UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year Ended December 31, 2004
                          Commission File No. 000-32633
                                              ---------

                       Belmar Capital Fund LLC (the Fund)
             (Exact name of registrant as specified in its charter)
          Securities registered pursuant to Section 12(g) of the Act:

               Delaware                                04-3508106
               --------                                ----------
        (State of organization)          ( I.R.S. Employer Identification No.)

            The Eaton Vance Building
                255 State Street
             Boston, Massachusetts                       02109
             ---------------------                       -----
    (Address of principal executive offices)           (Zip Code)

    Registrant's telephone number:                    617-482-8260
                                                      ------------

            Limited Liability Company Interests in the Fund (Shares)
            --------------------------------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                   YES  [X]     NO  [ ]


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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).

                                   YES  [X]     NO [ ]


Aggregate market value of the Shares held by non-affiliates of registrant, based
on the closing net asset value on June 30, 2004 was $1,903,992,715.  Calculation
of holdings by non-affiliates  is based upon the assumption,  for these purposes
only, that the registrant's  manager,  its executive  officers and directors and
persons holding 5% or more of the registrant's Shares are affiliates.

                           Incorporation by Reference:
                          ---------------------------
None.

                The Exhibit Index is located on page _________.
<PAGE>

                             Belmar Capital Fund LLC
                               Index to Form 10-K

Item                                                                       Page
                                     PART I
                                     ------

  1     Business...........................................................  1
           Fund Overview...................................................  1
              Structure of the Fund........................................  1
              Fund Management..............................................  1
              The Fund's Offering..........................................  2

           The Fund's Investment in Belvedere Capital Fund Company
            LLC and Tax-Managed Growth Portfolio...........................  2
              Belvedere Company............................................  2
              The Portfolio................................................  3
              The Portfolio's Investment Objective and Policies............  3
              The Portfolio's Tax-Sensitive Management Strategies..........  3

           The Fund's Real Estate Investments..............................  4
              Real Estate Joint Venture Investments........................  4
              Partnership Preference Units.................................  5
              Net Leased Property..........................................  6
              Organization of the Fund's Controlled Subsidiaries...........  6

           Fund Borrowings.................................................  6
              Interest Rate Swap Agreements................................  7

           The Eaton Vance Organization....................................  7
              Conflicts of Interest........................................  7

  2     Properties.........................................................  7

  3     Legal Proceedings..................................................  8

  4     Submission of Matters to a Vote of Security Holders................  8

                                     PART II
                                     -------

  5     Determining Net Asset Value, Market for Fund Shares, Related
         Shareholder Matters and Issuer Purchases of Equity Securities.....  9
            Market Information, Restrictions on Transfers and
             Redemption of Shares..........................................  9
               Transfers of Fund Shares....................................  9
               Redemption of Fund Shares...................................  9
               Determining Net Asset Value................................. 10
               Historic Net Asset Values................................... 11
            Record Holders of Shares of the Fund........................... 11
            Distributions.................................................. 11
               Income and Capital Gain Distributions....................... 11
               Special Distributions....................................... 12

  6     Selected Financial Data............................................ 12
           Table of Selected Financial Data................................ 12
<PAGE>

  7     Management's Discussion and Analysis of Financial Condition
         (MD&A) and Results of Operations.................................. 13
           Results of Operations........................................... 13

        MD&A and Results of Operations for the Year Ended December 31,
         2004 Compared to the Year Ended December 31, 2003................. 14
           Performance of the Fund......................................... 14
           Performance of the Portfolio.................................... 14
           Performance of Real Estate Investments.......................... 15
           Performance of Interest Rate Swap Agreements.................... 17

        MD&A and Results of Operations for the Year Ended December 31,
         2003 Compared to the Year Ended December 31, 2002................. 17
           Performance of the Fund......................................... 17
           Performance of the Portfolio.................................... 17
           Performance of Real Estate Investments.......................... 18
           Performance of Interest Rate Swap Agreements.................... 19
        Liquidity and Capital Resources.................................... 19
           Outstanding Borrowings.......................................... 19
           Liquidity....................................................... 19
        Off-Balance Sheet Arrangements..................................... 19
        The Fund's Contractual Obligations................................. 20
        Critical Accounting Estimates...................................... 20

  7A    Quantitative and Qualitative Disclosures About Market Risk
           Quantitative Information About Market Risk...................... 23
            Interest Rate Risk............................................. 23
          Qualitative Information About Market Risk........................ 23
            Risks Associated with Equity Investing......................... 25
            Risks of Investing in Foreign Securities....................... 25
            Risks of Certain Investment Techniques......................... 25
            Risks of Real Estate Investments............................... 26
            Risks of Interest Rate Swap Agreements......................... 28
            Risks of Leverage.............................................. 28

  8     Financial Statements and Supplementary Data........................ 28

  9     Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosures.............................. 29

  9A    Controls and Procedures............................................ 29

  9B    Other Information.................................................. 29

                                    PART III
                                    --------

 10     Directors and Executive Officers................................... 30
           Management...................................................... 30
           Compliance with Section 16(a) of the Securities Exchange
            Act of 1934.................................................... 31
           Code of Ethics.................................................. 31

 11     Executive Compensation............................................. 31

 12     Security Ownership of Certain Beneficial Owners and Management..... 31

<PAGE>

           Security Ownership of Certain Beneficial Owners................. 31
           Security Ownership of Management................................ 31
           Changes in Control.............................................. 31

 13     Certain Relationships and Related Transactions..................... 31
           The Fund's Investment Advisory and Administrative Fee........... 32
           Belmar Realty's Management Fee.................................. 32
           The Portfolio's Investment Advisory Fee......................... 32
           Servicing Fees Paid by the Fund................................. 33
           Servicing Fees Paid by Belvedere Company........................ 33
           Distribution Fees Paid to EV Distributors....................... 33
           Certain Real Estate Investment Transactions..................... 33

 14     Principal Accountant Fees and Services............................. 34

                                     PART IV
                                     -------

 15     Exhibits, Financial Statements and Reports on Form 8-K............. 34

APPENDIX A  ............................................................... 35

FINANCIAL STATEMENTS....................................................... 36

SIGNATURES  ............................................................... 80

EXHIBIT INDEX.............................................................. 81

<PAGE>

                                     PART I
                                     ------

ITEM 1. BUSINESS.
-----------------

FUND  OVERVIEW.  Belmar  Capital  Fund LLC (the  Fund) is a  private  investment
company   organized  by  Eaton  Vance   Management   (Eaton  Vance)  to  provide
diversification  and  tax-sensitive  investment  management to investors holding
large  and  concentrated  positions  in equity  securities  of  selected  public
companies.  The Fund's investment  objective is to achieve long-term,  after-tax
returns for persons who have  invested in the Fund  (Shareholders).  The Fund, a
Delaware limited liability company, commenced its investment operations on March
17, 2000.  Limited  liability company interests of the Fund (Shares) were issued
to  Shareholders  at five closings  during 2000. At each Fund closing,  the Fund
accepted  contributions  of stock from  investors  in exchange for Shares of the
Fund. The Fund discontinued  offering Shares on November 29, 2000 and, while the
Fund is not prohibited from doing so, no future  offering is anticipated.  As of
December 31, 2004, the Fund had net assets of approximately $1.9 billion.

STRUCTURE   OF  THE  FUND.   The  Fund  is   structured   to  provide   tax-free
diversification and tax-sensitive investment management to Shareholders. To meet
the  objective  of  tax-free  diversification,  the Fund must  satisfy  specific
requirements  of the Internal  Revenue Code of 1986,  as amended (the Code).  In
order for the  contributions of appreciated stock to the Fund by Shareholders to
be nontaxable,  not more than 80% of the Fund's assets (calculated in the manner
prescribed)  may consist of "stocks and  securities"  as defined in the Code. To
meet  this  requirement,  the Fund  invests  at least  20% of its  assets  as so
determined  in certain  real  estate  investments  (see "The  Fund's Real Estate
Investments"  below).  The Fund invests up to 80% of its assets in a diversified
portfolio of common stocks (see "The Fund's Investment in Belvedere Capital Fund
Company LLC and Tax-Managed Growth Portfolio" below). The Fund acquired its real
estate   investments  with  borrowed  funds,  as  described  below  under  "Fund
Borrowings".  See Appendix A for a chart  detailing the investment  structure of
the Fund.

In its investment program,  the Fund balances investment  considerations and tax
considerations,  and takes into  account the taxes  payable by  Shareholders  on
allocated  investment  income  and  realized  capital  gains.  See  "The  Fund's
Investment  in  Belvedere  Capital  Fund  Company  LLC  and  Tax-Managed  Growth
Portfolio" below.

There is no trading  market for the Fund's  Shares.  As described  further under
"Redemption  of Fund  Shares" in Item 5(a),  Fund  Shares may be redeemed on any
business day. The Fund satisfies redemption requests principally by distributing
securities,  but may also  distribute  cash.  The value of  securities  and cash
distributed to satisfy a redemption will equal the net asset value of the number
of Shares redeemed. Under most circumstances, a redemption from the Fund that is
met by  distributing  securities  as  described  herein  will not  result in the
recognition  of capital gains by the Fund or by the redeeming  Shareholder.  The
redeeming  Shareholder would generally  recognize capital gains upon the sale of
the securities received upon the redemption.

The Fund intends to distribute each year the amount of its net investment income
for such  year,  if any.  The Fund also  intends  to make  annual  capital  gain
distributions  equal to  approximately  18% of the  amount  of its net  realized
capital gains,  if any,  other than certain  precontribution  gains.  The Fund's
distributions generally are based on determinations of net investment income and
net realized  capital gains for federal  income tax  purposes.  Such amounts may
differ from net  investment  income (or loss) and net realized gain (or loss) as
set forth in the Fund's consolidated  financial statements due to differences in
the treatment of various income, gain, loss, expense and other items for federal
income tax purposes and under  generally  accepted  accounting  principles.  The
Fund's income distributions are not expected to be significant. The Fund intends
to pay any  distributions  on the last  business  day of each fiscal year of the
Fund (which concludes on December 31) or shortly thereafter. See "Distributions"
in Item 5(c).

FUND  MANAGEMENT.  The  manager  of the Fund is  Eaton  Vance,  a  Massachusetts
business trust registered as an investment adviser under the Investment Advisers
Act of 1940,  as amended (the  Advisers  Act).  Eaton Vance and its  subsidiary,
Boston  Management  and Research  (Boston  Management),  provide  management and
advisory  services to the Fund,  its real estate  subsidiary  and the investment
portfolio in which the Fund invests.  Boston Management is also registered as an
investment  adviser  under the Advisers Act.  Eaton Vance and Boston  Management
provide  advisory,   administration  and/or  management  services  to  over  150
investment companies,  as well as individual and institutional  investors. As of
October 31, 2004,  Eaton Vance and its affiliates  managed more than $90 billion
on behalf of clients. The fees payable to the Eaton Vance organization,  as well
as other fees  payable by the Fund,  are  described  in Item 13. The Eaton Vance
organization is subject to certain  conflicts of interest in providing  services
to the Fund, its  subsidiaries  and the  investment  portfolio in which the Fund
invests. See "The Eaton Vance Organization - Conflicts of Interest" below.

                                        1
<PAGE>

THE FUND'S OFFERING.  Shares of the Fund were privately offered and sold only to
"accredited  investors"  as defined in Rule 501(a) under the  Securities  Act of
1933, as amended (the  Securities  Act),  who were  "qualified  purchasers"  (as
defined in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended
(the 1940 Act)).  The offering was conducted by Eaton Vance  Distributors,  Inc.
(EV Distributors),  a wholly-owned subsidiary of Eaton Vance, as placement agent
and by certain subagents  appointed by EV Distributors.  The Shares were offered
and sold in reliance upon an exemption  from  registration  provided by Rule 506
under the  Securities  Act. The Fund issued Shares to  Shareholders  at closings
taking place on March 17, 2000, May 16, 2000, July 19, 2000,  September 27, 2000
and November 29, 2000. At the five closings,  an aggregate of 25,888,893  Shares
were issued in exchange for  Shareholder  contributions  totaling  approximately
$2.6 billion.

The Fund is  registered  under the  Securities  Exchange Act of 1934, as amended
(the 1934 Act),  and files  periodic  reports  (such as reports on Form 10-Q and
Form 10-K) thereunder. Copies of the reports filed by the Fund are available: at
the public  reference room of the Securities  and Exchange  Commission  (SEC) in
Washington,  DC (call  1-202-942-8090  for  information  on the operation of the
public  reference  room);  on the  EDGAR  Database  on the SEC's  Internet  site
(http:// www.sec.gov); or, upon payment of copying fees, by writing to the SEC's
public reference section,  Washington,  DC 20549-0102,  or by electronic mail at
publicinfo@sec.gov.  The Fund  does  not have a  website.  The Fund  intends  to
provide  Shareholders with an annual and semiannual report containing the Fund's
consolidated financial statements,  audited by the Fund's independent registered
public accounting firm in the case of the annual report.

THE FUND'S  INVESTMENT  IN BELVEDERE  CAPITAL  FUND COMPANY LLC AND  TAX-MANAGED
GROWTH  PORTFOLIO.  At each Fund  closing,  all of the  securities  accepted for
contribution to the Fund were contributed by the Fund to Belvedere  Capital Fund
Company LLC (Belvedere Company),  a Massachusetts  limited liability company, in
exchange  for  shares  of  Belvedere  Company.   Belvedere  Company,   in  turn,
immediately  thereafter  contributed  the  securities  received from the Fund to
Tax-Managed  Growth Portfolio (the Portfolio) in exchange for an interest in the
Portfolio.  The  Portfolio  is a  diversified,  open-end  management  investment
company  registered  under the 1940 Act with net assets of  approximately  $19.1
billion as of December 31, 2004. As of December 31, 2004, the Fund's  investment
in the Portfolio  through  Belvedere  Company had a value of approximately  $2.0
billion  (equal  to  approximately  75.4%  of  the  Fund's  total  assets  on  a
consolidated basis).

BELVEDERE  COMPANY.  Belvedere  Company was  organized in 1997 by Eaton Vance to
offer  tax-free  diversification  and  tax-sensitive  investment  management  to
certain  qualified  investors who contributed  diversified  portfolios of equity
securities.  As of December 31, 2004, the investment assets of Belvedere Company
consisted  exclusively  of  an  interest  in  the  Portfolio  with  a  value  of
approximately $12.8 billion. As of such date, the Fund owned approximately 15.7%
of Belvedere  Company's  outstanding  shares. As of December 31, 2004, the other
investors in Belvedere  Company  included seven other investment funds sponsored
by the  Eaton  Vance  organization  (investment  fund  investors),  as  well  as
qualified  individual  investors  who acquired  shares of  Belvedere  Company in
exchange  for   portfolios  of  acceptable   securities   (non-investment   fund
investors).

Belvedere Company considers for acceptance equity securities that (i) are listed
on the New York Stock Exchange, the American Stock Exchange, the NASDAQ National
Market or a major foreign exchange, (ii) have a trading price of at least $10.00
per share and (iii) are issued by issuers having an equity market capitalization
of at least $500 million.  Because Belvedere Company only accepts  contributions
of diversified  baskets of securities (as described below), it is not subject to
the  requirement  that not more than 80% of its assets  consist  of "stocks  and
securities" as defined in the Code. For investors that own a diversified  basket
of securities,  investing in Belvedere  Company (rather than in the Fund) avoids
the costs and risks of  investing  in real estate and the  associated  financial
leverage to which the Fund is subject.  See "Risks of  Investing in Real Estate"
and "Risks of Leverage" in Item 7A(b).

Belvedere   Company  provides  a  vehicle  through  which  investment  fund  and
non-investment fund investors  contributing a "diversified basket of securities"
can acquire an indirect  interest in the  Portfolio.  A  "diversified  basket of
securities"  means a group of securities that is diversified  such that not more
than 25% of the value of the securities are investments in the securities of any
one issuer and not more than 50% of the value of the securities are  investments
in the  securities  of five or fewer  issuers.  The  securities  contributed  to
Belvedere  Company at each Fund  closing  constituted  a  diversified  basket of
securities. Because the Fund is required to hold a percentage of its investments
in  non-Portfolio  assets  in  order  to  meet  certain  tax  requirements  (see
"Structure of the Fund" above and "The Fund's Real Estate  Investments"  below),
it does not satisfy the conditions of the 1940 Act for investing directly in the
Portfolio.

                                        2
<PAGE>

THE  PORTFOLIO.  The  Portfolio  was  organized  in 1995 by  Eaton  Vance as the
successor to the investment  operations of Eaton Vance  Tax-Managed  Growth Fund
1.0  (Tax-Managed  Growth 1.0), a mutual fund established in 1966 by Eaton Vance
and managed from inception for long-term,  after-tax returns. As of December 31,
2004, investors in the Portfolio included six investors in addition to Belvedere
Company and Tax-Managed  Growth 1.0, each of which acquired or is acquiring on a
continuous  basis  interests in the  Portfolio  with cash.  All investors in the
Portfolio are sponsored by or  affiliated  with Eaton Vance.  As of December 31,
2004, Belvedere Company owned approximately 66.9% of the Portfolio.

The Fund  invests in the  Portfolio  (on an  indirect  basis  through  Belvedere
Company)  because  it is a  well-established  investment  portfolio  that has an
investment  objective  and policies  that are  compatible  to those of the Fund.
Investing in the Portfolio  enables the Fund to participate  in a  substantially
larger  and more  diversified  investment  portfolio  than it could  achieve  by
managing the contributed  securities directly.  The audited financial statements
of the Portfolio  for the year ended  December 31, 2004 are included as pages 36
to 79 of this Annual  Report on Form 10-K.  The  Portfolio's  audited  financial
statements  include   information  about  the  assets  and  liabilities  of  the
Portfolio,  including  Portfolio  expenses.  For a discussion of the Portfolio's
performance  for the year ended  December  31,  2004,  see  "Performance  of the
Portfolio" in Item 7. For a description of the  investment  advisory fee payable
by the Portfolio, see "The Portfolio's Investment Advisory Fee" in Item 13.

THE PORTFOLIO'S  INVESTMENT OBJECTIVE AND POLICIES.  The investment objective of
the Portfolio is to achieve  long-term,  after-tax  returns for its investors by
investing in a diversified portfolio of equity securities. The Portfolio invests
primarily in common  stocks of domestic and foreign  growth  companies  that are
considered  by its  investment  adviser to be high in quality and  attractive in
their long-term investment prospects. The Portfolio seeks to invest in a broadly
diversified portfolio of stocks and to invest primarily in established companies
with characteristics of above-average growth,  predictability and stability that
are acquired  with the  expectation  of being held for a period of years.  Under
normal market conditions,  the Portfolio invests primarily in common stocks. The
Portfolio has acquired  securities through  contributions from Belvedere Company
and  Tax-Managed  Growth 1.0,  and through  purchases  of  securities  with cash
invested in the Portfolio by other investors.

Although the Portfolio may, in addition to investing in common stocks, invest in
investment-grade  preferred  stocks  and  debt  securities,  purchases  of  such
securities are normally limited to securities convertible into common stocks and
temporary  investments in short-term  notes and government  obligations.  During
periods in which the investment  adviser to the Portfolio  believes that returns
on common stock  investments  may be  unfavorable,  the  Portfolio  may invest a
portion of its assets in U.S. government obligations and high quality short-term
notes. The Portfolio's holdings represent a number of different industries.  Not
more than 25% of the  Portfolio's  assets may be invested in the  securities  of
issuers  having  their  principal   business  activity  in  the  same  industry,
determined as of the time of acquisition of any such securities.

THE PORTFOLIO'S  TAX-SENSITIVE  MANAGEMENT  STRATEGIES.  In its operations,  the
Portfolio seeks to achieve  long-term,  after-tax  returns in part by minimizing
the  taxes  incurred  by  investors  in the  Portfolio  in  connection  with the
Portfolio's  investment  income and realized capital gains.  Taxes on investment
income are minimized by investing  primarily in  lower-yielding  securities  and
stocks that pay  dividends  that qualify for  favorable  federal tax  treatment.
Taxes on realized capital gains are minimized by avoiding or minimizing the sale
of  securities  holdings with large  accumulated  capital  gains.  The Portfolio
generally seeks to avoid net realized short-term capital gains.

When the  Portfolio  decides  to sell a  particular  appreciated  security,  the
Portfolio  will select for sale the share lots  resulting in the most  favorable
tax treatment,  generally those with holding  periods  sufficient to qualify for
long-term capital gain treatment that have the highest cost basis. The Portfolio
may, when deemed prudent by its investment  adviser,  sell securities to realize
capital losses that can be used to offset  realized  gains.  While the Portfolio
generally  retains the  securities  contributed  to the  Portfolio  by Belvedere
Company,  the  Portfolio has the  flexibility  to sell  contributed  securities.
Securities  acquired by the Portfolio  with cash may be sold in accordance  with
the  tax-management  strategies  described above. In lieu of selling a security,
the Portfolio  may hedge its exposure to that  security by using the  techniques
described below. The Portfolio also disposes of contributed  securities  through
its  practice  of  settling  redemptions  by  investors  in the  Portfolio  that
contributed securities primarily by distributing securities as described in Item
5(a) under  "Redemption  of Fund  Shares." As described  in Item 5(a),  settling
redemptions with securities can result in certain tax benefits to the Portfolio,
Belvedere Company, the Fund and the redeeming Shareholder.

To reduce its exposure to adverse price  movements in  individual  securities or
groups of securities  holdings with large  accumulated  gains, the Portfolio may
use various investment techniques,  including,  but not limited to, the purchase
of put options on securities held,  equity collars  (combining the purchase of a
put  option  and the  sale of a call  option),  equity  swaps,  short  sales  of
individual  securities  held,  short sales of index or basket  securities  whose

                                        3
<PAGE>

constituents are held in whole or in part, forward sales of stocks held, and the
purchase and sale of futures  contracts on stocks and stock  indexes and options
thereon.  By using these  techniques  rather than selling such  securities,  the
Portfolio can, within certain  limits,  reduce its exposure to price declines in
the securities  without  realizing  substantial  capital gains under current tax
law.

The Portfolio's  ability to utilize  covered short sales,  certain equity swaps,
forward  sales,  futures  contracts and certain  equity  collar  strategies as a
tax-efficient  management  technique  with  respect to holdings  of  appreciated
securities  is limited to  circumstances  in which the  hedging  transaction  is
closed out within 30 days after the end of the Portfolio's taxable year in which
the hedging transaction was initiated and the underlying  appreciated securities
position  is held  unhedged  for at least the next 60 days  after  such  hedging
transaction is closed.  In addition,  dividends  received on stock for which the
Portfolio is obligated  to make  related  payments  (pursuant to a short sale or
otherwise)  with  respect  to  positions  in  substantially  similar  or related
property are subject to federal  income tax at ordinary rates and do not qualify
for favorable  tax  treatment.  Also,  the holding  periods  required to receive
tax-advantaged  treatment  of  qualified  dividends  on a  stock  are  suspended
whenever the Portfolio has an option (other than a qualified covered call option
not in the money when  written)  or  contractual  obligation  to sell or an open
short sale of substantially  identical stock, is the grantor of an option (other
than a  qualified  covered  call  option not in the money when  written)  to buy
substantially  identical  stock or has diminished  risk of loss in such stock by
holding positions with respect to substantially similar or related property. The
use of these  investment  techniques may require the Portfolio to commit or make
available  cash  and,  therefore,  may not be  available  at such  times  as the
Portfolio has limited holdings of cash. At December 31, 2004, the Portfolio held
a short position on a security with a value equal to  approximately  1.0% of the
Portfolio's net assets.  The Portfolio paid commissions  totaling  approximately
$90,000 in  connection  with  entering  into this short  position  in 2004.  The
Portfolio  did not otherwise  employ any of the  techniques  described  above on
securities  holdings  during the year ended  December  31,  2004.  See "Risks of
Certain Investment Techniques" in Item 7A(b).

THE  FUND'S  REAL  ESTATE  INVESTMENTS.  Separate  from  its  investment  in the
Portfolio  through  Belvedere  Company,  the Fund invests in certain real estate
investments  through Belmar Realty  Corporation  (Belmar Realty).  The ownership
structure of Belmar Realty is described below under  "Organization of the Fund's
Controlled Subsidiaries".  As referred to above under "Fund Overview - Structure
of the Fund",  the Fund invests in real estate  investments  to satisfy  certain
requirements of the Code for contributions of appreciated  stocks to the Fund by
Shareholders to be nontaxable.  As of December 31, 2004, the  consolidated  real
estate  investments  of Belmar Realty totaled  approximately  $643.2 million and
represented  24.1%  of the  Fund's  assets  on a  consolidated  basis.  The Fund
acquired its real estate  investments  with borrowed  funds,  as described below
under "Fund Borrowings".  The Fund seeks a return on its real estate investments
over the long term that exceeds the cost of the  borrowings  incurred to acquire
such  investments.  For a  description  of real estate  investment  transactions
during the year  ended  December  31,  2004,  see  "Performance  of Real  Estate
Investments" in Item 7.

At December  31, 2004,  Belmar  Realty held  investments  in a real estate joint
venture (Real Estate Joint  Venture) that is controlled by Belmar  Realty,  in a
portfolio  of  income-producing   preferred  equity  interests  in  real  estate
operating partnerships that generally are affiliated with and controlled by real
estate  investment   trusts  (REITs)  that  are  publicly  traded   (Partnership
Preference  Units),  in property  subject to a  long-term  triple net lease (Net
Leased  Property) and in certain other real estate  investments.  As of December
31, 2004,  approximately  46.4% of the consolidated  real estate  investments of
Belmar  Realty  consisted of its  investment  in the Real Estate Joint  Venture,
approximately   9.9%  was   investments   in   Partnership   Preference   Units,
approximately  43.2% was  investments in Net Leased  Property and  approximately
0.5% was investments in other real estate investments.

In the  future,  Belmar  Realty  may  invest  in  other  types  of  real  estate
investments.  Belmar Realty may purchase real estate  investments from, and sell
them to, real estate  subsidiaries of other  investment  funds advised by Boston
Management. See "Certain Real Estate Investment Transactions" in Item 13.

Boston Management  serves as manager of Belmar Realty. In that capacity,  Boston
Management manages the investment and reinvestment of Belmar Realty's assets and
administers its affairs.  See "Belmar Realty's  Management Fee" in Item 13 for a
description of the management fee payable by Belmar Realty to Boston Management.

REAL ESTATE JOINT VENTURE INVESTMENTS. At December 31, 2004, Belmar Realty owned
a controlling  interest in a Real Estate Joint  Venture,  Brazos  Property Trust
(Brazos).  Brazos owns real property through its interest in ProLogis Six Rivers
Limited  Partnership  and the ProLogis Brazos Fund L.P. With respect to the Real
Estate Joint Venture,  Belmar Realty owns a majority  economic  interest therein
and controls a majority of its board.  Belmar Realty's  approval is required for
all major decisions affecting the Real Estate Joint Venture.

                                        4
<PAGE>

The day-to-day  operating  management of the real  properties  owned by the Real
Estate  Joint  Venture is  provided by the real estate  operating  company  (the
Operating  Partner) that is the principal  minority  investor in the Real Estate
Joint Venture or an affiliated  company thereof.  The Operating  Partner (or its
affiliate)  receives certain fees from the Real Estate Joint Venture  (including
property management fees and fees for administration,  construction  management,
leasing, acquisitions,  dispositions, debt placement, tax preparation, legal and
other  services).  For the year  ended  December  31,  2004,  such fees  totaled
approximately $1.4 million.

At December 31, 2004,  the assets of the Real Estate Joint Venture  consisted of
23 industrial  distribution  properties acquired from or in conjunction with the
Operating Partner thereof.  See Item 2.  Distributable  cash flows from the Real
Estate Joint Venture are allocated in a manner that provides Belmar Realty: 1) a
priority  position  versus the Operating  Partner with respect to a fixed annual
preferred  return;  and 2)  participation  on a pro  rata or  reduced  basis  in
distributable  cash  flows in excess of the  annual  preferred  return of Belmar
Realty and the subordinated preferred return of the Operating Partner. A portion
of Belmar Realty's investment in Brazos represents a partial interest in certain
management  contracts  pursuant  to which  Brazos  may  receive  cash flows from
management fees and certain other fees over the life of the contracts.

Financing  for the Real Estate Joint  Venture  consists  primarily of fixed-rate
secured  mortgage  debt  obligations  of the Real Estate Joint  Venture that are
without  recourse to Belmar  Realty and the Fund, as described in "Risks of Real
Estate  Investments" in Item 7A(b). Both Belmar Realty and the Operating Partner
invested equity in the Real Estate Joint Venture.  Belmar Realty's equity in the
Real Estate Joint Venture was acquired using the proceeds of Fund borrowings.

A board of trustees  controlled by Belmar Realty oversees the performance of the
Operating  Partner and  controls  the major  decisions  of the Real Estate Joint
Venture.  Belmar  Realty  controls  three of the five seats on Brazos'  board of
trustees.  The  persons  serving  as  trustees  on behalf of Belmar  Realty  are
employees of Boston Management.  See "Directors and Executive  Officers" in Item
10(a).  No director of Belmar Realty or trustee of the Real Estate Joint Venture
is a  Shareholder  of the Fund.  The Operating  Partner of Belmar  Realty's Real
Estate Joint  Venture  also serves as an operating  partner of other Real Estate
Joint  Ventures  that are majority  owned by real estate  subsidiaries  of other
investment funds advised by Boston Management. Eaton Vance and its affiliates do
not have a material financial interest in the Real Estate Joint Venture.

The Operating  Partner of Brazos is ProLogis.  ProLogis,  a publicly  owned REIT
with  its  headquarters  in  Aurora,  Colorado,  operates  a global  network  of
industrial distribution  properties.  As of December 31, 2004, ProLogis owned or
had  ownership  interests in 1,994  distribution  facilities  aggregating  297.9
million  square  feet in 72 markets in North  America,  Europe and Asia.  Common
shares of ProLogis  are traded on the New York Stock  Exchange  under the symbol
"PLD". ProLogis owns 20% of the issued and outstanding shares of Brazos that are
entitled to  representation  on the board of  trustees.  Belmar  Realty owns the
balance of such shares.  Pursuant to an agreement with ProLogis,  from and after
August 4, 2014 either  Belmar  Realty or  ProLogis  may cause a  liquidation  of
Brazos.  If Belmar  Realty  elects to liquidate  Brazos,  ProLogis will have the
right  either to  purchase  the  shares of Brazos  owned by Belmar  Realty or to
acquire the assets of Brazos,  in either case at a price  determined  through an
independent  appraisal of the assets of Brazos.  The Brazos operating  documents
prohibit  the  transfer  of any  shares  that  would  adversely  affect  Brazos'
qualification as a REIT.

The liquidation agreement applicable to Brazos continues indefinitely, but could
be terminated  upon the receipt of the  requisite  approval of the owners of the
voting interests in Brazos.  If Belmar Realty were to dispose of its interest in
Brazos  pursuant to the  liquidation  agreement or otherwise,  it may acquire an
interest in a different real estate investment to replace the investment sold.

PARTNERSHIP   PREFERENCE  UNITS.  Belmar  Realty's  investments  in  Partnership
Preference  Units represent  preferred equity interests in real estate operating
partnerships.  The  assets  of the  partnerships  that  issued  the  Partnership
Preference Units owned by Belmar Realty on December 31, 2004 consisted of direct
or indirect ownership interests in real properties,  including manufactured home
communities and self-storage facilities.  The Partnership Preference Units owned
by Belmar  Realty as of  December  31,  2004 are listed in Item 7A(a) and in the
consolidated  portfolio  of  investments  included  in the  Fund's  consolidated
financial statements, which are included as pages 36 to 79 of this Annual Report
on Form 10-K.  Eaton Vance is not, and has not been,  involved in the management
or  operation  of  the  real  estate  operating  partnerships  that  issued  the
Partnership Preference Units owned by Belmar Realty.

The  Partnership   Preference  Units  held  by  Belmar  Realty  were  issued  by
partnerships  that are not  publicly-traded  partnerships  within the meaning of
Code Section  7704(b).  The  Partnership  Preference  Units are  perpetual  life
instruments  (subject to call  provisions) and are not, by their terms,  readily
convertible or  exchangeable  into cash or securities of the  affiliated  public

                                        5
<PAGE>

company.  Partnership Preference Units are not rated by a  nationally-recognized
rating  agency,  and such interests may not be as high in quality as issues that
are rated investment grade.

Each issue of  Partnership  Preference  Units held by Belmar Realty pays regular
quarterly  distributions  at fixed  rates from the net  profits  of the  issuing
partnership,  with preferential rights over common and other subordinated units.
None of the  Partnership  Preference  Units are or will be registered  under the
Securities Act and each issue is thus subject to restrictions on transfer.

NET LEASED  PROPERTY.  At December  31,  2004,  Belmar  Realty  owned Net Leased
Property  consisting of an office building and attached  facilities  leased to a
single tenant under a triple net lease. Belmar Realty owns this property through
its majority owned subsidiary,  Bel Stamford  Investors LLC (Bel Stamford).  Bel
Stamford's  property is financed by fixed-rate secured mortgage debt obligations
of Bel Stamford  that  generally  are without  recourse to Belmar Realty and the
Fund,  except as described in "Risks of Real Estate  Investments" in Item 7A(b).
Belmar  Realty's  equity in Bel Stamford was acquired using the proceeds of Fund
borrowings.

The Net Leased  Property held by Belmar Realty is leased on a long-term basis to
one tenant that is obligated to pay rent  sufficient  to service the  associated
mortgage debt and to pay all costs and expenses  associated  with  operation and
maintenance of the property, including real estate taxes, repairs and insurance.
The  tenant  has  also  generally   indemnified  Bel  Stamford  against  certain
liabilities in connection with the property. Because all or substantially all of
the rental  payments are dedicated to debt service,  realized  returns on Belmar
Realty's  investment in the Net Leased Property generally will be deferred until
the property is sold or re-leased following the initial lease term.

ORGANIZATION OF THE FUND'S CONTROLLED  SUBSIDIARIES.  Belmar Realty and the Real
Estate  Joint  Venture  operate in such a manner as to qualify  for  taxation as
REITs under the Code. As REITs,  Belmar Realty and the Real Estate Joint Venture
generally  are not  subject  to  federal  income  tax on that  portion  of their
ordinary income or taxable gain that is distributed to  stockholders  each year.
The Fund owns 100% of the common stock issued by Belmar  Realty,  and intends to
hold all of the common  stock at all  times.  Belmar  Realty  and the  Operating
Partner own all of the common shares of the Real Estate Joint Venture.

Belmar  Realty and the Real Estate  Joint  Venture  also have  issued  preferred
shares to satisfy  certain  provisions of the Code,  which require  (among other
things)  that a REIT  be  beneficially  owned  in the  aggregate  by 100 or more
persons. The preferred shares of each such entity are owned by not less than 100
charitable  organizations  that  received the  preferred  shares as gifts.  Each
charitable  organization  that  received a  preferred  share was an  "accredited
investor" (as defined in the  Securities  Act) with total assets in excess of $5
million at the time the organization  received the preferred shares. Eaton Vance
selected  the  charitable  organizations  from the  charities  for  which it has
matched employee contributions and/or based on suggestions from its employees or
the Operating Partner. As of December 31, 2004, the total value of the preferred
shares outstanding of Belmar Realty was $210,000.  Dividends on preferred shares
are cumulative and payable annually at a dividend rate of 8% per year for Belmar
Realty and 6% per year for Brazos.  The dividends paid on preferred  shares have
priority over payments on common  shares.  For the year ended December 31, 2004,
Belmar  Realty  paid or  accrued  distributions  to  preferred  shareholders  of
$16,800.  Brazos issued  preferred shares on January 28, 2005 and is expected to
make its first distribution on or about December 31, 2005.

FUND BORROWINGS.  To finance its real estate  investments,  the Fund has entered
into credit arrangements with DrKW Holdings, Inc. (the DrKW Credit Facility) and
Merrill Lynch Mortgage Capital,  Inc. (the MLMC Credit Facility)  (collectively,
the Credit  Facility).  The Credit Facility is secured by a pledge of the Fund's
assets,  excluding  the assets of Brazos and Bel  Stamford,  and expires in June
2010. At December 31, 2004, the total  principal  amount  outstanding  under the
Credit Facility was $290.0 million.  The Credit Facility is also used to provide
for selling commissions,  organizational expenses and any liquidity needs of the
Fund. Under certain circumstances,  the Fund may increase the size of the Credit
Facility  (subject to lender  consent) and the amount of outstanding  borrowings
thereunder.

The DrKW Credit Facility is a term credit  agreement.  Borrowings under the DrKW
Credit  Facility  accrue  interest at a rate of  one-month  LIBOR plus 0.20% per
annum.  As of December 31, 2004,  outstanding  borrowings  under the DrKW Credit
Facility totaled $290.0 million.

The MLMC Credit Facility is a revolving credit agreement. The Fund may borrow up
to $118.5 million under the MLMC Credit  Facility,  of which up to $10.0 million
may be letters of  credit.  Borrowings  under the MLMC  Credit  Facility  accrue
interest at a rate of one-month  LIBOR plus 0.38% per annum.  As of December 31,
2004, there were no outstanding borrowings under the MLMC Credit Facility. There
were no  letters of credit  issued as of  December  31,  2004.  The unused  loan

                                        6
<PAGE>

commitment amount totaled $118.5 million. A commitment fee of 0.10% per annum is
paid on the unused  commitment  amount.  The Fund pays all fees  associated with
issuing letters of credit.

Obligations under the Credit Facility are without recourse to Fund Shareholders.
As described  above,  financing for the Real Estate Joint Venture and Net Leased
Property consists  primarily of fixed-rate  secured mortgage debt obligations of
the Real Estate Joint Venture and Net Leased Property that are without  recourse
to Fund  Shareholders,  and generally are without  recourse to Belmar Realty and
the Fund, as described under "Risks of Real Estate Investments" in Item 7A(b).

INTEREST  RATE SWAP  AGREEMENTS.  The Fund has entered into  interest  rate swap
agreements with Merrill Lynch Capital  Services,  Inc. (MLCS) to fix the cost of
borrowings  under the  Credit  Facility  used to acquire  equity in real  estate
investments.  Pursuant to the interest rate swap agreements, the Fund makes cash
payments to MLCS at fixed rates in exchange for floating rate payments from MLCS
that fluctuate with one-month LIBOR.  The interest rate swap agreements  entered
into with respect to Belmar Realty's real estate  investments  extend until June
25,  2010,  subject  to the  Fund's  earlier  termination  rights in the case of
certain swaps,  and provide for the Fund to make payments to MLCS at fixed rates
averaging  4.53%.  See Note 7 to the Fund's  consolidated  financial  statements
included as pages to of this Annual Report on Form 10-K.

THE EATON VANCE  ORGANIZATION.  The Eaton Vance organization  sponsors the Fund.
Eaton Vance serves as the Fund's manager. Boston Management serves as the Fund's
investment  adviser and as manager of Belmar Realty.  EV Distributors  served as
the Fund's  placement  agent. The Fund's business affairs are conducted by Eaton
Vance (as its manager) and its  investment  operations  are  conducted by Boston
Management (as its  investment  adviser).  The Fund's  officers are employees of
Eaton Vance. Eaton Vance, Boston Management and EV Distributors are wholly-owned
subsidiaries  of Eaton Vance Corp.,  a  publicly-traded  holding  company  that,
through  its  affiliates  and  subsidiaries,  engages  primarily  in  investment
management, administration and marketing activities.

As described  above,  the Fund pursues its  objective  primarily by investing in
Belvedere  Company.  Belvedere  Company  invests  exclusively  in the Portfolio.
Boston  Management  acts as  investment  adviser of the Portfolio and manager of
Belvedere Company. EV Distributors acts as placement agent for Belvedere Company
and the Portfolio.  As of December 31, 2004, the assets of the Fund  represented
approximately 2.7% of assets under management by Eaton Vance and its affiliates.
The offices of the Fund, Eaton Vance,  Boston Management and EV Distributors are
located at 255 State Street, Boston, Massachusetts 02109.

CONFLICTS OF INTEREST.  Boston  Management and other Eaton Vance  affiliates are
subject to certain  conflicts  of  interests  in their  dealings  with the Fund,
Belmar  Realty,  Belvedere  Company  and the  Portfolio,  as well as with  other
investment  companies advised by Boston Management that invest in the Portfolio.
Eaton Vance and Boston  Management  have  determined and will determine which of
their sponsored  investment  companies  invest in the Portfolio,  the securities
each of them contributes to the Portfolio when making an investment therein and,
subject to the rights of redeeming  investors in the  Portfolio,  the securities
and/or cash received in redemptions from the Portfolio.  Such determinations are
inherently subject to potential  conflicts of interest.  In addition,  Portfolio
management  activities  with respect to securities  contributed to the Portfolio
may  have  different  tax  consequences  for the  contributing  investor  in the
Portfolio than for other investors in the Portfolio.  Boston Management  manages
the  Portfolio in pursuit of long-term,  after-tax  returns for all investors in
the Portfolio  and, with respect to contributed  securities,  takes into account
the  tax  position  of the  contributing  investor  in the  Portfolio.  Whenever
conflicts of interest  arise,  Eaton Vance,  Boston  Management  and other Eaton
Vance  affiliates  will endeavor to exercise  their  discretion in a manner that
they believe is equitable to all interested persons.

Belmar Realty may purchase real estate investments from real estate subsidiaries
of other investment funds advised by Boston  Management.  Belmar Realty may also
co-invest  with such  entities in real estate  investments  and sell real estate
investments to such entities. In any such transaction,  the assets purchased and
sold will be valued in good faith by Boston Management,  after  consideration of
factors,  data  and  information  that  Boston  Management  considers  relevant.
Transaction  prices  generally  will include an allocation of the original costs
incurred in creating and acquiring the transferred real estate investments. Real
estate  investments  are often difficult to value and others could in good faith
arrive at valuations  different from those of Boston  Management.  See "Critical
Accounting Estimates" in Item 7(e).

ITEM 2. PROPERTIES.
-------------------

The Fund does not own any physical  properties,  other than  indirectly  through
Belmar  Realty's   investments.   At  December  31,  2004,  Belmar  Realty  held
investments in  Partnership  Preference  Units of three issuers,  owned majority
interests  in  Brazos  and Bel  Stamford,  whose  assets  are  reflected  in the
consolidated  financial  statements  of the Fund.  At December 31, 2004,  Brazos

                                        7
<PAGE>

owned 23 industrial distribution  properties located in Florida,  Indiana, North
Carolina,  New Jersey,  Ohio,  Pennsylvania,  South Carolina and  Tennessee.  At
December 31, 2004, Bel Stamford owned an office building and attached facilities
in Connecticut.

