##### 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, 2009

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 1-866-921-7951





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

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

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

Large accelerated filer   ̈                    Accelerated filer   ̈                    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, 2009 and October 31, 2008                                                                 |  | 1       
|         |  |                                                                                                                                
|         |  | Statements of Assets and Liabilities at April 30, 2009 and October 31, 2008                                                     |  | 5       
|         |  |                                                                                                                                
|         |  | Statements of Operations for the six months ended April 30, 2009 and April 30, 2008                                             |  | 6       
|         |  |                                                                                                                                
|         |  | Statements of Operations for the three months ended April 30, 2009 and April 30, 2008                                           |  | 7       
|         |  |                                                                                                                                
|         |  | Statements of Changes in Net Assets for the six months ended April 30, 2009 and April 30, 2008                                  |  | 8       
|         |  |                                                                                                                                
|         |  | Statements of Cash Flows for the six months ended April 30, 2009 and April 30, 2008                                             |  | 9       
|         |  |                                                                                                                                
|         |  | Financial Highlights for the six months ended April 30, 2009 and fiscal years then ended October 31, 2008, 2007, 2006, and 2005 |  | 10      
|         |  |                                                                                                                                
|         |  | Notes to Financial Statements                                                                                                   |  | 11      
|         |  |                                                                                                                                
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                           |  | 20      
|         |  |                                                                                                                                
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                      |  | 22      
|         |  |                                                                                                                                
|Item 4.  |  | Controls and Procedures                                                                                                         |  | 23      
|         |  |                                                                                                                                
|PART II. |  | OTHER INFORMATION                                                                                                               |  | 24      
|         |  |                                                                                                                                
|Item 1.  |  | Legal Proceedings                                                                                                               |  | 24      
|         |  |                                                                                                                                
|Item 2.  |  | Changes in Securities and Use of Proceeds                                                                                       |  | 24      
|         |  |                                                                                                                                
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                 |  | 24      
|         |  |                                                                                                                                
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                             |  | 24      
|         |  |                                                                                                                                
|Item 5.  |  | Other Information                                                                                                               |  | 24      
|         |  |                                                                                                                                
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                                                |  | 24      



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

Excelsior
Venture Partners III, LLC

Portfolio of Investments April 30, 2009 (Unaudited)



|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|---------------------- |  | ---------------------------------------------------------------------- |  | ------------------ | ---------- | ---- | ---------- | ------------------ | - | ------------------- | - | ----- | ---------------------- |  | - | ----
|PrincipalAmount/Shares |  |                                                                        |  | AcquisitionDate ## |            | Cost |            | Fair Value(Note 1) |   | % of NetAssets **** |   |       | Per ShareFair Value ##
|                       |  | PRIVATE COMPANIES ***                                                  |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Common Stock #                                                         |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Optical @                                                              |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|10,615,593             |  | OpVista, Inc.                                                          |  | 06/06-10/08        |            | $    | 15,393,312 |                    | $ |                    |   | 0.00  | %                      |  | $ | 0.00
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  |                                                                        |  |                    |            |      | 15,393,312 |                    |   |                    |   | 0.00  | %                      |  |   |     
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Medical Technology                                                     |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|7,882                  |  | Recorders and Medicare Systems (P) Ltd. *                              |  | 12/08              |            |      | 382,623    |                    |   |                    |   | 0.00  | %                      |  | $ | 0.00
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  |                                                                        |  |                    |            |      | 382,623    |                    |   |                    |   | 0.00  | %                      |  |   |     
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | TOTAL COMMON STOCK - PRIVATE COMPANIES                                 |  |                    | 15,775,935 |      |            |                   |   | 0.00                | % |       |                        | 
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Preferred Stocks #                                                     |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Enterprise Software                                                    |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|4,542,763              |  | SOA Software, Inc., Series F Junior **                                 |  | 05/08              |            |      | 5,681,135  |                    |   |                    |   | 0.00  | %                      |  | $ | 0.00
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  |                                                                        |  |                    |            |      | 5,681,135  |                    |   |                    |   | 0.00  | %                      |  |   |     
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Life Sciences                                                          |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|1,999,999              |  | Archemix Corporation, Series A                                         |  | 08/02-11/03        |            |      | 1,999,999  |                    |   | 1,999,999           |   | 5.56  | %                      |  | $ | 1.00
|700,000                |  | Archemix Corporation, Series B                                         |  | 03/04-12/05        |            |      | 700,000    |                    |   | 700,000             |   | 1.95  | %                      |  | $ | 1.00
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  |                                                                        |  |                    |            |      | 2,699,999  |                    |   | 2,699,999           |   | 7.51  | %                      |  |   |     
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Wireless @                                                             |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|4,433,333              |  | Ethertronics, Inc. Series B                                            |  | 06/01-05/04        |            |      | 6,650,000  |                    |   | 6,650,000           |   | 18.50 | %                      |  | $ | 1.50
|1,697,957              |  | Ethertronics, Inc. Series C                                            |  | 05/05-04/07        |            |      | 2,546,936  |                    |   | 2,546,936           |   | 7.08  | %                      |  | $ | 1.50
|758,542                |  | Ethertronics, Inc. Series D                                            |  | 03/09              |            |      | 1,137,813  |                    |   | 1,137,813           |   | 3.16  | %                      |  | $ | 1.50
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  |                                                                        |  |                    |            |      | 10,334,749 |                    |   | 10,334,749          |   | 28.74 | %                      |  |   |     
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | TOTAL PREFERRED STOCKS - PRIVATE COMPANIES                             |  |                    | 18,715,883 |      |            | 13,034,748         |   | 36.25               | % |       |                        | 
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Warrants #, @                                                          |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Wireless                                                               |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|271,248                |  | Ethertronics, Inc. Series C (expiration date 03/10)                    |  | 05/05-04/07        |            |      |           |                    |   |                    |   | 0.00  | %                      |  | $ | 0.00
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | Optical                                                                |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|675,313                |  | OpVista, Inc., Series CC (expire 10/12 exercisable at $0.20 per share) |  | 10/07              |            |      | 675        |                    |   |                    |   | 0.00  | %                      |  | $ | 0.00
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | TOTAL WARRANTS                                                         |  |                    |            |      | 675        |                    |   |                    |   | 0.00  | %                      |  |   |     
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     
|                       |  | TOTAL - PRIVATE COMPANIES                                              |  |                    |            | $    | 34,492,493 |                    | $ | 13,034,748          |   | 36.25 | %                      |  |   |     
|                       |  |                                                                        |  |                    |            |      |            |                    |   |                     |   |       |                        |  |   |     



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, 2009 (Unaudited)



|               |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|-------------- |  | ------------------------------------------------------------ |  | ------------------ |  | ---------- | ---------- | ------- | - | ------------------ | --------- | ------------------- | ---------- | - | ------ | -
|PercentOwned & |  |                                                              |  | AcquisitionDate ## |  | Commitment |            | Cost    |   | Fair Value(Note 1) |           | % of NetAssets **** |           
|               |  | PRIVATE INVESTMENT FUNDS ***, #                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|0.38%          |  | Advanced Technology Ventures VII, L.P. (Note 8)              |  | 08/01-12/08        |  | $          | 2,700,000  |         | $ | 1,920,404          |           | $                   | 1,985,989  |   | 5.52   | %
|1.53%          |  | Burrill Life Sciences Capital Fund                           |  | 12/02-12/08        |  |            | 3,000,000  |         |   | 2,360,535          |           |                     | 1,450,289  |   | 4.03   | %
|1.34%          |  | CHL Medical Partners II, L.P.                                |  | 01/02-12/08        |  |            | 2,000,000  |         |   | 1,591,857          |           |                     | 1,207,971  |   | 3.36   | %
|1.03%          |  | CMEA Ventures VI, L.P. (Note 8)                              |  | 12/03-01/09        |  |            | 3,000,000  |         |   | 2,493,017          |           |                     | 2,912,012  |   | 8.10   | %
|0.37%          |  | Morgenthaler Partners VII, L.P.                              |  | 07/01-10/07        |  |            | 3,000,000  |         |   | 1,883,167          |           |                     | 1,420,538  |   | 3.95   | %
|0.59%          |  | Prospect Venture Partners II, L.P.                           |  | 06/01-04/09        |  |            | 3,000,000  |         |   | 1,070,073          |           |                     | 1,186,017  |   | 3.30   | %
|1.03%          |  | Sevin Rosen Fund IX, L.P.                                    |  | 10/04-04/09        |  |            | 3,000,000  |         |   | 1,791,609          |           |                     | 1,681,683  |   | 4.68   | %
|2.36%          |  | Tallwood II, L.P.                                            |  | 12/02-05/08        |  |            | 3,000,000  |         |   | 2,890,443          |           |                     | 1,263,771  |   | 3.51   | %
|1.70%          |  | Valhalla Partners, L.P.                                      |  | 10/03-04/09        |  |            | 3,000,000  |         |   | 1,699,705          |           |                     | 1,643,436  |   | 4.57   | %
|               |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|               |  | TOTAL PRIVATE INVESTMENT FUNDS                               |  |                    |  |            | 25,700,000 |         |   | 17,700,810         |           |                     | 14,751,706 |   | 41.02  | %
|               |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|               |  |                                                              |  |                    |  |           
|Shares         |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |           
|               |  | INVESTMENT COMPANY                                           |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|984,128        |  | Dreyfus Government Cash Management Fund Institutional Shares |  |                    |  |            |            | 984,128 |   |                    | 984,128   |                     | 2.74       | %
|               |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|               |  | TOTAL INVESTMENTS                                            |  |                    |  | $          | 25,700,000 |         | $ | 53,177,431         |           |                     | 28,770,582 |   | 80.01  | %
|               |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|               |  | OTHER ASSETS & LIABILITIES (NET)                             |  |                    |  |            |            |         |   |                    | 7,187,370 |                     | 19.99      | %
|               |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  
|               |  | NET ASSETS                                                   |  |                    |  |            |            |         |   |                    |           | $                   | 35,957,952 |   | 100.00 | %
|               |  |                                                              |  |                    |  |            |            |         |   |                    |           |                     |            |   |        |  



