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

                                    FORM 10-Q

                Quarterly Report pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                For the quarterly period ended September 30, 2003
                                               ------------------
                          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 Building
            255 State Street
         Boston, 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  and  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 Exchange Act).

                                   YES  X      NO
                                       ---       ---

<PAGE>
                             BELAIR CAPITAL FUND LLC
                               Index to Form 10-Q

PART I  FINANCIAL INFORMATION                                               Page

Item 1. Condensed Consolidated Financial Statements                            3

        Condensed Consolidated Statements of Assets
        and Liabilities as of September 30, 2003 (Unaudited)
        and December 31, 2002                                                  3

        Condensed Consolidated Statements of Operations
        (Unaudited) for the Three Months Ended September 30,
        2003 and 2002 and for the Nine Months Ended September
        30, 2003 and 2002                                                      4

        Condensed Consolidated Statements of Changes in Net
        Assets (Unaudited) for the Nine Months Ended
        September 30, 2003 and 2002                                            6

        Condensed Consolidated Statements of Cash Flows
        (Unaudited) for the Nine Months Ended September
        30, 2003 and 2002                                                      7

        Financial Highlights (Unaudited) for the Nine Months
        Ended September 30, 2003                                               9

        Notes to Condensed Consolidated Financial Statements
        as of September 30, 2003 (Unaudited)                                  10

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                                   16

Item 3. Quantitative and Qualitative Disclosures About Market Risk            20

Item 4. Controls and Procedures                                               22

PART II OTHER INFORMATION

Item 1. Legal Proceedings                                                     22

Item 2. Changes in Securities and Use of Proceeds                             22

Item 3. Defaults Upon Senior Securities                                       23

Item 4. Submission of Matters to a Vote of Security Holders                   23

Item 5. Other Information                                                     23

Item 6. Exhibits and Reports on Form 8-K                                      23

SIGNATURES                                                                    24

EXHIBIT INDEX                                                                 25

                                        2
<PAGE>
PART I.   FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
----------------------------------------------------

BELAIR CAPITAL FUND LLC
Condensed Consolidated Statements of Assets and Liabilities

<TABLE>
                                                                                        September 30, 2003         December 31,
                                                                                           (Unaudited)                 2002
                                                                                        ------------------         -------------
<S>                                                                                        <C>                   <C>
Assets:
    Investment in Belvedere Capital Fund Company LLC
      (Belvedere Capital)                                                                  $ 1,458,096,610       $ 1,361,415,813
    Investment in Partnership Preference Units                                                 344,676,082           391,195,982
    Investment in other real estate                                                            163,475,077           157,492,935
    Short-term investments                                                                      45,026,476             3,426,881
                                                                                           ----------------      ----------------
Total investments                                                                          $ 2,011,274,245       $ 1,913,531,611
    Cash                                                                                         4,955,907            16,067,430
    Escrow deposits - restricted                                                                    80,503             1,073,943
    Receivable for investments sold                                                                      -             4,952,435
    Dividends and interest receivable                                                            1,786,885             5,327,452
    Other assets                                                                                 1,163,851             1,285,939
                                                                                           ----------------      ----------------
Total assets                                                                               $ 2,019,261,391       $ 1,942,238,810
                                                                                           ----------------      ----------------

Liabilities:
    Loan payable - Credit Facility                                                         $   503,000,000       $   540,769,000
    Mortgage payable                                                                           112,630,517           112,630,517
    Open interest rate swap agreements, at value                                                 8,503,915            21,367,938
    Swap interest payable                                                                        1,417,600             5,029,500
    Security deposits                                                                              384,847               403,844
    Accrued expenses:
      Interest expense                                                                             940,424             1,787,051
      Property taxes                                                                             1,342,615               705,965
      Other expenses and liabilities                                                               508,599               706,227
    Minority interests in controlled subsidiaries                                                9,816,565            13,031,112
                                                                                           ----------------      ----------------
Total liabilities                                                                          $   638,545,082       $   696,431,154
                                                                                           ----------------      ----------------

Net assets                                                                                 $ 1,380,716,309       $ 1,245,807,656

                                                                                           ----------------      ----------------
Shareholders' Capital                                                                      $ 1,380,716,309       $ 1,245,807,656
                                                                                           ----------------      ----------------

Shares outstanding                                                                              13,018,644            13,485,660
                                                                                           ----------------      ----------------

Net asset value and redemption price per Share                                             $        106.06       $         92.38
                                                                                           ----------------      ----------------
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       3
<PAGE>
BELAIR CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited)

<TABLE>
                                                          Three Months      Three Months     Nine Months        Nine Months
                                                             Ended             Ended           Ended               Ended
                                                         September 30,     September 30,    September 30,      September 30,
                                                             2003              2002            2003                 2002
                                                         -------------     -------------    -------------      -------------
<S>                                                     <C>                <C>                 <C>              <C>
Investment Income:
    Dividends allocated from Belvedere Capital
      (net of foreign taxes of $43,881, $42,418,
      $195,924 and $161,697, respectively)              $    5,242,711     $    4,726,239   $ 15,215,372     $   14,646,879
    Interest allocated from Belvedere Capital                   43,444            108,312        293,296            387,454
    Expenses allocated from Belvedere Capital               (2,243,700)        (2,186,364)    (6,368,209)        (7,449,533)
                                                        ---------------    ---------------  -------------    ---------------
    Net investment income allocated from
      Belvedere Capital                                 $    3,042,455     $    2,648,187   $  9,140,459     $    7,584,800
    Dividends from Partnership Preference Units              7,776,686          9,400,672     27,085,587         27,538,520
    Rental income                                            5,408,027          5,644,042     16,475,632         24,778,816
    Interest                                                    82,837             16,150        192,285             82,982
                                                        ---------------    ---------------  -------------    ---------------
Total investment income                                 $   16,310,005     $   17,709,051   $ 52,893,963     $   59,985,118
                                                        ---------------    ---------------  -------------    ---------------

Expenses:
    Investment advisory and administrative fees         $    1,371,845     $    1,302,584   $  4,008,918     $    4,462,753
    Property management fees                                   216,118            226,923        660,784            998,029
    Servicing fees                                             136,472            103,797        384,192            420,176
    Interest expense on mortgages                            2,386,112          2,386,112      7,158,334          9,795,166
    Interest expense on Credit Facility                      2,160,493          3,261,594      7,131,846          9,976,826
    Interest expense on swap agreements                      2,444,721          7,767,646     14,429,097         22,654,696
    Property and maintenance expenses                        1,677,834          1,579,825      4,795,594          6,119,951
    Property taxes and insurance                               611,626            821,827      2,118,180          3,174,822
    Amortization of deferred expenses                                -             27,665          9,099             82,094
    Miscellaneous                                              200,650            165,289        510,791            569,799
                                                        ---------------    ---------------  -------------    ---------------
Total expenses                                          $   11,205,871     $   17,643,262   $ 41,206,835     $   58,254,312
                                                        ---------------    ---------------  -------------    ---------------
Net investment income before
    minority interest in net income of
    controlled subsidiary                               $    5,104,134     $       65,789   $ 11,687,128     $    1,730,806
Minority interest in net income
    of controlled subsidiary                                    (3,159)          (171,959)      (324,910)        (1,186,621)
                                                        ---------------    ---------------  -------------    ---------------
Net investment income (loss)                            $    5,100,975     $     (106,170)  $ 11,362,218     $      544,185
                                                        ---------------    ---------------  -------------    ---------------
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       4
<PAGE>
BELAIR CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited) (Continued)

<TABLE>
                                                         Three Months      Three Months       Nine Months       Nine Months
                                                            Ended             Ended              Ended            Ended
                                                         September 30,     September 30,     September 30,      Septemer 30,
                                                            2003               2002               2003             2002
                                                         -------------     -------------     -------------      ------------
<S>                                                    <C>              <C>                 <C>               <C>
Realized and Unrealized Gain (Loss)
Net realized gain (loss) -
  Investment transactions from Belvedere
     Capital (identified cost basis)                   $    1,035,691   $   (29,423,656)    $  (1,155,495)    $ (170,307,349)
  Investment transactions in Partnership
     Preference Units (identified cost basis)                 420,584                 -           420,676           (614,855)
  Investment transactions in other real estate                      -                 -                 -         (9,540,011)
                                                       ---------------  ----------------    --------------    ---------------
Net realized gain (loss)                               $    1,456,275   $   (29,423,656)    $    (734,819)    $ (180,462,215)
                                                       ---------------  ----------------    --------------    ---------------

