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, 2003
                          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. [ ]

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,  2003  was  $1,727,055,579.74.
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:
                           ---------------------------

The  financial  statements  contained in  registrant's  Form 10-K filed with the
Securities and Exchange Commission on March 27, 2003 have been incorporated into
the following Parts of this report: Part II and Part IV.

                    The Exhibit Index is located on page 68.

<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......................................................2
            The Portfolio's Investment Objective and Policies..................3
            The Portfolio's Tax-Sensitive Management Strategies................3

          The Fund's Real Estate Investments through Belmar Realty
          Corporation..........................................................4
            Real Estate Joint Venture Investments..............................4
            Partnership Preference Units.......................................5
            Net Leased Properties .............................................6
            Organization of Belmar Realty and the
             Real Estate Joint Venture ........................................6

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

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

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

3       Legal Proceedings......................................................7

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

                                     PART II
                                     -------

5       Determining Net Asset Value, Market for Fund Shares
        and Related Shareholder Matters........................................8
          Market Information, Restrictions on Transfers and Redemption
          of Shares............................................................8
            Transfers of Fund Shares...........................................8
            Redemption of Fund Shares..........................................8
            Determining Net Asset Value........................................9
            Historic Net Asset Values ........................................10
          Record Holders of Shares of the Fund................................10
          Distributions.......................................................10
            Income and Capital Gain Distributions.............................10
            Special Distributions.............................................11


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

7       Management's Discussion and Analysis of Financial Condition
        and Results of Operations.............................................12
          Results of Operations...............................................12
            Performance of the Fund...........................................13
            Performance of the Portfolio......................................13
            Performance of Real Estate Investments............................14
            Performance of Interest Rate Swap Agreements......................15
          Liquidity and Capital Resources.....................................15
            Outstanding Borrowings............................................15
            Liquidity.........................................................15
          Off-Balance Sheet Arrangements......................................16
          The Fund's Contractual Obligations..................................16
          Critical Accounting Estimates.......................................17

7A      Quantitative and Qualitative Disclosures About Market Risk............19
          Quantitative Information About Market Risk..........................19
            Interest Rate Risk................................................19
          Qualitative Information About Market Risk...........................21
            Risks Associated with Equity Investing............................21
            Risks of Investing in Foreign Securities..........................21
            Risks of Certain Investment Techniques............................22
            Risks of Real Estate Investments..................................22
            Risks of Interest Rate Swap Agreements............................25
            Risks of Leverage.................................................25

8       Financial Statements and Supplementary Data...........................25

9       Changes in and Disagreements with Accountants on
        Accounting and Financial Disclosures..................................26

9A      Controls and Procedures...............................................26

                                    PART III
                                    --------

10      Directors and Executive Officers......................................27
          Management..........................................................27
          Compliance with Section 16(a) of the Securities Exchange
          Act of 1934.........................................................28
          Code of Ethics......................................................28

11      Executive Compensation................................................28

12      Security Ownership of Certain Beneficial Owners and Management........28
          Security Ownership of Certain Beneficial Owners.....................28
          Security Ownership of Management....................................28
          Changes in Control..................................................28

13      Certain Relationships and Related Transactions........................29
          The Fund's Investment Advisory and Administrative Fee...............29
          Belmar Realty's Management Fee......................................29
          The Portfolio's Investment Advisory Fee.............................29


<PAGE>
          Servicing Fees Paid by the Fund.....................................30
          Servicing Fees Paid by Belvedere Company............................30
          Distribution Fees Paid to EV Distributors...........................30
          Redemption Fees.....................................................30
          Certain Real Estate Investment Transactions.........................30

14      Principal Accountant Fees and Services................................31

                                     PART IV
                                     -------

15      Exhibits, Financial Statements and Reports on Form 8-K................31

APPENDIX A  ..................................................................33

FINANCIAL STATEMENTS..........................................................34

SIGNATURES  ..................................................................67

EXHIBIT INDEX.................................................................68


<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, 2003, 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  through Belmar Realty  Corporation"  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 precontribution gain. 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.  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.  Eaton  Vance  and  Boston
Management provide advisory,  administration  and/or management services to over
170 investment companies, as well as individual and institutional  investors. As
of December 31, 2003, Eaton Vance and its affiliates  managed  approximately $80
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 below.  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., a
wholly-owned subsidiary of Eaton Vance (EV Distributors), 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  (the 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 auditor 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, a Massachusetts  limited liability company (Belvedere 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  $17.6
billion as of December 31, 2003. As of December 31, 2003, the Fund's  investment
in the Portfolio  through  Belvedere  Company had a value of approximately  $2.0
billion  (equal  to  approximately  75.3%  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, 2003, the investment assets of Belvedere Company
consisted  exclusively  of  an  interest  in  the  Portfolio  with  a  value  of
approximately $11.1 billion. As of such date, the Fund owned approximately 17.8%
of Belvedere  Company's  outstanding  shares.  The other  investors in Belvedere
Company  include  six  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.

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  through
Belmar Realty  Corporation"  below),  it could not satisfy the conditions of the
1940 Act for investing directly in the Portfolio.

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,
2003, investors in the Portfolio included six investors in addition to Belvedere
Company and  Tax-Managed  Growth 1.0, each of which has acquired or is acquiring

                                        2
<PAGE>
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,
2003, Belvedere Company owned approximately 63.0% 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, 2003 are included in the Fund's
annual report to Shareholders  and  incorporated by reference into Item 8 below.
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, 2003,
see "Management's  Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7. For 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
primarily invests in common stocks of domestic and foreign growth companies that
are  considered  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 by purchasing  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 realizing short-term capital gains.

When a decision is made 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 a distribution of securities as described in
Item 5(a) under "Redemption of Fund Shares." As described in Item 5(a), settling
redemptions with securities may result in certain tax benefits to the Portfolio,
Belvedere Company, the Fund and the redeeming Shareholder.

To protect against price declines in securities  holdings with large accumulated
capital 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,  covered  short  sales,  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 may, 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 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

                                        3
<PAGE>
30 days after the end of the taxable year of the  Portfolio 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, holding periods required to receive tax-advantaged treatment of
qualified  dividends on a stock holding are suspended whenever the Portfolio has
an  option  or  contractual  obligation  to  sell  or  an  open  short  sale  of
substantially  identical stock, is the grantor of an option 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.  During 2003, the Portfolio held covered
short  positions  that were closed in January.  The  Portfolio did not otherwise
employ any of the techniques  described above on securities  holdings during the
year ended December 31, 2003.

THE FUND'S REAL ESTATE INVESTMENTS THROUGH BELMAR REALTY  CORPORATION.  Separate
from its investment in the Portfolio through Belvedere Company, the Fund invests
in certain  real  estate  investments  through  its  subsidiary,  Belmar  Realty
Corporation  (Belmar  Realty).  The  ownership  structure  of  Belmar  Realty is
described below under  "Organization  of Belmar Realty and the Real Estate Joint
Venture".  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, 2003, the consolidated real estate investments
of Belmar Realty totaled  approximately  $609.9 million and represented 23.4% 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.

At December  31, 2003,  Belmar  Realty  invested in a real estate joint  venture
(Real  Estate  Joint  Venture)  that is  controlled  by Belmar  Realty  and 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).  Belmar Realty also owns an interest in Bel Holdings,  LLC, a
limited  liability  company formed in 2003 and treated as a partnership  for tax
purposes (Bel Holdings). At December 31, 2003, Bel Holdings' sole investment was
Partnership  Preference  Units  issued by Vornado  Realty,  L.P.  Belmar  Realty
acquired  units of Bel Holdings for cash and at December 31, 2003 owned 29.6% of
Bel  Holdings'  outstanding  units.  Information  included  herein  about Belmar
Realty's Partnership  Preference Units includes the Partnership Preference Units
held  directly  by Belmar  Realty and  indirectly  through Bel  Holdings.  As of
December  31,  2003,   approximately  30.4%  of  the  consolidated  real  estate
investments of Belmar Realty was its investment in the Real Estate Joint Venture
and approximately 69.6% was investments in Partnership Preference Units.

Belmar  Realty may invest in other  types of real  estate  investments,  such as
interests in real properties subject to long-term leases (Net Leased Properties)
as described below. Belmar Realty may purchase real estate investments from, and
sell them to, other investment  funds sponsored by the Eaton Vance  organization
and REIT  subsidiaries  of such  investment  funds  that are  similar  to Belmar
Realty.  Certain of the Partnership  Preference  Units acquired by Belmar Realty
during  the year  ended  December  31,  2003  were  acquired  from one such REIT
subsidiary.  During the year ended  December 31, 2003,  Belmar  Realty also sold
Partnership  Preference  Units to another of such REIT  subsidiaries  and Belmar
Realty recognized gains of approximately  $7.2 million on that transaction.  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 Item 13 for a description  of the  management fee
payable by Belmar Realty to Boston Management.

REAL ESTATE JOINT VENTURE INVESTMENTS. At December 31, 2003, Belmar Realty owned
a controlling  interest in a Real Estate Joint Venture, Bel Alliance Apartments,
LLC (Bel  Apartments).  With  respect to the Real Estate Joint  Venture,  Belmar
Realty owns a majority  economic interest therein and controls a majority of its
board of managers.  Belmar Realty's approval is required for all major decisions
affecting the Real Estate Joint Venture.

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 a property management fee for the services rendered to such
properties.  For the year ended  December 31,  2003,  property  management  fees
relating to real  properties  held  through the Real Estate  Joint  Venture were
approximately $1.3 million.

                                        4
<PAGE>
At December 31, 2003, the assets of the Real Estate Joint Venture consisted of a
total of 19 multifamily  residential communities acquired from or in conjunction
with  the  Operating  Partner  of the Real  Estate  Joint  Venture.  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 a  subordinated  preferred  return of the
Operating Partner.

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.  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.  At acquisition,  Belmar Realty's equity  investment in Bel
Apartments was approximately $39.4 million.

A board of managers  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 Bel Apartment's board
of  managers.  The persons  serving as  managers on behalf of Belmar  Realty are
employees of Boston Management.  See "Directors and Executive  Officers" in Item
10. 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   REIT   subsidiaries   of   other
similarly-structured investment funds sponsored by the Eaton Vance organization.
Eaton Vance has no financial interest in the Real Estate Joint Venture.

The Operating  Partner of Bel Apartments is Alliance GD GT, LLC, an affiliate of
Alliance  Holdings  LLC  (Alliance).  Alliance,  a  privately  owned real estate
company with management operating headquarters in Houston,  Texas, is one of the
largest  owners and  operators of  multifamily  residential  communities  in the
United States. Alliance specializes in middle-income,  market-rent  communities,
predominantly  in the  Southeastern  and  Southwestern  portions of the country.
Alliance  maintains  regional  management  and  construction  offices in Dallas,
Texas,  Greenville,  South Carolina and Charlotte,  North Carolina and currently
operates more than 214  communities,  with 63,500  apartment units in 16 states.
Alliance owns 37% of the issued and outstanding shares of Bel Apartments. Belmar
Realty owns the balance of such shares.

The  Real  Estate  Joint  Venture  includes  a  buy/sell  provision  that can be
exercised by either Belmar Realty or the Operating  Partner after a fixed period
of  years.  Pursuant  to the  buy/sell  provision  entered  into at the time Bel
Apartments was established, either Belmar Realty or the Bel Apartments Operating
Partner can give notice on or after  September 8, 2010 either to buy the other's
equity  interest  in Bel  Apartments  or to sell its own equity  interest in Bel
Apartments.

A  purchase  or sale  pursuant  to the  buy/sell  provision  would  be made at a
negotiated price. The agreement  containing the buy/sell provision applicable to
the Real Estate Joint Venture  continues  indefinitely,  but could be terminated
upon the receipt of the requisite approval of the owners of the voting interests
in the Real Estate Joint  Venture.  The sale to Belmar  Realty by the  Operating
Partner of the Operating  Partner's  interest in Bel Apartments would not affect
the REIT  qualification  of Bel Apartments.  If Belmar Realty were to dispose of
its interest in the Real Estate Joint Venture pursuant to the buy/sell provision
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  that are affiliated with publicly traded REITs.  The assets of the
partnerships that issued the Partnership Preference Units owned by Belmar Realty
on December 31, 2003 consisted of direct or indirect ownership interests in real
properties,  including  manufactured home communities,  multifamily  properties,
office and  industrial  properties,  self-storage  facilities,  regional  malls,
community  shopping  centers  and,  in the  case of one  issuer,  a  diversified
portfolio of properties. The Partnership Preference Units owned by Belmar Realty
as of  December  31,  2003  are  described  in Item  7A and in the  consolidated
portfolio  of  investments   included  in  the  Fund's  consolidated   financial
statements, which are incorporated by reference into Item 8. 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
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.

                                        5
<PAGE>
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  issues of  Partnership  Preference  Units is or will be  registered
under the  Securities  Act and each  issue is thus  subject to  restrictions  on
transfer.

NET LEASED PROPERTIES.  In January, 2004, Belmar Realty invested in a 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  wholly-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,  as  described  in "Risks of Real  Estatement  Investment"  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  the owner of the Net Leased Property
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 are
deferred  until the property is sold or re-leased  following  the initial  lease
term.

ORGANIZATION  OF BELMAR REALTY AND THE REAL ESTATE JOINT VENTURE.  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 Belmar Realty's common stock at all times.  Belmar Realty
and the Operating  Partner own all of the common shares or similar  interests 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 approximately 105
charitable  organizations  that  received the  preferred  shares as gifts.  Each
charitable  organization  that  received  preferred  stock  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  suggestions  from its employees or the
Operating  Partner.  As of December 31, 2003,  the total value of the  preferred
shares  outstanding  of each of Belmar Realty and Bel  Apartments  was $210,000.
Dividends on preferred  shares are cumulative and payable annually at a dividend
rate of 8% per year. The dividends  paid on preferred  shares have priority over
payments on common shares.  For the year ended December 31, 2003,  Belmar Realty
paid  or  accrued  distributions  to  preferred  shareholders  of  $16,800.  Bel
Apartments made no distributions to preferred shareholders during the year.

FUND  BORROWINGS.  To finance its real estate  investments  held through  Belmar
Realty, 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  Bel
Apartments,  and expires in June 2010. At December 31, 2003, the total principal
amount  outstanding  under the Credit  Facility was $513.0  million.  The Credit
Facility  is also  used  to  provide  for  selling  commissions,  organizational
expenses  and  any  short-term  liquidity  needs  of  the  Fund.  Under  certain
circumstances,  the Fund may  increase  the size of the Credit  Facility and the
amount of outstanding borrowings thereunder.

Borrowings under the DrKW Credit Facility accrue interest at a rate of one-month
LIBOR plus 0.20% per annum.  As of December  31,  2003,  outstanding  borrowings
under the DrKW Credit Facility totaled $513.0 million.

The Fund may borrow up to $118.5  million  under the MLMC  Credit  Facility,  of
which up to $10  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, 2003, there were no outstanding  borrowings or letters
of credit  issued  under the MLMC Credit  Facility.  The unused loan  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.

                                        6
<PAGE>
Obligations under the Credit Facility are without recourse to Fund Shareholders.
As  described  above,  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 Fund Shareholders,  Belmar Realty and
the Fund, as described in "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 Belmar Realty's equity in
its 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 and provide for the Fund to make  payments to MLCS at
fixed rates averaging  4.54%.  See Note 7 to the Fund's  consolidated  financial
statements incorporated by reference into Item 8.

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 adviser).  The Fund's  officers are employees of Eaton Vance.
Eaton Vance,  Boston  Management and EV Distributors  are indirect  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 noted  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, 2003, the assets of the Fund  represented
approximately 3.3% 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.  Also  investing  in the
Portfolio are other  investment  companies  sponsored by Eaton Vance.  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 the REIT subsidiaries of
other funds similar in purpose to the Fund that are sponsored by the Eaton Vance
organization. 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 include an
allocation  of the  original  costs  incurred  in  creating  and  acquiring  the
transferred  assets.  Real estate  investments  are often difficult to value and
others could in good faith arrive at valuations  different  from those of Boston
Management.

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

The Fund does not own any physical  properties,  other than  indirectly  through
Belmar  Realty's  investments.  As of  December  31,  2003,  Belmar  Realty held
investments  in  Partnership  Preference  Units of ten issuers.  At December 31,
2003, Belmar Realty owned majority interests in Bel Apartments, whose assets are
reflected in the consolidated  financial  statements of the Fund. Bel Apartments
owns 19 multifamily  residential  properties  located in eight states (Virginia,
Missouri, North Carolina, South Carolina, Nevada, Florida, Georgia and Texas).

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

Although in the ordinary course of business,  the Fund, Belmar Realty and Belmar
Realty's  controlled  subsidiary may become involved in legal  proceedings,  the
Fund is not aware of any material pending legal proceedings to which any of them
is subject.

                                        7
<PAGE>
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, 2003.


                                     PART II
                                     -------

ITEM 5.  DETERMINING  NET  ASSET  VALUE,  MARKET  FOR FUND  SHARES  AND  RELATED
         SHAREHOLDER MATTERS.
--------------------------------------------------------------------------------

This Item and other Items in this report contain summaries of certain provisions
contained  in the  Limited  Liability  Company  Agreement  of the Fund  (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 for 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.

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
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

                                        8
<PAGE>
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  will  ordinarily  be 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 Real Estate Joint  Ventures,  Partnership  Preference  Units or
other real estate  investments held by Belmar Realty 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 Fund  Shareholders.  No  redemption  fee is  payable  in the  event of a
compulsory  redemption,  including  those  arising as the  result of  applicable
anti-money laundering requirements.

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.

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 fair
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 System generally are
valued 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.  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

                                        9
<PAGE>
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.

The daily  valuation of foreign  securities  held by the Portfolio  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 NYSE.  The Portfolio may rely on an independent  fair  valuation  service in
adjusting  the  valuations  of  foreign   securities.   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. 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,  as  investment  adviser  to Belmar  Realty,  after
consideration  of relevant  factors,  data and  information.  The procedures for
valuing  Belmar  Realty's  assets  are  described  under  "Critical   Accounting
Estimates"  in Item 7 and under "Risks of Real Estate  Investments"  in Item 7A.
Boston  Management  values the Fund's interest rate swap  agreements  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 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, 2003 and 2002,  the closing NAV on the last  business  day of each
full quarter, and the percentage change in NAV during each such quarter.

<TABLE>
                                                     NAV at            Quarterly %
Quarter Ended       High NAV        Low NAV        Quarter End       Change in NAV(1)
-------------       --------        -------        -----------       ----------------
<S>               <C>             <C>             <C>                 <C>
  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%
  12/31/02           $73.16          $62.79          $69.87                 5.75%
   9/30/02           $77.71          $63.11          $66.07               -15.67%
   6/30/02           $88.25          $76.72          $78.35               -11.31%
   3/31/02           $90.50          $82.92          $88.34                 1.11%
</TABLE>

(1)  Past performance is no guarantee of future results.  Investment  return and
     principal  value will fluctuate so that Shares,  if 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 and Results of Operations" in Item 7.

