<PAGE>

                       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, 2002
                               ------------------------------------------------

                                       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             (I.R.S. Employer Identification No.)
Incorporation or Organization)

114 West 47th Street, New York, NY                       10036-1532
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                 (Zip Code)

Registrant's Telephone Number, Including Area Code  (212) 852-1000
                                                    ----------------------------

--------------------------------------------------------------------------------
    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

<PAGE>

                       EXCELSIOR VENTURE PARTNERS III, LLC

     This Quarterly Report on Form 10-Q contains historical information and
forward-looking statements. Statements looking forward in time are included in
this Form 10-Q pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. They involve known and unknown risks
and uncertainties that may cause Excelsior Venture Partners III, LLC's (the
"Company's") actual results to differ from future performance suggested herein.

<TABLE>
<CAPTION>
             INDEX                                                                               PAGE NO.
             -----                                                                               --------
<S>          <C>                                                                                 <C>
PART I.      FINANCIAL INFORMATION

  Item 1.    Financial Statements.                                                                     1

             Portfolio of Investments as of April 30, 2002.                                            1

             Statement of Assets and Liabilities at April 30, 2002 and October 31, 2001.               3

             Statement of Operations for the six-month periods ended April 30, 2002 and April
             30, 2001.                                                                                 4

             Statement of Changes in Net Assets for the six-month periods ended April 30, 2002
             and April 30, 2001.                                                                       5

             Statement of Cash Flows for the six-month periods ended April 30, 2002 and April
             30, 2001.                                                                                 6

             Financial Highlights at April 30, 2002 and October 31, 2001.                              7

             Notes to Financial Statements.                                                            8

  Item 2.    Management's Discussion and Analysis of Financial Condition and Results of               11
             Operations.

  Item 3.    Quantitative and Qualitative Disclosures about Market Risk.                              12

PART II.     OTHER INFORMATION

  Item 1.    Legal Proceedings.                                                                       12

  Item 2.    Changes in Securities and Use of Proceeds.                                               12

  Item 3.    Defaults Upon Senior Securities.                                                         12

  Item 4.    Submission of Matters to a Vote of Security Holders.                                     12

  Item 5.    Other Information.                                                                       12

  Item 6.    Exhibits and Reports on Form 8-K.                                                        12

SIGNATURES                                                                                            13
</TABLE>

<PAGE>

PART I.     FINANCIAL INFORMATION

Item 1.  Financial Statements.


Excelsior Venture Partners III, LLC
Portfolio of Investments (Unaudited)

                                                            April 30, 2002
                                                          ------------------

PORTFOLIO STRUCTURE
-------------------

    SHORT-TERM INVESTMENTS:

         U.S. GOVERNMENT AGENCY OBLIGATIONS        $   82,916,562        56.92%
         INVESTMENT COMPANIES                           6,036,204         4.14%

    PRIVATE COMPANIES                                  53,896,822        37.00%

    PRIVATE INVESTMENT FUNDS                            1,006,297         0.69%

                                                 ----------------   ------------

    TOTAL INVESTMENTS                                 143,855,885        98.75%
      OTHER ASSETS & LIABILITIES (NET)                  1,815,512         1.25%
                                                 ----------------   ------------

    NET ASSETS                                     $  145,671,397       100.00%
                                                 ================   ============

                       See Notes to Financial Statements.

                                       1

<PAGE>

Excelsior Venture Partners III, LLC
Portfolio of Investments (Unaudited)

<TABLE>
<CAPTION>
                                                                                              April 30, 2002
                                                                                              --------------
  Principal                                                                         Acquisition            Value
Amount/Shares                                                                         Date ##            (Note 1)
-------------                                                                         -------            --------
<S>                                                                                 <C>              <C>
    U.S. GOVERNMENT AGENCY OBLIGATIONS - 56.92%
    $83,000,000       U.S. Treasury Bill
                      1.645%, 5/23/02                                                                $      82,916,562
                                                                                                     ------------------
        Total - U.S. Government Agency Obligations (Cost $82,916,562)                                       82,916,562
                                                                                                     ------------------

