|UNITED STATES SECURITIES AND
      EXCHANGE COMMISSIONWashington, D.C.
      20549
|----------------------------------------------------------------------------------



|FORM
10-K
|---------



|ANNUAL REPORT PURSUANT TO SECTION 13OF THE SECURITIES EXCHANGE ACT OF 1934 (THE
      ACT)For the Fiscal Year Ended December 31,
      2005Commission File No.000-50258
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Belrose Capital Fund LLC (the
      Fund)(Exact name of registrant as specified
      inits
    charter)
|--------------------------------------------------------------------------------------------------------

Delaware
    
    04-3613468(State of organization)
    
    (I.R.S. Employer Identification No.)




|The Eaton Vance
      Building255 State StreetBoston, Massachusetts 02109(Address
      and zip code of principal executive
offices)
|------------------------------------------------------------------------------------------------------------------------------------



|617-482-8260(Registrants telephone number)
|-------------------------------------------

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. [X] Yes [ ] 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,
2005 was $1,656,653,056. 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
      80.
|----------------------------------------------

Belrose Capital Fund LLC

Index to Form 10-K

|Item |  |                                                                                                                                               |  | Page
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|     |  | PART I                                                                                                                                        |  |     
|    
|1    |  | Business 
      ............................................................................................................................. |  | 1   
|     |  | Fund Overview 
      .........................................................................................................                |  | 1   
|     |  | Structure of the Fund 
      ......................................................................................                           |  | 1   
|     |  | Fund
      Management 
      ...........................................................................................                      |  | 1   
|     |  | The
      Funds Offering 
      ........................................................................................                     |  | 2   
|    
|     |  | The Funds Investment in Belvedere
      Capital Fund Company LLC                                                                             |  |     
|     |  | and Tax-Managed Growth
      Portfolio 
      .........................................................................                       |  | 2   
|     |  | Belvedere Company 
      ........................................................................................                             |  | 2   
|     |  | The
      Portfolio 
      ...................................................................................................                |  | 2   
|     |  | The
      Portfolios Investment Objective and Policies 
      .............................................                                  |  | 3   
|     |  | The
      Portfolios Tax-Sensitive Management Strategies 
      .......................................                                      |  | 3   
|    
|     |  | The Funds Real Estate
      Investments 
      ...........................................................................                   |  | 4   
|     |  | Real
      Estate Joint Venture Investments 
      ..............................................................                             |  | 4   
|     |  | Partnership Preference Units 
      ...........................................................................                               |  | 5   
|     |  | Organization of the Funds Controlled Subsidiaries 
      ..........................................                                          |  | 6   
|    
|     |  | Fund Borrowings 
      .......................................................................................................                |  | 6   
|     |  | Interest Rate Swap Agreements 
      .......................................................................                                  |  | 7   
|    
|     |  | The Eaton Vance
      Organization 
      ...................................................................................                 |  | 7   
|     |  | Conflicts of Interest 
      .........................................................................................                        |  | 7   
|    
|1A   |  | Risk Factors 
      .......................................................................................................................   |  | 7   
|    
|1B   |  | Unresolved Staff Comments 
      ................................................................................................             |  | 8   
|    
|2    |  | Properties 
      ..........................................................................................................................  |  | 8   
|    
|3    |  | Legal Proceedings 
      ...............................................................................................................      |  | 8   
|    
|4    |  | Submission of Matters to a Vote of Security Holders 
      ...........................................................                        |  | 8   
|    
|     |  | PART II                                                                                                                                       |  |     
|    
|5    |  | Determining Net Asset Value, Market for Fund Shares,                                                                                          |  |     
|     |  | Related Shareholder Matters and Issuer Purchases of Equity
      Securities  ...............................                                  |  | 9   
|     |  | Market Information, Restrictions on
      Transfers and Redemption of Shares  ...................                                             |  | 9   
|     |  | Transfers of Fund Shares 
      .................................................................................                             |  | 9   
|     |  | Redemption of Fund Shares 
      .............................................................................                                |  | 9   
|     |  | Determining Net Asset Value 
      ...........................................................................                                |  | 10  
|     |  | Historic Net Asset Values 
      ................................................................................                             |  | 11  
|     |  | Record Holders of Shares of the
      Fund 
      ........................................................................                    |  | 11  
|     |  | Distributions 
      ..............................................................................................................           |  | 11  
|     |  | Income and Capital Gain Distributions 
      ..............................................................                                   |  | 11  
|     |  | Special Distributions 
      .......................................................................................                          |  | 12  



|6  |  | Selected Financial Data 
      .......................................................................................................    |  | 13
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------- |  | --
|   |  | Table of Selected Financial
      Data 
      .................................................................................           |  | 13
|  
|7  |  | Managements Discussion and Analysis of Financial Condition
      (MD&A)                                                                  |  |   
|   |  | and Results of Operations 
      ..................................................................................................       |  | 14
|   |  | Results of Operations 
      ................................................................................................             |  | 14
|   |  | MD&A and Results of Operations for
      the Year Ended December 31, 2005                                                                 |  |   
|   |  | Compared to the Year Ended
      December 31, 2004 
      ....................................................                            |  | 14
|   |  | Performance of the Fund 
      ..................................................................................                         |  | 14
|   |  | Performance of the Portfolio 
      ..............................................................................                        |  | 15
|   |  | Performance of Real Estate Investments 
      ............................................................                                |  | 15
|   |  | Performance of Interest Rate Swap Agreements 
      ................................................                                      |  | 17
|   |  | MD&A and Results of Operations for
      the Year Ended December 31, 2004                                                                 |  |   
|   |  | Compared to the Year Ended
      December 31, 2003 
      ...................................................                             |  | 17
|   |  | Performance of the Fund 
      ..................................................................................                         |  | 17
|   |  | Performance of the Portfolio 
      ..............................................................................                        |  | 17
|   |  | Performance of Real Estate Investments 
      ............................................................                                |  | 18
|   |  | Performance of Interest Rate Swap
      Agreements ..................................................                                     |  | 19
|   |  | Liquidity and Capital
      Resources 
      ...................................................................................          |  | 20
|   |  | Outstanding Borrowings 
      ....................................................................................                        |  | 20
|   |  | Liquidity 
      ...........................................................................................................              |  | 20
|   |  | Off-Balance Sheet
      Arrangements 
      ................................................................................              |  | 20
|   |  | The Funds Contractual
      Obligations 
      .............................................................................             |  | 21
|   |  | Critical Accounting
      Estimates 
      ......................................................................................         |  | 21
|  
|7A |  | Quantitative and Qualitative Disclosures About Market
      Risk  ..................................................                      |  | 24
|   |  | Quantitative Information About Market
      Risk 
      ................................................................                  |  | 24
|   |  | Interest Rate Risk 
      ..............................................................................................                  |  | 24
|   |  | Qualitative Information About Market
      Risk 
      ..................................................................                 |  | 25
|   |  | Risks
      Associated with Equity Investing 
      ...............................................................                       |  | 25
|   |  | Risks
      of Investing in Foreign Securities 
      ...............................................................                     |  | 26
|   |  | Risks
      of Certain Investment Techniques 
      .............................................................                         |  | 26
|   |  | Risks
      of Real Estate Investments 
      ........................................................................                    |  | 27
|   |  | Risks
      of Interest Rate Swap Agreements 
      ...........................................................                           |  | 28
|   |  | Risks
      of Leverage 
      ............................................................................................               |  | 28
|  
|8  |  | Financial Statements and Supplementary Data 
      .......................................................................                |  | 29
|  
|9  |  | Changes in and Disagreements with Accountants on                                                                                          |  |   
|   |  | Accounting and Financial
      Disclosure .....................................................................................           |  | 29
|  
|9A |  | Controls and
      Procedures .......................................................................................................     |  | 29
|   |  | Fund
      Governance .........................................................................................................           |  | 29
|   |  | Disclosure Controls and
      Procedures .............................................................................                    |  | 30
|   |  | Internal Control Over Financial
      Reporting 
      ....................................................................               |  | 30
|  
|9B |  | Other Information 
      ................................................................................................................ |  | 30

|                                                                                                                                                        |  | PART III                                                                                                                        |  |   
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | --
|                                                                                                                                                       
|10                                                                                                                                                      |  | Directors and Executive Officers of the
      Registrant .............................................................          |  | 31
|                                                                                                                                                        |  | Management 
      ..........................................................................................................    |  | 31
|                                                                                                                                                        |  | Compliance with Section 16(a) of the
      Securities Exchange Act of 1934 ...................                                  |  | 32
|                                                                                                                                                        |  | Code of Ethics 
      .......................................................................................................   |  | 32
|                                                                                                                                                       
|11                                                                                                                                                      |  | Executive Compensation 
      ................................................................................................. |  | 32
|                                                                                                                                                       
|12                                                                                                                                                      |  | Security Ownership of Certain Beneficial Owners and
      Management                                                            |  |   
|                                                                                                                                                        |  | and Related Shareholder
      Matters ....................................................................................      |  | 32
|                                                                                                                                                        |  | Security Ownership of Certain Beneficial
      Owners  ...................................................                      |  | 32
|                                                                                                                                                        |  | Security Ownership of
      Management 
      .......................................................................           |  | 32
|                                                                                                                                                        |  | Changes in Control 
      ................................................................................................      |  | 32
|                                                                                                                                                       
|13                                                                                                                                                      |  | Certain Relationships and Related Transactions 
      ................................................................          |  | 32
|                                                                                                                                                        |  | The Funds Investment Advisory and
      Administrative Fee 
    .........................................                      |  | 33
|                                                                                                                                                        |  | Belrose Realtys Management
      Fee 
      .........................................................................          |  | 33
|                                                                                                                                                        |  | The Portfolios Investment Advisory
      Fee 
      ................................................................           |  | 34
|                                                                                                                                                        |  | Servicing Fees Paid by the
      Fund 
      .............................................................................      |  | 34
|                                                                                                                                                        |  | Servicing Fees Paid by Belvedere
      Company 
      ...........................................................               |  | 34
|                                                                                                                                                        |  | Distribution Fees Paid to EV
      Distributors 
      ................................................................         |  | 34
|                                                                                                                                                        |  | Redemption Fees 
      ..................................................................................................       |  | 34
|                                                                                                                                                        |  | Certain Real Estate Investment
      Transactions 
      ..........................................................             |  | 35
|                                                                                                                                                       
|14                                                                                                                                                      |  | Principal Accountant Fees and Services 
      ..........................................................................        |  | 35
|                                                                                                                                                       
|                                                                                                                                                        |  | PART IV                                                                                                                         |  |   
|                                                                                                                                                       
|15                                                                                                                                                      |  | Exhibits and Financial Statement Schedules 
      ......................................................................        |  | 36
|                                                                                                                                                       
|APPENDIX A 
      ..................................................................................................................................... |  | 37                                                                                                                             
|                                                                                                                                                       
|FINANCIAL STATEMENTS 
      .............................................................................................................               |  | 38                                                                                                                             
|                                                                                                                                                       
|SIGNATURES 
      ....................................................................................................................................  |  | 79                                                                                                                             
|                                                                                                                                                       
|EXHIBIT INDEX 
      ................................................................................................................................   |  | 80                                                                                                                             



|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, 2005, the Fund had net assets of approximately $1.8 billion.

Structure of the Fund.The Fund is structured to provide tax-free diversification and
tax-sensitive investment management to Shareholders. To meet the objective of
tax-free diversification, the Fund must satisfy specific requirements of the
Internal Revenue Code of 1986, as amended (the Code). In order for the
contributions of appreciated stock to the Fund by Shareholders to be nontaxable,
not more than 80% of the Funds assets (calculated in the manner prescribed) may
consist of stocks and securities as defined in the Code. To meet this
requirement, the Fund 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 acquired its real estate
investments with borrowed funds, as described below under Fund Borrowings. See
Appendix A for a chart detailing the investment structure of the
Fund.

In its investment program, the Fund balances
investment considerations and tax considerations, and takes into account the
taxes payable by Shareholders on allocated investment income and realized
capital gains. See The Funds Investment in Belvedere Capital Fund Company LLC
and Tax-Managed Growth Portfolio below.

There is no trading market for the Funds Shares. As
described further under Redemption of Fund Shares in Item 5(a), Fund Shares
may be redeemed on any business day. The Fund satisfies redemption requests
principally by distributing securities, but may also distribute cash. The value
of securities and cash distributed to satisfy a redemption will equal the net
asset value of the number of Shares redeemed less any applicable redemption fee.
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 real estate subsidiary and the investment portfolio in which the
Fund invests. Boston Management is also registered as an investment adviser
under the Advisers Act. Eaton Vance and Boston Management provide advisory,
administration and/or management services to over 150 investment companies, as
well as separate accounts managed for individual and institutional investors. As
of December 31, 2005, Eaton Vance and its affiliates managed more than $110
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 Fund, its subsidiaries and the investment portfolio in which the
Fund invests. See The Eaton Vance Organization  Conflicts of Interest"
below.

1

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 1-202-942-8090 for information on the operation of the public reference room); on the EDGAR Database on the SECs Internet site (http:// www.sec.gov);
or, upon payment of copying fees, by writing to the SECs public reference section, Washington, DC 20549-0102, or by electronic mail at publicinfo@sec.gov. The Fund does not have a website. The Fund intends to provide Shareholders with an
annual and semiannual report containing the Funds consolidated financial statements, audited by the Funds independent registered public accounting firm in the case of the annual report.

The Funds Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth Portfolio.At each Fund closing, all of the securities accepted for contribution to the Fund were contributed by the Fund to
Belvedere Capital Fund Company LLC (Belvedere Company), a Massachusetts limited liability company, in exchange for shares of Belvedere Company. Belvedere Company, in turn, immediately thereafter contributed the securities received from the Fund to
Tax-Managed Growth Portfolio (the Portfolio) in exchange for an interest in the Portfolio. The Portfolio is a diversified, open-end management investment company registered under the 1940 Act with net assets of approximately $19.0 billion as of
December 31, 2005. As of December 31, 2005, the Funds investment in the Portfolio through Belvedere Company had a value of approximately $1.8 billion (equal to approximately 74.7% 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, 2005, the investment assets of Belvedere Company consisted exclusively of an interest inthe Portfolio with a value of approximately $13.4 billion. As of such
date, the Fund owned approximately 13.3% of Belvedere Companys outstanding shares. As of December 31, 2005, the other investors in Belvedere Company included ten 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 National Market or a major foreign exchange, (ii) have a trading price of at least
$10.00 per share and (iii) are issued by issuers having an equity market capitalization of at least $500 million. Because Belvedere Company only accepts contributions of diversified baskets of securities (as described below), it is not
subject to the requirement that not more than 80% of its assets consist of stocks and securities as defined in the Code. For investors that own a diversified basket of securities, investing in Belvedere Company (rather than in the Fund)
avoids the costs and risks of investing in real estate and the associated financial leverage to which the Fund is subject. 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.

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

2

managed from inception for long-term, after-tax returns. As of December 31, 2005, 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, 2005, Belvedere Company owned approximately 70.4% of the Portfolio.

The Fund invests in the Portfolio (on an indirect basis through Belvedere Company) because it is a well-established investment portfolio that has an investment objective and policies that are compatible to those of the Fund. Investing in the
Portfolio enables the Fund to participate in a substantially larger and more diversified investment portfolio than it could achieve by managing the contributed securities directly. The audited financial statements of the Portfolio for the year ended
December 31, 2005 are included as pages 61 to 77 of this Annual Report on Form 10-K. The Portfolios audited financial statements include information about the assets and liabilities of the Portfolio, including Portfolio expenses. For a
discussion of the Portfolios performance for the year ended December 31, 2005, 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 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 portion of its
assets in U.S. government obligations and high quality short-term notes. The Portfolios holdings represent a number of different industries. Not more than 25% of the Portfolios assets may be invested 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 avoiding or 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 contributed 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. As described in Item 5(a), settling redemptions with 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
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

3

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. At
December 31, 2005, the Portfolio held no short positions. The Portfolio did not otherwise employ any of the techniques described above on securities holdings during the year ended December 31, 2005. 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 the Funds Controlled Subsidiaries. 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, 2005, the consolidated real estate investments of Belrose Realty totaled
approximately $570.8 million and represented 23.3% of the Funds assets on a consolidated basis. The Fund acquired its real estate investments with borrowed funds, as described below under Fund Borrowings. The Fund seeks a
return on its real estate investments over the long term that exceeds the cost of the borrowings incurred to acquire such investments. For a description of material real estate investment transactions during the year ended December 31, 2005, see
"Performance of Real Estate Investments" in Item 7(a).

At December 31, 2005, Belrose Realty held investments in two real estate joint ventures (Real Estate Joint Ventures) that are controlled by Belrose Realty, in a portfolio of income producing preferred equity interests in real estate operating
partnerships that generally are affiliated with real estate investment trusts (REITs) that are publicly-traded (Partnership Preference Units), and in certain other real estate investments. 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, 2005, Belvorns sole investment was Partnership
Preference Units issued by Vornado Realty, L.P. At December 31, 2005, 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 through Belrose Realty and indirectly through Belvorn. As of December 31, 2005, approximately 67.4% of the consolidated real estate investments of the Fund consisted of its investments in the Real Estate Joint
Ventures, approximately 32.5% was investments in Partnership Preference Units and approximately 0.1% was investments in other real estate.

In the future, Belrose Realty may invest in other types of real estate investments, such as one or more real properties subject to long-term leases (Net Leased Property). Belrose Realty may purchase real estate investments from, and sell them
to, real estate affiliates of other investment funds advised by Boston Management. See "Certain Real Estate Investment Transactions" in Item 13.

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, 2005, Belrose Realty owned a controlling interest in two Real Estate Joint Ventures, Deerfield Property Trust (Deerfield) and Katahdin Property Trust LLC
(Katahdin). Deerfield owns real property through its interest in ProLogis Six Rivers Limited Partnership and the ProLogis Deerfield Fund L.P. Belrose

4

Realty owns a majority economic interest in each of Deerfield and Katahdin and controls a majority of the boards. Belrose Realtys approval is required for all major decisions affecting Deerfield and Katahdin.

The day-to-day operating management of the real properties owned by Deerfield and Katahdin is provided by a real estate operating company that is the principal minority investor in the respective Real Estate Joint Venture or an affiliated
company thereof (the Operating Partners). The Operating Partners receive certain fees from Deerfield and Katahdin (including property management fees and, in the case of Deerfield, fees for administration, construction management, leasing,
acquisitions, dispositions, debt placement, tax preparation, legal and other services) and, in addition, are reimbursed for payroll and other direct expenses incurred.. For the year ended December 31, 2005, such fees totaled approximately $2.7
million.

At December 31, 2005, the assets of Katahdin consisted of 6 multifamily properties and the assets of Deerfield consisted of 17 industrial distribution properties, in each case acquired from or in conjunction with the Operating Partner thereof.
See Item 2. Distributable cash flows from Deerfield and Katahdin are allocated in a manner that provides Belrose Realty: 1) a priority position versus the Operating Partners 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 Partners. A portion of Belrose Realtys investment in Deerfield represents a
partial interest in a property management contract pursuant to which Deerfield may receive cash flows from management fees and certain other fees over the life of the contract.

Financing for Deerfield and Katahdin consists primarily of fixed-rate secured mortgage debt obligations of Deerfield and Katahdin that are without recourse to Belrose Realty and the Fund. 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.

A board of managers or trustees controlled by Belrose Realty oversees the performance of each Operating Partner and controls the major decisions of Deerfield and Katahdin. The persons serving as managers and trustees on behalf of Belrose
Realty are employees of Boston Management. See Directors and Executive Officers in Item 10(a). No director of Belrose Realty or manager or trustee of Deerfield or Katahdin is a Shareholder of the Fund. The Operating Partners of Deerfield
and Katahdin also serve as operating partners of other Real Estate Joint Ventures that are majority owned by real estate affiliates of other investment funds advised by Boston Management. Eaton Vance and its affiliates do not have a material
financial interest in Deerfield and Katahdin.

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 a buy/sell agreement entered into at the time Katahdin was established, either Belrose Realty or
Archstone-Smith can give notice on or after November 23, 2010 either 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 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, from and after August 4, 2013 either Belrose Realty or ProLogis may cause a liquidation of Deerfield. If Belrose Realty elects to liquidate Deerfield, ProLogis will have the right either to purchase
the shares of Deerfield owned by Belrose Realty or to acquire the assets of Deerfield, in either case at a price determined through an independent appraisal of the assets of Deerfield. The Deerfield operative documents prohibit any transfer of
shares that would adversely affect Deerfields qualification as a REIT.

The buy/sell agreement applicable to Deerfield and the liquidation agreement applicable to Katahdin continue indefinitely, but could be terminated upon the receipt of the requisite approval of the owners of the voting interests therein. The
sale to Belrose Realty by the 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.

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, 2005 consisted primarily of direct or indirect ownership interests in real

5

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, 2005 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 38 to 60 of this Annual Report on Form 10-K. Eaton Vance is not, and has not been,
involved in the management or operation of the real estate operating partnerships that issued the Partnership Preference Units owned by Belrose Realty.

The Partnership Preference Units held by Belrose Realty were issued by partnerships that are not publicly-traded partnerships within the meaning of Code Section 7704(b). The Partnership Preference Units are perpetual life instruments (subject
to call provisions) and are not, by their terms, readily convertible or exchangeable into cash or securities of the affiliated public company. Partnership Preference Units are not rated by a nationally-recognized rating agency, and such interests
may not be as high in quality as issues that are rated investment grade.

Each issue of Partnership Preference Units held by Belrose Realty pays regular 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 the Funds Controlled Subsidiaries.Belrose Realty, Deerfield and Katahdin operate in such a manner as to qualify for taxation as REITs under the Code. As REITs, Belrose Realty, Deerfield and
Katahdin generally are not subject to federal income tax on that portion of their ordinary income or taxable gain that is distributed to stockholders each year. The Fund owns 100% of the common stock issued by Belrose Realty, and intends to hold all
of the common stock at all times. Belrose Realty and the Operating Partners own all of the common shares of Deerfield and Katahdin.

Belrose Realty, Deerfield and Katahdin also have 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 each such
entity 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, ProLogis or Archstone-Smith. As of December 31, 2005, the total value of the preferred shares outstanding of Belrose Realty, Katahdin and Deerfield was $210,000, $216,000 and $240,000, respectively. Dividends on
preferred shares are cumulative and payable annually at a dividend rate of 8% per year for Belrose Realty and Katahdin and 6% per year for Deerfield. The dividends paid on preferred shares have priority over payments on common shares. For the year
ended December 31, 2005, Belrose Realty, Katahdin and Deerfield paid distributions to preferred shareholders of $16,800, $17,280 and $13,027, respectively.

Fund Borrowings.To finance its real estate investments, the Fund has entered into credit arrangements with DrKW Holdings, Inc. (the DrKW Credit Facility) and Merrill Lynch Mortgage Capital, Inc. (the MLMC Credit
Facility) (collectively, the Credit Facility). The Credit Facility is secured by a pledge of the Funds assets, excluding the assets of Deerfield and Katahdin, and expires in June 2010. At December 31, 2005, the total principal amount
outstanding under the Credit Facility was $393.5 million. The Credit Facility is also used to provide for selling commissions, organizational expenses and any 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 DrKW Credit Facility is a term credit agreement. Borrowings under the DrKW Credit Facility accrue interest at a rate of one-month LIBOR plus 0.30% per annum. As of December 31, 2005, outstanding borrowings under the DrKW Credit Facility
totaled $242.5 million. During the quarter ended December 31, 2005, the Fund amended the DrKW Credit Facility to increase its borrowing by $9.0 million to $177.0 million.

The MLMC Credit Facility is a revolving credit agreement. The Fund may borrow up to $182.0 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, 2005, outstanding borrowings under the MLMC Credit Facility totaled $151.0 million. During the quarter ended December 31, 2005, the Fund amended the MLMC Credit
Facility to increase its borrowing limit by $125.0 million to $182.0 million. There were no letters of credit issued as of December 31, 2005. The unused loan commitment amount totaled $31.0. A commitment fee of 0.10% per annum is paid on
the unused commitment amount. The Fund pays all fees associated with issuing letters of credit.

6

Obligations under the Credit Facility are without
recourse to Fund Shareholders. As described above, financing for Deerfield and
Katahdin consists primarily of fixed-rate secured mortgage debt obligations of
Deerfield and Katahdin that are without recourse to Belrose Realty, the Fund and
Fund Shareholders.

Interest Rate Swap Agreements.The Fund has entered into interest rate swap
agreements with Merrill Lynch Capital Services, Inc. (MLCS) to fix the cost of
borrowings under the Credit Facility used to acquire equity in real estate
investments. Pursuant to the interest rate swap agreements, the Fund makes cash
payments to MLCS at fixed rates in exchange for floating rate payments from MLCS
that fluctuate with one-month and three-month LIBOR. The interest rate swap
agreements currently in effect with respect to Belrose Realtys real estate
investments 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% . See Note 7 to the Funds
consolidated financial statements included as pages 38 to 60 of this Annual
Report on Form 10-K.

The Eaton Vance
Organization.The Eaton
Vance organization sponsors the Fund. Eaton Vance serves as the Funds manager.
Boston Management serves as the Funds investment adviser and as manager of
Belrose Realty. EV Distributors served as the Funds placement agent. The Funds
business affairs are conducted by Eaton Vance (as its manager) and its
investment operations are conducted by Boston Management (as its investment
adviser). The Funds officers are employees of Eaton Vance. Eaton Vance, Boston
Management and EV Distributors are wholly-owned subsidiaries of Eaton Vance
Corp., a publicly-traded holding company that, through its affiliates and
subsidiaries, engages primarily in investment management, administration and
marketing activities.

As described above, the Fund pursues its objective
primarily by investing in Belvedere Company. Belvedere Company invests
exclusively in the Portfolio. Boston Management acts as investment adviser of
the Portfolio and manager of Belvedere Company. EV Distributors acts as
placement agent for Belvedere Company and the Portfolio. As of December 31,
2005, the assets of the Fund represented approximately 2.2% of assets under
management by Eaton Vance and its affiliates. The offices of the Fund, Eaton
Vance, Boston Management and EV Distributors are located at 255 State Street,
Boston, Massachusetts 02109.

Conflicts of Interest.Boston Management and other Eaton Vance affiliates are subject to
certain conflicts of interest in their dealings with the Fund, Belrose Realty,
Belvedere Company and the Portfolio, as well as with other investment companies
advised by Boston Management that invest in the Portfolio. Eaton Vance and
Boston Management have determined and will determine which of their sponsored
investment companies invest in the Portfolio, the securities each of them
contributes to the Portfolio when making an investment therein and, subject to
the rights of redeeming investors in the Portfolio, the securities and/or cash
received in redemptions from the Portfolio. Such determinations are inherently
subject to potential conflicts of interest. In addition, Portfolio management
activities with respect to securities contributed to the Portfolio may have
different tax consequences for the contributing investor in the Portfolio than
for other investors in the Portfolio. 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 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-

7

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, 2005,
Belrose Realty held investments in Partnership Preference Units of two issuers
and owned majority interests in Deerfield and Katahdin whose assets are
reflected in the consolidated financial statements of the Fund. At December 31,
2005, Katahdin owned six multifamily residential properties located in five
states (Colorado, Florida, North Carolina, Texas and Washington). At December
31, 2005, Deerfield owned seventeen industrial distribution properties located
in six states (Florida, Georgia, New Jersey, Ohio, Pennsylvania and South
Carolina).



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

Although in the ordinary course of business, the
Fund and its directly and indirectly controlled subsidiaries may become involved
in legal proceedings, the Fund is not aware of any material pending legal
proceedings to which 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, 2005.

