UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, DC 20549  FORM 10-K  ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934 (THE ACT) For the Fiscal Year Ended December 31, 2007  Commission file number 000-50258  Belrose Capital Fund LLC (the Fund) (Exact Name of Registrant as Specified in Its Charter)  Delaware
  
  04-3613468(State of Organization)
  
  (I.R.S. Employer Identification No.)
  The Eaton
Vance Building
255 State Street Boston,
Massachusetts 02109
(Address and Zip Code of Principal Executive Offices)  617-482-8260
(Registrants telephone number, including area code)  Securities registered
pursuant to Section 12(g) of the Act: Limited
Liability Company Interests in the Fund (Shares)  Indicate by check mark if
Registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act of 1933.x Yes o
No  Indicate by check mark if
Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act.o Yes x
No  Indicate by check mark
  whether Registrant (1) has filed all reports required to be filed by
  Section 13 or 15(d) of the Act 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 suchfiling requirements for
  the past 90 days.x
  Yes o No  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.x  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2
of the Exchange Act.  (Check one):  Large
  accelerated filerx
  Accelerated
  fileroNon-accelerated
  filero
  Smaller
  reporting companyo
  (Do
not check if a smaller reporting company)  Indicate by check mark
whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Act).YesoNox  Aggregate market value of
the Shares held by non-affiliates of Registrant, based on the closing net asset
value on June 29, 2007 was $1,929,436,738. Calculation of holdings by
non-affiliates is based upon the assumption, for these purposes only, that the
Registrants manager, its executive officers and directors and persons holding
5% or more of the Registrants Shares are affiliates.  Incorporations by
Reference: None.  The Exhibit Index
is located on page 79.


Belrose Capital Fund LLC
Index to Form 10-K  Item
  
  
  
  PagePART I1
  
  Business
  
  5Fund Overview
  
  5Structure of the Fund
  
  5Fund Management
  
  5The Funds Offering
  
  6The Funds Investment in Belvedere Capital Fund
  Company LLC and Tax-Managed Growth Portfolio
  
  6Belvedere Company
  
  6The Portfolio
  
  7The Portfolios Investment Objective and Policies
  
  7The Portfolios Tax-Sensitive Management Strategies
  
  7The Funds Real Estate Investments
  
  8Real Estate Joint Venture Investments
  
  9Wholly
  Owned Property
  
  10Partnership Preference Units
  
  10Organization of Belrose Realty
  
  10Fund Borrowings
  
  10Interest Rate Swap Agreements
  
  11The Eaton Vance Organization
  
  11Conflicts of Interest
  
  111A
  
  Risk
  Factors
  
  121B
  
  Unresolved
  Staff Comments
  
  122
  
  Properties
  
  123
  
  Legal Proceedings
  
  124
  
  Submission
  of Matters to a Vote of Security Holders
  
  12PART II5
  
  Determining
  Net Asset Value, Market for Fund Shares, Related Shareholder Matters and
  Issuer Purchases of Equity Securities
  
  13Market Information,
  Restrictions on Transfers and Redemption of Shares
  
  13Transfers of Fund
  Shares
  
  13Redemption
  of Fund Shares
  
  13Determining Net
  Asset Value
  
  15Historic Net Asset
  Values
  
  15Record
  Holders of Shares of the Fund
  
  16Distributions
  
  16Income and
  Capital Gain Distributions
  
  16Special Distributions
  
  16  2


6
  
  Selected
  Financial Data
  
  17Table of
  Selected Financial Data
  
  177
  
  Managements
  Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
  
  17Results of Operations
  
  18MD&A for
  the Year Ended December 31, 2007 Compared to the Year Ended
  December 31, 2006
  
  18Performance of the Fund
  
  18Performance of the
  Portfolio
  
  19Performance
  of Real Estate Investments
  
  19Performance
  of Interest Rate Swap Agreements
  
  20MD&A for
  the Year Ended December 31, 2006 Compared to the Year Ended
  December 31, 2005
  
  20Performance of the Fund
  
  20Performance of the
  Portfolio
  
  20Performance
  of Real Estate Investments
  
  21Performance
  of Interest Rate Swap Agreements
  
  22Liquidity and
  Capital Resources
  
  22Outstanding Borrowings
  
  22Liquidity
  
  22Off-Balance
  Sheet Arrangements
  
  22The Funds
  Contractual Obligations
  
  23Critical
  Accounting Estimates
  
  23Real Estate Joint
  Ventures
  
  24Wholly Owned
  and Co-owned Property
  
  25Partnership
  Preference Units
  
  257A
  
  Quantitative
  and Qualitative Disclosures About Market Risk
  
  26Quantitative
  Information About Market Risk
  
  26Interest
  Rate Risk
  
  26Qualitative
  Information About Market Risk
  
  28Risks
  Associated with Equity Investing
  
  28Risks of
  Investing in Foreign Securities
  
  28Risks of
  Certain Investment Techniques
  
  28Risks of Real
  Estate Investments
  
  29Risks of
  Interest Rate Swap Agreements
  
  32Risks
  of Leverage
  
  328
  
  Financial
  Statements and Supplementary Data
  
  329
  
  Changes in
  and Disagreements with Accountants on Accounting and Financial Disclosure
  
  339A
  
  Controls and
  Procedures
  
  33Fund
  Governance
  
  33Disclosure
  Controls and Procedures
  
  33Internal
  Control over Financial Reporting
  
  339B
  
  Other Information
  
  34  3


PART III10
  
  Directors,
  Executive Officers and Corporate Governance
  
  35Management
  
  35Compliance
  with Section 16(a) of the Act
  
  36Code
  of Ethics
  
  3611
  
  Executive
  Compensation
  
  3612
  
  Security
  Ownership of Certain Beneficial Owners and Management and Related Shareholder
  Matters
  
  36Security
  Ownership of Certain Beneficial Owners
  
  36Security
  Ownership of Management
  
  36Changes
  in Control
  
  3613
  
  Certain
  Relationships and Related Transactions, and Director Independence
  
  37The Funds
  Investment Advisory and Administrative Fee
  
  37Belrose Realtys
  Management Fee
  
  37The
  Portfolios Investment Advisory Fee
  
  38Servicing Fees
  Paid by the Fund
  
  38Servicing
  Fees Paid by Belvedere Company
  
  38Distribution
  Fees Paid to EV Distributors
  
  38Certain Real
  Estate Investment Transactions
  
  3914
  
  Principal
  Accountant Fees and Services
  
  39PART IV15
  
  Exhibits and
  Financial Statement Schedules
  
  40APPENDIX A
  
  41FINANCIAL
  STATEMENTS
  
  42SIGNATURES
  
  78EXHIBIT INDEX
  
  79  4


PART I  Item
1.Business.  Fund
Overview. Belrose
Capital Fund LLC (the Fund) is a private investment company organized by Eaton
Vance Management (Eaton Vance) to provide diversification and tax-sensitive
investment management to investors holding large and concentrated positions in
equity securities of selected public companies. The Funds investment objective
is to achieve long-term, after-tax returns for persons who have invested in the
Fund (Shareholders). The Fund, a Delaware limited liability company, commenced
its investment operations on March 19, 2002. Limited liability company
interests of the Fund (Shares) were issued to Shareholders at six closings
during 2002 and 2003. At each Fund closing, the Fund accepted contributions of
stock from investors in exchange for Shares of the Fund. The Fund discontinued
offering Shares on February 19, 2003 and, while the Fund is not prohibited
from doing so, no future offering is anticipated. As of December 31, 2007,
the Fund had net assets of approximately $1.8 billion.  Structure of the Fund. The Fund is structured to provide
tax-free diversification and tax-sensitive investment management to
Shareholders. To meet the objective of tax-free diversification, the Fund must
satisfy specific requirements of the Internal Revenue Code of 1986, as amended
(the Code). In order for the contributions of appreciated stock to the Fund by
Shareholders to be nontaxable, not more than 80% of the Funds assets
(calculated in the manner prescribed) may consist of stocks and securities as
defined in the Code. To meet this requirement, the Fund normally invests at
least 20% of its assets as so determined in certain real estate investments
(see The Funds Real Estate Investments below). The Fund invests up to 80% of
its assets in a diversified portfolio of common stocks (see The Funds
Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth
Portfolio below). The Fund may also invest cash on a temporary basis in
short-term instruments including in an investment company, Cash Management
Portfolio, advised by an affiliate of Eaton Vance. The Fund acquires its real
estate investments with borrowed funds, as described below under Fund
Borrowings. See Appendix A for a chart detailing the investment structure of
the Fund.  In its investment
program, the Fund balances investment considerations and tax considerations,
and takes into account the taxes payable by Shareholders on allocated
investment income and realized capital gains. See The Funds Investment in
Belvedere Capital Fund Company LLC and Tax-Managed Growth Portfolio below.  There is no trading
market for the Funds Shares. As described further under Redemption of Fund
Shares in Item 5(a), Fund Shares may be redeemed on any business day. The Fund
satisfies redemption requests principally by distributing securities, but may
also distribute cash. The value of securities and cash distributed to satisfy a
redemption will equal the net asset value of the number of Shares redeemed.
Under most circumstances, a redemption from the Fund that is met by
distributing securities as described herein will not result in the recognition
of capital gains by the Fund or by the redeeming Shareholder. The redeeming
Shareholder would generally recognize capital gains upon the sale of the
securities received upon the redemption.  The Fund intends to
distribute at the end of each year, or shortly thereafter, all of its net
investment income for such year, if any. The Fund also intends to make annual
capital gain distributions equal to approximately 18% of the amount of its net
realized capital gains, if any, other than certain precontribution gains. The
Funds distributions generally are based on determinations of net investment
income and net realized capital gains for federal income tax purposes. Such
amounts may differ from net investment income or loss and net realized gain or
loss as set forth in the Funds consolidated financial statements due to
differences in the treatment of various income, gain, loss, expense and other
items for federal income tax purposes and under generally accepted accounting
principles (GAAP). See Note 2 to the Funds consolidated financial statements.
The Fund intends to pay any distributions on the last business day of each
fiscal year of the Fund (which concludes on December 31) or shortly
thereafter. See Distributions in Item 5(c).  Fund Management. The manager of the Fund is Eaton Vance, a
Massachusetts business trust registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the Advisers Act). Eaton Vance and
its subsidiary, Boston Management and Research (Boston Management), provide
management and advisory services to the Fund, its direct real estate subsidiary
and the investment portfolio in which the Fund invests. Boston Management is
also registered as an investment adviser under the Advisers Act. Eaton Vance
and Boston Management provide advisory, administration and/or management
services to over 150 investment companies, as well as separate accounts managed
for individual and institutional investors. As of December 31, 2007, Eaton
Vance and its affiliates managed approximately $155 billion on behalf of
clients. The fees payable to the Eaton Vance organization, as well as other
fees payable by the Fund, are described in Item 13. The Eaton Vance
organization is subject to certain conflicts of interest in providing services
to the  5


Fund,
its subsidiaries and the investment portfolio in which the Fund invests. See The
EatonVance Organization  Conflicts of Interest below.  The Funds Offering. Shares of the Fund were privately offered
and sold only to accredited investors as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the Securities Act), who were qualified
purchasers (as defined in Section 2(a)(51)(A) of the Investment
Company Act of 1940, as amended (the 1940 Act)). The offering was conducted by
Eaton Vance Distributors, Inc. (EV Distributors), a wholly owned
subsidiary of Eaton Vance, as placement agent and by certain subagents
appointed by EV Distributors. The Shares were offered and sold in reliance upon
an exemption from registration provided by Rule 506 under the Securities
Act. The Fund issued Shares to Shareholders at closings taking place on March 19,
2002, May 22, 2002, July 30, 2002, October 9, 2002, December 18,
2002 and February 19, 2003. At the six closings, an aggregate of
17,590,033 Shares were issued in exchange for Shareholder contributions
totaling approximately $1.5 billion.  The Fund is registered
under the Act and files periodic reports (such as reports on Form 10-Q and
Form 10-K) thereunder. Copies of the reports filed by the Fund are
available: at the public reference room of the Securities and Exchange
Commission (SEC) in Washington, DC (call 1-202-551-8690 for information on the
operation of the public reference room); on the EDGAR Database on the SECs
Internet site (http://www.sec.gov); or, upon payment of copying fees, by
writing to the SECs public reference section, 100 F Street, NE, Washington, DC
20549-0102, or by electronic mail at publicinfo@sec.gov. The Fund does not have
a website. The Fund intends to provide Shareholders with an annual and
semiannual report containing the Funds consolidated financial statements,
audited by the Funds independent registered public accounting firm in the case
of the annual report.  The
Funds Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth
Portfolio. At each Fund closing, all
of the securities accepted for contribution to the Fund were contributed by the
Fund to Belvedere Capital Fund Company LLC (Belvedere Company), a Massachusetts
limited liability company, in exchange for shares of Belvedere Company.
Belvedere Company, in turn, immediately thereafter contributed the securities
received from the Fund to Tax-Managed Growth Portfolio (the Portfolio) in
exchange for an interest in the Portfolio. The Portfolio is a diversified,
open-end management investment company registered under the 1940 Act with net assets
of approximately $19.9 billion as of December 31, 2007. As of December 31,
2007, the Funds investment in the Portfolio through Belvedere Company had a
value of approximately $1.9 billion (equal to approximately 81.6% of the Funds
total assets on a consolidated basis).  Belvedere Company. Belvedere Company was organized in 1997 by
Eaton Vance to offer tax-free diversification and tax-sensitive investment
management to certain qualified investors who contributed diversified
portfolios of equity securities. As of December 31, 2007, the investment
assets of Belvedere Company consisted exclusively of an interest in the
Portfolio with a value of approximately $14.8 billion. As of such date, the
Fund owned approximately 12.9% of Belvedere Companys outstanding shares. As of
December 31, 2007, the other investors in Belvedere Company included
twelve other investment funds sponsored by the Eaton Vance organization
(investment fund investors), as well as qualified individual investors who
acquired shares of Belvedere Company in exchange for portfolios of acceptable
securities (non-investment fund investors).  Belvedere Company
considers for acceptance equity securities that (i) are listed on the New
York Stock Exchange (NYSE), the American Stock Exchange, the NASDAQ Global or
Global Select Market (NASDAQ) or a major foreign exchange, (ii) have a
trading price of at least $10.00 per share and (iii) are issued by issuers
having an equity market capitalization of at least $500 million. Because
Belvedere Company only accepts contributions of diversified baskets of
securities (as described below), it is not subject to the requirement that not
more than 80% of its assets consist of stocks and securities as defined in
the Code. For investors that own a diversified basket of securities, investing
in Belvedere Company (rather than in the Fund) avoids the costs and risks of
investing in real estate and the associated financial leverage to which the
Fund is subject. See Risks of Real Estate Investments and Risks of Leverage
in Item 7A(b).  Belvedere Company
provides a vehicle through which investment fund and non-investment fund
investors contributing a diversified basket of securities can acquire an
indirect interest in the Portfolio. A diversified basket of securities means
a group of securities that is diversified such that not more than 25% of the
value of the securities are investments in the securities of any one issuer and
not more than 50% of the value of the securities are investments in the
securities of five or fewer issuers. The securities contributed to Belvedere
Company at each Fund closing constituted a diversified basket of securities.
Because the Fund is required to hold a percentage of its investments in
non-Portfolio assets in order to meet certain tax requirements (see Structure
of the Fund above and The Funds Real Estate Investments below), it does not
satisfy the conditions of the 1940 Act for investing directly in the Portfolio.  6


The Portfolio. The Portfolio was organized in 1995 by Eaton
Vance as the successor to the investment operations of Eaton Vance Tax-Managed
Growth Fund 1.0 (Tax-Managed Growth 1.0), a mutual fund established in 1966 by
Eaton Vance and managed from inception for long-term, after-tax returns. As of December 31,
2007, investors in the Portfolio included six investors in addition to
Belvedere Company and Tax-Managed Growth 1.0, each of which acquired or is
acquiring on a continuous basis interests in the Portfolio with cash. All
investors in the Portfolio are sponsored by or affiliated with Eaton Vance. As
of December 31, 2007, Belvedere Company owned approximately 74.3% of the
Portfolios net assets.  The Fund invests in the
Portfolio (on an indirect basis through Belvedere Company) because it is a
well-established investment portfolio that has an investment objective and
policies that are compatible to those of the Fund. Investing in the Portfolio
enables the Fund to participate in a substantially larger and more diversified
investment portfolio than it could achieve by managing the contributed
securities directly. The audited financial statements of the Portfolio for the
year ended December 31, 2007 are included as pages 61 to 77 of this
Annual Report on Form 10-K. The Portfolios audited financial statements
include information about the assets and liabilities of the Portfolio,
including Portfolio income and expenses. For a discussion of the Portfolios
performance for the year ended December 31, 2007, see Performance of the
Portfolio in Item 7(a). For a description of the investment advisory fee
payable by the Portfolio, see The Portfolios Investment Advisory Fee in Item
13.  The Portfolios Investment Objective and Policies. The investment objective
of the Portfolio is to achieve long-term, after-tax returns for its investors
by investing in a diversified portfolio of equity securities. The Portfolio
invests primarily in common stocks of domestic and foreign growth companies
that are considered by its investment adviser to be high in quality and
attractive in their long-term investment prospects. The Portfolio seeks to
invest in a broadly diversified portfolio of stocks and to invest primarily in
established companies with characteristics of above-average growth, predictability
and stability that are acquired with the expectation of being held for a period
of years. Under normal market conditions, the Portfolio invests primarily in
common stocks. The Portfolio has acquired securities through contributions from
Belvedere Company, Tax-Managed Growth 1.0 and Eaton Vance Tax-Managed Growth
Fund 1.1, and through purchases of securities with cash invested in the
Portfolio by certain of these and other investors.  Although the Portfolio
may, in addition to investing in common stocks, invest in investment-grade
preferred stocks and debt securities, purchases of such securities are normally
limited to securities convertible into common stocks and temporary investments
in short-term notes and government obligations. During periods in which the
investment adviser to the Portfolio believes that returns on common stock
investments may be unfavorable, the Portfolio may invest a significant portion
of its assets in U.S. government obligations and high quality short-term notes,
including such investments held through Cash Management Portfolio. The
Portfolios holdings represent a number of different industries. Not more than
25% of the Portfolios assets may be invested in the securities of issuers
having their principal business activity in the same industry, determined as of
the time of acquisition of any such securities.  The Portfolios Tax-Sensitive Management Strategies. In its operations, the
Portfolio seeks to achieve long-term, after-tax returns in part by minimizing
the taxes incurred by investors in the Portfolio in connection with the
Portfolios investment income and realized capital gains. Taxes on investment
income are minimized by investing primarily in lower-yielding securities and
stocks that pay dividends that qualify for favorable federal tax treatment.
Taxes on realized capital gains are minimized by minimizing the sale of
securities holdings with large accumulated capital gains. The Portfolio
generally seeks to avoid net realized short-term capital gains.  When the Portfolio
decides to sell a particular appreciated security, the Portfolio will select
for sale the share lots resulting in the most favorable tax treatment,
generally those with holding periods sufficient to qualify for long-term
capital gain treatment that have the highest cost basis. The Portfolio may,
when deemed prudent by its investment adviser, sell securities to realize
capital losses that can be used to offset realized gains. While the Portfolio
generally retains the securities contributed to the Portfolio by Belvedere
Company, the Portfolio has the flexibility to sell contributed securities.
Securities acquired by the Portfolio with cash may be sold in accordance with
its management strategies. In lieu of selling a security, the Portfolio may
hedge its exposure to that security by using the techniques described below.
The Portfolio also disposes of appreciated securities through its practice of
settling redemptions by investors in the Portfolio that contributed securities
primarily by distributing securities as described in Item 5(a) under Redemption
of Fund Shares. The Portfolio may also settle redemptions by investors with
distributions of securities upon request. As described in Item 5(a), settling
redemptions with appreciated securities can result in certain tax benefits to
the Portfolio, Belvedere Company, the Fund and the redeeming Shareholder.  To reduce its exposure to
adverse price movements in individual securities or groups of securities
holdings with large accumulated gains, the Portfolio may use various investment
techniques, including, but not limited to, the purchase of put  7


options
on securities held, equity collars (combining the purchase of a put option and
the sale of acall option), equity swaps, short sales of individual
securities held, short sales of index or basket securities whose constituents
are held in whole or in part, forward sales of stocks held, and the purchase
and sale of futures contracts on stocks and stock indexes and options thereon.
By using these techniques rather than selling such securities, the Portfolio
can, within certain limits, reduce its exposure to price declines in the
securities without realizing substantial capital gains under current tax law.  The Portfolios ability
to utilize covered short sales, certain equity swaps, forward sales, futures
contracts and certain equity collar strategies as a tax-efficient management
technique with respect to holdings of appreciated securities is limited to
circumstances in which the hedging transaction is closed out within 30 days
after the end of the Portfolios taxable year in which the hedging transaction
was initiated and the underlying appreciated securities position is held
unhedged for at least the next 60 days after such hedging transaction is
closed. In addition, dividends received on stock for which the Portfolio is
obligated to make related payments (pursuant to a short sale or otherwise) with
respect to positions in substantially similar or related property are subject
to federal income tax at ordinary rates and do not qualify for favorable tax
treatment. Also, the holding periods required to receive tax-advantaged
treatment of qualified dividends on a stock are suspended whenever the
Portfolio has an option (other than a qualified covered call option not in the
money when written) or contractual obligation to sell or an open short sale of
substantially identical stock, is the grantor of an option (other than a
qualified covered call option not in the money when written) to buy
substantially identical stock or has diminished risk of loss in such stock by
holding positions with respect to substantially similar or related property.
The use of these investment techniques may require the Portfolio to commit or
make available cash and, therefore, may not be available at such times as the
Portfolio has limited holdings of cash. The Portfolio did not employ any of the
techniques described above on securities holdings during the year ended December 31,
2007. See Risks of Certain Investment Techniques in Item 7A(b).  The
Funds Real Estate Investments. Separate from its investment
in the Portfolio through Belvedere Company, the Fund invests in certain real
estate investments through Belrose Realty Corporation (Belrose Realty). The
ownership structure of Belrose Realty is described below under Organization of
Belrose Realty. As referred to above under Fund Overview - Structure of the
Fund, the Fund invests in real estate investments to satisfy certain
requirements of the Code for contributions of appreciated stocks to the Fund by
Shareholders to be nontaxable. As of December 31, 2007, the real estate
investments of Belrose Realty totaled approximately $419.5 million and
represented 18.0% of the Funds total assets. The Fund acquires its real estate
investments with borrowed funds, as described below under Fund Borrowings.
The Fund seeks a return on its real estate investments over the long term that
exceeds the cost of the borrowings incurred to acquire such investments. For a
description of material real estate investment transactions during the year
ended December 31, 2007, see Performance of Real Estate Investments in
Item 7(a).  At December 31,
2007, Belrose Realty held investments in: two real estate joint ventures (Real
Estate Joint Ventures), Deerfield Property Trust (Deerfield) and Katahdin
Property Trust, LLC (Katahdin), in which Belrose Realty owns a majority
economic interest; two wholly owned properties (Wholly Owned Properties)
consisting of an office campus held by Bel Marlborough Campus, LLC (Bel
Marlborough) and a retail building subject to a long-term net lease (Net Leased
Property) held by Bel Larimer LLC (Bel Larimer); and a portfolio of
income-producing preferred equity interests in real estate operating
partnerships that generally are affiliated with and controlled by real estate
investment trusts (REITs) that are publicly traded (Partnership Preference
Units). Certain of the Partnership Preference Units are held by Belrose Realty
indirectly through Belvorn Holdings LLC (Belvorn). Belvorn is a Delaware
limited liability company formed in 2005 and treated as a partnership for tax
purposes. At December 31, 2007, Belvorns sole investment was Partnership
Preference Units issued by Vornado Realty L.P. At December 31, 2007,
Belrose Realty owned 10% of Belvorns outstanding units. Information included
herein about Belrose Realtys Partnership Preference Units includes the
Partnership Preference Units held directly by Belrose Realty and indirectly
through Belvorn. As of December 31, 2007, approximately 35.5% of the real
estate investments of the Fund consisted of its investments in Real Estate
Joint Ventures, approximately 40% was investments in Wholly Owned Properties
and approximately 24.5% was investments in Partnership Preference Units.  In the future, Belrose
Realty may invest in other types of real estate investments, including
tenancy-in-common interests in real properties (Co-owned Property) and other
real property investments held directly or through majority-owned affiliates.
Real Estate Joint Ventures, Wholly Owned Properties and Co-owned Property are
sometimes referred to herein as Subsidiary Real Estate Investments. Belrose
Realty may purchase real estate investments from, and sell them to, real estate
investment affiliates of other investment funds advised by Boston Management.
See Certain Real Estate Investment Transactions in Item 13.  8


Boston
Management serves as manager of Belrose Realty. In that capacity, Boston
Managementmanages the investment and reinvestment of Belrose Realtys
assets and administers its affairs. See Belrose Realtys Management Fee in
Item 13 for a description of the management fee payable by Belrose Realty to
Boston Management.  Real Estate Joint Venture Investments. At December 31, 2007,
Belrose Realty owned a majority economic interest in two Real Estate Joint
Ventures, Deerfield and Katahdin. Deerfield owns real property through its
interest in ProLogis Six Rivers Limited Partnership and the ProLogis Deerfield
Fund L.P. At December 31, 2007, the average occupancy rate of the
properties owned by Deerfield and Katahdin was 82% and 94%, respectively.  A board of trustees or
managers controls the business of each Real Estate Joint Venture. Each of
Belrose Realty and the minority investor in a Real Estate Joint Venture has
representation on the board and the unanimous consent of the board is required
for all major decisions. The board of each Real Estate Joint Venture has delegated
the day-to-day administration of the Real Estate Joint Venture and the
day-to-day management of its real properties to the principal minority investor
in the Real Estate Joint Venture or an affiliated company thereof (the
Operating Partner). The Operating Partners receive management related fees from
Deerfield and Katahdin and, in addition are reimbursed for certain payroll and
other direct expenses incurred.  At December 31,
2007, the assets of Katahdin consisted of six multifamily properties and the assets
of Deerfield consisted of 17 industrial distribution properties, in each case
acquired from or in conjunction with the Operating Partner thereof. See Item 2.
Distributable cash flows from Deerfield and Katahdin are allocated in a manner
that provides Belrose Realty: 1) a priority with respect to a fixed annual
preferred return; and 2) participation on a pro rata or reduced basis in
distributable cash flows in excess of the annual preferred return of Belrose
Realty and the subordinated preferred return of the Operating Partner. A
portion of Belrose Realtys investment in Deerfield represents a partial
interest in a property management contract pursuant to which Deerfield may
receive cash flows from management fees and certain other fees over the life of
the contract.  Financing for Deerfield
and Katahdin consists primarily of fixed-rate secured mortgage debt obligations
of Deerfield and Katahdin that are without recourse to Fund Shareholders and
generally without recourse to Belrose Realty and the Fund, as described under Risks
of Real Estate Investments in Item 7A(b). Both Belrose Realty and the
respective Operating Partner invested equity in Deerfield and Katahdin. Belrose
Realtys equity in Deerfield and Katahdin was acquired using the proceeds of Fund
borrowings.  The Operating Partners of
Deerfield and Katahdin also serve as operating partners of other Real Estate
Joint Ventures in which affiliates of other investment funds advised by Boston
Management hold a majority economic interest. The persons serving as managers
or trustees of Deerfield and Katahdin on behalf of Belrose Realty are employees
or affiliates of Boston Management. See Directors, Executive Officers and
Corporate Governance in Item 10. No director of Belrose Realty or manager or
trustee of Deerfield or Katahdin is a Shareholder of the Fund. No company in
the Eaton Vance organization has a material financial interest in Deerfield or
Katahdin.  The Operating Partner of
Deerfield is ProLogis, a publicly owned REIT. Common shares of ProLogis are
traded on the NYSE under the symbol PLD. ProLogis owns 20% of the voting
shares of Deerfield. Belrose Realty owns the balance of such shares. Pursuant
to an agreement with ProLogis, upon unanimous consent or from and after August 4,
2013, either Belrose Realty or ProLogis may cause a liquidation of Deerfield.
If Belrose Realty or ProLogis elects to liquidate Deerfield, Deerfield will
retain an independent third party to effectuate the liquidation.  The Operating Partner of
Katahdin is an affiliate of a partnership sponsored by Tishman Speyer Real
Estate Venture VII and Lehman Brothers Holdings Inc. (Archstone-Smith). Prior
to a going private transaction in October 2007, the Operating Partner
was an affiliate of Archstone-Smith Trust, a public REIT whose stock traded on
the NYSE under the symbol ASN. Archstone-Smith owns 25% of the voting shares
of Katahdin. Belrose Realty owns the balance of such shares. Pursuant to an
agreement with Archstone-Smith, upon unanimous consent or on or after November 23,
2010, either Belrose Realty or Archstone-Smith can give notice to buy the others
equity interest in Katahdin or to sell its own equity interest in Katahdin. Any
such purchase or sale would be at a negotiated price.  The sale to Belrose
Realty by an Operating Partner of its interest in Deerfield or Katahdin would
not affect the REIT qualification of Deerfield or Katahdin. If Belrose Realty
were to dispose of its interest in Deerfield or Katahdin pursuant to a buy/sell
agreement, liquidation agreement or otherwise, it may acquire an interest in a
different real estate investment to replace the investment sold.  9


Wholly Owned Property. At December 31, 2007, Belrose
Realty owned two Wholly Owned Properties, Bel Marlborough and Bel Larimer. The
Bel Marlborough property consists of an office campus located in Marlborough,
Massachusetts. Boston Management has engaged an unaffiliated professional
property management firm (the Property Manager) to manage Bel Marlborough.
The Property Manager receives a property management fee from Bel Marlborough
for providing services to Bel Marlborough.  The Bel Larimer property
is a Net Leased Property consisting of a retail building located in Lonetree,
Colorado. The Bel Larimer property is leased on a long-term basis to one tenant
that is obligated to pay rent and all costs and expenses associated with the
operation and maintenance of the property, including real estate taxes, repairs
and insurance. The tenant has also generally indemnified Bel Larimer against
certain liabilities in connection with the property. Bel Larimers
non-cancelable, fixed term operating lease expires in December 2014, with
options to extend for six additional five-year periods.  The Bel Marlborough and
Bel Larimer property is financed by fixed-rate secured mortgage debt
obligations of Bel Marlborough and Bel Larimer that are without recourse to
Fund Shareholders and generally without recourse to Belrose Realty and the Fund
as described under Risks of Real Estate Investments in Item 7A(b). Belrose
Realtys equity in Bel Marlbrough and Bel Larimer was acquired with the
proceeds of Fund borrowings. At December 31, 2007, the properties held by
Bel Marlborough and Bel Larimer were 100% leased.  Partnership Preference Units. Belrose Realtys investments in
Partnership Preference Units represent preferred equity interests in real
estate operating partnerships. The assets of the partnerships that issued the
Partnership Preference Units owned by Belrose Realty on December 31, 2007
consisted primarily of direct or indirect ownership interests in real
properties, including multifamily properties, shopping centers, manufactured
home communities, self-storage facilities and office and industrial properties.
The Partnership Preference Units owned by Belrose Realty as of December 31,
2007 are listed in Item 7A(a) and in the consolidated portfolio of
investments included in the Funds consolidated financial statements, which are
included as pages 42 to 60 of this Annual Report on Form 10-K. Eaton
Vance is not, and has not been, involved in the management or operation of the
real estate operating partnerships that issued the Partnership Preference Units
owned by Belrose Realty.  The Partnership
Preference Units held by Belrose Realty were issued by partnerships that are
not publicly traded partnerships within the meaning of Code Section 7704(b).
The Partnership Preference Units are perpetual life instruments (subject to
call provisions) and are not, by their terms, readily convertible or
exchangeable into cash or securities of an affiliated public company.
Partnership Preference Units are not rated by a nationally recognized rating
agency, and such interests may not be as high in quality as issues that are
rated investment grade.  Each issue of Partnership
Preference Units held by Belrose Realty normally pays quarterly distributions
at fixed rates from the net profits or gross income of the issuing partnership,
with preferential rights over common and other subordinated units. None of the
Partnership Preference Units is or will be registered under the Securities Act
and each issue is thus subject to restrictions on transfer.  Organization of Belrose Realty. Belrose Realty operates in such
a manner as to qualify for taxation as a REIT under the Code. As a REIT,
Belrose Realty generally is not subject to federal income tax on that portion
of its ordinary income or taxable gain that is distributed to stockholders each
year. The Fund owns 100% of the common stock issued by Belrose Realty, and
intends to hold all of the common stock at all times.  Belrose Realty also has
issued preferred shares to satisfy certain provisions of the Code, which
require that a REIT be beneficially owned in the aggregate by 100 or more
persons. The preferred shares of Belrose Realty are owned by not less than 100
charitable organizations that received the preferred shares as gifts. Each
charitable organization that received a preferred share was an accredited
investor (as defined in the Securities Act) with total assets in excess of $5
million at the time the organization received the preferred shares. Eaton Vance
selected the charitable organizations from the charities for which it has
matched employee contributions and/or based on suggestions from its employees.
As of December 31, 2007, the total value of the preferred shares
outstanding of Belrose Realty was $218,500. Dividends on preferred shares are
cumulative and payable annually at a dividend rate of 8% per year. The
dividends paid on preferred shares have priority over payments on common
shares. For the year ended December 31, 2007, Belrose Realty paid
distributions to preferred shareholders of $19,851.  Fund
Borrowings. To
finance its real estate investments, the Fund has entered into credit arrangements
with Dresdner Kleinwort Holdings I, Inc. (the DKH Credit Facility) and
Merrill Lynch Mortgage Capital, Inc. (the MLMC Credit  10