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

As of March 1, 2004, there were 745 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%
(reduced  from 22% to reflect the reduction in federal  long-term  capital gains
rates) of the  amount of its net  realized  capital  gains,  if any,  other than
precontribution  gain  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  Company and,  indirectly,  the  Portfolio.  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

                                       10
<PAGE>
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  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  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.
The Fund made no distributions in 2002.

SPECIAL DISTRIBUTIONS.  In addition to the income and capital gain distributions
described  above,  the Fund also  makes  distributions  whenever  a  Shareholder
recognizes a precontribution  gain (other than precontribution gain 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   will  be  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.  For the years ended  December 31, 2003 and 2002,  the Fund made no
Special Distributions.

                                       11
<PAGE>
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, 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 incorporated by reference in Intem 8. The
other consolidated data referred to below is as of each period end.

<TABLE>
                                     Year Ended            Year Ended              Year Ended              Period Ended
                                     December 31, 2003     December 31, 2002(1)    December 31, 2001(1)    December 31, 2000(1)
                                     -----------------     --------------------    --------------------    --------------------
<S>                                  <C>                   <C>                     <C>                     <C>
Total investment income              $   94,906,482          $   99,814,835           $  103,489,725           $   53,330,719
Interest expense                     $   22,974,061          $   28,506,573           $   45,447,387           $   25,969,680
Net expenses (including interest
  expense)                           $   50,746,633          $   56,644,137           $   76,754,182           $   39,649,034
Net investment income                $   43,724,019          $   42,746,644           $   26,515,171           $   13,353,048
Minority interests in net income of
  controlled subsidiaries            $     (435,830)         $     (424,054)          $     (220,372)          $     (328,637)
Net realized gain (loss)             $    5,911,089          $  (41,522,684)          $  (35,955,721)          $    8,272,294
Net change in unrealized
  appreciation (depreciation)        $  362,154,142          $ (417,581,832)          $ (230,675,625)          $  (74,236,068)
Net increase (decrease) in net
  assets from operations             $  411,789,250          $ (416,357,872)          $ (240,116,175)          $  (52,610,726)
Total assets                         $2,611,939,419          $2,445,639,296           $2,967,430,657           $3,325,479,191
Loan payable                         $  513,000,000          $  596,500,000           $  613,500,000           $  613,500,000
Mortgages payable                    $  161,157,192          $  162,461,900           $  175,470,843           $  176,647,796
Net assets                           $1,920,611,857          $1,620,229,805           $2,108,684,133           $2,457,715,428
Shares outstanding                       22,261,334              23,190,678               24,134,504               25,122,311
Net asset value and redemption
  price per Share                    $        86.28          $        69.87           $        87.37           $        97.83
Net increase (decrease) in net
  assets from operations per Share   $        18.11          $       (17.50)          $        (9.67)          $        (1.87)
Distribution paid per
  Share(2)                           $         1.70(3)(4)    $         0.00(3)        $         0.79           $         0.30
</TABLE>

(1)  Certain  amounts  have been  reclassified  to conform with the current year
     presentation. The Fund commenced operations on March 17, 2000.

(2)  The Fund also makes Special Distributions, which are not made on a pro rata
     basis. See Item 5(c). During the year or period ended December 31, 2001 and
     2000,  the Fund made Special  Distributions  of $0.073 and $0.03 per Share,
     respectively.

(3)  On January 17,  2003,  the Fund made a  distribution  of $1.70 per Share to
     Shareholders of record on January 16, 2003.

(4)  On January 14,  2004,  the Fund made a  distribution  of $1.15 per Share to
     Shareholders of record on January 13, 2004.

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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 BELOW.

The  following  discussion  should  be  read  in  conjunction  with  the  Fund's
consolidated  financial  statements and related notes  incorporated by reference
into Item 8.

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

Increases and decreases in the Fund's net asset value per Share are derived from
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

                                       12
<PAGE>
subtracting  the  Fund's  total  expenses  from its  investment  income and then
deducting  the  minority  interest in net income of Belmar  Realty's  controlled
subsidiary.  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 subsidiary,  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,   property  management  fees,
distribution and servicing fees, interest expense from mortgages owned by Belmar
Realty's  controlled  subsidiary,  interest  expense  on  the  Credit  Facility,
property and  maintenance  expenses and property  taxes and  insurance  expenses
relating to the properties owned by Belmar Realty's controlled  subsidiary,  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  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.

The realized and unrealized  gains and losses on  investments  and interest rate
swap agreements 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 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.

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 Standard & Poor's 500 Composite Index
(the S&P 500) as the  Fund's  primary  performance  benchmark.  The S&P 500 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 Belmar Realty's equity in its 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, 2003 was 26.48%.  This
return  reflects 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 had a total return of 28.67% over the same period.  The
combined impact on performance of the Fund's  investment  activities  outside of
the Portfolio was positive for the year ended December 31, 2003. The performance
of the Fund exceeded that of the Portfolio by approximately 2.60% for the year.

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 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,
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%.


(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
     reinvested.  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. It is not possible to invest directly in an Index.

                                       13
<PAGE>
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.  As in 2002,  lack of  earnings
visibility and unattractive valuations caused Boston Management, the Portfolio's
investment  adviser,  to remain  cautious on the  technology  sector.  A similar
rationale  prompted  a  de-emphasis  of  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 the past year. Looking forward,  Boston Management  believes the economic
recovery will continue at a  sustainable  pace,  and that the market will better
reward quality companies that can consistently deliver earnings. The longer-term
success of the Portfolio will be determined by the  performance  of U.S.  equity
markets  and the  ability  of  Boston  Management's  research  staff to  deliver
superior  stock  selection  versus the  Portfolio's  benchmark.  Higher  quality
investments are gradually  gaining  strength in the market,  and the Portfolio's
investment  focus  will  continue  to  be  in  companies  with  strong  business
franchises and solid long-term earnings prospects.

PERFORMANCE OF REAL ESTATE INVESTMENTS.  The Fund's real estate investments held
through  Belmar  Realty  include  Partnership  Preference  Units and a  majority
interest in a Real Estate  Joint  Venture.  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  an   interest  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 by Belmar  Realty  and by the  purchase  of  Partnership
Preference Units in 2003. 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 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 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.

In February 2004, Belmar Realty sold (or experienced  scheduled  redemptions of)
certain  Partnership  Preference  Units totaling  approximately  $213.5 million,
recognizing  gains of  approximately  $30.5  million  (including  sales to other
investment funds advised by Boston Management).

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%. This decrease in rental income  resulted
primarily from increased rent concessions  and/or reduced apartment rental rates
and lower occupancy levels at properties owned by the Real Estate Joint Venture.

                                       14
<PAGE>
Property  operating  expenses  totaled $17.9 million for each of the years ended
December 31, 2003 and December 31, 2002 (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). While the U.S. economy showed signs of strength during
the year ended December 31, 2003, significant employment growth has not occurred
in most markets and low interest rates have  contributed to continued  apartment
move-outs (due to new home purchases) and ongoing development of new properties.
As a result,  Boston  Management,  Belmar  Realty's  manager,  expects that real
estate operating results in 2004 will be modestly below the levels of 2003.

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 is 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 estimated  income  levels to determine  the value of a real
estate  investment.  The Fund saw unrealized  depreciation in the estimated fair
value of its other real  estate  investments  (which  includes  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.

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 impact on 2002 Fund  performance  from
changes in swap  valuations  was due primarily to a decline in swap rates during
the year.

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.  As of  December  31,  2003,  the Fund had  outstanding
borrowings of $513.0 million and unused loan commitments of $118.5 million under
the Credit Facility. The Credit Facility is used primarily to finance the Fund's
equity in its real  estate  investments  and will  continue  to be used for such
purpose in the future.  The Credit  Facility may also be used for any short-term
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 for these purposes.

As of December 31, 2003, Bel Apartments had outstanding borrowings consisting of
fixed-rate secured mortgage debt obligations of $161.2 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, 2003, the Portfolio had cash and short-term investments totaling
$122.4  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,  2003.  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,  2003,  illiquid  assets  (consisting  of
restricted securities not available for current public sale) constituted 0.3% 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 buy/sell  arrangements with the
Operating Partner that may be exercised on or after September 8, 2010. See "Real
Estate Joint  Venuture  Investments"  under "The Fund's Real Estate  Investments
through  Belmar  Realty  Corporation"  in Item 1.  Transfers of Belmar  Realty's

                                       15
<PAGE>
interest in the Real Estate Joint  Venture to parties  other than the  Operating
Partner are restricted by terms of the operating management agreements, buy/sell
arrangements with the Operating Partner,  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 the 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, 2003, the
Fund did not have any such off-balance sheet arrangements.

(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, 2003:

<TABLE>
                                                                                        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)                                       $161,157,192    $ 1,382,577     $ 3,225,763  $ 3,775,747    $152,773,105
  Borrowings under Credit Facility(2)                    $513,000,000    $        --     $        --  $        --    $513,000,000
Purchase Obligations(3)
Other Long Term Liabilities:
   Interest Rate Swap Agreements(4)                      $114,372,475    $17,644,105     $35,288,211  $35,288,211    $ 26,151,948
------------------------------------------------------------------------------------------------------------------------------------
Total                                                    $788,529,667    $19,026,682     $38,513,974  $39,063,958    $691,925,053
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The rental  property  held by Belmar Realty is financed  through  mortgages
     issued to the Real Estate Joint  Venture.  The mortgages are secured by the
     underlying  rental property and is without  recourse to the other assets of
     the Fund or Belmar Realty. The mortgages mature in 2010 and 2027.  Mortgage
     obligations  cannot be prepaid or otherwise disposed of without incurring a
     substantial prepayment penalty or without the sale of the associated rental
     property.

(2)  To finance its real estate investments held through Belmar Realty, the Fund
     has  entered  into a Credit  Facility  with  $513.0  million of  borrowings
     outstanding  as of December 31, 2003.  The Credit  Facility is secured by a
     pledge of the Fund's assets,  excluding the assets of Bel  Apartments,  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, 2003,
     these fees equaled  approximately  1.10% 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 Belmar Realty's equity
     in its  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.

                                       16
<PAGE>
(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  notes  to
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) are 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 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. 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 performance;

     *    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,  2003,  the  estimated  fair value of the Fund's real estate
investments  represented  23.4% of the Fund's total  assets.  Adjusting  for the
minority  interest of the Operating  Partner of the Real Estate Joint Venture as
of December 31, 2003, the Fund's real estate  investments  represented  28.8% 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  obligations under the Credit
Facility  and  thereafter  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,  as manager of Belmar Realty,
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

                                       17
<PAGE>
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 may  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 multifamily  properties owned by such Real Estate Joint
Venture and an  allocation  of the equity value of the Real Estate Joint Venture
between the Fund and the  Operating  Partner.  Appraisals  of 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 years'  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 may
materially  impact the  estimated  fair value of the Fund's  Real  Estate  Joint
Venture.

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, as calculated by
a third party service provider. The service provider uses a financial model that
considers the (i) 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.  Interim valuations of Real Estate
Joint Venture assets may be adjusted to reflect  significant changes in economic
circumstances,  and the results of operations and distributions. If the estimate
of the  allocation of equity  interests in the Real Estate Joint Venture were to
change  (because,  for example,  the appraisers'  estimate 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  Real  Estate  Joint
Venture.

                                       18
<PAGE>
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
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 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 may materially impact the estimated fair value of the Fund's
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 Fund's  Credit  Facility and by  fixed-rate  secured
mortgage  debt  obligations  of  the  Real  Estate  Joint  Venture.  Partnership
Preference Units are fixed rate instruments whose values will generally increase
when interest  rates rise and decrease when  interest  rates fall.  The interest
rates on  borrowings  under the  Fund's  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 its borrowings  under the Credit  Facility used to
acquire Belmar Realty's equity in its 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 incorporated by reference into Item
8.

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

<TABLE>
                                                                                                                        Estimated
                                          2004         2005      2006-2007     2008       Thereafter        Total       Fair Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>       <C>           <C>        <C>               <C>         <C>
Rate sensitive liabilities:
---------------------------
Long-term debt:
---------------------------
Fixed-rate mortgages                                                                     $161,157,192   $161,157,192    $182,000,000

Average interest rate                                                                            8.50%          8.50%
---------------------------

                                       19
<PAGE>
                                                                                                                        Estimated
                                          2004         2005      2006-2007     2008       Thereafter        Total       Fair Value
------------------------------------------------------------------------------------------------------------------------------------
Variable-rate Credit Facility                                                            $513,000,000   $513,000,000    $513,000,000

Average interest rate                                                                            1.32%          1.32%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive derivative
financial instruments:
---------------------------
Pay fixed / receive variable
interest rate swap agreements                                                            $388,668,000   $388,668,000    $  2,090,845

Average pay rate                                                                                 4.54%          4.54%

Average receive rate                                                                             1.32%          1.32%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive investments:
---------------------------
Fixed-rate Partnership
Preference Units:
---------------------------
Cabot Industrial
Properties, L.P.,
8.625% Series B
Cumulative Redeemable
Preferred Units,
Callable 4/29/04,
Current Yield: 8.32%                   $55,831,200                                                      $ 55,831,200    $ 67,379,000

Camden Operating,
L.P., 7.00% Series B
Cumulative Redeemable
Perpetual Preferred
Units,
Callable 12/2/08,
Current Yield: 7.21%                                                        $54,424,145                 $ 54,424,145    $ 61,377,800

Essex Portfolio, L.P.,
7.875% Series B
Cumulative Redeemable
Preferred Units,
Callable 2/6/03,
Current Yield:8.17%(1)                 $11,997,050                                                      $ 11,997,050    $ 15,659,215

Essex Portfolio, L.P.,
9.30% Series D
Cumulative Redeemable
Preferred Units,
Callable 7/28/10,
Current Yield: 9.08%                                                                     $ 43,009,575   $ 43,009,575    $ 51,221,200

MHC Operating Limited
Partnership, 9% Series
D Cumulative
Redeemable Perpetual
Preference Units,
Callable 9/29/04,
Current Yield: 8.95%                   $20,544,240                                                      $ 20,544,240    $ 20,104,000

PSA Institutional
Partners, L.P., 9.50%
Series N Cumulative
Redeemable Perpetual
Preferred Units,
Callable 3/17/05,
Current Yield: 9.13%                                $64,418,165                                         $ 64,418,165    $ 66,430,000

                                       20
<PAGE>
                                                                                                                        Estimated
                                          2004         2005      2006-2007     2008       Thereafter        Total       Fair Value
------------------------------------------------------------------------------------------------------------------------------------
Prentiss Properties
Acquisition Partners,
L.P., 8.30% Series B
Cumulative Redeemable
Perpetual Preferred
Units,
Callable 6/25/03,
Current Yield: 8.45%                   $25,492,776                                                      $ 25,492,776    $ 32,599,524

Price Development
Company, L.P., 8.95%
Series B Cumulative
Redeemable Preferred
Partnership Units,
Callable 7/28/04,
Current Yield: 9.11%                   $20,085,760                                                      $ 20,085,760    $ 19,648,000

Regency Centers, L.P.,
9.125% Series D
Cumulative Redeemable
Preferred Units,
Callable 9/29/04,
Current Yield: 8.92%                   $12,924,525                                                      $ 12,924,525    $ 15,349,500

Sun Communities
Operating L.P., 8.875%
Series A Cumulative
Redeemable Perpetual
Preferred Units,
Callable 9/29/04,
Current Yield: 8.68%                   $44,052,800                                                      $ 44,052,800    $ 51,140,000

Vornado Realty, L.P.,
7% Series
D-10 Cumulative
Redeemable Preferred
Units, Callable
11/17/08,
Current Yield: 6.95%(2)                                                     $23,613,991                 $ 23,613,991    $ 23,872,204
</TABLE>

*    The investments listed reflect holdings as of December 31, 2003. The Fund's
     current holdings may differ.

(1)  On January 8, 2004, the call date was changed to 12/31/09.

(2)  As  described  under "The  Fund's Real Estate  Investments  through  Belmar
     Realty  Corporation  -  Partnership   Preference  Units",  Belmar  Realty's
     interest  in  these  Partnership  Preference  Units  is  held  through  Bel
     Holdings.

(b) QUALITATIVE INFORMATION ABOUT MARKET RISK.
----------------------------------------------

RISKS  ASSOCIATED  WITH  EQUITY  INVESTING.  The  value of Fund  Shares  may not
increase and may  decline.  The  performance  of the Fund  fluctuates.  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

                                       21
<PAGE>
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 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 make short sales of securities
provided that it holds an equal amount of the security sold short (or securities
convertible  into or  exchangeable  for an equal amount of the  securities  sold
short  without  payment of  additional  consideration)  or cash or other  liquid
securities in an amount equal to the current market value of the securities sold
short. The Portfolio 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  taxable  year of the  Portfolio  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.  There can be no assurance that  counterparties  will at all times be
willing to 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 Belmar  Realty'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,  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.

                                       22
<PAGE>
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. Belmar Realty's 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.
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.  Increases in interest rates and increases in the perceived riskiness of
such  units or  comparable  or  similar  securities  will  adversely  affect the
valuation of the  Partnership  Preference  Units.  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.  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  the  Real  Estate  Joint  Venture  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 will not be
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.

The debt of Bel Apartments 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 the Operating  Partner 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 based on
independent  valuations,  assuming an orderly  disposition  of assets,  that is,
other  than in a forced or  liquidation  sale.  Independent  valuations  include
property  appraisals   performed  by  appraisers  that  are  licensed  in  their
respective  states and not affiliated with Eaton Vance or the Operating  Partner
of the Real Estate Joint  Venture.  Such  appraisals are performed in accordance
with the Uniform Standards of Professional  Appraisal  Practice of the Appraisal
Standards  Board,  as well as the Code of  Professional  Ethics and Standards of
Professional  Appraisal Practice of the Appraisal  Institute (and other relevant
standards).

Detailed  investment  evaluations  are performed at least  annually and reviewed
periodically.  The value of the Real Estate Joint Venture is estimated using the
real  property  valuations  and an  allocation  of the equity  value of the Real
Estate Joint Venture  between  Belmar Realty and the Operating  Partner based on

                                       23
<PAGE>
the terms of the Real Estate Joint Venture.  Interim  valuations reflect results
of  operations  and  distributions,  and may be adjusted to reflect  significant
changes in economic  circumstances since the most recent independent  valuation.
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,
including,  but not limited  to, an orderly  disposition  of assets,  values may
differ from amounts ultimately realized.