8



|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 of Shares that are redeemed is based on the Funds net
asset value next computed after receipt of the redemption request. Shares
redeemed within three years of issuance are generally subject to a redemption
fee equal to 1% of the net asset value of the Shares redeemed. See Item 13.
During each month in the quarter ended December 31, 2005, the total number of
Shares redeemed and the average price paid per Share were as follows:

Total No. of Shares
    
    Average Price PaidMonth Ended
    
    Redeemed(1)
    
    Per ShareOctober
    
    4,881.859
    
    $102.42November
    
    37,699.900
    
    $104.74December
    
    105,680.151
    
    $109.32Total
    
    148,261.910
    
    $108.62


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

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.

9

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, but the selection of individual securities would be made by Boston
Management in its sole discretion. No interests in Real Estate Joint Ventures,
Partnership Preference Units, Net Leased Property 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.

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 less any applicable redemption fee. 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. No redemption fee is
payable in the event of compulsory redemption, including those 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.

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

10

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
National Market generally are valued at the NASDAQ official closing price.
Unlisted or listed securities for which closing sale prices are not available
are valued at the mean between the last available bid and asked prices or by an
independent pricing service. Exchange-traded options are valued at the last sale
price for the day of valuation as quoted on the principal exchange or board of
trade on which the options are traded, or in the absence of a sale on such day,
at the mean between the latest bid and asked prices therefor. Futures positions
on securities or currencies are generally valued at closing settlement prices.
Short-term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If short-term debt securities were acquired with a
remaining maturity of more than 60 days, their amortized cost value will be
based on their value on the sixty-first day prior to maturity. Other fixed
income and debt securities, including listed securities and securities for which
price quotations are available, will normally be valued on the basis of
valuations furnished by a pricing service.

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. The
Portfolio may rely on an independent fair valuation service in adjusting the
valuation of foreign equity securities. All securities for which market prices
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).
Boston Management values the Funds interest rate swap agreements based upon
dealer and counterparty quotes and pricing models that take into consideration
the market trading prices of interest rate swap agreements that have similar
terms to the Funds interest rate swap agreements. Fixed liabilities of the Fund
generally are stated at principal value.

Historic Net Asset Values.Set forth below are the high and low net asset
values per Share (NAVs) of the Fund for each full quarter during the two years
ended December 31, 2005 and 2004, 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)
|12/31/05      |  | $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%
|12/31/04      |  | $103.91  |  | $       |  | 93.76       |  | $102.03          |  | 6.54% 
|9/30/04       |  | $        |  | 97.52   |  | $           |  | 91.21            |  | $      |  | 95.77      
|6/30/04       |  | $        |  | 98.94   |  | $           |  | 93.82            |  | $      |  | 98.44      
|3/31/04       |  | $        |  | 99.06   |  | $           |  | 93.84            |  | $      |  | 96.87      

|(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
      (MD&A) and Results of Operations in Item 7.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   



|(b) Record Holders of Shares of the
      Fund.
|-----------------------------------------------

As of February 28, 2006, there were 627 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

11

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, 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. On January 14, 2004, the Fund made a distribution of $0.77
per Share to Shareholders of record on January 13, 2004.

Special Distributions.In addition to the pro rata income and capital gain distributions
described above, the Fund also makes distributions to Shareholders 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, 2005
and 2004.

12



|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, 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 38 to 78 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
|------------------------------------------------------------------------------ | - | -------------------- | ----------- | -------------------- | - | ------------------- | ----------- | ------------------------------ | - | - | ----------- | -------------- | - | - | ------------- | ----------------
|                                                                               |   | December 31, 2005    |             | December 31, 2004    |   | December 31, 2003   |             | December 31, 2002(1)          
|Total
      investment income                                                  |   | $                    |             | 85,765,527           |   | $                   |             | 90,895,859                     |   | $ |             | 82,312,956     |   | $ |               | 44,487,727      
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Interest
      expense                                                         |   | $                    |             | 32,704,624           |   | $                   |             | 30,873,176                     |   | $ |             | 29,114,183     |   | $ |               | 16,926,050      
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Net expenses
      (including interest expense)                                |   | $                    |             | 66,359,713           |   | $                   |             | 71,503,398                     |   | $ |             | 65,089,736     |   | $ |               | 37,590,944      
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Net investment
      income                                                    |   | $                    |             | 16,278,819           |   | $                   |             | 17,520,056                     |   | $ |             | 15,279,642     |   | $ |               | 5,431,684       
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Minority interests in net income of controlled
      subsidiaries              |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|                                                                               | $ |                      | (3,126,995) |                      | $ |                     | (1,872,405) |                                | $ |   | (1,943,578) |                | $ |   | (1,465,099)  
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Net realized
      gain                                                        |   | $                    |             | 69,272,363           |   | $                   |             | 37,095,580                     |   | $ |             | 2,449,130      |   | $ |               | 5,188,827       
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Net
      change in unrealized appreciation (depreciation)                     |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|                                                                               | $ |                      | 38,218,085  |                      | $ |                     | 62,187,846  |                                | $ |   | 311,836,713 |                | $ |   | (129,398,897)
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Net
      increase (decrease) in net assets from operations                    |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|                                                                               | $ |                      | 123,769,267 |                      | $ |                     | 116,803,482 |                                | $ |   | 329,565,485 |                | $ |   | (118,778,386)
|                                                                               |   |                      |             |                      |   |                     |             |                               
|Total
    assets                                                               |   | $      2,452,041,038 |             | $      2,333,346,902 |   | $     2,193,423,733 |             | $         
      1,791,452,901
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Loan
      payable--Credit Facility                                            |   | $                    |             | 393,500,000          |   | $                   |             | 236,000,000                    |   | $ |             | 183,300,000    |   | $ |               | 155,300,000     
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Mortgages
      payable                                                        |   | $                    |             | 238,850,000          |   | $                   |             | 359,850,000                    |   | $ |             | 344,219,483    |   | $ |               | 344,219,483     
|                                                                               |   |                      |             |                      |   |                     |             |                               
|Net
    assets                                                                 |   | $     1,753,010,400  |             | $     1,694,227,425  |   | $     1,632,454,758 |             | $     1,242,001,655           
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Shares
      outstanding                                                       |   |                      |             | 16,186,813           |   |                     |             | 16,604,562                     |   |   |             | 17,032,796     |   |   |               | 16,160,271      
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Net
      asset value and redemption price per Share                           |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|                                                                               | $ |                      | 108.30      |                      | $ |                     | 102.03      |                                | $ |   | 95.84       |                | $ |   | 76.86        
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Net
      increase (decrease) in net assets from operations per
      Share(6) |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|                                                                               | $ |                      | 7.56        |                      | $ |                     | 6.96        |                                | $ |   | 19.03       |                | $ |   | (23.14)      
|                                                                               |   |                      |             |                      |   |                     |             |                                |   |   |             |                |   |   |               |                 
|Distribution
      paid per Share                                              |   | $                    |             | 1.29(5)              |   | $                   |             | 0.77(4)                        |   | $ |             | 0.05(3)        |   | $ |               | 0.00(2)         

|(1) | The Fund commenced operations on March 19, 2002.                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | On January 17, 2003, the Fund made a distribution of
      $0.05 per Share to Shareholders of record on January 16, 2003 relating to
      net investment income and net realized capital gains recorded in
  2002.
|   
|(3) | On January 14, 2004, the Fund made a distribution of
      $0.77 per Share to Shareholders of record on January 13, 2004 relating to
      net investment income and net realized capital gains recorded in
  2003.
|   
|(4) | On January 27, 2005, the Fund made a distribution of
      $1.29 per Share to Shareholders of record on January 26, 2005 relating to
      net investment income and net realized capital gains recorded in
  2004.
|   
|(5) | On January 26, 2006, the Fund made a distribution of
      $1.28 per Share to Shareholders of record on January 25, 2006 relating to
      net investment income and net realized capital gains recorded in
  2005.
|   
|(6) | Based on average Shares outstanding.                                                                                                                                                                               
|   

13

Item 7. Managements Discussion and Analysis
of Financial Condition (MD&A) and Results of Operations.

The information in this report contains
forward-looking statements within the meaning of the federal securities laws.
Forward-looking statements typically are identified by use of terms such as
may, will, should, might, expect, anticipate, estimate, and
similar words, although some forward-looking statements are expressed
differently. The actual results of 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 note s
appearing on pages 38 to 78 of this Annual Report on Form 10-K.



|(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 and then deducting the net investment income or loss attributable to the
minority interest in the controlled subsidiaries of Belrose Realty. The Funds
investment income generally includes the net investment income allocated to the
Fund from Belvedere Company, rental income from the properties owned by Belrose
Realtys controlled subsidiaries, partnership income allocated to the
Partnership Preference Units owned directly or indirectly by Belrose Realty and
interest earned on the Funds short-term investments (if any). The net
investment income of Belvedere Company allocated to the Fund includes dividends,
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
include the Funds investment advisory and administrative fees, distribution and
servicing fees, interest expense from mortgages on properties owned by Belrose
Realtys controlled subsidiaries, interest expense on the Funds Credit
Facility, property management fees, property taxes, insurance, maintenance and
other expenses relating to the properties owned by Belrose Realtys controlled
subsidiaries, and other miscellaneous expenses. The Funds realized and
unrealized gains and losses are the result of transactions in, or changes in
value of, security investments held through the Funds indirect interest
(through Belvedere Company) in the Portfolio, real estate investments held
through Belrose Realty, the Funds interest rate swap agreements and any other
direct investments of the Fund, as well as periodic payments made by the Fund
pursuant to interest rate swap agreements.

Realized and unrealized gains and losses on
investments have the most significant impact on the Funds net asset value per
share and result primarily from sales of such investments and changes in their
underlying value. The investments of the Portfolio consist primarily of common
stocks of domestic and foreign growth companies that are considered by its
investment adviser to be high in quality and attractive in their long-term
investment prospects. Because the securities holdings of the Portfolio are
broadly diversified, the performance of the Portfolio cannot be attributed to
one particular stock or one particular industry or market sector. The
performance of the Portfolio and the Fund are substantially influenced by the
overall performance of the U.S. stock market, as well as by the relative
performance versus the overall market of specific stocks and classes of stocks
in which the Portfolio maintains large positions.

MD&A and Results of Operations for the
Year Ended December 31, 2005 Compared to the Year Ended December 31,
2004.

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. In measuring the performance of the
Funds real estate investments, Eaton Vance considers

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

14

whether, through current returns and changes in
valuation, the real estate investments achieve returns that over the long-term
exceed the cost of the borrowing incurred to acquire such investments and
thereby add to Fund returns. The Fund has entered into interest rate swap
agreements to fix the cost of its borrowings under the Credit Facility used to
acquire equity in real estate investments and to mitigate in part the impact of
interest rate changes on the Funds net asset value.

The Funds total return for the year ended December
31, 2005 was 7.54% . This return reflects 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 combined impact on performance of the Funds
investment activities outside of the Portfolio was positive for the year ended
December 31, 2005. The performance of the Fund exceeded that of the Portfolio by
approximately 2.84% for the year.

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 distribution of $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. For the year ended December 31, 2004, the
performance of the Fund trailed that of the Portfolio by approximately 2.35%
..

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 invests on a long-term basis in a
broadly diversified portfolio consisting primarily of common stocks of growth
companies. 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, telecommunication 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 detrimental
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.The Funds real estate investments are held through
Belrose Realty. As of December 31, 2005, real estate investments included
majority interests in two Real Estate Joint Ventures (Deerfield and Katahdin)
and a portfolio of Partnership Preference Units. Deerfield owns industrial
distribution properties and Katahdin owns multifamily properties. As of December
31, 2005, the estimated fair value of the Funds real estate investments
represented 23.3% of the Funds total assets on a consolidated basis. After
adjusting for the minority interests in Deerfield and Katahdin, the Funds real
estate investments represented 27.0% of the Funds net assets as of December 31,
2005.

On December 28, 2005, Katahdin sold a multifamily
property to a third party for approximately $42.3 million, recognizing a gain of
approximately $8.7 million on the transaction. On December 15, 2005, Katahdin
purchased a multifamily property from a third party 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 sale. On October 14, 2005, Belrose Realty sold
its interest in a multifamily Real Estate Joint Venture, Bel Communities
Property Trust (Bel Communities), to the real estate affiliate of another
investment fund advised by Boston Management, recognizing a $12.3 million gain
on the transaction.

15

During the year ended December 31, 2005, rental income from real estate operations was approximately $56.4 million compared to approximately $68.1 million for the year ended December 31, 2004, a decrease of $11.7 million or 17%.
This decrease in rental income was principally due to Belrose Realtys sale of its interest in Bel Apartment Property Trust (Bel Apartment), a multifamily Real Estate Joint Venture, in November 2004 and the sale of its interest in Bel
Communities in October 2005, which together accounted for 59% of consolidated rental income for the year ended December 31, 2004. This decrease was offset in part by the rental income of Deerfield, which was acquired in 2004. For the year ended
December 31, 2005, Deerfields rental income was negatively affected by a less favorable leasing environment than expected. During the year ended December 31, 2004, rental income increased due to income from the industrial distribution
properties acquired by Deerfield on June 30 and August 4, 2004, offset in part by the sale of Bel Apartment in November 2004.

During the year ended December 31, 2005, property operating expenses were approximately $24.6 million compared to approximately $32.0 million for the year ended December 31, 2004, a decrease of $7.4 million or 23% (property
operating expenses are before certain operating expenses of Belrose Realty of approximately $4.1 million for the year ended December 31, 2005 and $3.7 million for the year ended December 31, 2004). The decrease in property operating expenses
was principally due to the asset sales referenced in the preceding paragraph, offset in part by the operating expenses of Deerfield, which was acquired in 2004. For the year ended December 31, 2005, Deerfields property operating expenses were
in line with expectations. During the year ended December 31, 2004, the net increase in property operating expenses was principally due to the expenses of the industrial distribution properties acquired in 2004 and hurricane expenses of $2.6
million incurred by Katahdin, offset in part by the sale of Bel Apartment in November 2004.

Improvements in multifamily property operating conditions are being seen in numerous markets around the country, reflecting better supply/demand balance. Boston Management expects this favorable trend to continue in 2006, although higher
operating expenses and capital expenditures attributable to routine maintenance costs are expected to offset much of the improvement in rental income. For many industrial distribution properties, rent levels are expected to see minimal growth over
the near term. Boston Management expects that improvements in multifamily and industrial distribution property operating performance will occur over the longer term.

At December 31, 2005, the estimated fair value of the real properties indirectly held through Belrose Realty was approximately $385.0 million compared to approximately $496.8 million at December 31, 2004, a decrease of $111.8
million or 23%. The decrease in estimated real property values at December 31, 2005 as compared to December 31, 2004 was principally due to Belrose Realtys sale of its interests in Bel Communities in October 2005, offset in part by increases
in the estimated net values of properties held by Deerfield and Katahdin. The net increase in estimated real property values at December 31, 2004 was principally due to the properties acquired by Deerfield in June and August 2004, offset in part by
the sale of Bel Apartment in November 2004.

During the year ended December 31, 2005, the Fund saw net unrealized appreciation of the estimated fair value of its other real estate investments (which includes Deerfield and Katahdin) of approximately $20.8 million, compared to net
unrealized depreciation of approximately $27.6 million during the year ended December 31, 2004. Net unrealized appreciation of approximately $20.8 million during the year ended December 31, 2005 was due to increases in the estimated fair
value of properties held by Katahdin and Deerfield, offset in part by the recharacterizing of previously recorded unrealized appreciation as realized gains as a result of the October 2005 sale of Belrose Realtys interest in Bel Communities.
Despite weak operating conditions over the past several 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. Capitalization and discount rates, terms commonly used in the real estate industry, are rate of return percentages applied to actual or projected income levels to estimate the value of real estate investments. In the case of multifamily
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. The Funds net
unrealized depreciation for the year ended December 31, 2004 consisted of unrealized depreciation resulting from a net decrease in estimated industrial distribution property values, offset in part by unrealized appreciation resulting from a modest
net increase in estimated multifamily property values.

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 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 $0.3 million on the

16

transactions. At December 31, 2005, the estimated fair value of Belrose Realtys Partnership Preference Units totaled approximately $185.6 million compared to approximately $59.6 million at December 31, 2004, a net increase of
$126.0 million or 211%. The net increase in value was principally due to more Partnership Preference Units held at December 31, 2005 as compared to December 31, 2004. During 2004, the estimated fair value of Partnership Preference Unit
investments increased principally due to the net increase in the number of Partnership Preference Units held.

During the year ended December 31, 2005, the Fund saw net unrealized appreciation of the estimated fair value of its Partnership Preference Units of approximately $2.6 million compared to net unrealized depreciation of
approximately$8.0 million during the year ended December 31, 2004. The net unrealized appreciation of approximately $2.6 million during the year ended December 31, 2005 consisted of approximately $2.5
million of unrealized appreciation as a result of increases in the per unit values of the Partnership Preference Units held by Belrose Realty at December 31, 2005 and approximately $0.1 million of unrealized appreciation resulting from the
recharacterization of previously recorded unrealized depreciation as realized losses due to the sale of Partnership Preference Units during the year. During 2005, estimated fair values for Partnership Preference Units were positively affected by
tighter credit spreads for credit-sensitive income securities, including real estate-related securities. The net unrealized depreciation of approximately $8.0 million during the year ended December 31, 2004 consisted of approximately $0.3
million of unrealized depreciation resulting from decreases in per unit values of the Partnership Preference Units held by Belrose Realty and approximately $7.7 million of unrealized depreciation resulting from the recharacterization of
previously recorded unrealized appreciation to realized gains due to sales of Partnership Preference Units.

Distributions from Partnership Preference Units for the year ended December 31, 2005 totaled approximately $6.6 million compared to approximately $5.5 million for the year ended December 31, 2004, an increase of $1.1 million or
20%. The increase was due principally to an increased investment in Partnership Preference Units on average during the year, offset in part by lower average distribution rates for the Partnership Preference Units held. The decrease in average
distribution rates of Partnership Preference Units was primarily due to the restructuring of certain Partnership Preference Units (reflecting lower market rates for preferred securities) as they neared their potential call dates. During the year
ended December 31, 2004, distributions from Partnership Preference Units increased principally due to an increase in the number of Partnership Preference Units held on average and to a one-time special distribution from an issuer made in connection
with a restructuring of its Partnership Preference Units, offset in part by lower average distribution rates for the Partnership Preference Units held during the year ended December 31, 2004.

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 in part by $1.4 million of periodic payments made pursuant to outstanding swap agreements (and classified as net realized losses on interest rate swap agreements in the Funds consolidated financial statements).
In 2004, the Fund had net realized and unrealized losses of $0.8 million due to swap agreement valuation changes and $4.3 million of swap agreement periodic payments. 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. The negative contribution to Fund performance from changes in interest rate swap valuations
in 2004 was attributable to a modest decrease in swap rates during the holding period for swaps entered into during 2004.

MD&A and Results of Operations for the Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003.

Performance of the Fund.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
distribution of $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. For the year ended December 31, 2004, the performance of the Fund trailed that of the Portfolio by
approximately 2.35% .

The Fund had a total return of 24.77% for the year ended December 31, 2003. This return reflected an increase in the Funds net asset value per Share from $76.86 to $95.84 and a distribution of $0.05 per Share during the
period. For comparison, the S&P 500 Index had a total return of 28.67% over the same period. For the year ended December 31, 2003, the performance of the Fund exceeded that of the Portfolio by approximately 0.89% .

Performance of the Portfolio.Economic pressures lingered for much of 2004, but the lifting of some political uncertainty ignited a late-year market rally, helping U.S. equities lock in a second consecutive year of
gains. Strength in the broader

17

market toward year-end was a function of several economic and fundamental factors: historically low interest rates, decisive election results, retreating oil prices and solid earnings growth. A wave of merger and acquisition activity provided
additional support for equities, as companies across technology, telecommunications and health care sectors announced multi-billion dollar combinations. The Federal Reserve raised its key interest-rate target five times in 2004, increasing the
federal funds target rate to 2.25% . The Portfolios performance for the year ended December 31, 2004 was 9.67%, trailing the S&P 500 Index, which had a total return of 10.87% for the year. The total return of the Portfolio for the year
ended December 31, 2003 was 23.88% .

In 2004, value stocks outperformed growth stocks and small-caps and mid-caps outperformed large-caps. The best performing market sectors were energy, utilities, telecom services and industrials. Lagging the overall market were the health care,
technology, and consumer staples sectors.

During the year, the Portfolios sector allocation shifted slightly from 2003, as it increased positions in energy and industrial stocks and reduced exposure to the technology, health care and consumer discretionary sectors. The
Portfolios performance versus the S&P 500 Index benefited from relative overweightings in the strong performing energy and industrial sectors and favorable stock selection among consumer staples. The Portfolios relative performance
versus the S&P 500 Index was hampered by underweightings in the utilities and telecom services sectors and adverse selection among technology, health care and consumer discretionary stocks. Among industry groups, the Portfolio benefited from
overweightings of air freight and logistics, oil and gas, and building products and underweightings of semiconductors and pharmaceuticals. Industry groups adversely affecting the Portfolios relative performance included the overweighted
insurance and media groups and the underweighted health services and internet groups.

Performance of Real Estate Investments.As of December 31, 2004, real estate investments included majority interests in three Real Estate Joint Ventures (Bel Communities, Katahdin and Deerfield) and a portfolio of
Partnership Preference Units. Bel Communities and Katahdin operate multifamily properties and Deerfield operates industrial distribution properties.

During the year ended December 31, 2004, Belrose Realty acquired a majority interest in Deerfield. In transactions occurring in June and August 2004, Deerfield acquired 100% of the economic interest in 18 industrial distribution properties
located in six states. Deerfield acquired the properties for approximately $203.2 million. ProLogis owns a minority interest in Deerfield and manages the properties. Deerfield obtained first mortgage financing in October 2004, which is secured
by the properties it owns and without recourse to Belrose Realty, the Fund or Shareholders.

In November 2004, Belrose Realty sold its interest in Bel Apartment for approximately $32.4 million to the real estate subsidiary of another fund advised by Boston Management. Belrose Realty recognized a loss of approximately $1.5
million on the transaction.

During the year ended December 31, 2004, rental income from real estate operations was approximately $68.1 million compared to approximately $64.7 million for the year ended December 31, 2003, an increase of $3.4 million or 5%.
This increase in rental income was due to income from the industrial distribution properties acquired in 2004, offset in part by the sale of Bel Apartment in November 2004. For the year ended December 31, 2003, rental income increased principally
due to the greater number of properties held, offset in part by increased rent concessions or reduced apartment rental rates and lower occupancy levels at properties owned during 2003.

During the year ended December 31, 2004, property operating expenses were approximately $32.0 million compared to approximately $28.6 million for the year ended December 31, 2003, an increase of $3.4 million or 12% (property
operating expenses are before certain operating expenses of Belrose Realty of approximately $3.7 million for the year ended December 31, 2004 and $3.2 million for the year ended December 31, 2003). The net increase in property operating
expenses was principally due to the expenses of the industrial distribution properties acquired in 2004 and hurricane expenses of $2.6 million for Katahdin, offset in part by the sale of Bel Apartment in November 2004. During the year ended
December 31, 2003, property operating expenses increased principally due to the greater number of properties held during the year.

At December 31, 2004, the estimated fair value of the real properties indirectly held through Belrose Realty was approximately $496.8 million compared to approximately $473.5 million at December 31, 2003, a net increase of $23.3
million or 5%. The net increase in estimated real property values at December 31, 2004 was principally due to the properties acquired by Deerfield in June and August 2004, offset in part by the sale of Bel Apartment in November 2004. The modest
increase in estimated multifamily property values at December 31, 2003 resulted from declines in

18

capitalization rates in a lower-return environment,
which more than offset the impact of lower income expectations on property
values.

During the year ended December 31, 2004, the Fund
saw net unrealized depreciation of the estimated fair value of its other real
estate investments (which includes Bel Communities, Katahdin and Deerfield) of
approximately $27.6 million compared to unrealized appreciation of approximately
$3.6 million during the year ended December 31, 2003. Net unrealized
depreciation of approximately $27.6 million during the year ended December 31,
2004 included unrealized depreciation resulting from a net decrease in estimated
industrial distribution property values, offset in part by unrealized
appreciation resulting from a modest net increase in estimated multifamily
property values. The net decrease in industrial distribution property values
reflects the results of initial independent appraisals of newly acquired
properties and adjustments in the value of unappraised industrial distribution
properties to reflect appraisal results for similar properties, in accordance
with the Funds valuation procedures described in "Real Estate Joint Ventures"
under "Critical Accounting Estimates" in Item 7 (e) below. Initial appraised
values of newly acquired properties differed from transaction values due
primarily to differences in discount and capitalization rates applied in valuing
the properties. Unrealized appreciation during the year ended December 31, 2003
resulted from increases in estimated multifamily property values during
2003.

During the year ended December 31, 2004, Belrose
Realty sold (or experienced scheduled redemptions of) certain of its Partnership
Preference Units totaling approximately $80.4 million (including sales to real
estate subsidiaries of other investment funds advised by Boston Management),
recognizing a net gain of approximately $5.0 million on the transactions. During
the year ended December 31, 2004, Belrose Realty also acquired interests in
additional Partnership Preference Units (representing acquisitions from real
estate subsidiaries of other investment funds advised by Boston Management) for
a total of approximately $86.3 million.

At December 31, 2004, the estimated fair value of
Belrose Realtys Partnership Preference Units totaled approximately $59.6
million compared to approximately $56.7 million at December 31, 2003, a net
increase of $2.9 million or 5%. The net increase in value was principally due to
the net increase in the number of Partnership Preference Units held. During
2003, the estimated fair value of Partnership Preference Units increased
principally due to a greater number of units held.

During the year ended December 31, 2004, the Fund
saw net unrealized depreciation in the estimated fair value of its Partnership
Preference Units of approximately $8.0 million compared to unrealized
appreciation of approximately $6.8 million during the year ended December 31,
2003. The net unrealized depreciation of approximately $8.0 million during 2004
consisted of approximately $0.3 million of unrealized depreciation resulting
from decreases in per unit values of the Partnership Preference Units held by
Belrose Realty at December 31, 2004, and approximately $7.7 million of
unrealized depreciation resulting from the recharacterization of previously
recorded unrealized appreciation to realized gains due to sales of Partnership
Preference Units during the year ended December 31, 2004.

Distributions from Partnership Preference Units for
the year ended December 31, 2004 totaled approximately $5.5 million compared to
approximately $4.6 million for the year ended December 31, 2003, an increase of
$0.9 million or 20%. The increase was principally due to an increase in the
number of Partnership Preference Units held on average and to a one-time special
distribution from an issuer made in connection with a restructuring of its
Partnership Preference Units, offset in part by lower average distribution rates
for the Partnership Preference Units held during the year ended December 31,
2004. The decrease in the per unit values was principally due to restructurings
of certain Partnership Preference Units, including a special cash distribution
mentioned above and the renegotiated lower subsequent distribution rates, offset
in part by modest increases in value for other Partnership Preference Units held
at December 31, 2004. During the year ended December 31, 2003, distributions
increased due to the greater number of Partnership Preference Units held and the
longer period they were held.

Performance of Interest Rate Swap Agreements.For the year ended December 31, 2004, net realized
and unrealized losses on the Funds interest rate swap agreements totaled
approximately $5.1 million, compared to net realized and unrealized losses of
$3.7 million for the year ended December 31, 2003. Net realized and unrealized
losses on swap agreements in 2004 consisted of $0.8 million of net realized and
unrealized losses due to changes in swap agreement valuations and $4.3 million
of periodic payments made pursuant to outstanding swap agreements (and
classified as net realized losses on interest rate swap agreements in the Funds
consolidated financial statements). In 2003, the Fund had net realized and
unrealized gains of $0.8 million due to swap agreement valuation changes, offset
by $4.5 million of swap agreement periodic payments. The positive contribution
to 2003 Fund performance from changes in swap agreement valuations was
attributable to a rise in swap rates during the year.

