Manager). The combination of ~~expected~~these toproducts creates a broad and integrated governance suite that can be ~~launched~~managed infrom a single focal point. The company has several strategic initiatives underway to ensure the ~~first~~SOA ~~quarter~~can ofcontinue ~~2005.~~to grow during this difficult financing environment.

Investment: The Fund initially invested $3.5 million in June 2001, and invested an additional $1.2 million in the company in September 2002 and $1.0 million in July 2003. A follow-on investment of $1 million was added in May 2004. Sevin Rosen is a co-investor in Ethertronics.

• Genoptix, Inc.

Description: Developer of a breadth of services that focus on the challenges faced after a cancer diagnosis to make optimal treatment decisions and monitor disease.

2004 Activity: Genoptix’ personalized medicine initiative is building sales traction. The medical profession has lauded the company’s personalized chemotherapy treatment of patients with blood borne cancers, as the product has given better treatment and better outcomes.

Investment: The Fund invested $2.5 million in December 2001 and has invested an additional $0.4 million in July 2003 and $0.3 million in September 2003. In the 2004 fiscal year, two add-on investments were made in December 2003 ($.5 million) and August 2004 ($.3 million). Other investors include Alliance Technology Ventures, Enterprise Partners, Lotus Biosciences Investment Holdings, and Tullis-Dickerson & Co., Inc.

• LightConnect, Inc.

Description: Designer and manufacturer of MEMS (micro electro-mechanical systems) components for optical networks. LightConnect’s product is meeting the need for configurability in optical networks by enabling rapid dynamic bandwidth and circuit provisioning.

2004 Activity: The company is on target to at least double its revenues from 2003 and is considered to be the market leader in the VOA product lines. Customers of the company are large communications, networking and service providers in the United States, Europe and Asia.

Investment: The Fund invested $5.0 million in LightConnect in July 2001 and made a $1.0 million follow-on investment in December 2002. The other investors in LightConnect are Sevin Rosen, Incubic, Morgenthaler, and US Venture Partners.

• LogicLibrary, Inc.,

Description: Provider of software and services that help enterprises develop better software applications and integrate them faster. The company’s patent-pending technology provides software development organizations with comprehensive, intuitive tools for effectively and efficiently capturing, understanding, leveraging and managing their software development assets.

~~2004 Activity: Most notable among the company’s customer wins this year was the signing of a license to implement LogicLibrary program Logidex within IBM’s Software Development Group. In September~~OpVista, ~~Logic Library announced its acquisition of BugScan,~~ Inc., ~~an affiliate of HBGary, LLC. BugScan’s breakthrough technology enables developers to easily conduct security scans on an application’s binaries without requiring the source code.~~ (“OpVista”)

~~Investment~~Description: ~~The~~Description: ~~Fund~~OpVista ~~invested~~provides $2advanced optical network solutions for advanced video and IP services.0 ~~million~~OpVista’s reconfigurable inoptical ~~LogicLibrary~~transport insystems ~~January~~are ~~2002~~uniquely suited to deliver triple play convergence, especially advanced video and ~~invested~~IP anservices, ~~additional~~for ~~$0.7~~cable ~~million~~and incommunications ~~August~~service ~~2003~~providers. InAs ~~May~~of ~~2004~~October 31, 2008, the Company has invested $15.4 ~~Fund~~million ~~made~~in aOpVista ~~follow-on~~and values its investment ofat $zero.7 ~~million.~~As ~~Birchmere~~the ~~Ventures,~~Company’s ~~Novak~~equity ~~Biddle~~position ~~Venture~~in ~~Partners~~OpVista is junior to other preferred shareholders, ~~and~~despite ~~The~~some ~~Future~~positive ~~Fund~~news ~~also~~OpVista ~~invested~~is invalued ~~the~~at ~~company~~zero.

•2008 ~~Monterey~~Activity ~~Design~~and ~~Systems~~Outlook: OpVista is going into telecom equipment markets because the opportunities in the Company’s previous markets for cable equipment have declined during 2007. Due to this decline in business relative to the business plan and the change in marketing, ~~Inc~~the Company needed to raise additional equity. There is a long time horizon needed to achieve significant revenue progress in telecom markets so we do not expect rapid growth in revenues for 2008-2009.

~~Description:~~Tensys ~~Developer~~Medical, ~~of advanced physical design software solutions for the semiconductor industry~~Inc. ~~Leading~~(“Tensys”) ~~semiconductor companies have adopted~~ ~~Monterey’s products to dramatically increase their design productivity.~~

~~2004 Activity~~Description: InTensys ~~the~~designs, ~~fourth~~develops, ~~quarter~~manufactures ofand ~~2004~~markets a continuous, ~~the~~non-invasive ~~company~~arterial ~~entered~~blood ~~into~~pressure amanagement system. ~~strategic~~This ~~sale~~method ~~with~~is ~~one~~more effective than intermittent cuff-based systems and far less invasive than arterial cannulation. As of ~~the~~October 31, ~~largest~~2008, ~~Electronic~~the ~~Design~~Company ~~Automation~~has ~~(“EDA”)~~invested ~~vendors~~$6.8 million in ~~the~~Tensys ~~industry,~~and ~~whereby~~values ~~Monterey~~its ~~will become~~investment ~~part~~at ofzero. As the Company’s ~~larger~~equity ~~entity~~position in ~~providing~~Tensys ~~EDA~~is ~~tools~~junior to ~~semiconductor~~other ~~companies~~preferred shareholders, despite some positive news Tensys is valued at zero.

~~Investment~~2008 Activity and Outlook: ~~The~~Tensys ~~Fund~~continues ~~invested~~to $3invest in research and development to refine its non-invasive blood-pressure-monitoring products to improve market acceptance.0 ~~million~~Feedback infrom ~~the~~customers ~~company~~and inincreased ~~December~~usability ~~2001~~of Tensys’ new products indicate that earlier usability issues, ~~and~~which ~~made~~were a ~~follow-on~~key ~~investment~~stumbling inblock, ~~the~~have ~~amount~~been ofaddressed $4successfully.8 ~~million~~Tensys inand ~~the~~its ~~company~~board inof ~~June~~directors ~~2003.~~agreed ~~Other~~to ~~investors~~a ~~include~~merger ~~Sevin~~and ~~Rosen~~acquisition ~~Funds, US~~transaction ~~Venture~~with ~~Partners,~~a ~~Rho~~privately ~~Capital~~held ~~Partners,~~company. This ~~Vertex~~transaction ~~Partners,~~will ~~Information~~not ~~Technology~~provide ~~Ventures,~~any liquidity to the Company and ~~LSI~~is ~~Logic~~expected to occur in first quarter 2009.

•Investments ~~NanoOpto~~Held ~~Corporation~~— Public

~~Description: Designer and manufacturer of integrated optical components using nanotechnology manufacturing technology platforms. The company is replacing today’s discrete~~Genoptix, ~~costly, space-hungry bulk optics with a coherent family of functional optical building blocks called Modular Nano-Optics~~Inc. (“Genoptix”)

~~2004 Activity~~Description: ~~The~~Genoptix ~~company~~provides isPersonalized ~~ramping~~Medicine upServices ~~sales~~to hematologists and oncologists and their patients through its CLIA- and CAP-certified testing laboratory to ~~meet~~aid in the ~~orders~~treatment ~~generated~~of ~~from~~blood ~~large~~and bone-marrow ~~consumer~~malignancies. ~~electronics,~~Genoptix’s ~~cell~~Personalized ~~phones~~Medicine Services combines proprietary and ~~display~~exclusive ~~manufacturers. The~~tests ~~company~~with ~~recently~~advanced ~~hired~~clinical atechniques VPto ofprovide ~~Operations~~comprehensive evaluation to ~~help~~individual ~~with~~patients. ~~building~~Genoptix ~~the~~tests ~~firm~~monitor an individual patient’s ~~manufacturing~~response to chemotherapeutic agents in leukemia and other blood-related cancers. These services help physicians deliver personalized patient management which results in accurate diagnoses, ~~testing~~more effective treatment, reduced adverse effects, enhanced monitoring and ~~supply~~improved ~~chain~~outcomes ~~capabilities~~As of October 31, 2008, the Company has liquidated its position in Genoptix.

~~Investment:~~2008 ~~The~~Activity ~~Fund~~and ~~initially~~Outlook: ~~invested~~Genoptix ~~$2.0~~which ~~million~~trades inon ~~NanoOpto~~the inNASDAQ ~~October~~under ~~2001,~~the ~~and~~symbol ~~has~~GXDX, ~~followed~~was onsold ~~with~~down ~~two~~strategically ~~additional~~over ~~$0.2~~the ~~million~~course ~~investments in~~of ~~March~~a ~~2002~~ten ~~and~~month ~~September 2003~~period. ~~Four~~The ~~follow-on~~Company ~~investments~~invested ~~totaling~~ $14.8 million ~~were~~in ~~made~~Genoptix inand ~~the~~generated ~~2004~~proceeds ~~fiscal~~of ~~year~~$21.5 million ~~Bessemer~~through ~~Venture~~the ~~Partners,~~sales ~~Morgenthaler,~~for ~~and~~a ~~New~~4.5X ~~Enterprise~~return ~~Associates~~on ~~are~~its ~~co-investors~~investment inwith ~~NanoOpto~~an IRR of 31%.

•Exits ~~OpVista, Inc.~~

~~Description:~~The ~~Develops,~~Company ~~markets~~liquidated ~~and~~its ~~manufactures~~interest ~~Dense Wavelength Division Multiplexing (DWDM)-based optical networking equipment for deployment~~ in ~~long~~ ~~haul,~~eleven ~~regional~~of ~~metro~~its ~~networks~~portfolio ~~carriers,~~companies ~~and~~since ~~cable companies~~inception. ~~OpVista’s~~As ~~ultra-DWDM~~a ~~products~~result ~~allow~~of ~~service~~these ~~providers to build flexible~~exits, ~~scalable,~~the ~~and~~Company ~~cost-effective~~realized ~~networks~~proceeds ~~while~~of $64.0 ~~seamlessly integrating legacy networks~~million. ~~The~~Total ~~company’s products~~cost ~~are~~for ~~being~~these ~~successfully~~eleven ~~used~~companies bywas ~~Time~~$64.6 ~~Warner cable~~million.

~~2004~~The ~~Activity:~~Company Inmade ~~2004, the company was selected as~~ a ~~preferred~~$4.8 ~~vendor~~million byinvestment ~~one~~in ofGenoptix ~~the~~in ~~largest~~July 2003. ~~cable~~After ~~service~~Genoptix ~~providers~~went ~~and~~public ~~has~~in ~~won~~late ~~business~~2007, ~~with a number of divisions with other MSOs. Currently~~ the ~~focus~~Company isbegan ~~on building the manufacturing capabilities~~ to ~~deliver~~strategically ~~these~~liquidate ~~orders~~its byposition ~~the~~and ~~end~~as ofa ~~the~~result ~~first~~generated ~~quarter~~proceeds of ~~2005~~$21.5 ~~The~~million ~~company~~for ~~has~~a ~~also~~4.5X ~~expanded~~return ~~the~~on ~~management~~its ~~team,~~investment ~~hiring~~with aan VPIRR of ~~Engineering and VP of Operations to grow the business to the next level~~31%.

Investment: The Fund invested $4.0 million in OpVista in July 2001 and subsequently, a follow-on investment in the amount of $2.5 million was made in September 2003. Sevin Rosen and Incubic are investors in OpVista.

• Pilot Software, Inc.

Description: Developer and marketer of enterprise business performance management and business intelligence analytics software. Pilot currently has over 400 active customers including several Global 1000 companies such as United States Government GSA, Swiss Life, Nokia, and Noro Nordisk.

2004 Activity: The company launched a new product suite of performance management software (PilotWorks). Pilot also opened up two new channels in Europe, further enhancing their penetration outside of the United States.

~~Investment:~~Investments ~~The~~Held ~~Fund’s~~— ~~initial~~Third ~~investment~~Party ofInvestment ~~$3.0~~Funds ~~in May 2002 was followed by a $1.0 million investment in April 2003. The Fund made three follow-on investments totaling $750,000 in 2004. Other investors include G51.~~

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

~~Description:~~Burrill ~~Provider~~Life ofSciences ~~silicon~~Capital ~~and~~Fund ~~software~~(“Burrill”) ~~solutions~~is ~~that~~a ~~enable~~$200 IPmillion venture capital fund established to invest primarily in innovative, early-~~based~~stage ~~storage~~life ~~area~~science ~~networks~~venture ~~and~~opportunities. ~~data~~As ~~center~~of ~~systems~~October 31, 2008, Burrill has drawn approximately $2.3 million of the Company’s $3.0 million capital commitment. At October 31, 2008, the total value (fair market value plus distributions) of this investment was $1.6 million.

~~2004~~CHL ~~Activity:~~Medical ~~The~~Partners ~~company~~II, ~~had~~L.P. (“CHL”) is a ~~number~~$125 ofmillion ~~design~~venture ~~wins~~capital ~~with~~fund ~~storage~~ targeting start-up and ~~networking~~early-stage ~~vendors~~medical technology and islife ~~planning~~sciences tocompanies. ~~increase~~As ~~revenues~~of inOctober 31, ~~2005~~2008, CHL has drawn approximately $1.9 million of the Company’s $2.0 million capital commitment. At October 31, 2008, the total value (fair market value plus distributions) of this investment was $1.5 million.

~~Investment:~~CMEA ~~Initially~~Ventures VI, ~~the~~L.P. ~~Fund~~(“CMEA”) ~~invested~~is a $~~1.4~~100 million inventure ~~Silverback~~capital infund ~~February~~targeting ~~2002.~~both ~~Subsequent~~early ~~rounds~~life ofscience ~~financing~~and ~~include~~information atechnology $1companies.5 ~~million~~As ~~follow-on~~of ~~investment~~October 31, in2008, ~~March~~CMEA ~~2003,~~has adrawn approximately $12.53 million ~~follow-on~~of ~~investment in September 2003 and~~the aCompany’s $.3.0 million ~~follow-on~~capital ~~investment~~commitment. inAt ~~April~~October 31, ~~2004.~~2008, ~~Other~~the ~~investors~~total ~~include~~value ~~J.P.~~(fair ~~Morgan~~market ~~Partners,~~value ~~Newbury~~plus ~~Ventures,~~net ~~Pitango~~distributions) ~~Venture~~of ~~Capital,~~this ~~and~~investment ~~Gemini~~was ~~Israel~~$2.8 ~~Funds~~million.

•Morgenthaler ~~Tensys~~Venture ~~Medical~~Partners VII, ~~Inc~~L.P. (“Morgenthaler”) is an $850 million venture capital fund targeting multi-stage information technology, communications and health care companies. As of October 31, 2008, Morgenthaler has drawn approximately $2.9 million of the Company’s $3.0 million capital commitment. At October 31, 2008, the total value (fair market value plus distributions) of this investment was $1.8 million.

~~Description:~~Prospect ~~Tensys~~Venture ~~Medical~~Partners II, ~~Inc~~L.P. ~~designs,~~(“Prospect”) ~~develops~~is a $500 million venture capital fund targeting multi-stage life sciences companies. As of October 31, ~~manufactures~~2008, ~~and~~Prospect ~~markets~~has adrawn ~~continuous~~approximately $2.6 million of the Company’s $3.0 million capital commitment. At October 31, ~~non-invasive~~2008, ~~arterial~~the ~~blood~~total ~~pressure~~value ~~management~~(fair market value plus distributions) of this investment ~~systems~~was $1.6 million.

~~2004~~Sevin ~~Activity:~~Rosen ~~Tensys~~IX, isL.P. ~~set~~(“Sevin toRosen”) ~~launch~~ is a ~~second~~top-~~generation~~tier ~~product~~early-stage toventure ~~provide~~capital ~~real-time~~firm, ~~beat-to-beat~~which ~~blood~~closed ~~pressure~~a $305 inmillion ~~surgeries~~venture ~~where,~~capital ~~currently,~~fund adedicated ~~blood~~to ~~pressure~~early-stage ~~cuff~~technology ~~is used~~investments. ~~This~~As ~~product~~of ~~will~~October 31, ~~give~~2008, ~~the~~Sevin ~~anesthesiologist~~Rosen ~~better~~has ~~information~~drawn ~~about~~approximately ~~the~~$2.3 ~~patient’s~~million ~~status,~~of ~~thereby allowing~~ the ~~surgical~~Company’s ~~team~~$3.0 tomillion ~~more~~capital ~~quickly~~commitment. ~~respond~~At toOctober 31, ~~changes~~2008, inthe total ~~patient~~value ~~condition—thus~~(fair ~~providing~~market ~~better~~value ~~surgical~~plus ~~outcomes.~~distributions) Weof ~~expect Tensys to launch~~ this ~~new~~investment ~~product~~was in$1.7 ~~the first quarter of 2005~~million.

~~Investment:~~Tallwood ~~The~~II, ~~Fund~~L.P. ~~invested~~(“Tallwood”) is a $~~5.0~~150 million inventure ~~Tensys~~capital fund established to invest in ~~March~~attractive, ~~2002.~~early-stage ~~A follow~~growth companies possessing leading-onedge ~~investment~~technology in the semiconductor industry. As of October 31, 2008, Tallwood has approximately $13.40 million ~~was~~of ~~made~~the Company’s in$3.0 ~~May~~million ~~2004~~capital commitment. ~~Other~~At ~~investors~~October 31, ~~include~~2008, ~~Crosspoint~~the ~~Venture~~total ~~Partners,~~value ~~Enterprise~~(fair ~~Partners,~~market ~~Versant~~value ~~Ventures,~~plus ~~and~~distributions) ~~Sofinnova~~of ~~Ventures~~this investment was $2.0 million.

•Valhalla ~~Virtual~~Partners, ~~Silicon~~L.P. ~~Technology~~(“Valhalla”) is a $200 million venture capital fund established to invest in attractive early-stage venture capital investments in information technology companies in the Mid-Atlantic region. As of October 31, ~~Inc~~2008, Valhalla has drawn approximately $2.6 million of the Company’s $3.0 million capital commitment. At October 31, 2008, the total value (fair market value plus net distributions) of this investment was $2.4 million.

~~Description:~~The ~~Supplier~~Company ofcontinues ~~semiconductor~~to ~~intellectual~~monitor ~~property~~the ~~and~~progress ~~process~~of ~~technology~~the toCompany’s ~~manufacturers~~investments ~~and~~in ~~designers~~light of ~~systems-on-chip.~~the ~~Virtual~~current ~~Silicon~~economic ~~has~~environment. ~~licensed~~While ~~and~~our ~~delivered~~short-term ~~its~~outlook ~~Silicon~~for ~~Ready®~~liquidity ~~library~~appears ~~products~~challenging, tothere ~~hundreds~~is ~~of customers~~still ~~including~~value ~~semiconductor~~in ~~manufacturers,~~the ~~foundries~~investments the Company owns. Thus, ~~ASSP~~the ~~designers~~Company’s commitment to maximize the value from the investments is our highest priority. Lastly, the Company is managing the liquidity it possess in a judicious manner in light of the challenging financing environment and ~~systems~~intends ~~developers~~to dedicate its resources to those opportunities that possess the greatest potential.