|* | Tensys Medical, Inc. merged with Recorders and Medicare Systems (P) Ltd. on December 19, 2008. Recorders and Medicare Systems (P) Ltd. is based in India.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



|** | LogicLibrary, Inc. merged with SOA Software, Inc. on May 1, 2008. Shares of 4,542,763 include 4,088,487 shares held by the Company and 454,276 shares held in escrow for the
benefit of the Company.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*** | Restricted as to public resale and illiquid securities or investments. Total cost of restricted and illiquid securities or investments at April 30, 2009 was $52,193,303. Total
fair value of restricted and illiquid securities or investments owned at April 30, 2009 was $27,786,454 or 77.27% of net assets.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**** | Calculated as fair value divided by the Companys Net Assets.
|---- | -------------------------------------------------------------



|@ | At January 31, 2009, the Company owned 5% or more of the Private Companys outstanding shares thereby making the Private Company an affiliate as defined by the Investment
Company Act of 1940, as amended, (the Investment Company Act). Total fair value of affiliated securities owned at April 30, 2009 (including investments in controlled affiliates) was $10,334,749 or 28.74% of net assets.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|& | Represents capital balance of the Companys investment as a percentage of Private Investment Funds total capital.
|- | ------------------------------------------------------------------------------------------------------------------



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



2



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##### Table of Contents

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, 2008



|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|---------------------- |  | --------------------------------------------------- |  | ------------------ | ---------- | ---- | ---------- | ------------------ | - | ------------------ | - | ----- | -
|PrincipalAmount/Shares |  |                                                     |  | AcquisitionDate ## |            | Cost |            | Fair Value(Note 1) |   | % of NetAssets *** |  
|                       |  | PRIVATE COMPANIES **                                |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | Common Stock #                                      |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | Optical @                                           |  |                    |            |      |            |                    |   |                    |   |       |  
|10,615,593             |  | OpVista, Inc.                                       |  | 06/06-10/08        |            | $    | 15,393,312 |                    | $ |                   |   | 0.00  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | TOTAL COMMON STOCK - PRIVATE COMPANIES              |  |                    | 15,393,312 |      |            |                   |   | 0.00               | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | Preferred Stocks #                                  |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | Enterprise Software                                 |  |                    |            |      |            |                    |   |                    |   |       |  
|4,542,763              |  | SOA Software, Inc., Series F Junior *               |  | 05/08              |            |      | 5,681,135  |                    |   |                   |   | 0.00  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  |                                                     |  |                    |            |      | 5,681,135  |                    |   |                   |   | 0.00  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | Life Sciences                                       |  |                    |            |      |            |                    |   |                    |   |       |  
|1,999,999              |  | Archemix Corporation, Series A                      |  | 08/02-11/03        |            |      | 1,999,999  |                    |   | 1,629,629          |   | 4.05  | %
|700,000                |  | Archemix Corporation, Series B                      |  | 03/04-12/05        |            |      | 700,000    |                    |   | 570,371            |   | 1.42  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  |                                                     |  |                    |            |      | 2,699,999  |                    |   | 2,200,000          |   | 5.47  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | 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  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | Wireless @                                          |  |                    |            |      |            |                    |   |                    |   |       |  
|4,433,333              |  | Ethertronics, Inc. Series B                         |  | 06/01-05/04        |            |      | 6,650,000  |                    |   | 6,650,000          |   | 16.51 | %
|1,697,957              |  | Ethertronics, Inc. Series C                         |  | 05/05-04/07        |            |      | 2,546,937  |                    |   | 2,546,937          |   | 6.32  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  |                                                     |  |                    |            |      | 9,196,937  |                    |   | 9,196,937          |   | 22.83 | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | TOTAL PREFERRED STOCKS - PRIVATE COMPANIES          |  |                    | 24,385,694 |      |            | 11,396,937         |   | 28.30              | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | 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        |                    |   |                   |   | 0.00  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | TOTAL WARRANTS                                      |  |                    |            |      | 675        |                    |   |                   |   | 0.00  | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  
|                       |  | TOTAL - PRIVATE COMPANIES                           |  |                    |            | $    | 39,779,681 |                    | $ | 11,396,937         |   | 28.30 | %
|                       |  |                                                     |  |                    |            |      |            |                    |   |                    |   |       |  



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



3



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##### Table of Contents

Excelsior Venture Partners III, LLC

Portfolio of Investments October 31, 2008



|               |  |                                                              |  |                    |         |      |            |                    |   |                    |   |        |  
|-------------- |  | ------------------------------------------------------------ |  | ------------------ | ------- | ---- | ---------- | ------------------ | - | ------------------ | - | ------ | -
|PercentOwned & |  |                                                              |  | AcquisitionDate ## |         | Cost |            | Fair Value(Note 1) |   | % of NetAssets *** |  
|               |  | PRIVATE INVESTMENT FUNDS **, #                               |  |                    |         |      |            |                    |   |                    |   |        |  
|0.37%          |  | Advanced Technology Ventures VII, L.P.                       |  | 08/01-07/08        |         | $    | 1,852,904  |                    | $ | 1,995,953          |   | 4.96   | %
|1.55%          |  | Burrill Life Sciences Capital Fund                           |  | 12/02-05/08        |         |      | 2,077,902  |                    |   | 1,648,795          |   | 4.09   | %
|1.34%          |  | CHL Medical Partners II, L.P.                                |  | 01/02-03/08        |         |      | 1,571,857  |                    |   | 1,471,494          |   | 3.65   | %
|1.02%          |  | CMEA Ventures VI, L.P.                                       |  | 12/03-06/08        |         |      | 2,193,017  |                    |   | 2,816,599          |   | 6.99   | %
|0.34%          |  | Morgenthaler Partners VII, L.P.                              |  | 07/01-10/07        |         |      | 1,883,167  |                    |   | 1,770,123          |   | 4.39   | %
|0.57%          |  | Prospect Venture Partners II, L.P.                           |  | 06/01-03/08        |         |      | 1,408,668  |                    |   | 1,575,441          |   | 3.91   | %
|0.97%          |  | Sevin Rosen Fund IX, L.P.                                    |  | 10/04-07/08        |         |      | 1,626,609  |                    |   | 1,706,890          |   | 4.24   | %
|2.36%          |  | Tallwood II, L.P.                                            |  | 12/02-05/08        |         |      | 2,890,443  |                    |   | 2,020,019          |   | 5.02   | %
|1.64%          |  | Valhalla Partners, L.P.                                      |  | 10/03-07/08        |         |      | 2,074,224  |                    |   | 2,412,053          |   | 5.99   | %
|               |  |                                                              |  |                    |         |      |            |                    |   |                    |   |        |  
|               |  | TOTAL PRIVATE INVESTMENT FUNDS                               |  |                    |         |      | 17,578,791 |                    |   | 17,417,367         |   | 43.24  | %
|               |  |                                                              |  |                    |         |      |            |                    |   |                    |   |        |  
|               |  |                                                              |  |                    |        
|Shares         |  |                                                              |  |                    |         |      |            |                    |   |                    |  
|               |  | INVESTMENT COMPANY                                           |  |                    |         |      |            |                    |   |                    |   |        |  
|984,128        |  | Dreyfus Government Cash Management Fund Institutional Shares |  |                    | 984,128 |      |            | 984,128            |   | 2.44               | %
|               |  |                                                              |  |                    |         |      |            |                    |   |                    |   |        |  
|               |  | TOTAL INVESTMENTS                                            |  |                    |         | $    | 58,342,600 |                    |   | 29,798,432         |   | 73.98  | %
|               |  |                                                              |  |                    |         |      |            |                    |   |                    |   |        |  
|               |  | OTHER ASSETS & LIABILITIES (NET)                             |  |                    |         |      |            |                    |   | 10,480,576         |   | 26.02  | %
|               |  |                                                              |  |                    |         |      |            |                    |   |                    |   |        |  
|               |  | NET ASSETS                                                   |  |                    |         |      |            |                    | $ | 40,279,008         |   | 100.00 | %
|               |  |                                                              |  |                    |         |      |            |                    |   |                    |   |        |  



|* | LogicLibrary, Inc. merged with SOA Software, Inc. on May 1, 2008. Shares of 4,542,763 include 4,088,487 shares held by the Company and 454,276 shares held in escrow for the
benefit of the Company.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|*** | Calculated as fair value divided by the Companys Net Assets.
|--- | -------------------------------------------------------------