    PRIVATE COMPANIES **, #, @ -- 37.00%
           647,948      Adeza Biomedical Corporation, Series 5 Preferred                 09/01               3,000,000
         2,419,355      Ancile Pharmaceuticals, Inc., Series D Preferred                 11/01               3,000,000
        44,247,788      Cenquest, Inc., Series 1 Preferred                               07/01               1,999,995
         2,333,333      Ethertronics, Inc., Series B Preferred                           06/01               3,500,000
         1,879,699      Genoptix, Inc., Series B Preferred                               12/01               2,500,000
         4,330,504      LightConnect, Inc., Series B Preferred                           07/01               5,000,000
         4,374,256      LogicLibrary, Inc., Series A Preferred                           01/02               2,000,000
        15,739,638      Midas Vision Systems, Inc., Series C Preferred                   12/01               4,000,000
         7,089,552      Monterey Design Systems, Inc., Series 1 Preferred                12/01               4,750,000
           956,234      NanoOpto Corporation, Series A-1 Preferred                     10/01&3/02            2,231,212
         1,538,461      NetLogic Microsystems, Inc., Series D Preferred                  8/01                5,000,000
         5,333,333      OpVista, Inc., Series B Preferred                                07/01               4,000,000
           517,260      Senomyx, Inc., Series E Preferred                                11/01               1,500,000
         2,211,898      Silverback Systems, Inc., Series B Preferred                     02/02               1,415,615
         4,166,667      Tensys Medical, Inc., Series C Preferred                         03/02               5,000,000
         3,096,551      Virtual Silicon Technology, Inc., Series C Preferred             12/01               5,000,000
                                                                                                     ==================
         Total - Private Companies (Cost $53,896,827)                                                       53,896,822
                                                                                                     ==================

    PRIVATE INVESTMENT FUNDS **, # -- 0.69%
                        Advanced Technology Ventures VII, L.P.                        08/01-03/02              189,460
                        CHL Medical Partners II, L.P.                                 01/02-03/02              100,491
                        Morgenthaler Venture Partners VII, L.P.                       07/01-04/02              429,887
                        Prospect Venture Partners II, L.P.                            06/01-04/02              286,459
                                                                                                     ==================
         Total - Private Investment Funds (Cost $1,145,429)                                                  1,006,297
                                                                                                     ==================

    INVESTMENT COMPANIES -- 4.14%
       6,036,204      Dreyfus Government Cash Management Account                                             6,036,204
                                                                                                     ------------------
         Total - Investment Companies (Cost $6,036,204)

    TOTAL INVESTMENTS (Cost $143,995,022*) - 98.75%                                                        143,855,885
    OTHER ASSETS & LIABILITIES (NET) - 1.25%                                                                 1,815,512
                                                                                                     ------------------

    NET ASSETS - 100.00%                                                                             $     145,671,397
                                                                                                     ==================
</TABLE>

*    Aggregate cost for federal tax and book purposes.
**   Restricted as to public resale. Acquired between June 1, 2001 and April 30,
     2002. Total cost of restricted securities at April 30, 2002 aggregated
     $55,042,256. Total market value of restricted securities owned at April 30,
     2002 was $54,903,119 or 37.69% of net assets.
#    Non-income producing securities.
##   Required disclosure for restricted
     securities only.
@    At April 30, 2002, 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. Total market value of affiliated
     securities owned at April 30, 2002 was $53,896,822.

                       See Notes to Financial Statements.

                                       2

<PAGE>

Excelsior Venture Partners III, LLC
Statement of Assets and Liabilities

<TABLE>
<CAPTION>
                                                              April 30, 2002    October 31, 2001
                                                              --------------    ----------------
                                                                (Unaudited)
<S>                                                           <C>              <C>
ASSETS:

Investment Securities, at Cost                                $  143,995,022    $    139,742,790
                                                              ==============    ================

Investment Securities, at Value                               $  143,855,885    $    139,676,495

Cash and Cash Equivalents                                          2,700,000           8,433,122
Receivables:
     Interest                                                          4,447                  --
     Receivable due from Distributor                                      --              50,000
Prepaid Assets                                                        30,291              43,070
                                                              --------------    ----------------

         Total Assets                                            146,590,623         148,202,687
                                                              --------------    ----------------

LIABILITIES:

Management Fees Payable                                              712,339           1,377,259
Administration and Shareholder Servicing Fees Payable                157,468             249,241
Board of Managers' Fees Payable                                       29,753              45,000
Offering Costs Payable                                                    --              93,880
Accrued Expenses and Other Payables                                   19,666              16,529
                                                              --------------    ----------------

         Total Liabilities                                           919,226           1,781,909
                                                              --------------    ----------------

NET ASSETS                                                    $  145,671,397    $    146,420,778
                                                              ==============    ================