2004 Activity: The company successfully expanded into low power management market segments and is receiving excellent customer feedback on their new product offerings. Sample customers include large consumer electronics, semiconductor and cell phone manufacturing companies.

Investment: The Fund invested $5.0 million in the company in December 2001. A follow-on investment in the amount of $.1 million was made in October 2004. Infinity Capital, Walden International, Gemini Investors, Pacific Venture Group, and SCP Private Equity Partners are also investors in Virtual Silicon.

INVESTMENTS HELD—PUBLIC

• NetLogic Microsystems, Inc.

Description: Defines, designs, and markets highly differentiated data plane solutions that enable the global infrastructure of networking and optical communications to achieve the highest performance and functionality. NetLogic also provides multi-processor search interfaces and software drivers that accelerate design and development of leading-edge networking equipment.

2004 Activity: In July 2004, the company went public and is currently traded under the NASDAQ symbol NETL.

Investment: The Fund invested $5.0 million in August 2001 in NetLogic Microsystems. Sevin Rosen is a co-investor in NetLogic Microsystems. The Fund’s initial lockup expires in early January 2005.

• Senomyx, Inc.

Description: Senomyx seeks to be the leader in discovering new and improved proprietary flavor and fragrance molecules for use in a wide range of consumer products. The Company has four strategic collaborations with Coca Cola, Nestle, Kraft Foods, and Campbell Soup.

2004 Activity: The company announced an exclusive five-year discovery and development collaboration with Nestle SA for the discovery and commercialization of novel favor ingredients in the coffee field. The company made several discoveries in the area of novel bitter taste modulators.

~~Investment:~~For ~~The~~additional ~~Fund~~information ~~invested~~concerning ~~$1.5~~the ~~million~~Company’s ininvestments, ~~Senomyx~~see inthe ~~November~~financial ~~2001. Other investors include~~statements ~~Prospect~~beginning ~~Venture~~on ~~Partners,~~page ~~Rho~~12 ~~Ventures,~~of ~~Merrill~~this ~~Lynch, Avalon Ventures, Domain Associates, and Bay City Capital~~report. ~~The Fund’s initial lockup expired on 12/18/04.~~

INVESTMENTS HELD— THIRD PARTY INVESTMENT FUNDS

• Advanced Technology Ventures VII, L.P. (“ATV”) is a $700 million venture capital fund targeting varied-stage information technology, communications and life sciences companies. As of October 31, 2004, ATV has drawn 38% of the Fund’s $2.7 million capital commitment, and is being carried at a value of $0.7 million.

• Burrill Life Sciences Capital Fund (“Burrill”) is a $200 million venture capital fund established to invest primarily in innovative, early-stage life science venture opportunities. As of October 31, 2004, Burrill has drawn 32% of the Fund’s $3 million capital commitment, and is being carried at a value of $0.8 million.

• CHL Medical Partners II, L.P. (“CHL”) is a $125 million venture capital fund targeting start-up and early-stage medical technology and life sciences companies. As of October 31, 2004, CHL has drawn 34% of the Fund’s $2 million capital commitment, and is being carried at a value of $0.5 million.

• CMEA Ventures VI, L.P. (“CMEA”) is a $100 million venture capital fund targeting both early life science and information technology companies. The Fund committed $3 million in September 2003. As of October 31, 2004, CMEA has drawn 5% of the Fund’s $3 million commitment, and is being carried at $0.1 million.

• Morgenthaler Venture Partners VII, L.P. (“Morgenthaler”) is an $850 million venture capital fund targeting varied-stage information technology, communications, and health care companies. As of October 31, 2004, Morgenthaler has drawn 45% of the Fund’s $3 million capital commitment, and is being carried at a value of $1.1 million.

• Prospect Venture Partners II, L.P. (“Prospect”) is a $500 million venture capital fund targeting varied-stage life sciences companies. As of October 31, 2004, Prospect has drawn 48% of the Fund’s $3 million capital commitment, and is being carried at a value of $1.3 million.

• Sevin Rosen IX, L.P. (“Sevin Rosen”) is a top-tier early-stage venture capital firm, which closed a $305 million venture capital fund dedicated to early-stage technology investments. The Fund committed $3 million to Sevin Rosen; prior to year-end, the Fund contributed capital in the amount of $0.1 million and its investment is being carried at this amount.

• Tallwood II, L.P. (“Tallwood”) is a $150 million venture capital fund established to invest in attractive early-stage growth companies possessing leading-edge technology in the semiconductor industry. As of October 31, 2004, Tallwood has drawn 25% of the Fund’s $3 million capital commitment, and is being carried at a value of $0.6 million.

• Valhalla Partners, L.P. (“Valhalla”) is a $200 million venture capital fund established to invest in attractive early-stage venture capital investments in information technology companies in the Mid-Atlantic region. As of October 31, 2004, Valhalla has drawn 10% of the Fund’s $3 million capital commitment, and is being carried at a value of $0.2 million.

For additional information concerning the Company’s investments, see the financial statements beginning on page 13 of this report.

Competition

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

Employees

At October 31, ~~2004~~2008, the Company had no full-time employees. All personnel of the Company are employed by and compensated by the Investment ~~Advisers~~ Adviser pursuant to the ~~Investment~~Advisory ~~Agreements~~Agreement.

Risk Factors

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

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

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

ITEM 2.

PROPERTIES.

The Company does not own or lease any physical properties.

ITEM 3.

LEGAL PROCEEDINGS.

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

ITEM 5.

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

Market Information

The Company has an unlimited number of no par value units authorized. As of October 31, ~~2004~~2008, 295,210 units of membership interest were issued and outstanding. There is no established public trading market for the Company’s units of membership interest.

Holders

There were ~~256~~263 holders of units of membership interest as of ~~December~~ October 31, ~~2004~~2008.

Dividends and Distributions

Fiscal Year Ended October 31, ~~2004~~2008. ~~There~~Distributions ~~were~~of no$71.50 ~~dividends~~per orshare ~~distributions~~were ~~paid~~made to unit holders during fiscal year ~~2004~~2008.

Fiscal Year Ended October 31, ~~2003~~2007. ~~There~~A ~~were~~distribution noof ~~dividends~~$28.00 ~~or distributions~~per ~~paid~~share was made to unit holders during fiscal year ~~2003~~2007.

~~For~~Fiscal ~~additional information~~Year ~~concerning the payment of dividends~~Ended October 31, ~~see~~2006. ~~“Significant~~There ~~Accounting~~were ~~Policies”~~no indistributions ~~the~~paid ~~notes~~during tofiscal ~~the~~year ~~financial statements of the Company included in Item 8 hereof~~2006.

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

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

ITEM 6.

SELECTED FINANCIAL DATA.

($ in 000’s except for per unit data)

Fiscal Year Ended	10/31/0408			10/31/0307			10/31/0206			10/31/0105			10/31/04
Financial Position
Investments in securities	$	~~115~~29,~~731~~798		$	~~119~~68,~~500~~038		$	~~138~~75,~~513~~889		$	~~139~~92,~~676~~593		$	115,731
Other Assets		1,258			3,744			1,063			8,527
All Other Assets		10,835			4,980			31			1,362			1,258
Total Assets		~~116~~40,~~989~~633			~~123~~73,~~244~~018			~~139~~75,~~576~~920			~~148~~93,~~203~~955			116,989
Liabilities		~~910~~354			~~786~~676			~~1,081~~358			~~1,782~~606			910
Net Assets		~~116~~40,~~079~~279			~~122~~72,~~458~~342			~~138~~75,~~495~~562			~~146~~93,~~421~~349			116,079
Changes in Net Assets
Net investment income (loss)		(~~2,318~~988	)		(~~2,077~~615	)		(~~1,659~~638	)		~~831~~(1,311	)		(2,318	)
Net gain (loss) on investments		(4,060	)		(13,960	)		(6,267	)		(60	)
Net (loss)/gain on investments		(9,967	)		5,661			(17,148	)		(10,544	)		(4,060	)
Dividends		—			—			—			487
Distributions		21,108			8,266			—			10,876			—
Per Unit Data
Net Assets	$	~~393~~136.2144		$	~~414~~245.8205		$	~~469~~255.1496		$	~~495~~316.9921		$	393.21
Dividends Paid		—			—			—			1.65
Distributions Paid		71.50			28.00			—			36.84			—

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Liquidity and Capital Resources

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

At October 31, ~~2004~~2008, the Company held $010,693,165 in cash and cash equivalents and $45984,~~526,196~~128 in short-term investments, as compared to $326,~~738,154~~240 in cash and cash equivalents and $5311,~~514~~367,~~005~~859 in short-term investments respectively, at October 31, ~~2003~~2007. The ~~decrease~~marginal increase in cash and short-term investments from October 31, ~~2003~~2007 was primarily due to ~~new~~cash ~~and~~received ~~follow-on~~from ~~investments~~the insale ~~private~~of ~~companies~~Genoptix, Inc. asand ~~well~~other asinvestments ~~capital~~of ~~invested~~which inthe ~~private investment funds. The~~ Company, ~~during~~distributed ~~this~~approximately ~~period~~98% ~~funded~~of ~~additional~~the ~~capital~~gross ~~per~~proceeds ~~its~~generated ~~commitments~~during tothe ~~Advanced Technology~~fiscal ~~Ventures~~year ~~VII,~~ended ~~L.P.~~October 31, ~~Burrill Life Sciences Capital Fund, CHL Medical Partners II, L~~2008.~~P.,~~ ~~CMEA~~The ~~Ventures~~remaining ~~VI,~~proceeds ~~L.P.,~~were ~~Morgenthaler~~used ~~Partners~~to ~~VII,~~fund ~~L.P.,~~expenses ~~Prospect Venture Partners II, L.P., Tallwood II, L.P.,~~ and ~~Valhalla~~invest ~~Partners,~~in ~~L.P.,~~portfolio ~~each a private investment fund~~investments. The Company ~~has~~during ~~committed~~this ~~capital~~period tofunded ~~one~~ additional ~~private~~capital ~~investment~~per ~~fund,~~its ~~Sevin~~commitments ~~Rosen~~to ~~Fund~~all ~~IX,~~of ~~L.P,~~its ~~during~~private ~~fiscal~~investment ~~year ended October 31, 2004~~funds. In connection with the Company’s total commitments to private funds in the amount of $25,700,000 since inception, the Company, through October 31, ~~2004~~2008, has contributed $622,~~724~~301,~~661~~825 or 2686.278% of the total capital committed to nine private investment funds. During the fiscal year ended October 31, 2008, the Company also participated in follow-on financing rounds for several of its private companies totaling $536,176.

During the fiscal year ended October 31, 2004, the Company participated in follow-on financing rounds for many of its private companies, including: i) Archemix Corporation Series A preferred for $685,714 and Series B preferred for $466,666, ii) Genoptix, Inc. Series B-2 preferred for $515,148 and Series 1-C preferred for $277,089, iii) Gyration, Inc. bridge note and warrants for $2,800,000, iv) NanoOpto Corporation Series B preferred for $1,048,655, v) Silverback Systems Series C preferred for $333,333, vi) Ethertronics Series B preferred for $1,000,000, vii) LogicLibrary Series A preferred for $704,225, viii) Pilot Software bridge note for $750,000, ix) Tensys Medical Series D preferred for $1,425,000, and x) Virtual Silicon bridge note for $88,738. The Company also funded one new private company investment in Chips & Systems for $3,500,000

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

Results of Operations

Investment Income and Expenses

For the fiscal year ended October 31, ~~2004~~ 2008, the Company had investment income of $~~540~~408,~~784~~721, primarily from investments in short-term securities, and ~~net~~ operating expenses of $21,~~859~~396,~~165~~703, resulting in a net investment loss of ($2987,~~318,381~~982). For the fiscal year ended October 31, ~~2003~~2007, the Company had investment income of $~~844~~714,~~930~~577, primarily from investments in short-term securities, and ~~net~~ operating expenses of $21,~~922~~329,~~068~~691, resulting in a net investment loss of ($2615,~~077,138~~114). asFor ~~compared~~the tofiscal year ended October 31, 2006, the Company had investment income of $1,~~742~~238,~~304~~630, primarily from investments in short-term securities, and ~~net~~ operating expenses of $31,~~401~~876,~~295~~947, resulting in a net investment loss of ($1638,~~658,991~~317). The decrease in investment income for the ~~fiscal~~ year ended October 31, ~~2002~~2008 is due to decreases in interest income from investments in the private companies as well as decreases in money market rates. The ~~decline~~increase in ~~investment~~operating ~~income~~expenses iswas due primarily to increased legal costs which were partially offset by a decline in ~~interest~~management ~~earned~~fees onas ~~short-term~~a ~~securities~~result of reduced net assets under management. Additionally, asduring ~~well~~2007 asthe management fees were at a ~~decrease~~2.00% rate for a quarter of the year while the rate for fiscal year 2008 was consistently at 1.00% for the full fiscal year. The increase in investment income for the ~~level~~year ofended ~~assets~~October 31, ~~invested~~2007 in ~~short-term~~comparison ~~securities~~to the year ended October 31, 2006 is due to ~~the~~an ~~Company’s~~increase ~~investment~~in interest income from investments in ~~private~~the private companies and ~~private~~from ~~investment~~an ~~funds~~increase in interest earned on short-term securities. ~~Net~~The decrease in operating expenses, ~~decreased~~in ~~during~~comparing to the fiscal ~~2004~~year ~~compared~~ended toOctober 31, ~~fiscal~~2007 ~~2003~~and October 31, 2006, was primarily due to ~~reduced~~a decline in management fees which ~~paid~~resulted tofrom ~~the~~a ~~Investment~~reduced ~~Advisers.~~level ~~Net~~of ~~operating~~net ~~expenses~~assets ~~decreased~~under management during ~~fiscal~~the ~~2003~~period ~~compared~~and toa ~~fiscal~~decrease ~~2002~~in ~~due~~the tomanagement ~~reduced~~fee ~~management~~rate ~~fees~~from ~~paid~~2.00% to ~~the~~1.00% ~~Investment~~during ~~Advisers~~2007, aswhile ~~well~~for as2006 athe ~~reduction~~rate inwas ~~legal~~at ~~fees~~2.00%.

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

For the fiscal year ended October 31, 2004, the Investment Advisers earned $2,402,059 in management fees. For the fiscal year ended October 31, 2003, the Investment Advisers earned $2,530,840 in management fees, whereas for the year ended October 31, 2002, the Investment Advisers earned $2,881,830 in management fees. This decrease is a result of the fact that net assets for the periods of calculation of management fees during fiscal 2004 were lower than those for similar periods during the fiscal years ended October 31, 2003 and October 31, 2002. The Investment ~~Advisers~~Adviser ~~provide~~provides investment management and administrative services required for the operation of the Company. In consideration of the services rendered by the Investment ~~Advisers~~Adviser, the Company pays a management fee based upon a percentage of the net assets of the Company. This fee is determined and payable quarterly. Effective July 1, 2007, the Investment Sub-Adviser ceased to serve as Investment Sub-Adviser to the Company.

Net Assets

The Company’s net assets were $~~116~~40,~~079~~279,~~433~~008, or a net asset value per unit of $~~393~~136.2144, at October 31, ~~2004~~2008. This represents a decline of ($632,~~378~~063,~~420~~191), or ($21108.61) per unit, from net assets of $~~122~~72,~~457~~342,~~853~~199, or $~~414~~245.8205 per unit, at October 31, ~~2003~~2007. ~~This~~The ~~decline in~~ net ~~asset~~decrease ~~value~~resulted ~~per~~principally ~~unit~~from ~~is comprised of a net investment loss totaling ($2,318,381~~i), ~~or ($7.85) per unit, and~~ a net ~~change~~decrease in ~~realized~~net ~~and~~assets ~~unrealized~~from ~~depreciation~~operations ~~on investments~~ of ($410,~~060~~955,~~039~~676), or ($1337.7611) per unit. ~~The net realized loss of ($2,555,211~~and ii), ora ~~($8.66)~~distribution ~~per unit, was attributable Gyration, Inc. and Ancile Pharmaceuticals. The net change in unrealized depreciation~~ of ($121,~~504~~107,~~828~~515), or ($571.1050) per unit, ~~was principally the result of declines in the valuations of Monterey Design Systems and NetLogic Microsystems, Inc. (NASDAQ: NETL), offset by unrealized appreciation related~~ to ~~Ancile~~unit ~~Pharmaceuticals, LightConnect, and Senomyx (NASDAQ: SNMX), as described below~~holders.

The Company’s net assets were $~~122~~72,~~457~~342,~~853~~199, or a net asset value per unit of $~~414~~245.8205, at October 31, ~~2003~~2007. This represents a decline of ($3,219,893), ~~down~~or ($5410.3291) per unit, from ~~the~~ net assets of $~~138~~75,~~495~~562,~~015~~092, or a$255.96 ~~net asset value~~ per unit ~~of $469.14~~, at October 31, ~~2002~~2006. ~~This~~The ~~decline in~~ net ~~asset~~decrease ~~value~~resulted ~~per~~principally ~~unit~~from isi) ~~comprised~~a ofnet increase ain net ~~investment~~assets ~~loss~~from ~~totaling~~operations (of $25,~~077~~045,~~138),~~987 or ($717.~~04)~~09 per unit, and ii) a ~~net~~distribution ~~change in realized and unrealized depreciation on investments~~ of ($138,~~960~~265,~~024~~880), or ($~~47.~~28.00) per unit, ~~comprised of a $44 net realized gain on investments and a ($13,960,068) net change in unrealized depreciation of investments due~~ to ~~the~~unit ~~Company’s write-off of Ancile Pharmaceuticals and MIDAS Vision Systems, as well as the write-downs of Genoptix, Monterey Design Systems and NanoOpto~~holders.

Realized and Unrealized Gains and Losses from Portfolio Investments

The net realized ~~loss~~gain of $11,649,815 for the fiscal year ended October 31, ~~2004~~2008 was ~~principally~~comprised ~~the result~~ of ~~the~~a ~~conclusion~~gain offrom ~~Ancile~~the ~~Pharmaceuticals~~Company’s ~~general assignment~~sale ~~for the benefit~~ of ~~creditors~~Genoptix, ~~where~~Inc. in the ~~assets~~amount of ~~the business have been sold and its affairs wound up. The Company received no further distributions and accordingly reclassified~~ $317,~~850~~248,~~000 of unrealized depreciation to net realized loss on investments~~158. This ~~loss~~gain was partially offset by ~~one~~the ofrealized losses from the Company’s ~~investments,~~write ~~Gyration,~~off ~~Inc.,~~of ~~which~~Midas ~~entered~~Vision ~~into a merger agreement~~Systems, Inc. Onand ~~August~~NanoOpto 19Corporation, ~~2004,~~which ~~the~~resulted ~~Company~~in ~~received~~a ~~proceeds~~realized ~~totaling~~loss of ($65,~~948~~054,~~069~~960) ~~as a cash consideration for its investment in Gyration, Inc.~~ and ~~expects to receive an additional~~ ($1143,~~136~~937),~~322~~ ~~being~~respectively. ~~held~~All inother ~~escrow.~~remaining Indirect ~~August,~~investments ~~2004,~~and ~~the~~Private ~~Company~~Investment ~~recorded~~Funds aresulted ~~realized~~in ~~gain~~a onnet ~~the~~realized ~~transaction~~loss of ($1399,~~284,391~~446).

