|UNITED STATES
|-------------



|SECURITIES AND EXCHANGE
  COMMISSION
|------------------------------------



|Washington, D.C. 20549
|----------------------



|FORM 10-Q
|---------

|[X]         |  | Quarterly Report Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|----------- |  | ----------------------------------------------------------------------------------------------
|            |  | For the quarterly period
      endedSeptember 30, 2005                                        
|[  
      ] |  | Transition Report Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
|            |  | For the transition period from                                                                
|            |  | Commission File No.000-25767                                                                  



|Belair Capital Fund
LLC
|-----------------------



|(Exact name of registrant as specified in its
      charter)
|------------------------------------------------------------

Massachusetts
    
    04-3404037(State of organization)
    
    (I.R.S. Employer Identification
      No.)The Eaton Vance Building255 State StreetBoston,
      Massachusetts
    
    02109(Address of principal executive
      offices)
    
    (Zip Code)Registrants telephone
      number:
    
    617-482-8260




|None(Former Name, Former Address and Former Fiscal Year, if
      changed since last report)
|--------------------------------------------------------------------------------------------

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

YES
    
    __X__
    
    NO _____


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

YES
    
    __X__
    
    NO _____


---

|              |  |                             |  | Belair Capital Fund
      LLC                                                      |  |   
|------------- |  | --------------------------- |  | ---------------------------------------------------------------------------------- |  | --
|              |  |                             |  | Index to Form 10-Q                                                                 |  |   
|PART
      I  |  | FINANCIAL
      INFORMATION |  | Page                                                                              
|Item          |  | 1.                          |  | Financial
      Statements                                                         |  |   
|              |  |                             |  | Condensed Consolidated
      Statements of Assets and Liabilities as of            |  |   
|              |  |                             |  | September 30, 2005
      (Unaudited) and December 31, 2004                         |  | 3 
|              |  |                             |  | Condensed Consolidated
      Statements of Operations (Unaudited) for the          |  |   
|              |  |                             |  | Three Months Ended
      September 30, 2005 and 2004 and for the Nine
      Months |  |   
|              |  |                             |  | Ended September 30, 2005
      and 2004                                            |  | 4 
|              |  |                             |  | Condensed Consolidated
      Statements of Changes in Net Assets for the           |  |   
|              |  |                             |  | Nine Months Ended
      September 30, 2005 (Unaudited) and the Year                |  |   
|              |  |                             |  | Ended December 31,
      2004                                                      |  | 6 
|              |  |                             |  | Condensed Consolidated
      Statements of Cash Flows (Unaudited) for the          |  |   
|              |  |                             |  | Nine Months Ended
      September 30, 2005 and 2004                                |  | 7 
|              |  |                             |  | Financial Highlights for
      the Nine Months Ended                               |  |   
|              |  |                             |  | September 30, 2005
      (Unaudited) and the Year Ended December 31, 2004          |  | 9 
|              |  |                             |  | Notes to Condensed
      Consolidated Financial Statements                         |  |   
|              |  |                             |  | as of September 30, 2005
      (Unaudited)                                         |  | 10
|Item          |  | 2.                          |  | Managements Discussion
      and Analysis of Financial Condition (MD&A)           |  |   
|              |  |                             |  | and Results of
      Operations                                                    |  | 16
|Item          |  | 3.                          |  | Quantitative and
      Qualitative Disclosures About Market Risk                   |  | 21
|Item          |  | 4.                          |  | Controls and
      Procedures                                                      |  | 23
|PART
      II |  | OTHER
      INFORMATION     |  |                                                                                   
|Item          |  | 1.                          |  | Legal
      Proceedings                                                            |  | 24
|Item          |  | 2.                          |  | Unregistered Sales of
      Equity Securities and Use of Proceeds                  |  | 24
|Item          |  | 3.                          |  | Defaults Upon Senior
      Securities                                              |  | 24
|Item          |  | 4.                          |  | Submission of Matters to a
      Vote of Security Holders                          |  | 24
|Item          |  | 5.                          |  | Other
      Information                                                            |  | 24
|Item          |  | 6.                          |  | Exhibits                                                                           |  | 25
|SIGNATURES    |  | 26                         
|EXHIBIT INDEX |  | 27                         
|              |  |                             |  | 2                                                                                  |  |   

---

|PART I. FINANCIAL INFORMATION                                              |  |                    |  |               |  |              |  |              
|-------------------------------------------------------------------------- |  | ------------------ |  | ------------- |  | ------------ |  | -------------
|Item 1.
      Financial Statements.                                        |  |                    |  |               |  |              |  |              
|                                                                          
|BELAIR CAPITAL FUND
      LLC                                              |  |                    |  |               |  |              |  |              
|Condensed Consolidated Statements of Assets
      and Liabilities          |  |                    |  |               |  |              |  |              
|                                                                           |  | September 30, 2005 |  |               |  | December 31,
|                                                                           |  |                    |  | (Unaudited)   |  |              |  | 2004         
|                                                                           |  |                    |  |              
|Assets:                                                                    |  |                    |  |               |  |              |  |              
|Investment in Belvedere
      Capital Fund Company LLC                     |  |                    |  |               |  |              |  |              
|(Belvedere
      Company)                                                  |  | $                  |  | 1,353,048,691 |  | $            |  | 1,643,447,807
|Investment in Partnership
      Preference Units                           |  |                    |  | 274,896,621   |  |              |  | 203,826,804  
|Investment in other real
      estate                                      |  |                    |  | 177,907,413   |  |              |  | 339,580,435  
|Short-term
      investments                                               |  |                    |  | 11,143,039    |  |              |  | 1,891,000    
|                                                                           |  |                    |  |              
|Total investments                                                          |  | $                  |  | 1,816,995,764 |  | $            |  | 2,188,746,046
|Cash                                                                       |  |                    |  | 7,768,099     |  |              |  | 9,759,487    
|Escrow deposits 
      restricted                                         |  |                    |  | -             |  |              |  | 80,839       
|Open interest rate swap
      agreements, at value                         |  |                    |  | 7,425,308     |  |              |  | 2,366,785    
|Distributions and interest
      receivable                                |  |                    |  | 1,116,075     |  |              |  | 126,778      
|Other assets                                                               |  |                    |  | 4,033,008     |  |              |  | 5,158,454    
|                                                                           |  |                    |  |              
|Total assets                                                               |  | $                  |  | 1,837,338,254 |  | $            |  | 2,206,238,389
|                                                                           |  |                    |  |              
|                                                                          
|Liabilities:                                                               |  |                    |  |               |  |              |  |              
|Loan payable  Credit
      Facility                                       |  | $                  |  | 450,000,000   |  | $            |  | 405,000,000  
|Mortgages
      payable                                                    |  |                    |  | 135,000,000   |  |              |  | 247,630,517  
|Payable for Fund Shares
      redeemed                                     |  |                    |  | 251,688       |  |              |  | 19           
|Payable to affiliate for
      investment advisory and administration fees |  |                    |  | 428,845       |  |              |  | -            
|Payable to affiliate for
      servicing fees                              |  |                    |  | 117,683       |  |              |  | -            
|Security
      deposits                                                    |  |                    |  | 199,132       |  |              |  | 820,256      
|Accrued
      expenses:                                                    |  |                    |  |               |  |              |  |              
|Swap interest
      expense                                                |  |                    |  | 38,060        |  |              |  | 148,252      
|Interest
      expense                                                     |  |                    |  | 924,450       |  |              |  | 1,545,503    
|Property
      taxes                                                       |  |                    |  | 729,394       |  |              |  | 833,918      
|Other expenses
      and liabilities                                       |  |                    |  | 839,550       |  |              |  | 1,121,854    
|Minority interests in
      controlled subsidiaries                        |  |                    |  | 8,299,595     |  |              |  | 19,146,178   
|                                                                           |  |                    |  |              
|Total liabilities                                                          |  | $                  |  | 596,828,397   |  | $            |  | 676,246,497  
|                                                                           |  |                    |  |              
|                                                                          
|Net assets                                                                 |  | $                  |  | 1,240,509,857 |  | $            |  | 1,529,991,892
|                                                                           |  |                    |  |              
|                                                                          
|Shareholders Capital                                                      |  | $                  |  | 1,240,509,857 |  | $            |  | 1,529,991,892
|                                                                           |  |                    |  |              
|                                                                          
|Shares outstanding                                                         |  |                    |  | 9,633,159     |  |              |  | 12,058,622   
|                                                                           |  |                    |  |              
|                                                                          
|Net asset value and redemption price per
      Share                       |  | $                  |  | 128.77        |  | $            |  | 126.88       
|                                                                           |  |                    |  |              

See notes
to unaudited condensed consolidated financial statements

3

---

|BELAIR
      CAPITAL FUND LLC                                     |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|----------------------------------------------------------------- |  | ------------------------ |  | ------------------------ |  | ------------------ |  | ------------------------ |  | --------------------------------- |  | - |  | -----------
|Condensed Consolidated Statements of Operations
      (Unaudited) |  |                          |  |                          |  |                    |  |                          |  |                                   |  |  
|                                                                 
|                                                                  |  |                          |  | Three Months Ended       |  |                    |  | Nine Months Ended        |  |                                  
|                                                                  |  |                          |  |                         
|                                                                  |  | September 30,
      2005 |  | September 30,
      2004 |  | September 30, 2005 |  | September 30,
      2004
|                                                                  |  |                          |  |                          |  |                    |  |                         
|Investment
      Income:                                          |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|Dividends allocated from Belvedere Company                        |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|(net of
      foreign taxes of $35,297 $65,150,                   |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|$320,740 and $264,802,
      respectively)                        |  | $                        |  | 5,396,749                |  | $                  |  | 5,863,812                |  | $               
      18,695,728 |  | $ |  | 17,535,611 
|Interest allocated from Belvedere Company                         |  |                          |  | 34,903                   |  |                    |  | 9,940                    |  | 113,216                           |  |   |  | 55,343     
|Expenses allocated from Belvedere Company                         |  |                          |  | (2,083,312)              |  |                    |  | (2,351,208)              |  | (6,734,843)                       |  |   |  | (7,137,516)
|                                                                  |  |                          |  |                          |  |                    |  |                         
|Net investment income allocated from                              |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|Belvedere
      Company                                           |  | $                        |  | 3,348,340                |  | $                  |  | 3,522,544                |  | $                12,074,101       |  | $ |  | 10,453,438 
|Distributions from Partnership Preference
      Units             |  |                          |  | 4,571,431                |  |                    |  | 5,448,470                |  | 15,693,525                        |  |   |  | 20,942,014 
|Rental income                                                     |  |                          |  | 4,456,900                |  |                    |  | 8,892,692                |  | 15,735,574                        |  |   |  | 20,006,147 
|Interest                                                          |  |                          |  | 352,858                  |  |                    |  | 120,147                  |  | 650,194                           |  |   |  | 362,916    
|Other income                                                      |  |                          |  | -                        |  |                    |  | -                        |  | 5,853,947                         |  |   |  | -          
|                                                                  |  |                          |  |                          |  |                    |  |                         
|Total investment
      income                                     |  | $                        |  | 12,729,529               |  | $                  |  | 17,983,853               |  | $               50,007,341        |  | $ |  | 51,764,515 
|                                                                  |  |                          |  |                          |  |                    |  |                         
|                                                                 
|Expenses:                                                         |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|Investment advisory and administrative fees                       |  | $                        |  | 1,294,349                |  | $                  |  | 1,462,891                |  | $               
      4,059,899  |  | $ |  | 4,254,564  
|Property management fees                                          |  |                          |  | 117,296                  |  |                    |  | 276,863                  |  | 423,275                           |  |   |  | 718,744    
|Servicing fees                                                    |  |                          |  | 117,683                  |  |                    |  | 154,076                  |  | 383,902                           |  |   |  | 476,514    
|Interest expense on mortgages                                     |  |                          |  | 1,947,584                |  |                    |  | 2,386,112                |  | 6,666,613                         |  |   |  | 7,158,334  
|Interest expense on Credit Facility                               |  |                          |  | 4,579,813                |  |                    |  | 2,523,172                |  | 12,007,105                        |  |   |  | 5,890,234  
|Property and maintenance expenses                                 |  |                          |  | 299,834                  |  |                    |  | 1,938,895                |  | 2,792,867                         |  |   |  | 5,196,167  
|Property taxes and insurance                                      |  |                          |  | 708,755                  |  |                    |  | 1,111,430                |  | 2,365,948                         |  |   |  | 2,505,797  
|Miscellaneous                                                     |  |                          |  | 304,332                  |  |                    |  | 362,725                  |  | 1,307,088                         |  |   |  | 690,145    
|                                                                  |  |                          |  |                          |  |                    |  |                         
|Total
      expenses                                              |  | $                        |  | 9,369,646                |  | $                  |  | 10,216,164               |  | $            
       30,006,697   |  | $ |  | 26,890,499 
|                                                                  |  |                          |  |                          |  |                    |  |                         
|Net investment
      income before                                |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|minority interests in net income
      of                         |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|controlled subsidiaries                                           |  | $                        |  | 3,359,883                |  | $                  |  | 7,767,689                |  | $             
      20,000,644   |  | $ |  | 24,874,016 
|Minority interests in net
      income                            |  |                          |  |                          |  |                    |  |                          |  |                                   |  |   |  |            
|of controlled subsidiaries                                        |  |                          |  | (209,090)                |  |                    |  | (623,466)                |  | (509,041)                         |  |   |  | (849,446)  
|                                                                  |  |                          |  |                          |  |                    |  |                         
|Net investment
      income                                       |  | $                        |  | 3,150,793                |  | $                  |  | 7,144,223                |  | $             
      19,491,603   |  | $ |  | 24,024,570 
|                                                                  |  |                          |  |                          |  |                    |  |                         