Change in unrealized appreciation
  (depreciation) -
   Investment in Belvedere Capital
      (identified cost basis)                          $   29,558,954   $  (210,483,891)    $ 134,301,886     $ (271,842,429)
   Investments in Partnership Preference Units
      (identified cost basis)                              (1,256,112)       13,987,308        25,882,600         23,381,240
   Investments in other real estate
      (net of minority interests in unrealized
      (loss) gain of controlled subsidiaries of
      $(3,691,876), $202,776, $(3,521,856)
      and $(11,527), respectively)                          3,755,474          (202,776)        3,992,468         (2,907,245)
   Interest rate swap agreements                            2,407,883           (47,205)       12,864,023          2,083,291
                                                       ---------------  ----------------    --------------    ---------------
Net change in unrealized appreciation
  (depreciation)                                       $   34,466,199   $  (196,746,564)    $ 177,040,977     $ (249,285,143)
                                                       ---------------  ----------------    --------------    ---------------

Net realized and unrealized gain (loss)                $   35,922,474   $  (226,170,220)    $ 176,306,158     $ (429,747,358)
                                                       ---------------  ----------------    --------------    ---------------

Net increase (decrease) in net assets
  from operations                                      $   41,023,449   $  (226,276,390)    $ 187,668,376     $ (429,203,173)
                                                       ===============  ================    ==============    ===============
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       5
<PAGE>
BELAIR CAPITAL FUND LLC
Condensed Consolidated Statements of Changes in Net Assets (Unaudited)

<TABLE>
                                                                                   Nine Months            Nine Months
                                                                                     Ended                   Ended
                                                                                   September 30,         September 30,
                                                                                      2003                    2002
                                                                                   -------------         -------------
<S>                                                                             <C>                  <C>
Increase (Decrease) in Net Assets:
    Net investment income                                                       $    11,362,218      $         544,185
    Net realized loss from investment transactions                                     (734,819)          (180,462,215)
    Net change in unrealized appreciation (depreciation)
      of investments                                                                177,040,977           (249,285,143)
                                                                                ----------------     ------------------
Net increase (decrease) in net assets from operations                           $   187,668,376      $    (429,203,173)
                                                                                ----------------     ------------------

Transactions in Fund Shares -
    Net asset value of Fund Shares issued to Shareholders in
      payment of distributions declared                                         $     2,956,829      $               -
    Net asset value of Fund Shares redeemed                                         (49,108,579)           (68,437,211)
                                                                                ----------------     ------------------
Net decrease in net assets from Fund Share transactions                         $   (46,151,750)     $     (68,437,211)
                                                                                ----------------     ------------------

Distributions -
    Distributions to Shareholders                                               $    (6,607,973)     $               -
    Special distributions to Shareholders                                                     -                 (1,188)
                                                                                ----------------     ------------------
Total distributions                                                             $    (6,607,973)     $          (1,188)
                                                                                ----------------     ------------------

Net increase (decrease) in net assets                                           $   134,908,653      $    (497,641,572)

Net assets:
    At beginning of period                                                      $ 1,245,807,656      $   1,687,637,826
                                                                                ----------------     ------------------
    At end of period                                                            $ 1,380,716,309      $   1,189,996,254
                                                                                ================     ==================
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       6
<PAGE>
BELAIR CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
                                                                                        Nine Months           Nine Months
                                                                                          Ended                  Ended
                                                                                       September 30,          September 30,
                                                                                           2003                   2002
                                                                                       -------------          -------------
<S>                                                                                    <C>                  <C>
Cash Flows From (For) Operating Activities -
Net increase (decrease) in net assets from operations                                  $ 187,668,376        $ (429,203,173)
Adjustments to reconcile net increase (decrease) in net assets from
    operations to net cash flows from operating activities -
      Net investment income allocated from Belvedere Capital                              (9,140,459)           (7,584,800)
      Decrease (increase) in escrow deposits                                                 993,440               (10,837)
      Decrease in receivable for investments sold                                          4,952,435                     -
      Increase in interest receivable from other real estate                                (106,923)                    -
      Decrease (increase) in other assets                                                    122,088              (360,657)
      Decrease (increase) in dividends and interest receivable                             3,540,567            (3,680,860)
      (Decrease) increase in interest payable for open swap agreements                    (3,611,900)              358,094
      Decrease in security deposits, accrued interest and accrued
        other expenses and liabilities                                                    (1,063,252)             (180,114)
      Decrease in cash in connection with sale of majority
        interest in controlled subsidiary                                                          -            (2,429,734)
      Increase in accrued property taxes                                                     636,650                29,283
      Purchases of Partnership Preference Units                                                    -           (30,488,829)
      Proceeds from sale of investments in other real estate                                       -            32,965,765
      Proceeds from sales of Partnership Preference Units                                 68,845,584            18,708,345
      Improvements to rental property                                                     (1,427,016)           (1,209,566)
      Net (increase) decrease in investment in Belvedere Capital                          (3,500,000)           13,256,357
      Decrease in minority interest                                                                -               (52,500)
      (Increase) decrease in short-term investments                                      (41,599,595)            3,655,660
      Minority interest in net income of controlled subsidiary                               324,910             1,186,621
      Net realized loss from investment transactions                                         734,819           180,462,215
      Net change in unrealized (appreciation) depreciation of investments               (177,040,977)          249,285,143
                                                                                       --------------       ---------------
Net cash flows from operating activities                                               $  30,328,747        $   24,706,413
                                                                                       --------------       ---------------

Cash Flows From (For) Financing Activities -
    Repayment of Credit Facility                                                       $ (37,769,000)       $  (21,000,000)
    Payments for Fund Shares redeemed                                                         (2,526)           (4,530,073)
    Distributions paid to Shareholders                                                    (3,651,144)                    -
    Distributions paid to minority shareholders                                              (17,600)           (1,355,983)
                                                                                       --------------       ---------------
Net cash flows for financing activities                                                $ (41,440,270)       $  (26,886,056)
                                                                                       --------------       ---------------

Net decrease in cash                                                                   $ (11,111,523)       $   (2,179,643)

Cash at beginning of period                                                            $  16,067,430        $    6,540,394
                                                                                       --------------       ---------------
Cash at end of period                                                                  $   4,955,907        $    4,360,751
                                                                                       ==============       ===============
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       7
<PAGE>
BELAIR CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)

<TABLE>
                                                                                              Nine Months         Nine Months
                                                                                                 Ended              Ended
                                                                                             September 30,       September 30,
                                                                                                  2003              2002
                                                                                             -------------       -------------
<S>                                                                                        <C>                  <C>
Supplemental Disclosure and Non-cash Investing and
     Financing Activities -
      Interest paid on loan - Credit Facility                                              $     7,780,719      $   10,249,157
      Interest paid on swap agreements                                                     $    18,040,997      $   22,296,602
      Interest paid on mortgages                                                           $     7,036,592      $   10,423,855
      Market value of securities distributed in payment of
         redemptions                                                                       $    49,106,053      $   63,437,211
      Partnership Preference Units exchanged for a real estate equity
         investment and an investment in note receivable                                   $    (3,977,592)     $            -
      Market value of real estate equity investment                                        $     1,907,012      $            -
      Investment in note receivable                                                        $     2,070,580      $            -
      Market value of real property and other assets, net
         of current liabilities, disposed of in conjunction with
         sale of other real estate                                                         $             -      $  169,610,451
      Mortgage disposed of in conjunction with sale of
         other real estate                                                                 $             -      $  115,850,000
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       8
<PAGE>
BELAIR CAPITAL FUND LLC as of September 30, 2003
Condensed Consolidated Financial Statements (Continued)

<TABLE>
<S>                                                                               <C>                              <C>
Financial Highlights (Unaudited)

For the Nine Months Ended September 30, 2003
------------------------------------------------------------------------------------------------------------------------------------
Net asset value - Beginning of period                                                                    $       92.380
------------------------------------------------------------------------------------------------------------------------------------

Income (loss) from operations
------------------------------------------------------------------------------------------------------------------------------------
Net investment income (6)                                                                                $        0.856
Net realized and unrealized gain                                                                                 13.314
------------------------------------------------------------------------------------------------------------------------------------
Total income from operations                                                                             $       14.170
------------------------------------------------------------------------------------------------------------------------------------

Distributions
------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders                                                                            $       (0.490)
------------------------------------------------------------------------------------------------------------------------------------
Total distributions                                                                                      $       (0.490)
------------------------------------------------------------------------------------------------------------------------------------

Net asset value - End of period                                                                          $      106.060
------------------------------------------------------------------------------------------------------------------------------------

Total Return (1)                                                                                                  15.40%
------------------------------------------------------------------------------------------------------------------------------------

                                                                               As a Percentage            As a Percentage
                                                                               of Average Net             of Average Gross
Ratios                                                                           Assets (5)                 Assets (2)(5)
------------------------------------------------------------------------------------------------------------------------------------
Expenses of Consolidated Real Property Subsidiaries
    Interest and other borrowing costs  (7)                                       0.59%(8)                         0.40%(8)
    Operating expenses  (7)                                                       0.63%(8)                         0.43%(8)
Belair Capital Fund LLC Expenses
    Interest and other borrowing costs  (4)                                       2.21%(8)                         1.51%(8)
    Investment advisory and administrative fees,
       servicing fees and other Fund operating expenses (3)(4)                    1.15%(8)                         0.79%(8)
                                                                               -----------------------------------------------------
Total expenses                                                                    4.58%(8)                         3.13%(8)