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



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



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



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



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



4



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##### Table of Contents

Excelsior Venture Partners III, LLC

Statements of Assets and Liabilities (Unaudited)



|                                                                                                 |  |                |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------ |  | -------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                 |  | April 30, 2009 |             |   | October 31, 2008 |  
|ASSETS:                                                                                          |  |                |             |   |                  |   |             |  
|Unaffiliated Issuers at fair value (Cost $27,448,695 and $21,262,919, respectively)              |  | $              | 18,435,833  |   |                  | $ | 20,601,495  |  
|Non-Controlled Affiliated Issuers at fair value (Cost $25,728,736 and $37,079,681, respectively) |  |                | 10,334,749  |   |                  |   | 9,196,937   |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|Investments, at fair value (Cost $53,177,431 and $58,342,600, respectively) (Note 2)             |  |                | 28,770,582  |   |                  |   | 29,798,432  |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|Cash and cash equivalents (Note 2)                                                               |  |                | 7,530,089   |   |                  |   | 10,693,165  |  
|Restricted cash (Note 2)                                                                         |  |                | 2,341       |   |                  |   | 131,617     |  
|Interest and dividends receivable                                                                |  |                | 596         |   |                  |   | 9,681       |  
|Prepaid insurance                                                                                |  |                | 15,395      |   |                  |   | 470         |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|Total Assets                                                                                     |  |                | 36,319,003  |   |                  |   | 40,633,365  |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|LIABILITIES:                                                                                     |  |                |             |   |                  |   |             |  
|Management fees payable (Note 3)                                                                 |  |                | 87,893      |   |                  |   | 101,503     |  
|Audit fees payable                                                                               |  |                | 54,250      |   |                  |   | 56,750      |  
|Legal fees payable                                                                               |  |                | 46,849      |   |                  |   | 103,142     |  
|Tax preparation fees payable                                                                     |  |                | 105,206     |   |                  |   | 32,365      |  
|Board of Managers fees payable (Note 3)                                                         |  |                | 39,500      |   |                  |   | 19,500      |  
|Administration fees payable (Note 3)                                                             |  |                | 19,167      |   |                  |   | 19,167      |  
|Custody fees payable (Note 3)                                                                    |  |                | 2,909       |   |                  |   | 4,233       |  
|Other payables                                                                                   |  |                | 5,277       |   |                  |   | 17,697      |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|Total Liabilities                                                                                |  |                | 361,051     |   |                  |   | 354,357     |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|NET ASSETS                                                                                       |  | $              | 35,957,952  |   |                  | $ | 40,279,008  |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|NET ASSETS consist of :                                                                          |  |                |             |   |                  |   |             |  
|Members Contributions *                                                                         |  | $              | 146,136,782 |   |                  | $ | 146,136,782 |  
|Members Distributions                                                                           |  |                | (42,212,132 | ) |                  |   | (40,736,082 | )
|Inception-to-date realized (loss) and net investment (loss)                                      |  |                | (43,559,849 | ) |                  |   | (36,577,523 | )
|Accumulated unrealized (depreciation) on investments                                             |  |                | (24,406,849 | ) |                  |   | (28,544,169 | )
|                                                                                                 |  |                |             |   |                  |   |             |  
|Total Net Assets                                                                                 |  | $              | 35,957,952  |   |                  | $ | 40,279,008  |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|Units of Membership Interest Outstanding(Unlimited number of no par value units authorized)      |  |                | 295,210     |   |                  |   | 295,210     |  
|                                                                                                 |  |                |             |   |                  |   |             |  
|NET ASSET VALUE PER UNIT                                                                         |  | $              | 121.80      |   |                  | $ | 136.44      |  
|                                                                                                 |  |                |             |   |                  |   |             |  



|* | Members Contributions consist of contributions from Members net of offering costs charged to Members.
|- | ------------------------------------------------------------------------------------------------------



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



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##### Table of Contents

Excelsior Venture Partners III, LLC

Statements of Operations (Unaudited)



|                                                                  |  |                            |            |   |      |   |            |  
|----------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                  |  | Six Months Ended April 30, |           
|                                                                  |  | 2009                       |            |   | 2008 |  
|INVESTMENT INCOME:                                                |  |                            |            |   |      |   |            |  
|Interest income from unaffiliated investments(1)                  |  | $                          | 6,744      |   |      | $ | 183,513    |  
|Interest income from affiliated investments (Note 6)              |  |                            |           |   |      |   | 9,518      |  
|Dividend income from unaffiliated investments                     |  |                            | 3,143      |   |      |   | 17,831     |  
|                                                                  |  |                            |            |   |      |   |            |  
|Total Investment Income                                           |  |                            | 9,887      |   |      |   | 210,862    |  
|                                                                  |  |                            |            |   |      |   |            |  
|EXPENSES:                                                         |  |                            |            |   |      |   |            |  
|Management Investment Adviser fees (Note 3)                       |  |                            | 184,855    |   |      |   | 337,795    |  
|Legal fees                                                        |  |                            | 95,905     |   |      |   | 81,990     |  
|Audit fees                                                        |  |                            | 62,750     |   |      |   | 71,765     |  
|Administration fees (Note 3)                                      |  |                            | 57,500     |   |      |   | 57,500     |  
|Board of Managers fees (Note 3)                                  |  |                            | 46,000     |   |      |   | 46,000     |  
|Tax preparation fees                                              |  |                            | 72,841     |   |      |   | 19,133     |  
|Custodian fees (Note 3)                                           |  |                            | 11,884     |   |      |   | 14,633     |  
|Other expenses                                                    |  |                            | 15,380     |   |      |   | 34,819     |  
|                                                                  |  |                            |            |   |      |   |            |  
|Total Expenses                                                    |  |                            | 547,115    |   |      |   | 663,635    |  
|                                                                  |  |                            |            |   |      |   |            |  
|NET INVESTMENT (LOSS)                                             |  |                            | (537,228   | ) |      |   | (452,773   | )
|                                                                  |  |                            |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 2)  |  |                            |            |   |      |   |            |  
|Net realized (loss) on affiliated investments                     |  |                            | (6,445,098 | ) |      |   | (5,026,357 | )
|Net realized gain on unaffiliated investments                     |  |                            |           |   |      |   | 2,362,690  |  
|Net decrease/(increase) in unrealized depreciation on investments |  |                            | 4,137,320  |   |      |   | (4,992,869 | )
|                                                                  |  |                            |            |   |      |   |            |  
|NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS                 |  |                            | (2,307,778 | ) |      |   | (7,656,536 | )
|                                                                  |  |                            |            |   |      |   |            |  
|NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS            |  | $                          | (2,845,006 | ) |      | $ | (8,109,309 | )
|                                                                  |  |                            |            |   |      |   |            |  
|Weighted average units outstanding                                |  | $                          | 295,210    |   |      | $ | 295,210    |  
|                                                                  |  |                            |            |   |      |   |            |  
|Net (decrease) in net assets resulting from operations per unit   |  | $                          | (9.64      | ) |      | $ | (27.47     | )
|                                                                  |  |                            |            |   |      |   |            |  



|(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, |         
|                                                                 |  | 2009                         |          |   | 2008 |  
|INVESTMENT INCOME:                                               |  |                              |          |   |      |   |             |  
|Interest income from unaffiliated investments(1)                 |  | $                            | 1,230    |   |      | $ | 68,066      |  
|Interest income from affiliated investments (Note 6)             |  |                              |         |   |      |   | 71          |  
|Dividend income from unaffiliated investments                    |  |                              | 901      |   |      |   | 7,358       |  
|                                                                 |  |                              |          |   |      |   |             |  
|Total Investment Income                                          |  |                              | 2,131    |   |      |   | 75,495      |  
|                                                                 |  |                              |          |   |      |   |             |  
|EXPENSES:                                                        |  |                              |          |   |      |   |             |  
|Management Investment Adviser fees (Note 3)                      |  |                              | 87,893   |   |      |   | 148,922     |  
|Legal fees                                                       |  |                              | 64,600   |   |      |   | 45,990      |  
|Audit fees                                                       |  |                              | 28,000   |   |      |   | 34,125      |  
|Administration fees (Note 3)                                     |  |                              | 28,750   |   |      |   | 28,750      |  
|Board of Managers fees (Note 3)                                 |  |                              | 23,000   |   |      |   | 24,000      |  
|Tax preparation fees                                             |  |                              | 63,581   |   |      |   | 9,167       |  
|Custodian fees (Note 3)                                          |  |                              | 6,536    |   |      |   | 7,133       |  
|Other expenses                                                   |  |                              | 14,381   |   |      |   | 19,585      |  
|                                                                 |  |                              |          |   |      |   |             |  
|Total Expenses                                                   |  |                              | 316,741  |   |      |   | 317,672     |  
|                                                                 |  |                              |          |   |      |   |             |  
|NET INVESTMENT (LOSS)                                            |  |                              | (314,610 | ) |      |   | (242,177    | )
|                                                                 |  |                              |          |   |      |   |             |  
|NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: (Note 2) |  |                              |          |   |      |   |             |  
|Net realized (loss) on affiliated investments                    |  |                              |         |   |      |   | (21,269     | )
|Net realized gain on unaffiliated investments                    |  |                              |         |   |      |   | 2,568,570   |  
|Net (increase) in unrealized depreciation on investments         |  |                              | (623,143 | ) |      |   | (13,021,833 | )
|                                                                 |  |                              |          |   |      |   |             |  
|NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS                |  |                              | (623,143 | ) |      |   | (10,474,532 | )
|                                                                 |  |                              |          |   |      |   |             |  
|NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS           |  | $                            | (937,753 | ) |      | $ | (10,716,709 | )
|                                                                 |  |                              |          |   |      |   |             |  
|Weighted average units outstanding                               |  | $                            | 295,210  |   |      | $ | 295,210     |  
|                                                                 |  |                              |          |   |      |   |             |  
|Net (decrease) in net assets resulting from operations           |  | $                            | (3.18    | ) |      | $ | (36.30      | )
|                                                                 |  |                              |          |   |      |   |             |  



|(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, |           
|                                                                  |  | 2009                       |            |   | 2008 |  
|OPERATIONS:                                                       |  |                            |            |   |      |   |             |  
|Net investment (loss)                                             |  | $                          | (537,228   | ) |      | $ | (452,773    | )
|Net realized (loss) on investments                                |  |                            | (6,445,098 | ) |      |   | (2,663,667  | )
|Net decrease/(increase) in unrealized depreciation on investments |  |                            | 4,137,320  |   |      |   | (4,992,869  | )
|                                                                  |  |                            |            |   |      |   |             |  
|Net (decrease) in net assets resulting from operations            |  |                            | (2,845,006 | ) |      |   | (8,109,309  | )
|                                                                  |  |                            |            |   |      |   |             |  
|DISTRIBUTIONS TO MEMBERS:                                         |  |                            |            |   |      |   |             |  
|Distributions to Members                                          |  |                            | (1,476,050 | ) |      |   | (3,985,335  | )
|                                                                  |  |                            |            |   |      |   |             |  
|Total Distributions                                               |  |                            | (1,476,050 | ) |      |   | (3,985,335  | )
|                                                                  |  |                            |            |   |      |   |             |  
|Net (decrease) in Net Assets                                      |  |                            | (4,321,056 | ) |      |   | (12,094,644 | )
|                                                                  |  |                            |            |   |      |   |             |  
|NET ASSETS:                                                       |  |                            |            |   |      |   |             |  
|Beginning of period                                               |  |                            | 40,279,008 |   |      |   | 72,342,199  |  
|                                                                  |  |                            |            |   |      |   |             |  
|End of period                                                     |  | $                          | 35,957,952 |   |      | $ | 60,247,555  |  
|                                                                  |  |                            |            |   |      |   |             |  