NET ASSETS consist of:

Accumulated Undistributed Net Investment Income/(Loss)        $     (333,611)   $        343,692
Accumulated Net Realized Gain on Investments                           7,363               6,599
Net Unrealized (Depreciation) on Investments                        (139,137)            (66,295)
Paid in Capital                                                  146,136,782         146,136,782
                                                              --------------    ----------------

         Total Net Assets                                     $  145,671,397    $    146,420,778
                                                              ==============    ================

Units of Membership Interest Outstanding                             295,210             295,210
                                                              --------------    ----------------

NET ASSET VALUE PER UNIT                                      $       493.45    $         495.99
                                                              ==============    ================
</TABLE>


                       See Notes to Financial Statements.

                                       3

<PAGE>

Excelsior Venture Partners III, LLC
Statement of Operations (Unaudited)

<TABLE>
<CAPTION>
                                                                     Six Months Ended
                                                                         April 30,
                                                                 2002                2001
                                                            --------------      --------------
<S>                                                         <C>                 <C>
INVESTMENT INCOME:

Interest Income                                             $      988,746      $      307,671

                                                            --------------      --------------
         Total Income                                              988,746            307, 671
                                                            --------------      --------------

EXPENSES:

Management Fees                                                  1,450,460                  --
Professional Fees                                                  142,464                  --
Organizational Expenses (Note 4)                                   (93,880)                 --
Administration Fees                                                 80,148                  --
Board of Managers' Fees                                             52,753                  --
Custodian Fees                                                       8,926                  --
Miscellaneous                                                       12,398                  --
Insurance                                                           12,780                  --
                                                            --------------      --------------
         Total Expenses                                          1,666,049                  --

NET INVESTMENT (LOSS)                                             (677,303)           307, 671
                                                            --------------      --------------

REALIZED AND UNREALIZED GAIN/
  (LOSS) ON INVESTMENTS

Net Realized Gain on Security Transactions                             764                  --

Change in Unrealized (Depreciation) on Investments                 (72,842)             (1,998)
                                                            --------------      --------------

NET REALIZED AND UNREALIZED
  (LOSS) ON INVESTMENTS                                            (72,078)             (1,998)
                                                            --------------      --------------

NET INCREASE (DECREASE) IN NET

   ASSETS RESULTING FROM OPERATIONS                         $     (749,381)     $      305,673
                                                            ==============      ==============
</TABLE>

                       See Notes to Financial Statements.

                                       4

<PAGE>

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

<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                                            April 30,

                                                                     2002              2001
                                                                ---------------   ---------------
<S>                                                             <C>               <C>
OPERATIONS:

Net Investment Income/(Loss)                                    $      (677,303)  $       307,671
Net Realized Gain on Investments                                            764                --
Change in Unrealized
  (Depreciation) on Investments                                         (72,842)           (1,998)
                                                                ---------------   ---------------
Net Increase/(Decrease) in Net Assets
  Resulting from Operations                                            (749,381)          305,673

MEMBERSHIP INTEREST TRANACTIONS:

Proceeds from units of membership interest sold                              --       122,332,300

DISTRIBUTION TO SHAREHOLDERS FROM:

Net Investment Income                                                        --                --
Net Realized Gain on Investments                                             --                --
                                                                ---------------   ---------------
NET  INCREASE/(DECREASE) IN NET ASSETS                                 (749,381)      122,637,973

NET ASSETS:

Beginning of Period                                                 146,420,778               500
                                                                ---------------   ---------------
End of Period                                                   $   145,671,397   $   122,638,473
                                                                ===============   ===============
</TABLE>

                       See Notes to Financial Statements.

                                       5

<PAGE>

Excelsior Venture Partners III, LLC
Statement of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                                 Six Months Ended
                                                                     April 30,
                                                              2002              2001
                                                          -------------    -------------
<S>                                                       <C>              <C>
CASH FLOWS FROM INVESTING AND
  OPERATING ACTIVITIES:
Proceeds from investments sold                            $         764    $          --
Change in short term investments                             25,824,595     (119,681,016)
Securities purchased                                        (30,076,827)              --
Income received                                               1,034,298          307,671
Expenses paid                                                (2,515,952)        (174,267)
                                                          -------------    -------------
Net Cash Used for Investing and Operating Activities         (5,733,122)    (119,547,612)
                                                          -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:

Capital Contributions                                                --      122,332,300
                                                          -------------    -------------
Net Increase/(Decrease) in Cash                              (5,733,122)       2,784,688
                                                          -------------    -------------
CASH AT BEGINNING OF PERIOD                                   8,433,122              500
                                                          -------------    -------------
CASH AT END OF PERIOD                                     $   2,700,000    $   2,785,188
                                                          =============    =============
</TABLE>

                       See Notes to Financial Statements.