Belmar Realty's investments in Net Leased Properties are subject to general real
estate market risks similar to Real Estate Joint Ventures. Net Leased Properties
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
Properties  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  Properties are generally  illiquid,  and the ongoing value of Belmar
Realty's  investments in Net Leased Properties is substantially  uncertain.  Net
Leased   Properties  are  stated  at  estimated  fair  values  based  on  annual
appraisals.  These appraisals are conducted by independent,  licensed appraisers
in a manner  similar to the  appraisals of  properties  owned by the Real Estate
Joint Ventures  (described  above).  Because the value of Net Leased  Properties
reflects in part the  creditworthiness of their principal tenants, any reduction
in the credit  standing of a major  tenant  could have an adverse  effect on the
appraised  value of a 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.  Tenants may also hold options
to purchase Net Leased Properties, including options to purchase at below market
levels.  The value received upon the  disposition of Net Leased  Properties 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  sales of Net Leased  Properties  are not
expected to occur for many years,  market conditions and other valuation factors
at the  time of  sale  cannot  be  predicted.  Since  valuations  of Net  Leased
Prporties  assume an  orderly  disposition  of  assets,  amounts  realized  in a
distressed  sale may differ  substantially  from stated  values.  Mortgage  debt
associated with Net Leased  Properties  normally  cannot be refinanced  prior to
maturity  without  substantial  penalties.  The terms of outstanding  leases and
mortgage debt  obligations and  restrictions on refinancing such debt will limit
Belmar Realty's ability to dispose of Net Leased Properties.

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.

Because all or substantially all of the rental payments on Net Leased Properties
generally is dedicated to servicing the  associated  mortgage  debt,  during the
initial  lease term Belmar Realty does not generate  significant  cash flow from
investments  in Net  Leased  Properties  to  offset  Belmar  Realty's  operating
expenses and the cost of Fund  borrowings used to finance Belmar Realty's equity
in the Net Leased  Properties.  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 Properties generally are deferred until the properties
are sold or re-leased following the initial lease term.

Fluctuations  in the value of Partnership  Preference  Units and Belmar Realty's
equity in the Real Estate  Joint  Venture and the Net Leased  Property  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

                                       24
<PAGE>
hedges entered into by the Fund. Changes in the value of real estate investments
not offset by changes in the valuation of interest rate swap agreements or other
interest rate hedges entered into by the Fund 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. See "Critical Accounting Estimates" in Item 7.

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 Bel  Apartments.
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 Fund's  consolidated  financial  statements  for the year ended December 31,
2003, together with the auditors' report thereon,  appearing on pages 34 through
66  hereof,  are  incorporated  herein by  reference.  The  Fund's  consolidated
financial statements and auditors report thereon for the year ended December 31,
2002,  appearing  on pages 30 through 92 of the Fund's  Form 10-K filed with the
Securities  and Exchange  Commission  on March 27, 2003,  are also  incorporated
herein by reference.  The Portfolio's audited financial statements accompany the
Fund's  consolidated  financial  statements and are also incorporated  herein by
reference.  The  following  is a  summary  of  unaudited  quarterly  results  of
operations of the Fund for the years ended December 31, 2003 and 2002.

<TABLE>
                                                                                       2003
                                                             -----------------------------------------------------------
                                                                First         Second         Third          Fourth
                                                               Quarter        Quarter       Quarter         Quarter
                                                             -----------------------------------------------------------
<S>                                                            <C>            <C>            <C>           <C>
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(1)                                       $ 11,700,588   $ 11,435,095   $10,276,573    $ 10,311,763
Net (decrease) increase in net assets from operations          $(56,441,928)  $214,324,671   $49,210,874    $204,695,633

Per share data:(2)
Investment income                                              $       1.06   $       1.06   $      1.00    $       1.01
Net investment income(1)                                       $       0.50   $       0.49   $      0.45    $       0.46
Net (decrease) increase in net assets from operations          $      (2.42)  $       9.25   $      2.15    $       9.12
</TABLE>

                                       25
<PAGE>
<TABLE>
                                                                                         2002
                                                               ------------------------------------------------------------
                                                                  First          Second          Third           Fourth
                                                                 Quarter        Quarter         Quarter         Quarter
                                                               ------------------------------------------------------------
<S>                                                              <C>           <C>             <C>             <C>
Investment income                                                $25,147,757   $  25,342,553   $  24,358,376    $24,966,149
Minority interest in net income of controlled subsidiaries       $  (114,392)  $     (97,540)  $    (155,365)   $   (56,757)
Net investment income(3)                                         $10,333,922   $  10,732,800   $  10,410,443    $11,269,479
Net increase (decrease) in net assets from operations            $23,339,084   $(238,084,568)  $(290,536,145)   $88,923,757

Per share data:(2)
Investment income                                                $      1.04   $        1.06   $        1.03    $      1.07
Net investment income(3)                                         $      0.43   $        0.45   $        0.44    $      0.48
Net increase (decrease) in net assets from operations            $      0.97   $       (9.97)  $      (12.34)   $      3.81
</TABLE>

(1)  Net investment  income is presented  without reduction for interest expense
     on swap agreements.  Such amounts were previously  presented as a reduction
     to net investment  income.  For the quarters ended March 31, 2003, June 30,
     2003 and September  30, 2003,  interest  expense on swap  agreements in the
     amounts  of  $9,198,945,   $9,551,052  and  $6,972,899,   respectively,  is
     presented  as a  realized  loss  (see  Note  2 to the  Fund's  consolidated
     financial statements incorporated herein by reference).

(2)  Based on average Shares outstanding.

(3)  Net investment  income is presented  without reduction for interest expense
     on swap agreements.  Such amounts were previously  presented as a reduction
     to net investment  income.  For the quarters ended March 31, 2002, June 30,
     2002,  September 30, 2002 and December 31, 2002,  interests expense on swap
     agreements  in the  amounts of  $10,197,831,  $9,840,142,  $10,118,324  and
     $10,575,138,  respectively,  is presented as a realized loss (see Note 2 to
     the  Fund's  consolidated  financial  statements   incorporated  herein  by
     reference).

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, conducted an evaluation of 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.
Based on that  evaluation,  the Chief  Executive  Officer  and  Chief  Financial
Officer  concluded  that the Fund's  disclosure  controls  and  procedures  were
effective.  There were no changes in the Fund's internal  control over financial
reporting  that occurred  during the quarter  ended  December 31, 2003 that have
materially  affected,  or are reasonably likely to materially affect, the Fund's
internal control over financial reporting.

As the Fund's manager, the complete and entire management, control and operation
of the Fund are vested in Eaton Vance.  The Fund's Chief  Executive  Officer and
Chief  Financial  Officer  intend to report to the Board of  Directors  of Eaton
Vance, Inc. (the sole trustee of Eaton Vance) 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.

                                       26
<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.  Alexander  to serve  indefinitely  as the  Fund's  Chief
Executive  Officer and Chief  Financial  Officer,  respectively,  on October 16,
2002.  Information about Mr. Faust appears below. Ms.  Alexander,  34, 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
investment companies managed by Eaton Vance or Boston Management.  Ms. Alexander
has been an employee  of Eaton  Vance since 1997.  As members of the Eaton Vance
organization,  Mr. Faust and Ms. Alexander 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 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 William M. Steul.  Mr. Steul is a senior  officer of Eaton Vance and, as
such, is not independent of Fund management. Information about 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,  James B.  Hawkes and Alan R.
Dynner,  each of whom is described  below.  William R. Cross,  Vice President of
Belmar  Realty,  is primarily  responsible  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. Mr. Faust,  Mr. Cross and
Mr.  Dynner serve as managers of the Real Estate Joint  Venture  owned by Belmar
Realty. Mr. Dynner is also Vice President and Secretary of the Real Estate Joint
Venture. Information about Mr. Dynner appears below.

As  disclosed  under "The Eaton Vance  Organization"  in Item 1, Eaton Vance and
Boston  Management are indirect  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 (62) 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.  (45) 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  investment  companies
managed by Eaton  Vance or Boston  Management.  Mr.  Faust has been  employed by
Eaton Vance since 1985.

                                       27
<PAGE>
Alan R. Dynner (63) 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 (61) 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, based solely
on a review of the copies of such reports furnished to the Fund, during the year
ended December 31, 2003 all Section 16(a) filing requirements applicable to such
persons and entities were complied with for such year, except that each of James
B. Hawkes, Alan R. Dynner and William S. Steul, in their capacities as Directors
and/or executive  officers of Eaton Vance, Inc., failed to file one Form 3. Each
such Form 3 reported no transactions in Fund Shares.

(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  compensation
from the Fund for services  provided to the Fund,  which is 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 five percent of the Shares of the Fund.

SECURITY OWNERSHIP OF MANAGEMENT.  As of March 1, 2004, Eaton Vance, the manager
of the Fund, beneficially owned 1,103.07 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, 2004.  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.

                                       28
<PAGE>
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,  2003 and 2002 in
connection with services rendered by Eaton Vance and its affiliates. Each fee is
described following the table.

<TABLE>
                                                                                 Year ended      Year ended
                                                                                December 31,    December 31,
                                                                                    2003            2002
--------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>           <C>
  Fund Advisory and Administrative Fees*                                         $1,277,921    $1,246,862
--------------------------------------------------------------------------------------------------------------
  Belmar Realty Management Fees*                                                 $4,060,122    $4,553,263
--------------------------------------------------------------------------------------------------------------
  Fund's Allocable Portion of the Portfolio's Advisory Fees**                    $7,634,035    $8,125,471
--------------------------------------------------------------------------------------------------------------
  Fund Servicing Fees                                                            $1,658,867    $1,825,665
--------------------------------------------------------------------------------------------------------------
  Fund's Allocable Portion of Belvedere Company's Servicing Fees                 $2,617,051    $2,795,415
--------------------------------------------------------------------------------------------------------------
  Fund Distribution Fees*                                                        $1,711,661    $1,847,235
--------------------------------------------------------------------------------------------------------------
  Redemption Fee paid by Redeeming Shareholders                                  $  340,087    $  293,328
--------------------------------------------------------------------------------------------------------------
  Aggregate Compensation Paid by the Fund to Eaton Vance and its
  Affiliates                                                                     $7,049,704    $7,647,360
--------------------------------------------------------------------------------------------------------------
</TABLE>

*    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,  2003 and 2002,  advisory  fees paid or
     payable by the Portfolio totaled $67,584,543 and $71,564,552, respectively.
     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.
     For the year ended December 31, 2002, Belvedere Company's allocable portion
     of that fee was $41,180,870, of which $8,125,471 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:

                                       29
<PAGE>
                                                    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%

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.).

REDEMPTION FEES.  Shares of the Fund redeemed within three years of issuance are
generally  subject to a redemption fee equal to 1% of the net asset value of the
Fund Shares  redeemed.  The redemption fee is payable to EV Distributors in cash
by the Fund on behalf of the redeeming Shareholder. No redemption fee is imposed
on Shares of the Fund held for at least three years, Shares acquired through the
reinvestment of Fund distributions,  Shares redeemed in connection with a tender
offer or other extraordinary corporate event involving securities contributed by
the redeeming Shareholder,  or Shares redeemed following the death of all of the
initial  owners  of  the  Shares  redeemed.  In  addition,  no  fee  applies  to
redemptions  made  pursuant to a systematic  redemption  plan  established  by a
Shareholder  with the Fund. No redemption  fees have been imposed since November
30, 2003.

CERTAIN REAL ESTATE INVESTMENT TRANSACTIONS.  During the year ended December 31,
2003,  Bel  Holdings  issued  units to Belmar  Realty  for  approximately  $35.0
million.  As of December  31,  2003,  each  investor in Bel  Holdings was a REIT
subsidiary  of an  investment  fund managed by Eaton Vance and advised by Boston
Management.  During  the year  ended  December  31,  2003,  Belmar  Realty  also
purchased  Partnership  Preference  Units of two issuers  from  Belcrest  Realty
Corporation (Belcrest),  a REIT subsidiary of another investment fund managed by
Eaton Vance and advised by Boston Management, for a total of approximately $40.6

                                       30
<PAGE>
million.  Belcrest  recognized  gains  of  approximately  $0.6  million  on  the
transactions.  Belmar  Realty  also sold  Partnership  Preference  Units of five
issuers to Belshire Realty  Corporation and Partnership  Preference Units of one
issuer to Belrose Realty  Corporation,  REIT  subsidiaries  of other  investment
funds managed by Eaton Vance and advised by Boston Management, for approximately
$57.0  million.  In  connection  with such  sales,  the Fund  realized  gains of
approximately  $7.2 million.  The purchase and sale prices for such  Partnership
Preference  Units  were  determined  in good  faith by Boston  Management  after
consideration of factors, data and information that it considered relevant.

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,  2003 and 2002 and fees  billed  for  other
services rendered by Deloitte & Touche LLP during those periods.

Year ended December 31,                                        2003       2002
--------------------------------------------------------------------------------
Audit fees                                                   $ 32,656   $ 22,300
Audit related fees(1)                                          35,040     34,255
Tax fees(2)                                                   109,774    231,460
All other fees(3)                                               4,200      4,200
                                                             -------------------
Total                                                        $181,670   $292,215
                                                             -------------------

(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.


                                     PART IV
                                     -------

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

(a)            The following is a list of all financial statements  incorporated
               by  reference  into this  report  from the Fund's Form 10-K filed
               March 27, 2003:

(1)  (i)       Consolidated Portfolio of Investments as of December 31, 2002

               Consolidated  Statement of Assets and  Liabilities as of December
               31, 2002

               Consolidated  Statement of Operations for the year ended December
               31, 2002

               Consolidated  Statements  of  Changes in Net Assets for the years
               ended December 31, 2002 and December 31, 2001

               Consolidated  Statement of Cash Flows for the year ended December
               31, 2002

               Financial Highlights for the year ended December 31, 2002

               Notes to Consolidated Financial Statements

               Independent Auditors' Report dated February 28, 2003

               Portfolio of Investments of  Tax-Managed  Growth  Portfolio as of
               December 31, 2002

               Statement  of  Assets  and  Liabilities  of  Tax-Managed   Growth
               Portfolio as of December 31, 2002

               Statement of Operations of Tax-Managed  Growth  Portfolio for the
               year ended December 31, 2002

               Statements  of  Changes  in  Net  Assets  of  Tax-Managed  Growth
               Portfolio for the years ended  December 31, 2002 and December 31,
               2001

                                       31
<PAGE>
               Supplementary  Data of Tax-Managed Growth Portfolio for the years
               ended  December 31, 2002,  December 31, 2001,  December 31, 2000,
               December 31, 1999,  the two month period ended December 31, 1998,
               and the year ended October 31, 1998

               Notes to Financial Statements

               Independent Auditors' Report dated February 14, 2003

     (ii)      The  following is a list of all financial  statements  filed as a
               part of this report:

               Consolidated Portfolio of Investments as of December 31, 2003

               Consolidated  Statement of Assets and  Liabilities as of December
               31, 2003

               Consolidated  Statement of Operations for the year ended December
               31, 2003

               Consolidated  Statements  of  Changes in Net Assets for the years
               ended December 31, 2003 and December 31, 2002

               Consolidated  Statement of Cash Flows for the year ended December
               31, 2003

               Financial Highlights for the year ended December 31, 2003

               Notes to Consolidated Financial Statements

               Independent Auditors' Report dated March 5, 2004

               Portfolio of Investments of  Tax-Managed  Growth  Portfolio as of
               December 31, 2003

               Statement  of  Assets  and  Liabilities  of  Tax-Managed   Growth
               Portfolio as of December 31, 2003

               Statement of Operations of Tax-Managed  Growth  Portfolio for the
               year ended December 31, 2003

               Statements  of  Changes  in  Net  Assets  of  Tax-Managed  Growth
               Portfolio for the years ended  December 31, 2003 and December 31,
               2002

               Supplementary  Data of Tax-Managed Growth Portfolio for the years
               ended  December 31, 2003,  December 31, 2002,  December 31, 2001,
               December 31, 2000 and December 31, 1999

               Notes to Financial Statements

               Independent Auditors' Report dated February 20, 2004

(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 68 hereof.

                                       32
<PAGE>
                                                                      Appendix A



Set forth  below is a chart  depicting  the  various  entities in which the Fund
invested  as of December  31,  2003.  Defined  terms used below have the meaning
ascribed to them in Item 1.





[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 Bel  Apartments.  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); and Bel  Apartments  is followed by
footnote (E). 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  and  investment  adviser 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.

                                       33
<PAGE>
BELMAR CAPITAL FUND LLC as of December 31, 2003
CONSOLIDATED PORTFOLIO OF INVESTMENTS

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 Capital)                         12,559,085   $  1,966,911,184
-------------------------------------------------------------------------------------

TOTAL INVESTMENT IN BELVEDERE CAPITAL
   (IDENTIFIED COST, $2,352,813,010)                                 $  1,966,911,184
-------------------------------------------------------------------------------------

PARTNERSHIP PREFERENCE UNITS -- 16.4%

<Caption>
SECURITY                                                UNITS        VALUE
-------------------------------------------------------------------------------------
<S>                                                      <C>         <C>
Bel Holdings, LLC +(1)(2)                                  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+(2)                                         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+(2)                                         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+(2)(3)                                         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+(2)                                         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+(2)                           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+(2)                                         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+(2)                           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+(2)               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+(2)                                  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+(2)               2,000,000         51,140,000
-------------------------------------------------------------------------------------

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

<PAGE>
OTHER REAL ESTATE INVESTMENTS -- 7.1%

<Caption>
DESCRIPTION                                                          VALUE
-------------------------------------------------------------------------------------
<S>                                                                  <C>
Rental property(2)(4)                                                $    185,138,810
-------------------------------------------------------------------------------------

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

SHORT-TERM INVESTMENTS -- 0.7%

<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, $16,973,476)                                  $     16,973,476
-------------------------------------------------------------------------------------

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

+    Security exempt from registration under the Securities Act of 1933. At
     December 31, 2003, the value of these securities totaled $424,780,443, or
     22.1% of net assets.
(1)  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.
(2)  Investment valued at fair value using methods determined in good faith by
     or at the direction of the Manager of Belmar Realty Corporation.
(3)  On January 8, 2004 the call date was changed to 12/31/09.
(4)  Rental property represents nineteen multi-family residential properties
     located in eight states. None of the individual properties represent more
     than 5% of net assets.