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, |           
|                                                                                                                                        |  | 2009                       |            |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                   |  |                            |            |   |      |   |            |  
|Net (decrease) in net assets resulting from operations                                                                                  |  | $                          | (2,845,006 | ) |      | $ | (8,109,309 | )
|Adjustments to reconcile net (decrease) in net assets resulting from operations to net cash (used in)/provided by operating
activities: |  |                            |            |   |      |   |            |  
|Net (decrease)/increase in unrealized depreciation on investments                                                                       |  |                            | (4,137,320 | ) |      |   | 4,992,869  |  
|Purchase of investments                                                                                                                 |  |                            | (2,055,187 | ) |      |   | (1,905,199 | )
|Proceeds received from the sale of investments and distributions received from Private Investment Funds                                 |  |                            | 775,259    |   |      |   | 4,760,914  |  
|Decrease in receivables from sale of investments                                                                                        |  |                            |           |   |      |   | 2,275,482  |  
|Net realized loss on investments                                                                                                        |  |                            | 6,445,098  |   |      |   | 2,663,667  |  
|Proceeds from short-term investments maturing, net                                                                                      |  |                            |           |   |      |   | 10,383,731 |  
|Decrease/(increase) in restricted cash                                                                                                  |  |                            | 129,276    |   |      |   | (508,573   | )
|Decrease/(increase) in interest and dividends receivable                                                                                |  |                            | 9,085      |   |      |   | (16,963    | )
|(Increase) in prepaid insurance                                                                                                         |  |                            | (14,925    | ) |      |   | (12,601    | )
|Increase in tax preparation fees payable                                                                                                |  |                            | 72,841     |   |      |   |           |  
|(Decrease) in legal fees payable                                                                                                        |  |                            | (56,293    | ) |      |   | (35,054    | )
|Increase in Board of Managers fees payable                                                                                             |  |                            | 20,000     |   |      |   | 18,000     |  
|(Decrease) in management fees payable                                                                                                   |  |                            | (13,610    | ) |      |   | (33,879    | )
|(Decrease) in audit fees payable                                                                                                        |  |                            | (2,500     | ) |      |   | (14,295    | )
|(Decrease) in custody fees payable                                                                                                      |  |                            | (1,324     | ) |      |   | (12,496    | )
|(Decrease) in deferred income                                                                                                           |  |                            |           |   |      |   | (172,540   | )
|(Decrease) in administration fees payable                                                                                               |  |                            |           |   |      |   | (9,583     | )
|(Decrease) in other payables                                                                                                            |  |                            | (12,420    | ) |      |   | (2,782     | )
|                                                                                                                                        |  |                            |            |   |      |   |            |  
|Net cash (used in)/provided by operating activities                                                                                     |  |                            | (1,687,026 | ) |      |   | 14,261,389 |  
|                                                                                                                                        |  |                            |            |   |      |   |            |  
|CASH FLOWS FOR FINANCING ACTIVITIES                                                                                                     |  |                            |            |   |      |   |            |  
|Cash distributions to Members                                                                                                           |  |                            | (1,476,050 | ) |      |   | (3,985,335 | )
|                                                                                                                                        |  |                            |            |   |      |   |            |  
|Net cash (used in) financing activities                                                                                                 |  |                            | (1,476,050 | ) |      |   | (3,985,335 | )
|                                                                                                                                        |  |                            |            |   |      |   |            |  
|Net (decrease)/increase in cash                                                                                                         |  |                            | (3,163,076 | ) |      |   | 10,276,054 |  
|                                                                                                                                        |  |                            |            |   |      |   |            |  
|Cash and cash equivalents at beginning of period                                                                                        |  |                            | 10,693,165 |   |      |   | 26,240     |  
|                                                                                                                                        |  |                            |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                                                                              |  | $                          | 7,530,089  |   |      | $ | 10,302,294 |  
|                                                                                                                                        |  |                            |            |   |      |   |            |  
|SUPPLEMENTAL INFORMATION                                                                                                                |  |                            |            |   |      |   |            |  
|Non-cash distributions received from Private Investment Funds                                                                           |  | $                          |           |   |      | $ | 563,864    |  
|                                                                                                                                        |  |                            |            |   |      |   |            |  



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



9



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##### Table of Contents

Excelsior Venture Partners III, LLC

Financial Highlights (Unaudited)



|                                                                |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|--------------------------------------------------------------- |  | ------------------------ | ------ | -- | ------------------------------------ | - | ------ | ---- |  | - | ------ | -- |  | ---- | ------ | -- |  | - | ------ | --
|                                                                |  | Six MonthsEndedApril 30, |        |    | For the years then ended October 31, |  
|                                                                |  | 2009                     |        |    | 2008                                 |   |        | 2007 |  |   | 2006   |    |  | 2005 |       
|Per Unit Operating Performance: (1)                             |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|NET ASSET VALUE, BEGINNING OF PERIOD                            |  | $                        | 136.44 |    |                                      | $ | 245.05 |      |  | $ | 255.96 |    |  | $    | 316.21 |    |  | $ | 393.21 |   
|INCOME FROM INVESTMENT OPERATIONS:                              |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|Net investment (loss)                                           |  |                          | (1.82  | )  |                                      |   | (3.35  | )    |  |   | (2.08  | )  |  |      | (2.16  | )  |  |   | (4.44  | ) 
|Net realized and unrealized (loss)/gain on investments          |  |                          | (7.82  | )  |                                      |   | (33.76 | )    |  |   | 19.17  |    |  |      | (58.09 | )  |  |   | (35.72 | ) 
|                                                                |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|Net (decrease)/increase in net assets resulting from operations |  |                          | (9.64  | )  |                                      |   | (37.11 | )    |  |   | 17.09  |    |  |      | (60.25 | )  |  |   | (40.16 | ) 
|                                                                |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|Total Distributions to Members                                  |  |                          | (5.00  | )  |                                      |   | (71.50 | )    |  |   | (28.00 | )  |  |      |       |    |  |   | (36.84 | ) 
|                                                                |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|NET ASSET VALUE, END OF PERIOD                                  |  | $                        | 121.80 |    |                                      | $ | 136.44 |      |  | $ | 245.05 |    |  | $    | 255.96 |    |  | $ | 316.21 |   
|                                                                |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|TOTAL NET ASSET VALUE RETURN (2), (5)                           |  |                          | (7.06  | )% |                                      |   | (15.41 | )%   |  |   | 7.84   | %  |  |      | (19.05 | )% |  |   | (11.24 | )%
|RATIOS AND SUPPLEMENTAL DATA (3)                                |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|Net Assets, End of Period (000s)                               |  | $                        | 35,958 |    |                                      | $ | 40,279 |      |  | $ | 72,342 |    |  | $    | 75,562 |    |  | $ | 93,349 |   
|Ratios to Average Net Assets: (4)                               |  |                          |        |    |                                      |   |        |      |  |   |        |    |  |      |        |    |  |   |        |   
|Gross expenses                                                  |  |                          | 2.84   | %  |                                      |   | 2.11   | %    |  |   | 1.91   | %  |  |      | 2.18   | %  |  |   | 2.45   | % 
|Net expenses                                                    |  |                          | 2.84   | %  |                                      |   | 2.11   | %    |  |   | 1.91   | %  |  |      | 2.18   | %  |  |   | 2.45   | % 
|Net investment (loss)                                           |  |                          | (2.79  | )% |                                      |   | (1.49  | )%   |  |   | (0.88  | )% |  |      | (0.74  | )% |  |   | (1.23  | )%
|Portfolio Turnover Rate (5), (6)                                |  |                          | 2.79   | %  |                                      |   | 7.91   | %    |  |   | 12.37  | %  |  |      | 4.00   | %  |  |   | 24.00  | % 



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



|(2) | Total investment value return based on per unit net asset value reflects the effects of changes in net asset value based on the performance of the Company during the period, and
assumes dividends and distributions, if any, were reinvested. The Companys units were issued in a private placement and are not traded. Therefore, the market value of total investment return is not presented. For the period ended
October 31, 2008, the impact on the Companys total net asset value return of a voluntary reimbursement by BACA (as defined) for the matter discussed in Note 3 is 0.39%. Excluding this item, total net asset value return would have been
(15.80)% for the period ended October 31, 2008.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Income and expense ratios do not reflect the Companys proportionate share of net investment income/(loss) and expenses, including any performance-based fees, of the Private
Investment Funds. The Private Investment Funds expense ratios have been obtained from their audited financial statements for the period ended December 31, 2008, but are unaudited information in these Financial Statements. The range for these
ratios is given below:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                             |  |                
|-------------------------------------------- |  | ---------------
|Private Investment Funds Ratios             |  | Ratio Range    
|Expense excluding incentive carried interest |  | 1.99% - 4.10%  
|Incentive Carried interest                   |  | (3.80)% - 0.04%
|Expenses plus incentive carried interest     |  | 0.30% - 3.85%  

The Private Investment Funds management fees range from 2.00% to 2.50% on committed capital during
the initial investment period and typically decrease over time as the Private Investment Funds seek to exit investments. The Private Investment Funds incentive fees range from 20% to 25% of profit generated by the Private Investment Funds.