Net investment income                                                             1.17%(8)                         0.79%(8)
------------------------------------------------------------------------------------------------------------------------------------

Supplemental Data
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted)                                                                $    1,380,716
Portfolio Turnover of Tax-Managed Growth Portfolio (the Portfolio)                                                   14%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  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.
(2)  Average  Gross Assets is defined as the average  daily amount of all assets
     of Belair  Capital Fund LLC (Belair  Capital) (not including its investment
     in Belair Real Estate Corporation  (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  subsidiary  are  reduced  by the  proportionate
     interests therein of investors other than Belair Real Estate.
(3)  Includes  Belair  Capital's  share of Belvedere  Capital Fund Company LLC's
     allocated expenses, including those expenses allocated from the Portfolio.
(4)  Includes  the expenses of Belair  Capital and Belair Real Estate.  Does not
     include  expenses of the real estate  subsidiary  majority-owned  by Belair
     Real Estate.
(5)  For the purpose of  calculating  ratios,  the income and expenses of Belair
     Real  Estate's  controlled  subsidiary  are  reduced  by the  proportionate
     interests therein of investors other than Belair Real Estate.
(6)  Calculated using average shares outstanding.
(7)  Includes Belair Real Estate's  proportional  share of expenses  incurred by
     its majority-owned subsidiary.
(8)  Annualized.

       See notes to unaudited condensed consolidated financial statements

                                       9
<PAGE>
BELAIR CAPITAL FUND LLC as of September 30, 2003
Notes 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 by the Fund,  without audit, in accordance  with accounting  principles
generally  accepted  in the  United  States of  America  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 accounting principles
generally  accepted  in the United  States of  America  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  at 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, 2002 has been  derived from the December 31,
2002 audited  financial  statements but does not include all of the  information
and footnotes required by accounting principles generally accepted in the United
States  of  America  for  complete  financial  statements  as  permitted  by the
instructions to Form 10-Q and Article 10 of Regulation S-X.

Certain  amounts  in  the  prior  period's  condensed   consolidated   financial
statements   have  been   reclassified   to  conform  with  the  current  period
presentation.

2 Investment Transactions

The following table summarizes the Fund's  investment  transactions for the nine
months ended September 30, 2003 and September 30, 2002:

<TABLE>
                                                                Nine Months Ended        Nine Months Ended
                  Investment Transaction                       September 30, 2003       September 30, 2002
--------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                      <C>
Increases in investment in Belvedere Capital                      $   4,000,000            $  77,481,268
Decreases in investment in Belvedere Capital                      $  49,606,053            $ 154,594,643
Purchases of Partnership Preference Units                         $           -            $  30,488,829
Sales of Partnership Preference Units (1)                         $  68,845,584            $  18,708,345
Sales of other real estate (2)                                    $           -            $  32,965,765
--------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Sales  of  Partnership  Preference  Units  during  the  nine  months  ended
     September 30, 2003 and 2002 include  Partnership  Preference  Units sold to
     other funds sponsored by Eaton Vance  Management  (Eaton Vance) for which a
     loss of $771,250 and $775,295 was recognized, respectively.
(2)  During the nine  months  ended  September  30,  2002,  Belair  Real  Estate
     Corporation  (Belair Real  Estate)  sold its majority  interest in Katahdin
     Property  Trust LLC  (Katahdin) to another fund sponsored by Eaton Vance. A
     loss of $9,540,011 was recognized on the transaction.

During the nine months ended September 30, 2003, the Fund exchanged  Partnership
Preference  Units in the amount of  $3,977,592  for an equity  investment in two
private real estate  companies  affiliated with the issuer of such formerly held
Partnership  Preference Units and a note receivable in the amounts of $1,907,012
and $2,070,580,  respectively. The secured note receivable (valued at $2,070,580
as of September 30, 2003) earns interest of 8% per annum and matures in February
2013 or on demand.

                                       10
<PAGE>
3 Indirect Investment in Portfolio

The following  table  summarizes  the Fund's  investment in  Tax-Managed  Growth
Portfolio (the Portfolio)  through Belvedere Capital Fund Company LLC (Belvedere
Capital),  for the nine months ended  September 30, 2003 and September 30, 2002,
including  allocations  of income and expenses for the  respective  periods then
ended:

<TABLE>
                                                                         Nine Months Ended       Nine Months Ended
                                                                         September 30, 2003      September 30, 2002
----------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                     <C>
Belvedere Capital's interest in the Portfolio (1)                         $  9,775,572,306        $  8,043,904,602
The Fund's investment in Belvedere Capital (2)                            $  1,458,096,610        $  1,308,342,688
Income allocated to Belvedere Capital from the Portfolio                  $    102,346,416        $     88,799,143
Income allocated to the Fund from Belvedere Capital                       $     15,508,668        $     15,034,333
Expenses allocated to Belvedere Capital from the Portfolio                $     31,352,609        $     32,657,939
Expenses allocated to the Fund from Belvedere Capital                     $      6,368,209        $      7,449,533
Realized loss allocated to Belvedere Capital from the Portfolio           $    (10,803,952)       $   (613,666,720)
Realized loss allocated to the Fund from Belvedere Capital                $     (1,155,495)       $   (170,307,349)
Change in unrealized appreciation (depreciation) allocated to
    Belvedere Capital from the Portfolio                                  $    898,392,188        $ (2,038,582,077)
Change in unrealized appreciation (depreciation) allocated to the
    Fund from Belvedere Capital                                           $    134,301,886        $   (271,842,429)
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  As of  September  30,  2003 and  2002,  the  value of  Belvedere  Capital's
     interest in the Portfolio represents 62.1% and 58.6% of the Portfolio's net
     assets, respectively.
(2)  As of  September  30, 2003 and 2002,  the Fund's  investment  in  Belvedere
     Capital  represents  14.9% and 16.3% of  Belvedere  Capital's  net  assets,
     respectively.

A summary of the  Portfolio's  Statement of Assets and  Liabilities at September
30, 2003,  December 31, 2002 and September 30, 2002 and its  operations  for the
nine months ended  September 30, 2003,  for the year ended December 31, 2002 and
for the nine months ended September 30, 2002 follows:

<TABLE>
                                        September 30,          December 31,          September 30,
                                             2003                  2002                   2002
                                     ------------------------------------------------------------------
<S>                                   <C>                    <C>                   <C>
Investments, at value                 $ 15,720,495,292       $ 14,544,149,182      $ 13,713,440,772
Other assets                                22,166,551             70,073,039            59,906,476
-------------------------------------------------------------------------------------------------------
Total assets                          $ 15,742,661,843       $ 14,614,222,221      $ 13,773,347,248
Total liabilities                              241,245             42,700,633            35,785,860
-------------------------------------------------------------------------------------------------------
Net assets                            $ 15,742,420,598       $ 14,571,521,588      $ 13,737,561,388
=======================================================================================================
Dividends and interest                $    166,725,898       $    213,292,082      $    155,639,717
-------------------------------------------------------------------------------------------------------
Investment adviser fee                $     49,370,631       $     71,564,552      $     55,373,624
Other expenses                               1,730,334              2,577,489             1,956,361
-------------------------------------------------------------------------------------------------------
Total expenses                        $     51,100,965       $     74,142,041      $     57,329,985
-------------------------------------------------------------------------------------------------------
Net investment income                 $    115,624,933       $    139,150,041      $     98,309,732
Net realized losses                        (17,942,587)          (459,996,840)         (503,906,340)
Net change in unrealized
    appreciation (depreciation)          1,449,036,078         (3,312,547,564)       (4,125,048,140)
-------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
    assets from operations            $  1,546,718,424       $ (3,633,394,363)     $ (4,530,644,748)
-------------------------------------------------------------------------------------------------------
</TABLE>

                                       11
<PAGE>
4 Cancelable Interest Rate Swap Agreements

Belair  Capital has entered into  cancelable  interest  rate swap  agreements 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.  As of September 30, 2003 and December 31,
2002,  Belair Capital has entered into cancelable  interest rate swap agreements
with Merrill Lynch Capital Services, Inc. as listed below.

