##### Table of Contents





SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549





FORM 10-Q





(Mark One)

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

For the quarterly period ended April 30, 2008

OR



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

For the transition period from  to

Commission file number 000-29665





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) 352-4400



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





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

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

Large accelerated filer   ̈    Accelerated file   ̈    Non-accelerated filer  x

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

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









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##### Table of Contents

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 April 30, 2008 and October 31, 2007.                                |  | 1       
|         |  |                                                                                                
|         |  | Statements of Assets and Liabilities at April 30, 2008 and October 31, 2007.                    |  | 5       
|         |  |                                                                                                
|         |  | Statements of Operations for the six months ended April 30, 2008 and April 30, 2007.            |  | 6       
|         |  |                                                                                                
|         |  | Statements of Operations for the three months ended April 30, 2008 and April 30, 2007.          |  | 7       
|         |  |                                                                                                
|         |  | Statements of Changes in Net Assets for the six months ended April 30, 2008 and April 30, 2007. |  | 8       
|         |  |                                                                                                
|         |  | Statements of Cash Flows for the six months ended April 30, 2008 and April 30, 2007.            |  | 9       
|         |  |                                                                                                
|         |  | Financial Highlights for the six months ended April 30, 2008 and April 30, 2007.                |  | 10      
|         |  |                                                                                                
|         |  | Notes to Financial Statements.                                                                  |  | 11      
|         |  |                                                                                                
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations.          |  | 21      
|         |  |                                                                                                
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk.                                     |  | 23      
|         |  |                                                                                                
|Item 4.  |  | Controls and Procedures.                                                                        |  | 24      
|         |  |                                                                                                
|PART II. |  | OTHER INFORMATION                                                                               |  | 25      
|         |  |                                                                                                
|Item 1.  |  | Legal Proceedings.                                                                              |  | 25      
|         |  |                                                                                                
|Item 2.  |  | Changes in Securities and Use of Proceeds.                                                      |  | 25      
|         |  |                                                                                                
|Item 3.  |  | Defaults Upon Senior Securities.                                                                |  | 25      
|         |  |                                                                                                
|Item 4.  |  | Submission of Matters to a Vote of Security Holders.                                            |  | 25      
|         |  |                                                                                                
|Item 5.  |  | Other Information.                                                                              |  | 25      
|         |  |                                                                                                
|Item 6.  |  | Exhibits and Reports on Form 8-K.                                                               |  | 25      



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##### Table of Contents

Excelsior Venture Partners III, LLC

Portfolio of Investments April 30, 2008 (Unaudited)



|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|---------------------- |  | --------------------------------------------------- |  | --------------------- |  | ------------------- |  | ---------- |  | ------------------- | - | ------------------- | -
|PrincipalAmount/Shares |  |                                                     |  |                       |  | Acquisition Date ## |  | Cost       |  | Fair Value (Note 1) |   | % of Net Assets *** |  
|                       |  | PUBLIC COMPANIES #                                  |  |                       |  |                     |  |            |  |                     |  
|                       |  |                                                     |  | Common Stocks         |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Life Sciences **      |  |                     |  |            |  |                     |   |                     |  
|571,954                |  | Genoptix, Inc. (GXDX)                               |  | 07/03 - 05/05         |  | 2,237,392           |  | 14,863,753 |  | 24.68               | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  | TOTAL COMMON STOCK - PUBLIC COMPANIES               |  |                       |  | 2,237,392           |  | 14,863,753 |  | 24.68               | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  | PRIVATE COMPANIES **                                |  |                       |  |                     |  |            |  |                     |  
|                       |  |                                                     |  | Common Stocks #       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Optical @             |  |                     |  |            |  |                     |   |                     |  
|6,025,312              |  | OpVista, Inc.                                       |  | 06/06 - 12/07         |  | 13,649,206          |  |           |  | 0.00                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  | TOTAL COMMON STOCK - PRIVATE COMPANIES              |  |                       |  | 13,649,206          |  |           |  | 0.00                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Preferred Stocks #    |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Enterprise Software @ |  |                     |  |            |  |                     |   |                     |  
|8,940,298              |  | LogicLibrary, Inc., Series A                        |  | 01/02 - 11/07         |  | 4,087,685           |  |           |  | 0.00                | %
|3,080,464              |  | LogicLibrary, Inc., Series A-1                      |  | 08/03 - 05/04         |  | 1,408,450           |  |           |  | 0.00                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  |                       |  |                     |  | 5,496,135  |  |                    |   | 0.00                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Life Sciences         |  |                     |  |            |  |                     |   |                     |  
|1,999,999              |  | Archemix Corporation, Series A                      |  | 08/02 - 11/03         |  | 1,999,999           |  | 2,499,999  |  | 4.15                | %
|700,000                |  | Archemix Corporation, Series B                      |  | 03/04 - 12/05         |  | 700,000             |  | 875,000    |  | 1.45                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  |                       |  |                     |  | 2,699,999  |  | 3,374,999           |   | 5.60                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Medical Technology @  |  |                     |  |            |  |                     |   |                     |  
|4,166,667              |  | Tensys Medical, Inc., Series C                      |  | 03/02                 |  | 5,000,000           |  |           |  | 0.00                | %
|1,187,500              |  | Tensys Medical, Inc., Series D                      |  | 05/04                 |  | 1,425,000           |  |           |  | 0.00                | %
|318,845                |  | Tensys Medical, Inc., Series E                      |  | 07/06 - 12/07         |  | 382,623             |  |           |  | 0.00                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  |                       |  |                     |  | 6,807,623  |  |                    |   | 0.00                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Optical @             |  |                     |  |            |  |                     |   |                     |  
|1,088,532              |  | OpVista, Inc., Series AA                            |  | 06/06 - 01/07         |  | 966,605             |  | 551,817    |  | 0.92                | %
|83,001                 |  | OpVista, Inc., Series BB                            |  | 03/07 - 04/07         |  | 94,426              |  | 44,075     |  | 0.07                | %
|3,418,748              |  | OpVista, Inc., Series CC                            |  | 12/07                 |  | 683,075             |  | 1,025,624  |  | 1.70                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  |                       |  |                     |  | 1,744,106  |  | 1,621,516           |   | 2.69                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | Wireless @            |  |                     |  |            |  |                     |   |                     |  
|4,433,333              |  | Ethertronics, Inc. Series B                         |  | 06/01 - 05/04         |  | 6,650,000           |  | 6,650,000  |  | 11.04               | %
|1,697,957              |  | Ethertronics, Inc. Series C                         |  | 05/05 - 04/07         |  | 2,546,936           |  | 2,546,936  |  | 4.23                | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  |                       |  |                     |  | 9,196,936  |  | 9,196,936           |   | 15.27               | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  | TOTAL PREFERRED STOCKS - PRIVATE COMPANIES          |  |                       |  | 25,944,799          |  | 14,193,451 |  | 23.56               | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  
|                       |  |                                                     |  | 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                           |  |                       |  | 39,594,680          |  | 14,194,126 |  | 23.56               | %
|                       |  |                                                     |  |                       |  |                     |  |            |  |                     |   |                     |  