                See notes to consolidated financial statements

                                       34
<Page>

BELMAR CAPITAL FUND LLC as of December 31, 2003
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

AS OF DECEMBER 31, 2003

<Table>
<S>                                                                 <C>
ASSETS

Investments, at value (identified cost, $2,976,120,603)             $   2,593,803,913
Cash                                                                        6,605,096
Escrow deposits -- restricted                                               3,817,390
Open interest rate swap agreements, at value                                2,090,845
Distributions and interest receivable                                       1,960,318
Other assets                                                                3,661,857
-------------------------------------------------------------------------------------
TOTAL ASSETS                                                        $   2,611,939,419
-------------------------------------------------------------------------------------

LIABILITIES

Loan payable -- New Credit Facility                                 $     513,000,000
Mortgages payable                                                         161,157,192
Payable for Fund Shares redeemed                                            1,361,403
Distributions payable to minority shareholders                                 16,800
Security deposits                                                             744,420
Swap interest payable                                                         242,283
Notes payable to minority shareholder                                         565,972
Accrued expenses:
   Interest expense                                                         1,423,780
   Property taxes                                                           3,281,589
   Other expenses and liabilities                                           1,586,790
Minority interests in controlled subsidiaries                               7,947,333
-------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                   $     691,327,562
-------------------------------------------------------------------------------------
NET ASSETS FOR 22,261,334 FUND SHARES OUTSTANDING                   $   1,920,611,857
-------------------------------------------------------------------------------------

SHAREHOLDERS' CAPITAL                                               $   1,920,611,857
-------------------------------------------------------------------------------------

NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE (NOTE 4)

($1,920,611,857 DIVIDED BY 22,261,334 FUND SHARES OUTSTANDING)      $           86.28
-------------------------------------------------------------------------------------
</Table>

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2003

<Table>
<S>                                                                 <C>
INVESTMENT INCOME

Dividends allocated from Belvedere Capital
   (net of foreign taxes, $301,745)                                 $      25,889,334
Interest allocated from Belvedere Capital                                     410,423
Expenses allocated from Belvedere Capital                                 (10,585,603)
-------------------------------------------------------------------------------------
Net investment income allocated from Belvedere Capital              $      15,714,154
Distributions from Partnership Preference Units                            44,949,869
Rental income                                                              33,969,790
Interest                                                                      272,669
-------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME                                             $      94,906,482
-------------------------------------------------------------------------------------

EXPENSES

Investment advisory and administrative fees                         $       7,049,704
Property management fees                                                    1,342,305
Distribution and servicing fees                                             3,370,528
Interest expense on mortgages                                              14,303,813
Interest expense on credit facilities                                       8,670,248
Property and maintenance expenses                                          11,853,270
Property taxes and insurance                                                4,696,646
Miscellaneous                                                               1,171,780
-------------------------------------------------------------------------------------
TOTAL EXPENSES                                                      $      52,458,294
-------------------------------------------------------------------------------------
Deduct --
   Reduction of investment advisory and administrative fees         $       1,711,661
-------------------------------------------------------------------------------------

<PAGE>
NET EXPENSES                                                        $      50,746,633
-------------------------------------------------------------------------------------
Net investment income before minority interests in net income of
   controlled subsidiary                                            $      44,159,849
Minority interests in net income of controlled subsidiary                    (435,830)
-------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                               $      43,724,019
-------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain (loss) --
   Investment transactions from Belvedere Capital
      (identified cost basis)                                       $      22,323,706
   Investment transactions in Partnership Preference Units
      (identified cost basis)                                              39,965,989
   Interest rate swap agreements                                          (56,378,606)
-------------------------------------------------------------------------------------
NET REALIZED GAIN                                                   $       5,911,089
-------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
   Investment in Belvedere Capital (identified cost basis)          $     343,808,846
   Investments in Partnership Preference Units
      (identified cost basis)                                             (12,322,752)
   Investment in other real estate (net of minority interest
      in unrealized loss of controlled subsidiary of $1,889,589)          (18,480,109)
   Interest rate swap agreements                                           49,148,157
-------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)                $     362,154,142
-------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN                                    $     368,065,231
-------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS                          $     411,789,250
-------------------------------------------------------------------------------------
</Table>

                See notes to consolidated financial statements

                                       35
<Page>

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
INCREASE (DECREASE)                                  YEAR ENDED          YEAR ENDED
IN NET ASSETS                                        DECEMBER 31, 2003   DECEMBER 31, 2002
------------------------------------------------------------------------------------------
<S>                                                  <C>                 <C>
Net investment income                                $      43,724,019   $      42,746,644
Net realized gain (loss) from
   investment transactions                                   5,911,089         (41,522,684)
Net change in unrealized appreciation
   (depreciation) of investments                           362,154,142        (417,581,832)
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
   FROM OPERATIONS                                   $     411,789,250   $    (416,357,872)
------------------------------------------------------------------------------------------
Transactions in Fund Shares --
   Net asset value of Fund Shares issued to
      Shareholders in payment of
      distributions declared                         $      18,603,373   $              --
   Net asset value of Fund
      Shares redeemed                                      (90,690,145)        (72,096,456)
------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM FUND
   SHARE TRANSACTIONS                                $     (72,086,772)  $     (72,096,456)
------------------------------------------------------------------------------------------
Distributions --
   Distributions to Shareholders                     $     (39,320,426)  $              --
------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                  $     (39,320,426)  $              --
------------------------------------------------------------------------------------------

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

NET ASSETS

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

CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                         YEAR ENDED
INCREASE (DECREASE) IN CASH                                              DECEMBER 31, 2003
------------------------------------------------------------------------------------------
<S>                                                                      <C>
Cash Flows From (For) Operating Activities --
Net increase in net assets from operations                               $     411,789,250
Adjustments to reconcile net increase in net assets from operations
   to net cash flows from operating activities --
   Net investment income allocated from Belvedere Capital                      (15,714,154)
   Decrease in escrow deposits                                                     766,420
   Decrease in receivable for investments sold                                  29,285,540
   Increase in other assets                                                        (52,977)
   Decrease in distributions and interest receivable                               496,052
   Decrease in interest payable for open swap agreements                        (1,454,186)
   Decrease in security deposits, accrued interest and accrued
      other expenses and liabilities                                            (1,110,446)
   Increase in accrued property taxes                                              138,152
   Proceeds from sales of Partnership Preference Units                         228,888,304
   Purchases of Partnership Preference Units                                   (75,672,618)
   Improvements to rental property                                              (1,567,752)
   Net increase in investment in Belvedere Capital                             (25,866,250)
   Interest incurred on interest rate swap agreements                          (29,626,765)
   Payment for termination of interest rate swap agreements                    (26,751,841)
   Increase in short-term investments                                          (16,973,476)
   Minority interests in net income of controlled subsidiary                       435,830
   Net realized gain from investment transactions                               (5,911,089)
   Net change in unrealized (appreciation) depreciation of
      investments                                                             (362,154,142)
------------------------------------------------------------------------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES                                 $     108,943,852
------------------------------------------------------------------------------------------
Cash Flows From (For) Financing Activities --
   Repayment of New Credit Facility                                      $     (83,500,000)
   Payments on mortgages                                                        (1,304,708)
   Payments for Fund Shares redeemed                                            (3,265,017)
   Distributions paid to Shareholders                                          (20,717,053)
   Capital contributed to controlled subsidiary                                    298,926
------------------------------------------------------------------------------------------
NET CASH FLOWS FOR FINANCING ACTIVITIES                                  $    (108,487,852)
------------------------------------------------------------------------------------------

NET INCREASE IN CASH                                                     $         456,000
------------------------------------------------------------------------------------------

CASH AT BEGINNING OF YEAR                                                $       6,149,096
------------------------------------------------------------------------------------------

CASH AT END OF YEAR                                                      $       6,605,096
------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE AND NON-CASH
INVESTING AND FINANCING ACTIVITIES

Interest paid on loan -- credit facilities                               $       8,248,335
Interest paid on mortgages                                               $      13,933,726
Interest paid on swap agreements                                         $      31,080,951
Market value of securities distributed in payment of redemptions         $      86,063,725
------------------------------------------------------------------------------------------
</Table>

                See notes to consolidated financial statements

                                       36
<Page>

FINANCIAL HIGHLIGHTS

<Table>
<S>                                                            <C>
FOR THE YEAR ENDED DECEMBER 31, 2003

Net asset value -- Beginning of year                           $   69.870
-------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS

Net investment income(6)                                       $    1.905
Net realized and unrealized gain                                   16.205
-------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS                                   $   18.110
-------------------------------------------------------------------------

DISTRIBUTIONS

Distributions to Shareholders                                  $   (1.700)
-------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                            $   (1.700)
-------------------------------------------------------------------------

NET ASSET VALUE -- END OF YEAR                                 $   86.280
-------------------------------------------------------------------------

TOTAL RETURN(1)                                                     26.48%
-------------------------------------------------------------------------
</Table>

<Table>
<Caption>
                                                                 AS A PERCENTAGE OF        AS A PERCENTAGE OF
RATIOS                                                         AVERAGE NET ASSETS(5)   AVERAGE GROSS ASSETS(2)(5)
-----------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                    <C>
Expenses of Consolidated Real Property Subsidiary
   Interest and other borrowing costs(7)                               0.58%                         0.41%
   Operating expenses(7)                                               0.74%                         0.52%
Belmar Capital Fund LLC Expenses
   Interest and other borrowing costs(4)(8)                            0.51%                         0.35%
   Investment advisory and administrative fees, servicing
      fees and other Fund operating expenses(3)(4)                     1.17%                         0.82%
                                                               --------------------------------------------------
Total expenses                                                         3.00%                         2.10%

Net investment income                                                  2.55%                         1.79%
-----------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA

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

(1)  Returns are calculated by determining the percentage change in net asset
     value with all distributions reinvested.
(2)  Average Gross Assets is defined as the average daily amount of all assets
     of Belmar Capital Fund LLC (Belmar Capital) (including Belmar Capital's
     interest in Belvedere Capital Fund Company LLC (Belvedere Capital) 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 Corporation's
     (Belmar Realty) controlled subsidiary are reduced by the proportionate
     interests therein of investors other than Belmar Realty.
(3)  Includes Belmar Capital's share of Belvedere Capital's allocated
     expenses, including those expenses allocated from the Portfolio.
(4)  Includes the expenses of Belmar Capital and Belmar Realty. Does not
     include expenses of the real estate subsidiary majority-owned by Belmar
     Realty.
(5)  For the purpose of calculating ratios, the income and expenses of Belmar
     Realty's controlled subsidiary are reduced by the proportionate interests
     therein of investors other than Belmar Realty.
(6)  Calculated using average shares outstanding.
(7)  Includes Belmar Realty's proportional share of expenses incurred by its
     majority-owned subsidiary.
(8)  Ratios do not include interest incurred in connection with the interest
     rate swap agreements. Had such amounts been included, ratios would be
     higher.

                See notes to consolidated financial statements

                                       37
<Page>
BELMAR CAPITAL FUND LLC as of December 31, 2003
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 Capital), a separate Massachusetts limited
    liability company that invests exclusively in the Portfolio. The
    performance of Belmar Capital and Belvedere Capital is directly and
    substantially affected by the performance of the Portfolio. Separate from
    its investment in the Portfolio through Belvedere Capital, 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 an interest in
    real properties held through a joint venture that is a controlled
    subsidiary of Belmar Realty.

    B SUBSIDIARIES -- Belmar Capital invests in real estate through its
    subsidiary, Belmar Realty. At December 31, 2003, Belmar Realty invested
    directly and indirectly in Partnership Preference Units and indirectly in
    real property through a controlled subsidiary, Bel Alliance Apartments,
    LLC (Bel Apartments). Belmar Realty's investments in Partnership
    Preference Units are held directly except for its indirect investment in
    Partnership Preference Units of Vornado Realty, LP (a Delaware Limited
    Partnership) which is held through its 29.6% investment in Bel Holdings,
    LLC at December 31, 2003. Vornado Realty, LP is the sole investment of
    Bel Holdings, LLC.

    Belmar Realty -- At December 31, 2003, Belmar Capital owned 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, 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 Statement of Assets and Liabilities.

    Bel Apartments -- Bel Apartments, a majority-owned subsidiary of Belmar
    Realty, owns 19 multi-family residential properties consisting of 5,403
    units (collectively, the Bel Apartments Properties) located in eight
    states (South Carolina, Texas, Florida, North Carolina, Missouri, Georgia,
    Virginia and Nevada). The average occupancy rate was approximately 90% at
    December 31, 2003. Belmar Realty owns 100% of the Class A Units of Bel
    Apartments, representing 60% of the voting interests in Bel Apartments,
    and a minority shareholder (the Bel Apartments Minority Shareholder) owns
    100% of the Class B units, representing 40% of the voting interests in Bel
    Apartments. The Class B equity interest is recorded as minority interest
    on the Consolidated Statement of Assets and Liabilities. The primary
    distinctions between the two classes of shares are the distribution
    priority and voting rights. Belmar Realty has priority in distributions
    and has greater voting rights than the holder of the Class B units.
    Pursuant to a buy/sell agreement entered into at the time Bel Apartments
    was established, either Belmar Realty or the Bel Apartments Minority
    Shareholder can give notice on or after September 8, 2010 either to buy
    the other's equity interest in Bel Apartments or to sell its own equity
    interest in Bel Apartments.

    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.

<PAGE>
    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 its ownership exceeds 50 percent. The accompanying
    consolidated financial statements include the accounts of Belmar Capital,
    Belmar Realty and Bel Apartments (collectively, the Fund). All material
    intercompany accounts and transactions have been eliminated.

                                       38
<Page>
    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 in exchange for cash and a minority interest in the
    controlled subsidiary. Upon receipt of common stock from Shareholders,
    Belmar Capital immediately exchanged the contributed securities into
    Belvedere Capital for shares thereof, and Belvedere Capital, 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 Capital 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 Capital, Partnership Preference Units, real property
    investments and short-term debt securities. Belvedere Capital's only
    investment is an interest in the Portfolio, the value of which is derived
    from a proportional interest therein. Additionally, the Fund has entered
    into interest rate swap agreements (Note 7). The valuation policy followed
    by the Fund, Belvedere Capital 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 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.
    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. 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. The Portfolio may rely on an
    independent fair valuation service in adjusting the valuations of foreign
    securities. Foreign securities and currencies are valued in U.S. dollars,
    based on foreign currency exchange rate quotations supplied by an
    independent quotation service. 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 tradeable 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 and Research (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.

<PAGE>
    Market prices for the Fund's real estate investments (including
    Partnership Preference Units and the joint venture) 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

                                      39
<Page>
    information from dealers and similar firms with knowledge of such issues
    and 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
    valued based upon independent valuations, that represent the amount at
    which 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. The value of real
    estate investments in the joint venture is estimated using a financial
    model that considers the (i) 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 used in the independent valuations. Interim
    valuations reflect results of operations and distributions, and may be
    adjusted if there has been a significant change in economic circumstances
    since the most recent independent valuation. 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.

    A mortgage note payable may be adjusted to the estimated amount at which
    the mortgage note could be settled in a current transaction.  If the
    rental property securing such mortgage note payable has a value lower
    than the outstanding principal balance, is operating at a deficit and
    financial resources are not expected to be provided to fund such deficit,
    then the mortgage note payable may be adjusted to the estimated fair
    value of the property securing the mortgage note.

    Changes in the fair value of the Fund's investments are recorded as
    unrealized appreciation or depreciation in the Consolidated Statement 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 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 Statement 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 are
    leased to residents generally for terms of one year or less, with monthly
    payments due in advance.

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

    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 Capital's net investment income or loss consists of Belvedere
    Capital's pro rata share of the net investment income or loss of the
    Portfolio, less all actual or accrued expenses of Belvedere Capital,
    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 Capital, 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 Bel Apartments 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.

<PAGE>
    I INCOME TAXES -- Belmar Capital, Belvedere Capital and the Portfolio are
    treated as partnerships for federal income tax purposes. As a result,
    Belmar Capital, Belvedere Capital 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 and Bel Apartments is to
    comply with the Internal Revenue Code of 1986, as amended, applicable to
    REITs. Belmar Realty and Bel Apartments 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.

                                      40
<Page>
    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 contributed, 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 year's 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
    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) will be made solely to
    the Shareholders to whom such realized precontribution gain is allocated.
    There were no Special Distributions paid or accrued during the year ended
    December 31, 2003.

    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 Bel Apartments 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 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.

<PAGE>
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
                                           DECEMBER 31, 2003   DECEMBER 31, 2002
    ----------------------------------------------------------------------------
    <S>                                           <C>                   <C>
    Issued to Shareholders electing to
       receive payment of distributions
       in Fund Shares                                253,148                  --
    Redemptions                                   (1,182,492)           (943,826)
    ----------------------------------------------------------------------------
    NET DECREASE                                    (929,344)           (943,826)
    ----------------------------------------------------------------------------
</Table>

                                      41
<Page>
    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
    tender offer or other extraordinary 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,
    2003, EV Distributors received $340,087 in redemption fees.

    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, 2003, the
    Preferred Shares were valued at $86.28 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 for the
    year ended December 31, 2003:

<Table>
<Caption>
                                                     YEAR ENDED
    INVESTMENT TRANSACTION                           DECEMBER 31, 2003
    ------------------------------------------------------------------
    <S>                                                <C>
    Increases in investment in Belvedere Capital       $    25,000,000
    Decreases in investment in Belvedere Capital       $    85,197,475
    Purchases of Partnership Preference Units(1)       $    75,672,618
    Sales of Partnership Preference Units(2)           $   228,888,304
    ------------------------------------------------------------------
</Table>

    (1) Purchases of Partnership Preference Units for the year ended December
        31, 2003 include purchases of Partnership Preference Units from other
        funds sponsored by Eaton Vance Management (Eaton Vance) and the
        investment in Bel Holdings, LLC (Note1B) in the amount of $35,042,618.
    (2) Sales of Partnership Preference Units for the year ended December 31,
        2003 include Partnership Preference Units sold to other funds
        sponsored by Eaton Vance for which a gain of $7,239,933 was
        recognized.

<PAGE>
6   INDIRECT INVESTMENT IN PORTFOLIO

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

<Table>
<Caption>
                                                                 YEAR ENDED
                                                                 DECEMBER 31, 2003
    ------------------------------------------------------------------------------
    <S>                                                          <C>
    Belvedere Capital's interest in the Portfolio(1)             $  11,100,012,615
    The Fund's investment in Belvedere Capital(2)                $   1,966,911,184
    Income allocated to Belvedere Capital from the Portfolio     $     143,671,130
    Income allocated to the Fund from Belvedere Capital          $      26,299,757
    Expenses allocated to Belvedere Capital from the Portfolio   $      43,085,940
    Expenses allocated to the Fund from Belvedere Capital(3)     $      10,585,603
    Net realized gain allocated to Belvedere Capital from
       the Portfolio                                             $     128,352,887
    Net realized gain allocated to the Fund from Belvedere
       Capital                                                   $      22,323,706
    Change in unrealized appreciation (depreciation)
       allocated to Belvedere Capital from the Portfolio         $   1,892,271,872
    Change in unrealized appreciation (depreciation)
       allocated to the Fund from Belvedere Capital              $     343,808,846
    ------------------------------------------------------------------------------
</Table>

    (1) As of December 31, 2003, the value of Belvedere Capital's interest in
        the Portfolio represents 63.0% of the Portfolio's net assets.
    (2) As of December 31, 2003, the Fund's investment in Belvedere Capital
        represents 17.7% of Belvedere Capital's net assets.
    (3) Allocated expenses include $7,893,121 of expenses from the Portfolio,
        $75,431 of operating expenses and $2,617,051 of service fees (Note 9)

                                      42
<Page>
7   INTEREST RATE SWAP AGREEMENTS

    Belmar Capital has entered into interest rate swap agreements 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, 2003 are listed below.