                                       6

<PAGE>



Excelsior Venture Partners III, LLC
Financial Highlights (Unaudited)

Per Unit Operating Performance:  (1)

<TABLE>
<CAPTION>
                                                          April 30, 2002     October 31, 2001
                                                         ---------------    -----------------
<S>                                                      <C>                <C>
NET ASSET VALUE, BEGINNING OF PERIOD                         $  495.99          $  500.00
Deduction of Offering Cost from Contributions                       --              (4.97)

INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss)                                     (2.29)              2.81
Net Realized and Unrealized (Loss) on InvestmentS                (0.25)             (0.20)
                                                             ---------          ---------

      Total from Investment Operations                           (2.54)              2.61
                                                             ---------          ---------

DISTRIBUTIONS:

From Investment Income                                              --              (1.65)
                                                             ---------          ---------

      Total Distributions                                           --              (1.65)
                                                             ---------          ---------


NET ASSET VALUE, END OF PERIOD                               $  493.45          $  495.99
                                                             =========          =========

TOTAL NET ASSET VALUE RETURN (3)                                 (0.51)%             0.52%
                                                             =========          =========

Ratios and supplemental data:
Net Assets, End of Period (000's)                            $ 145,671          $ 146,421
 Ratios to Average Net Assets (2)
     Gross Expenses                                               2.28%              1.35%
     Net Expenses                                                 2.28%              1.32%
     Net Investment Income (Loss)                                (0.93)%             0.58%
     Turnover (3)                                                 0.00%              0.00%
</TABLE>


(1)  Selected data for a unit of membership interest outstanding throughout the
     period
(2)  Annualized
(3)  Non-annualized

                       See Notes to Financial Statements.

                                       7

<PAGE>

                       Excelsior Venture Partners III, LLC

                    Notes to Financial Statements (Unaudited)

Note 1 -- Significant Accounting Policies

     Excelsior Venture Partners III, LLC (the "Company") is a non-diversified,
closed-end management investment company which has elected to be treated as a
business development company under the Investment Company Act of 1940, as
amended. The Company was established as a Delaware limited liability company on
February 18, 2000. The Company commenced operations on April 5, 2001. As of
April 30, 2002 the Company had sold 295,210 units via a public offering which
closed on May 11, 2001. The duration of the Company is ten years (subject to
two, two-year extensions) from the final subscription closing, 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.

     Certain costs incurred in connection with the initial offering of units
totaled $1,468,218. Each member's 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 generally accepted accounting
principles for investment companies and are consistently followed in the
preparation of the financial statements. Generally accepted accounting
principles in the United States require management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates.

     A. Investment Valuation:

          The Company values portfolio securities quarterly and at such other
     times as, in the 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
     Advisers (as defined below) or a committee of the Board under the
     supervision of the Board pursuant to certain valuation procedures
     summarized below. Securities having remaining maturities of 60 days or less
     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" method of valuation. The
     private market method shall only be used with respect to reliable third
     party transactions by sophisticated, independent investors. The appraisal
     method shall be based upon such 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 Advisers or
     a committee of the Board and, in any event, not less frequently than
     quarterly. However, there can be no assurance that such value will
     represent the return that might ultimately be realized by the Company from
     the investments.

          At April 30, 2002, market quotations were not readily available for
     securities valued at $54,903,119. Such securities were valued by the
     Investment Advisers (as hereinafter defined), 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.

                                       8

<PAGE>


     B. Security transactions and investment income:

          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 investments, is earned from settlement date and is recorded on
     the accrual basis. Dividend income is recorded on the ex-dividend date.

     C. 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.

     D. Dividends to members:

          Dividends from net investment income and distributions from net
     realized capital gains, if any, will be declared and paid at least once a
     year. No dividends were paid during the six-month period ended April 30,
     2002.

     E. Other:

          The Company treats all highly-liquid financial instruments that mature
within three months as cash equivalents.