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



1



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##### Table of Contents

Excelsior Venture Partners III, LLC

Portfolio of Investments April 30, 2008 (Unaudited)



|             |  |                                                              |  |                                  |  |                     |  |            |            |                     |            |                     |        |  
|------------ |  | ------------------------------------------------------------ |  | -------------------------------- |  | ------------------- |  | ---------- | ---------- | ------------------- | ---------- | ------------------- | ------ | -
|PercentOwned |  |                                                              |  |                                  |  | Acquisition Date ## |  | Cost       |            | Fair Value (Note 1) |            | % of Net Assets *** |       
|             |  | PRIVATE INVESTMENT FUNDS **, #                               |  |                                  |  |                     |  |            |            |                     |            |                    
|0.39%        |  | Advanced Technology Ventures VII, L.P.                       |  | 08/01 - 01/08                    |  | 1,785,404           |  |            | 2,022,102  |                     | 3.36       | %                  
|1.58%        |  | Burrill Life Sciences Capital Fund                           |  | 12/02 - 12/07                    |  | 1,963,009           |  |            | 1,540,147  |                     | 2.56       | %                  
|1.35%        |  | CHL Medical Partners II, L.P.                                |  | 01/02 - 03/08                    |  | 1,541,857           |  |            | 1,551,292  |                     | 2.57       | %                  
|1.04%        |  | CMEA Ventures VI, L.P.                                       |  | 12/03 - 02/08                    |  | 1,863,017           |  |            | 2,811,152  |                     | 4.67       | %                  
|0.36%        |  | Morgenthaler Partners VII, L.P.                              |  | 07/01 - 10/07                    |  | 1,733,167           |  |            | 1,706,739  |                     | 2.83       | %                  
|0.58%        |  | Prospect Venture Partners II, L.P.                           |  | 06/01 - 03/08                    |  | 1,414,275           |  |            | 1,766,782  |                     | 2.93       | %                  
|0.98%        |  | Sevin Rosen Fund IX, L.P.                                    |  | 10/04 - 04/08                    |  | 1,416,609           |  |            | 1,551,116  |                     | 2.57       | %                  
|2.36%        |  | Tallwood II, L.P.                                            |  | 12/02 - 02/08                    |  | 2,590,443           |  |            | 1,939,899  |                     | 3.22       | %                  
|1.70%        |  | Valhalla Partners, L.P.                                      |  | 10/03 - 03/08                    |  | 1,937,501           |  |            | 2,210,717  |                     | 3.67       | %                  
|             |  |                                                              |  |                                  |  |                     |  |            |            |                     |            |                     |        |  
|             |  | TOTAL PRIVATE INVESTMENT FUNDS                               |  |                                  |  | 16,245,282          |  |            | 17,099,946 |                     | 28.38      | %                  
|             |  |                                                              |  |                                  |  |                     |  |            |            |                     |            |                     |        |  
|Shares       |  |                                                              |  |                                  |  |                     |  |            |            |                     |           
|             |  | INVESTMENT COMPANIES                                         |  |                                  |  |                     |  |            |            |                     |            |                    
|984,128      |  | Dreyfus Government Cash Management Fund Institutional Shares |  |                                  |  | 984,128             |  |            | 984,128    |                     | 1.63       | %                  
|             |  |                                                              |  |                                  |  |                     |  |            |            |                     |            |                     |        |  
|             |  |                                                              |  | TOTAL INVESTMENTS                |  |                     |  | 59,061,482 |            |                     | 47,141,953 |                     | 78.25  | %
|             |  |                                                              |  |                                  |  |                     |  |            |            |                     |            |                     |        |  
|             |  |                                                              |  | OTHER ASSETS & LIABILITIES (NET) |  |                     |  |            |            |                     | 13,105,602 |                     | 21.75  | %
|             |  |                                                              |  |                                  |  |                     |  |            |            |                     |            |                     |        |  
|             |  |                                                              |  | NET ASSETS                       |  |                     |  |            |            | $                   | 60,247,555 |                     | 100.00 | %
|             |  |                                                              |  |                                  |  |                     |  |            |            |                     |            |                     |        |  



|** | Restricted as to public resale and illiquid securities. Total cost of restricted and illiquid securities at April 30, 2008 was $58,077,354. Total fair value of restricted and
illiquid securities owned at April 30, 2008 was $46,157,825 or 76.62% of net assets.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|# | Non-income producing securities.
|- | --------------------------------

|@ | At April 30, 2008, the Company owned 5% or more of the companys outstanding shares thereby making the company an affiliate as defined by the Investment Company Act of
1940, as amended, (the Investment Company Act). Total fair value of affiliated securities owned at April 30, 2008 (including investments in controlled affiliates) was $10,819,127 or 17.96% of Net Assets.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|*** | Based on Fair Value.
|--- | --------------------

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



2



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##### Table of Contents

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, 2007 (Audited)



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

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



3



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##### Table of Contents

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, 2007 (Audited)



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



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

|# | Non-income producing securities.
|- | --------------------------------

|@ | At October 31, 2007, the Company owned 5% or more of the companys outstanding shares thereby making the company an affiliate as defined by the Investment Company Act.
Total fair value of affiliated securities owned at October 31, 2007 (including investments in controlled affiliates) was $25,066,204 or 34.64% of Net Assets.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|*** | Based on Fair Value.
|--- | --------------------