The net change in unrealized ~~depreciation~~(losses) of ($21,617,509) for the fiscal year ended October 31, ~~2004~~2008 was principally the ~~result~~combination of: ~~a decrease~~i) in the unrealized ~~valuation~~loss ofon ~~Monterey Design Systems~~OpVista, aInc. ~~private~~of ~~company investment, by~~ ($49,~~800~~272,~~000~~998),; aii) ~~decrease~~reversal ~~in the value~~ of ~~NetLogic~~unrealized ~~Microsystems,~~gains ~~Inc.~~due ~~(NASDAQ:~~to ~~NETL) by ($3,293,078), a decrease in~~ the ~~valuation~~sale of ~~OpVista~~Genoptix, aInc. ~~private~~of ~~company investment, by~~ ($17,~~500~~469,~~000~~920),; ~~and~~iii) ~~other~~an ~~net~~ unrealized ~~losses~~loss ~~related~~on toSOA ~~the Company’s investments totaling ($1~~Software,~~289,192)~~ Inc. ~~Offsetting~~in the ~~losses~~amount ~~was the reclassification~~ of ($35,~~850~~681,~~000~~135); ofiv) the unrealized ~~depreciation to net realized~~ loss on ~~its~~Archemix ~~investment~~Corporation, ~~in Ancile Pharmaceuticals~~Inc. ~~In addition, the Company recorded unrealized appreciation in the amount~~ of ($41,~~051~~850,~~437~~000); ~~related~~and tov) ~~its~~an ~~investment~~unrealized inloss ~~LightConnect~~of ~~and~~ ($1,~~476~~300,~~005~~757) ~~related~~on toTensys ~~Senomyx~~Medical, ~~(NASDAQ:~~Inc. ~~SNMX)~~Systems, ~~a public company investment~~Inc. ~~The Company~~This ~~utilized~~unrealized aloss ~~discount~~was ofpartially ~~30%~~offset inby: the ~~valuation~~reversal of ~~both~~unrealized oflosses ~~its~~due ~~public~~to ~~holdings~~write asoff of ~~October~~Midas 31Vision Systems, ~~2004~~Inc. ~~The~~of $5,054,960 ~~discount~~and ~~utilized~~NanoOpto ~~reflects~~Corp. ~~the inability~~ of ~~the~~$77,321, ~~Company~~respectively. toThe ~~sell~~remaining ~~its~~direct ~~shares~~investments ~~due~~and toPrivate ~~contractual~~Investment ~~lock-up~~Funds ~~agreements~~resulted in ~~place~~a ~~after~~net ~~initial public~~unrealized ~~offerings~~loss of ~~common shares of both companies~~($1,174,980).

The realized ~~gain~~loss of ($4423,862,768) for the fiscal year ended October 31, ~~2003~~2007 ~~was~~is ~~principally~~comprised ~~the~~of ~~result~~losses offrom ~~sales~~Cydelity, Inc. of ~~short-term~~($9,438,783), ~~securities~~NanoOpto Corp. ~~The~~of ~~net~~($4,633,377), ~~change~~Silverback inSystems, ~~unrealized~~Inc. ~~depreciation~~of ($7,580,196), Chips and Systems, Inc. of ($134,~~960~~941,~~068~~133). ~~for~~These ~~the~~losses ~~fiscal~~were ~~year~~partially ~~ended~~offset ~~October~~by 31gains on Pilot Software Inc. of $2,977,789. The remaining net loss of ($247,068) is comprised of all other gains/(losses) of the remaining direct investments and private investment funds.

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

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

~~2003~~The isnet ~~due~~change toin ~~the~~unrealized ~~write-off~~depreciation of ~~Ancile Pharmaceuticals and MIDAS Vision Systems, together totaling~~ ($812,~~904~~634,~~960~~704). ~~The~~for ~~Company also recorded write-downs of Genoptix, Monterey Design Systems and NanoOpto, all private company investments, during~~ the ~~fiscal~~ year ended October 31, ~~2003.~~2006 ~~The Company’s $3,850,000 million investment in Ancile Pharmaceuticals~~ was principally ~~written off as~~ the ~~company~~result ~~is currently conducting an orderly liquidation~~ of ~~its assets through~~ a ~~voluntary~~decrease ~~General~~in ~~Assignment for~~ the ~~Benefit~~valuation of ~~Creditors.~~Silverback ~~The~~Systems, ~~Company~~Inc ~~also~~of ~~wrote off its~~ ($56,~~054~~720,~~960~~039) ~~million investment in MIDAS Vision Systems due impaired performance~~ and ~~prospects~~OpVista ~~for~~Inc ~~the company.~~of ~~Genoptix~~($5,685,700) ~~Monterey~~both ~~Design~~private ~~Systems~~company ~~and NanoOpto were each written down as well~~investments. ~~These write-downs were due to financing events which effectively reduced the valuation of the Company’s investment.~~

Application of Critical Accounting Policies

Under the supervision of the ~~Company’s~~ Valuation and Audit Committees of the Company’s Board of Managers (the “Board” or “Board of Managers”), consisting of the ~~independent~~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 ~~Advisers~~Adviser ~~make~~makes certain critical accounting estimates with respect to the valuation of private portfolio investments, including private investment funds. These estimates could have a material impact on the presentation of the Company’s financial condition because in total, they currently represent 5671.554% of the Company’s net assets. For the private investments held at October 31, ~~2004~~2008, changes to these estimates~~, i.e. changes in the~~ ~~valuations~~and ofrealizations ~~these private investments,~~ resulted in a $318.54 million decrease in net asset value from October 31, ~~2003~~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 the its pro-rata share of the value of the assets of a private fund as determined by such private fund, in accordance with its partnership agreement, constitutional or other documents governing such valuation, on the valuation date. If such valuation with respect to the Company’s investments in private funds is not available by reason of timing or other event on the valuation date, or are deemed to be unreliable by the Investment ~~Advisers~~Adviser, the Investment ~~Advisers~~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 ~~Advisers~~Adviser also ~~make~~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~~may be applied.

ITEM 7A. 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, currently representing 56.5% of net assets, which are not publicly traded. These investments are recorded at fair value as determined by the Investment Advisers 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~~ITEM ~~hold underlying public securities, the Company is indirectly exposed to equity price risk associated with the public markets~~7A. ~~Nevertheless,~~QUANTITATIVE ~~the~~AND ~~Company is~~QUALITATIVE ~~exposed~~DISCLOSURES toABOUT ~~equity~~MARKET ~~price risk through its investments in the equity securities of two public companies, NetLogic Microsystems, Inc~~RISK. (NASDAQ: NETL), and Senomyx, Inc. (NASDAQ: SNMX). During the fiscal year ended October 31, 2004, both of these companies successfully completed public offerings of their common stock. At October 31, 2004, these publicly traded equity securities were valued at $4,682,927, and a 30% discount to the closing market price at that date, representing 4.0% of the Company’s net assets. Thus, there is exposure to equity price risk, estimated as the potential loss in fair value due to a hypothetical 10% decrease in quoted market prices, representing a decrease in the value of these securities of $468,293. At October 31, 2003, the Company held no publicly traded equity securities.

~~ITEM~~Equity 8.Price ~~FINANCIAL~~Risk ~~STATEMENTS AND SUPPLEMENTARY DATA.~~

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

Portfolios of Investments at October 31, 2004 and October 31, 2003

Statements of Assets and Liabilities at October 31, 2004, and October 31, 2003

Statements of Operations for the years ended October 31, 2004, October 31, 2003 and October 31, 2002

Statements of Changes in Net Assets for the years ended October 31, 2004, October 31, 2003 and October 31, 2002

Statements of Cash Flows for the years ended October 31, 2004, October 31, 2003 and October 31, 2002

Financial Highlights for the years ended October 31, 2004, October 31, 2003, October 31, 2002 and period April 5, 2001 (commencement of operations) through October 31, 2001

Notes to Financial Statements

Note - All other schedules are omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements or the notes thereto.

~~REPORT~~ITEM OF8. ~~INDEPENDENT~~FINANCIAL ~~REGISTERED~~STATEMENTS ~~PUBLIC~~AND ~~ACCOUNTING~~SUPPLEMENTARY ~~FIRM~~ DATA.

To the Members and Board of Managers of


Report of Independent Registered Public Accounting Firm		13

Portfolios of Investments at October 31, 2008 and October 31, 2007		14

Statements of Assets and Liabilities at October 31, 2008, and October 31, 2007		18

Statements of Operations for the years ended October 31, 2008, October 31, 2007 and October 31, 2006		19

Statements of Changes in Net Assets for the years ended October 31, 2008, October 31, 2007 and October 31, 2006		20

Statements of Cash Flows for the years ended October 31, 2008, October 31, 2007 and October 31, 2006		21

Financial Highlights for the years ended October 31, 2008, October 31, 2007, October 31, 2006, October 31, 2005 and October 31, 2004.		22

Notes to Financial Statements		23

Excelsior Venture Partners III, LLC

We have audited the accompanying statement of assets and liabilities of Excelsior Venture Partners III, LLC (which was formerly known as Excelsior Private Equity Fund III, LLC, the “Fund”), including the portfolio of investments, as of October 31, 2004 and 2003, and the related statements of operations, cash flows, changes in net assets and financial highlights for each of the years then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of operations, changes in net assets and cash flows for the year ended October 31, 2002 and the financial highlights for the year ended October 31, 2002 and for the period April 5, 2001 (commencement of operations) to October 31, 2002 were audited by other auditors whose report, dated December 17, 2002, expressed an unqualified opinion on such statements and financial highlights.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2004 and 2003, with the custodian and the management of the private investment funds; where responses were not received for the private investment funds, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1(A), the financial statements include investment securities valued at $65,522,013 and $65,986,308 as of October 31, 2004 and 2003, respectively, representing 56.45% and 53.90%, respectively, of net assets, whose values have been estimated by the Investment Advisor, under the supervision of the Board of Managers, in the absence of readily ascertainable market values. We have reviewed the procedures used by the Investment Advisor in preparing the valuations of investment securities and have inspected the underlying documentation, and in the circumstances we believe the procedures are reasonable and the documentation appropriate. However, in the case of those securities with no readily ascertainable market value, because of the inherent uncertainty of valuation, the Investment Advisor’s estimate of values may differ significantly from the values that would have been used had a ready market existed for the securities and the differences could be material.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Excelsior Venture Partners III, LLC as of October 31, 2004 and 2003, the results of its operations, its cash flows, changes in its net assets and the financial highlights for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP New York, New York December 28, 2004

~~Excelsior~~Report ~~Venture~~of ~~Partners~~Independent ~~III,~~Registered ~~LLC~~Public Accounting Firm

~~Portfolio~~To the Board of ~~Investments~~Managers ~~October~~and ~~31,~~Members ~~2004~~of

Principal Amount/Shares			Acquisition Date	Value (Note 1)
		MONEY MARKET INSTRUMENTS — 38.03%
	$3,000,000	UBS Financial Commercial Paper 1.75%, 11/01/04		$	2,999,854
	3,000,000	Morgan Stanley Commercial Paper 1.79%, 11/02/04			2,999,702
	4,000,000	Federal Home Loan Mortgage Corp. Discount Note 1.75%, 11/02/04			3,999,611
	6,000,000	Federal Home Loan Mortgage Corp. Discount Note 1.715%, 11/02/04			5,999,428
	3,000,000	Danske Bank Commercial Paper 1.76%, 11/03/04			2,999,560
	3,000,000	Du Pont Commercial Paper 1.75%, 11/03/04			2,999,563
	9,900,000	Federal Home Loan Bank Discount Note 1.70%, 11/04/04			9,898,130
	3,750,000	Caterpillar Finance Commercial Paper 1.73%, 11/10/04			3,748,198
	8,500,000	Federal National Mortgage Association Discount Note 1.72%, 11/10/04			8,495,939
		TOTAL MONEY MARKET INSTRUMENTS (Cost $44,139,985)			44,139,985
		PUBLIC COMPANIES **, # — 4.03% Common Stocks — 4.03% Consumer Products — 2.56%
	428,572	Senomyx, Inc.	06/04		2,976,005
		Semiconductor — 1.47%
	384,615	Netlogic Microsystems Inc.	07/04		1,706,922
		TOTAL PUBLIC COMPANIES (Cost $6,500,000)			4,682,927
		PRIVATE COMPANIES **, #, @ — 51.75% Common Stocks — 0.00% Capital Equipment — 0.00%
	157,396	MIDAS Vision Systems, Inc.	03/03		—
		Life Sciences — 0.00%
	46,860	Genoptix, Inc.	07/03		—
		Semiconductor — 0.00%
	708,955	Monterey Design Systems, Inc.	06/03		—
		TOTAL COMMON STOCKS (Cost $8,750,000)			—

Excelsior Venture Partners III, LLC:

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

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

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

New York, New York

December 24, 2008

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, ~~2004~~2008 ~~- (continued)~~

Shares		Acquisition Date	Value (Note 1)
PrincipalAmount/Shares		AcquisitionDate ##	Cost		FairValue (Note 1)		% of NetAssets ***
	PRIVATE COMPANIES **, #, @ — (continued) Preferred Stocks — 51.03% Capital Equipment — 0.00%
	Private Companies **
933,593	MIDAS Vision Systems, Inc., Series A-1	03/03	$	—
	Common Stock #
	Enterprise Software — 9.83%
	Optical @
19,995,000	***Datanautics, Inc., Series A Preferred	01/04		4,000,000
10,615,593	OpVista, Inc.	06/06 - 10/08	$	15,393,312	$	—	0.00	%
7,454,720	LogicLibrary, Inc., Series A	01/02, 08/03, 05/04		3,408,450
	Total Common Stock — Private Companies			15,393,312		—	0.00	%
20,000,000	***Pilot Software Inc., Series A	05/02 & 04/03		4,000,000
	Preferred Stocks #
				11,408,450
	Enterprise Software
	Information Services — 0.00%
4,542,763	SOA Software, Inc., Series F Junior *	05/08		5,681,135		—	0.00	%
4,425	Cenquest, Inc., Series 2	07/01		—
				5,681,135		—	0.00	%
	Life Sciences — 7.10%
	Life Sciences
647,948	Adeza Biomedical Corporation, Series 5	09/01		3,000,000
1,999,999	Archemix Corporation, Series A	08/02 - 11/03		1,999,999		1,629,629	4.05	%
1,999,999	Archemix Corporation, Series A	08/02, 01/03, 11/03		1,999,999
700,000	Archemix Corporation, Series B	03/04 - 12/05		700,000		570,371	1.42	%
466,666	Archemix Corporation, Series B	03/04 & 09/04		466,666
				2,699,999		2,200,000	5.47	%
942,481	Genoptix, Inc., Series B-1	12/01		1,253,500
	Medical Technology @
1,403,696	Genoptix, Inc., Series B-2	07/03, 09/03, 12/03		1,250,000
4,166,667	Tensys Medical, Inc., Series C	03/02		5,000,000		—	0.00	%
310,290	Genoptix, Inc., Series C	08/04		277,089
1,187,500	Tensys Medical, Inc., Series D	05/04		1,425,000		—	0.00	%
				8,247,254
318,845	Tensys Medical, Inc., Series E	07/06 - 12/07		382,623		—	0.00	%
	Medical Technology — 5.54%
				6,807,623		—	0.00	%
4,166,667	Tensys Medical, Inc., Series C	03/02		5,000,000
	Wireless @
1,187,500	Tensys Medical, Inc., Series D	05/04		1,425,000
4,433,333	Ethertronics, Inc. Series B	06/01 - 05/04		6,650,000		6,650,000	16.51	%
				6,425,000
1,697,957	Ethertronics, Inc. Series C	05/05 - 04/07		2,546,937		2,546,937	6.32	%
	Optical — 10.90%
				9,196,937		9,196,937	22.83	%
4,330,504	LightConnect, Inc., Series B	07/01		5,000,000
	Total Preferred Stocks — Private Companies			24,385,694		11,396,937	28.30	%
12,292,441	LightConnect, Inc., Series C	12/02		992,000
	Warrants #, @
956,234	NanoOpto Corporation, Series A-1	10/01 & 3/02		—
	Wireless
3,023,399	NanoOpto Corporation, Series B	09/03,11/03,01/04,07/04		1,655,118
271,247	Ethertronics, Inc. Series C (expirationdate 01/09)	05/05 - 07/06		—		—	0.00	%
5,333,333	OpVista, Inc., Series B	07/01		—
	Optical
12,671,059	OpVista, Inc., Series C	09/03		5,000,000
675,313	OpVista, Inc., Series CC (expirationdate 10/12)	10/07		675		—	0.00	%
				12,647,118
	Total Warrants			675		—	0.00	%
	Total — Private Companies			$ 39,779,681	$	11,396,937	28.30	%

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

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, ~~2004~~2008 — (continued)

Principal Amount/Shares / Percent Owned					Acquisition Date		Value (Note 1)
PercentOwned &				AcquisitionDate ##		Cost			FairValue (Note 1)		% of NetAssets ***
			PRIVATE COMPANIES **, #, @ — (continued) Preferred Stocks — (continued) Semiconductor — 11.93%
		Private Investment Funds **, #
	7,000,000		Chips & Systems, Inc., Series A		03/04		$	3,500,000
0.37%		Advanced Technology Ventures VII, L.P.		08/01 - 07/08		$	1,852,904		$	1,995,953	4.96	%
	3,333,333		Monterey Design Systems, Inc., Series 2		06/03			600,000
1.55%		Burrill Life Sciences Capital Fund		12/02 - 05/08			2,077,902			1,648,795	4.09	%
	2,211,898		Silverback Systems, Inc., Series B-1		02/02			450,052
1.34%		CHL Medical Partners II, L.P.		01/02 - 03/08			1,571,857			1,471,494	3.65	%
	34,364,257		Silverback Systems, Inc., Series C		03/03, 09/03, 04/04			4,298,896
1.02%		CMEA Ventures VI, L.P. (Note 9)		12/03 - 06/08			2,193,017			2,816,599	6.99	%
	3,096,551		Virtual Silicon Technology, Inc., Series C		12/01			5,000,000
0.34%		Morgenthaler Partners VII, L.P.		07/01 - 10/07			1,883,167			1,770,123	4.39	%
								13,848,948
0.57%		Prospect Venture Partners II, L.P.		06/01 - 03/08			1,408,668			1,575,441	3.91	%
			Wireless — 5.73%
0.97%		Sevin Rosen Fund IX, L.P.		10/04 - 07/08			1,626,609			1,706,890	4.24	%
	4,433,333		Ethertronics, Inc., Series B		06/01, 09/02, 07/03, 05/04			6,650,000
2.36%		Tallwood II, L.P. (Note 9)		12/02 - 05/08			2,890,443			2,020,019	5.02	%
			TOTAL PREFERRED STOCKS (Cost $69,300,611)					59,226,770
1.64%		Valhalla Partners, L.P. (Note 9)		10/03 - 07/08			2,074,224			2,412,053	5.99	%
			Notes — 0.72% Enterprise Software — 0.65%
		Total Private Investment Funds					17,578,791			17,417,367	43.24	%
$	750,000		***Pilot Software Inc., Bridge Note, 9%, 04/22/05		08/04 & 09/04, 10/04			750,000
Shares
			Semiconductor — 0.07%
		Investment Company
$	88,738		Virtual Silicon Technology, Inc., Bridge Note, 6%, 04/22/05		10/04			88,738
984,128		Dreyfus Government Cash Management Fund Institutional Shares					984,128			984,128	2.44	%
			TOTAL NOTES (Cost $838,738)					838,738
		Total Investments				$	58,342,600			29,798,432	73.98	%
			Warrants — 0.00%
		Other Assets & Liabilities (Net)								10,480,576	26.02	%
			Wireless — 0.00%
		Net Assets							$	40,279,008	100.00	%
	100,000		Ethertronics, Inc.		09/02			—
	115,000		Ethertronics, Inc.		07/03			—
	66,667		Ethertronics, Inc.		08/03			—
								—
			TOTAL WARRANTS (Cost $0)					—
			TOTAL — PRIVATE COMPANIES (Cost $78,889,349)					60,065,508

*	LogicLibrary, Inc. 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 the benefit of the Company.