<Table>
<Caption>
    NOTIONAL                            INITIAL
    AMOUNT                              OPTIONAL     FINAL        UNREALIZED
    (000'S     FIXED     FLOATING       TERMINATION  TERMINATION  APPRECIATION AT
    OMITTED)   RATE      RATE           DATE         DATE         DECEMBER 31, 2003
    -------------------------------------------------------------------------------
    <S>        <C>       <C>            <C>          <C>          <C>
    $  58,363    4.95%   LIBOR + 0.20%  2/04         6/10         $         133,207
       55,831   4.875%   LIBOR + 0.20%  4/04         6/10                   154,214
       43,010   4.755%   LIBOR + 0.20%  7/04         6/10                   163,545
       56,978   4.695%   LIBOR + 0.20%  9/04         6/10                   232,978
       64,418   4.565%   LIBOR + 0.20%  3/05         6/10                   316,702
      110,068  3.9725%   LIBOR + 0.20%    --         6/10                 1,090,199
    -------------------------------------------------------------------------------
    TOTAL                                                         $       2,090,845
    -------------------------------------------------------------------------------
</Table>

    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 New
    Credit Facility (as defined in 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 Bel Apartments is financed through
    mortgages. The mortgages are secured by the rental property, mortgage loan
    deposit accounts, including all subaccounts thereunder, and an assignment
    of certain leases and rents, and are without recourse to Belmar Capital
    and Belmar Realty. The estimated fair value of the aggregate rental
    property securing the loans is $185,138,810 at December 31, 2003. Balances
    outstanding at December 31, 2003 are as follows:

<Table>
<Caption>
                                   MONTHLY
                       ANNUAL      PRINCIPAL AND
                       INTEREST    INTEREST           BALANCE AT
    MATURITY DATE      RATE        PAYMENT            DECEMBER 31, 2003
    -------------------------------------------------------------------
    <S>                <C>        <C>                     <C>
    October 1, 2010    8.58%      $      165,866          $  20,950,165
    October 1, 2010    8.54%             458,550             58,120,436
    October 1, 2010    8.54%             207,681             26,323,618
    October 1, 2010    8.55%             364,480             46,158,028
    October 1, 2027    7.68%              73,293              9,604,945
    -------------------------------------------------------------------
                                  $    1,269,870          $ 161,157,192
    -------------------------------------------------------------------
</Table>

    Scheduled repayments of mortgages, for the years subsequent to December
    31, 2003 are as follows:

<Table>
<Caption>
    YEAR ENDING DECEMBER 31,                             AMOUNT
    -------------------------------------------------------------------
    <S>                                                  <C>
    2004                                                 $    1,382,577
    2005                                                      1,544,087
    2006                                                      1,681,676
    2007                                                      1,831,540
    2008                                                      1,944,207
    Thereafter                                              152,773,105
    -------------------------------------------------------------------
                                                         $  161,157,192
    -------------------------------------------------------------------
</Table>

<PAGE>
    The estimated market value of the mortgage notes payable is approximately
    $182,000,000 at December 31, 2003. 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 is 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.

                                      43
<Page>
    B CREDIT FACILITY -- On June 30, 2003, Belmar Capital refinanced its
    credit facility with Citicorp North America, Inc. with two new credit
    arrangements (collectively, the New Credit Facility). The New Credit
    Facility has a seven-year maturity and will expire on June 25, 2010.
    Belmar Capital's obligations under the New Credit Facility are secured by
    a pledge of its assets, excluding the assets of Bel Apartments.

    At the date the agreement was entered into, Belmar Capital borrowed
    $581,500,000 with DrKW Holdings, Inc. Borrowings under this credit
    arrangement accrue interest at a rate of one-month LIBOR plus 0.20% per
    annum. As of December 31, 2003, outstanding borrowings under this credit
    arrangement totaled $513,000,000.

    The $118,500,000 credit arrangement with Merrill Lynch Mortgage Capital,
    Inc. includes 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. As of December 31, 2003 there were no outstanding
    borrowings under this credit arrangement and there were no letters of
    credit issued.

    Borrowings under the New Credit Facility have been used to purchase the
    Fund's interests in real estate investments, to pay organizational costs
    and selling expenses, and to provide for the short-term liquidity needs of
    the Fund. Additional borrowings under the New 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 is payable at a rate of 10% per annum.
    The remaining principal balance of the notes plus accrued interest thereon
    is due in August 2004 and December 2004. At December 31, 2003, the
    aggregate principal amount outstanding under the notes is $565,972. At
    December 31, 2003, total interest payable to the Bel Apartments Minority
    Shareholder is $101,403.

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

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.
    For the year ended December 31, 2003, the advisory fee applicable to the
    Portfolio was 0.44% of average daily net assets. Belvedere Capital's
    allocated portion of the advisory fee totaled $41,671,111 of which
    $7,634,035 was allocated to Belmar Capital for the year ended December 31,
    2003.

    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 Capital 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 subsidiary,
    without reduction by any liabilities. For this purpose, the assets of
    Belmar Realty's controlled subsidiary are reduced by the proportionate
    interests therein of investors other than Belmar Realty. For the year
    ended December 31, 2003, the advisory and administrative fee payable to
    Boston Management by Belmar Capital, plus the management fee payable to
    Boston Management by Belmar Realty, less Belmar Capital's allocated share
    of the Portfolio's advisory fee, totaled $7,049,704.

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

    As compensation for its services as Placement Agent, Belmar Capital pays
    EV Distributors a monthly distribution

                                      44
<Page>
    fee at a rate of 1/120 of 1% (equivalent to 0.10% annually) of Belmar
    Capital's average daily net assets. For the year ended December 31, 2003,
    Belmar Capital's distribution fees paid or accrued to EV Distributors
    totaled $1,711,661.

    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.
    For the year ended December 31, 2003, Boston Management has waived
    $1,711,661 of the advisory and administrative fee of Belmar Capital.

    Pursuant to a servicing agreement between Belvedere Capital and EV
    Distributors, Belvedere Capital pays a servicing fee to EV Distributors
    for providing certain services and information to Shareholders. The
    servicing fee is paid on a quarterly basis at an annual rate of 0.15% of
    Belvedere Capital's average daily net assets and totaled $14,288,579 for
    the year ended December 31, 2003, of which $2,617,051 was allocated to
    Belmar Capital. Pursuant to a servicing agreement between Belmar Capital
    and EV Distributors, 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 Capital. For the year ended
    December 31, 2003, the servicing fee paid directly by Belmar Capital
    totaled $1,658,867. Of the servicing fee amounts allocated to and incurred
    by Belmar Capital for the year ended December 31, 2003, $4,268,598 was
    paid or accrued to subagents.

    Bel Apartments indirectly holds real property through its interest in five
    operating partnerships. Each operating partnership has entered into a
    management agreement with an affiliate of the Bel Apartments Minority
    Shareholder (Note 1B). The management agreements provide for a management
    fee and allow for reimbursement to the manager for payroll and other
    direct expenses incurred by the manager for managing the Bel Apartments
    Properties (Note 1B). For the year ended December 31, 2003, Bel Apartments
    paid or accrued property management fees of $1,342,305.

10  SEGMENT INFORMATION

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

    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:

<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 facilities                  (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
    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
    ------------------------------------------------------------------------------------
    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 Capital.

                                      45
<Page>
    The following tables reconcile the reported segment information to the
    consolidated financial statements for the year ended December 31, 2003:

<Table>
    <S>                                                            <C>
    Revenue:
       Revenue from reportable segments                            $    94,637,079
       Unallocated amounts:
         Interest earned on cash not invested in the
           Portfolio or in subsidiaries                                    269,403
    ------------------------------------------------------------------------------
    TOTAL REVENUE                                                  $    94,906,482
    ------------------------------------------------------------------------------
    Net increase (decrease) in net assets from operations:
       Net increase in net assets from operations of
         reportable segments                                       $   415,799,469
       Unallocated amounts:
         Interest earned on cash not invested in the
           Portfolio or in subsidiaries                                    269,403
       Unallocated amounts(1):
         Distribution and servicing fees                                (3,370,528)
         Interest expense on credit facilities                            (520,215)
         Audit, tax and legal fees                                        (279,016)
         Other operating expenses                                         (109,863)
    ------------------------------------------------------------------------------
    TOTAL NET INCREASE IN NET ASSETS FROM OPERATIONS               $   411,789,250
    ------------------------------------------------------------------------------
    Net assets:
       Net assets of reportable segments                           $ 1,953,187,951
       Unallocated cash(2)                                               5,019,018
       Short-term investments(2)                                        16,973,476
       Loan payable -- New Credit Facility(3)                          (54,357,683)
       Other liabilities                                                  (210,905)
    ------------------------------------------------------------------------------
    TOTAL NET ASSETS                                               $ 1,920,611,857
    ------------------------------------------------------------------------------
</Table>

    (1) Unallocated amounts represent expenses incurred that pertain to the
        overall operation of Belmar Capital, and do not pertain to either
        operating segment.
    (2) Unallocated cash and short-term investments represent cash and cash
        equivalents not invested in the Portfolio or real estate assets.
    (3) Unallocated amount of loan payable -- New 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 EVENTS (UNAUDITED)

    On January 14, 2004, the Fund made a distribution of $1.15 per Share to
    Shareholders of record on January 13, 2004.

    In January 2004, Belmar Realty purchased an indirect investment in real
    property through a controlled subsidiary, Bel Stamford Investors LLC (Bel
    Stamford) in the net amount of $16,058,060. Bel Stamford holds an indirect
    interest in leasehold improvements of an office building and attached
    facilities in Stamford, Connecticut. At the date of the transaction, the
    value of the real property is $242,750,000. The real property is 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. The real
    property is 100% occupied at December 31, 2003. The future minimum rents
    to be received during the current terms of the lease as of December 31,
    2003, are approximately $16,532,774 in 2004, $18,161,031 in 2005 through
    2008 and $142,261,407 thereafter through December 2017. During the initial
    lease term the rent from the lease is expected to equal the payments due
    under the mortgage.

    The real property is financed through a mortgage secured by the rental
    property and an assignment of rents and is generally without recourse to
    the other assets of Belmar Capital and Belmar Realty. The mortgage loan
    balance assumed at the date of the transaction is $229,674,914 and accrues
    interest at a fixed rate of 6.0% per annum through the stated maturity
    date, October 11, 2016. Principal and interest payments of $1,513,419 are
    due monthly and scheduled principal payments of $3,923,177 in 2004,
    $4,554,040 in 2005, $4,838,934 in 2006, $5,141,649 in 2007, $5,426,600 in
    2008 and $205,790,514 thereafter.

    In February 2004, Belmar Realty sold (or experienced scheduled redemptions
    of) certain Partnership Preference Units totaling $213,463,963,
    recognizing gains of $30,459,656 (including sales to other funds sponsored
    by Eaton Vance).

                                      46
<Page>
BELMAR CAPITAL FUND LLC as of December 31, 2003
INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF
BELMAR CAPITAL FUND LLC AND SUBSIDIARIES:

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

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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
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, 2003 by correspondence with the custodian and
brokers. 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, such 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, 2003 and the results of its
operations, the changes in its net assets, its cash flows, and the financial
highlights for the respective stated periods in conformity with accounting
principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 5, 2004

                                      47
<Page>
TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2003
PORTFOLIO OF INVESTMENTS

COMMON STOCKS -- 99.2%

<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
AEROSPACE AND DEFENSE -- 2.5%

Boeing Company (The)                                              797,051   $     33,587,729
General Dynamics                                                  735,000         66,436,650
Honeywell International, Inc.                                     275,998          9,226,613
Northrop Grumman Corp.                                          1,684,522        161,040,303
Raytheon Company                                                  313,599          9,420,514
Rockwell Collins, Inc.                                            203,032          6,097,051
Teledyne Technologies Incorporated(1)                               6,117            115,305
United Technologies Corp.                                       1,582,098        149,935,427
--------------------------------------------------------------------------------------------
                                                                            $    435,859,592
--------------------------------------------------------------------------------------------

AIR FREIGHT AND LOGISTICS -- 2.6%

FedEx Corporation                                               2,106,578   $    142,194,015
Robinson (C.H.) Worldwide, Inc.                                 1,186,638         44,985,447
United Parcel Service, Inc. Class B                             3,549,425        264,609,634
--------------------------------------------------------------------------------------------
                                                                            $    451,789,096
--------------------------------------------------------------------------------------------

AIRLINES -- 0.0%

Southwest Airlines, Inc.                                          126,393   $      2,039,983
--------------------------------------------------------------------------------------------
                                                                            $      2,039,983
--------------------------------------------------------------------------------------------

AUTO COMPONENTS -- 0.2%

ArvinMeritor, Inc.                                                 33,635   $        811,276
Borg-Warner Automotive, Inc.                                      203,981         17,352,664
Dana Corp.                                                         25,000            458,750
Delphi Automotive Systems Corp.                                     6,338             64,711
Johnson Controls, Inc.                                            114,364         13,279,948
Visteon Corp.                                                      10,226            106,453
--------------------------------------------------------------------------------------------
                                                                            $     32,073,802
--------------------------------------------------------------------------------------------

AUTOMOBILES -- 0.1%

DaimlerChrysler AG                                                  7,000   $        323,540
Ford Motor Co.                                                    145,884          2,334,144
General Motors Corp.                                               13,896            742,046
Harley-Davidson, Inc.                                             137,700          6,544,881
Honda Motor Co. Ltd. ADR                                           20,000            450,000
--------------------------------------------------------------------------------------------
                                                                            $     10,394,611
--------------------------------------------------------------------------------------------

BEVERAGES -- 3.9%

Anheuser-Busch Companies, Inc.                                  3,381,243   $    178,123,881
Coca-Cola Company (The)                                         3,177,651        161,265,788
Coca-Cola Enterprises, Inc.                                     1,729,424   $     37,822,503
PepsiCo., Inc.                                                  6,531,299        304,489,159
--------------------------------------------------------------------------------------------
                                                                            $    681,701,331
--------------------------------------------------------------------------------------------

BIOTECHNOLOGY -- 1.7%

Amgen, Inc.(1)                                                  3,861,137   $    238,618,267
Applera Corp. - Celera Genomics Group(1)                           26,000            361,660
Genzyme Corp. - General Division(1)                               464,926         22,939,449
Gilead Sciences, Inc.(1)                                           39,362          2,288,507
Incyte Pharmaceuticals, Inc.(1)                                    14,294             97,771
Invitrogen Corp.(1)                                               467,551         32,728,570
Vertex Pharmaceuticals, Inc.(1)                                    13,000            132,990
--------------------------------------------------------------------------------------------
                                                                            $    297,167,214
--------------------------------------------------------------------------------------------

<PAGE>
BUILDING PRODUCTS -- 0.9%

American Standard Companies, Inc.(1)                              331,609   $     33,393,026
CRH plc                                                           329,450          6,752,716
Masco Corporation                                               4,145,436        113,626,401
Water Pik Technologies(1)                                           2,141             26,270
--------------------------------------------------------------------------------------------
                                                                            $    153,798,413
--------------------------------------------------------------------------------------------

CAPITAL MARKETS -- 3.8%

Affiliated Managers Group(1)                                       13,680   $        951,991
Bank of New York Co., Inc. (The)                                  441,413         14,619,599
Bear Stearns Companies, Inc.                                       83,352          6,663,992
Credit Suisse Group                                               155,136          5,676,090
Federated Investors, Inc.                                       1,634,947         48,002,044
Franklin Resources, Inc.                                        1,508,429         78,528,814
Goldman Sachs Group, Inc.                                           9,627            950,474
Investors Financial Services Corp.                                475,402         18,260,191
Knight Trading Group, Inc.(1)                                   1,750,000         25,620,000
Legg Mason, Inc.                                                   17,641          1,361,532
Lehman Brothers Holdings, Inc.                                     57,486          4,439,069
Mellon Financial Corporation                                      221,912          7,125,594
Merrill Lynch & Co., Inc.                                       1,761,959        103,338,895
Morgan (J.P.) Chase & Co.                                         394,005         14,471,804
Morgan Stanley Dean Witter & Co.                                4,770,551        276,071,786
Northern Trust Corp.                                              261,505         12,139,062
Nuveen Investments Class A                                        150,000          3,999,000
Price (T. Rowe) Group, Inc.                                       171,434          8,127,686
Raymond James Financial, Inc.                                      98,225          3,703,082
Schwab (Charles) & Co.                                            946,055         11,201,291
</Table>

                      See notes to financial statements.