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



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



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



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



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##### Table of Contents

EXCELSIOR VENTURE PARTNERS III, LLC

NOTES TO FINANCIAL STATEMENTS

April 30, 2009

Note 1  Organization

Excelsior Venture Partners III, LLC (the Company) is a non-diversified, closed-end management investment company which has elected to be treated as a business development company or BDC under
the Investment Company Act. 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 of the Company (Members) as soon as is
practicable.

As a BDC, the Company must be primarily engaged in the business of furnishing capital and making available managerial
assistance to companies that generally do not have ready access to capital through conventional financial channels. The Companys investment objective is to achieve long-term capital appreciation primarily by investing in domestic venture
capital and other private companies and, to a lesser extent, domestic and international private funds, negotiated private investments in public companies and international direct investments that the Investment Adviser believes offer significant
long-term capital appreciation. Venture capital and private investment companies are companies in which the equity is closely held by company founders, management and/or a limited number of institutional investors. The Company generally does not
have the right to demand that such equity securities be registered.

Note 2  Significant Accounting Policies

A. Basis of Presentation and Use of Estimates:

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.

B. Cash and Cash Equivalents:

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

C. Restricted Cash:

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

D. Investment Valuation:

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

Securities for which no public market exists and other assets will be valued at fair
value as determined in good faith by the Investment Adviser (as defined below) or a committee of the Board of Managers (the Valuation Committee) 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.



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##### Table of Contents

Note 2  Significant Accounting Policies (continued)

D. Investment Valuation (continued):

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 and in conformity with U.S. generally accepted
accounting principles. Accordingly, the fair value measurement is determined based on the estimated price a seller would receive in an orderly transaction at the measurement date. For venture capital companies there 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 as a proxy for the exit price absent any public market quote and until developments provide a sufficient basis for use of
a valuation method other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued by the private market or the last round of financing as a
method of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. Other valuation methods that may use 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 values also may provide a basis for a change in valuation. The values for the investments referred to in this paragraph will be estimated regularly by the Investment Adviser (as defined below) or the Valuation Committee 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 Companys investments are reported at fair value in accordance with FAS 157, which is defined below. The Board and
the Valuation Committee have approved procedures pursuant to which the Company values its investments in Private Investment Funds, subject to the review and supervision of the Board and the Valuation Committee. In accordance with these procedures,
fair value of investments in the Private Investment Funds takes into consideration information reasonably available at the time the valuation is made and other factors that the Board and the Valuation Committee deems pertinent. Generally, the Board
and the Valuation Committee will use valuations reported to the Company by the managers of these Private Investment Funds as an input, and the Company, Board or the Valuation Committee may reasonably determine that additional factors should be
considered that were not reflected. The value of the Companys investments determined using the Companys procedures may differ from the value reported by the manager of the Private Investment Funds. Because of the inherent uncertainty of
valuations, however, estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

At April 30, 2009 and October 31, 2008, market quotations were not readily available for the Companys portfolio of
securities valued at $27,786,454 or 77.27% of net assets and $28,814,304 or 71.54% 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.

SFAS No. 157 Fair Value Measurements (FAS 157) establishes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs
(level 3 measurements). The three levels of the fair value hierarchy under FAS 157 are as follows:



| |  |  | Level 1 Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the
measurement date;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not
considered to be active;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 Inputs that are unobservable.
| | - |  | -------------------------------------

Inputs broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. The Company generally uses the capital balance reported by the Private Investment
Funds as the primary input in its valuation; however, adjustments to the reported capital balance may be made based on various factors, including, but not limited to, the attributes of the interest held, including the rights and obligations, any
restrictions or illiquidity on such interests, any potential clawbacks by the Private Investment Funds and the fair value of the Private Investment Funds investment portfolio or other assets and liabilities.



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##### Table of Contents

Note 2  Significant Accounting Policies (continued)

D. Investment Valuation (continued):

An individual Private Investment Funds level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what
constitutes observable requires significant judgment by the Company, Board and the Valuation Committee. The Company, Board and the Valuation Committee considers observable data to be that market data which is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary, provided by multiple, independent sources that are actively involved in the relevant market. The categorization of the Private Investment Fund within the hierarchy is based upon the
pricing transparency of that Private Investment Fund and does not necessarily correspond to the Companys perceived risk of that Private Investment Fund.

Substantially all of the Companys investments in the Private Investment Funds have been classified within level 3, and the Company
generally does not hold any investments that could be classified as level 1 or level 2, as observable prices are typically not available. The Private Investment Funds generally do not provide redemption options for investors and, subsequent to final
closing, do not permit subscriptions by new or existing investors. Accordingly, the Company generally holds interests in such Private Investment Funds for which there is no active market. These interests, in the absence of a recent and relevant
secondary market transaction, are generally classified as level 3. Assumptions used by the Company, Board or the Valuation Committee due to the lack of observable inputs may significantly impact the resulting fair value and, therefore, the
Companys results of operations.

The following table presents the investments carried on the Statement of Net Assets
by level within the valuation hierarchy as of April 30, 2009.



|                                        |  |                                                                            |         |                                                                          |   |                                                                                                                      |  |       |            |  |   |           
|--------------------------------------- |  | -------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------ | - | -------------------------------------------------------------------------------------------------------------------- |  | ----- | ---------- |  | - | ----------
|                                        |  | Unadjusted quotedprices in activemarkets for identicalsecurities (Level 1) |         | Quoted prices whichare not active, orinputs that areobservable (Level 2) |   | Prices, inputs ormodeling techniques thatare both significant to thefair value measurementand unobservable (Level 3) |  | Total
|Assets:                                 |  |                                                                            |         |                                                                          |   |                                                                                                                      |  |       |            |  |   |           
|Investments in Private Companies        |  | $                                                                          |        |                                                                          | $ |                                                                                                                     |  | $     | 13,034,748 |  | $ | 13,034,748
|Investments in Private Investment Funds |  |                                                                            |        |                                                                          |   |                                                                                                                     |  |       | 14,751,706 |  |   | 14,751,706
|Investment in Investment Company        |  |                                                                            | 984,128 |                                                                          |   |                                                                                                                     |  |       |           |  |   | 984,128   
|Other Investments*                      |  |                                                                            |        |                                                                          |   |                                                                                                                     |  |       |           |  |   |          
|                                        |  |                                                                            |         |                                                                          |   |                                                                                                                      |  |       |            |  |   |           
|Totals                                  |  | $                                                                          | 984,128 |                                                                          | $ |                                                                                                                     |  | $     | 27,786,454 |  | $ | 28,770,582
|                                        |  |                                                                            |         |                                                                          |   |                                                                                                                      |  |       |            |  |   |           
|Liabilities:                            |  |                                                                            |         |                                                                          |   |                                                                                                                      |  |       |            |  |   |           
|Investments in Securities               |  | $                                                                          |        |                                                                          | $ |                                                                                                                     |  | $     |           |  | $ |          
|Other Investments*                      |  |                                                                            |        |                                                                          |   |                                                                                                                     |  |       |           |  |   |          
|                                        |  |                                                                            |         |                                                                          |   |                                                                                                                      |  |       |            |  |   |           
|Totals                                  |  | $                                                                          |        |                                                                          | $ |                                                                                                                     |  | $     |           |  | $ |          
|                                        |  |                                                                            |         |                                                                          |   |                                                                                                                      |  |       |            |  |   |           



| | * | Other investments are derivative instruments, such as futures, forwards, written options and swap contracts.
| | - | ------------------------------------------------------------------------------------------------------------

The following table includes a roll-forward of the amounts for the period ended April 30, 2009 for investments classified within
level 3. The classification of an investment within level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement.



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##### Table of Contents

Note 2  Significant Accounting Policies (continued)

D. Investment Valuation (continued):



|                                                       |  |                                                                                                                      |            |  
|------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------- | ---------- | -
|                                                       |  | Prices, inputs or modelingtechniques that are
bothsignificant to the fair valuemeasurement andunobservable (Level 3) |           
|Balances as of October 31, 2008                        |  | $                                                                                                                    | 28,814,304 |  
|Net realized (loss) on investments                     |  |                                                                                                                      | (6,445,098 | )
|Net decrease in unrealized depreciation on investments |  |                                                                                                                      | 4,137,320  |  
|Net purchases/(sales proceeds)                         |  |                                                                                                                      | 1,279,928  |  
|Net transfers in and out of Level 3 **                 |  |                                                                                                                      |           |  
|                                                       |  |                                                                                                                      |            |  
|Balances as of April 30, 2009                          |  | $                                                                                                                    | 27,786,454 |  
|                                                       |  |                                                                                                                      |            |  



| | ** | Transfers in and out of Level 3 are valued at the beginning of the period value.
| | -- | --------------------------------------------------------------------------------

The unrealized gains (losses) in the table above are reflected in the accompanying Statement of Operations. Net unrealized gains (losses)
relate to investments held by the Company at April 30, 2009.

E. Security transactions and investment income:

Private and Public Companies

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

Private Investment Funds

Distributions of cash or in-kind securities from the Private Investment Funds are recorded at fair value as a return of capital to reduce the cost basis of the Private Investment Funds. In-kind securities received
from the Private Investment Funds are recorded at fair value. Distributions are recorded when they are received from the Private Investment Funds as there are no redemption rights with respect to the Private Investment Funds. Contributions to
Private Investment Funds are recorded when there is a legal and enforceable right to demand payment by the Private Investment Fund and serve to increase the cost basis.