<TABLE>
   Notional                                           Initial                       Unrealized        Unrealized
    Amount                                           Optional                      Depreciation      Depreciation
    (000's          Fixed          Floating         Termination      Maturity    At September 30,   At December 31,
   omitted)         Rate             Rate              Date            Date            2003              2002
----------------------------------------------------------------------------------------------------------------------
<S>                <C>            <C>                  <C>             <C>       <C>               <C>
$ 120,000          6.715%         LIBOR+0.45%          2/03            2/05      $         -*      $    592,865
   50,000           6.84%         LIBOR+0.45%          2/03            2/05                -*           253,428
  150,000          6.835%         LIBOR+0.45%          4/03            4/05                -*         2,209,596
   20,000           6.67%         LIBOR+0.45%          6/03            2/05                -*           462,191
   75,000           6.68%         LIBOR+0.45%          6/03            2/05                -*         1,736,787
   80,000          6.595%         LIBOR+0.45%          6/03            2/05                -*         1,820,237
   14,709           6.13%         LIBOR+0.45%         11/03            2/05           95,465            553,844
   34,951           6.34%         LIBOR+0.45%          2/04            2/05          642,739          1,729,610
    5,191           6.49%         LIBOR+0.45%          2/04            2/05          102,735            269,419
   24,902          7.077%         LIBOR+0.45%          7/04            2/05        1,105,165          1,906,989
   10,471           7.37%         LIBOR+0.45%          9/04            2/05          584,097            922,144
   19,149           7.89%         LIBOR+0.45%          2/04            2/05          467,945          1,284,855
   70,000           7.71%         LIBOR+0.45%          2/05            2/05        5,505,769          7,625,973
----------------------------------------------------------------------------------------------------------------------
                                                                                 $ 8,503,915       $ 21,367,938
----------------------------------------------------------------------------------------------------------------------
</TABLE>
*    Agreement was terminated on the Initial Optional Termination Date.

On October 1, 2003, new interest rate swap  agreements  were entered into to fix
the cost of a portion of Belair  Capital's  borrowings under the Credit Facility
(as defined in Note 5 below)  established on July 15, 2003. At the same time all
swap agreements outstanding on September 30, 2003 were terminated,  resulting in
realized  losses of  $8,499,438.  The table  below  identifies  the terms of the
interest rate swap agreements effective on October 1, 2003.

<TABLE>
  Notional                                                  Initial
   Amount                                                  Optional
   (000's            Fixed              Floating          Termination       Final Termination
  omitted)            Rate                Rate               Date                  Date
--------------------------------------------------------------------------------------------------
<S>                  <C>              <C>                    <C>                   <C>
  $ 20,000           4.045%           LIBOR+0.30%              -                   6/10
    95,952            5.05%           LIBOR+0.30%            2/04                  6/10
    61,500           4.865%           LIBOR+0.30%            7/04                  6/10
    75,000           4.795%           LIBOR+0.30%            9/04                  6/10
    42,000            4.69%           LIBOR+0.30%            2/05                  6/10
    49,000           4.665%           LIBOR+0.30%            3/05                  6/10
    35,330            4.18%           LIBOR+0.30%            7/09                  6/10
--------------------------------------------------------------------------------------------------
</TABLE>

                                       12
<PAGE>
5 Debt

Credit  Facility - On July 15,  2003,  Belair  Capital  refinanced  the existing
credit  facility  with  Merrill  Lynch  International  Bank Limited with two new
credit arrangements  (collectively,  the Credit Facility) totaling $615,000,000.
The Credit Facility has a seven-year  maturity and will expire on June 25, 2010.
Belair Capital's  obligations  under the Credit Facility are secured by a pledge
of its assets,  excluding the assets of Bel  Residential  Properties  Trust (Bel
Residential).

The credit arrangement with DrKW Holdings, Inc. is for $515,000,000. This credit
arrangement  accrues interest at a rate of one-month LIBOR plus 0.30% per annum.
As of September 30, 2003,  outstanding  borrowings under this credit arrangement
totaled $503,000,000.

The credit  arrangement  with Merrill Lynch Mortgage Capital is for $100,000,000
and  includes  the ability to issue  letters of credit up to  $10,000,000.  This
credit arrangement  accrues interest at a rate of one-month LIBOR plus 0.38% per
annum.  A  commitment  fee of 0.10% per annum is paid on the  unused  commitment
amount.  Belair  Capital  pays all fees  associated  with issuing the letters of
credit.  As of September 30, 2003,  there were no outstanding  borrowings  under
this credit  arrangement.  There was a letter of credit  issued in the amount of
$1,493,776  at  September  30,  2003.  The  letter  of  credit  was  issued as a
substitute for funding certain  mortgage escrow accounts  required by the lender
of Bel  Residential.  The  letter of credit  expires  in 2004 and  automatically
extends for one-year  periods,  not to extend beyond June 15, 2010. Fees paid or
accrued under the terms of the letter of credit issued under the existing Credit
Facility totaled $8,103, for the nine months ended September 30, 2003.

6 Segment Information

Belair  Capital  pursues  its  investment   objective   primarily  by  investing
indirectly  in the  Portfolio  through  Belvedere  Capital.  The  Portfolio is a
diversified  investment company that emphasizes  investments in common stocks of
domestic and foreign growth  companies that are considered to be high in quality
and  attractive  in their  long-term  investment  prospects.  Separate  from its
investment in Belvedere  Capital,  Belair Capital  invests in real estate assets
through its subsidiary  Belair Real Estate.  Belair Real Estate invests directly
in Partnership  Preference Units and debt and equity investments in private real
estate  companies,   and  indirectly  in  real  property  through  a  controlled
subsidiary,  Bel  Residential.  At  September  30,  2002,  Belair Real  Estate's
controlled  subsidiaries  also included Katahdin (for the period from January 1,
2002 through May 21, 2002).

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
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:

<TABLE>
FOR THE THREE MONTHS ENDED                              TAX-MANAGED GROWTH          REAL
SEPTEMBER 30, 2003                                          PORTFOLIO*             ESTATE               TOTAL
------------------------------------------------------ --------------------- ------------------- --------------------
<S>                                                     <C>                     <C>                  <C>
Revenue                                                 $    3,042,455          $  13,235,387        $  16,277,842
Interest expense on mortgages                                        -             (2,386,112)          (2,386,112)
Interest expense on Credit Facility                                  -             (2,024,360)          (2,024,360)
Interest expense on swap agreements                                  -             (2,444,721)          (2,444,721)
Operating expenses                                            (601,236)            (3,418,353)          (4,019,589)
Minority interest in net income of controlled
  subsidiary                                                         -                 (3,159)              (3,159)
------------------------------------------------------ --------------------- ------------------- --------------------
NET INVESTMENT INCOME                                   $    2,441,219          $   2,958,682        $   5,399,901
Net realized gain                                            1,035,691                420,584            1,456,275
Change in unrealized appreciation (depreciation)            29,558,954              4,907,245           34,466,199
------------------------------------------------------ --------------------- ------------------- --------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS OF
  REPORTABLE SEGMENTS                                   $   33,035,864          $   8,286,511        $  41,322,375
------------------------------------------------------ --------------------- ------------------- --------------------

                                       13
<PAGE>
FOR THE THREE MONTHS ENDED                              TAX-MANAGED GROWTH          REAL
SEPTEMBER 30, 2002                                          PORTFOLIO*             ESTATE               TOTAL
------------------------------------------------------ --------------------- ------------------- --------------------
Revenue                                                 $    2,648,187          $  15,059,788        $  17,707,975
Interest expense on mortgages                                        -             (2,386,112)          (2,386,112)
Interest expense on Credit Facility                                  -             (3,196,362)          (3,196,362)
Interest expense on swap agreements                                  -             (7,767,646)          (7,767,646)
Operating expenses                                            (521,904)            (3,520,866)          (4,042,770)
Minority interest in net income of controlled
  subsidiary                                                         -               (171,959)            (171,959)
------------------------------------------------------ --------------------- ------------------- --------------------
NET INVESTMENT INCOME (LOSS)                            $    2,126,283          $  (1,983,157)       $     143,126
Net realized loss                                          (29,423,656)                     -          (29,423,656)
Change in unrealized appreciation (depreciation)          (210,483,891)            13,737,327         (196,746,564)
------------------------------------------------------ --------------------- ------------------- --------------------
NET (DECREASE) INCREASE IN NET ASSETS FROM
  OPERATIONS OF REPORTABLE SEGMENTS                     $ (237,781,264)         $  11,754,170        $(226,027,094)
------------------------------------------------------ --------------------- ------------------- --------------------


FOR THE NINE MONTHS ENDED                               TAX-MANAGED GROWTH          REAL
SEPTEMBER 30, 2003                                          PORTFOLIO*             ESTATE               TOTAL
------------------------------------------------------ --------------------- ------------------- --------------------
Revenue                                                 $    9,140,459          $  43,691,528        $  52,831,987
Interest expense on mortgages                                        -             (7,158,334)          (7,158,334)
Interest expense on Credit Facility                                  -             (6,846,572)          (6,846,572)
Interest expense on swap agreements                                  -            (14,429,097)         (14,429,097)
Operating expenses                                          (1,648,461)           (10,243,614)         (11,892,075)
Minority interest in net income of controlled
  subsidiary                                                         -               (324,910)            (324,910)
------------------------------------------------------ --------------------- ------------------- --------------------
NET INVESTMENT INCOME                                   $    7,491,998          $   4,689,001        $  12,180,999
Net realized (loss) gain                                    (1,155,495)               420,676             (734,819)
Change in unrealized appreciation (depreciation)           134,301,886             42,739,091          177,040,977
------------------------------------------------------ --------------------- ------------------- --------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS OF
  REPORTABLE SEGMENTS                                   $   140,638,389         $  47,848,768        $ 188,487,157
------------------------------------------------------ --------------------- ------------------- --------------------


