SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~July~~January 31, ~~2008~~2009

¨	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)		(I.R.S. Employer Identification No.)

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

Registrant’s Telephone Number, Including Area Code ~~(203) 352~~1-~~4400~~866-921-7951

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

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

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

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

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

EXCELSIOR VENTURE PARTNERS III, LLC

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

	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
	Portfolio of Investments at July 31, 2008 and October 31, 2007	1
	Portfolio of Investments at January 31, 2009 and October 31, 2008.	1
	Statements of Assets and Liabilities at July 31, 2008 and October 31, 2007	5
	Statements of Assets and Liabilities at January 31, 2009 and October 31, 2008.	5
	Statements of Operations for the nine months ended July 31, 2008 and July 31, 2007	6
	Statements of Operations for the three months ended January 31, 2009 and January 31, 2008.	6
	Statements of Operations for the three months ended July 31, 2008 and July 31, 2007	7
	Statements of Changes in Net Assets for the three months ended January 31, 2009 and January 31, 2008.	7
	Statements of Changes in Net Assets for the nine months ended July 31, 2008 and July 31, 2007	8
	Statements of Cash Flows for the three months ended January 31, 2009 and January 31, 2008.	8
	Statements of Cash Flows for the nine months ended July 31, 2008 and July 31, 2007	9
	Financial Highlights for the three months ended January 31, 2009 and fiscal years then ended October 31, 2008, 2007, 2006, and 2005.	9
	Financial Highlights for the nine months ended July 31, 2008 and July 31, 2007	10
	Notes to Financial Statements.	10
	Notes to Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures.	22
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION	23
PART II.	OTHER INFORMATION	25
Item 1.	Legal Proceedings.	23
Item 1.	Legal Proceedings	25
Item 2.	Changes in Securities and Use of Proceeds.	23
Item 2.	Changes in Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities.	23
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Submission of Matters to a Vote of Security Holders.	23
Item 4.	Submission of Matters to a Vote of Security Holders	25
Item 5.	Other Information.	23
Item 5.	Other Information	25
Item 6.	Exhibits and Reports on Form 8-K.	23
Item 6.	Exhibits and Reports on Form 8-K	25

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Excelsior Venture Partners III, LLC

Portfolio of Investments ~~July~~January 31, ~~2008~~2009 (Unaudited)

PrincipalAmount/Shares		AcquisitionDate ##	Cost		~~Fair Value(Note 1)~~	Fair Value(Note 1)	% of NetAssets ***		% of NetAssets ****		Per ShareFair Value ##
	PUBLIC COMPANIES #
	PRIVATE COMPANIES ***
	Common Stocks
	Common Stock #
	Life Sciences
	Optical @
31,542	Genoptix, Inc. (GXDX)	07/03-05/05	94,989		919,449		1.46	%
10,615,593	OpVista, Inc.	06/06-10/08	$	15,393,312		$	—		0.00	%	$	0.00
	TOTAL COMMON STOCK - PUBLIC COMPANIES		94,989		919,449		1.46	%
				15,393,312			—		0.00	%
	PRIVATE COMPANIES **
	Medical Technology
	Common Stocks #
7,882	Recorders and Medicare Systems (P) Ltd. *	12/08		382,623			—		0.00	%	$	0.00
	Optical @
				382,623			—		0.00	%
6,025,312	OpVista, Inc.	06/06-12/07	13,649,206		—		0.00	%
	TOTAL COMMON STOCK - PRIVATE COMPANIES			15,775,935			—		0.00	%
	TOTAL COMMON STOCK - PRIVATE COMPANIES		13,649,206		—		0.00	%
	Preferred Stocks #
	Preferred Stocks #
	Enterprise Software
	Enterprise Software
4,542,763	SOA Software, Inc., Series F Junior **	05/08		5,681,135			—		0.00	%	$	0.00
4,542,763	SOA Software, Inc., Series F Junior *	05/08	5,681,135		—		0.00	%
				5,681,135			—		0.00	%
			5,681,135		—		0.00	%
	Life Sciences
	Life Sciences
1,999,999	Archemix Corporation, Series A	08/02-11/03		1,999,999			1,999,999		5.21	%	$	1.00
1,999,999	Archemix Corporation, Series A	08/02 - 11/03	1,999,999		2,499,999		3.97	%
700,000	Archemix Corporation, Series B	03/04-12/05		700,000			700,000		1.82	%	$	1.00
700,000	Archemix Corporation, Series B	03/04 - 12/05	700,000		875,000		1.39	%
				2,699,999			2,699,999		7.03	%
			2,699,999		3,374,999		5.36	%
	Wireless @
	Medical Technology @
4,433,333	Ethertronics, Inc. Series B	06/01-05/04		6,650,000			6,650,000		17.33	%	$	1.50
4,166,667	Tensys Medical, Inc., Series C	03/02	5,000,000		—		0.00	%
1,697,957	Ethertronics, Inc. Series C	05/05-04/07		2,546,937			2,546,937		6.64	%	$	1.50
1,187,500	Tensys Medical, Inc., Series D	05/04	1,425,000		—		0.00	%
				9,196,937			9,196,937		23.97	%
318,845	Tensys Medical, Inc., Series E	07/06 - 12/07	382,623		—		0.00	%
	TOTAL PREFERRED STOCKS - PRIVATE COMPANIES			17,578,071			11,896,936		31.00	%
			6,807,623		—		0.00	%
	Warrants #, @
	Optical @
	Optical
1,088,532	OpVista, Inc., Series AA	06/06 - 01/07	966,605		551,817		0.88	%
675,313	OpVista, Inc., Series CC (expire 10/12 exercisable at $0.20 per share)	10/07		675			—		0.00	%	$	0.00
83,001	OpVista, Inc., Series BB	03/07 - 04/07	94,426		44,075		0.07	%
	TOTAL WARRANTS			675			—		0.00	%
3,418,748	OpVista, Inc., Series CC	12/07	683,075		1,025,624		1.63	%
	TOTAL - PRIVATE COMPANIES		$	33,354,681		$	11,896,936		31.00	%
			1,744,106		1,621,516		2.58	%
	Wireless @
4,433,333	Ethertronics, Inc. Series B	06/01 - 05/04	6,650,000		6,650,000		10.57	%
1,697,957	Ethertronics, Inc. Series C	05/05 - 04/07	2,546,936		2,546,936		4.05	%
			9,196,936		9,196,936		14.62	%
	TOTAL PREFERRED STOCKS - PRIVATE COMPANIES		26,129,799		14,193,451		22.56	%
	Warrants #, @
	Wireless
271,247	Ethertronics, Inc. Series C (expiration date 01/09)	05/05 - 07/06	—		—		0.00	%
	Optical
675,313	OpVista, Inc., Series CC (expiration date 10/12)	10/07	675		675		0.00	%
	TOTAL WARRANTS		675		675		0.00	%
	TOTAL - PRIVATE COMPANIES		39,779,680		14,194,126		22.56	%

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

Excelsior Venture Partners III, LLC

Portfolio of Investments ~~July~~January 31, ~~2008~~2009 (Unaudited)

PercentOwned &				AcquisitionDate ##	~~AcquisitionDate ##~~	Cost	~~Cost~~	Fair Value(Note 1)		% of NetAssets ****
			PRIVATE INVESTMENT FUNDS **, #
		PRIVATE INVESTMENT FUNDS ***, #
0.37	%		Advanced Technology Ventures VII, L.P.		08/01-07/08		1,852,904		2,007,214	3.19	%
0.37%		Advanced Technology Ventures VII, L.P. (Note 8)		08/01-12/08		$	1,920,404	$	2,042,779	5.33	%
1.55	%		Burrill Life Sciences Capital Fund		12/02-05/08		2,077,902		1,760,175	2.80	%
1.56%		Burrill Life Sciences Capital Fund		12/02-12/08			2,310,935		1,501,770	3.91	%
1.34	%		CHL Medical Partners II, L.P.		01/02-03/08		1,541,857		1,635,364	2.60	%
1.33%		CHL Medical Partners II, L.P.		01/02-12/08			1,581,857		1,348,520	3.52	%
1.02	%		CMEA Ventures VI, L.P. (Note 9)		12/03-06/08		2,133,017		4,154,109	6.60	%
1.02%		CMEA Ventures VI, L.P. (Note 8)		12/03-01/09			2,343,017		2,768,418	7.22	%
0.35	%		Morgenthaler Partners VII, L.P.		07/01-10/07		1,733,167		1,664,042	2.64	%
0.36%		Morgenthaler Partners VII, L.P.		07/01-10/07			1,883,167		1,582,114	4.12	%
0.57	%		Prospect Venture Partners II, L.P.		06/01-03/08		1,414,275		1,704,793	2.71	%
0.58%		Prospect Venture Partners II, L.P.		06/01-03/08			1,025,073		1,147,965	2.99	%
0.97	%		Sevin Rosen Fund IX, L.P.		10/04-07/08		1,596,609		1,681,259	2.67	%
0.98%		Sevin Rosen Fund IX, L.P.		10/04-01/09			1,716,609		1,669,070	4.35	%
2.36	%		Tallwood II, L.P.		12/02-05/08		2,740,443		2,362,292	3.76	%
2.36%		Tallwood II, L.P.		12/02-05/08			2,890,443		1,275,369	3.32	%
1.64	%		Valhalla Partners, L.P.		10/03-07/08		2,074,835		2,363,363	3.76	%
1.69%		Valhalla Partners, L.P.		10/03-07/08			1,667,216		1,676,754	4.37	%
		TOTAL PRIVATE INVESTMENT FUNDS	~~TOTAL PRIVATE INVESTMENT FUNDS~~				17,~~165~~338,~~009~~721		1915,~~332~~012,~~611~~759	3039.7313	%
Shares
			INVESTMENT COMPANIES
		INVESTMENT COMPANY
984,128		Dreyfus Government Cash Management Fund Institutional Shares	~~Dreyfus Government Cash Management Fund Institutional Shares~~				984,128		984,128	12.56	%
		TOTAL INVESTMENTS	~~TOTAL INVESTMENTS~~			$	5851,~~023~~677,~~806~~530		3527,~~430~~893,~~314~~823	5672.3169	%
		OTHER ASSETS & LIABILITIES (NET)	~~OTHER ASSETS & LIABILITIES (NET)~~						2710,~~489~~477,~~432~~932	4327.6931	%
		NET ASSETS	~~NET ASSETS~~					$	6238,~~919~~371,~~746~~755	100.00	%

* ~~LogicLibrary~~Tensys Medical, Inc. merged with ~~SOA~~Recorders ~~Software,~~and ~~Inc.~~Medicare onSystems ~~May~~(P) ~~1, 2008~~Ltd. ~~Shares~~on ofDecember 419,~~542,763~~ ~~include~~2008 ~~4,088,487~~and ~~held~~Recorders ~~by the Company~~ and ~~454,276~~Medicare ~~held~~Systems in(P) ~~escrow~~Ltd. ~~for~~is ~~the~~based ~~benefit~~in ~~of the Company~~India.