Note 2 -- Investment Advisory Fee, Administration Fee and Related Party
Transactions

     U.S. Trust Company (the "Investment Adviser") serves as the investment
adviser to the Company pursuant to an Investment Advisory Agreement with the
Company. Each of United States Trust Company of New York ("U.S. Trust NY") and
U.S. Trust Company, N.A. serve as the investment sub-advisers to the Company
pursuant to investment sub-advisory agreements with U.S. Trust Company and the
Company. Pursuant to the investment sub-advisory agreements, U.S. Trust Company
pays investment management fees to U.S. Trust NY and U.S. Trust Company, N.A.
U.S. Trust Company, U.S. Trust NY and U.S. Trust Company, N.A. are together
referred to as the "Investment Advisers." In return for its services and
expenses which U.S. Trust Company assumes under the Investment Advisory
Agreement, the Company will pay U.S. Trust Company, on a quarterly basis, a
management fee at an annual rate equal to 2.00% of the Company's average
quarterly net assets through the fifth anniversary of the first closing date and
1.00% of net assets thereafter. In addition to the management fee, U.S. Trust
Company is entitled to allocations and distributions equal to the Incentive
Carried Interest. The Incentive Carried Interest is an amount equal to 20% of
the Company's cumulative realized capital gains on direct investments, less
cumulative realized capital losses, current net unrealized capital depreciation
on all of the Company's investments and cumulative net expenses of the Company.
The Incentive Carried Interest will be determined annually as of the end of each
calendar year.

     U.S. Trust Company is a Connecticut state bank and trust company. U.S.
Trust NY is a New York state-chartered bank and trust company and a member of
the Federal Reserve System. U.S. Trust Company, N.A. is a nationally chartered
bank. Each is a wholly-owned subsidiary of U.S. Trust Corporation, a registered
bank holding company. U.S. Trust Corporation is an indirect wholly-owned
subsidiary of The Charles Schwab Corporation ("Schwab").

     Pursuant to an Administration, Accounting and Investor Services Agreement,
the Company retains PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of
PNC Bank N.A., as administrator, accounting and investor services agent and
transfer 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 $11,000 for taxation services and (iii)
reimburses PFPC for out-of-pocket expenses.

                                       9

<PAGE>

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

     Each member of the Board of Managers receives $7,000 annually, $2,000 per
meeting attended and is reimbursed for expenses incurred for attending meetings.
No person who is an officer, manager or employee of U.S. Trust Corporation, or
its subsidiaries, who serves as an officer, manager or employee of the Company
receives any compensation from the Company.

     As of April 30, 2002, Excelsior Venture Investors III, LLC had an
investment in the Company of $92,476,971. This represents an ownership interest
of 63.483% in the Company.

Note 3 -- Purchases and Sales of Securities:

     Excluding short-term investments, the Company had $30,076,827 in purchases
and $0 in sales of securities for the six-month period ended April 30, 2002.

Note 4 -- Organization Fees

     The Company originally estimated organization fees totaling $154,976 which
were expensed in the fiscal period ended October 31, 2001. As a result of the
Company's final closing held on May 11, 2001, the Company was reimbursed for
$50,000 in organizational expenses from the Distributor. Certain organizational
expenses totaling $93,880 that were anticipated were ultimately never incurred.
As a result, the Company is reversing $93,880 of organizational expense, as
reflected in the Statement of Operations.

Note 5 -- Commitments

     As of April 30, 2002, the Company had outstanding investment commitments
totaling $9,854,571.

Note 6 -- Transactions with Affiliated Companies

     An affiliated company is a company in which the Company has ownership of at
least 5% of the voting securities.

The Company did not receive dividend or interest income from affiliated
companies during the six-month period ended April 30, 2002. Transactions with
companies, which are or were affiliates are as follows:

<TABLE>
<CAPTION>
                                                                       Sale/Merger      Realized           Value
                                                                       -----------      --------           -----
Affiliate                                                Purchases       Proceeds     Gain (Loss)         (Note 1)
---------                                              -------------    ----------    ------------        --------
<S>                                                    <C>            <C>            <C>                <C>
NanoOpto Corporation, Series A-1 Preferred ....         $  231,212             --             --         $ 2,231,212
                                                  -----------------------------------------------------------------------

Total .........................................         $  231,212             --             --         $ 2,231,212
                                                  =======================================================================
</TABLE>

