|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, 2006
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 StreetBoston, 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 [ ] No

Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ] 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 such filing requirements for the past 90 days. [ ] Yes [X] No

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Act). Large Accelerated Filer [X]   Accelerated Filer [ ]   Non-accelerated Filer [ ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes [ ] No [X]

Aggregate market value of the Shares held by non-affiliates of Registrant, based on the closing net asset value on June 30, 2006 was $1,759,148,760. 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 89.



|Explanatory Note
|----------------

The Annual Report on Form 10-K of Belrose Capital Fund LLC (the Fund) for the fiscal year ended December 31, 2006 contains restated consolidated financial statements for its fiscal years ended December 31, 2005 and 2004. Additionally, selected financial data as presented in Item 6 herein has been restated. The consolidated financial statements have been restated to present the Funds investment in real estate joint ventures (as described herein) using the equity method and to correct the allocation between realized gain (loss) and unrealized appreciation (depreciation) for certain investments. The restatement of this financial information, and reviews and discussions related thereto, delayed the filing of the Funds Annual Report on Form 10-K for the fiscal year ended December 31, 2006. The restatement did not affect the Funds net asset value per share, net assets, net investment income, net increase in net assets from operations or total return.

Belrose Capital Fund LLCIndex to Form 10-KItem
     
     
     
     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 andTax-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
     
     11Interest 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
     
     12


2

|   |  | PART II                                                                |  |   
|-- |  | ---------------------------------------------------------------------- |  | --
|5  |  | Determining Net Asset Value, Market for Fund Shares,                   |  |   
|   |  | Related Shareholder Matters and Issuer Purchases of Equity Securities  |  | 13
|   |  | Market Information, Restrictions on Transfers and Redemption of Shares |  | 13
|   |  | Transfers of Fund Shares                                               |  | 13
|   |  | Redemption of Fund Shares                                              |  | 13
|   |  | Determining Net Asset Value                                            |  | 15
|   |  | Historic Net Asset Values                                              |  | 15
|   |  | Record Holders of Shares of the Fund                                   |  | 16
|   |  | Distributions                                                          |  | 16
|   |  | Income and Capital Gain Distributions                                  |  | 16
|   |  | Special Distributions                                                  |  | 16
|6  |  | Selected Financial Data                                                |  | 17
|   |  | Table of Selected Financial Data                                       |  | 17
|7  |  | Managements Discussion and Analysis of Financial Condition and        |  |   
|   |  | Results of Operations (MD&A)                                           |  | 18
|   |  | Results of Operations                                                  |  | 18
|   |  | MD&A for the Year Ended December 31, 2006                              |  |   
|   |  | Compared to the Year Ended December 31, 2005                           |  | 19
|   |  | Performance of the Fund                                                |  | 19
|   |  | Performance of the Portfolio                                           |  | 19
|   |  | Performance of Real Estate Investments                                 |  | 20
|   |  | Performance of Interest Rate Swap Agreements                           |  | 20
|   |  | MD&A for the Year Ended December 31, 2005                              |  |   
|   |  | Compared to the Year Ended December 31, 2004                           |  | 21
|   |  | Performance of the Fund                                                |  | 21
|   |  | Performance of the Portfolio                                           |  | 21
|   |  | Performance of Real Estate Investments                                 |  | 21
|   |  | Performance of Interest Rate Swap Agreements                           |  | 22
|   |  | Liquidity and Capital Resources                                        |  | 22
|   |  | Outstanding Borrowings                                                 |  | 22
|   |  | Liquidity                                                              |  | 23
|   |  | Off-Balance Sheet Arrangements                                         |  | 23
|   |  | The Funds Contractual Obligations                                     |  | 24
|   |  | Critical Accounting Estimates                                          |  | 24
|7A |  | Quantitative and Qualitative Disclosures About Market Risk             |  | 27
|   |  | Quantitative Information About Market Risk                             |  | 27
|   |  | Interest Rate Risk                                                     |  | 27
|   |  | Qualitative Information About Market Risk                              |  | 29
|   |  | Risks Associated with Equity Investing                                 |  | 29
|   |  | Risks of Investing in Foreign Securities                               |  | 29
|   |  | Risks of Certain Investment Techniques                                 |  | 29
|   |  | Risks of Real Estate Investments                                       |  | 30
|   |  | Risks of Interest Rate Swap Agreements                                 |  | 33
|   |  | Risks of Leverage                                                      |  | 33
|8  |  | Financial Statements and Supplementary Data                            |  | 34

3

|9                    |  | Changes in and Disagreements with Accountants on                     |  |   
|-------------------- |  | -------------------------------------------------------------------- |  | --
|                     |  | Accounting and Financial Disclosure                                  |  | 35
|9A                   |  | Controls and Procedures                                              |  | 35
|                     |  | Fund Governance                                                      |  | 35
|                     |  | Disclosure Controls and Procedures                                   |  | 35
|                     |  | Internal Control over Financial Reporting                            |  | 35
|9B                   |  | Other Information                                                    |  | 36
|                     |  | PART III                                                             |  |   
|10                   |  | Directors, Executive Officers and Corporate Governance               |  | 37
|                     |  | Management                                                           |  | 37
|                     |  | Compliance with Section 16(a) of the Securities Exchange Act of 1934 |  | 38
|                     |  | Code of Ethics                                                       |  | 38
|11                   |  | Executive Compensation                                               |  | 38
|12                   |  | Security Ownership of Certain Beneficial Owners and Management       |  |   
|                     |  | and Related Shareholder Matters                                      |  | 38
|                     |  | Security Ownership of Certain Beneficial Owners                      |  | 38
|                     |  | Security Ownership of Management                                     |  | 38
|                     |  | Changes in Control                                                   |  | 38
|13                   |  | Certain Relationships and Related Transactions, and                  |  |   
|                     |  | Director Independence                                                |  | 39
|                     |  | The Funds Investment Advisory and Administrative Fee                |  | 39
|                     |  | Belrose Realtys Management Fee                                      |  | 39
|                     |  | The Portfolios Investment Advisory Fee                              |  | 40
|                     |  | Servicing Fees Paid by the Fund                                      |  | 40
|                     |  | Servicing Fees Paid by Belvedere Company                             |  | 40
|                     |  | Distribution Fees Paid to EV Distributors                            |  | 40
|                     |  | Redemption Fees                                                      |  | 41
|                     |  | Certain Real Estate Investment Transactions                          |  | 41
|14                   |  | Principal Accounting Fees and Services                               |  | 41
|                     |  | PART IV                                                              |  |   
|15                   |  | Exhibits and Financial Statement Schedules                           |  | 42
|APPENDIX A           |  | 43                                                                  
|FINANCIAL STATEMENTS |  | 44                                                                  
|SIGNATURES           |  | 88                                                                  
|EXHIBIT INDEX        |  | 89                                                                  

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|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, 2006, the Fund had net assets of approximately $1.9 billion.

Structure of the Fund.The Fund is structured to provide tax-free diversification and tax-sensitive investment management to Shareholders. To meet the objective of tax-free diversification, the Fund must satisfy specific requirements of the Internal Revenue Code of 1986, as amended (the Code). In order for the contributions of appreciated stock to the Fund by Shareholders to be nontaxable, not more than 80% of the Funds assets (calculated in the manner prescribed) may consist of stocks and securities as defined in the Code. To meet this requirement, the Fund 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). 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 April 30, 2007, Eaton Vance and its affiliates managed approximately $150.0 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 Eaton Vance 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 Securities Exchange Act of 1934, as amended (the 1934 Act), and files periodic reports (such as reports on Form 10-Q and Form 10-K) thereunder. Copies of the reports filed by the Fund are available: at the public reference room of the Securities and Exchange Commission (SEC) in Washington, DC (call 1-202-551-8690 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 $20.4 billion as of December 31, 2006. As of December 31, 2006, the Funds investment in the Portfolio through Belvedere Company had a value of approximately $1.9 billion (equal to approximately 83.3% of the Funds total assets on a consolidated basis).

Belvedere Company.Belvedere Company was organized in 1997 by Eaton Vance to offer tax-free diversification and tax-sensitive investment management to certain qualified investors who contributed diversified portfolios of equity securities. As of December 31, 2006, the investment assets of Belvedere Company consisted exclusively of an interest inthe Portfolio with a value of approximately $14.9 billion. As of such date, the Fund owned approximately 13.0% of Belvedere Companys outstanding shares. As of December 31, 2006, the other investors in Belvedere Company included eleven 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 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, 2006, 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, 2006, Belvedere Company owned approximately 73.1% 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, 2006 are included as pages 70 to 87 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, 2006, see Performance of the Portfolio in Item 7. For a description of the investment advisory fee payable by the Portfolio, see "The Portfolios Investment Advisory Fee" in Item 13.

The Portfolios Investment Objective and Policies.The investment objective of the Portfolio is to achieve long-term, after-tax returns for its investors by investing in a diversified portfolio of equity securities. The Portfolio invests primarily in common stocks of domestic and foreign growth companies that are considered by its investment adviser to be high in quality and attractive in their long-term investment prospects. The Portfolio seeks to invest in a broadly diversified portfolio of stocks and to invest primarily in established companies with characteristics of above-average growth, predictability and stability that are acquired with the expectation of being held for a period of years. Under normal market conditions, the Portfolio invests primarily in common stocks. The Portfolio has acquired securities through contributions from Belvedere Company, 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 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 inthe 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 incomeare 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 other 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 a call 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 isclosed 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, 2006. 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, 2006, the consolidated real estate investments of Belrose Realty totaled approximately $372.6 million and represented 16.1% of the Funds total assets on a consolidated basis. 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, 2006, see "Performance of Real Estate Investments" in Item 7(a).

At December 31, 2006, Belrose Realty held investments in two real estate joint ventures (Real Estate Joint Ventures), Deerfield Property Trust (Deerfield) and Katahdin Property Trust, LLC (Katahdin), that are majority owned by Belrose Realty, in a wholly owned property (Wholly Owned Property) consisting of an office campus held by Bel Marlborough Campus, LLC (Bel Marlborough), and in a portfolio of income-producing preferred equity interests in real estate operating partnerships that generally are affiliated with and controlled by real estate investment trusts (REITs) that are publicly traded (Partnership Preference Units). 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, 2006, Belvorns sole investment was Partnership Preference Units issued by Vornado Realty L.P. At December 31, 2006, Belrose Realty owned 10.0% 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, 2006, approximately 36.7% of the consolidated real estate investments of the Fund consisted of its investments in Deerfield and Katahdin, approximately 36.4% was the investment in Bel Marlborough and approximately 26.9% 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 Property 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 Management manages 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, 2006, 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, 2006, the average occupancy rate of the properties owned by Deerfield and Katahdin was 91% and 95%, 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 Partner receives certain fees from Deerfield and Katahdin (including property management fees and, in the case of Deerfield, fees for administration, construction management, leasing, acquisitions, dispositions and other services). The Operating Partners also are reimbursed for certain payroll and other direct expenses incurred.

At December 31, 2006, the assets of Katahdin consisted of six multifamily properties and the assets of Deerfield consisted of seventeen 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 position versus the Operating Partner with respect to a fixed annual preferred return; and 2) participation on a pro rata or reduced basis in distributable cash flows in excess of the annual preferred return of 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 managment 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(a). No director of Belrose Realty or manager or trustee of Deerfield or Katahdin is a Shareholder of the Fund. Eaton Vance and its affiliates do not have a material financial interest in Deerfield and 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 Archstone-Smith Operating Trust. Archstone-Smith Trust (Archstone-Smith), the sole trustee of Archstone-Smith Operating Trust, is a publicly owned REIT. Archstone-Smith is 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, 2006, Belrose Realty owned Bel Marlborough, a Wholly Owned Property consisting of an office campus located in Marlborough, Massachusetts. Boston Management has engaged an unaffiliated professional property managment 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.

Financing for Bel Marlborough consists in part of a fixed-rate secured mortgage debt obligations of Bel Marlborough that is 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 was acquired with the proceeds of Fund borrowings. At December 31, 2006, the properties held by Bel Marlborough 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, 2006 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, 2006 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 44 to 69 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, 2006, the total value of the preferred shares outstanding of Belrose Realty was $210,000. Dividends on preferred shares are cumulative and payable annually at a dividend rate of 8% per year. The dividends paid on preferred shares have priority over payments on common shares. For the year ended December 31, 2006, Belrose Realty paid distributions to preferred shareholders of $16,800.

10

Fund Borrowings.To finance its real estate investments, the Fund has entered into credit arrangements with Dresdner Kleinwort Holdings I, Inc. (formerly, DrKW Holdings, Inc.) (the DKH Credit Facility) and Merrill Lynch Mortgage Capital, Inc. (the MLMC Credit Facility) (collectively, the Credit Facility). The Credit Facility is secured by a pledge of the Funds assets, excluding the Funds investments in Deerfield and Katahdin and the assets of Bel Marlborough, and expires in June 2010. At December 31, 2006, the total principal amount outstanding under the Credit Facility was $356.5 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. Under certain circumstances, the Fund may increase the size of the Credit Facility (subject to lender consent) and the amount of outstanding borrowings thereunder.

The DKH Credit Facility is a term credit agreement. Borrowings under the DKH Credit Facility accrue interest at a rate of one-month LIBOR plus 0.30% per annum. As of December 31, 2006, outstanding borrowings under the DKH Credit Facility totaled $266.5 million.

The MLMC Credit Facility is a revolving credit agreement. The Fund may borrow up to $242.0 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, 2006, outstanding borrowings under the MLMC Credit Facility totaled $90.0 million. There were no letters of credit issued as of December 31, 2006. The unused loan commitment amount totaled $152.0 million. A commitment fee of 0.10% per annum is paid on the unused commitment amount. The Fund pays all fees associated with issuing letters of credit.

Obligations under the Credit Facility are without recourse to Fund Shareholders. As described above, financing for Deerfield, Katahdin and Bel Marlborough consists primarily or in part of fixed-rate secured mortgage debt obligations of Deerfield, Katahdin and Bel Marlborough 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 5.32% and 5.36%, respectively, at December 31, 2006. See Note 8 to the Funds consolidated financial statements included as pages 44 to 69 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, 2006, the assets of the Fund represented approximately 1.8% 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

11

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 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 that are 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, 2006, Belrose Realty held investments in: Partnership Preference Units of five issuers; Deerfield, which owned seventeen 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); and Bel Marlborough, which owned an office campus in Marlborough, Massachusetts.



|Item 3. Legal Proceedings.
|--------------------------

Although in the ordinary course of business the Fund and its direct and indirect 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, 2006.

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, 2006, 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
     
     133,908.996
     
     $117.49November
     
     170,171.065
     
     $120.19December
     
     23,100.028
     
     $121.55Total
     
     327,180.089
     
     $120.73


|(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 estate investments will be distributed to meet a redemption request, and restricted securities will be distributed only to the Shareholder who contributed such securities or such Shareholders successor in interest. 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, Investors Bank & 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 Global or Global Select Market generally are valued at the NASDAQ Global or Global Select Market 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 full quarter during the two years ended December 31, 2006 and 2005, the closing NAV on the last business day of each full quarter, and the percentage change in NAV during each such quarter.

NAV at
     
     Quarterly %Quarter Ended
     
     High NAV
     
     Low NAV
     
     Quarter End
     
     Change in NAV(1)12/31/06
     
     $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 %12/31/05
     
     $110.09
     
     $101.04
     
     $108.30
     
     2.86%9/30/05
     
     $106.03
     
     $101.10
     
     $105.29
     
     4.51%6/30/05
     
     $102.10
     
     $ 95.86
     
     $100.75
     
     0.72%3/31/05
     
     $102.53
     
     $ 97.52
     
     $100.03
     
     -1.96%


|(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 May 15, 2007, there were 598 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 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. On January 27, 2005, the Fund made a distribution of $1.29 per Share to Shareholders of record on January 26, 2005.

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, 2006 and 2005.

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, 2006, 2005, 2004, 2003 and the period from March 19, 2002 through December 31, 2002. The following information should be read in conjunction with all of the consolidated financial statements and related notes appearing on pages 44 to 87 of this Annual Report on Form 10-K. The other consolidated data referred to below is as of each period end.

|                         |  |                         |  | Year Ended               |  | Year Ended                |  | Year Ended                |  | Period Ended        
|------------------------ |  | ----------------------- |  | ------------------------ |  | ------------------------- |  | ------------------------- |  | --------------------
|                         |  | Year Ended              |  | December 31, 2005        |  | December 31, 2004         |  | December 31, 2003         |  | December 31, 2002(1)
|                         |  | December 31, 2006       |  | Restated(4)              |  | Restated(4)               |  | Restated(5)               |  | Restated(5)         
|                         |  |                        
|Total investment income  |  | $            46,412,378 |  | $             35,404,755 |  | $             30,228,062  |  | $             25,195,165  |  | $                   
|Interest expense         |  | $            21,839,659 |  | $             10,415,418 |  | $               4,381,975 |  | $               2,796,418 |  | $                   
|Net expenses (including  |  |                         |  |                          |  |                           |  |                           |  |                     
|interest expense)        |  | $            32,314,515 |  | $             19,109,136 |  | $             12,691,206  |  | $               9,898,723 |  | $                   
|Net investment income    |  | $            14,081,063 |  | $             16,278,819 |  | $             17,520,056  |  | $             15,279,642  |  | $                   
|Net realized gain (loss) |  | $            59,033,287 |  | $             31,499,490 |  | $               1,858,876 |  | $          (33,018,883)   |  | $                   
|Net change in unrealized |  |                         |  |                          |  |                           |  |                           |  |                     
|appreciation             |  |                         |  |                          |  |                           |  |                           |  |                     
|(depreciation)           |  | $          174,054,432  |  | $             75,990,958 |  | $             97,424,550  |  | $           347,304,726   |  | $                   
|Net increase (decrease)  |  |                         |  |                          |  |                           |  |                           |  |                     
|in net assets from       |  |                         |  |                          |  |                           |  |                           |  |                     
|operations               |  | $          247,168,782  |  | $           123,769,267  |  | $           116,803,482   |  | $           329,565,485   |  | $                   
|Total assets             |  | $       2,321,691,546   |  | $        2,148,260,625   |  | $        1,934,865,122    |  | $        1,816,407,382    |  | $1,409,603,412      
|Loan payable--Credit     |  |                         |  |                          |  |                           |  |                           |  |                     
|Facility                 |  | $          356,500,000  |  | $           393,500,000  |  | $           236,000,000   |  | $           183,300,000   |  | $                   
|Mortgage note payable    |  | $            62,401,229 |  | $                        |  |                          |  | $                         |  |                    
|Net assets               |  | $       1,899,447,145   |  | $        1,753,010,400   |  | $        1,694,227,425    |  | $        1,632,454,758    |  | $1,242,001,655      
|Shares outstanding       |  | 15,490,955              |  | 16,186,813               |  | 16,604,562                |  | 17,032,796                |  |                     
|Net asset value and      |  |                         |  |                          |  |                           |  |                           |  |                     
|redemption price per     |  |                         |  |                          |  |                           |  |                           |  |                     
|Share                    |  | $                       |  | 122.62                   |  | $                         |  | 108.30                    |  | $                   
|Net increase (decrease)  |  |                         |  |                          |  |                           |  |                           |  |                     
|in net assets from       |  |                         |  |                          |  |                           |  |                           |  |                     
|operations per Share(2)  |  | $                       |  | 15.60                    |  | $                         |  | 7.56                      |  | $                   
|Distribution paid per    |  |                         |  |                          |  |                           |  |                           |  |                     
|Share(3)                 |  | $                       |  | 1.28                     |  | $                         |  | 1.29                      |  | $                   

|(1) | The Fund commenced operations on March 19, 2002.                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Based on average Shares outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) | 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).                                                                                                                                                                                                                            
|   
|(4) | As discussed in Note 13 to the consolidated financial statements included in this Annual Report on Form 10-K, the financial statements from which the selected financial data are derived, have been restated. The selected financial data has been restated as follows: total assets were previously reported as $2,333,346,902 and restated as $1,934,865,122 and mortgage notes payable was previously reported as $359,850,000 and restated as $0.
|   
|(5) | As discussed in Note 13 to the consolidated financial statements included in this Annual Report on Form 10-K, the financial statements from which the selected financial data are derived, have been restated.  The selected financial data has been restated as follows:                                                                                                                                                                             
|   

17

Year Ended
     
     
     
     Year EndedDecember 31, 2003
     
     
     
     December 31, 2002Previously
     
     
     
     
     
     
     
     PreviouslyReported
     
     
     
     Restated
     
     
     
     Reported
     
     
     
     RestatedTotal investment income
     
     $
     
     82,312,956
     
     $
     
     25,195,165
     
     $
     
     44,487,727
     
     $
     
     11,322,878Interest expense
     
     $
     
     29,114,183
     
     $
     
     2,796,418
     
     $
     
     16,926,050
     
     $
     
     1,781,474Net expenses (including interestexpense)
     
     $
     
     65,089,736
     
     $
     
     9,898,723
     
     $
     
     37,590,944
     
     $
     
     5,875,402Minority interests in net incomeof controlled subsidiaries
     
     $
     
     (1,943,578)
     
     $
     
     
     
     $
     
     (1,465,099)
     
     $Net realized gain (loss)
     
     $
     
     2,449,130
     
     $
     
     (33,018,883)
     
     $
     
     5,188,827
     
     $
     
     (22,063,666)Net change in unrealized
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     appreciation (depreciation)
     
     $
     
     311,836,713
     
     $
     
     347,304,726
     
     $
     
     (129,398,897)
     
     $ (102,146,404)Total assets
     
     $ 2,193,423,733
     
     $
     
     1,816,407,382
     
     $ 1,791,452,901
     
     $ 1,409,603,412Mortgage notes payable
     
     $
     
     344,219,483
     
     $
     
     
     
     $
     
     344,219,483
     
     $
     
     


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 1934 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 44 to 69 of this Annual Report on Form 10-K. The MD&A gives effect to the restatement for the fiscal years ended December 31, 2005 and 2004 as discussed in Note 13 to the consolidated financial statements.



|(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 Property, net investment income allocated to the Fund from Real Estate Joint Venture investments, partnership income allocated from the Partnership Preference Units owned directly or indirectly by Belrose Realty 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 Property, 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

18

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, 2006 Compared to the Year Ended December 31, 2005.

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 borrowing incurred to acquire such investments and thereby add to Fund returns. The Fund has entered into interest rate swap agreements to fix the cost of 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.

The Funds total return for the year ended December 31, 2006 was 14.56%. This return reflects 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 combined impact on performance of the Funds investment activities outside of the Portfolio was positive for the year ended December 31, 2006.

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 distribution of $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. 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%, which trailed the S&P 500 Index by 0.21%.

|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

19

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.The Funds real estate investments are held through Belrose Realty. 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. Deerfield owns industrial distribution properties and Katahdin owns multifamily properties.

On September 20, 2006, Belrose Realty acquired Bel Marlborough for a purchase price of approximately $135.0 million. This acquisition was financed through an assumed mortgage (approximately $62.7 million at the time of the transaction) and borrowings under the Funds Credit Facility (described under "Liquidity and Capital Resources" below). 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. 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 (Bel Communities), 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.

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

20

from changes in swap agreement valuations in 2006 was attributable to a rise in swap rates during the year for swaps with maturities comparable to those of the Funds swaps.

MD&A for the Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004.

Performance of the Fund.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 distribution of $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.

The Fund had a total return of 7.32% for the year ended December 31, 2004. This return reflected an increase in the Funds net asset value per Share from $95.84 to $102.03 and a distributionof $0.77 per Share during the period. For comparison, the S&P 500 Index had a total return of 10.87% over the same period.

Performance of the Portfolio.A late year surge helped the stock market conclude 2005 on a positive note, locking in its third consecutive annual gain. The S&P 500 Index had a positive, albeit modest, total return for the year, despite investor angst over rising interest rates, record-level energy prices and a flattening yield curve. These factors were offset by resilient consumer spending and healthy corporate profits. Double-digit growth in dividend payouts and share buybacks, coupled with continued strength in merger and acquisition activity, provided additional support for equities.

For the year ended December 31, 2005, energy and utilities were the top performing sectors in the S&P 500 Index. The energy sector was up 31% in 2005 and the utility sector rose over 16% for the same period. In contrast, each of the eight remaining sectors in the S&P 500 Index recorded single-digit or negative returns. The more growth-oriented consumer discretionary, telecommunications and technology sectors were the worst performers for the year. Also, small- and mid-capitalization stocks outperformed large-cap stocks.