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



4



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##### Table of Contents

Excelsior Venture Partners III, LLC

Statements of Assets and Liabilities



|                                                                                                |  |                           |             |   |                           |   |            |  
|----------------------------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ------------------------- | - | ---------- | -
|                                                                                                |  | April 30, 2008(Unaudited) |             |   | October 31, 2007(Audited) |  
|ASSETS:                                                                                         |  |                           |             |   |                           |   |            |  
|Unaffiliated Issuers at fair value (Cost $22,166,801 and $33,138,256 respectively)              |  | $                         | 36,322,826  |   |                           | $ | 42,971,731 |  
|Non-Controlled Affiliated Issuers at fair value (Cost $36,894,681 and $41,826,339 respectively) |  |                           | 10,819,127  |   |                           |   | 25,066,204 |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|Investments, at fair value (Cost $59,061,482 and $74,964,595 respectively) (Note 2)             |  |                           | 47,141,953  |   |                           |   | 68,037,935 |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|Cash and cash equivalents (Note 2)                                                              |  |                           | 10,302,294  |   |                           |   | 26,240     |  
|Restricted cash (Note 2)                                                                        |  |                           | 3,180,966   |   |                           |   | 2,672,393  |  
|Receivables from sale of investments                                                            |  |                           |            |   |                           |   | 2,275,482  |  
|Interest receivable                                                                             |  |                           | 20,982      |   |                           |   | 4,019      |  
|Prepaid insurance                                                                               |  |                           | 12,601      |   |                           |   |           |  
|Other assets                                                                                    |  |                           | 1,945       |   |                           |   | 1,945      |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|Total Assets                                                                                    |  |                           | 60,660,741  |   |                           |   | 73,018,014 |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|LIABILITIES:                                                                                    |  |                           |             |   |                           |   |            |  
|Management fees payable (Note 3)                                                                |  |                           | 148,923     |   |                           |   | 182,802    |  
|Professional fees payable                                                                       |  |                           | 104,126     |   |                           |   | 153,475    |  
|Deferred income (Note 2)                                                                        |  |                           | 86,269      |   |                           |   | 258,809    |  
|Administration fees payable (Note 3)                                                            |  |                           | 19,167      |   |                           |   | 28,750     |  
|Board of Managers fees payable (Note 3)                                                        |  |                           | 37,500      |   |                           |   | 19,500     |  
|Custody fees payable (Note 3)                                                                   |  |                           | 4,506       |   |                           |   | 17,002     |  
|Other payables                                                                                  |  |                           | 12,695      |   |                           |   | 15,477     |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|Total Liabilities                                                                               |  |                           | 413,186     |   |                           |   | 675,815    |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|NET ASSETS                                                                                      |  | $                         | 60,247,555  |   |                           | $ | 72,342,199 |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|NET ASSETS consist of:                                                                          |  |                           |             |   |                           |   |            |  
|Members Capital(1)                                                                             |  | $                         | 72,167,084  |   |                           | $ | 79,268,859 |  
|Accumulated unrealized (depreciation) on investments                                            |  |                           | (11,919,529 | ) |                           |   | (6,926,660 | )
|                                                                                                |  |                           |             |   |                           |   |            |  
|Total Net Assets                                                                                |  | $                         | 60,247,555  |   |                           | $ | 72,342,199 |  
|                                                                                                |  |                           |             |   |                           |   |            |  
|Units of Membership Interest Outstanding                                                        |  |                           |             |   |                           |   |            |  
|(Unlimited Number of no par value units authorized)                                             |  |                           | 295,210     |   |                           |   | 295,210    |  
|NET ASSET VALUE PER UNIT                                                                        |  | $                         | 204.08      |   |                           | $ | 245.05     |  
|                                                                                                |  |                           |             |   |                           |   |            |  



|(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.



5



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##### Table of Contents

Excelsior Venture Partners III, LLC

Statements of Operations (Unaudited)



|                                                                    |  |                            |            |   |      |   |            |  
|------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                    |  | Six Months Ended April 30, |           
|                                                                    |  | 2008                       |            |   | 2007 |  
|INVESTMENT INCOME:                                                  |  |                            |            |   |      |   |            |  
|Interest income from unaffiliated investments(1)                    |  | $                          | 183,513    |   |      | $ | 365,742    |  
|Interest income from affiliated investments                         |  |                            | 9,518      |   |      |   | (12,259    | )
|Dividend income from unaffiliated investments                       |  |                            | 17,831     |   |      |   | 26,595     |  
|                                                                    |  |                            |            |   |      |   |            |  
|Total Investment Income                                             |  |                            | 210,862    |   |      |   | 380,078    |  
|                                                                    |  |                            |            |   |      |   |            |  
|EXPENSES:                                                           |  |                            |            |   |      |   |            |  
|Management Investment Adviser fees (Note 3)                         |  |                            | 337,795    |   |      |   | 348,046    |  
|Professional fees                                                   |  |                            | 172,888    |   |      |   | 191,606    |  
|Administration fees (Note 3)                                        |  |                            | 57,500     |   |      |   | 75,833     |  
|Board of Managers fees (Note 3)                                    |  |                            | 46,000     |   |      |   | 44,000     |  
|Custodian fees (Note 3)                                             |  |                            | 14,633     |   |      |   | 15,000     |  
|Insurance expense                                                   |  |                            | 12,464     |   |      |   | 15,554     |  
|Miscellaneous expenses                                              |  |                            | 22,355     |   |      |   | 15,000     |  
|                                                                    |  |                            |            |   |      |   |            |  
|Total Expenses                                                      |  |                            | 663,635    |   |      |   | 705,039    |  
|                                                                    |  |                            |            |   |      |   |            |  
|NET INVESTMENT (LOSS)                                               |  |                            | (452,773   | ) |      |   | (324,961   | )
|                                                                    |  |                            |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:(Note 2)     |  |                            |            |   |      |   |            |  
|Net realized (loss) on affiliated investments                       |  |                            | (5,026,357 | ) |      |   | (9,461     | )
|Net realized gain/(loss) on unaffiliated investments                |  |                            | 2,362,690  |   |      |   | (4,100,132 | )
|Net change in unrealized (depreciation)/appreciation on investments |  |                            | (4,992,869 | ) |      |   | 3,741,560  |  
|                                                                    |  |                            |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS                   |  |                            | (7,656,536 | ) |      |   | (368,033   | )
|                                                                    |  |                            |            |   |      |   |            |  
|NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS              |  | $                          | (8,109,309 | ) |      | $ | (692,994   | )
|                                                                    |  |                            |            |   |      |   |            |  



|(1) | Includes interest from short-term investments.
|--- | ----------------------------------------------