|See notes to unaudited condensed consolidated financial
      statements
|------------------------------------------------------------------------

4

---

|BELAIR
      CAPITAL FUND LLC                                                 |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|----------------------------------------------------------------------------- |  | ------------------------ |  | ------------------ |  | ----------------------------- |  | ------------------------------- |  | -------------------------------- |  | ------------ |  | -----------
|Condensed Consolidated Statements of Operations
      (Unaudited) (Continued) |  |                          |  |                    |  |                               |  |                                 |  |                                 
|                                                                             
|                                                                              |  |                          |  | Three Months Ended |  |                               |  | Nine Months Ended               |  |                                 
|                                                                              |  |                          |  |                   
|                                                                              |  | September 30,
      2005 |  | September 30, 2004 |  | September 30, 2005            |  | September 30,
      2004       
|                                                                              |  |                          |  |                    |  |                               |  |                                
|Realized and Unrealized
      Gain (Loss)                                     |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|Net realized gain (loss)
      -                                              |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|Investment transactions, securities sold short
      and                      |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|foreign currency
      transactions allocated from                            |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|Belvedere Company
      (identified cost basis)                               |  | $                        |  | 4,608,048          |  | $                             |  | 5,766                           |  | $              
       5,604,444 |  | $            |  | 11,842,265 
|Investment transactions in Partnership                                        |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|Preference Units
      (identified cost basis)                                |  |                          |  | (609,304)          |  |                               |  | 1,096,914                       |  | 224,104                          |  |              |  | 3,496,457  
|Investment transactions in other real estate
      (net                       |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|of minority interest in
      realized gain (loss) of                         |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|controlled subsidiaries of
      $178,736, $0,                                |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|$(3,371,929) and $0,
      respectively)                                      |  |                          |  | 866,502            |  |                               |  | -                               |  | 3,192,695                        |  |              |  | -          
|Interest rate swap agreements (1)                                             |  |                          |  | (880,827)          |  |                               |  | (2,373,127)                     |  | (3,958,713)                      |  |              |  | (8,618,678)
|                                                                              |  |                          |  |                    |  |                               |  |                                
|Net realized gain
      (loss)                                                |  | $                        |  | 3,984,419          |  | $                             |  | (1,270,447)                     |  | $                5,062,530       |  | $            |  | 6,720,044  
|                                                                              |  |                          |  |                    |  |                               |  |                                
|                                                                             
|Change in unrealized
      appreciation (depreciation) -                      |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|Investments, securities sold short and
      foreign                          |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|currency allocated from Belvedere Company                                     |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|(identified cost basis)                                                       |  | $                        |  | 43,583,130         |  | $         
      (37,880,862) |  | $              
      6,349,382 |  | $                                |  | (3,439,420) 
|Investment in Partnership Preference Units                                    |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|(identified cost basis)                                                       |  |                          |  | (3,211,099)        |  |                               |  | 1,826,871                       |  | 3,741,129                        |  | (10,785,064)
|Investment in other real estate (net of
      minority                        |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|interest in unrealized appreciation
      (depreciation)                      |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|of controlled subsidiaries of $80,625,
      $(281,253),                      |  |                          |  |                    |  |                               |  |                                 |  |                                  |  |              |  |            
|$3,462,737 and $1,778,551, respectively)                                      |  |                          |  | 364,137            |  |                               |  | (1,922,932)                     |  | 1,554,287                        |  |              |  | (4,368,174)
|Interest rate swap agreements                                                 |  |                          |  | 4,575,505          |  |                               |  | (5,309,803)                     |  | 5,058,523                        |  |              |  | (424,279)  
|                                                                              |  |                          |  |                    |  |                               |  |                                
|Net change in unrealized
      appreciation (depreciation)                    |  | $                        |  | 45,311,673         |  | $        
       (43,286,726) |  | $          
       16,703,321   |  | $            
      (19,016,937)
|                                                                              |  |                          |  |                    |  |                               |  |                                
|                                                                             
|Net realized and
      unrealized gain (loss)                                 |  | $                        |  | 49,296,092         |  | $         
      (44,557,173) |  | $           
      21,765,851   |  | $            
      (12,296,893)
|                                                                              |  |                          |  |                    |  |                               |  |                                
|                                                                             
|Net increase (decrease) in
      net assets from operations                   |  | $                        |  | 52,446,885         |  | $        
       (37,412,950) |  | $          
      41,257,454    |  | $                                |  | 11,727,677  
|                                                                              |  |                          |  |                    |  |                               |  |                                

(1) Amounts
include periodic payments made in connection with interest rate swap agreements
of $880,827, $2,909,625, $3,958,713 and $9,155,176, respectively (Note
4).

See notes
to unaudited condensed consolidated financial statements

5

---

|BELAIR
      CAPITAL FUND LLC                                                |  |                          |  |               |  |                         |  |              
|---------------------------------------------------------------------------- |  | ------------------------ |  | ------------- |  | ----------------------- |  | -------------
|Condensed Consolidated
      Statements of Changes in Net Assets             |  |                          |  |               |  |                         |  |              
|                                                                             |  |                          |  | Nine Months   |  |                         |  |              
|                                                                             |  |                          |  | Ended         |  |                         |  |              
|                                                                             |  | September 30,
      2005 |  |               |  | Year Ended             
|                                                                             |  |                          |  | (Unaudited)   |  | December 31,
      2004
|                                                                             |  |                          |  |              
|Increase (Decrease) in Net
      Assets:                                     |  |                          |  |               |  |                         |  |              
|From operations
      -                                                      |  |                          |  |               |  |                         |  |              
|Net investment
      income                                                  |  | $                        |  | 19,491,603    |  | $                       |  | 31,237,747   
|Net realized
      gain from investment transactions, securities sold short, |  |                          |  |               |  |                         |  |              
|foreign currency transactions and interest rate swap
      agreements        |  |                          |  | 5,062,530     |  |                         |  | 30,327,282   
|Net change in
      unrealized appreciation (depreciation) of investments,   |  |                          |  |               |  |                         |  |              
|securities sold short, foreign currency and interest rate
      swap         |  |                          |  |               |  |                         |  |              
|agreements                                                                   |  |                          |  | 16,703,321    |  |                         |  | 44,982,446   
|                                                                             |  |                          |  |              
|Net increase in net assets
      from operations                             |  | $                        |  | 41,257,454    |  | $                       |  | 106,547,475  
|                                                                             |  |                          |  |              
|                                                                            
|Transactions in Fund
      Shares -                                          |  |                          |  |               |  |                         |  |              
|Net asset
      value of Fund Shares issued to Shareholders in               |  |                          |  |               |  |                         |  |              
|payment of distributions declared                                            |  | $                        |  | 12,687,778    |  | $                       |  | 7,259,756    
|Net asset
      value of Fund Shares redeemed                                |  |                          |  | (314,776,350) |  |                         |  | (89,817,709) 
|                                                                             |  |                          |  |              
|Net decrease in net assets
      from Fund Share transactions                |  | $                        |  | (302,088,572) |  | $                       |  | (82,557,953) 
|                                                                             |  |                          |  |              
|                                                                            
|Distributions
      -                                                        |  |                          |  |               |  |                         |  |              
|Distributions
      to Shareholders                                          |  | $                        |  | (28,650,917)  |  | $                       |  | (16,279,479) 
|                                                                             |  |                          |  |              
|Total
      distributions                                                    |  | $                        |  | (28,650,917)  |  | $                       |  | (16,279,479) 
|                                                                             |  |                          |  |              
|                                                                            
|Net increase (decrease) in
      net assets                                  |  | $                        |  | (289,482,035) |  | $                       |  | 7,710,043    
|                                                                            
|Net assets:                                                                  |  |                          |  |               |  |                         |  |              
|At beginning
      of period                                                 |  | $                        |  | 1,529,991,892 |  | $                       |  | 1,522,281,849
|                                                                             |  |                          |  |              
|At end of
      period                                                       |  | $                        |  | 1,240,509,857 |  | $                       |  | 1,529,991,892
|                                                                             |  |                          |  |              