Facility) (collectively,
the Credit Facility). The Credit Facility is secured by a pledge of the Funds
assets, excluding the Funds investments in Real Estate Joint Ventures and the
assets of the Wholly Owned Properties, and expires in June 2010. At December 31,
2007, the total principal amount outstanding under the Credit Facility was
$417.5 million. The Credit Facility was also used to provide for selling
commissions and the Funds organizational expenses as well as any ongoing
liquidity needs of the Fund.  The DKH Credit Facility
is a term credit arrangement. Borrowings under the DKH Credit Facility accrue
interest at a rate of one-month LIBOR plus 0.30% per annum. As of December 31,
2007, outstanding borrowings under the DKH Credit Facility totaled $371.5
million.  The MLMC Credit Facility
is a revolving credit arrangement. The Fund may borrow up to $172.0 million
under the MLMC Credit Facility of which up to $10.0 million may be letters of
credit. Borrowings under the MLMC Credit Facility accrue interest at a rate of
one-month LIBOR plus 0.38% per annum. As of December 31, 2007, outstanding
borrowings under the MLMC Credit Facility totaled $46.0 million. There were no
letters of credit outstanding as of December 31, 2007. The unused loan
commitment amount totaled $126.0 million as of December 31, 2007. A
commitment fee of 0.10% per annum is paid on the unused commitment amount. The
Fund pays all fees associated with issuing letters of credit.  Obligations under the
Credit Facility are without recourse to Fund Shareholders. As described above,
financing for Deerfield, Katahdin, Bel Marlborough and Bel Larimer consists
primarily or in part of fixed-rate secured mortgage debt obligations of
Deerfield, Katahdin, Bel Marlborough and Bel Larimer that are without recourse
to Fund Shareholders and generally without recourse to Belrose Realty and the
Fund. See Risks of Real Estate Investments in Item 7A(b).  Interest Rate Swap Agreements. The Fund has entered into
interest rate swap agreements with Merrill Lynch Capital Services, Inc.
(MLCS) to fix the cost of a substantial portion of its borrowings under the
Credit Facility and to mitigate in part the impact of interest rate changes on
the Funds net asset value. Pursuant to the interest rate swap agreements, the
Fund makes cash payments to MLCS at fixed rates in exchange for floating rate
payments from MLCS that fluctuate with one-month and three-month LIBOR. The
interest rate swap agreements currently in effect extend until June 28,
2012, subject to the Funds earlier termination rights in the case of certain
swaps, and provide for the Fund to make payments to MLCS at fixed rates
averaging 4.26%. The variable one-month and three-month LIBOR rates on which
payments from MLCS are based were 4.60% and 4.7025%, respectively, at December 31,
2007. See Note 8 to the Funds consolidated financial statements included as pages 42
to 60 of this Annual Report on Form 10-K.  The
Eaton Vance Organization. The Eaton Vance
organization sponsors the Fund. Eaton Vance serves as the Funds manager.
Boston Management serves as the Funds investment adviser and as manager of
Belrose Realty. EV Distributors served as the Funds placement agent. The Funds
business affairs are conducted by Eaton Vance (as its manager) and its
investment operations are conducted by Boston Management (as its investment adviser).
The Funds officers are employees of Eaton Vance. Eaton Vance, Boston
Management and EV Distributors are wholly owned subsidiaries of Eaton Vance
Corp., a publicly traded holding company that, through its affiliates and
subsidiaries, engages primarily in investment management, administration and
marketing activities.  As described above, the
Fund pursues its objective primarily by investing in Belvedere Company.
Belvedere Company invests exclusively in the Portfolio. Boston Management acts
as investment adviser of the Portfolio and manager of Belvedere Company. EV
Distributors acts as placement agent for Belvedere Company and the Portfolio.
As of December 31, 2007, the assets of the Fund represented approximately
1.5% of assets under management by Eaton Vance and its affiliates. The offices
of the Fund, Eaton Vance, Boston Management and EV Distributors are located at
255 State Street, Boston, Massachusetts 02109.  Conflicts of Interest. Boston Management and other Eaton Vance
affiliates are subject to certain conflicts of interest in their dealings with
the Fund, Belrose Realty, Belvedere Company and the Portfolio, as well as with
other investment companies advised by Boston Management that invest in the
Portfolio. Eaton Vance and Boston Management have determined and will determine
which of their sponsored investment companies invest in the Portfolio, the
securities each of them contributes to the Portfolio when making an investment
therein and, subject to the rights of redeeming investors in the Portfolio, the
securities and/or cash received in redemptions from the Portfolio. Such
determinations are inherently subject to potential conflicts of interest. In
addition, Portfolio management activities with respect to securities
contributed to the Portfolio may have different tax consequences for the
contributing investor in the Portfolio than for other investors in the
Portfolio. Gains and losses on sales of other securities may also be allocated
disproportionately. Boston Management manages the Portfolio in pursuit of
long-term, after-tax returns for all investors in the Portfolio and, with
respect to contributed securities, takes into account the tax position of the
contributing investor in the Portfolio. Whenever conflicts  11


of interest arise, Eaton
Vance, Boston Management and other Eaton Vance affiliates will endeavor to
exercise their discretion in a manner that they believe is equitable to all
interested persons.  Belrose Realty may
purchase real estate investments from real estate investment affiliates of
other investment funds advised by Boston Management. Belrose Realty may also
co-invest with such entities in real estate investments and sell real estate
investments to such entities. In any such transaction, the assets purchased and
sold will be valued in good faith by Boston Management, after consideration of
factors, data and information that Boston Management considers relevant.
Transaction prices generally will include an allocation of the original costs
incurred in creating and acquiring the transferred real estate investments.
Real estate investments are often difficult to value and others could in good
faith arrive at valuations different from those of Boston Management. See Critical
Accounting Estimates in Item 7(e).  Item
1A. Risk Factors.  The Fund invests
primarily in a diversified portfolio of common stocks and is thereby subject to
general stock market risk. There can be no assurance that the performance of
the Fund will match that of the U.S. stock market or that of other equity
funds. In managing the Portfolio for long-term, after-tax returns, Boston
Management generally seeks to avoid or minimize sales of securities with large
accumulated capital gains, including contributed securities. Such securities
constitute a substantial portion of the assets of the Portfolio. Although the
Portfolio may utilize certain management strategies in lieu of selling
appreciated securities, the Portfolios, and hence the Funds, exposure to
losses during stock market declines may nonetheless be higher than funds that
do not follow a general policy of avoiding sales of highly appreciated
securities. The Fund is also subject to risks associated with real estate
investments and certain other risks, which are described under Qualitative
Information About Market Risk in Item 7A(b).  Item
1B. Unresolved Staff Comments.  None.  Item
2. Properties.  The Fund does not own any
physical properties, other than indirectly through Belrose Realtys
investments. At December 31, 2007, Belrose Realty held investments in:
Partnership Preference Units of six issuers; Deerfield, which owned 17
industrial distribution properties located in six states (Florida, Georgia, New
Jersey, Ohio, Pennsylvania and South Carolina); Katahdin, which owned six
multifamily residential properties located in five states (Arizona, Colorado,
Florida, Texas and Washington); Bel Marlborough, which owned an office campus
in Marlborough, Massachusetts; and Bel Larimer, which owned a retail building in
Lonetree, Colorado.  Item
3. Legal Proceedings.  Although in the ordinary
course of business the Fund and its subsidiaries may become involved in legal
proceedings, the Fund is not aware of any material pending legal proceedings to
which they are subject.  Item
4. Submission of Matters to a Vote of Security Holders.  No matters were submitted
to a vote of security holders during the quarter ended December 31, 2007.  12


PART II  Item
5. Determining Net Asset Value, Market for Fund Shares, Related Shareholder
Matters and Issuer Purchases of Equity Securities.  This Item and other Items
in this report contain summaries of certain provisions contained in the Limited
Liability Company Agreement of the Fund (the LLC Agreement), which was filed as
an exhibit to the Funds registration statement on Form 10. All such
summaries are qualified in their entirety by the actual provisions of the LLC
Agreement, which are incorporated by reference herein.  (a) Market
Information, Restrictions on Transfers and Redemption of Shares.  Transfers of Fund Shares. There is no established public
trading market for the Shares of the Fund. Other than transfers to the Fund in
a redemption, transfers of Shares are expressly prohibited by the LLC Agreement
without the consent of Eaton Vance. Eaton Vances consent to a transfer may be
withheld in its sole discretion for any reason or for no reason.  The Shares have not been
and will not be registered under the Securities Act, and may not be resold
unless an exemption from such registration is available. Shareholders have no
right to require registration of the Shares and the Fund does not intend to
register the Shares under the Securities Act or take any action to cause an
exemption (whether pursuant to Rule 144 of the Securities Act or
otherwise) to be available.  The Fund is not and will
not be registered under the 1940 Act, and no transfer of Shares may be made if,
as determined by Eaton Vance or counsel to the Fund, such transfer would result
in the Fund being required to be registered under the 1940 Act. In addition, no
transfer of Shares may be made unless, in the opinion of counsel to the Fund,
such transfer would not result in termination of the Fund for purposes of Section 708
of the Code or result in the classification of the Fund as an association or a
publicly traded partnership taxable as a corporation under the Code.  In no event shall all or
any part of a Shareholders Shares be assigned to a minor or an incompetent,
unless in trust for the benefit of such person. Shares may be sold,
transferred, assigned or otherwise disposed of by a Shareholder only if it is
determined by Eaton Vance or counsel to the Fund that such transfer, assignment
or disposition would not violate federal securities or state securities or blue
sky laws (including investor qualification standards).  There are no outstanding
options or warrants to purchase, or securities convertible into, Shares of the
Fund. Shares of the Fund cannot be sold pursuant to Rule 144 under the
Securities Act, and the Fund does not propose to publicly offer any of its
Shares at any time.  Redemption of Fund Shares. Shares of the Fund may be redeemed
on any business day. The redemption price will be based on the net asset value
next computed after receipt by the Fund of a written redemption request from a
Shareholder, including a proper form of signature guarantee and such other
documentation the Fund and the transfer agent may then require. The Fund may,
at its discretion, accept redemption requests submitted by facsimile
transmission. Once accepted, a redemption request may not be revoked without
the consent of the Fund. Settlement of redemptions will ordinarily occur within
five business days of receipt by the Funds transfer agent of the original
redemption request in good order, and (if applicable) promptly following
registration and processing of stock certificates by the transfer agent of the
issuer of the distributed securities. The right to redeem is available to all
Shareholders and all outstanding Fund Shares are eligible for redemption
(except for Shares subject to an estate freeze election). During each month in
the quarter ended December 31, 2007, the total number of Shares redeemed
and the average price paid per Share were as follows:  Total No. of Shares
  
  Average Price PaidMonth Ended
  
  Redeemed(1)
  
  Per ShareOctober
  
  43,211.625
  
  $
  130.83November
  
  106,974.198
  
  $
  124.54December
  
  47,114.745
  
  $
  125.97Total
  
  197,300.568
  
  $
  126.26  
 (1)All Shares
redeemed during the periods were redeemed at the option of Shareholders
pursuant to the Funds redemption policy. The Fund has not announced any plans
or programs to repurchase Shares other than at the option of Shareholders.  13


The Fund satisfies
redemption requests principally by distributing securities drawn from the
Portfolio, but may also distribute cash. If requested by a redeeming
Shareholder, the Fund will satisfy a redemption request by distributing
securities that were contributed by the redeeming Shareholder, provided that
such securities are held in the Portfolio at the time of redemption. The
securities contributed by a Shareholder will not be distributed to any other
Shareholder in the Fund (or to any other investor in Belvedere Company or the
Portfolio) during the first seven years following their contribution unless the
contributing Shareholder has withdrawn from the Fund.  Under most circumstances,
a redemption from the Fund that is settled with securities as described herein
will not result in the recognition of capital gains by the Fund or by the
redeeming Shareholder. The redeeming Shareholder would generally recognize
capital gains upon the sale of the securities received through redemption. If a
redeeming Shareholder receives cash in addition to securities to settle a
redemption, the amount of cash received will be taxable to the Shareholder to
the extent it exceeds such Shareholders tax basis in Fund Shares. Shareholders
should consult their tax advisors about the tax consequences of redeeming Fund
Shares.  A Shareholder redemption
request within seven years of a contribution of securities by such Shareholder
is ordinarily satisfied by distributing securities that were contributed by
such Shareholder, prior to distributing to such Shareholder any other
securities held in the Portfolio. Securities contributed by a Shareholder may
be distributed to other Shareholders in the Fund (or to other investors in
Belvedere Company or the Portfolio) after a holding period of at least seven
years and, if so distributed, would not be available to meet subsequent
redemption requests made by the contributing Shareholder.  If requested by a
redeeming Shareholder making a redemption of at least $1 million occurring more
than seven years after such Shareholders final contribution of securities to
the Fund, the Fund will generally distribute to the redeeming Shareholder a
diversified basket of securities representing a range of industry groups that
is drawn from the Portfolio. The selection of individual securities would be
made by Boston Management in its sole discretion. No interests in Real Estate
Joint Ventures, Wholly Owned Property, Co-owned Property, Partnership Preference
Units or other real property investments will be distributed to meet a
redemption request, and restricted securities will be distributed only to the
Shareholder who contributed such securities or such Shareholders successor in
interest. The Fund will not provide a redeeming Shareholder with a diversified
basket of securities if such a distribution is expected to cause, directly or
indirectly, any other Shareholder, any investor in Belvedere Company or any
investor in the Portfolio to realize taxable gain.  Other than as set forth
above, the allocation of each redemption between securities and cash and the
selection of securities to be distributed will be at the sole discretion of
Boston Management. Distributed securities may include securities contributed by
Shareholders as well as other readily marketable securities held in the
Portfolio. The value of securities and cash distributed to meet a redemption
will equal the net asset value of the number of Shares being redeemed. The Funds
Credit Facility prohibits the Fund from honoring redemption requests while
there is an event of default outstanding under the Credit Facility.  The Fund may compulsorily
redeem all or a portion of the Shares of a Shareholder if the Fund has
determined that such redemption is necessary or appropriate to avoid
registration of the Fund or Belvedere Company under the 1940 Act, or to avoid
adverse tax or other consequences to the Portfolio, Belvedere Company, the Fund
or Shareholders, including those redemptions arising as the result of
applicable anti-money laundering requirements.  The right of a
Shareholder to redeem can be suspended and the payment of the redemption price
may be deferred while there is an outstanding event of default under the Credit
Facility, when the NYSE is closed, during periods when trading on the NYSE is
restricted or during any emergency as determined by the SEC, at any time when
it is impracticable for the Portfolio or the Fund to dispose of or value its
assets, or during any other period permitted by order of the SEC for the
protection of investors.  A capital account for
each Shareholder is maintained on the books of the Fund. The account reflects
the value of such Shareholders interest in the Fund, which is adjusted for
profits, liabilities and distributions allocable to such account in accordance
with Article 6 of the Funds LLC Agreement.  Subject to the consent of
the manager of the Fund, a Shareholder may make an estate freeze election
pursuant to which all or a portion of such Shareholders Shares will be divided
into Preferred Shares and Common Shares (Estate Freeze Shares). Such division
will be made in accordance with the terms of the LLC Agreement. Estate Freeze
Shares are not transferable without the consent of the Funds manager and have
no redemption rights or voting or consent rights.  14


Determining Net Asset Value.Boston
Management, as investment adviser, is responsible for determining the value of
the Funds assets. The Funds custodian, State Street Bank and Trust Company,
calculates the value of the assets of the Fund, Belvedere Company and the
Portfolio each day that the NYSE is open for trading, as of the close of
regular trading on the NYSE. The Funds net asset value per Share is calculated
by dividing the value of the Funds total assets, less its liabilities, by the
number of Shares outstanding.  The Funds net assets are
valued in accordance with the Funds valuation procedures and reflect the value
of its directly held assets and liabilities, as well as the net asset value of
the Funds investment in the Portfolio held through Belvedere Company and in
real estate investments held through Belrose Realty. The trustees of the
Portfolio have established procedures for the valuation of the Portfolios
assets under normal market conditions. Pursuant to these procedures, marketable
securities listed on U.S. securities exchanges generally are valued at the last
sale price on the day of the valuation or, if there were no sales, at the mean
between the closing bid and asked prices therefor on the exchange where such
securities are principally traded. Marketable securities listed on the NASDAQ
generally are valued at the NASDAQ official closing price. Unlisted or listed
securities for which closing sale prices are not available are valued at the
mean between the last available bid and asked prices or by an independent
pricing service. Exchange-traded options are valued at the last sale price for
the day of valuation as quoted on the principal exchange or board of trade on
which the options are traded, or in the absence of a sale on such day, at the
mean between the latest bid and asked prices therefor. Futures positions on
securities or currencies are generally valued at closing settlement prices.
Short-term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. Other fixed income and debt securities, including
listed securities and securities for which price quotations are available, will
normally be valued on the basis of valuations furnished by a pricing service.  Foreign securities and
currencies held by the Portfolio are valued in U.S. dollars, as calculated by
the Portfolios custodian based on foreign currency exchange rate quotations
supplied by an independent quotation service. Valuation of foreign securities
may be adjusted from prices in effect at the close of trading on foreign
exchanges to more accurately reflect their fair value as of the close of
regular trading on the NYSE. In adjusting the value of foreign equity
securities the Portfolio may rely on an independent fair valuation service.
Investments for which valuations or market quotations are not readily available
are valued at fair value as determined in good faith by or at the direction of the
Portfolios trustees, considering relevant factors, data and information
including, in the case of restricted securities, the market value of freely
tradable securities of the same class in the principal market on which such
securities are normally traded.  The Funds real estate
investments are valued each day as determined in good faith by Boston
Management after consideration of relevant factors, data and information. The
procedures for valuing real estate investments are described under Critical Accounting
Estimates in Item 7(e). The Funds interest rate swap agreements are normally
valued by an independent pricing service. Fixed liabilities of the Fund
generally are stated at principal value.  Historic Net Asset Values. Set forth below are the high and low
net asset values per Share (NAVs) of the Fund for each quarter during the two
years ended December 31, 2007 and 2006, the closing NAV on the last
business day of each quarter, and the percentage change in NAV during each such
quarter.  NAV at
  
  Quarterly %Quarter Ended
  
  High NAV
  
  Low NAV
  
  Quarter End
  
  Change in NAV(1)12/31/07
  
  $
  132.66
  
  $
  120.01
  
  $
  124.89
  
  -3.61
  %9/30/07
  
  $
  132.42
  
  $
  120.58
  
  $
  129.57
  
  0.86
  %6/30/07
  
  $
  130.62
  
  $
  121.03
  
  $
  128.47
  
  6.24
  %3/31/07
  
  $
  124.51
  
  $
  117.30
  
  $
  120.93
  
  -1.38
  %12/31/06
  
  $
  122.84
  
  $
  115.30
  
  $
  122.62
  
  6.00
  %9/30/06
  
  $
  115.78
  
  $
  107.04
  
  $
  115.68
  
  4.72
  %6/30/06
  
  $
  114.99
  
  $
  106.02
  
  $
  110.47
  
  -1.39
  %3/31/06
  
  $
  112.71
  
  $
  107.36
  
  $
  112.03
  
  3.44
  %  
 (1)Past
performance is no guarantee of future results. Investment return and principal
value will fluctuate so that Shares, when redeemed, may be worth more or less
than their original cost. Changes in NAV are historical. Performance is for the
stated time period only; due to market volatility, the Funds current
performance may be lower or higher. For more information about the performance
of the Fund, see Managements Discussion and Analysis of Financial Condition
and Results of Operations (MD&A) in Item 7(a).  15


(b) Record
Holders of Shares of the Fund.  As of February 15,
2008, there were 575 record holders of Shares of the Fund.  (c) Distributions.  Income and Capital Gain Distributions. The Fund intends to
distribute each year the amount of its net investment income for such year, if
any. The Fund also intends to make annual capital gain distributions equal to
approximately 18% of the amount of its net realized capital gains, if any,
other than certain precontribution gains allocated to a Shareholder in
connection with a taxable tender offer or other taxable corporate event for a
security contributed to the Fund by that Shareholder or that Shareholders
predecessor in interest. The Funds net investment income and net realized
gains include the Funds allocated share of the net investment income and net
realized gains of Belvedere Company and, indirectly, the Portfolio, as well as
income and capital gains, if any, distributed by Belrose Realty. The Funds
distributions generally are based on determinations of net investment income
and net realized capital gains for federal income tax purposes. Such amounts
may differ from net investment income or loss and net realized gain or loss as
set forth in the Funds consolidated financial statements due to differences in
the treatment of various income, gain, loss, expense and other items for
federal income tax purposes and under GAAP. The Fund intends to pay
distributions, if any, on the last business day of each fiscal year of the Fund
(which concludes on December 31) or shortly thereafter. The Funds
distribution rates with respect to realized gains may be adjusted in the future
to reflect changes in the effective maximum marginal individual federal tax
rate applicable to long-term capital gains.  Shareholder distributions
with respect to net investment income, realized post-contribution gains and
certain other realized gains are made pro rata in proportion to the number of
Shares held as of the record date of the distribution. All income and capital
gain distributions (including Special Distributions described below) are paid
by the Fund in cash. Distributions are generally not taxable to the recipient
Shareholder unless the distributions exceed the recipient Shareholders tax
basis in Fund Shares. The Funds Credit Facility prohibits the Fund from making
any distribution to Shareholders while there is an event of default outstanding
under the Credit Facility.  On January 30, 2008,
the Fund made a distribution of $1.81 per Share to Shareholders of record on January 29,
2008. On January 26, 2007, the Fund made a distribution of $1.93 per Share
to Shareholders of record on January 25, 2007. On January 26, 2006,
the Fund made a distribution of $1.28 per Share to Shareholders of record on January 25,
2006.  Special Distributions. In addition to the pro rata income and
capital gain distributions described above, the Fund also makes distributions
to Shareholders of allocated precontribution gain (other than certain
precontribution gains allocated to a Shareholder in connection with a taxable
tender offer or other taxable corporate event involving a security contributed
by such Shareholder or such Shareholders predecessor in interest) (a Special
Distribution). Special Distributions generally equal approximately 18% of the
amount of realized precontribution gains plus approximately 4% of the allocated
precontribution gain or such other percentage as deemed appropriate to
compensate Shareholders receiving such distributions for taxes that may be due
on income specially allocated in connection with the precontribution gain and
Special Distributions. Special Distributions are made solely to the
Shareholders to whom the precontribution gain is allocated. The Fund does not
intend to make Special Distributions to a Shareholder in respect of realized
precontribution gain allocated to a Shareholder or such Shareholders
predecessor in interest in connection with a taxable tender offer or other
taxable corporate event involving a security contributed by such Shareholder or
such Shareholders predecessor in interest. The Fund made no Special
Distributions during the years ended December 31, 2007 and 2006.  16


Item
6. Selected Financial Data.  Table
of Selected Financial Data. The consolidated data referred
to below reflects the Funds historical results for the years ended December 31,
2007, 2006, 2005, 2004 and 2003. The following information should be read in
conjunction with all of the consolidated financial statements and related notes
appearing on pages 42 to 77 of this Annual Report on Form 10-K. The
other consolidated data referred to below is as of each year end.  Year Ended
  
  Year Ended
  
  Year Ended
  
  Year Ended
  
  Year EndedDecember 31, 2007
  
  December 31, 2006
  
  December 31, 2005
  
  December 31, 2004
  
  December 31, 2003Total investment income
  
  $
  54,592,768
  
  $
  46,412,378
  
  $
  35,404,755
  
  $
  30,228,062
  
  $
  25,195,165Interest expense
  
  $
  26,599,581
  
  $
  21,839,659
  
  $
  10,415,418
  
  $
  4,381,975
  
  $
  2,796,418Net expenses (including interest expense)
  
  $
  41,447,851
  
  $
  32,331,315
  
  $
  19,125,936
  
  $
  12,708,006
  
  $
  9,915,523Net investment income
  
  $
  13,144,917
  
  $
  14,081,063
  
  $
  16,278,819
  
  $
  17,520,056
  
  $
  15,279,642Net realized gain (loss)
  
  $
  76,813,580
  
  $
  59,033,287
  
  $
  31,499,490
  
  $
  1,858,876
  
  $
  (33,018,883
  )Net change in unrealized appreciation
  (depreciation)
  
  $
  (23,393,716
  )
  $
  174,054,432
  
  $
  75,990,958
  
  $
  97,424,550
  
  $
  347,304,726Net increase in net assets from operations
  
  $
  66,564,781
  
  $
  247,168,782
  
  $
  123,769,267
  
  $
  116,803,482
  
  $
  329,565,485Total assets
  
  $
  2,328,469,371
  
  $
  2,321,691,546
  
  $
  2,148,260,625
  
  $
  1,934,865,122
  
  $
  1,816,407,382Loan payableCredit Facility
  
  $
  417,500,000
  
  $
  356,500,000
  
  $
  393,500,000
  
  $
  236,000,000
  
  $
  183,300,000Mortgage notes payable
  
  $
  86,951,932
  
  $
  62,401,229
  
  $
  
  
  $
  
  
  $
  Net assets
  
  $
  1,820,169,810
  
  $
  1,899,447,145
  
  $
  1,753,010,400
  
  $
  1,694,227,425
  
  $
  1,632,454,758Shares outstanding
  
  14,573,940
  
  15,490,955
  
  16,186,813
  
  16,604,562
  
  17,032,796Net asset value and redemption price per Share
  
  $
  124.89
  
  $
  122.62
  
  $
  108.30
  
  $
  102.03
  
  $
  95.84Net increase in net assets from operations
  per Share(1)
  
  $
  4.20
  
  $
  15.60
  
  $
  7.56
  
  $
  6.96
  
  $
  19.03Distribution paid per Share(2)
  
  $
  1.93
  
  $
  1.28
  
  $
  1.29
  
  $
  0.77
  
  $
  0.05  
 (1)Based
on average Shares outstanding.  (2)Distributions
of net investment income and net realized capital gains are normally paid at
the end of each year, or shortly thereafter, to Shareholders of record as of
the record date. See Distributions in Item 5(c).  Item
7. Managements Discussion and Analysis of Financial Condition and Results of
Operations (MD&A).  The
information in this report contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Act. Forward-looking statements typically are identified by use of terms such
as may, will, should, might, expect, anticipate, estimate, and
similar words, although some forward-looking statements are expressed
differently. The actual results of the Fund could differ materially from those
contained in the forward-looking statements due to a number of factors. The
Fund undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events, or
otherwise, except as required by applicable law. Factors that could affect the
Funds performance include a decline in the U.S. stock markets or in general
economic conditions, adverse developments affecting the real estate industry,
or fluctuations in interest rates. See Qualitative Information About Market
Risk in Item 7A(b) below.  The
following discussion should be read in conjunction with the Funds consolidated
financial statements and related notes appearing on pages 42 to 60 of this
Annual Report on Form 10-K.  17


(a) Results
of Operations.  Increases and decreases
in the Funds net asset value per share are based on net investment income or
loss and realized and unrealized gains and losses on investments. The Funds
net investment income or loss is determined by subtracting the Funds total
expenses from its investment income. The Funds investment income generally includes
the net investment income allocated to the Fund from Belvedere Company, rental
income from Wholly Owned Properties, net investment income allocated to the
Fund from the Real Estate Joint Ventures, partnership income allocated from the
Partnership Preference Units and interest earned on the Funds short-term
investments, including investments in Cash Management Portfolio. The net
investment income of Belvedere Company allocated to the Fund includes
dividends, interest and expenses allocated to Belvedere Company by the
Portfolio less the expenses of Belvedere Company allocated to the Fund. The
Funds total expenses generally include the Funds investment advisory and
administrative fees, distribution and servicing fees, interest expense from
mortgage notes on Wholly Owned Properties, interest expense on the Funds
Credit Facility, property operating expenses and other miscellaneous expenses.
The Funds realized and unrealized gains and losses are the result of
transactions in, or changes in value of, security investments held through the
Funds indirect interest (through Belvedere Company) in the Portfolio, real
estate investments held through Belrose Realty, the Funds interest rate swap
agreements and any other direct investments of the Fund, as well as periodic
payments made by the Fund pursuant to interest rate swap agreements.  Realized and unrealized
gains and losses on investments have the most significant impact on the Funds
net asset value per share and result primarily from sales of such investments
and changes in their underlying value. The investments of the Portfolio consist
primarily of common stocks of domestic and foreign growth companies that are
considered by its investment adviser to be high in quality and attractive in
their long-term investment prospects. Because the securities holdings of the
Portfolio are broadly diversified, the performance of the Portfolio cannot be
attributed to one particular stock or one particular industry or market sector.
The performance of the Portfolio and the Fund are substantially influenced by
the overall performance of the U.S. stock market, as well as by the relative
performance versus the overall market of specific stocks and classes of stocks
in which the Portfolio maintains large positions.  MD&A
for the Year Ended December 31, 2007 Compared to the Year Ended December 31,
2006.  Performance of the Fund.(1) The Funds investment
objective is to achieve long-term, after-tax returns for Shareholders. Eaton
Vance, as the Funds manager, measures the Funds success in achieving its
objective based on the investment returns of the Fund, using the S&P 500
Index as the Funds primary performance benchmark. The S&P 500 Index is a
broad-based, unmanaged index of common stocks commonly used as a measure of
U.S. stock market performance. Eaton Vances primary focus in pursuing total
return is on the Funds common stock portfolio, which consists of its indirect
interest in the Portfolio. The Fund invests in the Portfolio through its
interest in Belvedere Company. The Funds performance will differ from that of
the Portfolio primarily due to its investments outside the Portfolio. In
measuring the performance of the Funds real estate investments, Eaton Vance
considers whether, through current returns and changes in valuation, the real
estate investments achieve returns that over the long-term exceed the cost of
the borrowings incurred to acquire such investments and thereby add to Fund
returns. The Fund has entered into interest rate swap agreements to fix the
cost of a substantial portion of its borrowings under the Credit Facility to
mitigate in part the impact of interest rate changes on the Funds net asset
value.  The Funds total return
for the year ended December 31, 2007 was 3.47%. This return reflects an
increase in the Funds net asset value per Share from $122.62 to $124.89 and a
distribution of $1.93 per Share during the period. For comparison, the S&P
500 Index had a total return of 5.49% over the same period. The combined impact
on performance of the Funds investment activities outside of the Portfolio was
negative for the year ended December 31, 2007.  
 (1)
  Past performance is no guarantee of future results.
  Investment return and principal value will fluctuate so that Shares, when
  redeemed, may be worth more or less than their original cost. Total returns
  are historical and are calculated by determining the percentage change in net
  asset value with all distributions reinvested. The Portfolios total return
  for the period reflects the total return of another fund that invests in the
  Portfolio adjusted for non-Portfolio expenses of that fund. Performance is
  for the stated time period only; due to market volatility, the Funds current
  performance may be lower or higher. The performance of the Fund and the Portfolio
  is compared to that of their benchmark, the S&P 500 Index. It is not
  possible to invest directly in an Index.  18


The Fund had a total
return of 14.56% for the year ended December 31, 2006. This return
reflected an increase in the Funds net asset value per Share from $108.30 to
$122.62 and a distribution of $1.28 per Share during the period. For
comparison, the S&P 500 Index had a total return of 15.78% over the same
period.  Performance of the Portfolio. Broad equity markets finished the
year ended December 31, 2007, with respectable gains, despite increased
volatility and ongoing concerns regarding the credit and housing markets.
Global equities were booming early in 2007 as strong momentum continued from
the previous year, but global markets encountered a turbulent second half of
the year. Troubles with sub-prime mortgages and the U.S. housing crisis rattled
the financial markets, leading to concerns of an economic slowdown.
Additionally, crude oil prices continued to rise to new highs, while the U.S.
dollar fell to record lows versus other major currencies, boosting many foreign
market indices. Despite the Federal Reserves decision to lower interest rates
during the second half of 2007, volatility in the equity and fixed income
markets continued through year-end.  For the year ended December 31,
2007, eight of the ten major sectors within the S&P 500 Index registered
positive returns. Energy, materials and utilities were the top-performing
S&P 500 Index sectors during the year, while the financials and consumer
discretionary sectors produced the weakest performance. Market-leading
industries of 2007 included energy equipment and services, metals and mining,
machinery, as well as independent power producers and energy traders. In
contrast, the thrifts and mortgage finance, household durables, real estate
management and development, and consumer finance industries all realized
negative returns for the year. On average during the course of the year, large-capitalization
stocks outperformed small-capitalization stocks and growth-style investments
reversed course to outperform value-style investments.  The Portfolios
performance for the year ended December 31, 2007 was 4.72%, which trailed
the return of the S&P 500 Index by 0.77%. The Portfolio underperformed its
benchmark due in part to differences in sector allocation and stock selection
versus the S&P 500 Index. The total return of the Portfolio for the year
ended December 31, 2006, was 13.69%, which trailed the S&P 500 Index
by 2.09%.  During the year ended December 31,
2007, the Portfolio remained overweight in the industrials, consumer staples
and consumer discretionary sectors, while continuing to underweight in the
technology, materials, telecommunications and utilities sectors. The Portfolios
computers and peripherals investments within the information technology sector
were the largest detractors from relative performance, as the Portfolios
underweight industry allocation and investment selections hurt relative
results. The energy sector was also a weak contributor to relative performance
as the Portfolios lighter exposure to the market-leading energy equipment and
services industry and its stock holdings hampered performance. Additionally,
the Portfolios allocation and relatively weaker selection within the
underperforming biotechnology stocks detracted from returns during the year.  During the year ended December 31,
2007, the Portfolio benefited from its investments in the industrials, financials
and consumer staples sectors. Its above-benchmark commitment to industrials and
its investment selections among machinery stocks significantly added to
results. The Portfolios underweight exposure to financial services, mortgage
finance and REIT stocks, relative to its benchmark, proved beneficial as
brokerage firms and mortgage and real estate companies suffered in the wake of
the sub-prime mortgage and domestic housing crises. Stock selection within the
insurance industry additionally boosted the Portfolios results. Finally, its
overweight position in the consumer staples sector added value versus its
benchmark, as investors favored defensive investments during this period of
economic uncertainty.  Performance of Real Estate Investments. The Funds real estate
investments are held through Belrose Realty. As of December 31, 2007, real
estate investments included: two Real Estate Joint Ventures (Deerfield and
Katahdin); two Wholly Owned Properties (Bel Marlborough and Bel Larimer); and a
portfolio of Partnership Preference Units. Deerfield owns industrial
distribution properties, Katahdin owns multifamily properties, Bel Marlborough
owns an office campus and Bel Larimer owns a retail building.  On May 11, 2007,
Belrose Realty acquired Bel Larimer for approximately $33.5 million with
proceeds from the Funds Credit Facility. On June 19, 2007, Bel Larimer
obtained mortgage financing secured by its property of approximately $25.5
million, the proceeds from which were used to pay down a portion of the Funds Credit
Facility.  During the year ended December 31,
2007, Belrose Realty also acquired interests in additional Partnership
Preference Units for approximately $25.0 million and sold certain of its
Partnership Preference Units for approximately $13.3 million (representing
sales to real estate investment affiliates of other investment funds advised by
Boston Management), recognizing a nominal gain on the sale transactions.  19