                                      48
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
CAPITAL MARKETS (CONTINUED)

State Street Corp.                                                328,000   $     17,082,240
UBS AG                                                             49,812          3,386,718
Waddell & Reed Financial, Inc., Class A                           271,320          6,365,167
--------------------------------------------------------------------------------------------
                                                                            $    672,086,121
--------------------------------------------------------------------------------------------

CHEMICALS -- 1.0%

Airgas, Inc.                                                      389,753   $      8,371,894
Arch Chemicals, Inc.                                                4,950            127,017
Bayer AG ADR                                                       40,000          1,176,400
Dow Chemical Co. (The)                                            267,064         11,101,850
DuPont (E.I.) de Nemours & Co.                                  1,302,039         59,750,570
Ecolab, Inc.                                                      318,168          8,708,258
MacDermid, Inc.                                                    61,937          2,120,723
Monsanto Company                                                   28,797            828,778
Olin Corp.                                                          9,900            198,594
PPG Industries, Inc.                                               23,542          1,507,159
Rohm and Haas, Co.                                                  2,601            111,089
RPM, Inc.                                                          88,338          1,454,043
Sigma-Aldrich Corp.                                               630,897         36,074,690
Solutia Inc.(1)                                                    20,293              7,407
Valspar Corp.                                                     818,316         40,441,177
--------------------------------------------------------------------------------------------
                                                                            $    171,979,649
--------------------------------------------------------------------------------------------

COMMERCIAL BANKS -- 8.3%

AmSouth Bancorporation                                            812,145   $     19,897,552
Associated Banc-Corp                                              749,148         31,951,162
Bank of America Corporation                                     2,257,529        181,573,057
Bank of Hawaii Corp.                                               49,425          2,085,735
Bank of Montreal                                                  269,166         11,116,556
Bank One Corp.                                                  1,786,768         81,458,753
Banknorth Group, Inc.                                              50,125          1,630,566
BB&T Corp.                                                      1,276,393         49,319,826
Charter One Financial, Inc.                                       251,993          8,706,358
City National Corp.                                               273,260         16,974,911
Colonial Bancgroup, Inc. (The)                                    253,936          4,398,172
Comerica, Inc.                                                    241,725         13,551,103
Commerce Bancshares, Inc.                                         147,766          7,243,489
Community First Bancshares, Inc.                                  360,184         10,423,725
Compass Bancshares, Inc.                                          358,352         14,086,817
Fifth Third Bancorp                                             1,209,520         71,482,632
First Citizens BancShares, Inc.                                    43,651          5,304,906
First Financial Bancorp                                            47,933            764,531
First Midwest Bancorp, Inc.                                       815,329   $     26,424,813
First Tennessee National Corporation                              157,089          6,927,625
FleetBoston Financial Corporation                                 715,716         31,241,003
Hibernia Corp. Class A                                            187,345          4,404,481
HSBC Holdings PLC ADR                                             608,017         47,923,900
Huntington Bancshares, Inc.                                       578,423         13,014,517
Keycorp                                                           625,951         18,352,883
M&T Bank Corp.                                                     37,734          3,709,252
Marshall & Ilsley Corp.                                           683,798         26,155,273
National City Corp.                                             1,598,288         54,245,895
National Commerce Financial Corp.                               1,113,055         30,364,140
North Fork Bancorporation, Inc.                                    53,534          2,166,521
PNC Bank Corp.                                                    156,003          8,538,044
Popular, Inc.                                                         716             32,177
Regions Financial Corp.                                         1,624,786         60,442,039
Royal Bank of Scotland Group PLC                                   50,837          1,497,956
S&T Bancorp, Inc.                                                 100,000          2,990,000
SouthTrust Corp.                                                  506,253         16,569,661
Southwest Bancorporation of Texas, Inc.(1)                        815,601         31,686,099
SunTrust Banks, Inc.                                              425,640         30,433,260
Synovus Financial Corp.                                         1,345,581         38,914,203
TCF Financial Corporation                                          28,000          1,437,800
U.S. Bancorp                                                    4,150,861        123,612,641
Union Planters Corp.                                              703,729         22,160,426
Valley National Bancorp                                           202,293          5,906,956
Wachovia Corp.                                                  1,901,325         88,582,732
Wells Fargo & Company                                           3,129,623        184,303,498
Westamerica Bancorporation                                        268,474         13,343,158
Whitney Holding Corp.                                             353,200         14,477,668
Zions Bancorporation                                              252,271         15,471,780
--------------------------------------------------------------------------------------------
                                                                            $  1,457,300,252
--------------------------------------------------------------------------------------------

<PAGE>
COMMERCIAL SERVICES AND SUPPLIES -- 2.4%

Allied Waste Industries, Inc.(1)                                1,674,390   $     23,240,533
Apollo Group, Inc. Class A(1)                                       7,599            516,732
Arbitron, Inc.(1)                                                  30,885          1,288,522
Avery Dennison Corp.                                            1,350,977         75,681,732
Banta Corp.                                                        42,341          1,714,810
Block (H&R), Inc.                                                 732,354         40,550,441
Bowne & Company                                                   172,640          2,340,998
Cendant Corp.(1)                                                  549,359         12,234,225
Century Business Services, Inc.(1)                                370,000          1,653,900
Cintas Corp.                                                    1,326,202         66,482,506
</Table>

                      See notes to financial statements.

                                      49
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
COMMERCIAL SERVICES AND SUPPLIES (CONTINUED)

Consolidated Graphics, Inc.(1)                                     70,215   $      2,217,390
Deluxe Corporation                                                 32,000          1,322,560
Donnelley (R.R.) & Sons Co.                                       200,521          6,045,708
Equifax, Inc.                                                      85,724          2,100,238
Gevity HR, Inc.                                                    78,125          1,737,500
Harland (John H.) Co.                                              51,540          1,407,042
HON Industries, Inc.                                            1,552,470         67,253,000
Hudson Highland Group, Inc.(1)                                     11,581            276,207
Imagistics International Inc.(1)                                    2,482             93,075
Manpower, Inc.                                                    112,000          5,272,960
Miller (Herman) Inc.                                              541,800         13,149,486
Monster Worldwide Inc.(1)                                         154,426          3,391,195
Navigant Consulting, Inc.(1)                                      463,017          8,732,501
Pitney Bowes, Inc.                                                 89,799          3,647,635
ServiceMaster Co.                                               1,318,302         15,358,218
Steelcase Inc.                                                    123,000          1,766,280
Sylvan Learning Systems, Inc.(1)                                  538,458         15,502,206
United Rentals, Inc.(1)                                           401,179          7,726,708
Waste Management, Inc.                                          1,255,659         37,167,506
--------------------------------------------------------------------------------------------
                                                                            $    419,871,814
--------------------------------------------------------------------------------------------

COMMUNICATIONS EQUIPMENT -- 1.3%

3Com Corp.(1)                                                     873,949   $      7,140,163
ADC Telecommunications, Inc.(1)                                   370,286          1,099,749
Advanced Fibre Communication, Inc.(1)                              15,000            302,250
Alcatel S.A. ADR(1)                                                43,728            561,905
Avaya, Inc.(1)                                                     56,960            737,062
Ciena Corp.(1)                                                    380,378          2,525,710
Cisco Systems, Inc.(1)                                          3,441,441         83,592,602
Comverse Technology, Inc.(1)                                      386,378          6,796,389
Corning, Inc.(1)                                                  651,520          6,795,354
Enterasys Networks, Inc.(1)                                        55,945            209,794
JDS Uniphase Corp.(1)                                              52,451            191,446
Lucent Technologies, Inc.(1)                                      555,464          1,577,518
McData Corp., Class A(1)                                           18,562            176,896
Motorola, Inc.                                                    741,114         10,427,474
Nokia Corp., Class A, ADR                                       4,870,478         82,798,126
Nortel Networks Corp.(1)                                        1,306,729          5,527,464
Qualcomm, Inc.                                                    344,112         18,557,960
Riverstone Networks, Inc.(1)                                       28,706             31,864
Tellabs, Inc.(1)                                                  118,404            998,146
--------------------------------------------------------------------------------------------
                                                                            $    230,047,872
--------------------------------------------------------------------------------------------

COMPUTERS AND PERIPHERALS -- 3.1%

Dell, Inc.(1)                                                   4,305,989   $    146,231,386
EMC Corp.(1)                                                    1,104,455         14,269,559
Gateway, Inc.(1)                                                   99,407            457,272
Hewlett-Packard Co.                                             1,197,265         27,501,177
International Business Machines Corp.                           2,286,121        211,877,694
Lexmark International Group, Inc.(1)                            1,704,885        134,072,156
Network Appliance, Inc.(1)                                        488,000         10,018,640
Palmone, Inc.(1)                                                   65,230            766,453
Sun Microsystems, Inc.(1)                                         370,670          1,664,308
--------------------------------------------------------------------------------------------
                                                                            $    546,858,645
--------------------------------------------------------------------------------------------

CONSTRUCTION AND ENGINEERING -- 0.1%

Dycom Industries, Inc.(1)                                         151,725   $      4,069,264
Jacobs Engineering Group, Inc.(1)                                 354,741         17,031,115
--------------------------------------------------------------------------------------------
                                                                            $     21,100,379
--------------------------------------------------------------------------------------------

CONSTRUCTION MATERIALS -- 0.0%

Vulcan Materials Company                                          184,512   $      8,777,236
--------------------------------------------------------------------------------------------
                                                                            $      8,777,236
--------------------------------------------------------------------------------------------

<PAGE>
CONSUMER FINANCE -- 0.9%

American Express Co.                                              521,715   $     25,162,314
Capital One Financial Corp.                                     1,245,321         76,325,724
MBNA Corporation                                                  456,002         11,331,650
Providian Financial Corp.(1)                                      457,296          5,322,925
SLM Corp.                                                         905,499         34,119,202
--------------------------------------------------------------------------------------------
                                                                            $    152,261,815
--------------------------------------------------------------------------------------------

CONTAINERS AND PACKAGING -- 0.1%

Bemis Co.                                                         207,593   $     10,379,650
Caraustar Industries, Inc.(1)                                     192,532          2,656,942
Sealed Air Corp.(1)                                                37,014          2,003,938
Sonoco Products Co.                                               160,690          3,956,188
Temple-Inland, Inc.                                                57,962          3,632,479
--------------------------------------------------------------------------------------------
                                                                            $     22,629,197
--------------------------------------------------------------------------------------------

DEPARTMENT STORES -- 0.0%

Neiman Marcus Group, Inc. (The)(1)                                 27,117   $      1,355,850
--------------------------------------------------------------------------------------------
                                                                            $      1,355,850
--------------------------------------------------------------------------------------------
</Table>

                      See notes to financial statements.

                                      50
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
DISTILLERS AND VINTNERS -- 0.1%

Brown-Forman Corp. Class A                                        154,012   $     14,931,463
--------------------------------------------------------------------------------------------
                                                                            $     14,931,463
--------------------------------------------------------------------------------------------

DISTRIBUTORS -- 0.0%

Genuine Parts Company                                             188,609   $      6,261,819
--------------------------------------------------------------------------------------------
                                                                            $      6,261,819
--------------------------------------------------------------------------------------------

DIVERSIFIED FINANCIAL SERVICES -- 1.6%

Citigroup Inc.                                                  4,030,512   $    195,641,052
Finova Group, Inc.(1)                                             175,587            114,132
ING groep, N.V. ADR                                               216,111          5,059,159
Moody's Corp.                                                      47,543          2,878,729
Royal Bank of Canada                                              321,353         15,322,111
Societe Generale                                                  809,647         71,487,377
--------------------------------------------------------------------------------------------
                                                                            $    290,502,560
--------------------------------------------------------------------------------------------

DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.3%

Alltel Corp.                                                    1,488,598   $     69,338,895
AT&T Corp.                                                        473,645          9,614,993
BCE, Inc.                                                       4,500,000        100,620,000
BellSouth Corp.                                                   457,572         12,949,288
Cincinnati Bell Inc.(1)                                           169,013            853,516
Citizens Communications Co.(1)                                     14,252            177,010
Deutsche Telekom AG(1)                                          1,956,790         35,476,603
PTEK Holdings, Inc.(1)                                             28,000            246,680
Qwest Communications International, Inc.(1)                        59,924            258,872
RSL Communications Ltd.(1)                                        247,161              2,472
SBC Communications, Inc.                                        1,493,660         38,939,716
Sprint Corp. - FON Group                                          167,078          2,743,421
Talk America Holdings, Inc.(1)                                     42,372            488,125
Telefonos de Mexico ADR                                         3,000,000         99,090,000
Verizon Communications                                            954,938         33,499,225
WorldCom, Inc.(1)                                                  98,634              1,302
WorldCom, Inc. - MCI Group(1)                                      42,805              2,097
--------------------------------------------------------------------------------------------
                                                                            $    404,302,215
--------------------------------------------------------------------------------------------

ELECTRIC UTILITIES -- 0.2%

Ameren Corp.                                                        5,000   $        230,000
American Electric Power, Inc.                                         960             29,290
Dominion Resources, Inc.                                           10,464            667,917
Exelon Corp.                                                      500,000         33,180,000
PG&E Corp.(1)                                                      47,705          1,324,768
TECO Energy, Inc.                                                  35,511   $        511,714
TXU Corp.                                                         250,196          5,934,649
Wisconsin Energy Corp.                                              9,576            320,317
--------------------------------------------------------------------------------------------
                                                                            $     42,198,655
--------------------------------------------------------------------------------------------

ELECTRICAL EQUIPMENT -- 0.6%

American Power Conversion Corp.                                    36,671   $        896,606
Baldor Electric Co.                                               149,060          3,406,021
Emerson Electric Co.                                            1,309,555         84,793,686
Rockwell International Corp.                                      179,520          6,390,912
Thomas & Betts Corp.                                              114,600          2,623,194
--------------------------------------------------------------------------------------------
                                                                            $     98,110,419
--------------------------------------------------------------------------------------------

<PAGE>
ELECTRONIC EQUIPMENT AND INSTRUMENTS -- 0.9%

Agilent Technologies, Inc.(1)                                     599,247   $     17,521,982
Arrow Electronics, Inc.(1)                                          8,750            202,475
Flextronics International Ltd.(1)                                 282,653          4,194,571
Jabil Circuit, Inc.(1)                                          2,127,971         60,221,579
Molex, Inc., Class A                                              112,582          3,305,408
National Instruments Corp.                                        490,458         22,301,125
PerkinElmer, Inc.                                                 300,081          5,122,383
Plexus Corp.(1)                                                   209,946          3,604,773
Roper Industries, Inc.                                             23,122          1,138,990
Sanmina Corp.(1)                                                1,164,972         14,690,297
Solectron Corporation(1)                                        1,818,848         10,749,392
Waters Corp.(1)                                                   165,841          5,499,288
X-Rite Incorporated                                               361,707          4,094,523
--------------------------------------------------------------------------------------------
                                                                            $    152,646,786
--------------------------------------------------------------------------------------------

ENERGY EQUIPMENT AND SERVICES -- 0.5%

Baker Hughes, Inc.                                                520,182   $     16,729,053
Core Laboratories N.V.(1)                                         109,787          1,832,345
Grant Prideco, Inc.(1)                                            124,234          1,617,527
Halliburton Company                                               481,502         12,519,052
National-Oilwell, Inc.(1)                                         686,929         15,359,732
Schlumberger Ltd.                                                 484,178         26,494,220
Smith International, Inc.(1)                                      140,000          5,812,800
Transocean Sedco Forex, Inc.(1)                                     6,315            151,623
--------------------------------------------------------------------------------------------
                                                                            $     80,516,352
--------------------------------------------------------------------------------------------

FOOD AND STAPLES RETAILING -- 2.3%

Albertson's, Inc.                                               1,172,238   $     26,551,191
</Table>

                      See notes to financial statements.

                                      51
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
FOOD AND STAPLES RETAILING (CONTINUED)

Casey's General Stores, Inc.                                       91,201   $      1,610,610
Costco Wholesale Corp.(1)                                       1,220,435         45,375,773
CVS Corp.                                                         177,839          6,423,545
Kroger Co. (The)(1)                                             1,201,784         22,245,022
Safeway, Inc.(1)                                                1,270,912         27,845,682
Sysco Corp.                                                     1,601,774         59,634,046
Sysco Corp.(2)(3)                                                  32,036          1,190,911
Walgreen Co.                                                      665,292         24,203,323
Wal-Mart Stores, Inc.                                           3,674,877        194,952,225
Winn-Dixie Stores, Inc.                                           225,735          2,246,063
--------------------------------------------------------------------------------------------
                                                                            $    412,278,391
--------------------------------------------------------------------------------------------

FOOD PRODUCTS -- 2.3%

Archer-Daniels-Midland Co.                                        316,652   $      4,819,443
Campbell Soup Co.                                               1,243,047         33,313,660
Conagra Inc.                                                    1,638,964         43,252,260
Dean Foods Co.(1)                                                 504,216         16,573,580
Del Monte Foods, Co.(1)                                           103,109          1,072,334
General Mills, Inc.                                               286,539         12,980,217
Heinz (H.J.) Co.                                                  298,859         10,887,433
Hershey Foods Corp.                                               244,744         18,842,841
JM Smucker Co.                                                     19,265            872,512
Kellogg Co.                                                        69,795          2,657,794
Kraft Foods, Inc.                                                     165              5,316
McCormick & Co., Inc.                                             219,798          6,615,920
Nestle SA                                                         200,000         49,969,679
Riviana Foods, Inc.                                               250,000          6,847,500
Sara Lee Corp.                                                  2,601,502         56,478,608
Smithfield Foods, Inc.(1)                                       4,207,530         87,095,871
Tyson Foods, Inc.                                                 315,272          4,174,201
Wrigley (Wm.) Jr. Company Class A                                 933,873         52,493,001
--------------------------------------------------------------------------------------------
                                                                            $    408,952,170
--------------------------------------------------------------------------------------------

GAS UTILITIES -- 0.6%

Kinder Morgan, Inc.                                             1,781,672   $    105,296,815
--------------------------------------------------------------------------------------------
                                                                            $    105,296,815
--------------------------------------------------------------------------------------------

<PAGE>
HEALTH CARE EQUIPMENT AND SUPPLIES -- 1.4%

Advanced Medical Optics(1)                                          3,744   $         73,570
Bausch & Lomb, Inc.                                                29,250          1,518,075
Baxter International, Inc.                                        201,413          6,147,125
Becton & Dickinson and Co.                                         64,173   $      2,640,077
Biomet, Inc.                                                      411,340         14,976,889
Boston Scientific Corporation(1)                                1,083,970         39,846,737
Dentsply International, Inc.                                       11,325            511,550
Edwards Lifesciences Corp.(1)                                      15,420            463,834
Guidant Corp.                                                      54,692          3,292,458
Hillenbrand Industries, Inc.                                      638,072         39,598,748
Lumenis Ltd.(1)                                                   100,000            135,000
Medtronic, Inc.                                                 2,259,696        109,843,823
Millipore Corporation(1)                                           70,000          3,013,500
St. Jude Medical, Inc.(1)                                          10,014            614,359
Steris Corp.(1)                                                    19,538            441,559
VISX, Inc.(1)                                                      50,000          1,157,500
Zimmer Holdings, Inc.(1)                                          251,155         17,681,312
--------------------------------------------------------------------------------------------
                                                                            $    241,956,116
--------------------------------------------------------------------------------------------

HEALTH CARE PROVIDERS AND SERVICES -- 2.0%

AmerisourceBergen Corp.                                           104,493   $      5,867,282
Andrx Group(1)                                                    393,772          9,466,279
Beverly Enterprises, Inc.(1)                                      357,143          3,067,858
Cardinal Health, Inc.                                           1,837,836        112,402,050
Cigna Corp.                                                        11,836            680,570
Express Scripts, Inc.(1)                                           14,002            930,153
HCA Inc.                                                          253,450         10,888,212
Health Management Associates, Inc., Class A                     1,036,833         24,883,992
IDX Systems Corp.(1)                                               60,000          1,609,200
IMS Health, Inc.                                                  280,530          6,973,976
McKesson HBOC, Inc.                                               101,169          3,253,595
Medco Health Solutions, Inc.(1)                                   131,480          4,469,005
Parexel International Corp.(1)                                     35,000            569,100
Quest Diagnostics, Inc.                                             8,750            639,712
Renal Care Group, Inc.(1)                                         371,007         15,285,488
Schein (Henry), Corp.(1)                                        1,272,548         85,998,794
Service Corp. International(1)                                    142,389            767,477
Stewart Enterprises, Inc.(1)                                      114,000            647,520
Sunrise Assisted Living, Inc.(1)                                  144,000          5,578,560
Tenet Healthcare Corp.(1)                                           3,961             63,574
UnitedHealth Group, Inc.                                          184,976         10,761,904
Ventiv Health, Inc.(1)                                            160,833          1,471,622
Wellpoint Health Networks(1)                                      404,000         39,183,960
--------------------------------------------------------------------------------------------
                                                                            $    345,459,883
--------------------------------------------------------------------------------------------
</Table>

                      See notes to financial statements.