19

On October 1, 2003, the Fund terminated all of its
then outstanding swap agreements and entered into new agreements to fix the cost
of a substantial portion of Fund borrowings under the Credit Facility. The Fund
realized a loss of approximately $12.2 million on the swap agreement
terminations.



|(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.
In the future, the Fund may increase the size of the Credit Facility (subject to
lender consent) and the amount of outstanding borrowings thereunder. As of
December 31, 2005, the Fund had outstanding borrowings of $393.5 million and
unused loan commitments of $31.0 under the Credit Facility. During the quarter
ended December 31, 2005, the Fund amended the Credit Facility to increase its
borrowing limit.

As of December 31, 2005, Katahdin had outstanding
borrowings consisting of fixed-rate secured mortgage debt obligations of $115.9
million and Deerfield had outstanding borrowings consisting of fixed-rate
secured mortgage obligations of $123.0 million.

Liquidity.The
Fund may redeem shares of Belvedere Company at any time. Both Belvedere Company
and the Portfolio normally follow the practice of satisfying redemptions
primarily by distributing securities drawn from the Portfolio. Belvedere Company
and the Portfolio may also satisfy redemptions by distributing cash. As of
December 31, 2005, the Portfolio had cash totaling $0.1 million. The Portfolio
participates in a $150 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 borrowings of $8.0 million outstanding at
December 31, 2005. 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, 2005, illiquid assets (consisting of restricted securities not
available for current public sale) constituted 0.03% of the net assets of the
Portfolio.

The liquidity of Belrose Realtys investments in
Deerfield and Katahdin are extremely limited, and relies principally upon
buy/sell and/or liquidation agreements with ProLogis and Archstone-Smith that
are described in "Real Estate Joint Venture Investments" under "The Funds Real
Estate Investments" in Item 1. Transfers of Belrose Realtys interest in
Deerfield and Katahdin to parties other than the Operating Partners are
restricted by terms of Deerfield and Katahdins operative agreements and lender
consent requirements. The Partnership Preference Units held by Belrose Realty
are not registered under the Securities Act and are subject to substantial
restrictions on transfer. As such, they are considered illiquid.



|(c) Off-Balance Sheet
      Arrangements.
|-----------------------------------------

The Fund is required to disclose off-balance sheet
arrangements that either have, or are reasonably likely to have, a current or
future effect on its financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to Shareholders. An off-balance sheet
arrangement includes any contractual arrangement to which an unconsolidated
entity is a party and under which the Fund has certain specified obligations. As
of December 31, 2005, the Fund did not have any such off-balance sheet
arrangements.

20

(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, 2005:

|                                          |  |              |  |            |  |             |  | Payments due: |  |              |  |              |  |             |  |             
|----------------------------------------- |  | ------------ |  | ---------- |  | ----------- |  | ------------- |  | ------------ |  | ------------ |  | ----------- |  | ------------
|                                         
|                                          |  |              |  | Less than  |  |             |  |               |  |              |  |              |  | More than 5
|Type of Obligation                        |  | Total        |  | 1 Year     |  | 1-3 Years   |  | 3-5 Years     |  | Years       
|                                         
|Long Term Debt:                           |  |              |  |            |  |             |  |               |  |              |  |              |  |             |  |             
|Mortgage Debt(1)                          |  | $238,850,000 |  | $          |  |            |  | $             |  |             |  | $            |  |            |  | $238,850,000
|Borrowings under Credit
      Facility(2) |  | $393,500,000 |  | $          |  |            |  | $             |  |             |  | $393,500,000 |  | $           |  |            
|Purchase Obligations(3)                   |  |              |  |            |  |             |  |               |  |              |  |              |  |             |  |             
|Other Long Term Liabilities:              |  |              |  |            |  |             |  |               |  |              |  |              |  |             |  |             
|Interest Rate Swap
      Agreements(4)    |  | $ 40,753,258 |  | $8,218,575 |  | $16,437,151 |  | $ 13,191,231  |  | $ 2,906,301 
|                                         
|Total                                     |  | $673,103,258 |  | $8,218,575 |  | $16,437,151 |  | $406,691,231  |  | $241,756,301
|                                         

|(1) | The property held by Belrose Realty is
      financed in part through mortgage notes issued to Deerfield and Katahdin.
      The mortgage notes are secured by the underlying property and are 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 2011 and 2012. The mortgage notes cannot be prepaid or
      otherwise disposed of without incurring a substantial prepayment penalty
      unless in conjunction with the sale of the associated property.                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(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 assets of Deerfield and Katahdin, 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.                                                                                                                                                                                                                                                                                                                             
|   
|(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, 2005, 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 borrowings under the Credit Facility
      used to acquire equity in real estate investments. Pursuant to the
      interest rate swap agreements, the Fund makes cash payments to MLCS at
      fixed rates in exchange for floating rate payments from MLCS that
      fluctuate with one-month 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 (including properties and other assets owned by
Belrose Realtys controlled subsidiaries, the allocation of equity interest in
Real Estate Joint Ventures and the Partnership Preference Units) 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 believes
the investment could be sold in a current transaction between

21

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

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

- such assets are, by their nature, difficult to value and
  estimated values may not accurately reflect what the Fund could realize in a current sale between willing parties;
- property appraisals and other factors used to determine the
  estimated fair value of the Funds real estate investments depend on estimates of future operating results and supply
  and demand assumptions that may not reflect actual
  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, 2005, the estimated fair value of
the Funds real estate investments represented 23.3% of the Funds total assets.
As of December 31, 2005, adjusting for the minority interests of ProLogis and
Archstone-Smith, the principal minority investors in Deerfield and Katahdin, the
Funds real estate investments represented 27.0% of the Funds net assets. The
estimated fair value of the Funds real estate investments may change due to
changes in market conditions and changes in valuation assumptions made by
property appraisers and third party valuation service providers as described
below.

As noted in Item 1, to satisfy certain requirements
of the Code, the Fund invests at least 20% of its gross assets (calculated in
the manner prescribed) in real estate investments (the 20% requirement). Should
the estimated fair value of the Funds real estate investments decrease, the
Fund may be required to acquire additional real estate investments to satisfy
the 20% requirement. Because the Fund acquires real estate investments with
borrowings, acquisitions of additional real estate investments would increase
the Funds borrowings under the Credit Facility and reduce the amounts otherwise
available to the Fund thereunder. Should the estimated fair value of the Funds
real estate investments increase, real estate investments could represent a
larger percentage of the Funds investment portfolio.

Partnership Preference Units.Boston Management 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
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.

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

22

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 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 appraisers who are licensed in their
respective states and not affiliated with Eaton Vance or the Operating Partners.
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 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 significant changes in economic
circumstances or recent evaluations of similar properties, and the results of
operations and distributions. As of December 31, 2005, all of the properties
owned by Deerfield and Katahdin were appraised during the year.

Boston Management determines the estimated fair
value of the Funds equity interest in a Real Estate Joint Venture based on an
estimate of the allocation of equity interests between the Fund and the
Operating Partner. This allocation is generally calculated by a third party
specialist, using current appraisals of the properties owned by the Real Estate
Joint Venture. The specialist uses a financial model that considers (i) the
terms of the joint venture agreement relating to allocation of distributable
cash flow, (ii) the expected duration of the joint venture, and (iii) the
projected property values and cash flows from the properties based on estimates
used in the independent valuations. The estimated allocation of equity interests
between the Fund and the Operating Partner of a Real Estate Joint Venture is
prepared quarterly and reviewed by Boston Management. If the estimate of the
allocation of equity interests in the Real Estate Joint Venture were to change
(for example, because the appraisers estimate of property values or projected
cash flows of the Real Estate Joint Venture changed), it may materially impact
the estimated fair value of the Funds equity interest in the Real Estate Joint
Venture.

23

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
Deerfield and Katahdin. Partnership Preference Units are fixed rate instruments
whose values will generally decrease when interest rates rise and increase when
interest rates fall. The interest rates on borrowings under the Credit Facility
are reset at regular intervals based on one-month LIBOR. The Fund has entered
into interest rate swap agreements to fix the cost of a substantial portion of
its borrowings under the Credit Facility used to acquire equity in real estate
investments and to mitigate in part the impact of interest rate changes on the
Funds net asset value. Under the terms of the interest rate swap agreements,
the Fund makes cash payments at fixed rates in exchange for floating rate
payments that fluctuate with one-month 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 7 and 8 to the Funds consolidated financial
statements appearing on pages 38 to 60 of this Annual Report on Form
10-K.



|Interest Rate
      SensitivityCost, Principal (Notional)
      Amountby Contractual Maturity and Callable
      Datefor the Twelve Months Ended December
      31,*
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         |  |           |  |             |  |      |  |              |  |              |  |              |  | Estimated        
|---------------------------------------- |  | --------- |  | ----------- |  | ---- |  | ------------ |  | ------------ |  | ------------ |  | -----------------
|                                         |  |           |  |             |  |      |  |              |  |              |  |              |  | Fair Value as of 
|                                         |  | 2006-2007 |  | 2008        |  | 2009 |  | 2010         |  | Thereafter   |  | Total        |  | December 31, 2005
|                                        
|Rate sensitive liabilities:              |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|                                         |  |          
|Long-term debt:                          |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|                                         |  |          
|Fixed-rate mortgages                     |  |           |  |             |  |      |  |              |  | $238,850,000 |  | $238,850,000 |  | $248,600,000     
|                                         |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Average interest rate                    |  |           |  |             |  |      |  |              |  | 6.23%        |  | 6.23%        |  |                  
|                                         |  |          
|Variable-rate Credit Facility            |  |           |  |             |  |      |  | $393,500,000 |  |              |  | $393,500,000 |  | $393,500,000     
|                                         |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Average interest rate                    |  |           |  |             |  |      |  | 4.72%        |  |              |  | 4.72%        |  |                  
|                                        
|Rate sensitive derivative financial      |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|instruments:                             |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|                                         |  |          
|Pay fixed/receive variable interest rate |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|swap agreements                          |  |           |  |             |  |      |  | $152,837,500 |  | $ 40,000,000 |  | $192,837,500 |  | $ 6,134,292      
|                                         |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Average pay rate                         |  |           |  |             |  |      |  | 4.10%        |  | 4.88%        |  | 4.26%        |  |                  
|                                         |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Average receive rate                     |  |           |  |             |  |      |  | 4.69%        |  | 4.54%        |  | 4.66%        |  |                  
|                                        
|Rate sensitive investments:              |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|                                         |  |          
|Fixed-rate Partnership Preference        |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Units:                                   |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|                                         |  |          
|Camden Operating, L.P., 7% Series B      |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Cumulative Redeemable Perpetual          |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Preferred Units, Callable 12/2/08,       |  |           |  |             |  |      |  |              |  |              |  |              |  |                  
|Current Yield: 7.15%                     |  |           |  | $15,802,670 |  |      |  |              |  |              |  | $ 15,802,670 |  | $ 15,918,500     

24

|                                       |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  | Estimated        
|-------------------------------------- |  | --------- |  | ---- |  | ----------- |  | ---------- |  | ---------- |  | - |  | ---------- |  | -----------------
|                                       |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  | Fair Value as of 
|                                       |  | 2006-2007 |  | 2008 |  | 2009        |  | 2010       |  | Thereafter |  |   |  | Total      |  | December 31, 2005
|                                      
|                                      
|Colonial Realty Limited Partnership,   |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|7.25% Series B Cumulative              |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Redeemable Perpetual Preferred         |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Units, Callable 8/24/09,               |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 7.27%                   |  |           |  |      |  | $19,419,240 |  |            |  |            |  | $ |  | 19,419,240 |  | $ 19,948,000     
|                                      
|Essex Portfolio, L.P., 7.875% Series B |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Cumulative Redeemable Preferred        |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Units, Callable 12/31/09,              |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 7.74%                   |  |           |  |      |  | $26,643,900 |  |            |  |            |  | $ |  | 26,643,900 |  | $ 26,707,537     
|                                      
|Essex Portfolio, L.P., 7.875% Series D |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Cumulative Redeemable Preferred        |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Units, Callable 7/28/10,               |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 7.68%                   |  |           |  |      |  | $           |  | 12,642,150 |  |            |  | $ |  | 12,642,150 |  | $ 12,815,350     
|                                      
|Kilroy Realty, L.P., 7.45% Series A    |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Cumulative Redeemable Preferred        |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Units, Callable 9/30/09,               |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 7.37%                   |  |           |  |      |  | $22,381,740 |  |            |  |            |  | $ |  | 22,381,740 |  | $ 22,731,975     
|                                      
|Liberty Property Limited Partnership,  |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|7.45% Series B Cumulative              |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Redeemable Preferred Units,            |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Callable 8/31/09,                      |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 7.22%                   |  |           |  |      |  | $27,039,290 |  |            |  |            |  | $ |  | 27,039,290 |  | $ 27,100,500     
|                                      
|MHC Operating Limited Partnership,     |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|8.0625% Series D Cumulative            |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Redeemable Perpetual Preference        |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Units, Callable 3/24/10,               |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 7.97%                   |  |           |  |      |  | $           |  | 15,000,000 |  |            |  | $ |  | 15,000,000 |  | $ 15,168,000     
|                                      
|PSA Institutional Partners, L.P., 6.4% |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Series NN Cumulative Redeemable        |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Perpetual Preferred Units,             |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Callable 3/17/10,                      |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 6.54%                   |  |           |  |      |  | $           |  | 34,377,134 |  |            |  | $ |  | 34,377,134 |  | $ 34,963,500     
|                                      
|Vornado Realty, L.P., 6.75% Series     |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|D-14 Cumulative Redeemable             |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Preferred Units, Callable 9/9/10,      |  |           |  |      |  |             |  |            |  |            |  |   |  |            |  |                  
|Current Yield: 6.59%(1)                |  |           |  |      |  | $           |  | 10,000,500 |  |            |  | $ |  | 10,000,500 |  | $ 10,240,754     

|* | The amounts listed reflect the Funds positions as of
      December 31, 2005. 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.

25

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 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.

26

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.

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. 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). 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.

The performance of Real Estate Joint Ventures is substantially influenced by the property management capabilities of the Operating Partners and conditions in the specific real estate sub-markets in which the properties owned by the Real Estate
Joint Ventures are located. The Operating Partners are subject to substantial conflicts of interest in structuring, operating and winding up the Real Estate Joint Ventures. Each respective Operating Partner has an economic incentive to maximize the
prices at which it sells properties to a Real Estate Joint Venture and has a similar incentive to minimize the prices at which it may acquire properties from a Real Estate Joint Venture. The Operating Partners may devote greater attention or more
resources to managing their wholly-owned properties than properties held by the Real Estate Joint Ventures. 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 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 Ventures 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 Belrose Realty, the Fund and Shareholders. The availability of financing and other financial conditions can have a material impact
on property values and therefore on the value of Real Estate Joint Venture assets. Mortgage debt of the Real Estate Joint Ventures normally cannot be refinanced prior to maturity without substantial penalties.

The ongoing value of Belrose Realtys investments in the Real Estate Joint Ventures is substantially uncertain. The real property held through Belrose Realtys Real Estate Joint Ventures is stated at the estimated fair value as
described in Item 7(e). The policies for valuing real estate investments involve significant judgments that are based upon a number of factors, which may include, without limitation, general economic conditions, the supply and demand for different
types of real properties, the financial health of tenants, the timing of lease expirations and terminations, fluctuations in rental rates

27

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, values may differ from amounts ultimately realized.

Belrose Realtys investments in Net Leased Property will be subject to general real estate market risks similar to an investment in a Real Estate Joint Venture. Investments in Net Leased Property will also be subject to risks specific to
this type of investment, including a concentration of risk exposure to specific real estate submarkets and individual properties and tenants. Principal among the risks of investing in Net Leased Property is the risk that a major tenant fails to
satisfy its lease obligations due to financial distress or other reasons. A tenants failure to meet its lease obligations would expose Belrose Realty to substantial loss of income without a commensurate reduction in debt service costs and
other expenses, and would 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.

Net Leased Property is generally illiquid, and the ongoing value of Belrose Realtys investments in Net Leased Property will be substantially uncertain. Net Leased Property held generally will be stated at estimated fair value based on
annual appraisals. See "Critical Accounting Estimates" in Item 7(e). Because the value of Net Leased Property will reflect in part the creditworthiness of its principal tenant(s), any change in the financial status of a major tenant could affect the
appraised value of a property and the value realized upon the disposition of such property. Tenants may hold rights to renew or extend expiring leases, and exercise of such rights would extend Belrose Realtys risk exposure to a particular
tenant beyond the initial lease term. Tenants may also hold options to purchase Net Leased Property, including options to purchase at below market levels. The value received upon the disposition of Net Leased 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 sales of Net Leased Property are not expected to occur for many years,
market conditions and other valuation factors at the time of sale cannot be predicted. Since valuations of Net Leased Property assume an orderly disposition of assets, amounts realized in a distressed sale may differ substantially from stated
values. Mortgage debt associated with Net Leased Property generally cannot be refinanced prior to maturity without substantial penalties. The terms of outstanding leases and mortgage debt obligations and restrictions on refinancing such debt will
limit Belrose Realtys ability to dispose of Net Leased Property.

Because all or substantially all of the rental payments on Net Leased Property generally will be dedicated to servicing the associated mortgage debt, during the initial lease term Belrose Realty will not generate significant cash flow from
investments to offset Belrose Realtys operating expenses and the cost of Fund borrowings used to finance Belrose Realtys equity therein. Such costs and expenses 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 generally are deferred until the properties are sold or re-leased following the initial lease term.

Changes in the 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.

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 assets of Deerfield and Katahdin. In the event of default, the lender could elect to sell assets of the Fund without regard

28

to consequences of such action for Shareholders. The
rights of the lender to receive payments of interest on and repayments of
principal of borrowings under the Credit Facility are senior to the rights of
the Shareholders.

Under the terms of the Credit Facility, the Fund is
not permitted to make distributions of cash or securities while there is an
event of default outstanding under the Credit Facility. During such periods, the
Fund would not be able to honor redemption requests or make cash distributions.
In addition, the rights of lenders under the mortgages used to finance Real
Estate Joint Venture properties are senior to Belrose Realtys right to receive
these distributions from the Real Estate Joint Ventures.



| | Item 8. Financial Statements and
      Supplementary Data.
| | ----------------------------------------------------------

The consolidated financial statements required by
Item 8 are contained on pages 38 to 78 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, 2005 and 2004.

|                                                                 |  |                    |  | 2005          |  |                   |  |                  
|---------------------------------------------------------------- |  | ------------------ |  | ------------- |  | ----------------- |  | -----------------
|                                                                 |  |                   
|                                                                 |  | First              |  | Second        |  | Third             |  | Fourth           
|                                                                 |  | Quarter            |  | Quarter       |  | Quarter           |  | Quarter          
|                                                                 |  |                   
|Investment income                                                |  | $
      20,955,693 |  | $24,367,673   |  | $21,309,458       |  | $19,132,703      
|Minority interest in net income of controlled
      subsidiaries |  | $
      (205,899)  |  | $ (1,273,280) |  | $
      (787,853) |  | $
      (859,963)
|Net investment income                                            |  | $
      2,685,963  |  | $ 6,033,521   |  | $
      3,220,354 |  | $
      4,338,981
|Net increase (decrease) in net assets from operations            |  | $(11,694,689)      |  | $11,826,642   |  | $74,581,679       |  | $49,055,635      
|                                                                
|Per share data:(1)                                               |  |                    |  |               |  |                   |  |                  
|Investment income                                                |  | $
      1.26       |  | $ 1.47        |  | $
      1.30      |  | $
      1.17     
|Net investment income                                            |  | $
      0.16       |  | $ 0.36        |  | $
      0.20      |  | $
      0.27     
|Net increase (decrease) in net assets from operations            |  | $
      (0.70)     |  | $ 0.71        |  | $
      4.55      |  | $
      3.01     



|                                                                 |  |                   |  |                   |  | 2004          |  |              |  |                   
|---------------------------------------------------------------- |  | ----------------- |  | ----------------- |  | ------------- |  | ------------ |  | ------------------
|                                                                 |  |                  
|                                                                 |  | First             |  | Second            |  |               |  | Third        |  | Fourth            
|                                                                 |  | Quarter           |  | Quarter           |  |               |  | Quarter      |  | Quarter           
|                                                                 |  |                  
|Investment income                                                |  | $22,340,109       |  | $21,472,458       |  | $             |  | 23,506,656   |  | $
      23,576,636
|Minority interest in net income of controlled
      subsidiaries |  | $
      (473,208) |  | $
      (508,514) |  | $             |  | (292,336)    |  | $
      (598,347) 
|Net investment income                                            |  | $
      5,440,346 |  | $
      4,322,775 |  | $             |  | 2,175,246    |  | $
      5,581,689 
|Net increase (decrease) in net assets from operations            |  | $30,511,170       |  | $26,772,662       |  | $(45,229,350) |  | $104,749,000
|                                                                
|Per share data:(1)                                               |  |                   |  |                   |  |               |  |              |  |                   
|Investment income                                                |  | $
      1.31      |  | $
      1.26      |  | $             |  | 1.39         |  | $
      1.41      
|Net investment income                                            |  | $
      0.32      |  | $
      0.25      |  | $             |  | 0.13         |  | $
      0.33      
|Net increase (decrease) in net assets from operations            |  | $
      1.79      |  | $
      1.58      |  | $             |  | (2.68)       |  | $
      6.27      



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

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.

29

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 it records,
processes, summarizes and reports in a timely manner the information that the
Fund must disclose in reports that it files or submits to the Securities and
Exchange Commission. Based on that evaluation, the Funds Chief Executive
Officer and Chief Financial Officer concluded that, as of December 31, 2005, 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 60 of this Annual Report on Form 10-K.



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



|None.
|-----

30



|PART
  III
|----------

Item 10. Directors and Executive Officers of
the Registrant.



|(a)
  Management.
|-----------------

Pursuant to the Funds LLC Agreement, the Funds
manager, Eaton Vance, has the authority to conduct the Funds business. Eaton
Vance appointed Thomas E. Faust Jr. and Michelle A. Green to serve indefinitely
as the Funds Chief Executive Officer and Chief Financial Officer, respectively,
on October 16, 2002. Information about Mr. Faust appears below. Ms. Green, 36,
is a Vice President of Eaton Vance and Boston Management. She also serves as
Chief Financial Officer of Belair Capital Fund LLC, Belcrest Capital Fund LLC,
Belmar Capital Fund LLC and Belport Capital Fund LLC and as an officer of
various other investment companies managed by Eaton Vance or Boston Management.
Ms. Green has been an employee of Eaton Vance since 1997. As members of the
Eaton Vance organization, Mr. Faust and Ms. Green receive no compensation from
the Fund for serving as Fund officers. There are no other officers of the Fund.
The Fund does not have a board of directors or similar governing
body.

The Board of Directors of Eaton Vance, Inc., the
sole trustee of Eaton Vance, oversees the accounting and financial reporting
processes of the Fund and audits of the Funds financial statements. The
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 Portfolio is Duncan W. Richardson, Executive Vice President and
Chief Equity Investment Officer of Eaton Vance and Boston Management. Mr.
Richardson has been employed by the Eaton Vance organization since 1987 and has
served as portfolio manager of the Fund since its inception and of the Portfolio
and its predecessor since 1990. A majority of Mr. Richardsons time is spent
managing the Portfolio and related entities. Boston Management has an
experienced team of analysts that provides Mr. Richardson with research and
recommendations on investments.

The directors of Belrose Realty are Mr. Faust and
Alan R. Dynner, each of whom is described below. William R. 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s time is spent managing the real estate
investments of Belrose Realty and the real estate affiliates of other investment
funds advised by Boston Management. Mr. Cross, David Carlson and Mr. Dynner
serve as managers or trustees of Deerfield and Katahdin owned by Belrose Realty.
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.
Prior to joining Eaton Vance, Mr. Carlson was President of ILM Holding, Inc., a
real estate holding company. 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 (64) 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.

Thomas E. Faust Jr. (47) 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

31

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

William M. Steul (63) 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, 2005 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. The Funds manager, Eaton Vance, and its
affiliates receive certain fees from the Fund for services provided to the Fund,
which are described in Item 13 below.

Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Shareholder
Matters.

Security Ownership of Certain Beneficial
Owners.To the knowledge of the Fund, no person
beneficially owns more than 5% of the Shares of the Fund.

Security Ownership of Management.As of February 28, 2006, Eaton Vance, the manager
of the Fund, beneficially owned 103 Shares of the Fund. The Shares owned by
Eaton Vance represent less than 1% of the outstanding Shares of the Fund as of
February 28, 2006. 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.

Item 13. Certain Relationships and Related
Transactions.

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, 2005 and 2004 in connection with services rendered by Eaton Vance and its
affiliates. Each fee is described following the table.

32

|                                                                     |  | Year ended        |  | Year ended       
|-------------------------------------------------------------------- |  | ----------------- |  | -----------------
|                                                                     |  | December 31, 2005 |  | December 31, 2004
|                                                                    
|Fund Advisory and Administrative Fees*                               |  | $1,311,285        |  | $1,217,128       
|                                                                    
|Belrose Realty Management Fees*                                      |  | $2,954,419        |  | $3,014,234       
|                                                                    
|Funds Allocable Portion of the Portfolios Advisory
      Fees**    |  | $7,486,967        |  | $7,197,653       
|                                                                    
|Fund Servicing Fees                                                  |  | $1,610,761        |  | $1,610,127       
|                                                                    
|Funds Allocable Portion of Belvedere Companys Servicing
      Fees |  | $2,601,544        |  | $2,494,434       
|                                                                    
|Fund Distribution Fees*                                              |  | $1,685,761        |  | $1,641,602       
|                                                                    
|Redemption Fees paid by Redeeming Shareholders                       |  | $ 128,646         |  | $ 285,453        
|                                                                    
|Aggregate Compensation Paid by the Fund to Eaton Vance
      and     |  |                   |  |                  
|its Affiliates                                                       |  | $5,951,465        |  | $5,872,964       
|                                                                    

|*  | 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.
      The amount is net of amounts waived by Boston Management.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|** | For years ended December 31, 2005 and 2004,
      advisory fees paid or payable by the Portfolio totaled $80,617,092 and
      $77,609,178, respectively. 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. For the year ended December 31,
      2004, Belvedere Companys allocable portion of that fee was $50,252,861 of
      which $7,197,653 was allocable to the Fund.                 
|  

The Funds Investment Advisory and
Administrative Fee.Under the terms of the Funds
investment advisory and administrative agreement, Boston Management is entitled
to receive, subject to the fee waiver described in the next sentence, a monthly
advisory and administrative fee at the rate of 1/20 of 1% (equivalent to 0.60%
annually) of the average daily gross assets of the Fund. 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 assets of the Fund means the value of all
Fund assets (including the Funds interest in Belvedere Company and the Funds
ratable share of the assets of its directly and indirectly controlled
subsidiaries), without reduction by any liabilities.

Belrose Realtys Management Fees.Under the terms of Belrose Realtys management
agreement with Boston Management, Boston Management receives a monthly
management fee at the rate of 1/20 of 1% (equivalent to 0.60% annually) of the
average daily gross assets of Belrose Realty. The term "gross assets of Belrose
Realty" means the current value of all assets of Belrose Realty (including
Belrose Realtys ratable share of the assets of its controlled subsidiaries),
without reduction by any liabilities. For this purpose, the assets and
liabilities of Belrose Realtys controlled subsidiaries are reduced by the
proportionate interests therein of investors other than Belrose
Realty.