ITEM 3. LEGAL PROCEEDINGS.
--------------------------

Although in the  ordinary  course of  business,  the Fund and its  directly  and
indirectly controlled subsidiaries may become involved in legal proceedings, the
Fund is not aware of any material pending legal proceedings to which any of them
is subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
------------------------------------------------------------

No matters were submitted to a vote of security holders during the quarter ended
December 31, 2004.

                                        8
<PAGE>

                                     PART II
                                    -------

ITEM 5. DETERMINING NET ASSET VALUE, MARKET FOR FUND SHARES, RELATED SHAREHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
--------------------------------------------------------------------------------

This Item and other Items in this report contain summaries of certain provisions
contained in the Limited  Liability  Company  Agreement of the Fund,  as amended
(the LLC  Agreement),  which was filed as an exhibit to the Fund's  registration
statement on Form 10. All such  summaries are qualified in their entirety by the
actual  provisions of the LLC  Agreement,  which are  incorporated  by reference
herein.

(a) MARKET INFORMATION, RESTRICTIONS ON TRANSFERS AND REDEMPTION OF SHARES.
----------------------------------------------------------------------------

TRANSFERS OF FUND SHARES.  There is no established public trading market for the
Shares of the Fund. Other than transfers to the Fund in a redemption,  transfers
of Shares are expressly  prohibited by the LLC Agreement of the Fund without the
consent of Eaton Vance.  Eaton Vance's  consent to a transfer may be withheld in
its sole discretion for any reason or for no reason.

The Shares have not been and will not be registered  under the  Securities  Act,
and may not be resold unless an exemption from such  registration  is available.
Shareholders  have no right to require  registration  of the Shares and the Fund
does not intend to  register  the Shares  under the  Securities  Act or take any
action to cause an exemption (whether pursuant to Rule 144 of the Securities Act
or otherwise) to be available.

The Fund is not and will not be  registered  under the 1940 Act, and no transfer
of Shares may be made if, as  determined  by Eaton Vance or counsel to the Fund,
such transfer would result in the Fund being required to be registered under the
1940 Act. In addition,  no transfer of Shares may be made unless, in the opinion
of counsel to the Fund,  such transfer  would not result in  termination  of the
Fund for purposes of Section 708 of the Code or result in the  classification of
the  Fund as an  association  or a  publicly  traded  partnership  taxable  as a
corporation under the Code.

In no event  shall all or any part of a  Shareholder's  Shares be  assigned to a
minor or an incompetent,  unless in trust for the benefit of such person. Shares
may be sold,  transferred,  assigned or otherwise  disposed of by a  Shareholder
only if it is  determined  by Eaton  Vance or  counsel  to the  Fund  that  such
transfer,  assignment or  disposition  would not violate  federal  securities or
state   securities  or  "blue  sky"  laws  (including   investor   qualification
standards).

There  are no  outstanding  options  or  warrants  to  purchase,  or  securities
convertible into, Shares of the Fund. Shares of the Fund cannot be sold pursuant
to Rule 144 under the Securities  Act, and the Fund does not propose to publicly
offer any of its Shares at any time.

REDEMPTION  OF FUND  SHARES.  Shares of the Fund may be redeemed on any business
day. The redemption price of Shares that are redeemed is based on the Fund's net
asset value next computed after receipt of the redemption  request.  During each
month in the  quarter  ended  December  31,  2004,  the  total  number of Shares
redeemed and the average price paid per Share were as follows:

                              Total No. of Shares     Average Price Paid Per
  Month Ended                     Redeemed(1)                 Share
--------------------------------------------------------------------------------
  October                          83,904.47                  $85.58
--------------------------------------------------------------------------------
  November                         21,058.23                  $90.06
--------------------------------------------------------------------------------
  December                         56,470.46                  $91.57
--------------------------------------------------------------------------------
  Total                           161,433.16                  $90.66
--------------------------------------------------------------------------------
(1)  All Shares  redeemed  during the  periods  were  redeemed  at the option of
     Shareholders  pursuant to the Fund's  redemption  policy.  The Fund has not
     announced  any plans or programs  to  repurchase  Shares  other than at the
     option of Shareholders.

The Fund satisfies  redemption requests  principally by distributing  securities
drawn from the  Portfolio,  but may also  distribute  cash.  If  requested  by a
redeeming   Shareholder,   the  Fund  will  satisfy  a  redemption   request  by
distributing  securities  that were  contributed  by the redeeming  Shareholder,
provided  that  such  securities  are  held  in the  Portfolio  at the  time  of
redemption.  The securities contributed by a Shareholder will not be distributed

                                        9
<PAGE>

to any other  Shareholder  in the Fund (or to any other  investor  in  Belvedere
Company  or  the  Portfolio)  during  the  first  seven  years  following  their
contribution unless the contributing Shareholder has withdrawn from the Fund.

Under  most  circumstances,  a  redemption  from the Fund that is  settled  with
securities  as described  herein will not result in the  recognition  of capital
gains by the Fund or by the redeeming  Shareholder.  The  redeeming  Shareholder
would generally recognize capital gains upon the sale of the securities received
through  redemption.  If a redeeming  Shareholder  receives  cash in addition to
securities to settle a  redemption,  the amount of cash received will be taxable
to the Shareholder to the extent it exceeds such Shareholder's tax basis in Fund
Shares.   Shareholders   should   consult  their  tax  advisors  about  the  tax
consequences of redeeming Fund Shares.

A  Shareholder  redemption  request  within  seven  years of a  contribution  of
securities  by  such   Shareholder  is  ordinarily   satisfied  by  distributing
securities that were contributed by such  Shareholder,  prior to distributing to
such  Shareholder  any  other  securities  held  in  the  Portfolio.  Securities
contributed by a Shareholder  may be distributed  to other  Shareholders  in the
Fund (or to other  investors  in  Belvedere  Company or the  Portfolio)  after a
holding  period of at least  seven years and,  if so  distributed,  would not be
available  to meet  subsequent  redemption  requests  made  by the  contributing
Shareholder.

If  requested  by a redeeming  Shareholder  making a  redemption  of at least $1
million  occurring  more  than  seven  years  after  such  Shareholder's   final
contribution  of securities to the Fund, the Fund will  generally  distribute to
the  redeeming  Shareholder a diversified  basket of securities  representing  a
range of industry groups that is drawn from the Portfolio,  but the selection of
individual securities would be made by Boston Management in its sole discretion.
No interests in the Real Estate Joint Venture,  Partnership  Preference Units or
other real estate investments will be distributed to meet a redemption  request,
and  "restricted  securities"  will be distributed  only to the  Shareholder who
contributed such securities or such Shareholder's successor in interest.

Other  than as set  forth  above,  the  allocation  of each  redemption  between
securities and cash and the selection of securities to be distributed will be at
the sole  discretion of Boston  Management.  Distributed  securities may include
securities  contributed  by  Shareholders  as well as other  readily  marketable
securities held in the Portfolio.  The value of securities and cash  distributed
to meet a  redemption  will  equal the net asset  value of the  number of Shares
being  redeemed.  The Fund's  Credit  Facility  prohibits the Fund from honoring
redemption  requests  while there is an event of default  outstanding  under the
Credit Facility.

The Fund may compulsorily redeem all or a portion of the Shares of a Shareholder
if the Fund has determined  that such  redemption is necessary or appropriate to
avoid  registration  of the Fund or Belvedere  Company under the 1940 Act, or to
avoid adverse tax or other consequences to the Portfolio, Belvedere Company, the
Fund or  Shareholders,  including  those  arising  as the  result of  applicable
anti-money laundering requirements.

The right of a  Shareholder  to redeem can be  suspended  and the payment of the
redemption  price may be deferred while there is outstanding an event of default
under the Credit Facility,  when the NYSE is closed, during periods when trading
on the NYSE is  restricted  or during any emergency as determined by the SEC, at
any time when it is impracticable for the Portfolio or the Fund to dispose of or
value its assets,  or during any other period  permitted by order of the SEC for
the protection of investors.

A capital  account for each  Shareholder is maintained on the books of the Fund.
The account reflects the value of such Shareholder's interest in the Fund, which
is adjusted for profits, liabilities and distributions allocable to such account
in accordance with Article 6 of the Fund's LLC Agreement.

Subject to the consent of the  manager of the Fund,  a  Shareholder  may make an
estate freeze election pursuant to which all or a portion of such  Shareholder's
Shares will be divided into  Preferred  Shares and Common Shares  (Estate Freeze
Shares).  Such  division  will be made in  accordance  with the terms of the LLC
Agreement.  Estate Freeze Shares are not transferable without the consent of the
Fund's manager and have no redemption rights or voting or consent rights.

DETERMINING  NET ASSET VALUE.  Boston  Management,  as  investment  adviser,  is
responsible  for  determining  the  value  of  the  Fund's  assets.  The  Fund's
custodian, Investors Bank & Trust Company, calculates the value of the assets of
the Fund,  Belvedere  Company and the Portfolio each day that the New York Stock
Exchange  (NYSE) is open for trading,  as of the close of regular trading on the
NYSE.  The Fund's net asset value per Share is  calculated by dividing the value
of the  Fund's  total  assets,  less its  liabilities,  by the  number of Shares
outstanding.
<PAGE>
The  Fund's  net assets  are  valued in  accordance  with the  Fund's  valuation
procedures and reflect the value of its directly-held assets and liabilities, as
well as the net asset  value of the  Fund's  investment  in the  Portfolio  held
through  Belvedere  Company and in real estate  investments  held through Belmar
Realty.  The  trustees of the  Portfolio  have  established  procedures  for the
valuation of the Portfolio's assets under normal market conditions.  Pursuant to
these  procedures,  marketable  securities listed on U.S.  securities  exchanges
generally  are valued at the last sale price on the day of the  valuation or, if
there  were no sales,  at the mean  between  the  closing  bid and asked  prices
therefor  on  the  exchange  where  such  securities  are  principally   traded.
Marketable securities listed on the NASDAQ  National Market generally are valued

                                       10
<PAGE>

at the NASDAQ official  closing price.  Unlisted or listed  securities for which
closing  sale prices are not  available  are valued at the mean between the last
available  bid  and  asked  prices  or  by  an  independent   pricing   service.
Exchange-traded  options  are  valued  at the  last  sale  price  for the day of
valuation  as quoted on the  principal  exchange  or board of trade on which the
options are traded, or in the absence of a sale on such day, at the mean between
the latest bid and asked prices  therefor.  Futures  positions on  securities or
currencies are generally valued at closing  settlement  prices.  Short-term debt
securities with a remaining  maturity of 60 days or less are valued at amortized
cost. If short-term debt  securities were acquired with a remaining  maturity of
more than 60 days,  their  amortized  cost value will be based on their value on
the sixty-first day prior to maturity.  Other fixed income and debt  securities,
including  listed  securities  and  securities  for which price  quotations  are
available,  will  normally be valued on the basis of  valuations  furnished by a
pricing service.

Foreign  securities  and  currencies  held by the  Portfolio  are valued in U.S.
dollars,  as calculated by the Portfolio's  custodian based on foreign  currency
exchange rate quotations supplied by an independent quotation service. The daily
valuation  of foreign  securities  generally  is  determined  as of the close of
trading  on the  principal  exchange  on which  such  securities  trade.  Events
occuring  after  the  close of  trading  on  foreign  exchanges  may  result  in
adjustments to the valuations of foreign  securities to more accurately  reflect
their fair value as of the close of regular  trading on the NYSE.  When  valuing
foreign equity securities that meet certain criteria,  the Portfolio uses a fair
value service that values such  securities to reflect market trading that occurs
after the close of the applicable  foreign  markets of comparable  securities or
other  instruments that have a strong  correlation to the securities held by the
Portfolio.  All other  securities are valued at fair value as determined in good
faith by or at the direction of the Portfolio's  trustees  considering  relevant
factors,  data and  information  including  the market value of freely  tradable
securities  of the same class in the principal  market on which such  securities
are normally traded.

The Fund's real estate  investments  are valued each day as  determined  in good
faith by Boston  Management after  consideration of relevant  factors,  data and
information.  The procedures for valuing real estate  investments  are described
under "Critical Accounting Estimates" in Item 7(e). Boston Management values the
Fund's interest rate swap agreements based upon dealer and  counterparty  quotes
and pricing  models that take into  consideration  the market  trading prices of
interest rate swap  agreements  that have similar  terms to the Fund's  interest
rate swap  agreements.  Fixed  liabilities  of the Fund  generally are stated at
principal value.

HISTORIC NET ASSET VALUES. Set forth below are the high and low net asset values
per Share  (NAVs) of the Fund for each full  quarter  during the two years ended
December  31, 2004 and 2003,  the closing NAV on the last  business  day of each
full quarter, and the percentage change in NAV during each such quarter.


                                                  NAV at          Quarterly %
Quarter Ended      High NAV       Low NAV       Quarter End     Change in NAV(1)
-------------      --------       -------       -----------     ----------------
  12/31/04          $93.34        $84.00          $91.50             6.59%
   9/30/04          $87.42        $81.49          $85.84            -2.75%
   6/30/04          $88.82        $83.79          $88.27             1.85%
   3/31/04          $88.81        $84.07          $86.67             0.45%
  12/31/03          $86.36        $78.90          $86.28            11.83%
   9/30/03          $79.91        $74.75          $77.15             2.81%
   6/30/03          $78.19        $66.42          $75.04            14.08%
   3/31/03          $73.04        $61.58          $65.78            -5.85%

(1)  Past performance is no guarantee of future results.  Investment  return and
     principal value will fluctuate so that Shares, when redeemed,  may be worth
     more or less than  their  original  cost.  Changes  in NAV are  historical.
     Performance is for the stated time period only;  due to market  volatility,
     the Fund's current performance may be lower or higher. For more information
     about  the  performance  of the  Fund,  see  "Management's  Discussion  and
     Analysis of Financial  Condition  (MD&A) and Results of Operations" in Item
     7(a).

(b) RECORD HOLDERS OF SHARES OF THE FUND.
-----------------------------------------

As of March 1, 2005, there were 715 record holders of Shares of the Fund.

(c) DISTRIBUTIONS.
------------------

INCOME AND CAPITAL GAIN DISTRIBUTIONS.  The Fund intends to distribute each year
the amount of its net  investment  income for such year,  if any.  The Fund also
intends to make annual capital gain distributions  equal to approximately 18% of
the amount of its net realized capital gains, if any, other than precontribution
gains  allocated to a Shareholder  in connection  with a taxable tender offer or
other taxable  corporate  event for a security  contributed  to the Fund by that
Shareholder  or that  Shareholder's  predecessor  in  interest.  The  Fund's net
investment  income and net realized gains include the Fund's  allocated share of
the net investment  income and net realized  gains of Belmar  Realty,  Belvedere

                                       11
<PAGE>

Company and, indirectly,  the Portfolio, as well as income and capital gains, if
any, distributed by Belmar Realty. The Fund's distributions  generally are based
on  determinations  of net investment  income and net realized capital gains for
federal income tax purposes.  Such amounts may differ from net investment income
(or  loss)  and  net  realized  gain  (or  loss)  as set  forth  in  the  Fund's
consolidated financial statements due to differences in the treatment of various
income,  gain, loss, expense and other items for federal income tax purposes and
under generally accepted  accounting  principles.  Because the Portfolio invests
primarily in lower yielding  securities,  seeks to avoid net realized short-term
capital gains and bears certain ongoing expenses, it is not expected that income
distributions  will be significant.  The Fund intends to pay  distributions  (if
any) on the last  business day of each fiscal year of the Fund (which  concludes
on  December  31) or  shortly  thereafter.  The Fund's  distribution  rates with
respect to realized  gains may be  adjusted in the future to reflect  changes in
the  effective  maximum  marginal  individual  federal  tax rate  applicable  to
long-term capital gains.

Shareholder  distributions  with respect to net  investment  income and realized
post-contribution  gains are made pro rata in proportion to the number of Shares
held as of the record  date of the  distribution.  All income and  capital  gain
distributions  (including Special Distributions described below) are paid by the
Fund  in  cash.  Distributions  are  generally  not  taxable  to  the  recipient
Shareholder  unless the  distributions  exceed the recipient  Shareholder's  tax
basis in Fund Shares.  The Fund's Credit Facility prohibits the Fund from making
any distribution to Shareholders while there is an event of default  outstanding
under the Credit Facility.

On  January  27,  2005,  the Fund  made a  distribution  of $1.12  per  Share to
Shareholders of record on January 26, 2005. On January 14, 2004, the Fund made a
distribution  of $1.15 per Share to  Shareholders of record on January 13, 2004.
On  January  17,  2003,  the Fund  made a  distribution  of $1.70  per  Share to
Shareholders of record on January 16, 2003.

SPECIAL  DISTRIBUTIONS.  In addition  to the pro rata  income and  capital  gain
distributions described above, the Fund also makes distributions to Shareholders
allocated  precontribution gain (other than precontribution gains allocated to a
Shareholder in connection with a tender offer or other  extraordinary  corporate
event  involving  a  security   contributed  by  such  Shareholder)  (a  Special
Distribution).  Special  Distributions  generally equal approximately 18% of the
amount of realized  precontribution gains plus approximately 4% of the allocated
precontribution   gain  or  such  other  percentage  as  deemed  appropriate  to
compensate  Shareholders  receiving such distributions for taxes that may be due
in connection with the precontribution gain and Special  Distributions.  Special
Distributions  are made solely to the  Shareholders to whom the  precontribution
gain is allocated.  The Fund does not intend to make Special  Distributions to a
Shareholder  in  respect  of  realized   precontribution  gain  allocated  to  a
Shareholder in connection with a tender offer or other  extraordinary  corporate
event  involving a security  contributed by such  Shareholder.  During the years
ended December 31, 2004 and 2003, the Fund made no Special Distributions.

ITEM 6. SELECTED FINANCIAL DATA.
--------------------------------

TABLE OF  SELECTED  FINANCIAL  DATA.  The  consolidated  data  referred to below
reflects the Fund's  historical  results for the years ended  December 31, 2004,
2003,  2002,  2001 and for the period from March 17, 2000  through  December 31,
2000. The following  information  should be read in conjunction  with all of the
consolidated  financial statements and related notes appearing on pages 36 to 79
of this Annual  Report on Form 10-K.  The other  consolidated  data  referred to
below is as of each period end.
<TABLE>
<CAPTION>
                              Year Ended         Year Ended           Year Ended            Year Ended            Year Ended
                           December 31, 2004  December 31, 2003  December 31, 2002(2)  December 31, 2001(2)  December 31, 2000(1)(2)
                           -----------------  -----------------  --------------------  --------------------  --------------------
<S>                         <C>                 <C>                 <C>                   <C>                   <C>
Total investment income     $   92,676,501      $   94,906,482      $   99,814,835        $  103,489,725        $   53,330,719
Interest expense            $   36,451,042      $   22,974,061      $   28,506,573        $   45,447,387        $   25,969,680
Net expenses (including
 interest expense)          $   66,204,475      $   50,746,633      $   56,644,137        $   76,754,182        $   39,649,034
Net investment income       $   25,224,494      $   43,724,019      $   42,746,644        $   26,515,171        $   13,353,048
Minority interests in net
 income of controlled
 subsidiaries               $   (1,247,532)     $     (435,830)     $     (424,054)       $     (220,372)       $     (328,637)
Net realized gain (loss)    $   57,671,882      $    5,911,089      $  (41,522,684)       $  (35,955,721)       $    8,272,294
Net change in unrealized
 appreciation
 (depreciation)             $   52,072,410      $  362,154,142      $ (417,581,832)       $ (230,675,625)       $  (74,236,068)

                                       12
<PAGE>

                              Year Ended         Year Ended           Year Ended            Year Ended            Year Ended
                           December 31, 2004  December 31, 2003  December 31, 2002(2)  December 31, 2001(2)  December 31, 2000(1)(2)
                           -----------------  -----------------  --------------------  --------------------  --------------------
Net increase (decrease) in
 net assets from operations $  134,968,786      $  411,789,250      $ (416,357,872)       $ (240,116,175)       $  (52,610,726)
Total assets                $2,677,042,933      $2,611,939,419      $2,445,639,296        $2,967,430,657        $3,325,479,191
Loan payable                $  290,000,000      $  513,000,000      $  596,500,000        $  613,500,000        $  613,500,000
Mortgages payable           $  455,098,913      $  161,157,192      $  162,461,900        $  175,470,843        $  176,647,796
Net assets                  $1,910,487,498      $1,920,611,857      $1,620,229,805        $2,108,684,133        $2,457,715,428
Shares outstanding              20,880,411          22,261,334          23,190,678            24,134,504            25,122,311
Net asset value and
 redemption price per Share $        91.50      $        86.28      $        69.87        $        87.37        $        97.83
Net increase (decrease) in
 net assets from operations
 per Share                  $         6.37      $        18.11      $       (17.50)       $        (9.67)       $        (1.87)
Distribution paid per
 Share(3)                   $         1.15(6)   $         1.70(5)   $         0.00(4)     $         0.79        $         0.30
</TABLE>
(1)  The Fund commenced operations on March 17, 2000.
(2)  Certain  amounts  have been  reclassified  to conform with the current year
     presentation.
(3)  The Fund also makes Special Distributions, which are not made on a pro rata
     basis. See Item 5(c).  Special  Distributions of $0.073 and $0.03 per Share
     were paid for the periods ended  December 31, 2001 and 2000,  respectively.
     Special Distributions,  to the extent made in 2004, 2003 and 2002, amounted
     to less than $0.001 per Share in each year.
(4)  On January 17,  2003,  the Fund made a  distribution  of $1.70 per Share to
     Shareholders of record on January 16, 2003.
(5)  On January 14,  2004,  the Fund made a  distribution  of $1.15 per Share to
     Shareholders of record on January 13, 2004.
(6)  On January 27,  2005,  the Fund made a  distribution  of $1.12 per Share to
     Shareholders of record on January 26, 2005.

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION (MD&A) AND
RESULTS OF OPERATIONS.
--------------------------------------------------------------------------------

The information in this report contains  forward-looking  statements  within the
meaning of the federal securities laws. Forward-looking statements typically are
identified by use of terms such as "may," "will," "should,"  "might,"  "expect,"
"anticipate,"  "estimate,"  and similar  words,  although  some  forward-looking
statements  are  expressed  differently.  The  actual  results of the Fund could
differ materially from those contained in the forward-looking  statements due to
a number of factors.  The Fund  undertakes no obligation to update  publicly any
forward-looking  statements,  whether  as a result  of new  information,  future
events,  or otherwise,  except as required by applicable law. Factors that could
affect the Fund's performance  include a decline in the U.S. stock markets or in
general  economic  conditions,  adverse  developments  affecting the real estate
industry, or fluctuations in interest rates. See "Qualitative  Information About
Market Risk" in Item 7A(b) below.

The  following  discussion  should  be  read  in  conjunction  with  the  Fund's
consolidated  financial statements and related notes appearing on pages 36 to 79
of this Annual Report on Form 10-K.

(a) RESULTS OF OPERATIONS.
--------------------------

Increases  and  decreases  in the Fund's net asset  value per share are based on
increases  and  decreases  in net  investment  income (or loss) and realized and
unrealized gains and losses on investments. The Fund's net investment income (or
loss) is determined by subtracting the Fund's total expenses from its investment
income and then deducting the net investment  income (or loss)  attributable  to
the minority  interest in Belmar Realty's  controlled  subsidiaries.  The Fund's
investment  income includes the net investment income allocated to the Fund from
Belvedere  Company,  rental income from the properties  owned by Belmar Realty's
controlled  subsidiaries,   partnership  income  allocated  to  the  Partnership
Preference  Units  owned by Belmar  Realty  and  interest  earned on the  Fund's
short-term  investments (if any). The net investment income of Belvedere Company
allocated to the Fund  includes  dividends  and interest  allocated to Belvedere
Company by the Portfolio less the expenses of Belvedere Company allocated to the
Fund.  The Fund's  total  expenses  include the Fund's  investment  advisory and
administrative  fees,  distribution  and servicing fees,  interest  expense from
mortgages  on  properties  owned by  Belmar  Realty's  controlled  subsidiaries,
interest  expense on the  Fund's  Credit  Facility,  property  management  fees,
property  taxes,  insurance,  maintenance  and other  expenses  relating  to the
properties  owned  by  Belmar  Realty's  controlled   subsidiaries,   and  other
miscellaneous  expenses. The Fund's realized and unrealized gains and losses are
the result of transactions in, or changes in value of, security investments held

                                       13
<PAGE>

through  the  Fund's  indirect  interest  (through  Belvedere  Company)  in  the
Portfolio,  real estate  investments  held  through  Belmar  Realty,  the Fund's
interest rate swap  agreements and any other direct  investments of the Fund, as
well as  periodic  payments  made by the Fund  pursuant  to  interest  rate swap
agreements.

Realized  and  unrealized   gains  and  losses  on  investments  have  the  most
significant  impact on the Fund's net asset value per share and result primarily
from sales of such  investments  and  changes  in their  underlying  value.  The
investments of the Portfolio  consist primarily of common stocks of domestic and
foreign growth  companies  that are  considered by its investment  adviser to be
high in quality and attractive in their long-term investment prospects.  Because
the  securities  holdings  of  the  Portfolio  are  broadly   diversified,   the
performance of the Portfolio cannot be attributed to one particular stock or one
particular  industry or market sector.  The performance of the Portfolio and the
Fund are substantially  influenced by the overall  performance of the U.S. stock
market,  as well as by the  relative  performance  versus the overall  market of
specific  stocks and classes of stocks in which the  Portfolio  maintains  large
positions.

MD&A AND RESULTS OF OPERATIONS  FOR THE YEAR ENDED DECEMBER 31, 2004 COMPARED TO
THE YEAR ENDED DECEMBER 31, 2003.
--------------------------------------------------------------------------------

PERFORMANCE  OF THE  FUND.(1)  The  Fund's  investment  objective  is to achieve
long-term,  after-tax  returns  for  Shareholders.  Eaton  Vance,  as the Fund's
manager,  measures the Fund's  success in achieving its  objective  based on the
investment  returns of the Fund,  using the S&P 500 Index as the Fund's  primary
performance  benchmark.  The S&P 500 Index is a broad-based  unmanaged  index of
common stocks commonly used as a measure of U.S. stock market performance. Eaton
Vance's  primary  focus in pursuing  total return is on the Fund's  common stock
portfolio,  which  consists  of  its  indirect  interest  in the  Portfolio.  In
measuring the  performance  of the Fund's real estate  investments,  Eaton Vance
considers  whether,  through current returns and changes in valuation,  the real
estate  investments  achieve returns that over the long-term  exceed the cost of
the  borrowing  incurred  to acquire  such  investments  and thereby add to Fund
returns. The Fund has entered into interest rate swap agreements to fix the cost
of its  borrowings  under the Credit  Facility  used to  acquire  equity in real
estate  investments  and to mitigate in part the impact of interest rate changes
on the Fund's net asset value.

The Fund's  total return for the year ended  December  31, 2004 was 7.48%.  This
return  reflects an increase in the Fund's net asset value per Share from $86.28
to  $91.50  and a  distribution  of $1.15  per  Share  during  the  period.  For
comparison, the S&P 500 Index had a total return of 10.87% over the same period.
The combined impact on performance of the Fund's investment  activities  outside
of the  Portfolio  was  negative  for the year  ended  December  31,  2004.  The
performance of the Fund trailed that of the Portfolio by approximately 2.19% for
the year.

The Fund had a total return of 26.48% for the year ended December 31, 2003. This
return reflected an increase in the Fund's net asset value per Share from $69.87
to  $86.28  and a  distribution  of $1.70  per  Share  during  the  period.  For
comparison, the S&P 500 Index had a total return of 28.67% over the same period.
For the year ended December 31, 2003, the  performance of the Fund exceeded that
of the Portfolio by approximately 2.60%.

PERFORMANCE OF THE PORTFOLIO.  Economic pressures lingered for much of 2004, but
the lifting of some  political  uncertainty  ignited a late-year  market  rally,
helping U.S.  equities lock in a second  consecutive year of gains.  Strength in
the  broader  market  toward  year-end  was a function of several  economic  and
fundamental factors: historically low interest rates, decisive election results,
retreating  oil  prices  and  solid  earnings  growth.  A  wave  of  merger  and
acquisition  activity  provided  additional  support for equities,  as companies
across   technology,   telecommunications   and  healthcare   sectors  announced
multi-billion   dollar   combinations.   The  Federal  Reserve  raised  its  key
interest-rate  target five times in 2004,  increasing  the federal  funds target
rate to 2.25%. The Portfolio's  performance for the year ended December 31, 2004
was 9.67%,  trailing  the S&P 500 Index,  which had a total return of 10.87% for
the year. The total return of the Portfolio for the year ended December 31, 2003
was 23.88%.

In 2004,  value stocks  outperformed  growth stocks and  small-caps and mid-caps
outperformed  large-caps.  The  best  performing  market  sectors  were  energy,
utilities, telecom services and industrials. Lagging the overall market were the
healthcare, technology, and consumer staples sectors.

During the year, the Portfolio's  sector allocation  shifted slightly from 2003,
as it increased  positions in energy and industrial  stocks and reduced exposure
to  the  technology,   healthcare  and  consumer   discretionary   sectors.  The
<PAGE>
--------------------------------
(1)  Past performance is no guarantee of future results.  Investment  return and
     principal value will fluctuate so that Shares, when redeemed,  may be worth
     more  or  less  than  their  original  cost.   Returns  are  calculated  by
     determining the percentage change in net asset value with all distributions
     invested.  Performance  is for the stated time period  only;  due to market
     volatility,  the Fund's  current  performance  may be lower or higher.  The
     performance  of the Fund and the  Portfolio  is  compared  to that of their
     benchmark,  the S&P 500 Index.  It is not possible to invest directly in an
     Index.

                                       14
<PAGE>

Portfolio's  performance  versus  the  S&P 500  Index  benefited  from  relative
overweightings  in the strong  performing  energy  and  industrial  sectors  and
favorable  stock  selection among consumer  staples.  The  Portfolio's  relative
performance  versus the S&P 500 Index was  hampered  by  underweightings  in the
utilities and telecom services sectors and adverse  selection among  technology,
healthcare  and  consumer  discretionary  stocks.  Among  industry  groups,  the
Portfolio benefited from  overweightings of air freight & logistics,  oil & gas,
and building products and underweightings of semiconductors and pharmaceuticals.
Industry  groups  adversely  affecting  the  Portfolio's   relative  performance
included  the  overweighted  insurance  and media  groups and the  underweighted
health services and internet groups.

Looking  forward,  Boston  Management  believes that corporate  earnings and the
economy will remain on track as we enter 2005.  The  longer-term  success of the
Portfolio will be determined by the  performance of the U.S.  equity markets and
the execution of the Portfolio's  investment strategy. The Portfolio maintains a
broadly diversified portfolio of stocks,  emphasizing investments in established
growth companies that are considered by Boston  Management to be high in quality
and attractive in their long-term investment  prospects.  The Portfolio seeks to
minimize  trading  costs and defer the  recognition  of taxable gains by holding
most  successful  investments  for the  long-term.  Stock  selection  and  asset
allocation are based on Boston Management's detailed fundamental analysis.

PERFORMANCE OF REAL ESTATE  INVESTMENTS.  The Fund's real estate investments are
held through Belmar  Realty.  As of December 31, 2004,  real estate  investments
included a majority  interest in a Real Estate  Joint  Venture  (Brazos),  a Net
Leased Property (Bel Stamford) and a portfolio of Partnership  Preference Units.
Brazos operates industrial distribution properties.

In January,  2004, Belmar Realty acquired Bel Stamford for  approximately  $16.1
million (including  transaction costs). During the year ended December 31, 2004,
Belmar Realty acquired a majority interest in Brazos. In transactions  occurring
in June and August 2004,  Brazos  acquired  100% of the economic  interest in 23
industrial  distribution properties located in eight states. Brazos acquired the
properties for approximately  $382.9 million.  ProLogis owns a minority interest
in Brazos and ProLogis or an affiliate  thereof manages the  properties.  Brazos
obtained  first  mortgage  financing  in October  2004,  which is secured by the
properties  it  owns  and  without  recourse  to  Belmar  Realty,  the  Fund  or
Shareholders.

In  September  2004,  Belmar  Realty sold its  interest  in a Real Estate  Joint
Venture, Cimmaron Property Trust (Cimmaron), for approximately $159.1 million to
the real estate subsidiary of another fund advised by Boston Management.  Belmar
Realty  recognized  a gain of  approximately  $0.9  million on the sale.  Belmar
Realty  acquired  its  interest in Cimmaron  in May 2004 and  Cimmaron  acquired
industrial distribution properties on June 30, 2004 and August 4, 2004.

In October 2004, Bel Alliance  Apartments LLC (Bel  Apartments)  sold all of its
multifamily  properties to an affiliate of the former  Operating  Partner of Bel
Apartments,   receiving  net  proceeds  of  approximately  $23.5  million.   Bel
Apartments  did not  retain  any  contingent  liabilities  associated  with  the
mortgage  debt secured by the  properties  or other  liabilities.  Belmar Realty
recognized a loss of  approximately  $19.4 million on the sale.  Concurrent with
this sale,  Belmar  Realty  acquired the  outstanding  minority  interest in Bel
Apartments for a nominal  amount.  On December 15, 2004,  Belmar Realty sold Bel
Apartments,  which then held a portfolio of Partnership Preference Units, to the
real estate  subsidiary  of another  fund advised by Boston  Management.  Belmar
Realty recognized a gain of approximately $0.5 million on the sale.

During  the year  ended  December  31,  2004,  rental  income  from real  estate
operations  was  approximately  $57.2 million  compared to  approximately  $34.0
million for the year ended  December 31, 2003,  an increase of $23.2  million or
68%.  This  increase  in rental  income  was due to income  from the  industrial
distribution  properties  acquired  in 2004  and from  the Net  Leased  Property
acquired in January 2004, offset in part by a decline in income from multifamily
properties.  Multifamily  income  decreased  primarily  due to the  sale  of Bel
Apartments' properties in October 2004. Prior to the sale of its properties, Bel
Apartments  experienced lower rental revenues as the result of reduced apartment
rental rates, increased rent concessions and lower occupancy levels during 2004.
For the year ended December 31, 2003, rental income decreased principally due to
increased rent concessions or reduced apartment rental rates and lower occupancy
levels at multifamily  properties during 2003.

During the year ended  December  31,  2004,  property  operating  expenses  were
approximately $17.7 million compared to approximately $17.9 million for the year
ended December 31, 2003, a decrease of $0.2 million or 1.1% (property  operating
expenses are before certain operating expenses of Belmar Realty of approximately
$6.2 million for the year ended  December 31, 2004 and $4.8 million for the year
ended  December  31,  2003).  During 2004,  the  decrease in property  operating
expenses  was  principally  due to the  sale of Bel  Apartments'  properties  in
October  2004 and was  offset by the  expenses  of the  industrial  distribution
properties  acquired in 2004. During the year ended December 31, 2003,  property
operating expenses  increased  principally due to 17% increase in property taxes

                                       15
<PAGE>

and insurance  expenses for Bel Apartments  during the year, offset in part by a
1% decrease in property and maintenance expenses.  Belmar Realty does not record
operating  expenses for the Net Leased Property  because expenses are assumed by
the tenant under the terms of the lease agreement.

In 2004,  certain  industrial  markets in the United  States began to experience
increased  demand for space after  several  years of  occupancy  and rental rate
declines. For many industrial distribution  properties,  reduced rent levels are
likely to continue over the near term as above-market leases mature and space is
released at current market rates. Boston Management expects that improvements in
industrial  distribution  property  operating  performance  will  occur over the
longer term.

At December 31, 2004, the estimated fair value of the real properties indirectly
held  through  Belmar  Realty  was  approximately  $579.5  million  compared  to
approximately  $185.1  million at December  31,  2003,  a net increase of $394.4
million, or 213%. The net increase in estimated real property values at December
31, 2004 as compared to  December  31, 2003 was  principally  due to the January
2004 acquisition of Net Leased Property and the properties acquired by Brazos in
June and August 2004,  offset in part by the sale of Bel Apartments'  properties
in October 2004. The decrease in estimated  property values at December 31, 2003
as  compared to December  31,  2002 was due to  declines in  near-term  earnings
expectations for the multifamily  properties held, partially offset by decreases
in capitalization  rates. The  capitalization  rate, a term commonly used in the
real  estate  industry,  is the rate of return  percentage  applied to actual or
projected income levels to estimate the value of a real estate investment.

During the year ended December 31, 2004, the Fund saw unrealized depreciation of
the estimated fair value of its other real estate  investments  (which  includes
Brazos and Bel Stamford) of  approximately  $15.8 million compared to unrealized
depreciation of  approximately  $18.5 million during the year ended December 31,
2003. Net unrealized depreciation of approximately $15.8 million during the year
ended December 31, 2004 included  unrealized  depreciation  resulting from a net
decrease in estimated industrial distribution property values, offset in part by
unrealized  appreciation  resulting  from net  increases in estimated Net Leased
Property values and the  recharacterization  of previously  recorded  unrealized
depreciation  to realized  losses due to the October 2004 sale of  properties of
Bel  Apartments.  The net decrease in industrial  distribution  property  values
reflects  the  results  of  initial  independent  appraisals  of newly  acquired
properties and adjustments in the value of unappraised  industrial  distribution
properties to reflect  appraisal results for similar  properties,  in accordance
with the  Fund's  valuation  procedures  (described  in "The Real  Estate  Joint
Venture"  under  "Critical  Accounting  Estimates" in Item 7(e) below).  Initial
appraised values of newly acquired  properties  differed from transaction values
due primarily to  differences  in discount and  capitalization  rates applied in
valuing the properties.  Unrealized  depreciation during the year ended December
31, 2003 was due to modest  decreases in estimated  multifamily  property values
during the year.

During the year ended  December 31,  2004,  Belmar  Realty sold (or  experienced
scheduled  redemptions of) certain of its Partnership  Preference Units totaling
approximately  $470.4 million  (including  sales to real estate  subsidiaries of
other investment funds advised by Boston Management),  recognizing a net gain of
approximately $45.8 million on the transactions.  During the year ended December
31,  2004,  Belmar  Realty also  acquired  interests in  additional  Partnership
Preference Units  (representing  acquisitions  from real estate  subsidiaries of
other   investment   funds  advised  by  Boston   Management)  for  a  total  of
approximately $108.4 million.

At December 31, 2004,  the estimated fair value of Belmar  Realty's  Partnership
Preference Units totaled  approximately  $63.7 million compared to approximately
$424.8  million at December 31,  2003, a net decrease of $361.1  million or 85%.
The net decrease in the value of  Partnership  Preference  Units at December 31,
2004 was principally due to fewer Partnership  Preference Units held as compared
to December 31, 2003. In the current low interest rate environment, many issuers
have been redeeming  Partnership  Preference Units as call protections expire or
restructuring the terms of outstanding  Partnership  Preference Units in advance
of their call dates.  Boston Management  expects this trend to continue in 2005.
At December 31, 2003, the estimated fair value of Partnership  Preference  Units
decreased  principally due to fewer units held as compared to December 31, 2002.
The per unit value of the remaining  Partnership  Preference Units also declined
slightly during 2003.

During  the  year  ended   December  31,  2004,  the  Fund  saw  net  unrealized
depreciation of the estimated fair value of its Partnership  Preference Units of
approximately $44.9 million compared to unrealized depreciation of approximately
$12.3  million  during the year ended  December  31,  2003.  The net  unrealized
depreciation   of   approximately   $44.9  million   during  2004  consisted  of
approximately $5.3 million of unrealized  depreciation  resulting from decreases
in per unit values of the Partnership  Preference Units held by Belmar Realty at
December 31, 2004, and  approximately  $39.6 million of unrealized  depreciation
resulting  from  the   recharacterization   of  previously  recorded  unrealized
appreciation  to realized  gains due to sales of  Partnership  Preference  Units
during the year ended  December  31,  2004.  The decrease in per unit values was

                                       16
<PAGE>

principally due to restructurings of certain Partnership Preference Units, which
resulted  in a special  cash  distribution  and  renegotiated  lower  subsequent
distribution  rates. The decrease was also due to modest decreases in values for
certain other  Partnership  Preference  Units held at December 31, 2004 as these
issues approach their call protection  expiration  dates.  During 2003, the Fund
reported net unrealized depreciation consisting of approximately $8.6 million of
unrealized  appreciation  as a result  of  increases  in the per  unit  value of
Partnership  Preference Units held by Belmar Realty, offset by reclassifications
of  previously  unrealized  appreciation  as  realized  gains  due to  sales  of
Partnership Preference Units in the amount of approximately $20.9 million.

Distributions from Partnership  Preference Units for the year ended December 31,
2004 totaled approximately $14.7 million compared to approximately $45.0 million
for the year ended  December 31,  2003, a decrease of $30.3  million or 67%. The
decrease  was  principally  due to fewer  Partnership  Preference  Units held on
average, as well as lower average  distribution rates on Partnership  Preference
Units held  during  the year  ended  December  31,  2004.  During the year ended
December 31, 2003, distributions from Partnership Preference Units decreased due
to fewer Partnership Preference Units held than during 2002.

PERFORMANCE  OF INTEREST RATE SWAP  AGREEMENTS.  For the year ended December 31,
2004,  net  realized  and  unrealized  losses on the Fund's  interest  rate swap
agreements totaled  approximately $13.4 million,  compared to approximately $7.2
million of net realized and  unrealized  losses for the year ended  December 31,
2003. Net realized and unrealized losses on swap agreements in 2004 consisted of
$1.8  million  of net  realized  and  unrealized  losses  due to changes in swap
agreement  valuations  and $11.6  million of periodic  payments made pursuant to
outstanding  swap  agreements (and classified as net realized losses on interest
rate swap  agreements).  In 2003, the Fund had net realized and unrealized gains
of $22.4  million  due to swap  agreement  valuation  changes,  offset  by $29.6
million of swap agreement periodic payments.  The negative  contribution to Fund
performance  from changes in swap  agreement  valuations  in 2004 was due to the
timing of terminating  certain  outstanding swap  agreements,  offset in part by
swaps  held  throughout  the year  increasing  modestly  in value as a result of
increases in swap rates on swap agreements  with maturities  comparable to those
of  the  Fund's  swap  agreements.   The  positive  contribution  to  2003  Fund
performance from changes in swap agreement valuations was attributable to a rise
in swap  rates  during  the year and swap  agreements  entered  into by the Fund
approaching their optional termination dates.