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

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

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

#	Non-income producing securities.

##	Disclosure is for restricted securities only.

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

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

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, ~~2004~~2007 ~~— (continued)~~

Percent Owned		Acquisition Date	Value (Note 1)
PrincipalAmount/Shares		AcquisitionDate ##	Cost		Fair Value(Note 1)		% of NetAssets ***
	PRIVATE INVESTMENT FUNDS **, # — 4.70%
	Money Market Instrument
0.40%	Advanced Technology Ventures VII, L.P.	08/01-04/04	$	715,058
10,385,000	Federal Home Loan Bank Discount Note 4.40%, 11/01/07			$ 10,383,731	$	10,383,731	14.35	%
1.44%	Burrill Life Sciences Capital Fund	12/02-08/04		829,098
	Public Companies #
1.35%	CHL Medical Partners II, L.P.	01/02-02/04		482,377
	Common Stocks
1.04%	CMEA Ventures, L.P.	12/03-04/04		121,020
	Wireless
0.36%	Morgenthaler Partners VII, L.P.	07/01-07/04		1,076,400
5,338	Citrix Systems, Inc. (CTXS)			226,011		229,481	0.32	%
0.58%	Prospect Venture Partners II, L.P.	06/01-09/04		1,325,462
	Capital Equipment
0.90%	Sevin Rosen Fund VI, L.P.	10/04		90,000
12,059	Acme Packet, Inc. (APKT)			160,803		173,168	0.24	%
2.36%	Tallwood II, L.P.	12/02-09/04		597,891
	Life Sciences **
1.70%	Valhalla Partners, L.P.	10/03-09/04		219,199
714,870	Genoptix, Inc. (GXDX)	07/03 - 05/05		3,124,453		10,594,373	14.64	%
	TOTAL — PRIVATE INVESTMENT FUNDS (Cost $6,614,318)			5,456,505
	Total Common Stocks - Public Companies			3,511,267		10,997,022	15.20	%
	Private Companies **
	Common Stocks #
	Capital Equipment @
157,396	MIDAS Vision Systems, Inc.	03/03		4,000,000		—	0.00	%
	Optical @
1,079,541	OpVista, Inc.	06/06		9,184,030		1,184,567	1.64	%
	Total Common Stocks - Private Companies			13,184,030		1,184,567	1.64	%
	Preferred Stocks #
	Capital Equipment @
933,593	MIDAS Vision Systems, Inc., Series A-1	03/03		1,054,960		—	0.00	%
	Enterprise Software @
8,751,782	LogicLibrary, Inc., Series A	01/02 - 09/07		4,001,492		4,001,492	5.53	%
3,080,464	LogicLibrary, Inc., Series A-1	08/03 - 05/04		1,408,450		1,408,450	1.95	%
				5,409,942		5,409,942	7.48	%
	Life Sciences
1,999,999	Archemix Corporation, Series A	08/02 - 11/03		1,999,999		2,999,999	4.15	%
700,000	Archemix Corporation, Series B	03/04 - 12/05		700,000		1,050,001	1.45	%
				2,699,999		4,050,000	5.60	%
	Medical Technology @
4,166,667	Tensys Medical, Inc., Series C	03/02		5,000,000		534,026	0.74	%
1,187,500	Tensys Medical, Inc., Series D	05/04		1,425,000		152,197	0.21	%
96,629	Tensys Medical, Inc., Series E	07/06 - 04/07		115,954		347,865	0.48	%
				6,540,954		1,034,088	1.43	%
	Optical @
5,683,906	OpVista, Inc., Series AA	06/06 - 01/07		5,034,407		6,236,892	8.62	%
433,400	OpVista, Inc., Series BB	03/07 - 04/07		491,800		491,800	0.68	%
				5,526,207		6,728,692	9.30	%
	Wireless @
4,433,333	Ethertronics, Inc. Series B	06/01 - 05/04		6,650,000		6,650,000	9.19	%
1,697,957	Ethertronics, Inc. Series C	05/05 - 04/07		2,546,936		2,546,937	3.52	%
				9,196,936		9,196,937	12.71	%
	Total Preferred Stocks		$	30,428,998	$	26,419,659	36.52	%

Shares
	INVESTMENT COMPANIES — 1.19%
1,386,211	Dreyfus Government Cash Management Fund Institutional Shares (Cost $1,386,211)		1,386,211
	TOTAL INVESTMENTS (Cost $137,529,863) — 99.70%		115,731,136
	OTHER ASSETS & LIABILITIES (NET) — 0.30%		348,297
	NET ASSETS — 100.00%	$	116,079,433

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

** Restricted as to public resale. Acquired between June 1, 2001 and October 31, 2004. Total cost of restricted securities at October 31, 2004 aggregated $92,003,667. Total value of restricted securities owned at October 31, 2004 was $70,204,940 or 60.48% of net assets.

# Non-income producing securities.

@ At October 31, 2004, the Company owned 5% or more of the company’s outstanding voting shares thereby making the company an affiliate as defined by the Investment Company Act of 1940. Total value of affiliated securities owned at October 31, 2004 was $51,315,508.

*** At October 31, 2004, 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, 2004 was $8,750,000.

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

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, ~~2003~~2007 — (continued)

Principa Amount/Shares		Acquisition Date ##	Value (Note 1)
PrincipalAmount/Shares		AcquisitionDate ##	Cost		Fair Value(Note 1)		% of NetAssets ***
AGENCY OBLIGATIONS — 43.27%
	Private Companies ** — (continued)
$53,000,000	Federal Home Loan Bank Discount Notes 0.95%, 11/05/03 (Cost $52,994,406)		$	52,994,406
	Notes @
PRIVATE COMPANIES **, #, @ — 51.37%
	Optical
Common Stocks — 0.00%
237,321	NanoOpto Corp, 10% Bridge Note, in default	03/07	$	237,321	$	160,000	0.22	%
Capital Equipment — 0.00%
	Optical @
157,396	MIDAS Vision Systems, Inc.	03/03		—
675,989	OpVista, Inc., 8% Bridge Note, April 2008, #	10/07		675,989		1,351,978	1.87	%
Life Sciences — 0.00%
	Total Notes			913,310		1,511,978	2.09	%
46,860	Genoptix, Inc.	07/03		—
	Warrants #, @
Semiconductor — 0.00%
	Wireless
708,955	Monterey Design Systems, Inc.	06/03		—
271,247	Ethertronics, Inc. Series C (expiration date 01/09)	05/05 - 07/06		—		—	0.00	%
	TOTAL COMMON STOCKS (Cost $8,749,999)			—
	Optical @
Preferred Stocks — 48.10%
675,313	OpVista, Inc., Series CC (expiration date 10/12)			—		—	0.00	%
Capital Equipment — 0.00%
	Total Warrants			—		—	0.00	%
933,593	MIDAS Vision Systems, Inc., Series A-1	03/03		—
	Total — Private Companies			44,526,338		29,116,204	40.25	%
Consumer Electronics — 3.27%
PercentOwned
1,523,810	Gyration, Inc., Series C-2	03/03		4,000,000
	Private Investment Funds **, #
Consumer Products — 1.22%
0.39%	Advanced Technology Ventures VII, L.P.	08/01 - 09/07		1,650,405		1,986,022	2.75	%
517,260	Senomyx, Inc., Series E	11/01		1,500,000
1.58%	Burrill Life Sciences Capital Fund	12/02 - 10/07		1,920,303		1,722,901	2.38	%
Enterprise Software — 5.48%
1.35%	CHL Medical Partners II, L.P.	01/02 - 10/07		1,326,857		1,432,494	1.98	%
5,914,488	LogicLibrary, Inc., Series A	01/02 & 08/03		2,704,226
1.04%	CMEA Ventures VI, L.P.	12/03 - 06/07		1,563,017		2,114,538	2.92	%
20,000,000	***Pilot Software Inc., Series A	05/02 & 04/03		4,000,000
0.36%	Morgenthaler Partners VII, L.P.	07/01 - 10/07		1,749,476		1,697,580	2.35	%
				6,704,226
0.58%	Prospect Venture Partners II, L.P.	06/01 - 05/07		1,561,766		2,194,662	3.03	%
Information Services — 0.00%
0.98%	Sevin Rosen Fund IX, L.P.	10/04 - 08/07		1,528,989		1,734,616	2.40	%
4,425	Cenquest, Inc., Series 2	7/01		—
2.36%	Tallwood II, L.P.	12/02 - 08/07		2,290,443		1,683,388	2.33	%
Life Sciences — 5.15%
1.70%	Valhalla Partners, L.P.	10/03 - 07/07		1,967,875		1,990,649	2.75	%
647,948	Adeza Biomedical Corporation, Series 5	09/01		3,000,000
	Total Private Investment Funds			15,559,131		16,556,850	22.89	%
2,419,355	Ancile Pharmaceuticals, Inc., Series D	11/01		—
Shares
1,314,285	Archemix Corporation, Inc., Series A	08/02 & 01/03		1,314,285
	Investment Company
942,481	Genoptix, Inc., Series B-1	12/01		1,253,500
984,128	Dreyfus Government Cash Management Fund Institutional Shares			984,128		984,128	1.36	%
826,823	Genoptix, Inc., Series B-2	07/03 & 09/03		734,851
	Total Investments		$	74,964,595		68,037,935	94.05	%
				6,302,636
	Other Assets & Liabilities (Net)					4,304,264	5.95	%
Medical Technology — 4.08%
	Net Assets				$	72,342,199	100.00	%
4,166,667	Tensys Medical, Inc., Series C	03/02		5,000,000
Optical — 8.11%
4,330,504	LightConnect, Inc., Series B	07/01		948,562
12,292,441	LightConnect, Inc., Series C	12/02		992,000
956,234	NanoOpto Corporation, Series A-1	10/01& 3/02		604,259
558,295	NanoOpto Corporation, Series B	09/03		888,244
5,333,333	OpVista, Inc., Series B	07/01		1,500,000
12,671,059	OpVista, Inc., Series C	09/03		5,000,000
				9,933,065
Semiconductor — 16.18%
3,333,333	Monterey Design Systems, Inc., Series 2	06/03		5,400,000
1,538,461	NetLogic Microsystems, Inc., Series D	08/01		5,000,000
1,105,949	Silverback Systems, Inc., Series B-1	02/02		450,051
30,927,835	Silverback Systems, Inc., Series C	03/03 & 09/03		3,965,564
3,096,551	Virtual Silicon Technology, Inc., Series C	12/01		5,000,000
				19,815,615

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

***	Based on fair value.

#	Non-income producing securities.

##	Disclosure is required for restricted securities only.

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

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

Excelsior Venture Partners III, LLC

~~Portfolio~~Statements of ~~Investments~~Assets ~~October~~and ~~31,~~Liabilities ~~2003— (continued)~~

PrincipalAmount/Shares/Percent Owned					Acquisition Date ##		Value (Note 1)
		October 31, 2008				October 31, 2007
	Wireless — 4.61%
Assets:
	3,766,666		Ethertronics, Inc., Series B		06/01, 09/02, 07/03			5,650,000
Unaffiliated Issuers at fair value (Cost $21,262,919 and $33,138,256 respectively)		$	20,601,495			$	42,971,731
			TOTAL PREFERRED STOCKS (Cost $68,844,780)					58,905,542
Non-Controlled Affiliated Issuers at fair value (Cost $37,079,681 and $41,826,339 respectively)			9,196,937				25,066,204
	Notes — 3.27%
Investments, at fair value (Cost $58,342,600 and $74,964,595 respectively) (Note 2)			29,798,432				68,037,935
	Enterprise Software — 3.27%
Cash and cash equivalents (Note 2)			10,693,165				26,240
$	4,000,000		***Datanautics, Inc., Convertible Promissory Note 3%, 1/31/2004@		08/03 & 09/03		$	4,000,000
Restricted cash (Note 2)			131,617				2,672,393
	Life Sciences—0.00 %
Receivables from sale of investments			—				2,275,482
$	600,000		Ancile Pharmaceuticals, Inc., Bridge Note 6%, 2/22/2003		10/02			—
Interest and dividends receivable			9,681				4,019
$	250,000		Ancile Pharmaceuticals, Inc., Bridge Note 6%, 5/10/2003		01/03			—
Prepaid insurance			470				—
								—
Other assets			—				1,945
			TOTAL NOTES (Cost $4,850,000)					4,000,000
Total Assets			40,633,365				73,018,014
	Warrants — 0.00%
Liabilities:
	Life Sciences—0.00 %
Deferred income			—				258,809
	2		Ancile Pharmaceuticals, Inc.		10/02 & 01/03			—
Management fees payable (Note 3)			101,503				182,802
	Wireless — 0.00%
Audit fees payable			56,750				75,295
	100,000		Ethertronics, Inc.		09/02			—
Legal fees payable			103,142				29,290
	115,000		Ethertronics, Inc.		07/03			—
Tax preparation fees payable			32,365				48,890
	66,667		Ethertronics, Inc.		08/03			—
Board of Managers’ fees payable (Note 3)			19,500				19,500
								—
Administration fees payable (Note 3)			19,167				28,750
			TOTAL WARRANTS (Cost $0)					—
Custody fees payable (Note 3)			4,233				17,002
			TOTAL — PRIVATE COMPANIES (Cost $82,444,779)					62,905,542
Other payables			17,697				15,477
	PRIVATE INVESTMENT FUNDS **, # — 2.52%
Total Liabilities			354,357				675,815
	0.40%		Advanced Technology Ventures VII, L.P.		08/01-05/03			490,904
Net Assets		$	40,279,008			$	72,342,199
	1.48%		Burrill Life Sciences Capital Fund		12/02			213,442
Net Assets consist of:
	1.35%		CHL Medical Partners II, L.P.		01/02-07/03			410,529
Members’ Capital (1)		$	68,823,176			$	79,268,859
	0.36%		Morgenthaler Partners VII, L.P.		07/01-09/03			740,727
Accumulated unrealized (depreciation) on investments			(28,544,168	)			(6,926,660	)
	0.60%		Prospect Venture Partners II, L.P.		06/01-09/03			761,700
Total Net Assets		$	40,279,008			$	72,342,199
	2.36%		Tallwood II, L.P.		12/02-10/03			343,464
Units of Membership Interest Outstanding
	2.79%		Valhalla Partners II, L.P.		10/03			120,000
(Unlimited number of no par value units authorized)			295,210				295,210
			TOTAL — PRIVATE INVESTMENT FUNDS (Cost $3,835,428)					3,080,766
Net Asset Value Per Unit		$	136.44			$	245.05
	INVESTMENT COMPANIES — 0.42%
	519,599		Dreyfus Government Cash Management Fund Institutional Shares (Cost $519,599)					519,599
	TOTAL INVESTMENTS (Cost $139,794,212)—97.58%							119,500,313
	OTHER ASSETS & LIABILITIES (NET)—2.42%							2,957,540
	NET ASSETS—100.00%						$	122,457,853

** Restricted as to public resale. Acquired between June (1,) ~~2001~~Members’ ~~and~~Capital ~~October~~includes ~~31,~~the ~~2003.~~accumulated ~~Total~~net ~~cost~~investment ~~of restricted securities at October 31~~(loss), ~~2003~~accumulated ~~aggregated~~realized ~~$86~~losses,~~280,207.~~ ~~Total~~contributions ~~value~~from ofand ~~restricted~~distributions ~~securities~~to ~~owned at October 31, 2003 was $65,986,308 or 53~~Members.~~88% of net assets.~~

#The ~~Non-income~~accompanying ~~producing~~notes ~~securities~~are an integral part of these Financial Statements.

## Required disclosure for restricted securities only.

@ At October 31, 2003, the Company owned 5% or more of the company’s outstanding voting shares thereby making the company an affiliate as defined by the Investment Company Act of 1940. Total value of affiliated securities owned at October 31, 2003 was $62,905,542.

*** At October 31, 2003, the Company owned 25% or more of the company’s outstanding voting shares 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, 2003 was $8,000,000.