The Portfolios performance for the year ended December 31, 2005 was 4.70%, trailing the return of the S&P 500 Index by 0.21% due in part to differences in sector allocation and stock selection. The total return of the Portfolio for the year ended December 31, 2004 was 9.67% . The Portfolio remained overweighted in the industrials and energy sectors, while continuing to underweight the technology, telecommunications and utilities sectors. The Portfolios energy emphasis was additive to performance as stocks there advanced on record-high commodity prices. Financials also experienced solid gains in 2005, and the Funds performance benefited from the Portfolios overweighting of capital markets and insurance industries and de-emphasis of mortgage finance stocks. Telecommunications stocks continued to struggle through the year, and the Portfolios underweighted position there was beneficial to returns.

The Portfolios worst performance came from the industrials and information technology sectors. Capacity and pricing issues plagued information technology holdings, and investments within computers and peripherals were notable underperformers. An overweighting in lagging machinery and building products stocks within the industrials sector was also deterimental to performance. In addition, de-emphasis of the slower-growth, high-dividend-yielding areas, such as utilities, also detracted from returns, as investors favored these defensive investments for much of 2005.

Performance of Real Estate Investments.As of December 31, 2005, real estate investments included investments in two Real Estate Joint Ventures (Deerfield and Katahdin) and a portfolio of Partnership Preference Units.

On December 28, 2005, Katahdin sold a multifamily property for approximately $42.3 million, resulting in a gain of approximately $8.7 million for Belrose Realty. On December 15, 2005, Katahdin purchased a multifamily property for approximately $55.0 million. On September 30, 2005, a property management contract in which Deerfield held an interest was terminated, resulting in a gain of approximately $0.8 million for Belrose Realty. On April 6, 2005, Deerfield sold an industrial distribution property for approximately $3.1 million, recognizing a loss of approximately $0.2 million on the transaction. On October 14, 2005, Belrose Realty sold its interest in Bel Communities to the real estate investment affiliate of another investment fund advised by Boston Management, recognizing a $12.3 million gain on the transaction.

During the year ended December 31, 2005 Belrose Realty acquired interests in additional Partnership Preference Units (including acquisitions from real estate investment affiliates of other investment funds advised by Boston Management) for a total of approximately $138.3 million. During the year ended December 31, 2005, Belrose Realty also sold certain of its Partnership Preference Units for a total of approximately $15.2 million (representing sales to real estate investment affiliates of other investment funds advised by Boston Management), recognizing a net gain of approximately $0.3 million on the transactions.

21

During the year ended December 31, 2005, the Funds net investment income from real estate investments held through Belrose Realty was approximately $16.2 million compared to approximately $13.0 million for the year ended December 31, 2004, an increase of $3.2 million or 25%. The increase was principally due to increases in net investment income from the Real Estate Joint Venture investments and higher average investments in Partnership Preference Units during the year, offset in part by the sale of Bel Communities and lower average distribution rates for the Partnership Preference Units held. The decrease in average distribution rates for Partnership Preference Units was primarily due to the restructuring of certain Partnership Preference Units during the year ended December 31, 2005 (reflecting lower market rates for preferred securities) as they neared their potential call dates.

The estimated fair value of the Funds real estate investments was approximately $349.2 million at December 31, 2005 compared to approximately $173.0 million at December 31, 2004, a net increase of $176.2 million or 102%. This net increase was principally due to more Partnership Preference Units held at year end and increases in the estimated net values of Belrose Realtys investment in the Real Estate Joint Ventures, partially offset by the sale of its interests in Bel Communities in October 2005.

Despite weak operating conditions in 2005 and prior years, estimated property values increased during 2005 as lower near-term property earnings expectations generally were offset by lower capitalization and discount rates applied in valuing properties. The increase in estimated fair values during 2005 also is attributable in part to increased investor demand for multifamily properties in certain markets experiencing increased condominium conversion activity. During 2005, estimated fair values for Partnership Preference Units were positively affected by declining interest rates.

During the year ended December 31, 2005, the Fund saw net unrealized appreciation of the estimated fair value of its real estate investments of approximately $23.3 million compared to net unrealized depreciation of approximately $35.6 million during the year ended December 31, 2004. Net unrealized appreciation of approximately $23.3 million during the year ended December 31, 2005 consisted of approximately $20.8 million of net unrealized appreciation in the Real Estate Joint Venture investments and $2.5 million of net unrealized appreciation in the value of the Partnership Preference Units.

Performance of Interest Rate Swap Agreements.For the year ended December 31, 2005, net realized and unrealized gains on the Funds interest rate swap agreements totaled approximately $4.2 million, compared to net realized and unrealized losses of $5.1 million for the year ended December 31, 2004. Net realized and unrealized gains on swap agreements in 2005 consisted of $5.6 million of net realized and unrealized gains due to changes in swap agreement valuations, offset by $1.4 million of periodic net payments made pursuant to outstanding swap agreements (and classified as net realized losses on interest rate swap agreements in the Funds consolidated financial statements). The positive contribution to Fund performance from changes in swap agreement valuations in 2005 was attributable to a rise in swap rates during the year for swaps with maturities comparable to those of the Funds swaps.



|(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 June 30, 2006, the Fund amended the DKH Credit Facility to increase the amount available for borrowing by $24.0 million to an aggregate amount of $266.5 million. The Fund also amended the MLMC Credit Facility on June 30, 2006 to increase the amount available by $60.0 million to an aggregate amount available for borrowing of $242.0 million. The Fund further amended the MLMC Credit Facility on January 18, 2007 to decrease the amount available by $45.0 million to an aggregate amount available for borrowing of $197.0 million.

As of December 31, 2006, the Fund had outstanding borrowings of $356.5 million and unused loan commitments of $152.0 million under the Credit Facility. In the future, the Fund may increase the size of the Credit Facility (subject to lender consent) and the amount of outstanding borrowings thereunder.

On May 9, 2007, the Fund amended the MLMC Credit Facility to decrease the amount available thereunder by $25.0 million to an aggregate amount available for borrowing of $172.0 million.

As of December 31, 2006, Bel Marlborough had outstanding borrowings consisting of fixed-rate secured mortgage obligations of $62.4 million.

22

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, 2006, the Portfolio had cash totaling $21.1 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, 2006. 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, 2006, the Portfolio had no illiquid assets.

The liquidity of Belrose Realtys investments in Deerfield and Katahdin is extremely limited and relies principally upon buy/sell and/or liquidation agreement 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.
|-----------------------------------

Belrose Realtys investments in Deerfield and Katahdin are presented in the Funds consolidated financial statements using the equity method and, as such, are not consolidated with the Fund. The Funds investment in Deerfield and Katahdin at December 31, 2006 were $43.8 million (or 2.3% of the Funds total net assets) and $93.1 million (or 4.9% of the Funds total net assets), respectively. Additional information about Deerfield and Katahdin is contained in Note 7 to the Funds consolidated financial statements. The Fund does not have any relationships with unconsolidated entities that have been established solely for the purpose of facilitating off-balance sheet arrangements.

23

(d) The Funds Contractual Obligations.

The following table sets forth the amounts of payments due under the specified contractual obligations outstanding on December 31, 2006:

Payments due:Less than
     
     
     
     
     
     
     
     More thanType of Obligation
     
     Total
     
     1 Year
     
     
     
     1-3 Years
     
     3-5 Years
     
     5 YearsLong Term Debt:Mortgage Debt(1)
     
     $  62,401,229
     
     $     949,297
     
     $
     
     2,045,647
     
     $    2,282,732
     
     $    57,123,553Borrowings under Credit Facility(2)
     
     $356,500,000
     
     $
     
     
     
     $
     
     
     
     $356,500,000
     
     $
     
     Service Agreements(3)Other Long Term Liabilities:Interest Rate Swap Agreements(4)
     
     $ 32,534,683
     
     $  8,218,575
     
     $     16,437,151
     
     $    6,922,656
     
     $
     
     956,301Total
     
     $451,435,912
     
     $  9,167,872
     
     $     18,482,798
     
     $365,705,388
     
     $  58,079,854


|(1) | The property held by Belrose Realty is financed in part through mortgage notes issued to Bel Marlborough. The mortgage notes are secured by the underlying property and are without recouse 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. Amount does not reflect interest. The mortgage notes cannot be prepaid or otherwise disposed of without incurring a substantial prepayment penalty.                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | To finance its real estate investments, the Fund has entered into a Credit Facility as described in "Liquidity and Capital Resources" above. The Credit Facility is secured by a pledge of the Funds assets, excluding the Funds investments in Deerfield and Katahdin and the assets of Bel Marlborough, and expires on June 25, 2010. The Credit Facility is primarily used to finance the Funds equity in its real estate investments and will continue to be used for such purpose in the future. The Credit Facility may also be used for other purposes, including any liquidity needs of the Fund. 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, 2006, fees paid to Eaton Vance and its affiliates equaled approximately 1.05% of the Funds net assets. Because these fees are based on the Funds assets (which will fluctuate over time) it is not possible to specify the dollar amounts payable in the future.                                                                                                              
|   
|(4) | The Fund has entered into interest rate swap agreements to fix the cost of 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

24

believes the investment could be sold in a current transaction between willing parties in an orderly disposition, that is, other than in a forced or liquidation sale. The Fund reports the estimated fair value of its real estate investments on its consolidated statement of assets and liabilities, with any changes to estimated fair value recorded as unrealized appreciation or depreciation in the Funds consolidated statement of operations.

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

- such assets are, by their nature, difficult to value and estimated 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, 2006, the estimated fair value of the Funds real estate investments represented 16.1% 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 property 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. Property appraisals are inherently uncertain because they apply assumed discount rates, capitalization rates, growth rates and inflation rates to the appraisers estimated stabilized cash flows, and due to the unique characteristics of a property, which may affect its value but may not be taken into account. If the assumptions and estimates used by the appraisers to determine the value of the properties owned by the 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

25

been appraised (such as when the Real Estate Joint Venture recently acquired the property), Boston Management determines the estimated fair value of the property based on the transaction value of the property, which equals the total acquisition cost of the property exclusive of certain legal and transaction costs, provided such amount is deemed indicative of fair value. Once an appraisal of a property has been conducted, Boston Management bases the estimated fair value of the property principally on the estimated value as determined by the appraiser. Appraisals of newly acquired properties are conducted in the year following the acquisition. If the initial appraised value of a newly acquired property differs significantly from the transaction value of the property, it may materially impact the estimated fair value of the Real Estate Joint Venture that holds the property. Interim valuations of Real Estate Joint Venture assets may be adjusted to reflect results of operations, significant changes in economic circumstances and/or recent independent valuations of similar properties and distributions. As of December 31, 2006, all of the properties owned by Deerfield and Katahdin had been appraised during the preceding 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. 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, and due to the unique characteristics of the property, which may affect its value but cannot be taken into account. If the assumptions and estimates used by the appraisers to determine the value of the property owned by the Funds subsidiary were to change, it could materially impact the estimated fair value of the Funds equity interest in Wholly Owned Property.

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

26

month Boston Management reviews the analysis and calculations performed by the service provider. Boston Management generally relies on the assumptions and judgments made by the service provider in estimating the fair value of the Partnership Preference Units. If the assumptions and estimates used by the service provider to calculate prices for Partnership Preference Units were to change, it could materially impact the estimated fair value of the Funds holdings of Partnership Preference Units.

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 Bel Marlborough. 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 and to mitigate in part the impact of interest rate changes on the Funds net asset value. Under the terms of the interest rate swap agreements, the Fund makes cash payments at fixed rates in exchange for floating rate payments that fluctuate with one-month 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 44 to 69 of this Annual Report on Form 10-K.

27



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

EstimatedFair Valueas ofDecember2007
     
     2008
     
     2009
     
     2010
     
     2011
     
     Thereafter
     
     Total
     
     31, 2006Rate sensitive liabilities:Long-term debt:Fixed-rate mortgages
     
     $949,297
     
     $991,370
     
     $1,054,277
     
     $1,111,308
     
     $1,171,424
     
     $57,123,553
     
     $62,401,229
     
     $61,900,000Average interest rate
     
     5.21%
     
     5.21%
     
     5.21%
     
     5.21%
     
     5.21%
     
     5.21%
     
     5.21%Variable-rate CreditFacility
     
     
     
     
     
     
     
     $356,500,000
     
     
     
     
     
     $356,500,000
     
     $356,500,000Average interest rate
     
     
     
     
     
     
     
     5.64%
     
     
     
     
     
     5.64%Rate sensitive derivativefinancial instruments:Pay fixed/receive variableinterest rateswap agreements
     
     
     
     
     
     
     
     $152,838,000
     
     
     
     $40,000,000
     
     $192,838,000
     
     $6,286,958Average pay rate
     
     
     
     
     
     
     
     4.10%
     
     
     
     4.88%
     
     4.26%Average receive rate
     
     
     
     
     
     
     
     5.62%
     
     
     
     5.36%
     
     5.57%Rate sensitiveinvestments:Fixed-rate PartnershipPreference Units:Colonial Realty LimitedPartnership, 7.25% SeriesB CumulativeRedeemable PerpetualPreferred Units,Callable 8/24/09,Current Yield: 7.44%
     
     
     
     
     
     $19,419,240
     
     
     
     
     
     
     
     $19,419,240
     
     $19,496,000Essex Portfolio, L.P.,7.875% Series BCumulative RedeemablePreferred Units,Callable 12/31/09,Current Yield: 7.80%
     
     
     
     
     
     $26,643,900
     
     
     
     
     
     
     
     $26,643,900
     
     $26,503,155Essex Portfolio, L.P.,7.875% Series DCumulative RedeemablePreferred Units,Callable 7/28/10,Current Yield: 7.74%
     
     
     
     
     
     
     
     $12,642,150
     
     
     
     
     
     $12,642,150
     
     $12,723,050


28

|                        |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  | Estimated  
|----------------------- |  | ---- |  | ---- |  | ---- |  | ----------- |  | ---- |  | ---------- |  | ----------- |  | -----------
|                        |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  | Fair Value 
|                        |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  | as of      
|                        |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  | December   
|                        |  | 2007 |  | 2008 |  | 2009 |  | 2010        |  | 2011 |  | Thereafter |  | Total       |  | 31, 2006   
|                       
|MHC Operating Limited   |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Partnership, 8.0625%    |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Series D Cumulative     |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Redeemable Perpetual    |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Preference Units,       |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Callable 3/24/10,       |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Current Yield: 8.09%    |  |      |  |      |  |      |  | $25,186,560 |  |      |  |            |  | $25,186,560 |  | $24,930,000
|PSA Institutional       |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Partners, L.P., 6.4%    |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Series NN Cumulative    |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Redeemable Perpetual    |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Preferred Units,        |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Callable 3/17/10,       |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Current Yield: 6.99%    |  |      |  |      |  |      |  | $7,189,950  |  |      |  |            |  | $7,189,950  |  | $6,864,000 
|Vornado Realty L.P.,    |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|6.75% Series            |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|D-14 Cumulative         |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Redeemable Preferred    |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Units,                  |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Callable 9/9/10,        |  |      |  |      |  |      |  |             |  |      |  |            |  |             |  |            
|Current Yield: 6.88%(1) |  |      |  |      |  |      |  | $9,300,636  |  |      |  |            |  | $9,300,636  |  | $9,809,098 



| | * The amounts listed reflect the Funds positions as of December 31, 2006. 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

29

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. 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).

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

30

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 Fund 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 Marlborough 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 reflects in part the creditworthiness of its principal tenant, 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 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

31

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 obligation of Bel Marlborough is generally without recourse to Belrose Realty, the potential loss from Belrose Realtys investments in Bel Marlborough 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 are 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.

32

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 Real Estate Joint Ventures and any assets of Wholly Owned Property or Co-owned Property. 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 these distributions from Deerfield and Katahdin.

33

Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements required by Item 8 are contained on pages 44 to 87 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, 2006 and 2005.

|                                                      |  | 2006         
|----------------------------------------------------- |  | -------------
|                                                      |  |              
|                                                      |  | First        
|                                                      |  | Quarter      
|                                                      |  | Restated(2)  
|                                                      |  |              
|Investment income                                     |  | $10,680,750  
|Net investment income                                 |  | $ 3,816,776  
|Net increase (decrease) in net assets from operations |  | $80,801,929  
|Per share data:(1)                                    |  |              
|Investment income                                     |  | $            
|Net investment income                                 |  | $            
|Net increase (decrease) in net assets from operations |  | $            
|                                                      |  | 2005         
|                                                      |  |              
|                                                      |  | First        
|                                                      |  | Quarter      
|                                                      |  | Restated(2)  
|                                                      |  |              
|Investment income                                     |  | $            
|Net investment income                                 |  | $            
|Net increase (decrease) in net assets from operations |  | $(11,694,689)
|Per share data:(1)                                    |  |              
|Investment income                                     |  | $            
|Net investment income                                 |  | $            
|Net increase (decrease) in net assets from operations |  | $            

|(1) | Based on average Shares outstanding.                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------
|   
|(2) | The unaudited quarterly results of operations for 2006 as previously stated on Form 10-Q are restated as follows:
|   

|                                |  | 2006         
|------------------------------- |  | -------------
|                                |  |              
|                                |  | First Quarter
|                                |  | Previously   
|                                |  | Reported     
|                                |  |              
|Investment income               |  | $19,080,282  
|Minority interest in net income |  |              
|of controlled subsidiary        |  | $ (527,539)  
|Per share data:(1)              |  |              
|Investment income               |  | $            
|.                               |  |              

34

As discussed in Note 13 to the consolidated financial statements included in this Annual Report on Form 10-K, the financial statements from which the unaudited quarterly results of operations are derived have been restated as follows:

|                                |  | 2005         
|------------------------------- |  | -------------
|                                |  |              
|                                |  | First Quarter
|                                |  | Previously   
|                                |  | Reported     
|                                |  |              
|Investment income               |  | $20,955,693  
|Minority interest in net income |  |              
|of controlled subsidiary        |  | $            
|Per share data:(1)              |  |              
|Investment income               |  | $            

|(1) | Based on average Shares outstanding.
|--- | ------------------------------------
|   

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 January 22, 2007, Eaton Vance appointed Andrew C. Frenette Chief Financial Officer to replace Michelle A. Green. Ms. Green stepped down from the position to focus on her other responsibilities as a member of the Eaton Vance Fund Administration team. Ms. Green will continue to be involved in the administration 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 Board of Directors of Eaton Vance, Inc. (the sole trustee of Eaton Vance) any significant deficiency in the design or operation of internal control over financial reporting which could adversely affect the Funds ability to record, process, summarize and report financial data, and any fraud, whether or not material, that involves management or other employees who have a significant role in the Funds internal control over financial reporting.

Disclosure Controls and Procedures.Eaton Vance, as the Funds manager, evaluated the effectiveness of the Funds disclosure controls and procedures (as defined by Rule 13a-15(e) of the 1934 Act) as of the end of the period covered by this report, with the participation of the Funds Chief Executive Officer and Chief Financial Officer. The Funds disclosure 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, and the revision to controls relative to the Real Estate Joint Venture investments referred to below, the Funds Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2006, 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 1934 Act. Fund managements report on internal control over financial reporting, including its assessment of the Funds internal control over financial reporting, appears on page 68 of this Annual Report on Form 10-K.

In financial statements prior to December 31, 2006, the Fund had consolidated Real Estate Joint Ventures in which it held a majority economic interest. Prior to the issuance of its financial statements as of and for the year ended December 31, 2006, the Fund determined that the Real Estate Joint Venture investments should not have been consolidated because the Fund did not have voting rights to control significant decisions relating to the Real Estate Joint Ventures and that the Funds net investment in the Real Estate Joint Venture(s) should be presented using the equity method. The revised accounting had no effect on the Funds previously stated net asset value per share, net assets, net investment income, and net increase in net assets from operations or total return.

This control deficiency represented a material weakness in the Funds internal control over financial reporting and resulted in the restatement described in Note 13 of the Funds consolidated financial statements. Fund management remediated the

35

material weakness by revising its controls relative to the Real Estate Joint Venture investments. At December 31, 2006, Fund management believed its internal control over financial reporting was effective.



|Item 9B. Other Information.
|---------------------------



|None.
|-----

36



|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, 32, 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 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 directors of Eaton Vance, Inc. are James B. Hawkes and William M. Steul. The Funds audit committee financial expert (as that term is defined in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act) is Mr. Steul. Messrs. Hawkes and Steul are senior officers of Eaton Vance and, as such, are not independent of Fund management. Information about Mr. Hawkes and Mr. Steul appears below.

Boston Management is investment adviser to the Fund and the Portfolio and manager of 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 Eaton Vance 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.

The directors of Belrose Realty are Mr. Faust, William R. Cross and Alan R. Dynner, 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. Messrs. Cross and Dynner and David Carlson serve as managers or trustees of Deerfield and Katahdin. Mr. Dynner is also Vice President of Katahdin. Mr. Carlson is secretary of Katahdin and Mr. Cross serves as Chairman of Katahdin and President and Chairman of Deerfield. Mr. Carlson is a Vice President of Eaton Vance and Boston Management and has been employed by the Eaton Vance organization since 2001. Information about Mr. Dynner appears below.

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

James B. Hawkes (65) is Chairman, Chief Executive Officer and a Director of Eaton Vance Corp. and Chief Executive Officer of Eaton Vance, Boston Management and Eaton Vance, Inc., and a Director of Eaton Vance, Inc. He is Vice President and Director of EV Distributors. He is also a Trustee and an officer of various investment companies managed by Eaton Vance or Boston Management and has been employed by Eaton Vance since 1970.

37

Thomas E. Faust Jr. (49) is President and Chief Investment Officer of Eaton Vance and Boston Management, President of Eaton Vance, Inc., and a Director, President and Chief Investment Officer of Eaton Vance Corp. 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.

Alan R. Dynner (66) is Vice President, Chief Legal Officer and Secretary of Eaton Vance, Boston Management, Eaton Vance Corp., EV Distributors and Eaton Vance, Inc. He is also an officer of various investment companies managed by Eaton Vance or Boston Management and has been employed by Eaton Vance since 1996.

Duncan W. Richardson, (49), 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.

William M. Steul (64) is Vice President and Chief Financial Officer of Eaton Vance, Boston Management, Eaton Vance Corp. and Eaton Vance, Inc. and a Director of Eaton Vance, Inc. He is also Vice President of EV Distributors. He has been employed by Eaton Vance since 1994.

(b) Compliance with Section 16(a) of the Securities Exchange Act of 1934.

Section 16(a) of the 1934 Act requires the Funds officers and directors and persons who own more than ten percent of the Funds Shares to file forms reporting their affiliation with the Fund and reports of ownership and changes in ownership of the Funds Shares with the SEC. Eaton Vance, as manager of the Fund, and the Directors and executive officers of Eaton Vance, Inc., the sole trustee of Eaton Vance, also comply with Section 16(a). These persons and entities are required by SEC regulations to furnish the Fund with copies of all Section 16(a) forms they file. To the best of the Funds knowledge, during the year ended December 31, 2006 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 May 15, 2007, Eaton Vance, the manager of the Fund, beneficially owned 105 Shares of the Fund. The Shares owned by Eaton Vance represent less than 1% of the outstanding Shares of the Fund as of May 15, 2007. 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.
|----------------------------------

38

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 1934 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 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, 2006.

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, 2006 and 2005 in connection with services rendered by Eaton Vance and its affiliates. Each fee is described following the table.

Year ended
     
     Year endedDecember 31, 2006
     
     December 31, 2005Fund Advisory and Administrative Fees*
     
     $1,543,775
     
     $1,311,285Belrose Realty Management Fees
     
     $3,181,220
     
     $2,954,419Funds Allocable Portion of the Portfolios Advisory Fees**
     
     $7,923,957
     
     $7,486,967Fund Servicing Fees
     
     $1,737,206
     
     $1,610,761Funds Allocable Portion of Belvedere Companys Servicing Fees
     
     $2,760,750
     
     $2,601,544Fund Distribution Fees
     
     $1,798,943
     
     $1,685,761Redemption Fees paid by Redeeming Shareholders
     
     $0
     
     $ 128,646Aggregate Compensation Paid by the Fund to Eaton Vance and itsAffiliates
     
     $6,523,938
     
     $5,951,465


|*  | 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, 2006 and 2005, advisory fees paid or payable by the Portfolio totaled $83,331,377 and $80,617,092, respectively. For the year ended December 31, 2006, Belvedere Companys allocable portion of that fee was $59,961,479, of which $7,923,957, was allocable to the Fund. For the year ended December 31, 2005, Belvedere Companys allocable portion of that fee was $55,259,100, of which $7,486,967 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 the deconsolidation of Real Estate Joint Venture investments and 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%

39

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 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 the deconsolidation of Real Estate Joint Venture investments and 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 Rate 
|-------------------------------------- |  | ----------------
|Average Daily Net Assets for the Month |  | (for each level)
|                                      
|Up to $500 million                     |  | 0.6250%         
|$500 million but less than $1 billion  |  | 0.5625%         
|$1 billion but less than $1.5 billion  |  | 0.5000%         
|$1.5 billion but less than $7 billion  |  | 0.4375%         
|$7 billion but less than $10 billion   |  | 0.4250%         
|$10 billion but less than $15 billion  |  | 0.4125%         
|$15 billion 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

40

compensation for its services as placement agent. The distribution fee accrued from the Funds initial closing and will continue for a period of ten years (subject to the annual approval of Eaton Vance, Inc.).