During the year ended December 31, 2004, the Fund terminated certain outstanding
swap agreements and realized a loss of approximately $2.4 million.

MD&A AND RESULTS OF OPERATIONS  FOR THE YEAR ENDED DECEMBER 31, 2003 COMPARED TO
THE YEAR ENDED DECEMBER 31, 2002.
--------------------------------------------------------------------------------

PERFORMANCE  OF THE FUND.  The Fund had a total  return  of 26.48%  for the year
ended  December  31, 2003.  This return  reflected an increase in the Fund's net
asset  value per Share  from  $69.87 to $86.28 and a  distribution  of $1.70 per
Share during the period. For comparison, the S&P 500 Index had a total return of
28.67%  over  the same  period.  For the  year  ended  December  31,  2003,  the
performance of the Fund exceeded that of the Portfolio by approximately 2.60%.

The Fund had a total  return of -20.03% for the year ended  December  31,  2002.
This  return  reflected  a decrease in the Fund's net asset value per Share from
$87.37 to  $69.87.  For  comparison,  the S&P 500  Index  had a total  return of
-22.09%  over the same  period.  For the  year  ended  December  31,  2002,  the
performance of the Fund trailed that of the Portfolio by approximately 0.51%.

PERFORMANCE OF THE PORTFOLIO.  U.S. equities experienced a successful 2003, with
most major indices posting their first annual gains since 1999.  Strength in the
broader market was a function of a favorable economic environment:  historically
low  inflation  and  interest  rates,  coupled with robust  earnings  growth and
continued  consumer  strength.  While the  Portfolio's  performance for the year
ended December 31, 2003 of 23.88% was strong,  the Portfolio trailed the S&P 500
Index,  which had a total return of 28.67% for the year. The total return of the
Portfolio for the year ended December 31, 2002 was -19.52%.

The Portfolio's sector allocation in 2003 was substantially  unaltered from 2002
in that the  Portfolio  continued  to  maintain  overweighted  positions  in the
industrial,  consumer  discretionary  and  financials  sectors.  Although  these
sectors  generally  performed well during 2003,  the sub-par  performance of the
Portfolio's  holdings across the constituent  industries,  and multi-line retail
and  aerospace/defense  names  in  particular,  hindered  its  performance.  The
Portfolio's  continued  underweight of the best  performing  sector of the year,
information  technology,  was another  factor  contributing  to the  Portfolio's
relative underperformance versus the S&P 500 Index. As in 2002, lack of earnings
visibility  and  unattractive  valuations  caused  Boston  Management  to remain
cautious on the technology sector. A similar rationale prompted a de-emphasis of

                                       17
<PAGE>

the telecommunications sector, the underweighting of which had a positive impact
on the Portfolio's return in 2003.

During the year, Boston Management increased the Portfolio's  allocation to more
economically  sensitive sectors, such as consumer discretionary and energy, from
2002  levels.   This  shift,   particularly   with  respect  to  investments  in
pro-cyclical industries, such as consumer electronics,  energy services, and oil
and gas, was particularly beneficial. Financial and health care investments also
contributed to relative performance in 2003, with strong performance by consumer
finance,  pharmaceuticals  and  biotechnology  investments.  While the Portfolio
remained  underweighted in the materials and the utilities  sectors during 2003,
stock  selections in the electric and gas utilities groups  positively  impacted
returns for the year.

Unlike  in  2002,  the  market  favored  lower  quality  and  higher  volatility
securities in 2003, something that is not unusual when coming out of an economic
slowdown or bear market. The Portfolio's policy of investing primarily in higher
quality   securities   and  its   valuation   discipline   contributed   to  its
underperformance  versus its benchmark and the Portfolio's more aggressive peers
during 2003.

PERFORMANCE  OF REAL ESTATE  INVESTMENTS.  At December 31, 2003, the Fund's real
estate  investments  included a majority interest in a Real Estate Joint Venture
(Bel  Apartments)  and  Partnership  Preference  Units.  During  the year  ended
December 31, 2003, the Fund's real estate operations continued to be impacted by
weak multifamily market fundamentals.  Rental income from real estate operations
decreased  to $34.0  million for the year ended  December  31, 2003  compared to
$34.8  million for the year ended  December 31, 2002, a decrease of $0.8 million
or 2%.

Property  operating  expenses  totaled $17.9 million for each of the years ended
December 31, 2003 and December 31, 2002.  Operating  expenses for 2002 decreased
4% from $18.6 million in 2001.  Property  operating  expenses are before certain
operating  expenses of Belmar Realty of approximately  $4.8 million for the year
ended  December  31,  2003 and  approximately  $5.0  million  for the year ended
December 31, 2002.  Multifamily market fundamentals began to deteriorate in late
2001 in most regions with falling  occupancy levels and rising rent concessions.
This trend  continued  through  2002.  While the U.S.  economy  showed  signs of
strength during the year ended December 31, 2003,  significant employment growth
did not occur in most markets and low interest  rates  contributed  to continued
apartment  move-outs (due to new home purchases) and ongoing  development of new
properties.

At December 31,  2003,  the  estimated  fair value of the real  properties  held
through Belmar Realty was $185.1 million  compared to $203.9 million at December
31,  2002, a decrease of $18.8  million or 9%. The  decrease in  estimated  real
property value was due to declines in near-term earnings  expectations offset in
part by decreases  in  capitalization  rates.  The  capitalization  rate, a term
commonly  used in the real  estate  industry,  is the rate of return  percentage
applied to actual or  projected  income  levels to estimate  the value of a real
estate  investment.  The Fund saw unrealized  depreciation in the estimated fair
value of its other real  estate  investments  (which  included  Belmar  Realty's
interest in the Real Estate Joint Venture) of approximately $18.5 million during
the year ended  December  31, 2003  compared to  approximately  $8.5  million of
unrealized depreciation during the year ended December 31, 2002.

During the years ended  December 31, 2003 and December 31, 2002,  Belmar  Realty
sold (or experienced  scheduled  redemptions of) certain Partnership  Preference
Units, recognizing gains of $40.0 million and $5.1 million, respectively, on the
transactions  (including  sales to other  investment  funds  advised  by  Boston
Management). In 2003, Belmar Realty acquired interests in additional Partnership
Preference  Units for  approximately  $75.7  million.  At December 31, 2003, the
estimated fair value of Belmar  Realty's  Partnership  Preference  Units totaled
$424.8  million  compared to $550.4  million at December 31, 2002, a decrease of
$125.6  million  or 23%.  The  decrease  in value  was due to fewer  Partnership
Preference  Units held at December 31, 2003,  offset in part by increases in the
per unit value of the Partnership Preference Units held.

The  Fund  saw  unrealized  depreciation  of the  estimated  fair  value  in its
Partnership  Preference  Units of  approximately  $12.3 million  during the year
ended  December 31, 2003 compared to  approximately  $17.8 million of unrealized
appreciation  during the year ended  December  31, 2002.  During 2003,  the Fund
reported net unrealized depreciation consisting of approximately $8.6 million of
unrealized  appreciation  as a result of  increases in the per unit value of the
Partnership   Preference   Units   held  by   Belmar   Realty,   offset  by  the
reclassification of previously unrealized  appreciation as realized gains due to
the sales of Partnership  Preference Units in the amount of approximately  $20.9
million.

Distributions  received  from  Partnership  Preference  Units for the year ended
December 31, 2003 totaled $45.0  million  compared to $52.1 million for the year
ended December 31, 2002, a decrease of $7.1 million or 14%. The decrease was due
to fewer  Partnership  Preference  Units held on  average  during the year ended
December 31, 2003.

                                       18
<PAGE>

PERFORMANCE  OF INTEREST RATE SWAP  AGREEMENTS.  For the year ended December 31,
2003,  net  realized  and  unrealized  losses on the Fund's  interest  rate swap
agreements totaled  approximately $7.2 million,  compared to approximately $43.5
million of net realized and  unrealized  losses for the year ended  December 31,
2002. Net realized and unrealized losses on swap agreements in 2003 consisted of
$22.4  million  of net  realized  and  unrealized  gains due to  changes in swap
agreement valuations, offset by $29.6 million of periodic payments made pursuant
to  outstanding  swap  agreements  (and  classified  as net  realized  losses on
interest  rate  swap  agreements  in  the  Fund's   consolidated   statement  of
operations).  In 2002, the Fund had net realized and  unrealized  losses of $2.8
million  due to swap  agreement  valuation  changes  and $40.7  million  of swap
agreement periodic payments.  The positive contribution to 2003 Fund performance
from changes in swap  agreement  valuations was  attributable  to a rise in swap
rates during the year and swap agreements  entered into by the Fund  approaching
their optional  termination  dates. The negative impact on 2002 Fund performance
from  changes in swap  valuations  was due  primarily to a decline in swap rates
during the years.

On  October  1,  2003,  the Fund  terminated  all of its then  outstanding  swap
agreements  and entered  into new  agreements  to fix the cost of a  substantial
portion of Fund borrowings under the Credit  Facility.  The Fund realized a loss
of approximately $26.8 million on the swap agreement terminations.

(b) LIQUIDITY AND CAPITAL RESOURCES.
------------------------------------

OUTSTANDING BORROWINGS.  The Fund has entered into the Credit Facility primarily
to finance  the Fund's  real  estate  investments  and will  continue to use the
Credit Facility for such purpose in the future.  The Credit Facility may also be
used for other  purposes,  including  any  liquidity  needs of the Fund.  In the
future, the Fund may increase the size of the Credit Facility (subject to lender
consent) and the amount of outstanding borrowings thereunder. As of December 31,
2004,  the Fund had  outstanding  borrowings  of $290.0  million and unused loan
commitments of $118.5 million under the Credit Facility.

As of  December  31,  2004,  Brazos had  outstanding  borrowings  consisting  of
fixed-rate secured mortgage debt obligations of $229.0 million.

LIQUIDITY.  The Fund may redeem  shares of Belvedere  Company at any time.  Both
Belvedere  Company and the Portfolio  normally follow the practice of satisfying
redemptions  by  distributing  securities  drawn from the  Portfolio.  Belvedere
Company and the Portfolio may also satisfy  redemptions by distributing cash. As
of December 31, 2004, the Portfolio had cash and short-term investments totaling
$29.9  million.  The  Portfolio  participates  in a  $150.0  million  multi-fund
unsecured  line of credit  agreement  with a group of banks.  The  Portfolio may
temporarily  borrow  from the line of credit to satisfy  redemption  requests in
cash or to settle  investment  transactions.  The Portfolio  had no  outstanding
borrowings  at December  31,  2004.  To ensure  liquidity  for  investors in the
Portfolio,  the  Portfolio  may not  invest  more than 15% of its net  assets in
illiquid  assets.  As of December  31,  2004,  illiquid  assets  (consisting  of
restricted  securities not available for current public sale)  constituted 0.02%
of the net assets of the Portfolio.

The  liquidity of Belmar  Realty's  Real Estate  Joint  Venture  investments  is
extremely limited,  and relies  principally upon liquidation  agreement with the
Operating  Partner  described in "Real Estate Joint Venture  Investments"  under
"The Fund's Real Estate  Investments"  in Item 1.  Transfers of Belmar  Realty's
interest  in a Real Estate  Joint  Venture to parties  other than the  Operating
Partner are  restricted  by terms of the Real Estate Joint  Venture's  operative
agreement and lender consent requirements. The Partnership Preference Units held
by Belmar Realty are not registered  under the Securities Act and are subject to
substantial  restrictions on transfer. As such, they are illiquid. The liquidity
of Net Leased Property is also extremely limited.

(c) OFF-BALANCE SHEET ARRANGEMENTS.
-----------------------------------

The Fund is required  to disclose  off-balance  sheet  arrangements  that either
have,  or are  reasonably  likely  to have,  a current  or future  effect on its
financial  condition,  changes in  financial  condition,  revenues or  expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to  Shareholders.  An  off-balance  sheet  arrangement  includes any
contractual  arrangement to which an unconsolidated  entity is a party and under
which the Fund has certain specified  obligations.  As of December 31, 2004, the
Fund did not have any such off-balance sheet arrangements.

                                       19
<PAGE>
(d) THE FUND'S CONTRACTUAL OBLIGATIONS.
---------------------------------------

The  following  table sets forth the amounts of payments due under the specified
contractual obligations outstanding on December 31, 2004:
<TABLE>
<CAPTION>
                                                                        Payments due:
-------------------------------------------------------------------------------------------------------------------
Type of Obligation                        Total       Less than 1 Year   1-3 Years    3-5 Years   More than 5 years
-------------------------------------------------------------------------------------------------------------------
<S>                                   <C>               <C>             <C>          <C>            <C>
Long Term Debt:
 Mortgage Debt(1)                     $455,098,913      $ 4,747,863     $10,406,657  $11,712,426    $428,231,967
 Borrowings under Credit Facility(2)  $290,000,000      $        --     $        --  $        --    $290,000,000
Purchase Obligations(3)               $         --      $        --     $        --  $        --    $         --
Other Long Term Liabilities:
 Interest Rate Swap Agreements(4)     $ 96,568,391      $17,614,924     $35,229,848  $35,229,848    $  2,108,360
-------------------------------------------------------------------------------------------------------------------
Total                                 $841,667,304      $22,362,787     $45,636,505  $46,942,274    $720,340,327
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The property held by Belmar Realty is financed  primarily through mortgages
     issued to the Real Estate Joint Venture and the Net Leased  Property.  Each
     mortgage is secured by the  underlying  property and is  generally  without
     recourse to the other assets of the Fund or Belmar Realty,  as described in
     "Risks of Real Estate  Investments" in Item 7A(b).  The mortgages mature in
     2012 and 2016. Mortgage obligations cannot be prepaid or otherwise disposed
     of without incurring a substantial  prepayment  penalty or without the sale
     of the associated property.

(2)  To finance its real estate investments,  the Fund has entered into a Credit
     Facility as described  in  "Liquidity  and Capital  Resources"  above.  The
     Credit Facility is secured by a pledge of the Fund's assets,  excluding the
     assets of Brazos and Bel  Stamford,  and  expires in June 2010.  The Credit
     Facility is primarily  used to finance the Fund's equity in its real estate
     investments and will continue to be used for such purpose in the future.

(3)  The Fund and Belmar  Realty  have  entered  into  agreements  with  certain
     service providers  pursuant to which the Fund and Belmar Realty pay fees as
     a percentage of assets. These fees include fees paid to Eaton Vance and its
     affiliates  (which are described in Item 13).  These  agreements  generally
     continue  indefinitely  unless  terminated by the Fund or Belmar Realty (as
     applicable) or the service provider.  For the year ended December 31, 2004,
     fees paid to Eaton Vance and its affiliates equaled  approximately 1.12% of
     the Fund's net assets.  Because  these fees are based on the Fund's  assets
     (which will  fluctuate  over time) it is not possible to specify the dollar
     amounts payable in the future.

(4)  The Fund has entered into interest rate swap  agreements to fix the cost of
     borrowings  under the Credit Facility used to acquire equity in real estate
     investments.  Pursuant to the interest rate swap agreements, the Fund makes
     cash payments to MLCS at fixed rates in exchange for floating rate payments
     from MLCS that fluctuate with one-month LIBOR. The amounts disclosed in the
     table  represent  the fixed  interest  amounts  payable  by the  Fund.  The
     periodic  floating rate payments that the Fund expects to receive  pursuant
     to the agreements will reduce the fixed interest cost to the Fund. The swap
     agreements  expire  on June  25,  2010,  subject  to the  Fund's  right  to
     terminate earlier in the case of certain swaps.

(e) CRITICAL ACCOUNTING ESTIMATES.
----------------------------------

The Fund's  consolidated  financial  statements are prepared in accordance  with
accounting  principles  generally accepted in the United States of America.  The
preparation of these financial  statements  requires the Fund to make estimates,
judgments  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  revenues  and  expenses.  Estimates  are  deemed  critical  when a
different  estimate  could  have  reasonably  been used or where  changes in the
estimate are  reasonably  likely to occur from period to period,  and where such
different or changed  estimates  would  materially  impact the Fund's  financial
condition,  changes in financial condition or results of operations.  The Fund's
significant  accounting  policies are  discussed  in Note 2 of the  consolidated
financial  statements;  critical estimates inherent in these accounting policies
are discussed in the following paragraphs.

The Fund has determined that the valuation of the Fund's real estate investments
(including the Real Estate Joint Venture,  the Partnership  Preference Units and
the Net Leased Property) involve critical  estimates.  The Fund's investments in
real estate are an important component of its total investment  program.  Market
prices  for these  investments  are not  readily  available  and  therefore  the
investments  are  stated in the  Fund's  consolidated  financial  statements  at
estimated fair value.  The estimated fair value of an investment  represents the
amount at which Boston  Management  believes the  investment  could be sold in a
current transaction between willing parties in an orderly disposition,  that is,

                                       20
<PAGE>

other than in a forced or liquidation  sale. The Fund reports the estimated fair
value of its real estate investments on its consolidated statement of assets and
liabilities  with any  changes to  estimated  fair value  charged to  unrealized
appreciation or depreciation in the Fund's consolidated statement of operations.

The need to  estimate  the fair  value of the  Fund's  real  estate  investments
introduces   uncertainty  into  the  Fund's  reported  financial  condition  and
performance because:

     *    such assets are, by their  nature,  difficult  to value and  estimated
          values may not  accurately  reflect  what the Fund could  realize in a
          current sale between willing parties;

     *    property  appraisals and other factors used to determine the estimated
          fair value of the Fund's real estate  investments  depend on estimates
          of future operating results and supply and demand assumptions that may
          not reflect actual current market conditions and full consideration of
          all factors relevant to valuations;

     *    property  appraisals and other factors used to determine the estimated
          fair value of the Fund's real estate  investments are not continuously
          updated and therefore may not be current as of specific dates; and

     *    if the Fund were forced to sell illiquid assets on a distressed basis,
          the proceeds may be substantially less than stated values.

As of December  31,  2004,  the  estimated  fair value of the Fund's real estate
investments  represented  24.1% of the Fund's total  assets.  As of December 31,
2004,  adjusting for the minority  interest of the Operating Partner that is the
principal  minority  investor in the Real Estate Joint Venture,  the Fund's real
estate  investments  represented  30.6% of the Fund's net assets.  The estimated
fair value of the Fund's  real estate  investments  may change due to changes in
market  conditions  and  changes  in  valuation  assumptions  made  by  property
appraisers and third party valuation service providers as described below.

As  noted in Item 1, to  satisfy  certain  requirements  of the  Code,  the Fund
invests at least 20% of its assets (calculated in the manner prescribed) in real
estate investments (the 20% requirement). Should the estimated fair value of the
Fund's real  estate  investments  decrease,  the Fund may be required to acquire
additional real estate  investments to satisfy the 20% requirement.  Because the
Fund  acquires  real  estate   investments  with  borrowings,   acquisitions  of
additional real estate  investments  would increase the Fund's  borrowings under
the Credit  Facility  and reduce the  amounts  otherwise  available  to the Fund
thereunder.   Should  the  estimated  fair  value  of  the  Fund's  real  estate
investments   increase,   real  estate  investments  could  represent  a  larger
percentage of the Fund's investment portfolio.

PARTNERSHIP  PREFERENCE UNITS.  Boston Management  determines the estimated fair
value  of  the  Fund's  Partnership  Preference  Units  based  on  analysis  and
calculations  performed  primarily on a monthly  basis by a third party  service
provider.  The service provider  calculates an estimated price and yield (before
accrued  distributions) for each issue of Partnership  Preference Units based on
descriptions  of such issue provided by Boston  Management and certain  publicly
available  information  including,  but not limited  to, the  trading  prices of
publicly issued debt and/or  preferred stock  instruments of the same or similar
issuers,  which may be adjusted to reflect the illiquidity and other  structural
characteristics  of the Partnership  Preference Units (such as call provisions).
Daily  valuations of  Partnership  Preference  Units are determined by adjusting
prices from the service provider to account for accrued  distributions under the
terms of the  Partnership  Preference  Units.  If changes in  relevant  markets,
events that materially  affect an issuer or other events that have a significant
effect on the price or yield of  Partnership  Preference  Units occur,  relevant
prices or yields may be recalculated to take such occurrences into account.

Valuations of Partnership Preference Units are inherently uncertain because they
are based on adjustments from the market prices of  publicly-traded  debt and/or
preferred  stock  instruments of the same or similar  issuers to account for the
Partnership  Preference Units'  illiquidity,  structural  features (such as call
provisions) and other relevant factors. Each month Boston Management reviews the
analysis and calculations  performed by the service provider.  Boston Management
generally  relies on the assumptions and judgments made by the service  provider
in  estimating  the  fair  value of the  Partnership  Preference  Units.  If the
assumptions and estimates used by the service  provider to calculate  prices for
Partnership  Preference  Units were to change,  it could  materially  impact the
estimated fair value of the Fund's holdings of Partnership Preference Units.

THE REAL ESTATE JOINT VENTURE.  Boston Management  determines the estimated fair
value of the Fund's interest in the Real Estate Joint Venture based primarily on
annual  appraisals  of the  properties  owned by such Real Estate Joint  Venture

                                       21
<PAGE>

(provided  such  appraisals are available) and an allocation of the equity value
of the Real Estate Joint  Venture  between the Fund and the  Operating  Partner.
Appraisals of the Real Estate Joint  Venture  properties  may be conducted  more
frequently than once a year if Boston  Management  determines  that  significant
changes in economic  circumstances that may materially impact estimated property
values have occurred since the most recent appraisal.

In deriving the estimated value of a property,  an appraiser  considers numerous
factors, including the expected future cash flows from the property, recent sale
prices for similar  properties and, if applicable,  the replacement  cost of the
property,  in order to  derive  an  indication  of the  amount  that a  prudent,
informed  purchaser-investor would pay for the property. More specifically,  the
appraiser  considers the revenues and expenses of the property and the estimated
future growth or decline thereof, which may be based on tenant quality, property
condition,  neighborhood change, market trends,  interest rates, inflation rates
or other factors  deemed  relevant by the  appraiser.  The  appraiser  estimates
operating  cash flows from the property and the sale proceeds of a  hypothetical
transaction  at the end of a  hypothetical  holding  period.  The cash flows are
discounted to their present values using a market-derived  discount rate and are
added together to obtain a value  indication.  This value indication is compared
to  the  value   indication   that  results  from   applying  a   market-derived
capitalization  rate to a single year's  stabilized net operating income for the
property.  The assumed  capitalization  rate may be extracted  from local market
transactions  or, when  transaction  evidence is  lacking,  obtained  from trade
sources.  The  appraiser  considers the value  indications  derived by these two
methods, as well as the value indicated by recent market transactions  involving
similar properties, in order to produce a final value estimate for the property.

Appraisals of properties owned by the Real Estate Joint Venture are conducted by
independent  appraisers  who are  licensed  in their  respective  states and not
affiliated  with  Eaton  Vance  or the  Operating  Partner.  Each  appraisal  is
conducted  in  accordance  with  the  Uniform  Standards  Board  and the Code of
Professional  Appraisal  Practice of the  Appraisal  Institute (as well as other
relevant  standards).  Boston Management  reviews the appraisal of each property
and generally  relies on the  assumptions  and judgments  made by the appraiser.
Property appraisals are inherently uncertain because they apply assumed discount
rates, capitalization rates, growth rates and inflation rates to the appraiser's
estimated  stabilized  cash flows,  and due to the unique  characteristics  of a
property,  which may affect its value but may not be taken into account.  If the
assumptions  and estimates  used by the appraisers to determine the value of the
properties  owned by the Fund's Real Estate  Joint  Venture  were to change,  it
could materially impact the estimated fair value of the Fund's Real Estate Joint
Venture.  When a property  owned by a Real  Estate  Joint  Venture  has not been
appraised  (such as when the Real Estate  Joint  Venture  recently  acquired the
property), Boston Management determines the estimated fair value of the property
based  on the  transaction  value  of  the  property,  which  equals  the  total
acquisition  cost of the  property  exclusive of certain  legal and  transaction
costs,  provided such amount is indicative of fair value. Once an appraisal of a
property has been conducted, Boston Management bases the estimated fair value of
the property  principally on the estimated value as determined by the appraiser.
Appraisals of newly acquired  properties are conducted in the year following the
acquisition. If the initial appraised value of a newly acquired property differs
significantly  from the  transaction  value of the property,  it may  materially
impact the estimated  fair value of the Real Estate Joint Venture that holds the
property. Interim valuations of Real Estate Joint Venture assets may be adjusted
by Boston Management to reflect significant changes in economic circumstances or
recent  independent  evaluations  of  similar  properties,  and the  results  of
operations and distributions.

Boston  Management  determines  the  estimated  fair value of the Fund's  equity
interest in the Real Estate Joint Venture based on an estimate of the allocation
of equity interests between the Fund and the Operating Partner.  This allocation
is generally calculated by a third party specialist, using current appraisals of
the  properties  owned by the Real Estate Joint Venture.  The specialist  uses a
financial  model that  considers  (i) the terms of the joint  venture  agreement
relating to  allocation  of  distributable  cash flow,  (ii) the duration of the
joint venture,  and (iii) the projected  property values and cash flows from the
properties based on estimates made by the appraisers.  The estimated  allocation
of equity  interests  between  the Fund and the  Operating  Partner  of the Real
Estate Joint Venture is prepared quarterly and reviewed by Boston Management. If
the  estimate of the  allocation  of equity  interests  in the Real Estate Joint
Venture were to change  (because,  for  example,  the  appraisers'  estimates of
property  values  or  projected  cash  flows of the Real  Estate  Joint  Venture
changed), it may materially impact the estimated fair value of the Fund's equity
interest in the Real Estate Joint Venture.  When the properties  owned by a Real
Estate Joint Venture have not been appraised (such as when the Real Estate Joint
Venture recently acquired the properties),  Boston  Management  allocates equity
interests in the Real Estate Joint  Venture based on the  contractual  ownership
interests of Belmar Realty and the Operating Partner. As of December 31, 2004, a
portion  of  the  properties  owned  by  Brazos  has  not  been  appraised.  The
unappraised properties have been fair valued in good faith by Boston Management.

NET LEASED PROPERTY.  Boston  Management  determines the estimated fair value of
the Net Leased  Property  based on an annual  appraisal of the leased fee market
value of the property.  These appraisals  are conducted by independent, licensed

                                       22
<PAGE>

appraisers in a manner similar to the appraisals of the properties  owned by the
Real Estate Joint  Venture  (described  above).  In deriving a leased fee market
value for the Net Leased Property,  an appraiser considers the owner's rights as
specified by the contract  terms of the lease with the tenant of the  properties
as well as the probability of the tenant  performing its lease obligations based
in part on the tenant's  financial  status.  This form of appraisal assumes that
the amount  that a prudent,  informed  purchaser-investor  would pay for the Net
Leased Property relates to the  predictability of the expected income stream and
that a more predictable income stream would result in a higher estimated value.

Boston Management reviews the appraisal of the Net Leased Property and generally
relies on the assumptions and judgments made by the appraiser. Appraisals of the
Net Leased  Property may be conducted more frequently than once a year if Boston
Management  determines that significant  changes in economic  circumstances have
occurred since the most recent appraisal.  Appraisals of the Net Leased Property
are   inherently   uncertain   because  they  apply  assumed   discount   rates,
capitalization  rates,  growth rates and inflation  rates to the expected income
stream from the property as defined by the contract terms of the lease,  and due
to the unique  characteristics  of the property,  which may affect its value but
cannot be taken into  account.  If the  assumptions  and  estimates  used by the
appraisers to determine the value of the property owned by the Fund's subsidiary
were to  change,  it could  materially  impact the  estimated  fair value of the
Fund's equity interest in the Net Leased Property.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
--------------------------------------------------------------------

(a) QUANTITATIVE INFORMATION ABOUT MARKET RISK.
-----------------------------------------------

INTEREST  RATE RISK.  The Fund's  primary  exposure to interest rate risk arises
from its real estate  investments  that are  financed by the Fund with  floating
rate  borrowings  under the Credit Facility and by fixed-rate  secured  mortgage
debt  obligations  of the Real Estate  Joint  Venture  and Net Leased  Property.
Partnership  Preference  Units are fixed  rate  instruments  whose  values  will
generally  decrease  when interest  rates rise and increase when interest  rates
fall.  The interest rates on borrowings  under the Credit  Facility are reset at
regular  intervals based on one-month  LIBOR. The Fund has entered into interest
rate swap agreements to fix the cost of a substantial  portion of its borrowings
under the Credit Facility used to acquire equity in real estate  investments and
to mitigate in part the impact of interest  rate changes on the Fund's net asset
value. Under the terms of the interest rate swap agreements, the Fund makes cash
payments at fixed rates in exchange for floating rate  payments  that  fluctuate
with one-month  LIBOR.  The Fund's  interest rate swap agreements will generally
increase in value when  interest  rates rise and decrease in value when interest
rates  fall.  In the  future,  the  Fund may use  other  interest  rate  hedging
arrangements (such as caps, floors and collars) to fix or limit borrowing costs.
The use of interest rate hedging arrangements is a specialized activity that can
expose the Fund to significant loss.

The following table summarizes the contractual  maturities and  weighted-average
interest rates  associated  with the Fund's  significant  non-trading  financial
instruments.  The Fund has no market risk sensitive instruments held for trading
purposes.  This information  should be read in conjunction with Notes 7 and 8 to
the Fund's consolidated financial statements appearing on pages 36 to 79 of this
Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                         Interest Rate Sensitivity
                                                     Cost, Principal (Notional) Amount
                                                 by Contractual Maturity and Callable Date
                                                 for the Twelve Months Ended December 31,*

                                                                                                     Estimated
                                                                                                   Fair Value as
                                                                                                    of December
                                 2005       2006-2008         2009      Thereafter      Total        31, 2004
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>             <C>         <C>           <C>           <C>
Rate sensitive
liabilities:
-----------------------
Long-term debt:
-----------------------
Fixed-rate mortgages                                                   $455,098,913  $455,098,913  $576,506,000

Average interest rate                                                          5.73%         5.73%
-----------------------

                                       23
<PAGE>
                                                                                                     Estimated
                                                                                                   Fair Value as
                                                                                                    of December
                                 2005       2006-2008         2009      Thereafter      Total        31, 2004
------------------------------------------------------------------------------------------------------------------------------------
Variable-rate Credit
Facility                                                               $290,000,000  $290,000,000  $290,000,000

Average interest rate                                                          2.60%         2.60%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive derivative
financial instruments:
-----------------------
Pay fixed/receive
variable interest
rate swap agreements                                                   $388,668,000  $388,668,000  $  2,701,342
Average pay rate                                                               4.53%         4.53%

Average receive rate                                                           2.60%         2.60%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive
investments:
-----------------------
Fixed-rate
Partnership
Preference Units:
-----------------------
MHC Operating Limited
Partnership, 9%
Series D Cumulative
Redeemable Perpetual
Preference Units,
Callable 9/29/04,
Current Yield: 8.97%          $20,544,240                                            $ 20,544,240  $ 20,064,000

PSA Institutional
Partners, L.P., 6.40%
Series NN Cumulative
Redeemable Perpetual
Preferred Units,
Callable 3/17/10,
Current Yield: 6.69%                                                   $ 13,387,321  $ 13,387,321  $ 13,275,600

Sun Communities
Operating L.P.,
8.875% Series A
Cumulative Redeemable
Perpetual Preferred
Units, Callable
9/29/04, Current Yield:
8.77%                         $26,227,200                                            $ 26,227,200  $ 30,348,000
</TABLE>
                                       23
<PAGE>

*    The amounts  listed  reflect the Fund's  positions as of December 31, 2004.
     The Fund's current positions may differ.

                                       24
<PAGE>
(b) QUALITATIVE INFORMATION ABOUT MARKET RISK.
----------------------------------------------

RISKS  ASSOCIATED  WITH  EQUITY  INVESTING.  The  Fund  invests  primarily  in a
diversified  portfolio of common stocks and is thereby  subject to general stock
market risk.  There can be no assurance  that the  performance  of the Fund will
match that of the U.S.  stock market or that of other equity funds.  In managing
the Portfolio for long-term,  after-tax  returns,  Boston  Management  generally
seeks to avoid or minimize sales of securities  with large  accumulated  capital
gains,   including   contributed   securities.   Such  securities  constitute  a
substantial  portion of the assets of the Portfolio.  Although the Portfolio may
utilize certain management strategies in lieu of selling appreciated securities,
the  Portfolio's,  and hence the Fund's,  exposure to losses during stock market
declines  may  nonetheless  be higher  than  funds  that do not follow a general
policy of avoiding sales of highly-appreciated securities.

RISKS OF INVESTING IN FOREIGN  SECURITIES.  The Portfolio  invests in securities
issued  by  foreign  companies  and the Fund may  acquire  foreign  investments.
Foreign  investments  involve  considerations  and possible  risks not typically
associated with investing in the United States. The value of foreign investments
to U.S.  investors  may be  adversely  affected  by changes in  currency  rates.
Foreign  brokerage  commissions,  custody fees and other costs of investing  are
generally higher than in the United States, and foreign  investments may be less
liquid,  more  volatile and subject to more  government  regulation  than in the
United States.  Foreign investments could be adversely affected by other factors
not  present  in  the  United  States,  including  expropriation,   confiscatory
taxation, lack of uniform accounting and auditing standards, armed conflict, and
potential difficulty in enforcing  contractual  obligations.  These risks can be
more significant for investments in emerging markets.

RISKS OF CERTAIN  INVESTMENT  TECHNIQUES.  In  managing  the  Portfolio,  Boston
Management may purchase or sell derivative instruments (which derive their value
by reference to other securities,  indexes,  instruments or currencies) to hedge
against  securities  price  declines and currency  movements,  to add investment
exposure  to  individual  securities  and  groups of  securities  and to enhance
returns.  Such transactions may include,  without  limitation,  the purchase and
sale of futures  contracts on stocks and stock indexes and options thereon,  the
purchase of put options and the sale of call options on securities held,  equity
swaps,  forward sales of stocks,  and the purchase and sale of forward  currency
exchange contracts and currency futures. The Portfolio may engage in short sales
of  individual  securities  held and short  sales of index or basket  securities
whose  constituents  are held in whole or in part.  The Portfolio may enter into
private contracts for the forward sale of stock held and may also lend portfolio
securities.

The use of these  investment  techniques is a  specialized  activity that may be
considered  speculative  and  which can  expose  the Fund and the  Portfolio  to
significant  risk of loss.  Successful  use of these  investment  techniques  is
subject to the ability and performance of the investment adviser. The Fund's and
the Portfolio's ability to achieve their investment  objectives may be adversely
affected by the use of these  techniques.  The writer of an option or a party to
an equity swap may incur losses that substantially exceed the payments,  if any,
received from a counterparty.  Forward sales,  swaps, caps, floors,  collars and
over-the-counter  options are private contracts in which there is also a risk of
loss in the event of a default on an obligation to pay by the counterparty. Such
instruments  may be  difficult  to value,  may be illiquid and may be subject to
wide  swings in  valuation  caused  by  changes  in the price of the  underlying
security,  index,  instrument  or  currency.  In  addition,  if the  Fund or the
Portfolio  has  insufficient  cash  to meet  margin,  collateral  or  settlement
requirements,   it  may  have  to  sell   assets  to  meet  such   requirements.
Alternatively, should the Fund or the Portfolio fail to meet these requirements,
the counterparty or broker may liquidate positions of the Fund or the Portfolio.
The Portfolio may also have to sell or deliver securities  holdings in the event
that it is not able to purchase securities on the open market to cover its short
positions or to close out or satisfy an exercise  notice with respect to options
positions it has sold.  In any of these cases,  such sales may be made at prices
or in circumstances that Boston Management considers unfavorable.

The Portfolio's  ability to utilize  covered short sales,  certain equity swaps,
forward  sales,  futures and certain  equity collar  strategies  (combining  the
purchase  of a put  option  and the sale of a call  option)  as a  tax-efficient
management  technique  with  respect to holdings of  appreciated  securities  is
limited to circumstances  in which the hedging  transaction is closed out within
30  days  of the end of the  Portfolio's  taxable  year  in  which  the  hedging
transaction was initiated and the underlying  appreciated securities position is
held  unhedged for at least the next 60 days after such hedging  transaction  is
closed.  In  addition,  dividends  received on stock for which the  Portfolio is
obligated to make related payments  (pursuant to a short sale or otherwise) with
respect to positions in substantially similar or related property are subject to
federal  income  taxation at ordinary rates and do not qualify for favorable tax
treatment. Also, holding periods required to receive tax-advantaged treatment of
qualified  dividends  on a stock are  suspended  whenever the  Portfolio  has an
option  (other  than a  qualified  covered  call  option  not in the money  when
written)  or   contractual   obligation  to  sell  or  an  open  short  sale  of
substantially  identical  stock,  is the  grantor  of an  option  (other  than a
qualified   covered  call  option  not  in  the  money  when   written)  to  buy
substantially  identical  stock or has diminished  risk of loss in such stock by
holding  positions with respect to  substantially  similar or related  property.
There can be no assurance  that  counterparties  will at all times be willing to
                                       25
<PAGE>

enter into covered short sales,  forward sales of stocks,  interest rate hedges,
equity swaps and other derivative instrument  transactions on terms satisfactory
to the Fund or the Portfolio.  The Fund's and the  Portfolio's  ability to enter
into such  transactions may also be limited by covenants under the Fund's Credit
Facility,  the federal margin  regulations and other laws and  regulations.  The
Portfolio's use of certain investment  techniques may be constrained because the
Portfolio is a diversified,  open-end  management  investment company registered
under the 1940 Act and because  other  investors in the  Portfolio are regulated
investment companies under Subchapter M of the Code. Moreover,  the Fund and the
Portfolio are subject to restrictions under the federal securities laws on their
ability to enter into  transactions in respect of securities that are subject to
restrictions on transfer pursuant to the Securities Act.

RISKS  OF REAL  ESTATE  INVESTMENTS.  The  success  of the  Fund's  real  estate
investments  depends in part on many factors  related to the real estate market.
These factors include,  without  limitation,  general economic  conditions,  the
supply and demand for different types of real  properties,  the financial health
of tenants,  changing  transportation  and  logistics  patterns  (in the case of
industrial  distribution  properties),  the  timing  of  lease  expirations  and
terminations,  fluctuations  in rental rates and  operating  costs,  exposure to
adverse  environmental  conditions  and losses from  casualty  or  condemnation,
fluctuations   in  interest  rates,   availability   of  financing,   managerial
performance,  government rules and regulations,  and acts of God (whether or not
insured  against).  There can be no assurance that Belmar Realty's  ownership of
real estate investments will be an economic success.

The success of investments in Partnership  Preference Units depends upon factors
relating  to  the  issuing  partnerships  that  may  affect  such  partnerships'
profitability and their ability to make  distributions to holders of Partnership
Preference  Units.  Interests in the Real Estate Joint  Venture and  Partnership
Preference  Units are not registered  under the federal  securities laws and are
subject to  restrictions  on  transfer.  Due to their  illiquidity,  they may be
difficult to value and the ongoing value of the  investments  is uncertain.  See
"Critical Accounting Estimates" in Item 7. Investments in Partnership Preference
Units are valued  primarily by referencing  market trading prices for comparable
preferred  equity  securities or other  fixed-rate  instruments  having  similar
investment  characteristics.  The  valuations of  Partnership  Preference  Units
fluctuate over time to reflect, among other factors,  changes in interest rates,
changes in the perceived riskiness of such units (including call risk),  changes
in the perceived  riskiness of comparable or similar  securities  trading in the
public market and the  relationship  between supply and demand for comparable or
similar  securities  trading in the public market.  The valuation of Partnership
Preference  Units will be adversely  affected by increases in interest rates and
increases  in the  perceived  riskiness of such units or  comparable  or similar
securities.  Fluctuations in the value of Partnership  Preference  Units derived
from changes in general interest rates can be expected to be offset in part (but
not entirely) by changes in the value of interest rate swap  agreements or other
interest  rate hedges  entered into by the Fund with  respect to its  borrowings
under the Credit Facility.  Fluctuations in the value of Partnership  Preference
Units  that are  derived  from  other  factors  besides  general  interest  rate
movements  (including   issuer-specific  and  sector-specific  credit  concerns,
property  or  tenant-specific  concerns,  and  changes in  interest  rate spread
relationships)  will not be offset by changes in the value of interest rate swap
agreements or other interest rate hedges  entered into by the Fund.  Because the
Partnership  Preference  Units are not rated by a  nationally-recognized  rating
agency,  they may be subject to more credit risk than  securities that are rated
investment grade.

The performance of the Real Estate Joint Venture is substantially  influenced by
the property management  capabilities of the Operating Partner and conditions in
the specific real estate  sub-markets in which the properties  owned by the Real
Estate  Joint  Venture  are  located.   The  Operating  Partner  is  subject  to
substantial  conflicts of interest in structuring,  operating and winding up the
Real Estate Joint Venture.  The Operating  Partner had an economic  incentive to
maximize the prices at which it sold properties to the Real Estate Joint Venture
and has a similar  incentive  to  minimize  the  prices at which it may  acquire
properties from the Real Estate Joint Venture.  The Operating Partner may devote
greater attention or more resources to managing its wholly-owned properties than
properties   held  by  the  Real  Estate  Joint   Venture.   Future   investment
opportunities  identified by the  Operating  Partner will more likely be pursued
independently,  rather than through,  the Real Estate Joint  Venture.  Financial
difficulties  encountered by the Operating  Partner in its other  businesses may
interfere with the operations of the Real Estate Joint Venture.

Belmar Realty's  investments in Real Estate Joint Ventures may be  significantly
concentrated  in terms of  geographic  regions,  property  types and  operators,
increasing the Fund's exposure to regional,  property type and operator specific
risks.  Given  a lack of  stand-alone  operating  history  and  relatively  high
financial  leverage,  the Real Estate Joint Venture is not equivalent in quality
to real estate  companies whose  preferred  equity or senior debt securities are
rated  investment  grade.  Distributable  cash flows from the Real Estate  Joint
Venture may not be  sufficient  for Belmar  Realty to receive  its fixed  annual
preferred return, or any returns in excess thereof.