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

Excelsior Venture Partners III, LLC

Statements of ~~Assets~~Operations ~~and Liabilities~~

	October 31,
	Year EndedOctober 31, 2008			Year EndedOctober 31, 2007			Year EndedOctober 31, 2006
	2004			2003
Investment Income:
ASSETS:
Interest income from unaffiliated investments (1)	$	255,827		$	614,813		$	978,408
Unaffiliated Issuers at value (Cost $52,140,514 and $57,349,433, respectively)	$	55,665,628		$	56,594,771
Interest income from affiliated investments (Note 6)		89,433			48,658			218,652
Controlled Affiliated Issuers at value (Cost $8,750,000 and $8,000,000, respectively)		8,750,000			8,000,000
Dividend income from unaffiliated investments		63,461			51,106			41,570
Non Controlled Affiliated Issuers at value (Cost $76,639,349 and $74,444,779, respectively)		51,315,508			54,905,542
Total investment income		408,721			714,577			1,238,630
Investments, at value (Cost $137,529,863 and $139,794,212, respectively) (Note 1)		115,731,136			119,500,313
Expenses:
Cash and cash equivalents		—			3,738,154
Management Investment Adviser fees (Note 3)		597,448			691,823			1,231,320
Distributions receivable		1,142,510			—
Legal fees		322,349			129,932			142,600
Receivable from affiliate (Note 10)		99,275			—
Audit fees		141,265			178,676			153,151
Interest receivable		10,575			407
Administration fees (Note 3)		115,000			115,000			115,000
Other receivables		1,945			1,945
Board of Managers’ fees (Note 3)		90,000			82,000			98,500
Prepaid insurance.		3,791			2,992
Tax preparation fees		39,646			36,667			31,003
Total Assets		116,989,232			123,243,811
Custodian fees (Note 3)		26,463			30,000			32,901
LIABILITIES:
Insurance expense		25,687			32,297			44,032
Management fees payable (Note 2)		583,569			617,322
Other expenses		38,845			33,296			28,440
Professional fees payable		184,559			66,298
Total expenses		1,396,703			1,329,691			1,876,947
Board of Managers’ fees payable (Note 2)		68,000			60,000
Net investment (loss)		(987,982	)		(615,114	)		(638,317	)
Administration fees payable (Note 2)		50,936			25,625
Net Realized and Unrealized Gain/(Loss) on Investments: (Note 2)
Other payables		22,735			16,713
Net realized (loss) on affiliated investments		(5,390,478	)		(23,447,216	)		(4,507,186	)
Total Liabilities		909,799			785,958
Net realized gain/(loss) on unaffiliated investments		16,771,294			(415,552	)		(6,548	)
NET ASSETS	$	116,079,433		$	122,457,853
Net realized gain from payments by affiliates (Note 3)		268,999			—			—
NET ASSETS consist of:
Net (increase)/decrease in unrealized depreciation on investments		(21,617,509	)		29,523,869			(12,634,704	)
Paid-in capital	$	137,878,160		$	142,751,752
Net realized and unrealized (loss)/gain on investments		(9,967,694	)		5,661,101			(17,148,438	)
Unrealized (depreciation) on investments		(21,798,737	)		(20,293,899	)
Net (decrease)/increase in net assets resulting from operations	$	(10,955,676	)	$	5,045,987		$	(17,786,755	)
Total Net Assets	$	116,079,433		$	122,457,853
Units of Membership Interest Outstanding (Unlimited Number of no par value units authorized)		295,210			295,210
NET ASSET VALUE PER UNIT	$	393.21		$	414.82

~~Notes~~(1) toIncludes ~~Financial Statements~~interest ~~are~~from anshort-term ~~integral part of these Financial Statements~~investments.

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

Excelsior Venture Partners III, LLC

Statements of ~~Operations~~Changes in Net Assets

	Year Ended October 31, 2004			Year Ended October 31, 2003			Year Ended October 31, 2002
	Year EndedOctober 31, 2008			Year EndedOctober 31, 2007			Year EndedOctober 31, 2006
INVESTMENT INCOME:
Operations:
Interest income	$	526,051		$	833,408		$	1,645,829
Net investment (loss)	$	(987,982	)	$	(615,114	)	$	(638,317	)
Dividend income		14,733			11,522			96,475
Net realized gain/(loss) on investments		11,649,815			(23,862,768	)		(4,513,734	)
Total Income		540,784			844,930			1,742,304
Net (increase)/decrease in unrealized depreciation on investments		(21,617,509	)		29,523,869			(12,634,704	)
EXPENSES:
Net (decrease)/increase in net assets resulting from operations		(10,955,676	)		5,045,987			(17,786,755	)
Management fees (Note 2)		2,402,059			2,530,840			2,881,830
Distributions to Members:
Professional fees		231,291			77,463			287,000
Distributions to Members		(21,107,515	)		(8,265,880	)		—
Administration fees (Note 2)		139,525			147,498			160,473
Total Distributions		(21,107,515	)		(8,265,880	)		—
Board of Managers’ fees (Note 2)		68,000			60,000			83,000
Net (decrease) in Net Assets		(32,063,191	)		(3,219,893	)		(17,786,755	)
Insurance		79,607			68,833			52,894
Net Assets:
Custodian fees		21,948			21,366			18,652
Beginning of year		72,342,199			75,562,092			93,348,847
Miscellaneous fees		16,010			16,068			11,326
End of year	$	40,279,008		$	72,342,199		$	75,562,092
Total Expenses		2,958,440			2,922,068			3,495,175
Organization expense reversal (Note 4)		—			—			(93,880	)
Less expense reimbursed by affiliate (Note 10)		(99,275	)		—			—
Net Expenses		2,859,165			2,922,068			3,401,295
NET INVESTMENT (LOSS)		(2,318,381	)		(2,077,138	)		(1,658,991	)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 1)
Net realized gain (loss) on investments		(2,555,211	)		44			764
Net change in (depreciation) on investments		(1,504,828	)		(13,960,068	)		(6,267,536	)
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS		(4,060,039	)		(13,960,024	)		(6,266,772	)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(6,378,420	)	$	(16,037,162	)	$	(7,925,763	)

~~Notes~~The toaccompanying ~~Financial Statements~~notes are an integral part of these Financial Statements.

Excelsior Venture Partners III, LLC

Statements of ~~Changes~~Cash inFlows ~~Net Assets~~

	Year Ended October 31, 2004			Year Ended October 31, 2003			Year Ended October 31, 2002
	Year EndedOctober 31, 2008			Year EndedOctober 31, 2007			Year EndedOctober 31, 2006
OPERATIONS:
Cash Flows from Operating Activities:
Net investment income (loss)	$	(2,318,381	)	$	(2,077,138	)	$	(1,658,991	)
Net (decrease)/increase in net assets resulting from operations	$	(10,955,676	)	$	5,045,987		$	(17,786,755	)
Net realized (loss)/gain on investments		(2,555,211	)		44			764
Adjustments to reconcile net (decrease)/increase in net assets resulting from operations to net cash provided by/(used in) operating activities:
Net change in unrealized (depreciation) on investments		(1,504,828	)		(13,960,068	)		(6,267,536	)
Net increase/(decrease) in unrealized depreciation on investments		21,617,509			(29,523,869	)		12,634,704
Net increase (decrease) in net assets resulting from operations.		(6,378,420	)		(16,037,162	)		(7,925,763	)
Purchase of investments		(3,567,909	)		(6,885,181	)		(17,056,870	)
Net Increase (Decrease) in Net Assets		(6,378,420	)		(16,037,162	)		(7,925,763	)
Proceeds received from the sale of investments and distributions received from Private Investment Funds		21,457,932			17,342,583			2,436,843
NET ASSETS:
Net realized (gain)/loss on investments		(11,649,815	)		23,862,768			4,513,734
Beginning of period		122,457,853			138,495,015			146,420,778
Proceeds from short-term investments maturing, net		10,383,731			3,054,579			14,175,856
End of period	$	116,079,433		$	122,457,853		$	138,495,015
Decrease/(increase) in restricted cash		2,540,776			(2,672,393	)		—
Decrease/(increase) in receivables from sale of investments		2,275,482			(2,275,482	)		600,031
(Increase)/decrease in interest and dividends receivable		(5,662	)		20,920			157,921
(Increase)/decrease in prepaid insurance		(470	)		1,378			1,002
(Decrease)/increase in deferred income		(258,809	)		258,809			—
(Decrease) in management fees payable		(81,299	)		(7,656	)		(278,837	)
(Decrease)/increase in audit fees payable		(18,545	)		3,295			—
Increase in legal fees payable		73,852			14,290			—
(Decrease)/increase in tax preparation fees payable		(16,525	)		48,890			—
(Decrease) in Board of Managers’ fees payable		—			(2,500	)		14,000
(Decrease) in administration fees payable		(9,583	)		(25,211	)		—
(Decrease)/increase in custody fees payable		(12,769	)		17,002			—
Increase in other payables		2,220			10,977			17,159
Net cash provided by/(used in) operating activities		31,774,440			8,289,186			(571,212	)
Cash Flows for Financing Activities
Cash distributions to Members		(21,107,515	)		(8,265,880	)		—
Net cash (used in) financing activities		(21,107,515	)		(8,265,880	)		—
Net increase/(decrease) in cash		10,666,925			23,306			(571,212	)
Cash and cash equivalents at beginning of year		26,240			2,934			574,146
Cash and cash equivalents at end of year	$	10,693,165		$	26,240		$	2,934
Supplimental Information
Non-cash distributions received from Private Investment Funds	$	563,864		$	614,956		$	—

~~Notes~~The toaccompanying ~~Financial Statements~~notes are an integral part of these Financial Statements.

Excelsior Venture Partners III, LLC

~~Statements~~Financial ofHighlights ~~Cash Flows~~

	Year Ended October 31, 2004			Year Ended October 31, 2003			Year Ended October 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (decrease) in net assets resulting from operations	$	(6,378,420	)	$	(16,037,162	)	$	(7,925,763	)
Adjustments to reconcile net (decrease) in net assets from operations to net cash (used in) / provided by operating activities:
Net change in unrealized depreciation on investments		1,504,828			13,960,068			6,267,536
Purchase of investments		(16,483,800	)		(25,204,380	)		(36,110,398	)
Sale of Investments		8,205,129			—			—
Realized Loss on Sale of Investment		2,555,211			—			—
Change in short-term investments		7,987,809			30,256,603			31,006,753
Decrease (increase) in receivable from affiliate		(99,275	)		—			—
Decrease (increase) in receivable due from distributor		(1,142,510	)		—			50,000
Decrease (increase) in interest receivable		(10,168	)		1,526			(1,933	)
Decrease (increase) in other receivable		—			994,345			(996,290	)
Decrease (increase) in prepaid insurance		(799	)		61,791			(21,713	)
Increase (decrease) in management fee payable		(33,753	)		(79,705	)		(680,232	)
Increase (decrease) in Board of Managers’ fees payable		8,000			—			15,000
Increase (decrease) in expenses payable		149,594			(214,932	)		(36,082	)
Net cash (used in) / provided by operating activities		(3,738,154	)		3,738,154			(8,433,122	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by financing activities		—			—			—
Net change in cash		(3,738,154	)		3,738,154			(8,433,122	)
Cash at beginning of period		3,738,154			—			8,433,122
Cash at end of period	$	—		$	3,738,154		$	—

Per Unit Operating Performance:⁽¹⁾

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


	Year Ended October 31, 2008			Year Ended October 31, 2007			Year Ended October 31, 2006			Year Ended October 31, 2005			Year Ended October 31, 2004
Net Asset Value, Beginning of Year	$	245.05		$	255.96		$	316.21		$	393.21		$	414.82
Income from Investment Operations:
Net investment (loss)		(3.35	)		(2.08	)		(2.16	)		(4.44	)		(7.85	)
Net realized and unrealized (loss)/gain on investments		(33.76	)		19.17			(58.09	)		(35.72	)		(13.76	)

Net (decrease)/increase in net assets resulting from operations		(37.11	)		17.09			(60.25	)		(40.16	)		(21.61	)

Total Distributions to Members		(71.50	)		(28.00	)		—			(36.84	)		—

Net Asset Value, End of Year	$	136.44		$	245.05		$	255.96		$	316.21		$	393.21

Total Net Asset Value Return⁽²⁾		(15.41	)%		7.84	%		(19.05	)%		(11.24	)%		(5.21	)%

Ratios and Supplemental Data ⁽³⁾
Net Assets, End of Year (000’s)	$	40,279		$	72,342		$	75,562		$	93,349		$	116,079
Ratios to Average Net Assets:
Gross expenses		2.11	%		1.91	%		2.18	%		2.45	%		2.45	%
Net expenses		2.11	%		1.91	%		2.18	%		2.45	%		2.37	%
Net investment (loss)		(1.49	)%		(0.88	)%		(0.74	)%		(1.23	)%		(1.92	)%
Portfolio Turnover Rate ⁽⁴⁾		7.91	%		12.37	%		4.00	%		24.00	%		11.00	%

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

(2)

Total investment value return based on per unit net asset value reflects the effects of changes in net asset value based on the performance of the Company during the period, and assumes dividends and distributions, if any, were reinvested. The Company’s units were issued in a private placement and are not traded. Therefore, the market value of total investment return is not presented. For the year ended October 31, 2008, 0.39% of the Company’s total net asset value return consists of a voluntary reimbursement by BACA for a net realized gain from payments by affiliates. Excluding this item, total net asset value return would have been (15.80%) for the year ended October 31, 2008.

(3)

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. 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.

(4)	Distributions from Private Investment Funds are included in the portfolio turnover rate.

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

Excelsior Venture Partners III, LLC

Financial Highlights — Selected Per Unit Data and Ratios

Per Unit Operating Performance:(1)

	Year Ended October 31, 2004			Year Ended October 31, 2003			Year Ended October 31, 2002			April 5, 2001 (Commencement of Operations)to October 31, 2001
NET ASSET VALUE, BEGINNING OF PERIOD	$	414.82		$	469.14		$	495.99		$	500.00
Deduction of offering cost from contributions		—			—			—			(4.97	)
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)		(7.85	)		(7.04	)		(5.62	)		2.81
Net realized and unrealized (loss) on investment transactions		(13.76	)		(47.28	)		(21.23	)		(0.20	)
Total from investment operations		(21.61	)		(54.32	)		(26.85	)		2.61
DISTRIBUTIONS
Net investment income		—			—			—			(1.65	)
Total Distributions		—			—			—			(1.65	)
NET ASSET VALUE, END OF PERIOD	$	393.21		$	414.82		$	469.14		$	495.99
TOTAL NET ASSET VALUE RETURN(5)		(5.21	)%		(11.58	)%		(5.41	)%		(0.41	)%(3)
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, End of Period (000’s)	$	116,079		$	122,458		$	138,495		$	146,421
Ratios to Average Net Assets:
Gross Expenses		2.45	%		2.27	%		2.43	%		1.35	%(2)
Net Expenses		2.37	%(6)		2.27	%		2.36	%(4)		1.32	%(2)
Net Investment Income (Loss)		(1.92	)%		(1.61	)%		(1.15	)%		0.58	%(2)
Portfolio Turnover Rate		11	%		0	%		0	%		0	%

(1) Selected data for a unit of membership interest outstanding through each period.

(2) Annualized.

(3) Not annualized. Percentage includes the impact of the deduction of offering costs from contributions.

(4) Net of organization expense reversal.

(5) Total investment 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 market value total investment return is not calculated.

(6) Net of reimbursement from affiliate. See Note 10.

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

EXCELSIOR VENTURE PARTNERS III, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, ~~2004~~2008

Note 1 — ~~Significant~~Organization ~~Accounting Policies~~

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 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.

As a BDC, the Company must be primarily engaged in the business of furnishing capital and making available managerial assistance to companies that generally do not have ready access to capital through conventional financial channels. The Company’s investment objective is to achieve long-term capital appreciation primarily by investing in domestic venture capital and other private companies and, to a lesser extent, domestic and international private funds, negotiated private investments in public companies and international direct investments that the Investment Adviser believes offer significant long-term capital appreciation ~~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.

Note 2 — Significant Accounting Policies

A. Basis of Presentation and Use of Estimates:

Costs 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.

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

AB. ~~Investment~~Cash ~~Valuation~~and Cash Equivalents:

~~The~~Cash ~~Company values portfolio securities quarterly~~ and atcash ~~such~~equivalents ~~other~~consist ~~times~~of ~~as,~~deposits inwith ~~the~~PNC ~~Board of Managers’ view~~Bank, ~~circumstances warrant~~N. ~~Securities~~A. ~~for~~All ~~which~~highly ~~market~~liquid ~~quotations~~investments are ~~readily~~listed ~~available~~separately ~~generally will be valued at the last sale price~~ on the ~~date~~Portfolio of ~~valuation~~Investments. ~~or,~~As ~~if no sale occurred, at the mean~~ of ~~the latest bid and ask prices; provided that~~October 31, ~~as to such securities that may have legal~~2008, ~~contractual or practical restrictions on transfer, a discount of 10% to 40% from~~ the ~~public~~Company ~~market~~did ~~price~~not ~~will~~hold ~~be applied. Securities for which no public market exists and other assets will be valued at fair value as determined in~~any ~~good~~short-term faith by the Investment Adviser (as defined below) or a committee of the Board of Managers or both under the supervision of the Board of Managers pursuant to certain valuation procedures summarized belowinvestments. ~~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~~C. ~~Generally,~~Restricted ~~such~~Cash: 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,

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

Note 2 — Significant Accounting Policies (continued)

D. Investment Valuation:

The Company values portfolio securities quarterly and at such other times as, in the Company’s Board of Managers’ view, circumstances warrant. Securities for which market quotations are readily available generally will be valued at the last sale price on the date of valuation or, if no sale occurred, at the mean of the latest bid and ask prices; provided that, as to such securities that may have legal, contractual or practical restrictions on transfer, a discount of 10% to 40% from the public market price may be applied.

Securities for which no public market exists and other assets will be valued at fair value as determined in good faith by the 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. Securities having remaining maturities of 60 days or less from the date of purchase are valued at amortized cost.

The value for securities for which no public market exists is difficult to determine. Generally, such investments will be valued on a “going concern” basis without giving effect to any disposition costs. There is a range of values that is reasonable for such investments at any particular time. Initially, direct investments are valued based upon their original cost until developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued by the “private market” or “appraisal” methods of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. The appraisal method shall be based upon such factors affecting the investee 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, 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 Investment Funds 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, in accordance with its partnership agreement, constitutional or other documents governing such valuation, on the valuation date. If such valuation with respect to the Company’s investments in Private Investment Funds is not available by reason of timing or other event on the valuation date, or 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.

At October 31, 2008 and October 31, 2007, market quotations were not readily available for the Company’s portfolio of securities valued at $28,814,304 or 71.54% of net assets and $56,267,427 or 77.78% 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.

E. Security transactions and investment income:

Private and Public Companies

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

~~liquidation~~Note ~~value.~~2 ~~The~~— ~~values~~Significant ~~for~~Accounting ~~the~~Policies ~~investments~~(continued) referred to in this paragraph will be estimated regularly by the Investment Adviser or a committee 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 Investment Funds 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, in accordance with its partnership agreement, constitutional or other documents governing such valuation, on the valuation dateE. IfSecurity ~~such~~transactions ~~valuation~~and ~~with~~investment ~~respect~~income: to(continued) the Company’s investments in Private Investment Funds is not available by reason of timing or other event on the valuation date, or are deemed to be unreliable by the 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.

AtPrivate October 31, 2004 and October 31, 2003, market quotations were not readily available for the Company’s portfolio of securities valued at $65,522,013 or 56.45% of net assets and 65,986,308 or 53.90% of net assets, respectively. Such securities were valued by the Investment ~~Adviser,~~Funds 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.

B.Distributions ~~Security~~of ~~transactions~~cash ~~and~~or ~~investment~~in-kind from a Private Investment Fund are recorded as a return of ~~income:~~capital and serve to reduce the cost basis of the Private Investment Fund. Distributions received in excess of the cost basis are recognized as realized gains. Distributions are recorded when they are received from the Private Investment Fund.