33

The Portfolios Investment Advisory Fee.Under the terms of the Portfolios investment
advisory agreement with Boston Management, Boston Management receives a monthly
advisory fee as follows:

Annual Fee RateAverage Daily Net Assets for the Month
    
    (for each level)Up to $500 million
    
    0.6250%$500 million but less than $1 billion
    
    0.5625%$1 billion but less than $1.5 billion
    
    0.5000%$1.5 billion but less than $7 billion
    
    0.4375%$7 billion but less than $10 billion
    
    0.4250%$10 billion but less than $15 billion
    
    0.4125%$15 billion and over
    
    0.4000%


In accordance with the terms of the 1940 Act, the
Portfolios Board of Trustees considers the continuation of the Portfolios
investment advisory agreement annually.

Servicing Fees Paid by the
Fund.Pursuant to a servicing agreement between
the Fund and EV Distributors, the Fund pays a servicing fee to EV Distributors
for providing certain services and information to the Shareholders of the Fund.
The servicing fee is paid on a quarterly basis at an annual rate of 0.25% of the
Funds average daily net assets. With respect to Shareholders who subscribed
through a subagent, EV Distributors has assigned servicing responsibilities and
fees to the applicable subagent, beginning twelve months after the issuance of
Shares of the Fund to such persons. The Funds allocated share of the servicing
fee paid by Belvedere Company is credited toward the Funds servicing fee
payment, thereby reducing the amount of the servicing fee payable by the
Fund.

Servicing Fees Paid by Belvedere
Company.Pursuant to a servicing agreement between
Belvedere Company and EV Distributors, Belvedere Company pays a servicing fee to
EV Distributors for providing certain services and information to direct and
indirect investors in Belvedere Company. The servicing fee is paid on a
quarterly basis, at an annual rate of 0.15% of Belvedere Companys average daily
net assets. With respect to investors in Belvedere Company andShareholders of the Fund who subscribed through a subagent, EV
Distributors has assigned servicing responsibilities and fees to the applicable
subagent, beginning twelve months after the issuance of shares of Belvedere
Company or Shares of the Fund to such persons. The Fund assumes its allocated
share of Belvedere Companys servicing fee. The servicing fee payable in respect
of the Funds investment in Belvedere Company is credited toward the Fund
servicing fee described above.

Distribution Fees Paid to EV
Distributors.Under the terms of the Funds placement
agreement with EV Distributors, EV Distributors receives a monthly distribution
fee at an annual rate of 0.10% of the average daily net assets of the Fund as
compensation for its services as placement agent. The distribution fee accrued
from the Funds initial closing and will continue for a period of ten years
(subject to the annual approval of Eaton Vance, Inc.).

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

34

Certain Real Estate Investment
Transactions.During the year ended December 31, 2005, Belrose Realty entered into the
following real estate investment transactions with real estate affiliates of
other investment funds managed by Eaton Vance and advised by Boston Management
or an entity owned by such real estate affiliate:

- Belrose Realty sold its interest in Bel Communities to
  Belwater Realty Corporation, which realized a gain of $12.3 million on the transaction.
- Belrose Realty purchased Partnership Preference Units from
  Belcrest Realty Corporation, which realized a loss of approximately $0.3 million on the transactions.
- Belrose Realty purchased Partnership Preference Units from
  Belwater Realty Corporation, which realized a loss of approximately $2.1 million on the transactions.
- Belrose Realty sold Partnership Preference Units to Belwater
  Realty Corporation, realizing a gain of approximately $0.3 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 Accountant Fees and
      Services.
|------------------------------------------------------

The following table presents fees for the
professional audit services rendered by Deloitte & Touche LLP for the audit
of the Funds annual financial statements for the years ended December 31, 2005
and 2004 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,
|----------- |  | -----------------------------
|           
|            |  | 2005                         
|           
|Audit fees  |  | $249,335                     
|Tax fees(1) |  | 215,876                      
|            |  |                              
|Total       |  | $465,211                     
|            |  |                              

|(1) | Tax fees consist of the aggregate fees
      billed for professional services rendered by Deloitte & Touche LLP for
      tax compliance, tax advice and tax planning.            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Certain amount have been reclassified to
      conform with current year presentation. Amounts disclosed as audit-related
      fees in 2004 have been reclassified as audit fees.
|   

The Funds Audit Committee reviews all audit, tax
and other fees of Deloitte & Touche LLP at least annually. The Audit
Committee pre-approved all audit and tax services for the years ended December
31, 2005 and 2004 in accordance with the Funds pre-approval policies. The Audit
Committee has concluded that the provision of the tax services listed above is
compatible with maintaining the independence of Deloitte & Touche
LLP.

35



|PART
  IV
|---------



|Item 15. Exhibits and Financial Statement
      Schedules.
|----------------------------------------------------------

|(a) | Please see the Funds consolidated
      financial statements on pages 38 to 60 of this Annual Report on Form 10-K.
      Please see the Portfolios financial statements on pages 61 to 77 of this
      Annual Report on Form 10- K.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Reports on Form 8-K: None.                                                                                                                                                                                                            
|   
|(c) | A list of the exhibits filed as a part of
      this Form 10-K is included in the Exhibit Index appearing on page 80
      hereof.                                                                                                    
|   

36

A p p e n d ix A



|T h e   F u n d s   In v e
      stm e n t   S tru c tu rea s 
       o f   D e c e m b e r   3 1 ,   2 0 0
      5
|--------------------------------------------------------------------------------------------------------------------



|(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 interest in
      these Real Estate Joint Ventures.                                                            
|                                                                                                                                                          
|(F )  Belrose Realty owns a minority
      interest in Belvorn Holdings LLC, which ownsPartnership Preference Units issued by Vornado Realty,
      L.P.  
|



37



|Belrose Capital Fund
      LLCCONSOLIDATED PORTFOLIOS OF
      INVESTMENTSAs of December 31,
    2005
|-----------------------------------------------------------------------------------------------------

|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  
      7 5 . 6 %                                                                                                                          
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                                                                                                                     
|Security                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                     
|Investment in Belvedere Capital Fund Company
      LLC  (Belvedere Company)                                                                                                                                                                          
|                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                     
|Total Investment in Belvedere Company                                                                                                                                                                                                                
|(identified cost,
      $1,505,010,481)                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                     
|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                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                     
|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,
      L.P.  (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)                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                     

|O t h e r R e a l E s t a t e  I n v e s
      t m e n t s   1 6 . 3 %
|-----------------------------------------------------------------------
|Description                                                            
|                                                                       
|Rental property(2)(3)                                                  
|Investment in management contracts(2)(4)                               
|                                                                       
|                                                                       
|Total Other Real Estate Investments                                    
|(identified cost,
      $381,781,034)                                  
|                                                                       
|                                                                       
|C o m m e r c i a l P a p e r   0 . 1
      %                         
|Security                                                               
|                                                                       
|                                                                       
|General Electric Capital Corporation,                                  
|4.20%, 1/3/06                                                          
|                                                                       
|                                                                       
|Total Commercial Paper                                                 
|(at amortized cost,
      $2,797,347)                                  
|                                                                       
|                                                                       
|O t h e r S h o r t - Te r m  I n v e s
      t m e n t s   0 . 1 %   
|Security                                                               
|                                                                       
|                                                                       
|Investors Bank & Trust Company                                        
|Time Deposit, 4.23%, 1/3/06                                            
|                                                                       
|                                                                       
|Total Other Short-Term Investments                                     
|(at amortized cost,
      $2,000,000)                                  
|                                                                       
|                                                                       
|Total Investments  100.0%                                             
|(identified cost,
      $2,074,895,486)                                
|                                                                       



|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
|----------------------------------------------------------------------------------------------

38



|Belrose Capital Fund
      LLCCONSOLIDATED PORTFOLIOS OF INVESTMENTSCONTDAs of
      December 31, 2004
|-------------------------------------------------------------------------------------------------------

|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    7 5 . 9
      %                                                                                                       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                                                                                                
|Security                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                
|Investment in Belvedere Capital Fund
      Company LLC                                                                                                                                                                          
|(Belvedere Company)                                                                                                                                                                                                             
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Total Investment in Belvedere
      Company                                                                                                                                                                                     
|(identified cost,
      $1,488,476,148)                                                                                                                                                                                         
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|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   2 . 6 %                                                                                                                                                            
|                                                                                                                                                                                                                                
|Security                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                
|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)                    
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|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)  
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|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,
      $59,871,404)                                                                                                                                                                                            
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|O t h e r R e a l E s t a t e 
       I n v e s t m e n t s  2 1 . 5 %                                                                                                                                                         
|                                                                                                                                                                                                                                
|Description                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                
|Rental property(2)(3)                                                                                                                                                                                                           
|Investment in management
      contracts(2)(4)                                                                                                                                                                                  
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Total Other Real Estate
      Investments                                                                                                                                                                                       
|(identified cost,
      $528,935,061)                                                                                                                                                                                           
|                                                                                                                                                                                                                                

|S h o r t - Te r m I n v e s t m e n t s   0 . 0 %                    
|-----------------------------------------------------------------------
|                                                                       
|                                                                       
|Security                                                               
|                                                                       
|                                                                       
|Investors Bank & Trust Company                                        
|Time Deposit, 2.25%, 1/3/05                                            
|                                                                       
|                                                                       
|                                                                       
|Total Short-Term Investments                                           
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Total Investments  100.0%                                             
|                                                                       
|                                                                       
|                                                                       
|The following footnotes are for the years ended December 31,
      2005
|and December 31, 2004:                                                 
|                                                                      
|                                                                       
|                                                                       
|                                                                       
|(1)                                                                    
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|(2)                                                                    
|                                                                       
|                                                                       
|(3)                                                                    
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|(4)                                                                    



|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
|---------------------------------------------------------------------------------------

39



|Belrose Capital Fund
      LLCCONSOLIDATED FINANCIAL
      STATEMENTSConsolidated Statements
      of Assets and Liabilities
|----------------------------------------------------------------------------------------------------------------------------

|Assets                                                                                         |  | December 31, 2005 |  | December 31, 2004
|---------------------------------------------------------------------------------------------- |  | ----------------- |  | -----------------
|                                                                                              
|Investments, at value (identified cost, $2,074,895,486 and
      $2,078,003,613, respectively) |  | $2,359,264,590    |  | $2,316,496,949   
|Cash                                                                                           |  |                   |  | 51,271,803       
|Escrow deposits  restricted                                                                   |  |                   |  | 29,764,909       
|Open interest rate swap agreements, at value                                                   |  |                   |  | 6,134,292        
|Distributions and interest receivable                                                          |  |                   |  | 285,450          
|Swap interest receivable                                                                       |  |                   |  | 68,131           
|Other assets                                                                                   |  |                   |  | 5,251,863        
|                                                                                              
|                                                                                              
|Total assets                                                                                   |  | $2,452,041,038    |  | $2,333,346,902   
|                                                                                              
|                                                                                              
|                                                                                              
|Liabilities                                                                                    |  |                   |  |                  
|                                                                                              
|Loan payable  Credit Facility                                                                 |  | $                 |  | 393,500,000      
|Mortgages payable                                                                              |  |                   |  | 238,850,000      
|Payable for Fund Shares redeemed                                                               |  |                   |  |                 
|Payable to affiliate for investment advisory and administrative
      fees                     |  |                   |  | 365,900          
|Payable to affiliate for distribution and servicing
      fees                                 |  |                   |  | 572,971          
|Note payable to minority shareholder                                                           |  |                   |  | 20,788,024       
|Security deposits                                                                              |  |                   |  | 1,229,116        
|Accrued expenses:                                                                              |  |                   |  |                  
|Swap interest expense                                                                          |  |                   |  |                 
|Interest expense                                                                               |  |                   |  | 1,622,241        
|Property taxes                                                                                 |  |                   |  | 1,856,924        
|Other expenses and liabilities                                                                 |  |                   |  | 2,461,869        
|Minority interests in controlled subsidiaries                                                  |  |                   |  | 37,783,593       
|                                                                                              
|                                                                                              
|Total liabilities                                                                              |  | $                 |  | 699,030,638      
|                                                                                              
|                                                                                              
|Net Assets                                                                                     |  | $1,753,010,400    |  | $1,694,227,425   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Shareholders Capital                                                                          |  | $1,753,010,400    |  | $1,694,227,425   
|                                                                                              
|                                                                                              
|                                                                                              
|Fund Shares Outstanding                                                                        |  |                   |  | 16,186,813       
|                                                                                              
|                                                                                              
|                                                                                              
|Net Asset Value and Redemption Price Per Share (Note
      4)                                  |  | $                 |  | 108.30           
|                                                                                              



|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
|--------------------------------------------------------------------------------------------------

40



|Belrose Capital Fund LLCCONSOLIDATED FINANCIAL
      STATEMENTSCONTDConsolidated Statements of Operations
|----------------------------------------------------------------------------------------------------------

|                                                                                                                                                                               |  |                   |  |                   |  | For the Year Ended |  |              |  |             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- |  | ----------------- |  | ------------------ |  | ------------ |  | ------------
|                                                                                                                                                                               |  |                  
|Investment Income                                                                                                                                                              |  | December 31, 2005 |  | December 31, 2004 |  | December 31, 2003 
|                                                                                                                                                                              
|Dividends allocated from Belvedere Company                                                                                                                                     |  |                   |  |                   |  |                    |  |              |  |             
|(net of foreign taxes, $441,558, $352,093 and
      $248,681, respectively)                                                                                                    |  | $ 29,228,092      |  | $                 |  | 26,977,973         |  | $            |  | 21,290,041  
|Interest allocated from Belvedere Company                                                                                                                                      |  |                   |  | 141,806           |  |                    |  | 117,249      |  |             
|Expenses allocated from Belvedere Company                                                                                                                                      |  | (10,412,031)      |  |                   |  | (9,996,601)        |  |              |  | (8,692,174) 
|                                                                                                                                                                              
|Net investment income allocated from Belvedere Company                                                                                                                         |  | $ 18,957,867      |  | $                 |  | 17,098,621         |  | $            |  | 12,933,752  
|Rental income                                                                                                                                                                  |  |                   |  | 56,403,019        |  |                    |  | 68,052,061   |  |             
|Distributions from Partnership Preference Units                                                                                                                                |  |                   |  | 6,573,938         |  |                    |  | 5,475,556    |  |             
|Interest                                                                                                                                                                       |  |                   |  | 526,681           |  |                    |  | 269,621      |  |             
|Other income                                                                                                                                                                   |  |                   |  | 3,304,022         |  |                    |  |             |  |             
|                                                                                                                                                                              
|Total investment income                                                                                                                                                        |  | $ 85,765,527      |  | $                 |  | 90,895,859         |  | $            |  | 82,312,956  
|                                                                                                                                                                              
|                                                                                                                                                                              
|Expenses                                                                                                                                                                       |  |                   |  |                   |  |                    |  |              |  |             
|                                                                                                                                                                              
|Investment advisory and administrative fees                                                                                                                                    |  | $                 |  | 5,951,465         |  | $                  |  | 5,872,964    |  | $           
|Property management and administrative fees                                                                                                                                    |  |                   |  | 2,486,905         |  |                    |  | 2,810,791    |  |             
|Distribution and servicing fees                                                                                                                                                |  |                   |  | 3,296,522         |  |                    |  | 3,251,729    |  |             
|Interest expense on mortgages                                                                                                                                                  |  |                   |  | 22,289,206        |  |                    |  | 26,491,201   |  |             
|Interest expense on Credit Facility                                                                                                                                            |  |                   |  | 10,415,418        |  |                    |  | 4,381,975    |  |             
|Property and maintenance expenses                                                                                                                                              |  |                   |  | 14,576,846        |  |                    |  | 20,756,004   |  |             
|Property taxes and insurance                                                                                                                                                   |  |                   |  | 7,531,090         |  |                    |  | 8,456,423    |  |             
|Miscellaneous                                                                                                                                                                  |  |                   |  | 1,498,022         |  |                    |  | 1,123,913    |  |             
|                                                                                                                                                                              
|Total expenses                                                                                                                                                                 |  | $ 68,045,474      |  | $                 |  | 73,145,000         |  | $            |  | 66,504,847  
|                                                                                                                                                                              
|Deduct                                                                                                                                                                        |  |                   |  |                   |  |                    |  |              |  |             
|Reduction of investment advisory and
      administrative fees                                                                                                                 |  | $                 |  | 1,685,761         |  | $                  |  | 1,641,602    |  | $           
|                                                                                                                                                                              
|Net expenses                                                                                                                                                                   |  | $ 66,359,713      |  | $                 |  | 71,503,398         |  | $            |  | 65,089,736  
|                                                                                                                                                                              
|Net investment income before minority interests in net income of
      controlled subsidiaries                                                                                 |  | $ 19,405,814      |  | $                 |  | 19,392,461         |  | $            |  | 17,223,220  
|Minority interests in net income of controlled subsidiaries                                                                                                                    |  |                   |  | (3,126,995)       |  |                    |  | (1,872,405)  |  |             
|                                                                                                                                                                              
|                                                                                                                                                                              
|Net investment income                                                                                                                                                          |  | $ 16,278,819      |  | $                 |  | 17,520,056         |  | $            |  | 15,279,642  
|                                                                                                                                                                              
|                                                                                                                                                                              
|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)                                                                                                                           |  | $ 48,573,761      |  | $                 |  | 37,885,739         |  | $            |  | 19,117,006  
|Investment transactions (identified cost
      basis)                                                                                                                          |  |                   |  |                  |  |                    |  |             |  |             
|Investment transactions in Partnership
      Preference Units (identified cost basis)                                                                                          |  |                   |  | 323,360           |  |                    |  | 4,995,589    |  |             
|Investment transactions in other real estate
      (net of minority interests in realized gain (loss)                                                                          |  |                   |  |                   |  |                    |  |              |  |             
|of controlled subsidiaries
      of $7,929,126, $(4,035,005) and $0, respectively)                                                                                             |  |                   |  | 21,758,545        |  |                    |  | (1,548,753)  |  |             
|Interest rate swap agreements(1)                                                                                                                                               |  |                   |  | (1,383,303)       |  |                    |  | (4,236,995)  |  |             
|                                                                                                                                                                              
|Net realized gain                                                                                                                                                              |  | $ 69,272,363      |  | $                 |  | 37,095,580         |  | $            |  | 2,449,130   
|                                                                                                                                                                              
|Change in unrealized appreciation (depreciation)                                                                                                                              |  |                   |  |                   |  |                    |  |              |  |             
|Investments, securities sold short and foreign
      currency allocated from Belvedere                                                                                         |  |                   |  |                   |  |                    |  |              |  |             
|Company (identified cost
      basis)                                                                                                                                          |  | $                 |  | 9,310,085         |  | $                  |  | 98,671,430   |  | $288,392,438
|Investments in Partnership Preference Units
      (identified cost basis)                                                                                                      |  |                   |  | 2,577,501         |  |                    |  | (7,973,845)  |  |             
|Investments in other real estate (net of
      minority interests in unrealized appreciation (depreciation)                                                                    |  |                   |  |                   |  |                    |  |              |  |             
|of controlled subsidiaries
      of $13,235,837, $(2,711,241) and $(5,418,472), respectively)                                                                                  |  |                   |  | 20,752,346        |  |                    |  | (27,642,011) |  |             
|Interest rate swap agreements                                                                                                                                                  |  |                   |  | 5,578,153         |  |                    |  | (867,728)    |  |             
|                                                                                                                                                                              
|Net change in unrealized appreciation (depreciation)                                                                                                                           |  | $                 |  | 38,218,085        |  | $                  |  | 62,187,846   |  | $311,836,713
|                                                                                                                                                                              
|Net realized and unrealized gain                                                                                                                                               |  | $107,490,448      |  | $                 |  | 99,283,426         |  | $314,285,843
|                                                                                                                                                                              
|Net increase in net assets from operations                                                                                                                                     |  | $123,769,267      |  | $ 116,803,482     |  | $329,565,485      
|                                                                                                                                                                              
|                                                                                                                                                                              
|(1) Amounts include net interest
      expense incurred in connection with interest rate swap agreements of
      $1,383,303, $4,297,449 and $4,477,357,respectively (Note 2).
|



|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
|----------------------------------------------------------------------------------------------

41



|Belrose Capital Fund
      LLCCONSOLIDATED FINANCIAL STATEMENTSCONTDConsolidated Statements of Changes in Net Assets
|---------------------------------------------------------------------------------------------------------------------

|                                                                                     |  |                   |  |                   |  |                   |  | Year Ended   |  |   |  |             
|------------------------------------------------------------------------------------ |  | ----------------- |  | ----------------- |  | ----------------- |  | ------------ |  | - |  | ------------
|                                                                                     |  |                  
|Increase (Decrease) in Net Assets                                                    |  | December 31, 2005 |  | December 31, 2004 |  | December 31, 2003
|                                                                                    
|From operations                                                                     |  |                   |  |                   |  |                   |  |              |  |   |  |             
|Net investment income                                                                |  | $                 |  | 16,278,819        |  | $                 |  | 17,520,056   |  | $ |  | 15,279,642  
|Net realized gain from investment transactions,
      securities sold short, foreign |  |                   |  |                   |  |                   |  |              |  |   |  |             
|currency transactions and
      interest rate swap agreements                        |  |                   |  | 69,272,363        |  |                   |  | 37,095,580   |  |   |  | 2,449,130   
|Net change in unrealized appreciation
      (depreciation) of investments,           |  |                   |  |                   |  |                   |  |              |  |   |  |             
|securities sold short,
      foreign currency and interest rate swap agreements      |  |                   |  | 38,218,085        |  |                   |  | 62,187,846   |  |   |  | 311,836,713 
|                                                                                    
|Net increase in net assets from operations                                           |  | $                 |  | 123,769,267       |  | $                 |  | 116,803,482  |  | $ |  | 329,565,485 
|                                                                                    
|Transactions in Fund Shares                                                         |  |                   |  |                   |  |                   |  |              |  |   |  |             
|Investment securities contributed                                                    |  | $                 |  |                  |  | $                 |  |             |  | $ |  | 95,047,136  
|Less  Selling commissions                                                           |  |                   |  |                  |  |                   |  |             |  |   |  | (325,083)   
|                                                                                    
|Net contributions                                                                    |  | $                 |  |                  |  | $                 |  |             |  | $ |  | 94,722,053  
|Net asset value of Fund Shares issued to
      Shareholders in payment of            |  |                   |  |                   |  |                   |  |              |  |   |  |             
|distributions
      declared                                                         |  |                   |  | 9,236,397         |  |                   |  | 5,415,563    |  |   |  | 348,050     
|Net asset value of Fund Shares
      redeemed                                        |  |                   |  | (52,805,361)      |  |                   |  | (47,331,125) |  |   |  | (33,374,471)
|                                                                                    
|Net increase (decrease) in net assets from Fund Share
      transactions             |  | $                 |  | (43,568,964)      |  | $                 |  | (41,915,562) |  | $ |  | 61,695,632  
|                                                                                    
|Distributions                                                                       |  |                   |  |                   |  |                   |  |              |  |   |  |             
|Distributions to Shareholders                                                        |  | $                 |  | (21,417,328)      |  | $                 |  | (13,115,253) |  | $ |  | (808,014)   
|                                                                                    
|Total distributions                                                                  |  | $                 |  | (21,417,328)      |  | $                 |  | (13,115,253) |  | $ |  | (808,014)   
|                                                                                    
|                                                                                    
|                                                                                    
|Net increase in net assets                                                           |  | $                 |  | 58,782,975        |  | $                 |  | 61,772,667   |  | $ |  | 390,453,103 
|                                                                                    
|                                                                                    
|                                                                                    
|Net Assets                                                                           |  |                   |  |                   |  |                   |  |              |  |   |  |             
|                                                                                    
|At beginning of year                                                                 |  | $1,694,227,425    |  | $1,632,454,758    |  | $1,242,001,655   
|                                                                                    
|At end of year                                                                       |  | $ 1,753,010,400   |  | $ 1,694,227,425   |  | $ 1,632,454,758  
|                                                                                    



|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
|--------------------------------------------------------------------------------------------------