** ~~Restricted~~LogicLibrary, asInc. tomerged ~~public~~with ~~resale~~SOA ~~and~~Software, ~~illiquid securities~~Inc. ~~Total~~on ~~cost~~May of1, ~~restricted~~2008. ~~and~~Shares ~~illiquid~~of ~~securities at July 31~~4,542,763 ~~2008~~include ~~was $56~~4,~~944~~088,~~689.~~487 ~~Total~~shares ~~fair~~held ~~value~~by ofthe ~~restricted~~Company and ~~illiquid~~454,276 ~~securities~~shares ~~owned~~held atin ~~July~~escrow ~~31,~~for ~~2008~~the ~~was~~benefit ~~$33,526,737 or 53.29%~~ of ~~net~~the ~~assets~~Company.

*** ~~Based~~Restricted onas to public resale and illiquid securities or investments. Total cost of restricted and illiquid securities or investments at January 31, 2009 was $50,693,402. Total fair value of restricted and illiquid securities or investments owned at January 31, 2009 was $26,909,695 or 70.13% of net assets.

@**** AtCalculated ~~July~~as ~~31,~~fair ~~2008,~~value ~~the~~divided ~~Company~~by ~~owned 5% or more of~~ the ~~company~~Company’s outstanding shares thereby making the company an affiliate as defined by the Investment Company Act of 1940, as amended, (the “Investment Company Act”). Total fair value of affiliated securities owned at July 31, 2008 (including investments in controlled affiliates) was $10,819,127 or 17.20% of Net Assets.

At January 31, 2009, the Company owned 5% or more of the Private Company’s outstanding shares thereby making the Private Company an affiliate as defined by the Investment Company Act of 1940, as amended, (the “Investment Company Act”). Total fair value of affiliated securities owned at January 31, 2009 (including investments in controlled affiliates) was $9,196,937 or 23.97% of net assets.

#	Non-income producing securities.

##	Disclosure is for restricted securities only.

& Represents ~~fair~~Capital ~~value~~Balance (Note 2) of the ~~Fund~~Company’s investment as a percentage of ~~Underlying~~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, ~~2007~~2008 ~~(Audited)~~

PrincipalAmount/Shares		AcquisitionDate ##	Cost		~~Fair Value(Note 1)~~	Fair Value(Note 1)	% of NetAssets ***		% of NetAssets ***
	MONEY MARKET INSTRUMENTS
	PRIVATE COMPANIES **
10,385,000	Federal Home Loan Bank Discount Note 4.40%, 11/01/07		10,383,731		10,383,731		14.35	%
	Common Stock #
	PUBLIC COMPANIES #
	Optical @
	Common Stocks
10,615,593	OpVista, Inc.	06/06-10/08	$	15,393,312		$	—		0.00	%
	Wireless
	TOTAL COMMON STOCK - PRIVATE COMPANIES			15,393,312			—		0.00	%
5,338	Citrix Systems, Inc. (CTXS)		226,011		229,481		0.32	%
	Preferred Stocks #
	Capital Equipment
	Enterprise Software
12,059	Acme Packet, Inc. (APKT)		160,803		173,168		0.24	%
4,542,763	SOA Software, Inc., Series F Junior *	05/08		5,681,135			—		0.00	%
	Life Sciences **
				5,681,135			—		0.00	%
714,870	Genoptix, Inc. (GXDX)	07/03-05/05	3,124,453		10,594,373		14.64	%
	Life Sciences
	TOTAL - PUBLIC COMPANIES COMMON STOCK		3,511,267		10,997,022		15.20	%
1,999,999	Archemix Corporation, Series A	08/02-11/03		1,999,999			1,629,629		4.05	%
	PRIVATE COMPANIES **
700,000	Archemix Corporation, Series B	03/04-12/05		700,000			570,371		1.42	%
	Common Stocks #
				2,699,999			2,200,000		5.47	%
	Capital Equipment @
	Medical Technology @
157,396	MIDAS Vision Systems, Inc.	03/03	4,000,000		—		0.00	%
4,166,667	Tensys Medical, Inc., Series C	03/02		5,000,000			—		0.00	%
	Optical @
1,187,500	Tensys Medical, Inc., Series D	05/04		1,425,000			—		0.00	%
1,079,541	OpVista, Inc.	06/06	9,184,030		1,184,567		1.64	%
318,845	Tensys Medical, Inc., Series E	07/06-12/07		382,623			—		0.00	%
	TOTAL COMMON STOCKS - PRIVATE COMPANIES		13,184,030		1,184,567		1.64	%
				6,807,623			—		0.00	%
	Preferred Stocks #
	Wireless @
	Capital Equipment @
4,433,333	Ethertronics, Inc. Series B	06/01-05/04		6,650,000			6,650,000		16.51	%
933,593	MIDAS Vision Systems, Inc., Series A-1	03/03	1,054,960		—		0.00	%
1,697,957	Ethertronics, Inc. Series C	05/05-04/07		2,546,937			2,546,937		6.32	%
	Enterprise Software @
				9,196,937			9,196,937		22.83	%
8,751,782	LogicLibrary, Inc., Series A	01/02-09/07	4,001,492		4,001,492		5.53	%
	TOTAL PREFERRED STOCKS - PRIVATE COMPANIES			24,385,694			11,396,937		28.30	%
3,080,464	LogicLibrary, Inc., Series A-1	08/03 - 05/04	1,408,450		1,408,450		1.95	%
	Warrants #, @
			5,409,942		5,409,942		7.48	%
	Wireless
	Life Sciences
271,247	Ethertronics, Inc. Series C (expiration date 01/09)	05/05-07/06		—			—		0.00	%
1,999,999	Archemix Corporation, Series A	08/02 - 11/03	1,999,999		2,999,999		4.15	%
	Optical
700,000	Archemix Corporation, Series B	03/04 - 12/05	700,000		1,050,001		1.45	%
675,313	OpVista, Inc., Series CC (expiration date 10/12)	10/07		675			—		0.00	%
			2,699,999		4,050,000		5.60	%
	TOTAL WARRANTS			675			—		0.00	%
	Medical Technology @
	TOTAL - PRIVATE COMPANIES		$	39,779,681		$	11,396,937		28.30	%
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	%

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

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, ~~2007~~2008 ~~(Audited)~~

PrincipalAmount/Shares					AcquisitionDate ##		Cost	Fair Value(Note 1)		% of NetAssets ***
PercentOwned &				AcquisitionDate ##		Cost		Fair Value(Note 1)		% of NetAssets ***
			PRIVATE COMPANIES** - (continued)
		PRIVATE INVESTMENT FUNDS **, #
			Notes @
0.37%		Advanced Technology Ventures VII, L.P.		08/01-07/08		$	1,852,904	$	1,995,953	4.96	%
			Optical
1.55%		Burrill Life Sciences Capital Fund		12/02-05/08			2,077,902		1,648,795	4.09	%
237,321			NanoOpto Corp, 10% Bridge Note, in default		03/07		237,321		160,000	0.22	%
1.34%		CHL Medical Partners II, L.P.		01/02-03/08			1,571,857		1,471,494	3.65	%
			Optical @
1.02%		CMEA Ventures VI, L.P.		12/03-06/08			2,193,017		2,816,599	6.99	%
675,989			OpVista, Inc., 8% Bridge Note, April 2008, #		10/07		675,989		1,351,978	1.87	%
0.34%		Morgenthaler Partners VII, L.P.		07/01-10/07			1,883,167		1,770,123	4.39	%
			TOTAL NOTES				913,310		1,511,978	2.09	%
0.57%		Prospect Venture Partners II, L.P.		06/01-03/08			1,408,668		1,575,441	3.91	%
			Warrants #, @
0.97%		Sevin Rosen Fund IX, L.P.		10/04-07/08			1,626,609		1,706,890	4.24	%
			Wireless
2.36%		Tallwood II, L.P.		12/02-05/08			2,890,443		2,020,019	5.02	%
271,247			Ethertronics, Inc. Series C (expiration date 01/09)		05/05 - 07/06		—		—	0.00	%
1.64%		Valhalla Partners, L.P.		10/03-07/08			2,074,224		2,412,053	5.99	%
			Optical @
		TOTAL PRIVATE INVESTMENT FUNDS					17,578,791		17,417,367	43.24	%
675,313			OpVista, Inc., Series CC (expiration date 10/12)				—		—	0.00	%
			TOTAL WARRANTS				—		—	0.00	%
			TOTAL - PRIVATE COMPANIES				44,526,338		29,116,204	40.25	%
PercentOwned
			PRIVATE INVESTMENT FUNDS **, #
0.39	%		Advanced Technology Ventures VII, L.P.		08/01-09/07		1,650,405		1,986,022	2.75	%
1.58	%		Burrill Life Sciences Capital Fund		12/02-10/07		1,920,303		1,722,901	2.38	%
1.35	%		CHL Medical Partners II, L.P.		01/02-10/07		1,326,857		1,432,494	1.98	%
1.04	%		CMEA Ventures VI, L.P.		12/03-06/07		1,563,017		2,114,538	2.92	%
0.36	%		Morgenthaler Partners VII, L.P.		07/01-10/07		1,749,476		1,697,580	2.35	%
0.58	%		Prospect Venture Partners II, L.P.		06/01-05/07		1,561,766		2,194,662	3.03	%
0.98	%		Sevin Rosen Fund IX, L.P.		10/04-08/07		1,528,989		1,734,616	2.40	%
2.36	%		Tallwood II, L.P.		12/02-08/07		2,290,443		1,683,388	2.33	%
1.70	%		Valhalla Partners, L.P.		10/03-07/07		1,967,875		1,990,649	2.75	%
			TOTAL PRIVATE INVESTMENT FUNDS				15,559,131		16,556,850	22.89	%
Shares
			INVESTMENT COMPANIES
		INVESTMENT COMPANY
984,128		Dreyfus Government Cash Management Fund Institutional Shares	~~Dreyfus Government Cash Management Fund Institutional Shares~~				984,128		984,128	12.3644	%
		TOTAL INVESTMENTS	~~TOTAL INVESTMENTS~~			$	7458,~~964~~342,~~595~~600		6829,~~037~~798,~~935~~432	9473.0598	%
		OTHER ASSETS & LIABILITIES (NET)	~~OTHER ASSETS & LIABILITIES (NET)~~						410,~~304~~480,~~264~~576	526.9502	%
		NET ASSETS	~~NET ASSETS~~					$	7240,~~342~~279,~~199~~008	100.00	%

** ~~Restricted~~LogicLibrary, asInc. tomerged ~~public~~with ~~resale~~SOA ~~and~~Software, ~~illiquid securities~~Inc. ~~Total~~on ~~cost~~May of1, ~~restricted~~2008. ~~and~~Shares ~~illiquid~~of ~~securities at October 31~~4,542,763 ~~2007~~include ~~was $63~~4,~~209~~088,~~922.~~487 ~~Total~~shares ~~fair~~held ~~value~~by ofthe ~~restricted~~Company and ~~illiquid~~454,276 ~~securities~~shares ~~owned~~held atin ~~October~~escrow ~~31,~~for ~~2007~~the ~~was~~benefit ~~$56,267,427 or 77.78%~~ of ~~net~~the ~~assets~~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 Private Company’s outstanding shares thereby making the Private Company an affiliate as defined by the Investment Company Act of 1940, as amended, (the “Investment Company Act”). Total fair value of affiliated securities owned at October 31, 2008 (including investments in controlled affiliates) was $9,196,937 or 22.83% of Net Assets.