~~Security transactions are recorded on a trade date basis~~F. ~~Realized~~Expenses: 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.

CThe Company records expenses on an accrual basis. ~~Income~~Such ~~taxes:~~accruals require management to make estimates and assumptions that affect the reported amounts, which is consistent with U.S. generally accepted accounting principles.

~~Under current law and based on certain assumptions and representations, the Company intends to be treated as a partnership for federal, state and local income tax purposes~~G. ByIncome ~~reason~~taxes: of this treatment, the Company will itself not be subject to income tax. Rather, each member, in computing income tax, will include his, her or its allocable share of Company items of income, gain, loss, deduction and expense.

~~The~~Under ~~cost~~current oflaw ~~the Private~~and ~~Investment Funds for federal tax purposes is~~ based on certain ~~amounts~~assumptions ~~reported~~and ~~to the Company on Schedule K-1 from the Private Investment Funds. As of October 31~~representations, ~~2004,~~ the Company ~~has~~intends ~~not received information~~ to ~~determine~~be ~~the~~treated ~~tax cost of the Private Investment Funds~~ as ofa ~~October~~partnership ~~31,~~for ~~2004. At December 31~~federal, ~~2003,~~state ~~the~~and ~~Private~~local ~~Investment~~income ~~Funds had a cost basis for~~ tax purposes ~~of $3,442,444~~. ~~Based~~By onreason ~~values~~ of ~~the~~this ~~Private Investment Funds as of October 31~~treatment, ~~2004,~~the ~~and~~Company ~~after~~will ~~adjustment~~itself ~~for purchases~~not ~~and~~be ~~sales~~subject ~~between~~to ~~December~~income ~~31, 2003 and October 31, 2004, this results in net unrealized depreciation at December 31, 2004 for~~ tax. ~~purposes on the Private Investment Funds of $456~~Rather,~~901,~~ ~~consisting~~each ~~of gross appreciation of $97~~member,~~676~~ ~~and gross~~in ~~depreciation~~computing ofincome ~~$554~~tax,~~577.~~ ~~The~~will ~~cost~~include ~~basis~~their ~~for~~allocable ~~federal~~share ~~tax purposes~~ of the Company’s ~~other investments is $130~~income,~~915,545,~~ ~~and those investments had net depreciation on a tax basis at October 31~~gain, ~~2004 of $20~~loss,~~640,914,~~ ~~consisting~~deduction ~~of gross appreciation of $8,311,832~~ and ~~gross depreciation of $28,952,746~~expense. ~~After~~There ~~adjusting~~were ~~the~~neither ~~October~~liabilities ~~31,~~nor ~~2003,~~deferred ~~cost~~tax ~~for~~assets ~~$360,320~~relating ~~of net contributions~~ to ~~Private~~uncertain ~~Investment~~income ~~Funds~~tax ~~made~~positions ~~during~~taken ~~November~~or ~~and~~expected ~~December~~to ofbe ~~2003,~~taken on the ~~Private Investment Funds had a cost basis for~~ tax ~~purposes~~return atas ~~December 31, 2003,~~ of ~~$3,442,444. The cost basis for federal tax purposes of the Company’s other investments at October~~ December 31, 2003, is $135,958,784, and those investments had net depreciation on a tax basis at October 31, 2003 of $19,539,237, consisting of gross appreciation of $6,506,176 and gross depreciation of $26,045,4132007.

DThe 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. ~~Dividends~~As of October 31, 2008, the Company has not received information to ~~members:~~determine the tax cost of the Private Investment Funds. At December 31, 2007 and December 31, 2006, the Private Investment Funds had a cost basis for tax purposes of $13,695,895 and $12,465,650, respectively. After rolling forward the tax cost for purchases and sales for the period between December 31, 2007 and October 31, 2008, the adjusted cost for tax purposes is $15,700,801. This results in net unrealized appreciation for tax purposes on the Private Investment Funds of $1,716,566. The cost basis for federal tax purposes of the Company’s other investments is $42,763,809, and those investments had net depreciation on a tax basis at October 31, 2008 of $31,366,872. The cost basis for federal tax purposes of the Company’s other investments at October 31, 2007, was $61,405,464, and those investments had net depreciation on a tax basis at October 31, 2007 of $9,924,379.

~~The~~Note ~~Company~~3 ~~will~~— ~~distribute all cash that the~~ Investment ~~Adviser~~Advisory ~~does~~Fee, ~~not expect to use in the operation of the Company. Due to the nature~~Administration ofFee ~~the~~and ~~Company’s~~Related ~~investments,~~Party ~~investors~~Transactions ~~should not expect distributions of cash or property during the first several years of the Company’s operations.~~

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

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

Note 23 — Investment Advisory Fee, Administration Fee and Related Party Transactions (continued)

~~Prior~~USTA, toa ~~June~~Delaware 1,corporation ~~2003,~~ and ~~pursuant~~registered toinvestment ~~an Investment Advisory Agreement (the “Agreement”)~~adviser, ~~U.S.~~has ~~Trust~~been ~~Company served during the reporting period as the Investment Adviser to the Company pursuant to~~ an ~~Investment~~indirect ~~Advisory~~wholly-owned ~~Agreement~~subsidiary ~~with~~of, ~~the~~and ~~Company.~~controlled ~~Under the Agreement for the services provided~~by, ~~the~~Bank ~~Investment Adviser is entitled to receive a management fee at an annual rate equal to 2.00%~~ of ~~the Company’s average quarterly net assets through the fifth anniversary of the first closing date of April 5~~America, since ~~2001~~July 1, ~~and 1~~2007.~~00%~~ ~~of net assets thereafter.~~ Prior to ~~June 1, 2003, and pursuant~~ to ~~sub-advisory agreements among the Company~~that, ~~U.S.~~USTA ~~Trust~~was ~~Company,~~an ~~United~~indirect ~~States~~subsidiary ~~Trust Company~~ of ~~New York (“~~U.S. Trust ~~NY”) and U~~Corp.~~S. Trust Company~~, ~~N.A.,~~a ~~U.S.~~registered ~~Trust~~financial NYholding ~~and~~company, ~~U.S.~~which, ~~Trust~~in ~~Company~~turn, ~~N.A.~~was ~~served~~a ~~as the investment sub~~wholly-~~advisers~~owned tosubsidiary ~~the Company and received an investment management fee from the Investment Adviser. As~~ of ~~October 31, 2004, and 2003, $583,569 and $617,322 were respectively payable to the Investment Adviser~~Schwab.

InUSTA ~~addition~~assumed to the ~~management~~duties ~~fee,~~of the ~~Investment~~investment ~~Adviser~~adviser isfrom ~~entitled to allocations and distributions equal to~~ the ~~Incentive~~previous ~~Carried~~investment ~~Interest.~~adviser ~~The Incentive Carried Interest is an amount equal~~ to ~~20% of~~ the Company’s, ~~cumulative realized capital gains on Direct Investments~~UST-NA, ~~net~~which ofwas ~~cumulative~~acting ~~realized~~through ~~capital~~its ~~losses~~registered ~~and~~investment ~~current~~advisory ~~net~~division, ~~unrealized capital depreciation on all of the Company’s investments and cumulative net expenses of the Company~~U.S. ~~Direct~~Trust ~~Investments~~Asset ~~means~~Management ~~Company~~Division, ~~investments~~on ~~in domestic and foreign companies in which the equity is closely held by company founders~~December 16, ~~management, and/or a limited number of institutional investors and negotiated private investments in public companies~~2005. ~~The~~UST-NA ~~Incentive~~has ~~Carried~~served ~~Interest will be determined annually~~ as of the ~~end~~investment ofadviser ~~each~~to ~~calendar year. As of, and for~~ the ~~years~~Company ~~ended,~~pursuant ~~October~~to ~~31,~~an ~~2004,~~investment ~~2003~~advisory ~~and 2002 there was no Incentive Carried interest earned by the Investment Adviser~~agreement.

~~U.S.~~Under ~~Trust~~the ~~NY is a~~ New ~~York~~Advisory ~~state-chartered~~Agreement ~~bank~~for ~~and trust company and a member of~~ the ~~Federal~~services ~~Reserve System. Effective June 1~~provided, ~~2003,~~the ~~U.S.~~Investment ~~Trust~~Adviser ~~Company merged~~is ~~into~~entitled ~~U.S.~~to ~~Trust~~receive ~~Company, N.A.,~~ a ~~nationally~~management ~~chartered~~fee ~~bank.~~at ~~Pursuant to~~ an ~~assumption~~annual ~~agreement~~rate ~~dated~~equal ~~June 1, 2003, U~~to 2.S.00% ~~Trust Company, N.A. has assumed the duties and obligations~~ of ~~U.S. Trust Company under~~ the ~~Agreement. As a result, U.S. Trust~~ Company,’s ~~N.A.,~~end ~~acting~~of ~~through its registered investment advisory division, U.S. Trust Company, N.A. Asset Management Division, serves as Investment Adviser to~~ the ~~Company~~quarter ~~with~~net ~~U.S.~~assets ~~Trust NY, acting~~ through ~~its registered investment advisory division, U.S. Trust—New York Asset Management Division, serving as a sub-investment adviser. The merger has no impact on~~ the ~~management~~fifth oranniversary ~~operations~~ of the ~~investment~~first ~~advisory~~closing ~~functions~~date ~~performed~~of ~~for~~April 5, ~~the Company~~2001, and ~~does not constitute a change in control~~1.00% ~~U.S. Trust NY and U.S. Trust Company, N.A. are each a wholly-owned subsidiary~~ of ~~U.S.~~net ~~Trust~~assets ~~Corporation, a registered bank holding company~~thereafter. ~~U.S. Trust Corporation is an indirect wholly-owned subsidiary of The Charles Schwab Corporation (“Schwab”).~~

~~Pursuant~~Prior to ~~an Administration~~March 31, ~~Accounting~~2006 and ~~Investor~~pursuant ~~Services~~to ~~Agreement, the Company retains PFPC Inc. (“PFPC”),~~ a ~~majority~~sub-~~owned~~advisory ~~subsidiary~~agreement ofamong ~~The~~the ~~PNC Financial Services Group~~Company, ~~as administrator~~UST-NA, ~~accounting~~ and ~~investor~~United ~~services~~States ~~agent. In addition, PFPC~~ Trust Company ~~serves~~of asNew ~~the~~York ~~Company’s custodian. In consideration for its services, the Company~~ (~~i) pays PFPC a variable fee between 0~~“U.~~105% and 0~~S.~~07%, based on average quarterly net assets, payable monthly, subject to a minimum quarterly~~ ~~fee~~Trust ~~of approximately $30,000, (ii~~NY”) ~~pays annual fees of approximately $15~~,~~000~~ ~~for~~U.S. ~~taxation~~Trust ~~services~~NY ~~and~~served ~~(iii)~~as ~~reimburses~~the ~~PFPC~~investment ~~for out~~sub-~~of-pocket~~adviser ~~expenses. Administration fees for the year ended October 31, 2004 amounted~~ to ~~$139,525, of which $50,936 was payable at October 31, 2004. Administration fees for~~ the ~~year~~Company ~~ended~~and ~~October~~received ~~31,~~an ~~2003~~investment ~~amounted~~management tofee ~~$147,498,~~from ofUST-NA ~~which~~and ~~$25~~USTA.~~625~~ ~~was payable at October 31, 2003. Administration fees for the year ended October 31, 2002 amounted to $160,473.~~

~~Charles~~On ~~Schwab & Co.~~March 31, ~~Inc. (the “Distributor”)~~2006, ~~the~~ ~~principal subsidiary of Schwab, serves as the Company’s distributor for the offering of units~~U. ~~The Investment Adviser paid the Distributor from its own assets an amount equal to 0~~S.~~02%~~ ofTrust ~~the~~NY ~~total~~converted ofinto ~~all~~a ~~subscriptions~~national ~~received~~bank innamed ~~the offering~~U.S. ~~The~~Trust ~~Investment~~and ~~Adviser or an affiliate will pay the Distributor an on~~UST-~~going~~NA ~~fee~~merged ~~for~~into ~~the~~U.S. ~~sale~~Trust, ofwith ~~units~~U.S. ~~and~~Trust ~~the~~as ~~provision of ongoing investor services in an amount equal to~~ the ~~annual~~surviving ~~rate of 0~~entity.~~45%~~ ofAfter the ~~average~~merger, 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 0U.~~22%~~S ~~thereafter~~Trust, ~~subject~~acting tothrough ~~elimination~~its ~~upon~~registered ~~all~~investment ~~such fees totaling~~advisory 6division, U.5%S. ofTrust-New ~~the~~York ~~gross~~Asset ~~proceeds~~Management ~~received~~Division, bywas ~~the~~serving ~~Company~~as ~~from~~ the ~~offering. The~~ Investment Sub-Adviser ~~paid~~to the ~~Distributor~~Company ~~$732~~pursuant into ~~fees~~an ~~for~~investment ~~the~~sub-advisory ~~year ended October 31, 2004, $772 for the year ended October 31, 2003 and $873 for the year ended October 31, 2002~~agreement.

~~Each~~On ~~member~~July 1, 2007, U.S. Trust Corp. and its subsidiaries, including USTA, were acquired by Bank of America (the ~~Board~~“Sale”). ofUSTA ~~Managers~~continued ~~receives~~to ~~$7,000~~serve as the Investment Adviser to the Company after the Sale ~~annually,~~(until $2May 29,~~000~~ ~~per~~2008) pursuant to the Advisory Agreement that was approved at a special meeting ~~attended~~of ~~and~~members isof ~~reimbursed~~the ~~for~~Company ~~expenses~~held ~~incurred~~on March 15, 2007. The Advisory Agreement was identical in all material respects except for ~~attending~~the ~~meetings~~term and the date of effectiveness to the previous investment advisory agreement. NoThe ~~person~~Investment ~~who~~Sub-Adviser isceased anto ~~officer,~~serve ~~manager~~as orthe ~~employee~~investment ofsub-adviser Uto the Company after the Sale.S.

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

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

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

In addition to the management fee, the Investment Adviser is entitled to allocations and distributions equal to the Incentive Carried Interest. The Incentive Carried Interest is an amount equal to 20% of the excess, if any, of the Company’s 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 and (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

~~Trust~~Note ~~Corporation,~~3 or— ~~its~~Investment ~~subsidiaries,~~Advisory ~~who serves as an officer~~Fee, ~~manager~~Administration orFee ~~employee~~and ofRelated ~~the~~Party ~~Company~~Transactions ~~receives~~(continued) any compensation from the Company. For the year ended October 31, 2004, the Board of Managers’ fees totaled $68,000, all of which was still payable at October 31, 2004. For the year ended October 31, 2003, the Board of Managers’ fees totaled $60,000, all of which was still payable at October 31, 2003. For the year ended October 31, 2002, the Board of Managers’ fees totaled $83,000.

Aslimited number of ~~October~~institutional ~~31,~~investors ~~2004,~~ and ~~2003~~negotiated ~~Excelsior~~private ~~Venture~~investments ~~Investors III, LLC had an investment~~ in ~~the~~public ~~Company~~companies. As of ~~$73~~October 31,~~691,035~~ 2008 and 77October 31,~~740~~ 2007,~~266~~ ~~respectively.~~there ~~This~~was no ~~represents~~Incentive anCarried ~~ownership~~Interest ~~interest~~earned ofby ~~63.48%~~BACA inor ~~the~~USTA, ~~Company as of both dates~~respectively.

~~See~~Pursuant ~~Note~~to 9an –Administration, ~~Subsequent~~Accounting ~~Events~~and Investor Services Agreement, the Company retains PNC Global Investment Servicing (“PNCGIS”) (formerly known as PFPC Inc.), a majority-owned subsidiary of The PNC Financial Services Group, as administrator, accounting and investor services agent. In addition, PFPC Trust Company serves as the Company’s custodian. In consideration for its services, the Company (i) pays PNCGIS a variable fee between 0.105% and 0.07%, based on average quarterly net assets, payable monthly, subject to a minimum quarterly fee of approximately $30,000, (ii) pays annual fees of approximately $36,667 for taxation services and (iii) reimburses PNCGIS for out-of-pocket expenses.

~~Note~~Charles 3Schwab & Co., Inc. (the “Distributor”), the principal subsidiary of Schwab, served as the Company’s distributor for the —offering ~~Purchases~~of units. UST-NA, and ~~Sales~~subsequently USTA, paid the Distributor from its own assets an amount equal to 0.02% of ~~Securities~~the total of all subscriptions received in the offering. UST-NA or an affiliate paid the Distributor an on-going fee for the sale of units and the provision of ongoing investor services in an amount equal to the annual rate of 0.45% of the average quarterly net asset value of all outstanding units held by investors introduced to the Company by the Distributor through the fifth anniversary of the final subscription closing date and at the annual rate of 0.22% thereafter, subject to elimination upon all such fees totaling 6.50% of the gross proceeds received by the Company from the offering. Since the fifth anniversary has expired, no further fees have been paid by the Company or its affiliates to the Distributor.

~~Excluding short-term~~Each ~~investments,~~member of the ~~Company~~Board ~~had~~of Managers receives $1610,~~483,800,~~000 as an annual retainer and the Chairman of the Board receives an additional $251,~~204~~000 annual retainer. Also,~~380,~~ each member of the Board receives $362,~~110~~000 per quarterly meeting attended. In addition,~~398~~ ineach ~~purchases~~Board member receives $500 per quarterly telephonic meeting and $8500 for any other telephonic special meeting. For each audit committee meeting attended,~~205~~ Board members receive $1,~~129~~500, while the Chairman of the Audit Committee receives an additional $01,000 $0retainer. inEach ~~sales~~member of ~~securities~~the Board is reimbursed for ~~the~~expenses ~~periods~~incurred ~~ending~~for ~~October~~attending 31meetings. No person who is an officer, ~~2004~~manager or employee of Bank of America, ~~October~~or 31its subsidiaries, ~~2003~~who ~~and~~serves ~~October~~as 31an officer, ~~2002~~manager ~~respectively~~or employee of the Company, receives any compensation from the Company.

~~Note~~As 4of —October 31, ~~Organization~~2008, ~~Fees~~and October 31, 2007 Excelsior Venture Investors III, LLC had an investment in the Company of $25,570,437 and $45,925,203, respectively. This represents an ownership interest of 63.48% in the Company as of both dates.

~~The~~Note ~~Company~~4 ~~originally~~— ~~estimated~~Purchases ~~organization fees totaling $154,976, which~~and ~~were~~Sales ~~expensed in the fiscal period ended October 31, 2001. As a result~~ of ~~the~~Securities Company’s final closing held on May 11, 2001, the Company was reimbursed for $50,000 in organizational expenses from the Distributor during 2002. Certain anticipated organizational expenses totaling $93,880 were ultimately not incurred. As a result, the Company reversed $93,880 of organizational expense in 2002, as reflected in the Statement of Operations.