42



|Belrose Capital Fund LLCCONSOLIDATED FINANCIAL
      STATEMENTSCONTDConsolidated Statements of Cash Flows
|----------------------------------------------------------------------------------------------------------

|                                                                                                                             |  |                   |  |                   |  |                   |  | Year Ended    |  |               |  |             
|---------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------------- |  | ----------------- |  | ------------- |  | ------------- |  | ------------
|                                                                                                                             |  |                  
|Increase (Decrease) in Cash                                                                                                  |  | December 31, 2005 |  | December 31, 2004 |  | December 31, 2003
|                                                                                                                            
|Cash Flows From (For) Operating Activities                                                                                  |  |                   |  |                   |  |                   |  |               |  |               |  |             
|Net increase in net assets from operations                                                                                   |  | $                 |  | 123,769,267       |  | $                 |  | 116,803,482   |  | $             |  | 329,565,485 
|Adjustments to reconcile net increase in net assets from operations
      to net cash flows                                  |  |                   |  |                   |  |                   |  |               |  |               |  |             
|for operating activities                                                                                                    |  |                   |  |                   |  |                   |  |               |  |               |  |             
|Net investment income allocated from Belvedere
      Company                                                                 |  |                   |  | (18,957,867)      |  |                   |  | (17,098,621)  |  |               |  | (12,933,752)
|(Increase) decrease in escrow deposits                                                                                       |  |                   |  | (27,604,169)      |  |                   |  | 196,902       |  |               |  | 802,927     
|(Increase) decrease in distributions and
      interest receivable                                                           |  |                   |  | (285,107)         |  |                   |  | 400,617       |  |               |  | 39,093      
|Increase in interest receivable for open swap
      agreements                                                               |  |                   |  | (68,131)          |  |                   |  |              |  |               |  |            
|(Increase) decrease in other assets                                                                                          |  |                   |  | 2,869,069         |  |                   |  | (4,481,027)   |  |               |  | (176,904)   
|Decrease in interest payable for open swap
      agreements                                                                  |  |                   |  | (46,549)          |  |                   |  | (32,731)      |  |               |  | (50,603)    
|Increase in payable to affiliate for investment
      advisory and administrative fees                                       |  |                   |  | 365,900           |  |                   |  |              |  |               |  |            
|Increase in payable to affiliate for
      distribution and servicing fees                                                   |  |                   |  | 572,971           |  |                   |  |              |  |               |  |            
|Increase (decrease) in security deposits,
      accrued interest and accrued other expenses and liabilities                  |  |                   |  | (1,007,848)       |  |                   |  | 5,182,819     |  |               |  | (858,833)   
|Increase (decrease) in accrued property
      taxes                                                                          |  |                   |  | 1,267,749         |  |                   |  | 367,112       |  |               |  | (615,937)   
|Purchases of Partnership Preference Units                                                                                    |  |                   |  | (138,329,380)     |  |                   |  | (86,271,304)  |  |               |  | (8,033,600) 
|Proceeds from sales of Partnership Preference
      Units                                                                    |  |                   |  | 15,217,520        |  |                   |  | 80,429,389    |  |               |  |            
|Proceeds from sale of common stock                                                                                           |  |                   |  |                  |  |                   |  |              |  |               |  | 10,140,535  
|Payments for investments in other real
      estate                                                                          |  |                   |  | (55,009,682)      |  |                   |  | (162,599,200) |  |               |  |            
|Proceeds from sale of investment in other real
      estate                                                                  |  |                   |  | 102,280,347       |  |                   |  | 32,404,340    |  |               |  |            
|Decrease in cash due to sale of majority
      interest in controlled subsidiary                                             |  |                   |  | (2,824,892)       |  |                   |  | (2,216,606)   |  |               |  |            
|Improvements to rental property                                                                                              |  |                   |  | (5,368,536)       |  |                   |  | (5,938,197)   |  |               |  | (4,679,844) 
|(Increase) decrease in short-term
      investments                                                                          |  |                   |  | (4,076,347)       |  |                   |  | 6,893,214     |  |               |  | (7,614,214) 
|Net decrease in investment in Belvedere
      Company                                                                        |  |                   |  |                  |  |                   |  |              |  |               |  | 1,651,419   
|Interest incurred on interest rate swap
      agreements, net of payments received                                           |  |                   |  | (1,383,303)       |  |                   |  | (4,297,449)   |  |               |  | (4,477,357) 
|Proceeds from (payments for) termination of
      interest rate swap agreements                                              |  |                   |  |                  |  |                   |  | 60,454        |  |               |  | (12,175,577)
|Minority interests in net income of controlled
      subsidiaries                                                            |  |                   |  | 3,126,995         |  |                   |  | 1,872,405     |  |               |  | 1,943,578   
|Net realized gain from investment transactions,
      securities sold short, foreign currency transactions and               |  |                   |  |                   |  |                   |  |               |  |               |  |             
|interest rate swap
      agreements                                                                                          |  |                   |  | (69,272,363)      |  |                   |  | (37,095,580)  |  |               |  | (2,449,130) 
|Net change in unrealized (appreciation)
      depreciation of investments, securities sold short, foreign currency
      and |  |                   |  |                   |  |                   |  |               |  |               |  |             
|interest rate swap
      agreements                                                                                          |  |                   |  | (38,218,085)      |  |                   |  | (62,187,846)  |  | (311,836,713)
|                                                                                                                            
|Net cash flows for operating activities                                                                                      |  | $(112,982,441)    |  | $(137,607,827)    |  | $                 |  | (21,759,427) 
|                                                                                                                            
|Cash Flows From (For) Financing Activities                                                                                  |  |                   |  |                   |  |                   |  |               |  |               |  |             
|Proceeds from Credit Facility                                                                                                |  | $ 173,500,000     |  | $ 228,000,000     |  | $                 |  | 28,000,000   
|Repayments of Credit Facility                                                                                                |  |                   |  | (16,000,000)      |  |                   |  | (175,300,000) |  |               |  |            
|Proceeds from mortgage                                                                                                       |  |                   |  |                  |  |                   |  | 123,000,000   |  |               |  |            
|Payments on behalf of investors (selling
      commissions)                                                                  |  |                   |  |                  |  |                   |  |              |  |               |  | (325,083)   
|Notes payable to minority shareholder                                                                                        |  |                   |  | 21,538,024        |  |                   |  |              |  |               |  |            
|Repayment of note payable to minority
      shareholder                                                                      |  |                   |  | (750,000)         |  |                   |  |              |  |               |  |            
|Issuance of real estate joint venture preferred
      shares                                                                 |  |                   |  | 240,000           |  |                   |  |              |  |               |  |            
|Payments for Fund Shares redeemed                                                                                            |  |                   |  | (5,766,830)       |  |                   |  | (6,693,147)   |  |               |  | (6,204,599) 
|Distributions paid to minority
      shareholders                                                                            |  |                   |  | (1,674,805)       |  |                   |  | (286,455)     |  |               |  |            
|Distributions paid to Shareholders                                                                                           |  |                   |  | (12,180,931)      |  |                   |  | (7,699,690)   |  |               |  | (459,964)   
|Return of capital distributed to minority
      shareholders                                                                 |  |                   |  |                  |  |                   |  | (24,600,000)  |  |               |  |            
|Capital contributed to controlled
      subsidiaries                                                                         |  |                   |  |                  |  |                   |  |              |  |               |  | 70,837      
|                                                                                                                            
|Net cash flows from financing activities                                                                                     |  | $ 158,905,458     |  | $ 136,420,708     |  | $                 |  | 21,081,191   
|                                                                                                                            
|Net increase (decrease) in cash                                                                                              |  | $                 |  | 45,923,017        |  | $                 |  | (1,187,119)   |  | $             |  | (678,236)   
|                                                                                                                            
|Cash at beginning of year                                                                                                    |  | $                 |  | 5,348,786         |  | $                 |  | 6,535,905     |  | $             |  | 7,214,141   
|                                                                                                                            
|Cash at end of year                                                                                                          |  | $                 |  | 51,271,803        |  | $                 |  | 5,348,786     |  | $             |  | 6,535,905   
|                                                                                                                            
|                                                                                                                            
|Supplemental Disclosure and Non-cash Investing
      and Financing Activities                                                |  |                   |  |                   |  |                   |  |              
|                                                                                                                            
|Securities contributed by Shareholders, invested in Belvedere
      Company                                                  |  | $                 |  |                  |  | $                 |  |              |  | $             |  | 95,047,136  
|Interest paid on loan  Credit Facility                                                                                      |  | $                 |  | 10,253,831        |  | $                 |  | 4,329,878     |  | $             |  | 2,852,392   
|Interest paid on mortgages                                                                                                   |  | $                 |  | 22,587,877        |  | $                 |  | 25,521,341    |  | $             |  | 25,904,530  
|Interest paid on swap agreements, net of interest received                                                                   |  | $                 |  | 1,497,983         |  | $                 |  | 4,330,180     |  | $             |  | 4,527,960   
|Market value of securities distributed in payment of
      redemptions                                                       |  | $                 |  | 50,997,295        |  | $                 |  | 36,679,214    |  | $             |  | 27,169,872  
|Market value of common stock received from Belvedere Company                                                                 |  | $                 |  |                  |  | $                 |  |              |  | $             |  | 10,155,477  
|Market value of real property and other assets, net of current
      liabilities, assumed in conjunction with                |  |                   |  |                   |  |                   |  |               |  |               |  |             
|the acquisition of other real estate                                                                                         |  | $                 |  |                  |  | $ 203,196,919     |  | $             |  |             
|Market value of minority interests assumed in conjunction with the
      acquisition of other real estate                    |  | $                 |  |                  |  | $                 |  | 40,639,384    |  | $             |  |            
|Market value of real property and other assets, net of current
      liabilities, disposed of in conjunction with            |  |                   |  |                   |  |                   |  |               |  |               |  |             
|the sale of other real estate                                                                                                |  | $ 187,024,309     |  | $ 143,874,457     |  | $                 |  |             
|Mortgage disposed of in conjunction with the sale of other real
      estate                                                 |  | $                 |  | 121,000,000       |  | $                 |  | 107,369,483   |  | $             |  |            
|Market value of minority interests disposed of in conjunction with
      the sale of other real estate                       |  | $                 |  | 14,906,651        |  | $                 |  | 7,073,281     |  | $             |  |            
|Non-cash change in working capital of real estate investments                                                                |  | $                 |  | 816,614           |  | $                 |  |              |  | $             |  |            
|                                                                                                                            



|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
|----------------------------------------------------------------------------------------------

43



|Belrose Capital Fund LLCCONSOLIDATED FINANCIAL
      STATEMENTSCONTDFinancial
Highlights
|-----------------------------------------------------------------------------------------

|                                                                                             |  |                   |  |                   |  |                   |  | Year Ended |  |   |  |        
|-------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------------- |  | ----------------- |  | ---------- |  | - |  | -------
|                                                                                             |  |                  
|                                                                                             |  | December 31, 2005 |  | December 31, 2004 |  | December 31, 2003
|                                                                                            
|Net asset value  Beginning of year                                                          |  | $                 |  | 102.030           |  | $                 |  | 95.840     |  | $ |  | 76.860 
|                                                                                            
|Income (loss) from operations                                                                |  |                   |  |                   |  |                   |  |            |  |   |  |        
|                                                                                            
|Net investment income(1)                                                                     |  | $                 |  | 0.989             |  | $                 |  | 1.036      |  | $ |  | 0.897  
|Net realized and unrealized gain                                                             |  |                   |  | 6.571             |  |                   |  | 5.924      |  |   |  | 18.133 
|                                                                                            
|Total income from operations                                                                 |  | $                 |  | 7.560             |  | $                 |  | 6.960      |  | $ |  | 19.030 
|                                                                                            
|                                                                                            
|Distributions                                                                                |  |                   |  |                   |  |                   |  |            |  |   |  |        
|                                                                                            
|Distributions to Shareholders                                                                |  | $                 |  | (1.290)           |  | $                 |  | (0.770)    |  | $ |  | (0.050)
|                                                                                            
|Total distributions                                                                          |  | $                 |  | (1.290)           |  | $                 |  | (0.770)    |  | $ |  | (0.050)
|                                                                                            
|Net asset value  End of year                                                                |  | $                 |  | 108.300           |  | $                 |  | 102.030    |  | $ |  | 95.840 
|                                                                                            
|Total Return(2)                                                                              |  |                   |  | 7.54%             |  |                   |  | 7.32%      |  |   |  | 24.77% 
|                                                                                            
|Ratios as a percentage of average net assets(3):                                             |  |                   |  |                   |  |                   |  |            |  |   |  |        
|                                                                                            
|Expenses of Consolidated Real Property Subsidiaries                                          |  |                   |  |                   |  |                   |  |            |  |   |  |        
|Interest and other borrowing costs(4)                                                        |  |                   |  | 1.00%             |  |                   |  | 1.29%      |  |   |  | 1.51%  
|Operating expenses(4)                                                                        |  |                   |  | 1.11%             |  |                   |  | 1.57%      |  |   |  | 1.65%  
|Belrose Capital Fund LLC Expenses                                                            |  |                   |  |                   |  |                   |  |            |  |   |  |        
|Interest and other borrowing costs(5)(6)                                                     |  |                   |  | 0.62%             |  |                   |  | 0.27%      |  |   |  | 0.20%  
|Investment advisory and administrative fees,
      distribution and servicing fees and other |  |                   |  |                   |  |                   |  |            |  |   |  |        
|Fund operating
      expenses(5)(7)                                                          |  |                   |  | 1.13%             |  |                   |  | 1.11%      |  |   |  | 1.12%  
|                                                                                             |  |                  
|Total expenses                                                                               |  |                   |  | 3.86%             |  |                   |  | 4.24%      |  |   |  | 4.48%  
|Net investment income                                                                        |  |                   |  | 0.97%             |  |                   |  | 1.07%      |  |   |  | 1.08%  
|                                                                                            
|Ratios as a percentage of average gross assets(3)(8):                                        |  |                   |  |                   |  |                   |  |            |  |   |  |        
|                                                                                            
|Expenses of Consolidated Real Property Subsidiaries                                          |  |                   |  |                   |  |                   |  |            |  |   |  |        
|Interest and other borrowing costs(4)                                                        |  |                   |  | 0.75%             |  |                   |  | 0.98%      |  |   |  | 1.14%  
|Operating expenses(4)                                                                        |  |                   |  | 0.84%             |  |                   |  | 1.18%      |  |   |  | 1.25%  
|Belrose Capital Fund LLC Expenses                                                            |  |                   |  |                   |  |                   |  |            |  |   |  |        
|Interest and other borrowing costs(5)(6)                                                     |  |                   |  | 0.46%             |  |                   |  | 0.20%      |  |   |  | 0.15%  
|Investment advisory and administrative fees,
      distribution and servicing fees and other |  |                   |  |                   |  |                   |  |            |  |   |  |        
|Fund operating
      expenses(5)(7)                                                          |  |                   |  | 0.85%             |  |                   |  | 0.84%      |  |   |  | 0.84%  
|                                                                                             |  |                  
|Total expenses                                                                               |  |                   |  | 2.90%             |  |                   |  | 3.20%      |  |   |  | 3.38%  
|Net investment income                                                                        |  |                   |  | 0.73%             |  |                   |  | 0.80%      |  |   |  | 0.81%  
|                                                                                            
|Supplemental Data                                                                            |  |                   |  |                   |  |                   |  |            |  |   |  |        
|                                                                                            
|Net assets, end of year (000s omitted)                                                      |  | $1,753,010        |  | $1,694,227        |  | $1,632,455       
|Portfolio turnover of Tax-Managed Growth Portfolio (the
      Portfolio)                     |  |                   |  | 0%(9)             |  |                   |  | 3%         |  |   |  | 15%    
|                                                                                            

|(1) | Calculated using average shares outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Returns are calculated by determining the percentage
      change in net asset value with all distributions reinvested.                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(3) | For the purpose of calculating ratios, the income and
      expenses of Belrose Realty Corporations (Belrose Realty) controlled
      subsidiaries are reduced by the proportionate interest therein of
      investors other than Belrose Realty.                                                                                                                                                                                                                                                            
|   
|(4) | Includes Belrose Realtys proportional share of expenses
      incurred by its controlled subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(5) | Includes the expenses of Belrose Capital Fund LLC
      (Belrose Capital) and Belrose Realty. Does not include expenses of Belrose
      Realtys controlled subsidiaries.                                                                                                                                                                                                                                                                                                                                     
|   
|(6) | Ratios do not include interest incurred in connection
      with interest rate swap agreements. Had such amounts been included, ratios
      would be higher.                                                                                                                                                                                                                                                                                                                                                  
|   
|(7) | Includes Belrose Capitals share of Belvedere Capital
      Fund Company LLCs (Belvedere Company) allocated expenses, including those
      expenses allocated from the Portfolio.                                                                                                                                                                                                                                                                                                                            
|   
|(8) | Average gross assets is defined as the average daily
      amount of all assets of Belrose Capital (including Belrose Capitals
      interest in Belvedere Company and Belrose Capitals ratable share of the
      assets of its directly and indirectly controlled subsidiaries), without
      reduction by any liabilities. For this purpose, the assets of Belrose
      Realtys controlled subsidiaries are reduced by the proportionate interest
      therein of investors other than Belrose Realty.
|   
|(9) | Amounts to less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   



|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
      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
|-------------------------------------------------------------------------------------------------------------



|1Organization
|-------------

AInvestment 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) and interests in real
properties held through real estate joint ventures that are controlled
subsidiaries of Belrose Realty.

BSubsidiaries Belrose Realty invests directly and indirectly in
Partnership Preference Units and indirectly in real property through controlled
subsidiaries, Katahdin Property Trust LLC (Katahdin), Deerfield Property Trust
(Deerfield), Bel Communities Property Trust (Bel Communities) and Bel Apartment
Properties Trust (Bel Apartment) (for the period during which Belrose Realty
maintained an interest in Bel Apartment and Bel Communities). 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 10% investment in
Belvorn Holdings LLC at December 31, 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 outstanding at December 31, 2005 and 2004. 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 equal to $8 per share. The interest in
preferred stock is recorded as minority interest on the Consolidated Statements
of Assets and Liabilities.

Katahdin  Katahdin, a controlled subsidiary of
Belrose Realty since May 2002, owns six multifamily residential properties
consisting of 2,384 units (collectively, the Katahdin Properties) located in
five states (Colorado, Florida, North Carolina, Texas and Washington). The
average occupancy rate is approximately 96% at December 31, 2005. Belrose Realty
owns 100% of the Class A units of Katahdin and a minority shareholder (the
Katahdin Minority Shareholder) owns 100% of the Class B units. The units of
Katahdin entitled to board of managers representation are currently owned 75%
by Belrose Realty and 25% by the Katahdin Minority Shareholder. The Class B
equity interest is recorded as minority interest on the Consolidated Statements
of Assets and Liabilities. The primary distinctions between the two classes of
units are the distribution priority and voting rights. Class A units have
priority in distributions and greater voting rights than Class B units. Pursuant
to a buy/sell agreement entered into at the time Katahdin was established,
either Belrose Realty or the Katahdin Minority Shareholder can give notice after
November 23, 2010 either to buy the others equity interest in Katahdin or to
sell its own equity interest in Katahdin.

Deerfield  Deerfield, a controlled subsidiary of
Belrose Realty since June 2004, owns seventeen industrial distribution
properties (collectively, the Deerfield Properties) located in six states
(Florida, Georgia, New Jersey, Ohio, Pennsylvania and South Carolina). The
average occupancy rate is approximately 90% at December 31, 2005. Belrose Realty
owns 100% of the Class A shares of Deerfield, representing 80% of the voting
interests in Deerfield and a minority shareholder (the Deerfield Minority
Shareholder) owns 100% of the Class B shares, representing 20% of the voting
interests in Deerfield. The Class B equity interest is recorded as minority
interest on the Consolidated Statements of Assets and Liabilities. The primary
distinctions between the two classes of shares are the distribution priority and
voting rights. Class A shares have priority in distributions and greater voting
rights than Class B shares. From and after August 4, 2013, either Belrose Realty
or the Deerfield Minority Shareholder may cause a liquidation of Deerfield and,
if Belrose Realty makes that election, the Deerfield

45



|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
|------------------------------------------------------------------------------------------------------------------------------

Minority Shareholder has the right either to
purchase the shares of Deerfield owned by Belrose Realty or to acquire the
assets of Deerfield, in either case at a price determined through an appraisal
of the assets of Deerfield.

Bel Communities  Bel Communities, formerly a
controlled subsidiary of Belrose Realty, was acquired in October 2002. Belrose
Realty subsequently sold its interest in Bel Communities in October 2005. Bel
Communities owns twelve multifamily residential properties consisting of 2,624
units (collectively, the Bel Communities Properties) located in eleven states.
Belrose Realty owned Class A shares of Bel Communities, representing 75% of the
voting interests in Bel Communities, and a minority shareholder (the Bel
Communities Minority Shareholder) owned Class B shares, representing 25% of the
voting interests in Bel Communities. Belrose Realty did not own an interest in
Bel Communities at December 31, 2005.

Bel Apartment  Bel Apartment, formerly a controlled
subsidiary of Belrose Realty, was acquired in March 2002. Belrose Realty
subsequently sold its interest in Bel Apartment in November 2004. Bel Apartment
owns ten multifamily residential properties consisting of 2,530 units
(collectively, the Bel Apartment Properties) located in seven states. Belrose
Realty owned Class A shares of Bel Apartment, representing 75% of the voting
interests in Bel Apartment, and a minority shareholder (the Bel Apartment
Minority Shareholder) owned Class B shares, representing 25% of the voting
interests in Bel Apartment. Belrose Realty did not own an interest in Bel
Apartment at December 31, 2004 or anytime thereafter.

2Significant Accounting
Policies

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

APrinciples of
Consolidation The consolidated financial statements
include the accounts of Belrose Capital and its controlled subsidiaries for the
periods during which Belrose Capital was invested in such controlled
subsidiaries. Belrose Capital and Belrose Realty consolidate all investments in
affiliates that are controlled by ownership of a majority voting
interest.

The accompanying consolidated financial statements
include the accounts of Belrose Capital, Belrose Realty, Katahdin, Deerfield,
Bel Communities and Bel Apartment (for the period during which Belrose Realty
maintained an interest in Bel Communities and Bel Apartment) (collectively, the
Fund).

All material intercompany accounts and transactions
have been eliminated.

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

CCash The Fund considers cash in banks that can be liquidated without prior
notice or penalty to be cash. Approximately $500,000 and $1,600,000 of cash is
restricted for use and is held by Deerfield. Such amounts are classified as
other assets for the years ended December 31, 2005 and 2004,
respectively.

DInvestment Costs The Funds investment assets were principally acquired
through contributions of common stock by Shareholders in exchange for Shares of
the Fund, through purchases of Partnership Preference Units and other real
estate investments, and through contributions of real estate investments by the
respective Minority Shareholder in exchange for cash and a minority interest in
controlled subsidiaries. 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 and other real estate
investments purchased by the Fund is the purchase cost. The initial financial
reporting cost basis of the Funds investments in real estate contributed to the
Fund is the estimated fair value on contribution date. The initial tax basis of
real estate investments contributed to the Fund is the contributors tax basis
at the time of contribution or the fair value on the date of contribution,
depending on the taxability of the contribution.

EInvestment and Other
Valuations The Funds investments may consist of
shares of Belvedere Company, Partnership Preference Units, investments in
management contracts, real property investments and short-term debt securities.
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

46



|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
|------------------------------------------------------------------------------------------------------------------------------

Financial Statements, which are included elsewhere
in this report. Additionally, Belrose Capital has entered into interest rate
swap agreements (Note 7). 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 management contracts and
joint ventures) 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 and Research (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. With respect to
investments in management contracts, Boston Management determines the estimated
fair value based upon discounting expected cash flows over the terms of the
contracts. Real estate investments, other than Partnership Preference Units, are
primarily valued based upon independent valuations (i.e. appraisals) that
represent the amount at which Boston Management believes the investments could
be sold in a current transaction between willing parties and assume an orderly
disposition, that is, other than in a forced or liquidation sale. Detailed real
property valuations are performed at least annually and reviewed periodically.
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 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 evaluations of similar properties, and the results of
operations and distributions.

The fair value of Belrose Realtys equity interest
in each real estate joint venture is estimated using a financial model that
considers (i) the terms of the joint venture agreements relating to the
allocation of distributable cash flow, (ii) theexpected
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.
If detailed independent real property valuations have not been performed on
every property within a joint venture (such as when a joint venture recently
acquired the properties) Boston Management allocates equity interest in the real
estate joint venture based on the contractual ownership interest of Belrose
Realty and the respective Minority Shareholder. Interim valuations reflect
results of operations and distributions, and may be adjusted if there has been a
significant change in economic circumstances or recent evaluations of similar
properties.

The valuation of real estate investments includes
many assumptions, including, but not limited to, a current transaction between
willing parties and an orderly disposition of assets. If the assumptions used to
value a real estate investment change, it may materially impact the estimated
fair value of that investment.

If a rental 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
mortgage notes payable at December 31, 2005 and 2004.

Interest rate swap agreements are valued by Boston
Management, as investment adviser of Belrose Capital, based upon dealer and
counterparty quotes and pricing models which take into consideration the market
trading prices of interest rate swap agreements that have similar terms to the
interest rate swap agreements Belrose Capital has entered.

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

FInterest Rate Swaps Belrose Capital has entered into interest rate swap
agreements with respect to its borrowings and real estate investments. 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 credit loss in the event of
non-performance by the swap

47

Belrose Capital Fund LLC

N 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

counterparty. Risks may arise from the unanticipated
movements in interest rates.

GRental Operations The apartment units held by Katahdin, Bel Communities
and Bel Apartment (for the period during which Belrose Realty maintained an
interest in Bel Communities and Bel Apartment) are leased to residents generally
for a term averaging approximately one year, renewable upon consent of both
parties on a year-to-year or month-to-month basis. The properties held by
Deerfield are leased under fixed long-term operating leases.

At December 31, 2005, the minimum lease payments
from leases with lease periods greater than one year are as follows:

|Year Ending December 31, |  | Amount     
|------------------------ |  | -----------
|                        
|2006                     |  | $          
|2007                     |  |            
|2008                     |  |            
|2009                     |  |            
|2010                     |  |            
|Thereafter               |  |            
|                        
|                         |  | $40,046,924
|                        

The mortgage escrow accounts consist of deposits for
real estate taxes and insurance as required under the mortgage agreements. The
mortgage escrow accounts also include amounts deposited by Katahdin as
collateral for its mortgage loan (Note 8) until the lender accepts the
multifamily residential property purchased on December 15, 2005 as replacement
collateral for the property sold on December 28, 2005 (Note 5). The mortgage
escrow accounts are held and controlled by the mortgage lenders (Note 8). Upon
lender approval the amounts will be released from escrow. The lender released
such amounts from escrow in March 2006.

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.

HIncome Dividend income and distributions from Partnership Preference Units are
recorded on the ex-dividend date and interest income is recorded on the accrual
basis. Rental income is recorded on the accrual basis based upon the terms of
the lease agreements.

Belvedere 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 accruedexpenses
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, plus all income earned on the
Funds direct and indirect investments (including Partnership Preference Units
and real property), less all actual and accrued expenses of the Fund determined
in accordance with GAAP.

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

JIncome Taxes Belrose Capital, Belvedere Company and the Portfolio
are treated as partnerships for federal income tax purposes. As a result,
Belrose Capital, Belvedere Company and the Portfolio do not incur federal income
tax liability, and the shareholders and partners thereof are individually
responsible for taxes on items of partnership income, gain, loss and deduction.
The policy of Belrose Realty and its controlled subsidiaries is to comply with
the Internal Revenue Code of 1986, as amended, applicable to REITs. Belrose
Realty, Katahdin, Deerfield, Bel Communities and Bel Apartment (for the period
during which Belrose Realty maintained an interest in Bel Communities and Bel
Apartment) will generally not be subject to federal income tax to the extent
that they distribute their earnings to their stockholders each year and maintain
their qualification as a REIT.

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 in connection with interest rate swap agreements and the character of
distributions received from REITs and Partnership Preference Units.

KOther Investment transactions are accounted for on a trade date
basis.

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

48



|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
|------------------------------------------------------------------------------------------------------------------------------

MIndemnifications 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 controlled
subsidiary may be indemnified against certain liabilities and expenses arising
out of their duties to the Fund. Shareholders also may be indemnified against
personal liability for the liabilities of Belrose Capital. Additionally, in the
normal course of business, the Fund enters into agreements with service
providers, lenders and counterparties that may contain indemnification clauses.
The Funds maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Fund that have not yet
occurred.

3Distributions to
Shareholders

Belrose Capital intends to distribute at the end of
each year, or shortly thereafter, all of its net investment income for the year,
if any, and approximately 18% of its net realized capital gains for such year
(reduced during the year ended December 31, 2003 from 22% to reflect the
reduction in federal long-term capital gains taxes), 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, 2005, 2004 and
2003.

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

In addition, Belrose Realty, Katahdin and Deerfield
intend to distribute substantially all of their taxable income earned by the
respective entities during the year.

Distributions made to Shareholders electing the
Funds Estate Freeze feature (Note 4) will be paid, first, to holders of
Preferred Shares to the extent of the unpaid cumulative annual priority return
of the Preferred Shares and, second, to the holders of the associated Common
Shares. Distributions made in respect of any realized precontribution gains and
associated supplemental distributions will be apportioned between Preferred
Shares and Common Shares consistent with the allocation to the Preferred Shares
and Common Shares of such realized precontribution gains. It is expected that
substantially all Belrose Capital distributions in respect of Estate Freeze
Shares will be paid to holders of Preferred Shares rather than holders of Common
Shares. Distributions on Estate Freeze Shares may be reinvested in Belrose
Capital to purchase undivided Fund Shares at the Funds net asset value per
share on the date of reinvestment.



|4Shareholder
      Transactions
|-------------------------------

Belrose Capital may issue an unlimited number of
full and fractional Fund Shares. Transactions in Fund Shares, including
contributions of securities in exchange for Shares of Belrose Capital, were as
follows:

|                                   |  |              |  | Year Ended   |  |             
|---------------------------------- |  | ------------ |  | ------------ |  | ------------
|                                   |  |             
|                                   |  | December 31, |  | December 31, |  | December 31,
|                                   |  | 2005         |  | 2004         |  | 2003        
|                                  
|Issued at Belrose Capital closings |  |             |  |             |  | 1,283,497   
|Issued to Shareholders electing to |  |              |  |              |  |             
|receive payment of distributions   |  |              |  |              |  |             
|in Fund Shares                     |  | 94,548       |  | 56,826       |  | 4,413       
|Redemptions                        |  | (512,297)    |  | (485,060)    |  | (415,385)   
|                                  
|Net increase (decrease)            |  | (417,749)    |  | (428,234)    |  | 872,525     
|                                  

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. For the years ended December 31, 2005, 2004 and 2003, EV
Distributors received $128,646, $285,453, and $139,527 in redemption fees,
respectively.