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



6



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##### Table of Contents

Excelsior Venture Partners III, LLC

Statements of Operations (Unaudited)



|                                                                |  |                              |             |   |      |   |            |  
|--------------------------------------------------------------- |  | ---------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                |  | Three Months Ended April 30, |            
|                                                                |  | 2008                         |             |   | 2007 |  
|INVESTMENT INCOME:                                              |  |                              |             |   |      |   |            |  
|Interest income from unaffiliated investments(1)                |  | $                            | 68,066      |   |      | $ | 196,940    |  
|Interest income from affiliated investments                     |  |                              | 71          |   |      |   | (45,171    | )
|Dividend income from unaffiliated investments                   |  |                              | 7,358       |   |      |   | 13,160     |  
|                                                                |  |                              |             |   |      |   |            |  
|Total Investment Income                                         |  |                              | 75,495      |   |      |   | 164,929    |  
|                                                                |  |                              |             |   |      |   |            |  
|EXPENSES:                                                       |  |                              |             |   |      |   |            |  
|Management Investment Adviser fees (Note 3)                     |  |                              | 148,922     |   |      |   | 162,403    |  
|Professional fees                                               |  |                              | 89,282      |   |      |   | 79,460     |  
|Administration fees (Note 3)                                    |  |                              | 28,750      |   |      |   | 37,916     |  
|Board of Managers fees (Note 3)                                |  |                              | 24,000      |   |      |   | 22,000     |  
|Custodian fees (Note 3)                                         |  |                              | 7,133       |   |      |   | 7,500      |  
|Insurance expense                                               |  |                              | 6,164       |   |      |   | 7,648      |  
|Miscellaneous expenses                                          |  |                              | 13,421      |   |      |   | 7,500      |  
|                                                                |  |                              |             |   |      |   |            |  
|Total Expenses                                                  |  |                              | 317,672     |   |      |   | 324,427    |  
|                                                                |  |                              |             |   |      |   |            |  
|NET INVESTMENT (LOSS)                                           |  |                              | (242,177    | ) |      |   | (159,498   | )
|                                                                |  |                              |             |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:(Note 2) |  |                              |             |   |      |   |            |  
|Net realized (loss)/gain on affiliated investments              |  |                              | (21,269     | ) |      |   | 3,292,793  |  
|Net realized gain/(loss) on unaffiliated investments            |  |                              | 2,568,570   |   |      |   | (686       | )
|Net change in unrealized (depreciation) on investments          |  |                              | (13,021,833 | ) |      |   | (1,915,488 | )
|                                                                |  |                              |             |   |      |   |            |  
|NET REALIZED AND UNREALIZED (LOSS)/GAIN ON INVESTMENTS          |  |                              | (10,474,532 | ) |      |   | 1,376,619  |  
|                                                                |  |                              |             |   |      |   |            |  
|NET (DECREASE)/INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |  | $                            | (10,716,709 | ) |      | $ | 1,217,121  |  
|                                                                |  |                              |             |   |      |   |            |  



|(1) | Includes interest from short-term investments.
|--- | ----------------------------------------------

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



7



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##### Table of Contents

Excelsior Venture Partners III, LLC

Statements of Changes in Net Assets (Unaudited)



|                                                                    |  |                            |             |   |      |   |            |  
|------------------------------------------------------------------- |  | -------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                    |  | Six Months Ended April 30, |            
|                                                                    |  | 2008                       |             |   | 2007 |  
|OPERATIONS:                                                         |  |                            |             |   |      |   |            |  
|Net investment (loss)                                               |  | $                          | (452,773    | ) |      | $ | (324,961   | )
|Net realized (loss) on investments                                  |  |                            | (2,663,667  | ) |      |   | (4,109,593 | )
|Net change in unrealized (depreciation)/appreciation on investments |  |                            | (4,992,869  | ) |      |   | 3,741,560  |  
|                                                                    |  |                            |             |   |      |   |            |  
|Net (decrease) in net assets resulting from operations              |  |                            | (8,109,309  | ) |      |   | (692,994   | )
|                                                                    |  |                            |             |   |      |   |            |  
|DISTRIBUTION TO MEMBERS:                                            |  |                            |             |   |      |   |            |  
|Distribution to Members                                             |  |                            | (3,985,335  | ) |      |   | (8,265,880 | )
|                                                                    |  |                            |             |   |      |   |            |  
|Total Distributions                                                 |  |                            | (3,985,335  | ) |      |   | (8,265,880 | )
|                                                                    |  |                            |             |   |      |   |            |  
|Net (decrease) in Net Assets                                        |  |                            | (12,094,644 | ) |      |   | (8,958,874 | )
|                                                                    |  |                            |             |   |      |   |            |  
|NET ASSETS:                                                         |  |                            |             |   |      |   |            |  
|Beginning of period                                                 |  |                            | 72,342,199  |   |      |   | 75,562,092 |  
|                                                                    |  |                            |             |   |      |   |            |  
|End of period                                                       |  | $                          | 60,247,555  |   |      | $ | 66,603,218 |  
|                                                                    |  |                            |             |   |      |   |            |  

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



8



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##### Table of Contents

Excelsior Venture Partners III, LLC

Statements of Cash Flows (Unaudited)



|                                                                                                                              |  |                            |            |   |      |   |            |  
|----------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                              |  | Six Months Ended April 30, |           
|                                                                                                                              |  | 2008                       |            |   | 2007 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                         |  |                            |            |   |      |   |            |  
|Net (decrease) in net assets resulting from operations                                                                        |  | $                          | (8,109,309 | ) |      | $ | (692,994   | )
|Adjustments to reconcile net (decrease) in net assets resulting from operations to net cash provided by operating activities: |  |                            |            |   |      |   |            |  
|Net change in unrealized depreciation/(appreciation) on investments                                                           |  |                            | 4,992,869  |   |      |   | (3,741,560 | )
|Purchase of investments                                                                                                       |  |                            | (1,905,199 | ) |      |   | (4,508,490 | )
|Proceeds received from the sale of investments and distributions received from private investment funds                       |  |                            | 4,760,914  |   |      |   | 14,577,254 |  
|Net realized loss on investments                                                                                              |  |                            | 2,663,667  |   |      |   | 4,109,593  |  
|Proceeds from short-term investments maturing, net                                                                            |  |                            | 10,383,731 |   |      |   | 3,276,123  |  
|(Increase) in restricted cash                                                                                                 |  |                            | (508,573   | ) |      |   |           |  
|Decrease/(increase) in receivables from sale of investments                                                                   |  |                            | 2,275,482  |   |      |   | (4,604,587 | )
|(Increase)/decrease in interest receivable                                                                                    |  |                            | (16,963    | ) |      |   | 12,186     |  
|(Increase) in prepaid insurance                                                                                               |  |                            | (12,601    | ) |      |   | (15,365    | )
|(Decrease) in deferred income                                                                                                 |  |                            | (172,540   | ) |      |   |           |  
|(Decrease) in management fee payable                                                                                          |  |                            | (33,879    | ) |      |   | (28,056    | )
|(Decrease) in professional fee payable                                                                                        |  |                            | (49,349    | ) |      |   | (10,735    | )
|Increase in Board of Managers' fees payable                                                                                   |  |                            | 18,000     |   |      |   | 22,000     |  
|(Decrease) in administration fees payable                                                                                     |  |                            | (9,583     | ) |      |   | 23,678     |  
|(Decrease)/increase in custody fees payable                                                                                   |  |                            | (12,496    | ) |      |   |           |  
|(Decrease)/increase in other payables                                                                                         |  |                            | (2,782     | ) |      |   | 8,970      |  
|                                                                                                                              |  |                            |            |   |      |   |            |  
|Net cash provided by operating activities                                                                                     |  |                            | 14,261,389 |   |      |   | 8,428,017  |  
|                                                                                                                              |  |                            |            |   |      |   |            |  
|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 in cash                                                                                                          |  |                            | 10,276,054 |   |      |   | 162,137    |  
|                                                                                                                              |  |                            |            |   |      |   |            |  
|Cash and cash equivalents at beginning of period                                                                              |  |                            | 26,240     |   |      |   | 2,934      |  
|                                                                                                                              |  |                            |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                                                                    |  | $                          | 10,302,294 |   |      | $ | 165,071    |  
|                                                                                                                              |  |                            |            |   |      |   |            |  
|SUPPLEMENTAL INFORMATION                                                                                                      |  |                            |            |   |      |   |            |  
|Non-cash distributions received from private investment funds                                                                 |  | $                          | 563,864    |   |      | $ |           |  
|                                                                                                                              |  |                            |            |   |      |   |            |  