Redemption Fees.Shares of the Fund redeemed within three years of issuance are generally subject to a redemption fee equal to 1% of the net asset value of the Fund Shares redeemed. The redemption fee is payable to EV Distributors in cash by the Fund on behalf of the redeeming Shareholder. No redemption fee is imposed on Shares of the Fund held for at least three years, Shares acquired through the reinvestment of Fund distributions, Shares redeemed in connection with a tender offer or other extraordinary corporate event involving securities contributed by the redeeming Shareholder, or Shares redeemed following the death of all of the initial owners of the Shares redeemed. In addition, no fee applies to redemptions made pursuant to a systematic redemption plan established by a Shareholder with the Fund. After February 19, 2006, redemptions of outstanding Shares of the Fund were no longer subject to the redemption fee.

Certain Real Estate Investment Transactions.During the year ended December 31, 2006, 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 purchased Partnership Preference Units from Belmar Realty Corporation, which realized a loss of approximately $0.1 million on the transaction.
- Belrose Realty sold Partnership Preference Units to Clearwood Realty Corporation, realizing a loss of approximately $0.6 million on the transactions.
- Belrose Realty sold Partnership Preference Units to Belbrook Realty Corporation, realizing a loss of approximately $1.9 million on the transactions.

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 Accounting 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, 2006 and 2005 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 31,2006
     
     2005Audit fees
     
     $108,634
     
     $141,770Tax fees (1)
     
     224,377
     
     135,276Total
     
     $333,011
     
     $277,046


|(1) | Tax fees consist of the aggregate fees billed for professional services rendered by Deloitte & Touche Tax LLP for tax compliance, tax advice and tax planning.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

The directors of Eaton Vance, Inc. review all audit, audit-related, tax and other fees at least annually. The directors of Eaton Vance, Inc. pre-approved all audit and tax services for the years ended December 31, 2006 and 2005. The directors of Eaton Vance, Inc. have concluded that the provision of the tax services listed above is compatible with maintaining the independence of Deloitte & Touche LLP.

41



|PART IV
|-------

Item 15. Exhibits and Financial Statement Schedules.

|(a) |  | Please see the Funds consolidated financial statements on pages 44 to 69 of this Annual Report on Form       
|--- |  | --------------------------------------------------------------------------------------------------------------
|    |  | 10-K. Please see the Portfolios financial statements on pages 70 to 87 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 89
|    |  | hereof.                                                                                                       

42



| | (A ) Eaton Vance is the manager of the Fund; Boston Management is the Fund's investment adviser.
(B ) Boston Management is the manager of Belvedere Company.
(C ) Boston Management is the Portfolio's investment adviser.
(D ) Boston Management is the manager of 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 is a wholly owned subsidiary of Belrose Realty.
(G ) Belrose Realty owns a minority interest in Belvorn, which owns Partnership Preference Units issued by Vornado Realty L.P.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

43

Belrose  Capital  Fund  LLC

C O N S O L I D A T E D   P O R T F O L I O S   O F   I N V E S T M E N T S

A s  o f  D e c e m b e r  3 1 ,  2 0 0 6



| | I n v e s t m e n t  i n  B e l v e d e r e  C a p i t a l  F u n d
C o m p a n y  L L C  8 3 . 8 %
| | ----------------------------------------------------------------------------------------------------

|Security                                                         |  | Shares         |  | Value         
|---------------------------------------------------------------- |  | -------------- |  | --------------
|                                                                
|Investment in Belvedere Capital Fund Company LLC                 |  |                |  |               
|(Belvedere Company)                                              |  | 9,785,750      |  | $1,934,569,661
|                                                                
|Total Investment in Belvedere Company                            |  |               
|(identified cost, $1,366,053,644)                                |  | $1,934,569,661
|                                                                
|P a r t n e r s h i p  P r e f e r e n c e  U n i t s   4 . 4 %
|Security                                                         |  | Units          |  | Value         
|                                                                
|Belvorn Holdings LLC(1)(2)                                      |  | 93,005         |  | $             
|Colonial Realty Limited Partnership                              |  |                |  |               
|(Delaware Limited Partnership affiliate of                       |  |                |  |               
|Colonial Properties Trust), 7.25% Series B                       |  |                |  |               
|Cumulative Redeemable Perpetual Preferred                        |  |                |  |               
|Units, Callable from 8/24/09(2)                                 |  | 400,000        |  |               
|Essex Portfolio, L.P. (California Limited                        |  |                |  |               
|Partnership affiliate of Essex Property                          |  |                |  |               
|Trust, Inc.), 7.875% Series B Cumulative                         |  |                |  |               
|Redeemable Preferred Units, Callable                             |  |                |  |               
|from 12/31/09(2)                                                |  | 525,000        |  |               
|Essex Portfolio, L.P. (California Limited                        |  |                |  |               
|Partnership affiliate of Essex Property                          |  |                |  |               
|Trust, Inc.), 7.875% Series D Cumulative                         |  |                |  |               
|Redeemable Preferred Units, Callable                             |  |                |  |               
|from 7/28/10(2)                                                 |  | 500,000        |  |               
|MHC Operating Limited Partnership                                |  |                |  |               
|(Illinois Limited Partnership affiliate of                       |  |                |  |               
|Equity Lifestyle Properties, Inc.), 8.0625%                      |  |                |  |               
|Series D Cumulative Redeemable Perpetual                         |  |                |  |               
|Preference Units, Callable from 3/24/10(2)                      |  | 1,000,000      |  |               
|PSA Institutional Partners, L.P. (California                     |  |                |  |               
|Limited Partnership affiliate of Public Storage,                 |  |                |  |               
|Inc.), 6.4% Series NN Cumulative                                 |  |                |  |               
|Redeemable Perpetual Preferred Units,                            |  |                |  |               
|Callable from 3/17/10(2)                                        |  | 300,000        |  |               
|                                                                
|Total Partnership Preference Units                               |  |                |  |               
|(identified cost, $100,382,436)                                  |  |                |  | $             
|                                                                
|R e a l  E s t a t e  J o i n t  V e n t u r e s   5 . 9 %     
|Description                                                      |  |                |  | Value         
|                                                                
|Investment in Deerfield Property Trust(2)(3)                     |  |                |  | $             
|Investment in Katahdin Property Trust, LLC(2)(4)                 |  |                |  |               
|                                                                
|Total Real Estate Joint Ventures                                 |  |                |  |               
|(identified cost, $118,770,822)                                  |  |                |  | $             
|                                                                

|W h o l l y  O w n e d  P r o p e r t y   5 . 9 %
|--------------------------------------------------
|Description                                       
|                                                  
|Bel Marlborough Campus, LLC(2)(5)                 
|                                                  
|Total Wholly Owned Property                       
|(identified cost, $135,667,563)                   
|                                                  
|S h o r t - Te r m  I n v e s t m e n t  0 . 0 % 
|                                                  
|                                                  
|Description                                       
|                                                  
|Investment in Cash Management Portfolio, 4.87%(6) 
|                                                  
|Total Short-Term Investment                       
|(at amortized cost, $1,053,938)                   
|                                                  
|Total Investments  100.0%                        
|(identified cost, $1,721,928,403)                 
|                                                  

S e e   n o t e s   t o   c o n s o l i d a t e d   f i n a n c i a l   s t a t e m e n t s

44



|Belrose  Capital  Fund  LLCC O N S O L I D A T E D   P O R T F O L I O S   O F   I N V E S T M E N T SC O N T  D
A s  o f  D e c e m b e r  3 1 ,  2 0 0 5 ( A s  R e s t a t e d ,  S e e  N o t e  1 3 )
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|I n v e s t m e n t  i n  B e l v e d e r e  C o m p a n y    8 3 . 4 %
|------------------------------------------------------------------------
|Security                                                                
|                                                                        
|Investment in Belvedere Company                                         
|                                                                        
|Total Investment in Belvedere Company                                   
|(identified cost, $1,369,280,397)                                       
|                                                                        
|P a r t n e r s h i p  P r e f e r e n c e   U n i t s  8 . 7 %        
|Security                                                                
|                                                                        
|Belvorn Holdings LLC(1)(2)                                             
|Camden Operating, L.P. (Delaware Limited                                
|Partnership affiliate of Camden Property                                
|Trust), 7% Series B Cumulative Redeemable                               
|Perpetual Preferred Units, Callable                                     
|from 12/2/08(2)                                                        
|Colonial Realty Limited Partnership                                     
|(Delaware Limited Partnership affiliate of                              
|Colonial Properties Trust), 7.25% Series B                              
|Cumulative Redeemable Perpetual Preferred                               
|Units, Callable from 8/24/09(2)                                        
|Essex Portfolio, L.P. (California Limited                               
|Partnership affiliate of Essex Property                                 
|Trust, Inc.), 7.875% Series B Cumulative                                
|Redeemable Preferred Units, Callable                                    
|from 12/31/09(2)                                                       
|Essex Portfolio, L.P. (California Limited                               
|Partnership affiliate of Essex Property Trust,                          
|Inc.), 7.875% Series D Cumulative                                       
|Redeemable Preferred Units, Callable                                    
|from 7/28/10(2)                                                        
|Kilroy Realty, L.P. (Delaware Limited                                   
|Partnership affiliate of Kilroy Realty                                  
|Corporation), 7.45% Series A Cumulative                                 
|Redeemable Preferred Units, Callable                                    
|from 9/30/09(2)                                                        
|Liberty Property Limited Partnership                                    
|(Pennsylvania Limited Partnership affiliate of                          
|Liberty Property Trust), 7.45% Series B                                 
|Cumulative Redeemable Preferred Units,                                  
|Callable from 8/31/09(2)                                               
|MHC Operating Limited Partnership                                       
|(Illinois Limited Partnership affiliate of                              
|Equity Lifestyle Properties, Inc.), 8.0625%                             
|Series D Cumulative Redeemable Perpetual                                
|Preference Units, Callable from 3/24/10(2)                             
|PSA Institutional Partners, L.P. (California                            
|Limited Partnership affiliate of Public Storage,                        
|Inc.), 6.4% Series NN Cumulative Redeemable                             
|Perpetual Preferred Units, Callable                                     
|from 3/17/10(2)                                                        
|                                                                        
|Total Partnership Preference Units                                      
|(identified cost, $183,306,624)                                         
|                                                                        

|R e a l  E s t a t e  J o i n t  V e n t u r e s    7 . 7 %
|------------------------------------------------------------
|Description                                                 
|                                                            
|Investment in Deerfield Property Trust(2)(3)(7)             
|Investment in Katahdin Property Trust, LLC(2)(4)(7)         
|                                                            
|Total Real Estate Joint Ventures                            
|(identified cost, $167,810,574)                             
|                                                            
|S h o r t - Te r m  I n v e s t m e n t s  0 . 2 %         
|                                                            
|Security                                                    
|                                                            
|General Electric Capital Corporation,                       
|4.20%, 1/3/06                                               
|Investors Bank & Trust Company                             
|Time Deposit, 4.23%, 1/3/06                                 
|                                                            
|Total Short-Term Investments                                
|(at amortized cost, $4,797,347)                             
|                                                            
|Total Investments  100.0%                                  
|(identified cost, $1,725,194,942)                           
|                                                            

The following footnotes are for the years ended December 31, 2006 and December 31, 2005:

 Security exempt from registration under the Securities Act of 1933. At December 31, 2006 and 2005, the value of these securities totaled $100,325,303 and $185,594,116 or 5.3% and 10.6% 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. See Note 1B.

(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)Investment represents a majority economic interest of 83.9% and 81.1% in Deerfield Property Trust (Deerfield) as of December 31, 2006 and 2005, respectively. Deerfield invests in seventeen industrial distribution properties located in six states.

(4)Investment represents a majority economic interest of 70.4% and 70.0% in Katahdin Property Trust, LLC (Katahdin) as of December 31, 2006 and 2005, respectively. Katahdin invests in six multifamily residential properties located in five states.

(5)Bel Marlborough Campus, LLC represents an office campus located in Massachusetts.

(6)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, 2006.

(7)Investment formerly presented as Other Real Estate Investment. See Note 13.

S e e   n o t e s   t o   c o n s o l i d a t e d   f i n a n c i a l   s t a t e m e n t s

45



|Belrose  Capital  Fund  LLCC O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S
C o n s o l i d a t e d   S t a t e m e n t s   o f   A s s e t s   a n d   L i a b i l i t i e s
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                             |  |                        |  | December 31, 2005     
|------------------------------------------------------------------------------------------------------------ |  | ---------------------- |  | ----------------------
|Assets                                                                                                       |  | December 31, 2006      |  | (Restated)(1)         
|                                                                                                            
|Investment in Belvedere Company, at value (identified cost, $1,366,053,644 and $1,369,280,397, respectively) |  | $       1,934,569,661  |  | $       1,783,649,094 
|Unaffiliated investments, at value (identified cost, $354,820,821 and $355,914,545, respectively)            |  |                        |  | 372,646,109           
|Affiliated investment, at value (amortized cost, $1,053,938 and $0, respectively)                            |  |                        |  | 1,053,938             
|Cash                                                                                                         |  |                        |  | 5,356,436             
|Distributions and interest receivable                                                                        |  |                        |  | 16,352                
|Swap interest receivable                                                                                     |  |                        |  | 40,454                
|Open interest rate swap agreements, at value                                                                 |  |                        |  | 6,286,958             
|Other assets                                                                                                 |  |                        |  | 1,721,638             
|                                                                                                            
|Total assets                                                                                                 |  | $       2,321,691,546  |  | $       2,148,260,625 
|                                                                                                            
|Liabilities                                                                                                  |  |                        |  |                       
|                                                                                                            
|Loan payable  Credit Facility                                                                               |  | $                      |  | 356,500,000           
|Mortgage note payable                                                                                        |  |                        |  | 62,401,229            
|Payable to affiliate for investment advisory and administrative fees                                         |  |                        |  | 405,573               
|Payable to affiliate for distribution and servicing fees                                                     |  |                        |  | 613,678               
|Other accrued expenses:                                                                                      |  |                        |  |                       
|Interest expense                                                                                             |  |                        |  | 346,485               
|Other expenses and liabilities                                                                               |  |                        |  | 1,767,436             
|Minority interest in subsidiary                                                                              |  |                        |  | 210,000               
|                                                                                                            
|Total liabilities                                                                                            |  | $                      |  | 422,244,401           
|                                                                                                            
|Net Assets                                                                                                   |  | $        1,899,447,145 |  | $        1,753,010,400
|                                                                                                            
|                                                                                                            
|Shareholders Capital                                                                                        |  | $        1,899,447,145 |  | $        1,753,010,400
|                                                                                                            
|Shares Outstanding (unlimited number of shares authorized)                                                   |  |                        |  | 15,490,955            
|                                                                                                            
|                                                                                                            
|Net Asset Value and Redemption Price Per Share (Note 4)                                                      |  | $                      |  | 122.62                
|                                                                                                            
|(1) See Note 13.                                                                                             |  |                        |  |                       



|S e e   n o t e s   t o   c o n s o l i d a t e d   f i n a n c i a l   s t a t e m e n t s
|-------------------------------------------------------------------------------------------



|46
|--



| | Belrose  Capital  Fund  LLCC O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S C O N T  D
C o n s o l i d a t e d   S t a t e m e n t s   o f   O p e r a t i o n s
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                 |  | Year Ended       
|---------------------------------------------------------------------------------------------------------------- |  | -----------------
|                                                                                                                 |  |                  
|                                                                                                                 |  |                  
|Investment Income                                                                                                |  | December 31, 2006
|                                                                                                                
|Dividends allocated from Belvedere Company (net of foreign taxes, $550,982, $441,558 and $352,093, respectively) |  | $                
|Interest allocated from Belvedere Company                                                                        |  |                  
|Security lending income allocated from Belvedere Company, net                                                    |  |                  
|Expenses allocated from Belvedere Company                                                                        |  |                  
|                                                                                                                
|Net investment income allocated from Belvedere Company                                                           |  | $                
|Distributions from Partnership Preference Units                                                                  |  |                  
|Net investment income from real estate joint ventures                                                            |  |                  
|Rental income from Wholly Owned Property                                                                         |  |                  
|Interest                                                                                                         |  |                  
|Interest allocated from affiliated investment                                                                    |  |                  
|Expenses allocated from affiliated investment                                                                    |  |                  
|                                                                                                                
|Total investment income                                                                                          |  | $                
|                                                                                                                
|Expenses                                                                                                         |  |                  
|                                                                                                                
|Investment advisory and administrative fees                                                                      |  | $                
|Distribution and servicing fees                                                                                  |  |                  
|Interest expense on mortgage note                                                                                |  |                  
|Interest expense on Credit Facility                                                                              |  |                  
|Property operating expenses                                                                                      |  |                  
|Miscellaneous                                                                                                    |  |                  
|                                                                                                                
|Total expenses                                                                                                   |  | $                
|                                                                                                                
|Deduct                                                                                                          |  |                  
|Reduction of investment advisory and administrative fees                                                         |  | $                
|                                                                                                                
|Net expenses                                                                                                     |  | $                
|                                                                                                                
|Net investment income before minority interest in net income of subsidiary                                       |  | $                
|Minority interest in net income of subsidiary                                                                    |  |                  
|                                                                                                                
|Net investment income                                                                                            |  | $                
|                                                                                                                
|Realized and Unrealized Gain (Loss)                                                                              |  |                  
|                                                                                                                
|Net realized gain (loss)                                                                                        |  |                  
|Investment transactions, securities sold short and foreign currency transactions allocated from Belvedere        |  |                  
|Company (identified cost basis)                                                                                  |  | $                
|Investment transactions in Partnership Preference Units (identified cost basis)                                  |  |                  
|Investment transactions in real estate joint ventures                                                            |  |                  
|Interest rate swap agreements(2)                                                                                 |  |                  
|                                                                                                                
|Net realized gain                                                                                                |  | $                
|                                                                                                                
|Change in unrealized appreciation (depreciation)                                                                |  |                  
|Investments, securities sold short and foreign currency allocated from Belvedere Company (identified cost basis) |  | $     154,147,320
|Investments in Partnership Preference Units (identified cost basis)                                              |  |                  
|Investments in real estate joint ventures                                                                        |  |                  
|Investments in Wholly Owned Property                                                                             |  |                  
|Interest rate swap agreements                                                                                    |  |                  
|                                                                                                                
|Net change in unrealized appreciation (depreciation)                                                             |  | $    174,054,432 
|                                                                                                                
|Net realized and unrealized gain                                                                                 |  | $    233,087,719 
|                                                                                                                
|Net increase in net assets from operations                                                                       |  | $    247,168,782 
|                                                                                                                

|(1) | See Note 13.                                                                                                                                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Amounts include net interest earned (incurred) in connection with interest rate swap agreements of $2,046,711, $(1,383,303) and $(4,297,449), respectively (Note 2F).
|   



|S e e   n o t e s   t o   c o n s o l i d a t e d   f i n a n c i a l   s t a t e m e n t s
|-------------------------------------------------------------------------------------------



|47
|--



| | Belrose  Capital  Fund  LLCC O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S C O N T  D
C o n s o l i d a t e d   S t a t e m e n t s   o f   C h a n g e s   i n   N e t   A s s e t s
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                         |  | Year Ended          
|-------------------------------------------------------------------------------------------------------- |  | --------------------
|                                                                                                         |  |                     
|                                                                                                         |  |                     
|Increase (Decrease) in Net Assets                                                                        |  | December 31, 2006   
|                                                                                                        
|From operations                                                                                         |  |                     
|Net investment income                                                                                    |  | $                   
|Net realized gain from investment transactions, securities sold short, foreign currency transactions and |  |                     
|interest rate swap agreements                                                                            |  |                     
|Net change in unrealized appreciation (depreciation) of investments, securities sold short, foreign      |  |                     
|currency and interest rate swap agreements                                                               |  |                     
|                                                                                                        
|Net increase in net assets from operations                                                               |  | $                   
|                                                                                                        
|Transactions in Fund Shares                                                                             |  |                     
|Net asset value of Fund Shares issued to Shareholders in payment of                                      |  |                     
|distributions declared                                                                                   |  | $                   
|Net asset value of Fund Shares redeemed                                                                  |  |                     
|                                                                                                        
|Net decrease in net assets from Fund Share transactions                                                  |  | $                   
|                                                                                                        
|Distributions                                                                                           |  |                     
|Distributions to Shareholders                                                                            |  | $                   
|                                                                                                        
|Total distributions                                                                                      |  | $                   
|                                                                                                        
|Net increase in net assets                                                                               |  | $                   
|                                                                                                        
|Net Assets                                                                                               |  |                     
|                                                                                                        
|At beginning of year                                                                                     |  | $      1,753,010,400
|                                                                                                        
|At end of year                                                                                           |  | $      1,899,447,145
|                                                                                                        
|(1) See Note 13.                                                                                         |  |                     



|S e e   n o t e s   t o   c o n s o l i d a t e d   f i n a n c i a l   s t a t e m e n t s
|-------------------------------------------------------------------------------------------



|48
|--



|Belrose  Capital  Fund  LLCC O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S C O N T  D
C o n s o l i d a t e d   S t a t e m e n t s   o f   C a s h   F l o w s
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                   |  | Year Ended         
|---------------------------------------------------------------------------------------------------------------------------------- |  | -------------------
|                                                                                                                                   |  |                    
|                                                                                                                                   |  |                    
|Increase (Decrease) in Cash                                                                                                        |  | December 31, 2006  
|                                                                                                                                  
|Cash Flows From Operating Activities                                                                                              |  |                    
|Net increase in net assets from operations                                                                                         |  | $                  
|Adjustments to reconcile net increase in net assets from operations to net cash flows provided by (used in) operating activities  |  |                    
|Net investment income allocated from Belvedere Company                                                                             |  |                    
|Net investment income from real estate joint ventures                                                                              |  |                    
|Return of capital from real estate joint venture                                                                                   |  |                    
|Distributions of earnings from real estate joint ventures                                                                          |  |                    
|Advances to real estate joint venture                                                                                              |  |                    
|Repayments of advances to real estate joint venture                                                                                |  |                    
|Interest received from advances to real estate joint venture                                                                       |  |                    
|(Increase) decrease in short-term investments                                                                                      |  |                    
|Increase in affiliated investment                                                                                                  |  |                    
|(Increase) decrease in distributions and interest receivable                                                                       |  |                    
|(Increase) decrease in interest receivable for open swap agreements                                                                |  |                    
|(Increase) decrease in other assets                                                                                                |  |                    
|Increase in payable to affiliate for investment advisory and administrative fees                                                   |  |                    
|Increase in payable to affiliate for distribution and servicing fees                                                               |  |                    
|Decrease in interest payable for open swap agreements                                                                              |  |                    
|Increase in accrued interest and other accrued expenses and liabilities                                                            |  |                    
|Purchases of Partnership Preference Units                                                                                          |  |                    
|Proceeds from sales of Partnership Preference Units                                                                                |  |                    
|Payments for investment in real estate joint venture                                                                               |  |                    
|Proceeds from sales of investments in real estate joint ventures                                                                   |  |                    
|Payments for investment in Wholly Owned Property                                                                                   |  |                    
|Improvements to Wholly Owned Property                                                                                              |  |                    
|Net interest earned (incurred) on interest rate swap agreements                                                                    |  |                    
|Proceeds from termination of interest rate swap agreements                                                                         |  |                    
|Minority interest in net income of subsidiary                                                                                      |  |                    
|Net realized gain from investment transactions, securities sold short, foreign currency transactions and interest                  |  |                    
|rate swap agreements                                                                                                               |  |                    
|Net change in unrealized (appreciation) depreciation of investments, securities sold short, foreign currency and                   |  |                    
|interest rate swap agreements                                                                                                      |  |                    
|                                                                                                                                  
|Net cash flows provided by (used in) operating activities                                                                          |  | $                  
|                                                                                                                                  
|Cash Flows From Financing Activities                                                                                              |  |                    
|Proceeds from Credit Facility                                                                                                      |  | $       104,000,000
|Repayments of Credit Facility                                                                                                      |  |                    
|Repayments of mortgage note                                                                                                        |  |                    
|Payments for Fund Shares redeemed                                                                                                  |  |                    
|Distributions paid to Shareholders                                                                                                 |  |                    
|Distributions paid to minority investors                                                                                           |  |                    
|                                                                                                                                  
|Net cash flows provided by (used in) financing activities                                                                          |  | $                  
|                                                                                                                                  
|Net increase (decrease) in cash                                                                                                    |  | $                  
|                                                                                                                                  
|Cash at beginning of year                                                                                                          |  | $                  
|                                                                                                                                  
|Cash at end of year                                                                                                                |  | $                  
|                                                                                                                                  
|Supplemental Disclosure and Non-cash Operating and Financing Activities                                                            |  |                    
|                                                                                                                                  
|Interest paid on loan  Credit Facility                                                                                            |  | $                  
|Interest paid on mortgage note                                                                                                     |  | $                  
|Interest paid (received) on swap agreements, net                                                                                   |  | $                  
|Reinvestment of distributions paid to Shareholders                                                                                 |  | $                  
|Market value of securities distributed in payment of redemptions                                                                   |  | $                  
|Market value of real property and other assets, net of current liabilities, assumed in conjunction with                            |  |                    
|the acquisition of Wholly Owned Property                                                                                           |  | $       135,552,769
|Mortgage note assumed in conjunction with the acquisition of Wholly Owned Property                                                 |  | $                  
|Recharacterization of real estate joint venture advances to equity                                                                 |  | $                  
|                                                                                                                                  
|(1) See Note 13.                                                                                                                   |  |                    