See notes
to unaudited condensed consolidated financial statements

6

---

|BELAIR
      CAPITAL FUND LLC                                                    |  |                                       |  |                                        |  |             
|-------------------------------------------------------------------------------- |  | ------------------------------------- |  | -------------------------------------- |  | ------------
|Condensed Consolidated
      Statements of Cash Flows (Unaudited)                |  |                                       |  |                                        |  |             
|                                                                                
|                                                                                 |  | Nine Months Ended                     |  |                                       
|                                                                                 |  |                                      
|                                                                                 |  | September 30, 2005                    |  | September 30,
      2004              
|                                                                                 |  |                                       |  |                                       
|Cash Flows From (For)
      Operating Activities                                |  |                                       |  |                                        |  |             
|Net increase in net assets
      from operations                                 |  | $               
       41,257,454    |  | $                                      |  | 11,727,677  
|Adjustments to reconcile
      net increase in net assets from                   |  |                                       |  |                                        |  |             
|operations to
      net cash flows for operating activities -                    |  |                                       |  |                                        |  |             
|Net investment income allocated from Belvedere
      Company                     |  | (12,074,101)                          |  |                                        |  | (10,453,438)
|Increase in interest receivable from other real estate
      investments         |  | (142,554)                             |  |                                        |  | (131,993)   
|(Increase) decrease in other assets                                              |  | 791,749                               |  |                                        |  | (4,896,184) 
|(Increase) decrease in distributions and interest
      receivable               |  | (989,297)                             |  |                                        |  | 567,409     
|Decrease in interest payable for open swap
      agreements                      |  | (110,192)                             |  |                                        |  | (80,231)    
|Increase in payable to affiliate for investment
      advisory                   |  |                                       |  |                                        |  |             
|and administrative fees                                                          |  | 428,845                               |  |                                        |  | -           
|Increase in payable to affiliate for servicing
      fees                        |  | 117,683                               |  |                                        |  | -           
|Increase (decrease) in security deposits, accrued interest
      and accrued     |  |                                       |  |                                        |  |             
|other expenses and liabilities                                                   |  | (147,168)                             |  |                                        |  | 2,218,522   
|Increase in accrued property taxes                                               |  | 392,898                               |  |                                        |  | 648,667     
|Purchases of Partnership Preference Units                                        |  | (135,861,641)                         |  |                                        |  | (67,498,333)
|Proceeds from sales of Partnership Preference
      Units                        |  | 68,757,057                            |  | 107,086,386                           
|Payment for investments in other real estate                                     |  | -                                     |  | (179,010,336)                         
|Proceeds from sale of investment in other real
      estate                      |  | 45,092,533                            |  |                                        |  | -           
|Improvements to rental property                                                  |  | (916,188)                             |  |                                        |  | (1,472,450) 
|Decrease in cash due to sale of majority interest in
      controlled subsidiary |  | (2,199,688)                           |  |                                        |  | -           
|Interest incurred on interest rate swap
      agreements                         |  | (3,958,713)                           |  |                                        |  | (9,155,176) 
|Payment received on termination of interest rate swap
      agreement            |  | -                                     |  |                                        |  | 536,498     
|(Increase) decrease in short-term investments                                    |  | (9,252,039)                           |  |                                        |  | 9,495,330   
|Minority interests in net income of controlled
      subsidiaries                |  | 509,041                               |  |                                        |  | 849,446     
|Net realized gain from investment transactions, securities
      sold            |  |                                       |  |                                        |  |             
|short, foreign currency transactions and
      interest rate swap agreements     |  | (5,062,530)                           |  |                                        |  | (6,720,044) 
|Net change in unrealized (appreciation) depreciation of
      investments,       |  |                                       |  |                                        |  |             
|securities sold short, foreign currency and
      interest rate                  |  |                                       |  |                                        |  |             
|swap agreements                                                                  |  | (16,703,321)                          |  |                                        |  | 19,016,937  
|                                                                                 |  |                                       |  |                                       
|Net cash flows for
      operating activities                                    |  | $                
      (30,070,172)  |  | $                
      (127,271,313) 
|                                                                                 |  |                                       |  |                                       
|                                                                                
|Cash Flows From (For)
      Financing Activities                                |  |                                       |  |                                        |  |             
|Proceeds from
      Credit Facility                                              |  | $                   
      89,000,000 |  | $                  
       179,200,000
|Repayment of
      Credit Facility                                               |  | (44,000,000)                          |  |                                        |  | (43,500,000)
|Issuance of
      real estate joint venture preferred shares                     |  | 240,000                               |  |                                        |  | -           
|Payments for
      Fund Shares redeemed                                          |  | (97,638)                              |  |                                        |  | (3,635)     
|Distributions
      paid to Shareholders                                         |  | (15,963,139)                          |  |                                        |  | (9,019,723) 
|Distributions
      paid to minority shareholders                                |  | (1,100,439)                           |  |                                        |  | (34,400)    
|                                                                                 |  |                                       |  |                                       
|Net cash flows from
      financing activities                                   |  | $                    28,078,784       |  | $                  
       126,642,242
|                                                                                 |  |                                       |  |                                       
|                                                                                
|Net decrease in
      cash                                                       |  | $                  
      (1,991,388) |  | $                                      |  | (629,071)   
|                                                                                
|Cash at beginning of
      period                                                |  | $                     9,759,487       |  | $                                      |  | 8,687,577   
|                                                                                 |  |                                       |  |                                       
|Cash at end of
      period                                                      |  | $                   
       7,768,099 |  | $                                      |  | 8,058,506   
|                                                                                 |  |                                       |  |                                       

See notes
to unaudited condensed consolidated financial statements

7

---

|BELAIR
      CAPITAL FUND LLC                                                 |  |                    |  |                         |  |   |  |            
|----------------------------------------------------------------------------- |  | ------------------ |  | ----------------------- |  | - |  | -----------
|Condensed Consolidated
      Statements of Cash Flows (Unaudited) (Continued) |  |                    |  |                         |  |   |  |            
|                                                                             
|                                                                              |  |                    |  | Nine Months
      Ended
|                                                                              |  |                   
|                                                                              |  | September 30, 2005 |  | September 30, 2004     
|                                                                              |  |                    |  |                        
|Supplemental Disclosure
      and Non-cash Investing and                      |  |                    |  |                         |  |   |  |            
|Financing
      Activities                                                   |  |                    |  |                         |  |   |  |            
|Interest paid on loan  Credit Facility                                       |  | $                  |  | 11,779,838              |  | $ |  | 5,792,824  
|Interest paid on mortgages                                                    |  | $                  |  | 6,522,718               |  | $ |  | 7,036,592  
|Interest paid on interest rate swap
      agreements                          |  | $                  |  | 4,068,905               |  | $ |  | 9,235,407  
|Market value of securities distributed in payment
      of                    |  |                    |  |                         |  |   |  |            
|redemptions                                                                   |  | $                  |  | 314,427,043             |  | $ |  | 51,849,198 
|Market value of real property and other assets, net
      of                  |  |                    |  |                         |  |   |  |            
|current liabilities assumed in conjunction
      with the                     |  |                    |  |                         |  |   |  |            
|acquisition of other real
      estate                                        |  | $                  |  | -                       |  | $ |  | 223,732,316
|Market value of minority interests assumed
      in                           |  |                    |  |                         |  |   |  |            
|conjunction with the acquisition of other
      real estate                   |  | $                  |  | -                       |  | $ |  | 44,746,462 
|Market value of real property and other assets, net
      of                  |  |                    |  |                         |  |   |  |            
|current liabilities, disposed of in
      conjunction with the                |  |                    |  |                         |  |   |  |            
|sale of other real estate                                                     |  | $                  |  | 163,004,330             |  | $ |  | -          
|Market value of minority interest disposed of
      in                        |  |                    |  |                         |  |   |  |            
|conjunction with the sale of other real
      estate                          |  | $                  |  | 10,585,993              |  | $ |  | -          
|Mortgage disposed of in conjunction with the sale
      of                    |  |                    |  |                         |  |   |  |            
|other real estate                                                             |  | $                  |  | 112,630,517             |  | $ |  | -          
|Non-cash change in working capital of real estate
      investments           |  | $                  |  | 894,238                 |  | $ |  | -          

See notes
to unaudited condensed consolidated financial statements

8

---

|BELAIR CAPITAL FUND LLC                                                  |  |   |  |                         |  |                   |  |          
|------------------------------------------------------------------------ |  | - |  | ----------------------- |  | ----------------- |  | ---------
|Condensed Consolidated Financial Statements
      (Continued)            |  |   |  |                         |  |                   |  |          
|                                                                        
|Financial
      Highlights                                               |  |   |  |                         |  |                   |  |          
|                                                                         |  |   |  | Nine
      Months Ended |  |                   |  |          
|                                                                         |  |   |  | September 30, 2005      |  | Year Ended       
|                                                                         |  |   |  | (Unaudited)             |  | December 31, 2004
|                                                                        
|Net asset value 
      Beginning of period                              |  |   |  | $                       |  | 126.880           |  | $        
|                                                                        
|Income (loss)
      from operations                                      |  |   |  |                         |  |                   |  |          
|                                                                        
|Net investment income
      (1)                                          |  |   |  | $                       |  | 1.754             |  | $        
|Net realized and
      unrealized gain                                   |  |   |  |                         |  | 2.516             |  |          
|                                                                        
|Total income
      from operations                                       |  |   |  | $                       |  | 4.270             |  | $        
|                                                                        
|Distributions                                                            |  |   |  |                         |  |                   |  |          
|                                                                        
|Distributions to
      Shareholders                                      |  |   |  | $                       |  | (2.380)           |  | $        
|                                                                        
|Total
      distributions                                                |  |   |  | $                       |  | (2.380)           |  | $        
|                                                                        
|                                                                        
|Net asset
      value  End of period                                    |  |   |  | $                       |  | 128.770           |  | $        
|                                                                        
|                                                                        
|Total Return
      (2)                                                   |  |   |  |                         |  | 3.49%             |  |          
|                                                                        
|                                                                        
|Ratios as a percentage of average net assets
      (3)                   |  |   |  |                         |  |                   |  |          
|                                                                        
|Expenses of Consolidated Real Property
      Subsidiaries                |  |   |  |                         |  |                   |  |          
|Interest and other borrowing costs (4)                                   |  |   |  | 0.53% (9)               |  |                   |  | 0.60%    
|Operating
      expenses (4)                                             |  |   |  |                         |  | 0.49% (9)         |  |          
|Belair Capital Fund LLC
      Expenses                                   |  |   |  |                         |  |                   |  |          
|Interest and other borrowing costs (5)(6)                                |  |   |  | 1.16% (9)               |  |                   |  | 0.58%    
|Investment advisory and administrative fees,                             |  |   |  |                         |  |                   |  |          
|servicing fees and other Fund operating
      expenses (5)(7)            |  |   |  | 1.15% (9)               |  |                   |  | 1.12%    
|                                                                         |  |  
|Total
      expenses                                                     |  |   |  |                         |  | 3.33%(9)          |  |          
|                                                                        
|Net investment
      income                                              |  |   |  |                         |  | 1.88% (9)         |  |          
|                                                                        
|                                                                        
|Ratios as a percentage of average gross assets
      (3)(8)              |  |   |  |                         |  |                   |  |          
|                                                                        
|Expenses of Consolidated Real Property
      Subsidiaries                |  |   |  |                         |  |                   |  |          
|Interest and
      other borrowing costs (4)                             |  |   |  |                         |  | 0.37% (9)         |  |          
|Operating
      expenses (4)                                             |  |   |  |                         |  | 0.34% (9)         |  |          
|Belair Capital Fund LLC
      Expenses                                   |  |   |  |                         |  |                   |  |          
|Interest and
      other borrowing costs (5)(6)                          |  |   |  |                         |  | 0.81% (9)         |  |          
|Investment advisory and administrative fees,                             |  |   |  |                         |  |                   |  |          
|servicing fees and other Fund operating
      expenses (5)(7)            |  |   |  | 0.80% (9)               |  |                   |  | 0.80%    
|                                                                         |  |  
|Total
      expenses                                                     |  |   |  |                         |  | 2.33%(9)          |  |          
|                                                                        
|Net investment
      income                                              |  |   |  |                         |  | 1.32% (9)         |  |          
|                                                                        
|Supplemental
      Data                                                  |  |   |  |                         |  |                   |  |          
|                                                                        
|Net
      assets, end of period (000s omitted)                          |  | $ |  | 1,240,510               |  | $                 |  | 1,529,992
|Portfolio turnover of Tax-Managed Growth Portfolio (the
      Portfolio) |  |   |  | 0.32%                   |  |                   |  | 3%       
|                                                                        

|(1) | Calculated using average shares outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Returns are calculated by determining the percentage
      change in net asset value with all distributions reinvested. Total return
      is not computed on an annualized basis.                                                                                                                                                                                                                                                                                                         
|   
|(3) | For
      the purpose of calculating ratios, the income and expenses of Belair Real
      Estate Corporation's (Belair Real Estate) controlled subsidiaries are
      reduced by the proportionate interests therein of investors other than
      Belair Real Estate.                                                                                                                                                                                                                     
|   
|(4) | Includes Belair Real Estate's proportional share of
      expenses incurred by its controlled subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                
|   
|(5) | Includes the expenses of Belair Capital Fund LLC (Belair
      Capital) and Belair Real Estate. Does not include expenses of Belair Real
      Estate's controlled subsidiaries.                                                                                                                                                                                                                                                                                                           
|   
|(6) | Ratios do not include interest incurred in connection
      with interest rate swap agreements. Had such amounts been included, ratios
      would be higher.                                                                                                                                                                                                                                                                                                                              
|   
|(7) | Includes Belair Capitals share of Belvedere Capital Fund
      Company LLC's (Belvedere Company) allocated expenses, including those
      expenses allocated from the Portfolio.                                                                                                                                                                                                                                                                                                         
|   
|(8) | Average gross assets is defined as the average daily
      amount of all assets of Belair Capital (not including its investment in
      Belair Real Estate) plus all assets of Belair Real Estate minus the sum of
      their liabilities other than the principal amount of money borrowed. For
      this purpose, the assets of Belair Real Estate's controlled subsidiaries
      are reduced by the proportionate interest therein of investors other than
      Belair Real Estate.
|   
|(9) | Annualized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   



|See notes to unaudited condensed consolidated financial
      statements9
|-------------------------------------------------------------------------