During the year ended December 31,
2007, the Funds net investment income from real estate investments held
through Belrose Realty was approximately $18.4 million compared to
approximately $20.5 million for the year ended December 31, 2006, a
decrease of $2.1 million or 10%. The decrease was principally due to fewer
Partnership Preference Units held on average during the year and a decrease in
the net investment income from Deerfield, partially offset by an increase in
net investment income related to the acquisition of Bel Marlborough in September 2006
and Bel Larimer in May 2007.  The estimated fair value
of the Funds real estate investments was approximately $419.5 million at December 31,
2007 compared to approximately $372.6 million at December 31, 2006, a net
increase of $46.9 million or 13%. This net increase was principally due to the
acquisition of Bel Larimer, an increase in the estimated fair value of the
properties held by the Real Estate Joint Ventures and by more Partnership
Preference Units held at year end partially offset by a net decline in the
estimated fair values of Partnership Preference Units as discussed below.  The Funds investments in
real properties achieved modest returns during the year, benefiting from
earnings in the expected range offset however by capitalization rates and
discount rates which widened slightly. These rates reflected the reduced
availability of debt financing and uncertainty on the direction of valuations
for institutional-grade real estate causing a decrease in transactional
activity towards the end of the year. The estimated fair values for Partnership
Preference Units decreased during the year due to widening credit spreads,
partially offset by a decline in interest rates during the year ended December 31,
2007.  During the year ended December 31,
2007, the Fund saw net unrealized depreciation of the estimated fair value of
its real estate investments of approximately $3.0 million compared to net
unrealized appreciation of approximately $19.8 million during the year ended December 31,
2006. Net unrealized depreciation of approximately $3.0 million consisted
primarily of $9.1 million of net unrealized depreciation in the value of the
Partnership Preference Units and $2.0 million of net unrealized depreciation in
the value of Bel Marlborough, offset in part by approximately $8.1 million of
net unrealized appreciation in the value of Real Estate Joint Venture
investments.  Performance of Interest Rate Swap Agreements. For the year ended December 31,
2007, net realized and unrealized losses on the Funds interest rate swap
agreements totaled approximately $4.9 million, compared to net realized and
unrealized gains of $2.2 million for the year ended December 31, 2006. Net
realized and unrealized losses on swap agreements in 2007 consisted of $7.3
million of unrealized losses due to changes in swap agreement valuations,
offset in part by $2.4 million of periodic net payments received pursuant to
outstanding swap agreements (and classified as net realized gains on interest
rate swap agreements in the Funds consolidated financial statements). The
negative contribution to Fund performance from changes in swap agreement
valuations in 2007 was attributable to decreases in swap rates during the year.  MD&A
for the Year Ended December 31, 2006 Compared to the Year Ended December 31,
2005.  Performance of the Fund. The Fund had a total return of 14.56%
for the year ended December 31, 2006. This return reflected an increase in
the Funds net asset value per Share from $108.30 to $122.62 and a distribution
of $1.28 per Share during the period. For comparison, the S&P 500 Index had
a total return of 15.78% over the same period.  The Fund had a total
return of 7.54% for the year ended December 31, 2005. This return
reflected an increase in the Funds net asset value per Share from $102.03 to
$108.30 and a distributionof $1.29 per Share during the period. For comparison,
the S&P 500 Index had a total return of 4.91% over the same period.  Performance of the Portfolio. The year ended December 31,
2006 marked another impressive year for equities as broad U.S. markets locked
in a fourth consecutive annual gain. Helping fuel the rally were easing
inflation and housing concerns, as well as declining oil prices and a continued
pause in interest rate increases. Record levels of mergers and private equity
activity further supported higher stock prices during the year, as did better
than expected earnings and profit results. Price gains for the year were
broad-based, but of particular note were the double digit gains realized by the
blue chip Dow Jones Industrial Average and the S&P 500 Index.  For the year ended December 31,
2006, each of the ten major sectors included in the S&P 500 Index
registered positive returns. Telecommunications, energy and utilities were the
top performing S&P 500 Index sectors during the year, while the health care
and information technology sectors had the weakest performance. Market leading
industries of 2006 included diversified telecommunications, real estate
investment trusts and investment banking and brokerage. In contrast, the
internet and catalog retailers, biotechnology and educational service
industries realized weaker returns for the year.  20


During the course of the
year, on average, small-cap stocks outperformed large-cap stocks and the value
investment style continued to outperform the growth investment style.  The Portfolio invests on
a long term basis in a broadly diversified portfolio consisting primarily of
common stocks of established growth companies. The Portfolios performance for
the year ended December 31, 2006 was 13.69%, which trailed the return of
the S&P 500 Index by 2.09%. The Portfolio underperformed its benchmark due
in part to differences in sector allocation and stock selection versus the
S&P 500 Index. The total return of the Portfolio for the year ended December 31,
2005 was 4.70%.  During the year ended December 31,
2006, the Portfolio remained overweight in the industrials, consumer staples
and consumer discretionary sectors, while continuing to underweight the
technology, telecommunications and utilities sectors. The Portfolio benefited
from its emphasis of the strong performing energy and consumer discretionary
sectors and relatively stronger investment selection within commercial banks
and metals and mining versus the S&P 500 Index. The Portfolios underweight
of the technology sector was also helpful, particularly within the
semiconductor and internet software industries, as stocks in those sectors
experienced significant declines over the course of the year.  During the year ended December 31,
2006, the Portfolios de-emphasis of high dividend yielding stocks, such as
those in the utilities and telecommunications sectors, hurt performance, as did
the weak performance of certain of the Portfolios holdings in the health care
and consumer staples sectors. Despite positive performance from holdings in the
air freight and machinery industries, the Portfolios overweight of the lagging
industrials sector negatively impacted returns.  Performance of Real Estate Investments. As of December 31,
2006, real estate investments included investments in two Real Estate Joint
Ventures (Deerfield and Katahdin), a Wholly Owned Property consisting of an
office campus (Bel Marlborough) and a portfolio of Partnership Preference
Units.  In July 2006,
Katahdin sold a property for approximately $23.4 million, with Belrose Realty
recognizing a gain of approximately $1.9 million on the transaction. Katahdin
previously acquired a replacement for this sold property in June 2006 for
approximately $29.7 million.  On September 20,
2006, Belrose Realty acquired Bel Marlborough for a purchase price of
approximately $135.0 million.  During the year ended December 31,
2006, Belrose Realty also acquired interests in additional Partnership
Preference Units for approximately $20.2 million (including acquisitions from
real estate investment affiliates of other investment funds advised by Boston
Management) and sold certain of its Partnership Preference Units for
approximately $100.6 million (representing sales to real estate investment
affiliates of other investment funds advised by Boston Management), recognizing
a net loss of approximately $2.5 million on the sale transactions.  During the year ended December 31,
2006, the Funds net investment income from real estate investments held
through Belrose Realty was approximately $20.5 million compared to
approximately $16.2 million for the year ended December 31, 2005, an
increase of $4.3 million or 27%. The increase was principally due to more
Partnership Preference Units held on average during the year and the
acquisition of Bel Marlborough, partially offset by the sale of Belrose Realtys
investment in a multifamily Real Estate Joint Venture, Bel Communities Property
Trust, in October 2005.  The estimated fair value
of the Funds real estate investments was approximately $372.6 million at December 31,
2006 compared to approximately $349.2 million at December 31, 2005, a net
increase of $23.4 million or 7%. This net increase was principally due to the
acquisition of Bel Marlborough, offset by fewer Partnership Preference Units
held at year end.  During the year ended December 31,
2006, the Funds investments in real properties achieved modest returns,
benefiting from capital appreciation as investor demand for institutional-grade
real estate remained robust. Both capitalization rates and discount rates
declined in most markets and for most property types, causing increases in
estimated fair values even in cases where operating performance was flat or
down. The estimated fair values for Partnership Preference Units were
negatively impacted by higher interest rates at December 31, 2006.  During the year ended December 31,
2006, the Fund saw net unrealized appreciation of the estimated fair value of
its real estate investments of approximately $19.8 million compared to net
unrealized appreciation of approximately $23.3 million during the year ended December 31,
2005. Net unrealized appreciation of approximately $19.8 million consisted
primarily of approximately $22.3 million of net unrealized appreciation in the
value of Real Estate Joint Venture investments, offset in part by $2.3 million
of net unrealized depreciation in the value of the Partnership Preference
Units.  21


Performance of Interest Rate Swap Agreements. For the year ended December 31,
2006, net realized and unrealized gains on the Funds interest rate swap
agreements totaled approximately $2.2 million, compared to net realized and
unrealized gains of $4.2 million for the year ended December 31, 2005. Net
realized and unrealized gains on swap agreements in 2006 consisted of $2.0
million of periodic net payments received pursuant to outstanding swap
agreements (and classified as net realized gains on interest rate swap
agreements in the Funds consolidated financial statements) and $0.2 million of
net realized and unrealized gains due to changes in swap agreement valuations.
The positive contribution to Fund performance from changes in swap agreement
valuations in 2006 was attributable to an increase in swap rates during the
year.  (b) Liquidity
and Capital Resources.  Outstanding Borrowings. The Fund has entered into the Credit
Facility primarily to finance the Funds real estate investments and to satisfy
the liquidity needs of the Fund. The Fund will continue to use the Credit
Facility for such purposes in the future.  On October 10, 2007,
the Fund amended the DKH Credit Facility to increase the amount of outstanding
borrowings by $105.0 million to an aggregate amount of outstanding borrowings
of $371.5 million.  During the period ended December 31,
2007, the Fund also amended the MLMC Credit Facility twice. On January 18,
2007, the Fund amended the MLMC Credit Facility to decrease the amount
available for borrowing by $45.0 million to an aggregate amount available for
borrowing of $197.0 million. On May 9, 2007, the Fund further amended the
MLMC Credit Facility to decrease the amount available for borrowing by $25.0
million to an aggregate amount available for borrowing of $172.0 million.  As of December 31,
2007, the Fund had outstanding borrowings of $417.5 million and unused loan
commitments of $126.0 million under the Credit Facility. Any increase in the
size of the Credit Facility or Fund borrowings will be subject to lender
consent and may result in a change to the interest and fees paid thereunder.  As of December 31,
2007, Bel Marlborough and Bel Larimer had outstanding borrowings consisting of
fixed-rate secured mortgage obligations of $61.5 million and $25.5 million,
respectively.  Liquidity.
The Fund may redeem shares of Belvedere Company at any time. Both Belvedere
Company and the Portfolio normally follow the practice of satisfying
redemptions primarily by distributing securities drawn from the Portfolio.
Belvedere Company and the Portfolio may also satisfy redemptions by
distributing cash. As of December 31, 2007, the Portfolio had cash and
short-term investments in the amount of $193.9 million. The Portfolio
participates in a $150.0 million multi-fund unsecured line of credit agreement
with a group of banks. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests in cash or to settle investment
transactions. The Portfolio had no outstanding borrowings at December 31,
2007. To ensure liquidity for investors in the Portfolio, the Portfolio may not
invest more than 15% of its net assets in illiquid assets. As of December 31,
2007, illiquid assets (consisting of restricted securities not available for
current public sale) constituted 0.01% of the net assets of the Portfolio.  The liquidity of Belrose
Realtys investments in Deerfield and Katahdin is extremely limited and relies
principally upon buy/sell and/or liquidation agreements with ProLogis and
Archstone-Smith that are described in Real Estate Joint Venture Investments
under The Funds Real Estate Investments in Item 1. Transfers of Belrose
Realtys interest in Deerfield and Katahdin to parties other than ProLogis and
Archstone-Smith are restricted by the terms of the Deerfield and Katahdin
operative agreements and lender consent requirements. The Partnership
Preference Units held by Belrose Realty are not registered under the Securities
Act and are subject to substantial restrictions on transfer. As such, they are
considered illiquid.  (c) Off-Balance
Sheet Arrangements.  The Fund does not have
any relationships with unconsolidated entities that have been established
solely for the purpose of facilitating off-balance sheet arrangements.  22


(d) The
Funds Contractual Obligations.  The following table sets
forth the amounts of payments due under the specified contractual obligations
outstanding as of December 31, 2007:  Payments due:Less than
  
  
  
  
  
  More thanType of Obligation
  
  Total
  
  1 Year
  
  1-3Years
  
  3-5 Years
  
  5 YearsLong Term Debt:Mortgage Debt(1)
  
  $
  86,951,932
  
  $
  991,370
  
  $
  2,165,584
  
  $
  2,397,594
  
  $
  81,397,384Borrowings under Credit Facility(2)
  
  $
  417,500,000
  
  $
  
  
  $
  417,500,000
  
  $
  
  
  $
  Service Agreements(3)Other Long Term Liabilities:Interest Rate Swap Agreements(4)
  
  $
  24,321,450
  
  $
  8,218,575
  
  $
  13,191,231
  
  $
  2,911,644
  
  $
  Total
  
  $
  528,773,382
  
  $
  9,209,945
  
  $
  432,856,815
  
  $
  5,309,238
  
  $
  81,397,384  
 (1)The property
held by Belrose Realty is financed in part through mortgage notes issued to Bel
Marlborough and Bel Larimer. The mortgage notes are secured by the underlying
property and are without recourse to Fund Shareholders and generally without
recourse to the other assets of the Fund or Belrose Realty, as described in Risks
of Real Estate Investments in Item 7A(b). The mortgage notes mature during
2014 and 2017, respectively. Amount does not reflect interest. The mortgage
notes cannot be prepaid or otherwise disposed of without incurring a
substantial prepayment penalty.  (2)The Fund has
entered into a Credit Facility as described in Liquidity and Capital Resources
above. The Credit Facility is secured by a pledge of the Funds assets,
excluding the Funds investments in Real Estate Joint Ventures and the assets
of Wholly Owned Properties, and expires on June 25, 2010. The Credit
Facility is primarily used to finance the Funds equity in its real estate
investments and to satisfy the liquidity needs of the Fund. The Fund will
continue to use the Credit Facility for such purposes in the future. Amount
does not reflect interest.  (3)The Fund and
Belrose Realty have entered into agreements with certain service providers
pursuant to which the Fund and Belrose Realty pay fees as a percentage of
assets. These fees include fees paid to Eaton Vance and its affiliates (which
are described in Item 13). These agreements generally continue indefinitely
unless terminated by the Fund or Belrose Realty (as applicable) or the service
provider. For the year ended December 31, 2007, fees paid to Eaton Vance
and its affiliates equaled approximately 1.06% of the Funds average net
assets. Because these fees are based on the Funds assets (which will fluctuate
over time) it is not possible to specify the dollar amounts payable in the
future.  (4)The Fund has
entered into interest rate swap agreements to fix the cost of a substantial
portion of its borrowings under the Credit Facility and to mitigate in part the
impact of interest rate changes on the Funds net asset value. Pursuant to the
interest rate swap agreements, the Fund makes cash payments to MLCS at fixed
rates in exchange for floating rate payments from MLCS that fluctuate with
one-month and three-month LIBOR. The amounts disclosed in the table represent
the fixed interest amounts payable by the Fund. The periodic floating rate
payments that the Fund expects to receive pursuant to the agreements reduce the
fixed interest cost to the Fund. The swap agreements expire on June 25,
2010 and June 28, 2012, subject to the Funds right to terminate earlier
in the case of some swaps.  (e) Critical
Accounting Estimates.  The Funds consolidated
financial statements are prepared in accordance with GAAP. The preparation of
these financial statements requires the Fund to make estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. Estimates are deemed critical when a different estimate could
have reasonably been used or where changes in the estimate are reasonably
likely to occur from period to period, and where such different or changed
estimates would materially impact the Funds financial condition, changes in
financial condition or results of operations. The Funds significant accounting
policies are discussed in Note 2 of the notes to the consolidated financial
statements; critical estimates inherent in these accounting policies are
discussed in the following paragraphs.  The Fund has determined
that the valuation of the Funds real estate investments involve critical
estimates. The Funds investments in real estate are an important component of
its total investment program. Market prices for these investments are not
readily available and therefore the investments are stated in the Funds
consolidated financial statements at estimated fair value. The estimated fair
value of an investment represents the amount at which Boston Management  23


believes the investment
could be sold in a current transaction between willing parties in an orderly
disposition, that is, other than in a forced or liquidation sale. The Fund
reports the estimated fair value of its real estate investments on its
consolidated statements of assets and liabilities, with any changes to
estimated fair value recorded as unrealized appreciation or depreciation in the
Funds consolidated statements of operations.  The need to estimate the
fair value of the Funds real estate investments introduces uncertainty into
the Funds reported financial condition and performance because:  ·such
assets are, by their nature, difficult to value and estimated fair values may
not accurately reflect what the Fund could realize in a current sale between
willing parties;  ·property
appraisals and other factors used to determine the estimated fair value of the
Funds real estate investments depend on estimates of future operating results
and supply and demand assumptions that may not reflect actual current market
conditions and full consideration of all factors relevant to valuations;  ·property
appraisals and other factors used to determine the estimated fair value of the
Funds real estate investments are not continuously updated and therefore may
not be current as of specific dates; and  ·if
the Fund were forced to sell illiquid assets on a distressed basis, the
proceeds may be substantially less than stated values.  As of December 31,
2007, the estimated fair value of the Funds real estate investments
represented 18.0% of the Funds total assets. The estimated fair value of the
Funds real estate investments may change due to changes in market conditions
and changes in valuation assumptions made by property appraisers and third
party valuation service providers as described below.  Real Estate Joint Ventures. Boston Management determines the
estimated fair value of the Funds interests in Real Estate Joint Ventures
based primarily on annual appraisals of the properties owned by such Real
Estate Joint Ventures (provided such appraisals are available) and an
allocation of the equity value of a Real Estate Joint Venture between the Fund
and the Operating Partner. Appraisals of Real Estate Joint Venture properties
may be conducted more frequently than once a year if Boston Management
determines that significant changes in economic circumstances that may
materially impact estimated fair values have occurred since the most recent
appraisal.  In deriving the estimated
fair value of a property, an appraiser considers numerous factors, including
the expected future cash flows from the property, recent sale prices for
similar properties and, if applicable, the replacement cost of the property, in
order to derive an indication of the amount that a prudent, informed
purchaser-investor would pay for the property. More specifically, the appraiser
considers the revenues and expenses of the property and the estimated future
growth or decline thereof, which may be based on tenant quality, property
condition, change in market or submarket conditions, market trends, interest
rates, inflation rates or other factors deemed relevant by the appraiser. The
appraiser estimates operating cash flows from the property and the sale
proceeds of a hypothetical transaction at the end of a hypothetical holding
period. The cash flows are discounted to their present values using a
market-derived discount rate and are added together to obtain a value
indication. This value indication is compared to the value indication that
results from applying a market-derived capitalization rate to a single years
stabilized net operating income for the property. The assumed capitalization
rate may be extracted from local market transactions or, when transaction
evidence is lacking, obtained from trade sources. The appraiser considers the
value indications derived by these two methods, as well as the value indicated
by recent market transactions involving similar properties, in order to produce
a final value estimate for the property.  Appraisals of properties
owned by Real Estate Joint Ventures are conducted by independent, licensed
appraisers who are not affiliated with Eaton Vance or the Operating Partners.
Such appraisers may perform other valuation services for the Fund. Each
appraisal is conducted in accordance with the Uniform Standards Board and the
Code of Professional Appraisal Practice of the Appraisal Institute (as well as
other relevant standards). Boston Management reviews the appraisal of each
property and generally relies on the assumptions and judgments made by the
appraiser when determining estimated fair value. Property appraisals are
inherently uncertain because they apply assumed discount rates, capitalization
rates, growth rates and inflation rates to the appraisers estimated stabilized
cash flows, and due to the unique characteristics of a property. If the
assumptions and estimates used by the appraisers to determine the value of the
properties owned by the Real Estate Joint Ventures were to change, it could
materially impact the estimated fair value of the Real Estate Joint Ventures.
When a property owned by a Real Estate Joint Venture has not been appraised
(such as  24


when the Real Estate
Joint Venture recently acquired the property), Boston Management determines the
estimated fair value of the property based on the transaction value of the
property, which equals the total acquisition cost of the property exclusive of
certain legal and transaction costs, provided such amount is deemed indicative
of fair value. Appraisals of newly acquired properties are conducted in the
year following the acquisition or when Boston Management determines there has
been a significant change in economic circumstances that may materially impact
the estimated fair value. If the initial appraised value of a newly acquired
property differs significantly from the transaction value of the property, it
may materially impact the estimated fair value of the Real Estate Joint Venture
that holds the property. Interim valuations of Real Estate Joint Venture assets
may be adjusted to reflect results of operations, significant changes in
economic circumstances and/or recent independent valuations of similar
properties and distributions. As of December 31, 2007, all of the
properties owned by Deerfield and Katahdin had been appraised during the year.  Boston Management
determines the estimated fair value of the Funds equity interest in a Real
Estate Joint Venture based on an estimate of the allocation of equity interests
between the Fund and the Operating Partner. This allocation is generally
calculated by a third party specialist, using current appraisals of the
properties owned by the Real Estate Joint Venture. The specialist uses a
financial model that considers (i) the terms of the joint venture
agreement relating to allocation of distributable cash flow, (ii) the
expected duration of the joint venture; and (iii) the projected property
values and cash flows from the properties based on estimates used in the
independent valuations. The estimated allocation of equity interests between
the Fund and the Operating Partner of a Real Estate Joint Venture is prepared
quarterly and reviewed by Boston Management. If the estimate of the allocation
of equity interests in the Real Estate Joint Venture were to change (for
example, because the appraisers estimate of property values or projected cash
flows of the Real Estate Joint Venture changed), it may materially impact the
estimated fair value of the Funds equity interest in the Real Estate Joint
Venture.  Wholly Owned and Co-owned Property. Boston Management determines
the estimated fair value of Wholly Owned Property based on an annual appraisal
of the property, which is conducted in a manner consistent with the appraisals
of the properties owned by a Real Estate Joint Venture (described above). When
a Wholly Owned Property has not been appraised (such as when it was recently
acquired), Boston Management determines its estimated fair value based on the
transaction value of the Wholly Owned Property, which would equal the total
acquisition cost of the Wholly Owned Property exclusive of certain legal and
transaction costs, provided such amount is deemed indicative of fair value.  Boston Management reviews
the appraisal of Wholly Owned Property and generally relies on the assumptions
and judgments made by the appraiser when determining estimated fair value.
Appraisals of Wholly Owned Property may be conducted more frequently than once
a year if Boston Management determines that significant changes in economic
circumstances have occurred since the most recent appraisal. Appraisals of
Wholly Owned Property are inherently uncertain because they apply assumed
discount rates, capitalization rates, growth rates and inflation rates to the
expected income stream from the property as defined by the contract terms of
the lease(s), and due to the unique characteristics of the property. If the
assumptions and estimates used by the appraisers to determine the value of the
property owned by the Funds subsidiary were to change, it could materially
impact the estimated fair value of the Funds equity interest in Wholly Owned
Property. As of December 31, 2007, the property owned by Bel Marlborough
and Bel Larimer was appraised during the year.  Boston Management
determines the estimated fair value of Co-owned Property in the same manner
used for Wholly Owned Property, applying the Funds ownership interest to the
estimated fair value of the property.  Partnership Preference Units. Boston Management determines the
estimated fair value of the Funds Partnership Preference Units based on
analysis and calculations performed primarily on a monthly basis by a third
party service provider. The service provider calculates an estimated price and
yield (before accrued distributions) for each issue of Partnership Preference
Units based on descriptions of such issue provided by Boston Management and certain
publicly available information including, but not limited to, the trading
prices of publicly issued debt and/or preferred stock instruments of the same
or similar issuers, which may be adjusted to reflect the illiquidity and other
structural characteristics of the Partnership Preference Units (such as call
provisions). Daily valuations of Partnership Preference Units are determined by
adjusting prices from the service provider to account for accrued distributions
under the terms of the Partnership Preference Units. If changes in relevant
markets, events that materially affect an issuer or other events that have a
significant effect on the price or yield of Partnership Preference Units occur,
relevant prices or yields may be adjusted to take such occurrences into
account.  Valuations of Partnership
Preference Units are inherently uncertain because they are based on adjustments
from the market prices of publicly traded debt and/or preferred stock
instruments of the same or similar issuers to account for the Partnership
Preference Units illiquidity, structural features (such as call provisions)
and other relevant factors. Each  25


month Boston Management
reviews the analysis and calculations performed by the service provider. Boston
Management generally relies on the assumptions and judgments made by the
service provider when determining the estimated fair value of the Partnership
Preference Units. If the assumptions and estimates used by the service provider
to calculate prices for Partnership Preference Units were to change, it could
materially impact the estimated fair value of the Funds holdings of
Partnership Preference Units.  Item
7A. Quantitative and Qualitative Disclosures About Market Risk.  (a) Quantitative
Information About Market Risk.  Interest Rate Risk. The Funds primary exposure to interest
rate risk arises from its real estate investments that are financed by the Fund
with floating rate borrowings under the Credit Facility and by fixed-rate secured
mortgage debt obligations of its Subsidiary Real Estate Investments.
Partnership Preference Units are fixed rate instruments whose values will
generally decrease when interest rates rise and increase when interest rates
fall. The interest rates on borrowings under the Credit Facility are reset at
regular intervals based on one-month and three-month LIBOR. The Fund has
entered into interest rate swap agreements to fix the cost of a substantial
portion of its borrowings under the Credit Facility to mitigate in part the
impact of interest rate changes on the Funds net asset value. Under the terms
of the interest rate swap agreements, the Fund makes cash payments at fixed
rates in exchange for floating rate payments that fluctuate with one-month and
three-month LIBOR. The Funds interest rate swap agreements will generally
increase in value when interest rates rise and decrease in value when interest
rates fall. In the future, the Fund may use other interest rate hedging
arrangements (such as caps, floors and collars) to fix or limit borrowing
costs. The use of interest rate hedging arrangements is a specialized activity
that can expose the Fund to significant loss.  The following table
summarizes the contractual maturities and weighted-average interest rates
associated with the Funds significant non-trading financial instruments. The
Fund has no market risk sensitive instruments held for trading purposes. This
information should be read in conjunction with Notes 8 and 9 to the Funds
consolidated financial statements appearing on pages 42 to 60 of this
Annual Report on Form 10-K.  26


Interest
Rate Sensitivity
Cost, Principal (Notional) Amount
by Contractual Maturity and Callable Date
for the Twelve Months Ended December 31,*  Estimated
  Fair Value
  as of
  December2008
  
  2009
  
  2010
  
  2011
  
  2012
  
  Thereafter
  
  Total
  
  31, 2007Rate sensitive
  liabilities:Long-term debt:Fixed-rate mortgages
  
  $
  991,370
  
  $
  1,054,276
  
  $
  1,111,308
  
  $
  1,171,424
  
  $
  1,226,170
  
  $
  81,397,384
  
  $
  86,951,932
  
  $
  85,600,000Average interest rate
  
  5.21
  %
  5.21
  %
  5.21
  %
  5.21
  %
  5.21
  %
  5.47
  %
  5.45
  %Variable-rate
  Credit Facility
  
  
  
  
  
  $
  417,500,000
  
  
  
  
  
  
  
  $
  417,500,000
  
  $
  417,500,000Average interest rate
  
  
  
  
  
  4.91
  %
  
  
  
  
  
  
  4.91
  %Rate
  sensitive derivative financial instruments:Pay
  fixed/receive variable interest rate swap agreements
  
  
  
  
  
  $
  152,838,000
  
  
  
  $
  40,000,000
  
  
  
  $
  192,838,000
  
  $
  (1,026,870
  )Average pay rate
  
  
  
  
  
  4.10
  %
  
  
  4.88
  %
  
  
  4.26
  %Average receive rate
  
  
  
  
  
  4.90
  %
  
  
  4.70
  %
  
  
  4.86
  %Rate
  sensitive investments:Fixed-rate
  Partnership Preference Units:Colonial
  Realty Limited Partnership, 7.25% Series B Cumulative Redeemable Perpetual
  Preferred Units, Callable 8/24/09,
  Current Yield: 8.32%
  
  
  
  $
  19,419,240
  
  
  
  
  
  
  
  
  
  $
  19,419,240
  
  $
  17,432,000Essex
  Portfolio, L.P., 7.875% Series B Cumulative Redeemable Preferred Units,
  Callable 12/31/09,
  Current Yield: 8.45%
  
  
  
  $
  26,643,900
  
  
  
  
  
  
  
  
  
  $
  26,643,900
  
  $
  24,466,155Liberty
  Property Limited Partnership, 7.40% Series H Cumulative Redeemable Preferred
  Units, Callable 8/21/12,
  Current Yield: 8/10%
  
  
  
  
  
  
  
  
  
  $
  25,000,000
  
  
  
  $
  25,000,000
  
  $
  22,850,000  27


Estimated
  Fair Value
  as of
  December2008
  
  2009
  
  2010
  
  2011
  
  2012
  
  Thereafter
  
  Total
  
  31, 2007MHC
  Operating Limited Partnership, 8.0625% Series D Cumulative Redeemable
  Perpetual Preference Units, Callable 3/24/10, Current Yield: 8.69%
  
  
  
  
  
  $
  25,186,560
  
  
  
  
  
  
  
  $
  25,186,560
  
  $
  23,200,000PSA
  Institutional Partners, L.P., 6.4% Series NN Cumulative Redeemable
  Perpetual Preferred Units, Callable 3/17/10, Current Yield: 7.70%
  
  
  
  
  
  $
  7,189,950
  
  
  
  
  
  
  
  $
  7,189,950
  
  $
  6,237,000Vornado
  Realty L.P., 6.75% Series D-14 Cumulative Redeemable Preferred Units,
  Callable 9/9/10,
  Current Yield: 7.72%(1)
  
  
  
  
  
  $
  8,672,724
  
  
  
  
  
  
  
  $
  8,672,724
  
  $
  8,742,122  
 *The
amounts listed reflect the Funds positions as of December 31, 2007. The
Funds current positions may differ.  (1)Belrose
Realtys interest in these Partnership Preference Units is held through
Belvorn.  (b) Qualitative
Information About Market Risk.  Risks
Associated with Equity Investing. The Fund invests primarily
in a diversified portfolio of common stocks and is thereby subject to general
stock market risk. There can be no assurance that the performance of the Fund
will match that of the U.S. stock market or that of other equity funds. In
managing the Portfolio for long-term, after-tax returns, Boston Management
generally seeks to avoid or minimize sales of securities with large accumulated
capital gains, including contributed securities. Such securities constitute a substantial
portion of the assets of the Portfolio. Although the Portfolio may utilize
certain management strategies in lieu of selling appreciated securities, the
Portfolios, and hence the Funds, exposure to losses during stock market
declines may nonetheless be higher than funds that do not follow a general
policy of avoiding sales of highly appreciated securities.  Risks of Investing in Foreign Securities. The Portfolio invests in
securities issued by foreign companies and the Fund may acquire foreign investments.
Foreign investments involve considerations and possible risks not typically
associated with investing in the United States. The value of foreign
investments to U.S. investors may be adversely affected by changes in currency
rates. Foreign brokerage commissions, custody fees and other costs of investing
are generally higher than in the United States, and foreign investments may be
less liquid, more volatile and subject to more government regulation than in
the United States. Foreign investments could be adversely affected by other
factors not present in the United States, including expropriation, confiscatory
taxation, lack of uniform accounting and auditing standards, armed conflict,
and potential difficulty in enforcing contractual obligations. These risks can
be more significant for investments in emerging markets.  Risks of Certain Investment Techniques. In managing the Portfolio,
Boston Management may purchase or sell derivative instruments (which derive
their value by reference to other securities, indexes, instruments or
currencies) to hedge against securities price declines and currency movements,
to add investment exposure to individual securities and groups of securities
and to enhance returns. Such transactions may include, without limitation, the
purchase and sale of futures contracts on stocks and stock indexes and options
thereon, the purchase of put options and the sale of call options on  28


securities held,
equity swaps, forward sales of stocks, and the purchase and sale of forward
currency exchange contracts and currency futures. The Portfolio may engage in
short sales of individual securities held and short sales of index or basket
securities whose constituents are held in whole or in part. The Portfolio may
enter into private contracts for the forward sale of stock held and may also
lend portfolio securities.  The use of these
investment techniques is a specialized activity that may be considered
speculative and which can expose the Fund and the Portfolio to significant risk
of loss. Successful use of these investment techniques is subject to the
ability and performance of the investment adviser. The Funds and the Portfolios
ability to achieve their investment objectives may be adversely affected by the
use of these techniques. The writer of an option or a party to an equity swap
may incur losses that substantially exceed the payments, if any, received from
a counterparty. Forward sales, swaps, caps, floors, collars and over-the-counter
options are private contracts in which there is also a risk of loss in the
event of a default on an obligation to pay by the counterparty. Such
instruments may be difficult to value, may be illiquid and may be subject to
wide swings in valuation caused by changes in the price of the underlying
security, index, instrument or currency. In addition, if the Fund or the
Portfolio has insufficient cash to meet margin, collateral or settlement
requirements, it may have to sell assets to meet such requirements. Alternatively,
should the Fund or the Portfolio fail to meet these requirements, the
counterparty or broker may liquidate positions of the Fund or the Portfolio.
The Portfolio may also have to sell or deliver securities holdings in the event
that it is not able to purchase securities on the open market to cover its
short positions or to close out or satisfy an exercise notice with respect to
options positions it has sold. In any of these cases, such sales may be made at
prices or in circumstances that Boston Management considers unfavorable.  The Portfolios ability
to utilize covered short sales, certain equity swaps, forward sales, futures
and certain equity collar strategies (combining the purchase of a put option
and the sale of a call option) as a tax-efficient management technique with
respect to holdings of appreciated securities is limited to circumstances in
which the hedging transaction is closed out within 30 days of the end of the
Portfolios taxable year in which the hedging transaction was initiated and the
underlying appreciated securities position is held unhedged for at least the
next 60 days after such hedging transaction is closed. In addition, dividends
received on stock for which the Portfolio is obligated to make related payments
(pursuant to a short sale or otherwise) with respect to positions in
substantially similar or related property are subject to federal income
taxation at ordinary rates and do not qualify for favorable tax treatment.
Also, holding periods required to receive tax-advantaged treatment of qualified
dividends on a stock are suspended whenever the Portfolio has an option (other
than a qualified covered call option not in the money when written) or
contractual obligation to sell or an open short sale of substantially identical
stock, is the grantor of an option (other than a qualified covered call option
not in the money when written) to buy substantially identical stock or has
diminished risk of loss in such stock by holding positions with respect to
substantially similar or related property. There can be no assurance that
counterparties will at all times be willing to enter into covered short sales,
forward sales of stocks, interest rate hedges, equity swaps and other
derivative instrument transactions on terms satisfactory to the Fund or the
Portfolio. The Funds and the Portfolios ability to enter into such
transactions may also be limited by covenants under the Funds Credit Facility,
the federal margin regulations and other laws and regulations. The Portfolios
use of certain investment techniques may be constrained because the Portfolio
is a diversified, open-end management investment company registered under the
1940 Act and because other investors in the Portfolio are regulated investment
companies under Subchapter M of the Code. Moreover, the Fund and the Portfolio
are subject to restrictions under the federal securities laws on their ability
to enter into transactions in respect of securities that are subject to
restrictions on transfer pursuant to the Securities Act.  Risks of Real Estate Investments. The success of the Funds real
estate investments depends in part on many factors related to the real estate
market in general, and to the specific sub-markets in which the real estate
investments are held. These factors include, without limitation, general
economic conditions, the supply and demand for different types of real
properties, the financial health of tenants, changing transportation and
logistics patterns (in the case of industrial distribution properties), the
timing of lease expirations and terminations, fluctuations in rental rates and
operating costs, exposure to adverse environmental conditions and losses from
casualty or condemnation, fluctuations in interest rates, availability of
financing, managerial performance, government rules and regulations, and
acts of God (whether or not insured against). There can be no assurance that
Belrose Realtys ownership of real estate investments will be an economic
success.  Interests in Real Estate
Joint Ventures and Partnership Preference Units are not registered under the
federal securities laws and are subject to restrictions on transfer. Due to
their illiquidity, they may be difficult to value and the ongoing value of the
investments is uncertain. See Critical Accounting Estimates in Item 7(e).  29