                                       26
<PAGE>

The debt of Brazos is  fixed-rate,  secured  by the  underlying  properties  and
without  recourse to Belmar Realty and the Fund. In connection  with Real Estate
Joint  Ventures  that may be acquired in the future,  Belmar Realty and the Fund
may be directly or indirectly  responsible for certain liabilities  constituting
exceptions to the generally  non-recourse  nature of the mortgage  indebtedness,
including liabilities associated with fraud, misrepresentation, misappropriation
of  funds,  or  breach of  material  covenants,  and  liabilities  arising  from
environmental  conditions  involving  or  affecting  Real Estate  Joint  Venture
properties.  To the extent  practicable,  the Fund and Belmar  Realty  will seek
indemnification   from   Operating   Partners  for  certain  of  such  potential
liabilities.  The  availability of financing and other financial  conditions can
have a material  impact on property  values and  therefore  on the value of Real
Estate Joint  Venture  assets.  Mortgage  debt of the Real Estate Joint  Venture
normally cannot be refinanced prior to maturity without substantial penalties.

The  ongoing  value of Belmar  Realty's  investments  in the Real  Estate  Joint
Venture is  substantially  uncertain.  The real  property  held  through  Belmar
Realty's  Real  Estate  Joint  Venture  is stated  at  estimated  fair  value as
described in Item 7(e). The policies for valuing real estate investments involve
significant  judgments  that are  based  upon a number  of  factors,  which  may
include, without limitation,  general economic conditions, the supply and demand
for different types of real  properties,  the financial  health of tenants,  the
timing of lease expirations and  terminations,  fluctuations in rental rates and
operating costs,  exposure to adverse  environmental  conditions and losses from
casualty or condemnation,  interest rates, availability of financing, managerial
performance  and government  rules and  regulations.  Given that such valuations
include many assumptions, values may differ from amounts ultimately realized.

Belmar  Realty's  investments in Net Leased Property are subject to general real
estate market risks similar to Real Estate Joint  Ventures.  Investments  in Net
Leased  Property are also subject to risks  specific to this type of investment,
including a  concentration  of risk exposure to specific real estate  submarkets
and individual properties and tenants. Principal among the risks of investing in
Net Leased  Property is the risk that a major  tenant fails to satisfy its lease
obligations due to financial  distress or other reasons.  A tenant's  failure to
meet its lease  obligations  would expose Belmar Realty to  substantial  loss of
income  without  a  commensurate  reduction  in debt  service  costs  and  other
expenses,  and would  transfer  to Belmar  Realty  all the costs,  expenses  and
liabilities of property  ownership and management  borne by the tenant under the
terms of the lease.  Re-leasing a property could involve  considerable  time and
expense.  Re-leasing  opportunities may be limited by the nature and location of
the  property,  which  may not be well  suited  to the  needs of other  possible
tenants.  Even if a  property  is  re-leased,  the  property  may  not  generate
sufficient rental income to cover debt service and other expenses.

Net Leased  Property is  generally  illiquid,  and the  ongoing  value of Belmar
Realty's  investments in Net Leased  Property is  substantially  uncertain.  Net
Leased Property held is generally stated at estimated fair value based on annual
appraisals.  See "Critical Accounting Estimates" in Item 7. Because the value of
Bel Stamford reflects in part the financial status of its principal tenant,  any
reduction in the financial  status of the tenant could have an adverse effect on
the appraised  value of the property and the value realized upon the disposition
of such property.  Tenants may hold rights to renew or extend  expiring  leases,
and exercise of such rights  would extend  Belmar  Realty's  risk  exposure to a
particular  tenant beyond the initial lease term. A tenant may also hold options
to purchase Net Leased Property,  including  options to purchase at below market
levels.  The value  received upon the  disposition  of Net Leased  Property will
depend on real estate market conditions, lease and mortgage terms, tenant credit
quality,  tenant purchase options,  lender approvals and other factors affecting
valuation  as may then  apply.  Because  a sale of Net  Leased  Property  is not
expected to occur for many years,  market conditions and other valuation factors
at the time of sale  cannot be  predicted.  Since the  valuations  of Net Leased
Property  assume  an  orderly  disposition  of  assets,  amounts  realized  in a
distressed sale may differ substantially from stated values.

The mortgage  debt  associated  with Net Leased  Property is  generally  without
recourse to Belmar Realty and the Fund,  except certain  liabilities  associated
with fraud, misrepresentation,  misappropriation of funds, or breach of material
covenants. Mortgage debt associated with Net Leased Property generally cannot be
refinanced prior to maturity  without  substantial  penalties.  The terms of the
outstanding  lease and mortgage debt obligations and restrictions on refinancing
such debt may limit Belmar Realty's ability to dispose of Net Leased Property.

Because the  mortgage  debt  obligation  of Bel  Stamford is  generally  without
recourse to Belmar Realty,  the Fund and  Shareholders,  the potential loss from
Belmar Realty's investments in Bel Stamford is normally limited to the amount of
its equity investment.  The Fund and Belmar Realty may, however,  be directly or
indirectly  responsible for certain liabilities  constituting  exceptions to the
generally   non-recourse   nature  of  the  mortgage   indebtedness,   including
liabilities associated with fraud, misrepresentation, misappropriation of funds,
or breach of material  covenants,  and  liabilities  arising from  environmental
conditions  involving or affecting  Bel Stamford,  increasing  the potential for
loss under extraordinary circumstances.

                                       27
<PAGE>

Because all or  substantially  all of the rental payments on Net Leased Property
generally is dedicated to servicing the  associated  mortgage  debt,  during the
initial  lease term Belmar Realty will not generate  significant  cash flow from
investments to offset Belmar  Realty's  operating  expenses and the cost of Fund
borrowings  used to  finance  Belmar  Realty's  equity  therein.  Such costs and
expenses  must be provided from other sources of cash flow for Belmar Realty and
the  Fund,  which may  include  additional  Fund  borrowings  under  the  Credit
Facility.  Realized returns on investments in Net Leased Property  generally are
deferred until the properties are sold or re-leased  following the initial lease
term.

Changes in the value of real estate investments and other factors will cause the
performance of the Fund to deviate from the  performance of the Portfolio.  Over
time,  the  performance of the Fund can be expected to be more volatile than the
performance of the Portfolio.

RISKS OF  INTEREST  RATE SWAP  AGREEMENTS.  Interest  rate swap  agreements  are
subject to changes in  valuation  caused  principally  by  movements in interest
rates.  Interest rate swap agreements are private  contracts in which there is a
risk  of  loss  in  the  event  of a  default  on an  obligation  to  pay by the
counterparty. Interest rate swap agreements may be difficult to value and may be
illiquid. Fluctuations in the value of Partnership Preference Units derived from
changes in general  interest rates can be expected to be offset in part (but not
entirely)  by changes in the value of  interest  rate swap  agreements  or other
interest  rate hedges that may be entered  into by the Fund with  respect to its
borrowings.

RISKS OF LEVERAGE.  Although intended to add to returns,  the borrowing of funds
to  purchase  real  estate  investments  exposes  the Fund to the risk  that the
returns  achieved on the real estate  investments will be lower than the cost of
borrowing  to purchase  such assets and that the  leveraging  of the Fund to buy
such assets will therefore diminish the returns achieved by the Fund as a whole.
In  addition,  there  is a risk  that  the  availability  of  financing  will be
interrupted  at some  future  time,  requiring  the Fund to sell assets to repay
outstanding  borrowings or a portion  thereof.  It may be necessary to make such
sales at unfavorable  prices.  The Fund's  obligations under the Credit Facility
are  secured by a pledge of its assets,  excluding  the assets of Brazos and Bel
Stamford.  In the event of default, the lender could elect to sell assets of the
Fund without regard to consequences of such action for Shareholders.  The rights
of the lender to receive  payments of interest on and repayments of principal of
borrowings   under  the  Credit  Facility  are  senior  to  the  rights  of  the
Shareholders.

Under  the  terms of the  Credit  Facility,  the Fund is not  permitted  to make
distributions  of  cash  or  securities  while  there  is an  event  of  default
outstanding under the Credit Facility.  During such periods,  the Fund would not
be able to honor redemption  requests or make cash  distributions.  In addition,
the rights of lenders  under the  mortgages  used to finance  Real Estate  Joint
Venture properties are senior to Belmar Realty's right to receive  distributions
from the Real Estate Joint Venture.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
----------------------------------------------------

The consolidated  financial statements required by Item 8 are contained on pages
36 to 79 to of this Annual  Report on Form 10-K.  The  following is a summary of
unaudited  quarterly  results  of  operations  of the Fund for the  years  ended
December 31, 2004 and 2003.
<TABLE>
<CAPTION>
                                                               2004
                                  --------------------------------------------------------------
                                     First           Second            Third           Fourth
                                    Quarter          Quarter          Quarter          Quarter
                                  --------------------------------------------------------------
<S>                               <C>              <C>              <C>              <C>
Investment income                 $22,676,223      $21,556,022      $ 25,613,813     $ 22,830,443
Minority interest in net income
 of controlled subsidiaries       $   (48,115)     $    46,387      $   (854,163)    $   (404,636)
Net investment income             $ 7,053,996      $ 6,439,572      $  5,704,716     $  6,078,187
Net increase (decrease) in
 net assets from operations       $34,515,612      $34,699,315      $(52,781,248)    $118,535,107

Per share data:(1)
Investment income                 $      1.02      $      0.99      $       1.20     $       1.09
Net investment income             $      0.32      $      0.30      $       0.27     $       0.29
Net increase (decrease) in
 net assets from operations       $      1.56      $      1.59      $      (2.47)    $       5.65

                                       28
<PAGE>

                                                              2003
                                  --------------------------------------------------------------
                                      First           Second          Third           Fourth
                                    Quarter(2)      Quarter(2)      Quarter(2)        Quarter
                                  --------------------------------------------------------------

Investment income                 $ 24,737,532     $ 24,603,075     $22,963,420      $ 22,602,455
Minority interest in net income
 of controlled subsidiaries       $   (137,545)    $    (94,806)    $   (45,381)     $   (158,098)
Net investment income (loss)      $ 11,700,588     $ 11,435,095     $10,276,573      $ 10,311,763
Net increase (decrease) in net
 assets from operations           $(56,441,928)    $214,324,671     $49,210,874      $204,695,633

Per share data:(1)
Investment income                 $       1.06     $       1.06     $      1.00      $       1.01
Net investment income (loss)      $       0.50     $       0.49     $      0.45      $       0.46
Net increase (decrease) in net
 assets from operations           $      (2.42)    $       9.25     $      2.15      $       9.12
</TABLE>
(1)  Based on average Shares outstanding.
(2)  Certain  amounts  have been  reclassified  to conform with the current year
     presentation.

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

There have been no changes in, or disagreements with,  accountants on accounting
and financial disclosures.

ITEM 9A. CONTROLS AND PROCEDURES.
----------------------------------

Eaton Vance, as the Fund's manager,  evaluated the  effectiveness  of the Fund's
disclosure  controls and  procedures  (as defined by Rule  13a-15(e) of the 1934
Act) as of the end of the period covered by this report,  with the participation
of the Fund's Chief Executive  Officer and Chief Financial  Officer.  The Fund's
disclosure  controls and procedures are the controls and other  procedures  that
the Fund designed to ensure that it records, processess,  summarizes and reports
in a timely manner the  information  that the Fund must disclose in reports that
it files or submits to the  Securities  and Exchange  Commission.  Based on that
evaluation,  the Fund's  Chief  Executive  Officer and Chief  Financial  Officer
concluded  that,  as of December 31, 2004,  the Fund's  disclosure  controls and
procedures were effective.

The Fund's Chief Executive  Officer and Chief Financial Officer have established
and maintain  internal  control over  financial  reporting  (as defined in Rules
13a-15(f) and 15d-15(f) of the 1934 Act). Fund  management's  report on internal
control  over  financial  reporting,  including  its  assessment  of the  Fund's
internal  control over  financial  reporting,  appears on page 58 of this Annual
Report on Form 10-K.  The Fund's  Chief  Executive  Officer and Chief  Financial
Officer  intend to report to the Board of  Directors  of Eaton  Vance,  Inc. any
significant  deficiency  in the design or  operation  of internal  control  over
financial  reporting which could adversely  affect the Fund's ability to record,
process,  summarize and report  financial  data,  and any fraud,  whether or not
material,  that involves  management  or other  employees who have a significant
role in the Fund's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.
---------------------------

None.

                                       29
<PAGE>

                                    PART III
                                    --------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
------------------------------------------

(a) MANAGEMENT.
---------------

Pursuant to the Fund's LLC Agreement,  the Fund's manager,  Eaton Vance, has the
authority to conduct the Fund's business.  Eaton Vance appointed Thomas E. Faust
Jr. and Michelle A. Green to serve  indefinitely  as the Fund's Chief  Executive
Officer and Chief Financial Officer,  respectively.  Information about Mr. Faust
appears  below.  Ms.  Green,  35, is a Vice  President of Eaton Vance and Boston
Management.  She also serves as Chief  Financial  Officer of Belair Capital Fund
LLC,  Belcrest  Capital Fund LLC,  Belport  Capital Fund LLC and Belrose Capital
Fund LLC and as an officer  of various  other  investment  companies  managed by
Eaton Vance or Boston Management.  Ms. Green has been an employee of Eaton Vance
since 1997. As members of the Eaton Vance organization,  Mr. Faust and Ms. Green
receive no compensation from the Fund for serving as Fund officers. There are no
other  officers  of the  Fund.  The Fund does not have a board of  directors  or
similar governing body.

The Board of Directors of Eaton  Vance,  Inc.,  the sole trustee of Eaton Vance,
oversees the accounting and financial reporting processes of the Fund and audits
of the Fund's financial statements. The directors of Eaton Vance, Inc. are James
B. Hawkes and William M. Steul. The Fund's audit committee  financial expert (as
that term is defined in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act)
is Mr. Steul.  Messrs.  Hawkes and Steul are senior officers of Eaton Vance and,
as such, are not independent of Fund  management.  Information  about Mr. Hawkes
and Mr. Steul appears below.

Boston  Management  is  investment  adviser  to the Fund and the  Portfolio  and
manager of Belmar Realty. The portfolio manager of the Fund and the Portfolio is
Duncan W. Richardson,  Senior Vice President and Chief Equity Investment Officer
of Eaton Vance and Boston  Management.  Mr.  Richardson has been employed by the
Eaton Vance  organization  since 1987 and has served as portfolio manager of the
Fund since its inception and of the Portfolio and its predecessor  since 1990. A
majority of Mr.  Richardson's  time is spent  managing the Portfolio and related
entities.  Boston  Management has an experienced  team of analysts that provides
Mr. Richardson with research and recommendations on investments.

The directors of Belmar Realty are Mr. Faust and Alan R. Dynner, each of whom is
described  below.  William R. Cross,  President and portfolio  manager of Belmar
Realty, has primary  responsibility for providing research and analysis relating
to the Fund's real estate investments held through Belmar Realty. Mr. Cross is a
Vice President of Eaton Vance and Boston Management and has been employed by the
Eaton Vance  organization  since 1996.  A majority of Mr.  Cross's time is spent
managing  the real  estate  investments  of Belmar  Realty  and the real  estate
subsidiaries of other investment funds advised by Boston Management.  Mr. Cross,
Mr.  Carlson and Mr.  Dynner serve as trustees of the Real Estate Joint  Venture
owned by Belmar  Realty.  Mr. Cross is also  Chairman and  President of the Real
Estate Joint  Venture.  Mr. Calson is a Vice President of Eaton Vance and Boston
Management  and has been  employed by the Eaton Vance  organization  since 2001.
Prior to joining Eaton Vance,  Mr. Carlson was President of ILM Holding,  nc., a
real estate holding company. Information about Mr. Dynner appears below.

As  disclosed  under "The Eaton Vance  Organization"  in Item 1, Eaton Vance and
Boston  Management  are  wholly-owned  subsidiaries  of Eaton  Vance  Corp.  The
non-voting  common stock of Eaton Vance Corp.  is listed and traded on the NYSE.
All shares of the voting common stock of Eaton Vance Corp.  are held in a voting
trust,  the voting  trustees  of which are senior  officers  of the Eaton  Vance
organization. Eaton Vance, Inc., a wholly-owned subsidiary of Eaton Vance Corp.,
is the sole trustee of Eaton Vance and of Boston Management,  each of which is a
Massachusetts  business  trust.  The  names of the  executive  officers  and the
directors of Eaton  Vance,  Inc. and their ages and  principal  occupations  (in
addition to their responsibilities described above) are set forth below.

James B. Hawkes (63) is Chairman, President and Chief Executive Officer of Eaton
Vance, Boston Management, Eaton Vance Corp. and Eaton Vance, Inc. and a Director
of Eaton Vance Corp. and Eaton Vance,  Inc. He is Vice President and Director of
EV  Distributors.  He is also a Trustee  and an officer  of  various  investment
companies  managed by Eaton Vance or Boston  Management and has been employed by
Eaton Vance since 1970.

Thomas E.  Faust Jr.  (46) is  Executive  Vice  President  and Chief  Investment
Officer of Eaton Vance,  Boston  Management,  Eaton Vance Corp. and Eaton Vance,
Inc., and a Director of Eaton Vance Corp. He is also Chief Executive  Officer of
Belair Capital Fund LLC, Belcrest Capital Fund LLC, Belport Capital Fund LLC and
Belrose Capital Fund LLC and is an officer of various other investment companies
managed by Eaton  Vance or Boston  Management.  Mr.  Faust has been  employed by
Eaton Vance since 1985.

                                       30
<PAGE>

Alan R. Dynner (64) is Vice  President,  Chief Legal  Officer and  Secretary  of
Eaton Vance,  Boston  Management,  Eaton Vance Corp., EV Distributors  and Eaton
Vance,  Inc. He is also an officer of various  investment  companies  managed by
Eaton  Vance or Boston  Management  and has been  employed  by Eaton Vance since
1996.

William M. Steul (62) is Vice  President  and Chief  Financial  Officer of Eaton
Vance, Boston Management, Eaton Vance Corp. and Eaton Vance, Inc. and a Director
of Eaton Vance,  Inc. He is also Vice President of EV Distributors.  He has been
employed by Eaton Vance since 1994.

(b) COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
-------------------------------------------------------------------------

Section  16(a) of the 1934 Act requires the Fund's  officers and  directors  and
persons  who own more  than ten  percent  of the  Fund's  Shares  to file  forms
reporting their  affiliation  with the Fund and reports of ownership and changes
in ownership of the Fund's Shares with the SEC.  Eaton Vance,  as manager of the
Fund,  and the Directors and executive  officers of Eaton Vance,  Inc., the sole
trustee of Eaton  Vance,  also  comply with  Section  16(a).  These  persons and
entities are required by SEC  regulations to furnish the Fund with copies of all
Section 16(a) forms they file. To the best of the Fund's  knowledge,  during the
year ended  December 31, 2004 no Section  16(a)  filings  were  required by such
persons or entities.

(c) CODE OF ETHICS.
-------------------

The Fund has adopted a Code of Ethics that  applies to the  principal  executive
officer  and  principal  financial  officer  (who is also the  Fund's  principal
accounting  officer).  A copy of the Code of Ethics is  available  at no cost by
request to the Fund's Chief  Financial  Officer,  255 State Street,  Boston,  MA
02109 or by calling (800) 225-6265. If the Fund makes any substantive amendments
to the Code of Ethics or grants any waiver, including an implicit waiver, from a
provision of the Code of Ethics as applicable to the principal executive officer
or  principal  financial  officer,  the Fund will  disclose  the  nature of such
amendment or waiver in a report on Form 8-K.

ITEM 11. EXECUTIVE COMPENSATION.
--------------------------------

As noted in Item 10, the officers of the Fund receive no  compensation  from the
Fund. The Fund's manager,  Eaton Vance, and its affiliates  receive certain fees
from the Fund for services  provided to the Fund, which are described in Item 13
below.

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

SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS. To the knowledge of the Fund,
no person beneficially owns more than 5% of the Shares of the Fund.

SECURITY OWNERSHIP OF MANAGEMENT.  As of March 1, 2005, Eaton Vance, the manager
of the Fund,  beneficially  owned 1,117.175 Shares of the Fund. The Shares owned
by Eaton Vance represent less than 1% of the  outstanding  Shares of the Fund as
of March 1, 2005. None of the other entities or individuals named in response to
Item 10 above beneficially owned Shares of the Fund as of such date.

CHANGES IN CONTROL.  Not applicable.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------------------------

The table below sets forth the fees,  paid or payable by, or  allocable  to, the
Fund and  Belmar  Realty  for the  years  ended  December  31,  2004 and 2003 in
connection with services rendered by Eaton Vance and its affiliates. Each fee is
described following the table.

                                       31
<PAGE>
                                                  Year ended       Year ended
                                                 December 31,     December 31,
                                                     2004             2003
-------------------------------------------------------------------------------
Fund Advisory and Administrative Fees*           $ 1,684,719      $ 1,277,921
-------------------------------------------------------------------------------
Belmar Real Estate Management Fees*              $ 4,389,001      $ 4,060,122
-------------------------------------------------------------------------------
Fund's Allocable Portion of the Portfolio's      $ 8,392,976      $ 7,634,035
Advisory Fees**
-------------------------------------------------------------------------------
Fund Servicing Fees                              $ 1,778,204      $ 1,658,867
-------------------------------------------------------------------------------
Fund's Allocable Portion of Belvedere
Company's Servicing Fees                         $ 2,908,588      $ 2,617,051
-------------------------------------------------------------------------------
Fund Distribution Fees*                          $ 1,874,514      $ 1,711,661
-------------------------------------------------------------------------------
Aggregate Compensation Paid by the Fund to
Eaton Vance and its Affiliates                   $ 7,948,234      $ 7,049,704
-------------------------------------------------------------------------------

*    Boston  Management  has  agreed  to waive  the  portion  of the  investment
     advisory and administrative fee payable by the Fund to the extent that such
     fee,  together with the  distribution fee payable by the Fund exceeds 0.60%
     of the average  daily gross  assets of the Fund  reduced by that portion of
     the advisory or management  fees payable by the Portfolio and Belmar Realty
     that is  attributable  to the  value  of the  Fund's  direct  and  indirect
     investments  therein.  The  amount  shown  reflects  this  waiver by Boston
     Management.

**   For the years  ended  December  31,  2004 and 2003,  advisory  fees paid or
     payable by the Portfolio totaled $77,609,178 and $67,584,543, respectively.
     For the year ended December 31, 2004, Belvedere Company's allocable portion
     of that fee was $50,252,861 of which  $8,392,976 was allocable to the Fund.
     For the year ended December 31, 2003, Belvedere Company's allocable portion
     of that fee was $41,671,111, of which $7,634,035 was allocable to the Fund.


THE FUND'S INVESTMENT  ADVISORY AND  ADMINISTRATIVE  FEE. Under the terms of the
Fund's investment  advisory and administrative  agreement,  Boston Management is
entitled to receive, subject to the fee waiver described in the next sentence, a
monthly advisory and administrative fee at the rate of 1/20 of 1% (equivalent to
0.60%  annually)  of the average  daily gross  assets of the Fund reduced by the
portion of the monthly  advisory or management  fees for such months  payable by
the  Portfolio and Belmar  Realty that is  attributable  to the Fund's direct or
indirect  investments therein (but no such reduction shall be made to the extent
that any such fee or  portion  thereof  has been  waived by Boston  Management).
Boston  Management  has agreed to waive that  portion of the monthly  investment
advisory and administrative fee payable by the Fund to the extent that such fee,
together with the distribution fees payable by the Fund (see  "Distribution Fees
Paid to EV Distributors"  below),  exceeds 1/20 of 1% of the average daily gross
assets of the Fund reduced by the portion of the monthly  advisory or management
fees  for  such  month  payable  by the  Portfolio  and  Belmar  Realty  that is
attributable to the value of the Fund's direct or indirect  investments  therein
(but no such reduction  shall be made to the extent that any such fee or portion
thereof has been  waived by Boston  Management).  The term "gross  assets of the
Fund"  means the value of all Fund  assets  (including  the Fund's  interest  in
Belvedere  Company and the Fund's  ratable share of the assets of its controlled
subsidiaries), without reduction by any liabilities.

BELMAR REALTY'S  MANAGEMENT  FEE. Under the terms of Belmar Realty's  management
agreement  with  Boston  Management,   Boston  Management   receives  a  monthly
management fee at the rate of 1/20 of 1%  (equivalent to 0.60%  annually) of the
average  daily gross assets of Belmar  Realty.  The term "gross assets of Belmar
Realty"  means  the  current  value of all  assets  of  Belmar  Realty,  without
reduction by any liabilities.

THE  PORTFOLIO'S  INVESTMENT  ADVISORY FEE.  Under the terms of the  Portfolio's
investment advisory agreement with Boston Management, Boston Management receives
a monthly advisory fee as follows:


                                                    Annual Fee Rate
         Average Daily Net Assets for the Month    (for each level)
        ------------------------------------------------------------
         Up to $500 million                            0.6250%
         $500 million but less than $1 billion         0.5625%
         $1 billion but less than $1.5 billion         0.5000%
         $1.5 billion but less than $7 billion         0.4375%
         $7 billion but less than $10 billion          0.4250%
         $10 billion but less than $15 billion         0.4125%
         $15 billion and over                          0.4000%

                                       32
<PAGE>

In accordance with the terms of the 1940 Act, the Portfolio's  Board of Trustees
considers the  continuation of the  Portfolio's  investment  advisory  agreement
annually.

SERVICING FEES PAID BY THE FUND.  Pursuant to a servicing  agreement between the
Fund and EV  Distributors,  the Fund pays a servicing fee to EV Distributors for
providing  certain services and information to the Shareholders of the Fund. The
servicing  fee is paid on a  quarterly  basis at an annual  rate of 0.25% of the
Fund's  average daily net assets.  With respect to  Shareholders  who subscribed
through a subagent, EV Distributors has assigned servicing  responsibilities and
fees to the applicable  subagent,  beginning twelve months after the issuance of
Shares of the Fund to such persons.  The Fund's allocated share of the servicing
fee paid by  Belvedere  Company is  credited  toward the  Fund's  servicing  fee
payment, thereby reducing the amount of the servicing fee payable by the Fund.

SERVICING  FEES PAID BY  BELVEDERE  COMPANY.  Pursuant to a servicing  agreement
between  Belvedere  Company  and  EV  Distributors,  Belvedere  Company  pays  a
servicing fee to EV Distributors for providing  certain services and information
to direct and indirect investors in Belvedere Company. The servicing fee is paid
on a quarterly basis, at an annual rate of 0.15% of Belvedere  Company's average
daily  net  assets.   With  respect  to  investors  in  Belvedere   Company  and
Shareholders of the Fund who subscribed through a subagent,  EV Distributors has
assigned  servicing  responsibilities  and  fees  to  the  applicable  subagent,
beginning  twelve  months after the  issuance of shares of Belvedere  Company or
Shares of the Fund to such  persons.  The Fund  assumes its  allocated  share of
Belvedere  Company's  servicing fee. The servicing fee payable in respect of the
Fund's investment in Belvedere Company is credited toward the Fund servicing fee
described above.

DISTRIBUTION  FEES  PAID TO EV  DISTRIBUTORS.  Under  the  terms  of the  Fund's
placement  agreement with EV  Distributors,  EV Distributors  receives a monthly
distribution  fee at an annual rate of 0.10% of the average  daily net assets of
the Fund as compensation  for its services as placement  agent. The distribution
fee accrued from the Fund's  initial  closing and will  continue for a period of
ten years (subject to the annual approval of Eaton Vance, Inc.).

CERTAIN REAL ESTATE INVESTMENT TRANSACTIONS.  During the year ended December 31,
2004,   Belmar  Realty  entered  into  the  following  real  estate   investment
transactions with real estate  subsidiaries of other investment funds advised by
Boston Management:

     *    Belmar Realty  purchased  Partnership  Preference  Units from Belterra
          Realty  Corporation,  which  realized  a gain  of  approximately  $3.0
          million on the transaction;

     *    Belmar Realty sold Partnership  Preference Units to Belair Real Estate
          Corporation,  realizing a gain of  approximately  $8.0  million on the
          transaction;

     *    Belmar Realty sold  Partnership  Preference  Units to Belcrest  Realty
          Corporation,  realizing a gain of  approximately  $18.5 million on the
          transactions;

     *    Belmar  Realty sold  Partnership  Preference  Units to Belrose  Realty
          Corporation, realizing  a gain of  approximately  $3.0  million on the
          transactions;

     *    Belmar Realty sold  Partnership  Preference Units to Bel Holdings LLC,
          realizing a gain of  approximately  $0.5 million on the  transactions;
          and

     *    Belmar Realty and Bel Apartments sold Partnership  Preference Units to
          Belterra Realty  Corporation,  realizing a gain of approximately  $2.7
          million and $0.5 million on the transactions respectively.

                                33
<PAGE>

The prices of the real estate  investments  purchased  and sold by Belmar Realty
were  determined  in good  faith by Boston  Management  after  consideration  of
factors,  data  and  information  that it  considered  relevant.  See  "Critical
Accounting Estimates" in Item 7(e).

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
------------------------------------------------

The following table presents fees for the professional  audit services  rendered
by Deloitte & Touche LLP for the audit of the Fund's annual financial statements
for the  years  ended  December  31,  2004 and 2003 and fees  billed  for  other
services rendered by Deloitte & Touche LLP during those periods.

Year ended December 31,                                      2004       2003
--------------------------------------------------------------------------------
Audit fees                                                 $199,358   $123,906
Audit related fees(1)                                        39,790     35,040
Tax fees(2)                                                 328,703    151,774
All other fees(3)                                                --      4,200
                                                         -----------------------
Total                                                      $567,851   $314,920
                                                         -----------------------

(1)  Audit  related  fees  consist of assurance  and related  services  that are
     reasonably   related  to  the  performance  of  the  audit  of  the  Fund's
     consolidated  financial  statements.  The category includes fees related to
     the  performance  of audits and attest  services not required by statute or
     regulation  and  accounting  consultations  regarding  the  application  of
     generally accepted accounting principles to proposed transactions.

(2)  Tax fees consist of the  aggregate  fees billed for  professional  services
     rendered  by Deloitte & Touche LLP for tax  compliance,  tax advice and tax
     planning.

(3)  Other fees consist  primarily of the aggregate fees billed for professional
     services  rendered  by  Deloitte  &  Touche  LLP  related  to  agreed  upon
     procedures for requirements by lenders.

The Directors of Eaton Vance, Inc. review all audit,  audit-related and tax fees
at least annually. The Directors  pre-approved all audit,  audit-related and tax
services for the years ended  December  31, 2004 and 2003.  The  Directors  have
concluded that the provision of the audit-related, tax and other services listed
above is compatible with maintaining the independence of Deloitte & Touche LLP.

                                     PART IV
                                     -------

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.
----------------------------------------------------------------

(a)  Please see the Fund's  consolidated  financial  statements  followed by the
     Portfolio's financial statements on pages 36 to 79 of this Annual Report on
     Form 10-K.

(b)  Reports on Form 8-K:

     None.

(c)  A list of the exhibits filed as a part of this Form 10-K is included in the
     Exhibit Index appearing on page 81 hereof.

                                       34
<PAGE>

  BELMAR 2004

                                                                      Appendix A



The Fund's Investment Structure as of December 31, 2004





[Chart depicting (1) the Fund investing in Belvedere  Company and Belmar Realty;
(2)  Belvedere  Company  investing  in the  Portfolio;  and  (3)  Belmar  Realty
investing  in Brazos and Bel  Stamford.  The Fund is followed  by footnote  (A);
Belvedere  Company is followed by footnote  (B);  the  Portfolio  is followed by
footnote (C);  Belmar Realty is followed by footnote (D);  Brazos is followed by
footnote (E); and Bel Stamford is followed by footnote (F). The footnotes appear
below.]









(A) Eaton  Vance is the  manager of the Fund;  Boston  Management  is the Fund's
investment  adviser.  (B) Boston Management is the manager of Belvedere Company.
(C)  Boston  Management  is  the  Portfolio's  investment  adviser.  (D)  Boston
Management is the manager of Belmar Realty. Belmar Realty also holds investments
in Partnership  Preference  Units. (E) Belmar Realty owns a majority interest in
this Real Estate Joint Venture. (F) Bel Stamford is a wholly-owned subsidiary of
Belmar Realty.


                                       35
<Page>

BELMAR CAPITAL FUND LLC
CONSOLIDATED PORTFOLIOS OF INVESTMENTS
As of December 31, 2004

INVESTMENT IN BELVEDERE CAPITAL
FUND COMPANY LLC -- 75.7%

<Table>
<Caption>
SECURITY                                           SHARES             VALUE
-------------------------------------------------------------------------------------
<S>                                                    <C>            <C>
Investment in Belvedere Capital Fund Company LLC
(Belvedere Company)                                    11,843,299     $ 2,015,871,844
-------------------------------------------------------------------------------------

TOTAL INVESTMENT IN BELVEDERE COMPANY
   (IDENTIFIED COST, $2,289,690,157)                                  $ 2,015,871,844
-------------------------------------------------------------------------------------
</Table>

PARTNERSHIP PREFERENCE UNITS -- 2.4%

<Table>
<Caption>
SECURITY                                           UNITS              VALUE
-------------------------------------------------------------------------------------
<S>                                                     <C>           <C>
MHC Operating Limited Partnership, L.P.
(Illinois Limited Partnership affiliate of
Equity Lifestyle Properties, Inc.), 9%
Series D Cumulative Redeemable
Perpetual Preference Units, Callable
from 9/29/04+(1)                                          800,000     $    20,064,000

PSA Institutional Partners, L.P. (California
Limited Partnership affiliate of Public
Storage, Inc.), 6.40% Series NN Cumulative
Redeemable Perpetual Preferred Units,
Callable from 3/17/10+(1)                                 555,000          13,275,600

Sun Communities Operating L.P.
(Michigan Limited Partnership affiliate of
Sun Communities, Inc.), 8.875% Series A
Cumulative Redeemable Perpetual Preferred
Units, Callable from 9/29/04+(1)                        1,200,000          30,348,000
-------------------------------------------------------------------------------------

TOTAL PARTNERSHIP PREFERENCE UNITS
   (IDENTIFIED COST, $60,158,761)                                     $    63,687,600
-------------------------------------------------------------------------------------
</Table>

OTHER REAL ESTATE INVESTMENTS -- 21.8%

<Table>
<Caption>
DESCRIPTION                                                           VALUE
-------------------------------------------------------------------------------------
<S>                                                                   <C>
Bel Stamford(1)(2)                                                    $   278,000,000
Rental property(1)(3)                                                     298,506,000
Investment in management contracts(1)(4)                                    2,990,359
-------------------------------------------------------------------------------------

TOTAL OTHER REAL ESTATE INVESTMENTS
   (IDENTIFIED COST, $638,556,732)                                    $   579,496,359
-------------------------------------------------------------------------------------
</Table>

SHORT-TERM INVESTMENTS -- 0.1%

<Table>
<Caption>
                                                   PRINCIPAL
                                                   AMOUNT
                                                   (000'S
SECURITY                                           OMITTED)           VALUE
-------------------------------------------------------------------------------------
<S>                                                <C>                <C>
Investors Bank & Trust Company --
Time Deposit, 2.25%, 1/3/05                        $        1,700     $     1,700,000
-------------------------------------------------------------------------------------

TOTAL SHORT-TERM INVESTMENTS
   (AT AMORTIZED COST, $1,700,000)                                    $     1,700,000
-------------------------------------------------------------------------------------

TOTAL INVESTMENTS -- 100.0%
   (IDENTIFIED COST, $2,990,105,650)                                  $ 2,660,755,803
-------------------------------------------------------------------------------------
</Table>

                 See notes to consolidated financial statements

                                        36
<Page>

As of December 31, 2003

INVESTMENT IN BELVEDERE CAPITAL
FUND COMPANY LLC -- 75.8%

<Table>
<Caption>
SECURITY                                           SHARES           VALUE
-------------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Investment in Belvedere Capital Fund Company LLC
(Belvedere Company)                                    12,559,085   $   1,966,911,184
-------------------------------------------------------------------------------------

TOTAL INVESTMENT IN BELVEDERE COMPANY
   (IDENTIFIED COST, $2,352,813,010)                                $   1,966,911,184
-------------------------------------------------------------------------------------
</Table>

PARTNERSHIP PREFERENCE UNITS -- 16.4%

<Table>
<Caption>
SECURITY                                           UNITS               VALUE
-------------------------------------------------------------------------------------
<S>                                                     <C>            <C>
Bel Holdings, LLC+(1)(5)                                  236,138      $   23,872,204

Cabot Industrial Properties, L.P. (Delaware
Limited Partnership affiliate of Cabot
Industrial Trust), 8.625% Series B
Cumulative Redeemable Preferred Units,
Callable from 4/29/04+(1)                               1,300,000          67,379,000

Camden Operating, L.P. (Delaware Limited
Partnership affiliate of Camden Property
Trust), 7% Series B Cumulative Redeemable
Perpetual Preferred Units, Callable
from 12/2/08+(1)                                        2,530,000          61,377,800

Essex Portfolio, L.P. (California Limited
Partnership affiliate of Essex Property
Trust, Inc.), 7.875% Series B Cumulative
Redeemable Preferred Units, Callable
from 2/6/03+(1)(6)                                        325,000          15,659,215

Essex Portfolio, L.P. (California Limited
Partnership affiliate of Essex Property
Trust, Inc.), 9.30% Series D Cumulative
Redeemable Preferred Units, Callable
from 7/28/10+(1)                                        2,000,000          51,221,200

MHC Operating Limited Partnership
(Illinois Limited Partnership affiliate of
Manufactured Home Communities, Inc.),
9% Series D Cumulative Redeemable
Perpetual Preference Units, Callable
from 9/29/04+(1)                                          800,000          20,104,000

PSA Institutional Partners, L.P. (California
Limited Partnership affiliate of Public
Storage, Inc.), 9.50% Series N Cumulative
Redeemable Perpetual Preferred Units,
Callable from 3/17/05+(1)                               2,555,000          66,430,000

Prentiss Properties Acquisition Partners, L.P.
(Delaware Limited Partnership affiliate of
Prentiss Properties Trust), 8.30% Series B
Cumulative Redeemable Perpetual Preferred
Units, Callable from 6/25/03+(1)                          663,536          32,599,524

Price Development Company, L.P.
(Maryland Limited Partnership affiliate of
J.P. Realty, Inc.), 8.95% Series B
Cumulative Redeemable Preferred
Partnership Units, Callable
from 7/28/04+(1)                                          800,000      $   19,648,000

Regency Centers, L.P. (Delaware Limited
Partnership affiliate of Regency Realty
Corporation), 9.125% Series D
Cumulative Redeemable Preferred Units,
Callable from 9/29/04+(1)                                 150,000          15,349,500

Sun Communities Operating L.P.
(Michigan Limited Partnership affiliate of
Sun Communities, Inc.), 8.875%
Series A Cumulative Redeemable
Perpetual Preferred Units, Callable
from 9/29/04+(1)                                        2,000,000          51,140,000
-------------------------------------------------------------------------------------

TOTAL PARTNERSHIP PREFERENCE UNITS
   (IDENTIFIED COST, $376,394,227)                                     $  424,780,443
-------------------------------------------------------------------------------------
</Table>

OTHER REAL ESTATE INVESTMENTS -- 7.1%

<Table>
<Caption>
DESCRIPTION                                                            VALUE
-------------------------------------------------------------------------------------
<S>                                                                    <C>
Rental property(1)(3)                                                  $  185,138,810
-------------------------------------------------------------------------------------

TOTAL OTHER REAL ESTATE INVESTMENTS
   (IDENTIFIED COST, $229,939,890)                                     $  185,138,810
-------------------------------------------------------------------------------------
</Table>

SHORT-TERM INVESTMENTS -- 0.7%

<Table>
<Caption>
                                                   PRINCIPAL
                                                   AMOUNT
                                                   (000'S
SECURITY                                           OMITTED)         VALUE
-------------------------------------------------------------------------------------
<S>                                                <C>              <C>
Investors Bank & Trust Company --
Time Deposit, 1.01%, 1/2/04                        $       16,973   $      16,973,476
-------------------------------------------------------------------------------------

TOTAL SHORT-TERM INVESTMENTS
   (AT AMORTIZED COST, $161,973,476)                                $      16,973,476
-------------------------------------------------------------------------------------

TOTAL INVESTMENTS -- 100.0%
   (IDENTIFIED COST, $2,976,120,603)                                $   2,593,803,913
-------------------------------------------------------------------------------------
</Table>

                 See notes to consolidated financial statements

                                       37
<Page>

The following  footnotes are for the years ended  December 31, 2004 and December
31, 2003:

+    Security  exempt from  registration  under the  Securities  Act of 1933. At
     December  31,  2004  and  2003,  the  value  of  these  securities  totaled
     $63,687,600   and   $424,780,443,   or  3.3%  and  22.1%  of  net   assets,
     respectively.
(1)  Investment  valued at fair value using methods  determined in good faith by
     or at the direction of the manager of Belmar Realty Corporation.
(2)  Bel Stamford represents one office building located in Connecticut.
(3)  At December 31, 2004, rental property  represents  twenty-three  industrial
     distribution  properties  located in eight  states.  At December  31, 2003,
     rental property represents  nineteen  multi-family  residential  properties
     located in eight states.  None of the values of the  individual  properties
     represent more than 5% of net assets, respectively.
(4)  See Note 5 -- Investment Transactions.
(5)  The sole investment of Bel Holdings LLC is as follows:  Vornado Realty,  LP
     (Delaware Limited Partnership affiliate of Vornado Realty Trust), 7% Series
     D-10 Cumulative  Redeemable  Preferred Units,  Callable from 11/17/08.  See
     Note 1B.
(6)  On January 8, 2004, the call date was changed to 12/31/09.