---



|BELAIR
      CAPITAL FUND LLCas of September 30, 2005Notes to Condensed Consolidated
      Financial Statements (Unaudited)
|---------------------------------------------------------------------------------------------------------------------------



|1 Basis
      of Presentation
|-----------------------------

The
condensed consolidated interim financial statements of Belair Capital Fund LLC
(Belair Capital) and its subsidiaries (collectively, the Fund) have been
prepared, without audit, in accordance with accounting principles generally
accepted in the United States of America (GAAP) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with GAAP have been
condensed or omitted as permitted by such rules and regulations. All
adjustments, consisting of normal recurring adjustments, have been included.
Management believes that the disclosures are adequate to present fairly the
financial position, results of operations, cash flows and financial highlights
as of the dates and for the periods presented. It is suggested that these
interim financial statements be read in conjunction with the financial
statements and the notes thereto included in the Funds latest annual report on
Form 10-K. Results for interim periods are not necessarily indicative of those
to be expected for the full fiscal year.

The balance
sheet at December 31, 2004 and the statement of changes in net assets and the
financial highlights for the year then ended have been derived from the December
31, 2004 audited financial statements but do not include all of the information
and footnotes required by GAAP for complete financial statements as permitted by
the instructions to Form 10-Q and Article 10 of Regulation S-X.



|2
      Investment Transactions
|-------------------------------

The
following table summarizes the Funds investment transactions, other than
short-term obligations, for the nine months ended September 30, 2005 and 2004:

|                                                                    |  |                          |  | Nine Months
      Ended
|------------------------------------------------------------------- |  | ------------------------ |  | -----------------------
|                                                                    |  |                         
|Investment Transactions                                             |  | September 30,
      2005 |  | September 30, 2004     
|                                                                   
|Decreases in investment in
      Belvedere Capital Fund Company LLC |  | $                        |  | 314,427,043            
|Acquisition of other real
      estate (1)                          |  | $                        |  | -                      
|Sale of other real estate
      (2)                                 |  | $                        |  | 45,092,533             
|Purchases of Partnership
      Preference Units (3)                 |  | $                        |  | 135,861,641            
|Sales of Partnership
      Preference Units (4)                     |  | $                        |  | 68,757,057             
|                                                                   

|(1) | On
      June 30, 2004 and August 4, 2004, Belair Real Estate Corporation (Belair
      Real Estate) purchased an indirect investment in real property through a
      controlled subsidiary, Elkhorn Property Trust (Elkhorn), for $17,686,317
      and $161,324,019, respectively.                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | In
      February 2005, Belair Real Estate sold its majority interest in Bel
      Residential Properties Trust (Bel Residential) to another fund advised by
      Boston Management and Research (Boston Management) recognizing a gain of
      $2,326,193. On September 30, 2005, Elkhorn sold a portion of its interest
      in property management contracts pertaining to properties of which the
      Fund does not own a direct or indirect interest for which Belair Real
      Estate recognized a gain of $866,502.
|   
|(3) | Purchases of Partnership Preference Units during the nine
      months ended September 30, 2005 and 2004 represent Partnership Preference
      Units purchased from other investment funds advised by Boston
      Management.                                                                                                                                                                                                                                                                                                 
|   
|(4) | Sales of Partnership Preference Units for the nine months
      ended September 30, 2005 and 2004 include Partnership Preference Units
      sold to other investment funds advised by Boston Management for which a
      gain of $224,104 and a loss of $113,968 were recognized,
      respectively.                                                                                                                                                                                                                         
|   

10

---



|3 Indirect Investment in the
      Portfolio
|--------------------------------------------

The
following table summarizes the Funds investment in Tax-Managed Growth Portfolio
(the Portfolio) through Belvedere Capital Fund Company LLC (Belvedere Company)
for the nine months ended September 30, 2005 and 2004, including allocations of
income, expenses and net realized and unrealized gains (losses) for the
respective periods then ended:

|                                                                                |  | Nine Months
      Ended
|------------------------------------------------------------------------------- |  | -----------------------
|                                                                                |  |                        
|                                                                                |  | September 30, 2005     
|                                                                               
|Belvedere Companys
      interest in the Portfolio (1)                         |  | $                      
|The Funds investment in
      Belvedere Company (2)                            |  | $                      
|Income allocated to
      Belvedere Company from the Portfolio                  |  | $                      
|Income allocated to the
      Fund from Belvedere Company                       |  | $                      
|Expenses allocated to
      Belvedere Company from the Portfolio                |  | $                      
|Expenses allocated to the
      Fund from Belvedere Company                     |  | $                      
|Net realized gain from
      investment transactions, securities sold short and |  |                        
|foreign
      currency transactions allocated to Belvedere Company from the     |  |                        
|Portfolio                                                                       |  | $                      
|Net realized gain from
      investment transactions, securities sold short and |  |                        
|foreign
      currency transactions allocated to the Fund from Belvedere        |  |                        
|Company                                                                         |  | $                      
|Net change in unrealized
      appreciation (depreciation) of investments,      |  |                        
|securities sold short and foreign currency allocated to
      Belvedere         |  |                        
|Company from the Portfolio                                                      |  | $                      
|Net change in unrealized
      appreciation (depreciation) of investments,      |  |                        
|securities sold short and foreign currency allocated to the
      Fund from     |  |                        
|Belvedere Company                                                               |  | $                      
|                                                                               

|(1) | As
      of September 30, 2005 and 2004, the value of Belvedere Companys interest
      in the Portfolio represents 69.3% and 65.9% of the Portfolios net assets,
      respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | As
      of September 30, 2005 and 2004, the Funds investment in Belvedere Company
      represents 10.4% and 13.2% of Belvedere Companys net assets,
      respectively.            
|   

A summary of
the Portfolios Statement of Assets and Liabilities at September 30, 2005,
December 31, 2004 and September 30, 2004 and its operations for the nine months
ended September 30, 2005, for the year ended December 31, 2004 and for the nine
months ended September 30, 2004 follows:

|                                      |  | September 30,
      2005 |  | December
      31, 2004 |  | September 30,
      2004
|------------------------------------- |  | ------------------------ |  | ----------------------- |  | ------------------------
|                                      |  |                          |  |                         |  |                         
|Investments, at
      value           |  | $                        |  | 18,678,299,659          |  | $                       
|Other assets                          |  |                          |  | 34,063,419              |  |                         
|                                     
|Total assets                          |  | $                        |  | 18,712,363,078          |  | $                       
|                                     
|Securities sold short, at
      value |  | $                        |  | -                       |  | $                       
|Loan payable  Line of
      Credit   |  |                          |  | -                       |  |                         
|Management fee
      payable          |  |                          |  | 6,726,529               |  |                         
|Other
      liabilities               |  |                          |  | 435,227                 |  |                         
|                                     
|Total
      liabilities               |  | $                        |  | 7,161,756               |  | $                       
|                                     
|Net assets                            |  | $                        |  | 18,705,201,322          |  | $                       
|                                     

11

---

|                                                 |  | September 30,
      2005 |  | December
      31, 2004 |  | September 30,
      2004
|------------------------------------------------ |  | ------------------------ |  | ----------------------- |  | ------------------------
|                                                 |  |                          |  |                         |  |                         
|Dividends and
      interest                     |  | $                        |  | 233,961,240             |  | $                       
|                                                
|Investment adviser
      fee                     |  | $                        |  | 60,374,997              |  | $                       
|Other
      expenses                             |  |                          |  | 1,919,988               |  |                         
|Total expense
      reductions                   |  |                          |  | (88,889)                |  |                         
|                                                
|Net expenses                                     |  | $                        |  | 62,206,096              |  | $                       
|                                                
|Net investment
      income                      |  | $                        |  | 171,755,144             |  | $                       
|Net realized gain from
      investment          |  |                          |  |                         |  |                         
|transactions,
      securities sold short and    |  |                          |  |                         |  |                         
|foreign
      currency transactions              |  |                          |  | 74,792,208              |  |                         
|Net change in unrealized
      appreciation      |  |                          |  |                         |  |                         
|(depreciation)
      of investments, securities  |  |                          |  |                         |  |                         
|sold short and
      foreign currency            |  |                          |  | 137,782,375             |  |                         
|                                                
|Net increase in net assets
      from operations |  | $                        |  | 384,329,727             |  | $                       
|                                                



| | 4
      Interest Rate Swap Agreements
| | -------------------------------------

Belair
Capital has entered into interest rate swap agreements with Merrill Lynch
Capital Services, Inc. in connection with its real estate investments and the
associated borrowings. Under such agreements, Belair 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 in place at September 30, 2005 and December 31, 2004 are listed
below.

|          |  |          |  |        |  |               |  |          |  |             |  |                               |  |              |  |        |  |          
|--------- |  | -------- |  | ------ |  | ------------- |  | -------- |  | ----------- |  | ----------------------------- |  | ------------ |  | ------ |  | ---------
|          |  |          |  |        |  |               |  | Initial  |  |             |  |                               |  |              |  |        |  |          
|          |  | Notional |  |        |  |               |  | Optional |  |             |  | Unrealized
      Appreciation
|          |  |          |  | Amount |  |               |  |          |  |             |  |                               |  |              |  | Termi- |  | Final    
|Effective |  | (000s   |  | Fixed  |  | Floating      |  | nation   |  | Termination |  | September 30,                 |  | December 31,
|Date      |  | omitted) |  | Rate   |  | Rate          |  | Date     |  | Date        |  |                               |  | 2005         |  | 2004  
|         
|10/03     |  | $20,000  |  | 4.045% |  | LIBOR + 0.30% |  | -        |  | 6/10        |  | $                             |  | 687,446      |  | $      |  | 265,191  
|10/03     |  | 61,500   |  | 4.865% |  | LIBOR + 0.30% |  | 07/04    |  | 6/10        |  |                               |  | 1,014,745    |  |        |  | 278,866  
|10/03     |  | 75,000   |  | 4.795% |  | LIBOR + 0.30% |  | 09/04    |  | 6/10        |  |                               |  | 1,376,344    |  |        |  | 450,060  
|10/03     |  | 42,000   |  | 4.69%  |  | LIBOR + 0.30% |  | 02/05    |  | 6/10        |  |                               |  | 892,113      |  |        |  | 354,457  
|10/03     |  | 49,000   |  | 4.665% |  | LIBOR + 0.30% |  | 03/05    |  | 6/10        |  |                               |  | 1,075,442    |  |        |  | 442,140  
|10/03     |  | 35,330   |  | 4.18%  |  | LIBOR + 0.30% |  | 07/09    |  | 6/10        |  |                               |  | 1,120,301    |  |        |  | 362,399  
|02/04     |  | 95,952   |  | 5.00%  |  | LIBOR + 0.30% |  | 08/04    |  | 6/10        |  |                               |  | 1,258,917    |  |        |  | 213,672  
|         
|Total     |  | $378,782 |  |        |  |               |  |          |  |             |  | $                             |  | 7,425,308    |  | $      |  | 2,366,785
|         



| | 5 Debt
| | ------

A Credit
FacilityOn February 17,
2005, Belair Capital amended its credit agreement with DrKW Holdings, Inc. to
establish a borrowing limit of $450,000,000 under that agreement. Belair Capital
used the proceeds from these borrowings to finance the Funds investment in
Partnership Preference Units. Borrowings under this credit arrangement accrue
interest at a rate of one-month LIBOR plus 0.30% per annum. As of September 30,
2005, outstanding borrowings under this credit arrangement totaled $450,000,000.