#	Non-income producing securities.

@## AtDisclosure ~~October~~is ~~31,~~for ~~2007,~~restricted ~~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~~only.~~64% of Net Assets~~

##& ~~Disclosure~~Represents isfair ~~required~~value ~~for~~of ~~restricted~~the ~~securities~~Company’s ~~only~~investment as a percentage of Private Investment Fund’s total capital.

*** Based on fair value.

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

Excelsior Venture Partners III, LLC

Statements of Assets and Liabilities (Unaudited)

	July 31, 2008(Unaudited)			October 31, 2007(Audited)
	January 31, 2009			October 31, 2008
ASSETS:
Unaffiliated Issuers at fair value (Cost $26,625,260 and $33,138,256 respectively)	$	24,611,187		$	42,971,731
Unaffiliated Issuers at fair value (Cost $27,086,606 and $21,262,919, respectively)	$	18,696,886		$	20,601,495
Non-Controlled Affiliated Issuers at fair value (Cost $31,398,546 and $41,826,339 respectively)		10,819,127			25,066,204
Non-Controlled Affiliated Issuers at fair value (Cost $24,590,924 and $37,079,681, respectively)		9,196,937			9,196,937
Investments, at fair value (Cost $58,023,806 and $74,964,595 respectively) (Note 2)		35,430,314			68,037,935
Investments, at fair value (Cost $51,677,530 and $58,342,600, respectively) (Note 2)		27,893,823			29,798,432
Cash and cash equivalents (Note 2)		2110,~~130~~683,~~822~~058			2610,~~240~~693,165
Restricted cash (Note 2)		2,~~986,779~~341			2131,~~672,393~~617
Receivables from sale of investments		3108,~~939,128~~618			~~2,275,482~~—
Interest receivable		13,695			4,019
Interest and dividends receivable		1,070			9,681
Prepaid insurance		723,~~046~~122			—470
Other assets		—			1,945
Total Assets		38,712,032			40,633,365
Total Assets		63,507,784			73,018,014
LIABILITIES:
Management fees payable (Note 3)		~~158~~96,~~150~~962			~~182~~101,~~802~~503
Professional fees payable		171,414			153,475
Audit fees payable		34,750			56,750
Deferred income (Note 2)		203,277			258,809
Legal fees payable		97,983			103,142
Administration fees payable (Note 3)		19,167			28,750
Tax preparation fees payable		41,625			32,365
Board of Managers’ fees payable (Note 3)		1126,~~000~~500			19,500
Custody fees payable (Note 3)		8,942			17,002
Administration fees payable (Note 3)		28,750			19,167
Other payables		16,088			15,477
Custody fees payable (Note 3)		3,361			4,233
Total Liabilities		588,038			675,815
Other payables		10,346			17,697
NET ASSETS	$	62,919,746		$	72,342,199
Total Liabilities		340,277			354,357
NET ASSETS consist of:
NET ASSETS	$	38,371,755		$	40,279,008
Members’ Capital (1)	$	85,513,238		$	79,268,859
NET ASSETS CONSIST OF:
Accumulated unrealized (depreciation) on investments		(22,593,492	)		(6,926,660	)
Members’ Capital (1)	$	62,155,462		$	68,823,176
Total Net Assets	$	62,919,746		$	72,342,199
Accumulated unrealized (depreciation) on investments		(23,783,707	)		(28,544,168	)
Total Net Assets	$	38,371,755		$	40,279,008
Units of Membership Interest Outstanding(Unlimited number of no par value units authorized)		295,210			295,210
NET ASSET VALUE PER UNIT	$	~~213~~129.1498		$	~~245~~136.0544

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

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

Excelsior Venture Partners III, LLC

Statements of Operations (Unaudited)

	Nine Months Ended July 31,
	Three Months Ended January 31,
	2008			2007
	2009			2008
INVESTMENT INCOME:
Interest income/(loss) from unaffiliated investments (1)	$	218,090		$	(7,538	)
Interest income from unaffiliated investments(1)	$	5,514		$	115,447
Interest income from affiliated investments		9,518			484,578
Interest income from affiliated investments (Note 6)		—			9,447
Dividend income from unaffiliated investments		232,~~321~~242			3810,~~997~~473
Total Investment Income		250,929			516,037
Total investment income		7,756			135,367
EXPENSES:
Management Investment Adviser fees (Note 3)		~~495~~96,~~945~~962			~~509~~188,~~020~~873
Professional fees		311,402			287,621
Legal fees		31,305			36,000
Administration fees (Note 3)		86,250			86,250
Audit fees		34,750			37,640
Board of Managers’ fees (Note 3)		67,500			66,000
Administration fees (Note 3)		28,750			28,750
Custodian fees (Note 3)		21,034			22,500
Board of Managers’ fees (Note 3)		23,000			22,000
Insurance expense		19,111			23,459
Tax preparation fees		9,260			9,966
Miscellaneous expenses		30,279			23,488
Custodian fees (Note 3)		5,348			7,500
Total Expenses		1,031,521			1,018,338
Other expenses		999			15,234
NET INVESTMENT (LOSS)		(780,592	)		(502,301	)
Total expenses		230,374			345,963
NET INVESTMENT (LOSS)		(222,618	)		(210,596	)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 2)
Net realized (loss) on affiliated investments		(56,~~143~~445,~~365~~098	)		(45,~~377~~005,~~728~~088	)
Net realized gain on unaffiliated investments		15,884,672			405,658
Net realized (loss) on unaffiliated investments		—			(205,880	)
Net realized gain from payments by affiliates (Note 3)		268,999			—
Net decrease in unrealized depreciation on investments		4,760,463			8,028,964
Net change in unrealized (depreciation)/appreciation on investments		(15,666,832	)		882,127
NET REALIZED AND UNREALIZED (LOSS)/GAIN ON INVESTMENTS		(1,684,635	)		2,817,996
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS		(4,656,526	)		(3,089,943	)
NET (DECREASE)/INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(1,907,253	)	$	2,607,400
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(5,437,118	)	$	(3,592,244	)

(1)	Includes interest from short-term investments.

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

Excelsior Venture Partners III, LLC

Statements of ~~Operations~~Changes in Net Assets (Unaudited)

	Three Months Ended July 31,
	Three Months Ended January 31,
	2008			2007
	2009			2008
INVESTMENT INCOME:
OPERATIONS:
Interest income from unaffiliated investments (1)	$	34,577		$	123,558
Net investment (loss)	$	(222,618	)	$	(210,596	)
Dividend income from unaffiliated investments		5,490			12,402
Net realized (loss) on investments		(6,445,098	)		(5,210,968	)
Total Investment Income		40,067			135,960
Net decrease in unrealized depreciation on investments		4,760,463			8,028,964
EXPENSES:
Net (decrease)/increase in net assets resulting from operations		(1,907,253	)		2,607,400
Management Investment Adviser fees (Note 3)		158,150			160,975
DISTRIBUTIONS TO MEMBERS:
Professional fees		138,514			77,682
Distributions to Members		—			—
Administration fees (Note 3)		28,750			28,750
Total Distributions		—			—
Board of Managers’ fees (Note 3)		21,500			22,000
Net (decrease)/increase in net assets		(1,907,253	)		2,607,400
Custodian fees (Note 3)		6,401			7,500
NET ASSETS:
Insurance expense		6,647			7,906
Beginning of period		40,279,008			72,342,199
Miscellaneous expenses		7,924			8,488
End of period	$	38,371,755		$	74,949,599
Total Expenses		367,886			313,301
NET INVESTMENT (LOSS)		(327,819	)		(177,341	)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 2)
Net realized (loss) on affiliated investments		(117,008	)		(258,809	)
Net realized gain on unaffiliated investments		13,521,982			396,333
Net realized gain from payments by affiliates (Note 3)		268,999			—
Net change in unrealized (depreciation) on investments		(10,673,963	)		(2,859,433	)
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS		3,000,010			(2,721,909	)
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	2,672,191		$	(2,899,250	)

(1) Includes interest from short-term investments.

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

Excelsior Venture Partners III, LLC

Statements of ~~Changes~~Cash inFlows ~~Net Assets~~ (Unaudited)

	Nine Months Ended July 31,
	Three Months Ended January 31,
	2008			2007
	2009			2008
OPERATIONS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net investment (loss)	$	(780,592	)	$	(502,301	)
Net (decrease)/increase in net assets resulting from operations	$	(1,907,253	)	$	2,607,400
Net realized gain/(loss) on investments		11,010,306			(3,972,070	)
Adjustments to reconcile net (decrease)/increase in net assets resulting from operations to net cash (used in) operating activities:
Net change in unrealized (depreciation)/appreciation on investments		(15,666,832	)		882,127
Net (decrease) in unrealized depreciation on investments		(4,760,463	)		(8,028,964	)
Net (decrease) in net assets resulting from operations		(5,437,118	)		(3,592,244	)
Purchase of investments		(550,532	)		(1,236,876	)
DISTRIBUTION TO MEMBERS:
Proceeds received from the sale of investments and distributions received from Private Investment Funds		770,505			1,326,511
Distribution to Members		(3,985,335	)		(8,265,880	)
Net realized loss on investments		6,445,098			5,210,968
Total Distributions		(3,985,335	)		(8,265,880	)
Proceeds from short-term investments maturing, net		—			(1,250,703	)
Net (decrease) in Net Assets		(9,422,453	)		(11,858,124	)
Decrease/(increase) in restricted cash		129,276			(162,591	)
NET ASSETS:
(Increase)/decrease in receivables from sale of investments		(108,618	)		1,753,484
Beginning of period		72,342,199			75,562,092
Decrease in interest and dividends receivable		8,611			630
End of period	$	62,919,746		$	63,703,968
(Increase) in prepaid insurance		(22,652	)		(18,764	)
(Decrease) in deferred income		—			(193,809	)
(Decrease)/increase in management fees payable		(4,541	)		6,071
(Decrease) in audit fees payable		(22,000	)		(39,919	)
(Decrease)/increase in legal fees payable		(5,159	)		3,958
Increase/(decrease) in tax preparation fees payable		9,260			(9,167	)
Increase in Board of Managers’ fees payable		7,000			8,000
Increase in administration fees payable		9,584			—
(Decrease) in custody fees payable		(872	)		(1,712	)
(Decrease)/increase in other payables		(7,351	)		2,484
Net cash (used in) operating activities		(10,107	)		(22,999	)
CASH FLOWS FOR FINANCING ACTIVITIES
Cash distributions to Members		—			—
Net cash (used in) financing activities		—			—
Net (decrease) in cash		(10,107	)		(22,999	)
Cash and cash equivalents at beginning of period		10,693,165			26,240
Cash and cash equivalents at end of period	$	10,683,058		$	3,241
SUPPLEMENTAL INFORMATION
Non-cash distributions received from Private Investment Funds	$	—		$	563,864