                 See notes to consolidated financial statements

                                       38
<Page>

BELMAR CAPITAL FUND LLC
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<Table>
<Caption>
                                                         DECEMBER 31, 2004   DECEMBER 31, 2003
----------------------------------------------------------------------------------------------
<S>                                                      <C>                 <C>
ASSETS

Investments, at value (identified cost, $2,990,105,650
  and $2,976,120,603, respectively)                      $   2,660,755,803   $   2,593,803,913
Cash                                                             6,789,395           6,605,096
Escrow deposits -- restricted                                           --           3,817,390
Open interest rate swap agreements, at value                     2,701,342           2,090,845
Distributions and interest receivable                                6,511           1,960,318
Other assets                                                     6,789,882           3,661,857
----------------------------------------------------------------------------------------------
TOTAL ASSETS                                             $   2,677,042,933   $   2,611,939,419
----------------------------------------------------------------------------------------------

LIABILITIES

Loan payable -- Credit Facility                          $     290,000,000   $     513,000,000
Mortgages payable                                              455,098,913         161,157,192
Payable for Fund Shares redeemed                                        --           1,361,403
Distributions payable to minority shareholders                          --              16,800
Security deposits                                                  502,487             744,420
Swap interest payable                                              144,508             242,283
Notes payable to minority shareholder                                   --             565,972
Accrued expenses:
   Interest expense                                              1,903,452           1,423,780
   Property taxes                                                   30,839           3,281,589
   Other expenses and liabilities                                2,879,715           1,586,790
Minority interests in controlled subsidiaries                   15,995,521           7,947,333
----------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                        $     766,555,435   $     691,327,562
----------------------------------------------------------------------------------------------
NET ASSETS                                               $   1,910,487,498   $   1,920,611,857
----------------------------------------------------------------------------------------------

SHAREHOLDERS' CAPITAL                                    $   1,910,487,498   $   1,920,611,857
----------------------------------------------------------------------------------------------

FUND SHARES OUTSTANDING                                         20,880,411          22,261,334
----------------------------------------------------------------------------------------------

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE           $           91.50   $           86.28
----------------------------------------------------------------------------------------------
</Table>

                        See notes to consolidated financial statements

                                       39
<Page>

CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                         FOR THE YEAR ENDED   FOR THE YEAR ENDED   FOR THE YEAR ENDED
                                                         DECEMBER 31, 2004    DECEMBER 31, 2003    DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>                  <C>
INVESTMENT INCOME

Dividends allocated from Belvedere Company
 (net of foreign taxes, $410,963, $301,745
 and $230,203, respectively)                             $       31,399,615   $       25,889,334   $       23,452,669
Interest allocated from Belvedere Company                           136,313              410,423              677,946
Expenses allocated from Belvedere Company                       (11,656,198)         (10,585,603)         (11,284,744)
---------------------------------------------------------------------------------------------------------------------
Net investment income allocated from
 Belvedere Company                                       $       19,879,730   $       15,714,154   $       12,845,871
Distributions from Partnership Preference Units                  14,708,477           44,949,869           52,071,790
Rental income                                                    57,195,941           33,969,790           34,819,869
Interest                                                            633,453              272,669               77,305
Miscellaneous income                                                258,900                   --                   --
---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME                                  $       92,676,501   $       94,906,482   $       99,814,835
---------------------------------------------------------------------------------------------------------------------

EXPENSES

Investment advisory and administrative fees              $        7,948,234   $        7,049,704   $        7,647,360
Property management fees                                          1,359,591            1,342,305            1,375,915
Distribution and servicing fees                                   3,652,718            3,370,528            3,672,900
Interest expense on mortgages                                    28,190,253           14,303,813           14,882,677
Interest expense on Credit Facility                               8,260,789            8,670,248           13,623,896
Property and maintenance expenses                                10,854,510           11,853,270           11,756,824
Property taxes and insurance                                      5,475,612            4,696,646            4,734,164
Miscellaneous                                                     2,337,282            1,171,780              797,636
---------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES                                           $       68,078,989   $       52,458,294   $       58,491,372
---------------------------------------------------------------------------------------------------------------------
Deduct --
 Reduction of investment advisory and
   administrative fees                                   $        1,874,514   $        1,711,661   $        1,847,235
---------------------------------------------------------------------------------------------------------------------
NET EXPENSES                                             $       66,204,475   $       50,746,633   $       56,644,137
---------------------------------------------------------------------------------------------------------------------
Net investment income before minority
 interests in net income of controlled subsidiaries      $       26,472,026   $       44,159,849   $       43,170,698
Minority interests in net income of controlled
 subsidiaries                                                    (1,247,532)            (435,830)            (424,054)
---------------------------------------------------------------------------------------------------------------------

NET INVESTMENT INCOME                                    $       25,224,494   $       43,724,019   $       42,746,644
---------------------------------------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain (loss) --
 Investment transactions, securities sold short
   and foreign currency transactions allocated from
   Belvedere Company (identified cost basis)             $       45,278,877   $       22,323,706   $       (1,023,197)
 Investment transactions (identified cost basis)                         --                   --             (763,095)
 Investment transactions in other investment
  (identified cost basis)                                                --                   --           (2,338,586)
 Investment transactions in Partnership Preference
  Units (identified cost basis)                                  45,834,076           39,965,989            5,116,279
 Investment transactions in other real
  estate (net of minority interests in realized loss
  of controlled subsidiaries of $(27,592,937), $0
  and $(476,023), respectively)                                 (19,408,521)                  --           (1,782,650)
 Interest rate swap agreements(1)                               (14,032,550)         (56,378,606)         (40,731,435)
---------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)                                 $       57,671,882   $        5,911,089   $      (41,522,684)
---------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
 Investments, securities sold short, and foreign
 currency allocated from Belvedere Company
 (identified cost basis)                                 $      112,083,513   $      343,808,846   $     (424,007,010)
 Investments in Partnership Preference Units
  (identified cost basis)                                       (44,857,377)         (12,322,752)          17,761,335
 Investments in other real estate (net of minority
  interests in unrealized appreciation (depreciation)
  of controlled subsidiaries of $1,505,726,
  $(1,889,589) and $(3,723,223), respectively)                  (15,764,223)         (18,480,109)          (8,518,155)
 Interest rate swap agreements                                      610,497           49,148,157           (2,818,002)
---------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)     $       52,072,410   $      362,154,142   $     (417,581,832)
---------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)                  $      109,744,292   $      368,065,231   $     (459,104,516)
---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS    $      134,968,786   $      411,789,250   $     (416,357,872)
---------------------------------------------------------------------------------------------------------------------
</Table>

(1)  Amounts  include  periodic  payments made in connection  with interest rate
     swap agreements of $11,595,294,  $29,626,765 and $40,731,435,  respectively
     (Note 2).

                 See notes to consolidated financial statements

                                       40
<Page>

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                         YEAR ENDED           YEAR ENDED           YEAR ENDED
                                                         DECEMBER 31, 2004    DECEMBER 31, 2003    DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>                  <C>
INCREASE (DECREASE) IN NET ASSETS

Net investment income                                    $       25,224,494   $       43,724,019   $       42,746,644
Net realized gain (loss) from investment transactions,
 securities sold short, foreign currency, transactions
 and interest rate swap agreements                               57,671,882            5,911,089          (41,522,684)
Net change in unrealized appreciation (depreciation)
 of investments, securities sold short, foreign
 currency and interest rate swap agreements                      52,072,410          362,154,142         (417,581,832)
---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS    $      134,968,786   $      411,789,250   $     (416,357,872)
---------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares --
 Net asset value of Fund Shares issued to Shareholders
   in payment of distributions declared                  $       10,101,552   $       18,603,373   $               --
 Net asset value of Fund Shares redeemed                       (129,608,009)         (90,690,145)         (72,096,456)
---------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS  $     (119,506,457)  $      (72,086,772)  $      (72,096,456)
---------------------------------------------------------------------------------------------------------------------
Distributions --
 Distributions to Shareholders                           $      (25,586,688)  $      (39,320,426)  $               --
---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                      $      (25,586,688)  $      (39,320,426)  $               --
---------------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS                    $      (10,124,359)  $      300,382,052   $     (488,454,328)
---------------------------------------------------------------------------------------------------------------------

NET ASSETS

At beginning of year                                     $    1,920,611,857   $    1,620,229,805   $    2,108,684,133
---------------------------------------------------------------------------------------------------------------------
AT END OF YEAR                                           $    1,910,487,498   $    1,920,611,857   $    1,620,229,805
---------------------------------------------------------------------------------------------------------------------
</Table>

                 See notes to consolidated financial statements

                                       41
<Page>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                         YEAR ENDED           YEAR ENDED           YEAR ENDED
                                                         DECEMBER 31, 2004    DECEMBER 31, 2003    DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>                  <C>
(DECREASE) INCREASE IN CASH

Cash Flows From (For) Operating Activities --
Net increase (decrease) in net assets from operations    $      134,968,786   $      411,789,250   $     (416,357,872)
Adjustments to reconcile net increase (decrease) in
   net assets from operations to net cash flows from
   (for) operating activities --
   Net investment income allocated from Belvedere
     Company                                                    (19,879,730)         (15,714,154)         (12,845,871)
   (Increase) decrease in escrow deposits                          (504,789)             766,420            1,251,018
   Decrease in receivable for securities sold                            --           29,285,540                   --
   (Increase) decrease in other assets                           (1,003,263)             (52,977)             372,239
   Decrease in distributions and interest receivable              1,953,807              496,052            2,478,889
   (Decrease) increase in interest payable for open
     swap agreements                                                (97,775)          (1,454,186)             248,825
   Increase (decrease) in security deposits, accrued
     interest and accrued other expenses and liabilities          4,324,537           (1,110,446)          (1,104,644)
   (Decrease) increase in accrued property taxes                   (614,721)             138,152              108,785
   Purchases of Partnership Preference Units                   (108,352,710)         (75,672,618)                  --
   Proceeds from sales of Partnership Preference Units          470,422,252          228,888,304           60,076,602
   Proceeds from sale of common stock                                    --                   --           90,874,505
   Payments for investments in other real estate               (479,708,008)                  --          (67,401,013)
   Proceeds from sale of investment in other real estate        182,557,032                   --                   --
   Proceeds from other investments                                       --                   --           65,062,425
   Cash assumed in connection with acquisition of other
     real estate                                                     15,051                   --                   --
   Decrease in cash due to sale of other real estate             (1,297,376)                  --              (17,946)
   Decrease (increase) in short-term investments                 15,273,476          (16,973,476)           3,919,805
   Improvements to rental property                               (1,217,999)          (1,567,752)          (1,963,230)
   Net increase in investment in Belvedere Company                       --          (25,866,250)        (116,904,831)
   Interest incurred on interest rate swap agreements           (11,595,294)         (29,626,765)         (40,731,435)
   Payment for termination of interest rate swap
     agreements                                                  (2,437,256)         (26,751,841)                  --
   Minority interests in net income of controlled
     subsidiaries                                                 1,247,532              435,830              424,054
   Net realized gain (loss) from investment
     transactions, securities sold short, foreign
     currency transactions and interest rate swap
     agreements                                                 (57,671,882)          (5,911,089)          41,522,684
   Net change in unrealized (appreciation) depreciation
     of investments, securities sold short, foreign
     currency, and interest rate swap agreements                (52,072,410)        (362,154,142)         417,581,832
---------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES                 $       74,309,260   $      108,943,852   $       26,594,821
---------------------------------------------------------------------------------------------------------------------
Cash Flows From (For) Financing Activities --
   Proceeds from Credit Facility                         $      347,000,000   $        3,500,000   $       61,000,000
   Repayment of Credit Facility                                (570,000,000)         (87,000,000)         (78,000,000)
   Proceeds from mortgage                                       215,000,000                   --                   --
   Repayments of mortgage                                        (5,174,535)          (1,304,708)          (1,237,423)
   Payments for Fund Shares redeemed                             (2,687,952)          (3,265,017)          (3,715,985)
   Payment on notes payable to minority shareholder                      --                   --             (134,028)
   Decrease in minority interest                                   (210,000)                  --                   --
   Distributions paid to Shareholders                           (15,485,136)         (20,717,053)                  --
   Distributions paid to minority shareholders                     (446,326)                  --              (16,800)
   Return of capital distributed to minority shareholder        (43,000,000)                  --                   --
   Capital contributed to controlled subsidiary                     878,988              298,926                   --
---------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FOR FINANCING ACTIVITIES                  $      (74,124,961)  $     (108,487,852)  $      (22,104,236)
---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH                                     $          184,299   $          456,000   $        4,490,585
---------------------------------------------------------------------------------------------------------------------
CASH AT BEGINNING OF YEAR                                $        6,605,096   $        6,149,096   $        1,658,511
---------------------------------------------------------------------------------------------------------------------
CASH AT END OF YEAR                                      $        6,789,395   $        6,605,096   $        6,149,096
---------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE AND NON-CASH INVESTING AND
  FINANCING ACTIVITIES

Interest paid on loan -- Credit Facility                 $        8,234,733   $        8,248,335   $       11,186,341
Interest paid on mortgages                               $       26,002,996   $       13,933,726   $       14,515,550
Interest paid on swap agreements                         $       11,693,069   $       31,080,951   $       40,482,610
Market value of securities distributed in payment of
  redemptions                                            $      128,281,460   $       86,063,725   $       68,380,471
Market value of common stock received from Belvedere
  Company                                                $               --   $               --   $      120,923,140
Market value of real property and other assets, net of
  current liabilities, assumed in conjunction with the
  acquisitions of other real estate                      $      840,381,023   $               --   $               --
Mortgages assumed in conjunction with acquisitions of
  other real estate                                      $      244,129,496   $               --   $               --
Market value of minority interests assumed in
  conjunction with the acquisitions of other real estate $      116,686,185   $               --   $               --
Market value of real property and other assets, net of
  current liabilities, disposed of in conjunction with
  the sale of other real estate                          $      379,783,597   $               --   $       10,281,661
Mortgage disposed of in conjunction with the sale of
  one multifamily property in other real estate          $      160,013,240   $               --   $       11,776,683
Market value of minority interests disposed of in
  conjunction with the sale of other real estate         $       40,158,768   $               --   $               --
---------------------------------------------------------------------------------------------------------------------
</Table>

                 See notes to consolidated financial statements

                                       42
<Page>

BELMAR CAPITAL FUND LLC
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                         YEAR ENDED           YEAR ENDED           YEAR ENDED
                                                         DECEMBER 31, 2004    DECEMBER 31, 2003    DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>                  <C>
Net asset value -- Beginning of year                     $           86.280   $           69.870   $           87.370
---------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS

Net investment income(1)                                 $            1.170   $            1.905   $            1.803
Net realized and unrealized gain (loss)                               5.200               16.205              (19.303)
---------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS                      $            6.370   $           18.110   $          (17.500)
---------------------------------------------------------------------------------------------------------------------

DISTRIBUTIONS

Distributions to Shareholders                            $           (1.150)  $           (1.700)  $               --
---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                      $           (1.150)  $           (1.700)  $               --
---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR                           $           91.500   $           86.280   $           69.870
---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2)                                                        7.48%               26.48%              (20.03)%
---------------------------------------------------------------------------------------------------------------------

RATIOS AS PERCENTAGE OF AVERAGE NET ASSETS(3):

Expenses of Consolidated Real Property Subsidiaries
   Interest and other borrowing costs(4)                               1.47%                0.58%                0.64%
   Operating expenses(4)                                               0.94%                0.74%                0.78%
Belmar Capital Fund LLC Expenses
   Interest and other borrowing costs(5)(6)                            0.44%                0.51%                0.74%
   Investment advisory and administrative fees,
     servicing fees and other Fund operating expenses
     (5)(7)                                                            1.23%                1.17%                1.16%
                                                         ------------------------------------------------------------
Total expenses                                                         4.08%                3.00%                3.32%

Net investment income                                                  1.34%                2.55%                2.32%
---------------------------------------------------------------------------------------------------------------------

RATIOS AS PERCENTAGE OF AVERAGE GROSS ASSETS(3)(8):

Expenses of Consolidated Real Property Subsidiaries
   Interest and other borrowing costs(4)                               1.01%                0.41%                0.45%
   Operating expenses(4)                                               0.64%                0.52%                0.54%
Belmar Capital Fund LLC Expenses
   Interest and other borrowing costs(5)(6)                            0.30%                0.35%                0.52%
   Investment advisory and administrative fees,
     servicing fees and other Fund operating expenses
     (5)(7)                                                            0.86%                0.82%                0.82%
                                                         ------------------------------------------------------------
Total expenses                                                         2.81%                2.10%                2.33%

Net investment income                                                  0.93%                1.79%                1.63%
---------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA

Net assets, end of year (000's omitted)                  $        1,910,487   $        1,920,612   $        1,620,230
Portfolio turnover of Tax-Managed Growth Portfolio
   (the Portfolio)                                                        3%                  15%                  23%
---------------------------------------------------------------------------------------------------------------------
</Table>

(1)  Calculated using average shares outstanding.
(2)  Returns are  calculated by determining  the percentage  change in net asset
     value with all distributions reinvested.
(3)  For the purpose of  calculating  ratios,  the income and expenses of Belmar
     Realty Corporation's (Belmar Realty's) controlled  subsidiaries are reduced
     by the  proportionate  interests  therein of  investors  other than  Belmar
     Realty.
(4)  Includes Belmar  Realty's  proportional  share of expenses  incurred by its
     majority-owned subsidiaries.
(5)  Includes  the  expenses of Belmar  Capital  Fund LLC (Belmar  Capital)  and
     Belmar Realty.  Does not include  expenses of the real estate  subsidiaries
     majority-owned by Belmar Realty.
(6)  Ratios do not include  interest  incurred in  connection  with the interest
     rate swap  agreements.  Had such  amounts  been  included,  ratios would be
     higher.
(7)  Includes Belmar Capital's share of Belvedere  Company's allocated expenses,
     including those expenses allocated from the Portfolio.
(8)  Average  Gross Assets is defined as the average  daily amount of all assets
     of Belmar Capital (including Belmar Capital's interest in Belvedere Company
     and  Belmar  Capital's  ratable  share of the  assets of its  directly  and
     indirectly  controlled  subsidiaries  (Note 1)),  without  reduction by any
     liabilities.  For this  purpose,  the  assets of Belmar  Realty  controlled
     subsidiaries  are  reduced  by  the  proportionate   interests  therein  of
     investors other than Belmar Realty.

                 See notes to consolidated financial statements

                                       43
<Page>
BELMAR CAPITAL FUND LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1    ORGANIZATION

A INVESTMENT OBJECTIVE -- Belmar Capital Fund LLC (Belmar Capital) is a Delaware
limited liability company established to offer diversification and tax-sensitive
investment  management to investors holding large and concentrated  positions in
equity  securities  of  selected   publicly-traded   companies.  The  investment
objective  of Belmar  Capital is to achieve  long-term,  after-tax  returns  for
Belmar  Capital  shareholders   (Shareholders).   Belmar  Capital  pursues  this
objective primarily by investing indirectly in Tax-Managed Growth Portfolio (the
Portfolio),  a diversified,  open-end  management  investment company registered
under the Investment Company Act of 1940, as amended. The Portfolio is organized
as a trust under the laws of the state of New York. Belmar Capital maintains its
investment in the  Portfolio by investing in Belvedere  Capital Fund Company LLC
(Belvedere  Company),  a separate  Massachusetts  limited liability company that
invests  exclusively  in the  Portfolio.  The  performance of Belmar Capital and
Belvedere Company is directly and  substantially  affected by the performance of
the Portfolio.  Separate from its investment in the Portfolio  through Belvedere
Company,  Belmar  Capital  invests in real estate  assets  through a  controlled
subsidiary,  Belmar Realty Corporation (Belmar Realty). Such investments include
income-producing   preferred   equity   interests   in  real  estate   operating
partnerships (Partnership Preference Units) affiliated with publicly-traded real
estate  investment  trusts (REITs) and interests in leasehold  improvements held
through Bel Stamford  Investors LLC (Bel  Stamford) and joint  ventures that are
controlled subsidiaries of Belmar Realty.

B SUBSIDIARIES  -- Belmar Realty invests  directly and indirectly in Partnership
Preference   Units  and   indirectly   in  real  property   through   controlled
subsidiaries,  Bel Alliance Apartments,  LLC (Bel Apartments) (for the period in
which Belmar Realty held an interest in Bel  Apartments),  Bel Stamford,  Brazos
Property Trust (Brazos) and Cimmaron  Property Trust  (Cimmaron) (for the period
in which  Belmar  Realty held an interest in  Cimmaron).  At December  31, 2003,
Belmar Realty's  investments in Partnership  Preference Units were held directly
except for its indirect  investment in Partnership  Preference  Units of Vornado
Realty,  LP (a Delaware  Limited  Partnership)  which was held through its 29.6%
investment in Bel Holdings LLC. Vornado Realty, LP is the sole investment of Bel
Holdings  LLC. At December 31, 2004,  Belmar  Realty did not hold an interest in
Bel Holdings LLC.

Belmar  Realty -- Belmar  Capital owns 100% of the common stock issued by Belmar
Realty and  intends to hold all of Belmar  Realty's  common  stock at all times.
Additionally,  2,100 shares of preferred  stock of Belmar Realty are outstanding
at December 31, 2004 and 2003.

The  preferred  stock has a par value of $0.01  per share and is  redeemable  by
Belmar  Realty at a redemption  price of $100 per share after the  occurrence of
certain tax events or after December 31, 2005.  Dividends on the preferred stock
are  cumulative  and payable  annually  equal to $8 per share.  The  interest in
preferred stock is recorded as minority interest on the Consolidated  Statements
of Assets and Liabilities.

Bel Apartments -- Bel Apartments,  a majority-owned  subsidiary of Belmar Realty
since  September  2000,  sold  all of  its  multifamily  residential  properties
(represented by 19 multifamily  residential properties consisting of 5,403 units
(collectively  the Bel  Apartment  Properties)  located in eight  states,  to an
affiliate  of the  Bel  Apartments  minority  shareholder  (the  Bel  Apartments
Minority  Shareholder) in October 2004. Concurrent with this sale, Belmar Realty
acquired  the  outstanding  minority  interest in Bel  Apartments  for a nominal
amount.  Prior  to  acquiring  the  interest  of  the  Bel  Apartments  Minority
Shareholder  Belmar  Realty  owned 100% of the Class A units of Bel  Apartments,
representing  60%  of the  voting  interests  in Bel  Apartments,  and  the  Bel
Apartments  Minority  Shareholder owned 100% of the Class B units,  representing
40% of the voting interests in Bel Apartments.  The primary distinctions between
the two classes of units are the distribution  priority and voting rights. Class
A units have priority in  distributions  and greater  voting rights than Class B
units.  In December  2004,  Belmar Realty sold its interest in Bel Apartments to
another fund advised by Boston  Management  and  Research  (Boston  Management).
Belmar Realty did not own an interest in Bel Apartments at December 31, 2004.

Bel  Stamford  -- Bel  Stamford,  a  wholly-owned  subsidiary  of Belmar  Realty
acquired  in  January  2004,   owns  a  100%  indirect   interest  in  leasehold
improvements  of  an  office  building  and  attached  facilities  in  Stamford,
Connecticut.  The real  property  is leased to a single  tenant on a triple  net
lease  basis (Net Leased  Property)  pursuant  to a  non-cancelable,  fixed term
operating  lease expiring in December  2017,  with options to extend for renewal
periods  extending no later than December 2057. The Net Leased  Property is 100%
leased at December 31, 2004.

Brazos -- On May 3, 2004,  Belmar Realty  entered into an agreement to establish
and acquire a majority interest in a controlled subsidiary,  Brazos. On June 30,
2004,  Brazos  acquired  a majority  interest  in four  industrial  distribution
properties  located in two states  (Tennessee and North Carolina).  On August 4,
2004, Brazos acquired an additional nineteen industrial  distribution properties
located in six states  (Florida,  Indiana,  New Jersey,  Ohio,  Pennsylvania and
South  Carolina).  On December 31,  2004,  Brazos owns  twenty-three  industrial
distribution  properties  located in eight  states  (New  Jersey,  Pennsylvania,
Indiana,  Florida,  South  Carolina,  North Carolina,  Tennessee and Ohio).  The

                                       44
<Page>

average occupancy rate was approximately 85% at December 31, 2004. Belmar Realty
owns  100% of the  Class A shares  of  Brazos,  representing  80% of the  voting
interests in Brazos and a minority shareholder (the Brazos Minority Shareholder)
owns 100% of the Class B shares,  representing  20% of the voting  interests  in
Brazos.  The Class B equity  interest is recorded as a minority  interest on the
Consolidated  Statements  of Assets and  Liabilities.  The primary  distinctions
between  the two  classes of shares  are the  distribution  priority  and voting
rights.  Class A shares have priority in distributions and greater voting rights
than Class B shares.  From and after August 4, 2014, either Belmar Realty or the
Brazos  Minority  Shareholder  may cause a liquidation  of Brazos and, if Belmar
Realty makes that election, the Brazos Minority Shareholder has the right either
to purchase the shares of Brazos owned by Belmar Realty or to acquire the assets
of Brazos,  in either case at a price  determined  through an  appraisal  of the
assets of Brazos.

Cimmaron -- On May 3, 2004, Belmar Realty entered into an agreement to establish
and acquire a majority interest in a controlled  subsidiary,  Cimmaron.  On June
30, 2004, Cimmaron acquired a majority interest in four industrial  distribution
properties  located in four  states  (Tennessee,  Georgia,  Texas and Ohio).  On
August 4, 2004,  Cimmaron acquired an additional twenty industrial  distribution
properties located in five states (Florida,  New Jersey, Ohio,  Pennsylvania and
South  Carolina).  On  September  29, 2004,  Belmar  Realty sold its interest in
Cimmaron  to another  investment  fund  advised by Boston  Management.  Prior to
selling its interest Belmar Realty owned 100% of the Class A shares of Cimmaron,
representing 60% of the voting interests in Cimmaron and a minority  shareholder
(the  Cimmaron  Minority   Shareholder)  owned  100%  of  the  Class  B  shares,
representing 40% of the voting interests in Cimmaron.  The primary  distinctions
between  the two  classes of shares  are the  distribution  priority  and voting
rights.  Class A shares have priority in distributions and greater voting rights
than  Class B shares.  Belmar  Realty did not own an  interest  in  Cimmaron  at
December 31, 2004.

The audited  financial  statements of the Portfolio,  including the Portfolio of
Investments,  are  included  elsewhere  in this  report  and  should  be read in
conjunction with these financial statements.

2    SIGNIFICANT ACCOUNTING POLICIES

The  following  is a summary of  significant  accounting  policies  consistently
followed  in the  preparation  of the  consolidated  financial  statements.  The
policies are in conformity with accounting  principles generally accepted in the
United States of America.

A PRINCIPLES OF CONSOLIDATION -- The consolidated  financial  statements include
the  accounts of Belmar  Capital and its  majority  owned  subsidiaries.  Belmar
Capital and Belmar Realty  consolidate  all  investments  in affiliates in which
their ownership  exceeds 50 percent.  The  accompanying  consolidated  financial
statements include the accounts of Belmar Capital and Belmar Realty and may also
include Bel Stamford,  Bel Apartments,  Brazos and Cimmaron  (collectively,  the
Fund). All material intercompany accounts and transactions have been eliminated.

B BASIS OF PRESENTATION -- Belmar Capital is an investment company and, as such,
presents its assets at fair value.  Fixed  liabilities  are generally  stated at
their principal value.

C INVESTMENT COSTS -- The Fund's  investment  assets were  principally  acquired
through  contributions of common stock by Shareholders in exchange for Shares of
the Fund,  through  purchases  of  Partnership  Preference  Units and other real
estate investments, and through contributions of real estate investments by each
respective Minority  Shareholder in exchange for cash and a minority interest in
controlled subsidiaries. Upon receipt of common stock from Shareholders,  Belmar
Capital immediately exchanged the contributed  securities into Belvedere Company
for shares  thereof,  and Belvedere  Company,  in turn,  immediately  thereafter
exchanged the  contributed  securities into the Portfolio for an interest in the
Portfolio.  The  initial  cost at which the Fund's  investments  of  contributed
securities is carried in the consolidated  financial  statements is the value of
the contributed securities as of the close of business on the day prior to their
contribution to the Fund. The initial tax basis of the Fund's  investment in the
Portfolio   through   Belvedere   Company  is  the  same  as  the   contributing
Shareholders'  basis in securities  contributed to the Fund. The initial tax and
financial  reporting  basis of the Fund's  investment in Partnership  Preference
Units and other real estate  investments  purchased  by the Fund is the purchase
cost. The initial cost at which the Fund's investment in real estate contributed
is carried  in the  consolidated  financial  statements  is the market  value on
contribution date. The initial tax basis of real estate investments  contributed
is the  contributor's tax basis at the time of contribution or the fair value at
the time of contribution, depending on the taxability of the contribution.

D  INVESTMENT  AND OTHER  VALUATIONS  -- The Fund's  investments  may consist of
shares  of  Belvedere  Company,  Partnership  Preference  Units,  real  property
investments and short-term debt securities.  Belvedere Company's only investment
is an  interest  in  the  Portfolio,  the  value  of  which  is  derived  from a
proportional interest therein.

                                       45
<Page>

Additionally,  the Fund has entered into interest rate swap agreements (Note 7).
The valuation policy followed by the Fund,  Belvedere  Company and the Portfolio
is as follows:

Securities listed on a U.S. securities exchange generally are valued at the last
sale price on the day of valuation  or, if no sales took place on such date,  at
the mean  between the closing bid and asked  prices  therefore  on the  exchange
where such securities are principally  traded.  Equity  securities listed on the
NASDAQ  National  Market  generally  are valued at the official  NASDAQ  closing
price.  Unlisted or listed  securities for which closing sales prices or closing
quotations are not available are valued at the mean between the latest available
bid and asked prices or, in the case of preferred equity  securities held by the
Portfolio that are not listed or traded in the  over-the-counter  market,  by an
independent pricing service. Exchange-traded options are valued at the last sale
price for the day of valuation as quoted on the  principal  exchange or board of
trade on which the  options are traded or, in the absence of sales on such date,
at the mean between the latest bid and asked prices therefore. Futures positions
on securities and currencies  generally are valued at closing settlement prices.
Short-term  debt  securities  with a  remaining  maturity of 60 days or less are
valued at amortized  cost. If short-term  debt  securities  were acquired with a
remaining  maturity  of more than 60 days,  their  amortized  cost value will be
based on their  value on the  sixty-first  day prior to  maturity.  Other  fixed
income and debt securities, including listed securities and securities for which
price  quotations  are  available,  will  normally  be  valued  on the  basis of
valuations furnished by a pricing service. Foreign securities and currencies are
valued in U.S.  dollars,  based on foreign  currency  exchange  rate  quotations
supplied by an independent  quotation  service.  The daily  valuation of foreign
securities  generally is  determined as of the close of trading on the principal
exchange on which such  securities  trade.  Events  occurring after the close of
trading on foreign  exchanges  may result in  adjustments  to the  valuation  of
foreign  securities to more accurately  reflect their fair value as of the close
of regular trading on the New York Stock Exchange  (NYSE).  When valuing foreign
equity securities that meet certain criteria, the Trustees have approved the use
of a fair value service that values such  securities to reflect  market  trading
that occurs  after the close of the  applicable  foreign  markets of  comparable
securities or other instruments that have a strong correlation to the securities
held by the Portfolio. Investments held by the Portfolio for which valuations or
market  quotations  are  unavailable  are  valued at fair  value  using  methods
determined in good faith by or at the direction of the Trustees of the Portfolio
considering relevant factors, data and information including the market value of
freely  tradable  securities of the same class in the principal  market on which
such securities are normally traded. Interest rate swap agreements are valued by
Boston Management,  as investment  adviser of Belmar Capital,  based upon dealer
and  counterparty  quotes and pricing models which take into  consideration  the
market trading prices of interest rate swap  agreements  that have similar terms
to the interest rate swap agreements the Fund has entered.

Market  prices for the Fund's real  estate  investments  (including  Partnership
Preference  Units,  joint  ventures and Net Leased  Properties)  are not readily
available and  therefore  they are stated in the Fund's  consolidated  financial
statements at estimated  fair value.  The estimated  fair value of an investment
represents  the amount at which Boston  Management (as manager of Belmar Realty)
believes the investment could be sold in a current  transaction  between willing
parties  in  an  orderly  disposition,  that  is,  other  than  in a  forced  or
liquidation  sale. In valuing these  investments,  Boston  Management  considers
relevant  factors,  data  and  information.   With  respect  to  investments  in
Partnership  Preference  Units,  Boston  Management  considers  information from
dealers and similar  firms with  knowledge  of such issues  and/or the prices of
comparable  preferred  equity  securities  and other  fixed or  adjustable  rate
instruments having similar investment characteristics.  Real estate investments,
other  than  Partnership  Preference  Units,  are  primarily  valued  based upon
independent  valuations  (ie,  appraisals),  that  represent the amount at which
Boston  Management   believes  the  investments  could  be  sold  in  a  current
transaction between willing parties and assume an orderly disposition,  that is,
other than in a forced or liquidation  sale.  Detailed real property  valuations
are performed at least annually and reviewed  periodically.  When a property has
not been appraised (such as when a propety has been recently  acquired),  Boston
Management  determines  the  estimated  fair value of the property  based on the
transaction  value of the property,  which equals the total  acquisition cost of
the  property,  exclusive  of  certain  legal  and  transaction  costs.  Once an
appraisal  of a  property  has  been  conducted,  Boston  Management  bases  the
estimated  fair value of the  property  principally  on the  estimated  value as
determined  by the  appraiser.  Appraisals  of  newly  acquired  properties  are
conducted  in  the  year  following  the  acquisition.   Interim  valuations  of
properties  may  be  adjusted  to  reflect   significant   changes  in  economic
circumstances or recent  evaluations of similar  properties,  and the results of
operations and distributions. The equity value of each real estate joint venture
between Belmar Realty and the respective Minority Shareholder is estimated using
a financial  model that considers (i) the terms of the joint venture  agreements
relating to allocation of distributable cash flow, (ii) the expected duration of
the joint venture;  and (iii) the projected  property values and cash flows from
the  properties  based  on  estimates  used in the  independent  valuations.  If
detailed  real property  valuations  have not been  performed on every  property
within a joint  venture  (such as when a joint  venture  recently  acquired  the
properties)  then  Boston  Management  allocates  equity  interest  based on the
contractual  ownership  interest of Belmar  Realty and the  respective  Minority
Shareholder. Interim valuations reflect results of operations and distributions,
and  may be  adjusted  if  there  has  been a  significant  change  in  economic
circumstances  or recent  independent  evaluations  of similar  properties.  The
valuation of real estate investments includes many assumptions,  including,  but
not limited to, a current  transaction  between  willing  parties and an orderly
disposition of assets. If the assumptions used to value a real estate investment
change, it may materially impact the estimated fair value of that investment.

                                       46
<Page>

If a rental  property  securing a mortgage  note payable has an  estimated  fair
value lower than the outstanding  principal  balance,  the mortgage note payable
may be  adjusted  to the  estimated  fair  value of the  property  securing  the
mortgage note. No such  adjustments  have been made to mortgage notes payable at
December 31, 2004 and 2003.

Changes in the fair value of the Fund's  investments  are recorded as unrealized
appreciation or depreciation in the Consolidated Statements of Operations.

E INTEREST  RATE SWAPS -- Belmar  Capital has entered  into  interest  rate swap
agreements with respect to its borrowings and real estate investments.  Pursuant
to these agreements,  Belmar Capital makes periodic payments to the counterparty
at  predetermined  fixed rates in exchange for  floating-rate  payments from the
counterparty at a predetermined  spread to one-month or three-months  LIBOR. Net
interest  paid and accrued or received and earned is recorded as realized  gains
or losses and  changes in the  underlying  values of the swaps are  recorded  as
unrealized appreciation  (depreciation),  each in the Consolidated Statements of
Operations.   Belmar  Capital  is  exposed  to  credit  loss  in  the  event  of
non-performance by the swap counterparty. Risks may arise from the unanticipated
movements in the value of interest rates.

F RENTAL  OPERATIONS  -- The  apartment  units held by Bel  Apartments  (for the
period during which Belmar Realty maintained an interest in Bel Apartments) were
leased to residents generally for a term averaging  approximately one year, with
monthly payments due in advance.

Bel  Stamford  holds an interest in  leasehold  improvements  leased to a single
tenant on a triple net lease  basis  pursuant  to a  non-cancelable,  fixed-term
operating  lease expiring in December  2017,  with options to extend for renewal
periods extending no later than December 2057. During the initial lease term the
rental income from the office  building and attached  facilities,  together with
any related payments received,  are expected to equal the payments due under the
mortgage.

The  properties  held by Brazos and Cimmaron (for the period during which Belmar
Realty  maintained  an interest in Cimmaron)  are leased  under fixed  long-term
operating  leases.  At December 31, 2004, the minimum lease payments expected to
be received by Bel  Stamford and Brazos from leases with lease  periods  greater
than one year are as follows:

<Table>
<Caption>
TWELVE MONTHS ENDING DECEMBER 31,               AMOUNT
--------------------------------------------------------------
<S>                                             <C>
2005                                            $   47,970,113
2006                                                35,887,793
2007                                                35,207,628
2008                                                33,039,222
2009                                                30,154,702
Thereafter                                         183,203,797
--------------------------------------------------------------
                                                $  365,463,255
--------------------------------------------------------------
</Table>

The  mortgage  escrow  accounts  consisted  of deposits  for real estate  taxes,
insurance, reserve for replacements and capital repairs that were required under
the mortgage  agreements.  The mortgage escrow accounts were held and controlled
by the mortgage lenders (Note 8).

Certain of the costs incurred in connection with acquisitions of properties have
been  capitalized.  Significant  betterments and improvements are capitalized as
part of real property.

G INCOME -- Dividend income and distributions from Partnership  Preference Units
are  recorded on the  ex-dividend  date and  interest  income is recorded on the
accrual  basis.  Rental  income is recorded on the accrual  basis based upon the
terms of the lease agreements.

Belvedere  Company's  net  investment  income  or  loss  consists  of  Belvedere
Company's pro rata share of the net investment  income or loss of the Portfolio,
less all  actual  or  accrued  expenses  of  Belvedere  Company,  determined  in
accordance with accounting principles generally accepted in the United States of
America.  The Fund's net  investment  income or loss  consists of the Fund's pro
rata share of the net investment income or loss of Belvedere  Company,  plus all
income  earned  on  the  Fund's  direct  and  indirect  investments   (including
Partnership  Preference  Units and real  property),  less all actual and accrued
expenses  of the  Fund  determined  in  accordance  with  accounting  principles
generally accepted in the United States of America.

H DEFERRED COSTS -- Mortgage  origination  expenses  incurred in connection with
the financing of real estate joint ventures are  capitalized  and amortized over
the terms of the  respective  loans.  Deferred  loan costs are included in other
assets  and  amortization  expense  is  included  in  interest  expense  in  the
accompanying consolidated financial statements.

                                       47
<Page>

I INCOME  TAXES -- Belmar  Capital,  Belvedere  Company  and the  Portfolio  are
treated as  partnerships  for federal income tax purposes.  As a result,  Belmar
Capital,  Belvedere  Company and the Portfolio do not incur  federal  income tax
liability,   and  the   shareholders   and  partners  thereof  are  individually
responsible for taxes on items of partnership income,  gain, loss and deduction.
The policy of Belmar Realty, Bel Apartments, Brazos and Cimmaron (for the period
during  which  Belmar  Realty  maintained  an  interest  in Bel  Apartments  and
Cimmaron)  is to comply  with the  Internal  Revenue  Code of 1986,  as amended,
applicable to REITs.  Belmar Realty and Brazos will  generally not be subject to
federal  income tax to the extent that they  distribute  their earnings to their
stockholders each year and maintain their  qualification as a REIT. Bel Stamford
is a single member liability company treated as pass-through  entity for federal
tax purposes.

Net investment income and capital gains determined in accordance with income tax
regulations may differ from such amounts determined in accordance with generally
accepted  accounting  principles.  Such differences could be significant and are
primarily  due  to  differences  in the  cost  basis  of  securities  and  other
contributed  investments,  depreciation on real estate assets, periodic payments
made in  connection  with  interest  rate swap  agreements  and the character of
distributions received from REITs and Partnership Preference Units.

J OTHER -- Investment transactions are accounted for on a trade-date basis.

K USE OF ESTIMATES -- The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts of assets and  liabilities  at the date of the financial  statements and
the reported amounts of income and expense during the reporting  period.  Actual
results could differ from those estimates.

L  RECLASSIFICATIONS  --  Certain  amounts  in  the  prior  years'  consolidated
financial  statements  have been  reclassified  to conform with the current year
presentation.

M   INDEMNIFICATIONS   --  Under  Belmar  Capital's  Limited  Liability  Company
Agreement,  Belmar Capital's officers, its manager,  investment adviser, and any
affiliate,  associate,  officer,  employee or trustee thereof,  and any manager,
director,  officer  or  employee  of  Belmar  Realty  or  any  other  controlled
subsidiary may be indemnified  against certain  liabilities and expenses arising
out of their duties to the Fund.  Shareholders  also may be indemnified  against
personal liability for the liabilities of Belmar Capital.  Additionally,  in the
normal  course  of  business,  the Fund  enters  into  agreements  with  service
providers that may contain indemnification  clauses. The Fund's maximum exposure
under these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred.

3    DISTRIBUTIONS TO SHAREHOLDERS

Belmar  Capital  intends  to  distribute  at the end of each  year,  or  shortly
thereafter,  all of its  net  investment  income  for  the  year,  if  any,  and
approximately  18% of its net  realized  capital  gains for such  year  (reduced
during the year ended  December  31, 2003 from 22% to reflect the  reduction  in
federal long-term  capital gains tax rates), if any, other than  precontribution
gains  allocated to a  Shareholder  in  connection  with a tender offer or other
extraordinary  event with respect to a security  contributed by that Shareholder
or  such  Shareholder's  predecessor  in  interest.  In  addition,   whenever  a
distribution  in  respect  of a  precontribution  gain is made,  Belmar  Capital
intends to make a supplemental distribution to compensate Shareholders receiving
such  distributions  for taxes that may be due on income specially  allocated in
connection with the precontribution gain and supplemental distributions. Capital
gain distributions that are made with respect to realized  precontribution gains
and   the   associated   supplemental   distributions   (collectively,   Special
Distributions)  are  made  solely  to the  Shareholders  to whom  such  realized
precontribution gain is allocated.  There were no Special  Distributions paid or
accrued during the years ended December 31, 2004, 2003 and 2002.

The Fund's distributions generally are based on determinations of net investment
income and net realized  capital  gains for federal  income tax  purposes.  Such
amounts may differ from net  investment  income (or loss) and net realized  gain
(or loss) as set forth in the Fund's financial  statements due to differences in
the treatment of various income, gain, loss, expense and other items for federal
income tax purposes and under generally accepted accounting principles.

In addition,  Belmar Realty and Brazos intend to distribute substantially all of
their taxable income earned by the respective entities during the year.