                                      52
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
HOTELS, RESTAURANTS AND LEISURE -- 1.6%

Brinker International, Inc.(1)                                    459,469   $     15,235,992
Carnival Corporation                                              559,353         22,223,095
CBRL Group, Inc.                                                   62,047          2,373,918
Darden Restaurants Inc.                                           184,714          3,886,383
Evans (Bob) Farms, Inc.                                            51,662          1,676,949
Gaylord Entertainment Co.(1)                                      428,482         12,790,188
International Game Technology                                     400,000         14,280,000
International Speedway Corporation                                118,344          5,285,243
Jack in the Box, Inc.(1)                                          500,000         10,680,000
Lone Star Steakhouse & Saloon, Inc.                               145,981          3,383,840
Marriott International, Inc.                                      332,298         15,352,168
McDonald's Corp.                                                1,176,299         29,207,504
MGM Grand, Inc.(1)                                                 94,445          3,552,076
Navigant International, Inc.(1)                                    44,278            613,250
Outback Steakhouse, Inc.                                        1,641,207         72,557,761
Papa John's International, Inc.(1)                                199,488          6,658,909
Royal Caribbean Cruises Ltd.                                      500,000         17,395,000
Sonic Corp.(1)                                                    106,510          3,261,336
Starbucks Corp.(1)                                              1,255,994         41,523,162
Yum! Brands, Inc.(1)                                              241,659          8,313,070
--------------------------------------------------------------------------------------------
                                                                            $    290,249,844
--------------------------------------------------------------------------------------------

HOUSEHOLD DURABLES -- 0.5%

Blyth Industries, Inc.                                            742,373   $     23,919,258
Department 56, Inc.(1)                                            255,162          3,342,622
Fortune Brands Inc.                                               142,143         10,161,803
Helen of Troy Ltd.(1)                                              20,000            463,000
Interface, Inc. Class A(1)                                         75,467            417,333
Leggett & Platt, Inc.                                           1,581,019         34,197,441
Maytag Corp.                                                       27,073            753,983
Newell Rubbermaid, Inc.                                           438,432          9,983,097
Snap-On, Inc.                                                      51,429          1,658,071
--------------------------------------------------------------------------------------------
                                                                            $     84,896,608
--------------------------------------------------------------------------------------------

HOUSEHOLD PRODUCTS -- 1.8%

Clorox Co. (The)                                                   53,688   $      2,607,089
Colgate-Palmolive Co.                                             676,711         33,869,386
Energizer Holdings(1)                                             168,981          6,346,926
Kimberly-Clark Corp.                                            1,535,512         90,733,404
Procter & Gamble Co.                                            1,877,616        187,536,286
--------------------------------------------------------------------------------------------
                                                                            $    321,093,091
--------------------------------------------------------------------------------------------

INDUSTRIAL CONGLOMERATES -- 1.9%

3M Co.                                                            564,132   $     47,968,144
General Electric Co.                                            8,283,871        256,634,324
Teleflex, Inc.                                                     47,559          2,298,526
Tyco International Ltd.                                         1,176,566         31,178,999
--------------------------------------------------------------------------------------------
                                                                            $    338,079,993
--------------------------------------------------------------------------------------------

<PAGE>
INSURANCE -- 6.3%

21st Century Insurance Group                                       70,700   $        972,125
Aegon N.V. ADR                                                  5,311,829         78,615,069
AFLAC Corp.                                                     2,092,063         75,690,839
Allstate Corp. (The)                                              188,362          8,103,333
American International Group, Inc.                              5,434,795        360,218,213
AON Corp.                                                         826,887         19,795,675
Berkshire Hathaway, Inc., Class A(1)                                  393         33,110,250
Berkshire Hathaway, Inc., Class B(1)                               40,126        112,954,690
Chubb Corporation                                                   3,901            265,658
Commerce Group, Inc.                                              120,000          4,740,000
Delphi Financial Group Inc.                                         9,672            348,192
Gallagher (Arthur J.) and Co.                                     991,627         32,217,961
Hartford Financial Services Group, Inc.                            11,800            696,554
Jefferson-Pilot Corp.                                             211,013         10,687,808
Kansas City Life Insurance Co.                                     70,800          3,270,960
Lincoln National Corp.                                             52,903          2,135,694
Manulife Financial Corp.                                           74,958          2,421,143
Marsh & McLennan Cos., Inc.                                     1,830,750         87,674,617
MetLife, Inc.                                                   1,969,700         66,319,799
Old Republic International Corp.                                  195,360          4,954,330
Progressive Corp.                                               1,855,100        155,067,809
Safeco Corp.                                                      177,122          6,895,359
St. Paul Companies, Inc. (The)                                    325,275         12,897,154
Torchmark Corp.                                                   440,119         20,043,019
Travelers Property Casualty - Class A                             196,364          3,294,988
Travelers Property Casualty - Class B                             403,442          6,846,411
UICI(1)                                                            43,597            578,968
UnumProvident Corp.                                                53,710            847,007
XL Capital Ltd., Class A                                           79,232          6,144,442
--------------------------------------------------------------------------------------------
                                                                            $  1,117,808,067
--------------------------------------------------------------------------------------------

INTEGRATED TELECOMMUNICATION SERVICES -- 0.0%

McLeodUSA(1)                                                       35,538   $         52,596
--------------------------------------------------------------------------------------------
                                                                            $         52,596
--------------------------------------------------------------------------------------------
</Table>

                      See notes to financial statements.

                                      53
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
INTERNET AND CATALOG RETAIL -- 0.4%

eBay, Inc(1)(2)(3)                                                200,000   $     12,909,926
eBay, Inc.(1)                                                      89,632          5,789,331
eBay, Inc.(1)(2)(3)                                               318,000         20,534,485
InterActiveCorp.(1)                                               806,192         27,354,095
School Specialty Corp.(1)                                          49,197          1,673,190
--------------------------------------------------------------------------------------------
                                                                            $     68,261,027
--------------------------------------------------------------------------------------------

INTERNET SOFTWARE AND SERVICES -- 0.0%

Retek, Inc.(1)                                                    150,348   $      1,395,229
--------------------------------------------------------------------------------------------
                                                                            $      1,395,229
--------------------------------------------------------------------------------------------

IT SERVICES -- 3.1%

Accenture Ltd.(1)                                               3,638,000   $     95,752,160
Acxiom Corp.(1)                                                   647,804         12,029,720
Affiliated Computer Services(1)                                   200,654         10,927,617
Automatic Data Processing, Inc.                                 2,223,695         88,080,559
BISYS Group, Inc. (The)(1)                                        280,492          4,173,721
Ceridian Corp.(1)                                                 166,750          3,491,745
Certegy, Inc.                                                      42,862          1,405,874
Computer Sciences Corp.(1)                                        388,302         17,174,597
Concord EFS, Inc.(1)                                              267,810          3,974,300
CSG Systems International, Inc.(1)                                 41,116            513,539
DST Systems, Inc.(1)                                              391,034         16,329,580
eFunds Corp.(1)                                                    17,645            306,141
Electronic Data Systems Corp.                                     157,712          3,870,252
First Data Corp.                                                4,920,602        202,187,536
Gartner Group, Inc., Class A(1)                                     4,811             54,412
Gartner Group, Inc., Class B(1)                                    92,416          1,005,486
Keane, Inc.(1)                                                     52,404            767,195
Paychex, Inc.                                                   1,379,399         51,313,643
Perot Systems Corp.(1)                                            726,775          9,796,927
Safeguard Scientifics, Inc.(1)                                     26,579            107,379
SunGard Data Systems, Inc.(1)                                     822,160         22,782,054
--------------------------------------------------------------------------------------------
                                                                            $    546,044,437
--------------------------------------------------------------------------------------------

LEISURE EQUIPMENT AND PRODUCTS -- 0.0%

Eastman Kodak Co.                                                 150,547   $      3,864,541
Mattel, Inc.                                                        9,739            187,671
--------------------------------------------------------------------------------------------
                                                                            $      4,052,212
--------------------------------------------------------------------------------------------

MACHINERY -- 3.0%

Caterpillar, Inc.                                                  27,255   $      2,262,710
Danaher Corporation                                             2,015,985   $    184,966,624
Deere & Co.                                                     3,450,000        224,422,500
Dionex Corp.(1)                                                   139,750          6,431,295
Donaldson Company, Inc.                                            40,220          2,379,415
Dover Corp.                                                       375,527         14,927,198
Federal Signal Corp.                                              283,471          4,966,412
Illinois Tool Works, Inc.                                         756,502         63,478,083
ITT Industries, Inc.                                                4,214            312,721
Nordson Corporation                                               163,978          5,662,160
Parker-Hannifin Corporation                                        33,842          2,013,599
Tecumseh Products Co., Class A                                    156,420          7,575,421
Wabtec                                                            232,061          3,954,319
--------------------------------------------------------------------------------------------
                                                                            $    523,352,457
--------------------------------------------------------------------------------------------

<PAGE>
MEDIA -- 7.0%

ADVO, Inc.                                                        794,552   $     25,234,972
Belo (A.H.) Corp.                                                 542,924         15,386,466
Cablevision Systems Corp.(1)                                      207,410          4,851,320
Catalina Marketing Corp.(1)                                        89,203          1,798,332
Clear Channel Communications, Inc.                                424,444         19,876,713
Comcast Corp. Class A(1)                                        4,466,124        146,801,496
Comcast Corp. Class A Special(1)                                2,280,622         71,337,856
Cox Communications, Inc., Class A(1)                            1,265,627         43,600,850
Disney (Walt) Company                                           6,250,933        145,834,267
EchoStar Communications, Class A(1)                                35,150          1,195,100
Entercom Communications Corp.(1)                                  220,000         11,651,200
Gannett Co., Inc.                                               1,447,727        129,079,339
Havas Advertising, S.A. ADR                                     3,142,938         18,417,617
Hughes Electronics Corp.(1)                                            24                397
Interpublic Group of Companies., Inc.(1)                        1,520,905         23,726,118
KnightRidder, Inc.                                                 18,123          1,402,177
Lamar Advertising Co.(1)                                          243,271          9,078,874
Liberty Media Corp. Class A(1)                                    965,499         11,479,783
Liberty Media Corp. Class B(1)                                     32,876            453,689
MacClatchy Co. (The)                                               48,066          3,306,941
McGraw-Hill Companies, Inc. (The)                                 246,964         17,267,723
Meredith Corp.                                                    190,000          9,273,900
New York Times Co. (The), Class A                                 282,204         13,486,529
News Corporation Ltd.                                              93,967          2,842,502
Omnicom Group, Inc.                                             2,334,382        203,861,580
Proquest Company(1)                                               115,000          3,386,750
Publicis Groupe SA                                                367,533         11,914,205
Reuters Holdings plc ADR                                            1,431             36,319
</Table>

                      See notes to financial statements.

                                      54
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
MEDIA (CONTINUED)

Scripps (The E.W) Company                                          25,533   $      2,403,677
Time Warner Inc.(1)                                             3,754,241         67,538,796
Tribune Co.                                                     1,501,683         77,486,843
Univision Communications, Inc.(1)                                 917,233         36,404,978
Viacom, Inc., Class A                                              29,774          1,318,095
Viacom, Inc., Class B                                           1,383,821         61,413,976
Vivendi Universal S.A. ADR(1)                                     490,725         11,914,803
Washington Post Co. (The)                                          14,970         11,847,258
Westwood One, Inc.(1)                                             122,400          4,187,304
WPP Group plc                                                     139,450          1,369,256
WPP Group plc ADR                                                 209,454         10,294,664
--------------------------------------------------------------------------------------------
                                                                            $  1,232,762,665
--------------------------------------------------------------------------------------------

METALS AND MINING -- 0.2%

Alcoa, Inc.                                                       558,287   $     21,214,906
Allegheny Technologies, Inc.                                       21,408            283,014
Nucor Corp.                                                       221,462         12,401,872
Phelps Dodge Corp.(1)                                              14,862          1,130,850
Steel Dynamics, Inc.(1)                                           311,800          7,324,182
Worthington Industries, Inc.                                      147,466          2,658,812
--------------------------------------------------------------------------------------------
                                                                            $     45,013,636
--------------------------------------------------------------------------------------------

MULTILINE RETAIL -- 1.8%

99 Cents Only Stores(1)                                         1,142,232   $     31,102,977
Dollar General Corp.                                              101,456          2,129,561
Dollar Tree Stores, Inc.(1)                                       813,306         24,447,978
Family Dollar Stores, Inc.                                      2,618,411         93,948,587
Kohls Corp.(1)                                                         55              2,472
May Department Stores Co. (The)                                   632,760         18,394,333
Nordstrom, Inc.                                                    65,692          2,253,236
Penney (J.C.) Company, Inc.                                       529,169         13,906,561
Sears, Roebuck & Co.                                               16,950            771,055
Target Corp.                                                    3,576,019        137,319,130
--------------------------------------------------------------------------------------------
                                                                            $    324,275,890
--------------------------------------------------------------------------------------------

MULTI-UTILITIES AND UNREGULATED POWER -- 0.1%

AES Corporation(1)                                                 49,542   $        467,676
Duke Energy Corp.                                                 419,154          8,571,699
Dynegy, Inc.(1)                                                    63,525            271,887
El Paso Corp.                                                     175,909          1,440,695
National Fuel Gas Co.                                               4,000             97,760
Williams Companies. Inc. (The)                                    222,833   $      2,188,220
--------------------------------------------------------------------------------------------
                                                                            $     13,037,937
--------------------------------------------------------------------------------------------

OFFICE ELECTRONICS -- 0.0%

Ikon Office Solutions, Inc.                                        83,040   $        984,854
Xerox Corp.(1)                                                     20,000            276,000
Zebra Technologies Corp., Class A(1)                                9,000            597,330
--------------------------------------------------------------------------------------------
                                                                            $      1,858,184
--------------------------------------------------------------------------------------------

<PAGE>
OIL AND GAS -- 5.9%

Amerada Hess Corp.                                                 18,947   $      1,007,412
Anadarko Petroleum Corp.                                        2,557,003        130,432,723
Apache Corporation                                              1,035,690         83,994,459
Ashland, Inc.                                                      85,716          3,776,647
BP plc ADR                                                      5,056,838        249,554,955
Burlington Resources, Inc.                                      2,130,802        118,003,815
ChevronTexaco Corporation                                         123,875         10,701,561
ConocoPhillips                                                  1,790,067        117,374,693
Devon Energy Corp.                                                507,678         29,069,642
Exxon Mobil Corp.                                               5,811,941        238,289,581
Kerr - McGee Corp.                                                267,327         12,428,032
Marathon Oil Corp.                                                  1,450             47,980
Murphy Oil Corporation                                             13,200            862,092
Newfield Exploration Company(1)                                    60,000          2,672,400
Royal Dutch Petroleum Co.                                          96,661          5,064,070
Total Fina Elf SA ADR                                             400,000         37,004,000
Valero Energy Corp.                                                51,510          2,386,973
--------------------------------------------------------------------------------------------
                                                                            $  1,042,671,035
--------------------------------------------------------------------------------------------

PAPER AND FOREST PRODUCTS -- 0.2%

Georgia-Pacific Corp.                                             647,002   $     19,843,551
International Paper Co.                                           232,175         10,009,064
Louisiana-Pacific Corp.(1)                                         70,750          1,265,010
MeadWestvaco Corp.                                                 84,358          2,509,651
Weyerhaeuser Co.                                                  119,608          7,654,912
--------------------------------------------------------------------------------------------
                                                                            $     41,282,188
--------------------------------------------------------------------------------------------

PERSONAL PRODUCTS -- 1.4%

Avon Products, Inc.                                               186,700   $     12,600,383
Gillette Company                                                3,929,412        144,327,303
Lauder (Estee) Companies, Inc.                                  2,092,312         82,144,169
--------------------------------------------------------------------------------------------
                                                                            $    239,071,855
--------------------------------------------------------------------------------------------
</Table>

                      See notes to financial statements.