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|49
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| | Belrose  Capital  Fund  LLCC O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T SC O N T  D
F i n a n c i a l   H i g h l i g h t s
| | -----------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                |  | Year Ended       
|--------------------------------------------------------------------------------------------------------------- |  | -----------------
|                                                                                                                |  |                  
|                                                                                                                |  |                  
|                                                                                                                |  | December 31, 2006
|                                                                                                               
|Net asset value  Beginning of year                                                                             |  | $                
|                                                                                                               
|Income (loss) from operations                                                                                   |  |                  
|                                                                                                               
|Net investment income(1)                                                                                        |  | $                
|Net realized and unrealized gain                                                                                |  |                  
|                                                                                                               
|Total income from operations                                                                                    |  | $                
|                                                                                                               
|Distributions                                                                                                   |  |                  
|                                                                                                               
|Distributions to Shareholders                                                                                   |  | $                
|                                                                                                               
|Total distributions                                                                                             |  | $                
|                                                                                                               
|Net asset value  End of year                                                                                   |  | $                
|                                                                                                               
|Total Return(2)                                                                                                 |  |                  
|                                                                                                               
|Ratios as a percentage of average net assets                                                                    |  |                  
|                                                                                                               
|Expenses of Wholly Owned Property(3)                                                                            |  |                  
|Belrose Capital Fund LLC Expenses                                                                               |  |                  
|Interest and other borrowing costs(4)(5)                                                                        |  |                  
|Investment advisory and administrative fees, distribution and servicing fees and other operating expenses(4)(6) |  |                  
|                                                                                                                |  |                  
|Total expenses                                                                                                  |  |                  
|Net investment income(5)                                                                                        |  |                  
|                                                                                                               
|Ratios as a percentage of average gross assets(7)                                                               |  |                  
|                                                                                                               
|Expenses of Wholly Owned Property(3)                                                                            |  |                  
|Belrose Capital Fund LLC Expenses                                                                               |  |                  
|Interest and other borrowing costs(4)(5)                                                                        |  |                  
|Investment advisory and administrative fees, distribution and servicing fees and other operating expenses(4)(6) |  |                  
|                                                                                                                |  |                  
|Total expenses                                                                                                  |  |                  
|Net investment income(5)                                                                                        |  |                  
|                                                                                                               
|Supplemental Data                                                                                               |  |                  
|                                                                                                               
|Net assets, end of year (000s omitted)                                                                         |  | $    1,899,447   
|Portfolio turnover of Tax-Managed Growth Portfolio(8)                                                           |  |                  
|                                                                                                               

|(1)  | Calculated using average shares outstanding.                                                                                                                                                                                                                                                                                                                              
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  | Returns are calculated by determining the percentage change in net asset value with all distributions reinvested.                                                                                                                                                                                                                                                         
|    
|(3)  | Represents expenses incurred by Belrose Realty Corporations (Belrose Realty) Wholly Owned Property.                                                                                                                                                                                                                                                                      
|    
|(4)  | Includes the expenses of Belrose Capital Fund LLC (Belrose Capital) and Belrose Realty. Does not include expenses of Belrose Realtys Wholly Owned Property.                                                                                                                                                                                                              
|    
|(5)  | Ratios do not include net interest incurred or earned in connection with interest rate swap agreements. Had such amounts been included, ratios would have been higher or lower.                                                                                                                                                                                           
|    
|(6)  | 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 and Cash Management Portfolio.                                                                                                                                                      
|    
|(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 7%, 6% and 10% for the years ended December 31, 2006, 2005 and 2004, respectively.                                                   
|    
|(9)  | Amounts to less than 1%.                                                                                                                                                                                                                                                                                                                                                  
|    
|(10) | See Note 13.                                                                                                                                                                                                                                                                                                                                                              
|    



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|50
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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T S
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1 Organization

A Investment Objective  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 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 assets 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 and an investment in real property (Wholly Owned Property) held through a wholly owned subsidiary, Bel Marlborough Campus, LLC (Bel Marlborough).

B Subsidiaries  Belrose Realty invests directly and indirectly in Partnership Preference Units, investments in real estate joint ventures and Wholly Owned Property. Belrose Realtys investments in Partnership Preference Units are held directly except for its indirect investment in Partnership Preference Units of Vornado Realty L.P. (a Delaware limited partnership), which is held through its investment in 10% of the units of Belvorn Holdings LLC at December 31, 2006 and 2005. Vornado Realty L.P. is the sole investment of Belvorn Holdings LLC.

Belrose Realty  Belrose Capital owns 100% of the common stock issued by Belrose Realty and intends to hold all of Belrose Realtys common stock at all times.

Additionally, 2,100 shares of preferred stock of Belrose Realty are held by other investors at December 31, 2006 and 2005. The preferred stock has a par value of $0.01 per share and is redeemable by Belrose Realty at a redemption price of $100 per share. Dividends on the preferred stock are cumulative and payable annually at a rate of $8 per share. The interest in preferred stock is recorded as minority interest on the Consolidated Statements of Assets and Liabilities.

Bel Marlborough  Bel Marlborough, a wholly owned subsidiary of Belrose Realty since September 2006, owns an office campus consisting of approximately 530,000 square feet of rentable office space and 126 acres of land in Marlborough, Massachusetts. Bel Marlborough is 100% leased at December 31, 2006. The property is managed by an unrelated third party national real estate management company.

2 Significant Accounting PoliciesThe 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).

A Principles of Consolidation  The consolidated financial statements include the accounts of Belrose Capital, Belrose Realty and Bel Marlborough (collectively, the Fund). All material intercompany accounts and transactions have been eliminated.

Investments in real estate joint ventures in which the Fund does not control operating and financial policies are accounted for under the equity method of accounting and stated at estimated fair value (Note 2E). Under the equity method, the Funds investments in 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. The Funds investments in real estate joint ventures are adjusted to reflect distributions, contributions, advances to the real estate joint ventures in the form of loans, interest earned on advances and certain other adjustments, as appropriate.

B Basis 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.

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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

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

D Investment Costs The Funds investment assets were principally acquired through contributions of common stock by Shareholders in exchange for Shares and through purchases of Partnership Preference Units, investments in real estate joint ventures and Wholly Owned Property. 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, investments in real estate joint ventures and Wholly Owned Property purchased by the Fund is the purchase cost.

E Investment and Other Valuations The Funds investments consist of shares of Belvedere Company, Partnership Preference Units, investments in real estate joint ventures, Wholly Owned Property and short-term debt securities. The Fund may also invest in 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, investments in real estate joint ventures and Wholly Owned Property) 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 Property 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. Once an appraisal of a property has been conducted, Boston Management bases the estimated fair value of the property principally on the estimated value as determined by the appraiser.

Appraisals of newly acquired properties, whether held by a wholly owned subsidiary of Belrose Realty or by a real estate joint venture, are generally conducted in the year following the acquisition. 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 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.

For other assets for which a market price is not readily available, Boston Management determines the estimated fair value, as appropriate, based on the present value of estimated cash flows or other relevant information.

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

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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

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.

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, 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 investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 under the Investment Company Act of 1940. 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. Prior to October 31, 2006, interest rate swap agreements were valued by Boston Management, as investment adviser of Belrose Capital, based upon dealer and counterparty quotes and pricing models which took into consideration the market trading prices of interest rate swap agreements with similar terms to the interest rate swap agreements held by Belrose Capital.

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

F Interest 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 LIBOR. Net interest paid and accrued or received and earned is recorded as realized gains or losses and changes in the underlying values of the swaps are recorded as unrealized appreciation (depreciation), each in the Consolidated Statements of Operations. Belrose Capital is exposed to a risk of loss in the event of non-performance by the swap counterparty. Risks may arise from the unanticipated movements in interest rates.

G Rental Operations The properties held by Bel Marlborough are leased under fixed long-term operating leases.

At December 31, 2006, 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     
|------------------------ |  | -----------
|                        
|2007                     |  | $11,010,240
|2008                     |  | 11,048,593 
|2009                     |  | 11,157,340 
|2010                     |  | 8,586,178  
|2011                     |  | 5,782,533  
|Thereafter               |  | 29,427,847 
|                        
|                         |  | $77,012,731
|                        

The mortgage escrow account consists of deposits for real estate taxes and capital replacement reserves as required under the mortgage agreement. The mortgage escrow account is held and controlled by the mortgage lender (Note 9). As of December 31, 2006 and 2005, mortgage escrow amounts of $688,635 and $0, respectively, are included in other assets.

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

H Income Belvedere Companys net investment income or loss consists of Belvedere Companys pro rata share of the net investment income or loss of the Portfolio, less all actual or accrued expenses of Belvedere Company, determined in accordance with 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 income earned on the Funds direct and indirect investments (including Partnership Preference Units, real estate joint ventures, Wholly Owned Property and short-term

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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

investments), less all actual and accrued 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 income earned by the real estate joint ventures. Rental income from Wholly Owned Property is recorded on the accrual basis based upon the terms of the lease agreements. Interest income is recorded on the accrual basis.

I Deferred Costs Mortgage origination expenses incurred in connection with the financing of the Wholly Owned Property 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.

J Income 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. Bel Marlborough is a single member limited liability company treated as a pass-through entity for federal income tax purposes.

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 and real estate joint ventures.

K Other Investment transactions are accounted for on the date the securities are purchased or sold.

L Use 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.

M Indemnifications 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.

N Recently 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. Unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings at each subsequent reporting date. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Management is currently evaluating the impact the adoption of SFAS No. 159 will have on the Funds financial statements.

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. Management is currently evaluating the impact the adoption of SFAS No. 157 will have on the Funds financial statement disclosures.

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 in accordance with SFAS No. 109, Accounting for Income Taxes. This interpretation prescribes a recognition threshold and measurement attributes for the financial statement

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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T S C O N T  D
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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 during the first required financial reporting period for fiscal years beginning after December 15, 2006. The adoption of FIN 48 will not have a material impact on the Funds net assets or results of operations.

3 Distributions 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, 2006, 2005 and 2004.

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.

Distributions made to Shareholders electing the Funds Estate Freeze feature (Note 4) will be paid, first, to holders of Preferred Shares to the extent of the unpaid cumulative annual priority return of the Preferred Shares and, second, to the holders of the associated Common Shares. Distributions made in respect of any realized precontribution gains and associated supplemental distributions will be apportioned between Preferred Shares and Common Shares consistent with the allocation to the Preferred Shares and Common Shares of such realized precontribution gains. It is expected that substantially all 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.

4 Shareholder 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,
|                                   |  | 2006        
|                                  
|Issued to Shareholders electing to |  |             
|receive payment of distributions   |  |             
|in Fund Shares                     |  | 81,051      
|Redemptions                        |  | (776,909)   
|                                  
|Net decrease                       |  | (695,858)   
|                                  

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 year ended December 31, 2006. For the years ended December 31, 2005 and 2004, EV Distributors received $128,646 and $285,453 in redemption fees, respectively.

Shareholders in Belrose Capital are entitled to restructure their Fund Shares under what is termed an Estate Freeze Election. Under this election, Fund Shares are divided into Preferred Shares and Common Shares. Preferred Shares have a preferential right over the corresponding Common Shares equal to (i) 95% of the original capital contribution made in respect of the undivided Shares from which the Preferred Shares and Common Shares were derived, plus (ii) an annuity priority return equal to 7.75% of the Preferred Shares preferential interest in the original capital contribution of the undivided Fund Shares. The associated Common Shares are entitled to the remaining 5% of the original capital contribution in respect of the undivided Fund Shares, plus any returns thereon in excess of the

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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T S C O N T  D
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fixed annual priority of the Preferred Shares. The existence of restructured Fund Shares does not adversely affect Shareholders who do not make an election nor do the restructured Fund Shares have preferential rights to Fund Shares that have not been restructured. Shareholders who divide Fund Shares under this election sacrifice certain rights and privileges that they would otherwise have with respect to the Fund Shares so divided, including redemption rights and voting and consent rights. Upon the twentieth anniversary of the issuance of the associated undivided Fund Shares to the original holders thereof, Preferred and Common Shares will automatically convert into full and fractional undivided Fund Shares.

The allocation of Belrose Capitals net asset value per Share of $122.62 and $108.30 as of December 31, 2006 and 2005, respectively, between Preferred and Common Shares that have been restructured is as follows:

|  |  |                                                                                          |  | Per Share Value At
|- |  | ---------------------------------------------------------------------------------------- |  | ------------------
|  |  |                                                                                          |  |                   
|  |  |                                                                                          |  | December 31, 2006 
|  |  |                                                                                          |  |                   
|  |  |                                                                                          |  | Preferred         
|  |  | Date of Contribution                                                                     |  | Shares            
|  |  |                                                                                         
|  |  | February 19, 2003                                                                        |  | $87.77            
|  |  |                                                                                         
|5 |  | Investment Transactions                                                                  |  |                   
|  |  | The following table summarizes the Funds investment transactions, other than short-term
|  |  | short-term obligations, for the years ended December 31, 2006, 2005 and 2004:           
|  |  |                                                                                          |  | Year Ended        
|  |  |                                                                                          |  |                   
|  |  |                                                                                          |  | December 31,      
|  |  | Investment Transactions                                                                  |  | 2006              
|  |  |                                                                                         
|  |  | Decreases in investment in                                                               |  |                   
|  |  | Belvedere Company                                                                        |  | $                 
|  |  | Purchases of Partnership                                                                 |  |                   
|  |  | Preference Units(1)                                                                      |  | $                 
|  |  | Sales of Partnership                                                                     |  |                   
|  |  | Preference Units(2)                                                                      |  | $     100,632,895 
|  |  | Purchase of investment in                                                                |  |                   
|  |  | real estate joint venture(3)                                                             |  | $                 
|  |  | Sales of investments in real                                                             |  |                   
|  |  | estate joint ventures(4)                                                                 |  | $                 
|  |  | Purchase of investment in                                                                |  |                   
|  |  | Wholly Owned Property(5)                                                                 |  | $                 
|  |  |                                                                                         

|(1) | Purchases of Partnership Preference Units for the years ended December 31, 2006, 2005 and 2004 include Partnership Preference Units purchased from real estate investment affiliates of other investment funds advised by Boston Management.                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Sales of Partnership Preference Units for the years ended December 31, 2006, 2005 and 2004 include Partnership Preference Units sold to real estate investment affiliates of other investment funds advised by Boston Management for which a loss of $2,480,905 and gains of $323,360 and $1,946,870 were recognized, respectively.
|   

|(3) | In June and August 2004, Belrose Realty purchased majority economic interests in a real estate joint venture for $9,339,576 and $153,259,624, respectively (Note 7).                                                                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) | In October 2005, Belrose Realty sold its interest in a real estate joint venture to the real estate investment affiliate of another investment fund advised by Boston Management for $54,793,899 and for which a gain of $12,343,706 was recognized (Note 7).
|   
|    | In November 2004, Belrose Realty sold its interest in a real estate joint venture to the real estate investment affiliate of another investment fund advised by Boston Management for $32,404,340 and for which a loss of $1,548,753 was recognized (Note 7).
|   
|(5) | On September 20, 2006, Belrose Realty purchased a direct investment in Wholly Owned Property through Bel Marlborough for $73,078,196 (Note 1).                                                                                                               
|   

6  Indirect Investment in the Portfolio The following table summarizes the Funds investment in the Portfolio through Belvedere Company for the years ended December 31, 2006, 2005 and 2004, including allocations of income, expenses and net realized and unrealized gains (losses) for the years then ended:

|                          |  | Year Ended       
|------------------------- |  | -----------------
|                          |  |                  
|                          |  | December 31,     
|                          |  | 2006             
|                         
|Belvedere Companys       |  |                  
|interest in the           |  |                  
|Portfolio(1)              |  | $  14,909,807,057
|The Funds investment in  |  |                  
|Belvedere Company(2)      |  | $                
|Income allocated to       |  |                  
|Belvedere Company         |  |                  
|from the Portfolio        |  | $                
|Income allocated to       |  |                  
|the Fund from             |  |                  
|Belvedere Company         |  | $                
|Expenses allocated to     |  |                  
|Belvedere Company         |  |                  
|from the Portfolio        |  | $                
|Expenses allocated to     |  |                  
|the Fund from             |  |                  
|Belvedere Company(3)      |  | $                
|Net realized gain from    |  |                  
|investment transactions,  |  |                  
|securities sold short and |  |                  
|foreign currency          |  |                  
|transactions allocated to |  |                  
|Belvedere Company         |  |                  
|from the Portfolio        |  | $                



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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

|                         |  | Year Ended  
|------------------------ |  | ------------
|                         |  |             
|                         |  | December 31,
|                         |  | 2006        
|                        
|Net realized gain from   |  |             
|investment transactions, |  |             
|securities sold short    |  |             
|and foreign currency     |  |             
|transactions allocated   |  |             
|to the Fund from         |  |             
|Belvedere Company        |  | $           
|Net change in unrealized |  |             
|appreciation             |  |             
|(depreciation) of        |  |             
|investments, securities  |  |             
|sold short and foreign   |  |             
|currency allocated to    |  |             
|Belvedere Company        |  |             
|from the Portfolio       |  | $           
|Net change in unrealized |  |             
|appreciation             |  |             
|(depreciation) of        |  |             
|investments, securities  |  |             
|sold short and foreign   |  |             
|currency allocated to    |  |             
|the Fund from            |  |             
|Belvedere Company        |  | $           
|                        

|(1) | As of December 31, 2006, 2005 and 2004, the value of Belvedere Companys interest in the Portfolio represents 73.1%, 70.4% and 66.9% of the Portfolios net assets, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | As of December 31, 2006, 2005 and 2004, the Funds investment in Belvedere Company represents 13.0%, 13.3% and 13.7% of Belvedere Companys net assets, respectively.            
|   
|(3) | Expenses allocated to the Fund from Belvedere Company include:                                                                                                                   
|   

|                             |  | Year Ended  
|---------------------------- |  | ------------
|                             |  |             
|                             |  | December 31,
|                             |  | 2006        
|                            
|Expenses allocated           |  |             
|from the Portfolio           |  | $8,206,328  
|Servicing fees (see Note 10) |  | $2,760,750  
|Operating expenses           |  | $     68,810
|                            

7 Investments in Real Estate Joint Ventures At December 31, 2006 and 2005, 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 and August 2004 and its investment in Katahdin in May 2002. Belrose Realty previously held investments in two other real estate joint ventures, Bel Communities Properties Trust (Bel Communities) and Bel Apartment Properties Trust (Bel Apartment), and disposed of such investments in October 2005 and November 2004, respectively.

Belrose Realty owns 100% of the Class A shares of the real estate joint ventures (for the periods during which Belrose Realty maintained an interest in each real estate joint venture), representing 75% to 80% of the initial economic interest in the real estate joint ventures. Third 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.

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.

During 2006, Belrose Capital loaned amounts to the Katahdin real estate joint venture. The notes bear interest on the outstanding principal amount at the rate of 8.75% per annum. The entire outstanding principal balance of the notes, plus all accrued unpaid interest thereon is due and payable at maturity, generally one year from the date of inception of each note. As of December 31, 2006, the outstanding loan balances due to Belrose Capital were converted to Class A units of equity interest in Katahdin. The principal balance due to Belrose Capital at the time of conversion amounted to $8,733,205. During 2006, the Class B shareholder loaned its proportionate share to the Katahdin real estate joint venture in conjunction with the loans made by Belrose Capital.



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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T S   C O N T  D
|--------------------------------------------------------------------------------------------------------------------------

Deerfield holds investments in seventeen industrial distribution properties located in six states. Katahdin holds investments in six multifamily residential properties located in five states. Bel Communities held investments in twelve multifamily residential properties located in eleven states. Bel Apartment held investments in ten multifamily residential properties located in seven states. Condensed summary financial data of the real estate joint ventures is presented below. The investment in real estate is presented at estimated fair value.

|                                           |  | December 31,  |  | December 31, 
|------------------------------------------ |  | ------------- |  | -------------
|                                           |  | 2006          |  | 2005         
|                                          
|Assets:                                    |  |               |  |              
|Investment in real estate                  |  | $425,726,033  |  | $384,991,981 
|Other assets                               |  | 9,606,679     |  | 82,382,356   
|                                          
|Total assets                               |  | $ 435,332,712 |  | $ 467,374,337
|                                          
|Liabilities and Shareholders Equity:      |  |               |  |              
|Mortgage notes payable(1)                  |  | $244,470,903  |  | $238,850,000 
|Other liabilities                          |  | 6,656,555     |  | 89,980,000   
|                                          
|Total liabilities                          |  | $ 251,127,458 |  | $ 328,830,000
|                                          
|Shareholders equity                       |  | $ 184,205,254 |  | $ 138,544,337
|                                          
|Total liabilities and shareholders equity |  | $ 435,332,712 |  | $ 467,374,337
|                                          

(1) The estimated fair value of the mortgage notes payable is approximately $251,000,000 and $248,600,000 as of December 31, 2006 and 2005, 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 currently prevailing interest rates.

|                            |  | Year Ended     
|--------------------------- |  | ---------------
|                            |  |                
|                            |  | December 31,   
|                            |  | 2006           
|                           
|Revenues                    |  | $    41,989,315
|Expenses                    |  |                
|                           
|Income before realized and  |  |                
|unrealized gain (loss)      |  | $              
|Realized gain               |  | $              
|Change in net unrealized    |  |                
|appreciation (depreciation) |  |                
|                           
|Net income (loss)           |  | $    37,860,243
|                           

|(2) | Includes the results of Bel Communities, disposed of in October 2005.
|--- | ---------------------------------------------------------------------
|(3) | Includes the results of Bel Apartment, disposed of in November 2004. 
|   

8 Interest 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, 2006 and 2005 are listed below.

|          |  |          |  |        |  |          |  | Initial  |  |        |  |                            |  |             
|--------- |  | -------- |  | ------ |  | -------- |  | -------- |  | ------ |  | -------------------------- |  | ------------
|          |  | Notional |  |        |  |          |  | Optional |  | Final  |  |                            |  |             
|          |  | Amount   |  |        |  |          |  | Termi-   |  | Termi- |  | Unrealized Appreciation at
|Effective |  | (000s   |  | Fixed  |  | Floating |  | nation   |  | nation |  | December 31,               |  | December 31,
|Date      |  | omitted) |  | Rate   |  | Rate     |  | Date     |  | Date   |  | 2006                       |  | 2005        
|         
|          |  |          |  |        |  | LIBOR +  |  |          |  |        |  |                            |  |             
|10/03     |  | $31,588  |  | 4.180% |  | 0.30%    |  | 7/09     |  | 6/10   |  | $1,160,202                 |  | $1,209,537  
|          |  |          |  |        |  | LIBOR +  |  |          |  |        |  |                            |  |             
|10/03     |  | 37,943   |  | 4.160% |  | 0.30%    |  | 11/09    |  | 6/10   |  | 1,396,074                  |  | 1,449,351   
|          |  |          |  |        |  | LIBOR +  |  |          |  |        |  |                            |  |             
|10/03     |  | 83,307   |  | 4.045% |  | 0.30%    |  |         |  | 6/10   |  | 3,291,836                  |  | 3,433,250   
|          |  |          |  |        |  | 3 mo.    |  |          |  |        |  |                            |  |             
|          |  |          |  |        |  | LIBOR +  |  |          |  |        |  |                            |  |             
|06/04     |  | 40,000   |  | 4.875% |  | 0.00%    |  |         |  | 6/12   |  | 438,846                    |  | 42,154      
|         
|          |  |          |  |        |  |          |  |          |  |        |  | $ 6,286,958                |  | $6,134,292  
|         

9 Debt

A Mortgage Note  Real property held by Bel Marlborough is financed through a mortgage note secured by the real property held by Bel Marlborough. The mortgage note is 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 matters.