12

---

B MortgageIn February 2005,
in conjunction with the sale of Belair Real Estates majority interest in Bel
Residential (Note 2), the mortgage payable by Bel Residential was disposed of.
At the time of the transaction the loan balance was $112,630,517.



|6 Segment
      Information
|---------------------------

Belair
Capital pursues its investment objective primarily by investing indirectly in
the Portfolio through Belvedere Company. The Portfolio is a diversified
investment company that emphasizes investments in common stocks of domestic and
foreign growth companies that are considered by its investment adviser to be
high in quality and attractive in their long-term investment prospects. Separate
from its investment in Belvedere Company, Belair Capital invests in real estate
assets through its subsidiary, Belair Real Estate. Belair Real Estate invests
directly and indirectly in Partnership Preference Units, debt and common equity
investments in private real estate companies and in real property through a
controlled subsidiary, Elkhorn, and formerly invested in Bel Residential (for
the period during which Belair Real Estate maintained an interest in each of the
controlled subsidiaries).

Belair
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 the
net change in unrealized appreciation (depreciation). The accounting policies of
the reportable segments are the same as those for Belair Capital on a
consolidated basis. No reportable segments have been aggregated. Reportable
information by segment is as follows:

|                                                           |  | Tax-Managed              |  |              |  |             |  |                      |  |      
|---------------------------------------------------------- |  | ------------------------ |  | ------------ |  | ----------- |  | -------------------- |  | -----
|For the Three
      Months Ended                           |  | Growth                   |  |              |  | Real        |  |                      |  |      
|September 30,
      2005                                   |  | Portfolio*               |  |              |  | Estate      |  |                      |  | Total
|                                                          
|Revenue                                                    |  | $                        |  | 3,348,340    |  | $           |  | 9,104,944            |  | $    
|Interest expense on
      mortgages                        |  |                          |  | -            |  |             |  | (1,947,584)          |  |      
|Interest expense on Credit
      Facility                  |  |                          |  | -            |  |             |  | (3,973,286)          |  |      
|Operating
      expenses                                   |  |                          |  | (647,347)    |  |             |  | (2,018,646)          |  |      
|Minority interest in net
      income of controlled        |  |                          |  |              |  |             |  |                      |  |      
|subsidiaries                                               |  |                          |  | -            |  |             |  | (209,090)            |  |      
|                                                          
|Net
      investment income                                |  | $                        |  | 2,700,993    |  | $           |  | 956,338              |  | $    
|Net realized gain
      (loss)                             |  |                          |  | 4,608,048    |  |             |  | (623,629)            |  |      
|Net change in unrealized
      appreciation (depreciation) |  |                          |  | 43,583,130   |  |             |  | 1,728,543            |  |      
|                                                          
|Net increase
      in net assets from operations of        |  |                          |  |              |  |             |  |                      |  |      
|reportable segments                                        |  | $                        |  | 50,892,171   |  | $           |  | 2,061,252            |  | $    
|                                                          
|                                                          
|                                                           |  | Tax-Managed              |  |              |  |             |  |                      |  |      
|For the Three
      Months Ended                           |  | Growth                   |  |              |  | Real        |  |                      |  |      
|September 30,
      2004                                   |  | Portfolio*               |  |              |  | Estate      |  |                      |  | Total
|                                                          
|Revenue                                                    |  | $                        |  | 3,522,544    |  | $           |  | 14,395,076           |  | $    
|Interest expense on
      mortgages                        |  |                          |  | -            |  |             |  | (2,386,112)          |  |      
|Interest expense on Credit
      Facility                  |  |                          |  | -            |  |             |  | (2,262,416)          |  |      
|Operating
      expenses                                   |  |                          |  | (659,794)    |  |             |  | (4,434,527)          |  |      
|Minority interest in net
      income of controlled        |  |                          |  |              |  |             |  |                      |  |      
|subsidiary                                                 |  |                          |  | -            |  |             |  | (623,466)            |  |      
|                                                          
|Net
      investment income                                |  | $                        |  | 2,862,750    |  | $           |  | 4,688,555            |  | $    
|Net realized gain
      (loss)                             |  |                          |  | 5,766        |  |             |  | (1,276,213)          |  |      
|Net change in unrealized
      appreciation (depreciation) |  |                          |  | (37,880,862) |  |             |  | (5,405,864)          |  |      
|                                                          
|Net decrease
      in net assets from operations of        |  |                          |  |              |  |             |  |                      |  |      
|reportable segments                                        |  | $           (35,012,346) |  | $            |  | (1,993,522) |  | $
      (37,005,868)
|                                                          

13

---

|                                                           |  | Tax-Managed |  |             |  |        |  |              |  |      
|---------------------------------------------------------- |  | ----------- |  | ----------- |  | ------ |  | ------------ |  | -----
|For the Nine
      Months Ended                            |  | Growth      |  |             |  | Real   |  |              |  |      
|September 30,
      2005                                   |  | Portfolio*  |  |             |  | Estate |  |              |  | Total
|                                                          
|Revenue                                                    |  | $           |  | 12,074,101  |  | $      |  | 37,504,893   |  | $    
|Interest expense on
      mortgages                        |  |             |  | -           |  |        |  | (6,666,613)  |  |      
|Interest expense on Credit
      Facility                  |  |             |  | -           |  |        |  | (10,806,395) |  |      
|Operating
      expenses                                   |  |             |  | (1,994,034) |  |        |  | (8,693,217)  |  |      
|Minority interest in net
      income of controlled        |  |             |  |             |  |        |  |              |  |      
|subsidiaries                                               |  |             |  | -           |  |        |  | (509,041)    |  |      
|                                                          
|Net
      investment income                                |  | $           |  | 10,080,067  |  | $      |  | 10,829,627   |  | $    
|Net realized gain
      (loss)                             |  |             |  | 5,604,444   |  |        |  | (541,914)    |  |      
|Net change in unrealized
      appreciation (depreciation) |  |             |  | 6,349,382   |  |        |  | 10,353,939   |  |      
|                                                          
|Net increase
      in net assets from operations of        |  |             |  |             |  |        |  |              |  |      
|reportable segments                                        |  | $           |  | 22,033,893  |  | $      |  | 20,641,652   |  | $    
|                                                          
|                                                          
|                                                           |  | Tax-Managed |  |             |  |        |  |              |  |      
|For the Nine
      Months Ended                            |  | Growth      |  |             |  | Real   |  |              |  |      
|September 30,
      2004                                   |  | Portfolio*  |  |             |  | Estate |  |              |  | Total
|                                                          
|Revenue                                                    |  | $           |  | 10,453,438  |  | $      |  | 41,107,491   |  | $    
|Interest expense on
      mortgages                        |  |             |  | -           |  |        |  | (7,158,334)  |  |      
|Interest expense on Credit
      Facility                  |  |             |  | -           |  |        |  | (5,360,113)  |  |      
|Operating
      expenses                                   |  |             |  | (2,083,276) |  |        |  | (11,080,798) |  |      
|Minority interest in net
      income of controlled        |  |             |  |             |  |        |  |              |  |      
|subsidiaries                                               |  |             |  | -           |  |        |  | (849,446)    |  |      
|                                                          
|Net
      investment income                                |  | $           |  | 8,370,162   |  | $      |  | 16,658,800   |  | $    
|Net realized gain
      (loss)                             |  |             |  | 11,842,265  |  |        |  | (5,122,221)  |  |      
|Net change in unrealized
      appreciation (depreciation) |  |             |  | (3,439,420) |  |        |  | (15,577,517) |  |      
|                                                          
|Net increase
      (decrease) in net assets from           |  |             |  |             |  |        |  |              |  |      
|operations of reportable segments                          |  | $           |  | 16,773,007  |  | $      |  | (4,040,938)  |  | $    
|                                                          

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

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

|                                            |  | Three Months
      Ended |  | Nine Months
      Ended
|------------------------------------------- |  | ------------------------ |  | -----------------------
|                                            |  |                         
|                                            |  | September
      30,      |  | September
      30,    
|                                            |  | 2005                     |  | 2004                   
|                                            |  |                         
|Revenue:                                    |  |                          |  |                        
|Revenue from
      reportable segments      |  | $                        |  | 12,453,284             
|Unallocated
      amounts:                  |  |                          |  |                        
|Interest earned on cash not invested in the |  |                          |  |                        
|Portfolio or in
      subsidiaries          |  |                          |  | 276,245                
|                                            |  |                         
|Total
      revenue                         |  | $                        |  | 12,729,529             
|                                            |  |                         

14

---

|                                                 |  | Three Months
      Ended |  | Nine Months
      Ended
|------------------------------------------------ |  | ------------------------ |  | -----------------------
|                                                 |  |                         
|                                                 |  | September
      30,      |  | September
      30,    
|                                                 |  | 2005                     |  | 2004                   
|                                                 |  |                         
|Net increase (decrease) in
      net assets from |  |                          |  |                        
|operations:                                      |  |                          |  |                        
|Net increase
      (decrease) in net assets from |  |                          |  |                        
|operations of reportable segments                |  | $                        |  | 52,953,423             
|Unallocated
      investment income:             |  |                          |  |                        
|Interest earned on cash not invested in the      |  |                          |  |                        
|Portfolio or in
      subsidiaries               |  |                          |  | 276,245                
|Unallocated
      expenses (1):                  |  |                          |  |                        
|Servicing fees                                   |  |                          |  | (117,683)              
|Interest expense on Credit Facility              |  |                          |  | (606,527)              
|Audit, tax and legal fees                        |  |                          |  | (43,099)               
|Other operating expenses                         |  |                          |  | (15,474)               
|                                                 |  |                         
|Net increase (decrease)
      in net assets from |  |                          |  |                        
|operations                                       |  | $                        |  | 52,446,885             
|                                                 |  |                         

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

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

|                                                      |  | Tax-Managed             |  |               |  | Real   |  |              |  |      
|----------------------------------------------------- |  | ----------------------- |  | ------------- |  | ------ |  | ------------ |  | -----
|At September
      30, 2005                           |  | Growth
      Portfolio* |  |               |  | Estate |  |              |  | Total
|                                                     
|Segment
      assets                                  |  | $                       |  | 1,353,048,691 |  | $      |  | 470,395,112  |  | $    
|Segment
      liabilities                             |  |                         |  | 463,660       |  |        |  | 555,645,437  |  |      
|                                                     
|Net assets
      (liabilities) of reportable segments |  | $                       |  | 1,352,585,031 |  | $      |  | (85,250,325) |  | $    
|                                                     
|                                                     
|                                                      |  | Tax-Managed             |  |               |  | Real   |  |              |  |      
|At December
      31, 2004                            |  | Growth
      Portfolio* |  |               |  | Estate |  |              |  | Total
|                                                     
|Segment
      assets                                  |  | $                       |  | 1,643,447,807 |  | $      |  | 557,178,367  |  | $    
|Segment
      liabilities                             |  |                         |  | 19            |  |        |  | 655,203,581  |  |      
|                                                     
|Net assets
      (liabilities) of reportable segments |  | $                       |  | 1,643,447,788 |  | $      |  | (98,025,214) |  | $    
|                                                     

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

|                                        |  | September 30,
      2005 |  | December 31,
      2004
|--------------------------------------- |  | ------------------------ |  | -----------------------
|                                        |  |                         
|Net assets:                             |  |                          |  |                        
|Net assets of
      reportable segments |  | $                        |  | 1,267,334,706          
|Unallocated
      amounts:              |  |                          |  |                        
|Cash (1)                                |  |                          |  | 2,751,412              
|Short-term investments (1)              |  |                          |  | 11,143,039             
|Loan payable  Credit Facility (2)      |  |                          |  | (40,375,462)           
|Payable to affiliate for servicing fee  |  |                          |  | (117,683)              
|Other liabilities                       |  |                          |  | (226,155)              
|                                        |  |                         
|Net
      assets                        |  | $                        |  | 1,240,509,857          
|                                        |  |                         

|(1) | Unallocated cash and short-term investments represent cash
      and cash equivalents not invested in the Portfolio or real estate
      assets.                                                                                                                                     
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Unallocated amount of loan payable  Credit Facility
      represents borrowings not specifically used to fund real estate
      investments. Such borrowings are generally used to pay selling
      commissions, organization expenses and other liquidity needs of the
      Fund.
|   

15

---

Item 2. Managements Discussion and Analysis of Financial Condition (MD&A) and Results of Operations.