                                      55
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
PHARMACEUTICALS -- 7.0%

Abbott Laboratories                                             2,482,012   $    115,661,759
Allergan, Inc.                                                     38,840          2,983,300
Bristol-Myers Squibb Company                                    3,201,708         91,568,849
Elan Corp., PLC ADR(1)                                             31,838            219,364
Forest Laboratories, Inc.(1)                                      656,800         40,590,240
GlaxoSmithKline plc                                               433,759         20,221,845
Johnson & Johnson                                               2,917,570        150,721,666
King Pharmaceuticals, Inc.(1)                                   1,481,117         22,601,845
Lilly (Eli) & Co.                                               3,173,638        223,201,961
Merck & Co., Inc.                                               1,611,471         74,449,960
Mylan Laboratories, Inc.                                           27,992            707,078
Novo Nordisk ADR                                                  292,277         11,971,666
Pfizer, Inc.                                                    7,799,066        275,541,002
Schering AG ADR                                                    25,000          1,277,500
Schering-Plough Corp.                                           2,478,438         43,100,037
Sepracor, Inc.(1)                                                   4,000             95,720
Teva Pharmaceutical Industries Ltd. ADR                         1,200,000         68,052,000
Watson Pharmaceuticals, Inc.(1)                                   951,175         43,754,050
Wyeth Corp.                                                       974,196         41,354,620
--------------------------------------------------------------------------------------------
                                                                            $  1,228,074,462
--------------------------------------------------------------------------------------------

REAL ESTATE -- 0.2%

AvalonBay Communities, Inc.                                        55,000   $      2,629,000
Catellus Development Corp.                                        441,282         10,643,722
Jones Lang Lasalle, Inc.(1)                                       154,567          3,204,174
Plum Creek Timber Co., Inc.                                       198,791          6,053,186
Trammell Crow Co.(1)                                              804,200         10,655,650
--------------------------------------------------------------------------------------------
                                                                            $     33,185,732
--------------------------------------------------------------------------------------------

ROAD AND RAIL -- 0.2%

ANC Rental Corporation(1)                                         459,525   $             46
Burlington Northern Santa Fe Corp.                                203,594          6,586,266
CSX Corporation                                                    38,134          1,370,536
Florida East Coast Industries, Inc.                               121,978          4,037,472
Heartland Express, Inc.                                           435,436         10,533,197
Kansas City Southern Industries, Inc.(1)                           15,215            217,879
Norfolk Southern Corp.                                              3,990             94,364
Union Pacific Corp.                                                92,772          6,445,799
--------------------------------------------------------------------------------------------
                                                                            $     29,285,559
--------------------------------------------------------------------------------------------

SEMICONDUCTORS AND SEMICONDUCTOR
EQUIPMENT -- 2.6%

Agere Systems, Inc.(1)                                              6,495   $         19,810
Agere Systems, Inc., Class B(1)                                   159,398            462,254
Altera Corp.(1)                                                    66,116          1,500,833
Analog Devices, Inc.(1)                                           555,525         25,359,716
Applied Materials, Inc.(1)                                        418,392          9,392,900
Applied Materials, Inc.(1)(2)(3)                                  543,250         12,183,767
Broadcom Corp.(1)                                                 234,000          7,977,060
Conexant Systems, Inc.(1)                                         134,174            666,845
Cypress Semiconductor Corporation(1)                              152,742          3,262,569
Intel Corp.                                                     9,103,378        293,128,772
KLA-Tencor Corp.(1)                                               108,382          6,358,772
KLA-Tencor Corp.(1)(2)(3)                                          50,000          2,929,100
Linear Technologies Corp.                                          87,760          3,692,063
LSI Logic Corporation(1)                                          132,810          1,178,025
Maxim Integrated Products Co.                                     274,351         13,662,680
Mindspeed Technologies Inc.(1)                                     44,724            306,359
Skyworks Solutions, Inc.(1)                                        98,685            858,560
Taiwan Semiconductor ADR(1)                                     1,000,000         10,240,000
Teradyne, Inc.(1)                                                  27,996            712,498
Texas Instruments, Inc.                                         1,970,330         57,888,295
Xilinx, Inc.(1)                                                    68,518          2,654,387
--------------------------------------------------------------------------------------------
                                                                            $    454,435,265
--------------------------------------------------------------------------------------------

<PAGE>
SOFTWARE -- 2.5%

Adobe Systems, Inc.                                               261,994   $     10,296,364
BMC Software, Inc.(1)                                              27,000            503,550
Cadence Design Systems, Inc.(1)                                   900,000         16,182,000
Cognos, Inc.(1)                                                    77,000          2,357,740
Computer Associates International, Inc.                            33,070            904,134
Compuware Corp.(1)                                                150,944            911,702
Fair, Isaac and Co., Inc.                                         707,571         34,784,190
Henry (Jack) & Associates                                         201,006          4,136,703
I2 Technologies, Inc.(1)                                          233,752            388,028
Intuit, Inc.(1)                                                 1,108,389         58,644,862
Microsoft Corp.                                                 9,489,802        261,349,147
Oracle Corp.(1)                                                   737,178          9,730,750
PalmSource, Inc.(1)                                                20,208            440,332
Parametric Technology Corp.(1)                                     94,600            372,724
PeopleSoft, Inc.(1)                                               300,680          6,855,504
Reynolds & Reynolds, Co.                                          451,043         13,102,799
Siebel Systems, Inc.(1)                                           816,061         11,318,766
Symantec Corporation(1)                                            30,450          1,055,093
</Table>

                      See notes to financial statements.

                                      56
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
SOFTWARE (CONTINUED)

VERITAS Software Corp.(1)                                          43,942   $      1,632,885
Wind River Systems, Inc.(1)                                        91,910            805,132
--------------------------------------------------------------------------------------------
                                                                            $    435,772,405
--------------------------------------------------------------------------------------------

SPECIALTY RETAIL -- 2.2%

Abercrombie & Fitch Co.(1)                                         14,915   $        368,550
AutoNation, Inc.(1)                                             3,744,851         68,792,913
Best Buy Co., Inc.                                                313,610         16,382,986
Boise Cascade Corporation                                           2,192             72,029
Burlington Coat Factory Warehouse Corp.                           609,010         12,886,652
Carmax, Inc.(1)                                                    67,797          2,096,961
Circuit City Stores, Inc.                                         216,000          2,188,080
Gap, Inc. (The)                                                   541,012         12,556,889
Home Depot, Inc. (The)                                          3,469,933        123,147,922
Limited Brands, Inc.                                              813,017         14,658,697
Lowe's Companies                                                  963,356         53,360,289
Office Depot, Inc.(1)                                             238,664          3,988,075
Payless Shoesource, Inc.(1)                                        23,100            309,540
Pep Boys - Manny, Moe & Jack (The)                                 83,415          1,907,701
Pier 1 Imports, Inc.                                               44,982            983,307
RadioShack Corp.                                                  677,904         20,798,095
Sherwin-Williams Co. (The)                                         80,569          2,798,967
Staples, Inc.(1)                                                   92,500          2,525,250
Tiffany & Co.                                                      88,000          3,977,600
TJX Companies, Inc. (The)                                       2,016,834         44,471,190
Too, Inc.(1)                                                       38,284            646,234
--------------------------------------------------------------------------------------------
                                                                            $    388,917,927
--------------------------------------------------------------------------------------------

TEXTILES, APPAREL AND LUXURY GOODS -- 0.5%

Coach, Inc.(1)                                                    365,720   $     13,805,930
Nike Inc., Class B                                              1,079,222         73,883,538
Unifi, Inc.(1)                                                     42,921            276,840
--------------------------------------------------------------------------------------------
                                                                            $     87,966,308
--------------------------------------------------------------------------------------------

THRIFTS AND MORTGAGE FINANCE -- 0.8%

Countrywide Financial Corp.                                       133,333   $     10,113,308
Fannie Mae                                                        406,147         30,485,394
Freddie Mac                                                       135,586          7,907,376
Golden West Financial Corporation                                  21,845          2,254,186
GreenPoint Financial Corp.                                      1,081,474         38,197,662
MGIC Investment Corp.                                              85,000          4,839,900
Radian Group, Inc.                                                 30,800          1,501,500
Sovereign Bancorporation, Inc.                                     23,766   $        564,443
Washington Mutual, Inc.                                         1,204,074         48,307,449
--------------------------------------------------------------------------------------------
                                                                            $    144,171,218
--------------------------------------------------------------------------------------------

TOBACCO -- 0.2%

Altria Group Inc.                                                 593,732   $     32,310,895
UST, Inc.                                                             439             15,668
--------------------------------------------------------------------------------------------
                                                                            $     32,326,563
--------------------------------------------------------------------------------------------

<PAGE>
WIRELESS TELECOMMUNICATION SERVICES -- 0.1%

AT&T Wireless Services, Inc.(1)                                 1,321,244   $     10,556,740
Nextel Communications, Inc., Class A(1)                            73,122          2,051,803
Sprint Corp. - PCS Group(1)                                        19,754            111,017
Telephone and Data Systems, Inc.                                   70,844          4,431,292
Vodafone Group plc ADR                                            116,617          2,920,090
--------------------------------------------------------------------------------------------
                                                                            $     20,070,942
--------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
   (IDENTIFIED COST $14,558,336,419)                                        $ 17,461,971,848
--------------------------------------------------------------------------------------------

CONVERTIBLE PREFERRED STOCKS -- 0.0%

MULTI-UTILITIES AND UNREGULATED POWER -- 0.0%

Enron Corp.(1)(2)                                                  11,050   $          8,448
--------------------------------------------------------------------------------------------
                                                                            $          8,448
--------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
   (IDENTIFIED COST $4,500,777)                                             $          8,448
--------------------------------------------------------------------------------------------

PREFERRED STOCKS -- 0.0%

COMMERCIAL BANKS -- 0.0%

Wachovia Corp. (Dividend Equalization
   Preferred Shares)(1)                                           166,518   $            832
--------------------------------------------------------------------------------------------
                                                                            $            832
--------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
   (IDENTIFIED COST $39,407)                                                $            832
--------------------------------------------------------------------------------------------

RIGHTS -- 0.0%

BANKS -- 0.0%

Bank United Corp. (Litigation Contingent
   Payment Rights)(1)                                             102,072   $         12,249
--------------------------------------------------------------------------------------------
                                                                            $         12,249
--------------------------------------------------------------------------------------------
</Table>

                      See notes to financial statements.

                                      57
<Page>
<Table>
<Caption>
SECURITY                                                      SHARES             VALUE
--------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>
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)                                                $         12,249
--------------------------------------------------------------------------------------------

SHORT-TERM INVESTMENTS -- 0.3%

<Caption>
                                                          PRINCIPAL
                                                          AMOUNT
SECURITY                                                  (000'S OMITTED)        VALUE
--------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>
Investors Bank & Trust Company -
Time Deposit, 1.01%, 1/2/04                               $        47,415   $     47,415,330
--------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
   (AT AMORTIZED COST, $47,415,330)                                         $     47,415,330
--------------------------------------------------------------------------------------------

COMMERCIAL PAPER -- 0.4%

<Caption>
                                                          PRINCIPAL
                                                          AMOUNT
SECURITY                                                  (000'S OMITTED)        VALUE
--------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>
Old Line Funding Corp., 1.09%, 1/9/04                     $        25,000   $     24,993,944
Transamerica Finance Corp., 1.07%, 1/9/04                          50,000         49,988,111
--------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
   (AT AMORTIZED COST, $74,982,055)                                         $     74,982,055
--------------------------------------------------------------------------------------------

TOTAL INVESTMENTS -- 99.9%
   (IDENTIFIED COST $14,685,324,584)                                        $ 17,584,390,762
--------------------------------------------------------------------------------------------

OTHER ASSETS, LESS LIABILITIES -- 0.1%                                      $     25,198,243
--------------------------------------------------------------------------------------------

NET ASSETS -- 100.0%                                                        $ 17,609,589,005
--------------------------------------------------------------------------------------------
</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 restricted from resale for a period not exceeding two years. At
    December 31, 2003, the value of these securities totaled $49,748,189 or
    0.3% of net assets.

                      See notes to financial statements.

                                      58
<Page>
TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2003
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

AS OF DECEMBER 31, 2003

<Table>
<S>                                                                        <C>
ASSETS

Investments, at value
   (identified cost, $14,685,324,584)                                      $ 17,584,390,762
Cash                                                                                  5,669
Receivable for investments sold                                                   2,552,453
Dividends and interest receivable                                                22,326,200
Tax reclaim receivable                                                              578,423
-------------------------------------------------------------------------------------------
TOTAL ASSETS                                                               $ 17,609,853,507
-------------------------------------------------------------------------------------------

LIABILITIES

Payable to affiliate for Trustees' fees                                    $          8,252
Accrued expenses                                                                    256,250
-------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                          $        264,502
-------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO                  $ 17,609,589,005
-------------------------------------------------------------------------------------------

SOURCES OF NET ASSETS

Net proceeds from capital contributions and withdrawals                    $ 14,710,453,882
Net unrealized appreciation (computed on the basis of identified cost)        2,899,135,123
-------------------------------------------------------------------------------------------
TOTAL                                                                      $ 17,609,589,005
-------------------------------------------------------------------------------------------
</Table>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2003

<Table>
<S>                                                                        <C>
INVESTMENT INCOME

Dividends (net of foreign taxes, $2,599,762)                               $    229,304,460
Interest                                                                          3,621,452
-------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME                                                    $    232,925,912
-------------------------------------------------------------------------------------------

EXPENSES

Investment adviser fee                                                     $     67,584,543
Trustees' fees and expenses                                                          30,403
Custodian fee                                                                     1,909,174
Legal and accounting services                                                        85,806
Miscellaneous                                                                       270,270
-------------------------------------------------------------------------------------------
TOTAL EXPENSES                                                             $     69,880,196
-------------------------------------------------------------------------------------------

NET INVESTMENT INCOME                                                      $    163,045,716
-------------------------------------------------------------------------------------------

<PAGE>
REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain (loss) --
   Investment transactions (identified cost basis)                         $     73,809,988
   Securities sold short                                                         (2,985,249)
   Foreign currency transactions                                                     85,031
-------------------------------------------------------------------------------------------
NET REALIZED GAIN                                                          $     70,909,770
-------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
   Investments (identified cost basis)                                     $  3,174,871,573
   Securities sold short                                                           (203,701)
   Foreign currency                                                                  41,238
-------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)                       $  3,174,709,110
-------------------------------------------------------------------------------------------

NET REALIZED AND UNREALIZED GAIN                                           $  3,245,618,880
-------------------------------------------------------------------------------------------

NET INCREASE IN NET ASSETS FROM OPERATIONS                                 $  3,408,664,596
-------------------------------------------------------------------------------------------
</Table>

                      See notes to financial statements.

                                      59
<Page>
STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
INCREASE (DECREASE)                      YEAR ENDED           YEAR ENDED
IN NET ASSETS                            DECEMBER 31, 2003    DECEMBER 31, 2002
-------------------------------------------------------------------------------
<S>                                      <C>                  <C>
From operations --
   Net investment income                 $     163,045,716    $     139,150,041
   Net realized gain (loss)                     70,909,770         (459,996,840)
   Net change in unrealized
      appreciation (depreciation)            3,174,709,110       (3,312,547,564)
-------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
   NET ASSETS FROM OPERATIONS            $   3,408,664,596    $  (3,633,394,363)
-------------------------------------------------------------------------------
Capital transactions --
   Contributions                         $   1,351,483,956    $   2,786,165,872
   Withdrawals                              (1,722,081,135)      (2,917,114,901)
-------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS
   FROM CAPITAL TRANSACTIONS             $    (370,597,179)   $    (130,949,029)
-------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS    $   3,038,067,417    $  (3,764,343,392)
-------------------------------------------------------------------------------

NET ASSETS

At beginning of year                     $  14,571,521,588    $  18,335,864,980
-------------------------------------------------------------------------------
AT END OF YEAR                           $  17,609,589,005    $  14,571,521,588
-------------------------------------------------------------------------------
</Table>

                      See notes to financial statements.

                                      60
<Page>
SUPPLEMENTARY DATA

<Table>
<Caption>
                                                                       YEAR ENDED DECEMBER 31,
                                            ------------------------------------------------------------------------------
                                                2003            2002             2001             2000            1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>              <C>              <C>             <C>
RATIOS/SUPPLEMENTAL DATA

Ratios (As a percentage of average daily
   net assets):
   Expenses                                         0.45%           0.45%            0.45%            0.45%           0.46%
   Net investment income                            1.05%           0.85%            0.64%            0.67%           0.72%
Portfolio Turnover                                    15%             23%              18%              13%             11%
--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                    23.88%         (19.52)%          (9.67)%             --              --
--------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S OMITTED)     $ 17,609,589    $ 14,571,522     $ 18,335,865     $ 18,385,069    $ 15,114,649
--------------------------------------------------------------------------------------------------------------------------
</Table>

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

                      See notes to financial statements.

                                      61
<Page>
TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2003
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 -- Marketable securities, including options, that
    are listed on foreign or U.S. securities exchanges are valued at closing
    sale prices on the exchange where such securities are principally traded.
    Marketable securities listed in the NASDAQ National Market System are
    valued at the NASDAQ official closing price. Unlisted or listed securities
    for which closing sale prices are not available are generally valued at
    the mean between the latest bid and asked prices. 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, which approximates fair value. 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.
    Over-the-counter options are normally valued at the mean between the
    latest bid and asked price. Investments 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.

    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 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 recorded when the
    security is delivered to

                                      62
<Page>
    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 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 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. For the year ended December 31, 2003, the
    advisory fee was 0.44% of the Portfolio's average daily net assets. 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, 2003, 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, 2003, purchases and sales of investments,
    other than short-term obligations, aggregated $2,315,531,044 and
    $2,601,576,258, respectively. In addition, investments having an aggregate
    market value of $701,210,532 at dates of withdrawal were distributed in
    payment for capital withdrawals. During the year ended December 31, 2003,
    investors contributed securities with a value of $789,740,742.

<PAGE>
4   FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION)

    The cost and unrealized appreciation (depreciation) in value of the
    investments owned at December 31, 2003 as computed on a federal income tax
    basis, were as follows:

<Table>
    <S>                                <C>
    AGGREGATE COST                     $        5,191,822,303
    ---------------------------------------------------------
    Gross unrealized appreciation      $       12,396,006,523
    Gross unrealized depreciation                  (3,438,064)
    ---------------------------------------------------------
    NET UNREALIZED APPRECIATION        $       12,392,568,459
    ---------------------------------------------------------
</Table>

                                      63
<Page>
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, 2003.

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 0.10% 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, 2003.

7   RESTRICTED SECURITIES

    At December 31, 2003, the Portfolio owned the following securities
    (representing 0.3% of net assets) which were restricted as to public
    resale and not registered under the Securities Act of 1933. 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
    DESCRIPTION                 ACQUISITION    SHARES        COST         FAIR VALUE
    ---------------------------------------------------------------------------------
    <S>                         <C>           <C>        <C>             <C>
    Applied Materials, Inc.     12/17/03      543,250    $ 11,575,935    $ 12,183,767
    eBay, Inc                    5/13/03      200,000       9,466,769      12,909,926
    eBay, Inc.                   2/19/03      318,000      12,143,667      20,534,485
    KLA-Tencor Corp.            12/17/03       50,000       2,744,377       2,929,100
    Sysco Corp.                 12/17/03       32,036       1,157,644       1,190,911
    ---------------------------------------------------------------------------------
                                                         $ 37,088,392    $ 49,748,189
    ---------------------------------------------------------------------------------
</Table>

                                      64
<Page>
TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2003
INDEPENDENT AUDITORS' REPORT

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, 2003, and the related statement of operations
for the year then ended, the statements of changes in net assets for the two
years in the period then ended and the supplementary data for each of the five
years ended 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and supplementary data 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, 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 financial statements and supplementary data present
fairly, in all material respects, the financial position of Tax-Managed Growth
Portfolio at December 31, 2003, 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.

DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 20, 2004

                                      65
<Page>
BELMAR CAPITAL FUND LLC as of December 31, 2003


           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 AUDITORS
           Deloitte & Touche LLP
           200 Berkeley Street
           Boston, MA 0211637

                                      66
<Page>
                                   SIGNATURES


Pursuant to the  requirements  of Section 13 of the  Securities  Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 15, 2004.

                                BELMAR CAPITAL FUND LLC
                                (Registrant)

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

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
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, 2004


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

Date: March 15, 2004

                                       67
<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 herewith.

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.

9              Not applicable and not filed.

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.

11             Not applicable and not filed.

12             Not applicable and not filed.

21             List of Subsidiaries of the Fund.

24             Not applicable and not filed.

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

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

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

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

99.3           Form N-CSR of Eaton Vance Tax-Managed  Growth Portfolio (File No.
               811-7409)   for  its  year   ended   December   31,   2003  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).

                                       68