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



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Excelsior Venture Partners III, LLC

Financial Highlights (Unaudited)



|                                                              |  |                            |        |    |      |   |        |   
|------------------------------------------------------------- |  | -------------------------- | ------ | -- | ---- | - | ------ | --
|                                                              |  | Six Months Ended April 30, |       
|                                                              |  | 2008                       |        |    | 2007 |  
|Per Unit Operating Performance: (1)                           |  |                            |        |    |      |   |        |   
|NET ASSET VALUE, BEGINNING OF PERIOD                          |  | $                          | 245.05 |    |      | $ | 255.96 |   
|INCOME FROM INVESTMENT OPERATIONS:                            |  |                            |        |    |      |   |        |   
|Net investment (loss)                                         |  |                            | (1.53  | )  |      |   | (1.10  | ) 
|Net realized and unrealized (loss) on investment transactions |  |                            | (25.94 | )  |      |   | (1.25  | ) 
|                                                              |  |                            |        |    |      |   |        |   
|Net (decrease) in net assets resulting from operations        |  |                            | (27.47 | )  |      |   | (2.35  | ) 
|                                                              |  |                            |        |    |      |   |        |   
|Total Distributions to Members                                |  |                            | (13.50 | )  |      |   | (28.00 | ) 
|                                                              |  |                            |        |    |      |   |        |   
|NET ASSET VALUE, END OF PERIOD                                |  | $                          | 204.08 |    |      | $ | 225.61 |   
|                                                              |  |                            |        |    |      |   |        |   
|TOTAL NET ASSET VALUE RETURN (2), (5)                         |  |                            | (11.21 | )% |      |   | (0.92  | )%
|                                                              |  |                            |        |    |      |   |        |   
|RATIOS AND SUPPLEMENTAL DATA (3)                              |  |                            |        |    |      |   |        |   
|Net Assets, End of Period (000s)                             |  | $                          | 60,248 |    |      | $ | 66,603 |   
|Ratios to Average Net Assets: (4)                             |  |                            |        |    |      |   |        |   
|Gross Expenses                                                |  |                            | 1.86   | %  |      |   | 1.96   | % 
|Net Expenses                                                  |  |                            | 1.86   | %  |      |   | 1.96   | % 
|Net Investment (loss)/gain                                    |  |                            | (1.27  | )% |      |   | 0.90   | % 
|Portfolio Turnover Rate (5), (6)                              |  |                            | 3.52   | %  |      |   | 7.83   | % 



|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Income and expense ratios do not reflect the Company's proportionate share of net investment income/(loss) and expenses, including any performance-based fees, of the Private
Investment Funds. The Private Investment Funds expense ratios have been obtained from audited financials for the period ended December 31, 2007 but are unaudited information in these Financial Statements. The Private Investment Funds expense
ratios excluding incentive carried interest, incentive carried interest and expenses plus incentive carried interest range from 0.34% to 3.14%, 1.46% to 4.31% and 2.34% to 7.45%, respectively. The Private Investment Funds management fees range from
2.00% to 2.50% on committed capital during the initial investment period and typically decrease over time as the Private Investment Funds seek to exit investments. The Private Investment Funds incentive fees range from 20% to 25% of profit generated
by the Private Investment Funds.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Annualized for a period less than a year.
|--- | -----------------------------------------

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

|(6) | Distributions from Private Investment Funds are included in the Portfolio Turnover Rate.
|--- | ----------------------------------------------------------------------------------------

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



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EXCELSIOR VENTURE PARTNERS III, LLC

NOTES TO FINANCIAL STATEMENTS

April 30, 2008

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 does not have the right to demand that such equity securities be registered.

Note 2  Significant Accounting Policies

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 interim financial data as of April 30, 2008 and for the six months ended April 30, 2008 and April 30, 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 banks. All highly liquid investments are listed separately on the Portfolio of Investments.

B. Restricted Cash:

Restricted cash, if any, consisted of proceeds from the sales of
investments held by counterparties as collateral for certain contingent claims for a specified period of time.



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Note 2  Significant Accounting Policies (continued)



C. Investment Valuation:

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

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

The value for securities for which no public market exists is difficult to determine. Generally,
such investments will be valued on a going concern basis without giving effect to any disposition costs. There is a range of values that is reasonable for such investments at any particular time. Initially, direct investments are valued
based upon their original cost until developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued by the
private market or appraisal methods of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. The appraisal method shall be based
upon such factors affecting the investee company such as earnings, net worth, reliable private sale prices of the investee companys securities, the market prices for similar securities of comparable companies, an assessment of the investee
companys future prospects or, if appropriate, liquidation value. The values for the investments referred to in this paragraph will be estimated regularly by the Investment Adviser or a committee of the Board under the supervision of the Board
of Managers and, in any event, not less frequently than quarterly. However, there can be no assurance that such value will represent the return that might ultimately be realized by the Company from the investments.

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

At April 30, 2008 and October 31, 2007, market quotations were not readily available for the Companys portfolio of securities valued at $46,157,825 or 76.62% 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.



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Note 2  Significant Accounting Policies (continued)



D. Security transactions and investment income:

Private and Public Companies

Security transactions are recorded on a trade date basis. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income, adjusted for amortization of premiums and discounts 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 from a Private Investment Fund are recorded as a 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 are received from the Private Investment Fund.