The information in this report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements typically are identified by use of terms such
as may, will, should, might, expect, anticipate, estimate, and similar words, although some forward-looking statements are expressed differently. The actual results
of Belair Capital Fund LLC (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.

The following discussion should be read in conjunction with the Funds unaudited condensed consolidated financial statements and related notes in Item 1 above.

MD&A and Results of Operations for the Quarter Ended September 30, 2005 Compared to the Quarter Ended September 30, 2004

Performance of the Fund.1The Funds
investment objective is to achieve long-term, after-tax returns for Shareholders. Eaton Vance Management (Eaton Vance), as the Funds manager, measures the Funds success in achieving its objective based on the investment returns of the
Fund, using the S&P 500 Index as the Funds primary performance benchmark. The S&P 500 Index is a broad-based unmanaged index of common stocks widely 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 Tax-Managed Growth Portfolio (the Portfolio). The Fund invests in the Portfolio through its interest in Belvedere Capital Fund Company
LLC (Belvedere Company). 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 borrowings incurred to acquire such investments and thereby add to Fund returns. The Fund has entered into interest rate swap agreements to fix a substantial portion of the borrowing costs under the Credit Facility (described
under "Liquidity and Capital Resources" below) used to acquire 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 was 4.05% for the quarter ended September 30, 2005. This return reflects an increase in the Funds net asset value per share from $123.76 to $128.77
during the period. The total return of the S&P 500 Index was 3.60% over the same period. The performance of the Fund exceeded that of the Portfolio by approximately 0.38% during the period. Last year, the Fund had a total return performance of
-2.42% for the quarter ended September 30, 2004. This return reflected a decrease in the Funds net asset value per share from $122.20 to $119.24 during the period. The S&P 500 Index had a total return of -1.87% over the same
period. The performance of the Fund trailed that of the Portfolio by approximately 0.38% during that period.

Performance of the Portfolio.For the quarter ended September 30, 2005, the Portfolio had a total return of 3.67%, which
compares to the 3.60% total return of the S&P 500 Index over the same period. During the third quarter of last year, the Portfolio had a total return of -2.04% and the S&P 500 Index had a total return of -1.87% . Following a lackluster first
half, U.S. equities posted modest gains for the third quarter of 2005. The spike in energy costs, exacerbated by two catastrophic Gulf Coast hurricanes, began to weigh on the resilient US consumer. However, an improving job market and continued
strength in capital spending helped keep the economy growing at a healthy pace. For the period, energy and utility sectors continued to lead the market, while small- and mid-cap stocks generally outperformed large-cap holdings. Also notable,
technology stocks reversed course and outperformed the market.

Similar to last quarter, defensive sectors such as utilities and health care performed the best, while on average telecommunications and consumer discretionary stocks were disappointing. Market
leading industries included electric utilities, metals and biotechnology, while diversified consumer services, chemicals, and wireless telecommunication were among the worst performing industries.

|1 | Total returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. 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. The Portfolios total return for the period reflects the total return of another fund that invests in the
Portfolio, adjusted for non-Portfolio expenses of that fund. Performance is for the stated time period only and is not annualized; due to market volatility, the Funds current performance may be lower or higher. The performance of the Fund and
the Portfolio is compared to that of their benchmark, the S&P 500 Index. It is not possible to invest directly in an Index.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 

16

---

The Portfolios large-cap growth focus was once again out of favor with the markets continued preference for value and smaller capitalization stocks. An underweight of the utilities
sector and an overweight of the underperforming consumer discretionary and industrials sectors also hurt returns. Sub-par performance of investments within the computers, machinery, and semiconductor industries was also disappointing.

On the positive side, continued emphasis of energy stocks and an underweight of the telecommunication services sector proved beneficial. Investments within commercial banks, health care services,
pharmaceuticals and staples industries were also positive.

Performance of Real Estate Investments.The Funds real estate investments are held through Belair Real Estate
Corporation (Belair Real Estate).Asof September 30, 2005, real estate investments includedan interest in a real estate joint venture (Real Estate Joint Venture), Elkhorn Property Trust (Elkhorn), a portfolio of income-producing preferred equity securities in real estate operating partnerships (Partnership
Preference Units) and certain debt and common equity securities of two private real estate companies. Elkhorn owns industrial distribution properties. As of September 30, 2005, the estimated fair value of the Funds real estate investments
represented 24.6% of the Funds total assets on a consolidated basis. After adjusting for the minority interest in the Real Estate Joint Venture, the Funds real estate investments represented 34.1% of the Funds net assets as of
September 30, 2005.

During the quarter ended September 30, 2005, rental income from real estate operations was approximately $4.5 million compared to approximately $8.9 million for the quarter ended
September 30, 2004, a decrease of $4.4 million or 49%.This decrease in rental income was principally due toBelair Real
Estates February 2005 sale of its interest in a multifamily Real Estate Joint Venture that provided 62% of consolidated rental income for the quarter ended September 30, 2004. The decline in rental income due to the sale of the multifamily
Real Estate Joint Venture was offset in part by the rental income of Elkhorn, which was acquired in June 2004. For the quarter ended September 30, 2005, Elkhorns rental income was negatively affected by a less favorable leasing environment
than expected.During the quarter ended September 30, 2004, rental income increased due to income from the industrial distribution properties acquired by Elkhorn on June 30 and August 4,
2004, and an increase in income from the multifamily Real Estate Joint Venture owned during that period.

During the quarter ended September 30, 2005, property operating expenses were approximately $1.1 million compared to approximately $3.3 million for the quarter ended September 30, 2004, a
decrease of $2.2 million or 67% (property operating expenses are before certain operating expenses of Belair Real Estate of approximately $0.9 million for the quarter ended September 30, 2005 and $1.1 million for the quarter ended
September 30, 2004). The decrease in property operating expenses was principally due to the February 2005 asset sale referenced in the preceding paragraph, offset in part by the operating expenses of Elkhorn, which was acquired in June 2004. For the
quarter ended September 30, 2005, Elkhorns property operating expenses were in line with expectations.Property operating expenses for the quarter ended September 30, 2004 increased
by approximately 32% due principally to expenses of the industrial distribution properties acquired by Elkhorn on June 30 and August 4, 2004, and a 5% increase in property and maintenance expenses for continuing multifamily operations.

For many industrial distribution properties, rent levels are expected to see minimal growth over the near term. Boston Management and Research (Boston Management) expects that improvements in
industrial distribution property operating performance will occur over the longer term.

During the quarter ended September 30, 2005, the Fund saw net unrealized appreciation of the estimated fair value of its other real estate investments (which includes Elkhorn and certain debt and
equity securities) of approximately $0.4 million compared to net unrealized depreciation of approximately $1.9 million during the quarter ended September 30, 2004. Net unrealized appreciation of approximately $0.4 million during the
quarter ended September 30, 2005 consisted of net unrealized appreciation in the value of the properties of Elkhorn, offset by slight depreciation in the value of debt and equity investments in the two private real estate companies.The Funds net unrealized depreciation for the quarter ended September 30, 2004 consisted of approximately $1.0 million of unrealized depreciation resulting from declines in estimated property
values and approximately $0.9 million of unrealized depreciation due to certain legal and transaction costs associated with Elkhorns acquisitions.

During the quarter ended September 30, 2005, Belair Real Estate sold certain of its Partnership Preference Units for a total of approximately $45.1 million (representing sales to real estate
investment affiliates of other investment funds advised by Boston Management), recognizing a net loss of approximately $0.6 million on the transactions. During the quarter ended September 30, 2005, Belair Real Estate also acquired interests in
additional Partnership Preference Units for a total of $20.0 million. During the quarter ended September 30, 2005, the Fund saw net unrealized depreciation of the estimated

17

---

fair value of its Partnership Preference Units of approximately $3.2 million compared to net unrealized appreciation of approximately $1.8 million during the quarter ended September 30,
2004. The net unrealized depreciation of approximately $3.2 million during the quarter ended September 30, 2005 consisted of approximately $3.7 million of unrealized depreciation as a result of decreases in the per unit values of Partnership
Preference Units held, due primarily to increasing long-term interest rates, and approximately $0.5 million of unrealized appreciation resulting from the recharacterization of previously recorded unrealized depreciation as realized losses due to
the sales of Partnership Preference Units during the quarter ended September 30, 2005. The Funds net unrealized appreciation in the third quarter of 2004 consisted of approximately $2.4 million of unrealized appreciation resulting from
modest increases in per unit values of the Partnership Preference Units held, due principally to low interest rates and tight spreads on real estate securities, offset by approximately $0.6 million of unrealized depreciation resulting from the
recharacterization of previously recorded unrealized appreciation to realized gains due to sales of Partnership Preference Units.

Distributions from Partnership Preference Units for the quarter ended September 30, 2005 totaled approximately $4.6 million compared to approximately $5.4 million for the quarter ended
September 30, 2004, a decrease of $0.8 million or 15%. The decrease was due principally tofewer Partnership Preference Units held on average during the quarter, as well as lower
average distribution rates for the Partnership Preference Units held. The decrease in average distribution rates of Partnership Preference Units was primarily due to the restructuring of certain Partnership Preference Units (reflecting lower market
rates for preferred securities) as they neared their potential call dates.Distributions from Partnership Preference Units decreased for the quarter ended September 30, 2004 due to fewer
Partnership Preference Units held on average, as well as lower average distribution rates for the Partnership Preference Units held during the quarter.

Performance of Interest Rate Swap Agreements.For the quarter ended September 30, 2005, net realized and unrealized
gains on the Funds interest rate swap agreements totaled approximately $3.7 million, compared to net realized and unrealized losses of approximately $7.7 million for the quarter ended September 30, 2004. Net realized and unrealized
gains on swap agreements for the quarter ended September 30, 2005 consisted of $4.6 million of unrealized appreciation due to changes in swap agreement valuations offset in part by $0.9 million of periodic payments made pursuant to
outstanding swap agreements (and classified as net realized losses on interest rate swap agreements). For the quarter ended September 30, 2004, net realized and unrealized losses on swap agreements consisted of unrealized depreciation of $5.3
million on swap agreement valuation changes, $2.9 million of swap agreement periodic payments and $0.5 million of realized gains from termination of swap agreements. The positive contribution to Fund performance for the quarter ended
September 30, 2005 from changes in swap valuations was attributable to an increase in swap rates during the period for swaps with maturities comparable to those of the Funds swaps. The negative impact on Fund performance for the quarter ended
September 30, 2004 from changes in swap agreement valuations was attributable to a decrease in swap rates during the period.