In connection with the offering of Fund Shares, for
the year ended December 31, 2003, EV Distributors, the Placement Agent, received
$325,083 in selling commissions paid by Belrose Capital on behalf of
Shareholders. EV

49



|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
|------------------------------------------------------------------------------------------------------------------------------

Distributors, in turn paid this amount to the
applicable subagent on behalf of Shareholders investing in Belrose Capital
through such subagent. In addition, for the year ended December 31, 2003, EV
Distributors made payments to subagents from its own resources totaling $950,471
approximately equal to 1.0% of the value of investments in Belrose Capital made
through subagents. There were no offerings of Fund Shares during the years ended
December 31, 2005 and 2004.

Shareholders in Belrose Capital are entitled to
restructure their Fund Share interests under what is termed an Estate Freeze
Election. Under this election, Fund Shares are divided into Preferred Shares and
Common Shares. Preferred Shares have a preferential right over the corresponding
Common Shares equal to (i) 95% of the original capital contribution made in
respect of the undivided Shares from which the Preferred Shares and Common
Shares were derived, plus (ii) an annuity priority return equal to 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 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 subdivide Fund Shares under this election
sacrifice certain rights and privileges that they would otherwise have with
respect to the Fund Shares so divided, including redemption rights and voting
and consent rights. Upon the twentieth anniversary of the issuance of the
associated undivided Fund Shares to the original holders thereof, Preferred and
Common Shares will automatically convert into full and fractional undivided Fund
Shares.

The allocation of Belrose Capitals net asset value
per Share of $108.30 and $102.03 as of December 31, 2005 and 2004, respectively,
between Preferred and Common Shares that have been restructured is as
follows:

|                     |  |                   |  | Per Share Value
      At |  |          
|-------------------- |  | ----------------- |  | ------------------------ |  | ---------
|                     |  |                  
|                     |  | December 31, 2005 |  | December 31, 2004       
|                     |  |                  
|                     |  | Preferred         |  | Common                   |  | Preferred
|Date of Contribution |  | Shares            |  | Shares                   |  | Shares   
|                    
|February 19, 2003    |  | $83.61            |  | $24.69                   |  | $79.48   
|                    

5Investment
Transactions

The following table summarizes the Funds investment
transactions, other than short-term obligations, for the years ended December
31, 2005, 2004 and 2003:

|                              |  |              |  |              |  |              |  | Year Ended |  |             |  |  
|----------------------------- |  | ------------ |  | ------------ |  | ------------ |  | ---------- |  | ----------- |  | -
|                              |  |             
|                              |  | December 31, |  | December 31, |  | December 31,
|Investment Transactions       |  | 2005         |  | 2004         |  | 2003        
|                             
|Increases in investment in    |  |              |  |              |  |              |  |            |  |             |  |  
|Belvedere Company             |  | $            |  |             |  | $            |  |           |  | $95,047,136
|Decreases in investment in    |  |              |  |              |  |              |  |            |  |             |  |  
|Belvedere Company(1)          |  | $            |  | 50,997,295   |  | $            |  | 36,679,214 |  | $38,976,768
|Sale of common stock(1)       |  | $            |  |             |  | $            |  |           |  | $10,140,535
|Acquisitions of other real    |  |              |  |              |  |              |  |            |  |             |  |  
|estate(2)                     |  | $            |  | 55,009,682   |  | $162,599,200 |  | $          |  |           
|Sales of other real estate(3) |  | $102,280,347 |  | $            |  | 32,404,340   |  | $          |  |           
|Purchases of Partnership      |  |              |  |              |  |              |  |            |  |             |  |  
|Preference Units(4)           |  | $138,329,380 |  | $            |  | 86,271,304   |  | $          |  | 8,033,600  
|Sales of Partnership          |  |              |  |              |  |              |  |            |  |             |  |  
|Preference Units(5)           |  | $            |  | 15,217,520   |  | $            |  | 80,429,389 |  | $           |  | 
|                             

|(1) | Included in decreases in investment in
      Belvedere Company for the year ended December 31, 2003 is the receipt of
      common stock through a redemption in-kind of $10,155,477.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Belrose Capital subsequently sold the
      common stock during the year ended December 31, 2003 recognizing a loss of
      $14,942 on the transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(2) | On December 15, 2005, Katahdin purchased a
      multifamily residential property from a third party for
      $55,009,682.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    | In June and August 2004, Belrose Realty
      purchased indirect investments in real property through a controlled
      subsidiary, Deerfield, for $9,339,576 and $153,259,624, respectively (Note
      1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(3) | On December 28, 2005, Katahdin sold a
      multifamily residential property to a third party for $42,276,160 and for
      which Belrose Realty recognized a gain of $8,733,050.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    | On October 14, 2005, Belrose Realty sold
      its majority interest in Bel Communities 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.                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | On April 6, 2005, Deerfield sold an
      industrial distribution property to a third party for $3,105,985 and for
      which Belrose Realty recognized a loss of $152,242. On September 30, 2005,
      Deerfield received compensation for its interest in the Contracts (as
      defined below) from an affiliate of the Deerfield Minority Shareholder for
      $2,104,303 and for which Belrose Realty recognized a gain of $834,031. In
      Novemeber 2004, Belrose Realty sold its majority interest in Bel Apartment
      to the real estate investment affiliate of another investment fund advised
      by Boston Management for which a loss of $1,548,753 was recognized.
|   
|(4) | Purchases of Partnership Preference Units
      for the years ended December 31, 2005, 2004 and 2003 represent purchases
      of Partnership Preference Units from real estate investment affiliates of
      other investment funds advised by Boston Management.                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(5) | Sales of Partnership Preference Units for
      the years ended December 31, 2005 and 2004 include Partnership Preference
      Units sold to real estate investment affiliates of other investment funds
      advised by Boston Management for which gains of $323,360 and $1,946,870
      were recognized, respectively.                                                                                                                                                                                                                                                                                                                                                                
|   

50



|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
|------------------------------------------------------------------------------------------------------------------------------

A portion of Belrose Realtys investment in
Deerfield represents an interest in certain property management contracts (the
Contracts) pertaining to properties of which the Fund does not own a direct or
indirect interest. Other interested parties to the Contracts include an
affiliate of the Deerfield Minority Shareholder. The Contracts provide for
Deerfield to receive cash flows from management fees and certain other fees over
the life of the Contracts in amounts that exceed certain preferred payments to
other interested parties. In September 2005, one of the Contracts was terminated
(as described above). The estimated fair value of Deerfields interest in the
Contract(s) is $232,052 and $1,542,829 as of December 31, 2005 and 2004,
respectively, and is estimated based upon discounting expected cash flows over
the terms of the Contract(s).

6Indirect Investment in the
Portfolio

The following table summarizes the Funds investment
in the Portfolio through Belvedere Company for the years ended December 31,
2005, 2004 and 2003, including allocations of income, expenses and net realized
and unrealized gains (losses) for the years then ended:

|                          |  |                 |  |                 |  |                 |  | Year Ended    |  |                 |  |            
|------------------------- |  | --------------- |  | --------------- |  | --------------- |  | ------------- |  | --------------- |  | -----------
|                          |  |                
|                          |  | December 31,    |  | December 31,    |  | December 31,   
|                          |  | 2005            |  | 2004            |  | 2003           
|                         
|Belvedere Companys       |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|interest in the           |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Portfolio(1)              |  | $13,400,922,141 |  | $12,806,516,230 |  | $11,100,012,615
|The Funds investment in  |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Belvedere Company(2)      |  | $               |  | 1,783,649,094   |  | $               |  | 1,757,804,676 |  | $ 1,640,828,100
|Income allocated to       |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Belvedere Company         |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|from the Portfolio        |  | $               |  | 216,731,361     |  | $               |  | 189,728,234   |  | $               |  | 143,671,130
|Income allocated to the   |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Fund from Belvedere       |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Company                   |  | $               |  | 29,369,898      |  | $               |  | 27,095,222    |  | $               |  | 21,625,926 
|Expenses allocated to     |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Belvedere Company         |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|from the Portfolio        |  | $               |  | 57,207,392      |  | $               |  | 51,953,817    |  | $               |  | 43,085,940 
|Expenses allocated to the |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Fund from Belvedere       |  |                 |  |                 |  |                 |  |               |  |                 |  |            
|Company(3)                |  | $               |  | 10,412,031      |  | $               |  | 9,996,601     |  | $               |  | 8,692,174  

|                                  |  |              |  |              |  |              |  | Year Ended  |  |                 |  |            
|--------------------------------- |  | ------------ |  | ------------ |  | ------------ |  | ----------- |  | --------------- |  | -----------
|                                 
|                                  |  | December 31, |  | December 31, |  | December 31,
|                                  |  | 2005         |  | 2004         |  | 2003        
|                                 
|Net realized gain from            |  |              |  |              |  |              |  |             |  |                 |  |            
|investment transactions,          |  |              |  |              |  |              |  |             |  |                 |  |            
|securities sold short             |  |              |  |              |  |              |  |             |  |                 |  |            
|and foreign currency              |  |              |  |              |  |              |  |             |  |                 |  |            
|transactions allocated            |  |              |  |              |  |              |  |             |  |                 |  |            
|to Belvedere Company              |  |              |  |              |  |              |  |             |  |                 |  |            
|from the Portfolio                |  | $            |  | 341,680,818  |  | $            |  | 276,250,393 |  | $               |  | 128,352,887
|Net realized gain from            |  |              |  |              |  |              |  |             |  |                 |  |            
|investment transactions,          |  |              |  |              |  |              |  |             |  |                 |  |            
|securities sold short             |  |              |  |              |  |              |  |             |  |                 |  |            
|and foreign currency              |  |              |  |              |  |              |  |             |  |                 |  |            
|transactions allocated            |  |              |  |              |  |              |  |             |  |                 |  |            
|to the Fund from                  |  |              |  |              |  |              |  |             |  |                 |  |            
|Belvedere Company                 |  | $            |  | 48,573,761   |  | $            |  | 37,885,739  |  | $               |  | 19,117,006 
|Net change in unrealized          |  |              |  |              |  |              |  |             |  |                 |  |            
|appreciation (depreciation)       |  |              |  |              |  |              |  |             |  |                 |  |            
|of investments, securities        |  |              |  |              |  |              |  |             |  |                 |  |            
|sold short and foreign            |  |              |  |              |  |              |  |             |  |                 |  |            
|currency allocated to             |  |              |  |              |  |              |  |             |  |                 |  |            
|Belvedere Company                 |  |              |  |              |  |              |  |             |  |                 |  |            
|from the Portfolio                |  | $            |  | 100,866,308  |  | $            |  | 691,783,587 |  | $ 1,892,271,872
|Net change in unrealized          |  |              |  |              |  |              |  |             |  |                 |  |            
|appreciation
      (depreciation) |  |              |  |              |  |              |  |             |  |                
|of investments, securities        |  |              |  |              |  |              |  |             |  |                 |  |            
|sold short and foreign            |  |              |  |              |  |              |  |             |  |                 |  |            
|currency allocated to             |  |              |  |              |  |              |  |             |  |                 |  |            
|the Fund from                     |  |              |  |              |  |              |  |             |  |                 |  |            
|Belvedere Company                 |  | $            |  | 9,310,085    |  | $            |  | 98,671,430  |  | $               |  | 288,392,438
|                                 

|(1) | As of December 31, 2005, 2004 and 2003, the
      value of Belvedere Companys interest in the Portfolio represents 70.4%,
      66.9% and 63.0% of the Portfolios net assets, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | As of December 31, 2005, 2004 and 2003, the
      Funds investment in Belvedere Company represents 13.3%, 13.7% and 14.8%
      of Belvedere Companys net assets, respectively.            
|   
|(3) | Allocated expenses include:                                                                                                                                                                  
|   

|                            |  |              |  | Year Ended   |  |             
|--------------------------- |  | ------------ |  | ------------ |  | ------------
|                            |  |             
|                            |  | December 31, |  | December 31, |  | December 31,
|                            |  | 2005         |  | 2004         |  | 2003        
|                           
|Expenses allocated from the |  |              |  |              |  |             
|Portfolio                   |  | $7,751,156   |  | $7,441,023   |  | $6,481,012  
|Service fees (see Note 9)   |  | $2,601,544   |  | $2,494,434   |  | $2,149,331  
|Operating expenses          |  | $ 59,331     |  | $ 61,144     |  | $ 61,831    
|                           

51

Belrose Capital Fund LLC

N 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

7 Interest Rate Swap Agreements

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

|EffectiveDate |  | NotionalAmount(000somitted) |  | FixedRate |  | FloatingRate            |  | InitialOptionalTermi-nationDate |  | FinalTermi-nationDate |  |                |  |          
|------------- |  | ---------------------------- |  | --------- |  | ----------------------- |  | ------------------------------- |  | --------------------- |  | -------------- |  | ---------
|              |  |                              |  |           |  | Unrealized Appreciation
|              |  |                              |  |           |  | (Depreciation)
      at
|              |  |                              |  |           |  | December
      31,      |  | December
      31,             
|              |  |                              |  |           |  | 2005                    |  | 2004                           
|             
|              |  |                              |  |           |  | LIBOR +                 |  |                                 |  |                       |  |                |  |          
|10/03         |  | $31,588 4.180%               |  | 0.30%     |  | 7/09                    |  | 6/10                            |  | $
      1,209,537     |  | $ 324,014     
|              |  |                              |  |           |  | LIBOR +                 |  |                                 |  |                       |  |                |  |          
|10/03         |  | 37,943 4.160%                |  | 0.30%     |  | 11/09                   |  | 6/10                            |  | 1,449,351             |  | 373,892       
|              |  |                              |  |           |  | LIBOR +                 |  |                                 |  |                       |  |                |  |          
|10/03         |  | 83,307 4.045%                |  | 0.30%     |  |                        |  | 6/10                            |  | 3,433,250             |  | 1,104,607     
|              |  |                              |  |           |  | 3 mo.                   |  |                                 |  |                       |  |                |  |          
|              |  |                              |  |           |  | LIBOR +                 |  |                                 |  |                       |  |                |  |          
|06/04         |  | 40,000 4.875%                |  | 0.00%     |  |                        |  | 6/12                            |  | 42,154                |  | (1,246,374)(1)
|             
|             
|              |  |                              |  |           |  |                         |  |                                 |  |                       |  | $6,134,292     |  | $ 556,139
|             

|(1) | On May 3, 2004, Belrose Capital entered into a forward
      interest rate swap agreement having a notional amount of $108,168,000 with
      Merrill Lynch Capital Services, Inc. in anticipation of its investment in
      a controlled subsidiary, Deerfield, for the purpose of hedging Belrose
      Realtys proportionate share of the interest rate of substantially all of
      the expected fixed-rate mortgage financing of the real property over the
      expected 8-year term. A portion of this agreement was terminated in July
      2004 and the Fund realized a gain of $60,454 upon this partial
      termination. Belrose Capital retains a $40,000,000 notional amount in this
      interest rate swap agreement at December 31, 2005.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

8 Debt

A Mortgages Rental property held by
Belrose Realtys controlled subsidiaries is financed through mortgage notes
issued to those controlled subsidiaries. The mortgage notes are secured by the
rental property of Katahdin, Deerfield and Bel Communities (for the period
during which Belrose Realty maintained an interest in Bel Communities). The
mortgage notes are generally without recourse to Belrose Capital and Belrose
Realty, except, in the case of Bel Communities, where there may be recourse for
certain liabilities associated with fraud, misrepresentation,
misappropriation of funds or breach of material covenants, and liabilities
arising from environmental conditions involving or affecting the rental property
subject to the mortgage notes. Belrose Capital and Belrose Realty have received
indemnification from the Bel Communities Minority Shareholder (Note 1B) for
certain of such potential liabilities.

The estimated fair value of the aggregate rental property securing
the mortgage notes is approximately $384,992,000 and $496,847,000 at December
31, 2005 and 2004, respectively. Terms of the mortgage notes payable and amounts
outstanding at December 31, 2005 and 2004 are as follows:

|Maturity  Date          |  | Annual  Interest  Rate |              | Monthly  Interest  Payment* |                    | Balance
      at
|----------------------- |  | ---------------------- | ------------ | --------------------------- | ------------------ | ----------------
|                        |  |                        | December 31, |                             | December
      31,
|                        |  |                        | 2005         |                             | 2004              
|                       
|December 1,
      2010  |  | 7.540%                 |              | $760,283                    |                    | $               
|June 1,
      2011      |  | 6.765%                 |              | 653,104                     |                    |                 
|September 1,
      2012 |  | 5.720%                 |              | 586,300                     |                    |                 
|                       
|                        |  |                        |              |                             |                    | $238,850,000    
|                       

|*   |  | The mortgage
      notes provide for interest only payments due    
|--- |  | -------------------------------------------------------------------
|    |  | monthly with
      the entire principal balance due on the         
|    |  | respective
      maturity date.                                    
|(1) |  | In October
      2005, Belrose Realty sold its majority interest in
|    |  | Bel Communities
      (Note 5). At the time of the transaction,    
|    |  | the Bel
      Communities mortgage loan balance was                
|    |  | $121,000,000.                                                      
|(2) |  | On October 6,
      2004, Deerfield obtained first mortgage        
|    |  | financing for
      its investment in real properties in the amount
|    |  | of
      $123,000,000.                                             

The estimated market value of the mortgage notes payable is
approximately $248,600,000 and $392,500,000 at December 31, 2005 and 2004,
respectively. The estimated market value of the mortgage notes payable at
December 31, 2004 included an estimated market value of $137,900,000 for the
mortgage note payable of Bel Communities that was disposed of in October 2005.
The mortgage notes payable cannot be prepaid or otherwise disposed of without
incurring a substantial prepayment penalty or without the sale of the rental
property financed by the mortgage notes payable. Management generally has no
current plans to prepay or otherwise dispose of the mortgage notes payable or
sell the related rental property prior to the maturity date. The market value of
the mortgage notes is based on estimates using discounted cash flow analysis and
currently prevailing rates.

Considerable judgment is necessary in interpreting market data to
develop estimates of market value. The use of

52



|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
|------------------------------------------------------------------------------------------------------------------------------

different assumptions or estimation methodologies
may have a material effect on the estimated market value.

BCredit Facility Belrose Capital has entered into credit arrangements
with DrKW Holdings, Inc. (DrKW) and Merrill Lynch Mortgage Capital, Inc.
(Merrill Lynch) (collectively, the Credit Facility). The Credit Facility has a
seven-year maturity and will expire on June 25, 2010. Belrose Capitals
obligations under the Credit Facility are secured by a pledge of its assets,
excluding the assets of Katahdin, Deerfield and Bel Communities (for the period
during which Belrose Realty maintained an interest in Bel
Communities).

The credit arrangement with DrKW is a term loan
facility that accrues interest at a rate of one-month LIBOR plus 0.30% per
annum. On December 15, 2005, Belrose Capital amended its credit arrangement with
DrKW by $26,500,000 to increase the amount of the term loan to
$242,500,000.

The credit arrangement with Merrill Lynch is a
revolving loan facility, including the ability to issue letters of credit up to
$10,000,000. During the fourth quarter of 2005, Belrose Capital amended its
credit arrangement with Merrill Lynch to increase the amount available by a
total of $125,000,000 to an aggregate amount available for borrowing of
$182,000,000. This credit arrangement accrues interest at a rate of one-month
LIBOR plus 0.38% per annum. A commitment fee of 0.10% per annum is paid on the
unused commitment amount. Belrose Capital pays all fees associated with issuing
the letters of credit. A letter of credit was issued as a substitute for funding
certain mortgage escrow accounts required by the lender of Bel Communities (for
the period during which Belrose Realty maintained an interest in Bel
Communities).

Among other borrowings made during the period, in
August 2004, Belrose Capital made borrowings under its credit arrangement with
Merrill Lynch in the amount of $57,000,000. At that time, Belrose Capital also
increased the amount available under its credit arrangement with Merrill Lynch
under a temporary arrangement (the Temporary Arrangement) by $66,000,000 and
borrowed that amount. Belrose Capital used the proceeds from these borrowings to
finance the Funds investment in Deerfield (Note 5). The borrowing under the
Temporary Arrangement accrued interest at a rate of one-month LIBOR plus 0.90%
and was for a term of sixty days, subject to a thirty-day extension. Any unused
amount of the increase pertaining to the Temporary Arrangement was subject to a
commitment fee of 0.10% per annum.

On October 6, 2004, Deerfield obtained first
mortgage financing for its investment in real properties in the amount of
$123,000,000. The proceeds from this financing were distributed to Belrose
Realty and the Deerfield Minority Shareholder in accordance with their equity
interests. Belrose Realtys proceeds from this transaction along with other
funds available were used to repay Belrose Capitals borrowings under the
Temporary Arrangement as well as a portion of other borrowings under the Credit
Facility. Pursuant to its terms, the Temporary Arrangement expired on October
29, 2004.

The following table summarizes Belrose Capitals
Credit Facility:

|                                     |  | At December 31, 2005 |  | At December 31, 2004
|------------------------------------ |  | -------------------- |  | --------------------
|                                    
|Total amount available under the     |  |                      |  |                     
|Credit Facility                      |  | $424,500,000         |  | $273,000,000        
|DrKW borrowings outstanding          |  | $242,500,000         |  | $216,000,000        
|Merrill Lynch borrowings outstanding |  | $151,000,000         |  | $                   
|Outstanding letter 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.

CNotes Payable On June 1, 2005, Belrose Realty and the Katahdin
Minority Shareholder loaned $2,250,000 and $750,000, respectively, to Katahdin.
The note bore interest on the outstanding principal amount at the rate of 8.75%
per annum. There was no obligation to pay any principal or interest until
maturity on May 31, 2006, at which time the entire outstanding principal balance
of the note, plus all accrued unpaid interest thereon was due and payable. In
November 2005, the entire principal amount plus accrued and unpaid interest
outstanding under the note due to Belrose Realty and the Katahdin Minority
Shareholder was paid in full.

On December 14, 2005, Belrose Realty and the
Katahdin Minority Shareholder loaned $62,364,071 and $20,788,024, respectively,
to Katahdin. The notes bear interest on the outstanding principal amount at the
rate of 8.75% per annum. There is no obligation to pay any principal or interest
until maturity on December 14, 2006, at which time the entire outstanding
principal balance of the note, plus all accrued unpaid interest thereon is due
and payable. At December 31, 2005, the principal amount outstanding under the
notes due to Belrose Realty and the Katahdin

53



|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
|------------------------------------------------------------------------------------------------------------------------------

Minority Shareholder is $62,364,071 and $20,788,024,
respectively. All balances and transactions related to the notes payable made by
Belrose Realty have been eliminated through consolidation of the financial
statements. In January and March 2006, Katahdin paid Belrose Realty and the
Katahdin Minority Shareholder an aggregate amount of $58,934,951 and
$19,644,984, respectively, of the principal amount outstanding.

9Management 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 interestholder approval. For the years ended
December 31, 2005, 2004 and 2003, the advisory fee applicable to the Portfolio
was 0.43%, 0.43% and 0.44% of average daily net assets, respectively.

In addition, Boston Management is, subject to the
fee cap described below, entitled to receive a monthly advisory and
administrative fee of 1/20 of 1% (0.60% annually) of the average daily gross
assets of Belrose Capital. The term gross assets with respect to Belrose
Capital is defined to include the current 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 directly and indirectly controlled
subsidiaries, without reduction by any liabilities. The advisory fee payable to
the Portfolio in respect of Belrose Capitals indirect investment in the
Portfolio is credited towards Belrose Capitals advisory and administrative fee
payment. 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 with respect to Belrose Realty
is defined to include the current value of all assets of Belrose Realty,
including Belrose Realtys ratable share of the assets of its controlled
subsidiaries, without reduction by any liabilities. For this purpose, the assets
of Belrose Realtys controlled subsidiaries are reduced by the proportionate
interest therein of investors other than Belrose Realty.

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

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.

Payments to the Eaton Vance organization for
investment advisory, management, administration and distribution services made
by or in respect of Belrose Capital on a direct or indirect basis are subject to
a monthly fee cap at a rate of 1/20 of 1% (equivalent to 0.60% annually) of the
average daily gross assets of Belrose Capital (as defined above). Payments
subject to the monthly fee cap are the distribution fee paid to EV Distributors,
Belrose Capitals attributable share of advisory and management fees paid by the
Portfolio and Belrose Realty, and Belrose Capitals advisory and administrative
fee. Boston Management has agreed to waive a portion of the monthly advisory and
administrative fee otherwise payable by Belrose Capital as necessary to comply
with the monthly fee cap.

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, less Belrose Capitals allocated
share of the servicing fee payable by Belvedere Company. With respect to
Shareholders who subscribe through a subagent, EV Distributors has assigned
servicing responsibilities and fees to the applicable subagent.

Management services for the real property held by
Katahdin, Deerfield, Bel Apartment and Bel Communities (for the period during
which Belrose Realty maintained an interest in Bel Apartment and Bel
Communities) are provided by an affiliate of each respective entitys Minority
Shareholder (Note 1B). Each management agreement provides for a management fee
and allows for reimbursement of payroll and other direct expenses incurred by
the managers in conjunction with managing each respective entitys properties
(Note 1B). In addition to the fees noted above, an affiliate of the Deerfield
Minority Shareholder also receives administrative and other fees for
administering the financial and operating activities of the Deerfield
Properties.

54



|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
|------------------------------------------------------------------------------------------------------------------------------

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, 2005, 2004 and 2003, in connection with the services rendered by Eaton
Vance, its affiliates, and affiliates of Belrose Realtys controlled
subsidiaries.

|                              |  |              |  |              |  | Year Ended   |  |           |  |  
|----------------------------- |  | ------------ |  | ------------ |  | ------------ |  | --------- |  | -
|                              |  |             
|                              |  | December 31, |  | December 31, |  | December 31,
|                              |  | 2005         |  | 2004         |  | 2003        
|                             
|Advisory fee allocated to     |  |              |  |              |  |              |  |           |  |  
|Belvedere Company from        |  |              |  |              |  |              |  |           |  |  
|the Portfolio                 |  | $55,259,100  |  | $50,252,861  |  | $41,671,111 
|Advisory fee allocated to     |  |              |  |              |  |              |  |           |  |  
|the Fund from Belvedere       |  |              |  |              |  |              |  |           |  |  
|Company                       |  | $            |  | 7,486,967    |  | $            |  | 7,197,653 |  | $
|Advisory and administrative   |  |              |  |              |  |              |  |           |  |  
|fee and management fee        |  |              |  |              |  |              |  |           |  |  
|incurred directly by the Fund |  | $            |  | 5,951,465    |  | $            |  | 5,872,964 |  | $
|Distribution fees incurred    |  |              |  |              |  |              |  |           |  |  
|directly by the Fund          |  | $            |  | 1,685,761    |  | $            |  | 1,641,602 |  | $
|Reduction of advisory and     |  |              |  |              |  |              |  |           |  |  
|administrative fees           |  | $            |  | 1,685,761    |  | $            |  | 1,641,602 |  | $
|Servicing fees of Belvedere   |  |              |  |              |  |              |  |           |  |  
|Company                       |  | $19,202,381  |  | $17,418,515  |  | $14,288,579 
|Servicing fees allocated to   |  |              |  |              |  |              |  |           |  |  
|the Fund from Belvedere       |  |              |  |              |  |              |  |           |  |  
|Company                       |  | $            |  | 2,601,544    |  | $            |  | 2,494,434 |  | $
|Servicing fees incurred       |  |              |  |              |  |              |  |           |  |  
|directly by the Fund          |  | $            |  | 1,610,761    |  | $            |  | 1,610,127 |  | $
|Servicing fees paid or        |  |              |  |              |  |              |  |           |  |  
|accrued to subagents          |  | $            |  | 4,212,279    |  | $            |  | 4,104,537 |  | $
|Property management,          |  |              |  |              |  |              |  |           |  |  
|administrative and            |  |              |  |              |  |              |  |           |  |  
|other fees                    |  | $            |  | 2,748,714    |  | $            |  | 2,879,830 |  | $
|                             

10Segment
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. 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
and indirectly in real property through controlled subsidiaries, Katahdin,
Deerfield, Bel Apartment and Bel Communities (for the period during which
Belrose Realty maintained an interest in Bel Apartment and Bel Communities)
(Note 1B).