FOR THE NINE MONTHS ENDED                               TAX-MANAGED GROWTH          REAL
SEPTEMBER 30, 2002                                          PORTFOLIO*             ESTATE               TOTAL
------------------------------------------------------ --------------------- ------------------- --------------------
Revenue                                                 $     7,584,800         $  52,374,252        $  59,959,052
Interest expense on mortgages                                         -            (9,795,166)          (9,795,166)
Interest expense on Credit Facility                                   -            (9,777,289)          (9,777,289)
Interest expense on swap agreements                                   -           (22,654,696)         (22,654,696)
Operating expenses                                           (1,890,794)          (13,243,011)         (15,133,805)
Minority interest in net income of controlled
  subsidiaries                                                        -            (1,186,621)          (1,186,621)
------------------------------------------------------ --------------------- ------------------- --------------------
NET INVESTMENT INCOME (LOSS)                            $     5,694,006         $  (4,282,531)       $   1,411,475
Net realized loss                                          (170,307,349)          (10,154,866)        (180,462,215)
Change in unrealized appreciation (depreciation)           (271,842,429)           22,557,286         (249,285,143)
------------------------------------------------------ --------------------- ------------------- --------------------
NET (DECREASE) INCREASE IN NET ASSETS FROM
  OPERATIONS OF REPORTABLE SEGMENTS                     $  (436,455,772)        $   8,119,889        $(428,335,883)
------------------------------------------------------ --------------------- ------------------- --------------------

                                       14
<PAGE>
                                                        TAX-MANAGED GROWTH          REAL
AT SEPTEMBER 30, 2003                                       PORTFOLIO*             ESTATE               TOTAL
------------------------------------------------------ --------------------- ------------------- --------------------
Segment assets                                          $ 1,458,096,610         $ 514,884,480        $1,972,981,090
Segment liabilities                                                   -           584,842,546           584,842,546
------------------------------------------------------ --------------------- ------------------- --------------------
NET ASSETS OF REPORTABLE SEGMENTS                       $ 1,458,096,610         $ (69,958,066)       $1,388,138,544
------------------------------------------------------ --------------------- ------------------- --------------------

AT DECEMBER 31, 2002
------------------------------------------------------ --------------------- ------------------- --------------------
Segment assets                                          $ 1,366,368,248         $ 558,359,888        $1,924,728,136
Segment liabilities                                                   -           673,833,607           673,833,607
------------------------------------------------------ --------------------- ------------------- --------------------
NET ASSETS OF REPORTABLE SEGMENTS                       $ 1,366,368,248         $(115,473,719)       $1,250,894,529
------------------------------------------------------ --------------------- ------------------- --------------------
</TABLE>
*    Belair Capital invests  indirectly in Tax-Managed  Growth Portfolio through
     Belvedere Capital.

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

<TABLE>
                                                   THREE MONTHS      THREE MONTHS        NINE MONTHS       NINE MONTHS
                                                      ENDED              ENDED              ENDED             ENDED
                                                  SEPTEMBER 30,      SEPTEMBER 30,      SEPTEMBER 30,     SEPTEMBER 30,
                                                       2003              2002               2003               2002
                                                 ----------------- ------------------ ------------------ -----------------
<S>                                                  <C>             <C>                <C>                 <C>
Revenue:
  Revenue from reportable segments                   $ 16,277,842    $  17,707,975      $ 52,831,987        $  59,959,052
  Unallocated revenue                                      32,163            1,076            61,976               26,066
                                                 ----------------- ------------------ ------------------ -----------------
TOTAL REVENUE                                        $ 16,310,005    $  17,709,051      $ 52,893,963        $  59,985,118
                                                 ----------------- ------------------ ------------------ -----------------

Net increase (decrease) in net assets from
  operations:
  Net increase (decrease) in net assets from
     operations of reportable segments               $ 41,322,375    $(226,027,094)     $188,487,157        $(428,335,883)
  Unallocated revenue                                      32,163            1,076            61,976               26,066
  Unallocated expenses **                                (331,089)        (250,372)         (880,757)            (893,356)
                                                 ----------------- ------------------ ------------------ -----------------
TOTAL NET INCREASE (DECREASE) IN NET ASSETS
  FROM OPERATIONS                                    $ 41,023,449    $(226,276,390)     $187,668,376        $(429,203,173)
                                                 ----------------- ------------------ ------------------ -----------------
</TABLE>
**   Unallocated expenses include Belair Capital's cost to operate the Fund such
     as servicing fees, as well as other miscellaneous and administrative  costs
     of Belair Capital.

<TABLE>
                                                                                 SEPTEMBER 30,          DECEMBER 31,
                                                                                     2003                   2002
                                                                               -----------------------------------------
<S>                                                                             <C>                     <C>
Net assets:
  Net assets of reportable segments                                             $ 1,388,138,544         $ 1,250,894,529
  Unallocated cash                                                                    1,253,825              14,074,693
  Short-term investments                                                             45,026,476 (1)           3,426,881
  Other assets                                                                                -                   9,100
  Loan payable - Credit Facility                                                    (53,576,352)(1)         (22,499,768)
  Other liabilities                                                                    (126,184)                (97,779)
                                                                               -------------------------------------------
TOTAL NET ASSETS                                                                $ 1,380,716,309         $ 1,245,807,656
                                                                               -------------------------------------------
</TABLE>
(1)  During  October 2003,  $31,000,000  of short-term  investments  was used to
     repay amounts outstanding under the Credit Facility.

                                       15
<PAGE>
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

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

RESULTS OF OPERATIONS  FOR THE QUARTER ENDED  SEPTEMBER 30, 2003 COMPARED TO THE
QUARTER ENDED SEPTEMBER 30, 2002

PERFORMANCE  OF THE  FUND.1 The Fund's  total  return was 3.05% for the  quarter
ended  September  30, 2003.  This return  reflects an increase in the Fund's net
asset value per share from $102.92 to $106.06 during the period. For comparison,
the  Standard  & Poor's  500 Index (the S&P 500),  an  unmanaged  index of large
capitalization  stocks  commonly used as a benchmark for the U.S. equity market,
had a total return of 2.65% over the same period.  The  performance  of the Fund
exceeded that of Tax-Managed  Growth  Portfolio (the Portfolio) by approximately
0.7% during the period.  Last year,  the Fund had a total return  performance of
-15.84%  for the quarter  ended  September  30,  2002.  This return  reflected a
decrease in the Fund's net asset value per share from  $103.00 to $86.69  during
the period.  For comparison,  the S&P 500 had a total return of -17.27% over the
same  period.  The  performance  of the Fund  trailed  that of the  Portfolio by
approximately 0.7% during that period.

PERFORMANCE OF THE PORTFOLIO.  The total return of the Portfolio for the quarter
ended  September 30, 2003 was 2.35% compared to the 2.65% return achieved by the
S&P 500 over the same  period.  The modest gain posted by the S&P 500 during the
quarter is in sharp contrast to the worst broad market quarterly decline in this
decade that was  experienced  in the  quarter  ended  September  30,  2002.  The
Portfolio's  total return for the quarter ended  September 30, 2002 was -15.11%.
The encouraging  fiscal and monetary  policies,  resilient consumer spending and
positive earnings momentum  experienced through the first half of 2003 continued
during the third quarter and  contributed  to the market's  strength  during the
quarter, extending its gains for the year.

The performance of the Portfolio slightly trailed the performance of the S&P 500
during the quarter  ended  September 30, 2003  primarily due to the  Portfolio's
relatively  more  defensive  tilt  and  its  continued   underweighting  of  the
information  technology  sector.  Unlike  a  year  ago  when  it was  the  worst
performing sector,  information technology was by far the best performing sector
of the market during the quarter ended September 30, 2003.

During the quarter ended September 30, 2003, the Portfolio's  sector  allocation
remained very similar to last year's positioning relative to the market, with no
major  sector or industry  shifts.  Near the end of the  quarter  there was some
pause in the strong  momentum of higher  beta  stocks,  helping the  Portfolio's
relative performance.

The Portfolio's stock selection and underweighting of the  telecommunication and
health care  sectors  were  particularly  beneficial  during the  quarter  ended
September  30,  2003,  but were not  sufficient  to  offset  the  impact  of the
Portfolio's  underweighting of information  technology stocks. Boston Management
and Research (Boston Management),  the Portfolio's investment adviser,  remained
cautious  in  the  information  technology  and  telecommunications  sectors,  a
comparable underweight allocation from the same period a year ago.

PERFORMANCE OF REAL ESTATE  INVESTMENTS.  The Fund's real estate investments are
held through Belair Real Estate  Corporation  (Belair Real Estate), a controlled
subsidiary  of  the  Fund.  Real  estate  investments  include  a  portfolio  of
income-producing  preferred  equity  interests  in operating  partnerships  (the
Partnership  Preference  Units) that are affiliated with real estate  investment
trusts and an interest in a real estate  joint  venture  (the Real Estate  Joint
Venture) that is majority-owned by Belair Real Estate.