MD&A and Results of Operations for the Nine Months Ended September 30, 2005 Compared to the Nine Months Ended September 30, 2004

Performance of the Fund.The Funds total return was 3.49% for the nine months ended September 30, 2005. This
return reflects an increase in the Funds net asset value per share from $126.88 to $128.77 and a distribution of $2.38 per share during the period. The S&P 500 Index had a total return of 2.77% over the same period. The
performance of the Fund exceeded that of the Portfolio by approximately 1.37% during the period. Last year, the Fund had a total return performance of 0.78% for the nine months ended September 30, 2004. This return reflected a decrease in the
Funds net asset value per share from $119.60 to $119.24 and a distribution of $1.28 per share during the period. The S&P 500 Index had a total return of 1.51% over the same period. The performance of the Fund trailed that of
the Portfolio by 0.55% during that period.

Performance of the Portfolio.For the nine months ended September 30, 2005, the Portfolio had a total return of 2.12%,
which compares to the 2.77% total return of the S&P 500 Index over the same period. During the first nine months of last year, the Portfolio had a total return of 1.33% and the S&P 500 Index had a total return of 1.51% . Although consumer
and business spending and corporate earnings growth remained healthy during the first nine months of 2005, investor concerns about rising interest rates, a mounting trade deficit and record oil prices held back stock market performance. Equity
market leadership for the first nine months of 2005 can be characterized as commodity-driven, as well as defensive and interest rate sensitive. Higher yielding stocks generally outperformed more aggressive stocks, and small- and mid-cap stocks
generally outperformed large-cap stocks. Energy, utilities and health care were the strongest performing sectors, while telecommunications, consumer discretionary, and materials were the worst perfomers during the period.

18

---

The Portfolios sector allocation at September 30, 2005 remained comparable to that as of September 30, 2004, with a slight increase to the consumer staples, health care, and energy sectors
and a slight decrease to the information technology and financials sectors. During the nine months ended September 30, 2005, the Portfolios large-cap growth focus was once again out of favor with the markets continued preference for
value and smaller capitalization stocks. An underweight of the utilities sector and an overweight of the consumer discretionary and financials during the period was also negative, as were investments within the lagging industrials multi-line retail
and insurance industries.

On the positive side, an overweight position in the energy sector helped the Portfolios performance, as investments within oil and gas exploration, storage and transportation companies
advanced on record oil prices. The Portfolios underweight of the information technology and materials sectors was also helpful, as electronic equipment, software and chemical industries declined during the first nine months of 2005. The
Portfolio also benefited from investments within diversified telecommunication, mortgage-thrift and media industries.

Performance of Real Estate Investments.During the nine months ended September 30, 2005, rental income from real estate
operations was approximately $15.7 million compared to approximately $20.0 million for the nine months ended September 30, 2004, a decrease of $4.3 million or 22%. This decrease in rental income from real estate operations was
principally due to Belair Real Estates February 2005 sale of its interest in a multifamily Real Estate Joint Venture that provided 83% of consolidated rental income for the nine months ended September 30, 2004, offset in part by the rental
income of Elkhorn, which was acquired in 2004. For the nine months ended September 30, 2005, Elkhorns rental income was negatively affected by a less favorable leasing environment than expected. For the nine months ended September 30, 2004
rental income from real estate operations increased due to income from the industrial distribution properties acquired by Elkhorn on June 30 and August 4, 2004, as well as modest increases in apartment rental rates net of concessions for multifamily
properties owned.

During the nine months ended September 30, 2005, property operating expenses were approximately $5.6 million compared to approximately $8.4 million for the nine months ended September 30,
2004, a decrease of $2.8 million or 33% (property operating expenses are before certain operating expenses of Belair Real Estate of approximately $3.1 million for the nine months ended September 30, 2005 and $2.7 million for the nine
months ended September 30, 2004). This decrease in property operating expenses was principally due to the February 2005 asset sale referenced in the preceding paragraph, offset in part by the operating expenses of Elkhorn, which was acquired in June
2004. For the nine months ended September 30, 2005, Elkhorns property operating expenses were in line with expectations. For the nine months ended September 30, 2004, property operating expenses increased principally due to the expenses of the
industrial distribution properties acquired by Elkhorn on June 30 and August 4, 2004.

The estimated fair value of the real properties indirectly held through Belair Real Estate was approximately $174.7 million at September 30, 2005 compared to approximately $333.7 million
at December 31, 2004, a net decrease of $159 million or 48%. This net decrease in the estimated fair value of the real properties for the nine months ended September 30, 2005 was principally due to Belair Real Estates February 2005 sale of
its interest in a multifamily Real Estate Joint Venture, offset in part by modest increases in the net values of properties held by Elkhorn.Despite weak market conditions over the past
several years, property values have remained stable or increased modestly as lower near-term property earnings expectations have generally been offset by lower capitalization and discount rates applied in valuing the properties.

During the nine months ended September 30, 2005, the Fund saw net unrealized appreciation in the estimated fair value of its other real estate investments (which includes Elkhorn and certain debt
and equity securities) of approximately $1.6 million compared to approximately $4.4 million of unrealized depreciation for the nine months ended September 30, 2004, an increase of $6.0 million. Net unrealized appreciation of $1.6
million during the nine months ended September 30, 2005 was due to modest increases in the estimated fair value of properties owned by Elkhorn, offset in part by the recharacterization of previously recorded unrealized appreciation as realized gains
as a result of the February 2005 sale of Belair Real Estates interest in a multifamily Real Estate Joint Venture and a slight decrease in the value of equity investments in other real estate. Net unrealized depreciation in the estimated fair
value of the Funds other real estate investments for the nine months ended September 30, 2004 included unrealized depreciation of approximately $3.5 million due to modest declines in estimated property values and approximately $0.9
million of unrealized depreciation due to certain legal and transaction costs associated with Elkhorns acquisitions.

During the nine months ended September 30, 2005, Belair Real Estate sold certain of its Partnership Preference Units totaling $68.8 million (representing sales to real estate investment
affiliates of other investment funds advised by Boston Management), recognizing net gains of approximately $0.2 million on the transactions. During the nine months ended September 30, 2005, Belair Real Estate also acquired interests in
additional Partnership Preference Units (representing

19

---

acquisitions from real estate investment affiliates of other investment funds advised by Boston Management) for a total of approximately $135.9 million. At September 30, 2005, the estimated
fair value of Belair Real Estates Partnership Preference Units totaled approximately $274.9 million compared to approximately $203.8 million at December 31, 2004, an increase of $71.1 million or 35%. This net increase in the
estimated fair value of Belair Real Estates Partnership Preference Units for the nine months ended September 30, 2005 was principally due to more Partnership Preference Units held and increases in the average per unit values of the Partnership
Preference Units. Prior to the third quarter of 2005, estimated fair values for Partnership Preference Units had been positively affected by low long-term interest rates and by tight spreads for credit-sensitive income securities, including real
estate-related securities. As discussed above, per unit values decreased during the quarter ended September 30, 2005 as a result of an increase in long-term interest rates.

The Fund saw net unrealized appreciation in the estimated fair value of its Partnership Preference Units of approximately $3.7 million during the nine months ended September 30, 2005 compared
to net unrealized depreciation of approximately $10.8 million for the nine months ended September 30, 2004. The net unrealized appreciation of approximately $3.7 million during the nine months ended September 30, 2005 consisted of
approximately $3.5 million of unrealized appreciation as a result of increases in average per unit values of the Partnership Preference Units held and approximately $0.2 million of unrealized appreciation resulting from the reclassification
of previously recorded unrealized depreciation as realized losses due to the sales of Partnership Preference Units during the nine months ended September 30, 2005. The Funds net unrealized depreciation for the first nine months of 2004
consisted of approximately $6.5 million of unrealized depreciation resulting from decreases in average per unit values of the Partnership Preference Units held and approximately $4.3 million of unrealized depreciation resulting from the
recharacterization of previously recorded unrealized appreciation to realized gains due to sales of Partnership Preference Units during the nine months ended September 30, 2004.

Distributions from Partnership Preference Units for the nine months ended September 30, 2005 totaled approximately $15.7 million compared to approximately $20.9 million for the nine
months ended September 30, 2004, a decrease of $5.2 million or 25%. The decrease in the distributions from Partnership Preference Units for the nine months ended September 30, 2005 was principally due to fewer Partnership Preference Units held
on average and lower average distribution rates. The decrease in average distribution rates of Partnership Preference Units was primarily due to the restructuring of certain Partnership Preference Units (reflecting lower market rates for preferred
securities) as they neared their potential call dates. During the nine months ended September 30, 2005, the Fund also received a special distribution of approximately $5.9 million from its investment in two private real estate companies. The
distribution resulted from a recapitalization of the issuers. Distributions from Partnership Preference Units decreased during the first nine months of 2004 principally due to fewer Partnership Preference Units held on average and lower average
distribution rates for the Partnership Preference Units held, partially offset by a one-time special distribution from one issuer made in connection with a restructuring of its Partnership Preference Units during the period.

Performance of Interest Rate Swap Agreements.For the nine months ended September 30, 2005, net realized and unrealized
gains on the Funds interest rate swap agreements totaled approximately $1.1 million, compared to net realized and unrealized losses of approximately $9.0 million for the nine months ended September 30, 2004. Net realized and unrealized
gains on swap agreements for the nine months ended September 30, 2005 consisted of $5.1 million of unrealized appreciation due to changes in swap agreement valuations offset in part by $4.0 million of periodic payments made pursuant to
outstanding swap agreements (and classified as net realized losses on interest rate swap agreements). For the nine months ended September 30, 2004, net realized and unrealized losses on swap agreements consisted of $0.4 million of unrealized
depreciation on swap agreement valuation changes, $9.2 million of swap agreement periodic payments and $0.6 million of realized gains from termination of swap agreements. The positive contribution to Fund performance for the nine months
ended September 30, 2005 from changes in swap agreement valuations was attributable to an increase in swap rates during the period for swaps with maturities comparable to those of the Funds swaps. The negative impact on Fund performance for
the nine months ended September 30, 2004 was attributable to a decline in swap rates during the period.



|Liquidity and Capital Resources.
|--------------------------------

Outstanding Borrowings.The Fund has entered into credit arrangements with DrKW Holdings, Inc. and Merrill Lynch
Mortgage Capital, Inc. (collectively, the Credit Facility) primarily to finance the Funds real estate investments and will continue to use the Credit Facility for such purpose in the future. The Credit Facility may also be used for other
purposes, including any liquidity needs of the Fund. In the future, the Fund may increase the size of the Credit Facility (subject to lender consent) and the amount of outstanding borrowings thereunder. As of September 30, 2005, the Fund had
outstanding borrowings of $450.0 million and $100.0 million of unused loan commitments under the Credit Facility.

20

---

The Fund has
entered into interest rate swap agreements with respect to a substantial portion
of its real estate investments and associated borrowings. Pursuant to these
agreements, the Fund makes periodic payments to the counterparty at
predetermined fixed rates in exchange for floating-rate payments that fluctuate
with one-month LIBOR. During the terms of the outstanding interest rate swap
agreements, changes in the underlying values of the agreements are recorded as
unrealized appreciation or depreciation. As of September 30, 2005, the
unrealized appreciation related to the interest rate swap agreements was
approximately $7.4 million. As of December 31, 2004, the unrealized appreciation
related to the interest rate swap agreements was approximately $2.4
million.

Item
3. Quantitative and Qualitative Disclosures About Market
Risk.