Distributions  made to  Shareholders  electing the Fund's Estate Freeze  feature
(Note 4) will be paid,  first,  to holders of Preferred  Shares to the extent of
the unpaid  cumulative  annual  priority  return of the  Preferred  Shares  and,
second,  to the holders of the associated Common Shares.  Distributions  made in
respect  of any  realized  precontribution  gains  and  associated  supplemental

                                       48
<Page>

distributions  will be apportioned  between  Preferred  Shares and Common Shares
consistent with the allocation to the Preferred Shares and Common Shares of such
realized  precontribution  gains. It is expected that  substantially  all Belmar
Capital distributions in respect of Estate Freeze Shares will be paid to holders
of Preferred  Shares  rather than  holders of Common  Shares.  Distributions  on
Estate Freeze Shares may be reinvested in Belmar  Capital to purchase  undivided
Fund Shares at the Fund's net asset value per share on the date of reinvestment.

4    SHAREHOLDER TRANSACTIONS

Belmar Capital may issue an unlimited number of full and fractional Fund Shares.
Transactions in Fund Shares were as follows:

<Table>
<Caption>
                                             YEAR ENDED        YEAR ENDED        YEAR ENDED
                                             DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                             2004              2003              2002
-----------------------------------------------------------------------------------------------
<S>                                              <C>               <C>                 <C>
Issued to Shareholders electing to receive
  payment of distributions in Fund Shares           118,507           253,148                --
Redemptions                                      (1,499,430)       (1,182,492)         (943,826)
-----------------------------------------------------------------------------------------------
NET DECREASE                                     (1,380,923)         (929,344)         (943,826)
-----------------------------------------------------------------------------------------------
</Table>

Redemptions of Fund Shares held less than three years are generally subject to a
redemption  fee of 1% of the net  asset  value  of  Fund  Shares  redeemed.  The
redemption fee is paid to Eaton Vance  Distributors,  Inc. (EV  Distributors) by
Belmar  Capital on behalf of the redeeming  Shareholder.  No charge is levied on
redemptions of Fund Shares acquired through the  reinvestment of  distributions,
Fund Shares  redeemed in connection with a taxable tender offer or other taxable
corporate  event  or Fund  Shares  redeemed  following  the  death of all of the
initial  holders of the Fund Shares  redeemed.  In  addition,  no fee applies to
redemptions made pursuant to a Systematic Redemption Plan, whereby a Shareholder
can redeem up to 2% of Fund Shares held on a quarterly basis. For the year ended
December 31, 2004, EV  Distributors  did not receive  redemption  fees.  For the
years ended December 31, 2003 and 2002, EV  Distributors  received  $340,087 and
$293,328 in redemption fees, respectively.

Shareholders  in Belmar  Capital are  entitled to  restructure  their Fund Share
interests under what is termed an Estate Freeze  Election.  Under this election,
Fund Shares are  divided  into  Preferred  Shares and Common  Shares.  Preferred
Shares have a preferential  right over the corresponding  Common Shares equal to
(i) 95% of the original  capital  contribution  made in respect of the undivided
Shares from which the Preferred Shares and Common Shares were derived, plus (ii)
an annuity priority return equal to 8.5% of the Preferred  Shares'  preferential
interest in the original capital  contribution of the undivided Fund Shares. The
associated  Common  Shares are  entitled  to the  remaining  5% of the  original
capital  contribution  in  respect of the  undivided  Shares,  plus any  returns
thereon in excess of the fixed  annual  priority  of the  Preferred  Shares.  At
December  31,  2004 and 2003,  the  Preferred  Shares  were valued at $91.50 and
$86.28,  respectively,  and the Common  Shares had no value.  The  existence  of
restructured Fund Shares does not adversely affect  Shareholders who do not make
an election nor do the restructured Fund Shares have preferential rights to Fund
Shares that have not been  restructured.  Shareholders who subdivide Fund Shares
under this election  sacrifice  certain  rights and  privileges  that they would
otherwise have with respect to the Fund Shares so divided,  including redemption
rights and voting and consent  rights.  Upon the  twentieth  anniversary  of the
issuance  of the  associated  undivided  Fund  Shares  to the  original  holders
thereof,  Preferred and Common Shares will  automatically  convert into full and
fractional undivided Fund Shares.

5    INVESTMENT TRANSACTIONS

The following table  summarizes the Fund's  investment  transactions  other than
short-term obligations for the years ended December 31, 2004, 2003 and 2002:

<Table>
<Caption>
                                             YEAR ENDED       YEAR ENDED       YEAR ENDED
                                             DECEMBER 31,     DECEMBER 31,     DECEMBER 31,
INVESTMENT TRANSACTION                       2004             2003             2002
---------------------------------------------------------------------------------------------
<S>                                          <C>              <C>              <C>
Increases in investment in
 Belvedere Company                           $           --   $   25,000,000   $  246,297,586
Decreases in investment in
 Belvedere Company(1)                        $  128,281,460   $   85,197,475   $  318,696,366
Acquisition of other real
 property(2)(3)                              $  479,708,008   $           --   $           --
Sale of other real
 property(3)(4)                              $  182,557,032   $           --   $           --
Sale of common stock(1)                      $           --   $           --   $  120,160,045
Sale of other investments(5)                 $           --   $           --   $   65,062,425
Purchases of Partnership
 Preference Units(6)                         $  108,352,710   $   75,672,618   $           --
Sales of Partnership
 Preference Units(7)                         $  470,422,252   $  228,888,304   $   60,076,602
---------------------------------------------------------------------------------------------
</Table>

(1)  Included in decreases in investment in Belvedere Company for the year ended
     December   31,   2002  is  the   receipt   of   common   stock   through  a
     redemption-in-kind  of $120,923,140.  Belmar Capital  subsequently sold the
     common stock during the year ended December 31, 2002  recognizing a loss of
     $763,095.

(2)  In January  2004,  Belmar Realty  purchased  indirect  investments  in real
     property through its wholly-owned subsidiary, Bel Stamford for $16,058,060.

                                       49
<Page>

(3)  On June 30,  2004 and  August  4, 2004  Belmar  Realty  purchased  indirect
     investments in real property  through two controlled  subsidiaries,  Brazos
     and  Cimmaron,   for  $7,791,240  and   $298,641,468  and  $16,407,819  and
     $140,809,421, respectively (Note 1). On September 29, 2004, Belmar sold its
     interest in  Cimmaron  to another  fund  advised by Boston  Management  for
     proceeds of $159,062,857 for which a gain of $908,060 was recognized on the
     transaction.

(4)  In May  2004,  Bel  Apartments  agreed  to  sell  all  of  its  multifamily
     residential  properties  to an  affiliate  of the Bel  Apartments  Minority
     Shareholder.  In October 2004, the sale  transaction  was completed and Bel
     Apartments received proceeds of $23,494,175 as consideration for all of its
     interest in the  multifamily  properties  and did not retain any contingent
     liabilities  associated with the mortgage debt secured by the properties or
     other  liabilities.  The  Fund  recognized  a loss of  $19,408,521  on this
     transaction.   Concurrent  with  this  sale,  Belmar  Realty  acquired  the
     outstanding  minority  interest in Bel Apartments for a nominal amount.  In
     December  2004,  the Fund sold its remaining  interest in Bel Apartments to
     another fund advised by Boston Management and recognized a gain of $433,833
     which is included  in the net gains  recognized  from sales of  Partnership
     Preference  Units  (included  below in note 7). In June 2002, a multifamily
     residential  property  owned by Bel  Apartments was sold to an affiliate of
     the Bel Apartments Minority  Shareholder.  Belmar Capital recognized a loss
     of  $1,782,650,  net of the  minority  interest  in such loss of  $476,023.
     (5)During  the year ended  December  31,  2002,  Belmar  Capital  purchased
     $67,401,012 of other  investments  and  subsequently  sold the  investments
     recognizing a loss of $2,338,586.

(6)  Purchases of Partnership  Preference Units for the years ended December 31,
     2004,  and  2003  represent  purchases  of  Partnership   Preference  Units
     purchased from other investment funds advised by Boston  Management.  There
     were no  purchases  of  Partnership  Preference  Units  for the year  ended
     December 31, 2002.

(7)  Sales of  Partnership  Preference  Units for the years ended  December  31,
     2004,  2003, and 2002 include  Partnership  Preference  Units sold to other
     investment  funds  advised  by  Boston  Management  for  which net gains of
     $33,340,051, $7,239,933 and $5,116,279 were recognized, respectively.

A portion of the  Fund's  indirect  investment  in Brazos  represents  a partial
interest in certain property management  contracts.  Other interested parties to
the property  management  contracts  include an affiliate of the Brazos Minority
Shareholder.  This  partial  interest  provides for Brazos to receive cash flows
from  management  fees and certain  other fees over the life of the contracts in
amounts that exceed certain preferred payments to other interested parties.  The
estimated value of Brazos's interest in the management  contracts is $2,990,359.
Such value is  estimated  based upon  discounting  expected  cash flows over the
terms of the  agreements.  The value of such interests will be reviewed at least
annually  however will be adjusted when there has been a  significant  change in
economic circumstances since the most recent valuation.

6    INDIRECT INVESTMENT IN THE PORTFOLIO

The following table  summarizes the Fund's  investment in the Portfolio  through
Belvedere  Company,  for the  years  ended  December  31,  2004,  2003 and 2002,
including allocations of income, expenses, and net realized and unrealized gains
(losses) for the years then ended:

<Table>
<Caption>
                                             YEAR ENDED          YEAR ENDED          YEAR ENDED
                                             DECEMBER 31,        DECEMBER 31,        DECEMBER 31,
                                             2004                2003                2002
-----------------------------------------------------------------------------------------------------
<S>                                          <C>                 <C>                 <C>
Belvedere Company's interest in the
 Portfolio(1)                                $  12,806,516,230   $  11,100,012,615   $  8,753,268,522

The Fund's investment in Belvedere
 Company(2)                                  $   2,015,871,844   $   1,966,911,184   $  1,645,261,953

Income allocated to Belvedere Company
 from the Portfolio                          $     189,728,234   $     143,671,130   $    123,096,851

Income allocated to the Fund from
 Belvedere Company                           $      31,535,928   $      26,299,757   $     24,130,615

Expenses allocated to Belvedere Company
 from the Portfolio                          $      51,953,817   $      43,085,940   $     42,648,896

Expenses allocated to the Fund from
 Belvedere Company(3)                        $      11,656,198   $      10,585,603   $     11,284,744

Net realized gain (loss) from investment
 transactions, securities sold short and
 foreign currency transactions allocated
 to Belvedere Company from the
 Portfolio                                   $     276,250,393   $     128,352,887   $     (2,190,956)

Net realized gain (loss) from investment
 transactions, securities sold short and
 foreign currency transactions allocated
 to the Fund from Belvedere Company          $      45,278,877   $      22,323,706   $     (1,023,197)

Net change in unrealized appreciation
 (depreciation) of investments, securities
 sold short and foreign currency allocated
 to Belvedere Company from the Portfolio     $     691,783,587   $   1,892,271,872   $ (2,139,304,336)

Net change in unrealized appreciation
 (depreciation) of investments, securities
 sold short and foreign currency allocated
 to the Fund from Belvedere Company          $     112,083,513   $     343,808,846   $   (424,007,010)
-----------------------------------------------------------------------------------------------------
</Table>

                                       50
<Page>

(1)  As of December  31, 2004,  2003 and 2002 the value of  Belvedere  Company's
     interest  in  the  Portfolio  represents  66.9%,  63.0%  and  60.1%  of the
     Portfolio's net assets, respectively. (2) As of December 31, 2004, 2003 and
     2002, the Fund's investment in Belvedere Company  represents 15.7%,  17.7%,
     and 18.8% of Belvedere  Company's net assets,  respectively.  (3) Allocated
     expenses  include   $8,676,304,   $7,893,121  and  $8,418,124  of  expenses
     allocated from the Portfolio,  operating  expenses of $71,305,  $75,431 and
     $71,205 and service fees of $2,908,588,  $2,617,051 and $2,795,415, for the
     years ended December 31, 2004, 2003 and 2002, respectively (Note 9).

7    INTEREST RATE SWAP AGREEMENTS

Belmar Capital has entered into interest rate swap agreements with Merrill Lynch
Capital  Services,  Inc. in connection with its real estate  investments and the
associated borrowings. Under such agreements,  Belmar Capital has agreed to make
periodic payments at fixed rates in exchange for payments at floating rates. The
notional  or  contractual  amounts  of  these  instruments  may not  necessarily
represent the amounts  potentially subject to risk. The measurement of the risks
associated  with  these  investments  is  meaningful  only  when  considered  in
conjunction with all related assets,  liabilities and agreements.  Interest rate
swap agreements open at December 31, 2004 and 2003 are listed below.

<Table>
<Caption>
                                                INITIAL               UNREALIZED     UNREALIZED
            NOTIONAL                            OPTIONAL   FINAL      APPRECI-       APPRECI-
            AMOUNT                              TERMI-     TERMI-     ATION AT       ATION AT
EFFECTIVE   (000'S      FIXED       FLOATING    NATION     NATION     DECEMBER 31,   DECEMBER 31,
DATE        OMITTED)    RATE        RATE        DATE       DATE       2004           2003
-------------------------------------------------------------------------------------------------
<S>         <C>         <C>         <C>         <C>        <C>        <C>            <C>
                                    LIBOR +
06/04       $ 279,760   4.875%        0.00%      --        6/12       $         --*  $         --

                                    LIBOR +
02/04          58,363    4.90%        0.20%     8/04       6/10            129,965             --

                                    LIBOR +
10/03          58,363    4.95%        0.20%     2/04       6/10                 --**      133,207

                                    LIBOR +
10/03          55,831   4.875%        0.20%     4/04       6/10            136,605        154,214

                                    LIBOR +
10/03          43,010   4.755%        0.20%     7/04       6/10            203,743        163,545

                                    LIBOR +
10/03          56,978   4.695%        0.20%     9/04       6/10            341,914        232,978

                                    LIBOR +
10/03          64,418   4.565%        0.20%     3/05       6/10            581,263        316,702

                                    LIBOR +
10/03         110,068   3.973%        0.20%      --        6/10          1,307,852      1,090,199
-------------------------------------------------------------------------------------------------
                                                                      $  2,701,342   $  2,090,845
-------------------------------------------------------------------------------------------------
</Table>

*    On May 3, 2004,  Belmar Capital  entered into a forward  interest rate swap
     agreement with Merrill Lynch Capital Services,  Inc. in anticipation of its
     investment in controlled subsidiaries, Brazos and Cimmaron, for the purpose
     of hedging  Belmar  Realty's  proportionate  share of the interest  rate of
     substantially all of the expected fixed-rate mortgage financing of the real
     property over the expected  8-year term.  Such  agreement was terminated in
     July 2004 and the Fund realized a loss of $2,437,256 upon termination.

**   Agreement was terminated on the Initial Optional Termination Date.

On October 1, 2003, new interest rate swap agreements were entered into to fix a
portion of the cost of Belmar  Capital's  borrowings  under the Credit  Facility
(Note 8B)  established  on June 30, 2003.  Concurrently,  all interest rate swap
agreements  outstanding  on  September  30, 2003 were  terminated,  resulting in
realized losses of $26,751,841.

8    DEBT

A MORTGAGES -- Rental property held by Belmar Realty's controlled  subsidiaries,
Bel Apartments  (during the period which Belmar Realty maintained an interest in
Bel Apartments),  Brazos and Bel Stamford,  is financed through mortgages issued
to the  controlled  subsidiaries.  The  mortgages  held by Bel  Apartments  were
secured by the rental property,  mortgage loan deposit  accounts,  including all
subaccounts thereunder,  and an assignment of certain leases and rents, and were
without  recourse  to Belmar  Capital  and  Belmar  Realty.  The  mortgage  debt
obligation of Brazos is secured by all of the Brazos properties and is generally
without  recourse to the other assets of Belmar Capital and Belmar  Realty.  The
mortgage debt obligation of a controlled subsidiary of Bel Stamford is generally
without recourse to Belmar Capital, Belmar Realty and Shareholders.
<PAGE>
The estimated fair value of the aggregate rental property securing the loans was
$576,506,000  and  $185,138,810  at December  31,  2004 and 2003,  respectively.
Amounts outstanding at December 31, 2004 and 2003 are as follows:

<Table>
<Caption>
                              MONTHLY
                   ANNUAL     PRINCIPAL      BALANCE AT          BALANCE AT
MATURITY           INTEREST   AND INTEREST   DECEMBER 31,        DECEMBER 31,
DATE               RATE       PAYMENT        2004                2003
-------------------------------------------------------------------------------
<S>                    <C>    <C>            <C>                 <C>
October 1, 2010        8.58%  $    165,866   $           --(1)   $   20,950,165
October 1, 2010        8.54%       458,550               --(1)       58,120,436
October 1, 2010        8.54%       207,681               --(1)       26,323,618
October 1, 2010        8.55%       364,480               --(1)       46,158,028
October 1, 2027        7.68%        73,293               --(1)        9,604,945
October 11, 2016       6.00%     1,513,419      225,751,737(2)               --
January 1, 2013        6.29%        90,893       14,347,176(3)               --
November 1, 2012       5.40%       967,500      215,000,000(4)               --
-------------------------------------------------------------------------------
                                             $  455,098,913      $  161,157,192
-------------------------------------------------------------------------------
</Table>

                                       51
<Page>

(1)  Upon the sale of Bel Apartment's  interest in the Bel Apartment  Properties
     in October 2004,  Bel Apartment did not retain any  contingent  liabilities
     associated with the mortgage debt secured by the properties.

(2)  In January 2004, a wholly-owned  subsidiary of Belmar Realty, Bel Stamford,
     assumed a mortgage  note to finance its interest in leasehold  improvements
     of an office building and attached facilities. The mortgage note balance at
     the date of the transaction was $229,674,914.

(3)  In connection  with the  acquisition  of real  properties on June 30, 2004,
     Brazos  assumed  an  existing  mortgage  note with a  principal  balance of
     $14,454,582. Principal and interest payments are due monthly with a balloon
     payment of $12,395,774 due on January 1, 2013.

(4)  On October 21, 2004,  Brazos  obtained  first  mortgage  financing  for its
     investment  in real  properties  in the  amount of  $215,000,000.  Interest
     payments  are due  monthly,  starting  November  1,  2004,  with the unpaid
     principal due on November 1, 2012.

Principal  payments due under the  mortgage  notes for the years  subsequent  to
December 31, 2004 are as follows:

<Table>
<Caption>
YEAR ENDING DECEMBER 31,         AMOUNT
------------------------------------------------
<S>                              <C>
2005                             $     4,747,863
2006                                   5,045,286
2007                                   5,361,371
2008                                   5,660,549
2009                                   6,051,877
Thereafter                           428,231,967
------------------------------------------------
                                 $   455,098,913
------------------------------------------------
</Table>

The  estimated  market  value of the  mortgage  notes  payable is  approximately
$463,100,000 and $182,000,000 at December 31, 2004 and 2003,  respectively.  The
mortgage  notes  payable  cannot be prepaid  or  otherwise  disposed  of without
incurring  a  substantial  prepayment  penalty or without the sale of the rental
property  financed by the mortgage  notes payable.  Management  generally has no
current  plans to prepay or otherwise  dispose of the mortgage  notes payable or
sell the related rental property prior to the maturity date. The market value of
the mortgages  are based on estimates  using  discounted  cash flow analysis and
currently prevailing rates.  Considerable  judgment is necessary in interpreting
market  data  to  develop  estimates  of  market  value.  The  use of  different
assumptions  or  estimation  methodologies  may have a  material  effect  on the
estimated market value.

B CREDIT  FACILITY -- On June 30, 2003,  Belmar  Capital  refinanced  its credit
facility with Citicorp North America, Inc. with two new credit arrangements with
DrKW Holdings,  Inc. (DrKW) and Merrill Lynch Mortgage  Capital,  Inc.  (Merrill
Lynch) (collectively, the Credit Facility). The Credit Facility has a seven-year
maturity and will expire on June 25, 2010.  Belmar Capital's  obligations  under
the Credit Facility are secured by a pledge of its assets,  excluding the assets
of Bel Stamford and Brazos.

The credit  arrangement  with DrKW is a term loan facility that accrues interest
at a rate of one-month LIBOR plus 0.20% per annum.

The credit  arrangement  with Merrill Lynch is a revolving  loan facility in the
amount of  $118,500,000,  including the ability to issue letters of credit up to
$10,000,000.  This credit  arrangement  accrues  interest at a rate of one-month
LIBOR plus 0.38% per annum.  A commitment  fee of 0.10% per annum is paid on the
unused commitment  amount.  Belmar Capital pays all fees associated with issuing
the letters of credit.

In August 2004, Belmar Capital made borrowings under its credit arrangement with
Merrill Lynch in the amount of $118,500,000.  At that time,  Belmar Capital also
increased the amount available with Merrill Lynch under a temporary  arrangement
(the Temporary  Arrangement)  by $213,500,000  and borrowed that amount.  Belmar
Capital used the proceeds from these borrowings to finance the Fund's investment
in Brazos and Cimmaron (Note 5). The borrowing  under the Temporary  Arrangement
accrued  interest at a rate of one-month  LIBOR plus 0.90% and was for a term of
sixty days, subject to a thirty-day extension. Any unused amount of the increase
pertaining to the Temporary Arrangement was subject to a commitment fee of 0.10%
per annum.

On October 21, 2004, Brazos obtained first mortgage financing for its investment
in real  properties  in the  amount  of  $215,000,000.  The  proceeds  from this
financing were distributed to Belmar Realty and the Brazos Minority  Shareholder
in accordance with their equity  interests.  Belmar Realty's  proceeds from this
transaction along with other funds available were used to repay Belmar Capital's
borrowings  under  the  Temporary  Arrangement  as well as a  portion  of  other
borrowings  under the Credit  Facility.  Pursuant  to its terms,  the  Temporary
Arrangement expired on October 29, 2004.

The following table summarizes Belmar Capital's Credit Facility.

<Table>
<Caption>
                                               AT DECEMBER 31, 2004   AT DECEMBER 31, 2003
------------------------------------------------------------------------------------------
<S>                                            <C>                    <C>
Total amount available under Credit Facility   $        408,500,000   $        631,500,000
DrKW borrowings outstanding                    $        290,000,000   $        513,000,000
Merrill Lynch borrowings outstanding           $                 --   $                 --
Outstanding letters of credit                  $                 --   $                 --
------------------------------------------------------------------------------------------
</Table>

Borrowings  under the  Credit  Facility  have been used to  purchase  the Fund's
interests in real estate investments,  to pay organizational  costys and selling

                                       52
<Page>

expenses  and to  provide  for  the  liquidity  needs  of the  Fund.  Additional
borrowings  under  the  Credit  Facility  may be made in the  future  for  these
purposes.

C NOTES PAYABLE -- The Bel Apartments  Minority  Shareholder loaned $600,000 and
$100,000 to Bel Apartments in November and December 2001, respectively. Interest
on the notes was  payable at a rate of 10% per annum.  The  remaining  principal
balance of the notes plus  accrued  interest  thereon was due in August 2004 and
December 2004. At December 31, 2003, the aggregate  principal amount outstanding
under the notes was $565,972.  At December 31, 2003,  total interest  payable to
the Bel Apartments Minority Shareholder was $101,403.

Belmar Realty also loaned  $900,000 and $150,000 to Bel Apartments in August and
December 2001, respectively.  Interest on the notes was payable at a rate of 10%
per annum.  The remaining  principal  balance of the notes plus accrued interest
thereon was due in August 2004 and December  2004.  At December  31,  2003,  the
aggregate principal amount outstanding under the notes was $866,708. At December
31, 2003 total interest payable to Belmar Realty was $155,286.  All balances and
transactions  related to the notes made by Belmar  Realty  have been  eliminated
through consolidation of the financial statements.

In October  2004,  the  liability of Bel  Apartments  for such notes payable was
relieved upon the sale of Bel Apartments interests in the multifamily properties
(Note 5).

9    MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Belmar Capital and the Portfolio  have engaged  Boston  Management as investment
adviser.  Under the terms of the advisory  agreement with the Portfolio,  Boston
Management  receives a monthly  advisory fee of 5/96 of 1% (0.625%  annually) of
the average daily net assets of the Portfolio up to $500,000,000  and at reduced
rates as daily net assets  exceed that level.  Certain of the  advisory fee rate
reductions  are  pursuant  to an  agreement  between  the  portfolio's  Board of
Trustees and Boston  Management.  Those  reductions  may not be changed  without
Trustee and interestholder approval. For the years ended December 31, 2004, 2003
and 2002,  the advisory fee  applicable to the  Portfolio  was 0.43%,  0.44% and
0.44% of average daily net assets, respectively.

In addition,  Boston  Management  is,  subject to the fee cap  described  below,
entitled  to receive a monthly  advisory  and  administrative  fee of 1/20 of 1%
(0.60%  annually) of the average daily gross assets of Belmar Capital.  The term
"gross  assets" with respect to Belmar Capital is defined to include the current
value of all of Belmar Capital's  assets including Belmar Capital's  interest in
Belvedere  Company  and  Belmar  Capital's  ratable  share of the  assets of its
directly  and  indirectly  controlled  subsidiaries,  without  reduction  by any
liabilities.  Belmar Realty pays Boston Management a monthly management fee at a
rate of 1/20 of 1%  (equivalent  to 0.60%  annually) of the average  daily gross
assets of Belmar  Realty.  The term "gross assets" with respect to Belmar Realty
is  defined  to  include  the  current  value of all  assets of  Belmar  Realty,
including  Belmar  Realty's  ratable  share  of the  assets  of  its  controlled
subsidiaries, without reduction by any liabilities. For this purpose, the assets
of Belmar  Realty's  controlled  subsidiaries  are reduced by the  proportionate
interests therein of investors other than Belmar Realty.

Eaton  Vance   Management  and  Boston   Management  do  not  receive   separate
compensation  for serving as manager of Belmar  Capital and manager of Belvedere
Company, respectively.

As compensation for its services as Placement  Agent,  Belmar Capital pays Eaton
Vance  Distributors  (EV  Distributors) a monthly  distribution fee at a rate of
1/120 of 1% (equivalent to 0.10% annually) of Belmar Capital's average daily net
assets.

Payments to the Eaton Vance  organization for investment  advisory,  management,
administration and distribution services made by or in respect of Belmar Capital
on a direct or indirect basis are subject to a monthly fee cap at a rate of 1/20
of 1% (equivalent to 0.60% annually) of the average daily gross assets of Belmar
Capital  (as  defined  above).  Payments  subject to the monthly fee cap are the
distribution fee paid to EV Distributors, Belmar Capital's attributable share of
the advisory and management  fees paid by the Portfolio and Belmar  Realty,  and
Belmar Capital's advisory and  administrative  fee. Boston Management has agreed
to waive a portion of the monthly  advisory  and  administrative  fee  otherwise
payable by Belmar Capital as necessary to comply with the monthly fee cap.

Pursuant to a servicing agreement between Belvedere Company and EV Distributors,
Belvedere  Company pays a servicing fee to EV Distributors for providing certain
services and  information  to  Shareholders.  With respect to  Shareholders  who
subscribe through a subagent, EV Distributors assigns servicing responsibilities
and fees to the applicable  subagent  beginning twelve months after the issuance
of Fund Shares to such persons.  The servicing fee is paid on a quarterly  basis
at an annual  rate of 0.15% of  Belvedere  Company's  average  daily net assets.
Pursuant to a servicing  agreement  between Belmar Capital and EV  Distributors,

                                       53
<Page>

Belmar Capital pays a servicing fee to EV  Distributors  on a quarterly basis at
an annual  rate of 0.25% of Belmar  Capital's  average  daily net  assets,  less
Belmar  Capital's  allocated  share of the  servicing  fee payable by  Belvedere
Company.

Management  services for the real  property held by Bel  Apartments,  Brazos and
Cimmaron (for the period during which Belmar Realty  maintained  interest in Bel
Apartments  and  Cimmaron)  are  provided  by an  affiliate  of each  respective
entity's Minority  Shareholder (Note 1B). Each management agreement provides for
a  management  fee and allows for  reimbursement  of  payroll  and other  direct
expenses  incurred by the managers in conjunction  with managing each respective
entity's properties (Note 1B). In addition to the fees noted above, an affiliate
of the Brazos Minority Shareholder also receives a REIT administration fee.

The table below sets forth the fees,  paid or payable by, or  allocable  to, the
Fund and Belmar Realty for the years ended  December 31, 2004,  2003 and 2002 in
connection  with the  services  rendered by Eaton  Vance,  its  affiliates,  and
affiliates of Belmar Realty's controlled subsidiaries.

<Table>
<Caption>
                                   YEAR ENDED       YEAR ENDED       YEAR ENDED
                                   DECEMBER 31,     DECEMBER 31,     DECEMBER 31,
                                   2004             2003             2002
-----------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>
Advisory fee allocated to
 Belvedere Company from
 the Portfolio                     $   50,252,861   $   41,671,111   $   41,180,780
Advisory fee allocated to the
 Fund from Belvedere Company       $    8,392,976   $    7,634,035   $    8,125,471
Advisory fee and administrative
 fee and management fee
 incurred directly by the
 Fund                              $    7,948,234   $    7,049,704   $    7,647,360
Distribution fees                  $    1,874,514   $    1,711,661   $    1,847,235
Reduction of advisory and
 administrative fees               $    1,874,514   $    1,711,661   $    1,847,235
Servicing fees of Belvedere
 Company                           $   17,418,515   $   14,288,579   $   14,167,556
Servicing fees allocated to the
 Fund from Belvedere Company       $    2,908,588   $    2,617,051   $    2,795,415
Servicing fees incurred directly
 by the Fund                       $    1,778,204   $    1,658,867   $    1,825,665
Servicing fees paid or accrued to
 subagents                         $    4,676,253   $    4,268,598   $    4,606,555
Property management fees           $    1,359,591   $    1,342,305   $    1,375,915
REIT administration fee            $      319,454   $           --   $           --
-----------------------------------------------------------------------------------
</Table>

10   SEGMENT INFORMATION

Belmar  Capital  pursues  its  investment   objective   primarily  by  investing
indirectly  in the  Portfolio  through  Belvedere  Company.  The  Portfolio is a
diversified  investment company that emphasizes  investments in common stocks of
domestic and foreign  growth  companies  that are  considered by its  investment
adviser to be high in  quality  and  attractive  in their  long-term  investment
prospects.  Separate from its  investment in Belvedere  Company,  Belmar Capital
invests in real estate  assets  through its  subsidiary  Belmar  Realty.  Belmar
Realty invests  directly and indirectly in Partnership  Preference  Units and in
real property through  controlled  subsidiaries,  Bel Apartments,  Bel Stamford,
Brazos and Cimmaron  (for the period during which Belmar  Capital  maintained an
interest in Bel Apartments and Cimmaron) (Note 1 and Note 5).

Belmar Capital evaluates performance of the reportable segments based on the net
increase  (decrease) in net assets from  operations of the  respective  segment,
which  includes net  investment  income  (loss),  net  realized  gain (loss) and
unrealized   appreciation   (depreciation).   The  accounting  policies  of  the
reportable  segments are the same as those for Belmar  Capital on a consolidated
basis  (Note  2).  No  reportable  segments  have  been  aggregated.  Reportable
information by segment is as follows:

<Table>
<Caption>
                                   TAX-
                                   MANAGED
FOR THE YEAR ENDED                 GROWTH           REAL
DECEMBER 31, 2004                  PORTFOLIO*       ESTATE           TOTAL
-----------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>
Revenue                            $   19,879,730   $   72,201,124   $   92,080,854
Interest expense
 on mortgages                                  --      (28,190,253)     (28,190,253)
Interest expense on
 Credit Facility                       (1,652,158)      (4,873,866)      (6,526,024)
Operating expenses                     (1,684,719)     (23,969,912)     (25,654,631)
Minority interest in net income
 of controlled subsidiaries                    --       (1,247,532)      (1,247,532)
-----------------------------------------------------------------------------------

NET INVESTMENT INCOME              $   16,542,853   $   13,919,561   $   30,462,414
Net realized gain                      45,278,877       12,393,005       57,671,882
Net change in unrealized
 appreciation (depreciation)          112,083,513      (60,011,103)      52,072,410
-----------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN
 NET ASSETS FROM OPERATIONS
 OF REPORTABLE SEGMENTS            $  173,905,243   $  (33,698,537)  $  140,206,706
-----------------------------------------------------------------------------------
</Table>

                                       54
<Page>

<Table>
<Caption>
                                   TAX-
                                   MANAGED
FOR THE YEAR ENDED                 GROWTH           REAL
DECEMBER 31, 2003                  PORTFOLIO*       ESTATE           TOTAL
-----------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>
Revenue                            $   15,714,154   $   78,922,925   $   94,637,079
Interest expense on mortgages                  --      (14,303,813)     (14,303,813)
Interest expense on Credit
 Facility                              (1,040,430)      (7,109,603)      (8,150,033)
Operating expenses                     (1,277,920)     (22,735,245)     (24,013,165)
Minority interest in net income
 of controlled subsidiary                      --         (435,830)        (435,830)
-----------------------------------------------------------------------------------

NET INVESTMENT INCOME              $   13,395,804   $   34,338,434   $   47,734,238
Net realized gain (loss)               22,323,706      (16,412,617)       5,911,089
Net change in unrealized
 appreciation (depreciation)          343,808,846       18,345,296      362,154,142
-----------------------------------------------------------------------------------

NET INCREASE IN NET ASSETS
 FROM OPERATIONS OF
 REPORTABLE SEGMENTS               $  379,528,356   $   36,271,113   $  415,799,469
-----------------------------------------------------------------------------------

<Caption>
                                   TAX-
                                   MANAGED
FOR THE YEAR ENDED                 GROWTH           REAL
DECEMBER 31, 2002                  PORTFOLIO*       ESTATE           TOTAL
-----------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>
Revenue                            $   12,845,871   $   86,920,215   $   99,766,086
Interest expense on mortgages                  --      (14,882,677)     (14,882,677)
Interest expense on Credit
 Facility                                (136,239)     (12,806,462)     (12,942,701)
Operating expenses                     (1,246,862)     (22,848,604)     (24,095,466)
Minority interest in net income
 of controlled subsidiary                      --         (424,054)        (424,054)
-----------------------------------------------------------------------------------

NET INVESTMENT INCOME              $   11,462,770   $   35,958,418   $   47,421,188
Net realized loss                      (1,786,292)     (37,397,806)     (39,184,098)
Net change in unrealized
 appreciation (depreciation)         (424,007,010)       6,425,178     (417,581,832)
-----------------------------------------------------------------------------------

NET (DECREASE) INCREASE IN NET
 ASSETS FROM OPERATIONS OF
 REPORTABLE SEGMENTS               $ (414,330,532)  $    4,985,790   $ (409,344,742)
-----------------------------------------------------------------------------------
</Table>

The following tables reconcile the reported segment information  reported to the
consolidated financial statements for the periods indicated:

<Table>
<Caption>
                                                    YEAR ENDED        YEAR ENDED        YEAR ENDED
                                                    DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                                    2004              2003              2002
-------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>               <C>
Revenue:
   Revenue from reportable
     segments                                       $    92,080,854   $    94,637,079   $    99,766,086
   Unallocated amounts:
      Interest earned on cash not invested in the
        Portfolio or in subsidiaries                        595,647           269,403            48,749
-------------------------------------------------------------------------------------------------------
TOTAL REVENUE                                       $    92,676,501   $    94,906,482   $    99,814,835
-------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
  operations:
   Net increase (decrease) in net assets from
      operations of reportable segments             $   140,206,706   $   415,799,469   $  (409,344,742)
   Unallocated investment income:
      Interest earned on cash not invested in the
        Portfolio or in subsidiaries                        595,647           269,403            48,749
   Unallocated expenses(1):
      Realized loss                                              --                --        (2,338,586)
      Distribution and servicing fees                    (3,652,718)       (3,370,528)       (3,672,900)
      Interest expense on Credit Facility                (1,734,765)         (520,215)         (681,195)
      Audit, tax and legal fees                            (326,449)         (279,016)         (242,914)
      Other operating expenses                             (119,635)         (109,863)         (129,284)
-------------------------------------------------------------------------------------------------------
TOTAL NET INCREASE (DECREASE) IN NET ASSETS FROM
  OPERATIONS                                        $   134,968,786   $   411,789,250   $  (416,357,872)
-------------------------------------------------------------------------------------------------------
</Table>

(1)  Unallocated  expenses  represent costs incurred that pertain to the overall
     operation  of  Belmar  Capital,  and do not  pertain  to  either  operating
     segment.

                                       55
<Page>

<Table>
<Caption>
                                                    TAX-
                                                    MANAGED
                                                    GROWTH            REAL
AT DECEMBER 31, 2004                                PORTFOLIO*        ESTATE            TOTAL
-------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>               <C>
Segments assets                                     $ 2,015,871,844   $   658,486,334   $ 2,674,358,178
Segment liabilities                                      86,014,107       670,844,012       756,858,119
-------------------------------------------------------------------------------------------------------
NET ASSETS (LIABILITIES) OF REPORTABLE SEGMENTS     $ 1,929,857,737   $   (12,357,678)  $ 1,917,500,059
-------------------------------------------------------------------------------------------------------

<Caption>
                                                    TAX-
                                                    MANAGED
                                                    GROWTH            REAL
AT DECEMBER 31, 2003                                PORTFOLIO*        ESTATE            TOTAL
-------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>               <C>
Segment assets                                      $ 1,966,911,184   $   623,035,741   $ 2,589,946,925
Segment liabilities                                      87,378,722       549,380,252       636,758,974
-------------------------------------------------------------------------------------------------------
NET ASSETS OF REPORTABLE SEGMENTS                   $ 1,879,532,462   $    73,655,489   $ 1,953,187,951
-------------------------------------------------------------------------------------------------------
</Table>

*    Belmar Capital invests  indirectly in Tax-Managed  Growth Portfolio through
     Belvedere Company.

The  following  table  reconciles  the  reported  segment   information  to  the
consolidated financial statements for the periods indicated:

<Table>
<Caption>
                                       DECEMBER 31, 2004   DECEMBER 31, 2003
----------------------------------------------------------------------------
<S>                                    <C>                 <C>
Net assets:
 Net assets of reportable segments     $   1,917,500,059   $   1,953,187,951
 Unallocated amounts:
   Cash(1)                                       984,755           5,019,018
   Short-term investments(1)                   1,700,000          16,973,476
   Loan payable -- Credit Facility(2)         (9,454,900)        (54,357,683)
   Other liabilities                            (242,416)           (210,905)
----------------------------------------------------------------------------
TOTAL NET ASSETS                       $   1,910,487,498   $   1,920,611,857
----------------------------------------------------------------------------
</Table>

(1)  Unallocated  cash  and  short-term  investments  represent  cash  and  cash
     equivalents not currently invested in the Portfolio or real estate assets.

(2)  Unallocated amount of loan payable - Credit Facility represents  borrowings
     not specifically used to fund real estate investments.  Such borrowings are
     generally used to pay selling commissions,  organization expenses and other
     liquidity needs of the Fund.

11   SUBSEQUENT EVENT (UNAUDITED)

On  January  27,  2005,  the Fund  made a  distribution  of $1.12  per  share to
Shareholders of record on January 26, 2005

                                       56
<Page>

BELMAR CAPITAL FUND LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE SHAREHOLDERS OF BELMAR CAPITAL FUND LLC AND SUBSIDIARIES

We  have  audited  the  accompanying   consolidated  statements  of  assets  and
liabilities,  including the  consolidated  portfolio of  investments,  of Belmar
Capital Fund LLC and subsidiaries,  (collectively,  the Fund) as of December 31,
2004 and 2003, and the related consolidated statements of operations, changes in
net assets, cash flows, and financial  highlights for each of the three years in
the period ended December 31, 2004. These financial statements and the financial
highlights are the responsibility of the Fund's  management.  Our responsibility
is to express an opinion on these financial  statements and financial highlights
based on our audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial statements. Our procedures included confirmation of
securities  owned as of December  31, 2004 and 2003 by  correspondence  with the
custodian.  An audit also includes assessing the accounting  principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the consolidated  financial statements and financial highlights
referred to above  present  fairly,  in all  material  respects,  the  financial
position  of the Fund as of December  31, 2004 and 2003,  and the results of its
operations,  the changes in its net assets,  its cash flows,  and the  financial
highlights  for each of the three years in the period ended December 31, 2004 in
conformity with accounting principles generally accepted in the United States of
America.

We have also  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States),  the effectiveness of the Company's
internal control over financial  reporting as of December 31, 2004, based on the
criteria  established in INTERNAL CONTROL -- INTEGRATED  FRAMEWORK issued by the
Committee of Sponsoring  Organizations of the Treadway Commission and our report
dated March 11, 2005 expressed an unqualified opinion on management's assessment
of the effectiveness of the Company's internal control over financial  reporting
and an  unqualified  opinion  on the  effectiveness  of the  Company's  internal
control over financial reporting.

/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 11, 2005

                                       57
<Page>

BELMAR CAPITAL FUND LLC
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Eaton Vance Management  ("Eaton  Vance"),  as manager of Belmar Capital Fund LLC
(the "Fund"),  with the  participation of the Fund's Chief Executive Officer and
Chief  Financial   Officer,   (collectively   referred  to  in  this  report  as
"management") is responsible for establishing and maintaining  adequate internal
control over  financial  reporting as defined in Rules  13a-15(f)  and 15d-15(f)
under the 1934 Act.  The Fund's  internal  control over  financial  reporting is
designed to provide reasonable  assurance regarding the reliability of financial
reporting and the preparation of financial  statements for external  purposes in
accordance with generally accepted accounting principles.

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

During the second  quarter of 2004,  the Fund acquired an interest in a new real
estate joint venture, Brazos Property Trust ("Brazos"). As of December 31, 2004,
Brazos  owned  23  industrial  distribution  properties  located  in  7  states.
Management  concluded  that it was not  possible  to  conduct an  assessment  of
internal  control  over  financial   reporting  of  Brazos.   Brazos  represents
approximately  11.7% of the Fund's  consolidated  total  assets and 10.0% of the
total  investment  income as of and for the period ended  December 31, 2004.  In
accordance  with  guidance  from  the  staff  of  the  Securities  and  Exchange
Commission, management intends to include an assessment of internal control over
financial  reporting of Brazos in its report on internal  control over financial
reporting for the fiscal year ended December 31, 2005.

Management  assessed  the  effectiveness  of the Fund's  internal  control  over
financial  reporting  as of  December  31,  2004.  In  making  this  assessment,
management   used  the  criteria  set  forth  by  the  Committee  of  Sponsoring
Organizations of the Treadway  Commission (COSO) in Internal  Control-Integrated
Framework.