F. Expenses:

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

G. Income taxes:

Under current law and based on certain assumptions and
representations, the Company intends to be treated as a partnership for federal, state and local income tax purposes. By reason of this treatment, the Company will itself not be subject to income tax. Rather, Members, in computing income tax, will
include their allocable share of the Companys income, gain, loss, deduction and expense. There were neither liabilities nor deferred tax assets relating to uncertain income tax positions taken or expected to be taken on the tax return as of
December 31, 2008.

The cost of the Private Investment Funds for federal tax purposes is based on amounts reported to
the Company on Schedule K-1 from the Private Investment Funds. As of April 30, 2009, the Company has not received information to determine the tax cost of the Private Investment Funds. At December 31, 2008 and December 31, 2007, the
Private Investment Funds had a cost basis for tax purposes of $14,677,567 and $13,695,895, respectively. After adjusting the tax cost for purchases and sales for the period between December 31, 2008 and April 30, 2009, the adjusted cost
for tax purposes is $15,279,656. This results in net unrealized depreciation for tax purposes on the Private Investment Funds of $527,950. The cost basis for federal tax purposes of the Companys other investments is $37,476,622, and those
investments had net depreciation on a tax basis at April 30, 2009 of $24,441,874. The cost basis for federal tax purposes of the Companys other investments at October 31, 2008, was $42,763,809, and those investments had net
depreciation on a tax basis at October 31, 2008 of $31,366,872.



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##### Table of Contents

Note 2  Significant Accounting Policies (continued)

G. Income taxes: (continued)

Effective November 1, 2007, the Company adopted the Financial Accounting Standards Board (FASB) FASB interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Companys
tax returns to determine whether the tax positions are more-likely-than-not of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax
benefit or expense in the current year. The Company has evaluated the application of FIN 48 and has determined that it does not have a material impact on the Companys financial statements. There are neither tax liabilities nor deferred tax
assets relating to uncertain income tax positions taken or expected to be taken on the tax return for the year ended December 31, 2008. 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, 2008. The statute of limitations on the Companys state and local tax returns may remain open for an additional year depending upon the jurisdiction.

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

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

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

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

Under that investment advisory agreement for the services provided, the Investment Adviser was entitled to receive a
management fee at an annual rate equal to 2.00% of the Companys end of the quarter net assets through the fifth anniversary of the first closing date of April 5, 2001, and 1.00% of net assets thereafter.

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

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

.



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##### Table of Contents

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

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

As of April 30, 2009 and October 31, 2008, $87,893 and $101,503, respectively, were payable to BACA.

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

In addition to the management fee, the Investment Adviser is entitled to allocations and distributions equal to the
Incentive Carried Interest. The Incentive Carried Interest is an amount equal to 20% of the excess, if any, of the Companys cumulative realized capital gains on Direct Investments, over the sum of (a) cumulative realized capital losses on
investments of any type (b) cumulative gross unrealized capital depreciation on investments of any type and (c) cumulative net expenses. Direct Investments means Company investments in domestic and foreign companies in which the equity is
closely held by company founders, management, and/or a limited number of institutional investors and negotiated private investments in public companies. As of April 30, 2009 and October 31, 2008, there was no Incentive Carried Interest
earned by BACA.

Pursuant to an Administration, Accounting and Investor Services Agreement, the Company retains PNC Global Investment
Servicing (PNCGIS) (formerly PFPC, Inc.), a majority-owned subsidiary of The PNC Financial Services Group, as administrator, accounting and investor services agent. In addition, PFPC Trust Company serves as the Companys custodian.
In consideration for its services, the Company (i) pays PNCGIS a variable fee between 0.105% and 0.07%, based on average quarterly net assets, payable monthly, subject to a minimum quarterly fee of approximately $30,000, (ii) pays annual
fees of approximately $37,000 for taxation services and (iii) reimburses PNCGIS for out-of-pocket expenses.

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.

Affiliates of the Investment Adviser may have banking, underwriting, lending, brokerage, or other business
relationships with Private Investment Funds or direct investments in which the Company invests and with companies in which the Private Investment Funds invest.

As of April 30, 2009, and October 31, 2008, Excelsior Venture Investors III, LLC had an investment in the Company of $22,827,289 and $25,570,437, respectively. This represents an ownership interest of 63.48%
in the Company as of both dates.

Note 4  Purchases and Sales of Securities

Excluding short-term investments, the Companys purchases and proceeds received from the sale of investments and distributions received from Private
Investment Funds for the six months ended April 30, 2009 and April 30, 2008 were as follows:



|                           |  |               |  |             
|-------------------------- |  | ------------- |  | ------------
|Six Months Ended April 30, |  | Purchases ($) |  | Proceeds ($)
|2009                       |  | 2,055,187     |  | 775,259     
|2008                       |  | 1,905,199     |  | 4,760,914   



16



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##### Table of Contents

Note 5  Commitments

As of April 30, 2009, the Company had unfunded investment commitments to Private Investment Funds totaling $2,480,799. The Company also had commitments from its investors of $147.6 million, none of which remains
uncalled.



|                                         |  |                    |          
|---------------------------------------- |  | ------------------ | ---------
|Private Investment Funds                 |  | UnfundedCommitment
|Advanced Technology Ventures VII, L.P.   |  | $                  | 121,500  
|Burrill Life Sciences Capital Fund, L.P. |  |                    | 443,963  
|CHL Medical Partners II, L.P.            |  |                    | 49,960   
|CMEA Ventures VI, L.P.                   |  |                    | 450,000  
|Morgenthaler Partners VII, L.P.          |  |                    | 150,000  
|Prospect Venture Partners II, L.P.       |  |                    | 345,000  
|Sevin Rosen Fund IX, L.P.                |  |                    | 585,000  
|Tallwood II, L.P.                        |  |                    |         
|Valhalla Partners, L.P.                  |  |                    | 335,376  
|                                         |  |                    |          
|Total                                    |  | $                  | 2,480,799
|                                         |  |                    |          

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, 2009 and for the year ended October 31, 2008. Transactions with companies, which are or were affiliates, were as follows:



|                                               |  |                                                |  |                           |           |                                 |   |                                                     |  |   |                  |   |                     |   |   |                                              |   |                                  |   |  |            |  |   |           
|---------------------------------------------- |  | ---------------------------------------------- |  | ------------------------- | --------- | ------------------------------- | - | --------------------------------------------------- |  | - | ---------------- | - | ------------------- | - | - | -------------------------------------------- | - | -------------------------------- | - |  | ---------- |  | - | ----------
|                                               |  |                                                |  |                           |           |                                 |   | For the Six Months Ended April 30, 2009 (Unaudited)
|Name of Investment                             |  | Shares/PrincipalAmount Held atOctober 31, 2008 |  | October 31,2008 FairValue |           | Purchases/ConversionAcquisition |   | SalesProceeds/Conversion                            |  |   | InterestReceived |   | RealizedGain/(Loss) |   |   | Shares/PrincipalAmount Held atApril 30, 2009 |   | April 30, 2009Fair Value(Note 1)
|Controlled Affiliates                          |  |                                                |  |                           |           |                                 |   |                                                     |  |   |                  |   |                     |   |   |                                              |   |                                  |   |  |            |  |   |           
|Cydelity Inc., Series A-2 Preferred *          |  |                                               |  | $                         |          |                                 | $ |                                                    |  | $ |                 |   |                     | $ |  |                                              | $ | (20,098                          | ) |  |           |  | $ |          
|                                               |  |                                                |  |                           |           |                                 |   |                                                     |  |   |                  |   |                     |   |   |                                              |   |                                  |   |  |            |  |   |           
|Total Controlled Affiliates                    |  |                                               |  | $                         |          |                                 | $ |                                                    |  | $ |                 |   |                     | $ |  |                                              | $ | (20,098                          | ) |  |           |  | $ |          
|Non-Controlled Affiliates                      |  |                                                |  |                           |           |                                 |   |                                                     |  |   |                  |   |                     |   |   |                                              |   |                                  |   |  |            |  |   |           
|Ethertronics, Inc., Series B Preferred         |  | 4,433,333                                      |  |                           | 6,650,000 |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  | 4,433,333  |  |   | 6,650,000 
|Ethertronics, Inc., Series C Warrants          |  | 271,247                                        |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  | 271,248    |  |   |          
|Ethertronics, Inc., Series C Preferred         |  | 1,697,957                                      |  |                           | 2,546,937 |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  | 1,697,957  |  |   | 2,546,936 
|Ethertronics, Inc., Series D Preferred         |  |                                               |  |                           |          |                                 |   | 1,137,813                                           |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  | 758,542    |  |   | 1,137,813 
|OpVista, Inc., Common Stock                    |  | 10,615,593                                     |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  | 10,615,593 |  |   |          
|OpVista, Inc., Series BB Convertible Preferred |  |                                               |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  |           |  |   |          
|OpVista, Inc., Series CC Convertible Preferred |  |                                               |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  |           |  |   |          
|OpVista, Inc., Bridge Note                     |  |                                               |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  |           |  |   |          
|OpVista, Inc., Series CC Warrants              |  | 675,313                                        |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   |                                 |   |  | 675,313    |  |   |          
|Tensys Medical, Inc., Series C Preferred       |  | 4,166,667                                      |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   | (5,000,000                       | ) |  |           |  |   |          
|Tensys Medical, Inc., Series D Preferred       |  | 1,187,500                                      |  |                           |          |                                 |   |                                                    |  |   |                 |   |                     |   |  |                                              |   | (1,425,000                       | ) |  |           |  |   |          
|Tensys Medical, Inc., Series E Preferred       |  | 318,845                                        |  |                           |          |                                 |   |                                                    |  |   | (382,623         | ) |                     |   |  |                                              |   |                                 |   |  |           |  |   |          
|                                               |  |                                                |  |                           |           |                                 |   |                                                     |  |   |                  |   |                     |   |   |                                              |   |                                  |   |  |            |  |   |           
|Total Non-Controlled Affiliates                |  |                                                |  | $                         | 9,196,937 |                                 | $ | 1,137,813                                           |  | $ | (382,623         | ) |                     | $ |  |                                              | $ | (6,425,000                       | ) |  |            |  | $ | 10,334,749
|                                               |  |                                                |  |                           |           |                                 |   |                                                     |  |   |                  |   |                     |   |   |                                              |   |                                  |   |  |            |  |   |           
|Total Non-Controlled and Controlled Affiliates |  |                                                |  | $                         | 9,196,937 |                                 | $ | 1,137,813                                           |  | $ | (382,623         | ) |                     | $ |  |                                              | $ | (6,445,098                       | ) |  |            |  | $ | 10,334,749
|                                               |  |                                                |  |                           |           |                                 |   |                                                     |  |   |                  |   |                     |   |   |                                              |   |                                  |   |  |            |  |   |           



|* | Investment was liquidated in a prior year but had an adjustment to an escrow release.
|- | -------------------------------------------------------------------------------------