E. 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 April 30, 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 April 30, 2008, and after adjustment for purchases and sales between December 31, 2007 and April 30, 2008, this
results in net unrealized appreciation for tax purposes on the Private Investment Funds of $2,732,655. The cost basis for federal tax purposes of the Companys other investments at April 30, 2008 is $44,806,754, and those investments had
net depreciation on a tax basis at April 30, 2008 of $14,764,747. 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 April 30, 2008, there was approximately $86,269 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.



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

UST Advisers, Inc. (USTA or the Investment Adviser), which has its principal offices at 225 High Ridge Road, Stamford, Connecticut
06905, is a Delaware corporation and registered investment adviser. 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
July 1, 2007, the Investment Adviser 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
(Schwab).

Prior to December 16, 2005, U.S. Trust Company, N.A. (UST-NA), acting through its registered
investment advisory division, U.S. Trust Asset Management Division, served as the investment adviser to the Company (the former Investment Adviser) pursuant to an Investment Advisory Agreement (the Agreement). Effective
December 16, 2005, USTA assumed the duties of UST-NA.

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. Prior to
March 31, 2006 and pursuant to a sub-advisory agreement among the Company, the former Investment Adviser, and United States Trust Company of New York (U.S. Trust NY), U.S. Trust NY served as the investment sub-adviser to the Company
and received an investment management fee from the former Investment Adviser and Investment Adviser. As of April 30, 2008 and October 31, 2007, $148,923 and $182,802 were payable to the Investment Adviser.

Prior to March 31, 2006, USTA was a wholly-owned subsidiary of UST-NA, and UST-NA and U.S. Trust NY were wholly-owned subsidiaries of U.S. Trust
Corp. Effective 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. U.S Trust was the surviving entity and remained a
wholly-owned subsidiary of U.S. Trust Corp. U.S Trust, acting through its registered investment advisory division, U.S. Trust-New York Asset Management Division (the Investment Sub-Adviser), was also serving as 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 pursuant to a new investment advisory agreement with the Company (the New Advisory Agreement) that
was approved at a special meeting of members of the Company held on March 15, 2007. The New Advisory Agreement is identical in all material respects except for the term and the date of effectiveness to the 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.

On March 11, 2008, the Companys Board
of Managers approved a transfer of USTAs right and obligations in the New Advisory Agreement between the Company and USTA, dated July 1, 2007, to Bank of America Capital Advisors, LLC (BACA), an indirect wholly-owned
subsidiary of Bank of America, which is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Transfer). This change is a product of corporate mergers resulting from the acquisition by Bank of
America of U.S. Trust Corporation in July 2007. The Transfer of the New Advisory Agreement from USTA to BACA did not change (i) the way the Company is managed, including the level of services provided, (ii) the team of investment
professionals providing services to the Company, or (iii) the management and incentive fees the Company pays. The Transfer became effective May 29, 2008.



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##### Table of Contents

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



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 April 30, 2008 and
October 31, 2007, there was no Incentive Carried Interest earned by the Investment Adviser.

Pursuant to an Administration, Accounting
and Investor Services Agreement, the Company retains PFPC Inc. (PFPC), 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 PFPC 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 PFPC 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 April 30, 2008 and October 31, 2007, Excelsior
Venture Investors III, LLC had an investment in the Company of $38,247,126 and $45,925,203, 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 from sales of securities for the six months ended April 30, 2008 and April 30, 2007 were as follows:



|                          |  |               |  |             
|------------------------- |  | ------------- |  | ------------
|Six Months Ended April 30 |  | Purchases ($) |  | Proceeds ($)
|2008                      |  | 1,905,199     |  | 4,760,914   
|2007                      |  | 4,508,490     |  | 14,577,254  



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##### Table of Contents

Note 5  Commitments

As of April 30, 2008, the Company had unfunded investment commitments to Private Investment Funds totaling $4,875,859. The Company also had commitments from its investors of $148.8 million, of which $2.7 million
remains uncalled.



|                                       |  |            |            |                    |   |          
|-------------------------------------- |  | ---------- | ---------- | ------------------ | - | ---------
|Private Investment Funds               |  | Commitment |            | UnfundedCommitment
|Advanced Technology Ventures VII, L.P. |  | $          | 2,700,000  |                    | $ | 256,500  
|Burrill Life Sciences Capital Fund     |  |            | 3,000,000  |                    |   | 873,702  
|CHL Medical Partners II, L.P.          |  |            | 2,000,000  |                    |   | 99,960   
|CMEA Ventures VI, L.P.                 |  |            | 3,000,000  |                    |   | 1,080,000
|Morgenthaler Partners VII, L.P.        |  |            | 3,000,000  |                    |   | 300,000  
|Prospect Venture Partners II, L.P.     |  |            | 3,000,000  |                    |   | 435,000  
|Sevin Rosen Fund IX, L.P.              |  |            | 3,000,000  |                    |   | 960,000  
|Tallwood II, L.P.                      |  |            | 3,000,000  |                    |   | 300,000  
|Valhalla Partners, L.P.                |  |            | 3,000,000  |                    |   | 570,697  
|                                       |  |            |            |                    |   |          
|Total                                  |  | $          | 25,700,000 |                    | $ | 4,875,859
|                                       |  |            |            |                    |   |          



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##### Table of Contents

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 six months ended April 30, 2008 and October 31, 2007. Transactions with companies, which are or were affiliates, were as follows:



|                                                 |  |                                                |  |                           |            |                                 |   |            |                                                 |  |                  |        |                     |   |       |                                              |   |                                  |   |  |           |  |   |           
|------------------------------------------------ |  | ---------------------------------------------- |  | ------------------------- | ---------- | ------------------------------- | - | ---------- | ----------------------------------------------- |  | ---------------- | ------ | ------------------- | - | ----- | -------------------------------------------- | - | -------------------------------- | - |  | --------- |  | - | ----------
|                                                 |  |                                                |  |                           |            |                                 |   |            | For Six Months Ended April 30, 2008 (Unaudited)
|Name of Investment                               |  | Shares/PrincipalAmount Held atOctober 31, 2007 |  | October 31,2007 FairValue |            | Purchases/ConversionAcquisition |   |            | SalesProceeds/Conversion                        |  | InterestReceived |        | RealizedGain/(Loss) |   |       | Shares/PrincipalAmount Held atApril 30, 2008 |   | April 30, 2008Fair Value(Note 1)
|Controlled Affiliates                            |  |                                                |  |                           |            |                                 |   |            |                                                 |  |                  |        |                     |   |       |                                              |   |                                  |   |  |           |  |   |           
|Pilot Software Inc., Series A Preferred          |  |                                               |  |                           |           |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   | 172,540                          |   |  |          |  |   |          
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                                 |  |                  |        |                     |   |       |                                              |   |                                  |   |  |           |  |   |           
|Total Controlled Affiliates                      |  |                                                |  | $                         |           |                                 | $ |           |                                                 |  | $                |       |                     | $ |      |                                              | $ | 172,540                          |   |  |           |  | $ |          
|                                                 |  |                                                |  |                           |            |                                 |   |           
|Non-Controlled Affiliates                        |  |                                                |  |                           |            |                                 |   |            |                                                 |  |                  |        |                     |   |       |                                              |   |                                  |   |  |           |  |   |           
|Ethertronics, Inc., Series B Preferred           |  | 4,433,333                                      |  |                           | 6,650,000  |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 4,433,333 |  |   | 6,650,000 
|Ethertronics, Inc., Series C Warrants            |  | 271,247                                        |  |                           |           |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 271,247   |  |   |          
|Ethertronics, Inc., Series C Preferred           |  | 1,697,957                                      |  |                           | 2,546,937  |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 1,697,957 |  |   | 2,546,936 
|LogicLibrary, Inc., Series A Preferred           |  | 8,751,782                                      |  |                           | 4,001,492  |                                 |   | 84,507     |                                                 |  |                  |       |                     |   | 1,758 |                                              |   |                                 |   |  | 8,940,298 |  |   |          
|LogicLibrary, Inc., Series A-1 Preferred         |  | 3,080,464                                      |  |                           | 1,408,450  |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 3,080,464 |  |   |          
|MIDAS Vision Systems, Inc., Series A-1 Preferred |  | 933,593                                        |  |                           |           |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   | (1,054,960                       | ) |  |          |  |   |          
|MIDAS Vision Systems, Inc., Common Stock         |  | 157,396                                        |  |                           |           |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   | (4,000,000                       | ) |  |          |  |   |          
|NanoOpto Corp., Bridge Note                      |  | 237,321                                        |  |                           | 160,000    |                                 |   |           |                                                 |  |                  | 93,384 |                     |   |      |                                              |   | (143,937                         | ) |  |          |  |   |          
|OpVista, Inc., Series AA Preferred               |  | 5,683,906                                      |  |                           | 6,236,892  |                                 |   | (4,067,801 | )                                               |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 1,088,532 |  |   | 551,817   
|OpVista, Inc., Common Stock                      |  | 1,079,541                                      |  |                           | 1,184,567  |                                 |   | 4,465,175  |                                                 |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 6,025,312 |  |   |          
|OpVista, Inc., Series BB Convertible Preferred   |  | 433,399                                        |  |                           | 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   | )                                               |  |                  |       |                     |   | 7,761 |                                              |   |                                 |   |  |          |  |   |          
|OpVista, Inc., Series CC Warrants                |  | 675,313                                        |  |                           |           |                                 |   |           |                                                 |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 675,313   |  |   | 675       
|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    |                                                 |  |                  |       |                     |   |      |                                              |   |                                 |   |  | 318,845   |  |   |          
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                                 |  |                  |        |                     |   |       |                                              |   |                                  |   |  |           |  |   |           
|Total Non-Controlled Affiliates                  |  |                                                |  | $                         | 25,066,204 |                                 | $ | 351,176    |                                                 |  | $                | 93,384 |                     | $ | 9,518 |                                              | $ | (5,198,897                       | ) |  |           |  | $ | 10,819,127
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                                 |  |                  |        |                     |   |       |                                              |   |                                  |   |  |           |  |   |           
|Total Non-Controlled and Controlled Affiliates   |  |                                                |  | $                         | 25,066,204 |                                 | $ | 351,176    |                                                 |  | $                | 93,384 |                     | $ | 9,518 |                                              | $ | (5,026,357                       | ) |  |           |  | $ | 10,819,127
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                                 |  |                  |        |                     |   |       |                                              |   |                                  |   |  |           |  |   |           



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|                                                 |  |                                                |  |                           |            |                                 |   |          |                                               |  |   |                  |   |                     |   |        |                                                |   |                                    |   |  |   |           |  |   |           
|------------------------------------------------ |  | ---------------------------------------------- |  | ------------------------- | ---------- | ------------------------------- | - | -------- | --------------------------------------------- |  | - | ---------------- | - | ------------------- | - | ------ | ---------------------------------------------- | - | ---------------------------------- | - |  | - | --------- |  | - | ----------
|                                                 |  |                                                |  |                           |            |                                 |   |          | 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  |                                               |  |   |                 |   |                     |   |       |                                                |   |                                   |   |  |   | 433,399   |  |   | 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
|                                                 |  |                                                |  |                           |            |                                 |   |          |                                               |  |   |                  |   |                     |   |        |                                                |   |                                    |   |  |   |           |  |   |           



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Note 7  Pending Litigation

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

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

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.

Note 8  Guarantees

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

Note 9  New Accounting Pronouncement

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.

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



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Note 9  New Accounting Pronouncement (continued)



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

Note 10  Subsequent Events

The Transfer of the
New Advisory Agreement became effective on May 29, 2008.

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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations. For the Six and Three months ended April 30, 2008 as Compared to the Similar
Periods in 2007
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Realized and Unrealized Gains and Losses from Portfolio Investments

For the six months ended April 30, 2008 and 2007, the Company had a net realized (loss) on security transactions of ($2,663,667) and ($4,109,593),
respectively. The realized loss of ($2,663,667) for the six months ended April 30, 2008 is comprised of losses from 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. This loss was partially offset by the realized gain of $2,568,611 from the Companys partial sale of Genoptix, Inc. All other remaining direct investments and Private Investment Funds resulted in a net
realized loss of ($33,381). The net realized (loss) for the six months ended April 30, 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 $3,292,793 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 $177,810 for the period ended April 30,
2007.

For the six months ended April 30, 2008 and 2007, the Company had a net change in unrealized (depreciation)/appreciation on
investments of ($4,992,869) and $3,741,560, respectively. The net change in unrealized (depreciation)/appreciation for the six months ended April 30, 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; and ii) appreciation on Genoptix, Inc. of $5,156,440. This unrealized gain was partially offset by: i) the unrealized loss on OpVista, Inc. of ($7,650,806); ii) an unrealized loss on LogicLibrary, Inc. in
the amount of ($5,496,135); and iii) an unrealized loss of ($1,300,748) on Tensys Medical, Inc. The remaining direct investments and Private Investment Funds resulted in a net unrealized loss of ($756,611). The net change in unrealized appreciation
for the six months ended April 30, 2007 was principally the combination of: i) the sale of Silverback Systems Inc. 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 ($4,840,465) due to the write-down of Cydelity, Inc., a private company investment; and iii) an increase of $1,012,291 due to the write-up of OpVista Inc.