                                       10

<PAGE>

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

Results of Operations

Six-Month Period Ended April 30, 2002 as Compared to the Similar Period in 2001

     The Company's net asset value per unit of membership interest was $493.45
at April 30, 2002, a decrease of $2.54 per unit from the net asset value per
unit of membership interest of $495.99 at October 31, 2001. This decrease is
principally the result of operating expenses exceeding investment income during
the period. During the period, the Company completed direct investments in
Silverback Systems, Inc. and Tensys Medical, Inc. In addition, the Company
completed a follow-on investment in NanoOpto Coporation. The Company also
contributed capital to Advanced Technology Ventures VII, L.P., CHL Medical
Partners II, L.P., Morgenthaler Venture Partners VII, L.P. and Prospect Venture
Partners II, L.P., each a private equity fund. The Company's net asset value per
common share was $501.25 at April 30, 2001, up $1.25 per unit of from the net
asset value per common share of $500.00 at October 31, 2000.

Realized and Unrealized Gains and Losses from Portfolio Investments

     For the six-month periods ended April 30, 2002 and 2001, the Company had a
net realized gain on security transactions of $764 and $0, respectively. For the
six-month periods ended April 30, 2002 and 2001, the Company had a net change in
unrealized depreciation on investments of ($72,842) and ($1,998), respectively.
The realized gains were principally the result of the Company's sale of
short-term investments. The change in unrealized depreciation was principally
the result of a decline in the value of private investment funds and short-term
investments.

Investment Income and Expenses

     For the six-month period ended April 30, 2002, the Company had interest
income of $988,746 and net operating expenses of $1,666,049, resulting in net
investment loss of $677,303. In comparison, for the six-month period ended April
30, 2001, the Company had interest income of $307,671 and net operating expenses
of $0 resulting in net investment gain of $307,671.

     U.S. Trust Company (the "Investment Adviser") and United States Trust
Company of New York and U.S. Trust Company, N.A. (each an "Investment
Sub-Adviser" and together with U.S. Trust Company, the "Investment Advisers")
provide investment management and administrative services required for the
operation of the Company. In consideration of the services rendered by the
Investment Adviser, the Company pays a management fee based upon a percentage of
the net assets of the Company invested or committed to be invested in certain
types of investments and an incentive fee based in part on a percentage of
realized capital gains of the Company. Such fee is determined and payable
quarterly. For the six-month periods ended April 30, 2002 and 2001, the
Investment Adviser earned $1,450,460 and $0 in management fees, respectively.

Net Assets

     At April 30, 2002, the Company's net assets were $145,671,397, a decrease
of $749,381 from net assets of $146,420,778 at October 31, 2001. The decrease
was the result of a net investment loss, primarily due to management fees
exceeding interest income for the six-month period ended April 30, 2002. The
Company's net assets at April 30, 2001 were $122,638,473, up $122,637,973 from
net assets of $500 at October 31, 2000. This is due to the commencement of the
Company's operations on April 5, 2001 whereby proceeds from units of membership
interest sold were received in connection with the Company's initial offering.

                                       11

<PAGE>

Liquidity and Capital Resources

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

     At April 30, 2002, the Company held $2,700,000 in cash and $143,855,885 in
investments as compared to $8,433,122 in cash and $139,676,495 in investments at
October 31, 2001. These changes from October 31, 2001 were due to purchases and
sales of short-term investments made by the Company during the period in order
to provide liquidity for the purchase of direct investments and private fund
investments. In connection with the Company's total commitments to private funds
in the amount of $11,000,000 since inception, the Company, through April 30,
2002, has contributed a total of $1,145,429.

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 equity securities in private companies and private investment funds
which are not publicly traded. These investments are recorded at fair value as
determined by the Investment Advisers in accordance with valuation guidelines
adopted by the Board of Managers. This method of valuation does not result in
increases or decreases in the fair value of these equity securities in response
to changes in market prices. Thus, these equity securities are not subject to
equity price risk. As of April 30, 2002, the Company held no investments in the
equity securities of public companies.

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.

         None.

(b)      Reports on Form 8-K.

         None.

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<PAGE>

                                   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 14, 2002                By:/s/ David I. Fann
                                      ------------------------------------------
                                          David I. Fann
                                          (Co-Principal Executive Officer)



Date: June 14, 2002                By:/s/ Douglas A. Lindgren
                                      -----------------------------------------
                                          Douglas A. Lindgren
                                          (Co-Principal Executive Officer)



Date: June 14, 2002                By:/s/ Brian F. Schmidt
                                      ------------------------------------------
                                          Brian F. Schmidt
                                          (Principal Financial and Accounting
                                          Officer)

                                       13