17



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##### Table of Contents

Note 6  Transactions with Affiliated Companies (continued)



|                                                 |  |                                                |  |                           |            |                                 |   |            |                                     |  |                  |           |                     |   |        |                                                |   |                                    |   |  |            |  |   |          
|------------------------------------------------ |  | ---------------------------------------------- |  | ------------------------- | ---------- | ------------------------------- | - | ---------- | ----------------------------------- |  | ---------------- | --------- | ------------------- | - | ------ | ---------------------------------------------- | - | ---------------------------------- | - |  | ---------- |  | - | ---------
|                                                 |  |                                                |  |                           |            |                                 |   |            | For the Year Ended October 31, 2008
|Name of Investment                               |  | Shares/PrincipalAmount Held atOctober 31, 2007 |  | October 31,2007 FairValue |            | Purchases/ConversionAcquisition |   |            | SalesProceeds/Conversion            |  | InterestReceived |           | RealizedGain/(Loss) |   |        | Shares/PrincipalAmount Held atOctober 31, 2008 |   | October 31, 2008Fair Value(Note 1)
|Controlled Affiliates                            |  |                                                |  |                           |            |                                 |   |            |                                     |  |                  |           |                     |   |        |                                                |   |                                    |   |  |            |  |   |          
|Pilot Software Inc., Escrow                      |  |                                               |  | $                         |           |                                 | $ |           |                                     |  | $                | 2,079,801 |                     | $ | 76,123 |                                                | $ | (152,497                           | ) |  |           |  | $ |         
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                     |  |                  |           |                     |   |        |                                                |   |                                    |   |  |            |  |   |          
|Total Controlled Affiliates                      |  |                                               |  | $                         |           |                                 | $ |           |                                     |  | $                | 2,079,801 |                     | $ | 76,123 |                                                | $ | (152,497                           | ) |  |           |  | $ |         
|Non-Controlled Affiliates                        |  |                                                |  |                           |            |                                 |   |            |                                     |  |                  |           |                     |   |        |                                                |   |                                    |   |  |            |  |   |          
|Ethertronics, Inc., Series B Preferred           |  | 4,433,333                                      |  |                           | 6,650,000  |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  | 4,433,333  |  |   | 6,650,000
|Ethertronics, Inc., Series C Warrants            |  | 271,247                                        |  |                           |           |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  | 271,247    |  |   |         
|Ethertronics, Inc., Series C Preferred           |  | 1,697,957                                      |  |                           | 2,546,937  |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  | 1,697,957  |  |   | 2,546,937
|LogicLibrary, Inc., Series A Preferred           |  | 8,751,782                                      |  |                           | 4,001,492  |                                 |   | (4,087,685 | )                                   |  |                  |          |                     |   | 1,758  |                                                |   |                                   |   |  |           |  |   |         
|LogicLibrary, Inc., Series A-1 Preferred         |  | 3,080,464                                      |  |                           | 1,408,450  |                                 |   | (1,408,450 | )                                   |  |                  |          |                     |   |       |                                                |   |                                   |   |  |           |  |   |         
|MIDAS Vision Systems, Inc., Series A-1 Preferred |  | 933,593                                        |  |                           |           |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   | (1,054,960                         | ) |  |           |  |   |         
|MIDAS Vision Systems, Inc., Common Stock         |  | 157,396                                        |  |                           |           |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   | (4,000,000                         | ) |  |           |  |   |         
|NanoOpto Corp., Bridge Note                      |  | 237,321                                        |  |                           | 160,000    |                                 |   |           |                                     |  |                  | 93,384    |                     |   |       |                                                |   | (143,937                           | ) |  |           |  |   |         
|OpVista, Inc., Series AA Preferred               |  | 5,683,906                                      |  |                           | 6,236,892  |                                 |   | (6,236,892 | )                                   |  |                  |          |                     |   |       |                                                |   |                                   |   |  |           |  |   |         
|OpVista, Inc., Common Stock                      |  | 1,079,541                                      |  |                           | 1,184,567  |                                 |   | 7,411,767  |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  | 10,615,593 |  |   |         
|OpVista, Inc., Series BB Convertible Preferred   |  | 433,400                                        |  |                           | 491,800    |                                 |   | (491,800   | )                                   |  |                  |          |                     |   |       |                                                |   |                                   |   |  |           |  |   |         
|OpVista, Inc., Series CC Convertible Preferred   |  |                                               |  |                           |           |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  |           |  |   |         
|OpVista, Inc., Bridge Note                       |  | 675,989                                        |  |                           | 1,351,978  |                                 |   | (683,075   | )                                   |  |                  |          |                     |   | 7,760  |                                                |   |                                   |   |  |           |  |   |         
|OpVista, Inc., Series CC Warrants                |  | 675,313                                        |  |                           |           |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  | 675,313    |  |   |         
|Silverback Systems, Inc., Escrow                 |  |                                               |  |                           |           |                                 |   |           |                                     |  |                  | 217,763   |                     |   |       |                                                |   | (39,084                            | ) |  |           |  |   |         
|Tensys Medical, Inc., Series C Preferred         |  | 4,166,667                                      |  |                           | 534,026    |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  | 4,166,667  |  |   |         
|Tensys Medical, Inc., Series D Preferred         |  | 1,187,500                                      |  |                           | 152,197    |                                 |   |           |                                     |  |                  |          |                     |   |       |                                                |   |                                   |   |  | 1,187,500  |  |   |         
|Tensys Medical, Inc., Series E Preferred         |  | 96,629                                         |  |                           | 347,865    |                                 |   | 266,669    |                                     |  |                  |          |                     |   | 3,792  |                                                |   |                                   |   |  | 318,845    |  |   |         
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                     |  |                  |           |                     |   |        |                                                |   |                                    |   |  |            |  |   |          
|Total Non-Controlled Affiliates                  |  |                                                |  | $                         | 25,066,204 |                                 | $ | (5,229,466 | )                                   |  | $                | 311,147   |                     | $ | 13,310 |                                                | $ | (5,237,981                         | ) |  |            |  | $ | 9,196,937
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                     |  |                  |           |                     |   |        |                                                |   |                                    |   |  |            |  |   |          
|Total Non-Controlled and Controlled Affiliates   |  |                                                |  | $                         | 25,066,204 |                                 | $ | (5,229,466 | )                                   |  | $                | 2,390,948 |                     | $ | 89,433 |                                                | $ | (5,390,478                         | ) |  |            |  | $ | 9,196,937
|                                                 |  |                                                |  |                           |            |                                 |   |            |                                     |  |                  |           |                     |   |        |                                                |   |                                    |   |  |            |  |   |          



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Note 7  Guarantees

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

Many of the Private Investment Funds partnership agreements contain provisions that allow them to recycle or recall distributions made to the Company. Accordingly, the unfunded commitments disclosed under Note 5 reflect both amounts undrawn
to satisfy commitments and distributions that are recallable.

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

Advanced Technology Ventures VII, L.P. represents 5.52% of the Companys Net Assets at April 30, 2009. The investment objective
of Advanced Technology Ventures VII, L.P. is to invest in multistage information technology, communications and life sciences companies in order to achieve capital appreciation. Advanced Technology Ventures VII, L.P. does not provide liquidity to
its partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partners discretion in the form of distributions in either cash or marketable securities.
Additionally, the general partner of Advanced Technology Ventures VII, L.P. may approve transfers at its sole discretion.

CMEA Ventures
VI, L.P. represents 8.10% of the Companys Net Assets at April 30, 2009. The investment objective of CMEA Ventures VI, L.P. is to invest in and assist new and emerging growth-oriented business that are involved in the areas of life science
technology, human healthcare and high technology companies in order to achieve net rates of return on invested capital in the top quartile of venture capital funds of the same vintage year. CMEA Ventures VI, L.P. does not provide liquidity to its
partners in the form of redemptions and explicitly states that no partner can withdraw its capital or profits. Liquidity is provided at the general partners discretion in the form of distributions in either cash or marketable securities.
Additionally, the general partner of CMEA Ventures VI, L.P. may approve transfers at its sole discretion.