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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T S C O N T  D
|------------------------------------------------------------------------------------------------------------------------

The estimated fair value of the real property securing the mortgage note is approximately $135,000,000 at December 31, 2006. Terms of the mortgage note payable and the amount outstanding at December 31, 2006 are as follows:

|                 |  |          |  | Monthly       |  |                  
|---------------- |  | -------- |  | ------------- |  | -----------------
|                 |  | Annual   |  | Principal and |  |                  
|Maturity         |  | Interest |  | Interest      |  | Balance at       
|Date             |  | Rate     |  | Payment       |  | December 31, 2006
|                
|December 1, 2014 |  | 5.2075%  |  | $351,728      |  | $62,401,229(1)   
|                

|(1) | On September 20, 2006, Bel Marlborough assumed an existing mortgage note payable with a principal balance of $62,703,613.
|--- | -------------------------------------------------------------------------------------------------------------------------
|   

Scheduled principal payments of the mortgage note for the years subsequent to December 31, 2006 are as follows:

|Year Ending December 31, |  | Amount       
|------------------------ |  | -------------
|                        
|2007                     |  | $     949,297
|2008                     |  | 991,370      
|2009                     |  | 1,054,277    
|2010                     |  | 1,111,308    
|2011                     |  | 1,171,424    
|Thereafter               |  | 57,123,553   
|                        
|                         |  | $62,401,229  
|                        

The estimated fair value of the mortgage note payable is approximately $61,900,000 at December 31, 2006. The mortgage note payable generally cannot be prepaid or otherwise disposed of without incurring a substantial prepayment penalty unless the rental property financed by the mortgage note payable is sold. Management generally has no current plans to prepay or otherwise dispose of the mortgage note payable without the sale of the related rental property prior to the maturity date. The fair value of the mortgage note is based on estimates using discounted cash flow analysis and currently prevailing interest rates.

B Credit Facility  Belrose Capital has entered into credit arrangements with Dresdner Kleinwort Holdings I, Inc. (formerly, DrKW Holdings, 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 Bel Marlborough and the Funds investments in 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 June 30, 2006, Belrose Capital amended its credit arrangement with DKH to increase the amount of the term loan by $24,000,000 to an aggregate principal amount of $266,500,000.

The credit arrangement with Merrill Lynch is a revolving loan facility, including the ability to issue letters of credit up to $10,000,000. On June 30, 2006, Belrose Capital amended its credit arrangement with Merrill Lynch to increase the amount of the loan facility by $60,000,000 to an aggregate amount available for borrowing of $242,000,000. Borrowings under this credit agreement 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, 2006 |  | At December 31, 2005
|------------------------------------ |  | -------------------- |  | --------------------
|                                    
|Total amount available under the     |  |                      |  |                     
|Credit Facility                      |  | $    508,500,000     |  | $     424,500,000   
|DKH borrowings outstanding           |  | $    266,500,000     |  | $     242,500,000   
|Merrill Lynch borrowings outstanding |  | $                    |  | 90,000,000          
|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.

C Average Borrowings and Average Interest Rate  For the year ended December 31, 2006, the average balance of borrowings under the Credit Facility and the Bel Marlborough mortgage note payable was approximately $383,200,000 and $16,000,000 with a weighted average interest rate of 5.38% and 5.21%, respectively.

10 Management 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. Certain of the advisory fee rate reductions are pursuant to an agreement between the Portfolios Board of Trustees and Boston Management. Those reductions may not be changed without Trustee and



|59
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|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

interestholder approval. For each of the years ended December 31, 2006, 2005 and 2004, the advisory fee applicable to the Portfolio was 0.43% of average daily net assets.

Subject to the fee cap 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 administration 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 Shareholders. The servicing fee is paid on a quarterly basis at an annual rate of 0.15% of Belvedere Companys average daily net assets. Pursuant to a servicing agreement between 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 and Belrose Realty for the years ended December 31, 2006, 2005 and 2004 in connection with the services rendered by Eaton Vance and its affiliates.

|                              |  | Year Ended   
|----------------------------- |  | -------------
|                              |  |              
|                              |  | December 31, 
|                              |  | 2006         
|                             
|Advisory fee allocated to     |  |              
|Belvedere Company from        |  |              
|the Portfolio                 |  | $  59,961,479
|Advisory fee allocated to     |  |              
|the Fund from Belvedere       |  |              
|Company                       |  | $            
|Advisory fee allocated to     |  |              
|the Fund from Cash            |  |              
|Management                    |  | $            
|Advisory and administrative   |  |              
|fee and management fee        |  |              
|incurred directly by the Fund |  | $            
|Distribution fees incurred    |  |              
|directly by the Fund          |  | $            
|Reduction of advisory and     |  |              
|administrative fees           |  | $            
|Servicing fees of Belvedere   |  |              
|Company                       |  | $  20,893,224
|Servicing fees allocated to   |  |              
|the Fund from                 |  |              
|Belvedere Company             |  | $            
|Servicing fees incurred       |  |              
|directly by the Fund          |  | $            
|Servicing fees paid or        |  |              
|accrued to subagents          |  | $            

60



|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T S C O N T  D
|------------------------------------------------------------------------------------------------------------------------

11 Segment 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 revenue 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 assets through its subsidiary, Belrose Realty. Belrose Realty invests directly and indirectly in Partnership Preference Units, investments in real estate joint ventures (Note 7) and Wholly Owned Property. The Funds revenues from the real estate assets primarily consist of distribution income from Partnership Preference Units, net investment income from real estate joint ventures and rental income from Wholly Owned Property.

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 allocated to the real estate segment for presentation purposes herein. Credit Facility borrowings allocated to the real estate segment primarily consist of 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. The accounting policies of the reportable segments are the same as those for Belrose Capital on a consolidated basis (Note 2A). No reportable segments have been aggregated. Reportable information by segment is as follows:

|                  |  | Year Ended  
|----------------- |  | ------------
|                  |  |             
|                  |  | December 31,
|                  |  | 2006        
|                 
|Investment income |  |             
|The Portfolio*    |  | $           
|Real Estate       |  |             
|Unallocated       |  |             
|                 
|Total investment  |  |             
|income            |  | $           
|                 

|                            |  | Year Ended    
|--------------------------- |  | --------------
|                            |  |               
|                            |  | December 31,  
|                            |  | 2006          
|                           
|Interest expense            |  |               
|The Portfolio*              |  | $             
|Real Estate(1)              |  |               
|Unallocated(2)              |  |               
|                           
|Total interest expense      |  | $             
|                           
|Net realized gain (loss)    |  |               
|The Portfolio*              |  | $             
|Real Estate                 |  |               
|Unallocated                 |  |               
|                           
|Total net realized gain     |  | $             
|                           
|Net change in unrealized    |  |               
|appreciation (depreciation) |  |               
|The Portfolio*              |  | $  154,147,320
|Real Estate                 |  |               
|Unallocated                 |  |               
|                           
|Total net change            |  |               
|in unrealized               |  |               
|appreciation                |  |               
|(depreciation)              |  | $  174,054,432
|                           
|Net increase (decrease) in  |  |               
|net assets from operations  |  |               
|The Portfolio*              |  | $  232,916,718
|Real Estate                 |  |               
|Unallocated(3)              |  |               
|                           
|Net increase in net         |  |               
|assets from operations      |  | $  247,168,782
|                           
|                            |  |               
|                           
|Segment assets              |  |               
|The Portfolio*              |  |               
|Real Estate                 |  |               
|Unallocated(4)              |  |               
|                           
|Segment assets              |  |               
|                           
|Net assets                  |  |               
|The Portfolio*              |  |               
|Real Estate                 |  |               
|Unallocated(5)              |  |               
|                           
|Net Assets                  |  |               
|                           

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

(1) Includes interest expense on the mortgage note payable held by Bel Marlborough (Note 9A), as well as interest expense incurred on Credit Facility borrowings allocated to the real estate segment for  presentation purposes.

61



|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T S C O N T  D
|------------------------------------------------------------------------------------------------------------------------

|(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:                                             
|    |  |                                                                 
|    |  |                                                                 
|    |  |                                                                 
|    |  |                                                                 
|    |  |                                                                 
|    |  | Distribution and servicing fees                                 
|    |  | Credit Facility interest expense                                
|    |  |                                                                 
|(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, 2006       
|    |  | and 2005, such borrowings totaled $90,593,015 and               
|    |  | $66,644,485, respectively.                                      

12 Subsequent Event On January 26, 2007, the Fund made a distribution of $1.93 per share to Shareholders of record on January 25, 2007.

13 Restatement In prior years consolidated financial statements, Belrose Capital had consolidated real estate joint ventures in which Belrose Realty held a majority economic interest. Prior to the issuance of its December 31, 2006 financial statements, Belrose Capital determined that such investments should not have been consolidated because Belrose Realty did not have voting rights sufficient to control significant decisions relating to real estate joint ventures without the consent of the real estate joint venture partners and therefore the real estate joint venture investments should have been accounted for using the equity method. Accordingly, the Fund has restated its Consolidated Portfolio of Investments and Consolidated Statement of Assets and Liabilities as of December 31, 2005 and its Consolidated Statements of Operations, Consolidated Statements of Cash Flows and Financial Highlights for the years ended December 31, 2005 and 2004.

The effect of deconsolidation on the Funds financial statements is to eliminate the presentation of the minority shareholders interest in the real estate joint venture investment and to present the Funds net investment in the real estate joint venture using the equity method. Using the equity method, the Fund reports its net investment in the real estate joint venture in the Consolidated Statement of Assets and Liabilities as an unaffiliated investment. The Fund reports in the Consolidated Statement of Operations its share of the current years real estate joint venture net investment income, realized gains (losses), if any, and unrealized appreciation (depreciation).

Additionally, certain amounts in the prior years consolidated financial statements were restated due to the correction of the allocation of realized gain (loss) from Belvedere Company. This change resulted in a decrease to net realized gain (loss) and an increase in the net change in unrealized appreciation (depreciation) within the Consolidated Statements of Operations, Consolidated Statements of Changes in Net Assets and Consolidated Statements of Cash Flows. The cost of the Funds investment in Belvedere Company within the Consolidated Statements of Assets and Liabilities was also decreased as of December 31, 2005.

The restatement of December 31, 2005 and December 31, 2004 amounts has had no effect on the Funds previously stated net asset value per share, net assets, net investment income, net increase in net assets from operations or total return. Amounts restated in the Funds previously reported consolidated financial statements for 2005 and 2004 are as follows:

|                                           |  | December 31, 2005  
|------------------------------------------ |  | -------------------
|                                           |  |                    
|Consolidated Portfolio of                  |  |                    
|Investments                                |  |                    
|                                          
|Total Investment in Belvedere Company      |  |                    
|(identified cost)                          |  | $     1,505,010,481
|Other Real Estate Investments              |  |                    
|Rental property                            |  | $                  
|Investment in management contracts         |  |                    
|Total Other Real Estate Investments        |  | $                  
|Total Other Real Estate Investments        |  |                    
|(identified cost)                          |  | $                  
|Real Estate Joint Ventures                 |  |                    
|Investment in Deerfield Property Trust     |  | $                  
|Investment in Katahdin Property Trust, LLC |  |                    
|Total Real Estate Joint Ventures           |  | $                  
|Total Real Estate Joint Ventures           |  |                    
|(identified cost)                          |  | $                  
|Total Investments                          |  | $    2,359,264,590 
|Total Investments (identified cost)        |  | $    2,074,895,486 
|                                          

62



|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

|                                              |  | December 31, 2005 
|--------------------------------------------- |  | ------------------
|                                              |  |                   
|Consolidated Statement of                     |  |                   
|Assets and Liabilities                        |  |                   
|                                             
|Investments, at value                         |  | $    2,359,264,590
|Investments (identified cost)                 |  |                   
|Investment in Belvedere Company, at value     |  |                   
|Investment in Belvedere Company               |  |                   
|(identified cost)                             |  |                   
|Unaffiliated investments, at value            |  |                   
|Unaffiliated investments (identified cost)    |  |                   
|Cash                                          |  |                   
|Escrow deposits  restricted                  |  |                   
|Other assets                                  |  |                   
|Total assets                                  |  | $    2,452,041,038
|Mortgage notes payable                        |  | $                 
|Notes payable to minority shareholder         |  |                   
|Security deposits                             |  |                   
|Accrued interest expense                      |  |                   
|Accrued property taxes                        |  |                   
|Accrued other expenses and liabilities        |  |                   
|Minority interests in controlled subsidiaries |  |                   
|Total liabilities                             |  | $                 
|                                             
|                                              |  | Year Ended        
|                                              |  | December 31, 2005 
|                                              |  |                   
|Consolidated Statement of                     |  |                   
|Operations                                    |  |                   
|                                             
|Rental income                                 |  | $                 
|Net investment income from real estate        |  |                   
|joint ventures                                |  |                   
|Interest                                      |  |                   
|Other income                                  |  |                   
|Total investment income                       |  | $                 
|Property management and administrative fees   |  | $                 
|Interest expense on mortgage notes            |  |                   
|Property and maintenance expenses             |  |                   
|Property taxes and insurance                  |  |                   
|Miscellaneous                                 |  |                   
|Total expenses                                |  | $                 
|Net expenses                                  |  | $                 
|Net investment income before minority         |  |                   
|interests in net income of controlled         |  |                   
|subsidiaries                                  |  | $                 
|Minority interests in net income of           |  |                   
|controlled subsidiaries                       |  |                   

|                                               |  |   |  | Year Ended       
|---------------------------------------------- |  | - |  | -----------------
|                                               |  |   |  | December 31, 2005
|                                               |  |  
|Consolidated Statement of                      |  |   |  | Previously       
|Operations                                     |  |   |  | Reported         
|                                              
|Net realized gain (loss)                       |  |   |  |                  
|Investment transactions, securities sold short |  |   |  |                  
|and foreign currency transactions allocated    |  |   |  |                  
|from Belvedere Company (identified             |  |   |  |                  
|cost basis)                                    |  | $ |  | 48,573,761       
|Net realized gain                              |  | $ |  | 69,272,363       
|Change in unrealized appreciation              |  |   |  |                  
|(depreciation)                                 |  |   |  |                  
|Investments, securities sold short and         |  |   |  |                  
|foreign currency allocated from                |  |   |  |                  
|Belvedere Company (identified                  |  |   |  |                  
|cost basis)                                    |  | $ |  | 9,310,085        
|Net change in unrealized                       |  |   |  |                  
|appreciation (depreciation)                    |  | $ |  | 38,218,085       
|                                              
|                                               |  |   |  | Year Ended       
|                                               |  |   |  | December 31, 2005
|                                               |  |  
|Consolidated Statement of Changes              |  |   |  | Previously       
|in Net Assets                                  |  |   |  | Reported         
|                                              
|Net realized gain from investment              |  |   |  |                  
|transactions, securities sold short,           |  |   |  |                  
|foreign currency transactions and              |  |   |  |                  
|interest rate swap agreements                  |  | $ |  | 69,272,363       
|Net change in unrealized appreciation          |  |   |  |                  
|(depreciation) of investments, securities      |  |   |  |                  
|sold short, foreign currency and interest      |  |   |  |                  
|rate swap agreements                           |  |   |  | 38,218,085       
|                                              
|                                               |  |   |  | Year Ended       
|                                               |  |   |  | December 31, 2005
|                                               |  |  
|Consolidated Statement of                      |  |   |  | Previously       
|Cash Flows                                     |  |   |  | Reported         
|                                              
|Net investment income from real estate         |  |   |  |                  
|joint ventures                                 |  | $ |  |                 
|Return of capital from real estate             |  |   |  |                  
|joint venture                                  |  |   |  |                 
|Distributions of earnings from real estate     |  |   |  |                  
|joint ventures                                 |  |   |  |                 
|Advances to real estate joint venture          |  |   |  |                 
|Repayments of advances to real estate          |  |   |  |                  
|joint venture                                  |  |   |  |                 
|Interest received from advances to real        |  |   |  |                  
|estate joint venture                           |  |   |  |                 
|Increase in escrow deposits                    |  |   |  | (27,604,169)     

63



|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

|                                              |  | Year Ended       
|--------------------------------------------- |  | -----------------
|                                              |  | December 31, 2005
|                                              |  |                  
|Consolidated Statement of                     |  |                  
|Cash Flows                                    |  |                  
|                                             
|Decrease in other assets                      |  | $                
|Increase (decrease) in security deposits,     |  |                  
|accrued interest and accrued other            |  |                  
|expenses and liabilities                      |  |                  
|Increase in accrued property taxes            |  |                  
|Payments for investments in other real estate |  |                  
|Proceeds from sale of investment in other     |  |                  
|real estate                                   |  |                  
|Improvements to rental property               |  |                  
|Decrease in cash due to sale of majority      |  |                  
|interest in controlled subsidiary             |  |                  
|Minority interests in net income of           |  |                  
|controlled subsidiaries                       |  |                  
|Net realized gain from investment             |  |                  
|transactions, securities sold short,          |  |                  
|foreign currency transactions and             |  |                  
|interest rate swap agreements                 |  |                  
|Net change in unrealized (appreciation)       |  |                  
|depreciation of investments, securities       |  |                  
|sold short, foreign currency and interest     |  |                  
|rate swap agreements                          |  |                  
|Net cash flows used in operating activities   |  | $                
|Proceeds from notes payable to minority       |  |                  
|shareholder                                   |  | $                
|Repayment of note payable to minority         |  |                  
|shareholder                                   |  |                  
|Issuance of real estate joint venture         |  |                  
|preferred shares                              |  |                  
|Distributions paid to minority shareholders   |  |                  
|Net cash flows provided by financing          |  |                  
|activities                                    |  | $                
|Net increase in cash                          |  | $                
|Cash at beginning of year                     |  | $                
|Cash at end of year                           |  | $                
|Supplemental Disclosure and Non-cash          |  |                  
|Operating and Financing Activities            |  |                  
|Interest paid on mortgage notes               |  | $                
|Market value of real property and other       |  |                  
|assets, net of current liabilities,           |  |                  
|disposed of in conjunction with the           |  |                  
|sales of other real estate                    |  |                  
|Mortgage notes disposed of in conjunction     |  |                  
|with the sales of other real estate           |  |                  

|                                            |  | Year Ended       
|------------------------------------------- |  | -----------------
|                                            |  | December 31, 2005
|                                            |  |                  
|Consolidated Statement of                   |  |                  
|Cash Flows                                  |  |                  
|                                           
|Market value of minority interests disposed |  |                  
|of in conjunction with the sales of other   |  |                  
|real estate                                 |  | $                
|Non-cash change in working capital of real  |  |                  
|estate investments                          |  |                  
|                                           
|                                            |  | Year Ended       
|                                            |  | December 31, 2005
|                                            |  |                  
|                                            |  |                  
|Financial Highlights                        |  |                  
|                                           
|Ratios as a percentage of average           |  |                  
|net assets                                  |  |                  
|Expenses of Consolidated Real Property      |  |                  
|Subsidiaries                                |  |                  
|Interest and other borrowing costs          |  |                  
|Operating expenses                          |  |                  
|Total expenses                              |  |                  
|Ratios as a percentage of average           |  |                  
|gross assets                                |  |                  
|Expenses of Consolidated Real Property      |  |                  
|Subsidiaries                                |  |                  
|Interest and other borrowing costs          |  |                  
|Operating expenses                          |  |                  
|Total expenses                              |  |                  
|                                           
|                                            |  | Year Ended       
|                                            |  | December 31, 2004
|                                            |  |                  
|Consolidated Statement of                   |  |                  
|Operations                                  |  |                  
|                                           
|Rental income                               |  | $                
|Net investment income from real estate      |  |                  
|joint ventures                              |  |                  
|Interest                                    |  |                  
|Total investment income                     |  | $                
|Property management and                     |  |                  
|administrative fees                         |  | $                
|Interest expense on mortgage notes          |  |                  
|Property and maintenance expenses           |  |                  
|Property taxes and insurance                |  |                  
|Miscellaneous                               |  |                  
|Total expenses                              |  | $                
|Net expenses                                |  | $                

64



|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

|                                             |  | Year Ended       
|-------------------------------------------- |  | -----------------
|                                             |  | December 31, 2004
|                                             |  |                  
|Consolidated Statement of                    |  |                  
|Operations                                   |  |                  
|                                            
|Net investment income before minority        |  |                  
|interests in net income of controlled        |  |                  
|subsidiaries                                 |  | $                
|Minority interests in net income of          |  |                  
|controlled subsidiaries                      |  |                  
|Net realized gain (loss)                     |  |                  
|Investment transactions, securities sold     |  |                  
|short and foreign currency transactions      |  |                  
|allocated from Belvedere Company             |  |                  
|(identified cost basis)                      |  | $                
|Net realized gain                            |  | $                
|Change in unrealized appreciation            |  |                  
|(depreciation)                               |  |                  
|Investments, securities sold short and       |  |                  
|foreign currency allocated from              |  |                  
|Belvedere Company (identified cost basis)    |  | $                
|Net change in unrealized                     |  |                  
|appreciation (depreciation)                  |  | $                
|                                            
|                                             |  | Year Ended       
|                                             |  | December 31, 2004
|                                             |  |                  
|Consolidated Statement of Changes            |  |                  
|in Net Assets                                |  |                  
|                                            
|Net realized gain from investment            |  |                  
|transactions, securities sold short, foreign |  |                  
|currency transactions and interest rate      |  |                  
|swap agreements                              |  | $                
|Net change in unrealized appreciation        |  |                  
|(depreciation) of investments, securities    |  |                  
|sold short, foreign currency and interest    |  |                  
|rate swap agreements                         |  |                  
|                                            
|                                             |  | Year Ended       
|                                             |  | December 31, 2004
|                                             |  |                  
|Consolidated Statement of                    |  |                  
|Cash Flows                                   |  |                  
|                                            
|Net investment income from real estate       |  |                  
|joint ventures                               |  | $                
|Return of capital from real estate           |  |                  
|joint venture                                |  |                  
|Distributions of earnings from real estate   |  |                  
|joint ventures                               |  |                  
|Decrease in escrow deposits                  |  |                  
|Increase in other assets                     |  |                  
|Increase in security deposits, accrued       |  |                  
|interest and accrued other expenses          |  |                  
|and liabilities                              |  |                  

|                                             |  | Year Ended       
|-------------------------------------------- |  | -----------------
|                                             |  | December 31, 2004
|                                             |  |                  
|Consolidated Statement of                    |  |                  
|Cash Flows                                   |  |                  
|                                            
|Increase in accrued property taxes           |  | $                
|Decrease in cash due to sale of controlled   |  |                  
|subsidiaries                                 |  |                  
|Improvements to rental property              |  |                  
|Minority interests in net income of          |  |                  
|controlled subsidiaries                      |  |                  
|Net realized gain from investment            |  |                  
|transactions, securities sold short, foreign |  |                  
|currency transactions and interest rate      |  |                  
|swap agreements                              |  |                  
|Net change in unrealized (appreciation)      |  |                  
|depreciation of investments, securities      |  |                  
|sold short, foreign currency and interest    |  |                  
|rate swap agreements                         |  |                  
|Net cash flows used in operating             |  |                  
|activities                                   |  | $                
|Proceeds from mortgage notes                 |  | $                
|Distributions paid to minority shareholders  |  |                  
|Return of capital distributed to minority    |  |                  
|shareholder                                  |  |                  
|Net cash flows provided by financing         |  |                  
|activities                                   |  | $                
|Net decrease in cash                         |  | $                
|Cash at beginning of year                    |  | $                
|Cash at end of year                          |  | $                
|Supplemental Disclosure and Non-cash         |  |                  
|Operating and Financing Activities           |  |                  
|Interest paid on mortgage notes              |  | $                
|Market value of real property and other      |  |                  
|assets, net of current liabilities,          |  |                  
|assumed in conjunction with the              |  |                  
|acquisition of other real estate             |  |                  
|Market value of minority interests           |  |                  
|assumed in conjunction with the              |  |                  
|acquisition of other real estate             |  |                  
|Market value of real property and other      |  |                  
|assets, net of current liabilities,          |  |                  
|disposed of in conjunction with the          |  |                  
|sales of other real estate                   |  |                  
|Mortgage notes disposed of in conjunction    |  |                  
|with the sales of other real estate          |  |                  
|Market value of minority interests           |  |                  
|disposed of in conjunction with the          |  |                  
|sales of other real estate                   |  |                  
|                                            

65



|Belrose  Capital  Fund  LLCN O T E S   T O   C O N S O L I D AT E D   F I N A N C I A L   S T AT E M E N T SC O N T  D
|-----------------------------------------------------------------------------------------------------------------------

|                                       |  | Year Ended       
|-------------------------------------- |  | -----------------
|                                       |  | December 31, 2004
|                                       |  |                  
|                                       |  | Previously       
|Financial Highlights                   |  | Reported         
|                                      
|Ratios as a percentage of average      |  |                  
|net assets                             |  |                  
|Expenses of Consolidated Real Property |  |                  
|Subsidiaries                           |  |                  
|Interest and other borrowing costs     |  | 1.29%            
|Operating expenses                     |  | 1.57%            
|Total expenses                         |  | 4.24%            
|Ratios as a percentage of average      |  |                  
|gross assets                           |  |                  
|Expenses of Consolidated Real Property |  |                  
|Subsidiaries                           |  |                  
|Interest and other borrowing costs     |  | 0.98%            
|Operating expenses                     |  | 1.18%            
|Total expenses                         |  | 3.20%            
|                                      



|66
|--



|Belrose  Capital  Fund  LLCREPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM
|----------------------------------------------------------------------------------------

To the Shareholders of Belrose Capital Fund LLC and Subsidiaries

We have audited the accompanying consolidated statements of asset and liabilities, including the consolidated portfolio of investments, of Belrose Capital Fund LLC and Subsidiaries (collectively, the Fund) as of December 31, 2006 and 2005, 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, 2006. These financial statements and financial highlights are the responsibility of the Funds management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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, 2006 and 2005 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2006 and 2005, and the results of its operations, the changes in its net assets, its cash flows, and the financial highlights for each of the three years in the period ended December 31, 2006 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, 2006 and 2005 these investments were valued at $372,646,109 (20% of net assets) and $349,188,040 (20% of net assets), respectively.