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

Excelsior Venture Partners III, LLC

Statements of Cash Flows (Unaudited)

	Nine Months Ended July 31,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (decrease) in net assets resulting from operations	$	(5,437,118	)	$	(3,592,244	)
Adjustments to reconcile net increase/(decrease) in net assets resulting from operations to net cash provided by operating activities:
Net change in unrealized depreciation/(appreciation) on investments		15,666,832			(882,127	)
Purchase of investments		(3,037,411	)		(5,507,172	)
Proceeds received from the sale of investments and distributions received from private investment funds		20,606,720			14,976,791
Net realized loss on investments		(11,010,306	)		3,972,070
Proceeds from short-term investments maturing, net		10,383,731			3,614,699
(Increase) in restricted cash		(314,386	)		(2,672,394	)
(Increase) in receivables from sale of investments		(1,663,646	)		(1,897,928	)
(Increase)/decrease in interest receivable		(9,676	)		20,665
(Increase) in receivable from affiliates		—			(4,242	)
(Increase) in prepaid insurance		(7,046	)		(7,460	)
(Decrease)/increase in deferred income		(55,532	)		258,809
(Decrease) in management fee payable		(24,652	)		(29,483	)
Increase in professional fee payable		17,939			41,185
(Decrease) in Board of Managers’ fees payable		(8,500	)		(6,000	)
(Decrease) in administration fees payable		(9,583	)		(23,017	)
(Decrease) in custody fees payable		(8,060	)		—
Increase in other payables		611			3,365
Net cash provided by operating activities		25,089,917			8,265,517
CASH FLOWS FOR FINANCING ACTIVITIES
Cash distributions to Members		(3,985,335	)		(8,265,880	)
Net cash (used in) financing activities		(3,985,335	)		(8,265,880	)
Net increase/(decrease) in cash		21,104,582			(363	)
Cash and cash equivalents at beginning of period		26,240			2,934
Cash and cash equivalents at end of period	$	21,130,822		$	2,571
SUPPLEMENTAL INFORMATION
Non-cash distributions received from private investment funds	$	563,864		$	171,233

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

Excelsior Venture Partners III, LLC

Financial Highlights (Unaudited)

	Nine Months Ended July 31,
	Three MonthsEndedJanuary 31,2009			For the years ended October 31,
	~~2008~~		~~2007~~	2008			2007			2006			2005
Per Unit Operating Performance: (1)
NET ASSET VALUE, BEGINNING OF PERIOD	$~~245.05~~	136.44	~~$255.96~~	$	245.05		$	255.96		$	316.21		$	393.21
INCOME FROM INVESTMENT OPERATIONS:
Net investment (loss)	~~(2.64)~~	(0.75	~~(1.70~~)		(3.35	)		(2.08	)		(2.16	)		(4.44	)
Net realized and unrealized (loss) on investment transactions	(15.77)		(10.47)
Net realized and unrealized (loss)/gain on investments		(5.71	)		(33.76	)		19.17			(58.09	)		(35.72	)
Net (decrease) in net assets resulting from operations	(18.41)		(12.17)
Net (decrease)/increase in net assets resulting from operations		(6.46	)		(37.11	)		17.09			(60.25	)		(40.16	)
Total Distributions to Members	~~(13.50)~~	—	~~(28.00)~~		(71.50	)		(28.00	)		—			(36.84	)
NET ASSET VALUE, END OF PERIOD	$~~213.14~~	129.98	~~$215.79~~	$	136.44		$	245.05		$	255.96		$	316.21
TOTAL NET ASSET VALUE RETURN (2), (5)	~~(7.27)%~~	(4.73	~~(5.04~~)%		(15.41	)%		7.84	%		(19.05	)%		(11.24	)%
RATIOS AND SUPPLEMENTAL DATA (3)
Net Assets, End of Period (000’s)	$~~62,920~~	38,372	~~$63,704~~	$	40,279		$	72,342		$	75,562		$	93,349
Ratios to Average Net Assets: (4)
Gross Expenses	1.98 %		1.92 %
Gross expenses		2.30	%		2.11	%		1.91	%		2.18	%		2.45	%
Net Expenses	1.98 %		1.92 %
Net expenses		2.30	%		2.11	%		1.91	%		2.18	%		2.45	%
Net Investment (loss)	(1.50)%		(0.95)%
Net investment (loss)		(2.22	)%		(1.49	)%		(0.88	)%		(0.74	)%		(1.23	)%
Portfolio Turnover Rate (5), (6)	~~6.18 %~~	1.98	~~9.94~~ %		7.91	%		12.37	%		4.00	%		24.00	%

(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. InFor the ~~nine~~period ~~months~~ ended ~~July~~October 31, 2008, 0.4039% of the Company’s total net asset value return consists of a voluntary reimbursement by BACA (as defined below) for a net realized gain from payments by affiliates. Excluding this item, total net asset value return would have been (715.6780)% for the period 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 their audited ~~financials~~financial statements for the period ended December 31, ~~2007~~2008, 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)	Annualized for a period less than a year.

(5)	Not annualized for a period less than a year.

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

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

109

EXCELSIOR VENTURE PARTNERS III, LLC

NOTES TO FINANCIAL STATEMENTS

~~July~~January 31, ~~2008~~2009

Note 1 — Organization

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 “Investment Company Act”)~~. The Company was established as a Delaware limited liability company on February 18, 2000. The Company commenced operations on April 5, 2001. The duration of the Company is ten years (subject to two 2-year extensions) from the final subscription closing which occurred on May 11, 2001, at which time the affairs of the Company will be wound up and its assets distributed pro rata to members as soon as is practicable.

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 ~~(as defined below)~~ believes offer significant long-term capital appreciation ~~potential~~. Venture capital and private investment companies are companies in which the equity is closely held by company founders, management and/or a limited number of institutional investors. The Company generally 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. U.S. generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.

~~The~~B. ~~interim~~Cash ~~financial data as of July 31, 2008~~ and ~~for the nine and three months ended July 31, 2008~~Cash ~~and~~Equivalents: July 31, 2007 is unaudited; however, in the opinion of the Company, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods.

A. Cash and Cash Equivalents:

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

BC. Restricted Cash:

Restricted cash, if any, ~~consisted~~consists of proceeds from the sales of investments held by counterparties as collateral for certain contingent claims for a specified period of time. At January 31, 2009, the Company held $2,341 as restricted cash.

11D. 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 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 (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 below. Securities having remaining maturities of 60 days or less from the date of purchase are valued at amortized cost.

Note 2 — Significant Accounting Policies (continued)

CD. Investment Valuation (continued):

The ~~Company~~value ~~values~~for ~~portfolio~~ securities ~~quarterly~~for ~~and~~which atno ~~such~~public ~~other~~market ~~times~~exists asis difficult to determine. Generally, insuch ~~the~~investments ~~Company’s~~will ~~Board~~be ofvalued ~~Managers’~~on ~~(the~~a “~~Board~~going concern” orbasis ~~“Board~~and ofin ~~Managers”)~~conformity ~~view~~with U.S. generally accepted accounting principles. Accordingly, ~~circumstances~~the ~~warrant~~fair value measurement is determined based on the estimated price a seller would receive in an orderly transaction at the measurement date. For venture capital companies there are a range of values that is ~~Securities~~reasonable for ~~which~~such ~~market~~investments ~~quotations~~at any particular time. Initially, direct investments are ~~readily~~valued ~~available~~based ~~generally~~upon their original cost as a proxy for the exit price absent any public market quote and until developments provide a sufficient basis for use of a valuation method other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued atby the ~~last~~“private ~~sale~~market” ~~price~~or on the ~~date~~last round of financing as a method of valuation. ~~or,~~The ifprivate nomarket ~~sale~~method ~~occurred~~shall only be used with respect to reliable third party transactions by sophisticated, atindependent investors. Other valuation methods that may use factors affecting the ~~mean~~investee company such as earnings, net worth, reliable private sale prices of the ~~latest~~investee ~~bid~~company’s ~~and~~securities, ~~ask~~the market prices; ~~provided~~for ~~that~~similar securities of comparable companies, asan toassessment ~~such~~of ~~securities~~the ~~that~~investee company’s future prospects or, if appropriate, liquidation values also may ~~have~~provide ~~legal,~~a ~~contractual~~basis orfor ~~practical~~a ~~restrictions~~change onin ~~transfer,~~valuation. The values for the investments referred to in this paragraph will be estimated regularly by the Investment Adviser (as defined below) or a ~~discount~~committee of ~~10%~~the toBoard ~~40%~~under ~~from~~the supervision of the ~~public~~Board of ~~market~~Managers ~~price~~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 ~~applied~~realized by the Company from the investments.

~~Securities~~The ~~for~~Company’s ~~which~~Private noInvestment ~~public~~Funds ~~market~~are ~~exists~~fair ~~and~~valued ~~other~~by ~~assets~~the ~~will~~Investment beAdviser ~~valued~~based on the estimated price a seller would receive in an orderly transaction at the measurement date. Such fair value is generally based upon the Company’s pro-rata share of the value of the net assets of the Private Investment Fund as determined by such Private Investment Fund, in ~~good~~accordance with ~~faith~~its bypartnership agreement, constitutional or other documents governing such valuation (“Capital Balance”), on the valuation date, subject to the Investment Adviser’s ordetermination athat ~~committee~~the ofCapital Balance represents the ~~Board~~fair value of ~~Managers~~the orinvestment. ~~both~~If ~~under~~such valuation with respect to the ~~supervision~~Company’s investments in Private Investment Funds is not available by reason of timing or other event on the ~~Board~~valuation ofdate, ~~Managers~~or ~~pursuant~~is deemed to ~~certain~~be ~~valuation~~unreliable ~~procedures~~by ~~summarized~~the ~~below.~~Investment ~~Securities~~Adviser, the ~~having~~Investment ~~remaining~~Adviser, ~~maturities~~under supervision of 60the ~~days~~Board orof ~~less~~Managers, ~~from~~shall ~~the~~determine ~~date~~such value based on its judgment of ~~purchase~~fair ~~are~~value ~~valued~~on atthe ~~amortized~~appropriate ~~cost~~date, less applicable charges, if any.