Note 9  New Accounting Pronouncements

FASB Staff Position FAS 157-4 (FSP FAS 157-4), Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, was issued on April 9, 2009 to be effective for interim and annual reporting periods ending after June 15, 2009 and applied
prospectively. FSP FAS 157-4 provides additional guidance in order to estimate fair value when the volume and level of activity for an asset or liability have significantly decreased. FSP FAS 157-4 also identifies conditions to consider in assessing
whether a transaction is not orderly (i.e. distressed or forced). FSP 157-4 amends FAS 157 to require entities to disclose additional information regarding the inputs and valuation techniques used to measure fair value and requires entities to
provide disclosures for major categories of securities in a more disaggregated basis than previously had been required under FAS 157. The Company is reviewing FSP FAS 157-4 along with its impact, if any, on the financial statements.



19



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations For the Six and Three months ended April 30, 2009 as Compared to the Similar
Periods in 2008
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Realized and Unrealized Gains and (Losses) from Portfolio Investments

For the six months ended April 30, 2009 and 2008, the Company had a net realized (loss) on security transactions of ($6,445,098) and ($2,663,667),
respectively. The realized loss of ($6,445,098) for the six months ended April 30, 2009 is comprised of losses from the Companys write off of Tensys Medical, Inc., a Private Company of ($6,425,000), and the realized loss of ($20,098) on
Cydelity, Inc., a Private Company investment. The Tensys Medical, Inc. write off is a result of the merger with Recorders and Medicare Systems (P) Ltd. whereby Series C and D preferred stock were not ascribed any value. 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).

For the six months ended April 30, 2009 and 2008, the Company had a net decrease/(increase) in unrealized depreciation on investments of $4,137,320
and ($4,992,869), respectively. The net decrease in unrealized depreciation for the six months ended April 30, 2009 was principally the combination of the unrealized appreciation on Tensys Medical, Inc., a Private Company of $6,425,000, and the
unrealized appreciation on Archemix Corporation, a Private Company investment in the amount of $499,999. This unrealized appreciation was partially offset by the combination of: i) the unrealized depreciation on Tallwood II, L.P. of ($756,248); ii)
an unrealized depreciation on Burrill Life Sciences Capital Fund, L.P. in the amount of ($481,138); iii) an unrealized depreciation of ($394,098) on Valhalla Partners, L.P.; iv) the unrealized depreciation on Morgenthaler Partners VII, L.P. of
($349,585); v) an unrealized depreciation on CHL Medical Partners II, L.P. in the amount of ($283,523); and vi) an unrealized depreciation on CMEA Ventures VI, L.P. in the amount of ($204,587). The remaining Private Investment Funds resulted in a
net unrealized depreciation of ($318,500). The net (increase) in unrealized depreciation for the six months ended April 30, 2008 was principally the combination of: i) the reversal of unrealized depreciation 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 appreciation was partially offset by: i) the unrealized depreciation on OpVista, Inc. of ($7,650,806); ii) an unrealized depreciation on LogicLibrary,
Inc. in the amount of ($5,496,135); and iii) an unrealized depreciation of ($1,300,748) on Tensys Medical, Inc. The remaining direct investments and Private Investment Funds resulted in a net unrealized depreciation of ($756,611).

For the three months ended April 30, 2009, the Company did not have any net realized gain or loss on security transactions. In comparison, for the
three month period ended April 30, 2008, the Company had a net realized gain on security transactions of $2,547,301. 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, 2009 and 2008, the Company had a net (increase) in
unrealized depreciation on investments of ($623,143) and ($13,021,833), respectively. The net (increase) in unrealized depreciation for the three months ended April 30, 2008 was principally the combination of: i) the unrealized depreciation on
Morgenthaler Partners VII, L.P. of ($161,576); ); ii) an unrealized depreciation on CHL Medical Partners II, L.P. in the amount of ($150,549); iii) an unrealized depreciation of ($101,080) on Burrill Life Sciences Capital Fund, L.P.; and iv) the
unrealized depreciation on Valhalla Partners, L.P. of ($65,807). The remaining unrealized depreciation was an overall decrease in the valuation of the Companys Private Investment Funds in the amount of ($144,131). The net (increase) 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).

Investment Income and Expenses

For the six months
ended April 30, 2009, the Company had investment income of $9,887, primarily from investments in short-term securities, and net operating expenses of $547,115, resulting in a net investment loss of ($537,228). In comparison, for the similar
period 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). The decrease in
investment income for the six months ended April 30, 2009 is due to decreases in interest income due to declines in short-term interest rates. For the six months ended April 30, 2009, expenses decreased due to lower management fees charged
to the Company as a result of lower net assets.



20



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations For the Six and Three months ended April 30, 2009 as Compared to the Similar
Periods in 2008 (continued)
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Investment Income and Expenses (continued)

For the three months ended April 30, 2009, the Company had investment income of $2,131 and net operating expenses of $316,741 resulting in a net
investment loss of ($314,610). In comparison, for the similar period 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). The decrease in net
investment income for the three months ended April 30, 2009 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, 2009 and 2008, the Investment Adviser earned
$184,855 and $337,795 in management fees, respectively. For the three months ended April 30, 2009 and 2008, the Investment Adviser earned $87,893 and $148,922 in management fees, respectively. Management fees recorded during the periods ended
April 30, 2009 and April 30, 2008 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
$35,957,952, or a net asset value per unit of $121.80, at April 30, 2009. This represents a decrease of ($4,321,056) or ($14.64) per unit, from net assets of $40,279,008, or $136.44 per unit, at October 31, 2008. The net decrease resulted
principally from a net decrease in net assets from operations of ($2,845,006), or ($9.64) per unit, and distributions to Members of ($1,476,050), or ($5.00) 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, 2009, the Company held $7,530,089 in cash and cash equivalents and $984,128 in short-term investments, as compared to $10,693,165 in
cash and cash equivalents and $984,128 in short-term investments, respectively, at October 31, 2008. The overall decrease in cash was primarily due to cash used for follow-on investments and a distribution to Members. At April 30, 2009,
the Company did not invest in any short-term notes. The Company during this period funded capital commitments to its Private Investment Funds in the amount of $917,374 for the six months ended April 30, 2009. In connection with the
Companys total commitments to Private Investment Funds in the amount of $25,700,000 since inception, the Company, through April 30, 2009, has contributed $23,219,201 or 90.35% of the total capital committed to nine Private Investment
Funds. During the six months ended April 30, 2009, the Company also participated in follow-on financing rounds for several of its private companies totaling $1,137,813.

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

Application of Critical Accounting Policies

Under the supervision of the Valuation and Audit Committees of the Companys Board of Managers, consisting of the Managers, who are not interested persons, as defined in Section 2(a)(19) of the
Investment Company Act (the Independent Managers), of the Company, the Investment Adviser makes certain critical accounting estimates with respect to the valuation of private portfolio investments. These estimates could have a material
impact on the presentation of the Companys financial condition because in total, they currently represent 77.27% of the Companys net assets. For the private investments held at April 30, 2009, changes to these estimates and
realizations resulted in a $1.03 million decrease in net asset value from October 31, 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, 2009 as Compared to the Similar
Periods in 2008 (continued)
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Application of Critical Accounting Policies (continued)

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 and in conformity with U.S. generally accepted accounting principles. Accordingly, the fair value measurement is determined based on the estimated price a seller would receive in an orderly transaction at the measurement date.
For venture capital companies there 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 as a proxy for the exit price absent any public market
quote and until developments provide a sufficient basis for use of a valuation method other than cost. Upon the occurrence of developments providing a sufficient basis for a change in valuation, direct investments will be valued by the private
market or the last round of financing as a method of valuation. The private market method shall only be used with respect to reliable third party transactions by sophisticated, independent investors. Other valuation methods that
may use 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 values also may provide a basis for a change in valuation. The values for the investments referred to in this paragraph will be estimated regularly by the Investment Adviser (as defined
below) 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 Companys investments are reported at fair value in accordance with FAS 157, which is defined
below. The Board and Valuation Committee have approved procedures pursuant to which the Company values its investments in Private Investment Funds, subject to the review and supervision of the Board and the Valuation Committee. In accordance with
these procedures, fair value of investments in the Private Investment Funds takes into consideration information reasonably available at the time the valuation is made and other factors that the Board and the Valuation Committee deems pertinent.
Generally, the Board and the Valuation Committee will use valuations reported to the Company by the managers of these Private Investment Funds as an input, and the Company, Board or Vthe aluation Committee may reasonably determine that additional
factors should be considered that were not reflected. The value of the Companys investments determined using the Companys procedures may differ from the value reported by the manager of the Private Investment Funds. Because of the
inherent uncertainty of valuations, however, estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.



|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, 2009, 77.27% 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. The Companys investments are subject to various risk factors including market, credit, industry and currency risk. Equity Price Risk represents the potential loss in value of financial instruments
caused by movements in market variables, such as interest and foreign exchange rates and equity prices. The Company may have a concentration of investments, as permitted by the private placement offering memorandum, in a particular industry or
sector. Investment performance of the sector may have a significant impact on the performance of the Company. The Companys investments are also subject to the risk associated with investing in private equity securities. The investments in
private equity securities are illiquid, can be subject to various restrictions on resale, and there can be no assurance that the Company will be able to realize the value of such investments in a timely manner.



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

(a) Evaluation of
Disclosure Controls and Procedures. As of April 30, 2009 (the end of the period covered by this report), the Companys principal executive officers and principal financial officer evaluated the effectiveness of the Companys
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Companys disclosure controls and procedures were adequate and effective to ensure that
material information relating to the Company was made known to them by others within those entities.

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



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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 15, 2009 |  |                                     |  | By: |  | /s/    James D. Bowden               
|                    |  |                                     |  |     |  | James D. Bowden                      
|                    |  |                                     |  |     |  | President and Chief Executive Officer
|                    |  |                                     | 
|Date: June 15, 2009 |  |                                     |  | By: |  | /s/    Steven L. Suss                
|                    |  |                                     |  |     |  | Steven L. Suss                       
|                    |  |                                     |  |     |  | Treasurer and Chief Financial Officer