The performance of Real
Estate Joint Ventures is substantially influenced by the property management
capabilities of the Operating Partner and conditions in the specific real
estate submarkets in which the properties owned by the Real Estate Joint
Venture are located. The Operating Partners are subject to substantial
conflicts of interest in structuring, operating and winding up the Real Estate
Joint Ventures. The respective Operating Partner has an economic incentive to
maximize the prices at which it sells properties to the Real Estate Joint
Venture and has a similar incentive to minimize the prices at which it may
acquire properties from the Real Estate Joint Venture. The Operating Partners
may devote greater attention or more resources to managing other properties in
which they hold an interest than to managing properties held by the Real Estate
Joint Venture. Future investment opportunities identified by the Operating
Partners will more likely be pursued independently, rather than through the
Real Estate Joint Ventures. Financial difficulties encountered by the Operating
Partners in their other businesses may interfere with the operations of the
Real Estate Joint Ventures.  Belrose Realtys
investment in Real Estate Joint Ventures may be significantly concentrated in
terms of geographic regions, property types and operators, increasing the Funds
exposure to regional, property type and operator-specific risks. Given a lack
of stand-alone operating history, limited diversification and relatively high
financial leverage, the Real Estate Joint Ventures are not equivalent in
quality to real estate companies whose preferred equity or senior debt
securities are rated investment grade. Distributable cash flows from a Real
Estate Joint Venture may not be sufficient for Belrose Realty to receive its
fixed annual preferred return, or any returns in excess thereof.  The debt of Deerfield and
Katahdin is fixed-rate, secured by the underlying properties and without
recourse to Shareholders and generally without recourse to Belrose Realty and
the Fund. Belrose Realty and the Fund may be directly or indirectly responsible
for certain liabilities constituting exceptions to the generally non-recourse
nature of the mortgage indebtedness, including liabilities associated with
fraud, misrepresentation, misappropriation of funds, breach of material
covenants or liabilities arising from environmental conditions involving or
affecting Real Estate Joint Venture properties. To the extent practicable, the
Fund and Belrose Realty will seek indemnification from the Operating Partners
for certain of such potential liabilities. The availability of financing and
other financial conditions can have a material impact on property values and
therefore on the value of the Real Estate Joint Ventures assets. Mortgage debt
of Deerfield and Katahdin normally cannot be refinanced prior to maturity
without substantial penalties.  The ongoing value of
Belrose Realtys investments in Deerfield and Katahdin is substantially
uncertain. The real property held through Deerfield and Katahdin is stated at
the estimated fair value as described in Item 7(e). The policies for estimating
the fair value of real estate investments involve significant judgments that
are based upon a number of factors, which may include, without limitation,
general economic conditions, the supply and demand for different types of real
properties, the financial health of tenants, the timing of lease expirations
and terminations, fluctuations in rental rates and operating costs, exposure to
adverse environmental conditions and losses from casualty or condemnation,
interest rates, availability of financing, managerial performance and
government rules and regulations. Given that such valuations include many
assumptions, estimated fair values may differ from amounts ultimately realized.  Belrose Realtys
investments in Wholly Owned Property are subject to general real estate market
risks similar to those of an investment in a Real Estate Joint Venture.
Investments in Wholly Owned Property are also subject to risks specific to
these types of investments, including a concentration of risk exposure to
specific real estate submarkets and individual properties and tenants.
Principal among the risks of investing in the Wholly Owned Property is the risk
that a major tenant fails to satisfy its lease obligations due to financial
distress or other reasons. A major tenants failure to meet its lease
obligations would expose Belrose Realty to substantial loss of income without a
commensurate reduction in debt service costs and other expenses, and may
transfer to Belrose Realty all the costs, expenses and liabilities of property
ownership and management borne by the tenant under the terms of the lease.
Re-leasing a property could involve considerable time and expense. Re-leasing
opportunities may be limited by the nature and location of the property, which
may not be well suited to the needs of other possible tenants. Even if a
property is re-leased, the property may not generate sufficient rental income
to cover debt service and other expenses.  Wholly Owned Property is
generally illiquid, and the ongoing value of Belrose Realtys investments in
Bel Marlbrorough and Bel Larimer is substantially uncertain. Wholly Owned
Property held is generally stated at estimated fair value as described in Item
7(e). Because the value of Bel Marlborough and Bel Larimer reflects in part the
creditworthiness of its tenant(s), any change in the financial status of the
tenant could affect the appraised value of the property and the value realized
upon the disposition of such property. Tenants may hold rights to renew or
extend expiring leases, and exercise of such rights would extend Belrose Realtys
risk exposure to a particular tenant beyond the initial lease term. A tenant
may also hold options to purchase properties, including options to purchase at
below market levels. The value received upon the disposition of Wholly Owned
Property will depend on real estate market conditions, lease and mortgage
terms, tenant  30


credit quality, tenant
purchase options, lender approvals and other factors affecting valuation as may
then apply. Because a sale of Wholly Owned Property is not expected to occur
for many years, market conditions and other valuation factors at the time of
sale cannot be predicted. Since the valuations of Wholly Owned Property assume
an orderly disposition of assets, amounts realized in a distressed sale may
differ substantially from stated values.  The leveraged nature of
most anticipated Wholly Owned Property investments means that a relatively
small decline in the value of a property could result in the loss by Belrose
Realty of all or a substantial portion of its equity in such property. Mortgage
debt associated with Wholly Owned Property generally cannot be refinanced prior
to maturity without substantial penalties. The terms of the outstanding lease
and mortgage debt obligations and restrictions on refinancing such debt may
limit Belrose Realtys ability to dispose of Wholly Owned Property.  A default by a major
tenant could materially reduce the value of a Wholly Owned Property. The
leveraged nature of most anticipated Wholly Owned Property investments means
that a relatively small decline in the value of a property could result in the
loss by Belrose Realty of all or a substantial portion of its equity in such
property. Because the mortgage debt obligations of Wholly Owned Property will
be without recourse to Shareholders and generally will be with recourse to
Belrose Realty and the Fund, the potential loss from Wholly Owned Property is
normally limited to the amount of equity invested in such property by Belrose
Realty.  Because the mortgage debt
obligations of Bel Marlborough and Bel Larimer are generally without recourse
to Belrose Realty, the potential loss from Belrose Realtys investments in Bel
Larimer and Bel Larimer is normally limited to the amount of its equity
investment. The Fund and Belrose Realty may, however, be directly or indirectly
responsible for certain liabilities constituting exceptions to the generally
non-recourse nature of the mortgage indebtedness, including liabilities
associated with fraud, misrepresentation, misappropriation of funds, breach of
material covenants or liabilities arising from environmental conditions
increasing the potential for loss under extraordinary circumstances.  Substantially all of the
rental payments on certain Wholly Owned Property that is Net Leased Property
may be dedicated to servicing the associated mortgage debt, in which case
significant amounts of cash would not be available to offset operating expenses
and the cost of Fund borrowings used to finance Belrose Realtys equity in the
properties. Such costs and expenses generally must be provided from other
sources of cash flow for Belrose Realty and the Fund, which may include
additional Fund borrowings under the Credit Facility. Realized returns on
investments in Net Leased Property may be deferred until the property is
re-leased following the initial lease term or sold.  The risks of investing in
Co-owned Property are substantially the same as investing in Wholly Owned
Property, as well as certain additional risks relating to the ownership of real
properties as tenants-in-common. Included in these risks are the inability to
make independent decisions regarding the property and the risks that other
owners may not properly perform their obligations relating to the property.  The success of
investments in Partnership Preference Units depends upon factors relating to
the issuing partnerships that may affect such partnerships profitability and
their ability to make distributions to holders of Partnership Preference Units.
Investments in Partnership Preference Units are valued primarily by referencing
market trading prices for comparable preferred equity securities or other
fixed-rate instruments having similar investment characteristics. The
valuations of Partnership Preference Units fluctuate over time to reflect,
among other factors, changes in interest rates, changes in the perceived
riskiness of such units (including call risk), changes in the perceived
riskiness of comparable or similar securities trading in the public market and the
relationship between supply and demand for comparable or similar securities
trading in the public market. The valuation of Partnership Preference Units
will be adversely affected by increases in interest rates and increases in the
perceived riskiness of such units or comparable or similar securities.
Fluctuations in the value of Partnership Preference Units derived from changes
in general interest rates can be expected to be offset in part (but not
entirely) by changes in the value of interest rate swap agreements or other
interest rate hedges entered into by the Fund with respect to its borrowings
under the Credit Facility. Fluctuations in the value of Partnership Preference
Units that are derived from other factors besides general interest rate movements
(including issuer-specific and sector-specific credit concerns, property or
tenant-specific concerns, and changes in interest rate spread relationships)
will not be offset by changes in the value of interest rate swap agreements or
other interest rate hedges entered into by the Fund. Because the Partnership
Preference Units are not rated by a nationally recognized rating agency, they
may be subject to more credit risk than securities that are rated investment
grade.  Changes in the estimated
fair value of real estate investments and other factors will cause the
performance of the Fund to deviate from the performance of the Portfolio. Over
time, the performance of the Fund can be expected to be more volatile than the
performance of the Portfolio.  31


Risks of Interest Rate Swap Agreements.
Interest rate swap agreements are subject to changes in valuation caused
principally by movements in interest rates. Interest rate swap agreements are
private contracts in which there is a risk of loss in the event of a default on
an obligation to pay by the counterparty. Interest rate swap agreements may be
difficult to value and may be illiquid. Fluctuations in the value of
Partnership Preference Units derived from changes in general interest rates can
be expected to be offset in part (but not entirely) by changes in the value of
interest rate swap agreements applying to those Partnership Preference Units
for which they were purchased, or other interest rate hedges that may be
entered into by the Fund with respect to its borrowings.  Risks of Leverage. Although intended to add to returns, the
borrowing of funds to purchase real estate investments exposes the Fund to the
risk that the returns achieved on the real estate investments will be lower
than the cost of borrowing to purchase such assets and that the leveraging of
the Fund to buy such assets will therefore diminish the returns achieved by the
Fund as a whole. In addition, there is a risk that the availability of
financing will be interrupted at some future time, requiring the Fund to sell
assets to repay outstanding borrowings or a portion thereof. It may be
necessary to make such sales at unfavorable prices. The Funds obligations
under the Credit Facility are secured by a pledge of its assets, excluding the
Funds investment in Subsidiary Real Estate Investments. In the event of
default, the lender could elect to sell assets of the Fund without regard to
consequences of such action for Shareholders. The rights of the lender to
receive payments of interest on and repayments of principal of borrowings under
the Credit Facility are senior to the rights of the Shareholders.  Under the terms of the
Credit Facility, the Fund is not permitted to make distributions of cash or
securities while there is an event of default outstanding under the Credit
Facility. During such periods, the Fund would not be able to honor redemption
requests or make cash distributions. In addition, the rights of lenders under
the mortgage notes used to finance Real Estate Joint Venture properties are
senior to Belrose Realtys right to receive cash distributions from Deerfield
and Katahdin.  Item
8. Financial Statements and Supplementary Data.  The consolidated
financial statements required by Item 8 are contained on pages 42 to 77 of
this Annual Report on Form 10-K. The following is a summary of unaudited
quarterly results of operations of the Fund for the years ended December 31,
2007 and 2006.  2007First
  
  Second
  
  Third
  
  FourthQuarter
  
  Quarter
  
  Quarter
  
  QuarterInvestment income
  
  $
  13,172,638
  
  $
  14,624,845
  
  $
  14,093,277
  
  $
  12,702,008Net investment income
  
  $
  3,275,613
  
  $
  4,373,157
  
  $
  3,306,053
  
  $
  2,190,094Net increase (decrease) in net assets from
  operations
  
  $
  3,784,913
  
  $
  115,871,802
  
  $
  15,898,380
  
  $
  (68,990,314
  )Per share data:(1)Investment income
  
  $
  0.85
  
  $
  0.96
  
  $
  0.95
  
  $
  0.87Net investment income
  
  $
  0.21
  
  $
  0.29
  
  $
  0.22
  
  $
  0.15Net increase (decrease) in net assets from
  operations
  
  $
  0.24
  
  $
  7.61
  
  $
  1.07
  
  $
  (4.70
  )  2006First
  
  Second
  
  Third
  
  FourthQuarter
  
  Quarter
  
  Quarter
  
  QuarterInvestment income
  
  $
  10,680,750
  
  $
  11,292,729
  
  $
  11,370,612
  
  $
  13,068,287Net investment income
  
  $
  3,816,776
  
  $
  4,099,143
  
  $
  3,090,815
  
  $
  3,074,329Net increase (decrease) in net assets from
  operations
  
  $
  80,801,929
  
  $
  (24,916,182
  )
  $
  82,667,831
  
  $
  108,615,204Per share data:(1)Investment income
  
  $
  0.66
  
  $
  0.71
  
  $
  0.72
  
  $
  0.84Net investment income
  
  $
  0.24
  
  $
  0.26
  
  $
  0.19
  
  $
  0.20Net increase (decrease) in net assets from
  operations
  
  $
  5.01
  
  $
  (1.56
  )
  $
  5.20
  
  $
  6.95  
 (1)Based
on average Shares outstanding.  32


Item
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.  There have been no
changes in, or disagreements with, accountants on accounting and financial
disclosure.  Item
9A. Controls and Procedures.  Effective November 1,
2007, the directors of Eaton Vance, Inc. retired and were replaced by
Thomas E. Faust Jr., John E. Pelletier and Robert J. Whelan. At that time, the
directors created an Audit Committee whose members include Messrs. Pelletier
and Whelan. The Audit Committee of Eaton Vance, Inc. acts as the audit
committee of the Fund.  Fund
Governance. As the
Funds manager, the complete and entire management, control and operation of
the Fund are vested in Eaton Vance. The Funds Chief Executive Officer and
Chief Financial Officer intend to report to the Audit Committee of the Board of
Directors of Eaton Vance, Inc. (the sole trustee of Eaton Vance) any
significant deficiency in the design or operation of internal control over
financial reporting which could adversely affect the Funds ability to record,
process, summarize and report financial data, and any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Funds internal control over financial reporting.  Disclosure
Controls and Procedures. Eaton Vance, as the Funds
manager, evaluated the effectiveness of the Funds disclosure controls and
procedures (as defined by Rule 13a-15(e) of the Act) as of the end of
the period covered by this report, with the participation of the Funds Chief
Executive Officer and Chief Financial Officer. The Funds disclosure controls
and procedures are the controls and other procedures that the Fund designed to
ensure that information required to be disclosed by the issuer in the reports
that it files or submits under the Act is recorded, processed, summarized and
reported, within the time periods specified in the Commissions rules and
forms. Based on that evaluation, the Funds Chief Executive Officer and Chief
Financial Officer concluded that, as of December 31, 2007, the Funds
disclosure controls and procedures were effective.  Internal
Control Over Financial Reporting. The Funds Chief Executive
Officer and Chief Financial Officer have established and maintain internal
control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) of the Act.  MANAGEMENTS REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING  Eaton Vance Management
(Eaton Vance), as manager of Belrose Capital Fund LLC (the Fund), with the
participation of the Funds Chief Executive Officer and Chief Financial
Officer, (collectively referred to in this report as management) is responsible
for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
1934 Act. The Funds internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.  Because of its inherent
limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.  Management assessed the
effectiveness of the Funds internal control over financial reporting as of December 31,
2007. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.
Based on its assessment and those criteria, management believes that the Fund
maintained effective internal control over financial reporting as of December 31,
2007.  The Funds independent
registered public accounting firm has issued an attestation report on the Funds
internal control over financial reporting. That report appears on the following
page.  February 27, 2008  33


REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM  To the
Shareholders of Belrose Capital Fund LLC and Subsidiaries  We have audited the
internal control over financial reporting of Belrose Capital Fund LLC and
subsidiaries (the Fund) as of December 31, 2007, based on criteria
established in Internal ControlIntegrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Funds management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the
accompanying Managements Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Funds internal control over
financial reporting based on our audit.  We conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.  A companys internal
control over financial reporting is a process designed by, or under the
supervision of, the companys principal executive and principal financial
officers, or persons performing similar functions, and effected by the companys
board of directors, management, and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.  Because of the inherent
limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the effectiveness of the
internal control over financial reporting to future periods are subject to the
risk that the controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.  In our opinion, the Fund
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2007, based on the criteria established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.  We have also audited, in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements and financial highlights
as of and for the year ended December 31, 2007 of the Fund and our report
dated February 27, 2008 expressed an unqualified opinion on those
financial statements and financial highlights.  DELOITTE &
TOUCHE LLP 
Boston, Massachusetts 
February 27, 2008  Item
9B. Other Information.  None.  34


PART III  Item
10. Directors, Executive Officers and Corporate Governance.  (a) Management.  Pursuant to the Funds
LLC Agreement, the Funds manager, Eaton Vance, has the authority to conduct
the Funds business. Eaton Vance appointed Thomas E. Faust Jr. to serve
indefinitely as the Funds Chief Executive Officer on October 16, 2002. On
January 22, 2007, Andrew C. Frenette replaced Michelle A. Green as the
Funds Chief Financial Officer. Ms. Green had served as the Funds Chief
Financial Officer since 2002. Information about Mr. Faust appears below. Mr. Frenette,
33, is a Vice President of Eaton Vance and Boston Management. He also serves as
Chief Financial Officer of Belair Capital Fund LLC, Belcrest Capital Fund LLC,
Belmar Capital Fund LLC and Belport Capital Fund LLC. Mr. Frenette has
been an employee of Eaton Vance since April 2006. Prior to joining Eaton
Vance, Mr. Frenette was Manager of Finance - Investments and Acquisitions
for GE Real Estate, a business unit of GE Commercial Finance. Mr. Frenette
serves as a Vice President of Belrose Realty, as well as the REIT subsidiary of
each of the other above-mentioned funds. As members of the Eaton Vance
organization, Messrs. Faust and Frenette receive no compensation from the
Fund for serving as Fund officers. There are no other officers of the Fund. The
Fund does not have a board of directors or similar governing body.  The Audit Committee of
the Board of Directors of Eaton Vance, Inc., the sole trustee of Eaton
Vance, oversees the accounting and financial reporting processes of the Fund,
audits of the Funds financial statements and otherwise serves as the Funds
audit committee. The Fund has no nominating or compensation committee. The
members of the Audit Committee of the Board of Directors of Eaton Vance, Inc.
are John E. Pelletier and Robert J. Whelan. The Funds audit committee
financial expert (as that term is defined in Item 7(d)(3)(iv) of Schedule
14A under the Act) is Mr. Whelan. Messrs. Pelletier and Whelan are
senior officers of Eaton Vance and, as such, are not independent of Fund
management. Information about Mr. Pelletier and Mr. Whelan appears
below.  Boston Management is
investment adviser to the Fund and the Portfolio and manager of Belrose Realty.
The portfolio manager of the Fund and the co-portfolio manager of the Portfolio
is Duncan W. Richardson. Additional information about Mr. Richardson
appears below. A majority of Mr. Richardsons time is spent managing the
Portfolio and related entities. Lewis R. Piantedosi, a Vice President of Eaton
Vance and Boston Management, is co-portfolio manager of the Portfolio. Mr. Piantedosi
became co-portfolio manager of the Portfolio on May 1, 2006, has been
employed by the Eaton Vance organization for more than five years and manages
other Eaton Vance portfolios. Boston Management has an experienced team of
analysts that provides Messrs. Richardson and Piantedosi with research and
recommendations on investments. As of March 1, 2008, Yana S. Barton and
Michael A. Allison will join Messrs. Richardson and Piantedosi as
co-portfolio managers of both the Fund and Portfolio. Ms. Barton and Mr. Allison
are both Vice Presidents of Eaton Vance and Boston Management, have been
employed by the Eaton Vance organization for more than five years and manage
other Eaton Vance portfolios.  The directors of Belrose
Realty are Mr. Faust and William R. Cross, each of whom is described
below. Mr. Cross is the President and portfolio manager of Belrose Realty
and the head of Boston Managements real estate investment group, which has
primary responsibility for providing research and analysis relating to the Funds
real estate investments held through Belrose Realty. Mr. Cross is a Vice
President of Eaton Vance and Boston Management and has been employed by the
Eaton Vance organization since 1996. A majority of Mr. Cross time is
spent managing the real estate investments of Belrose Realty and the real
estate subsidiaries of other investment funds advised by Boston Management. Mr. Cross
serves as Chairman of the Board of Katahdin and President and Chairman of the
Board of Deerfield. Other officers of Eaton Vance and Boston Management also
serve as officers and/or directors of Deerfield and Katahdin.  As disclosed under The
Eaton Vance Organization in Item 1, Eaton Vance and Boston Management are
wholly owned subsidiaries of Eaton Vance Corp. The non-voting common stock of
Eaton Vance Corp. is listed and traded on the NYSE. All shares of the voting
common stock of Eaton Vance Corp. are held in a voting trust, the voting
trustees of which are senior officers of the Eaton Vance organization. Eaton
Vance, Inc., a wholly owned subsidiary of Eaton Vance Corp., is the sole trustee of
Eaton Vance and of Boston Management, each of which is a Massachusetts
business trust. The names of the executive officers and the directors of Eaton
Vance, Inc. and their ages and principal occupations (in addition to their
responsibilities described above) are set forth below.  Thomas E. Faust Jr. (49)
is Chief Executive Officer and President of Eaton Vance Corp., President and Director
of Eaton Vance, Inc., Chief Executive Officer and President of Eaton Vance
Management and Boston Management, and Director of  35


EV Distributors. He is
also Chief Executive Officer of Belair Capital Fund LLC, Belcrest Capital Fund
LLC, Belmar Capital Fund LLC and Belport Capital Fund LLC and is an officer of
various other investment companies managed by Eaton Vance or Boston Management.
Mr. Faust has been employed by Eaton Vance since 1985.  John E. Pelletier (43) is
Vice President and Chief Legal Officer of Eaton Vance, Boston Management, Eaton
Vance Corp., EV Distributors and Eaton Vance, Inc. He is also an officer
of various investment companies managed by Eaton Vance or Boston Management and
has been employed by Eaton Vance since October 29, 2007. Prior to joining
Eaton Vance, Mr. Pelletier was Chief Operating Officer and Executive Vice
President for Natixis Global Associates. He was General Counsel of Natixis
Global Associates from 1997 to 2004.  Duncan W. Richardson,
(50), is Executive Vice President and Chief Equity Investment Officer of Eaton
Vance, Boston Management, Eaton Vance Corp. and Eaton Vance, Inc. He is
also an officer of various investment companies managed by Eaton Vance or
Boston Management and has been employed by Eaton Vance since 1987.  Robert J. Whelan (46) is
Vice President and Chief Financial Officer of Eaton Vance, Boston Management,
Eaton Vance Corp. and Eaton Vance, Inc. and a Director of Eaton Vance, Inc.
He is also Vice President and Director of EV Distributors. He has been employed
by Eaton Vance since April 1, 2007. Prior to joining Eaton Vance, Mr. Whelan
was Executive Vice President and Chief Financial Officer for Boston Private
Wealth Management Group from December 2004 to April 2007. Before
joining Boston Private Wealth Management Group, he was Senior Vice President
and Chief Financial Officer of MFS Investment Management from May 1996 to September 2004.  (b) Compliance
with Section 16(a) of the Act.  Section 16(a) of
the 1934 Act requires the Funds officers and directors and persons who own
more than ten percent of the Funds Shares to file forms reporting their
affiliation with the Fund and reports of ownership and changes in ownership of
the Funds Shares with the SEC. Eaton Vance, as manager of the Fund, and the
Directors and executive officers of Eaton Vance, Inc., the sole trustee of
Eaton Vance, also comply with Section 16(a). These persons and entities
are required by SEC regulations to furnish the Fund with copies of all Section 16(a) forms
they file. To the best of the Funds knowledge, during the year ended December 31,
2007 no Section 16(a) filings were required by such persons or
entities.  (c) Code
of Ethics.  The Fund has adopted a
Code of Ethics that applies to the principal executive officer and principal
financial officer (who is also the Funds principal accounting officer). A copy
of the Code of Ethics is available at no cost by request to the Funds Chief
Financial Officer, 255 State Street, Boston, MA 02109 or by calling (800)
225-6265. If the Fund makes any substantive amendments to the Code of Ethics or
grants any waiver, including an implicit waiver, from a provision of the Code
of Ethics as applicable to the principal executive officer or principal
financial officer, the Fund will disclose the nature of such amendment or
waiver in a report on Form 8-K.  Item
11. Executive Compensation.  As noted in Item 10, the
officers of the Fund receive no compensation from the Fund (nor does any other
officer of Belrose Realty or a Subsidiary Real Estate Investment of the Fund
performing policy making functions for the Fund). The Funds manager, Eaton
Vance, and its affiliates receive certain fees from the Fund for services
provided to the Fund, which are described in Item 13 below.  Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters.  Security
Ownership of Certain Beneficial Owners.To the knowledge of the
Fund, no person beneficially owns more than 5% of the Shares of the Fund.  Security
Ownership of Management. As of February 15, 2008,
Eaton Vance, the manager of the Fund, beneficially owned 107 Shares of the
Fund. The Shares owned by Eaton Vance represent less than 1% of the outstanding
Shares of the Fund as of February 15, 2008. None of the other entities or
individuals named in response to Item 10 above beneficially owned Shares of the
Fund as of such date.  Changes
in Control. Not
applicable.  36


Item
13. Certain Relationships and Related Transactions, and Director Independence.  Messrs. Faust and
Frenette are currently the only related persons of the Fund (as that term is
defined in Regulation S-K under the Securities Act and the Act). The Fund has
instituted written policies and procedures to determine the existence of a
reportable transaction under Item 404(a) of Regulation S-K. In accordance
with such policies and procedures, Eaton Vance circulates an Executive Officer
Questionnaire to each related person annually to determine the existence of a
potential reportable transaction. Any transaction, or proposed transaction, in
which the Fund was or is to be a participant and the amount of which exceeds
$120,000 (and in which a related person had or will have a direct or indirect
material interest) is required to be reviewed by the Audit Committee of the
Board of Directors of Eaton Vance, Inc. The Fund did not have any
reportable transactions under Item 404(a) of Regulation S-K during the
year ended December 31, 2007.  The table below sets
forth the fees paid or payable by, or allocable to, the Fund and Belrose Realty
for the years ended December 31, 2007 and 2006 in connection with services
rendered by Eaton Vance
and its affiliates. Each fee is described following the table.  Year ended
  
  Year endedDecember 31, 2007
  
  December 31, 2006Fund Advisory and Administrative Fees*
  
  $
  1,495,668
  
  $
  1,543,775Belrose Realty Management Fees
  
  $
  3,601,482
  
  $
  3,181,220Funds Allocable Portion of the Portfolios
  Advisory Fees**
  
  $
  8,335,212
  
  $
  7,923,219Fund Servicing Fees
  
  $
  1,805,886
  
  $
  1,737,206Funds Allocable Portion of Belvedere
  Companys Servicing Fees
  
  $
  2,934,192
  
  $
  2,760,750Fund Distribution Fees
  
  $
  1,896,200
  
  $
  1,798,943Aggregate Compensation Paid by the Fund to
  Eaton Vance and its Affiliates
  
  $
  6,993,350
  
  $
  6,523,938  
 *Boston
Management has agreed to waive the portion of the investment advisory and
administrative fee payable by the Fund to the extent that such fee, together with
the distribution fee payable by the Fund and the Funds attributable share of
the investment advisory and management fees payable by the Portfolio and
Belrose Realty, respectively, exceeds 0.60% of the average daily gross assets
of the Fund. If the Fund invests in Cash Management Portfolio, the advisory and
administrative fee paid to Boston Management by Cash Management Portfolio in
respect of the Funds investment therein will be credited towards the Funds
advisory and administrative fee payments, reducing the amount of such fees
otherwise payable. The amounts shown are net of reductions and amounts waived
by Boston Management.  **For years
ended December 31, 2007 and 2006, advisory fees paid or payable by the
Portfolio totaled $87,681,000 and $83,323,602, respectively. For the year ended
December 31, 2007, Belvedere Companys allocable portion of that fee was
$64,755,126 of which $8,335,212, was allocable to the Fund. For the year ended December 31,
2006, Belvedere Companys allocable portion of that fee was $59,955,794 of
which $7,923,219 was allocable to the Fund. The advisory fee payable by the
Portfolio is reduced by the Portfolios allocable portion of the advisory fee
paid by Cash Management Portfolio.  The
Funds Investment Advisory and Administrative Fee. Under the terms of the
Funds investment advisory and administrative agreement, Boston Management is
entitled to receive, subject to the fee waiver described in the next sentence,
a monthly advisory and administrative fee at the rate of 1/20 of 1% (equivalent
to 0.60% annually) of the average daily gross assets of the Fund. Boston
Management has agreed to waive that portion of the monthly investment advisory
and administrative fee payable by the Fund to the extent that such fee,
together with the distribution fees payable by the Fund (see Distribution Fees
Paid to EV Distributors below) and the Funds attributable share of the
monthly investment advisory and management fees for such month payable by the
Portfolio and Belrose Realty, respectively, exceeds 1/20 of 1% of the average
daily gross assets of the Fund. The term gross investment assets as used in the
agreement means the value of all assets of Belrose Realty, including Belrose
Realtys ratable share of the assets of its direct and indirect subsidiaries,
Real Estate Joint Ventures and Co-owned Property investments, without reduction
by any liabilities. The Funds investment advisory and administrative agreement
was amended in June 2007 to reflect, among other things, Belrose Realtys
ability to invest in Co-owned Property.  Belrose
Realtys Management Fee. Under the terms of Belrose
Realtys management agreement with Boston Management, Boston Management
receives a monthly management fee at the rate of 1/20 of 1% (equivalent to
0.60% annually) of the average daily gross assets of Belrose Realty. The term
gross investment assets as used in the agreement means the value of all assets
of Belrose Realty, including Belrose Realtys ratable share of the assets of
its direct and  37


indirect
subsidiaries, Real Estate Joint Ventures and Co-owned Property investments,
without reduction by any liabilities. Belrose Realtys management agreement was
amended in June 2007 to reflect, among other things, its ability to invest
in Co-owned Property.  The
Portfolios Investment Advisory Fee. Under the terms of the
Portfolios investment advisory agreement with Boston Management, Boston
Management receives a monthly advisory fee as follows:  Annual Fee RateAverage Daily Net Assets for the Month
  