For the three months ended April 30, 2008 and 2007, the Company had a net realized gain on security transactions of $2,547,301 and $3,292,107,
respectively. The net realized gain for the three-month period ended April 30, 2008 was principally the result of the Companys partial sale of Genoptix, Inc. of $2,568,611. For the three months ended April 30, 2007, the net realized
gain was principally the result of a distribution of $3,292,793 from the Companys sale of Pilot Software Inc.

For the three months
ended April 30, 2008 and 2007, the Company had a net change in unrealized (depreciation) on investments of ($13,021,833) and ($1,915,488), respectively. The net change in unrealized depreciation for the three months ended April 30, 2008
was principally the combination of: i) the reclassification from unrealized appreciation to realized gain of Genoptix, Inc. of ($4,954,941); ii) the write-down of LogicLibrary, Inc. of ($5,496,135); and iii) the write-down of Tensys Medical, Inc. of
($1,690,441), an overall decrease in the valuation of the Companys Private Investment Funds in the amount of ($799,848). The net change in unrealized depreciation for the three months ended April 30, 2007 was principally the result of a
reclassification of ($3,736,394) of unrealized appreciation on the Companys investment in Pilot Software Inc. to realized gains. This change was offset by an increase in unrealized appreciation of $1,012,291 due to the write-up of OpVista Inc.



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Investment Income and Expenses

For the six months ended April 30, 2008, the Company had investment income of $210,862, primarily from investments in short-term securities, and net operating expenses of $663,635, resulting in a net investment
loss of ($452,773). In comparison, for the similar period ended April 30, 2007, the Company had investment income of $380,078, primarily from investments in short-term securities, and net operating expenses of $705,039, resulting in a net
investment loss of ($324,961). The decrease in investment income for the six months ended April 30, 2008 is due to decreases in interest income due to declines in short-term interest rates. For the six months ended April 30, 2008, expenses
decreased due to lower professional fees charged to the Company.

For the three months ended April 30, 2008, the Company had
investment income of $75,495 and net operating expenses of $317,672 resulting in a net investment loss of ($242,177). In comparison, for the similar period ended April 30, 2007, the Company had investment income of $164,929 and net operating
expenses of $324,427, resulting in a net investment loss of ($159,498). The decrease in net investment income for the three months ended April 30, 2008 was a result of a decrease in short-term interest income. The decrease in operating expenses
was primarily due to a decline in management fees which resulted from a reduced level of net assets under management during the period.

For the six months ended April 30, 2008 and 2007, the Investment Adviser earned $337,795 and $348,046 in management fees, respectively. For the three months ended April 30, 2008 and 2007, the Investment Adviser earned $148,922 and
$162,403 in management fees, respectively. Management fees recorded during the periods ended April 30, 2008 and April 30, 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 $60,247,555, or a net asset value per unit of $204.08, at April 30, 2008. This represents a decrease of $12,094,644, or $40.97 per unit, from net assets of $72,342,199, or
$245.05 per unit, at October 31, 2007. The net decrease resulted principally from a net decrease in net assets from operations of $8,109,309, or $27.47 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.

At April 30, 2008, the Company held $10,302,294 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 combined decrease in cash and short-term investments was primarily due to cash used for follow-on investments and distributions to members. At
April 30, 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 $1,520,001 for the six months ended April 30, 2008. In
connection with the Companys total commitments to private funds in the amount of $25,700,000 since inception, the Company, through April 30, 2008, has contributed $20,824,141 or 81.03% of the total capital committed to nine Private
Investment Funds. During the six months ended April 30, 2008, the Company also participated in follow-on financing rounds for several of its private companies totaling $351,167.

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.



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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 76.62% of the Companys net assets. For the
private investments held at April 30, 2008, changes to these estimates and realizations resulted in a $7.3 million decrease in net asset value from October 31, 2007.

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

Initially, direct private company investments are valued based upon their original cost until developments provide a sufficient basis for use of a valuation other than cost. Upon the occurrence of developments
providing a sufficient basis for a change in valuation, direct private company investments will be valued by the private market or appraisal methods of valuation. The private market method shall only be used with respect to
reliable third party transactions by sophisticated, independent investors. The appraisal method shall be based upon such factors affecting the company such as earnings, net worth, reliable private sale prices of the companys securities, the
market prices for similar securities of comparable companies, an assessment of the companys future prospects or, if appropriate, liquidation value. The values for the investments referred to in this paragraph will be estimated regularly by the
Investment Adviser or a committee of the Board of Managers, or both, under the supervision of the Board, and, in any event, not less frequently than quarterly. However, there can be no assurance that such value will represent the return that might
ultimately be realized by the Company from the investments.

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

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



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

Equity Price Risk

The Company anticipates that a majority of its investment portfolio will consist of securities in private
companies and Private Investment Funds. As of April 30, 2008, 76.62% of the Companys net assets are not publicly traded. These investments are recorded at fair value as determined by the Investment Adviser in accordance with valuation
guidelines adopted by the Board of Managers. This method of valuation does not result in increases or decreases in the fair value of these securities in response to changes in market prices. Thus, these securities are not subject to equity price
risk normally associated with public equity markets, except that to the extent that the Private Investment Funds hold underlying public securities, the Company is indirectly exposed to equity price risk associated with the public markets. At
April 30, 2008 and April 30, 2007, the Company was not subject to equity price risk normally associated with public equity markets, except to the extent that the Private Investment Funds that the Company has invested in hold, from time to
time, interests in securities which may be publicly traded.



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

(a) Evaluation of
Disclosure Controls and Procedures. As of April 30, 2008 (the end of the period covered by this report), the Companys principal executive officers and principal financial officer evaluated the effectiveness of the Companys
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Companys disclosure controls and procedures were adequate and effective to ensure that
material information relating to the Company was made known to them by others within those entities.

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

[intentionally left blank]



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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.
|--- | --------------------

None.



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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: June 16, 2008 |  |  |  | By:                                 |  | /s/  DAVID R. BAILIN                 
|                    |  |  |  |                                     |  | David R. Bailin                      
|                    |  |  |  |                                     |  | Co-Chief Executive Officer           
|                    |  |  | 
|Date: June 16, 2008 |  |  |  | By:                                 |  | /s/  RAGHAV V. NANDAGOPAL            
|                    |  |  |  |                                     |  | Raghav V. Nandagopal                 
|                    |  |  |  |                                     |  | Co-Chief Executive Officer           
|                    |  |  | 
|Date: June 16, 2008 |  |  |  | By:                                 |  | /s/  STEVEN L. SUSS                  
|                    |  |  |  |                                     |  | Steven L. Suss                       
|                    |  |  |  |                                     |  | Treasurer and Chief Financial Officer



26