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

The
following table summarizes the contractual maturities and weighted-average
interest rates associated with the Funds significant non-trading financial
instruments. The Fund has no market risk sensitive instruments held for trading
purposes. This information should be read in conjunction with Note 4 and Note 5
to the Funds unaudited condensed consolidated financial statements in Item 1
above.



|Interest Rate SensitivityCost, Principal (Notional)
      Amountby
      Contractual Maturity and Callable Datefor the Twelve Months Ended September
      30,*
|---------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  |  |      |  |       |  |      |  |              |  |              |  |              |  | Estimated    
|--------------------------------- |  | ---- |  | ----- |  | ---- |  | ------------ |  | ------------ |  | ------------ |  | -------------
|                                  |  |      |  |       |  |      |  |              |  |              |  |              |  | Fair Value as
|                                  |  |      |  | 2007- |  |      |  |              |  |              |  |              |  | of Septem-   
|                                  |  | 2006 |  | 2008  |  | 2009 |  | 2010         |  | Thereafter   |  | Total        |  | ber 30, 2005 
|                                 
|Rate sensitive
      liabilities: |  |      |  |       |  |      |  |              |  |              |  |              |  |              
|                                  |  |     
|Long-term
      debt:             |  |      |  |       |  |      |  |              |  |              |  |              |  |              
|                                  |  |     
|Fixed-rate
      mortgages        |  |      |  |       |  |      |  |              |  | $135,000,000 |  | $135,000,000 |  | $138,700,000 
|Average interest
      rate       |  |      |  |       |  |      |  |              |  | 5.67%        |  | 5.67%        |  |              
|                                  |  |     
|Variable-rate
      Credit        |  |      |  |       |  |      |  |              |  |              |  |              |  |              
|Facility                          |  |      |  |       |  |      |  | $450,000,000 |  |              |  | $450,000,000 |  | $450,000,000 
|Average interest
      rate       |  |      |  |       |  |      |  | 4.16%        |  |              |  | 4.16%        |  |              
|                                 
|Rate sensitive
      derivative   |  |      |  |       |  |      |  |              |  |              |  |              |  |              
|financial
      instruments:      |  |      |  |       |  |      |  |              |  |              |  |              |  |              
|                                  |  |     
|Pay fixed/
      receive          |  |      |  |       |  |      |  |              |  |              |  |              |  |              
|variable interest rate
      swap |  |      |  |       |  |      |  |              |  |              |  |              |  |              
|agreements                        |  |      |  |       |  |      |  | $378,782,000 |  |              |  | $378,782,000 |  | $7,425,308   
|Average pay
      rate            |  |      |  |       |  |      |  | 4.73%        |  |              |  | 4.73%        |  |              
|Average receive
      rate        |  |      |  |       |  |      |  | 4.16%        |  |              |  | 4.16%        |  |              
|                                 

21

---

|                                |  |             |  |       |  |             |  |             |  |            |  |             |  | Estimated    
|------------------------------- |  | ----------- |  | ----- |  | ----------- |  | ----------- |  | ---------- |  | ----------- |  | -------------
|                                |  |             |  |       |  |             |  |             |  |            |  |             |  | Fair Value as
|                                |  |             |  | 2007- |  |             |  |             |  |            |  |             |  | of Septem-   
|                                |  | 2006        |  | 2008  |  | 2009        |  | 2010        |  | Thereafter |  | Total       |  | ber 30, 2005 
|                               
|                               
|                               
|Rate
      sensitive            |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|investments:                    |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|                                |  |            
|                               
|Fixed-rate
      Partnership    |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Preference
      Units:         |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|                                |  |            
|                               
|Camden Operating,
      L.P.,   |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|7% Series B
      Cumulative    |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Perpetual      |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Preferred Units,
      Callable |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|12/2/08, Current
      Yield:   |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|7.21%                           |  |             |  |       |  | $4,161,360  |  |             |  |            |  | $4,161,360  |  | $3,884,800   
|                               
|Colonial Realty
      Limited   |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Partnership, 7.25%
      Series |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|B Cumulative                    |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Perpetual      |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Preferred Units,
      Callable |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|8/24/09,
      Current          |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Yield: 7.37%                    |  |             |  |       |  | $24,728,427 |  |             |  |            |  | $24,728,427 |  | $26,568,000  
|                               
|Essex Portfolio
      L.P.,     |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|7.875% Series
      D           |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Cumulative
      Redeemable     |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Preferred Units,
      Callable |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|7/28/10, Current
      Yield:   |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|7.62%                           |  |             |  |       |  |             |  | $28,232,050 |  |            |  | $28,232,050 |  | $28,430,710  
|                               
|Kilroy Realty,
      L.P.,      |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|7.45% Series
      A            |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Cumulative
      Redeemable     |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Preferred Units,
      Callable |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|9/30/09,                        |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Current Yield:
      7.46%      |  |             |  |       |  | $10,000,000 |  |             |  |            |  | $10,000,000 |  | $9,989,120   
|                               
|Liberty Property
      Limiited |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Partnership, 7.45%
      Series |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|B Cumulative                    |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Preferred      |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Units, Callable
      8/31/09,  |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Current Yield:
      7.23%      |  |             |  |       |  | $22,750,000 |  |             |  |            |  | $22,750,000 |  | $23,432,500  
|                               
|MHC Operating
      Limited     |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Partnership,
      8.0625%      |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Series D
      Cumulative       |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Perpetual      |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Preference
      Units,         |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Callable 3/24/10,
      Current |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Yield: 7.94%                    |  |             |  |       |  |             |  | $50,000,000 |  |            |  | $50,000,000 |  | $50,800,000  
|                               
|National Golf
      Operating   |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Partnership, L.P.,
      11%    |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Series A
      Cumulative       |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Preferred      |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Units, Callable
      2/6/03,   |  |             |  |       |  |             |  |             |  |            |  |             |  |              
|Current Yield:
      10.49%     |  | $31,454,184 |  |       |  |             |  |             |  |            |  | $31,454,184 |  | $34,640,602  

22

---

|                                |  |            |  |       |  |             |  |             |  |            |  |             |  | Estimated    
|------------------------------- |  | ---------- |  | ----- |  | ----------- |  | ----------- |  | ---------- |  | ----------- |  | -------------
|                                |  |            |  |       |  |             |  |             |  |            |  |             |  | Fair Value as
|                                |  |            |  | 2007- |  |             |  |             |  |            |  |             |  | of Septem-   
|                                |  | 2006       |  | 2008  |  | 2009        |  | 2010        |  | Thereafter |  | Total       |  | ber 30, 2005 
|                               
|                               
|National Golf
      Operating   |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Partnership, L.P.,
      11%    |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Series B
      Cumulative       |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Preferred      |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Units, Callable
      2/6/03,   |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Current Yield:
      10.49%     |  | $5,000,000 |  |       |  |             |  |             |  |            |  | $5,000,000  |  | $5,244,000   
|                               
|PSA
      Institutional         |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Partners, L.P.,
      6.4%      |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Series NN
      Cumulative      |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Perpetual      |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Preferred Units,
      Callable |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|3/17/10, Current
      Yield:   |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|6.54%                           |  |            |  |       |  |             |  | $29,541,670 |  |            |  | $29,541,670 |  | $28,886,400  
|                               
|Regency Centers,
      L.P.     |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|7.45% Series
      D            |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Cumulative
      Redeemable     |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Preferred Units,
      Callable |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|9/29/09, Current
      Yield:   |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|7.18%                           |  |            |  |       |  | $19,310,868 |  |             |  |            |  | $19,310,868 |  | $18,678,600  
|                               
|Vornado Realty, L.P.,
      7%  |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Series D-10
      Cumulative    |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Redeemable
      Preferred      |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Units, Callable
      11/17/08, |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Current Yield:
      6.92%(1)   |  |            |  |       |  | $22,685,921 |  |             |  |            |  | $22,685,921 |  | $24,267,445  
|                               
|Vornado Realty,
      L.P.,     |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|6.75% Series
      D-14         |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Cumulative
      Redeemable     |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|Preferred Units,
      Callable |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|9/9/10, Current
      Yield:    |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|6.72%(2)                        |  |            |  |       |  |             |  | $20,000,000 |  |            |  | $20,000,000 |  | $20,074,444  
|                                |  |           
|                               
|Note
      Receivable:          |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|                                |  |           
|                               
|Fixed-rate
      note           |  |            |  |       |  |             |  |             |  |            |  |             |  |              
|receivable,
      8%            |  |            |  |       |  |             |  |             |  | $2,070,580 |  | $2,070,580  |  | $2,539,845   

*The amounts listed
reflect the Funds positions as of September 30, 2005. The Funds current
positions may differ.

|(1) | Belair Real Estates interest in these Partnership Preference
      Units is held through Bel Holdings LLC.    
|--- | ---------------------------------------------------------------------------------------------------------------
|   
|(2) | Belair Real Estates interest in these Partnership Preference
      Units is held through Belvorn Holdings LLC.
|   



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

Fund
Governance.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.

Disclosure Controls and Procedures. Eaton Vance, as the Funds manager,
evaluated the effectiveness of the Funds disclosure controls and procedures (as
defined by Rule 13a-15(e) of the 1934 Act) as of the end of the period covered
by this report, with the participation of the Funds Chief Executive Officer and
Chief Financial Officer. The Funds disclosure

23

---

controls and
procedures are the controls and other procedures that the Fund designed to
ensure that it records, processes, summarizes and reports in a timely manner the
information that the Fund must disclose in reports that it files or submits to
the Securities and Exchange Commission. Based on that evaluation, the Funds
Chief Executive Officer and Chief Financial Officer concluded that, as of
September 30, 2005, the Funds disclosure controls and procedures were
effective.

Internal Control Over Financial Reporting. There were no changes in the
Funds internal control over financial reporting that occurred during the
quarter ended September 30, 2005 that have materially affected or are reasonably
likely to materially affect the Funds internal control over financial
reporting.



|PART II.
      OTHER INFORMATION
|--------------------------------



|Item 1. Legal
Proceedings.
|--------------------------

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

Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.

As described
in the Funds Annual Report on Form 10-K for the year ended December 31, 2004,
shares of the Fund may be redeemed by Fund Shareholders on any business day.
Redemptions are met at the net asset value per share of the Fund. The right to
redeem is available to all Shareholders and all outstanding Fund shares are
eligible. During each month in the quarter ended September 30, 2005, the total
number of shares redeemed and the average price paid per share were as follows:

Total No. of Shares
    
    Average Price PaidMonth Ended
    
    Redeemed(1)
    
    Per ShareJuly 31, 2005
    
    525,295.607
    
    $127.88August 31,
      2005
    
    429,722.427
    
    $128.22September 30,
      2005
    
    17,985.275
    
    $128.90Total
    
    973,003.309
    
    $128.37


|(1) | All
      shares redeemed during the periods were redeemed at the option of
      Shareholders pursuant to the Funds redemption policy. The Fund has not
      announced any plans or programs to repurchase shares other than at the
      option of shareholders.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

Item
3. Defaults Upon Senior Securities.

None.

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

No matters
were submitted to a vote of security holders during the three months ended
September 30, 2005.

Item
5. Other Information.

None.

24

---

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

(a) The following is a list of all exhibits filed as part of this Form 10-Q:

|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
|    

(b) Reports on Form 8-K:

None.

25

---



|SIGNATURES
|----------

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized officer
on November 9, 2005.



|BELAIR CAPITAL FUND LLC
|-----------------------



| | /s/ Michelle A. GreenMichelle A. GreenChief Financial Officer(Duly Authorized Officer andPrincipal Financial Officer)
| | ---------------------------------------------------------------------------------------------------------------------

26

---



|EXHIBIT INDEX
|-------------

|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
|    

27

---