~~The~~At ~~value~~January 31, ~~for~~2009 ~~securities~~and ~~for~~October 31, ~~which~~2008, ~~no public~~ market ~~exists~~quotations iswere ~~difficult~~not toreadily ~~determine.~~available ~~Generally,~~for ~~such~~the ~~investments~~Company’s ~~will~~portfolio beof securities valued onat a$26,909,695 ~~“going~~or ~~concern” basis without giving effect to any disposition costs~~70.13% ~~There is a range~~ of ~~values~~net ~~that~~assets isand ~~reasonable for such investments at any particular time. Initially~~$28,814,304 ~~direct~~or ~~investments are valued based upon their original cost until developments provide a sufficient basis for use of a valuation other than cost~~71.54% ~~Upon the occurrence~~ of ~~developments~~net ~~providing a sufficient basis for a change in valuation~~assets, ~~direct~~respectively. ~~investments~~Such ~~will~~securities bewere valued by the ~~“private market”~~Investment ~~or “appraisal” methods of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated~~Adviser, ~~independent~~under ~~investors. The appraisal method shall be based upon such factors affecting~~ the ~~investee~~supervision ~~company such as earnings, net worth, reliable private sale prices~~ of the ~~investee~~Board ~~company’s securities, the market prices for similar securities~~ of ~~comparable~~Managers. ~~companies,~~Because ~~an assessment~~ of the ~~investee company’s future~~inherent ~~prospects~~uncertainty ~~or,~~of ~~if appropriate~~valuation, ~~liquidation~~the ~~value.~~estimated ~~The~~ values ~~for~~may ~~the~~differ ~~investments~~significantly ~~referred~~from tothe invalues ~~this~~that ~~paragraph~~would ~~will~~have bebeen ~~estimated~~used ~~regularly~~had ~~by the Investment Adviser or~~ a ~~committee~~ready ofmarket ~~the~~for ~~Board under~~ the ~~supervision~~securities ofexisted, ~~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~~differences ~~that~~could ~~might ultimately~~ be ~~realized by the Company from the investments~~material.

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 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 July 31, 2008 and October 31, 2007, market quotations were not readily available for the Company’s portfolio of securities valued at $33,526,737 or 53.29% 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.

Note 2 — Significant Accounting Policies (continued)

D. Security transactions and investment income:

Private and Public Companies

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

Private Investment Funds

Distributions of cash or securities from a Private Investment Fund are recorded as areturns ~~return~~ of 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~~the ~~are~~Company has ~~received~~a legal and enforceable right to demand payment from the Private Investment Fund at fair value, which is generally based on the Private Investment Fund’s determined fair value.

E.11 ~~Income taxes:~~

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. By reason 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 cost of the Private Investment Funds for federal tax purposes is based on amounts reported to the Company on Schedule K-1 from the Private Investment Funds. As of July 31, 2008, the Company has not received information to determine the tax cost of the Private Investment Funds. At December 31, 2007 and December 31, 2006, the Private Investment Funds had a cost basis for tax purposes of $14,367,291 and $12,465,650, respectively. Based on values of the Private Investment Funds as of July 31, 2008, and after adjustment for purchases and sales between December 31, 2007 and July 31, 2008, this results in net unrealized appreciation for tax purposes on the Private Investment Funds of $4,045,593. The cost basis for federal tax purposes of the Company’s other investments at July 31, 2008 is $42,858,798, and those investments had net depreciation on a tax basis at July 31, 2008 of $26,761,095. 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.

F. Deferred income:

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

Note 2 — Significant Accounting Policies (continued)

F. Expenses:

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

G. Income taxes:

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. By reason of this treatment, the Company will itself not be subject to income tax. Rather, members, in computing income tax, will include their allocable share of the Company’s income, gain, loss, deduction and expense. There were neither liabilities nor deferred tax assets relating to uncertain income tax positions taken or expected to be taken on the tax return as of December 31, 2008.

The cost of the Private Investment Funds for federal tax purposes is based on amounts reported to the Company on Schedule K-1 from the Private Investment Funds. As of January 31, 2009, the Company has not received information to determine the tax cost of the Private Investment Funds. At December 31, 2008 and December 31, 2007, the Private Investment Funds had a cost basis for tax purposes of $15,220,730 and $13,695,895, respectively. After adjusting the tax cost for purchases and sales for the period between December 31, 2008 and January 31, 2009, the adjusted cost for tax purposes is $15,460,730. This results in net unrealized depreciation for tax purposes on the Private Investment Funds of $447,970. The cost basis for federal tax purposes of the Company’s other investments is $36,338,809, and those investments had net depreciation on a tax basis at January 31, 2009 of $24,441,874. The cost basis for federal tax purposes of the Company’s other investments at October 31, 2008, was $42,763,809, and those investments had net depreciation on a tax basis at October 31, 2008 of $31,366,872.

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

Bank of America Capital Advisors LLC (“BACA” or the “Investment Adviser”), which has its principal offices at 100 Federal Street, Boston, MA 02110, serves as the investment adviser to the Company. BACA is a Delaware limited liability company which is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Investment Adviser is an indirect wholly-owned subsidiary of, and controlled by, Bank of America Corporation (“Bank of America”), a bank holding and a financial holding company which has its principal executive offices at 101 North Tryon Street, Charlotte, North Carolina 28255.

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

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

~~USTA~~12 assumed the duties of the investment adviser from the previous investment adviser to the Company, U.S. Trust Company, N.A. (“UST-NA”), which was acting through its registered investment advisory division, U.S. Trust Asset Management Division, on December 16, 2005. UST-NA has served as the investment adviser to the Company pursuant to an Investment Advisory Agreement (the “Agreement”). Under the Agreement for the services provided, the Investment Adviser is entitled to receive a management fee at an annual rate equal to 2.00% of the Company’s end of the quarter net assets through the fifth anniversary of the first closing date of April 5, 2001, and 1.00% of net assets thereafter.

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

OnNote ~~March 31,~~3 ~~2006,~~— ~~U.S.~~Investment ~~Trust~~Advisory ~~NY converted into a national bank named United States Trust Company~~Fee, ~~National~~Administration ~~Association~~Fee ~~(“U.S. Trust”)~~ and ~~UST-NA~~Related ~~merged~~Party ~~into~~Transactions ~~U.S. Trust, with U.S. Trust as the surviving entity. After the merger, U.S Trust, acting through its registered investment advisory division, U.S. Trust-New York Asset Management Division~~ (~~the “Investment Sub-Adviser”~~continued), ~~was serving as investment sub-adviser to the Company pursuant to an investment sub-advisory agreement.~~

OnUnder ~~July 1,~~that ~~2007,~~investment ~~U.S.~~advisory ~~Trust~~agreement ~~Corp.~~for ~~and~~the ~~its~~services ~~subsidiaries~~provided, ~~including USTA and~~ the Investment ~~Sub-~~Adviser, ~~were~~was ~~acquired~~entitled ~~by Bank of America (the “Sale”). USTA continued~~ to ~~serve~~receive asa ~~the~~management ~~Investment~~fee ~~Adviser~~at toan ~~the~~annual ~~Company after the~~rate ~~Sale~~equal ~~(until May 29, 2008, as indicated above) pursuant~~ to a2.00% ~~new~~of ~~investment advisory agreement with~~ the Company’s ~~(the~~end ~~“New Advisory Agreement”) that was approved at a special meeting~~ of ~~members of~~ the ~~Company~~quarter ~~held~~net onassets ~~March 15,~~through ~~2007 and~~the ~~was~~fifth ~~identical~~anniversary inof ~~all material respects except for~~ the ~~term~~first ~~and~~closing ~~the~~ date of ~~effectiveness~~April 5, to2001, ~~the~~and ~~Agreement~~1.00% ~~The~~of ~~Investment~~net ~~Sub-Adviser~~assets ~~ceased to serve as the investment sub-adviser to the Company after the Sale~~thereafter.

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

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

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 ~~July~~January 31, ~~2008~~2009 and October 31, ~~2007~~2008, $~~158~~96,~~150~~962 and $~~182~~101,~~802~~503, respectively, were payable to ~~the Investment Adviser and USTA, respectively~~BACA.

14On 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 were 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 limited number of institutional investors and negotiated private investments in public companies. As of January 31, 2009 and October 31, 2008, there was no Incentive Carried Interest earned by BACA.

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

OnPursuant ~~July 31,~~to ~~2008~~an Administration, ~~the~~Accounting ~~Company~~and ~~received~~Investor ~~$268~~Services Agreement,~~999~~ ~~from~~the ~~BACA~~Company asretains aPNC ~~reimbursement~~Global ~~for~~Investment ~~fees~~Servicing ~~associated~~(“PNCGIS”) (formerly ~~with~~known ~~the~~as ~~sale~~PFPC ~~of Genoptix,~~ Inc. ~~During the period~~), ~~the~~a ~~Company~~majority-owned ~~through~~subsidiary ~~its~~of ~~own~~The ~~internal~~PNC ~~controls~~Financial ~~identified~~Services aGroup, ~~potential~~as ~~violation~~administrator, ofaccounting ~~the~~and ~~Investment~~investor ~~Company~~services ~~Act~~agent. ~~involving~~In ~~the~~addition, ~~sale~~PFPC ofTrust ~~Genoptix,~~Company ~~Inc.~~serves ~~through~~as anthe ~~affiliate~~Company’s ~~of USTA~~custodian. ~~BACA~~In ~~and~~consideration for its ~~affiliate~~services, ~~believe that~~ the ~~sale~~Company ~~of Genoptix,~~(i) pays ~~Inc.~~PNCGIS ina ~~the~~variable ~~initial~~fee ~~public~~between ~~offering~~0.105% and ~~secondary offering was at arms-length~~0. ~~However~~07%, tobased ~~ensure~~on ~~the~~average ~~Company~~quarterly ~~and~~net ~~its~~assets, ~~investors~~payable ~~are~~monthly, ~~not~~subject ~~detrimented~~to ~~and~~a inminimum ~~its~~quarterly ~~fiduciary~~fee ~~capacity~~of asapproximately ~~the Investment Adviser~~$30,000, ~~BACA~~(ii) pays ~~decided~~annual tofees ~~reimburse~~of ~~the~~approximately ~~Company~~$37,000 for ~~the~~taxation ~~fees~~services ~~paid~~and to(iii) reimburses ~~its~~PNCGIS ~~affiliate~~for out-of-pocket expenses.

InCharles ~~addition~~Schwab & toCo., ~~the~~Inc. ~~management fee~~(the “Distributor”), the ~~Investment~~principal ~~Adviser~~subsidiary isof ~~entitled~~Schwab, ~~to allocations~~served ~~and~~as ~~distributions~~the ~~equal~~Company’s todistributor for the ~~Incentive~~offering ~~Carried~~of ~~Interest~~units. ~~The~~UST-NA, ~~Incentive~~and ~~Carried~~subsequently ~~Interest~~USTA, ispaid the Distributor from its own assets an amount equal to 200.02% of the ~~excess,~~total ifof ~~any,~~all subscriptions ofreceived in the ~~Company’s~~offering. ~~cumulative~~UST-NA ~~realized~~or ~~capital~~an ~~gains~~affiliate onpaid ~~Direct~~the ~~Investments,~~Distributor ~~over~~an ongoing fee for the ~~sum~~sale of ~~(a) cumulative~~ ~~realized~~units ~~capital~~and ~~losses~~the onprovision ~~investments~~ of ~~any~~ongoing ~~type~~investor ~~(b) cumulative~~services ~~gross~~in ~~unrealized~~an ~~capital~~amount ~~depreciation~~equal onto ~~investments~~the annual rate of ~~any~~0.45% ~~type~~of ~~and~~the ~~(c) cumulative~~average quarterly net ~~expenses.~~asset value ~~Direct~~of ~~Investments~~all ~~means~~outstanding ~~Company~~units ~~investments~~held ~~in domestic~~by ~~and~~investors ~~foreign~~introduced ~~companies~~to inthe ~~which~~Company by the ~~equity~~Distributor isthrough ~~closely~~the ~~held~~fifth byanniversary ~~company~~of ~~founders,~~the ~~management,~~final subscription closing date and~~/or~~ aat ~~limited~~the ~~number~~annual rate of ~~institutional~~0.22% ~~investors~~thereafter, ~~and~~subject ~~negotiated~~to ~~private~~elimination ~~investments~~upon inall ~~public~~such ~~companies~~fees totaling 6.50% As of ~~July 31,~~the ~~2008~~gross ~~and October 31,~~proceeds ~~2007,~~received ~~there~~by ~~was~~the Company from the offering. Since the fifth anniversary has expired, no ~~Incentive~~further ~~Carried~~fees ~~Interest~~have ~~earned~~been paid by the ~~Investment~~Company ~~Adviser~~or its affiliates to the Distributor.