Based on its assessment and those  criteria,  management  believes that the Fund
maintained  effective  internal control over financial  reporting as of December
31, 2004.

The  Fund's  independent   registered  public  accounting  firm  has  issued  an
attestation  report on management's  assessment of the Fund's  internal  control
over financial reporting. That report appears on the following page.

March 11, 2005

                                       58
<Page>
BELMAR CAPITAL FUND LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE SHAREHOLDERS OF BELMAR CAPITAL FUND LLC AND SUBSIDIARIES

We  have  audited   management's   assessment,   included  in  the  accompanying
Management's  Report on Internal Control Over Financial  Reporting,  that Belmar
Capital Fund LLC and subsidiaries  (the "Fund")  maintained  effective  internal
control over  financial  reporting  as of December  31, 2004,  based on criteria
established in INTERNAL CONTROL -- INTEGRATED  FRAMEWORK issued by the Committee
of  Sponsoring  Organizations  of  the  Treadway  Commission.  As  described  in
Management's  Report on Internal  Control Over Financial  Reporting,  management
excluded from their assessment the internal control over financial  reporting at
Brazos  Property  Trust,  which was acquired on June 30, 2004.  Brazos  Property
Trust represents approximately 11.7% of the Fund's consolidated total assets and
10.0% of the total investment income as of and for the period ended December 31,
2004. Accordingly, our audit did not include the internal control over financial
reporting at Brazos  Property  Trust.  The Fund's  management is responsible for
maintaining  effective  internal  control over  financial  reporting and for its
assessment of the  effectiveness of internal  control over financial  reporting.
Our  responsibility  is to express an opinion on management's  assessment and an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain  reasonable  assurance  about whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit included obtaining an understanding of internal control over
financial reporting,  evaluating management's assessment, testing and evaluating
the design and operating  effectiveness of internal control, and performing such
other  procedures as we considered  necessary in the  circumstances.  We believe
that our audit provides a reasonable basis for our opinions.

A company's internal control over financial  reporting is a process designed by,
or under the  supervision  of, the company's  principal  executive and principal
financial officers, or persons performing similar functions, and effected by the
company's  board of  directors,  management,  and  other  personnel  to  provide
reasonable  assurance  regarding the reliability of financial  reporting and the
preparation  of financial  statements for external  purposes in accordance  with
generally  accepted  accounting  principles.  A company's  internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

Because  of  the  inherent   limitations  of  internal  control  over  financial
reporting,  including  the  possibility  of  collusion  or  improper  management
override of controls,  material  misstatements  due to error or fraud may not be
prevented or detected on a timely basis. Also,  projections of any evaluation of
the  effectiveness  of the internal  control over financial  reporting to future
periods are subject to the risk that the controls may become inadequate  because
of changes in conditions,  or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion,  management's  assessment that the Company maintained  effective
internal  control over  financial  reporting as of December 31, 2004,  is fairly
stated, in all material respects,  based on the criteria established in INTERNAL
CONTROL  --  INTEGRATED   FRAMEWORK   issued  by  the  Committee  of  Sponsoring
Organizations  of the  Treadway  Commission.  Also in our  opinion,  the Company
maintained, in all material respects,  effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in INTERNAL
CONTROL  --  INTEGRATED   FRAMEWORK   issued  by  the  Committee  of  Sponsoring
Organizations of the Treadway Commission.

We have also  audited,  in accordance  with the standards of the Public  Company
Accounting   Oversight  Board  (United  States),   the  consolidated   financial
statements  as of and for the year ended  December  31, 2004 of the Fund and our
report dated March 11, 2005 expressed an unqualified  opinion on those financial
statements.

/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 11, 2005

                                       59
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
PORTFOLIO OF INVESTMENTS

COMMON STOCKS -- 99.8%

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
AEROSPACE AND DEFENSE -- 2.8%

Boeing Company (The)                                                      796,801   $       41,250,388
General Dynamics                                                          735,000           76,881,000
Honeywell International, Inc.                                             277,798            9,836,827
Northrop Grumman Corp.                                                  3,497,103          190,102,519
Raytheon Company                                                          340,663           13,227,944
Rockwell Collins, Inc.                                                    190,614            7,517,816
Teledyne Technologies Incorporated(1)                                       6,117              180,023
United Technologies Corp.                                               1,897,601          196,117,063
------------------------------------------------------------------------------------------------------
                                                                                    $      535,113,580
------------------------------------------------------------------------------------------------------

AIR FREIGHT AND LOGISTICS -- 2.9%

FedEx Corporation                                                       2,106,578   $      207,476,867
Robinson (C.H.) Worldwide, Inc.                                         1,098,233           60,973,896
United Parcel Service, Inc. Class B                                     3,401,734          290,712,188
------------------------------------------------------------------------------------------------------
                                                                                    $      559,162,951
------------------------------------------------------------------------------------------------------

AIRLINES -- 0.0%

Southwest Airlines, Inc.                                                  294,642   $        4,796,772
------------------------------------------------------------------------------------------------------
                                                                                    $        4,796,772
------------------------------------------------------------------------------------------------------

AUTO COMPONENTS -- 0.2%

ArvinMeritor, Inc.                                                          8,000   $          178,960
Borg-Warner Automotive, Inc.                                              381,499           20,665,801
Dana Corp.                                                                 25,000              433,250
Delphi Automotive Systems Corp.                                             6,199               55,915
Johnson Controls, Inc.                                                    234,164           14,855,364
Visteon Corp.                                                               9,828               96,020
------------------------------------------------------------------------------------------------------
                                                                                    $       36,285,310
------------------------------------------------------------------------------------------------------

AUTOMOBILES -- 0.1%

DaimlerChrysler AG                                                          7,000   $          336,350
Ford Motor Co.                                                            145,050            2,123,532
General Motors Corp.                                                       13,492              540,490
Harley-Davidson, Inc.                                                     140,700            8,547,525
Honda Motor Co. Ltd. ADR                                                   20,000              521,200
------------------------------------------------------------------------------------------------------
                                                                                    $       12,069,097
------------------------------------------------------------------------------------------------------

BEVERAGES -- 4.0%

Anheuser-Busch Companies, Inc.                                          4,421,625   $      224,309,036
Brown-Forman Corp. Class A                                                547,732           27,802,876
Brown-Forman Corp. Class B                                                 45,820   $        2,230,518
Coca-Cola Company (The)                                                 3,442,924          143,328,926
Coca-Cola Enterprises, Inc.                                             1,756,930           36,631,991
PepsiCo., Inc.                                                          6,267,913          327,185,059
------------------------------------------------------------------------------------------------------
                                                                                    $      761,488,406
------------------------------------------------------------------------------------------------------

BIOTECHNOLOGY -- 1.7%

Amgen, Inc.(1)                                                          4,060,747   $      260,496,920
Applera Corp. - Celera Genomics Group(1)                                   26,000              357,500
Biogen Idec Inc.(1)                                                        11,200              746,032
Genzyme Corp. - General Division(1)                                       564,926           32,805,253
Gilead Sciences, Inc.(1)                                                  115,482            4,040,715
Incyte Pharmaceuticals, Inc.(1)                                            14,294              142,797
Invitrogen Corp.(1)                                                       429,910           28,859,858
Vertex Pharmaceuticals, Inc.(1)                                            13,000              137,410
------------------------------------------------------------------------------------------------------
                                                                                    $      327,586,485
------------------------------------------------------------------------------------------------------

BUILDING PRODUCTS -- 1.0%

American Standard Companies, Inc.(1)                                      977,738   $       40,400,134
Masco Corporation                                                       4,157,854          151,886,407
Water Pik Technologies(1)                                                   2,141               37,960
------------------------------------------------------------------------------------------------------
                                                                                    $      192,324,501
------------------------------------------------------------------------------------------------------

CAPITAL MARKETS -- 4.1%

Affiliated Managers Group(1)                                               20,520   $        1,390,025
Bank of New York Co., Inc. (The)                                          402,028           13,435,776
Bear Stearns Companies, Inc.                                               88,001            9,003,382
Credit Suisse Group(1)                                                    155,136            6,521,607
Federated Investors, Inc.                                               1,666,768           50,669,747
Franklin Resources, Inc.                                                1,462,116          101,836,379
Goldman Sachs Group, Inc.                                                 832,738           86,638,062
Investors Financial Services Corp.                                        453,428           22,662,331
Knight Trading Group, Inc.(1)                                           1,750,000           19,162,500
Legg Mason, Inc.                                                           26,461            1,938,533
Lehman Brothers Holdings, Inc.                                             99,493            8,703,648
Mellon Financial Corporation                                              221,912            6,903,682
Merrill Lynch & Co., Inc.                                               2,108,147          126,003,946
Morgan Stanley Dean Witter & Co.                                        4,737,998          263,053,649
Northern Trust Corp.                                                      368,571           17,905,179
Nuveen Investments Class A                                                150,000            5,920,500
Piper Jaffray Companies, Inc.(1)                                           41,059            1,968,779
Price (T. Rowe) Group, Inc.                                               191,743           11,926,415
</Table>

                        See notes to financial statements

                                       60
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
CAPITAL MARKETS (CONTINUED)

Raymond James Financial, Inc.                                             147,337   $        4,564,500
Schwab (Charles) & Co.                                                    857,261           10,252,842
State Street Corp.                                                        131,670            6,467,630
UBS AG                                                                     63,392            5,314,785
Waddell & Reed Financial, Inc., Class A                                   340,438            8,133,064
------------------------------------------------------------------------------------------------------
                                                                                    $      790,376,961
------------------------------------------------------------------------------------------------------

CHEMICALS -- 1.0%

Airgas, Inc.                                                              353,715   $        9,376,985
Arch Chemicals, Inc.                                                        4,950              142,461
Bayer AG ADR                                                               40,000            1,359,200
Dow Chemical Co. (The)                                                    247,183           12,238,030
DuPont (E.I.) de Nemours & Co.                                          1,328,903           65,182,692
Ecolab, Inc.                                                              258,423            9,078,400
MacDermid, Inc.                                                            61,937            2,235,926
Monsanto Company                                                           19,181            1,065,505
Olin Corp.                                                                  9,900              217,998
PPG Industries, Inc.                                                       23,542            1,604,623
Rohm and Haas, Co.                                                          2,601              115,042
RPM, Inc.                                                                  70,138            1,378,913
Sigma-Aldrich Corp.                                                       630,897           38,144,033
Solutia Inc.(1)                                                            20,293               23,743
Valspar Corp.                                                             818,316           40,923,983
------------------------------------------------------------------------------------------------------
                                                                                    $      183,087,534
------------------------------------------------------------------------------------------------------

COMMERCIAL BANKS -- 8.6%

AmSouth Bancorporation                                                    626,715   $       16,231,919
Associated Banc-Corp                                                    1,061,378           35,248,363
Bank of America Corporation                                             4,845,034          227,668,148
Bank of Hawaii Corp.                                                       69,735            3,538,354
Bank of Montreal                                                          267,204           12,863,201
Banknorth Group, Inc.                                                      10,000              366,000
BB&T Corp.                                                              1,826,737           76,814,291
Canadian Imperial Bank of Commerce                                        100,000            6,026,000
City National Corp.                                                       273,260           19,305,819
Colonial Bancgroup, Inc. (The)                                            253,936            5,391,061
Comerica, Inc.                                                            331,589           20,233,561
Commerce Bancshares, Inc.                                                 155,154            7,788,731
Compass Bancshares, Inc.                                                  301,339           14,666,169
Fifth Third Bancorp                                                     1,355,381           64,082,414
First Citizens BancShares, Inc.                                            30,600            4,536,450
First Financial Bancorp                                                    47,933              838,828
First Horizon National Corp.                                              155,551   $        6,705,804
First Midwest Bancorp, Inc.                                               815,329           29,588,289
Hibernia Corp. Class A                                                    187,345            5,528,551
HSBC Holdings PLC ADR                                                     592,965           50,485,040
Huntington Bancshares, Inc.                                               586,532           14,534,263
Keycorp                                                                   625,951           21,219,739
M&T Bank Corp.                                                             47,419            5,113,665
Marshall & Ilsley Corp.                                                   629,932           27,842,994
National City Corp.                                                     1,677,060           62,973,603
North Fork Bancorporation, Inc.                                         1,785,892           51,522,984
PNC Bank Corp.                                                            156,003            8,960,812
Popular, Inc.                                                               1,432               41,285
Regions Financial Corp.                                                 2,282,030           81,217,448
Royal Bank of Canada                                                      349,353           18,669,424
Royal Bank of Scotland Group PLC                                           50,837            1,707,348
S&T Bancorp, Inc.                                                         100,000            3,769,000
Societe Generale                                                          809,647           81,960,387
Southwest Bancorporation of Texas, Inc.                                 1,255,140           29,232,211
SunTrust Banks, Inc.                                                    1,307,505           96,598,469
Synovus Financial Corp.                                                 1,345,581           38,456,705
TCF Financial Corporation                                                  72,500            2,330,150
U.S. Bancorp                                                            5,276,270          165,252,776
Valley National Bancorp                                                   164,652            4,552,628
Wachovia Corp.                                                          2,239,760          117,811,376
Wells Fargo & Company                                                   2,391,184          148,612,086
Westamerica Bancorporation                                                268,474           15,654,719
Whitney Holding Corp.                                                     347,200           15,620,528
Zions Bancorporation                                                      250,076           17,012,670
------------------------------------------------------------------------------------------------------
                                                                                    $    1,638,574,263
------------------------------------------------------------------------------------------------------

COMMERCIAL SERVICES AND SUPPLIES -- 2.0%

Allied Waste Industries, Inc.(1)                                        1,674,390   $       15,538,339
Apollo Group, Inc. Class A(1)                                              18,411            1,485,952
Avery Dennison Corp.                                                    1,157,598           69,421,152
Banta Corp.                                                                42,341            1,895,183
Block (H&R), Inc.                                                         732,354           35,885,346
Cendant Corp.                                                             549,359           12,844,013
Century Business Services, Inc.(1)                                        185,000              806,600
Cintas Corp.                                                            1,399,270           61,371,982
Consolidated Graphics, Inc.(1)                                             70,215            3,222,869
Deluxe Corporation                                                         32,000            1,194,560
Donnelley (R.R.) & Sons Co.                                                91,260            3,220,565
Equifax, Inc.                                                              80,000            2,248,000
</Table>

                        See notes to financial statements

                                       61
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
COMMERCIAL SERVICES AND SUPPLIES (CONTINUED)

Gevity HR, Inc.                                                            78,125   $        1,606,250
HNI Corp.                                                               1,470,565           63,307,823
Hudson Highland Group, Inc.(1)                                             11,581              333,533
Ikon Office Solutions, Inc.                                                83,040              959,942
Imagistics International Inc.(1)                                              809               27,231
Laureate Education Inc.(1)                                                520,213           22,936,191
Manpower, Inc.                                                              2,000               96,600
Miller (Herman) Inc.                                                      541,800           14,969,934
Monster Worldwide Inc.(1)                                                 154,426            5,194,891
Navigant Consulting, Inc.(1)                                              463,017           12,316,252
Pitney Bowes, Inc.                                                         42,343            1,959,634
School Specialty Corp.(1)                                                  49,197            1,897,036
ServiceMaster Co.                                                       1,224,880           16,891,095
Steelcase Inc.                                                            123,000            1,702,320
Waste Management, Inc.                                                  1,145,998           34,311,180
------------------------------------------------------------------------------------------------------
                                                                                    $      387,644,473
------------------------------------------------------------------------------------------------------

COMMUNICATIONS EQUIPMENT -- 1.2%

3Com Corp.(1)                                                             873,949   $        3,644,367
ADC Telecommunications, Inc.(1)                                           301,164              807,119
Alcatel S.A. ADR(1)                                                        43,728              683,469
Avaya, Inc.(1)                                                             56,571              973,021
Ciena Corp.(1)                                                            380,378            1,270,463
Cisco Systems, Inc.(1)                                                  4,475,139           86,370,183
Comverse Technology, Inc.(1)                                              375,922            9,191,293
Corning, Inc.(1)                                                        3,645,380           42,906,123
Enterasys Networks, Inc.(1)                                                55,945              100,701
JDS Uniphase Corp.(1)                                                      52,451              166,270
Lucent Technologies, Inc.(1)                                              555,464            2,088,545
Motorola, Inc.                                                            980,426           16,863,327
Nokia Corp., Class A, ADR                                               2,050,478           32,130,990
Nortel Networks Corp.(1)                                                1,135,030            3,961,255
Qualcomm, Inc.                                                            758,638           32,166,251
Riverstone Networks, Inc.(1)                                               28,706               30,572
Tellabs, Inc.(1)                                                          110,405              948,379
------------------------------------------------------------------------------------------------------
                                                                                    $      234,302,328
------------------------------------------------------------------------------------------------------

COMPUTERS AND PERIPHERALS -- 3.4%

Dell Inc.(1)                                                            4,460,429   $      187,962,478
EMC Corp.(1)                                                            1,388,652           20,649,255
Gateway, Inc.(1)                                                           95,621              574,682
Hewlett-Packard Co.                                                     1,094,183           22,945,018
International Business Machines Corp.                                   2,426,216   $      239,176,373
Lexmark International Group, Inc.(1)                                    1,804,885          153,415,225
McData Corp., Class A(1)                                                   17,982              107,173
Network Appliance, Inc.(1)                                                488,000           16,211,360
Palmone, Inc.(1)                                                           65,230            2,058,007
Sun Microsystems, Inc.(1)                                                 366,670            1,972,685
------------------------------------------------------------------------------------------------------
                                                                                    $      645,072,256
------------------------------------------------------------------------------------------------------

CONSTRUCTION AND ENGINEERING -- 0.1%

Dycom Industries, Inc.(1)                                                 149,711   $        4,569,180
Jacobs Engineering Group, Inc.(1)                                         229,985           10,990,983
------------------------------------------------------------------------------------------------------
                                                                                    $       15,560,163
------------------------------------------------------------------------------------------------------

CONSTRUCTION MATERIALS -- 0.1%

CRH plc                                                                   329,450   $        8,812,801
Vulcan Materials Company                                                  184,512           10,076,200
------------------------------------------------------------------------------------------------------
                                                                                    $       18,889,001
------------------------------------------------------------------------------------------------------

CONSUMER FINANCE -- 1.2%

American Express Co.                                                      772,583   $       43,550,504
Capital One Financial Corp.                                             1,411,152          118,833,110
MBNA Corporation                                                          456,002           12,854,696
Providian Financial Corp.(1)                                              457,296            7,531,665
SLM Corp.                                                                 905,499           48,344,592
------------------------------------------------------------------------------------------------------
                                                                                    $      231,114,567
------------------------------------------------------------------------------------------------------

CONTAINERS AND PACKAGING -- 0.1%

Bemis Co.                                                                 295,186   $        8,586,961
Caraustar Industries, Inc.(1)                                             167,599            2,819,015
Sealed Air Corp.(1)                                                        37,014            1,971,736
Sonoco Products Co.                                                       160,690            4,764,459
Temple-Inland, Inc.                                                        57,962            3,964,601
------------------------------------------------------------------------------------------------------
                                                                                    $       22,106,772
------------------------------------------------------------------------------------------------------

DISTRIBUTORS -- 0.1%

Genuine Parts Company                                                     323,060   $       14,234,024
------------------------------------------------------------------------------------------------------
                                                                                    $       14,234,024
------------------------------------------------------------------------------------------------------

DIVERSIFIED FINANCIAL SERVICES -- 1.7%

Citigroup Inc.                                                          4,110,278   $      198,033,194
Finova Group, Inc.(1)                                                     175,587               28,094
</Table>

                        See notes to financial statements

                                       62
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)

ING groep, N.V. ADR                                                       257,281   $        7,782,750
Moody's Corp.                                                              67,543            5,866,110
Morgan (J.P.) Chase & Co.                                               2,952,221          115,166,141
------------------------------------------------------------------------------------------------------
                                                                                    $      326,876,289
------------------------------------------------------------------------------------------------------

DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.1%

Alltel Corp.                                                            1,632,558   $       95,929,108
AT&T Corp.                                                                495,955            9,452,902
BCE, Inc.                                                               3,400,000           82,042,000
BellSouth Corp.                                                           455,705           12,664,042
Cincinnati Bell Inc.(1)                                                   169,013              701,404
Citizens Communications Co.                                                13,568              187,103
Deutsche Telekom AG(1)                                                  2,006,790           45,513,997
McLeodUSA(1)                                                               21,974               15,821
PTEK Holdings, Inc.(1)                                                     28,000              299,880
Qwest Communications International, Inc.(1)                                59,924              266,063
RSL Communications Ltd.(1)(2)                                             247,161                    0
SBC Communications, Inc.                                                1,464,924           37,751,091
Sprint Corp. - FON Group                                                  101,903            2,532,290
Talk America Holdings, Inc.(1)                                              9,703               64,234
Telefonos de Mexico ADR                                                 2,000,000           76,640,000
Verizon Communications                                                  1,050,565           42,558,388
------------------------------------------------------------------------------------------------------
                                                                                    $      406,618,323
------------------------------------------------------------------------------------------------------

ELECTRIC UTILITIES -- 0.3%

Ameren Corp.                                                                5,000   $          250,700
American Electric Power, Inc.                                                 960               32,966
Exelon Corp.                                                            1,002,000           44,158,140
PG&E Corp.(1)                                                              47,705            1,587,622
Southern Co. (The)                                                         65,985            2,211,817
TECO Energy, Inc.                                                          34,145              523,784
TXU Corp.                                                                 250,196           16,152,654
Wisconsin Energy Corp.                                                      9,576              322,807
------------------------------------------------------------------------------------------------------
                                                                                    $       65,240,490
------------------------------------------------------------------------------------------------------

ELECTRICAL EQUIPMENT -- 0.5%

American Power Conversion Corp.                                            34,704   $          742,666
Baldor Electric Co.                                                       149,060            4,103,622
Emerson Electric Co.                                                    1,111,539           77,918,884
Rockwell International Corp.                                              156,699            7,764,435
Roper Industries, Inc.                                                     23,122            1,405,124
Thomas & Betts Corp.(1)                                                   114,600            3,523,950
------------------------------------------------------------------------------------------------------
                                                                                    $       95,458,681
------------------------------------------------------------------------------------------------------

ELECTRONIC EQUIPMENT AND INSTRUMENTS -- 0.7%

Agilent Technologies, Inc.(1)                                             569,891   $       13,734,373
Arrow Electronics, Inc.(1)                                                  8,750              212,625
Dionex Corp.(1)                                                           139,750            7,919,633
Flextronics International Ltd.(1)                                         293,053            4,049,992
Jabil Circuit, Inc.(1)                                                  2,127,971           54,433,498
Molex, Inc., Class A                                                       65,367            1,742,031
National Instruments Corp.                                                735,687           20,047,471
PerkinElmer, Inc.                                                         254,526            5,724,290
Plexus Corp.(1)                                                           158,108            2,056,985
Sanmina Corp.(1)                                                        1,140,602            9,660,899
Solectron Corporation(1)                                                1,752,794            9,342,392
X-Rite Incorporated                                                       288,000            4,610,880
------------------------------------------------------------------------------------------------------
                                                                                    $      133,535,069
------------------------------------------------------------------------------------------------------

ENERGY EQUIPMENT AND SERVICES -- 0.7%

Baker Hughes, Inc.                                                        457,426   $       19,518,367
Core Laboratories N.V.(1)                                                  31,290              730,622
Grant Prideco, Inc.(1)                                                     35,444              710,652
Halliburton Company                                                       990,930           38,884,093
National-Oilwell, Inc.(1)                                                 514,062           18,141,248
Schlumberger Ltd.                                                         567,476           37,992,518
Smith International, Inc.(1)                                              140,000            7,617,400
Transocean Sedco Forex, Inc.(1)                                           106,247            4,503,810
------------------------------------------------------------------------------------------------------
                                                                                    $      128,098,710
------------------------------------------------------------------------------------------------------

FOOD AND STAPLES RETAILING -- 2.2%

Albertson's, Inc.                                                       1,022,529   $       24,417,993
Casey's General Stores, Inc.                                               89,966            1,632,883
Costco Wholesale Corp.                                                    927,132           44,882,460
CVS Corp.                                                                 132,268            5,961,319
Kroger Co. (The)(1)                                                     1,357,551           23,811,445
Safeway, Inc.(1)                                                        1,649,342           32,558,011
Sysco Corp.(2)(3)                                                          30,000            1,143,381
Sysco Corp.                                                             1,749,792           66,789,561
Sysco Corp.(2)(3)                                                          25,000              953,892
Walgreen Co.                                                              800,825           30,727,655
Wal-Mart Stores, Inc.                                                   3,481,821          183,909,785
Winn-Dixie Stores, Inc.                                                   204,622              931,030
------------------------------------------------------------------------------------------------------
                                                                                    $      417,719,415
------------------------------------------------------------------------------------------------------

FOOD PRODUCTS -- 2.8%

Archer-Daniels-Midland Co.                                              1,143,641   $       25,514,631
</Table>

                        See notes to financial statements

                                       63
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
FOOD PRODUCTS (CONTINUED)

Campbell Soup Co.                                                       1,242,265   $       37,131,301
Conagra Inc.                                                            1,657,734           48,820,266
Dean Foods Co.(1)                                                         443,988           14,629,405
Del Monte Foods, Co.(1)                                                    99,492            1,096,402
General Mills, Inc.                                                       186,227            9,257,344
Heinz (H.J.) Co.                                                          292,208           11,393,190
Hershey Foods Corp.                                                       507,333           28,177,275
JM Smucker Co.                                                             12,365              582,021
Kellogg Co.                                                                59,640            2,663,522
Kraft Foods, Inc.                                                             465               16,559
McCormick & Co., Inc.                                                       1,624               62,686
Nestle SA                                                                 275,000           71,773,953
Sara Lee Corp.                                                          3,789,758           91,484,758
Smithfield Foods, Inc.(1)                                               4,207,530          124,500,813
Tyson Foods, Inc.                                                         315,272            5,801,005
Wrigley (Wm.) Jr. Company Class A                                         902,761           62,462,034
------------------------------------------------------------------------------------------------------
                                                                                    $      535,367,165
------------------------------------------------------------------------------------------------------

HEALTH CARE EQUIPMENT AND SUPPLIES -- 1.4%

Advanced Medical Optics(1)                                                  3,558   $          146,376
Bausch & Lomb, Inc.                                                        29,250            1,885,455
Baxter International, Inc.                                                221,749            7,659,210
Becton & Dickinson and Co.                                                 64,173            3,645,026
Biomet, Inc.                                                              419,890           18,219,027
Boston Scientific Corporation(1)                                        1,110,370           39,473,654
Dentsply International, Inc.                                               10,928              614,154
Edwards Lifesciences Corp.(1)                                              10,353              427,165
Guidant Corp.                                                              74,638            5,381,400
Hillenbrand Industries, Inc.                                              586,943           32,598,814
Hospira, Inc.(1)                                                          246,711            8,264,819
Lumenis Ltd.(1)                                                           100,000              193,500
Medtronic, Inc.                                                         2,312,831          114,878,316
St. Jude Medical, Inc.(1)                                                  48,028            2,013,814
Steris Corp.(1)                                                             8,125              192,725
Stryker Corp.                                                              36,741            1,772,753
VISX, Inc.(1)                                                              50,000            1,293,500
Waters Corp.(1)                                                           165,841            7,759,700
Zimmer Holdings, Inc.(1)                                                  285,489           22,873,379
------------------------------------------------------------------------------------------------------
                                                                                    $      269,292,787
------------------------------------------------------------------------------------------------------

HEALTH CARE PROVIDERS AND SERVICES -- 1.9%

AmerisourceBergen Corp.                                                   141,513   $        8,303,983
Andrx Group(1)                                                            180,170   $        3,933,111
Beverly Enterprises, Inc.(1)                                              357,143            3,267,858
Cardinal Health, Inc.                                                   1,840,995          107,053,859
Caremark Rx, Inc.(1)                                                      701,471           27,659,002
Cigna Corp.                                                                11,836              965,463
Express Scripts, Inc.(1)                                                   26,658            2,037,738
HCA Inc.                                                                      140                5,594
Health Management Associates, Inc., Class A                               856,502           19,459,725
IDX Systems Corp.(1)                                                       60,000            2,067,600
IMS Health, Inc.                                                          280,530            6,511,101
McKesson HBOC, Inc.                                                         2,631               82,771
Medco Health Solutions, Inc.(1)                                           170,891            7,109,066
Parexel International Corp.(1)                                             27,837              565,091
Renal Care Group, Inc.(1)                                                 480,046           17,276,856
Schein (Henry), Corp.(1)                                                1,188,477           82,765,538
Service Corp. International(1)                                            142,389            1,060,798
Stewart Enterprises, Inc.(1)                                              114,000              796,860
Sunrise Assisted Living, Inc.(1)                                          144,000            6,675,840
Tenet Healthcare Corp.(1)                                                   3,961               43,492
UnitedHealth Group, Inc.                                                  201,976           17,779,947
Ventiv Health, Inc.(1)                                                    160,833            3,268,127
WellPoint Inc.(1)                                                         404,000           46,460,000
------------------------------------------------------------------------------------------------------
                                                                                    $      365,149,420
------------------------------------------------------------------------------------------------------

HOTELS, RESTAURANTS AND LEISURE -- 1.9%

Brinker International, Inc.(1)                                            304,144   $       10,666,330
Carnival Corporation                                                      565,071           32,565,042
CBRL Group, Inc.                                                           62,047            2,596,667
Darden Restaurants Inc.                                                   184,714            5,123,966
Evans (Bob) Farms, Inc.                                                    51,662            1,350,445
Gaylord Entertainment Co.(1)                                              428,482           17,794,857
International Game Technology                                             400,000           13,752,000
International Speedway Corporation                                        118,344            6,248,563
Jack in the Box, Inc.(1)                                                  500,000           18,435,000
Lone Star Steakhouse & Saloon, Inc.                                       145,981            4,087,468
Marriott International, Inc.                                              288,169           18,148,884
McDonald's Corp.                                                          690,866           22,149,164
MGM Grand, Inc.(1)                                                         94,445            6,869,929
Navigant International, Inc.(1)                                            44,278              538,863
Outback Steakhouse, Inc.                                                1,641,207           75,134,456
Papa John's International, Inc.(1)                                        195,330            6,727,165
Royal Caribbean Cruises Ltd.                                              500,000           27,220,000
Sonic Corp.(1)                                                            159,765            4,872,833
</Table>

                        See notes to financial statements

                                       64
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                    <C>          <C>
HOTELS, RESTAURANTS AND LEISURE (CONTINUED)

Starbucks Corp.(1)                                                      1,229,375   $       76,663,825
Yum! Brands, Inc.                                                         236,779           11,171,233
------------------------------------------------------------------------------------------------------
                                                                                    $      362,116,690
------------------------------------------------------------------------------------------------------

HOUSEHOLD DURABLES -- 0.6%

Blyth Industries, Inc.                                                    708,382   $       20,939,772
D.R. Horton Inc.                                                          468,942           18,903,052
Department 56, Inc.(1)                                                    255,162            4,248,447
Fortune Brands Inc.                                                       128,148            9,890,463
Helen of Troy Ltd.(1)                                                      20,000              672,200
Interface, Inc. Class A(1)                                                 75,467              752,406
Leggett & Platt, Inc.                                                   1,813,805           51,566,476
Maytag Corp.                                                               27,073              571,240
Newell Rubbermaid, Inc.                                                   374,251            9,053,132
Snap-On, Inc.                                                              42,453            1,458,685
------------------------------------------------------------------------------------------------------
                                                                                    $      118,055,873
------------------------------------------------------------------------------------------------------

HOUSEHOLD PRODUCTS -- 1.7%

Clorox Co. (The)                                                           53,688   $        3,163,834
Colgate-Palmolive Co.                                                     699,356           35,779,053
Energizer Holdings(1)                                                     168,981            8,396,666
Kimberly-Clark Corp.                                                    1,476,156           97,145,826
Procter & Gamble Co.                                                    3,229,777          177,896,117
------------------------------------------------------------------------------------------------------
                                                                                    $      322,381,496
------------------------------------------------------------------------------------------------------

INDUSTRIAL CONGLOMERATES -- 2.9%

3M Co.                                                                    697,787   $       57,267,379
General Electric Co.                                                   11,805,529          430,901,809
Teleflex, Inc.                                                             33,700            1,750,378
Tyco International Ltd.                                                 2,017,132           72,092,298
------------------------------------------------------------------------------------------------------
                                                                                    $      562,011,864
------------------------------------------------------------------------------------------------------

INSURANCE -- 5.9%

21st Century Insurance Group                                               70,700   $          961,520
Aegon N.V. ADR                                                          5,311,829           72,825,176
AFLAC Inc.                                                              2,190,281           87,260,795
Allstate Corp. (The)                                                      199,712           10,329,105
American International Group, Inc.                                      5,670,853          372,404,917
AON Corp.                                                                 824,293           19,667,631
Berkshire Hathaway, Inc., Class A(1)                                          450           39,555,000
Berkshire Hathaway, Inc., Class B(1)                                       40,634          119,301,424
Chubb Corporation                                                           7,077              544,221
Commerce Group, Inc.                                                      120,000   $        7,324,800
Gallagher (Arthur J.) and Co.                                             821,773           26,707,623
Hartford Financial Services Group, Inc.                                    13,797              956,270
Jefferson-Pilot Corp.                                                     186,921            9,712,415
Lincoln National Corp.                                                     52,903            2,469,512
Manulife Financial Corp.                                                   74,958            3,463,060
Marsh & McLennan Cos., Inc.                                             1,080,587           35,551,312
MetLife, Inc.                                                           1,869,700           75,741,547
Old Republic International Corp.                                          240,548            6,085,864
Progressive Corp.(2)(3)                                                    10,900              923,369
Progressive Corp.                                                       1,991,008          168,917,119
Safeco Corp.                                                              173,122            9,043,893
St. Paul Companies, Inc. (The)                                            311,524           11,548,195
Torchmark Corp.                                                           417,159           23,836,465
UICI                                                                       43,597            1,477,938
UnumProvident Corp.                                                        53,710              963,557
XL Capital Ltd., Class A                                                  187,100           14,528,315
------------------------------------------------------------------------------------------------------
                                                                                    $    1,122,101,043
------------------------------------------------------------------------------------------------------

INTERNET AND CATALOG RETAIL -- 0.5%

Amazon.com Inc.(1)                                                         23,500   $        1,040,815
eBay, Inc.(1)                                                             619,501           72,035,576
IAC/InterActivecorp(1)                                                    806,192           22,267,023
------------------------------------------------------------------------------------------------------
                                                                                    $       95,343,414
------------------------------------------------------------------------------------------------------

INTERNET SOFTWARE AND SERVICES -- 0.0%

Retek, Inc.(1)                                                            110,742   $          681,063
------------------------------------------------------------------------------------------------------
                                                                                    $          681,063
------------------------------------------------------------------------------------------------------

IT SERVICES -- 2.8%

Accenture Ltd.(1)                                                       4,838,000   $      130,626,000
Acxiom Corp.                                                              647,804           17,037,245
Affiliated Computer Services(1)                                           183,730           11,058,709
Automatic Data Processing, Inc.                                         1,553,046           68,877,590
BISYS Group, Inc. (The)(1)                                                280,492            4,614,093
Ceridian Corp.(1)                                                          27,490              502,517
Certegy, Inc.                                                              42,862            1,522,887
Computer Sciences Corp.(1)                                                362,598           20,439,649
CSG Systems International, Inc.(1)                                         25,200              471,240
DST Systems, Inc.(1)                                                      391,634           20,411,964
eFunds Corp.(1)                                                            17,645              423,656
Electronic Data Systems Corp.                                              77,336            1,786,462
</Table>

                        See notes to financial statements

                                       65
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
IT SERVICES (CONTINUED)

First Data Corp.                                                        3,776,540   $      160,654,012
Fiserv, Inc.(1)                                                           300,000           12,057,000
Gartner Group, Inc., Class A(1)                                             4,811               59,945
Gartner Group, Inc., Class B(1)                                            27,576              338,909
Keane, Inc.(1)                                                             50,295              739,337
Paychex, Inc.                                                           1,398,101           47,647,282
Perot Systems Corp.(1)                                                    725,507           11,629,877
Safeguard Scientifics, Inc.(1)                                             26,579               56,347
SunGard Data Systems, Inc.(1)                                             773,601           21,916,116
------------------------------------------------------------------------------------------------------
                                                                                    $      532,870,837
------------------------------------------------------------------------------------------------------

LEISURE EQUIPMENT AND PRODUCTS -- 0.0%

Eastman Kodak Co.                                                         113,722   $        3,667,535
Mattel, Inc.                                                                1,096               21,361
------------------------------------------------------------------------------------------------------
                                                                                    $        3,688,896
------------------------------------------------------------------------------------------------------

MACHINERY -- 3.1%

Caterpillar, Inc.                                                          53,830   $        5,248,963
Danaher Corporation                                                     4,031,970          231,475,398
Deere & Co.                                                             3,350,000          249,240,000
Donaldson Company, Inc.                                                    80,440            2,620,735
Dover Corp.                                                               165,567            6,943,880
Federal Signal Corp.                                                      283,471            5,006,098
Illinois Tool Works, Inc.                                                 809,040           74,981,827
ITT Industries, Inc.                                                        4,214              355,872
Nordson Corporation                                                       163,978            6,570,598
Parker-Hannifin Corporation                                                30,653            2,321,658
Tecumseh Products Co., Class A                                            125,700            6,008,460
Wabtec                                                                     94,504            2,014,825
------------------------------------------------------------------------------------------------------
                                                                                    $      592,788,314
------------------------------------------------------------------------------------------------------

MEDIA -- 5.3%

ADVO, Inc.                                                                750,000   $       26,737,500
Arbitron, Inc.(1)                                                          11,555              452,725
Belo (A.H.) Corp.                                                         542,924           14,246,326
Cablevision Systems Corp.(1)                                              207,410            5,165,546
Catalina Marketing Corp.                                                   88,490            2,621,959
Clear Channel Communications, Inc.                                        145,017            4,856,619
Comcast Corp. Class A(1)                                                1,968,785           65,521,165
Comcast Corp. Class A Special(1)                                        1,280,622           42,055,626
Disney (Walt) Company                                                   4,834,833          134,408,357
EchoStar Communications, Class A                                           35,150            1,168,386
Entercom Communications Corp.(1)                                          220,000   $        7,895,800
Gannett Co., Inc.                                                       1,562,342          127,643,341
Havas Advertising, S.A. ADR                                             3,142,938           17,565,880
Interpublic Group of Companies, Inc.(1)                                 1,134,505           15,202,367
Knight Ridder, Inc.                                                        18,123            1,213,154
Lamar Advertising Co.(1)                                                  241,409           10,327,477
Liberty Media Corp. Class A(1)                                          1,013,104           11,123,882
Liberty Media Corp. Class B(1)                                             32,876              381,362
Liberty Media International Inc. Class A(1)                                50,655            2,341,781
Liberty Media International Inc. Class B(1)                                 1,643               80,408
McClatchy Co. (The)                                                        48,066            3,451,619
McGraw-Hill Companies, Inc. (The)                                         446,964           40,915,085
Meredith Corp.                                                            190,000           10,298,000
New York Times Co. (The), Class A                                         303,168           12,369,254
News Corp. Inc. - Class A                                                 187,934            3,506,848
Omnicom Group, Inc.                                                     2,318,719          195,514,386
Proquest Company(1)                                                       115,000            3,415,500
Publicis Groupe SA                                                        360,784           11,681,944
Reuters Holdings plc ADR                                                    1,431               61,461
Scripps (The E.W) Company                                                  51,066            2,465,466
Time Warner Inc.(1)                                                     4,102,164           79,746,068
Tribune Co.                                                             1,428,878           60,212,919
Univision Communications, Inc.(1)                                         401,298           11,745,992
Viacom, Inc., Class A                                                      29,774            1,104,020
Viacom, Inc., Class B                                                     971,451           35,351,102
Vivendi Universal S.A. ADR(1)                                             490,725           15,737,551
Washington Post Co. (The)                                                  14,970           14,715,809
Westwood One, Inc.(1)                                                     122,400            3,296,232
WPP Group plc                                                             139,450            1,529,144
WPP Group plc ADR                                                         256,051           13,993,187
------------------------------------------------------------------------------------------------------
                                                                                    $    1,012,121,248
------------------------------------------------------------------------------------------------------

METALS AND MINING -- 0.4%

Alcoa, Inc.                                                               797,947   $       25,071,495
Allegheny Technologies, Inc.                                               21,408              463,911
Inco, Ltd.(1)                                                             200,000            7,356,000
Nucor Corp.                                                               442,924           23,182,642
Phelps Dodge Corp.                                                         14,862            1,470,149
Steel Dynamics, Inc.                                                      311,800           11,810,984
Worthington Industries, Inc.                                               75,160            1,471,633
------------------------------------------------------------------------------------------------------
                                                                                    $       70,826,814
------------------------------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       66
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
MULTILINE RETAIL -- 1.8%

99 Cents Only Stores(1)                                                 1,142,232   $       18,458,469
Dollar General Corp.                                                      101,456            2,107,241
Dollar Tree Stores, Inc.(1)                                               813,306           23,325,616
Family Dollar Stores, Inc.                                              2,618,411           81,772,976
Kohls Corp.(1)                                                                 55                2,704
May Department Stores Co. (The)                                           607,760           17,868,144
Neiman Marcus Group, Inc. (The)                                                 6                  401
Nordstrom, Inc.                                                            65,692            3,069,787
Penney (J.C.) Company, Inc.                                               223,408            9,249,091
Sears, Roebuck & Co.                                                       23,074            1,177,466
Target Corp.                                                            3,547,475          184,220,377
------------------------------------------------------------------------------------------------------
                                                                                    $      341,252,272
------------------------------------------------------------------------------------------------------

MULTI-UTILITIES AND UNREGULATED POWER -- 0.1%

AES Corporation(1)                                                         49,542   $          677,239
Dominion Resources, Inc.                                                   10,464              708,831
Duke Energy Corp.                                                         417,416           10,573,147
Dynegy, Inc.(1)                                                            63,525              293,486
National Fuel Gas Co.                                                       4,000              113,360
------------------------------------------------------------------------------------------------------
                                                                                    $       12,366,063
------------------------------------------------------------------------------------------------------