1    Past performance is no guarantee of future results.  Investment  return and
     principal value will fluctuate so that Fund shares,  when redeemed,  may be
     worth more or less than their original  cost.  Comparison to the S&P 500 is
     for reference only. It is not possible to invest directly in an Index.

                                       16
<PAGE>
During the  quarter  ended  September  30,  2003,  Belair  Real  Estate sold (or
experienced  scheduled  redemptions of) certain  Partnership  Preference  Units,
recognizing  gains  of $0.4  million  on the  transactions  (including  sales to
another  investment fund advised by Boston  Management).  There were no gains or
losses  recognized during the quarter ended September 30, 2002. At September 30,
2003,  the  estimated  fair value of the  Fund's  Partnership  Preference  Units
totaled  $344.7  million  compared to $411.0  million at  September  30, 2002, a
decrease of $66.3 million or 16%. The decrease in value was  principally  due to
fewer  Partnership  Preference  Units held at September  30, 2003.  The per unit
value of the  remaining  Partnership  Preference  Units also  declined  slightly
during the quarter.  The Fund saw unrealized  depreciation of the estimated fair
value in its Partnership  Preference Units of approximately  $1.3 million during
the quarter ended  September 30, 2003  compared to  unrealized  appreciation  of
approximately $14.0 million for the quarter ended September 30, 2002.

Dividends  received  from  Partnership  Preference  Units for the quarter  ended
September 30, 2003 totaled $7.8 million compared to $9.4 million for the quarter
ended  September  30,  2002, a decrease of $1.6 million or 17%. The decrease was
due to fewer  Partnership  Preference  Units being held during the quarter ended
September 30, 2003.

During the quarter ended September 30, 2003, real estate operations continued to
be impacted by weak  multifamily  market  fundamentals.  Rental income from real
estate  operations fell to $5.4 million for the quarter ended September 30, 2003
from $5.6 million for the quarter  ended  September 30, 2002, a decrease of $0.2
million or 4%. This decrease in rental income was  principally  due to increased
rent concessions or reduced apartment rental rates and lower occupancy levels at
properties owned by Belair Real Estate's Real Estate Joint Venture, a trend that
has continued from 2002.

Property  operating  expenses  totaled  $2.5  million  and $2.6  million for the
quarters  ended  September 30, 2003 and 2002,  respectively,  a decrease of $0.1
million or 4% (property operating expenses are before certain operating expenses
of Belair Real Estate of  approximately  $0.9 million for both the quarter ended
September  30, 2003 and the quarter ended  September  30,  2002).  While overall
property  operating  expenses  decreased  slightly,   property  and  maintenance
expenses increased 6% and property taxes and insurance expense decreased 26%.

Even though the U.S.  economy  showed  signs of  improvement  during the quarter
ended September 30, 2003, significant employment growth has not occurred in most
markets and low interest rates have contributed to continued  development of new
properties.  As a result,  Boston  Management,  Belair  Real  Estate's  manager,
expects that real estate operating  results for Belair Real Estate's Real Estate
Joint Venture in 2003 will continue to be modestly below the levels of 2002.

At September 30, 2003,  the  estimated  fair value of the real  properties  held
through  Belair Real  Estate was $159.4  million  compared to $156.8  million at
September  30, 2002,  an increase of $2.6 million or 2%. The modest  increase in
estimated  real property  values at September 30, 2003 resulted from declines in
capitalization rates in a lower-return  environment.  Declines in capitalization
rates more than  offset  the impact on  property  values of lower  income  level
expectations.  The Fund saw unrealized  appreciation of the estimated fair value
in its other real  estate  investments  (which  includes  Belair  Real  Estate's
interest in the Real Estate Joint Venture) of approximately  $3.8 million during
the quarter ended September 30, 2003 compared to  approximately  $0.2 million of
unrealized depreciation for the quarter ended September 30, 2002.

PERFORMANCE OF INTEREST RATE SWAP  AGREEMENTS.  For the quarter ended  September
30, 2003,  interest rate swap agreement values appreciated by approximately $2.4
million due to a slight  increase in swap rates and a  shortening  of  effective
maturities as the Fund's interest rate swap agreements  approached their initial
optional  termination dates. For the quarter ended September 30, 2002, the value
of interest  rate swap  agreements  declined  slightly  due to a decline in swap
rates.

On October 1, 2003, new interest rate swap  agreements  were entered into to fix
the cost of a portion of Fund borrowings  under the Credit Facility  established
on July 15, 2003. At the same time, the Fund made payments of approximately $8.5
million to terminate  all interest  rate swaps  outstanding  as of September 30,
2003,  realizing a loss in that amount on the  transactions.  The realized  loss
approximated the value of the positions on the books of the Fund. See "Liquidity
and  Capital  Resources"  below for a  description  of the Credit  Facility  and
interest rate swap agreements.

RESULTS OF OPERATIONS  FOR THE NINE MONTHS ENDED  SEPTEMBER 30, 2003 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 2002

PERFORMANCE  OF THE FUND. The Fund's total return was 15.40% for the nine months
ended  September  30, 2003.  This return  reflects an increase in the Fund's net
asset  value per share from $92.38 to $106.06  and a  distribution  of $0.49 per
share  during the  period.  For  comparison,  the S&P 500 had a total  return of
14.71% over the same period.  The  performance  of the Fund exceeded that of the
Portfolio by  approximately  4.7% during the period.  Last year,  the Fund had a
total  return  performance  of -26.15% for the nine months ended  September  30,

                                       17
<PAGE>
2002.  This return  reflected a decrease in the Fund's net asset value per share
from  $117.39  to  $86.69.  For  comparison,  the S&P 500 had a total  return of
-28.15% over the same period.  The  performance  of the Fund trailed that of the
Portfolio by approximately 1.8% for the nine months ended September 30, 2002.

PERFORMANCE  OF THE  PORTFOLIO.  The total return of the  Portfolio for the nine
months  ended  September  30,  2003 was 10.74%  compared  to the  14.71%  return
achieved by the S&P 500 over the same period.  The total return of the Portfolio
for the nine months ended September 30, 2002 was -24.40%.

The first  nine  months of 2003  remained  volatile,  but  markets  proved to be
resilient  achieving  impressive  returns.  War angst, a  questionable  economic
recovery and the SARS  outbreak were just a few of the factors  contributing  to
increased  volatility and unsettled investor sentiment during the period.  While
the first nine  months of 2003 also  witnessed  reduced  geopolitical  concerns,
higher consumer confidence and a strong housing market, concerns about inflation
and  unemployment  developed over the summer and early fall of 2003 and kept the
market and various sectors quite volatile.

The Portfolio's  performance trailed the overall market in the first nine months
of 2003,  mostly due to a lower exposure to higher beta and lower quality issues
that were the  strongest  price  performers  during this period.  The  Portfolio
maintained a pro-cyclical  stance  emphasizing  the consumer  discretionary  and
consumer  staples  sectors,  as it did in the first nine months of 2002.  Boston
Management continued to de-emphasize health care investments, a directional move
initiated last year which was positive for the Portfolio's relative returns.

During the first nine months of 2003, Boston  Management  continued to emphasize
industrial  company  investments,  especially  in the  airfreight  logistics and
aerospace defense areas.  Airfreight logistics and aerospace defense investments
have been helpful to the  Portfolio's  longer-term  record,  but detracted  from
results during the nine months ended September 30, 2003.

Lack of earnings visibility reinforced the Portfolio's cautious weighting in the
telecommunications   and   information   technology   sectors.   Both   of   the
aforementioned  sectors were de-emphasized  during the first nine months of last
year as well.  The  Portfolio's  underweight of the  telecommunication  services
sector during the nine months ended  September 30, 2003 continued to be positive
for the Portfolio.  Boston  Management  continued to underweight the Portfolio's
investments in the materials and utilities  sectors during the period, a similar
stance to last year's allocation.

PERFORMANCE OF REAL ESTATE  INVESTMENTS.  During the nine months ended September
30, 2003 and  September  30,  2002,  Belair  Real  Estate  sold (or  experienced
scheduled  redemptions of) certain  Partnership  Preference  Units,  recognizing
gains  of  $0.4  million  and  losses  of  $0.6  million,  respectively,  on the
transactions  (including  sales to  another  investment  fund  advised by Boston
Management).  At September  30,  2003,  the  estimated  fair value of the Fund's
Partnership  Preference  Units totaled $344.7 million compared to $411.0 million
at September 30, 2002, a decrease of $66.3 million or 16%. The decrease in value
was principally due to fewer Partnership  Preference Units held at September 30,
2003,  offset  in part by  increases  in the per  unit  value  of the  remaining
Partnership  Preference Units held by Belair Real Estate.  This  appreciation in
per unit value  resulted from declining  interest  rates and tighter  spreads on
real estate securities during the nine months ended September 30, 2003. The Fund
saw  unrealized  appreciation  in the  estimated  fair value of its  Partnership
Preference  Units of  approximately  $25.9 million  during the nine months ended
September 30, 2003,  compared to  approximately  $23.4  million  during the nine
months ended September 30, 2002.