Pursuant to an Administration, Accounting and Investor Services Agreement, the Company retains PNC Global Investment Servicing (“PNC GIS”) (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 PNC GIS 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 PNC GIS for out-of-pocket expenses.

Charles Schwab & Co., Inc. (the “Distributor”), the principal subsidiary of Schwab, served as the Company’s distributor for the offering of units. The former Investment Adviser paid the Distributor from its own assets an amount equal to 0.02% of the total of all subscriptions received in the offering. The Investment Adviser or an affiliate paid the Distributor an on-going fee for the sale of units and the provision of ongoing investor services in an amount equal to the annual rate of 0.45% of the average quarterly net asset value of all outstanding units held by investors introduced to the Company by the Distributor through the fifth anniversary of the final subscription closing date and at the annual rate of 0.22% thereafter, subject to elimination upon all such fees totaling 6.5% of the gross proceeds received by the Company from the offering.

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

As of ~~July~~January 31, ~~2008~~2009, and October 31, ~~2007~~2008, Excelsior Venture Investors III, LLC had an investment in the Company of $3924,~~943~~359,~~520~~ 650 and $4525,~~925~~570,~~203~~437, respectively. This represents an ownership interest of 63.48% in the Company as of both dates.

Note 4 — Purchases and Sales of Securities

Excluding short-term investments, the Company’s purchases and proceeds received from ~~sales~~the sale of ~~securities~~investments and distributions received from Private Investment Funds for the ~~nine~~three months ended ~~July~~ January 31, ~~2008 and July~~2009, January 31, ~~2007~~2008 were as follows:

Nine Months Ended July 31,	Purchases ($)	Proceeds ($)
Three Months Ended January 31,	Purchases ($)	Proceeds ($)
2008	3,037,411	20,606,720
2009	550,533	770,506
2007	5,507,172	14,976,791
2008	1,236,876	1,326,511

Note 5 — Commitments

As of ~~July~~January 31, ~~2008~~2009, the Company had unfunded investment commitments to Private Investment Funds totaling $32,~~928~~847,~~672~~642. The Company also had commitments from its investors of $~~148~~147.86 million, of ~~which~~none ~~$2.7~~of ~~million~~ which remains uncalled.

Private Investment Funds	Commitment		UnfundedCommitment
Advanced Technology Ventures VII, L.P.	$	2,700,000	$	~~189~~121,~~000~~500
Burrill Life Sciences Capital Fund		3,000,000		~~731~~498,~~349~~316
CHL Medical Partners II, L.P.		2,000,000		9959,960
CMEA Ventures VI, L.P.		3,000,000		~~810~~600,000
Morgenthaler Partners VII, L.P.		3,000,000		~~300~~150,000
Prospect Venture Partners II, L.P.		3,000,000		~~435~~390,000
Sevin Rosen Fund IX, L.P.		3,000,000		~~780~~660,000
Tallwood II, L.P.		3,000,000		~~150,000~~—
Valhalla Partners, L.P.		3,000,000		~~433~~367,~~363~~866
Total	$	25,700,000	$	32,~~928~~847,~~672~~642

1615

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 dividends from affiliated companies during the ~~nine~~three months ended ~~July~~January 31, ~~2008~~2009 and for the year ended October 31, ~~2007~~2008. Transactions with companies, which are or were affiliates, were as follows:

							For Nine Months Ended July 31, 2008 (Unaudited)
	Shares/PrincipalAmount Held atOctober 31, 2008	October 31,2008 FairValue		Purchases/ConversionAcquisition			For the Three Months Ended January 31, 2009 (Unaudited)
Name of Investment	~~Shares/PrincipalAmount Held atOctober 31, 2007~~	~~October 31,2007 FairValue~~		~~Purchases/ConversionAcquisition~~			SalesProceeds/Conversion		InterestReceived		RealizedGain/(Loss)			Shares/PrincipalAmount Held ~~atJuly~~atJanuary 31, ~~2008~~2009	~~July~~January 31, ~~2008Fair~~2009Fair Value(Note 1)
Controlled Affiliates
Pilot Software Inc., Series A Preferred	—		—		—			—		—		75,463		—		—
Cydelity Inc., Series A-2 Preferred	—	$	—	$	—		$	—	$	—	$	(20,098	)	—	$	—
Total Controlled Affiliates	—	$	—	$	—		$	—	$	—	$	75(20,~~463~~098	)	—	$	—
Non-Controlled Affiliates
Ethertronics, Inc., Series B Preferred	4,433,333	$	6,650,000	$	—		$	—	$	—	$	—		4,433,333	$	6,650,000
Ethertronics, Inc., Series C Warrants	271,247		—		—		$	—		—		—		~~271,247~~—		—
Ethertronics, Inc., Series C Preferred	1,697,957		2,546,937		—			—		—		—		1,697,957		2,546,~~936~~937
LogicLibrary, Inc., Series A Preferred	8,751,782		4,001,492		(4,087,685	)		—		1,758		—		—		—
OpVista, Inc., Common Stock	10,615,593		—		—			—		—		—		10,615,593		—
LogicLibrary, Inc., Series A-1 Preferred	3,080,464		1,408,450		(1,408,450	)				—		—		—		—
OpVista, Inc., Series CC Warrants	675,313		—		—			—		—		—		675,313		—
MIDAS Vision Systems, Inc., Series A-1 Preferred	933,593		—		—			—		—		(1,054,960	)	—		—
Tensys Medical, Inc., Series C Preferred	4,166,667		—		—			—		—		(5,000,000	)	—		—
MIDAS Vision Systems, Inc., Common Stock	157,396		—		—			—		—		(4,000,000	)	—		—
Tensys Medical, Inc., Series D Preferred	1,187,500		—		—			—		—		(1,425,000	)	—		—
NanoOpto Corp., Bridge Note	237,321		160,000		—			93,384		—		(143,937	)	—		—
Tensys Medical, Inc., Series E Preferred	318,845		—		(382,623	)		—		—		—		—		—
OpVista, Inc., Series AA Preferred	5,683,906		6,236,892		(4,067,801	)		—		—		—		1,088,532		551,817
Total Non-Controlled Affiliates		$	9,196,937	$	(382,623	)	$	—	$	—	$	(6,425,000	)		$	9,196,937
OpVista, Inc., Common Stock	1,079,541		1,184,567		4,465,175			—		—		—		6,025,312		—
Total Non-Controlled and Controlled Affiliates		$	9,196,937	$	(382,623	)	$	—	$	—	$	(6,445,098	)		$	9,196,937
OpVista, Inc., Series BB Convertible Preferred	433,400		491,800		(397,374	)		—		—		—		83,001		44,075
OpVista, Inc., Series CC Convertible Preferred	—		—		683,075			—		—		—		3,418,748		1,025,624
OpVista, Inc., Bridge Note	675,989		1,351,978		(683,075	)		—		7,760		—		—		—
OpVista, Inc., Series CC Warrants	675,313		—		—			—		—		—		675,313		675
Silverback Systems, Inc., Escrow	—		—		—			—		—		(19,931	)	—		—
Tensys Medical, Inc., Series C Preferred	4,166,667		534,026		—			—		—		—		4,166,667		—
Tensys Medical, Inc., Series D Preferred	1,187,500		152,197		—			—		—		—		1,187,500		—
Tensys Medical, Inc., Series E Preferred	96,629		347,865		—			—		—		—		318,845		—
Total Non-Controlled Affiliates		$	25,066,204	$	(5,496,135	)	$	93,384	$	9,518	$	(5,218,828	)		$	10,819,127
Total Non-Controlled and Controlled Affiliates		$	25,066,204	$	(5,496,135	)	$	93,384	$	9,518	$	(5,143,365	)		$	10,819,127


	Shares/Principal Amount Held at October 31, 2007	October 31, 2007 Fair Value		Purchases/ Conversion Acquisition			For the Year Ended October 31, 2008
Name of Investment	Shares/Principal Amount Held at October 31, 2007	October 31, 2007 Fair Value		Purchases/ Conversion Acquisition			Sales Proceeds/ Conversion		Interest Received		Realized Gain/ (Loss)			Shares/Principal Amount Held at October 31, 2008	October 31, 2008 Fair Value (Note 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

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

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

Advanced Technology Ventures VII, L.P. represents 5.33% of the Company’s Net Assets at January 31, 2009. The investment objective of Advanced Technology Ventures VII, L.P. is to invest in multistage information technology, communications and life sciences companies in order to achieve capital appreciation. Advanced Technology Ventures VII, L.P. does not provide liquidity to its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partner’s discretion in the form of distributions in either cash or marketable securities. Additionally, the general partner of Advanced Technology Ventures VII, L.P. may approve transfers at its sole discretion.

CMEA Ventures VI, L.P. represents 7.22% of the Company’s Net Assets at January 31, 2009. The investment objective of CMEA Ventures VI, L.P. is to invest in and assist new and emerging growth-oriented business that are involved in the areas of life science technology, human healthcare and high technology companies in order to achieve net rates of return on invested capital in the top quartile of venture capital funds of the same vintage year. CMEA Ventures VI, L.P. does not provide liquidity to its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partner’s discretion in the form of distributions in either cash or marketable securities. Additionally, the general partner of CMEA Ventures VI, L.P. may approve transfers at its sole discretion.

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.