~~Note~~Excluding 5short-term —investments, ~~Commitments~~the Company’s purchases and proceeds received from the sale of investments and distributions received from Private Investment Funds for the years ended October 31, 2008, October 31, 2007, and October 31, 2006 were as follows:

As of October 31, 2004, the Company had outstanding investment commitments totaling $18,975,339.


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

Note 6 — Transactions with Affiliated Companies

An affiliated company is a company in which the Company has ownership of more than 5% of the voting securities. The Company did not receive dividend income from affiliated companies during the year ended October 31, 2004 and October 31, 2003. Transactions with companies, which are or were affiliates were as follows:

						For the Year Ended October 31, 2004
Name of Investment	Shares/PrincipalAmount Held atOctober 31, 2003	October 31, 2003 Value		Purchases /ConversionAcquisitions		Sale/Conversion Proceeds			InterestReceived		RealizedGain (Loss)		Shares/PrincipalAmount Held atOctober 31, 2004	October 31, 2004Value (Note 1)
Controlled Affiliates
Pilot Software Inc., Series A Preferred	20,000,000	$	4,000,000	$	—	$	—		$	—	$	—	20,000,000	$	4,000,000
Pilot Software Inc., Bridge Note, 9%	—		—		750,000		—			9,062		—	750,000		750,000
Datanautics Inc., Series A Preferred	—		—		4,000,000					—		—	19,995,000		4,000,000
Datanautics, Inc., Promissory Note 3%	4,000,000		4,000,000		—		(4,000,000	)		—		—	—		—
Total Controlled Affiliates		$	8,000,000	$	4,750,000	$	(4,000,000	)	$	9,062	$	—		$	8,750,000

							For the Year Ended October 31, 2004
Name of Investment	Shares/PrincipalAmount Held atOctober 31, 2003		October 31,2003 Value		Purchases /ConversionAcquisitions		Sale/Conversion Proceeds			InterestReceived		RealizedGain (Loss)			Shares/PrincipalAmount Held atOctober 31, 2004	October 31,2004 Value (Note 1)
Non Controlled Affiliates
Adeza Biomedical Corp., Series 5 Preferred	$	647,948	$	3,000,000	$	—	$	—		$	—	$	—		647,948	$	3,000,000
Ancile Pharmaceuticals, Inc. Series D Preferred		2,419,355		—		—		—			—		(3,000,000	)	—		—
Ancile Pharmaceuticals, Inc. Bridge Note 6%		850,000		—		—		—			—		(850,000	)	—		—
Ancile Pharmaceuticals, Inc. Warrants		2		—		—		—			—		—		—		—
Archemix Corporation, Series A Preferred		1,314,285		1,314,285		685,714		—			—		—		1,999,999		1,999,999
Archemix Corporation, Series B Preferred		—		—		466,666		—			—		—		466,666		466,666
Cenquest, Inc., Series 2 Preferred		4,425		—		—		—			—		—		4,425		—
Chips & Systems, Inc., Series A Preferred		—		—		3,500,000		—			—		—		7,000,000		3,500,000
Ethertronics Inc., Series B Preferred		3,766,666		5,650,000		1,000,000		—			—		—		4,433,333		6,650,000
Ethertronics Inc., Warrants		281,667		—		—		—			—		—		281,667		—
Genoptix, Inc., Series B-1 Preferred		942,481		1,253,500		—		—			—		—		942,481		1,253,500
Genoptix, Inc., Series B-2 Preferred		826,823		734,851		515,148		—			—		—		1,403,696		1,250,000
Genoptix, Inc., Series C Preferred		—		—		277,089		—			—		—		310,290		277,089
Genoptix, Inc., Common Stock		46,860		—		—		—			—		—		46,860		—
Gyration, Inc., Series C-2 Preferred		1,523,810		4,000,000				(5,290,579	)		—		1,290,579		—		—
Gyration, Inc., Bridge Note 12%		—		—		2,797,200		(2,797,200	)		6,658		—		—		—
Gyration, Inc., Warrant		—		—		2,800		(2,800	)		—		—		—		—
LightConnect, Inc., Series B Preferred		4,330,504		948,563		—		—			—		—		4,330,504		5,000,000
LightConnect, Inc., Series C Preferred		12,292,441		992,000		—		—			—		—		12,292,441		992,000
LogicLibrary, Inc., Series A Preferred		5,914,488		2,704,226		704,225		—			—		—		7,454,720		3,408,450
MIDAS Vision Systems, Inc., Series A-1 Preferred		933,593		—		—		—			—		—		933,593		—
MIDAS Vision Systems, Inc., Common Stock		157,396		—		—		—			—		—		157,396		—
Monterey Design Systems, Inc., Common Stock		708,955		—		—		—			—		—		708,955		—
Monterey Design Systems, Inc., Series 2 Preferred		3,333,333		5,400,000		—		—			—		—		3,333,333		600,000
NanoOpto Corp., Series A-1 Preferred		956,234		604,259		—		—			—		—		956,234		—
NanoOpto Corp., Series B Preferred		558,295		888,244		1,048,656		—			—		—		3,023,399		1,655,118
NetLogic Microsystems, Inc., Series D Preferred		1,538,461		5,000,000		—		(5,000,000	)		—		—		—		—
NetLogic Microsystems, Inc., Common Stock		—		—		5,000,000		—			—		—		384,615		1,706,922
OpVista, Inc., Series B Preferred		5,333,333		1,500,000		—		—			—		—		5,333,333		—
OpVista, Inc., Series C Preferred		12,671,059		5,000,000		—		—			71		—		12,671,059		5,000,000
Senomyx, Inc., Series E Preferred		517,260		1,500,000		—		(1,500,000	)		—		—		—		—
Senomyx, Inc., Common Stock		—		—		1,500,000		—			—		—		428,572		2,976,005
Silverback Systems, Inc., Series B-1 Preferred		2,211,898		450,052		—		—			—		—		2,211,898		450,051
Silverback Systems, Inc., Series C Preferred		30,927,835		3,965,564		333,333		—			—		—		34,364,257		4,298,896
Tensys Medical, Inc., Series C Preferred		4,166,667		5,000,000		—		—			—		—		4,166,667		5,000,000
Tensys Medical, Inc., Series D Preferred		—		—		1,425,000		—			—		—		1,187,500		1,425,000
Virtual Silicon Technology, Inc., Series C Preferred		3,096,551		5,000,000		—		—			—		—		3,096,551		5,000,000
Virtual Silicon Technology, Inc., Bridge Note		—		—		88,738		—			—		—		88,738		88,738
Total Non Controlled Affiliates			$	54,905,543	$	19,344,569	$	14,590,579		$	6,729	$	(2,559,421	)		$	55,998,434

Note 5 — Commitments

As of October 31, 2008, the Company had unfunded investment commitments to Private Investment Funds totaling $3,398,175. The Company also had commitments from its investors of $147.6 million, none of which remains uncalled.


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		69,960
CMEA Ventures VI, L.P.		3,000,000		750,000
Morgenthaler Partners VII, L.P.		3,000,000		150,000
Prosepect Venture Partners II, L.P.		3,000,000		390,000
Sevin Rosen Fund IX, L.P.		3,000,000		750,000
Tallwood II, L.P.		3,000,000		—
Valhalla Partners, L.P.		3,000,000		367,866

Total	$	25,700,000	$	3,398,175

Note 76 — ~~Pending~~Transactions ~~Litigation~~with Affiliated Companies

~~The~~An ~~Investment~~affiliated ~~Adviser~~company ~~was~~is ~~contacted~~a company in ~~September,~~which ~~2003 by~~ the ~~Office~~Company ofhas ~~the~~ownership ~~New York State Attorney General (the “NYAG”), and the Securities and Exchange Commission (the “SEC”) and later by the Attorney General~~ of ~~the~~more ~~State~~than of5% ~~West Virginia in connection with their investigations~~ of ~~practices in~~ the ~~mutual~~voting ~~fund industry identified as “market timing” and “late trading” of mutual fund shares (the “Investigations”)~~securities. The ~~Investment~~Company ~~Adviser~~did ~~has~~not ~~been~~receive ~~providing~~dividends ~~full cooperation with respect to these Investigations and continues to review the facts and~~from ~~circumstances~~affiliated ~~relevant~~companies toduring the ~~Investigations.~~year Asended ~~disclosed~~October 31, ~~previously~~2008 ~~by the Investment Adviser~~ and ~~its affiliates~~October 31, ~~with~~2007. ~~respect~~Transactions towith ~~the Investment Adviser~~companies, ~~these investigations have been focusing on circumstances in~~ which aare ~~small~~or ~~number~~were ofaffiliates, ~~parties~~ were ~~permitted~~as tofollows: engage in short-term trading of certain mutual funds managed by the Investment Adviser. The short-term trading activities permitted under these arrangements have been terminated and the Investment Adviser has strengthened its policies and procedures to deter frequent trading.

The Investment Adviser, and certain of its affiliates, has also been named in five class action lawsuits which allege that the Investment Adviser, certain of its affiliates, and others allowed certain parties to engage in illegal and improper mutual fund trading practices, which allegedly caused financial injury to the shareholders of certain mutual funds managed by the Investment Adviser. The Investment Adviser and certain affiliates have also been named in two derivative actions alleging breach of fiduciary duty in relation to allegedly illegal and improper mutual fund trading practices.


Name of Investment							For the Year Ended October 31, 2008
Name of Investment	Shares/ Principal Amount Held at October 31, 2007	October 31, 2007 Fair Value		Purchases/ Conversion Acquisition			Sales Proceeds/ Conversion		Interest Received		Realized Gain/(Loss)			Shares/ Principal Amount Held at October 31, 2008	October 31, 2008 Fair Value (Note 1)
Controlled Affiliates
Pilot Software Inc., Escrow	—	$	—	$	—		$	2,079,801	$	76,123	$	(152,497	)	—	$	—

Total Controlled Affiliates	—	$	—	$	—		$	2,079,801	$	76,123	$	(152,497	)	—	$	—
Non-Controlled Affiliates
Ethertronics, Inc., Series B Preferred	4,433,333		6,650,000		—			—		—		—		4,433,333		6,650,000
Ethertronics, Inc., Series C Warrants	271,247		—		—			—		—		—		271,247		—
Ethertronics, Inc., Series C Preferred	1,697,957		2,546,937		—			—		—		—		1,697,957		2,546,937
LogicLibrary, Inc., Series A Preferred	8,751,782		4,001,492		(4,087,685	)		—		1,758		—		—		—
LogicLibrary, Inc., Series A-1 Preferred	3,080,464		1,408,450		(1,408,450	)		—		—		—		—		—
MIDAS Vision Systems, Inc., Series A-1 Preferred	933,593		—		—			—		—		(1,054,960	)	—		—
MIDAS Vision Systems, Inc., Common Stock	157,396		—		—			—		—		(4,000,000	)	—		—
NanoOpto Corp., Bridge Note	237,321		160,000		—			93,384		—		(143,937	)	—		—
OpVista, Inc., Series AA Preferred	5,683,906		6,236,892		(6,236,892	)		—		—		—		—		—
OpVista, Inc., Common Stock	1,079,541		1,184,567		7,411,767			—		—		—		10,615,593		—
OpVista, Inc., Series BB Convertible Preferred	433,400		491,800		(491,800	)		—		—		—		—		—
OpVista, Inc., Series CC Convertible Preferred	—		—		—			—		—		—		—		—
OpVista, Inc., Bridge Note	675,989		1,351,978		(683,075	)		—		7,760		—		—		—
OpVista, Inc., Series CC Warrants	675,313		—		—			—		—		—		675,313		—
Silverback Systems, Inc., Escrow	—		—		—			217,763		—		(39,084	)	—		—
Tensys Medical, Inc., Series C Preferred	4,166,667		534,026		—			—		—		—		4,166,667		—
Tensys Medical, Inc., Series D Preferred	1,187,500		152,197		—			—		—		—		1,187,500		—
Tensys Medical, Inc., Series E Preferred	96,629		347,865		266,669			—		3,792		—		318,845		—

Total Non-Controlled Affiliates		$	25,066,204	$	(5,229,466	)	$	311,147	$	13,310	$	(5,237,981	)		$	9,196,937
Total Non-Controlled and Controlled Affiliates		$	25,066,204	$	(5,229,466	)	$	2,390,948	$	89,433	$	(5,390,478	)		$	9,196,937

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

Note 8 — Guarantees

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

Note 9 — Contingent Liabilities

The Company has entered into an agreement with Pilot Software Inc. (“Pilot”), a controlled affiliate of the Company, in which the Company agreed to lend up to $1,000,000 to Pilot. During the year ended October 31, 2004, the Company loaned $750,000 to Pilot. At October 31, 2004, the Company is obligated to loan the remaining $250,000 to Pilot. The loan has an interest rate of 9% and matures on April 22, 2005. At October 31, 2004, the fund had interest receivable on the loan in the amount of $9,062.

Note 106 -— ~~Subsequent~~Transactions ~~Events~~with Affiliated Companies (continued)

On November 23, 2004, the Company engaged Deloitte & Touche, LLP (“D&T”) as the Company’s independent public accountants for the fiscal year ended October 31, 2004, replacing Ernst & Young LLP (“E&Y”), the Company’s prior independent public accountants. E&Y was terminated by the Company on October 28, 2004 as a result of concerns regarding their independence at the time of issuance of their report on the Company’s October 31, 2003 financial statements. These concerns are the result of certain real estate consulting services performed by E&Y on a contingent fee basis for Charles Schwab & Co., Inc., an affiliate of the Company’s Adviser.


							For the Year Ended October 31, 2007
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	)	—		—

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

As a result of the agreement with Schwab, the Company has recorded a reimbursement amount of $99,275 in the Statement of Operations for the year ended October 31, 2004 as a reduction of expenses. This $99,275 amount reflects the reimbursement of certain expenses recorded in the Statement of Operations for the year ended October 31, 2004 which relate to termination of E&Y costs paid and accrued. These costs include legal fees, audit fees (related to re-audit by D&T), and Board of Managers’ fees and expenses of $14,000, $77,275, and $8,000, respectively.

In November of 2004, the Company purchased Series D Preferred shares of Opvista, Inc. for $1,058,000.

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

There has been a change in the Company’s independent public accountants (see Note 10 to the financial statements), however there were no disagreements or reportable events.

ITEM 9A. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures. As of October 31, 2004 (the end of the period covered by this report), the Company’s principal executive officer and principal financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))and have concluded that, based on such evaluation, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company was made known to them by others within those entities.

(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 III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Managers and Officers

Set forth below are names, ages, positions and certain other information concerning the current managers and executive officers of the Company as of October 31, 2004.

Name and Age	Position	Served in Present Capacity Since	Principal Occupation During Past 5 Years and Other Affiliations
Douglas A.Lindgren, 43	Chief Executive Officer	July 20, 2000	Mr. Lindgren is a Managing Director of U.S. Trust Company. Mr. Lindgren also serves as Co-Chief Executive Officer of Excelsior Private Equity Fund II, Inc. and Excelsior Venture Investors III, LLC, Manager of Excelsior Directional Hedge Fund of Funds, LLC, and Chairman of the Board of Excelsior Buyout Investors, LLC and Excelsior Absolute Return Fund of Funds, LLC.
RobertAufenanger, 51	Treasurer	June 3, 2003	Mr. Aufenanger is a Senior Vice President of U.S. Trust Company, N.A. Prior to joining U.S. Trust in April 2003, Mr. Aufenanger worked as a consultant to various clients in the fund industry and prior to this was Chief Financial Officer for Icon Holdings Corp. Mr. Aufenanger also serves as Treasurer of Excelsior Private Equity Fund II, Inc. and Excelsior Venture Investors III, LLC, and Chief Financial Officer of Excelsior Directional Hedge Fund of Funds, LLC, Excelsior Buyout Investors, LLC, and Excelsior Absolute Return Fund of Funds, LLC.
Lee A.Gardella, 37	Vice President	July 20, 2000	Mr. Gardella is a Senior Vice President of U.S. Trust Company, N.A. Mr. Gardella also serves as Vice President of Excelsior Private Equity Fund II, Inc., Excelsior Venture Investors III, LLC, and Excelsior Absolute Return Fund of Funds, LLC.
CynthiaEnglert, 40	Chief Administrative Officer and Secretary	September 19,2001	Ms. Englert is a Vice President of U.S. Trust Company, N.A. Prior to joining U.S. Trust in August 2001, Ms. Englert held positions in finance at Whitney & Co. and Greenwich Capital Markets, Inc. Ms. Englert also serves as Chief Administrative Officer and Secretary of Excelsior Private Equity Fund II, Inc. and Excelsior Venture Investors III, LLC, and Secretary of Excelsior Buyout Investors, LLC and Excelsior Absolute Return Fund of Funds, LLC.
Raghav V.Nandagopal, 42	Vice President	September 19,2001	Mr. Nandagopal is a Senior Vice President of U.S. Trust Company, N.A. in the Alternative Investments Division. Prior to joining U.S. Trust in February 2001, Mr. Nandagopal held positions at McKinsey & Company and AT&T Capital. Mr. Nandagopal also serves as Vice President of Excelsior Venture Investors III, LLC.

Note 6 — Transactions with Affiliated Companies (continued)


						For the Year Ended October 31, 2007
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)
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

Note 7 — Guarantees

Note 8 — Disclosure regarding Private Investment Funds over 5% of Net Assets

CMEA Ventures VI, L.P. represents 6.99% of the Company’s Net Assets at October 31, 2008. The investment objective of CMEA Ventures VI, L.P. is to invest in and assist new and emerging growth-oriented business that are involved in the areas of life science technology, human healthcare and high technology companies in order to achieve net rates of return on invested capital in the top quartile of venture capital funds of the same vintage year. CMEA Ventures VI, L.P. does not provide liquidity to its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partner’s discretion in the form of distributions in either cash or marketable securities. Additionally, the general partner of CMEA Ventures VI, L.P. may approve transfers at its sole discretion.

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

SharonDavison,50	Chief Compliance Officer	October 1, 2004	Ms. Davison is Director of Securities & Corporate Compliance, U.S. Trust Co; prior to U.S. Trust, Ms. Davison served as Director of Special Investigations at the New York Stock Exchange and as Senior Counsel in the Division of Market Surveillance at the New York Stock Exchange
John C.Hover II,61	Chairman of the Board and Manager	May 26, 2000	Mr. Hover was an Executive Vice President of U.S. Trust Company (retired since 1998). Mr. Hover also serves as chairman of the board of directors or managers of Excelsior Private Equity Fund II, Inc. and Excelsior Venture Investors III, LLC, and serves on the board of directors of Tweedy, Brown Fund, Inc.
Gene M.Bernstein,57	Manager, Member of the Audit and Valuation Committees	May 26, 2000	Mr. Bernstein is Director of NIC Holding Corp; Dean of the Skodneck Business Development Center at Hofstra University from 2000-2001; prior to this Mr. Bernstein was President and Vice Chairman at Northville Industries, a petroleum marketing, distribution, trading and storage company and wholly-owned subsidiary of NIC Holding Corp. Mr. Bernstein also serves as a director or manager of Excelsior Private Equity Fund II, Inc., Excelsior Venture Investors III, LLC and Excelsior Directional Hedge Fund of Funds, LLC.
StephenV.Murphy,59	Manager, Member of the Audit and Valuation Committees	May 26, 2000	Mr. Murphy is President of S.V. Murphy & Co., an investment banking firm. Mr. Murphy also serves as a director or manager of Excelsior Private Equity Fund II, Inc., Excelsior Venture Investors III, LLC and Excelsior Directional Hedge Fund of Funds, LLC.
Victor F.Imbimbo,Jr., 52	Manager, Member of the Audit and Valuation Committees	May 26, 2000	Since October 2002, Mr. Imbimbo has been head of healthcare marketing in the United States for TBWA, a global marketing agency. Prior to this, he was with Bedrock Communications, Inc., a consulting company addressing the merger of traditional and digital communications solutions. Mr. Imbimbo also serves as a director or manager of Excelsior Private Equity Fund II, Inc., Excelsior Venture Investors III, LLC and Excelsior Directional Hedge Fund of Funds, LLC.