Dividends  received from Partnership  Preference Units for the nine months ended
September 30, 2003 totaled $27.1 million  compared to $27.5 million for the nine
months ended  September 30, 2002, a decrease of $0.4 million or 1%. The decrease
was due to fewer Partnership  Preference Units being held during the nine months
ended September 30, 2003.

Belair  Real  Estate's  sale of its  interest  in  Katahdin  Property  Trust LLC
(Katahdin)  in May 2002  reduced the scope of the Fund's real estate  activities
for the nine months ended  September  30, 2003 compared to the nine months ended
September 30, 2002. Rental income from real estate operations decreased to $16.5
million for the nine months ended  September 30, 2003 from $24.8 million for the
nine  months  ended  September  30,  2002,  a decrease  of $8.3  million or 33%.
Property  operating expenses decreased to $7.6 million for the nine months ended
September  30, 2003 from $10.3  million for the nine months ended  September 30,
2002, a decrease of $2.7 million or 26% (property  operating expenses are before
certain operating  expenses of Belair Real Estate of approximately  $2.6 million
for the nine months ended September 30, 2003 and approximately  $2.9 million for
the  nine  months  ended  September  30,  2002).   While  these  decreases  were
principally  due to the May  2002  sale of  Belair  Real  Estate's  interest  in
Katahdin,  weak  multifamily  market  fundamentals in most regions combined with
lower  occupancy  levels and increased rent  concessions  also impacted  results
during the period, as did modest increases in operating  expenses of Belair Real
Estate's remaining Real Estate Joint Venture.

                                       18
<PAGE>
At September 30, 2003,  the  estimated  fair value of the real  properties  held
through  Belair Real  Estate was $159.4  million  compared to $156.8  million at
September  30, 2002,  an increase of $2.6 million or 2%. The modest  increase in
estimated values at September 30, 2003 resulted from declines in  capitalization
rates in a lower-return environment.  Declines in capitalization rates more than
offset the impact on property  values of lower  income level  expectations.  The
Fund saw unrealized  appreciation  of the estimated fair value in its other real
estate  investments of  approximately  $4.0 million during the nine months ended
September  30,  2003,  compared  to  approximately  $2.9  million of  unrealized
depreciation  during the nine months ended  September 30, 2002.  During the nine
months  ended  September  30,  2002,  Belair Real  Estate  sold its  interest in
Katahdin to another  fund  advised by Boston  Management  and realized a loss of
$9.5 million on the transaction.

PERFORMANCE  OF  INTEREST  RATE  SWAP  AGREEMENTS.  For the  nine  months  ended
September  30,  2003,   interest  rate  swap  agreement  values  appreciated  by
approximately  $12.9 million  compared to  appreciation  of  approximately  $2.1
million for the nine months  ended  September  30,  2002.  The  appreciation  is
primarily  due to a shortening of effective  maturities  as the Fund's  interest
rate swap agreements  approached their initial optional  termination dates. Swap
rates  declined  during the nine  months  ended  September  30, 2002 and did not
change significantly during the nine months ended September 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

Effective July 15, 2003, the Fund  refinanced its then existing  credit facility
with Merrill Lynch  International Bank by entering into new credit  arrangements
with DrKW Holdings,  Inc. (DrKW) and Merrill Lynch Mortgage Capital, Inc. (MLMC)
(collectively,  the Credit  Facility) which together total $615.0  million.  The
Credit  Facility  is  secured by a pledge of the Fund's  assets,  excluding  the
assets of Bel Residential  Properties Trust, and has a seven-year maturity.  The
Credit Facility will expire in June 2010.

The Credit  Facility  is  primarily  used to finance  the Fund's  equity in real
estate  investments and will continue to be used for such purpose in the future.
The Credit  Facility  also  provides  for  selling  commissions,  organizational
expenses  and  any  short-term  liquidity  needs  of  the  Fund.  Under  certain
circumstances,  the Fund may  increase  the size of the Credit  Facility and the
amount of outstanding borrowings thereunder for these purposes.

The Credit  Facility  includes a $515.0  million credit  arrangement  with DrKW.
Borrowings  under  the DrKW  credit  arrangement  accrue  interest  at a rate of
one-month  LIBOR plus 0.30% per annum.  As of September  30,  2003,  outstanding
borrowings under the DrKW credit arrangement totaled $503.0 million.

The Credit Facility also includes a $100 million credit  arrangement  with MLMC,
including up to $10.0 million under letters of credit. Borrowings under the MLMC
credit  arrangement  accrue interest at a rate of one-month LIBOR plus 0.38% per
annum. As of September 30, 2003, there were no outstanding  borrowings under the
MLMC arrangement. There was $1.5 million outstanding under a letter of credit at
September 30, 2003.  The unused loan  commitment  amount  totaled  approximately
$98.5  million.  A  commitment  fee of 0.10%  per  annum  is paid on the  unused
commitment amount. The Fund pays all fees associated with issuing the letters of
credit.

The Fund has entered into interest rate swap agreements with respect to 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  at  a  predetermined   spread  plus
three-month  LIBOR.  During  the  terms of the  outstanding  interest  rate swap
agreements,  changes in the underlying  values of the agreements are recorded as
unrealized  gains or  losses.  On  October  1,  2003,  new  interest  rate  swap
agreements  were  entered  into to fix a portion of the cost of Fund  borrowings
under the Credit  Facility  established  on July 15, 2003. At the same time, all
interest rate swap agreements outstanding on September 30, 2003 were terminated.
Under the new interest rate swap agreements the Fund makes periodic  payments to
the  counterparty at  predetermined  fixed rates, in exchange for  floating-rate
payments at a predetermined spread plus one-month LIBOR.

As of September  30, 2003 and September 30, 2002,  the  unrealized  depreciation
related to the interest rate swap agreements was approximately  $8.5 million and
$27.8 million, respectively.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Fund's  discussion  and analysis of its  financial  condition and results of
operations  are  based  upon  its  unaudited  condensed  consolidated  financial
statements,  which have been prepared in accordance with  accounting  principles
generally  accepted in the United States of America.  The  preparation  of these
financial  statements  requires  the  Fund  to  make  estimates,  judgments  and
assumptions  that affect the reported amounts of assets,  liabilities,  revenues

                                       19
<PAGE>
and  expenses.  The Fund bases these  estimates,  judgments and  assumptions  on
historical  experience  and on other  various  factors  that are  believed to be
reasonable  under the  circumstances.  Actual  results  may  differ  from  these
estimates under different assumptions or conditions.

The Fund's  critical  accounting  policies  affect the Fund's  more  significant
estimates and assumptions used in valuing the Fund's real estate investments and
interest rate swap agreements.  Prices are not readily available for these types
of investments  and therefore they are fair valued on an ongoing basis by Boston
Management, in its capacity as manager of Belair Real Estate, in the case of the
real estate  investments,  and in its capacity as the Fund's investment adviser,
in the  case  of the  interest  rate  swap  agreements.  The  fair  value  of an
investment  represents  the  amount  at which  Boston  Management  believes  the
investment could be sold in a current transaction between willing parties,  that
is, other than in a forced or liquidation sale.

In estimating  the fair value of Belair Real Estate's  investment in Partnership
Preference  Units,  Boston  Management takes into account all relevant  factors,
data and information,  including information from dealers and similar firms with
knowledge  of  such  issues  and  the  prices  of  comparable  preferred  equity
securities  and  other  fixed or  adjustable  rate  instruments  having  similar
investment  characteristics.  With  respect to Belair Real  Estate's  other real
estate  investments,  detailed  investment  valuations  are based on independent
valuations  that are  performed at least  annually  and  reviewed  periodically.
Interim valuations  reflect results of operations and distributions,  and may be
adjusted if there has been a significant change in economic  circumstances since
the most recent independent valuation. In determining the fair value of interest
rate swap agreements, Boston Management may consider, among other things, dealer
and  counterparty  quotes and pricing  models.  Given that the valuation of real
estate investments and interest rate swap agreements  includes many assumptions,
including but not limited to the assumption that the investment could be sold in
a current transaction  between willing parties,  that is, other than in a forced
or liquidation sale, values may differ from amounts ultimately realized.

The policies for valuing real estate investments involve  significant  judgments
that are based upon, without limitation, general economic conditions, the supply
and demand for  different  types of real  properties,  the  financial  health of
tenants,  the timing of lease  expirations  and  terminations,  fluctuations  in
rental rates and operating costs, exposure to adverse  environmental  conditions
and losses from  casualty  or  condemnation,  interest  rates,  availability  of
financing,  managerial  performance and government  rules and  regulations.  The
valuations of Partnership Preference Units fluctuate over time to reflect, among
other factors, changes in interest rates, changes in perceived riskiness of such
units (including call risk), changes in the perceived riskiness of comparable or
similar  securities  trading in the public market and the  relationship  between
supply and demand for  comparable  or similar  securities  trading in the public
market.