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 accounting policies of the reportable segments are the same
as those for Belrose Capital on a consolidated basis (Note 2). No reportable
segments have been aggregated. Reportable information by segment is as
follows:

|                            |  | Tax-         |  |                      |  |                   
|--------------------------- |  | ------------ |  | -------------------- |  | ------------------
|                            |  | Managed      |  |                      |  |                   
|For the Year Ended          |  | Growth       |  | Real                 |  |                   
|December 31, 2005           |  | Portfolio*   |  | Estate               |  | Total             
|                           
|Revenue                     |  | $            |  | 18,957,867           |  | $
      66,581,796
|Interest expense            |  |              |  |                      |  |                   
|on mortgages                |  |              |  |                     |  | (22,289,206)      
|Interest expense on         |  |              |  |                      |  |                   
|Credit Facility             |  |              |  |                     |  | (8,644,797)       
|Operating expenses          |  |              |  | (1,312,178)          |  | (28,654,593)      
|Minority interest in net    |  |              |  |                      |  |                   
|income of                   |  |              |  |                      |  |                   
|controlled subsidiaries     |  |              |  |                     |  | (3,126,995)       
|                           
|                           
|Net investment income       |  | $            |  | 17,645,689           |  | $
      3,866,205 
|Net realized gain           |  |              |  | 48,573,761           |  | 20,698,602        
|Net change in unrealized    |  |              |  |                      |  |                   
|appreciation (depreciation) |  |              |  | 9,310,085            |  | 28,908,000        
|                           
|                           
|Net increase in net assets  |  |              |  |                      |  |                   
|from operations of          |  |              |  |                      |  |                   
|reportable segments         |  | $            |  | 75,529,535           |  | $
      53,472,807
|                           
|                           
|                            |  | Tax-         |  |                      |  |                   
|                            |  | Managed      |  |                      |  |                   
|For the Year Ended          |  | Growth       |  | Real                 |  |                   
|December 31, 2004           |  | Portfolio*   |  | Estate               |  | Total             
|                           
|Revenue                     |  | $            |  | 17,098,621           |  | $
      73,646,315
|Interest expense            |  |              |  |                      |  |                   
|on mortgages                |  |              |  |                     |  | (26,491,201)      
|Interest expense on         |  |              |  |                      |  |                   
|Credit Facility             |  |              |  |                     |  | (3,768,499)       
|Operating expenses          |  |              |  | (1,217,128)          |  | (35,726,434)      
|Minority interest in net    |  |              |  |                      |  |                   
|income of                   |  |              |  |                      |  |                   
|controlled subsidiaries     |  |              |  |                     |  | (1,872,405)       
|                           
|                           
|Net investment income       |  | $            |  | 15,881,493           |  | $
      5,787,776 
|Net realized gain (loss)    |  |              |  | 37,885,739           |  | (790,159)         
|Net change in unrealized    |  |              |  |                      |  |                   
|appreciation (depreciation) |  |              |  | 98,671,430           |  | (36,483,584)      
|                           
|                           
|Net increase (decrease) in  |  |              |  |                      |  |                   
|net assets from operations  |  |              |  |                      |  |                   
|of reportable segments      |  | $152,438,662 |  | $
      (31,485,967) |  | $120,952,695      
|                           

55



|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
|------------------------------------------------------------------------------------------------------------------------------

|                                                                 |  | Tax-               |  |                    |  |                   
|---------------------------------------------------------------- |  | ------------------ |  | ------------------ |  | ------------------
|                                                                 |  | Managed            |  |                    |  |                   
|For the Year Ended                                               |  | Growth             |  | Real               |  |                   
|December 31, 2003                                                |  | Portfolio*         |  | Estate             |  | Total             
|                                                                
|Revenue                                                          |  | $
      12,933,752 |  | $
      69,349,438 |  | $
      82,283,190
|Interest expense                                                 |  |                    |  |                    |  |                   
|on mortgages                                                     |  |                   |  | (26,317,765)       |  | (26,317,765)      
|Interest expense on                                              |  |                    |  |                    |  |                   
|Credit Facility                                                  |  |                   |  | (2,488,812)        |  | (2,488,812)       
|Operating expenses                                               |  | (922,781)          |  | (31,784,810)       |  | (32,707,591)      
|Minority interest in net                                         |  |                    |  |                    |  |                   
|income of                                                        |  |                    |  |                    |  |                   
|controlled subsidiaries                                          |  |                   |  | (1,943,578)        |  | (1,943,578)       
|                                                                
|                                                                
|Net investment income                                            |  | $
      12,010,971 |  | $
      6,814,473  |  | $
      18,825,444
|Net realized gain (loss)                                         |  | 19,102,064         |  | (16,652,934)       |  | 2,449,130         
|Net change in unrealized                                         |  |                    |  |                    |  |                   
|appreciation (depreciation)                                      |  | 288,392,438        |  | 23,444,275         |  | 311,836,713       
|                                                                
|                                                                
|Net increase in net assets                                       |  |                    |  |                    |  |                   
|from operations of                                               |  |                    |  |                    |  |                   
|reportable segments                                              |  | $319,505,473       |  | $
      13,605,814 |  | $333,111,287      
|                                                                
|                                                                
|* Belrose Capital invests indirectly in Tax-Managed
      Growth
|Portfolio through Belvedere
      Company.                       |  |                   

The following table reconciles the reported segment
information to the consolidated financial statements for the periods
indicated:

|                                 |  |                    |  | Year Ended         |  |                   
|-------------------------------- |  | ------------------ |  | ------------------ |  | ------------------
|                                 |  |                   
|                                 |  | December 31,       |  | December 31,       |  | December 31,      
|                                 |  | 2005               |  | 2004               |  | 2003              
|                                
|Revenue:                         |  |                    |  |                    |  |                   
|Revenue from reportable          |  |                    |  |                    |  |                   
|segments                         |  | $
      85,539,663 |  | $
      90,744,936 |  | $
      82,283,190
|Unallocated amounts:             |  |                    |  |                    |  |                   
|Interest earned on cash          |  |                    |  |                    |  |                   
|not invested in the              |  |                    |  |                    |  |                   
|Portfolio or in
      controlled |  |                    |  |                    |  |                   
|subsidiaries                     |  | 225,864            |  | 150,923            |  | 29,766            
|                                
|Total revenue                    |  | $
      85,765,527 |  | $
      90,895,859 |  | $
      82,312,956
|                                
|Net increase (decrease) in net   |  |                    |  |                    |  |                   
|assets from operations:          |  |                    |  |                    |  |                   
|Net increase in net assets       |  |                    |  |                    |  |                   
|from operations of               |  |                    |  |                    |  |                   
|reportable segments              |  | $129,002,342       |  | $120,952,695       |  | $333,111,287      
|Unallocated investment income:   |  |                    |  |                    |  |                   
|Interest earned on cash          |  |                    |  |                    |  |                   
|not invested in the              |  |                    |  |                    |  |                   
|Portfolio or in
      controlled |  |                    |  |                    |  |                   
|subsidiaries                     |  | 225,864            |  | 150,923            |  | 29,766            
|Unallocated expenses(1):         |  |                    |  |                    |  |                   
|Distribution and servicing fees  |  | (3,296,522)        |  | (3,251,729)        |  | (2,800,440)       
|Interest expense on              |  |                    |  |                    |  |                   
|Credit Facility                  |  | (1,770,621)        |  | (613,476)          |  | (307,606)         
|Audit, tax and legal fees        |  | (287,685)          |  | (309,465)          |  | (294,771)         
|Other operating expenses         |  | (104,111)          |  | (125,466)          |  | (172,751)         
|                                
|Net increase in net assets       |  |                    |  |                    |  |                   
|from operations                  |  | $123,769,267       |  | $116,803,482       |  | $329,565,485      
|                                

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

56



|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
|------------------------------------------------------------------------------------------------------------------------------

The following tables reconcile the reported segment
information to the consolidated financial statements as of December 31, 2005 and
2004:

|                            |  | Tax-                  |  |                      |  |                      
|--------------------------- |  | --------------------- |  | -------------------- |  | ---------------------
|                            |  | Managed               |  |                      |  |                      
|                            |  | Growth                |  | Real                 |  |                      
|December 31, 2005           |  | Portfolio*            |  | Estate               |  | Total                
|                           
|Segment assets              |  | $1,783,649,094        |  | $661,856,326         |  | $2,445,505,420       
|Segment liabilities         |  | 116,987               |  | 631,424,066          |  | 631,541,053          
|                           
|                           
|Net assets of reportable    |  |                       |  |                      |  |                      
|segments                    |  | $
      1,783,532,107 |  | $
      30,432,260   |  | $
      1,813,964,367
|                           
|                            |  | Tax-                  |  |                      |  |                      
|                            |  | Managed               |  |                      |  |                      
|                            |  | Growth                |  | Real                 |  |                      
|December 31, 2004           |  | Portfolio*            |  | Estate               |  | Total                
|                           
|Segment assets              |  | $1,757,804,676        |  | $574,450,377         |  | $2,332,255,053       
|Segment liabilities         |  | 3,958,764             |  | 602,352,828          |  | 606,311,592          
|                           
|                           
|Net assets (liabilities) of |  |                       |  |                      |  |                      
|reportable segments         |  | $
      1,753,845,912 |  | $
      (27,902,451) |  | $
      1,725,943,461
|                           

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

|                                      |  | December 31, 2005 |  | December 31, 2004
|------------------------------------- |  | ----------------- |  | -----------------
|                                     
|Net assets:                           |  |                   |  |                  
|Net assets of reportable segments     |  | $1,813,964,367    |  | $1,725,943,461   
|Unallocated amounts:                  |  |                   |  |                  
|Cash(1)                               |  | 1,738,271         |  | 370,849          
|Short-term investments(1)             |  | 4,797,347         |  | 721,000          
|Loan payable  Credit Facility(2)     |  | (66,644,485)      |  | (32,573,536)     
|Payable to affiliate for distribution |  |                   |  |                  
|and servicing fees                    |  | (572,971)         |  |                 
|Other liabilities                     |  | (272,129)         |  | (234,349)        
|                                     
|Net assets                            |  | $ 1,753,010,400   |  | $1,694,227,425   
|                                     

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

11Contingencies

Katahdin became party to a claim arising out of the
ordinary course of business during 2005. Due to the preliminary nature, it is
not possible to predict or determine the outcome of the legal proceeding, nor is
it reasonably possible to estimate the amount of loss, if any,that would be associated with an adverse decision. It is not expected
that the results of any such claim or litigation will have a material adverse
effect on the Funds financial position or results of operations.

12Subsequent
Event

On January 26, 2006, the Fund made a distribution of
$1.28 per share to Shareholders of record on January 25, 2006.

57



|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 assets and liabilities, including the consolidated portfolio of
investments, of Belrose Capital Fund LLC and Subsidiaries, (collectively, the
Fund) as of December 31, 2005 and 2004, 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, 2005. These financial
statements and the financial highlights are the responsibility of the Funds
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with standards
of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2005 and
2004 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, 2005
and 2004, 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, 2005 in conformity with accounting principles
generally accepted in the United States of America.

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, 2005, based on the criteria established inInternal Control  Integrated Frameworkissued
by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 10, 2006 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 LLPBoston, MassachusettsMarch 10,
      2006
|--------------------------------------------------------------

58



|Belrose Capital Fund
  LLC
|--------------------------

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

Eaton Vance Management (Eaton Vance), as manager
of Belrose Capital Fund LLC (the Fund), with the participation of the Funds
Chief Executive Officer and Chief Financial Officer, (collectively referred to
in this report as management) is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the 1934 Act. The Funds internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.

Management assessed the effectiveness of the Funds
internal control over financial reporting as of December 31, 2005. In making
this assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission inInternal 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,
2005.

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.



|March 10, 2006
|--------------

59



|Belrose Capital Fund
  LLC
|--------------------------

R E P O RT   O F   I N D E P
E N D E N T   R E G I S T E R E D   P U B L I C 
 A C C O U N T I N G   F I R M

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, 2005, based on criteria established inInternal
Control  Integrated Frameworkissued by the Committee
of Sponsoring Organizations of the Treadway Commission. The Funds management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. 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, 2005, is fairly stated, in all material respects, based on the
criteria established inInternal 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, 2005, based on the criteria established inInternal 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, 2005
of the Fund and our report dated March 10, 2006 expressed an unqualified opinion
on those financial statements.



|DELOITTE & TOUCHE LLPBoston, MassachusettsMarch 10,
      2006
|--------------------------------------------------------------

60

Tax-Managed Growth Portfolioa
s   o f   D e c e m b e r   3 1 ,   2 0
0 5

P 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  3.0%                   |  |  |  |           |  |      
|                                            
|Boeing Company (The)                         |  |  |  | 798,441   |  | $    
|General Dynamics Corp.                       |  |  |  | 735,000   |  |      
|Honeywell International, Inc.                |  |  |  | 289,748   |  |      
|Northrop Grumman Corp.                       |  |  |  | 3,090,955 |  |      
|Raytheon Co.                                 |  |  |  | 345,300   |  |      
|Rockwell Collins, Inc.                       |  |  |  | 156,972   |  |      
|Teledyne Technologies, Inc.(1)               |  |  |  | 6,117     |  |      
|United Technologies Corp.                    |  |  |  | 3,660,728 |  |      
|                                            
|                                             |  |  |  |           |  | $    
|                                            
|Air Freight & Logistics  2.9%               |  |  |  |           |  |      
|                                            
|C.H. Robinson Worldwide, Inc.                |  |  |  | 2,079,406 |  | $    
|FedEx Corp.                                  |  |  |  | 2,226,609 |  |      
|United Parcel Service, Inc., Class B         |  |  |  | 3,231,607 |  |      
|                                            
|                                             |  |  |  |           |  | $    
|                                            
|Airlines  0.0%                              |  |  |  |           |  |      
|                                            
|Southwest Airlines Co.                       |  |  |  | 386,112   |  | $    
|                                            
|                                             |  |  |  |           |  | $    
|                                            
|Auto Components  0.1%                       |  |  |  |           |  |      
|                                            
|ArvinMeritor, Inc.                           |  |  |  | 8,000     |  | $    
|BorgWarner, Inc.                             |  |  |  | 180,098   |  |      
|Delphi Corp.                                 |  |  |  | 5,361     |  |      
|Johnson Controls, Inc.                       |  |  |  | 233,221   |  |      
|Visteon Corp.(1)                             |  |  |  | 9,828     |  |      
|                                            
|                                             |  |  |  |           |  | $    
|                                            
|Automobiles 
      0.1%                     |  |  |  |           |  |      
|                                            
|DaimlerChrysler AG(2)                        |  |  |  | 7,000     |  | $    
|Ford Motor Co.                               |  |  |  | 83,266    |  |      
|General Motors Corp.                         |  |  |  | 34,443    |  |      
|Harley-Davidson, Inc.                        |  |  |  | 140,700   |  |      
|Honda Motor Co. Ltd. (ADR)                   |  |  |  | 20,000    |  |      
|                                            
|                                             |  |  |  |           |  | $    
|                                            
|Beverages  4.2%                             |  |  |  |           |  |      
|                                            
|Anheuser-Busch Companies, Inc.               |  |  |  | 4,702,340 |  | $    
|Brown-Forman Corp., Class A                  |  |  |  | 547,732   |  |      
|Brown-Forman Corp., Class B                  |  |  |  | 45,820    |  |      

|Security                                 |  | Shares    |  | Value
|---------------------------------------- |  | --------- |  | -----
|                                        
|Beverages (continued)                    |  |           |  |      
|                                        
|Coca-Cola Co.                            |  | 3,696,347 |  | $    
|Coca-Cola Enterprises, Inc.              |  | 1,756,930 |  |      
|PepsiCo, Inc.                            |  | 6,217,904 |  |      
|                                        
|                                         |  |           |  | $    
|                                        
|Biotechnology 
      2.2%               |  |           |  |      
|                                        
|Amgen, Inc.(1)                           |  | 4,322,439 |  | $    
|Applera Corp. - Celera Genomics Group(1) |  | 26,000    |  |      
|Biogen Idec, Inc.(1)                     |  | 11,200    |  |      
|Genzyme Corp.(1)                         |  | 476,887   |  |      
|Gilead Sciences, Inc.(1)                 |  | 115,482   |  |      
|Incyte Corp.(1)                          |  | 14,294    |  |      
|Invitrogen Corp.(1)                      |  | 429,910   |  |      
|Vertex Pharmaceuticals, Inc.(1)          |  | 13,000    |  |      
|                                        
|                                         |  |           |  | $    
|                                        
|Building Products  0.8%                 |  |           |  |      
|                                        
|American Standard Companies, Inc.        |  | 975,691   |  | $    
|Masco Corp.                              |  | 3,815,892 |  |      
|Water Pik Technologies, Inc.(1)          |  | 2,141     |  |      
|                                        
|                                         |  |           |  | $    
|                                        
|Capital Markets 
      4.6%             |  |           |  |      
|                                        
|Affiliated Managers Group, Inc.(1)       |  | 20,520    |  | $    
|Ameriprise Financial, Inc.               |  | 123,241   |  |      
|Bank of New York Co., Inc. (The)         |  | 399,053   |  |      
|Bear Stearns Companies, Inc.             |  | 88,001    |  |      
|Charles Schwab Corp. (The)               |  | 857,261   |  |      
|Credit Suisse Group(2)                   |  | 155,136   |  |      
|Federated Investors, Inc.                |  | 1,666,768 |  |      
|Franklin Resources, Inc.                 |  | 1,448,649 |  |      
|Goldman Sachs Group, Inc.                |  | 1,014,997 |  |      
|Investors Financial Services Corp.       |  | 453,428   |  |      
|Knight Capital Group, Inc., Class A(1)   |  | 1,750,000 |  |      
|Legg Mason, Inc.                         |  | 26,461    |  |      
|Lehman Brothers Holdings, Inc.           |  | 96,237    |  |      
|Mellon Financial Corp.                   |  | 250,087   |  |      
|Merrill Lynch & Co., Inc.                |  | 2,109,325 |  |      
|Morgan Stanley                           |  | 3,713,173 |  |      
|Northern Trust Corp.                     |  | 726,812   |  |      
|Nuveen Investments, Class A              |  | 150,000   |  |      
|Piper Jaffray Cos., Inc.(1)              |  | 27,967    |  |      

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

61



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|---------------------------------------- |  | --------- |  | -----
|                                        
|Capital Markets
      (continued)        |  |           |  |      
|                                        
|Raymond James Financial, Inc.            |  | 147,337   |  | $    
|State Street Corp.                       |  | 150,434   |  |      
|T. Rowe Price Group, Inc.                |  | 163,648   |  |      
|UBS AG(2)                                |  | 83,392    |  |      
|Waddell & Reed Financial, Inc., Class A  |  | 273,635   |  |      
|                                        
|                                         |  |           |  | $    
|                                        
|Chemicals 
      0.8%                   |  |           |  |      
|                                        
|Airgas, Inc.                             |  | 117,613   |  | $    
|Arch Chemicals, Inc.                     |  | 4,950     |  |      
|Ashland, Inc.                            |  | 116,107   |  |      
|Bayer AG (ADR)                           |  | 40,000    |  |      
|Dow Chemical Co. (The)                   |  | 257,005   |  |      
|E.I. du Pont de Nemours and Co.          |  | 1,069,852 |  |      
|Ecolab, Inc.                             |  | 305,627   |  |      
|MacDermid, Inc.                          |  | 61,937    |  |      
|Monsanto Co.                             |  | 19,181    |  |      
|Olin Corp.                               |  | 9,900     |  |      
|PPG Industries, Inc.                     |  | 23,542    |  |      
|Rohm and Haas Co.                        |  | 2,601     |  |      
|RPM International, Inc.                  |  | 70,138    |  |      
|Sigma-Aldrich Corp.                      |  | 630,897   |  |      
|Solutia, Inc.(1)                         |  | 11,510    |  |      
|Valspar Corp. (The)                      |  | 1,289,459 |  |      
|                                        
|                                         |  |           |  | $    
|                                        
|Commercial Banks 
      8.4%            |  |           |  |      
|                                        
|AmSouth Bancorporation                   |  | 586,114   |  | $    
|Associated Banc-Corp.                    |  | 991,726   |  |      
|Bank of America Corp.                    |  | 4,813,556 |  |      
|Bank of Hawaii Corp.                     |  | 69,735    |  |      
|Bank of Montreal(2)                      |  | 257,366   |  |      
|BB&T Corp.                               |  | 1,715,782 |  |      
|City National Corp.                      |  | 184,221   |  |      
|Colonial BancGroup, Inc. (The)           |  | 253,936   |  |      
|Comerica, Inc.                           |  | 333,089   |  |      
|Commerce Bancshares, Inc.                |  | 162,911   |  |      
|Compass Bancshares, Inc.                 |  | 297,054   |  |      
|Fifth Third Bancorp                      |  | 1,973,171 |  |      
|First Citizens BancShares, Inc., Class A |  | 30,600    |  |      
|First Financial Bancorp.                 |  | 47,933    |  |      
|First Horizon National Corp.             |  | 152,267   |  |      

|Security                                    |  | Shares    |  | Value
|------------------------------------------- |  | --------- |  | -----
|                                           
|Commercial Banks
      (continued)          |  |           |  |      
|                                           
|First Midwest Bancorp, Inc.                 |  | 523,358   |  | $    
|HSBC Holdings PLC (ADR)                     |  | 601,671   |  |      
|Huntington Bancshares, Inc.                 |  | 630,239   |  |      
|KeyCorp                                     |  | 799,881   |  |      
|M&T Bank Corp.                              |  | 64,486    |  |      
|Marshall & Ilsley Corp.                     |  | 589,899   |  |      
|National City Corp.                         |  | 1,784,322 |  |      
|North Fork Bancorporation, Inc.             |  | 1,865,892 |  |      
|PNC Financial Services Group, Inc.          |  | 149,958   |  |      
|Popular, Inc.(2)                            |  | 1,432     |  |      
|Regions Financial Corp.                     |  | 1,653,747 |  |      
|Royal Bank of Canada(2)                     |  | 288,465   |  |      
|Royal Bank of Scotland Group PLC(2)         |  | 50,837    |  |      
|S&T Bancorp, Inc.                           |  | 100,000   |  |      
|Societe Generale(2)                         |  | 1,152,974 |  |      
|SunTrust Banks, Inc.                        |  | 1,373,393 |  |      
|Synovus Financial Corp.                     |  | 1,369,351 |  |      
|TCF Financial Corp.                         |  | 72,500    |  |      
|Trustmark Corp.                             |  | 205,425   |  |      
|U.S. Bancorp                                |  | 4,364,242 |  |      
|Valley National Bancorp.                    |  | 104,601   |  |      
|Wachovia Corp.                              |  | 2,190,523 |  |      
|Wells Fargo & Co.                           |  | 2,313,285 |  |      
|Westamerica Bancorporation                  |  | 268,474   |  |      
|Whitney Holding Corp.                       |  | 383,436   |  |      
|Zions Bancorporation                        |  | 620,420   |  |      
|                                           
|                                            |  |           |  | $    
|                                           
|Commercial
      Services & Supplies  1.4% |  |           |  |      
|                                           
|Acco Brands Corp.(1)                        |  | 30,117    |  | $    
|Allied Waste Industries, Inc.(1)            |  | 1,626,411 |  |      
|Avery Dennison Corp.                        |  | 851,315   |  |      
|Banta Corp.                                 |  | 42,341    |  |      
|CBIZ, Inc.(1)                               |  | 185,000   |  |      
|Cendant Corp.                               |  | 584,731   |  |      
|Cintas Corp.                                |  | 1,531,435 |  |      
|Consolidated Graphics, Inc.(1)              |  | 70,215    |  |      
|Deluxe Corp.                                |  | 32,000    |  |      
|Donnelley (R.R.) & Sons Co.                 |  | 91,260    |  |      
|Equifax, Inc.                               |  | 80,000    |  |      
|Herman Miller, Inc.                         |  | 541,800   |  |      
|HNI Corp.                                   |  | 1,121,592 |  |      

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|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|------------------------------------------------ |  | --------- |  | -----
|                                                
|Commercial
      Services & Supplies (continued)
|                                                
|Hudson Highland Group, Inc.(1)                   |  | 10,262    |  | $    
|Ikon Office Solutions, Inc.                      |  | 56,287    |  |      
|Manpower, Inc.                                   |  | 2,000     |  |      
|Monster Worldwide, Inc.(1)                       |  | 68,426    |  |      
|Navigant Consulting, Inc.(1)                     |  | 238,641   |  |      
|PHH Corp.(1)                                     |  | 27,467    |  |      
|Pitney Bowes, Inc.                               |  | 22,857    |  |      
|School Specialty, Inc.(1)                        |  | 49,197    |  |      
|Steelcase, Inc., Class A                         |  | 123,000   |  |      
|Waste Management, Inc.                           |  | 911,032   |  |      
|                                                
|                                                 |  |           |  | $    
|                                                
|Communications Equipment  1.4%                  |  |           |  |      
|                                                
|3Com Corp.(1)                                    |  | 664,106   |  | $    
|ADC Telecommunications, Inc.(1)                  |  | 41,693    |  |      
|Alcatel SA (ADR)(1)                              |  | 43,728    |  |      
|Avaya, Inc.(1)                                   |  | 31,239    |  |      
|Ciena Corp.(1)                                   |  | 375,431   |  |      
|Cisco Systems, Inc.(1)                           |  | 5,089,042 |  |      
|Comverse Technology, Inc.(1)                     |  | 293,654   |  |      
|Corning, Inc.(1)                                 |  | 3,633,999 |  |      
|Dycom Industries, Inc.(1)                        |  | 143,116   |  |      
|Enterasys Networks, Inc.(1)                      |  | 12,356    |  |      
|JDS Uniphase Corp.(1)                            |  | 52,451    |  |      
|Juniper Networks, Inc.(1)                        |  | 35,691    |  |      
|Lucent Technologies, Inc.(1)                     |  | 255,464   |  |      
|Motorola, Inc.                                   |  | 1,282,326 |  |      
|Nokia Oyj (ADR)                                  |  | 2,042,478 |  |      
|Nortel Networks Corp.(1)(2)                      |  | 739,418   |  |      
|QUALCOMM, Inc.                                   |  | 562,096   |  |      
|Riverstone Networks, Inc.(1)                     |  | 28,706    |  |      
|Tellabs, Inc.(1)                                 |  | 106,674   |  |      
|                                                
|                                                 |  |           |  | $    
|                                                
|Computers & Peripherals  2.2%                   |  |           |  |      
|                                                
|Dell, Inc.(1)                                    |  | 4,471,715 |  | $    
|EMC Corp.(1)                                     |  | 1,770,402 |  |      
|Gateway, Inc.(1)                                 |  | 79,938    |  |      
|Hewlett-Packard Co.                              |  | 906,807   |  |      
|International Business Machines Corp.            |  | 1,712,254 |  |      
|Lexmark International, Inc., Class A(1)          |  | 1,714,509 |  |      
|McDATA Corp., Class A(1)                         |  | 17,915    |  |      

|Security                                   |  | Shares    |  | Value
|------------------------------------------ |  | --------- |  | -----
|                                          
|Computers & Peripherals (continued)        |  |           |  |      
|                                          
|Network Appliance, Inc.(1)                 |  | 488,000   |  | $    
|Palm, Inc.(1)                              |  | 64,913    |  |      
|Sun Microsystems, Inc.(1)                  |  | 319,180   |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Construction &
      Engineering  0.1%    |  |           |  |      
|                                          
|Jacobs Engineering Group, Inc.(1)          |  | 160,823   |  | $    
|                                          
|                                           |  |           |  | $    
|                                          
|Construction
      Materials  0.2%        |  |           |  |      
|                                          
|CRH PLC(2)                                 |  | 329,450   |  | $    
|Vulcan Materials Co.                       |  | 206,614   |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Consumer Finance 
      1.1%              |  |           |  |      
|                                          
|American Express Co.                       |  | 617,258   |  | $    
|Capital One Financial Corp.                |  | 1,429,006 |  |      
|MBNA Corp.                                 |  | 411,292   |  |      
|SLM Corp.                                  |  | 916,399   |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Containers &
      Packaging  0.1%        |  |           |  |      
|                                          
|Bemis Co., Inc.                            |  | 295,186   |  | $    
|Caraustar Industries, Inc.(1)              |  | 167,599   |  |      
|Sealed Air Corp.(1)                        |  | 37,014    |  |      
|Sonoco Products Co.                        |  | 148,033   |  |      
|Temple-Inland, Inc.                        |  | 115,924   |  |      
|                                          
|                                           |  |           |  | $    
|                                          
|Distributors  0.1%                        |  |           |  |      
|                                          
|Genuine Parts Co.                          |  | 347,293   |  | $    
|                                          
|                                           |  |           |  | $    
|                                          
|Diversified Consumer Services 
      0.4% |  |           |  |      
|                                          
|Apollo Group, Inc., Class A(1)             |  | 49,852    |  | $    
|H&R Block, Inc.                            |  | 1,575,244 |  |      
|Laureate Education, Inc.(1)                |  | 520,213   |  |      
|Service Corp. International                |  | 142,389   |  |      
|ServiceMaster Co. (The)                    |  | 1,156,537 |  |      
|Stewart Enterprises, Inc.                  |  | 114,000   |  |      
|                                          
|                                           |  |           |  | $    
|                                          