  (for each level)Up to $500 million
  
  0.6250
  %$500 million but less than $1 billion
  
  0.5625
  %$1 billion but less than $1.5 billion
  
  0.5000
  %$1.5 billion but less than $7 billion
  
  0.4375
  %$7 billion but less than $10 billion
  
  0.4250
  %$10 billion but less than $15 billion
  
  0.4125
  %$15 billion but less than $20 billion
  
  0.4000
  %$20 billion but less than $25 billion
  
  0.3900
  %$25 billion and over*
  
  0.3800
  %  
 *Effective April 23, 2007.  In accordance with the
terms of the 1940 Act, the Portfolios Board of Trustees considers the
continuation of the Portfolios investment advisory agreement annually.  Servicing
Fees Paid by the Fund. Pursuant to a servicing
agreement between the Fund and EV Distributors, the Fund pays a servicing fee
to EV Distributors for providing certain services and information to the
Shareholders of the Fund. The servicing fee is paid on a quarterly basis at an
annual rate of 0.25% of the Funds average daily net assets. With respect to
Shareholders who subscribed through a subagent, EV Distributors has assigned
servicing responsibilities and fees to the applicable subagent, beginning
twelve months after the issuance of Shares of the Fund to such persons. The
Funds allocated share of the servicing fee paid by Belvedere Company is
credited toward the Funds servicing fee payment, thereby reducing the amount
of the servicing fee payable by the Fund.  Servicing
Fees Paid by Belvedere Company. Pursuant to a servicing
agreement between Belvedere Company and EV Distributors, Belvedere Company pays
a servicing fee to EV Distributors for providing certain services and
information to direct and indirect investors in Belvedere Company. The
servicing fee is paid on a quarterly basis, at an annual rate of 0.15% of
Belvedere Companys average daily net assets. With respect to investors in
Belvedere Company and Shareholders of the Fund who subscribed through a
subagent, EV Distributors has assigned servicing responsibilities and fees to
the applicable subagent, beginning twelve months after the issuance of shares
of Belvedere Company or Shares of the Fund to such persons. The Fund assumes
its allocated share of Belvedere Companys servicing fee. The servicing fee
payable in respect of the Funds investment in Belvedere Company is credited
toward the Fund servicing fee described above.  Distribution
Fees Paid to EV Distributors.Under the terms of the Funds placement agreement with EV
Distributors, EV Distributors receives a distribution fee at an annual rate of
0.10% of the average daily net assets of the Fund as compensation for its
services as placement agent. The distribution fee accrued from the Funds
initial closing and will continue for a period of ten years (subject to the
annual approval of Eaton Vance, Inc.).  38


Certain
Real Estate Investment Transactions. During the year ended December 31,
2007, Belrose Realty entered into the following real estate investment
transactions with real estate investment affiliates of other investment funds
managed by Eaton Vance and advised by Boston Management or an entity owned by a
real estate investment affiliate:  ·Belrose Realty sold
Partnership Preference Units to Belvedere Equity Real Estate Corporation,
realizing a minimal loss on the transaction.  The prices of the real
estate investments purchased and sold by Belrose Realty were determined in good
faith by Boston Management after consideration of factors, data and information
that it considered relevant.  Item
14. Principal Accountant Fees and Services.  The following table
presents fees for the professional audit services rendered by Deloitte &
Touche LLP for the audit of the Funds annual financial statements for the
years ended December 31, 2007 and 2006 and fees billed for other services
rendered by Deloitte & Touche LLP during those periods, including fees
charged by Deloitte & Touche LLP to the Funds consolidated
subsidiaries.  Year ended December 31,2007
  
  2006Audit fees
  
  $
  109,025
  
  $
  108,634Tax fees (1)
  
  152,301
  
  224,377Total
  
  $
  261,326
  
  $
  333,011  
 (1)Tax fees
consist of the aggregate fees billed for professional services rendered by
Deloitte Tax LLP for tax compliance, tax advice and tax planning.  The Audit Committee of
the Board of Directors of Eaton Vance, Inc. reviews all audit,
audit-related, tax and other fees at least annually. The Audit Committee of the
Board of Directors of Eaton Vance, Inc., and prior to the creation of the
Audit Committee of the Board of Directors of Eaton Vance, Inc., the
directors of Eaton Vance, Inc., pre-approved all audit and tax services
for the years ended December 31, 2007 and 2006. The Audit Committee of the
Board of Directors of Eaton Vance, Inc. has concluded that the provision
of the tax services listed above is compatible with maintaining the
independence of Deloitte & Touche LLP.  39


PART IV  Item
15. Exhibits and Financial Statement Schedules.  (a)
  
  Please see the Funds consolidated financial
  statements on pages 42 to 60 of this Annual Report on Form 10-K. Please
  see the Portfolios financial statements on pages 61 to 77 of this
  Annual Report on Form 10-K.(b)
  
  Reports on Form 8-K:The Fund filed a report on Form 8-K on
  January 26, 2007, regarding the appointment of Mr. Frenette as
  Chief Financial Officer of the Fund, replacing Ms. Green.The Fund filed a report on Form 8-K on
  June 5, 2007, regarding its previously issued financial statements.(c)
  
  A list of the exhibits filed as a part of this
  Form 10-K is included in the Exhibit Index appearing on page 79
  hereof.  40


Appendix
A  Belrose
Capital Fund LLC s (The Fund ) Investment Structure as of December 31,
2007    
 (A)
  
  Eaton Vance Management is the manager of the Fund;
  Boston Management and Research (Boston Management) is the Funds investment
  adviser.(B)
  
  Boston Management is the manager of Belvedere
  Capital Fund Company LLC.(C)
  
  Boston Management is the investment adviser o f
  Tax-Managed Growth Portfolio.(D)
  
  Boston Management is the manager of Belrose Realty
  Corporation (Belrose Realty). Belrose Realty also holds direct investments in
  partnership preference units.(E)
  
  Belrose Realty owns a majority economic interest in
  these real estate joint ventures.(F)
  
  Bel Malborough Campus LLC is a wholly owned
  subsidiary of Belrose Realty.(G)
  
  Bel Larimer LLC is a wholly owned subsidiary of
  Belrose Realty.(H)
  
  Belrose Realty owns a minority interest in Belvorn
  Holdings LLC, which owns partnership preference units issued by Vornado
  Realty L.P.  41


Belrose Capital Fund LLC

CONSOLIDATED PORTFOLIOS OF INVESTMENTS

As of December 31, 2007

|Investment in Belvedere Capital FundCompany LLC  81.9%                                                                                                                                                   | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Security                                                                                                                                                                                                  | 
|Investment in Belvedere Capital Fund Company LLC(Belvedere Company)                                                                                                                                       | 
|Total Investment in Belvedere Company(identified cost, $1,344,043,565)                                                                                                                                    | 
|Partnership Preference Units  4.5%                                                                                                                                                                       | 
|Security                                                                                                                                                                                                  | 
|Belvorn Holdings LLC(1)(2)                                                                                                                                                                               | 
|Colonial Realty Limited Partnership(Delaware Limited Partnership affiliateof Colonial Properties Trust), 7.25%Series B Cumulative Redeemable PerpetualPreferred Units, Callable from 8/24/09(2)          | 
|Essex Portfolio, L.P. (California LimitedPartnership affiliate of Essex PropertyTrust, Inc.), 7.875% Series B CumulativeRedeemable Preferred Units, Callablefrom 12/31/09(2)                             | 
|Liberty Property Limited Partnership(Pennsylvania Limited Partnership affiliateof Liberty Property Trust), 7.40% Series HCumulative Redeemable Preferred Units,Callable from 8/21/12(2)                  | 
|MHC Operating Limited Partnership(Illinois Limited Partnership affiliate ofEquity Lifestyle Properties, Inc.), 8.0625%Series D Cumulative Redeemable PerpetualPreference Units, Callable from 3/24/10(2) | 
|PSA Institutional Partners, L.P.(California Limited Partnership affiliate ofPublic Storage, Inc.), 6.4% Series NNCumulative Redeemable PerpetualPreferred Units, Callable from 3/17/10(2)                | 
|Total Partnership Preference Units(identified cost, $112,112,374)                                                                                                                                         | 



|Real Estate Joint Ventures  6.4%                                                                                                                                                                                               | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Description                                                                                                                                                                                                                     | 
|Investment in Deerfield Property Trust (a majority economicinterest of 80.5% in Deerfield Property Trust which investsin seventeen industrial distribution properties located insix states, net of associated mortgage debt)(2) | 
|Investment in Katahdin Property Trust, LLC (a majorityeconomic interest of 69.4% in Katahdin Property Trust, LLCwhich invests in six multifamily properties located in fivestates, net of associated mortgage debt)(2)          | 
|Total Real Estate Joint Ventures(identified cost, $122,791,395)                                                                                                                                                                 | 
|Wholly Owned Properties  7.2%                                                                                                                                                                                                  | 
|Description                                                                                                                                                                                                                     | 
|Bel Larimer, LLC (a single member LLC investing in aretail building located in Colorado)(2)                                                                                                                                     | 
|Bel Marlborough Campus, LLC (a single member LLCinvesting in an office campus located in Massachusetts)(2)                                                                                                                      | 
|Total Wholly Owned Properties(identified cost, $169,838,584)                                                                                                                                                                    | 
|Short-Term Investment  0.0%                                                                                                                                                                                                    | 



|Description                                                 |  | Interest(000'somitted) |               | Value | 
|----------------------------------------------------------- |  | ---------------------- | ------------- | ----- | 
|Investment in Cash Management Portfolio, 4.58%(3)           |  |                        | 741           |       | 
|Total Short-Term Investment(identified cost, $740,854)      |  | $                      | 740,854       |       | 
|Total Investments  100.0%(identified cost, $1,749,526,772) |  | $                      | 2,319,788,189 |       | 



See notes to consolidated financial statements

42

---

Belrose Capital Fund LLC

CONSOLIDATED PORTFOLIOS OF INVESTMENTSCONT'D

As of December 31, 2006

|Investment in Belvedere Company 83.8%                                                                                                                                                                    | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Security                                                                                                                                                                                                  | 
|Investment in Belvedere Company                                                                                                                                                                           | 
|Total Investment in Belvedere Company(identified cost, $1,366,053,644)                                                                                                                                    | 
|Partnership Preference Units  4.4%                                                                                                                                                                       | 
|Security                                                                                                                                                                                                  | 
|Belvorn Holdings LLC(1)(2)                                                                                                                                                                               | 
|Colonial Realty Limited Partnership(Delaware Limited Partnership affiliateof Colonial Properties Trust), 7.25%Series B Cumulative Redeemable PerpetualPreferred Units, Callable from 8/24/09(2)          | 
|Essex Portfolio, L.P. (California LimitedPartnership affiliate of Essex PropertyTrust, Inc.), 7.875% Series B CumulativeRedeemable Preferred Units, Callablefrom 12/31/09(2)                             | 
|Essex Portfolio, L.P. (California LimitedPartnership affiliate of Essex PropertyTrust, Inc.), 7.875% Series D CumulativeRedeemable Preferred Units, Callablefrom 7/28/10(2)                              | 
|MHC Operating Limited Partnership(Illinois Limited Partnership affiliate ofEquity Lifestyle Properties, Inc.), 8.0625%Series D Cumulative Redeemable PerpetualPreference Units, Callable from 3/24/10(2) | 
|PSA Institutional Partners, L.P.(California Limited Partnership affiliate ofPublic Storage, Inc.), 6.4% Series NNCumulative Redeemable PerpetualPreferred Units, Callable from 3/17/10(2)                | 
|Total Partnership Preference Units(identified cost, $100,382,436)                                                                                                                                         | 



|Real Estate Joint Ventures  5.9%                                                                                                                                                                                               | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Description                                                                                                                                                                                                                     | 
|Investment in Deerfield Property Trust (a majority economicinterest of 83.9% in Deerfield Property Trust which investsin seventeen industrial distribution properties located insix states, net of associated mortgage debt)(2) | 
|Investment in Katahdin Property Trust, LLC (a majorityeconomic interest of 70.4% in Katahdin Property Trust, LLCwhich invests in six multifamily properties located in fivestates, net of associated mortgage debt)(2)          | 
|Total Real Estate Joint Ventures(identified cost, $118,770,822)                                                                                                                                                                 | 
|Wholly Owned Property  5.9%                                                                                                                                                                                                    | 
|Description                                                                                                                                                                                                                     | 
|Bel Marlborough Campus, LLC (a single member LLC investingin an office campus located in Massachusetts)(2)                                                                                                                      | 
|Total Wholly Owned Property(identified cost, $135,667,563)                                                                                                                                                                      | 
|Short-Term Investment  0.0%                                                                                                                                                                                                    | 



|Description                                                 |  | Interest(000'somitted) |               | Value | 
|----------------------------------------------------------- |  | ---------------------- | ------------- | ----- | 
|Investment in Cash Management Portfolio, 4.87%(3)           |  |                        | 1,054         |       | 
|Total Short-Term Investment(at identified cost, $1,053,938) |  | $                      | 1,053,938     |       | 
|Total Investments  100.0%(identified cost, $1,721,928,403) |  | $                      | 2,308,269,708 |       | 



The following footnotes are for the years ended December 31, 2007 and December 31, 2006:

Security exempt from registration under the Securities Act of 1933. At December 31, 2007 and 2006, the value of these securities totaled $102,927,277 and $100,325,303 or 5.7% and 5.3% of net assets, respectively.

(1)The sole investment of Belvorn Holdings LLC is as follows: Vornado Realty L.P. (Delaware limited partnership affiliate of Vornado Realty Trust), 6.75% Series D-14 Cumulative Redeemable Preferred Units, callable from 9/9/10. This security is exempt from the Securities Act of 1933.

(2)Investment valued at estimated fair value using methods determined in good faith by or at the direction of the manager of Belrose Realty Corporation.

(3)Affiliated investment company available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of December 31, 2007 and 2006, respectively.

See notes to consolidated financial statements

43

---

Belrose Capital Fund LLC

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Assets and Liabilities

|Assets                                                                                                       |  | December 31, 2007 |               | December 31, 2006 | 
|------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------------- | ----------------- | 
|Investment in Belvedere Company, at value (identified cost, $1,344,043,565 and $1,366,053,644, respectively) |  | $                 | 1,899,517,238 |                   | 
|Unaffiliated investments, at value (identified cost, $404,742,353 and $354,820,821, respectively)            |  |                   | 419,530,097   |                   | 
|Affiliated investment, at value (identified cost, $740,854 and $1,053,938, respectively)                     |  |                   | 740,854       |                   | 
|Cash                                                                                                         |  |                   | 6,847,717     |                   | 
|Distributions and interest receivable                                                                        |  |                   | 362,605       |                   | 
|Interest receivable from affiliated investment                                                               |  |                   | 12,491        |                   | 
|Swap interest receivable                                                                                     |  |                   | 27,849        |                   | 
|Open interest rate swap agreements, at value                                                                 |  |                   |              |                   | 
|Other assets                                                                                                 |  |                   | 1,430,520     |                   | 
|Total assets                                                                                                 |  | $                 | 2,328,469,371 |                   | 
|Liabilities                                                                                                  | 
|Loan payable  Credit Facility                                                                               |  | $                 | 417,500,000   |                   | 
|Mortgage notes payable                                                                                       |  |                   | 86,951,932    |                   | 
|Open interest rate swap agreements, at value                                                                 |  |                   | 1,026,870     |                   | 
|Payable to affiliate for investment advisory and administrative fees                                         |  |                   | 429,781       |                   | 
|Payable to affiliate for distribution and servicing fees                                                     |  |                   | 594,811       |                   | 
|Other accrued expenses:                                                                                      | 
|Interest expense                                                                                             |  |                   | 440,944       |                   | 
|Other expenses and liabilities                                                                               |  |                   | 1,355,223     |                   | 
|Total liabilities                                                                                            |  | $                 | 508,299,561   |                   | 
|Net Assets                                                                                                   |  | $                 | 1,820,169,810 |                   | 
|Shareholders' Capital                                                                                        |  | $                 | 1,820,169,810 |                   | 
|Shares Outstanding (unlimited number of shares authorized)                                                   |  |                   | 14,573,940    |                   | 
|Net Asset Value and Redemption Price Per Share                                                               |  | $                 | 124.89        |                   | 



See notes to consolidated financial statements

44

---

Belrose Capital Fund LLC

CONSOLIDATED FINANCIAL STATEMENTSCONT'D

Consolidated Statements of Operations

|                                                                                                                                 |  | Year Ended        |            
|-------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -----------
|Investment Income                                                                                                                |  | December 31, 2007 |            
|Dividends allocated from Belvedere Company(net of foreign taxes, $623,110, $550,982 and $441,558, respectively)                  |  | $                 | 37,824,235 
|Interest allocated from Belvedere Company                                                                                        |  |                   | 492,337    
|Security lending income allocated from Belvedere Company, net                                                                    |  |                   | 140,850    
|Expenses allocated from Belvedere Company                                                                                        |  |                   | (11,677,373
|Net investment income allocated from Belvedere Company                                                                           |  | $                 | 26,780,049 
|Rental income from Wholly Owned Properties                                                                                       |  |                   | 14,766,193 
|Distributions from Partnership Preference Units                                                                                  |  |                   | 7,178,195  
|Net investment income from Real Estate Joint Ventures                                                                            |  |                   | 5,615,557  
|Interest                                                                                                                         |  |                   | 13,030     
|Interest allocated from affiliated investment                                                                                    |  |                   | 264,922    
|Expenses allocated from affiliated investment                                                                                    |  |                   | (25,178    
|Total investment income                                                                                                          |  | $                 | 54,592,768 
|Expenses                                                                                                                         | 
|Investment advisory and administrative fees                                                                                      |  | $                 | 6,993,350  
|Distribution and servicing fees                                                                                                  |  |                   | 3,702,086  
|Interest expense on Credit Facility                                                                                              |  |                   | 22,393,645 
|Interest expense on mortgage notes                                                                                               |  |                   | 4,205,936  
|Wholly Owned Properties operating expenses                                                                                       |  |                   | 4,916,949  
|Custodian and transfer agent fee                                                                                                 |  |                   | 103,104    
|Miscellaneous                                                                                                                    |  |                   | 1,028,981  
|Total expenses                                                                                                                   |  | $                 | 43,344,051 
|Deduct                                                                                                                          | 
|Reduction of investment advisory and administrative fees                                                                         |  | $                 | 1,896,200  
|Net expenses                                                                                                                     |  | $                 | 41,447,851 
|Net investment income                                                                                                            |  | $                 | 13,144,917 
|Realized and Unrealized Gain (Loss)                                                                                              | 
|Net realized gain (loss)                                                                                                        | 
|Investment transactions in Belvedere Company (investments, securities sold shortand foreign currency) (identified cost basis)(1) |  | $                 | 74,429,684 
|Investment transactions in Partnership Preference Units (identified cost basis)                                                  |  |                   | 1,844      
|Investment transactions in Real Estate Joint Ventures                                                                            |  |                   | (36,059    
|Interest rate swap agreements(2)                                                                                                 |  |                   | 2,418,111  
|Net realized gain                                                                                                                |  | $                 | 76,813,580 
|Change in unrealized appreciation (depreciation)                                                                                | 
|Investments in Belvedere Company (investments, securities sold shortand foreign currency) (identified cost basis)                |  | $                 | (13,042,344
|Investments in Partnership Preference Units (identified cost basis)                                                              |  |                   | (9,127,964 
|Investments in Real Estate Joint Ventures                                                                                        |  |                   | 8,049,964  
|Investments in Wholly Owned Properties                                                                                           |  |                   | (1,959,544 
|Interest rate swap agreements                                                                                                    |  |                   | (7,313,828 
|Net change in unrealized appreciation (depreciation)                                                                             |  | $                 | (23,393,716
|Net realized and unrealized gain                                                                                                 |  | $                 | 53,419,864 
|Net increase in net assets from operations                                                                                       |  | $                 | 66,564,781 



(1)Amounts include net realized gain from redemptions in-kind of $58,081,011, $29,037,860 and $10,326,380, respectively.

(2)Amounts represent net interest earned (incurred) in connection with interest rate swap agreements (Note 2F).

See notes to consolidated financial statements

45

---

Belrose Capital Fund LLC

CONSOLIDATED FINANCIAL STATEMENTSCONT'D

Consolidated Statements of Changes in Net Assets

|                                                                                                                                              |  | Year Ended        |              
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------------
|Increase (Decrease) in Net Assets                                                                                                             |  | December 31, 2007 |              
|From operations                                                                                                                              | 
|Net investment income                                                                                                                         |  | $                 | 13,144,917   
|Net realized gain from investment transactions, securities sold short, foreign currency transactions andinterest rate swap agreements         |  |                   | 76,813,580   
|Net change in unrealized appreciation (depreciation) of investments, securities sold short, foreigncurrency and interest rate swap agreements |  |                   | (23,393,716  
|Net increase in net assets from operations                                                                                                    |  | $                 | 66,564,781   
|Transactions in Fund Shares                                                                                                                  | 
|Net asset value of Fund Shares issued to Shareholders in payment ofdistributions declared                                                     |  | $                 | 11,132,632   
|Net asset value of Fund Shares redeemed                                                                                                       |  |                   | (127,098,588 
|Net decrease in net assets from Fund Share transactions                                                                                       |  | $                 | (115,965,956 
|Distributions                                                                                                                                | 
|Distributions to Shareholders                                                                                                                 |  | $                 | (29,876,160  
|Total distributions                                                                                                                           |  | $                 | (29,876,160  
|Net increase (decrease) in net assets                                                                                                         |  | $                 | (79,277,335  
|Net Assets                                                                                                                                    | 
|At beginning of year                                                                                                                          |  | $                 | 1,899,447,145
|At end of year                                                                                                                                |  | $                 | 1,820,169,810



See notes to consolidated financial statements

46

---

Belrose Capital Fund LLC

CONSOLIDATED FINANCIAL STATEMENTSCONT'D

Consolidated Statements of Cash Flows

|                                                                                                                                                |  | Year Ended        |             
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------------
|Increase (Decrease) in Cash                                                                                                                     |  | December 31, 2007 |             
|Cash Flows From Operating Activities                                                                                                           | 
|Net increase in net assets from operations                                                                                                      |  | $                 | 66,564,781  
|Adjustments to reconcile net increase in net assets from operations to net cash flowsprovided by (used in) operating activities                | 
|Net investment income allocated from Belvedere Company                                                                                          |  |                   | (26,780,049 
|Net investment income from Real Estate Joint Ventures                                                                                           |  |                   | (5,615,557  
|Capital contributions to Real Estate Joint Venture                                                                                              |  |                   | (1,200,000  
|Return of capital from Real Estate Joint Venture                                                                                                |  |                   |            
|Distributions of earnings from Real Estate Joint Ventures                                                                                       |  |                   | 2,694,023   
|Advances to Real Estate Joint Venture                                                                                                           |  |                   |            
|Repayments of advances to Real Estate Joint Venture                                                                                             |  |                   |            
|Interest received from advances to Real Estate Joint Venture                                                                                    |  |                   | 64,902      
|(Increase) decrease in short-term investments                                                                                                   |  |                   |            
|(Increase) decrease in affiliated investment                                                                                                    |  |                   | 313,084     
|(Increase) decrease in distributions and interest receivable                                                                                    |  |                   | (362,107    
|(Increase) decrease in interest receivable from affiliated investment                                                                           |  |                   | 3,363       
|(Increase) decrease in interest receivable for open swap agreements                                                                             |  |                   | 12,605      
|Decrease in other assets                                                                                                                        |  |                   | 291,118     
|Increase in payable to affiliate for investment advisory and administrative fees                                                                |  |                   | 24,208      
|Increase (decrease) in payable to affiliate for distribution and servicing fees                                                                 |  |                   | (18,867     
|Decrease in interest payable for open swap agreements                                                                                           |  |                   |            
|Increase (decrease) in accrued interest and other accrued expenses and liabilities                                                              |  |                   | (629,116    
|Purchases of Partnership Preference Units                                                                                                       |  |                   | (25,008,167 
|Proceeds from sales of Partnership Preference Units                                                                                             |  |                   | 13,280,073  
|Proceeds from sales of investments in Real Estate Joint Ventures                                                                                |  |                   |            
|Purchases of investments in Wholly Owned Properties                                                                                             |  |                   | (33,524,989 
|Improvements to Wholly Owned Property                                                                                                           |  |                   | (544,670    
|Net interest earned (incurred) on interest rate swap agreements                                                                                 |  |                   | 2,418,111   
|Minority interest in net income of subsidiary                                                                                                   |  |                   | 19,851      
|Net realized gain from investment transactions, securities sold short, foreign currency transactions and interestrate swap agreements           |  |                   | (76,813,580 
|Net change in unrealized (appreciation) depreciation of investments, securities sold short, foreign currency andinterest rate swap agreements   |  |                   | 23,393,716  
|Net cash flows provided by (used in) operating activities                                                                                       |  | $                 | (61,417,267 
|Cash Flows From Financing Activities                                                                                                           | 
|Proceeds from Credit Facility                                                                                                                   |  | $                 | 229,000,000 
|Repayments of Credit Facility                                                                                                                   |  |                   | (168,000,000
|Proceeds from mortgage note                                                                                                                     |  |                   | 25,500,000  
|Repayments of mortgage note                                                                                                                     |  |                   | (949,297    
|Payments for Fund Shares redeemed                                                                                                               |  |                   | (3,878,776  
|Distributions paid to Shareholders                                                                                                              |  |                   | (18,743,528 
|Distributions paid to minority investors                                                                                                        |  |                   | (19,851     
|Net cash flows provided by (used in) financing activities                                                                                       |  | $                 | 62,908,548  
|Net increase in cash                                                                                                                            |  | $                 | 1,491,281   
|Cash at beginning of year                                                                                                                       |  | $                 | 5,356,436   
|Cash at end of year                                                                                                                             |  | $                 | 6,847,717   
|Supplemental Disclosure and Non-cash Operating and Financing Activities                                                                         | 
|Interest paid on loan  Credit Facility                                                                                                         |  | $                 | 22,401,696  
|Interest paid on mortgage notes                                                                                                                 |  | $                 | 4,006,088   
|Interest paid (received) on swap agreements, net                                                                                                |  | $                 | (2,430,716  
|Reinvestment of distributions paid to Shareholders                                                                                              |  | $                 | 11,132,632  
|Market value of securities distributed in payment of redemptions                                                                                |  | $                 | 123,219,812 
|Market value of real property and other assets, net of current liabilities, assumed in conjunction withthe acquisition of Wholly Owned Property |  | $                 | 33,493,039  
|Mortgage note assumed in conjunction with the acquisition of Wholly Owned Property                                                              |  | $                 |            
|Recharacterization of Real Estate Joint Venture advances to equity                                                                              |  | $                 |            



See notes to consolidated financial statements

47

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Belrose Capital Fund LLC

CONSOLIDATED FINANCIAL STATEMENTSCONT'D

Financial Highlights

|                                                                                                                |  | Year Ended        |          
|--------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------
|                                                                                                                |  | December 31, 2007 |          
|Net asset value  Beginning of year                                                                             |  | $                 | 122.620  
|Income (loss) from operations                                                                                   | 
|Net investment income(1)                                                                                        |  | $                 | 0.872    
|Net realized and unrealized gain                                                                                |  |                   | 3.328    
|Total income from operations                                                                                    |  | $                 | 4.200    
|Distributions                                                                                                   | 
|Distributions to Shareholders                                                                                   |  | $                 | (1.930   
|Total distributions                                                                                             |  | $                 | (1.930   
|Net asset value  End of year                                                                                   |  | $                 | 124.890  
|Total Return(2)                                                                                                 |  |                   | 3.47     
|Ratios as a percentage of average net assets                                                                    | 
|Investment advisory and administrative fees, distribution and servicing fees and other operating expenses(3)(4) |  |                   | 1.12     
|Interest and other borrowing costs(3)(5)                                                                        |  |                   | 1.18     
|Expenses of Wholly Owned Properties(6)                                                                          |  |                   | 0.50     
|Total expenses                                                                                                  |  |                   | 2.80     
|Net investment income(5)                                                                                        |  |                   | 0.69     
|Ratios as a percentage of average gross assets(7)                                                               | 
|Investment advisory and administrative fees, distribution and servicing fees and other operating expenses(3)(4) |  |                   | 0.83     
|Interest and other borrowing costs(3)(5)                                                                        |  |                   | 0.87     
|Expenses of Wholly Owned Properties(6)                                                                          |  |                   | 0.37     
|Total expenses                                                                                                  |  |                   | 2.07     
|Net investment income(5)                                                                                        |  |                   | 0.51     
|Supplemental Data                                                                                               | 
|Net assets, end of year (000's omitted)                                                                         |  | $                 | 1,820,170
|Portfolio turnover of Tax-Managed Growth Portfolio(8)                                                           |  |                   | 2        



(1)Calculated using average shares outstanding.

(2)Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested.

(3)Includes the expenses of Belrose Capital Fund LLC (Belrose Capital) and Belrose Realty Corporation (Belrose Realty). Does not include expenses of Belrose Realty's Wholly Owned Properties.

(4)Includes Belrose Capital's share of Belvedere Capital Fund Company LLC's (Belvedere Company) allocated expenses, including those expenses allocated from Tax-Managed Growth Portfolio.

(5)Ratios do not include net interest earned or incurred in connection with interest rate swap agreements. Had such amounts been included, ratios would have been lower or higher.

(6)Represents expenses incurred by Belrose Realty's Wholly Owned Properties.

(7)Average gross assets means the average daily amount of the value of all assets of Belrose Capital (including Belrose Capital's interest in Belvedere Company and Belrose Capital's ratable share of the assets of its direct and indirect subsidiaries, real estate joint ventures and co-owned real property investments, if any), without reduction by any liabilities.

(8)Excludes the value of portfolio securities contributed or distributed as a result of in-kind shareholder transactions. The total turnover rate of Tax-Managed Growth Portfolio including in-kind contributions and distributions was 6%, 7% and 6% for the years ended December 31, 2007, 2006 and 2005, respectively.

(9)Amounts to less than 1%.

See notes to consolidated financial statements

48

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1Organization

Belrose Capital Fund LLC (Belrose Capital) is a Delaware limited liability company established to offer diversification and tax-sensitive investment management to investors holding large and concentrated positions in equity securities of selected publicly traded companies. The investment objective of Belrose Capital is to achieve long-term, after-tax returns for Belrose Capital shareholders (Shareholders). Belrose Capital pursues this objective primarily by investing indirectly in Tax-Managed Growth Portfolio (the Portfolio), a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act). The Portfolio is organized as a trust under the laws of the state of New York. Belrose Capital maintains its investment in the Portfolio by investing in Belvedere Capital Fund Company LLC (Belvedere Company), a separate Massachusetts limited liability company that invests exclusively in the Portfolio. The performance of Belrose Capital and Belvedere Company is directly and substantially affected by the performance of the Portfolio. The audited financial statements of the Portfolio, including the Portfolio of Investments, are included elsewhere in this report and should be read in conjunction with these financial statements.

Separate from its investment in the Portfolio through Belvedere Company, Belrose Capital invests in real estate investments through a controlled subsidiary, Belrose Realty Corporation (Belrose Realty). Such investments include income-producing preferred equity interests in real estate operating partnerships (Partnership Preference Units) affiliated with publicly traded real estate investment trusts (REITs), investments in Real Estate Joint Ventures (Real Estate Joint Ventures) and investments in wholly owned real properties (Wholly Owned Properties) held through Bel Larimer, LLC (Bel Larimer) and Bel Marlborough Campus, LLC (Bel Marlborough).

2Significant Accounting Policies

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

APrinciples of Consolidation The consolidated financial statements include the accounts of Belrose Capital and its subsidiaries (collectively, the Fund). All material intercompany accounts and transactions have been eliminated.

Investments in which the Fund cannot exercise a majority voting interest but over which the Fund has the ability to exercise significant influence over operating and financial policies are presented under the equity method and stated at estimated fair value (Note 2E). Real Estate Joint Ventures are presented under the equity method. Under the equity method, Real Estate Joint Ventures are initially recognized on the Consolidated Statements of Assets and Liabilities at cost (provided such cost is indicative of estimated fair value) and are subsequently adjusted to reflect the Fund's proportionate share of the net increase (decrease) in net assets from operations of the Real Estate Joint Ventures. Real Estate Joint Ventures are also adjusted to reflect distributions, contributions, advances in the form of loans, interest earned on advances and certain other adjustments, as appropriate.

BBasis of Presentation Belrose Capital is an investment company and, as such, presents its assets at fair value. Fixed liabilities are generally stated at their principal value.

CCash The Fund considers deposits in banks that can be liquidated without prior notice or penalty to be cash.

DInvestment Costs The Fund's investment assets were principally acquired through contributions of common stock by Shareholders in exchange for Fund Shares and through purchases of Partnership Preference Units, Real Estate Joint Ventures and Wholly Owned Properties. Upon receipt of common stock from Shareholders, Belrose Capital immediately exchanged the contributed securities into Belvedere Company for shares thereof, and Belvedere Company, in turn, immediately thereafter exchanged the contributed securities into the Portfolio for an interest in the Portfolio. The initial financial reporting cost basis of the Fund's investments in contributed securities is the value of the contributed securities as of the close of business on the day prior to their contribution to the Fund. The initial tax basis of the Fund's investment in the Portfolio through Belvedere Company is the same as the contributing Shareholders' basis in securities contributed to the Fund. The initial tax and financial reporting cost basis of the Fund's investments in Partnership Preference Units, Real Estate Joint Ventures and Wholly Owned Properties purchased by the Fund is the purchase cost, which includes the capitalization of certain transaction costs incurred with the acquisition.

EInvestment and Other Valuations The Fund's investments consist of shares of Belvedere Company, Partnership Preference Units, Real Estate Joint Ventures and Wholly Owned Properties. The Fund may also invest in

49

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

short-term debt securities and Cash Management Portfolio (Cash Management), an affiliated investment company managed by Boston Management and Research (Boston Management), a subsidiary of Eaton Vance Management. Belvedere Company's only investment is an interest in the Portfolio, the value of which is derived from a proportional interest therein. Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio's Notes to Financial Statements, which are included elsewhere in this report. Additionally, Belrose Capital has entered into interest rate swap agreements (Note 8). The valuation policies followed by the Fund are as follows:

Market prices for the Fund's real estate investments (including Partnership Preference Units, Real Estate Joint Ventures and Wholly Owned Properties) are not readily available and therefore such investments are stated in the Fund's consolidated financial statements at estimated fair value. The estimated fair value of an investment represents the amount at which Boston Management, as manager of Belrose Realty, believes the investment could be sold in a current transaction between willing parties in an orderly disposition, that is, other than in a forced or liquidation sale. In valuing these investments, Boston Management considers relevant factors, data and information. With respect to investments in Partnership Preference Units, Boston Management considers information from dealers and similar firms with knowledge of such issues and/or the prices of comparable preferred equity securities and other fixed or adjustable rate instruments having similar investment characteristics. Wholly Owned Properties and real property held by Real Estate Joint Ventures are primarily valued based upon independent valuations (i.e., appraisals). Detailed real property valuations are performed at least annually and reviewed periodically. When a property has not been appraised (such as when a property has been recently acquired), Boston Management determines the estimated fair value of the property based on the transaction value of the property, which equals the total acquisition cost of the property, exclusive of certain legal and transaction costs, provided such amount is deemed indicative of fair value.