As discussed in Note 13, for the Fund referred to above, the consolidated statement of assets and liabilities, including the consolidated portfolio of investments as of December 31, 2005, and the related consolidated statements of operations, changes in net assets, cash flows, and financial highlights for each of the two years in the period ended December 31, 2005, have been restated.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Funds internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 18, 2007 expressed an unqualified opinion on managements assessment of the effectiveness of the Funds internal control over financial reporting and an unqualified opinion on the effectiveness of the Funds internal control over financial reporting.



|DELOITTE & TOUCHE LLP
Boston, MA
June 18, 2007
|----------------------------------------------



|67
|--



|Belrose  Capital  Fund  LLCMANAGEMENT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.

During the third quarter of 2006, the Fund acquired an investment in real property indirectly through a wholly owned subsidiary, Bel Marlborough Campus, LLC (Bel Marlborough). As of December 31, 2006, Bel Marlborough owned an office campus consisting of approximately 530,000 square feet of rentable space and 126 acres of land in Marlborough, Massachusetts. Management concluded that it was not possible to conduct an assessment of internal control over financial reporting of Bel Marlborough. Bel Marlborough represents approximately 5.9% of the Funds consolidated total assets and 6.3% of the Funds total investment income as of and for the year ended December 31, 2006. In accordance with guidance from the staff of the Securities and Exchange Commission, management intends to include an assessment of internal control over financial reporting of Bel Marlborough for the fiscal year ended December 31, 2007.

Management assessed the effectiveness of the Funds internal control over financial reporting as of December 31, 2006. 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, 2006.

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

June 18, 2007



|68
|--



|Belrose  Capital  Fund  LLCREPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM
|----------------------------------------------------------------------------------------

To the Shareholders of Belrose Capital Fund LLC and Subsidiaries

We have audited managements assessment, included in the accompanying Managements Report on Internal Control Over Financial Reporting, that Belrose Capital Fund LLC and subsidiaries (the Fund) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Managements Report on Internal Control Over Financial Reporting, management excluded from their assessment the internal control over financial reporting at Bel Marlborough Campus, LLC (Bel Marlborough), which was acquired on September 20, 2006. Bel Marlborough represents approximately 5.9% of the Funds consolidated total assets and 6.3% of the total investment income as of and for the period ended December 31, 2006. Accordingly, our audit did not include the internal control over financial reporting at Bel Marlborough. The Funds management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of the 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, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons performing similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

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

In our opinion, managements assessment that the Fund maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the criteria established in Internal Control Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Fund maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2006 of the Fund and our report dated June 18, 2007 expressed an unqualified opinion on those financial statements.



|DELOITTE & TOUCHE LLP
Boston, Massachusetts
June 18, 2007
|---------------------------------------------------------

69



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T S
|--------------------------------------------------------------------------------------------------------------------

|C o m m o n   S t o c k s   9 9 . 7 % |  |  |  |           |  |      
|-------------------------------------- |  |  |  | --------- |  | -----
|                                      
|Security                               |  |  |  | Shares    |  | Value
|                                      
|Aerospace & Defense  3.3%             |  |  |  |           |  |      
|                                      
|Boeing Company (The)                   |  |  |  | 948,774   |  | $    
|General Dynamics Corp.                 |  |  |  | 1,470,000 |  |      
|Honeywell International, Inc.          |  |  |  | 293,060   |  |      
|Northrop Grumman Corp.                 |  |  |  | 3,106,377 |  |      
|Raytheon Co.                           |  |  |  | 350,050   |  |      
|Rockwell Collins, Inc.                 |  |  |  | 129,632   |  |      
|United Technologies Corp.              |  |  |  | 3,693,938 |  |      
|                                      
|                                       |  |  |  |           |  | $    
|                                      
|Air Freight & Logistics  2.7%         |  |  |  |           |  |      
|                                      
|C.H. Robinson Worldwide, Inc.          |  |  |  | 2,078,589 |  | $    
|FedEx Corp.                            |  |  |  | 2,219,776 |  |      
|United Parcel Service, Inc., Class B   |  |  |  | 2,979,416 |  |      
|                                      
|                                       |  |  |  |           |  | $    
|                                      
|                                      
|Airlines  0.0%                        |  |  |  |           |  |      
|                                      
|Southwest Airlines Co.                 |  |  |  | 386,112   |  | $    
|                                      
|                                       |  |  |  |           |  | $    
|                                      
|Auto Components  0.1%                 |  |  |  |           |  |      
|                                      
|BorgWarner, Inc.                       |  |  |  | 95,849    |  | $    
|Delphi Corp.(1)                        |  |  |  | 5,361     |  |      
|Johnson Controls, Inc.                 |  |  |  | 213,523   |  |      
|Visteon Corp.(1)                       |  |  |  | 4,426     |  |      
|                                      
|                                       |  |  |  |           |  | $    
|                                      
|Automobiles  0.1%                     |  |  |  |           |  |      
|                                      
|DaimlerChrysler AG(2)                  |  |  |  | 24,284    |  | $    
|Ford Motor Co.                         |  |  |  | 83,266    |  |      
|General Motors Corp.                   |  |  |  | 33,939    |  |      
|Harley-Davidson, Inc.                  |  |  |  | 141,140   |  |      
|                                      
|                                       |  |  |  |           |  | $    
|                                      
|Beverages  4.5%                       |  |  |  |           |  |      
|                                      
|Anheuser-Busch Companies, Inc.         |  |  |  | 4,881,907 |  | $    
|Brown-Forman Corp., Class A            |  |  |  | 479,732   |  |      
|Brown-Forman Corp., Class B            |  |  |  | 45,820    |  |      
|Coca Cola Co. (The)                    |  |  |  | 4,721,933 |  |      
|Coca-Cola Enterprises, Inc.            |  |  |  | 1,606,930 |  |      
|PepsiCo, Inc.                          |  |  |  | 6,177,920 |  |      
|                                      
|                                       |  |  |  |           |  | $    
|                                      

|Security                                |  | Shares    |  | Value
|--------------------------------------- |  | --------- |  | -----
|                                       
|Biotechnology  1.7%                    |  |           |  |      
|                                       
|Amgen, Inc.(1)                          |  | 4,383,782 |  | $    
|Biogen Idec, Inc.(1)                    |  | 211,200   |  |      
|Celera Group(1)                         |  | 8,870     |  |      
|Genzyme Corp.(1)                        |  | 501,099   |  |      
|Gilead Sciences, Inc.(1)                |  | 115,482   |  |      
|Vertex Pharmaceuticals, Inc.(1)         |  | 13,000    |  |      
|                                       
|                                        |  |           |  | $    
|                                       
|Building Products  0.7%                |  |           |  |      
|                                       
|American Standard Companies, Inc.       |  | 868,699   |  | $    
|Masco Corp.                             |  | 3,420,182 |  |      
|                                       
|                                        |  |           |  | $    
|                                       
|Capital Markets  5.4%                  |  |           |  |      
|                                       
|Affiliated Managers Group, Inc.(1)      |  | 20,520    |  | $    
|Ameriprise Financial, Inc.              |  | 67,969    |  |      
|Bank of New York Co., Inc.              |  | 426,888   |  |      
|Bear Stearns Companies, Inc.            |  | 95,736    |  |      
|Charles Schwab Corp. (The)              |  | 847,738   |  |      
|Credit Suisse Group(2)                  |  | 155,136   |  |      
|Federated Investors, Inc., Class B      |  | 1,599,819 |  |      
|Franklin Resources, Inc.                |  | 797,053   |  |      
|Goldman Sachs Group, Inc.               |  | 1,115,548 |  |      
|Investors Financial Services Corp.      |  | 450,386   |  |      
|Knight Capital Group, Inc., Class A(1)  |  | 1,750,000 |  |      
|Legg Mason, Inc.                        |  | 46,784    |  |      
|Lehman Brothers Holdings, Inc.          |  | 192,474   |  |      
|Mellon Financial Corp.                  |  | 321,392   |  |      
|Merrill Lynch & Co., Inc.               |  | 2,472,803 |  |      
|Morgan Stanley                          |  | 3,053,604 |  |      
|Northern Trust Corp.                    |  | 725,484   |  |      
|Nuveen Investments, Class A             |  | 110,000   |  |      
|Piper Jaffray Cos., Inc.(1)             |  | 27,517    |  |      
|Raymond James Financial, Inc.           |  | 221,005   |  |      
|State Street Corp.                      |  | 146,764   |  |      
|T. Rowe Price Group, Inc.               |  | 341,862   |  |      
|UBS AG(2)                               |  | 192,683   |  |      
|Waddell & Reed Financial, Inc., Class A |  | 273,635   |  |      
|                                       
|                                        |  |           |  | $    
|                                       



|S e e   n o t e s   t o   f i n a n c i a l   s t a t e m e n t s
|-----------------------------------------------------------------



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                 |  | Shares    |  | Value
|---------------------------------------- |  | --------- |  | -----
|                                        
|Chemicals  0.8%                         |  |           |  |      
|                                        
|Arch Chemicals, Inc.                     |  | 4,950     |  | $    
|Arkema (ADR)(1)                          |  | 20,000    |  |      
|Ashland, Inc.                            |  | 46,969    |  |      
|Dow Chemical Co. (The)                   |  | 250,250   |  |      
|E.I. du Pont de Nemours and Co.          |  | 1,031,498 |  |      
|Ecolab, Inc.                             |  | 407,411   |  |      
|MacDermid, Inc.                          |  | 41,355    |  |      
|Monsanto Co.                             |  | 39,066    |  |      
|Olin Corp.                               |  | 9,900     |  |      
|PPG Industries, Inc.                     |  | 27,142    |  |      
|Rohm and Haas Co.                        |  | 2,601     |  |      
|Sigma-Aldrich Corp.                      |  | 630,897   |  |      
|Tronox, Inc., Class B                    |  | 37,854    |  |      
|Valspar Corp. (The)                      |  | 1,219,107 |  |      
|                                        
|                                         |  |           |  | $    
|                                        
|Commercial Banks  7.8%                  |  |           |  |      
|                                        
|Associated Banc-Corp.                    |  | 991,726   |  | $    
|Bank of Hawaii Corp.                     |  | 69,735    |  |      
|Bank of Montreal(2)                      |  | 255,949   |  |      
|BB&T Corp.                               |  | 1,867,960 |  |      
|City National Corp.                      |  | 184,221   |  |      
|Colonial BancGroup, Inc. (The)           |  | 52,095    |  |      
|Comerica, Inc.                           |  | 466,015   |  |      
|Commerce Bancshares, Inc.                |  | 171,056   |  |      
|Compass Bancshares, Inc.                 |  | 54,254    |  |      
|Fifth Third Bancorp                      |  | 2,711,753 |  |      
|First Citizens BancShares, Inc., Class A |  | 22,480    |  |      
|First Horizon National Corp.             |  | 148,868   |  |      
|First Midwest Bancorp, Inc.              |  | 523,358   |  |      
|HSBC Holdings PLC (Hungary) (ADR)        |  | 220,592   |  |      
|HSBC Holdings PLC (UK) (ADR)             |  | 580,708   |  |      
|Huntington Bancshares, Inc.              |  | 583,001   |  |      
|KeyCorp                                  |  | 663,862   |  |      
|M&T Bank Corp.                           |  | 81,234    |  |      
|Marshall & Ilsley Corp.                  |  | 663,221   |  |      
|National City Corp.                      |  | 1,511,282 |  |      
|PNC Financial Services Group, Inc.       |  | 166,675   |  |      
|Popular, Inc.(2)                         |  | 1,432     |  |      
|Regions Financial Corp.                  |  | 2,294,230 |  |      
|Royal Bank of Canada(2)                  |  | 574,109   |  |      
|Societe Generale(2)                      |  | 1,606,685 |  |      
|SunTrust Banks, Inc.                     |  | 1,252,412 |  |      

|Security                              |  | Shares    |  | Value
|------------------------------------- |  | --------- |  | -----
|                                     
|Commercial Banks (continued)          |  |           |  |      
|                                     
|Synovus Financial Corp.               |  | 1,065,458 |  | $    
|Toronto-Dominion Bank (The)(2)        |  | 17,915    |  |      
|Trustmark Corp.                       |  | 205,425   |  |      
|U.S. Bancorp                          |  | 4,831,496 |  |      
|Valley National Bancorp.              |  | 109,831   |  |      
|Wachovia Corp.                        |  | 2,539,881 |  |      
|Wells Fargo & Co.                     |  | 4,253,936 |  |      
|Westamerica Bancorporation            |  | 258,826   |  |      
|Whitney Holding Corp.                 |  | 117,128   |  |      
|Zions Bancorporation                  |  | 454,096   |  |      
|                                     
|                                      |  |           |  | $    
|                                     
|Commercial Services & Supplies  0.8% |  |           |  |      
|                                     
|Acco Brands Corp.(1)                  |  | 15,490    |  | $    
|Allied Waste Industries, Inc.(1)      |  | 1,240,437 |  |      
|Avery Dennison Corp.                  |  | 65,769    |  |      
|Cintas Corp.                          |  | 1,251,060 |  |      
|Donnelley (R.R.) & Sons Co.           |  | 60,262    |  |      
|Herman Miller, Inc.                   |  | 541,800   |  |      
|HNI Corp.                             |  | 765,839   |  |      
|Hudson Highland Group, Inc.(1)        |  | 5,226     |  |      
|Manpower, Inc.                        |  | 706       |  |      
|Monster Worldwide, Inc.(1)            |  | 39,395    |  |      
|PHH Corp.(1)                          |  | 27,409    |  |      
|Pitney Bowes, Inc.                    |  | 31,857    |  |      
|School Specialty, Inc.(1)             |  | 12,603    |  |      
|Waste Management, Inc.                |  | 671,011   |  |      
|                                     
|                                      |  |           |  | $    
|                                     
|Communications Equipment  1.6%       |  |           |  |      
|                                     
|3Com Corp.(1)                         |  | 472,985   |  | $    
|ADC Telecommunications, Inc.(1)       |  | 21,341    |  |      
|Alcatel SA (ADR)                      |  | 89,240    |  |      
|Avaya, Inc.(1)                        |  | 20,404    |  |      
|Cisco Systems, Inc.(1)                |  | 6,198,467 |  |      
|Comverse Technology, Inc.(1)          |  | 165,755   |  |      
|Corning, Inc.(1)                      |  | 3,671,953 |  |      
|Dycom Industries, Inc.(1)             |  | 61,019    |  |      
|Juniper Networks, Inc.(1)             |  | 35,691    |  |      
|Motorola, Inc.                        |  | 1,266,823 |  |      
|Nokia Oyj (ADR)                       |  | 2,042,478 |  |      
|Nortel Networks Corp.(1)(2)           |  | 72,544    |  |      



|S e e  n o t e s  t o  f i n a n c i a l  s t a t e m e n t s
|-------------------------------------------------------------



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                |  | Shares    |  | Value
|--------------------------------------- |  | --------- |  | -----
|                                       
|Communications Equipment (continued)    |  |          
|                                       
|QUALCOMM, Inc.                          |  | 347,456   |  | $    
|Riverstone Networks, Inc.(3)            |  | 28,706    |  |      
|Tellabs, Inc.(1)                        |  | 32,678    |  |      
|                                       
|                                        |  |           |  | $    
|                                       
|Computer Peripherals  2.3%             |  |           |  |      
|                                       
|Dell, Inc.(1)                           |  | 4,406,741 |  | $    
|EMC Corp.(1)                            |  | 1,747,812 |  |      
|Gateway, Inc.(1)                        |  | 65,556    |  |      
|Hewlett-Packard Co.                     |  | 887,799   |  |      
|International Business Machines Corp.   |  | 1,575,883 |  |      
|Lexmark International, Inc., Class A(1) |  | 1,714,509 |  |      
|McDATA Corp., Class A(1)                |  | 7,666     |  |      
|Network Appliance, Inc.(1)              |  | 364,967   |  |      
|Palm, Inc.(1)                           |  | 68,379    |  |      
|Sun Microsystems, Inc.(1)               |  | 319,180   |  |      
|                                       
|                                        |  |           |  | $    
|                                       
|Construction & Engineering  0.1%       |  |           |  |      
|                                       
|Jacobs Engineering Group, Inc.(1)       |  | 157,319   |  | $    
|                                       
|                                        |  |           |  | $    
|                                       
|Construction Materials  0.1%           |  |           |  |      
|                                       
|CRH PLC(2)                              |  | 207,894   |  | $    
|Vulcan Materials Co.                    |  | 206,614   |  |      
|                                       
|                                        |  |           |  | $    
|                                       
|Consumer Finance  1.0%                 |  |           |  |      
|                                       
|American Express Co.                    |  | 618,260   |  | $    
|Capital One Financial Corp.             |  | 1,705,714 |  |      
|SLM Corp.                               |  | 916,399   |  |      
|                                       
|                                        |  |           |  | $    
|                                       
|Containers & Packaging  0.1%           |  |           |  |      
|                                       
|Bemis Co., Inc.                         |  | 295,186   |  | $    
|Sealed Air Corp.                        |  | 21,264    |  |      
|Sonoco Products Co.                     |  | 128,617   |  |      
|Temple-Inland, Inc.                     |  | 115,924   |  |      
|                                       
|                                        |  |           |  | $    
|                                       
|Distributors  0.0%                     |  |           |  |      
|                                       
|Genuine Parts Co.                       |  | 190,459   |  | $    
|                                       
|                                        |  |           |  | $    
|                                       

|Security                                              |  | Shares    |  | Value
|----------------------------------------------------- |  | --------- |  | -----
|                                                     
|Diversified Consumer Services  0.3%                  |  |           |  |      
|                                                     
|Apollo Group, Inc., Class A(1)                        |  | 31,893    |  | $    
|H&R Block, Inc.                                       |  | 1,599,312 |  |      
|Laureate Education, Inc.(1)                           |  | 302,518   |  |      
|ServiceMaster Co. (The)                               |  | 1,156,537 |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     
|Diversified Financial Services  3.1%                 |  |           |  |      
|                                                     
|Bank of America Corp.                                 |  | 4,074,755 |  | $    
|Citigroup, Inc.                                       |  | 4,486,846 |  |      
|ING Groep N.V. (ADR)                                  |  | 257,281   |  |      
|JPMorgan Chase & Co.                                  |  | 2,748,807 |  |      
|Moodys Corp.                                         |  | 309,906   |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     
|Diversified Telecommunication Services  1.4%        
|                                                     
|AT&T, Inc.                                            |  | 1,201,387 |  | $    
|BCE, Inc.(2)                                          |  | 2,653,500 |  |      
|Bell Aliant Regional Communications, Inc.(1)(2)(3)(5) |  | 210,251   |  |      
|BellSouth Corp.                                       |  | 165,981   |  |      
|Cincinnati Bell, Inc.(1)                              |  | 169,013   |  |      
|Citizens Communications Co.                           |  | 6,949     |  |      
|Deutsche Telekom AG (ADR)                             |  | 1,843,732 |  |      
|Embarq Corp.                                          |  | 16,420    |  |      
|McLeod USA, Inc., Class A(1)(3)                       |  | 947       |  |      
|Qwest Communications International, Inc.(1)           |  | 38,011    |  |      
|RSL Communications, Ltd., Class A(1)(2)(3)            |  | 247,161   |  |      
|Telefonos de Mexico SA de CV (ADR)                    |  | 2,883,026 |  |      
|Verizon Communications, Inc.                          |  | 462,191   |  |      
|Windstream Corp.                                      |  | 1,105,386 |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     
|Electric Utilities  0.4%                             |  |           |  |      
|                                                     
|American Electric Power Co., Inc.                     |  | 960       |  | $    
|Duke Energy Corp.                                     |  | 417,250   |  |      
|Exelon Corp.                                          |  | 1,003,134 |  |      
|Southern Co. (The)                                    |  | 65,985    |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     
|Electrical Equipment  0.6%                           |  |           |  |      
|                                                     
|American Power Conversion Corp.                       |  | 15,654    |  | $    
|Emerson Electric Co.                                  |  | 2,533,434 |  |      
|Rockwell Automation, Inc.                             |  | 160,084   |  |      
|Roper Industries, Inc.                                |  | 46,244    |  |      
|Thomas & Betts Corp.(1)                               |  | 106,648   |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     



|S e e   n o t e s   t o   f i n a n c i a l   s t a t e m e n t s
|-----------------------------------------------------------------