Note 8 — Disclosure regarding Private Investment Funds over 5% of Net Assets (continued)

~~Audit~~provide ~~Committee~~liquidity ~~Financial~~to ~~Expert~~its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partner’s discretion in the form of distributions in either cash or marketable securities. Additionally, the general partner of Tallwood II, L.P. may approve transfers at its sole discretion.

MrValhalla Partners, L.P. ~~Murphy~~represents 5.99% of the Company’s Net Assets at October 31, 2008. The investment objective of Valhalla Partners, L.P. is to invest in attractive early-stage venture capital investments in information technology companies in the ~~audit~~Mid-Atlantic ~~committee~~region ~~financial~~in ~~expert~~order asto achieve superior rates of return on invested capital. Valhalla Partners, L.P. does not provide liquidity to ~~defined~~its bypartners ~~SEC~~in ~~rules~~the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is ~~“independent,”~~provided asat the ~~term~~general ispartner’s ~~used~~discretion in ~~Item~~the ~~7(d)(3)(iv)~~form of ~~Schedule~~distributions ~~14A~~in ~~under~~either ~~the~~cash ~~Securities~~or ~~Exchange~~marketable ~~Act~~securities. Additionally, the general partner of ~~1934~~Valhalla Partners, L.P. may approve transfers at its sole discretion.

Note 9 — New Accounting Pronouncements

Effective November 1, 2007, the Company adopted the Financial Accounting Standards Board (“FASB”) FASB interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected 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 a material impact on the Company’s financial statements. There are neither tax liabilities nor deferred tax assets relating to uncertain income tax positions taken or expected to be taken on the tax return for the year ended December 31, 2007. The statute of limitations on the Company’s U.S. Federal tax returns remains open for the years ended December 31, 2005 through December 31, 2007. The statute of limitations on the Company’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

FASB issued Statement No. 157 (“SFAS 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.

Note 10 — Subsequent Events

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

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

Note 10 — Subsequent Events (continued)

Supplemental Information (Unaudited)

Effective November 14, 2008, Mr. Matthew Ahern replaced Mr. Raghav Nandagopal as the portfolio manager (the “Portfolio Manager”) primarily responsible for the day-to-day management of the Company’s portfolio, subject to such policies as may be adopted by the Board.

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

ITEM 9.

CONTROLS AND PROCEDURES.

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

ITEM 9A (T).

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures.

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

Management’s Report on Internal Control over Financial Reporting

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

•

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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

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


By:		/S/ JAMES D. BOWDEN
		James D. Bowden
		Chief Executive Officer and President

By:		/S/ STEVE L. SUSS
		Steve L. Suss
		Chief Financial Officer and Treasurer

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

PART III

ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Set forth below are names, ages, positions and certain other information concerning the current managers and certain officers of the Company as of October 31, 2008.


Name, Address and Age	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation During Past Five Years	Number of Portfolios in Fund Complex Overseen by Manager*
Disinterested Managers
Gene M. Bernstein Bank of America 114 West 47th Street New York, NY 10036 (Born 1947)	Manager and Member of the Audit and Valuation Committees	Since Company inception	Mr. Bernstein is Director of NIC Holding Corp. He was Dean of the Skodneck Business Development Center at Hofstra University from 2000-2001. Prior to that, Mr. Bernstein was President and Vice Chairman at Northville Industries, a petroleum marketing, distribution, trading and storage company and wholly-owned subsidiary of NIC Holding Corp. Mr. Bernstein also serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC.	5

Victor F. Imbimbo Bank of America 114 West 47th Street New York, NY 10036 (Born 1952)	Manager and Member of the Audit and Valuation Committees	Since Company inception	Mr. Imbimbo is the President and CEO of Caring Today, LLC., the publisher of Caring Today Magazine, the leading information resource within the family caregivers market. Prior to this, Mr. Imbimbo, was Executive Vice President of TBWA\New York and President for North America with TBWA/WorldHealth, a division of TBWA Worldwide where he directed consumer marketing program development for healthcare companies primarily within the pharmaceutical industry. Mr. Imbimbo serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC.Mr. Imbimbo is a Board member for Vertical Branding, Inc, a public company specializing in direct response branding and marketing.	5


Name, Address and Age	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation During Past Five Years	Number of Portfolios in Fund Complex Overseen by Manager*
Stephen V. Murphy Bank of America 114 West 47th Street New York, NY 10036 (Born 1945)	Manager and Member of the Audit and Valuation Committees	Since Company inception	Mr. Murphy is President of S.V. Murphy & Co., an investment banking firm. Mr. Murphy serves as a manager of Excelsior Venture Investors III, LLC, Excelsior Directional Hedge Fund of Funds Master Fund, LLC, Excelsior Directional Hedge Fund of Funds (TI), LLC and Excelsior Directional Hedge Fund of Funds (TE), LLC. He also serves on the board of directors of The First of Long Island Corporation, The First National Bank of Long Island and Bowne & Co., Inc.	5

John C. Hover II Bank of America 114 West 47th Street New York, NY 10036 (Born 1943)	Manager and Chairman of the Board and Member of the Audit and Valuation Committees	Since Company inception. Served on Audit and Valuation Committees since July 1, 2007	Mr. Hover was an Executive Vice President of U.S. Trust Company (retired since 1998). Mr. Hover serves as chairman of the board of managers of Excelsior Venture Investors III, LLC. He also serves on the board of directors of Tweedy, Browne Fund, Inc.	2

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

Officers


Name, Address and Age	Position(s) Held with the Company	Term of Office and Length of Time Served	Principal Occupation During Past Five Years
James D. Bowden Bank of America Capital Advisors, LLC One Financial Center Boston, MA 02111 (Born 1953)	Chief Executive Officer and President	Since July, 2008	Managing Director and Senior Vice President, Bank of America Capital Advisors, LLC (since 1998).

Steve L. Suss Bank of America Capital Advisors, LLC One Financial Center Boston, MA 02111 (Born 1960)	Chief Financial Officer and Treasurer	Since April, 2007	Managing Director, Alternative Investment Solutions, Bank of America (7/07 to present); Director (4/07 to 5/08), Senior Vice President (7/07 to 5/08), and President (4/07 to 6/07) of UST Advisers, Inc.; Senior Vice President of U.S. Trust’s Alternative Investment Division (4/07 to 6/07); Chief Financial Officer and Chief Compliance Officer, Heirloom Capital Management, L.P. (5/02 to 9/06); Vice President and Chief Financial Officer, Westway Capital LLC (9/97 to 1/02).

Benjamin Tanen Bank of America Capital Advisors, LLC One Financial Center Boston, MA 02111 (Born 1976)	Vice President	Since April, 2007	Vice President, Alternative Investment Solutions, Bank of America (7/07 to present); Vice President, UST Advisers, Inc. (9/05 to 5/08); Associate and Vice President at Dawntreader Ventures (formerly SoundView Ventures), a venture capital firm (2000 to 2005); Associate Analyst at Giga Information Group (now Forrester Research), a technology research and advisory firm (1997 to 1999).

Marina Belaya Bank of America 114 W. 47th Street New York, NY 10036 (Born 1967)	Secretary	Since April, 2007	Assistant General Counsel, Bank of America (7/07 to present); Vice President and Senior Attorney of U.S. Trust (2/06 to 6/07); Vice President, Corporate Counsel, Prudential Financial (4/05 to 01/06); Associate, Schulte Roth & Zabel LLP (09/02 to 03/05).

Linda Wondrack Bank of America One Financial Center Boston, MA 02111 (Born 1964)	Chief Compliance Officer	Since August, 2007	Director (Columbia Management Group LLC and Investment Product Group Compliance), Bank of America (6/05 to present); Director of Corporate Compliance and Conflicts Officer, MFS Investment Management (8/04 to 5/05; Managing Director, Deutsche Asset Management (prior to 8/04).

All officers of the Company are employees and/or officers of the Investment Adviser.

Officers of the Company are elected by the Managers and hold office until they resign, are removed or are otherwise disqualified to serve.

Audit Committee Financial Expert

Mr. Murphy is the audit committee financial expert as defined by the Securities and Exchange Commission (“SEC”) rules and is “independent,” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934.

Code of Ethics

As of the end of the period, October 31, ~~2004~~2008, the Company has adopted a code of ethics, which complies with the criteria provided in the SEC rules, and applies to its principal executive officer, the principal financial officer and any other officers who serve a similar function. A copy of the code of ethics is incorporated herein by reference in Item 15 of this Form 10-K.

Section 16(a) Beneficial Ownership Reporting Compliance

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

ITEM 11.

EXECUTIVE COMPENSATION.

The Company has no full-time employees. Pursuant to the ~~Investment~~Advisory ~~Agreements~~Agreement, the Investment ~~Advisers~~Adviser ~~employ~~employs and ~~compensate~~compensates all of the personnel of the Company, and also ~~furnish~~furnishes all office facilities, equipment, management and other administrative services required for the operation of the Company. In consideration of the services rendered by the Investment ~~Advisers~~Adviser, the Company will pay a management fee based upon average quarterly net assets and an incentive fee based in part on a percentage of realized capital gains of the Company.

Managers receive compensation of $710,000 ~~annually~~as an annual retainer and the Chairman of the Board receives an additional $1,000 annual retainer. Also, each member of the Board will receive $2,000 per quarterly meeting attended. ~~plus~~In ~~reasonable~~addition, each Board member will receive $500 per quarterly telephonic meeting and $500 for any other telephonic special meeting. For each audit committee meeting attended, Board members will receive $1,500, while the Chairman of the Audit Committee will receive an additional $1,000 retainer. Each member of the Board is reimbursed for expenses incurred for attending meetings. The Company does not have a stock option plan, other long-term incentive plan, retirement plan or other retirement benefits.

~~The~~38 ~~following chart provides certain information about the fees received by the managers in the fiscal year ended October 31, 2004.~~

Name of Person/Position	Aggregate Compensation From The Company		Total Compensation From the Company And Fund Complex * Paid to Managers
John C. Hover II Manager	$	19,000	$	40,750	(4 Funds)
Gene M. Bernstein Manager	$	19,000	$	62,000	(5 Funds)
Stephen V. Murphy Manager	$	19,000	$	62,000	(5 Funds)
Victor F. Imbimbo, Jr. Manager	$	17,000	$	58,000	(5 Funds)

* The “Fund Complex” consists of Excelsior Private Equity Fund II, Inc., Excelsior Venture Partners III, LLC, Excelsior Venture Investors III, LLC and Excelsior Directional Hedge Fund of Funds, LLC. The parenthetical number represents the number of investment companies (including the Company) from which such person receives compensation that is considered a part of the same Fund Complex as the Company.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

As of October 31, 2004, certain beneficial owners, the directors, the chief executive officer and the directors and executive officers as a group held of record the following shares. Except as set forth below, to the Company’s knowledge and based solely on a review of Forms 13D and 13G filed with the Securities and Exchange Commission (or the lack of such filings, as the case may be), no other person beneficially owned more than 5% of the Company’s shares.

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

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


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

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

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

As of October 31, 2008, certain beneficial owners, the managers, the Chief Executive Officer and the managers and executive officers as a group held of record the following shares. Except as set forth below, to the Company’s knowledge and based solely on a review of Forms 13D and 13G filed with the SEC (or the lack of such filings, as the case may be), no other person beneficially owned more than 5% of the Company’s shares.


Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
Units of membership Interest	Excelsior Venture Investors III, LLC 225 High Ridge Road Stamford, CT 06905	187,409 units	63.5	%

Units of membership Interest	John C. Hover II c/o Bank of America 114 West 47th Street, New York, NY 10036-1532.	200 units	*

Units of membership Interest	Gene M. Bernstein c/o Bank of America 114 West 47th Street, New York, NY 10036-1532.	300 units	*

Units of membership Interest	Stephen V. Murphy c/o Bank of America 114 West 47th Street, New York, NY 10036-1532.	200 units	*

Units of membership Interest	Managers and executive officers as a group (3 persons)	700 units	*

*	Less than one percent.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company has engaged in no transactions with the managers or executive officers other than as described above or in the notes to the financial statements.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

(a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the ~~principal~~registered public accountant for the audit of the ~~registrant~~Company’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $47107,~~500~~060 for ~~2003~~2007 and $~~121~~113,~~000~~500 for ~~2004~~2008.

Audit-Related Fees

(b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the ~~principal~~registered public accountant that are reasonably related to the performance of the audit of the ~~registrant~~Company’s financial statements and are not reported under paragraph (a) of this Item are $023,000 for ~~2003~~2007 and $025,500 for ~~2004~~2008.

Tax Fees

(c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the ~~principal~~registered public accountant for tax compliance, tax advice, and tax planning are $~~3,000~~0 for ~~2003~~2007 and $0 for ~~2004~~2008.

All Other Fees

(d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the ~~principal~~registered public accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for ~~2003~~2007 and $0 for ~~2004~~2008.

3441

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)	1.	Financial Statements
		The financial statements listed in Item 8, “Financial Statements and Supplementary Data,” beginning on page 12 are filed aspart of this report.
	2	Financial Statement Schedules
		The financial statement schedules listed in Item 8, “Financial Statements and Supplementary Data,” beginning on page 12are filed as part of this report.
	3.	Exhibits
		(3)(a)	Certificate of Formation of Limited Liability Company 1
		(3)(b)	Certificate of Amendment 1
		(3)(c)	Form of Limited Liability Company Operating Agreement 1
		(4)	For instruments defining the rights of security holders see Exhibits (3)(a), (b) and (c), (10)(h),(i),(j) and (k) hereto and the Specimen Certificate of the Company’s units1
		(10)(a)	Form of Investment Advisory Agreement 1
		(10)(b)	Form of Investment Sub-Advisory Agreement 1
		(10)(c)	Form of Distribution Agreement 1
		(10)(d)	Form of Selling Agent Agreement 1
		(10)(e)	Form of Custodian Agreement 1
		(10)(f)	Form of Administration, Accounting and Investor Services Agreement 1
		(10)(g)	Form of Escrow Agreement 1
		(10)(h)	Form of Subscription Agreement for investment in units of the Company 1
		(10)(i)	Form of Subscription Agreement with Charles Schwab & Co., Inc. for investment in units of the Company 1
		(10)(j)	Amended and Restated Agreement with respect to Seed Capital 2
		(10)(k)	Form of Subscription Agreement between the Company and Excelsior Venture Investors III, LLC 1
		(10)(l)	Investment Sub-Advisory Agreement dated December 21, 2001 among the Company, U.S. Trust Company and U.S. Trust Company, N.A. 3
		(14)	Code of Ethics 4

(a) 1.

Financial Statements

35The financial statements listed in Item 8, “Financial Statements and Supplementary Data,” beginning on page 12 are filed as part of this report.

~~Table~~2. ofFinancial ~~Contents~~Statement Schedules

						(31.1)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
						(31.2)		Certification of Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
						(32.1)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
						(99)(a)		Audit Committee Charter 5

The financial statement schedules listed in Item 8, “Financial Statements and Supplementary Data,” beginning on page 12 are filed as part of this report.

Exhibits


		(3)(a)		Certificate of Formation of Limited Liability Company. ¹

		(3)(b)		Certificate of Amendment. ¹

		(3)(c)		Form of Limited Liability Company Operating Agreement. ¹

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

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

		(10)(a)(ii)		Form of Investment Advisory Agreement for Investment Adviser.

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

		(10)(c)		Form of Distribution Agreement. ¹

		(10)(d)		Form of Selling Agent Agreement. ¹

		(10)(e)		Form of Custodian Agreement. ¹

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

		(10)(g)		Form of Escrow Agreement. ¹

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

		(10)(i)		Form of Subscription Agreement with Charles Schwab & Co., Inc. for investment in units of the Company. ¹

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

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

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

		(14)		Code of Ethics.

		(31.1)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

		(31.2)		Certification of Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

		(99)(a)		Audit Committee Charter. – No Change.

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

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

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

442 ~~Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on January 29, 2004.~~

5 Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on January 29, 2000.

SIGNATURES

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

	EXCELSIOR VENTURE PARTNERS III, LLC	~~EXCELSIOR VENTURE PARTNERS III, LLC~~
Date: January 28, 2005	By:	/s/ DOUGLAS A. LINDGREN
Date: 01/30/09	By:	/S/ JAMES D. BOWDEN
		Douglas A. Lindgren
		James D. Bowden
		Chief Executive Officer
		Chief Executive Officer and President
		(principal executive officer)
Date: 01/30/09	By:	/S/ STEVEN L. SUSS
		Steven L. Suss
		Chief Financial Officer and Treasurer

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

Signature	Title	Date
/s/ DOUGLAS A. LINDGREN Douglas A. Lindgren	Chief Executive Officer (principal executive officer)	January 28, 2005
/S/ JAMES D. BOWDEN James D. Bowden	Chief Executive Officer and President	01/30/09
/s/ ROBERT F. AUFENANGER Robert F. Aufenanger	Treasurer (principal financial and accounting officer)	January 28, 2005
/S/ STEVE L. SUSS Steve L. Suss	Chief Financial Officer and Treasurer	01/30/09
/s/ JOHN C. HOVER II John C. Hover II	Chairman of the Board and Manager	January 28, 2005
/S/ JOHN C. HOVER II John C. Hover II	Chairman of the Board and Director	01/30/09
/s/ GENE M. BERNSTEIN Gene M. Bernstein	Manager	January 28, 2005
/S/ GENE M. BERNSTEIN Gene M. Bernstein	Director	01/30/09
/s/ STEPHEN V. MURPHY Stephen V. Murphy	Manager	January 28, 2005
/S/ STEPHEN V. MURPHY Stephen V. Murphy	Director	01/30/09
/s/ VICTOR F. IMBIMBO, JR Victor F. Imbimbo, Jr.	Manager	January 28, 2005
/S/ VICTOR F. IMBIMBO, JR. Victor F. Imbimbo, Jr.	Director	01/30/09

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