Appraisals of newly acquired properties, whether held by a wholly owned subsidiary of Belrose Realty or a Real Estate Joint Venture, are generally conducted in the year following the acquisition or when there has been a significant change in economic circumstances. Interim valuations of properties may be adjusted to reflect significant changes in economic circumstances or recent independent valuations of similar properties, and the results of operations and distributions.

The fair value of Belrose Realty's equity interest in each Real Estate Joint Venture is estimated quarterly using a financial model that considers (i) the terms of the Real Estate Joint Venture agreements relating to the allocation of distributable cash flow, (ii) the expected duration of the Real Estate Joint Venture, and (iii) the projected property values and cash flows from the properties based on estimates used in the independent valuations. If detailed independent real property valuations have not been performed on property within a recently established Real Estate Joint Venture, Boston Management allocates equity interest in the Real Estate Joint Venture based on the contractual ownership interests of the parties. Interim valuations may be adjusted to reflect significant changes in economic circumstances or recent independent valuations of similar properties, and the results of operations and distributions.

The valuation of real estate investments is based on many assumptions, including, but not limited to, a current transaction between willing parties and an orderly disposition of assets, that is, other than in a forced or liquidation sale. If the assumptions used to value a real estate investment change, it may materially impact the estimated fair value of that investment.

If real property securing a mortgage note payable has an estimated fair value that is less than the outstanding principal balance, the mortgage note payable may be adjusted to the estimated fair value of the property securing the mortgage note. No such adjustment has been made to the mortgage note payable at December 31, 2007 and 2006.

Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. If short-term debt securities are acquired with a remaining maturity of more than 60 days, they will be valued by a pricing service.

Cash Management values its investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 under the 1940 Act. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium.

Interest rate swap agreements are normally valued on the basis of valuations furnished by an independent pricing service.

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

50

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

FInterest Rate Swaps Belrose Capital has entered into interest rate swap agreements with respect to its borrowings. Pursuant to these agreements, Belrose Capital makes periodic payments to the counterparty at predetermined fixed rates in exchange for floating-rate payments from the counterparty at a predetermined spread to one-month or three-month London Interbank Offered Rate (LIBOR). Net interest paid and accrued or received and earned is recorded as realized gains or losses and changes in the underlying values of each in the Consolidated Statements of Operations. Belrose Capital is exposed to a risk of loss in the event of non-performance by the swap counterparty. Risks may arise from unanticipated movements in interest rates.

GRental Income Wholly Owned Properties are leased pursuant to non-cancelable, fixed-term operating leases expiring between 2008 and 2018, each with options to extend. Certain Wholly Owned Properties are subject to net leases and require the lessee to pay all costs associated with the operations and maintenance of the property.

Bel Larimer and Bel Marlborough are 100% leased at December 31, 2007.

At December 31, 2007, the minimum lease payments expected to be received from leases with lease periods greater than one year are as follows:

|Year Ending December 31, |  | Amount |           
|------------------------ |  | ------ | ----------
|2008                     |  | $      | 13,154,741
|2009                     |  |        | 12,939,066
|2010                     |  |        | 9,087,982 
|2011                     |  |        | 8,566,360 
|2012                     |  |        | 8,680,061 
|Thereafter               |  |        | 37,505,631
|                         |  |        |           



HIncome Belvedere Company's net investment income or loss consists of Belvedere Company's pro rata share of the net investment income or loss of the Portfolio, less all expenses of Belvedere Company, determined in accordance with GAAP.

The Fund's net investment income or loss consists of the Fund's pro rata share of the net investment income or loss of Belvedere Company, the Fund's pro rata share of the net investment income or loss of Cash Management, plus all net investment income earned on the Fund's real estate investments, less all expenses of the Fund, determined in accordance with GAAP.

Dividend income and distributions from Partnership Preference Units are recorded on the ex-dividend date or on the date the Fund is informed of the distribution. Income from the Real Estate Joint Ventures is recorded based on the Fund's proportional interest in the net investment income earned by the Real Estate Joint Ventures. Rental income from Wholly Owned Properties is recorded on the accrual basis based upon the terms of the lease agreements. Interest income is recorded on the accrual basis.

IDeferred Costs Mortgage origination expenses incurred in connection with the financing of the Wholly Owned Properties are capitalized and amortized over the terms of the respective loans. Deferred loan costs are included in other assets and amortization expense is included in mortgage interest expense in the accompanying consolidated financial statements.

JIncome Taxes Belrose Capital, Belvedere Company and the Portfolio are treated as partnerships for federal income tax purposes. As a result, Belrose Capital, Belvedere Company and the Portfolio do not incur federal income tax liability, and the shareholders and partners thereof are individually responsible for taxes on items of partnership income, gain, loss and deduction. The policy of Belrose Realty is to comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to REITs. Belrose Realty will generally not be subject to federal income tax to the extent that it distributes its taxable income to its stockholders each year and maintains its qualification as a REIT. Wholly owned subsidiaries of Belrose Realty are generally treated as pass-through entities for federal income tax purposes.

The Fund recognizes interest expense and penalties related to uncertain tax positions as tax expense when incurred.

Net investment income and capital gains determined in accordance with income tax regulations may differ from such amounts determined in accordance with GAAP. Such differences could be significant and are primarily due to differences in the cost basis of securities and other contributed investments, depreciation of real estate assets, periodic payments made or received in connection with interest rate swap agreements and the character of distributions received from Belrose Realty, Partnership Preference Units, Real Estate Joint Ventures and Wholly Owned Properties.

KOther Investment transactions are accounted for on the date the investments are purchased or sold.

51

---

Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

LUse of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

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

NRecently Issued Accounting Pronouncements In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities  including an amendment of FASB Statement No. 115." SFAS No. 159 permits entities to elect to measure certain financial assets and liabilities at fair value. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. SFAS No.159 will not have a material impact on the Fund's net asset value, financial condition or results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. SFAS No. 157 will require additional financial statement disclosures and will not have a material effect on the net asset value, financial condition or results of operations of the Fund.

In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes  an interpretation of SFAS No. 109." FIN 48 clarifies the accounting for uncertainty in income taxes recognized inaccordance with SFAS No. 109, "Accounting for Income Taxes." FIN 48 is effective during the first required financial reporting period for fiscal years beginning after December 15, 2006.

The Fund adopted the provisions of FIN 48 on March 30, 2007, as required. The adoption of FIN 48 did not have a material effect on the net asset value, financial condition or results of operations of the Fund. In accordance with the requirements of FIN 48, the Fund evaluated all tax years still subject to potential audit under state and federal income tax law in reaching its accounting conclusions. The Fund files numerous U.S. federal, state and local income and franchise tax returns. With few exceptions, the Fund is no longer subject to U.S. federal, state or local tax examinations by taxing authorities for years prior to 2004.

3Distributions to Shareholders

Belrose Capital intends to distribute at the end of each year, or shortly thereafter, all of its net investment income for the year, if any, and approximately 18% of its net realized capital gains for such year, if any, other than precontribution gains allocated to a Shareholder in connection with a taxable tender offer or other taxable corporate event with respect to a security contributed by that Shareholder or such Shareholder's predecessor in interest. In addition, whenever a distribution in respect of a precontribution gain is made, Belrose Capital intends to make a supplemental distribution to compensate Shareholders receiving such distributions for taxes that may be due on income specially allocated in connection with the precontribution gain and supplemental distributions. Capital gain distributions that are made with respect to realized precontribution gains and the associated supplemental distributions (collectively, Special Distributions) are made solely to the Shareholders to whom such realized precontribution gain is allocated. There were no Special Distributions paid or accrued during the years ended December 31, 2007, 2006 and 2005.

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

In addition, Belrose Realty intends to distribute substantially all of its taxable income earned during the year.

52

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

Distributions made to Shareholders electing the Fund's Estate Freeze feature will be paid, first, to holders of Preferred Shares to the extent of the unpaid cumulative annual priority return of the Preferred Shares and, second, to the holders of the associated Common Shares. Distributions made in respect of any realized precontribution gains and associated supplemental distributions will be apportioned between Preferred Shares and Common Shares consistent with the allocation to the Preferred Shares and Common Shares of such realized precontribution gains. It is expected that substantially all Belrose Capital distributions in respect of Estate Freeze Shares will be paid to holders of Preferred Shares rather than holders of Common Shares. Distributions on Estate Freeze Shares may be reinvested in Belrose Capital to purchase undivided Fund Shares at the Fund's net asset value per share on the date of reinvestment.

4Shareholder Transactions

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

|                                                                                 |  | Year Ended       |           
|-------------------------------------------------------------------------------- |  | ---------------- | ----------
|                                                                                 |  | December 31,2007 |           
|Issued to Shareholders electing toreceive payment of distributionsin Fund Shares |  |                  | 91,907    
|Redemptions                                                                      |  |                  | (1,008,922
|Net decrease                                                                     |  |                  | (917,015  



Redemptions of Fund Shares held less than three years are generally subject to a redemption fee of 1% of the net asset value of Fund Shares redeemed. The redemption fee is paid to Eaton Vance Distributors, Inc. (EV Distributors) by Belrose Capital on behalf of the redeeming Shareholder. No charge is levied on redemptions of Fund Shares acquired through the reinvestment of distributions, Fund Shares redeemed in connection with a taxable tender offer or other taxable corporate event or Fund Shares redeemed following the death of all of the initial holders of the Fund Shares redeemed. In addition, no fee applies to redemptions made pursuant to a Systematic Redemption Plan, whereby a Shareholder can redeem up to 2% of Fund Shares held on a quarterly basis. There were no redemption fees paid to EV Distributors for the years ended December 31, 2007 and 2006. For the year ended December 31, 2005, EV Distributors received $128,646 in redemption fees.

5Investment Transactions

The following table summarizes the Fund's investment transactions, other than short-term investments, for the years ended December 31, 2007, 2006 and 2005:

|                                                        |  | Year Ended       |            
|------------------------------------------------------- |  | ---------------- | -----------
|Investment Transactions                                 |  | December 31,2007 |            
|Decreases in investment inBelvedere Company             |  | $                | 123,219,812
|Increases in PartnershipPreference Units(1)             |  | $                | 25,008,167 
|Decreases in PartnershipPreference Units(2)             |  | $                | 13,280,073 
|Increase in investments in RealEstate Joint Ventures    |  | $                | 1,200,000  
|Decrease in investments in RealEstate Joint Ventures(3) |  | $                | 2,758,925  
|Increases in investments inWholly Owned Properties      |  | $                | 33,524,989 



(1)Increases in Partnership Preference Units for the years ended December 31, 2006 and 2005 represent Partnership Preference Units purchased from real estate investment affiliates of other investment funds advised by Boston Management.

(2)Decreases in Partnership Preference Units for the years ended December 31, 2007, 2006 and 2005 represent Partnership Preference Units sold to real estate investment affiliates of other investment funds advised by Boston Management for which a net realized gain of $1,844, a net realized loss of $2,480,905 and a net realized gain of $323,360 were recognized, respectively.

(3)Decrease in investments in Real Estate Joint Ventures for the year ended December 31, 2005 includes the sale of Belrose Realty's interest in a Real Estate Joint Venture to the real estate investment affiliate of another investment fund advised by Boston Management for which a realized gain of $12,343,706 was recognized (Note 7).

6Indirect Investment in the Portfolio

The following table summarizes the Fund's investment in the Portfolio through Belvedere Company for the years ended December 31, 2007, 2006 and 2005, including allocations of income, expenses and net realized and unrealized gains (losses) for the years then ended:

|                                                       |  | Year Ended       |               
|------------------------------------------------------ |  | ---------------- | --------------
|                                                       |  | December 31,2007 |               
|Belvedere Company'sinterest in thePortfolio(1)         |  | $                | 14,763,099,076
|The Fund's investment inBelvedere Company(2)           |  | $                | 1,899,517,238 
|Income allocated toBelvedere Companyfrom the Portfolio |  | $                | 298,751,556   



53

---

Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

|                                                                                                                                                           |  | Year Ended       |            
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | -----------
|                                                                                                                                                           |  | December 31,2007 |            
|Income allocated tothe Fund fromBelvedere Company                                                                                                          |  | $                | 38,457,422 
|Expenses allocated toBelvedere Companyfrom the Portfolio                                                                                                   |  | $                | 67,348,884 
|Expenses allocated tothe Fund fromBelvedere Company(3)                                                                                                     |  | $                | 11,677,373 
|Net realized gain frominvestment transactions,securities sold shortand foreign currencytransactions allocatedto Belvedere Companyfrom the Portfolio        |  | $                | 581,142,259
|Net realized gain frominvestment transactions,securities sold short andforeign currencytransactions allocatedto the Fund fromBelvedere Company             |  | $                | 74,429,684 
|Net change in unrealizedappreciation(depreciation) ofinvestments, securitiessold short and foreigncurrency allocated toBelvedere Companyfrom the Portfolio |  | $                | (99,671,823
|Net change in unrealizedappreciation(depreciation) ofinvestments, securitiessold short and foreigncurrency allocated tothe Fund fromBelvedere Company      |  | $                | (13,042,344



(1)As of December 31, 2007, 2006 and 2005, the value of Belvedere Company's interest in the Portfolio represents 74.3%, 73.1% and 70.4% of the Portfolio's net assets, respectively.

(2)As of December 31, 2007, 2006 and 2005, the Fund's investment in Belvedere Company represents 12.9%, 13.0% and 13.3% of Belvedere Company's net assets, respectively.

(3)Expenses allocated to the Fund from Belvedere Company represent:

|                                     |  | Year Ended       |          
|------------------------------------ |  | ---------------- | ---------
|                                     |  | December 31,2007 |          
|Expenses allocatedfrom the Portfolio |  | $                | 8,669,123
|Servicing fee (see Note 10)          |  | $                | 2,934,192
|Operating expenses                   |  | $                | 74,058   



7Investments in Real Estate Joint Ventures

At December 31, 2007 and 2006, Belrose Realty held investments in two Real Estate Joint Ventures, Deerfield Property Trust (Deerfield) and Katahdin Property Trust, LLC (Katahdin). Belrose Realty acquired its investment in Deerfield in June 2004 and its investment in Katahdin in May 2002. Belrose Realty previously held an investment in another Real Estate Joint Venture, Bel Communities Property Trust (Bel Communities), and disposed of such investment in October 2005.

Belrose Realty owns 100% of the Class A shares of the Real Estate Joint Ventures representing 75% to 80% of the initial economic interest in the Real Estate Joint Ventures. Parties unrelated to Belrose Realty own 100% of the Class B shares of each Real Estate Joint Venture, representing 20% to 25% of the initial economic interest. The primary distinction between the two classes of shares is the distribution priority.

Distributable cash flows are allocated per each Real Estate Joint Venture agreement in a manner that provides Belrose Realty 1) a priority with respect to a fixed annual preferred return; and 2) participation on a pro rata or reduced basis in distributable cash flows in excess of the annual preferred return of Belrose Realty and the subordinated preferred return of the Class B shareholder.

Major decisions of the Real Estate Joint Ventures are subject to the unanimous approval of each Real Estate Joint Venture's board. The day-to-day operating management is provided by real estate operating companies which are affiliates of the Class B shareholders.

Upon unanimous consent or from and after August 4, 2013, either Belrose Realty or the Deerfield Class B shareholder may cause a liquidation of Deerfield. If Belrose Realty or the Deerfield Class B shareholder elects to liquidate Deerfield, Deerfield will retain an independent third party to effectuate the liquidation. Upon unanimous consent or after November 23, 2010, either Belrose Realty or the Katahdin Class B shareholder can give notice either to buy the other's equity interest in Katahdin or to sell its own equity interest in Katahdin.

54

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

Real property held by Deerfield and Katahdin is financed through mortgage notes issued to Deerfield and Katahdin. The mortgage notes are secured by the real property held by Deerfield and Katahdin and are generally without recourse to Belrose Capital and Belrose Realty.

Condensed summary financial data of the Real Estate Joint Ventures is presented below.

|                                           |  | December 31,2007 |             | December 31,2006 | 
|------------------------------------------ |  | ---------------- | ----------- | ---------------- | 
|Assets:                                    | 
|Investment in real estate                  |  | $                | 443,657,436 |                  | 
|Other assets                               |  |                  | 11,162,064  |                  | 
|Total assets                               |  | $                | 454,819,500 |                  | 
|Liabilities and Shareholders' Equity:      | 
|Mortgage notes payable(1)                  |  | $                | 242,825,937 |                  | 
|Other liabilities                          |  |                  | 7,576,845   |                  | 
|Total liabilities                          |  | $                | 250,402,782 |                  | 
|Shareholders' equity                       |  | $                | 204,416,718 |                  | 
|Total liabilities and shareholders' equity |  | $                | 454,819,500 |                  | 



(1)The estimated fair value of the mortgage notes payable is approximately $250,500,000 and $251,000,000 as of December 31, 2007 and 2006, respectively. The mortgage notes payable generally cannot be prepaid or otherwise disposed of without incurring a substantial prepayment penalty unless the rental property financed by the mortgage notes payable is sold. Management generally has no current plans to prepay or otherwise dispose of the mortgage notes payable without the sale of the related rental property prior to the maturity date. The fair value of the mortgage notes is based on estimates using discounted cash flow analysis and current prevailing interest rates.

|                                                               |  | Year Ended       |           
|-------------------------------------------------------------- |  | ---------------- | ----------
|                                                               |  | December 31,2007 |           
|Revenues                                                       |  | $                | 42,271,494
|Expenses                                                       |  |                  | 34,626,529
|Net investment incomebefore realized andunrealized gain (loss) |  | $                | 7,644,965 
|Realized gain (loss)                                           |  |                  | (47,215   
|Change in net unrealizedappreciation (depreciation)            |  |                  | 13,422,884
|Net investment income                                          |  | $                | 21,020,634



(2)Includes the results of Bel Communities, disposed of in October 2005.

8Interest Rate Swap Agreements

Belrose Capital has entered into interest rate swap agreements with Merrill Lynch Capital Services, Inc. to fix the cost of a substantial portion of its borrowings under the Credit Facility (Note 9B) and to mitigate in part the impact of interest rate changes on Belrose Capital's net asset value. Under such agreements, Belrose Capital has agreed to make periodic payments at fixed rates in exchange for payments at floating rates. The notional or contractual amounts of these instruments may not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these investments is meaningful only when considered in conjunction with all related assets, liabilities and agreements. Interest rate swap agreements in place at December 31, 2007 and 2006 are listed below:

|              |  | NotionalAmount |        |           |  |              |       | InitialOptionalTermi- |  | FinalTermi-      |  | Unrealized Appreciation(Depreciation) at |  
|------------- |  | -------------- | ------ | --------- |  | ------------ | ----- | --------------------- |  | ---------------- |  | ---------------------------------------- | -
|EffectiveDate |  | (000'somitted) |        | FixedRate |  | FloatingRate |       | nationDate            |  | nationDate       |  | December 31,2007                         |  
|10/03         |  | $              | 31,588 |           |  |              | 4.180 | %                     |  | LIBOR +0.30%     |  | 7/09                                     |  
|10/03         |  |                | 37,943 |           |  |              | 4.160 | %                     |  | LIBOR +0.30%     |  | 11/09                                    |  
|10/03         |  |                | 83,307 |           |  |              | 4.045 | %                     |  | LIBOR +0.30%     |  |                                          | 
|6/04          |  |                | 40,000 |           |  |              | 4.875 | %                     |  | 3mo.LIBOR +0.00% |  |                                          | 
|              |  |                |        |           |  |              |       |                       |  |                  |  |                                          |  



9Debt

AMortgage Notes Real properties held by BelLarimer and Bel Marlborough are financed through mortgage notes secured by the real property held by BelLarimer and Bel Marlborough. The mortgage notes are generally without recourse to Belrose Capital and Belrose Realty, except that there may be recourse for certain liabilities arising from actions such as fraud, misrepresentation, misappropriation of funds or breach of material covenants and liabilities arising from environmental conditions.

The estimated fair value of the aggregate real property securing the mortgage notes is approximately $167,700,000 and $135,400,000 at December 31, 2007 and 2006, respectively.

55

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

Terms of the mortgage notes payable and amounts outstanding at December 31, 2007 and 2006 are as follows:

|                 |  | Annual       |        | MonthlyPrincipal and |  | Outstanding at   |           
|---------------- |  | ------------ | ------ | -------------------- |  | ---------------- | ----------
|MaturityDate     |  | InterestRate |        | InterestPayment      |  | December 31,2007 |           
|December 1, 2014 |  |              | 5.2075 | %                    |  | $                | 351,728   
|July 8, 2017     |  |              | 6.03   | %                    |  |                  | 128,138   
|                 |  |              |        |                      |  | $                | 86,951,932



(1)Mortgage note provides for interest only payments due monthly with the entire principal balance due on the maturity date.

(2)In June 2007, Bel Larimer obtained first mortgage financing for its investment in real property.

Scheduled principal payments of the mortgage notes for the years subsequent to December 31, 2007 are as follows:

|Year Ending December 31, |  | Amount |           
|------------------------ |  | ------ | ----------
|2008                     |  | $      | 991,370   
|2009                     |  |        | 1,054,276 
|2010                     |  |        | 1,111,308 
|2011                     |  |        | 1,171,424 
|2012                     |  |        | 1,226,170 
|Thereafter               |  |        | 81,397,384
|                         |  |        |           



The estimated fair value of the mortgage notes payable is approximately $85,600,000 and $61,900,000 at December 31, 2007 and 2006, respectively. The mortgage notes payable generally cannot be prepaid or otherwise disposed of without incurring a substantial prepayment penalty unless the rental property financed by the mortgage notes payable is sold.

Management generally has no current plans to prepay or otherwise dispose of the mortgage notes payable without the sale of the related rental property prior to the maturity date. The fair value of the mortgage notes is based on estimates using discounted cash flow analysis and current prevailing interest rates.

BCredit Facility Belrose Capital has entered into credit arrangements with Dresdner Kleinwort Holdings I, Inc. (DKH) and Merrill Lynch Mortgage Capital, Inc. (Merrill Lynch) (collectively, the Credit Facility). The Credit Facility expires on June 25, 2010. Belrose Capital's obligations under the Credit Facility are secured by a pledge of its assets, excluding the assets of the Wholly Owned Properties and the Real Estate Joint Ventures.

The credit arrangement with DKH is a term loan facility that accrues interest at a rate of one-month LIBOR plus 0.30% per annum. On October 10, 2007, Belrose Capital amended its credit arrangement with DKH to increase the amount of the term loan by $105,000,000 to an aggregate principal amount of $371,500,000.

The credit arrangement with Merrill Lynch is a revolving loan facility, including the ability to issue letters of credit up to $10,000,000. During the year ended December 31, 2007, Belrose Capital amended its credit arrangement with Merrill Lynch to decrease the amount of the revolving loan facility by an aggregate amount of $70,000,000 to an aggregate amount available for borrowing of $172,000,000. Borrowings under this credit arrangement accrue 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.

The following table summarizes Belrose Capital's Credit Facility:

|                                                |  | At December 31, 2007 |             | At December 31, 2006 | 
|----------------------------------------------- |  | -------------------- | ----------- | -------------------- | 
|Total amount available under theCredit Facility |  | $                    | 543,500,000 |                      | 
|DKH borrowings outstanding                      |  | $                    | 371,500,000 |                      | 
|Merrill Lynch borrowings outstanding            |  | $                    | 46,000,000  |                      | 
|Outstanding letters of credit                   |  | $                    |            |                      | 



Borrowings under the Credit Facility have been used to purchase the Fund's interests in real estate investments, to pay selling commissions and organizational expenses and to provide for the liquidity needs of the Fund. Additional borrowings under the Credit Facility may be made in the future for these purposes.

CAverage Borrowings and Average Interest Rate During the year ended December 31, 2007, the average balance of borrowings under the Credit Facility and the mortgage notes payable was approximately $402,200,000 and $75,700,000 with a weighted average interest rate of 5.57% and 5.36%, respectively.

10Management Fee and Other Transactions with Affiliates

Belrose Capital and the Portfolio have engaged Boston Management as investment adviser. Under the terms of the advisory agreement with the Portfolio, Boston Management receives a monthly advisory fee of 5/96 of 1% (0.625% annually) of the average daily net assets of the Portfolio up to $500,000,000 and at reduced rates as daily net assets exceed that level. For each of the years ended December 31,

56

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

2007, 2006 and 2005, the advisory fee applicable to the Portfolio was 0.43% of average daily net assets.

Subject to the fee waiver described below, Boston Management is entitled to receive a monthly advisory and administrative fee of 1/20 of 1% (0.60% annually) of the average daily gross assets of Belrose Capital. The term "gross assets" means the value of all of Belrose Capital's assets, including Belrose Capital's interest in Belvedere Company and Belrose Capital's ratable share of the assets of its direct and indirect subsidiaries, real estate joint ventures and co-owned real property investments, if any, without reduction by any liabilities. Belrose Realty pays Boston Management a monthly management fee at a rate of 1/20 of 1% (equivalent to 0.60% annually) of the average daily gross assets of Belrose Realty. The term "gross assets" means the value of all assets of Belrose Realty, including Belrose Realty's ratable share of the assets of its direct and indirect subsidiaries, real estate joint ventures and co-owned real property investments, if any, without reduction by any liabilities.

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

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

Boston Management has agreed to waive that portion of the monthly investment advisory and administrative fee payable by Belrose Capital to the extent that such fee, together with the monthly distribution fee payable by Belrose Capital to EV Distributors and Belrose Capital's attributable share of the monthly investment advisory fee and management fee payable by the Portfolio and Belrose Realty, respectively, exceeds 0.60% of the average daily gross assets of Belrose Capital (as described above). In addition, if Belrose Capital invests in Cash Management, the advisory and administrative fees paid to Boston Management by Cash Management in respect of Belrose Capital's investment therein will be credited towards Belrose Capital's advisory and administrative fee payments, reducing the amount of such fees otherwise payable by Belrose Capital.

Pursuant to a servicing agreement between Belvedere Company and EV Distributors, Belvedere Company pays a servicing fee to EV Distributors for providing certain services and information to direct and indirect investors in Belvedere Company. The servicing fee is paid on aquarterly basis at an annual rate of 0.15% of Belvedere Company's average daily net assets.

Pursuant to a servicing agreement between Belrose Capital and EV Distributors, Belrose Capital pays a servicing fee to EV Distributors on a quarterly basis at an annual rate of 0.25% of Belrose Capital's average daily net assets. Belrose Capital's allocated share of the servicing fee payable by Belvedere Company is credited towards Belrose Capital's servicing fee payment, reducing the amount of such fee that would otherwise be payable by Belrose Capital. With respect to Shareholders who subscribe through a subagent, EV Distributors has assigned servicing responsibilities and fees to the applicable subagent. The table below sets forth the fees paid or payable by, or allocable to, the Fund for the years ended December 31, 2007, 2006 and 2005 in connection with the services rendered by Eaton Vance Management and its affiliates.

|                                                             |  | Year Ended       |           
|------------------------------------------------------------ |  | ---------------- | ----------
|                                                             |  | December 31,2007 |           
|Advisory fee allocated toBelvedere Company fromthe Portfolio |  | $                | 64,755,126
|Advisory fee allocated tothe Fund from BelvedereCompany      |  | $                | 8,335,212 
|Advisory fee allocated tothe Fund from CashManagement        |  | $                | 24,117    
|Advisory and administrativefees incurred directly bythe Fund |  | $                | 6,993,350 
|Distribution fee incurreddirectly by the Fund                |  | $                | 1,896,200 
|Reduction of advisory andadministrative fees                 |  | $                | 1,896,200 
|Servicing fee of BelvedereCompany                            |  | $                | 22,797,451
|Servicing fee allocated tothe Fund fromBelvedere Company     |  | $                | 2,934,192 
|Servicing fee incurreddirectly by the Fund                   |  | $                | 1,805,886 
|Servicing fee paid oraccrued to subagents                    |  | $                | 4,740,051 



57

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Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

11Segment Information

Belrose Capital pursues its investment objective primarily by investing indirectly in the Portfolio through Belvedere Company. The Portfolio is a diversified investment company that emphasizes investments in common stocks of domestic and foreign growth companies that are considered by its investment adviser to be high in quality and attractive in their long-term investment prospects. The Fund's investment income includes the Fund's pro rata share of Belvedere Company's net investment income. Separate from its investment in Belvedere Company, Belrose Capital invests in real estate investments through its subsidiary, Belrose Realty. Belrose Realty invests directly and indirectly in Partnership Preference Units, Real Estate Joint Ventures (Note 7) and Wholly Owned Properties. The Fund's investment income from real estate investments primarily consists of rental income from Wholly Owned Properties, distribution income from Partnership Preference Units and net investment income from Real Estate Joint Ventures.

Belrose Capital evaluates performance of the reportable segments based on the net increase (decrease) in net assets from operations of the respective segment, which includes net investment income (loss), net realized gain (loss) and the net change in unrealized appreciation (depreciation). The Fund's Credit Facility borrowings and related interest expense are centrally managed by the Fund. A portion of the Credit Facility borrowings and related interest expense have been approximated and allocated to the real estate segment for presentation purposes herein. Credit Facility borrowings allocated to the real estate segment primarily represent estimated net amounts borrowed to purchase the Fund's interest in real estate investments. The Fund's interest rate swap agreement balances are presented as part of the real estate segment for presentation purposes herein. The accounting policies of the reportable segments are the same as those for Belrose Capital on a consolidated basis (Note 2). No reportable segments have been aggregated. Reportable information by segment is as follows:

|                                                        |  | Year Ended       |            
|------------------------------------------------------- |  | ---------------- | -----------
|                                                        |  | December 31,2007 |            
|Investment income                                       | 
|The Portfolio*                                          |  | $                | 26,780,049 
|Real Estate                                             |  |                  | 27,560,766 
|Unallocated                                             |  |                  | 251,953    
|Total investment income                                 |  | $                | 54,592,768 
|Interest expense                                        | 
|The Portfolio*                                          |  | $                |           
|Real Estate(1)                                          |  |                  | 19,881,488 
|Unallocated(2)                                          |  |                  | 6,718,093  
|Total interest expense                                  |  | $                | 26,599,581 
|Net realized gain (loss)                                | 
|The Portfolio*                                          |  | $                | 74,429,684 
|Real Estate                                             |  |                  | 2,383,896  
|Unallocated                                             |  |                  |           
|Total net realized gain                                 |  | $                | 76,813,580 
|Net change in unrealizedappreciation (depreciation)     | 
|The Portfolio*                                          |  | $                | (13,042,344
|Real Estate                                             |  |                  | (10,351,372
|Unallocated                                             |  |                  |           
|Total net changein unrealizedappreciation(depreciation) |  | $                | (23,393,716
|Net increase (decrease) innet assets from operations    | 
|The Portfolio*                                          |  | $                | 86,671,721 
|Real Estate                                             |  |                  | (9,519,298 
|Unallocated(3)                                          |  |                  | (10,587,642
|Net increase in netassets from operations               |  | $                | 66,564,781 



|               |  | At December 31, 2007 |               | At December 31, 2006 | 
|-------------- |  | -------------------- | ------------- | -------------------- | 
|Segment assets | 
|The Portfolio* |  | $                    | 1,899,517,238 |                      | 
|Real Estate    |  |                      | 423,116,327   |                      | 
|Unallocated(4) |  |                      | 5,835,806     |                      | 
|Segment assets |  | $                    | 2,328,469,371 |                      | 
|Net assets     | 
|The Portfolio* |  | $                    | 1,899,396,571 |                      | 
|Real Estate    |  |                      | 41,123,512    |                      | 
|Unallocated(5) |  |                      | (120,350,273  | )                    | 
|Net Assets     |  | $                    | 1,820,169,810 |                      | 



*  Belrose Capital invests indirectly in the Portfolio through Belvedere Company.

58

---

Belrose Capital Fund LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONT'D

(1)Includes interest expense on the mortgage notes payable held by Bel Larimer and Bel Marlborough, as well as interest expense incurred on Credit Facility borrowings allocated to the real estate segment for presentation purposes.

(2)Unallocated interest expense represents interest incurred on unallocated Credit Facility borrowings. Such borrowings are used to finance ongoing operations of the Fund and are not allocable to reportable segments.

(3)Unallocated amounts pertain to the overall operation of Belrose Capital and do not pertain to either segment. Included in this amount are primarily distribution and servicing fees and unallocated Credit Facility interest expense as follows:

|                                 |  | Year Ended       |          
|-------------------------------- |  | ---------------- | ---------
|                                 |  | December 31,2007 |          
|Distribution and servicing fees  |  | $                | 3,702,086
|Credit Facility interest expense |  | $                | 6,718,093



(4)Represents direct cash and short-term investments held by the Fund, including the Fund's investment in Cash Management.

(5)Amount includes unallocated liabilities, net of unallocated assets. Unallocated liabilities primarily consist of outstanding unallocated Credit Facility borrowings. Such borrowings are used to finance ongoing operations of the Fund and are not allocable to reportable segments. As of December 31, 2007 and 2006, such borrowings totaled approximately $125,280,000 and $90,593,000, respectively.

12Subsequent Event

On January 30, 2008, the Fund made a distribution of $1.81 per share to Shareholders of record on January 29, 2008.