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                  |  | Shares    |  | Value
|----------------------------------------- |  | --------- |  | -----
|                                         
|Electronic Equipment & Instruments  0.4%
|                                         
|Agilent Technologies, Inc.(1)             |  | 451,772   |  | $    
|Arrow Electronics, Inc.(1)                |  | 8,750     |  |      
|Flextronics International, Ltd.(1)(2)     |  | 441,607   |  |      
|Jabil Circuit, Inc.                       |  | 2,082,013 |  |      
|National Instruments Corp.                |  | 278,794   |  |      
|Plexus Corp.(1)                           |  | 146,273   |  |      
|Sanmina-SCI Corp.(1)                      |  | 540,602   |  |      
|Solectron Corp.(1)                        |  | 1,670,613 |  |      
|                                         
|                                          |  |           |  | $    
|                                         
|Energy Equipment & Services  0.7%        |  |           |  |      
|                                         
|Baker Hughes, Inc.                        |  | 194,687   |  | $    
|GlobalSantaFe Corp.(2)                    |  | 20,000    |  |      
|Grant Prideco, Inc.(1)                    |  | 11,694    |  |      
|Halliburton Co.                           |  | 1,251,578 |  |      
|Schlumberger, Ltd.(2)                     |  | 1,178,674 |  |      
|Smith International, Inc.                 |  | 120,165   |  |      
|Transocean, Inc.(1)(2)                    |  | 103,602   |  |      
|                                         
|                                          |  |           |  | $    
|                                         
|Food & Staples Retailing  1.8%           |  |           |  |      
|                                         
|Caseys General Stores, Inc.              |  | 12,551    |  | $    
|Costco Wholesale Corp.                    |  | 928,292   |  |      
|CVS Corp.                                 |  | 365,636   |  |      
|Kroger Co. (The)                          |  | 1,344,295 |  |      
|Safeway, Inc.                             |  | 1,135,280 |  |      
|SUPERVALU, Inc.                           |  | 98,710    |  |      
|Sysco Corp.                               |  | 2,229,368 |  |      
|Walgreen Co.                              |  | 1,063,420 |  |      
|Wal-Mart Stores, Inc.                     |  | 2,141,995 |  |      
|                                         
|                                          |  |           |  | $    
|                                         
|Food Products  2.5%                      |  |           |  |      
|                                         
|Archer-Daniels-Midland Co.                |  | 1,376,641 |  | $    
|Campbell Soup Co.                         |  | 1,295,515 |  |      
|ConAgra Foods, Inc.                       |  | 954,451   |  |      
|Dean Foods Co.(1)                         |  | 286,449   |  |      
|Del Monte Foods Co.                       |  | 99,492    |  |      
|General Mills, Inc.                       |  | 151,524   |  |      
|H.J. Heinz Co.                            |  | 292,513   |  |      
|Hershey Co. (The)                         |  | 497,578   |  |      
|J.M. Smucker Co. (The)                    |  | 7,152     |  |      

|Security                                    |  | Shares    |  | Value
|------------------------------------------- |  | --------- |  | -----
|                                           
|Food Products (continued)                   |  |           |  |      
|                                           
|Kellogg Co.                                 |  | 54,076    |  | $    
|Kraft Foods, Inc.                           |  | 465       |  |      
|Nestle SA(2)                                |  | 275,000   |  |      
|Sara Lee Corp.                              |  | 4,504,598 |  |      
|Smithfield Foods, Inc.(1)                   |  | 3,650,830 |  |      
|TreeHouse Foods, Inc.(1)                    |  | 64,797    |  |      
|Tyson Foods, Inc., Class A                  |  | 265,272   |  |      
|William Wrigley Jr. Co.                     |  | 996,034   |  |      
|                                           
|                                            |  |           |  | $    
|                                           
|Gas Utilities  0.0%                        |  |           |  |      
|                                           
|National Fuel Gas Co.                       |  | 4,000     |  | $    
|                                           
|                                            |  |           |  | $    
|                                           
|Health Care Equipment & Supplies  1.0%     |  |          
|                                           
|Advanced Medical Optics, Inc.(1)            |  | 9,834     |  | $    
|Baxter International, Inc.                  |  | 241,562   |  |      
|Becton, Dickinson and Co.                   |  | 63,708    |  |      
|Biomet, Inc.                                |  | 419,890   |  |      
|Boston Scientific Corp.(1)                  |  | 1,138,837 |  |      
|DENTSPLY International, Inc.                |  | 7,701     |  |      
|Edwards Lifesciences Corp.(1)               |  | 3,070     |  |      
|Hillenbrand Industries, Inc.                |  | 188,606   |  |      
|Hospira, Inc.(1)                            |  | 114,611   |  |      
|Medtronic, Inc.                             |  | 1,886,733 |  |      
|Medtronic, Inc.(3)(4)                       |  | 7,500     |  |      
|St. Jude Medical, Inc.(1)                   |  | 84,585    |  |      
|Stryker Corp.                               |  | 151,918   |  |      
|Zimmer Holdings, Inc.(1)                    |  | 302,863   |  |      
|                                           
|                                            |  |           |  | $    
|                                           
|Health Care Providers & Services  1.9%     |  |          
|                                           
|AmerisourceBergen Corp.                     |  | 369,925   |  | $    
|Cardinal Health, Inc.                       |  | 2,189,814 |  |      
|Caremark Rx, Inc.                           |  | 1,087,504 |  |      
|CIGNA Corp.                                 |  | 15,036    |  |      
|Express Scripts, Inc.(1)                    |  | 74,800    |  |      
|Health Management Associates, Inc., Class A |  | 124,425   |  |      
|Henry Schein, Inc.(1)                       |  | 1,143,408 |  |      
|McKesson Corp.                              |  | 2,631     |  |      
|Medco Health Solutions, Inc.(1)             |  | 174,081   |  |      
|Sunrise Senior Living, Inc.(1)              |  | 8,000     |  |      



|S e e   n o t e s   t o   f i n a n c i a l   s t a t e m e n t s
|-----------------------------------------------------------------



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                     |  | Shares    |  | Value
|-------------------------------------------- |  | --------- |  | -----
|                                            
|Health Care Providers & Services (continued)
|                                            
|Tenet Healthcare Corp.(1)                    |  | 3,478     |  | $    
|Unitedhealth Group                           |  | 453,594   |  |      
|WellPoint, Inc.(1)                           |  | 834,692   |  |      
|                                            
|                                             |  |           |  | $    
|                                            
|Health Care Technology  0.0%                |  |           |  |      
|                                            
|IMS Health, Inc.                             |  | 120,055   |  | $    
|                                            
|                                             |  |           |  | $    
|                                            
|Hotels, Restaurants & Leisure  1.5%         |  |           |  |      
|                                            
|Bob Evans Farms, Inc.                        |  | 49,985    |  | $    
|Brinker International, Inc.                  |  | 185,881   |  |      
|Carnival Corp.(2)                            |  | 550,082   |  |      
|Darden Restaurants, Inc.                     |  | 184,714   |  |      
|Gaylord Entertainment Co.(1)                 |  | 428,482   |  |      
|International Game Technology                |  | 409,904   |  |      
|International Speedway Corp., Class A        |  | 118,344   |  |      
|Jack in the Box, Inc.(1)                     |  | 74,400    |  |      
|Marriott International, Inc., Class A        |  | 395,881   |  |      
|McDonalds Corp.                             |  | 915,891   |  |      
|MGM MIRAGE(1)                                |  | 188,890   |  |      
|OSI Restaurant Partners, Inc.                |  | 1,034,548 |  |      
|Papa Johns International, Inc.(1)           |  | 157,179   |  |      
|Sonic Corp.(1)                               |  | 43,809    |  |      
|Starbucks Corp.(1)                           |  | 2,254,271 |  |      
|Wyndham Worldwide Corp.(1)                   |  | 128,223   |  |      
|Yum! Brands, Inc.                            |  | 247,333   |  |      
|                                            
|                                             |  |           |  | $    
|                                            
|Household Durables  0.4%                    |  |           |  |      
|                                            
|Blyth, Inc.                                  |  | 583,297   |  | $    
|D.R. Horton, Inc.                            |  | 637,557   |  |      
|Fortune Brands, Inc.                         |  | 115,429   |  |      
|Leggett & Platt, Inc.                        |  | 1,794,941 |  |      
|Newell Rubbermaid, Inc.                      |  | 291,589   |  |      
|                                            
|                                             |  |           |  | $    
|                                            
|Household Products  3.1%                    |  |           |  |      
|                                            
|Clorox Co. (The)                             |  | 14,873    |  | $    
|Colgate-Palmolive Co.                        |  | 702,684   |  |      
|Energizer Holdings, Inc.(1)                  |  | 168,981   |  |      
|Kimberly-Clark Corp.                         |  | 1,398,706 |  |      
|Procter & Gamble Co. (The)                   |  | 7,412,101 |  |      
|                                            
|                                             |  |           |  | $    
|                                            

|Security                                             |  | Shares     |  | Value
|---------------------------------------------------- |  | ---------- |  | -----
|                                                    
|Independent Power Producers &  Energy Traders  0.1% |  |            |  |      
|                                                    
|AES Corp. (The)(1)                                   |  | 40,339     |  | $    
|Dynegy, Inc., Class A(1)                             |  | 22,688     |  |      
|TXU Corp.                                            |  | 196,092    |  |      
|                                                    
|                                                     |  |            |  | $    
|                                                    
|Industrial Conglomerates  2.9%                      |  |            |  |      
|                                                    
|3M Co.                                               |  | 911,246    |  | $    
|General Electric Co.                                 |  | 12,987,699 |  |      
|Teleflex, Inc.                                       |  | 14,497     |  |      
|Textron, Inc.                                        |  | 12,838     |  |      
|Tyco International, Ltd.(2)                          |  | 1,125,841  |  |      
|                                                    
|                                                     |  |            |  | $    
|                                                    
|Insurance  5.8%                                     |  |            |  |      
|                                                    
|Aegon, N.V. (ADR)                                    |  | 5,182,849  |  | $    
|AFLAC, Inc.                                          |  | 2,198,053  |  |      
|Allstate Corp. (The)                                 |  | 191,646    |  |      
|American International Group, Inc.                   |  | 6,322,481  |  |      
|AON Corp.                                            |  | 517,325    |  |      
|Arthur J. Gallagher & Co.                            |  | 557,196    |  |      
|Berkshire Hathaway, Inc., Class A(1)                 |  | 641        |  |      
|Berkshire Hathaway, Inc., Class B(1)                 |  | 40,436     |  |      
|Chubb Corp. (The)                                    |  | 30,869     |  |      
|Commerce Group, Inc. (The)                           |  | 84,309     |  |      
|Hartford Financial Services Group, Inc. (The)        |  | 45,700     |  |      
|Lincoln National Corp.                               |  | 224,854    |  |      
|Manulife Financial Corp.(2)                          |  | 210,896    |  |      
|Marsh & McLennan Cos., Inc.                          |  | 478,800    |  |      
|MetLife, Inc.                                        |  | 803,028    |  |      
|Old Republic International Corp.                     |  | 300,685    |  |      
|Principal Financial Group, Inc.                      |  | 113,328    |  |      
|Progressive Corp. (The)                              |  | 3,784,948  |  |      
|SAFECO Corp.                                         |  | 161,000    |  |      
|St. Paul Travelers Cos., Inc. (The)                  |  | 349,428    |  |      
|Torchmark Corp.                                      |  | 318,929    |  |      
|UnumProvident Corp.                                  |  | 53,710     |  |      
|XL Capital Ltd., Class A(2)                          |  | 187,100    |  |      
|                                                    
|                                                     |  |            |  | $    
|                                                    



|S e e   n o t e s   t o   f i n a n c i a l   s t a t e m e n t s
|-----------------------------------------------------------------



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                     |  | Shares    |  | Value
|-------------------------------------------- |  | --------- |  | -----
|                                            
|Internet & Catalog Retail  0.2%             |  |           |  |      
|                                            
|Amazon.com, Inc.(1)                          |  | 42,476    |  | $    
|Expedia, Inc.(1)                             |  | 403,096   |  |      
|IAC/InterActiveCorp(1)                       |  | 429,832   |  |      
|Liberty Media Corp. - Interactive(1)         |  | 275,760   |  |      
|                                            
|                                             |  |           |  | $    
|                                            
|Internet Software & Services  0.4%          |  |           |  |      
|                                            
|eBay, Inc.(1)                                |  | 1,257,244 |  | $    
|Google, Inc., Class A(1)                     |  | 91,634    |  |      
|                                            
|                                             |  |           |  | $    
|                                            
|IT Services  2.5%                           |  |           |  |      
|                                            
|Accenture Ltd., Class A(2)                   |  | 2,739,520 |  | $    
|Acxiom Corp.                                 |  | 455,893   |  |      
|Affiliated Computer Services, Inc.(1)        |  | 183,730   |  |      
|Automatic Data Processing, Inc.              |  | 1,491,647 |  |      
|BISYS Group, Inc. (The)(1)                   |  | 65,000    |  |      
|Computer Sciences Corp.(1)                   |  | 226,702   |  |      
|DST Systems, Inc.(1)                         |  | 72,199    |  |      
|Electronic Data Systems Corp.                |  | 1,252     |  |      
|Fidelity National Information Services, Inc. |  | 42,862    |  |      
|First Data Corp.                             |  | 3,488,152 |  |      
|Fiserv, Inc.(1)                              |  | 832,355   |  |      
|Gartner, Inc., Class A(1)                    |  | 30,576    |  |      
|Paychex, Inc.                                |  | 1,623,499 |  |      
|Perot Systems Corp.(1)                       |  | 649,037   |  |      
|Safeguard Scientifics, Inc.(1)               |  | 26,579    |  |      
|Western Union Co.                            |  | 3,488,152 |  |      
|                                            
|                                             |  |           |  | $    
|                                            
|Leisure Equipment & Products  0.0%          |  |           |  |      
|                                            
|Eastman Kodak Co.                            |  | 90,761    |  | $    
|Mattel, Inc.                                 |  | 30,514    |  |      
|                                            
|                                             |  |           |  | $    
|                                            
|Life Sciences Tools & Services  0.2%        |  |           |  |      
|                                            
|Dionex Corp.(1)                              |  | 37,300    |  | $    
|Invitrogen Corp.(1)                          |  | 429,910   |  |      
|PerkinElmer, Inc.                            |  | 254,526   |  |      
|Waters Corp.(1)                              |  | 97,439    |  |      
|                                            
|                                             |  |           |  | $    
|                                            

|Security                                         |  | Shares    |  | Value
|------------------------------------------------ |  | --------- |  | -----
|                                                
|Machinery  3.6%                                 |  |           |  |      
|                                                
|Caterpillar, Inc.                                |  | 185,437   |  | $    
|Danaher Corp.                                    |  | 4,060,343 |  |      
|Deere & Co.                                      |  | 3,312,500 |  |      
|Donaldson Co., Inc.                              |  | 77,792    |  |      
|Dover Corp.                                      |  | 532,425   |  |      
|Illinois Tool Works, Inc.                        |  | 1,656,572 |  |      
|ITT Industries, Inc.                             |  | 8,428     |  |      
|Nordson Corp.                                    |  | 72,383    |  |      
|Parker Hannifin Corp.                            |  | 35,571    |  |      
|                                                
|                                                 |  |           |  | $    
|                                                
|Media  4.9%                                     |  |           |  |      
|                                                
|ADVO, Inc.                                       |  | 750,000   |  | $    
|Belo Corp., Class A                              |  | 330,817   |  |      
|Cablevision Systems Corp., Class A               |  | 4         |  |      
|Catalina Marketing Corp.                         |  | 79,803    |  |      
|CBS Corp., Class A                               |  | 14,887    |  |      
|CBS Corp., Class B                               |  | 556,629   |  |      
|Clear Channel Communications, Inc.               |  | 129,887   |  |      
|Comcast Corp., Class A(1)                        |  | 1,895,538 |  |      
|Comcast Corp., Class A Special(1)                |  | 2,367,010 |  |      
|Discovery Holding Co., Class A(1)                |  | 102,540   |  |      
|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.                                |  | 423,389   |  |      
|Havas SA (ADR)                                   |  | 3,142,938 |  |      
|Idearc, Inc.(1)                                  |  | 23,103    |  |      
|Interpublic Group of Companies, Inc., (The)(1)   |  | 932,692   |  |      
|Lamar Advertising Co.(1)                         |  | 241,409   |  |      
|Liberty Global, Inc., Class A(1)                 |  | 46,731    |  |      
|Liberty Global, Inc., Class C(1)                 |  | 48,416    |  |      
|Liberty Media Holding Corp.-Capital, Series A(1) |  | 55,152    |  |      
|Liberty Media Holding Corp.-Capital, Series B(1) |  | 526       |  |      
|Live Nation, Inc.(1)                             |  | 16,410    |  |      
|McClatchy Co., (The), Class A                    |  | 9,394     |  |      
|McGraw-Hill Companies, Inc., (The)               |  | 482,884   |  |      
|New York Times Co. (The), Class A                |  | 300,468   |  |      
|News Corp., Class A                              |  | 187,934   |  |      
|Omnicom Group, Inc.                              |  | 2,410,418 |  |      
|Publicis Groupe(1)                               |  | 329,132   |  |      
|Time Warner, Inc.                                |  | 4,059,654 |  |      
|Tribune Co.                                      |  | 1,694,658 |  |      



|S e e   n o t e s   t o   f i n a n c i a l   s t a t e m e n t s
|-----------------------------------------------------------------



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                   |  | Shares    |  | Value
|------------------------------------------ |  | --------- |  | -----
|                                          
|Media (continued)                          |  |           |  |      
|                                          
|Univision Communications, Inc., Class A(1) |  | 27,009    |  | $    
|Viacom, Inc., Class A(1)                   |  | 13,791    |  |      
|Viacom, Inc., Class B(1)                   |  | 524,573   |  |      
|Vivendi SA (ADR)                           |  | 174,913   |  |      
|Walt Disney Co. (The)                      |  | 4,955,298 |  |      
|Washington Post Co. (The), Class B         |  | 16,470    |  |      
|WPP Group PLC(2)                           |  | 139,450   |  |      
|WPP Group PLC (ADR)                        |  | 256,051   |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Metals & Mining  0.3%                     |  |           |  |      
|                                          
|Alcoa, Inc.                                |  | 85,947    |  | $    
|Nucor Corp.                                |  | 741,928   |  |      
|Phelps Dodge Corp.                         |  | 29,724    |  |      
|Steel Dynamics, Inc.                       |  | 623,600   |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Multiline Retail  1.6%                    |  |           |  |      
|                                          
|99 Cents Only Stores(1)                    |  | 807,619   |  | $    
|Dollar General Corp.                       |  | 52,668    |  |      
|Dollar Tree Stores, Inc.(1)                |  | 646,996   |  |      
|Family Dollar Stores, Inc.                 |  | 2,249,176 |  |      
|Federated Department Stores, Inc.          |  | 231,607   |  |      
|J.C. Penney Company, Inc.                  |  | 130,349   |  |      
|Nordstrom, Inc.                            |  | 131,384   |  |      
|Sears Holdings Corp.(1)                    |  | 4,563     |  |      
|Target Corp.                               |  | 3,504,497 |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Multi-Utilities  0.0%                     |  |           |  |      
|                                          
|Ameren Corp.                               |  | 5,000     |  | $    
|Dominion Resources, Inc.                   |  | 3,249     |  |      
|PG&E Corp.                                 |  | 3,000     |  |      
|TECO Energy, Inc.                          |  | 20,354    |  |      
|Wisconsin Energy Corp.                     |  | 9,576     |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Office Electronics  0.0%                  |  |           |  |      
|                                          
|Xerox Corp.(1)                             |  | 22,878    |  | $    
|Zebra Technologies Corp., Class A(1)       |  | 13,500    |  |      
|                                          
|                                           |  |           |  | $    
|                                          

|Security                               |  | Shares    |  | Value
|-------------------------------------- |  | --------- |  | -----
|                                      
|Oil, Gas & Consumable Fuels  10.1%    |  |           |  |      
|                                      
|Anadarko Petroleum Corp.               |  | 5,118,262 |  | $    
|Apache Corp.                           |  | 2,145,450 |  |      
|BP PLC (ADR)                           |  | 5,110,159 |  |      
|Chevron Corp.                          |  | 545,679   |  |      
|ConocoPhillips                         |  | 6,155,436 |  |      
|Devon Energy Corp.                     |  | 818,602   |  |      
|El Paso Corp.                          |  | 97,665    |  |      
|Exxon Mobil Corp.                      |  | 7,018,803 |  |      
|Hess Corp.                             |  | 56,192    |  |      
|Kinder Morgan, Inc.                    |  | 1,762,113 |  |      
|Marathon Oil Corp.                     |  | 19,294    |  |      
|Murphy Oil Corp.                       |  | 39,036    |  |      
|Newfield Exploration Co.(1)            |  | 30,851    |  |      
|Royal Dutch Shell PLC (ADR)            |  | 116,941   |  |      
|Total SA (ADR)                         |  | 762,250   |  |      
|Valero Energy Corp.                    |  | 11,481    |  |      
|Williams Cos., Inc. (The)              |  | 223,515   |  |      
|                                      
|                                       |  |           |  | $    
|                                      
|Paper and Forest Products  0.1%       |  |           |  |      
|                                      
|International Paper Co.                |  | 150,301   |  | $    
|MeadWestvaco Corp.                     |  | 45,590    |  |      
|Neenah Paper, Inc.                     |  | 33,028    |  |      
|Weyerhaeuser Co.                       |  | 85,020    |  |      
|                                      
|                                       |  |           |  | $    
|                                      
|Personal Products  0.3%               |  |           |  |      
|                                      
|Avon Products, Inc.                    |  | 173,400   |  | $    
|Estee Lauder Cos., Inc., (The) Class A |  | 1,160,940 |  |      
|                                      
|                                       |  |           |  | $    
|                                      
|Pharmaceuticals  6.6%                 |  |           |  |      
|                                      
|Abbott Laboratories                    |  | 3,244,908 |  | $    
|Allergan, Inc.                         |  | 138,300   |  |      
|Bristol-Myers Squibb Co.               |  | 4,735,992 |  |      
|Eli Lilly & Co.                        |  | 3,934,161 |  |      
|Forest Laboratories, Inc.(1)           |  | 56,729    |  |      
|GlaxoSmithKline PLC (ADR)              |  | 419,815   |  |      
|Johnson & Johnson                      |  | 3,883,957 |  |      
|King Pharmaceuticals, Inc.(1)          |  | 152,305   |  |      
|Merck & Co., Inc.                      |  | 2,720,051 |  |      
|Mylan Laboratories, Inc.               |  | 27,992    |  |      



|S e e   n o t e s   t o   f i n a n c i a l   s t a t e m e n t s
|-----------------------------------------------------------------



|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                        |  | Shares     |  | Value
|----------------------------------------------- |  | ---------- |  | -----
|                                               
|Pharmaceuticals (continued)                     |  |            |  |      
|                                               
|Novo Nordisk A/S (ADR)                          |  | 269,510    |  | $    
|Pfizer, Inc.                                    |  | 9,928,570  |  |      
|Schering-Plough Corp.                           |  | 1,739,845  |  |      
|Sepracor, Inc.(1)                               |  | 4,000      |  |      
|Shering AG (ADR)                                |  | 25,000     |  |      
|Teva Pharmaceutical Industries, Ltd. (ADR)      |  | 1,676,190  |  |      
|Watson Pharmaceuticals, Inc.(1)                 |  | 562,702    |  |      
|Wyeth                                           |  | 828,310    |  |      
|                                               
|                                                |  |            |  | $    
|                                               
|Real Estate Investment Trusts (REITs)  0.0%   
|                                               
|ProLogis                                        |  | 104,563    |  | $    
|                                               
|                                                |  |            |  | $    
|                                               
|Real Estate Management & Development  0.0%    
|                                               
|Forest City Enterprises, Inc., Class A          |  | 58,779     |  | $    
|Realogy Corp.(1)                                |  | 160,279    |  |      
|                                               
|                                                |  |            |  | $    
|                                               
|Road & Rail  0.1%                              |  |            |  |      
|                                               
|Avis Budget Group, Inc.                         |  | 64,111     |  | $    
|Burlington Northern Santa Fe Corp.              |  | 192,210    |  |      
|CSX Corp.                                       |  | 76,268     |  |      
|Heartland Express, Inc.                         |  | 1          |  |      
|Kansas City Southern(1)                         |  | 6,815      |  |      
|Norfolk Southern Corp.                          |  | 3,990      |  |      
|Union Pacific Corp.                             |  | 14,580     |  |      
|                                               
|                                                |  |            |  | $    
|                                               
|Semiconductors & Semiconductor Equipment  1.9%
|                                               
|Agere Systems, Inc.(1)                          |  | 7,696      |  | $    
|Analog Devices, Inc.                            |  | 600,378    |  |      
|Applied Materials, Inc.                         |  | 1,094,431  |  |      
|Broadcom Corp., Class A(1)                      |  | 911,708    |  |      
|Cypress Semiconductor Corp.(1)                  |  | 52,742     |  |      
|Intel Corp.                                     |  | 11,168,974 |  |      
|KLA-Tencor Corp.                                |  | 148,373    |  |      
|Linear Technology Corp.                         |  | 395,760    |  |      
|LSI Logic Corp.(1)                              |  | 132,810    |  |      
|Maxim Integrated Products, Inc.                 |  | 263,099    |  |      
|Skyworks Solutions, Inc.(1)                     |  | 98,685     |  |      
|Teradyne, Inc.(1)                               |  | 7,248      |  |      

|Security                                             |  | Shares    |  | Value
|---------------------------------------------------- |  | --------- |  | -----
|                                                    
|Semiconductors & Semiconductor Equipment (continued) |  |           |  |      
|                                                    
|Texas Instruments, Inc.                              |  | 2,086,420 |  | $    
|Verigy, Ltd.(1)(2)                                   |  | 29,129    |  |      
|Xilinx, Inc.                                         |  | 23,033    |  |      
|                                                    
|                                                     |  |           |  | $    
|                                                    
|Software  2.0%                                      |  |           |  |      
|                                                    
|Adobe Systems, Inc.(1)                               |  | 489,938   |  | $    
|CA, Inc.                                             |  | 39,583    |  |      
|Cadence Design Systems, Inc.(1)                      |  | 269,092   |  |      
|Compuware Corp.(1)                                   |  | 150,944   |  |      
|Electronic Arts, Inc.(1)                             |  | 21,405    |  |      
|Fair Isaac Corp.                                     |  | 236,946   |  |      
|Intuit, Inc.(1)                                      |  | 997,878   |  |      
|Jack Henry & Associates, Inc.                        |  | 201,006   |  |      
|Microsoft Corp.                                      |  | 6,910,072 |  |      
|Oracle Corp.(1)                                      |  | 4,797,138 |  |      
|SAP AG (ADR)                                         |  | 615,900   |  |      
|Symantec Corp.(1)                                    |  | 197,186   |  |      
|Wind River Systems, Inc.(1)                          |  | 59,479    |  |      
|                                                    
|                                                     |  |           |  | $    
|                                                    
|Specialty Retail  1.8%                              |  |           |  |      
|                                                    
|Abercrombie & Fitch Co., Class A                     |  | 5,929     |  | $    
|AutoNation, Inc.(1)                                  |  | 890,018   |  |      
|Best Buy Co., Inc.                                   |  | 170,415   |  |      
|CarMax, Inc.(1)                                      |  | 61,533    |  |      
|Circuit City Stores, Inc.                            |  | 104,507   |  |      
|Gap, Inc. (The)                                      |  | 540,888   |  |      
|Home Depot, Inc.                                     |  | 4,483,290 |  |      
|Limited Brands, Inc.                                 |  | 603,584   |  |      
|Lowes Companies, Inc.                               |  | 1,785,216 |  |      
|Office Depot, Inc.(1)                                |  | 79,998    |  |      
|Payless ShoeSource, Inc.(1)                          |  | 23,100    |  |      
|Pep Boys (The) - Manny, Moe & Jack                   |  | 62,500    |  |      
|RadioShack Corp.                                     |  | 502,318   |  |      
|Sherwin-Williams Co. (The)                           |  | 35,899    |  |      
|Staples, Inc.                                        |  | 275,430   |  |      
|TJX Companies, Inc. (The)                            |  | 1,716,834 |  |      
|Tween Brands, Inc.(1)                                |  | 8,057     |  |      
|                                                    
|                                                     |  |           |  | $    
|                                                    