In September 2006, the Financial Accounting Standards Board (“FASB”) released Statement of Financial Accounting Standards (“SFAS”) No. 157, which provides enhanced guidance for using fair value to measure assets and liabilities. The Company adopted SFAS No. 157 on November 1, 2008. SFAS No. 157 establishes a fair value hierarchy and expands disclosures about fair value measurements. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under SFAS No. 157 are described below:

•

Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

•

Level 2 — Quoted prices which are not active, or inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and

•

Level 3 — Prices, inputs or exotic modeling techniques which are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Note 79 — ~~Pending~~New ~~Litigation~~Accounting Pronouncements (continued)

~~The~~As ~~former~~required ~~Investment~~by ~~Adviser,~~SFAS ~~certain of its affiliates, including U~~No.~~S. Trust~~157, ~~and~~investments ~~others~~are ~~were~~classified ~~named~~within inthe ~~four~~level ~~shareholder~~of ~~class~~the ~~action~~lowest ~~lawsuits~~significant ~~and~~input ~~two~~considered ~~derivative~~in ~~actions~~determining ~~which~~fair ~~allege~~value. ~~that the~~Investments ~~former~~classified ~~Investment~~within ~~Adviser,~~Level ~~certain~~3 ofconsider ~~its~~several ~~affiliates~~inputs and ~~others~~may ~~allowed~~include ~~certain~~Level ~~parties~~1 toor ~~engage~~Level in2 ~~illegal~~inputs ~~and~~as ~~improper~~components ~~mutual fund trading practices, which allegedly caused financial injury to the shareholders~~ of ~~certain mutual funds managed by~~ the ~~former~~overall ~~Investment~~fair ~~Adviser.~~value ~~Each seeks unspecified monetary damages and related equitable relief~~measurement.

The ~~class~~table ~~and derivative~~below ~~actions~~sets ~~described~~forth ~~above~~information ~~were~~about ~~transferred to~~ the ~~United~~level ~~States~~within ~~District Court for~~ the ~~District~~fair ofvalue ~~Maryland~~hierarchy ~~for~~at ~~coordinated~~which ~~and consolidated pre-trial proceedings. In November 2005,~~ the ~~Maryland court dismissed many of the plaintiffs~~Company’ ~~claims~~s inportfolio ~~both~~investments ~~the~~are ~~class~~measured ~~action~~at and derivative lawsuits. Several affiliates of the former Investment Adviser and individual defendants have also been dismissed. Plaintiffs’ claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and under SectionJanuary ~~36(b) and 48(a) of the Investment Company Act~~31, ~~however,~~2009: ~~have not been dismissed.~~

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


	Unadjusted quoted prices in active markets for identical securities (Level 1)		Quoted prices which are not active, or inputs that are observable (Level 2)		Prices, inputs or modeling techniques that are both significant to the fair value measurement and unobservable (Level 3)		Total
Assets:
Investments in Private Companies	$	—	$	—	$	11,896,936	$	11,896,936
Investments in Private Investment Funds		—		—		15,012,759		15,012,759
Investment in Investment Company		984,128		—		—		984,128
Other Investments*		—		—		—		—

Totals	$	984,128	$	—	$	26,909,695	$	27,893,823

Liabilities:
Investments in Securities	$	—	$	—	$	—	$	—
Other Investments*		—		—		—		—

Totals	$	—	$	—	$	—	$	—

~~Note~~* 8Other —investments ~~Guarantees~~are derivative instruments, such as futures, forwards, written options and swap contracts.

~~In the normal course of business, the Company enters into contracts that provide general indemnifications.~~ The ~~Company’s~~following ~~maximum exposure under these agreements~~ is ~~dependent~~a onreconciliation ~~future~~of ~~claims that may be made against~~ the ~~Company,~~investments ~~and~~in ~~therefore~~securities ~~cannot be~~within ~~established;~~Level ~~however,~~3 ~~based~~used onin ~~experience,~~determining ~~the~~value: ~~risk of loss from such claims is considered remote.~~

Note 9 — Disclosure regarding Private Investment Funds over 5% of Net Assets


	Prices, inputs or modeling techniques that are both significant to the fair value measurement and unobservable (Level 3)
Balances as of October 31, 2008	$	28,814,304
Net realized (loss) on investments		(6,445,098	)
Net decrease in unrealized depreciation on investments		4,760,463
Net purchases/(sales proceeds)		(219,974	)
Net transfers in and out of Level 3**		—

Balances as of January 31, 2009	$	26,909,695

~~CMEA~~** ~~Ventures~~Transfers ~~VI, L.P. represents 6.60% of Net Assets at July 31, 2008. The investment objective of CMEA Ventures VI, L.P. is to invest~~ in and ~~assist~~out ~~new~~of ~~and~~Level ~~emerging~~3 ~~growth-oriented business that~~ are ~~involved~~valued 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~~beginning ~~partner’s discretion in the form~~ of ~~distributions in either cash or marketable securities. Additionally,~~ the ~~general~~period ~~partner of CMEA Ventures VI, L~~value.~~P. may approve transfers; however, it is at its sole discretion.~~

~~Note~~For 10information —on ~~New~~the ~~Accounting~~Company’s ~~Pronouncements~~other significant accounting policies, please refer to the Company’s most recent semi-annual or annual financial statements.

Effective November 1, 2007, the Company adopted the Financial Accounting Standards Board (“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.

~~Note~~Item 102. —Management’s ~~New~~Discussion ~~Accounting~~and ~~Pronouncements~~Analysis ~~(continued)~~of Financial Condition and Results of Operations For the Three months ended January 31, 2009 as Compared to the Similar Period in 2008

~~FASB~~Realized ~~issued Statement No. 157 in September 2006, “Fair Value Measurements,” which is effective for financial statements issued for fiscal years beginning after November 15, 2007,~~ and ~~interim~~Unrealized ~~periods~~Gains ~~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”~~Losses) ~~and~~from ~~expands~~Portfolio ~~disclosures~~Investments about fair value measurements. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. The Company is reviewing the statement and its impact on the financial statements.

~~FASB~~For ~~issued~~the ~~Statement~~three ~~No.~~months ended January ~~159~~31, ~~(“SFAS~~2009 ~~159”~~and 2008, the Company had a net realized (loss) inof ~~February~~($6,445,098) ~~2007~~and ($5,210,968), “respectively. The realized ~~Fair~~loss ~~Value~~of ~~Option~~($6,445,098) for ~~Financial~~the ~~Assets~~three months ended January 31, 2009 is comprised of losses from the Company’s write off of Tensys Medical, Inc., a Private Company investment of ($6,425,000), and the realized loss of ($20,098) on ~~Financial~~Cydelity, ~~Liabilities~~Inc.,” ~~which~~a Private Company investment. The Tensys Medical, Inc. write off is ~~effective~~a ~~for~~result ~~Financial~~of ~~Statements~~the ~~issued~~merger with Recorders and Medicare Systems (P) Ltd. whereby Series C and D preferred stock were not ascribed any value. The realized loss of ($5,210,968) for ~~fiscal~~the ~~year~~three ~~beginning~~months ~~after~~ended ~~November~~January 1531, ~~2007.~~2008 ~~SFAS~~is ~~159~~comprised ~~permits~~of ~~entities~~losses tofrom ~~choose~~Company’s towrite ~~measure~~off ~~many~~of ~~financial~~Midas ~~instruments~~Vision ~~and~~Systems, ~~certain~~Inc., ~~other~~a ~~items~~Private atCompany ~~fair~~investment, ~~value~~which resulted in a realized loss of ($5,054,960). This loss also ~~with~~includes ~~changes~~a inrealized ~~fair~~loss ~~value~~of ~~recognized~~($82,047) infrom ~~earnings~~the Company’s sale of stock of Hansen Medical, Inc. The ~~Company~~remaining isnet ~~reviewing~~loss ~~the~~of ~~statement~~($73,961) ~~and~~is ~~its~~comprised ~~impact~~of onall other gains/(losses) of the ~~financial~~remaining ~~statements.~~direct investments and Private Investment Funds.

~~Note~~For 11the —three months ended January 31, 2009 and 2008, the Company had a decrease in unrealized losses on investments of $4,760,463 ~~Subsequent~~and ~~Events~~$8,028,964, respectively. The Company had a decrease in unrealized losses for the three months ended January 31, 2009 was principally the combination of the unrealized gain on Tensys Medical, Inc., a Private Company investment of $6,425,000, and the unrealized gain on Archemix Corporation, a Private Company investment in the amount of $499,999. This unrealized gain partially offset the combination of: i) the unrealized (loss) of ($744,650) on Tallwood II, L.P.; ii) the unrealized (loss) of ($380,058) on Burrill Life Science Capital Fund; iii) the unrealized (loss) of ($328,291) on Valhalla Partners, L.P.; iv) the unrealized (loss) of ($198,181) on CMEA Venture VI, L.P.; and v) the unrealized (loss) of ($188,009) on Morgenthaler Partners VII, L.P. The remaining direct investments and Private Investment Funds resulted in a net unrealized loss of ($325,257). The net change in unrealized appreciation for the three months ended January 31, 2008 was principally the combination of: i) the reversal of unrealized losses due to write off of Midas Vision Systems, Inc. of $5,054,960; ii) appreciation on Genoptix, Inc. of $10,111,381; and iii) appreciation on Private Investment Funds of $656,752. This unrealized gain was partially offset by the unrealized loss on OpVista, Inc. of ($7,570,304).

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

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

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

Realized and Unrealized Gains and Losses from Portfolio Investments

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

For the nine months ended July 31, 2008 and 2007, the Company had a net change in unrealized (depreciation)/appreciation on investments of ($15,666,832) and $882,127, respectively. The net change in unrealized (depreciation) for the nine months ended July 31, 2008 was principally the combination of: i) the unrealized loss on OpVista, Inc. of ($7,650,806); ii) an unrealized loss on SOA Software, Inc. in the amount of ($5,681,135); iii) reversal of unrealized gains due to the sale of Genoptix, Inc. of ($6,645,429); and iv) an unrealized loss of ($1,300,748) on Tensys Medical, Inc. This unrealized loss was partially offset by: the reversal of unrealized losses due to write off of Midas Vision Systems, Inc. of $5,054,960 and the appreciation of CMEA Ventures VI, L.P. of $1,469,571. The remaining direct investments and Private Investment Funds resulted in a net unrealized loss of ($913,245). The net change in unrealized appreciation for the nine months ended July 31, 2007 was principally the combination of: i) the sale of Silverback Systems Inc. which resulted in a reversal in unrealized depreciation of $6,730,172 due to the reclassification from an unrealized loss to realized loss; ii) a decrease of ($4,840,466) due to the write-down of Cydelity, Inc., a private company investment; iii) an increase of $1,012,291 due to the write-up of OpVista Inc.; and iv) a decrease of ($3,320,399) due to a write-down of NanoOpto Corporation ; v) an increase of $1,350,001 due to a write-up of Archemix Corporation; vi) a decrease of ($1,521,144) due to a write-down on Tensys Medical, Inc.; and vii) an increase of $1,469,065 due to a write-up of Genoptix, Inc. The remaining change was a result of changes in the private investment funds and public stocks.

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

For the three months ended July 31, 2008 and 2007, the Company had a net change in unrealized (depreciation) on investments of ($10,673,963) and ($2,859,433), respectively. The net change in unrealized depreciation for the three months ended July 31, 2008 was principally the combination of: i) the reclassification from unrealized appreciation to realized gain of Genoptix, Inc. of ($11,801,901); ii) the write-down of SOA Software, Inc. of ($185,000); and iii) the appreciation of CMEA Ventures VI, L.P. of $1,072,957, an overall increase in the valuation of the Company’s Private Investment Funds in the amount of $239,981. The net change in unrealized depreciation for the period ended July 31, 2007 was principally the result of the combination of: i) an increase of $1,350,001 and $1,469,065 due to write-ups on Archemix Corporation and Genoptix, Inc., respectively and ii) a decrease of ($3,320,399), ($1,521,144), and ($618,000) due to write-downs of NanoOpto Corporation, Tensys Medical, Inc., and Cydelity, Inc., respectively. The remaining change was a result of changes in the Private Investment Funds and public stocks.