59

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Belrose Capital Fund LLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of Belrose Capital Fund LLC and Subsidiaries

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated portfolios of investments, of Belrose Capital Fund LLC and subsidiaries (collectively, the Fund) as of December 31, 2007 and 2006, and the related consolidated statements of operations, changes in net assets, cash flows, and financial highlights for each of the three years in the period ended December 31, 2007. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2007 and 2006, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Belrose Capital Fund LLC and subsidiaries as of December 31, 2007 and 2006, and the results of their operations, the changes in their net assets, their cash flows, and the financial highlights for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the financial statements, the financial statements include investments whose fair values have been estimated by management in the absence of readily determinable fair values. Management's estimates are based on information provided by the fund managers. As of December 31, 2007 and 2006, these investments were valued at $419,530,097 (23% of net assets) and $372,646,109 (20% of net assets), respectively.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Fund's internal control over financial reporting as of December 31, 2007, based on the criteria established inInternal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2008 expressed an unqualified opinion on the Fund's internal control over financial reporting.

DELOITTE & TOUCHE LLPBoston, MassachusettsFebruary 27, 2008

60

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTS

|Common Stocks  99.4%                | 
|------------------------------------ | 
|Security                             | 
|Aerospace & Defense  3.9%           | 
|Boeing Co. (The)                     | 
|General Dynamics Corp.               | 
|Honeywell International, Inc.        | 
|Lockheed Martin Corp.                | 
|Northrop Grumman Corp.               | 
|Raytheon Co.                         | 
|Rockwell Collins, Inc.               | 
|United Technologies Corp.            | 
|                                     | 
|Air Freight & Logistics  2.2%       | 
|CH Robinson Worldwide, Inc.          | 
|FedEx Corp.                          | 
|United Parcel Service, Inc., Class B | 
|                                     | 
|Airlines  0.0%                      | 
|Southwest Airlines Co.               | 
|                                     | 
|Auto Components  0.2%               | 
|Delphi Corp.(1)                      | 
|Johnson Controls, Inc.               | 
|WABCO Holdings, Inc.                 | 
|                                     | 
|Automobiles  0.1%                   | 
|DaimlerChrysler AG(2)                | 
|Ford Motor Co.(1)                    | 
|General Motors Corp.                 | 
|Harley-Davidson, Inc.                | 
|                                     | 
|Beverages  5.7%                     | 
|Anheuser-Busch Cos., Inc.            | 
|Brown-Forman Corp., Class A          | 
|Brown-Forman Corp., Class B          | 
|Coca-Cola Co. (The)                  | 
|Coca-Cola Enterprises, Inc.          | 
|PepsiCo, Inc.                        | 
|                                     | 



|Security                                |  | Shares |             | Value | 
|--------------------------------------- |  | ------ | ----------- | ----- | 
|Biotechnology  1.0%                    | 
|Amgen, Inc.(1)                          |  |        | 3,455,994   |       | 
|Biogen Idec, Inc.(1)                    |  |        | 212,421     |       | 
|Genentech, Inc.(1)                      |  |        | 8,609       |       | 
|Genzyme Corp.(1)                        |  |        | 244,608     |       | 
|Gilead Sciences, Inc.(1)                |  |        | 280,364     |       | 
|Vertex Pharmaceuticals, Inc.(1)         |  |        | 13,000      |       | 
|                                        |  | $      | 204,574,928 |       | 
|Building Products  0.5%                | 
|Masco Corp.                             |  |        | 3,187,629   |       | 
|Trane, Inc.                             |  |        | 444,951     |       | 
|                                        |  | $      | 89,668,324  |       | 
|Capital Markets  4.8%                  | 
|Affiliated Managers Group, Inc.(1)      |  |        | 20,520      |       | 
|Ameriprise Financial, Inc.              |  |        | 66,443      |       | 
|Bank of New York Mellon Corp. (The)     |  |        | 903,498     |       | 
|Bear Stearns Companies, (The), Inc.     |  |        | 95,740      |       | 
|Charles Schwab Corp. (The)              |  |        | 797,107     |       | 
|Credit Suisse Group(2)                  |  |        | 155,136     |       | 
|Deutsche Bank AG(2)                     |  |        | 16,000      |       | 
|E*Trade Financial Corp.(1)              |  |        | 45,935      |       | 
|Federated Investors, Inc., Class B      |  |        | 1,599,819   |       | 
|Franklin Resources, Inc.                |  |        | 569,223     |       | 
|Goldman Sachs Group, Inc.               |  |        | 1,115,548   |       | 
|Knight Capital Group, Inc., Class A(1)  |  |        | 1,000,000   |       | 
|Legg Mason, Inc.                        |  |        | 46,784      |       | 
|Lehman Brothers Holdings, Inc.          |  |        | 195,374     |       | 
|Merrill Lynch & Co., Inc.               |  |        | 2,652,883   |       | 
|Morgan Stanley                          |  |        | 3,033,981   |       | 
|Northern Trust Corp.                    |  |        | 701,042     |       | 
|Piper Jaffray Cos., Inc.(1)             |  |        | 12,636      |       | 
|Raymond James Financial, Inc.           |  |        | 221,005     |       | 
|State Street Corp.                      |  |        | 607,860     |       | 
|T. Rowe Price Group, Inc.               |  |        | 341,862     |       | 
|UBS AG(2)                               |  |        | 192,957     |       | 
|Waddell & Reed Financial, Inc., Class A |  |        | 273,635     |       | 
|                                        |  | $      | 945,957,548 |       | 
|Chemicals  0.8%                        | 
|Arch Chemicals, Inc.                    |  |        | 4,950       |       | 
|Ashland, Inc.                           |  |        | 46,969      |       | 
|Dow Chemical Co. (The)                  |  |        | 250,895     |       | 



See notes to financial statements61

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Security                               |  | Shares |               | Value | 
|-------------------------------------- |  | ------ | ------------- | ----- | 
|Chemicals (continued)                  | 
|E.I. du Pont de Nemours & Co.          |  |        | 985,903       |       | 
|Ecolab, Inc.                           |  |        | 414,911       |       | 
|Monsanto Co.                           |  |        | 39,168        |       | 
|Olin Corp.                             |  |        | 9,900         |       | 
|PPG Industries, Inc.                   |  |        | 14,262        |       | 
|Rohm and Haas Co.                      |  |        | 2,380         |       | 
|Sigma-Aldrich Corp.                    |  |        | 1,062,698     |       | 
|Tronox, Inc., Class B                  |  |        | 3,250         |       | 
|Valspar Corp. (The)                    |  |        | 985,379       |       | 
|                                       |  | $      | 162,971,823   |       | 
|Commercial Banks  5.6%                | 
|Associated Banc-Corp.                  |  |        | 512,602       |       | 
|Banco Bilbao Vizcaya Argentaria SA ADR |  |        | 80,438        |       | 
|Bank of Hawaii Corp.                   |  |        | 69,735        |       | 
|Bank of Montreal(2)                    |  |        | 244,144       |       | 
|BB&T Corp.                             |  |        | 1,490,483     |       | 
|City National Corp.                    |  |        | 143,260       |       | 
|Comerica, Inc.                         |  |        | 315,697       |       | 
|Commerce Bancshares, Inc.              |  |        | 179,609       |       | 
|Fifth Third Bancorp                    |  |        | 3,175,840     |       | 
|First Horizon National Corp.           |  |        | 142,230       |       | 
|First Midwest Bancorp, Inc.            |  |        | 241,668       |       | 
|HSBC Holdings PLC(2)                   |  |        | 220,592       |       | 
|HSBC Holdings PLC UK ADR               |  |        | 578,331       |       | 
|Huntington Bancshares, Inc.            |  |        | 583,001       |       | 
|KeyCorp                                |  |        | 545,748       |       | 
|M&T Bank Corp.                         |  |        | 75,512        |       | 
|Marshall & Ilsley Corp.                |  |        | 672,512       |       | 
|National City Corp.                    |  |        | 1,543,156     |       | 
|PNC Financial Services Group, Inc.     |  |        | 86,068        |       | 
|Regions Financial Corp.                |  |        | 2,202,677     |       | 
|Royal Bank of Canada(2)                |  |        | 611,218       |       | 
|Societe Generale(2)                    |  |        | 1,669,583     |       | 
|SunTrust Banks, Inc.                   |  |        | 882,656       |       | 
|Synovus Financial Corp.                |  |        | 842,907       |       | 
|Toronto-Dominion Bank (The)(2)         |  |        | 17,915        |       | 
|Trustmark Corp.                        |  |        | 205,425       |       | 
|U.S. Bancorp                           |  |        | 4,908,006     |       | 
|Valley National Bancorp.               |  |        | 5,229         |       | 
|Wachovia Corp.                         |  |        | 2,843,749     |       | 
|Wells Fargo & Co.                      |  |        | 3,305,187     |       | 
|Westamerica Bancorporation             |  |        | 1,968         |       | 
|Zions Bancorporation                   |  |        | 366,194       |       | 
|                                       |  | $      | 1,115,266,841 |       | 



|Security                                |  | Shares |             | Value | 
|--------------------------------------- |  | ------ | ----------- | ----- | 
|Commercial Services & Supplies  0.3%   | 
|ACCO Brands Corp.(1)                    |  |        | 15,490      |       | 
|Allied Waste Industries, Inc.(1)        |  |        | 656,568     |       | 
|Avery Dennison Corp.                    |  |        | 56,594      |       | 
|Cintas Corp.                            |  |        | 280,640     |       | 
|Herman Miller, Inc.                     |  |        | 541,800     |       | 
|HNI Corp.                               |  |        | 291,437     |       | 
|Manpower, Inc.                          |  |        | 706         |       | 
|PHH Corp.(1)                            |  |        | 20,110      |       | 
|Pitney Bowes, Inc.                      |  |        | 43,177      |       | 
|RR Donnelley & Sons Co.                 |  |        | 18,144      |       | 
|Waste Management, Inc.                  |  |        | 264,230     |       | 
|                                        |  | $      | 59,047,557  |       | 
|Communications Equipment  2.4%         | 
|ADC Telecommunications, Inc.(1)         |  |        | 21,340      |       | 
|Alcatel SA ADR                          |  |        | 89,240      |       | 
|Cisco Systems, Inc.(1)                  |  |        | 8,650,060   |       | 
|Comverse Technology, Inc.(1)            |  |        | 25,350      |       | 
|Corning, Inc.                           |  |        | 3,672,635   |       | 
|Dycom Industries, Inc.(1)               |  |        | 57,599      |       | 
|Juniper Networks, Inc.(1)               |  |        | 137,067     |       | 
|Motorola, Inc.                          |  |        | 1,260,589   |       | 
|Nokia Oyj ADR                           |  |        | 1,994,425   |       | 
|Nortel Networks Corp.(1)(2)             |  |        | 72,544      |       | 
|QUALCOMM, Inc.                          |  |        | 1,355,558   |       | 
|Riverstone Networks, Inc.(3)            |  |        | 28,706      |       | 
|Tellabs, Inc.(1)                        |  |        | 25,118      |       | 
|                                        |  | $      | 481,157,628 |       | 
|Computer Peripherals  2.2%             | 
|Brocade Communications Systems, Inc.(1) |  |        | 5,418       |       | 
|Dell, Inc.(1)                           |  |        | 4,283,879   |       | 
|EMC Corp.(1)                            |  |        | 2,761,909   |       | 
|Hewlett-Packard Co.                     |  |        | 902,900     |       | 
|International Business Machines Corp.   |  |        | 1,713,085   |       | 
|Lexmark International, Inc., Class A(1) |  |        | 1,208,803   |       | 
|Network Appliance, Inc.(1)              |  |        | 369,094     |       | 
|Palm, Inc.                              |  |        | 398         |       | 
|Sun Microsystems, Inc.(1)               |  |        | 79,795      |       | 
|                                        |  | $      | 439,779,361 |       | 



See notes to financial statements62

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Security                              |  | Shares |             | Value | 
|------------------------------------- |  | ------ | ----------- | ----- | 
|Construction & Engineering  0.1%     | 
|Jacobs Engineering Group, Inc.(1)     |  |        | 108,010     |       | 
|                                      |  | $      | 10,326,836  |       | 
|Construction Materials  0.1%         | 
|Cemex SAB de CV ADR(1)                |  |        | 51,226      |       | 
|CRH PLC(2)                            |  |        | 207,894     |       | 
|Vulcan Materials Co.                  |  |        | 205,352     |       | 
|                                      |  | $      | 24,734,732  |       | 
|Consumer Finance  0.8%               | 
|American Express Co.                  |  |        | 684,621     |       | 
|Capital One Financial Corp.           |  |        | 1,770,321   |       | 
|Discover Financial Services           |  |        | 1,230,162   |       | 
|SLM Corp.                             |  |        | 911,782     |       | 
|                                      |  | $      | 156,193,486 |       | 
|Containers & Packaging  0.1%         | 
|Bemis Co., Inc.                       |  |        | 295,186     |       | 
|Sealed Air Corp.                      |  |        | 3,799       |       | 
|Sonoco Products Co.                   |  |        | 73,373      |       | 
|Temple-Inland, Inc.                   |  |        | 90,660      |       | 
|                                      |  | $      | 12,458,193  |       | 
|Distributors  0.0%                   | 
|Genuine Parts Co.                     |  |        | 190,459     |       | 
|                                      |  | $      | 8,818,252   |       | 
|Diversified Consumer Services  0.2%  | 
|Apollo Group, Inc., Class A(1)        |  |        | 27,070      |       | 
|H&R Block, Inc.                       |  |        | 1,603,312   |       | 
|                                      |  | $      | 31,672,464  |       | 
|Diversified Financial Services  2.2% | 
|Bank of America Corp.                 |  |        | 3,631,286   |       | 
|Citigroup, Inc.                       |  |        | 4,583,304   |       | 
|CME Group, Inc.                       |  |        | 2,908       |       | 
|ING Groep N.V. ADR                    |  |        | 264,281     |       | 
|IntercontinentalExchange, Inc.(1)     |  |        | 11,417      |       | 
|JPMorgan Chase & Co.                  |  |        | 2,698,987   |       | 
|Moody's Corp.                         |  |        | 323,702     |       | 
|                                      |  | $      | 428,602,108 |       | 



|Security                                              |  | Shares |             | Value | 
|----------------------------------------------------- |  | ------ | ----------- | ----- | 
|Diversified Telecommunication Services  1.7%         | 
|AT&T, Inc.                                            |  |        | 1,601,671   |       | 
|BCE, Inc.(2)(4)                                       |  |        | 2,653,500   |       | 
|Bell Aliant Regional Communications, Inc.(1)(2)(3)(5) |  |        | 210,251     |       | 
|Cincinnati Bell, Inc.(1)                              |  |        | 169,013     |       | 
|Citizens Communications Co.                           |  |        | 6,949       |       | 
|Deutsche Telekom AG ADR                               |  |        | 1,845,908   |       | 
|Embarq Corp.                                          |  |        | 10,856      |       | 
|McLeod USA, Inc., Class A(1)(3)                       |  |        | 947         |       | 
|Qwest Communications International, Inc.(1)           |  |        | 888         |       | 
|RSL Communications, Ltd., Class A(1)(2)(3)            |  |        | 247,161     |       | 
|Telefonos de Mexico SAB de CV ADR                     |  |        | 2,519,435   |       | 
|Verizon Communications, Inc.                          |  |        | 523,029     |       | 
|Windstream Corp.                                      |  |        | 906,552     |       | 
|                                                      |  | $      | 347,191,492 |       | 
|Electric Utilities  0.5%                             | 
|Duke Energy Corp.                                     |  |        | 432,532     |       | 
|Exelon Corp.                                          |  |        | 1,011,736   |       | 
|Southern Co. (The)                                    |  |        | 68,451      |       | 
|                                                      |  | $      | 93,974,773  |       | 
|Electrical Equipment  0.8%                           | 
|Emerson Electric Co.                                  |  |        | 2,534,883   |       | 
|Rockwell Automation, Inc.                             |  |        | 112,400     |       | 
|Roper Industries, Inc.                                |  |        | 46,244      |       | 
|Thomas & Betts Corp.(1)                               |  |        | 22,600      |       | 
|                                                      |  | $      | 155,377,979 |       | 
|Electronic Equipment & Instruments  0.3%             | 
|Agilent Technologies, Inc.(1)                         |  |        | 459,803     |       | 
|Arrow Electronics, Inc.(1)                            |  |        | 8,750       |       | 
|Flextronics International, Ltd.(1)(2)                 |  |        | 480,195     |       | 
|Jabil Circuit, Inc.                                   |  |        | 1,651,513   |       | 
|National Instruments Corp.                            |  |        | 88,674      |       | 
|Plexus Corp.(1)                                       |  |        | 140,213     |       | 
|Sanmina-SCI Corp.(1)                                  |  |        | 18,166      |       | 
|Tyco Electronics, Ltd.(2)                             |  |        | 281,877     |       | 
|                                                      |  | $      | 65,383,270  |       | 



See notes to financial statements63

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Security                                |  | Shares |             | Value | 
|--------------------------------------- |  | ------ | ----------- | ----- | 
|Energy Equipment & Services  0.9%      | 
|Baker Hughes, Inc.                      |  |        | 204,980     |       | 
|Halliburton Co.                         |  |        | 900,476     |       | 
|Schlumberger, Ltd.(2)                   |  |        | 1,200,029   |       | 
|Transocean, Inc.(2)                     |  |        | 81,993      |       | 
|                                        |  | $      | 180,545,074 |       | 
|Food & Staples Retailing  2.3%         | 
|Casey's General Stores, Inc.            |  |        | 12,551      |       | 
|Costco Wholesale Corp.                  |  |        | 913,115     |       | 
|CVS Caremark Corp.                      |  |        | 2,392,086   |       | 
|Kroger Co. (The)                        |  |        | 1,368,952   |       | 
|Safeway, Inc.                           |  |        | 1,133,243   |       | 
|Sysco Corp.                             |  |        | 2,322,757   |       | 
|Walgreen Co.                            |  |        | 989,530     |       | 
|Wal-Mart Stores, Inc.                   |  |        | 2,417,231   |       | 
|                                        |  | $      | 459,554,443 |       | 
|Food Products  2.6%                    | 
|Archer-Daniels-Midland Co.(6)           |  |        | 25,859      |       | 
|Archer-Daniels-Midland Co.              |  |        | 1,548,807   |       | 
|Campbell Soup Co.                       |  |        | 1,295,515   |       | 
|ConAgra Foods, Inc.                     |  |        | 438,684     |       | 
|Dean Foods Co.                          |  |        | 286,449     |       | 
|Del Monte Foods Co.                     |  |        | 98,719      |       | 
|General Mills, Inc.                     |  |        | 133,423     |       | 
|H.J. Heinz Co.                          |  |        | 154,799     |       | 
|Hershey Co. (The)                       |  |        | 494,963     |       | 
|J.M. Smucker Co. (The)                  |  |        | 6,121       |       | 
|Kellogg Co.                             |  |        | 9,362       |       | 
|Kraft Foods, Inc., Class A              |  |        | 422,531     |       | 
|Nestle SA(2)                            |  |        | 275,000     |       | 
|Sara Lee Corp.                          |  |        | 4,267,625   |       | 
|Smithfield Foods, Inc.(1)               |  |        | 2,352,196   |       | 
|TreeHouse Foods, Inc.(1)                |  |        | 25,945      |       | 
|Tyson Foods, Inc., Class A              |  |        | 241,647     |       | 
|Unilever PLC ADR                        |  |        | 1,755       |       | 
|William Wrigley Jr. Co.                 |  |        | 999,004     |       | 
|                                        |  | $      | 512,801,186 |       | 
|Health Care Equipment & Supplies  1.3% | 
|Advanced Medical Optics, Inc.(1)        |  |        | 9,834       |       | 
|Baxter International, Inc.              |  |        | 244,163     |       | 



|Security                                     |  | Shares |             | Value | 
|-------------------------------------------- |  | ------ | ----------- | ----- | 
|Health Care Equipment & Supplies (continued) | 
|Becton, Dickinson and Co.                    |  |        | 63,708      |       | 
|Boston Scientific Corp.(1)                   |  |        | 1,124,134   |       | 
|Covidien, Ltd.(2)                            |  |        | 281,877     |       | 
|DENTSPLY International, Inc.                 |  |        | 7,700       |       | 
|Hospira, Inc.(1)                             |  |        | 111,411     |       | 
|Medtronic, Inc.                              |  |        | 3,132,080   |       | 
|St. Jude Medical, Inc.(1)                    |  |        | 154,981     |       | 
|Stryker Corp.                                |  |        | 168,467     |       | 
|Zimmer Holdings, Inc.(1)                     |  |        | 599,639     |       | 
|                                             |  | $      | 266,396,898 |       | 
|Health Care Providers & Services  1.5%      | 
|AmerisourceBergen Corp.                      |  |        | 368,948     |       | 
|Cardinal Health, Inc.                        |  |        | 1,856,066   |       | 
|CIGNA Corp.                                  |  |        | 49,467      |       | 
|Express Scripts, Inc.(1)                     |  |        | 196,994     |       | 
|Health Management Associates, Inc., Class A  |  |        | 124,425     |       | 
|Henry Schein, Inc.(1)                        |  |        | 1,089,990   |       | 
|McKesson Corp.                               |  |        | 6,462       |       | 
|Medco Health Solutions, Inc.(1)              |  |        | 167,770     |       | 
|PharMerica Corp.(1)                          |  |        | 30,682      |       | 
|Sunrise Senior Living, Inc.(1)               |  |        | 8,000       |       | 
|Tenet Healthcare Corp.(1)                    |  |        | 1,548       |       | 
|UnitedHealth Group, Inc.                     |  |        | 441,856     |       | 
|WellPoint, Inc.(1)                           |  |        | 609,715     |       | 
|                                             |  | $      | 305,771,070 |       | 
|Health Care Technology  0.0%                | 
|IMS Health, Inc.                             |  |        | 120,055     |       | 
|                                             |  | $      | 2,766,067   |       | 
|Hotels, Restaurants & Leisure  1.0%         | 
|Bob Evans Farms, Inc.                        |  |        | 1,792       |       | 
|Carnival Corp.(2)                            |  |        | 543,886     |       | 
|Darden Restaurants, Inc.                     |  |        | 184,714     |       | 
|Gaylord Entertainment Co.(1)                 |  |        | 74,918      |       | 
|International Game Technology                |  |        | 409,904     |       | 
|International Speedway Corp., Class A        |  |        | 118,344     |       | 
|Marriott International, Inc., Class A        |  |        | 424,554     |       | 
|McDonald's Corp.                             |  |        | 939,331     |       | 
|MGM MIRAGE(1)                                |  |        | 27,640      |       | 
|Starbucks Corp.(1)                           |  |        | 2,254,271   |       | 



See notes to financial statements64

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Security                                            |  | Shares |             | Value | 
|--------------------------------------------------- |  | ------ | ----------- | ----- | 
|Hotels, Restaurants & Leisure (continued)           | 
|Wyndham Worldwide Corp.                             |  |        | 110,649     |       | 
|Yum! Brands, Inc.                                   |  |        | 363,380     |       | 
|                                                    |  | $      | 190,104,520 |       | 
|Household Durables  0.3%                           | 
|Blyth, Inc.                                         |  |        | 136,371     |       | 
|D.R. Horton, Inc.                                   |  |        | 642,283     |       | 
|Fortune Brands, Inc.                                |  |        | 119,860     |       | 
|Leggett & Platt, Inc.                               |  |        | 1,290,676   |       | 
|Newell Rubbermaid, Inc.                             |  |        | 291,589     |       | 
|                                                    |  | $      | 50,179,629  |       | 
|Household Products  3.4%                           | 
|Clorox Co. (The)                                    |  |        | 14,873      |       | 
|Colgate-Palmolive Co.                               |  |        | 707,241     |       | 
|Energizer Holdings, Inc.(1)                         |  |        | 76,555      |       | 
|Kimberly-Clark Corp.                                |  |        | 639,207     |       | 
|Procter & Gamble Co. (The)                          |  |        | 7,811,071   |       | 
|                                                    |  | $      | 682,501,339 |       | 
|Independent Power Producers & Energy Traders  0.0% | 
|AES Corp. (The)(1)                                  |  |        | 133,519     |       | 
|                                                    |  | $      | 2,855,971   |       | 
|Industrial Conglomerates  3.0%                     | 
|3M Co.                                              |  |        | 1,008,315   |       | 
|General Electric Co.                                |  |        | 13,169,338  |       | 
|Teleflex, Inc.                                      |  |        | 11,386      |       | 
|Textron, Inc.                                       |  |        | 43,912      |       | 
|Tyco International, Ltd.(2)                         |  |        | 281,877     |       | 
|                                                    |  | $      | 588,233,262 |       | 
|Insurance  5.6%                                    | 
|Aegon, N.V. ADR                                     |  |        | 5,224,475   |       | 
|AFLAC, Inc.                                         |  |        | 2,260,033   |       | 
|Allstate Corp. (The)                                |  |        | 191,074     |       | 
|American International Group, Inc.                  |  |        | 6,433,663   |       | 
|AON Corp.                                           |  |        | 386,911     |       | 
|Arthur J. Gallagher & Co.                           |  |        | 557,025     |       | 
|Berkshire Hathaway, Inc., Class A(1)                |  |        | 633         |       | 
|Berkshire Hathaway, Inc., Class B(1)                |  |        | 40,413      |       | 
|Chubb Corp.                                         |  |        | 28,354      |       | 



|Security                                      |  | Shares |               | Value | 
|--------------------------------------------- |  | ------ | ------------- | ----- | 
|Insurance (continued)                         | 
|Hartford Financial Services Group, Inc. (The) |  |        | 58,685        |       | 
|Lincoln National Corp.                        |  |        | 143,261       |       | 
|Manulife Financial Corp.(2)                   |  |        | 246,658       |       | 
|Marsh & McLennan Cos., Inc.                   |  |        | 478,442       |       | 
|MetLife, Inc.                                 |  |        | 81            |       | 
|Old Republic International Corp.              |  |        | 294,458       |       | 
|Progressive Corp. (The)                       |  |        | 3,731,348     |       | 
|SAFECO Corp.                                  |  |        | 161,000       |       | 
|Torchmark Corp.                               |  |        | 318,929       |       | 
|Travelers Cos., Inc. (The)                    |  |        | 348,162       |       | 
|UnumProvident Group                           |  |        | 39,000        |       | 
|XL Capital Ltd., Class A(2)                   |  |        | 187,100       |       | 
|                                              |  | $      | 1,102,245,281 |       | 
|Internet & Catalog Retail  0.1%              | 
|Amazon.com, Inc.(1)                           |  |        | 43,801        |       | 
|Expedia, Inc.(1)                              |  |        | 403,096       |       | 
|IAC/InterActiveCorp(1)                        |  |        | 429,832       |       | 
|                                              |  | $      | 28,374,698    |       | 
|Internet Software & Services  1.2%           | 
|eBay, Inc.(1)                                 |  |        | 1,257,244     |       | 
|Google Inc., Class A(1)                       |  |        | 294,413       |       | 
|                                              |  | $      | 245,308,629   |       | 
|IT Services  1.9%                            | 
|Accenture Ltd., Class A(2)                    |  |        | 2,739,520     |       | 
|Acxiom Corp.                                  |  |        | 74,785        |       | 
|Affiliated Computer Services, Inc.(1)         |  |        | 176,162       |       | 
|Automatic Data Processing, Inc.               |  |        | 1,494,739     |       | 
|Broadridge Financial Solutions, Inc.          |  |        | 223,288       |       | 
|Computer Sciences Corp.(1)                    |  |        | 226,702       |       | 
|DST Systems, Inc.(1)                          |  |        | 22,600        |       | 
|Electronic Data Systems Corp.                 |  |        | 1,252         |       | 
|Fidelity National Information Services, Inc.  |  |        | 37,789        |       | 
|Fiserv, Inc.(1)                               |  |        | 836,355       |       | 
|Gartner, Inc., Class A(1)                     |  |        | 30,575        |       | 
|Metavante Technologies, Inc.(1)               |  |        | 224,170       |       | 
|Paychex, Inc.                                 |  |        | 983,290       |       | 
|Perot Systems Corp.(1)                        |  |        | 625,309       |       | 
|Western Union Co.                             |  |        | 3,488,152     |       | 
|                                              |  | $      | 374,696,941   |       | 



See notes to financial statements65

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Security                                         |  | Shares |               | Value | 
|------------------------------------------------ |  | ------ | ------------- | ----- | 
|Leisure Equipment & Products  0.0%              | 
|Eastman Kodak Co.                                |  |        | 26,739        |       | 
|Mattel, Inc.                                     |  |        | 30,514        |       | 
|                                                 |  | $      | 1,165,769     |       | 
|Life Sciences Tools & Services  0.2%            | 
|Dionex Corp.(1)                                  |  |        | 37,300        |       | 
|Invitrogen Corp.(1)                              |  |        | 429,910       |       | 
|PerkinElmer, Inc.                                |  |        | 139,526       |       | 
|Thermo Fisher Scientific, Inc.(1)                |  |        | 18,700        |       | 
|                                                 |  | $      | 47,957,654    |       | 
|Machinery  5.1%                                 | 
|Caterpillar, Inc.                                |  |        | 217,329       |       | 
|Danaher Corp.                                    |  |        | 3,933,362     |       | 
|Deere & Co.                                      |  |        | 5,563,523     |       | 
|Donaldson Co., Inc.                              |  |        | 77,792        |       | 
|Dover Corp.                                      |  |        | 653,465       |       | 
|Illinois Tool Works, Inc.                        |  |        | 1,708,540     |       | 
|ITT Industries, Inc.                             |  |        | 8,428         |       | 
|Nordson Corp.                                    |  |        | 20,306        |       | 
|Parker Hannifin Corp.                            |  |        | 45,658        |       | 
|                                                 |  | $      | 1,009,331,288 |       | 
|Media  3.8%                                     | 
|CBS Corp., Class A                               |  |        | 10,967        |       | 
|CBS Corp., Class B                               |  |        | 556,629       |       | 
|Citadel Broadcasting Corp.                       |  |        | 16,551        |       | 
|Comcast Corp., Class A(1)                        |  |        | 2,800,692     |       | 
|Comcast Corp., Class A Special(1)                |  |        | 3,545,407     |       | 
|Discovery Holding Co., Class A(1)                |  |        | 16,629        |       | 
|E.W. Scripps Co. (The), Class A                  |  |        | 51,066        |       | 
|EchoStar Communications Corp., Class A(1)        |  |        | 35,150        |       | 
|Entercom Communications Corp.                    |  |        | 220,000       |       | 
|Gannett Co., Inc.                                |  |        | 476,821       |       | 
|Havas Advertising(2)                             |  |        | 3,142,938     |       | 
|Idearc, Inc.                                     |  |        | 22,323        |       | 
|Interpublic Group of Cos., Inc.(1)               |  |        | 932,692       |       | 
|Lamar Advertising Co.                            |  |        | 241,409       |       | 
|Liberty Global, Inc., Class A(1)                 |  |        | 19,414        |       | 
|Liberty Global, Inc., Class C(1)                 |  |        | 3,140         |       | 
|Liberty Media Corp. - Interactive(1)             |  |        | 256,350       |       | 
|Liberty Media Holding Corp.-Capital, Series A(1) |  |        | 8,315         |       | 
|Live Nation, Inc.(1)                             |  |        | 9,085         |       | 



|Security                                      |  | Shares |             | Value | 
|--------------------------------------------- |  | ------ | ----------- | ----- | 
|Media (continued)                             | 
|McClatchy Co., (The), Class A                 |  |        | 3,310       |       | 
|McGraw-Hill Companies, Inc., (The)            |  |        | 472,678     |       | 
|New York Times Co. (The), Class A             |  |        | 22,468      |       | 
|News Corp., Class A                           |  |        | 188,031     |       | 
|Omnicom Group, Inc.                           |  |        | 4,815,503   |       | 
|Publicis Groupe(2)                            |  |        | 329,132     |       | 
|Time Warner, Inc.                             |  |        | 4,062,511   |       | 
|Viacom, Inc., Class A(1)                      |  |        | 4,000       |       | 
|Viacom, Inc., Class B(1)                      |  |        | 524,573     |       | 
|Vivendi SA(2)                                 |  |        | 163,491     |       | 
|Walt Disney Co.                               |  |        | 4,933,939   |       | 
|Washington Post Co. (The), Class B            |  |        | 13,327      |       | 
|WPP Group PLC(2)                              |  |        | 139,450     |       | 
|WPP Group PLC ADR                             |  |        | 252,137     |       | 
|                                              |  | $      | 750,664,952 |       | 
|Metals & Mining  0.0%                        | 
|Alcoa, Inc.                                   |  |        | 85,947      |       | 
|Freeport-McMoRan Copper & Gold, Inc., Class B |  |        | 21,456      |       | 
|Steel Dynamics, Inc.                          |  |        | 51,604      |       | 
|                                              |  | $      | 8,413,366   |       | 
|Multiline Retail  1.1%                       | 
|Dollar Tree Stores, Inc.(1)                   |  |        | 52,534      |       | 
|Family Dollar Stores, Inc.                    |  |        | 1,279,835   |       | 
|JC Penney Co., Inc.                           |  |        | 130,349     |       | 
|Macy's, Inc.                                  |  |        | 230,860     |       | 
|Nordstrom, Inc.                               |  |        | 131,384     |       | 
|Sears Holdings Corp.(1)                       |  |        | 4,107       |       | 
|Target Corp.                                  |  |        | 3,590,237   |       | 
|                                              |  | $      | 222,436,012 |       | 
|Multi-Utilities  0.0%                        | 
|Ameren Corp.                                  |  |        | 5,000       |       | 
|PG&E Corp.                                    |  |        | 3,000       |       | 
|Wisconsin Energy Corp.                        |  |        | 9,576       |       | 
|                                              |  | $      | 866,767     |       | 
|Office Electronics  0.0%                     | 
|Xerox Corp.                                   |  |        | 10,000      |       | 
|Zebra Technologies Corp., Class A(1)          |  |        | 13,500      |       | 
|                                              |  | $      | 630,350     |       | 