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|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

|Security                                                           |  | Shares    |  | Value          
|------------------------------------------------------------------ |  | --------- |  | ---------------
|                                                                  
|Textiles, Apparel & Luxury Goods  1.0%                            |  |           |  |                
|                                                                  
|Coach, Inc.(1)                                                     |  | 735,936   |  | $              
|Hanesbrands, Inc.(1)                                               |  | 563,704   |  |                
|NIKE, Inc., Class B                                                |  | 1,529,222 |  |                
|                                                                  
|                                                                   |  |           |  | $              
|                                                                  
|Thrifts & Mortgage Finance  0.3%                                  |  |           |  |                
|                                                                  
|Fannie Mae                                                         |  | 335,606   |  | $              
|Freddie Mac                                                        |  | 146,695   |  |                
|MGIC Investment Corp.                                              |  | 95,045    |  |                
|Washington Mutual, Inc.                                            |  | 625,699   |  |                
|                                                                  
|                                                                   |  |           |  | $              
|                                                                  
|Tobacco  0.3%                                                     |  |           |  |                
|                                                                  
|Altria Group, Inc.                                                 |  | 621,907   |  | $              
|                                                                  
|                                                                   |  |           |  | $              
|                                                                  
|Trading Companies & Distributors  0.0%                            |  |          
|                                                                  
|United Rentals, Inc.(1)                                            |  | 391,179   |  | $              
|                                                                  
|                                                                   |  |           |  | $              
|                                                                  
|Wireless Telecommunication Services  0.5%                        
|                                                                  
|Alltel Corp.                                                       |  | 1,421,969 |  | $              
|Sprint Nextel Corp.                                                |  | 344,624   |  |                
|Telephone & Data Systems, Inc., Special Shares                     |  | 25,844    |  |                
|Telephone and Data Systems, Inc.                                   |  | 25,844    |  |                
|Vodafone Group PLC (ADR)                                           |  | 299,500   |  |                
|                                                                  
|                                                                   |  |           |  | $              
|                                                                  
|Total Common Stocks                                                |  |           |  |                
|(identified cost $13,972,240,872)                                  |  |           |  | $20,334,849,302
|                                                                  
|C o n v e r t i b l e   P r e f e r r e d   S t o c k s   0 . 0 %
|Security                                                           |  | Shares    |  | Value          
|                                                                  
|Independent Power Producers & Energy                               |  |          
|Traders  0.0%                                                     |  |           |  |                
|                                                                  
|Enron Corp.(1)(3)                                                  |  | 11,050    |  | $              
|                                                                  
|                                                                   |  |           |  | $              
|                                                                  
|Total Convertible Preferred Stocks                                 |  |           |  |                
|(identified cost $16,626,069)                                      |  |           |  | $              
|                                                                  

|O t h e r   I s s u e s   0 . 0 %                 |  |         |  |         |  |      
|-------------------------------------------------- |  | ------- |  | ------- |  | -----
|Security                                           |  |         |  | Shares  |  | Value
|                                                  
|Commercial Banks  0.0%                            |  |         |  |         |  |      
|                                                  
|Wachovia Corp. (Dividend Equalization              |  |         |  |         |  |      
|Preferred Shares)(1)                               |  |         |  | 166,518 |  | $    
|                                                  
|                                                   |  |         |  |         |  | $    
|                                                  
|Software  0.0%                                    |  |         |  |         |  |      
|                                                  
|Seagate Technology, Inc. (Tax Refund Rights)(1)(3) |  | 197,392 |  | $       |  | 0    
|                                                  
|                                                   |  |         |  |         |  | $    
|                                                  
|Total Other Issues                                 |  |         |  |         |  |      
|(identified cost $39,407)                          |  |         |  | $       |  | 416  
|                                                  
|W a r r a n t s   0 . 0 %                         |  |         |  |         |  |      
|Security                                           |  |         |  | Shares  |  | Value
|                                                  
|Communications Equipment  0.0%                    |  |         |  |        
|                                                  
|Lucent Technologies, Inc.(1)                       |  |         |  | 18,106  |  | $    
|                                                  
|                                                   |  |         |  |         |  | $    
|                                                  
|Total Warrants                                     |  |         |  |         |  |      
|(identified cost $0)                               |  |         |  | $       |  | 5,613
|                                                  



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|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6P O R T F O L I O   O F   I N V E S T M E N T SC O N T  D
|-------------------------------------------------------------------------------------------------------------------------------

A f f i l i a t e d   I n v e s t m e n t s  0 . 1 %

|                                                  |   | Interest        |   |               
|------------------------------------------------- | - | --------------- | - | --------------
|Description                                       |   | (000s omitted) |   | Value         
|                                                 
|Investment in Cash Management Portfolio, 4.87%(6) |   | $   21,137      | $ | 21,136,709    
|                                                 
|Total Affiliated Investments                      |   |                 |   |               
|(at amortized cost, $21,136,709)                  |   |                 | $ | 21,136,709    
|                                                 
|Total Investments  99.8%                         |   |                 |   |               
|(identified cost $14,010,043,057)                 |   |                 | $ | 20,355,992,040
|                                                 
|Other Assets, Less Liabilities  0.2%             | $ | 31,300,207     
|                                                 
|Net Assets  100.0%                               |   |                 | $ | 20,387,292,247
|                                                 

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

(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, 2006, the aggregate value of the securities is $4,870,986 or 0.02% of the Portfolios net assets.

(6) Affiliated investment investing in high quality, U. S. Dollar denominated money market instruments, and that is available to Eaton Vance portfolios and funds. The rate shown is the annualized seven-day yield as of December 31, 2006.



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|Tax-Managed Growth Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6F I N A N C I A L   S T A T E M E N T S
|------------------------------------------------------------------------------------------------------------

|S t a t e m e n t   o f   A s s e t s   a n d   L i a b i l i t i e s  |  |                          
|---------------------------------------------------------------------- |  | -------------------------
|As of December 31, 2006                                                |  |                          
|Assets                                                                 |  |                          
|                                                                      
|Unaffiliated Investments, at value (identified cost, $13,988,906,348)  |  | $          20,334,855,331
|Affiliated Investments, at value (amortized cost, $21,136,709)         |  | 21,136,709               
|Cash                                                                   |  | 2,010                    
|Receivable for investments sold                                        |  | 9,565,416                
|Dividends and interest receivable                                      |  | 28,247,780               
|Tax reclaim receivable                                                 |  | 1,478,224                
|                                                                      
|Total assets                                                           |  | $          20,395,285,470
|                                                                      
|Liabilities                                                            |  |                          
|                                                                      
|Payable to affiliate for investment adviser fee                        |  | $                        
|Payable to affiliate for Trustees fees                                |  |                          
|Other accrued expenses                                                 |  |                          
|                                                                      
|Total liabilities                                                      |  | $                        
|                                                                      
|Net Assets applicable to investors interest in Portfolio              |  | $          20,387,292,247
|                                                                      
|Sources of Net Assets                                                  |  |                          
|                                                                      
|Net proceeds from capital contributions and withdrawals                |  | $          14,041,287,771
|Net unrealized appreciation (computed on the basis of identified cost) |  |                          
|                                                                      
|Total                                                                  |  | $         20,387,292,247 
|                                                                      

|S t a t e m e n t   o f   O p e r a t i o n s        |  |                    |   |            
|---------------------------------------------------- |  | ------------------ | - | -----------
|For the Year Ended                                   |  |                    |   |            
|December 31, 2006                                    |  |                    |   |            
|Investment Income                                    |  |                    |   |            
|                                                    
|Dividends (net of foreign taxes, $5,508,449)         |  |                    | $ | 352,655,089
|Interest                                             |  |                    |   | 2,633,384  
|Security lending income, net                         |  |                    |   | 450,588    
|Interest income allocated from affiliated investment |  |                    |   | 85,831     
|Expense allocated from affiliated investment         |  |                    |   | (7,961)    
|                                                    
|Total investment income                              |  |                    | $ | 355,816,931
|                                                    
|Expenses                                             |  |                    |   |            
|                                                    
|Investment adviser fee                               |  |                    | $ | 83,323,602 
|Trustees fees and expenses                          |  |                    |   | 28,217     
|Custodian fee                                        |  |                    |   | 2,217,430  
|Legal and accounting services                        |  |                    |   | 92,496     
|Miscellaneous                                        |  |                    |   | 628,068    
|                                                    
|Total expenses                                       |  |                    | $ | 86,289,813 
|                                                    
|Deduct                                              |  |                    |   |            
|Reduction of custodian fee                           |  |                    | $ | 99         
|                                                    
|Total expense reductions                             |  |                    | $ | 99         
|                                                    
|Net expenses                                         |  |                    | $ | 86,289,714 
|                                                    
|Net investment income                                |  |                    | $ | 269,527,217
|                                                    
|Realized and Unrealized Gain (Loss)                  |  |                    |   |            
|                                                    
|Net realized gain (loss)                            |  |                    |   |            
|Investment transactions (identified cost basis)      |  |                    | $ | 644,762,039
|Foreign currency transactions                        |  |                    |   | (23,541)   
|                                                    
|Net realized gain                                    |  |                    | $ | 644,738,498
|                                                    
|Change in unrealized appreciation (depreciation)    |  |                    |   |            
|Investments (identified cost basis)                  |  | $    1,577,869,222
|Foreign currency                                     |  |                    |   | 101,821    
|                                                    
|Net change in unrealized appreciation (depreciation) |  | $    1,577,971,043
|                                                    
|Net realized and unrealized gain                     |  | $    2,222,709,541
|                                                    
|Net increase in net assets from operations           |  | $    2,492,236,758
|                                                    



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| | Tax-Managed  Growth  Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6F I N A N C I A L   S T A T E M E N T SC O N T  D
S t a t e m e n t s  o f  C h a n g e s  i n  N e t  A s s e t s
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Increase (Decrease)                        |  | Year Ended        |  | Year Ended       
|------------------------------------------ |  | ----------------- |  | -----------------
|in Net Assets                              |  | December 31, 2006 |  | December 31, 2005
|                                          
|From operations                           |  |                   |  |                  
|Net investment income                      |  | $                 |  | 269,527,217      
|Net realized gain from investment          |  |                   |  |                  
|transactions, securities sold short and    |  |                   |  |                  
|foreign currency transactions              |  |                   |  | 644,738,498      
|Net change in unrealized appreciation      |  |                   |  |                  
|(depreciation) of investments, securities  |  |                   |  |                  
|sold short and foreign currency            |  |                   |  | 1,577,971,043    
|                                          
|Net increase in net assets from operations |  | $                 |  | 2,492,236,758    
|                                          
|Capital transactions                      |  |                   |  |                  
|Contributions                              |  | $                 |  | 1,447,009,081    
|Withdrawals                                |  |                   |  | (2,584,560,445)  
|                                          
|Net decrease in net assets                 |  |                   |  |                  
|from capital transactions                  |  | $                 |  | (1,137,551,364)  
|                                          
|Net increase (decrease) in net assets      |  | $                 |  | 1,354,685,394    
|                                          
|Net Assets                                 |  |                   |  |                  
|                                          
|At beginning of year                       |  | $                 |  | 19,032,606,853   
|                                          
|At end of year                             |  | $                 |  | 20,387,292,247   
|                                          

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|Tax-Managed  Growth  Portfolioa s  o f  D e c e m b e r  3 1 ,  2 0 0 6F I N A N C I A L   S T A T E M E N T SC O N T  D
S u p p l e m e n t a r y   D a t a
|-------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                      |  | Year Ended December 31,
|----------------------------------------------------- |  | -----------------------
|                                                      |  |                        
|                                                      |  | 2006                   
|                                                     
|Ratios/Supplemental Data                              |  |                        
|                                                     
|Ratios (As a percentage of average daily net assets): |  |                        
|Expenses before custodian fee reduction               |  | 0.45%                  
|Expenses after custodian fee reduction                |  | 0.45%                  
|Net investment income                                 |  | 1.39%                  
|Portfolio Turnover(1)                                 |  | 1%                     
|                                                     
|Total Return                                          |  | 13.69%                 
|                                                     
|Net assets, end of year (000s omitted)               |  | $20,387,292            
|                                                     

|(1) | 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 7%, 6%, 10%, 21%, and 30% for 2006, 2005, 2004, 2003, and 2002, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | 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).                                                                                                                               
|   
|(3) | Amounts to less than 1%.                                                                                                                                                                                                                                                                               
|   



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|Tax-Managed  Growth Portfolio a s  o f  D e c e m b e r  3 1 ,  2 0 0 6N O T E S   T O   F I N A N C I A L   S T A T E M E N T S
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1 Significant Accounting Policies Tax-Managed Growth Portfolio (the Portfolio) is registered under the Investment Company Act of 1940 (the 1940 Act), as amended, as a diversified, open-end management investment company. The Portfolio, which was organized as a trust under the laws of the State of New York on December 1, 1995, seeks to 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 consistently followed by the Portfolio in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

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

The Portfolio may invest in Cash Management Portfolio (Cash Management) and Cash Collateral Fund, LLC (Cash Collateral), both are 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 are valued at the net asset value per share on the valuation date.

B Federal 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 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.

C Futures Contracts  Upon the entering of a financial futures contract, the Portfolio is required to deposit either in cash or securities an amount (initial margin) equal to a certain percentage of the purchase price indicated in the financial futures contract. Subsequent payments are made or received by the Portfolio (margin maintenance) each day, dependent on daily fluctuations in the value of the underlying security, and are recorded for



|Tax-Managed  Growth  Portfolio a s  o f  D e c e m b e r  3 1 ,  2 0 0 6N O T E S   T O   F I N A N C I A L   S T A T E M E N T S C O N T  D
|---------------------------------------------------------------------------------------------------------------------------------------------

book purposes as unrealized gains or losses by the Portfolio. The Portfolios investment in financial futures contracts is designed to hedge against anticipated future changes in the price of current or anticipated portfolio positions. Should prices move unexpectedly, the Portfolio may not achieve the anticipated benefits of the financial futures contracts and may realize a loss.

D Put Options  Upon the purchase of a put option by the Portfolio, the premium paid is recorded as an investment, the value of which is marked-to-market daily. When a purchased option expires, the Portfolio will realize a loss in the amount of the cost of the option. When the Portfolio enters into a closing sale transaction, the Portfolio will realize a gain or loss depending on whether the sales proceeds from the closing sale transaction are greater or less than the cost of the option. When the Portfolio exercises a put option, settlement is made in cash. The risk associated with purchasing options is limited to the premium originally paid.

E Securities Sold Short  The Portfolio may sell individual securities short if it owns at least an equal amount of the security sold short or has at the time of the sale a right to obtain securities equivalent in kind and amount to the securities sold short provided that, if such right is conditional, the sale is made upon the same conditions (a covered short sale). The Portfolio may sell short securities representing an index or basket of securities whose constituents the Portfolio holds in whole or in part. A short sale of an index or basket of securities will be a covered short sale if the underlying index or basket of securities is the same or substantially identical to securities held by the Portfolio. Upon executing the transaction, the Portfolio records the proceeds as deposits with brokers in the Statement of Assets and Liabilities and establishes an offsetting payable for securities sold short for the securities due on settlement. The proceeds are retained by the broker as collateral for the short position. The liability is marked-to-market and the Portfolio is required to pay the lending broker any dividend or interest income earned while the short position is open. The seller of a short position generally realizes a profit on the transaction if the price it receives on the short sale exceeds the cost of closing out the position by purchasing securities in the market, but generally realizes a loss if the cost of closing out the short position exceeds the proceeds of the short sale. The exposure to loss on covered short sales (to the extent the value of the security sold short rises instead of falls) is offset by the increase in the value of the underlying security or securities retained. The profit or loss on a covered short sale is also affected by the borrowing cost of any securities borrowed in connection with the short sale (which will vary with market conditions) and use of the proceeds of the short sale. The Portfolio expects normally to close covered short sales against-the-box by delivering newly acquired stocks. Exposure to loss on an index or basket of securities sold short will not be offset by gains on other securities holdings to the extent that the constituent securities of the index or a basket of securities sold short are not held by the Portfolio. Such losses may be substantial.

F Foreign Currency Translation  Investment valuations, other assets, and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to 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.

G Indemnifications  Under the Portfolios organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the Portfolio. Additionally, in the normal course of business, the 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.

H Other  Investment transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Portfolio is informed of the ex-dividend date. Interest income is recorded on the accrual basis.



|Tax-Managed  Growth Portfolio a s  o f  D e c e m b e r  3 1 ,  2 0 0 6N O T E S   T O   F I N A N C I A L   S T A T E M E N T S C O N T  D
|--------------------------------------------------------------------------------------------------------------------------------------------

I Expense Reduction  Investors Bank & Trust Company (IBT) serves as custodian to the Portfolio. Pursuant to the custodian agreement, IBT receives a fee reduced by credits which are determined based on the average daily cash balance the Portfolio maintains with IBT. All credit balances used to reduce the Portfolios custodian fees are reported as a reduction of expenses in the Statement of Operations. For the year ended December 31, 2006, there were $99 in credit balances used to reduce the Portfolios custodian fee.

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

2 Investment Adviser Fee and Other Transactions with Affiliates The investment adviser fee is earned by BMR, a wholly-owned subsidiary of EVM, as compensation for management and investment advisory services rendered to the Portfolio. Under the advisory agreement, BMR receives a monthly advisory fee of 5/96 of 1% (0.625% annually) of the average daily net assets of the Portfolio up to $500,000,000, and at reduced rates as daily net assets exceed that level. Certain of the advisory fee rate reductions are pursuant to an agreement between the Portfolios Board of Trustees and BMR. Those reductions may not be changed without Trustee and interestholder approval. In addition, the investment adviser fee payable by the Portfolio is reduced by the Portfolios allocable portion of the advisory fee paid by Cash Management, an affiliated investment company managed by BMR. The Portfolios allocated portion of the advisory fee paid by Cash Management totaled $7,775 and the advisory fee incurred directly by the Portfolio amounted to $83,323,602 for the year ended December 31, 2006. For the year ended December 31, 2006, the effective annual rate of investment advisory fees paid or accrued on a direct and indirect basis by the Portfolio, based on average net assets, was 0.43% .

Except for Trustees of the Portfolio who are not members of EVMs or BMRs organization, officers and Trustees receive remuneration for their services to the Portfolio out of such investment adviser fee. Trustees of the Portfolio that 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, 2006, no significant amounts have been deferred.

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

3 Investment Transactions For the year ended December 31, 2006, purchases and sales of investments, other than short-term obligations, aggregated $112,574,873 and $621,537,755, respectively. In addition, investments having an aggregate market value of $1,585,969,823 at dates of withdrawal were distributed in payment for capital withdrawals and investors contributed securities with a value of $1,240,104,202, during the year ended December 31, 2006.

4 Federal Income Tax Basis of Unrealized Appreciation (Depreciation) The cost and unrealized appreciation (depreciation) in value of the investments owned at December 31, 2006 as computed on a federal income tax basis, were as follows:

|Aggregate cost                |  | $ 4,054,619,301
|----------------------------- |  | ---------------
|                             
|Gross unrealized appreciation |  | $26,261,456,216
|Gross unrealized depreciation |  | (9,960,083,477)
|                             
|Net unrealized appreciation   |  | $16,301,372,739
|                             

Unrealized appreciation on foreign currency is $55,493.

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

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



|Tax-Managed  Growth  Portfolio a s  o f  D e c e m b e r  3 1 ,  2 0 0 6N O T E S   T O   F I N A N C I A L   S T A T E M E N T S C O N T  D
|---------------------------------------------------------------------------------------------------------------------------------------------

open obligations under these financial instruments at December 31, 2006.

6 Line of Credit The Portfolio participates with other portfolios and funds managed by BMR and EVM and its affiliates in a $150 million unsecured line of credit agreement with a group of banks. Borrowings will be made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each participating portfolio or fund based on its borrowings at an amount above either the Eurodollar rate or Federal Funds rate. In addition, a fee computed at an annual rate of 0.10% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the year ended December 31, 2006.

7 Restricted Securities At December 31, 2006, the Portfolio owned the following securities (representing less than 0.01% of net assets) which were restricted as to public resale and not registered under the Securities Act of 1933. The securities are valued at fair value using methods determined in good faith by or at the direction of the Trustees.

|                |  | Date of     |  | Eligible   |  |        |  |          |  |           
|--------------- |  | ----------- |  | ---------- |  | ------ |  | -------- |  | ----------
|Common Stocks   |  | Acquisition |  | for Resale |  | Shares |  | Cost     |  | Fair Value
|               
|Medtronic, Inc. |  | 5/18/06     |  | 5/19/07    |  | 7,500  |  | $368,372 |  | $401,074  
|               
|                |  |             |  |            |  |        |  | $368,372 |  | $401,074  
|               

8 Securities Lending Agreement The Portfolio has established a securities lending agreement with a securities lending agent, IBT, in which the Portfolio lends portfolio securities to qualified borrowers in exchange for collateral consisting 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 which invests in high quality money market instruments. The Portfolio earns interest on the amount invested in Cash Collateral but it must pay the broker a loan rebate fee computed as a varying percentage of the collateral received. The loan rebate fee paid by the Portfolio amounted to $2,160,185 for the year ended December 31, 2006. 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. The Portfolio did not have any securities on loan at December 31, 2006.

9 Recently Issued Accounting Pronouncements 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 during the first required financial reporting period for fiscal years beginning after December 15, 2006. Management is currently evaluating the impact of applying the various provisions of FIN 48.

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. Management is currently evaluating the impact the adoption of FAS 157 will have on the Portfolios financial statement disclosures.

86



|Tax-Managed  Growth  Portfolio a s  o f  D e c e m b e r  3 1 ,  2 0 0 6REPORT  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, 2006, 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, 2006 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, 2006, 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 LLP
Boston, Massachusetts
February 20, 2007
|-------------------------------------------------------------

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: June 28, 2007

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: June 28, 2007

By:
     
     /s/ Andrew C. FrenetteAndrew C. FrenetteChief Financial Officer


Date: June 28, 2007

88



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

|Exhibit No. |  | Description                                                                                                  
|----------- |  | -------------------------------------------------------------------------------------------------------------
|3           |  | 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.)                                 
|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 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 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 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 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 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 Form 10-Q for the period ended June 30, 2006 and   
|            |  | incorporated herein by reference.                                                                            
|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 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 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 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 Form 10-K filed for the period ended December        
|            |  | 31, 2005 and incorporated herein by reference.                                                               
|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 Form 10-Q for the period ended June 30, 2006 and              
|            |  | incorporated herein by reference.                                                                            

89

|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 herewith.                                                                          
|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 herewith.                                                                                   
|10(1)    |  | Copy of Investment Advisory and Administration 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 Administration Agreement between the Fund and           
|         |  | Boston Management and Research dated as of June 5, 2007 filed herewith.                                    
|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 herewith.                                                 
|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.                                                                          
|99.3     |  | Form N-CSR of Eaton Vance Tax-Managed Growth Portfolio (File No. 811-7409) for its year ended              
|         |  | December 31, 2006 filed electronically with the Securities and Exchange Commission under the               
|         |  | Investment Company Act of 1940 on March 9, 2007 incorporated herein by reference pursuant to Rule          
|         |  | 12b-32.                                                                                                    

90