Investment Income and Expenses

For the ~~nine~~three months ended ~~July~~January 31, ~~2008~~2009, the Company had investment income of $~~250~~7,~~929~~756, primarily from investments in short-term securities, and net operating expenses of $1230,~~031~~374,~~521,~~ resulting in a net investment loss of ($~~780~~222,~~592~~618). In comparison, for the similar period ended ~~July~~January 31, ~~2007~~2008, the Company had investment income of $~~516~~135,~~037~~367, primarily from investments in short-term securities, and net operating expenses of $1345,~~018~~963,~~338,~~ resulting in a net investment loss of ($~~502~~210,~~301~~596). The decrease in investment income for the ~~nine~~three months ended ~~July~~January 31, ~~2008~~2009 is primarily due to decreases in interest income due to declines in short-term interest rates. For the ~~nine~~ three months ended ~~July~~January 31, 2008, expenses increased due to higher professional fees charged to the Company.

For the three months ended ~~July~~January 31, 2009 and 2008, the ~~Company~~Investment ~~had~~Adviser ~~investment~~earned ~~income of~~ $4096,~~067~~962 and ~~net operating expenses of~~ $~~367~~188,~~886~~873 ~~resulting~~ in amanagement ~~net investment loss of ($327~~fees,~~819)~~ respectively. InManagement ~~comparison,~~fees ~~for~~recorded during the ~~similar~~periods ~~period~~ ended ~~July~~January 31, ~~2007, the Company had~~2009 ~~investment~~and ~~income~~January 31, of2008 ~~$135,960~~are ~~and~~at ~~net~~an ~~operating~~annual ~~expenses~~rate of ~~$313,301,~~1.00% ~~resulting~~of ~~in a~~ net ~~investment loss of ($177,341)~~assets. The decrease in ~~net~~management ~~investment~~fees ~~income~~coincides ~~for~~with the ~~three~~overall ~~months~~decreases ~~ended July 31, 2008 was a result of a decrease~~ in ~~short-term interest~~net ~~income.~~asset ~~The~~over ~~increase in operating expenses was primarily due to higher professional fees charged to~~ the ~~Company~~comparable periods.

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

Net Assets

The Company’s net assets were $6238,~~919~~371,~~746~~755, or a net asset value per unit of $~~213~~129.1498, at ~~July~~January 31, ~~2008~~2009. This represents a decrease of ($91,~~422~~907,~~453,~~253) or ($316.9146) per unit, from net assets of $7240,~~342~~279,~~199~~008, or $~~245~~136.05 44 per unit, at October 31, ~~2007~~2008. The net decrease resulted principally from a net decrease in net assets from operations of ($51,~~437~~907,~~188,~~253) or ($186.4146) per unit~~, and distributions to members of $3,985,335, or $13~~.50 ~~per unit.~~

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.

At20 July 31, 2008, the Company held $21,130,822 in cash and cash equivalents and $984,128 short-term investments, as compared to $26,240 in cash and cash equivalents and $11,367,859 in short-term investments, at October 31, 2007. The overall increase in cash and short-term investments was primarily due to cash received from the sale of Genoptix, Inc. At July 31, 2008, the Company did not invest in any short-term notes. The Company funded additional capital per its commitments to its Private Investment Funds in the amount of $2,467,188 for the nine months ended July 31, 2008. In connection with the Company’s total commitments to private funds in the amount of $25,700,000 since inception, the Company, through July 31, 2008, has contributed $21,771,328 or 84.71% of the total capital committed to nine Private Investment Funds. During the nine months ended July 31, 2008, the Company also participated in follow-on financing rounds for several of its private companies totaling $570,223.

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.

Liquidity and Capital Resources (continued)

At January 31, 2009, the Company held $10,683,058 in cash and cash equivalents and $984,128 in short-term investments, as compared to $10,693,165 in cash and cash equivalents and $984,128 in short-term investments, respectively, at October 31, 2008. The overall decrease in cash was primarily due to cash used for expenses and operations. At January 31, 2009, the Company did not invest in any short-term notes. The Company during this period funded capital commitments to its Private Investment Funds in the amount of $550,533 for the three months ended January 31, 2009. In connection with the Company’s total commitments to Private Investment Funds in the amount of $25,700,000 since inception, the Company, through January 31, 2009, has contributed $22,852,358 or 88.92% of the total capital committed to nine Private Investment Funds. During the three months ended January 31, 2009, the Company did not participate in follow-on financing rounds for any of its private companies.

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.

Application of Critical Accounting Policies

Under the supervision of the Valuation and Audit Committees of the Company’s Board of Managers, consisting of the Managers, who are not “interested persons,” as defined in Section 2(a)(19) of the Investment Company Act (the “Independent Managers”), of the Company, the Investment Adviser makes certain critical accounting estimates with respect to the valuation of private portfolio investments. These estimates could have a material impact on the presentation of the Company’s financial condition because in total, they currently represent 5370.2913% of the Company’s net assets. For the private investments held at ~~July~~January 31, ~~2008~~2009, changes to these estimates and realizations resulted in a $51.69 million decrease in net asset value from October 31, ~~2007~~2008.

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~~and ~~giving effect~~in toconformity ~~any~~with ~~disposition~~U.S. ~~costs~~generally accepted accounting principles. ~~There~~Accordingly, the fair value measurement is determined based on the estimated price a seller would receive in an orderly transaction at the measurement date. For venture capital companies there are a range of values that is reasonable for such investments at any particular time. 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 as a proxy for the exit price absent any public market quote and until developments provide a sufficient basis for use of a valuation method 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”~~the ~~methods~~last round of financing as a method of valuation, subject to the Investment Adviser’s determination that such methodology results in an appropriate fair valuation of the investment in accordance with U.S. generally accepted accounting principles. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. The ~~appraisal~~valuation ~~method~~will ~~shall~~also betake ~~based~~into ~~upon~~consideration 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~~ comparable companies, an assessment of the company’s future prospects or, if appropriate, liquidation ~~value~~values also may provide a basis for a change in valuation. 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~~21 valuation of the Company’s private funds is based upon its pro-rata share of the value of the assets of a private fund as determined by such private fund, in accordance with its partnership agreement, constitutional or other documents governing such valuation, on the valuation date. If such valuation with respect to the Company’s investments in private funds is not available by reason of timing or other event on the valuation date, or deemed to be unreliable by the Investment Adviser, the Investment Adviser, under supervision of the Board, shall determine such value based on its judgment of fair value on the appropriate date, less applicable charges, if any.

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

Application of Critical Accounting Policies (continued)

The Company’s Private Investment Funds are fair valued by the Investment Adviser based on the estimated price a seller would receive in an orderly transaction at the measurement date. Such fair value is generally based upon the Company’s 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 (“Capital Balance”), on the valuation date, subject to the Investment Adviser’s determination that the Capital Balance represents the fair value of the investment. 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.

The Investment Adviser also makes estimates regarding discounts on market prices of publicly traded securities where appropriate. For securities where there are legal or contractual restrictions on transfer of the security, a discount from the public market price will be applied.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

Equity Price Risk

The Company anticipates that a majority of its investment portfolio will consist of securities in ~~private~~Private Companies ~~companies~~ and Private Investment Funds. As of ~~July~~January 31, ~~2008~~2009, 5370.2913% 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~~The ~~method~~Company’s ofinvestments ~~valuation~~are ~~does~~subject ~~not~~to ~~result~~various inrisk ~~increases~~factors orincluding ~~decreases~~market, incredit, ~~the~~industry ~~fair~~and ~~value~~currency ofrisk. ~~these~~Equity ~~securities~~Price Risk represents the potential loss in ~~response~~value toof ~~changes~~financial instruments caused by movements in market ~~prices. Thus~~variables, ~~these~~such ~~securities~~as ~~are~~interest ~~not subject~~and toforeign exchange rates and equity ~~price~~prices. ~~risk~~The ~~normally~~Company ~~associated~~may ~~with~~have ~~public~~a ~~equity~~concentration ~~markets~~of investments, ~~except~~as ~~that~~permitted toby the ~~extent~~private ~~that~~placement ~~the~~offering ~~Private~~memorandum, ~~Investment~~in ~~Funds~~a ~~hold~~particular ~~underlying~~industry ~~public~~or sector. ~~securities,~~Investment performance of the ~~Company~~sector ismay ~~indirectly~~have ~~exposed~~a tosignificant ~~equity~~impact ~~price~~on ~~risk~~the ~~associated~~performance ~~with~~of the ~~public~~ ~~markets~~Company. AtThe ~~July 31,~~Company’s ~~2008~~investments ~~and~~are ~~July 31,~~also ~~2007,~~subject to the ~~Company~~risk ~~was~~associated ~~not~~with ~~subject~~investing toin private equity ~~price~~securities. ~~risk~~The ~~normally~~investments ~~associated~~in private ~~with~~equity ~~public~~securities ~~equity~~are ~~markets~~illiquid, ~~except~~can ~~for~~be ~~Genoptix,~~subject ~~Inc.~~to ~~and~~various torestrictions ~~the~~on ~~extent~~resale, ~~that~~and ~~the~~there ~~Private~~can ~~Investment~~be ~~Funds~~no assurance that the Company ~~has~~will ~~invested~~be inable ~~hold, from time~~ to ~~time,~~realize ~~interests~~the invalue ~~securities~~of ~~which~~such ~~may~~investments bein ~~publicly~~a ~~traded~~timely manner.

Item 4.

Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. As of ~~July~~January 31, ~~2008~~2009 (the end of the period covered by this report), the Company’s principal executive officers and principal financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company was made known to them by others within those entities.

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

2422

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

None.

Item 2.

Changes in Securities and Use of Proceeds.

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Submission of Matters to a Vote of Security Holders.

None.

Item 5.

Other Information.

None.

Item 6.

Exhibits and Reports on Form 8-K.

(a)

Exhibits.


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

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

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

(b)

Reports on Form 8-K.

~~On May 30, 2008, the Company filed a Current Report on Form 8-K to report under Item 8~~None.01 ~~certain disclosures.~~

On23 ~~July 16, 2008, the Company filed a Current Report on Form 8-K to report under Item 5.02 certain disclosures.~~

SIGNATURES

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

	EXCELSIOR VENTURE PARTNERS III, LLC
Date: September 15, 2008		By:	/s/ James D. Bowden
Date: March 17, 2009		By:	/s/ James D. Bowden
		James D. Bowden
		President and Chief Executive Officer
Date: September 15, 2008		By:	/s/ Steven L. Suss
Date: March 17, 2009		By:	/s/ Steven L. Suss
		Steven L. Suss
		Treasurer and Chief Financial Officer

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

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Filing Compare · EXCELSIOR VENTURE PARTNERS III LLC