See notes to financial statements66

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Security                            |  | Shares |               | Value | 
|----------------------------------- |  | ------ | ------------- | ----- | 
|Oil, Gas & Consumable Fuels  11.5% | 
|Anadarko Petroleum Corp.            |  |        | 4,388,053     |       | 
|Apache Corp.                        |  |        | 2,147,950     |       | 
|BPPLC ADR                           |  |        | 4,966,126     |       | 
|Chevron Corp.                       |  |        | 701,238       |       | 
|ConocoPhillips                      |  |        | 6,223,305     |       | 
|Devon Energy Corp.                  |  |        | 720,663       |       | 
|El Paso Corp.                       |  |        | 97,665        |       | 
|Exxon Mobil Corp.                   |  |        | 6,940,827     |       | 
|Hess Corp.                          |  |        | 54,286        |       | 
|Marathon Oil Corp.                  |  |        | 177,844       |       | 
|Murphy Oil Corp.                    |  |        | 78,679        |       | 
|Royal Dutch Shell PLC ADR           |  |        | 9,594         |       | 
|Royal Dutch Shell PLC ADR           |  |        | 157,131       |       | 
|Spectra Energy Corp.                |  |        | 263,315       |       | 
|Total SA ADR                        |  |        | 272,750       |       | 
|Williams Cos., Inc.                 |  |        | 223,515       |       | 
|                                    |  | $      | 2,287,947,573 |       | 
|Paper and Forest Products  0.1%    | 
|International Paper Co.             |  |        | 155,490       |       | 
|Neenah Paper, Inc.                  |  |        | 23,874        |       | 
|Weyerhaeuser Co.                    |  |        | 85,055        |       | 
|                                    |  | $      | 12,002,649    |       | 
|Personal Products  0.0%            | 
|Avon Products, Inc.                 |  |        | 173,400       |       | 
|Estee Lauder Cos., Inc., Class A    |  |        | 13,035        |       | 
|                                    |  | $      | 7,422,958     |       | 
|Pharmaceuticals  7.5%              | 
|Abbott Laboratories                 |  |        | 3,728,243     |       | 
|Allergan, Inc.                      |  |        | 276,600       |       | 
|Bristol-Myers Squibb Co.            |  |        | 4,298,950     |       | 
|Eli Lilly & Co.                     |  |        | 4,347,136     |       | 
|Forest Laboratories, Inc.(1)        |  |        | 56,729        |       | 
|GlaxoSmithKline PLC ADR             |  |        | 426,495       |       | 
|Johnson & Johnson                   |  |        | 3,911,737     |       | 
|King Pharmaceuticals, Inc.(1)       |  |        | 152,305       |       | 
|Merck & Co., Inc.                   |  |        | 2,224,896     |       | 
|Mylan, Inc.                         |  |        | 6,832         |       | 
|Novo Nordisk A/S ADR                |  |        | 398,434       |       | 
|Pfizer, Inc.                        |  |        | 12,368,792    |       | 



|Security                                        |  | Shares |               | Value | 
|----------------------------------------------- |  | ------ | ------------- | ----- | 
|Pharmaceuticals (continued)                     | 
|Schering-Plough Corp.                           |  |        | 1,731,023     |       | 
|Shering AG ADR                                  |  |        | 25,000        |       | 
|Teva Pharmaceutical Industries, Ltd. ADR        |  |        | 1,676,674     |       | 
|Watson Pharmaceuticals, Inc.(1)                 |  |        | 558,195       |       | 
|Wyeth                                           |  |        | 996,516       |       | 
|                                                |  | $      | 1,482,611,740 |       | 
|Real Estate Management & Development  0.0%     | 
|Forest City Enterprises, Inc., Class A          |  |        | 56,500        |       | 
|Forestar Real Estate Group, Inc.                |  |        | 30,220        |       | 
|                                                |  | $      | 3,223,750     |       | 
|Road & Rail  0.1%                              | 
|Avis Budget Group, Inc.(1)                      |  |        | 55,324        |       | 
|Burlington Northern Santa Fe Corp.              |  |        | 55,466        |       | 
|CSX Corp.                                       |  |        | 3,276         |       | 
|Kansas City Southern(1)                         |  |        | 6,815         |       | 
|Norfolk Southern Corp.                          |  |        | 3,090         |       | 
|Union Pacific Corp.                             |  |        | 65,519        |       | 
|                                                |  | $      | 14,100,041    |       | 
|Semiconductors & Semiconductor Equipment  2.8% | 
|Analog Devices, Inc.                            |  |        | 586,324       |       | 
|Applied Materials, Inc.                         |  |        | 1,094,431     |       | 
|Broadcom Corp., Class A(1)                      |  |        | 1,034,881     |       | 
|Cypress Semiconductor Corp.(1)                  |  |        | 52,742        |       | 
|Intel Corp.                                     |  |        | 11,610,600    |       | 
|KLA-Tencor Corp.                                |  |        | 148,373       |       | 
|Linear Technology Corp.                         |  |        | 423,388       |       | 
|LSI Corp.(1)                                    |  |        | 141,203       |       | 
|Maxim Integrated Products, Inc.                 |  |        | 263,099       |       | 
|Skyworks Solutions, Inc.(1)                     |  |        | 98,685        |       | 
|Teradyne, Inc.(1)                               |  |        | 6,799         |       | 
|Texas Instruments, Inc.                         |  |        | 4,191,058     |       | 
|Verigy, Ltd.(1)(2)                              |  |        | 4,119         |       | 
|Xilinx, Inc.                                    |  |        | 24,830        |       | 
|                                                |  | $      | 546,398,386   |       | 



See notes to financial statements67

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Security                                |  | Shares |             | Value | 
|--------------------------------------- |  | ------ | ----------- | ----- | 
|Software  2.5%                         | 
|Adobe Systems, Inc.(1)                  |  |        | 490,317     |       | 
|CA, Inc.                                |  |        | 40,728      |       | 
|Compuware Corp.(1)                      |  |        | 150,944     |       | 
|Electronic Arts, Inc.(1)                |  |        | 21,405      |       | 
|Intuit, Inc.(1)                         |  |        | 736,959     |       | 
|Jack Henry & Associates, Inc.           |  |        | 119,142     |       | 
|Microsoft Corp.                         |  |        | 7,280,107   |       | 
|Oracle Corp.(1)                         |  |        | 7,224,372   |       | 
|SAP AG ADR                              |  |        | 400,000     |       | 
|Symantec Corp.(1)                       |  |        | 225,808     |       | 
|Wind River Systems, Inc.(1)             |  |        | 1,304       |       | 
|                                        |  | $      | 497,127,563 |       | 
|Specialty Retail  1.4%                 | 
|Abercrombie & Fitch Co., Class A        |  |        | 4,015       |       | 
|AutoNation, Inc.(1)                     |  |        | 75,966      |       | 
|Best Buy Co., Inc.                      |  |        | 280,415     |       | 
|Collective Brands, Inc.(1)              |  |        | 23,100      |       | 
|Gap, Inc. (The)                         |  |        | 599,138     |       | 
|Home Depot, Inc.                        |  |        | 4,526,827   |       | 
|Limited Brands, Inc.                    |  |        | 503,556     |       | 
|Lowe's Companies, Inc.                  |  |        | 2,734,798   |       | 
|RadioShack Corp.                        |  |        | 74,318      |       | 
|Sherwin-Williams Co. (The)              |  |        | 500         |       | 
|Staples, Inc.                           |  |        | 275,430     |       | 
|TJX Companies, Inc. (The)               |  |        | 1,718,239   |       | 
|                                        |  | $      | 279,773,286 |       | 
|Textiles, Apparel & Luxury Goods  1.2% | 
|Coach, Inc.(1)                          |  |        | 729,407     |       | 
|Hanesbrands, Inc.(1)                    |  |        | 559,410     |       | 
|Nike, Inc., Class B                     |  |        | 3,058,444   |       | 
|                                        |  | $      | 233,978,879 |       | 
|Thrifts & Mortgage Finance  0.1%       | 
|Fannie Mae                              |  |        | 301,173     |       | 
|Freddie Mac                             |  |        | 146,695     |       | 
|Guaranty Financial Group, Inc.          |  |        | 30,220      |       | 
|MGIC Investment Corp.                   |  |        | 95,045      |       | 
|Washington Mutual, Inc.                 |  |        | 643,357     |       | 
|                                        |  | $      | 28,410,264  |       | 



|Security                                                        |  | Shares |                | Value | 
|--------------------------------------------------------------- |  | ------ | -------------- | ----- | 
|Tobacco  0.2%                                                  | 
|Altria Group, Inc.                                              |  |        | 589,531        |       | 
|                                                                |  | $      | 44,556,753     |       | 
|Trading Companies & Distributors  0.0%                         | 
|United Rentals, Inc.(1)                                         |  |        | 266,647        |       | 
|                                                                |  | $      | 4,895,639      |       | 
|Wireless Telecommunication Services  0.2%                      | 
|SprintNextel Corp.                                              |  |        | 1,848,673      |       | 
|Telephone and Data Systems, Inc.                                |  |        | 9,252          |       | 
|Telephone and Data Systems, Inc., Special Shares                |  |        | 24,636         |       | 
|Vodafone Group PLC ADR                                          |  |        | 302,728        |       | 
|                                                                |  | $      | 37,569,094     |       | 
|Total Common Stocks(identified cost $13,619,432,710)            |  | $      | 19,742,377,028 |       | 
|Convertible Preferred Stocks  0.0%                             | 
|Security                                                        |  | Shares |                | Value | 
|Independent Power Producers & EnergyTraders  0.0%              | 
|Enron Corp.(1)(3)                                               |  |        | 11,050         |       | 
|                                                                |  | $      | 0              |       | 
|Total Convertible Preferred Stocks(identified cost $16,626,069) |  | $      | 0              |       | 
|Other Investments  0.0%                                        | 
|Description                                                     |  | Shares |                | Value | 
|Commercial Banks  0.0%                                         | 
|Wachovia Corp. (Dividend Equalization Preferred Shares)         |  |        | 166,518        |       | 
|Software  0.0%                                                 | 
|Seagate Technology, Inc. (Tax Refund Rights)(1)(3)              |  |        | 197,392        |       | 
|Total Other Investments(identified cost $39,407)                |  | $      | 250            |       | 



See notes to financial statements68

---

Tax-Managed Growth Portfolioas of December 31, 2007

PORTFOLIO OF INVESTMENTSCONT'D

|Short-Term Investments  1.0%                               | 
|----------------------------------------------------------- | 
|Description                                                 | 
|Eaton Vance Cash Collateral Fund, LLC, 4.99%(7)(8)          | 
|Investment in Cash Management Portfolio, 4.58%(8)           | 
|Total Short-Term Investments(identified cost $193,886,028)  | 
|Total Investments  100.4%(identified cost $13,829,984,214) | 
|Other Assets, Less Liabilities  (0.4)%                     | 
|Net Assets  100.0%                                         | 



ADR - American Depository Receipt

(1)Non-income producing security.

(2)Foreign security.

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

(4)All or a portion of these securities were on loan at December 31, 2007.

(5)Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2007, the aggregate value of the securities is $6,269,504 or 0.03% of the Portfolio's net assets.

(6)Security subject to restrictions on resale (see Note 5).

(7)The amount invested in Eaton Vance Cash Collateral Fund, LLC represents cash collateral received for securities on loan as of December 31, 2007. Other Assets, Less Liabilities includes an equal and offsetting liability of the Portfolio to repay collateral upon the return of loaned securities.

(8)Affiliated investment company available to Eaton Vance portfolios and funds which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of December 31, 2007.

See notes to financial statements69

---

Tax-Managed Growth Portfolioas of December 31, 2007

FINANCIAL STATEMENTS

Statement of Assets and Liabilities

As of December 31, 2007

|Assets                                                                                                            | 
|----------------------------------------------------------------------------------------------------------------- | 
|Unaffiliated investments, at value including $105,508,702of securities on loan (identified cost, $13,636,098,186) | 
|Affiliated investments, at value (identified cost, $193,886,028)                                                  | 
|Cash                                                                                                              | 
|Receivable for investments sold                                                                                   | 
|Dividends and interest receivable                                                                                 | 
|Interest receivable from affiliated investment                                                                    | 
|Securities lending income receivable                                                                              | 
|Tax reclaims receivable                                                                                           | 
|Total assets                                                                                                      | 
|Liabilities                                                                                                       | 
|Collateral for securities loaned                                                                                  | 
|Payable to affiliate for investment advisory fees                                                                 | 
|Payable to affiliate for Trustees' fees                                                                           | 
|Other accrued expenses                                                                                            | 
|Total liabilities                                                                                                 | 
|Net Assets applicable to investors' interest in Portfolio                                                         | 
|Sources of Net Assets                                                                                             | 
|Net proceeds from capital contributions and withdrawals                                                           | 
|Net unrealized appreciation (computed on the basis of identified cost)                                            | 
|Total                                                                                                             | 



Statement of Operations

For the Year Ended December 31, 2007

|Investment Income                                                                     | 
|------------------------------------------------------------------------------------- | 
|Dividends (net of foreign taxes, $6,224,760)                                          | 
|Interest                                                                              | 
|Security lending income, net                                                          | 
|Interest income allocated from affiliated investment                                  | 
|Expenses allocated from affliated investment                                          | 
|Total investment income                                                               | 
|Expenses                                                                              | 
|Investment adviser fee                                                                | 
|Trustees' fees and expenses                                                           | 
|Custodian fee                                                                         | 
|Legal and accounting services                                                         | 
|Miscellaneous                                                                         | 
|Total expenses                                                                        | 
|Deduct Reduction of custodian fee                                                    | 
|Total expense reductions                                                              | 
|Net expenses                                                                          | 
|Net investment income                                                                 | 
|Realized and Unrealized Gain (Loss)                                                   | 
|Net realized gain (loss) Investment transactions (identified cost basis)(1)          | 
|Foreign currency transactions                                                         | 
|Net realized gain                                                                     | 
|Change in unrealized appreciation (depreciation) Investments (identified cost basis) | 
|Foreign currency                                                                      | 
|Net change in unrealized appreciation (depreciation)                                  | 
|Net realized and unrealized gain                                                      | 
|Net increase in net assets from operations                                            | 



(1)Includes net realized gains of $624,934,809 from redemptions in-kind.

See notes to financial statements70

---

Tax-Managed Growth Portfolioas of December 31, 2007

FINANCIAL STATEMENTSCONT'D

Statements of Changes in Net Assets

|Increase (Decrease)in Net Assets                                                       |  | Year EndedDecember 31, 2007 |                | Year EndedDecember 31, 2006 | 
|-------------------------------------------------------------------------------------- |  | --------------------------- | -------------- | --------------------------- | 
|From operations Net investment income                                                 |  | $                           | 313,617,864    |                             | 
|Net realized gain from investmentand foreign currency transactions                     |  |                             | 891,474,938    |                             | 
|Net change in unrealized appreciation(depreciation) of investments andforeign currency |  |                             | (239,534,188   | )                           | 
|Net increase in net assets from operations                                             |  | $                           | 965,558,614    |                             | 
|Capital transactions Contributions                                                    |  | $                           | 1,526,283,139  |                             | 
|Withdrawals                                                                            |  |                             | (3,014,972,770 | )                           | 
|Net decrease in net assetsfrom capital transactions                                    |  | $                           | (1,488,689,631 | )                           | 
|Net increase (decrease) in net assets                                                  |  | $                           | (523,131,017   | )                           | 
|Net Assets                                                                             | 
|At beginning of year                                                                   |  | $                           | 20,387,292,247 |                             | 
|At end of year                                                                         |  | $                           | 19,864,161,230 |                             | 



See notes to financial statements71

---

Tax-Managed Growth Portfolioas of December 31, 2007

FINANCIAL STATEMENTSCONT'D

Supplementary Data

|                                                      |  | Year Ended December 31, |           
|----------------------------------------------------- |  | ----------------------- | ----------
|                                                      |  | 2007                    |           
|Ratios/Supplemental Data                              | 
|Ratios (As a percentage of average daily net assets): | 
|Expenses before custodian fee reduction               |  |                         | 0.44      
|Expenses after custodian fee reduction                |  |                         | 0.44      
|Net investment income                                 |  |                         | 1.52      
|Portfolio Turnover(2)                                 |  |                         | 2         
|Total Return                                          |  |                         | 4.72      
|Net assets, end of year (000's omitted)               |  | $                       | 19,864,161



(1)The investment adviser waived a portion of its investment advisory fee (equal to less than 0.01% and 0.01% of average daily net assets for 2005 and 2004, respectively).

(2)Excludes the value of the portfolio securities contributed or distributed as a result of in-kind shareholder transactions. The total turnover rate of the Portfolio including in-kind contributions and distributions was 6%, 7%, 6%, 10%, and 21% for 2007, 2006, 2005, 2004, and 2003, respectively.

(3)Amounts to less than 1%.

See notes to financial statements72

---

Tax-Managed Growth Portfolioas of December 31, 2007

NOTES TO FINANCIAL STATEMENTS

1Significant Accounting Policies

Tax-Managed Growth Portfolio (the Portfolio) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio seeks to achieve long-term, after-tax returns for its interestholders through investing in a diversified portfolio of equity securities. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America.

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

The Portfolio may invest in Cash Management Portfolio (Cash Management) and Eaton Vance Cash Collateral Fund, LLC (Cash Collateral Fund), affiliated investment companies managed by Boston Management and Research (BMR) and Eaton Vance Management (EVM), respectively. Cash Management values its investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 of the 1940 Act. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. Investments in Cash Collateral Fund are valued at the net asset value per share on the valuation date.

BInvestment Transactions Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.

CIncome Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Fund is informed of the ex-dividend date. Withholding taxes on foreign dividends and capital gains have been provided for in accordance with the Fund's understanding of the applicable countries' tax rules and rates. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.

DFederal Taxes The Portfolio has elected to be treated as a partnership for federal tax purposes. No provision is made by the Portfolio for federal or state taxes on any taxable income of the Portfolio because each investor in the Portfolio is ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio's investors is a regulated investment company that invests all or substantially all of

73

---

Tax-Managed Growth Portfolioas of December 31, 2007

NOTES TO FINANCIAL STATEMENTSCONT'D

its assets in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification requirements (under the Internal Revenue Code) in order for its investors to satisfy them. The Portfolio will allocate, at least annually among its investors, each investor's distributive share of the Portfolio's net investment income, net realized capital gains and any other items of income, gain, loss, deduction or credit.

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109". FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, "Accounting for Income Taxes". This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective on the last business day of the first required financial reporting period for fiscal years beginning after December 15, 2006. Management has concluded that as of December 31, 2007, there are no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Portfolio's federal tax returns filed in the 3-year period ended December 31, 2007 remains subject to examination by the Internal Revenue Service.

EExpense Reduction State Street Bank and Trust Company (SSBT) serves as custodian of the Portfolio. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Portfolio maintains with SSBT. All credit balances, if any, used to reduce the Portfolio's custodian fees are reported as a reduction of expenses in the Statement of Operations.

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

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

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

2Investment Adviser Fee and Other Transactions with Affiliates

The investment adviser fee is earned by BMR, a subsidiary of EVM, as compensation for investment advisory services rendered to the Portfolio. The fee is payable monthly and is computed at an annual rate of 0.625% of the average daily net assets of the Portfolio up to $500 million. The advisory fee on net assets of $500 million or more is reduced asfollows:

|Average Daily Net Assets For the Month |  | Annual Fee Rate(for each level) |       
|-------------------------------------- |  | ------------------------------- | ------
|$500 million but less than $1 billion  |  |                                 | 0.5625
|$1 billion but less than $1.5 billion  |  |                                 | 0.5000
|$1.5 billion but less than $7 billion  |  |                                 | 0.4375
|$7 billion but less than $10 billion   |  |                                 | 0.4250
|$10 billion but less than $15 billion  |  |                                 | 0.4125
|$15 billion but less than $20 billion  |  |                                 | 0.4000
|$20 billion but less than $25 billion  |  |                                 | 0.3900
|$25billion and over                    |  |                                 | 0.3800



*  Effective April 23, 2007.

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Tax-Managed Growth Portfolioas of December 31, 2007

NOTES TO FINANCIAL STATEMENTSCONT'D

The portion of the advisory fee payable by Cash Management on the Portfolio's investment of cash therein is credited against the Portfolio's advisory fees. For the year ended December 31, 2007, the Portfolio's advisory fee totaled $88,148,658 of which $467,658 was allocated from Cash Management and $87,681,000 was paid or accrued directly by the Portfolio. For the year ended December 31, 2007, the Portfolio's advisory fee, including the portion allocated from Cash Management, was 0.43% of the Portfolio's average daily net assets.

Except as to Trustees of the Portfolio who are not members of EVM's or BMR's organizations, officers and Trustees receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the year ended December 31, 2007, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.

3Purchases and Sales of Investments

For the year ended December 31, 2007, purchases and sales of investments, other than short-term obligations, aggregated $434,592,730 and $569,175,325, respectively. In addition, investments having an aggregate market value of $1,986,256,699 at dates of withdrawal were distributed in payment for capital withdrawals and investors contributed securities with a value of $880,809,267, during the year ended December 31, 2007.

4Federal Income Tax Basis of Investments

The cost and unrealized appreciation (depreciation) of investments of the Portfolio at December 31, 2007 as determined on a federal income tax basis were as follows:

|Aggregate cost                |  | $ | 4,503,281,878  |   | 
|----------------------------- |  | - | -------------- | - | 
|Gross unrealized appreciation |  | $ | 24,767,710,218 |   | 
|Gross unrealized depreciation |  |   | (9,334,728,790 | ) | 
|Net unrealized appreciation   |  | $ | 15,432,981,428 |   | 



The net unrealized appreciation on foreign currency at December 31, 2007 on a federal income tax basis was $191,196.

5Restricted Securities

At December 31, 2007, the Portfolio owned the following securities (representing 0.01% of net assets) which were restricted as to public resale and not registered under the Securities Act of 1933 (excluding Rule 144A securities). The Portfolio has various registration rights (exercisable under a variety of circumstances) with respect to these securities. The fair value of these securities is determined based on valuations provided by brokers when available, or if not available, they are valued at fair value using methods determined in good faith by or at the direction of the Trustees.

|Common Stocks               |  | Date ofAcquisition |           | Eligiblefor Resale |  | Shares |            | Cost |  | Value |       
|--------------------------- |  | ------------------ | --------- | ------------------ |  | ------ | ---------- | ---- |  | ----- | ------
|Archer-Daniels-Midland Co.  |  |                    | 12/13/07  |                    |  |        | 12/13/2008 |      |  |       | 25,859
|Total Restricted Securities |  | $                  | 1,000,017 |                    |  | $      | 1,198,834  |      | 



6Financial Instruments

The Portfolio may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities to assist in managing exposure to various market risks. These financial instruments may include written options, forward foreign currency exchange contracts and financial futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Portfolio has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. The Portfolio did not have any open obligations under these financial instruments at December 31, 2007.

7Line of Credit

The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $200 million unsecured line of credit agreement with a group of banks. Borrowings will be made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the Eurodollar rate or Federal Funds rate. In addition, a fee computed at an annual rate of 0.07% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. The Portfolio did not

75

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Tax-Managed Growth Portfolioas of December 31, 2007

NOTES TO FINANCIAL STATEMENTSCONT'D

have any significant borrowings or allocated fees during the year ended December 31, 2007.

8Securities Lending Agreement

The Portfolio has established a securities lending agreement with SSBT as securities lending agent in which the Portfolio lends portfolio securities to qualified borrowers in exchange of either cash or U.S. government securities in an amount at least equal to the market value of the securities on loan. Cash collateral is invested in Cash Collateral Fund. The Portfolio earns interest on the amount invested in Cash Collateral Fund but it must pay the broker a loan rebate fee computed as a varying percentage of the collateral received. The loan rebate fee and lending agent fee paid by the Portfolio amounted to $2,679,685 and $263,837, respectively, for the year ended December 31, 2007. At December 31, 2007, the value of the securities loaned and the value of the collateral amounted to $105,508,702 and $107,661,941, respectively. In the event of counterparty default, the Portfolio is subject to potential loss if it is delayed or prevented from exercising its right to dispose of the collateral. The Portfolio bears risk in the event that invested collateral is not sufficient to meet obligations due on loans.

9Recently Issued Accounting Pronouncement

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (FAS 157), "Fair Value Measurements". FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. As of December 31, 2007, management does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements; however, additional disclosures may be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements on changes in net assets for the period.

76

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Tax-Managed Growth Portfolioas of December 31, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Trustees and Investors of Tax-Managed Growth Portfolio:

We have audited the accompanying statement of assets and liabilities of Tax-Managed Growth Portfolio (the Portfolio), including the portfolio of investments, as of December 31, 2007, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the supplementary data for each of the five years in the period then ended. These financial statements and supplementary data are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and supplementary data based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and supplementary data are free of material misstatement. The Portfolio is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and supplementary data referred to above present fairly, in all material respects, the financial position of Tax-Managed Growth Portfolio as of December 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the supplementary data for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLPBoston, MassachusettsFebruary 15, 2008

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SIGNATURES   Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.  BELROSE CAPITAL FUND
  LLC
  (Registrant)By:
  /s/ Andrew C.
  FrenetteAndrew C. FrenetteDuly Authorized Officer andPrincipal Accounting Officer  Date: February 29,
2008   Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.   By:
  /s/ Thomas E. Faust Jr.Thomas E. Faust Jr.Chief Executive Officer  Date:
February 29, 2008   By:
  /s/ Andrew C. FrenetteAndrew C. FrenetteChief Financial Officer  Date: February 29,
2008  78


EXHIBIT INDEX  Exhibit No.
  
  Description3
  
  Copy of Limited Liability Company Agreement of the
  Fund dated December 5, 2001 filed as Exhibit 3 to the Funds
  Initial Registration Statement on Form 10 and incorporated herein by
  reference. (Note: the LLC Agreement also defines the rights of the holders of
  Shares of the Fund.)3(a)
  
  Copy of Amendment No. 1 to the Funds Limited
  Liability Company Agreement dated as of December 30, 2003 filed as Exhibit 3(a) to
  the Funds Report on Form 10-K filed for the period ended December 31,
  2003 and incorporated herein by reference.4.1
  
  Copy of Loan and Security Agreement between the Fund
  and DrKW Holdings, Inc. dated as of June 30, 2003 filed as Exhibit 4.1
  to the Funds Report on Form 10-Q filed for the period ended June 30,
  2003 and incorporated herein by reference.4.1(a)
  
  Copy of Amendment No. 1 to Loan and Security
  Agreement between the Fund and DrKW Holdings, Inc. dated September 29,
  2003 filed as Exhibit 4.1(a) to the Funds Report on Form 10-Q
  filed for the period ended September 30, 2003 and incorporated herein by
  reference.4.1(b)
  
  Copy of Amendment No. 2 to Loan and Security
  Agreement between the Fund and DrKW Holdings, Inc. dated March 16,
  2004 filed as Exhibit 4.1(b) to the Funds Report on Form 10-Q
  filed for the period ended March 31, 2004 and incorporated herein by
  reference.4.1(c)
  
  Copy of Amendment No. 3 to Loan and Security
  Agreement between the Fund and DrKW Holdings, Inc. dated December 15,
  2005 filed as Exhibit 4.1(c) to the Funds Report on Form 10-K
  filed for the period ended December 31, 2005 and incorporated herein by
  reference.4.1(d)
  
  Copy of Amendment No. 4 to Loan and Security
  Agreement between the Fund and DrKW Holdings, Inc. dated December 15,
  2005 filed as Exhibit 4.1(d) to the Funds Report on Form 10-K
  filed for the period ended December 31, 2005 and incorporated herein by
  reference.4.1(e)
  
  Copy of Amendment No. 5 to Loan and Security
  Agreement between the Fund and DrKW Holdings, Inc. dated June 30,
  2006 filed as Exhibit 4.1(e) to the Funds Report on Form 10-Q
  for the period ended June 30, 2006 and incorporated herein by reference.4.1(f)
  
  Copy of Amendment No. 6 to Loan and Security
  Agreement between the Fund and Dresdner Kleinwort Holdings I, Inc.
  (formerly DrKW Holings, Inc.) dated October 10, 2007 filed
  herewith.4.2
  
  Copy of Loan and Security Agreement among the Fund,
  Merrill Lynch Mortgage Capital, Inc., the Lenders referred to therein
  and Merrill Lynch Capital Services, Inc., dated June 30, 2003 filed
  as Exhibit 4.2 to the Funds Form 10-Q for the period ended June 30,
  2003 and incorporated herein by reference.4.2(a)
  
  Copy of Amendment No. 1 to Loan and Security
  Agreement among the Fund, Merrill Lynch Mortgage Capital, Inc., as Agent,
  the Lenders referred to therein and Merrill Lynch Capital Services, Inc.
  dated September 29, 2003 filed as Exhibit 4.2(a) to the Funds
  Report on Form 10-Q for the period ended September 30, 2003 and
  incorporated herein by reference.4.2(b)
  
  Copy of Amendment No. 2 to Loan and Security
  Agreement among the Fund, Merrill Lynch Mortgage Capital, Inc., as
  Agent, the Lenders referred to therein and Merrill Lynch Capital Services, Inc.
  dated August 3, 2004 filed as Exhibit 4.2(b) to the Funds
  Report on Form 10-Q for the period ended September 30, 2004 and
  incorporated herein by reference.4.2(c)
  
  Copy of Amendment No. 3 to Loan and Security
  Agreement among the Fund, Merrill Lynch Morgage Capital, Inc., as Agent,
  the Lenders referred to therein and Merrill Lynch Capital Services, Inc.
  dated October 14, 2005 filed as Exhibit 4.2(c) to the Funds
  Report on Form 10-K filed for the period ended December 31, 2005
  and incorporated herein by reference.4.2(d)
  
  Copy of Amendment No. 4 to Loan and Security
  Agreement among the Fund, Merrill Lynch Morgage Capital, Inc., as Agent,
  the Lenders referred to therein and Merrill Lynch Capital Services, Inc.
  dated December 15, 2005 filed as Exhibit 4.2(d) to the Funds
  Report on Form 10-K filed for the period ended December 31, 2005
  and incorporated herein by reference.  79


4.2(e)
  
  Copy of Amendment No. 5
  to Loan and Security Agreement among the Fund, Merrill Lynch Mortgage Capital, Inc.,
  as Agent, the Lenders referred to therein and Merrill Lynch Capital Services, Inc.
  dated June 30, 2006 filed as Exhibit 4.2(e) to the Funds
  Report on Form 10-Q for the period ended June 30, 2006 and
  incorporated herein by reference.4.2(f)
  
  Copy of Amendment No. 6
  to Loan and Security Agreement among the Fund, Merrill Lynch Mortgage Capital, Inc.,
  as Agent, the Lenders referred to therein and Merrill Lynch Capital Services, Inc.
  dated January 18, 2007 filed as Exhibit 4.2(f) to the Funds
  Report on Form 10-K for the period ended December 31, 2006 and
  incorporated herein by reference.4.2(g)
  
  Copy of Amendment No. 7
  to Loan and Security Agreement among the Fund, Merrill Lynch Mortgage Capital, Inc.,
  as Agent, the Lenders referred to therein and Merrill Lynch Capital Services, Inc.
  dated May 9, 2007 filed as Exhibit 4.2(g) to the Funds Report
  on Form 10-Q for the period ended June 30, 2007 and incorporated
  herein by reference.10(1)
  
  Copy of Investment
  Advisory and Administrative Agreement between the Fund and Boston Management
  and Research dated March 7, 2001 filed as Exhibit 10(1) to the
  Funds Initial Registration Statement on Form 10 and incorporated herein
  by reference.10(1)(a)
  
  Copy of Amendment No. 1
  to Investment Advisory and Administrative Agreement between the Fund and
  Boston Management and Research dated as of June 5, 2007 filed as Exhibit 10(1)(a) to
  the Funds Report on Form 10-K for the period ended December 31,
  2006 and incorporated herein by reference.10(2)
  
  Copy of Management
  Agreement between Belrose Realty Corporation and Boston Management and
  Research dated March 9, 2002 filed as Exhibit 10(2) to the
  Funds Initial Registration Statement on Form 10 and incorporated herein
  by reference.10(2)(a)
  
  Copy of Amendment No. 1
  to Management Agreement between Belrose Realty Corporation and Boston
  Management and Research dated June 5, 2007 filed as Exhibit 10(2)(a) to
  the Funds Report on Form 10-K for the period ended December 31,
  2006 and incorporated herein by reference.10(3)
  
  Copy of Investor
  Servicing Agreement between the Fund and Eaton Vance Distributors, Inc.
  dated December 5, 2000 filed as Exhibit 10(3) the Funds
  Initial Registration Statement on Form 10 and incorporated herein by
  reference.10(4)
  
  Copy of Custody and
  Transfer Agency Agreement between the Fund and Investors Bank &
  Trust Company dated December 5, 2000 filed as Exhibit 10(4) the
  Funds Initial Registration Statement on Form 10 and incorporated herein
  by reference.10(4)(a)
  
  Copy of Amendment dated
  March 29, 2005 to Custody and Transfer Agency Agreement between the Fund
  and Investors Bank & Trust Company filed as Exhibit 10(4)(a) to
  the Funds report on Form 10-Q for the period ended June 30, 2005
  and incorporated herein by reference.20(a)
  
  Report on Form 8-K
  filed electronically with the Securities and Exchange Commission on January 26,
  2007 and incorporated herein by reference.20(b)
  
  Report on Form 8-K
  filed electronically with the Securities and Exchange Commission on June 5,
  2007 and incorporated herein by reference.21
  
  List of Subsidiaries of
  the Fund filed herewith.31.1
  
  Certification Pursuant
  to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of
  the Sarbanes-Oxley Act of 2002 filed herewith.31.2
  
  Certification Pursuant
  to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of
  the Sarbanes-Oxley Act of 2002 filed herewith.32.1
  
  Certification Pursuant
  to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
  the Sarbanes-Oxley Act of 2002 filed herewith.32.2
  
  Certification Pursuant
  to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
  the Sarbanes-Oxley Act of 2002 filed herewith.  80


99.3
  
  Form N-CSR of
  Eaton Vance Tax-Managed Growth Portfolio (File No. 811-7409) for its
  year ended December 31, 2007 filed electronically with the Securities
  and Exchange Commission under the Investment Company Act of 1940 on February 22,
  2008 incorporated herein by reference pursuant to Rule 12b-32.  81