The value of  interest  rate swap  agreements  may be subject to wide  swings in
valuation  caused  principally by changes in interest rates.  Interest rate swap
agreements  may be difficult to value since such  instruments  may be considered
illiquid. Fluctuations in the value of Partnership Preference Units derived from
changes in general  interest rates can be expected to be offset in part (but not
entirely)  by changes in the value of  interest  rate swap  agreements  or other
interest  rate hedges that may be entered  into by the Fund with  respect to its
borrowings.  Fluctuations in the value of real estate  investments  derived from
other factors besides general interest rate movements (including issuer-specific
and sector-specific credit concerns,  property-specific  concerns and changes in
interest rate spread  relationships)  will not be offset by changes in the value
of  interest  rate swap  agreements  or other  interest  rate hedges that may be
entered into by the Fund.  Changes in the  valuation of  Partnership  Preference
Units not offset by changes in the valuation of interest rate swap agreements or
other  interest  rate hedges that may be entered into by the Fund and changes in
the value of other real estate  investments  will cause the  performance  of the
Fund to deviate from the performance of the Portfolio.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Fund's  primary  exposure to interest  rate risk arises from its real estate
investments  that are financed by the Fund with floating rate  borrowings  under
the Fund's Credit Facility and by fixed-rate  secured  mortgage debt obligations
of the Real Estate Joint  Venture.  The interest  rates on borrowings  under the
Fund's  Credit  Facility  are reset at  regular  intervals  based on a fixed and
predetermined premium to LIBOR for short-term extensions of credit. The Fund has
entered into  cancellable  interest rate swap  agreements to fix the cost of its
borrowings  under the Credit  Facility  and to attempt to mitigate 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 short- term LIBOR.  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.

                                       20
<PAGE>
The value of Partnership  Preference  Units and, to a lesser degree,  other real
estate  investments  is sensitive to interest  rate risk.  Increases in interest
rates  generally  will  have an  adverse  affect  on the  value  of  Partnership
Preference Units and other real estate investments.

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 Sensitivity
           Cost, Principal (Notional) Amount by Contractual Maturity
                   For the Twelve Months Ended September 30,

<TABLE>
                                                                                   Estimated
                                    2004-2008     Thereafter        Total          Fair Vaue
---------------------------------------------------------------------------------------------
<S>                                 <C>         <C>             <C>              <C>
Rate sensitive
liabilities:
------------------------
Long-term debt:
------------------------
Fixed-rate mortgages                            $112,630,517    $112,630,517     $136,000,000
Average interest rate                                   8.33%           8.33%
------------------------
Variable-rate Credit
Facility                                        $503,000,000    $503,000,000     $503,000,000
Average interest rate                                   1.42%           1.42%
-----------------------------------------------------------------------------------------------
Rate sensitive
derivative financial
instruments:
------------------------
Pay fixed/ receive
variable interest rate
swap agreements (1)                             $378,782,000    $378,782,000     $          -
Average pay rate (1)                                    4.75%           4.75%
Average receive rate(1)                                 1.42%           1.42%

(1)  The terms disclosed are those of the interest rate swap agreements  entered
     into that are  effective  on  October  1,  2003.  See Note 4 to the  Fund's
     unaudited condensed  consolidated  financial statements in Item 1 above for
     the terms of the interest  rate swap  agreements in effect on September 30,
     2003 and  terminated  on October 1, 2003 as well as the loss  realized as a
     result of such termination.
-----------------------------------------------------------------------------------------------
Rate sensitive
investments:
------------------------
Fixed-rate Partnership
Preference Units:
------------------------
Bradley Operating
Limited Partnership,
8.875% Series B
Cumulative Redeemable
Perpetual Preferred
Units, Callable
2/23/04, Current
Yield: 8.83%                                    $ 22,521,852    $ 22,521,852     $ 25,717,841

Camden Operating,
L.P., 8.50% Series B
Cumulative Redeemable
Perpetual Preferred
Units, Callable
2/23/04, Current
Yield: 8.39%                                    $ 27,384,494    $ 27,384,494     $ 27,852,000

Colonial Realty
Limited Partnership,
8.875% Series B
Cumulative Redeemable
Perpetual Preferred
Units, Callable
2/23/04, Current
Yield: 8.76%                                    $ 44,807,072    $ 44,807,072     $ 49,111,100

<PAGE>
Kilroy Realty, L.P.,
8.075% Series A
Cumulative Redeemable
Preferred Units,
Callable 2/06/03,
Current Yield: 8.75%                            $ 20,000,000    $ 20,000,000     $ 18,453,880

Liberty Property L.P.,
9.25% Series B
Cumulative Redeemable
Preferred Units,
Callable 7/28/04,
Current Yield: 8.99%                            $ 30,875,000    $ 30,875,000     $ 31,764,200

                                       21
<PAGE>
                                                                                   Estimated
                                    2004-2008     Thereafter        Total          Fair Vaue
---------------------------------------------------------------------------------------------
MHC Operating Limited
Partnership, 9% Series
D Cumulative
Redeemable Perpetual
Preference Units,
Callable 9/29/04,
Current Yield: 9.01%                            $ 50,000,000    $ 50,000,000     $ 49,920,000

National Golf
Operating Partnership,
L.P., 9.30% Series A
Cumulative Redeemable
Preferred Units,
Callable 2/6/03,
Current Yield: 9.80%                            $ 31,454,184    $ 31,454,184     $ 31,351,561

National Golf
Operating Partnership,
L.P., 9.30% Series B
Cumulative Redeemable
Preferred Units,
Callable 2/6/03,
Current Yield: 9.80%                            $  5,000,000    $  5,000,000     $  4,746,000

PSA Institutional
Partners, L.P., 9.50%
Series N Cumulative
Redeemable Perpetual
Preferred Units,
Callable 3/17/05,
Current Yield: 9.09%                            $ 48,250,000    $ 48,250,000     $ 50,411,600

Price Development
Company, L.P., 8.95%
Series B Cumulative
Redeemable Preferred
Partnership Interests,
Callable 7/28/04,
Current Yield: 9.25%                            $ 30,625,000    $ 30,625,000     $ 29,620,500

Urban Shopping
Centers, L.P., 9.45%
Series D Cumulative
Redeemable Perpetual
Preferred Units,
Callable 10/01/04,                              $ 25,000,000    $ 25,000,000     $ 25,727,400
Current Yield: 9.18%
------------------------
Note Receivable:
------------------------
Fixed-rate note
receivable, 8%                                  $  2,070,580    $  2,070,580     $  2,070,580
</TABLE>

ITEM 4. CONTROLS AND PROCEDURES.

Eaton  Vance  Management  (Eaton  Vance),  as  the  Fund's  manager,   with  the
participation of the Fund's Chief Executive Officer and Chief Financial Officer,
conducted an evaluation of the effectiveness of the Fund's  disclosure  controls
and procedures  (as defined by Rule 13a-15(e) of the Securities  Exchange Act of
1934, as amended) as of the end of the period  covered by this report.  Based on
that  evaluation,  the  Chief  Executive  Officer  and Chief  Financial  Officer
concluded that the Fund's  disclosure  controls and procedures  were  effective.
There were no changes in the Fund's  internal  control over financial  reporting
that  occurred  during the period  covered by this report  that have  materially
affected,  or are reasonably  likely to materially  affect,  the Fund's internal
control over financial reporting.

As the Fund's manager, the complete and entire management, control and operation
of the Fund are vested in Eaton Vance. The Fund's organizational  structure does
not provide for a board of directors or a board audit  committee.  As such,  the
Fund's Chief Executive  Officer and Chief Financial  Officer intend to report to
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.

PART II. OTHER INFORMATION

<PAGE>
ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

None.

                                       22
<PAGE>
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, 2003.

ITEM 5. OTHER INFORMATION.

None.

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:

4.1  Loan  and  Security  Agreement  between  Belair  Capital  Fund LLC and DrKW
     Holdings, Inc., as Lender

4.2  Loan and Security  Agreement  among Belair Capital Fund LLC,  Merrill Lynch
     Mortgage  Capital,  Inc.,  as Agent,  the  Lenders  referred to therein and
     Merrill Lynch Capital Services, Inc.

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.

                                       23
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned duly authorized officer on November 10, 2003.


                                BELAIR CAPITAL FUND LLC


                                /s/ Michelle A. Alexander
                                -------------------------
                                Michelle A. Alexander
                                Chief Financial Officer
                                (Duly Authorized Officer and
                                Principal Financial Officer)

                                       24
<PAGE>
                                  EXHIBIT INDEX
                                  -------------

4.1  Loan  and  Security  Agreement  between  Belair  Capital  Fund LLC and DrKW
     Holdings, Inc., as Lender

4.2  Loan and Security  Agreement  among Belair Capital Fund LLC,  Merrill Lynch
     Mortgage  Capital,  Inc.,  as Agent,  the  Lenders  referred to therein and
     Merrill Lynch Capital Services, Inc.

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

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