OFFICE ELECTRONICS -- 0.0%

Xerox Corp.(1)                                                             42,878   $          729,355
Zebra Technologies Corp., Class A(1)                                       13,500              759,780
------------------------------------------------------------------------------------------------------
                                                                                    $        1,489,135
------------------------------------------------------------------------------------------------------

OIL AND GAS -- 7.8%

Amerada Hess Corp.                                                         18,947   $        1,560,854
Anadarko Petroleum Corp.                                                2,557,003          165,719,364
Apache Corporation                                                      2,075,352          104,950,551
Ashland, Inc.                                                              85,716            5,004,100
BP plc ADR                                                              5,081,540          296,761,936
Burlington Resources, Inc.                                              4,259,405          185,284,118
ChevronTexaco Corporation                                                 311,976           16,381,860
ConocoPhillips                                                          1,675,581          145,490,698
Devon Energy Corp.                                                      1,015,400           39,519,368
El Paso Corp.                                                             148,709            1,546,574
Exxon Mobil Corp.                                                       6,231,588          319,431,201
Kerr - McGee Corp.                                                        267,327           15,448,827
Kinder Morgan, Inc.                                                     1,781,672          130,293,673
Marathon Oil Corp.                                                          1,450               54,535
Murphy Oil Corporation                                                     19,518            1,570,223
Newfield Exploration Company(1)                                            60,000   $        3,543,000
Royal Dutch Petroleum Co.                                                  83,074            4,766,786
Total Fina Elf SA ADR                                                     400,000           43,936,000
Valero Energy Corp.                                                       103,020            4,677,108
Williams Companies Inc (The)                                              219,065            3,568,569
------------------------------------------------------------------------------------------------------
                                                                                    $    1,489,509,345
------------------------------------------------------------------------------------------------------

PAPER AND FOREST PRODUCTS -- 0.2%

Georgia-Pacific Corp.                                                     598,732   $       22,440,475
International Paper Co.                                                   112,154            4,710,468
Louisiana-Pacific Corp.                                                    70,750            1,891,855
MeadWestvaco Corp.                                                         84,358            2,858,893
Neenah Paper Inc.(1)                                                       44,890            1,463,414
Weyerhaeuser Co.                                                           89,778            6,034,877
------------------------------------------------------------------------------------------------------
                                                                                    $       39,399,982
------------------------------------------------------------------------------------------------------

PERSONAL PRODUCTS -- 1.5%

Avon Products, Inc.                                                       173,400   $        6,710,580
Gillette Company                                                        3,950,586          176,907,241
Lauder (Estee) Companies, Inc.                                          2,092,312           95,765,120
------------------------------------------------------------------------------------------------------
                                                                                    $      279,382,941
------------------------------------------------------------------------------------------------------

PHARMACEUTICALS -- 6.2%

Abbott Laboratories                                                     2,821,474   $      131,621,762
Allergan, Inc.                                                             38,300            3,104,981
Bristol-Myers Squibb Company                                            4,566,981          117,006,053
Elan Corp., PLC ADR(1)                                                     31,838              867,586
Forest Laboratories, Inc.(1)                                               56,800            2,548,048
GlaxoSmithKline plc                                                       430,517           20,402,201
Johnson & Johnson                                                       3,181,341          201,760,646
King Pharmaceuticals, Inc.(1)                                             505,637            6,269,899
Lilly (Eli) & Co.                                                       3,412,870          193,680,373
Merck & Co., Inc.                                                       2,317,124           74,472,365
Mylan Laboratories, Inc.                                                   27,992              494,899
Novo Nordisk ADR                                                          292,277           15,858,950
Pfizer, Inc.                                                            8,662,582          232,936,830
Schering AG ADR                                                            25,000            1,856,250
Schering-Plough Corp.                                                   2,515,998           52,534,038
Sepracor, Inc.(1)                                                           4,000              237,480
Teva Pharmaceutical Industries Ltd. ADR                                 2,282,011           68,140,848
Watson Pharmaceuticals, Inc.(1)                                           865,911           28,410,540
Wyeth Corp.                                                               790,783           33,679,448
------------------------------------------------------------------------------------------------------
                                                                                    $    1,185,883,197
------------------------------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       67
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
REAL ESTATE -- 0.2%

AvalonBay Communities, Inc.                                                28,867   $        2,173,685
Catellus Development Corp.                                                419,601           12,839,791
Forest City Enterprises - Class A                                          38,663            2,225,056
Jones Lang Lasalle, Inc.(1)                                               154,567            5,782,351
Plum Creek Timber Co., Inc.                                               198,791            7,641,526
Trammell Crow Co.(1)                                                      764,200           13,839,662
------------------------------------------------------------------------------------------------------
                                                                                    $       44,502,071
------------------------------------------------------------------------------------------------------

ROAD AND RAIL -- 0.2%

ANC Rental Corporation(1)                                                 459,525   $               46
Burlington Northern Santa Fe Corp.                                        207,932            9,837,263
CSX Corporation                                                            38,134            1,528,411
Florida East Coast Industries, Inc.                                       121,978            5,501,208
Heartland Express, Inc.                                                   653,154           14,676,370
Kansas City Southern Industries, Inc.(1)                                   15,215              269,762
Norfolk Southern Corp.                                                      3,990              144,398
Union Pacific Corp.                                                         7,811              525,290
------------------------------------------------------------------------------------------------------
                                                                                    $       32,482,748
------------------------------------------------------------------------------------------------------

SEMICONDUCTORS AND SEMICONDUCTOR
EQUIPMENT -- 2.0%

Agere Systems, Inc.(1)                                                      6,495   $            8,898
Agere Systems, Inc., Class B(1)                                           159,398              215,187
Altera Corp.(1)                                                            66,116            1,368,601
Analog Devices, Inc.                                                      778,870           28,755,880
Applied Materials, Inc.(1)                                              1,741,642           29,782,078
Broadcom Corp. - Class A(1)                                               530,892           17,137,194
Broadcom Corp. - Class A(1)(2)(3)                                          35,000            1,128,105
Conexant Systems, Inc.(1)                                                 134,174              267,006
Cypress Semiconductor Corporation(1)                                      152,742            1,791,664
Freescale Semiconductor-B(1)                                              101,704            1,867,286
Intel Corp.                                                             9,580,974          224,098,982
KLA-Tencor Corp.(1)                                                       148,373            6,911,214
Linear Technologies Corp.                                                 187,760            7,277,578
LSI Logic Corporation(1)                                                  132,810              727,799
Maxim Integrated Products Co.                                             374,351           15,868,739
Mindspeed Technologies Inc.(1)                                             44,724              124,333
Skyworks Solutions, Inc.(1)                                                98,685              930,600
Taiwan Semiconductor ADR                                                      866                7,352
Teradyne, Inc.(1)                                                          27,996              477,892
Texas Instruments, Inc.                                                 1,912,604           47,088,310
Xilinx, Inc.                                                               59,554            1,765,776
------------------------------------------------------------------------------------------------------
                                                                                    $      387,600,474
------------------------------------------------------------------------------------------------------

SOFTWARE -- 2.1%

Adobe Systems, Inc.                                                       258,794   $       16,236,736
Cadence Design Systems, Inc.(1)                                           900,000           12,429,000
Cognos, Inc.(1)                                                            77,000            3,392,620
Computer Associates International, Inc.                                    33,070            1,027,154
Compuware Corp.(1)                                                        150,944              976,608
Electronic Arts Inc.(1)                                                    21,405            1,320,260
Fair, Isaac and Co., Inc.                                                 997,172           36,576,269
Henry (Jack) & Associates                                                 201,006            4,002,029
Intuit, Inc.(1)                                                           921,314           40,547,029
Microsoft Corp.                                                         7,312,311          195,311,827
Oracle Corp.(1)                                                           817,568           11,217,033
PalmSource, Inc.(1)                                                        20,208              257,450
Parametric Technology Corp.(1)                                             94,600              557,194
Reynolds & Reynolds, Co.                                                  216,412            5,737,082
Sap AG ADR                                                                600,000           26,526,000
Siebel Systems, Inc.(1)                                                   179,184            1,881,432
Symantec Corporation(1)                                                 1,499,722           38,632,839
VERITAS Software Corp.(1)                                                 243,942            6,964,544
Wind River Systems, Inc.(1)                                                91,910            1,245,381
------------------------------------------------------------------------------------------------------
                                                                                    $      404,838,487
------------------------------------------------------------------------------------------------------

SPECIALTY RETAIL -- 2.0%

Abercrombie & Fitch Co.                                                    11,225   $          527,014
AutoNation, Inc.(1)                                                     1,493,099           28,682,432
Best Buy Co., Inc.                                                        113,610            6,750,706
Burlington Coat Factory Warehouse Corp.                                   238,448            5,412,770
CarMax, Inc.(1)                                                            67,797            2,105,097
Circuit City Stores, Inc.                                                 216,000            3,378,240
Gap, Inc. (The)                                                           541,012           11,426,173
Home Depot, Inc. (The)                                                  4,281,726          183,000,969
Limited Brands, Inc.                                                      762,510           17,552,980
Lowe's Companies                                                          875,941           50,445,442
Office Depot, Inc.(1)                                                     205,276            3,563,591
Officemax Inc.                                                              2,192               68,785
Payless Shoesource, Inc.(1)                                                23,100              284,130
Pep Boys - Manny, Moe & Jack (The)                                         83,415            1,423,894
Radioshack Corp.                                                          631,599           20,766,975
Sherwin-Williams Co. (The)                                                 80,569            3,595,794
Staples, Inc.                                                             158,266            5,335,147
Tiffany & Co.                                                              57,286            1,831,433
TJX Companies, Inc. (The)                                               1,716,834           43,144,038
Too, Inc.(1)                                                               38,284              936,427
------------------------------------------------------------------------------------------------------
                                                                                    $      390,232,037
------------------------------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       68
<Page>

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
TEXTILES, APPAREL AND LUXURY GOODS -- 0.7%

Coach, Inc.(1)                                                            365,720   $       20,626,608
Nike Inc., Class B                                                      1,329,222          120,547,143
Unifi, Inc.(1)                                                              1,208                4,627
------------------------------------------------------------------------------------------------------
                                                                                    $      141,178,378
------------------------------------------------------------------------------------------------------

THRIFTS AND MORTGAGE FINANCE -- 0.7%

Countrywide Financial Corp.                                             1,499,998   $       55,514,926
Fannie Mae                                                                345,171           24,579,627
Freddie Mac                                                               135,586            9,992,688
Golden West Financial Corporation                                          74,590            4,581,318
MGIC Investment Corp.                                                      85,000            5,857,350
Radian Group, Inc.                                                         30,800            1,639,792
Washington Mutual, Inc.                                                   927,674           39,222,057
------------------------------------------------------------------------------------------------------
                                                                                    $      141,387,758
------------------------------------------------------------------------------------------------------

TOBACCO -- 0.2%

Altria Group Inc.                                                         763,945   $       46,677,040
UST, Inc.                                                                     439               21,120
------------------------------------------------------------------------------------------------------
                                                                                    $       46,698,160
------------------------------------------------------------------------------------------------------

TRADING COMPANIES AND DISTRIBUTORS -- 0.0%

United Rentals, Inc.(1)                                                   401,179   $        7,582,283
------------------------------------------------------------------------------------------------------
                                                                                    $        7,582,283
------------------------------------------------------------------------------------------------------

WIRELESS TELECOMMUNICATION SERVICES -- 0.1%

Nextel Communications, Inc., Class A(1)                                   134,072   $        4,022,160
Telephone and Data Systems, Inc.                                           70,844            5,451,446
Vodafone Group plc ADR                                                    213,962            5,858,280
------------------------------------------------------------------------------------------------------
                                                                                    $       15,331,886
------------------------------------------------------------------------------------------------------

TOTAL COMMON STOCKS
   (IDENTIFIED COST $14,860,534,853)                                                $   19,109,250,562
------------------------------------------------------------------------------------------------------
</Table>

CONVERTIBLE PREFERRED STOCKS -- 0.0%

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                        <C>      <C>
MULTI-UTILITIES AND UNREGULATED POWER -- 0.0%

Enron Corp.(1)(2)                                                          11,050   $                0
------------------------------------------------------------------------------------------------------
                                                                                    $                0
------------------------------------------------------------------------------------------------------

TOTAL CONVERTIBLE PREFERRED STOCKS
   (IDENTIFIED COST $4,500,777)                                                     $                0
------------------------------------------------------------------------------------------------------
</Table>

PREFERRED STOCKS -- 0.0%

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                       <C>       <C>
COMMERCIAL BANKS -- 0.0%

Wachovia Corp. (Dividend Equalization Preferred Shares)(1)                166,518   $              167
------------------------------------------------------------------------------------------------------
                                                                                    $              167
------------------------------------------------------------------------------------------------------

TOTAL PREFERRED STOCKS
   (IDENTIFIED COST $39,407)                                                        $              167
------------------------------------------------------------------------------------------------------
</Table>

WARRANTS -- 0.0%

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                        <C>      <C>
COMMUNICATIONS EQUIPMENT -- 0.0%

Lucent Technologies, Inc.                                                  18,106   $           28,607
------------------------------------------------------------------------------------------------------
                                                                                    $           28,607
------------------------------------------------------------------------------------------------------

TOTAL WARRANTS
   (IDENTIFIED COST $0)                                                             $           28,607
------------------------------------------------------------------------------------------------------
</Table>

RIGHTS -- 0.0%

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
BANKS -- 0.0%

Bank United Corp. (Litigation Contingent Payment
 Rights)(1)(2)                                                            102,072   $            6,124
------------------------------------------------------------------------------------------------------
                                                                                    $            6,124
------------------------------------------------------------------------------------------------------

COMPUTERS AND BUSINESS EQUIPMENT -- 0.0%

Seagate Technology, Inc. (Tax Refund Rights)(1)(2)                        197,392   $                0
------------------------------------------------------------------------------------------------------
                                                                                    $                0
------------------------------------------------------------------------------------------------------

INTEGRATED TELECOMMUNICATION SERVICES -- 0.0%

McLeodUSA (Escrow Rights)(1)(2)                                         1,592,200   $                0
------------------------------------------------------------------------------------------------------
                                                                                    $                0
------------------------------------------------------------------------------------------------------

TOTAL RIGHTS
   (IDENTIFIED COST $50,596)                                                        $            6,124
------------------------------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       69
<Page>

SHORT-TERM INVESTMENTS -- 0.1%

<Table>
<Caption>
                                                               PRINCIPAL
                                                               AMOUNT
SECURITY                                                       (000'S OMITTED)      VALUE
------------------------------------------------------------------------------------------------------
<S>                                                            <C>                  <C>
Investors Bank & Trust Company --
Time Deposit, 2.25%, 1/3/05                                    $            7,668   $        7,668,000
------------------------------------------------------------------------------------------------------

TOTAL SHORT-TERM INVESTMENTS
   (AT AMORTIZED COST, $7,668,000)                                                  $        7,668,000
------------------------------------------------------------------------------------------------------
</Table>

COMMERCIAL PAPER -- 0.1%

<Table>
<Caption>
                                                               PRINCIPAL
                                                               AMOUNT
SECURITY                                                       (000'S OMITTED)      VALUE
------------------------------------------------------------------------------------------------------
<S>                                                            <C>                  <C>
Societe Generale North America, 2.32%, 1/5/05                  $           22,295   $       22,289,253
------------------------------------------------------------------------------------------------------

TOTAL COMMERCIAL PAPER
   (AT AMORTIZED COST, $22,289,253)                                                 $       22,289,253
------------------------------------------------------------------------------------------------------

TOTAL INVESTMENTS -- 100.0%
   (IDENTIFIED COST $14,895,082,886)                                                $   19,139,242,713
------------------------------------------------------------------------------------------------------
</Table>

SECURITIES SOLD SHORT -- -1.0%

<Table>
<Caption>
SECURITY                                                             SHARES         VALUE
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
American International Group, Inc.                                      3,000,000   $     (197,010,000)
------------------------------------------------------------------------------------------------------

TOTAL SECURITIES SOLD SHORT
   (PROCEEDS $169,710,627)                                                          $     (197,010,000)
------------------------------------------------------------------------------------------------------

OTHER ASSETS, LESS LIABILITIES
   EXCLUDING SECURITIES SOLD SHORT -- 1.0%                                          $      198,909,689
------------------------------------------------------------------------------------------------------

NET ASSETS -- 100.0%                                                                $   19,141,142,402
------------------------------------------------------------------------------------------------------
</Table>

ADR - American Depositary Receipt

(1)  Non-income producing security.

(2)  Security valued at fair value using methods  determined in good faith by or
     at the direction of the Trustees.

(3)  Security subject to restrictions on resale (see Note 7).

                        See notes to financial statements

                                       70
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

As of December 31, 2004

<Table>
<S>                                                                      <C>
ASSETS

Investments, at value (identified cost, $14,895,082,886)                 $   19,139,242,713
Cash                                                                                  2,563
Deposits with brokers for securities sold short                                 169,710,627
Dividends and interest receivable                                                24,103,436
Receivable for investments sold                                                   4,256,707
Tax reclaim receivable                                                            1,180,262
-------------------------------------------------------------------------------------------
TOTAL ASSETS                                                             $   19,338,496,308
-------------------------------------------------------------------------------------------

LIABILITIES

Securities sold short, at value (proceeds received of $169,710,627)      $      197,010,000
Payable for dividends on securities sold short                                      225,000
Payable to affiliate for Trustees' fees                                               6,053
Accrued expenses                                                                    112,853
-------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                        $      197,353,906
-------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO                $   19,141,142,402
-------------------------------------------------------------------------------------------

SOURCES OF NET ASSETS

Net proceeds from capital contributions and withdrawals                  $   14,924,128,572
Net unrealized appreciation (computed on the basis of identified cost)        4,217,013,830
-------------------------------------------------------------------------------------------
TOTAL                                                                    $   19,141,142,402
-------------------------------------------------------------------------------------------
</Table>

STATEMENT OF OPERATIONS

For the Year Ended
December 31, 2004

<Table>
<S>                                                                      <C>
INVESTMENT INCOME

Dividends (net of foreign taxes, $3,794,755)                             $      291,107,513
Interest                                                                          1,157,693
-------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME                                                  $      292,265,206
-------------------------------------------------------------------------------------------

EXPENSES

Investment adviser fee                                                   $       77,609,178
Trustees' fees and expenses                                                          25,376
Custodian fee                                                                     1,999,827
Dividends on securities sold short                                                  225,000
Legal and accounting services                                                        94,573
Miscellaneous                                                                       304,587
-------------------------------------------------------------------------------------------
TOTAL EXPENSES                                                           $       80,258,541
-------------------------------------------------------------------------------------------
Deduct --
   Reduction of custodian fee                                            $               39
   Reduction of investment adviser fee                                               26,667
-------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS                                                 $           26,706
-------------------------------------------------------------------------------------------

NET EXPENSES                                                             $       80,231,835
-------------------------------------------------------------------------------------------

NET INVESTMENT INCOME                                                    $      212,033,371
-------------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain (loss) --
   Investment transactions (identified cost basis)                       $      152,362,325
   Foreign currency transactions                                                     60,515
-------------------------------------------------------------------------------------------
NET REALIZED GAIN                                                        $      152,422,840
-------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
   Investments (identified cost basis)                                   $    1,345,093,649
   Securities sold short                                                        (27,299,373)
   Foreign currency                                                                  84,431
-------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)                     $    1,317,878,707
-------------------------------------------------------------------------------------------

NET REALIZED AND UNREALIZED GAIN                                         $    1,470,301,547
-------------------------------------------------------------------------------------------

NET INCREASE IN NET ASSETS FROM OPERATIONS                               $    1,682,334,918
-------------------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       71
<Page>

STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
INCREASE (DECREASE)                                            YEAR ENDED            YEAR ENDED
IN NET ASSETS                                                  DECEMBER 31, 2004     DECEMBER 31, 2003
-------------------------------------------------------------------------------------------------------
<S>                                                            <C>                   <C>
From operations --
   Net investment income                                       $      212,033,371    $      163,045,716
   Net realized gain from investment
      transactions, securities sold short
      and foreign currency transactions                               152,422,840            70,909,770
   Net change in unrealized appreciation
      (depreciation) of investments,
      securities sold short and
      foreign currency                                              1,317,878,707         3,174,709,110
-------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS                     $    1,682,334,918    $    3,408,664,596
-------------------------------------------------------------------------------------------------------
Capital transactions --
   Contributions                                               $    1,775,098,351    $    1,351,483,956
   Withdrawals                                                     (1,925,879,872)       (1,722,081,135)
-------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
   CAPITAL TRANSACTIONS                                        $     (150,781,521)   $     (370,597,179)
-------------------------------------------------------------------------------------------------------

NET INCREASE IN NET ASSETS                                     $    1,531,553,397    $    3,038,067,417
-------------------------------------------------------------------------------------------------------

NET ASSETS

At beginning of year                                           $   17,609,589,005    $   14,571,521,588
-------------------------------------------------------------------------------------------------------
AT END OF YEAR                                                 $   19,141,142,402    $   17,609,589,005
-------------------------------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       72
<Page>

SUPPLEMENTARY DATA

<Table>
<Caption>
                                                                                 YEAR ENDED DECEMBER 31,
                                                        -------------------------------------------------------------------------
                                                            2004            2003           2002           2001           2000
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>            <C>            <C>            <C>
RATIOS/SUPPLEMENTAL DATA+

Ratios (As a percentage of average daily net assets):
   Net expenses                                                 0.45%           0.45%          0.45%          0.45%          0.45%
   Net expenses after custodian fee reduction                   0.45%             --             --             --             --
   Net investment income                                        1.18%           1.05%          0.85%          0.64%          0.67%
Portfolio Turnover                                                 3%             15%            23%            18%            13%
---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                                 9.67%          23.88%        (19.52)%        (9.67)%           --
---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S OMITTED)                 $ 19,141,142    $ 17,609,589   $ 14,571,522   $ 18,335,865   $ 18,385,069
---------------------------------------------------------------------------------------------------------------------------------

+    The operating expenses of the Portfolio reflect a reduction of the
     investment adviser fee. Had such action not been taken, the ratios would
     have been as follows:

Ratios (As a percentage of average daily net assets):
   Expenses                                                     0.45%             --             --             --             --
   Expenses after custodian fee reduction                       0.45%             --             --             --             --
   Net investment income                                        1.18%             --             --             --             --
</Table>

(1)  Total return is required to be disclosed for fiscal years  beginning  after
     December 15, 2000.

                        See notes to financial statements

                                       73
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
NOTES TO FINANCIAL STATEMENTS

1    SIGNIFICANT ACCOUNTING POLICIES

Tax-Managed  Growth Portfolio (the Portfolio) is registered under the Investment
Company  Act  of  1940,  as  amended,  as  a  diversified,  open-end  management
investment company. The Portfolio, which was organized as a trust under the laws
of the  State of New York on  December  1,  1995,  seeks  to  provide  long-term
after-tax returns by investing in a diversified  portfolio of equity securities.
The  Declaration  of  Trust  permits  the  Trustees  to issue  interests  in the
Portfolio.  The  following  is a  summary  of  significant  accounting  policies
consistently  followed by the  Portfolio  in the  preparation  of its  financial
statements.  The policies are in conformity with accounting principles generally
accepted in the United States of America.

A INVESTMENT  VALUATIONS  --  Securities  listed on a U.S.  securities  exchange
generally  are valued at the last sale price on the day of  valuation  or, if no
sales took place on such date,  at the mean  between  the  closing bid and asked
prices  therefore on the exchange where such securities are principally  traded.
Equity  securities  listed on the NASDAQ  National  Market System  generally are
valued at the official NASDAQ closing price.  Unlisted or listed  securities for
which closing sales prices or closing quotations are not available are valued at
the mean  between the latest  available  bid and asked prices or, in the case of
preferred   equity   securities   that  are  not   listed   or   traded  in  the
over-the-counter  market,  by an independent  pricing  service.  Exchange-traded
options are valued at the last sale price for the day of  valuation as quoted on
the principal  exchange or board of trade on which the options are traded or, in
the absence of sales on such date,  at the mean between the latest bid and asked
prices therefore.  Futures positions on securities and currencies  generally are
valued at closing settlement prices. Short-term debt securities with a remaining
maturity of 60 days or less are valued at amortized  cost.  If  short-term  debt
securities were acquired with a remaining  maturity of more than 60 days,  their
amortized cost value will be based on their value on the  sixty-first  day prior
to maturity. Other fixed income and debt securities, including listed securities
and securities for which price quotations are available, will normally be valued
on the basis of valuations  furnished by a pricing service.  Foreign  securities
and currencies are valued in U.S.  dollars,  based on foreign currency  exchange
rate  quotations  supplied  by  an  independent  quotation  service.  The  daily
valuation  of foreign  securities  generally  is  determined  as of the close of
trading  on the  principal  exchange  on which  such  securities  trade.  Events
occurring  after  the  close of  trading  on  foreign  exchanges  may  result in
adjustments to the valuation of foreign  securities to more  accurately  reflect
their  fair  value as of the  close of  regular  trading  on the New York  Stock
Exchange. When valuing foreign equity securities that meet certain criteria, the
Trustees  have  approved  the  use of a fair  value  service  that  values  such
securities  to  reflect  market  trading  that  occurs  after  the  close of the
applicable  foreign markets of comparable  securities or other  instruments that
have a strong  correlation to the securities held by the Portfolio.  Investments
held by the Portfolio for which valuations or market  quotations are unavailable
are valued at fair value  using  methods  determined  in good faith by or at the
direction of the Trustees of the Portfolio  considering  relevant factors,  data
and information  including the market value of freely tradable securities of the
same class in the principal market on which such securities are normally traded.

B INCOME  TAXES -- The  Portfolio  is treated as a  partnership  for federal tax
purposes.  No provision is made by the  Portfolio  for federal or state taxes on
any taxable  income of the  Portfolio  because each investor in the Portfolio is
ultimately responsible for the payment of any taxes on its share of such taxable
income.  Since  some  of the  Portfolio's  investors  are  regulated  investment
companies that invest all or substantially all of their assets in the Portfolio,
the  Portfolio  normally  must  satisfy  the  applicable  source of  income  and
diversification  requirements (under the Internal Revenue Code) in order for its
investors to satisfy them. The Portfolio will allocate,  at least annually among
its  investors,  each  investor's  distributive  share  of the  Portfolio's  net
investment  income, net realized capital gains or losses, and any other items of
income, gain, loss, deduction or credit.

C FUTURES CONTRACTS -- Upon the entering of a financial  futures  contract,  the
Portfolio is required to deposit either in cash or securities an amount (initial
margin)  equal to a certain  percentage of the purchase  price  indicated in the
financial  futures  contract.  Subsequent  payments  are made or received by the
Portfolio (margin  maintenance) each day, dependent on daily fluctuations in the
value  of the  underlying  security,  and are  recorded  for  book  purposes  as
unrealized  gains or losses by the  Portfolio.  The  Portfolio's  investment  in
financial  futures  contracts is designed to hedge  against  anticipated  future
changes in the price of  current  or  anticipated  portfolio  positions.  Should
prices move unexpectedly, the Portfolio may not achieve the anticipated benefits
of the financial futures contracts and may realize a loss.

D PUT OPTIONS -- Upon the purchase of a put option by the Portfolio, the premium
paid is recorded as an asset in the  Statement  of Assets and  Liabilities,  the
value of which is marked-to-market  daily. When a purchased option expires,  the
Portfolio  will  realize a loss in the  amount  of the  premium  paid.  When the
Portfolio enters into a closing sale  transaction,  the Portfolio will realize a

                                       74
<Page>

gain or loss  depending  on whether the sales  proceeds  from the  closing  sale
transaction  are  greater  or less than the  premium  paid.  When the  Portfolio
exercises a put option,  settlement is made in cash.  The risk  associated  with
purchasing options is limited to the premium originally paid.

E SECURITIES SOLD SHORT -- The Portfolio may sell a security short if it owns at
least  an  equal  amount  of  the  security  sold  short  or  another   security
exchangeable for an equal amount of the security sold short in anticipation of a
decline in the market  price of the  securities  or in order to hedge  portfolio
positions.  The Portfolio  will  generally  borrow the security sold in order to
make  delivery to the buyer.  Upon  executing  the  transaction,  the  Portfolio
records the  proceeds as deposits  with  brokers in the  Statement of Assets and
Liabilities and establishes an offsetting  payable for securities sold short for
the  securities  due on  settlement.  The proceeds are retained by the broker as
collateral for the short  position.  The liability is  marked-to-market  and the
Portfolio is required to pay the lending broker any dividend or interest  income
earned while the short  position is open. A gain or loss is recognized  when the
security is delivered to the broker.  The  Portfolio may recognize a loss on the
transaction  if the market value of the  securities  sold  increases  before the
securities are delivered.

F FOREIGN  CURRENCY  TRANSLATION  --  Investment  valuations,  other  assets and
liabilities  initially  expressed  in  foreign  currencies  are  converted  each
business day into U.S. dollars based upon current exchange rates.  Purchases and
sales of foreign  investment  securities  and income and expenses are  converted
into  U.S.  dollars  based  upon  currency  exchange  rates  prevailing  on  the
respective dates of such transactions.  Recognized gains or losses on investment
transactions  attributable to foreign  currency  exchange rates are recorded for
financial  statement  purposes as net realized gains and losses on  investments.
That portion of  unrealized  gains and losses on  investments  that results from
fluctuations in foreign currency exchange rates is not separately disclosed.

G  INDEMNIFICATIONS  -- Under  the  Portfolio's  organizational  documents,  its
officers  and  Trustees  may be  indemnified  against  certain  liabilities  and
expenses  arising  out of the  performance  of their  duties  to the  Portfolio.
Interestholders  in the  Portfolio  are  jointly  and  severally  liable for the
liabilities  and  obligations  of the  Portfolio in the event that the Portfolio
fails to satisfy such liabilities and obligations;  provided,  however, that, to
the extent  assets are available in the  Portfolio,  the  Portfolio  may,  under
certain circumstances,  indemnify  interestholders from and against any claim or
liability  to which such holder may become  subject by reason of being or having
been an interestholder in the Portfolio.  Additionally,  in the normal course of
business,  the Fund enters into agreements  with the service  providers that may
contain  indemnification  clauses.  The Portfolio's maximum exposure under these
arrangements  is unknown as this would  involve  future  claims that may be made
against the Portfolio that have not yet occurred.

H OTHER -- Investment  transactions  are  accounted  for on a trade-date  basis.
Dividend income is recorded on the ex-dividend date. However, if the ex-dividend
date has passed,  certain dividends from foreign  securities are recorded as the
Portfolio is informed of the  ex-dividend  date.  Interest income is recorded on
the accrual basis.

I EXPENSE  REDUCTION -- Investors Bank & Trust Company (IBT) serves as custodian
of the  Portfolio.  Pursuant  to the  custodian  agreement,  IBT  receives a fee
reduced by credits which are determined based on the average daily cash balances
the  Portfolio  maintains  with IBT.  All  credit  balances  used to reduce  the
Portfolio's  custodian  fees are  reported  as a  reduction  of  expenses on the
Statement of Operations.

J USE OF ESTIMATES -- The preparation of the financial  statements in conformity
with accounting  principles  generally  accepted in the United States of America
requires  management to make estimates and assumptions  that affect the reported
amounts of assets and  liabilities  at the date of the financial  statements and
the reported amounts of income and expense during the reporting  period.  Actual
results could differ from those estimates.

2    INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

The investment  adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned  subsidiary of Eaton Vance  Management  (EVM), as compensation  for
management and investment advisory services rendered to the Portfolio. Under the
advisory agreement,  BMR receives a monthly advisory fee in the amount of 0.625%
annually of average daily net assets of the Portfolio up to $500,000,000  and at
reduced rates as daily net assets exceed that level. Certain of the advisory fee
rate reductions are pursuant to an agreement  between the  Portfolio's  Board of
Trustees  and BMR.  Those  reductions  may not be changed  without  Trustee  and
interestholder  approval. For the year ended December 31, 2004, the advisory fee
was 0.43% of the  Portfolio's  average daily net assets.  BMR has also agreed to
reduce  the  investment  adviser  fee by an  amount  equal  to that  portion  of

                                       75
<Page>

commissions   paid  to  broker  dealers  in  execution  of  Portfolio   security
transactions that is consideration for third-party  research  services.  For the
year ended December 31, 2004, BMR waived $26,667 of its advisory fee. Except for
Trustees of the  Portfolio  who are not members of EVM's or BMR's  organization,
officers and Trustees  receive  remuneration for their services to the Portfolio
out of such  investment  adviser  fee.  Trustees  of the  Portfolio  who are not
affiliated  with the  Investment  Adviser may elect to defer receipt of all or a
percentage  of their annual fees in  accordance  with the terms of the Trustees'
Deferred Compensation Plan. For the year ended December 31, 2004, no significant
amounts have been deferred.

Certain  officers  and  Trustees  of the  Portfolio  are  officers  of the above
organizations.

3    INVESTMENT TRANSACTIONS

For the year ended December 31, 2004, purchases and sales of investments,  other
than  short-term   obligations,   aggregated   $534,673,041  and   $946,726,635,
respectively.  In  addition,  investments  having an  aggregate  market value of
$808,158,950  at dates of  withdrawal  were  distributed  in payment for capital
withdrawals.  During the year ended  December  31, 2004,  investors  contributed
securities with a value of $1,370,704,943.

4    FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION)

The cost and unrealized appreciation  (depreciation) in value of the investments
owned at December  31, 2004 as computed on a federal  income tax basis,  were as
follows:

<Table>
<S>                                     <C>
AGGREGATE COST                          $   4,833,216,291
---------------------------------------------------------
Gross unrealized appreciation           $  14,307,238,475
Gross unrealized depreciation                  (1,212,053)
---------------------------------------------------------

NET UNREALIZED APPRECIATION             $  14,306,026,422
---------------------------------------------------------
</Table>

5    FINANCIAL INSTRUMENTS

The Portfolio may trade in financial  instruments with off-balance sheet risk in
the normal course of its investing  activities to assist in managing exposure to
various market risks.  These  financial  instruments  include  written  options,
forward foreign currency exchange  contracts and financial futures contracts and
may  involve,  to a varying  degree,  elements  of risk in excess of the amounts
recognized for financial statement purposes.

The  notional  or  contractual  amounts  of  these  instruments   represent  the
investment the Portfolio has in particular classes of financial  instruments and
does not  necessarily  represent the amounts  potentially  subject to risk.  The
measurement of the risks  associated  with these  instruments is meaningful only
when all related and offsetting  transactions are considered.  The Portfolio did
not have any open obligations under these financial  instruments at December 31,
2004.

6    LINE OF CREDIT

The Portfolio  participates  with other  portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement with
a group of banks.  Borrowings will be made by the Portfolio solely to facilitate
the  handling of unusual  and/or  unanticipated  short-term  cash  requirements.
Interest  is  charged  to each  participating  portfolio  or fund  based  on its
borrowings at an amount above either the Eurodollar  rate or Federal Funds rate.
In  addition,  a fee  computed  at an annual  rate of 0.1% on the  daily  unused
portion of the line of credit is allocated  among the  participating  portfolios
and funds at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the year ended December 31, 2004.

7    RESTRICTED SECURITIES

At December 31, 2004, the Portfolio owned the following securities (representing
0.02%  of net  assets)  which  were  restricted  as to  public  resale  and  not
registered  under the  Securities  Act of 1933.  The securities are eligible for
resale  after  December 15,  2005,  except for the 25,000  shares of Sysco Corp.
which are eligible for resale after March 3, 2005.  The securities are valued at
fair value using methods  determined in good faith by or at the direction of the
Trustees.

<Table>
<Caption>
                                 DATE OF
COMMON STOCKS                    ACQUISITION      SHARES          COST       FAIR VALUE
----------------------------------------------------------------------------------------
<S>                                <C>            <C>        <C>            <C>
Broadcom Corp. - Class A           12/15/04       35,000     $  1,121,815   $  1,128,105

Progressive Corp.                  12/15/04       10,900          943,939        923,369

Sysco Corp.                          3/3/04       25,000          994,756        953,892

Sysco Corp.                        12/15/04       30,000        1,115,824      1,143,381
----------------------------------------------------------------------------------------
                                                             $  4,176,334   $  4,148,747
----------------------------------------------------------------------------------------
</Table>

                                       76
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


TO THE TRUSTEES AND INVESTORS OF TAX-MANAGED GROWTH PORTFOLIO:

We have audited the accompanying statement of assets and liabilities,  including
the portfolio of investments, of Tax-Managed Growth Portfolio (the Portfolio) as
of December 31, 2004, and the related  statement of operations for the year then
ended,  the statements of changes in net assets for each of the two years in the
period then ended and the  supplementary  data for each of the five years in the
period then ended.  These financial  statements and  supplementary  data are the
responsibility of the Portfolio's  management.  Our responsibility is to express
an opinion on these  financial  statements and  supplementary  data based on our
audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness of the Portfolio's  internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  Our procedures included confirmation
of  securities  owned  as of  December  31,  2004,  by  correspondence  with the
custodian.  We  believe  that our  audits  provide  a  reasonable  basis for our
opinion.

In our opinion,  the financial statements and supplementary data present fairly,
in all material respects, the financial position of Tax-Managed Growth Portfolio
at December 31, 2004, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
its  supplementary  data for each of the five years in the period  then ended in
conformity with accounting principles generally accepted in the United States of
America.

/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 18, 2005

                                       77
<Page>

BELMAR CAPITAL FUND LLC

          INVESTMENT ADVISER OF
          TAX-MANAGED GROWTH PORTFOLIO AND
          BELMAR CAPITAL FUND LLC
          Boston Management and Research
          The Eaton Vance Building
          255 State Street
          Boston, MA 02109


          MANAGER OF BELMAR
          REALTY CORPORATION
          Boston Management and Research
          The Eaton Vance Building
          255 State Street
          Boston, MA 02109


          MANAGER OF BELMAR CAPITAL FUND LLC
          Eaton Vance Management
          The Eaton Vance Building
          255 State Street
          Boston, MA 02109


          CUSTODIAN AND TRANSFER AGENT
          Investors Bank & Trust Company
          200 Clarendon Street
          Boston, MA 02116


          INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
          Deloitte & Touche LLP
          200 Berkeley Street
          Boston, MA 02116

                                       78
<Page>

                       THIS PAGE INTENTIONALLY LEFT BLANK

                                       79
<PAGE>

                                   SIGNATURES


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

                                          BELMAR CAPITAL FUND LLC
                                          (Registrant)


                                          By: /s/ Michelle A. Green
                                              -------------------------
                                              Michelle A. Green
                                              Duly Authorized Officer and
                                              Principal Accounting Officer


Date:  March 15, 2005



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



                                          By: /s/ Thomas E. Faust Jr.
                                              --------------------------
                                              Thomas E. Faust Jr.
                                              Chief Executive Officer


Date:  March 15, 2005



                                          By: /s/ Michelle A. Green
                                              -------------------------
                                              Michelle A. Green
                                              Chief Financial Officer


Date:  March 15, 2005

                                       80
<PAGE>

                                  EXHIBIT INDEX
                                  -------------

EXHIBIT NO.    DESCRIPTION
-----------    -----------

  3            Copy of Limited  Liability  Company  Agreement  of the Fund dated
               March  17,  2000  filed  as  Exhibit  3  to  the  Fund's  Initial
               Registration  Statement  on Form 10 and  incorporated  herein  by
               reference.  (Note:  the LLC Agreement  also defines the rights of
               the holders of Shares of the Fund.)

  3(a)         Copy of Amendment No. 1 to the Fund's Limited  Liability  Company
               Agreement  dated  December  30, 2003 filed as Exhibit 3(a) to the
               Fund's  Report on Form 10-K for the  period  ended  December  31,
               2003.

  4.1          Copy of Loan and  Security  Agreement  between  the Fund and DrKW
               Holdings,  Inc., as lender,  dated June 25, 2003 filed as Exhibit
               4.1 to the Fund's  Report on Form 10-Q for the period  ended June
               30, 2003 and incorporated herein by reference.

  4.2          Copy of Loan and Security Agreement between the Fund and MLMC, as
               Agent,  and MLCS dated June 25,  2003 filed as Exhibit 4.2 to the
               Fund's Report on Form 10-Q for the period ended June 30, 2003 and
               incorporated herein by reference.

  4.2(a)       Copy of Amendment No. 1 dated August 3, 2004 to Loan and Security
               Agreement among  the Fund,  Merrill Lynch Mortgage Capital, Inc.,
               as Agent,  the  Lenders  referred to  therein  and  Merrill Lynch
               Capital  Services, Inc. filed as  Exhibit 4.2(a)  to  the  Fund's
               Report on Form 10-Q for the  period ended  September 30, 2004 and
               incorporated herein by reference.

 10(1)         Copy of Investment Advisory and Administration  Agreement between
               the Fund and Boston  Management and Research dated March 10, 2000
               filed  as  Exhibit  10(1)  to  the  Fund's  Initial  Registration
               Statement on Form 10 and incorporated herein by reference.

 10(2)         Copy of Management  Agreement  between Belmar Realty  Corporation
               and Boston  Management and Research dated March 10, 2000 filed as
               Exhibit  10(2) to the Fund's  Initial  Registration  Statement on
               Form 10 and incorporated herein by reference.

 10(2)(a)      Copy of Amendment  No. 1 to  Management  Agreement between Belmar
               Realty Corporation and Boston Management and Research dated as of
               January 2, 2001 filed as Exhibit 10(2)(a) to the Fund's Report on
               Form  10-Q  for  the   period  ended   September   30,  2001  and
               incorporated herein by reference.

 10(3)         Copy of Investor  Servicing  Agreement between the Fund and Eaton
               Vance Distributors, Inc. dated December 15, 1999 filed as Exhibit
               10(3) to the Fund's Initial Registration Statement on Form 10 and
               incorporated herein by reference.

 10(4)         Copy of Custody and Transfer  Agency  Agreement  between the Fund
               and Investors  Bank & Trust Company dated December 15, 1999 filed
               as Exhibit 10(4) to the Fund's Initial Registration  Statement on
               Form 10 and incorporated herein by reference.

 21            List of Subsidiaries of the Fund filed herewith.

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

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

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

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

 99.3          Form N-CSR of Eaton Vance Tax-Managed  Growth Portfolio (File No.
               811-7409)   for  its  year   ended   December   31,   2004  filed
               electronically  with the Securities and Exchange Commission under
               the Investment Company Act of 1940 on March 8, 2004 (incorporated
               herein by reference pursuant to Rule 12b-32).

                                       81