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63



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|--------------------------------------------- |  | --------- |  | -----
|                                             
|Diversified Financial Services  1.9%         |  |           |  |      
|                                             
|Citigroup, Inc.                               |  | 4,327,010 |  | $    
|FINOVA Group, Inc. (The)(1)                   |  | 175,587   |  |      
|ING Groep N.V. (ADR)                          |  | 257,281   |  |      
|JPMorgan Chase & Co.                          |  | 3,164,955 |  |      
|Moodys Corp.                                 |  | 155,397   |  |      
|Principal Financial Group, Inc.               |  | 113,328   |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Diversified Telecommunication Services  1.3%
|                                             
|AT&T, Inc.                                    |  | 1,678,472 |  | $    
|BCE, Inc.(2)                                  |  | 3,100,000 |  |      
|BellSouth Corp.                               |  | 161,722   |  |      
|Cincinnati Bell, Inc.(1)                      |  | 169,013   |  |      
|Citizens Communications Co.                   |  | 12,231    |  |      
|Deutsche Telekom AG (ADR)                     |  | 2,006,790 |  |      
|McLeod USA, Inc., Class A(1)                  |  | 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)            |  | 3,051,574 |  |      
|Verizon Communications, Inc.                  |  | 459,935   |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Electric Utilities  0.3%                     |  |           |  |      
|                                             
|American Electric Power Co., Inc.             |  | 960       |  | $    
|Exelon Corp.                                  |  | 1,002,600 |  |      
|Southern Co. (The)                            |  | 65,985    |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Electrical Components 
      0.0%            |  |           |  |      
|                                             
|Molex, Inc., Class A                          |  | 61,319    |  | $    
|                                             
|                                              |  |           |  | $    
|                                             
|Electrical
      Equipment  0.6%             |  |           |  |      
|                                             
|American Power Conversion Corp.               |  | 30,856    |  | $    
|Baldor Electric Co.                           |  | 149,060   |  |      
|Emerson Electric Co.                          |  | 1,143,636 |  |      
|Rockwell Automation, Inc.                     |  | 250,649   |  |      
|Roper Industries, Inc.                        |  | 46,244    |  |      
|Thomas & Betts Corp.(1)                       |  | 114,600   |  |      
|                                             
|                                              |  |           |  | $    
|                                             

|Security                                              |  | Shares    |  | Value
|----------------------------------------------------- |  | --------- |  | -----
|                                                     
|Electronic
      Equipment & Instruments 
      0.7%
|                                                     
|Agilent Technologies, Inc.(1)                         |  | 461,244   |  | $    
|Arrow Electronics, Inc.(1)                            |  | 8,750     |  |      
|Flextronics International, Ltd.(1)(2)                 |  | 441,607   |  |      
|Jabil Circuit, Inc.(1)                                |  | 2,127,971 |  |      
|National Instruments Corp.                            |  | 735,687   |  |      
|Plexus Corp.(1)                                       |  | 150,776   |  |      
|Sanmina-SCI Corp.(1)                                  |  | 1,140,602 |  |      
|Solectron Corp.(1)                                    |  | 1,707,596 |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     
|Energy Equipment &
      Services  0.8%              |  |           |  |      
|                                                     
|Baker Hughes, Inc.                                    |  | 358,482   |  | $    
|Core Laboratories N.V.(1)(2)                          |  | 20,244    |  |      
|Grant Prideco, Inc.(1)                                |  | 11,694    |  |      
|Halliburton Co.                                       |  | 644,762   |  |      
|National-Oilwell Varco, Inc.(1)                       |  | 311,875   |  |      
|Schlumberger, Ltd.(2)                                 |  | 557,887   |  |      
|Smith International, Inc.                             |  | 191,739   |  |      
|Transocean, Inc.(1)(2)                                |  | 103,602   |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     
|Food & Staples Retailing  1.8%                       |  |           |  |      
|                                                     
|Albertsons, Inc.                                     |  | 853,255   |  | $    
|Caseys General Stores, Inc.                          |  | 12,551    |  |      
|Costco Wholesale Corp.                                |  | 928,292   |  |      
|CVS Corp.                                             |  | 266,910   |  |      
|Kroger Co. (The)(1)                                   |  | 1,348,478 |  |      
|Safeway, Inc.                                         |  | 1,190,841 |  |      
|Sysco Corp.                                           |  | 2,053,288 |  |      
|Sysco Corp.(3)(4)                                     |  | 60,000    |  |      
|Walgreen Co.                                          |  | 988,481   |  |      
|Wal-Mart Stores, Inc.                                 |  | 2,119,018 |  |      
|Winn-Dixie Stores, Inc.(1)                            |  | 137,447   |  |      
|                                                     
|                                                      |  |           |  | $    
|                                                     
|Food Products  2.6%                                  |  |           |  |      
|                                                     
|Archer-Daniels-Midland Co.                            |  | 977,204   |  | $    
|Campbell Soup Co.                                     |  | 1,274,493 |  |      
|ConAgra Foods, Inc.                                   |  | 1,048,341 |  |      
|Dean Foods Co.(1)                                     |  | 304,629   |  |      
|Del Monte Foods Co.(1)                                |  | 99,492    |  |      
|General Mills, Inc.                                   |  | 151,037   |  |      

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|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|--------------------------------------------- |  | --------- |  | -----
|                                             
|Food Products (continued)                     |  |           |  |      
|                                             
|H.J. Heinz Co.                                |  | 299,708   |  | $    
|Hershey Co. (The)                             |  | 505,557   |  |      
|J.M. Smucker Co. (The)                        |  | 7,276     |  |      
|Kellogg Co.                                   |  | 54,076    |  |      
|Kraft Foods, Inc.                             |  | 465       |  |      
|Nestle SA(2)                                  |  | 275,000   |  |      
|Sara Lee Corp.                                |  | 4,771,143 |  |      
|Smithfield Foods, Inc.(1)                     |  | 3,845,278 |  |      
|TreeHouse Foods, Inc.(1)                      |  | 64,797    |  |      
|Tyson Foods, Inc., Class A                    |  | 265,272   |  |      
|Wm. Wrigley Jr. Co.                           |  | 839,317   |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Gas Utilities  0.0%                          |  |           |  |      
|                                             
|National Fuel Gas Co.                         |  | 4,000     |  | $    
|                                             
|                                              |  |           |  | $    
|                                             
|Health Care Equipment
      & Supplies  1.3% |  |          
|                                             
|Advanced Medical Optics, Inc.(1)              |  | 31,158    |  | $    
|Bausch & Lomb, Inc.                           |  | 29,250    |  |      
|Baxter International, Inc.                    |  | 229,317   |  |      
|Becton, Dickinson and Co.                     |  | 64,173    |  |      
|Biomet, Inc.                                  |  | 419,890   |  |      
|Boston Scientific Corp.(1)                    |  | 1,109,134 |  |      
|DENTSPLY International, Inc.                  |  | 6,927     |  |      
|Dionex Corp.(1)                               |  | 37,300    |  |      
|Edwards Lifesciences Corp.(1)                 |  | 10,353    |  |      
|Guidant Corp.                                 |  | 57,206    |  |      
|Hillenbrand Industries, Inc.                  |  | 342,176   |  |      
|Hospira, Inc.(1)                              |  | 126,372   |  |      
|Lumenis, Ltd.(1)(2)                           |  | 100,000   |  |      
|Medtronic, Inc.                               |  | 2,079,834 |  |      
|PerkinElmer, Inc.                             |  | 254,526   |  |      
|St. Jude Medical, Inc.(1)                     |  | 48,028    |  |      
|Steris Corp.                                  |  | 718       |  |      
|Stryker Corp.                                 |  | 71,556    |  |      
|Waters Corp.(1)                               |  | 165,841   |  |      
|Zimmer Holdings, Inc.(1)                      |  | 320,941   |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Health Care Providers
      & Services  2.1% |  |          
|                                             
|AmerisourceBergen Corp.                       |  | 348,354   |  | $    

|Security                                           |  | Shares    |  | Value
|-------------------------------------------------- |  | --------- |  | -----
|                                                  
|Health Care Providers
      & Services (continued)
|                                                  
|Beverly Enterprises, Inc.(1)                       |  | 50,586    |  | $    
|Cardinal Health, Inc.                              |  | 1,784,669 |  |      
|Caremark Rx, Inc.(1)                               |  | 801,471   |  |      
|CIGNA Corp.                                        |  | 11,836    |  |      
|Express Scripts, Inc.(1)                           |  | 53,316    |  |      
|HCA, Inc.                                          |  | 140       |  |      
|Health Management Associates, Inc., Class A        |  | 131,615   |  |      
|Henry Schein, Inc.(1)                              |  | 1,904,253 |  |      
|IDX Systems Corp.(1)                               |  | 60,000    |  |      
|IMS Health, Inc.                                   |  | 280,530   |  |      
|McKesson Corp.                                     |  | 2,631     |  |      
|Medco Health Solutions, Inc.(1)                    |  | 182,743   |  |      
|PAREXEL International Corp.(1)                     |  | 27,837    |  |      
|Renal Care Group, Inc.(1)                          |  | 239,856   |  |      
|Sunrise Senior Living, Inc.(1)                     |  | 288,000   |  |      
|Tenet Healthcare Corp.(1)                          |  | 3,961     |  |      
|UnitedHealth Group, Inc.                           |  | 426,716   |  |      
|Ventiv Health, Inc.(1)                             |  | 13,170    |  |      
|WellPoint, Inc.(1)                                 |  | 809,292   |  |      
|                                                  
|                                                   |  |           |  | $    
|                                                  
|Hotels, Restaurants & Leisure  1.7%               |  |           |  |      
|                                                  
|Bob Evans Farms, Inc.                              |  | 50,957    |  | $    
|Brinker International, Inc.                        |  | 198,438   |  |      
|Carnival Corp.(2)                                  |  | 561,335   |  |      
|CBRL Group, Inc.                                   |  | 62,047    |  |      
|Darden Restaurants, Inc.                           |  | 184,714   |  |      
|Gaylord Entertainment Co.(1)                       |  | 428,482   |  |      
|International Game Technology                      |  | 400,000   |  |      
|International Speedway Corp., Class A              |  | 118,344   |  |      
|Jack in the Box, Inc.(1)                           |  | 500,000   |  |      
|Lone Star Steakhouse & Saloon, Inc.                |  | 145,981   |  |      
|Marriott International, Inc., Class A              |  | 185,766   |  |      
|McDonalds Corp.                                   |  | 863,972   |  |      
|MGM MIRAGE(1)                                      |  | 188,890   |  |      
|Navigant International, Inc.(1)                    |  | 38,258    |  |      
|Outback Steakhouse, Inc.                           |  | 1,360,076 |  |      
|Papa Johns International, Inc.(1)                 |  | 188,800   |  |      
|Royal Caribbean Cruises, Ltd.(2)                   |  | 397,428   |  |      
|Sonic Corp.(1)                                     |  | 159,765   |  |      
|Starbucks Corp.(1)                                 |  | 2,343,463 |  |      
|Yum! Brands, Inc.                                  |  | 236,553   |  |      
|                                                  
|                                                   |  |           |  | $    
|                                                  

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|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|------------------------------------- |  | ---------- |  | -----
|                                     
|Household Durables  0.5%             |  |            |  |      
|                                     
|Blyth, Inc.                           |  | 699,869    |  | $    
|D.R. Horton, Inc.                     |  | 625,255    |  |      
|Fortune Brands, Inc.                  |  | 126,932    |  |      
|Helen of Troy, Ltd.(1)(2)             |  | 20,000     |  |      
|Interface, Inc., Class A(1)           |  | 75,467     |  |      
|Leggett & Platt, Inc.                 |  | 1,799,370  |  |      
|Lenox Group, Inc.(1)                  |  | 5,455      |  |      
|Newell Rubbermaid, Inc.               |  | 411,393    |  |      
|Snap-On, Inc.                         |  | 42,453     |  |      
|                                     
|                                      |  |            |  | $    
|                                     
|Household Products  2.9%             |  |            |  |      
|                                     
|Clorox Co. (The)                      |  | 53,688     |  | $    
|Colgate-Palmolive Co.                 |  | 713,670    |  |      
|Energizer Holdings, Inc.(1)           |  | 168,981    |  |      
|Kimberly-Clark Corp.                  |  | 1,484,938  |  |      
|Procter & Gamble Co. (The)            |  | 7,098,400  |  |      
|                                     
|                                      |  |            |  | $    
|                                     
|Independent Power Producers &         |  |            |  |      
|Energy Traders  0.2%                 |  |            |  |      
|                                     
|AES Corp. (The)(1)                    |  | 49,542     |  | $    
|Duke Energy Corp.                     |  | 417,250    |  |      
|Dynegy, Inc., Class A(1)              |  | 22,688     |  |      
|TXU Corp.                             |  | 327,916    |  |      
|                                     
|                                      |  |            |  | $    
|                                     
|Industrial Conglomerates
       3.0% |  |            |  |      
|                                     
|3M Co.                                |  | 913,513    |  | $    
|General Electric Co.                  |  | 13,345,070 |  |      
|Teleflex, Inc.                        |  | 23,700     |  |      
|Tyco International, Ltd.(2)           |  | 1,147,900  |  |      
|                                     
|                                      |  |            |  | $    
|                                     
|Insurance  6.2%                      |  |            |  |      
|                                     
|21st Century Insurance Group          |  | 70,700     |  | $    
|Aegon, N.V. (ADR)                     |  | 5,182,849  |  |      
|AFLAC, Inc.                           |  | 2,196,373  |  |      
|Allstate Corp. (The)                  |  | 189,192    |  |      
|American International Group, Inc.    |  | 5,154,370  |  |      
|AON Corp.                             |  | 550,106    |  |      
|Arthur J. Gallagher & Co.             |  | 647,017    |  |      

|Security                                      |  | Shares    |  | Value
|--------------------------------------------- |  | --------- |  | -----
|                                             
|Insurance (continued)                         |  |           |  |      
|                                             
|Berkshire Hathaway, Inc., Class A(1)          |  | 639       |  | $    
|Berkshire Hathaway, Inc., Class B(1)          |  | 41,253    |  |      
|Chubb Corp. (The)                             |  | 16,099    |  |      
|Commerce Group, Inc. (The)                    |  | 120,000   |  |      
|Hartford Financial Services Group, Inc. (The) |  | 46,382    |  |      
|Jefferson-Pilot Corp.                         |  | 150,301   |  |      
|Lincoln National Corp.                        |  | 52,903    |  |      
|Manulife Financial Corp.(2)                   |  | 74,958    |  |      
|Marsh & McLennan Cos., Inc.                   |  | 686,159   |  |      
|MetLife, Inc.                                 |  | 1,824,271 |  |      
|Old Republic International Corp.              |  | 240,548   |  |      
|Progressive Corp. (The)(3)(4)                 |  | 9,470     |  |      
|Progressive Corp. (The)                       |  | 1,725,948 |  |      
|SAFECO Corp.                                  |  | 161,000   |  |      
|St. Paul Travelers Companies, Inc., (The)     |  | 333,134   |  |      
|Torchmark Corp.                               |  | 324,638   |  |      
|UICI                                          |  | 43,597    |  |      
|UnumProvident Corp.                           |  | 53,710    |  |      
|XL Capital Ltd., Class A(2)                   |  | 187,100   |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Internet & Catalog Retail  0.1%              |  |           |  |      
|                                             
|Amazon.com, Inc.(1)                           |  | 23,500    |  | $    
|Expedia, Inc.(1)                              |  | 403,096   |  |      
|IAC/InterActiveCorp(1)                        |  | 403,096   |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Internet Software & Services  0.3%           |  |           |  |      
|                                             
|eBay, Inc.(1)                                 |  | 1,257,244 |  | $    
|                                             
|                                              |  |           |  | $    
|                                             
|IT Services 
      2.5%                      |  |           |  |      
|                                             
|Accenture Ltd., Class A(2)                    |  | 2,738,000 |  | $    
|Acxiom Corp.                                  |  | 616,809   |  |      
|Affiliated Computer Services, Inc.(1)         |  | 183,730   |  |      
|Automatic Data Processing, Inc.               |  | 1,560,553 |  |      
|BISYS Group, Inc. (The)(1)                    |  | 65,000    |  |      
|Ceridian Corp.(1)                             |  | 26,632    |  |      
|Certegy, Inc.                                 |  | 42,862    |  |      
|Computer Sciences Corp.(1)                    |  | 226,702   |  |      
|CSG Systems International, Inc.(1)            |  | 25,200    |  |      
|DST Systems, Inc.(1)                          |  | 231,544   |  |      

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66



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|------------------------------------- |  | --------- |  | -----
|                                     
|IT Services
      (continued)         |  |           |  |      
|                                     
|eFunds Corp.(1)                       |  | 1         |  | $    
|Electronic Data Systems Corp.         |  | 1,252     |  |      
|First Data Corp.                      |  | 3,759,930 |  |      
|Fiserv, Inc.(1)                       |  | 832,355   |  |      
|Gartner, Inc.(1)                      |  | 30,576    |  |      
|Paychex, Inc.                         |  | 1,597,890 |  |      
|Perot Systems Corp.(1)                |  | 684,871   |  |      
|Safeguard Scientifics, Inc.(1)        |  | 26,579    |  |      
|                                     
|                                      |  |           |  | $    
|                                     
|Leisure Equipment & Products  0.0%   |  |           |  |      
|                                     
|Eastman Kodak Co.                     |  | 90,761    |  | $    
|Mattel, Inc.                          |  | 30,514    |  |      
|                                     
|                                      |  |           |  | $    
|                                     
|Machinery 
      3.0%                |  |           |  |      
|                                     
|Caterpillar, Inc.(3)(4)               |  | 34,186    |  | $    
|Caterpillar, Inc.                     |  | 110,120   |  |      
|Danaher Corp.                         |  | 4,031,970 |  |      
|Deere & Co.                           |  | 3,350,000 |  |      
|Donaldson Co., Inc.                   |  | 79,326    |  |      
|Dover Corp.                           |  | 367,670   |  |      
|Federal Signal Corp.                  |  | 218,345   |  |      
|Illinois Tool Works, Inc.             |  | 756,673   |  |      
|ITT Industries, Inc.                  |  | 4,214     |  |      
|Nordson Corp.                         |  | 163,978   |  |      
|Parker Hannifin Corp.                 |  | 43,632    |  |      
|Tecumseh Products Co., Class A        |  | 125,700   |  |      
|Wabtec Corp.                          |  | 94,504    |  |      
|                                     
|                                      |  |           |  | $    
|                                     
|Media  4.3%                          |  |           |  |      
|                                     
|ADVO, Inc.                            |  | 750,000   |  | $    
|Arbitron, Inc.                        |  | 11,555    |  |      
|Belo Corp., Class A                   |  | 542,924   |  |      
|Cablevision Systems Corp., Class A(1) |  | 207,410   |  |      
|Catalina Marketing Corp.              |  | 87,095    |  |      
|CCE Spinco, Inc.(1)                   |  | 16,410    |  |      
|Clear Channel Communications, Inc.    |  | 131,283   |  |      
|Comcast Corp., Class A(1)             |  | 1,979,556 |  |      
|Comcast Corp., Class A Special(1)     |  | 1,424,823 |  |      
|Discovery Holding Co., Class A(1)     |  | 131,304   |  |      

|Security                                      |  | Shares    |  | Value
|--------------------------------------------- |  | --------- |  | -----
|                                             
|Media (continued)                             |  |           |  |      
|                                             
|Discovery Holding Co., Class B(1)             |  | 3,287     |  | $    
|E.W. Scripps Co. (The), Class A               |  | 51,066    |  |      
|EchoStar Communications Corp., Class A(1)     |  | 35,150    |  |      
|Entercom Communications Corp.(1)              |  | 220,000   |  |      
|Gannett Co., Inc.                             |  | 701,567   |  |      
|Havas SA (ADR)                                |  | 3,142,938 |  |      
|Interpublic Group of Companies, Inc. (The)(1) |  | 976,936   |  |      
|Knight Ridder, Inc.                           |  | 19,023    |  |      
|Lamar Advertising Co.(1)                      |  | 241,409   |  |      
|Liberty Global, Inc., Class A(1)              |  | 50,655    |  |      
|Liberty Global, Inc., Class B(1)              |  | 1,643     |  |      
|Liberty Global, Inc., Class C(1)              |  | 52,298    |  |      
|Liberty Media Corp., Class A(1)               |  | 1,313,041 |  |      
|Liberty Media Corp., Class B(1)               |  | 32,876    |  |      
|McClatchy Co., (The), Class A                 |  | 48,066    |  |      
|McGraw-Hill Companies, Inc., (The)            |  | 472,484   |  |      
|New York Times Co. (The), Class A             |  | 300,468   |  |      
|News Corp., Class A                           |  | 187,934   |  |      
|Omnicom Group, Inc.                           |  | 2,326,246 |  |      
|ProQuest Co.(1)                               |  | 95,464    |  |      
|Publicis Groupe(2)                            |  | 329,132   |  |      
|Reuters Group PLC (ADR)                       |  | 1,431     |  |      
|Time Warner, Inc.                             |  | 4,153,197 |  |      
|Tribune Co.                                   |  | 1,601,074 |  |      
|Univision Communications, Inc., Class A(1)    |  | 401,298   |  |      
|Viacom, Inc., Class A                         |  | 29,774    |  |      
|Viacom, Inc., Class B                         |  | 965,189   |  |      
|Vivendi Universal SA (ADR)                    |  | 417,045   |  |      
|Walt Disney Co., (The)                        |  | 4,904,830 |  |      
|Washington Post Co. (The), Class B            |  | 16,470    |  |      
|Westwood One, Inc.                            |  | 122,400   |  |      
|WPP Group PLC(2)                              |  | 139,450   |  |      
|WPP Group PLC (ADR)                           |  | 256,051   |  |      
|                                             
|                                              |  |           |  | $    
|                                              |  |           |  |      
|Metals & Mining  0.3%                        |  |           |  |      
|                                             
|Alcoa, Inc.                                   |  | 85,947    |  | $    
|Allegheny Technologies, Inc.                  |  | 21,408    |  |      
|Inco, Ltd.(1)(2)                              |  | 200,000   |  |      
|Nucor Corp.                                   |  | 421,662   |  |      
|Phelps Dodge Corp.                            |  | 14,862    |  |      
|Steel Dynamics, Inc.                          |  | 311,800   |  |      
|                                             
|                                              |  |           |  | $    
|                                             

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

67



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|----------------------------------------- |  | --------- |  | -----
|                                         
|Multiline Retail  1.6%                   |  |           |  |      
|                                         
|99 Cents Only Stores(1)                   |  | 1,142,232 |  | $    
|Dollar General Corp.                      |  | 101,456   |  |      
|Dollar Tree Stores, Inc.(1)               |  | 659,218   |  |      
|Family Dollar Stores, Inc.                |  | 2,618,411 |  |      
|Federated Department Stores, Inc.         |  | 130,024   |  |      
|J.C. Penney Company, Inc.                 |  | 130,816   |  |      
|Kohls Corp.(1)                           |  | 55        |  |      
|Nordstrom, Inc.                           |  | 131,384   |  |      
|Sears Holdings Corp.(1)                   |  | 5,747     |  |      
|Target Corp.                              |  | 3,498,908 |  |      
|                                         
|                                          |  |           |  | $    
|                                         
|Multi-Utilities  0.0%                    |  |           |  |      
|                                         
|Ameren Corp.                              |  | 5,000     |  | $    
|Dominion Resources, Inc.                  |  | 3,249     |  |      
|PG&E Corp.                                |  | 47,705    |  |      
|TECO Energy, Inc.                         |  | 34,145    |  |      
|Wisconsin Energy Corp.                    |  | 9,576     |  |      
|                                         
|                                          |  |           |  | $    
|                                         
|Office
      Electronics  0.0%           |  |           |  |      
|                                         
|Xerox Corp.(1)                            |  | 42,878    |  | $    
|Zebra Technologies Corp., Class A(1)      |  | 13,500    |  |      
|                                         
|                                          |  |           |  | $    
|                                         
|Oil, Gas &
      Consumable Fuels  10.5% |  |           |  |      
|                                         
|Amerada Hess Corp.                        |  | 18,947    |  | $    
|Anadarko Petroleum Corp.                  |  | 2,559,141 |  |      
|Apache Corp.                              |  | 2,073,929 |  |      
|BP PLC (ADR)                              |  | 5,008,980 |  |      
|Burlington Resources, Inc.                |  | 4,335,883 |  |      
|Chevron Corp.                             |  | 409,158   |  |      
|ConocoPhillips                            |  | 3,329,274 |  |      
|Devon Energy Corp.                        |  | 1,015,400 |  |      
|El Paso Corp.                             |  | 148,709   |  |      
|Exxon Mobil Corp.                         |  | 6,579,287 |  |      
|Kerr-McGee Corp.                          |  | 267,327   |  |      
|Kinder Morgan, Inc.                       |  | 1,781,672 |  |      
|Marathon Oil Corp.                        |  | 30,098    |  |      
|Murphy Oil Corp.                          |  | 39,036    |  |      
|Newfield Exploration Co.(1)               |  | 120,000   |  |      
|Royal Dutch Shell PLC (ADR)               |  | 118,194   |  |      

|Security                                      |  | Shares    |  | Value
|--------------------------------------------- |  | --------- |  | -----
|                                              |  |           |  |      
|Oil, Gas &
      Consumable Fuels (continued) |  |          
|                                              |  |          
|Total SA (ADR)                                |  | 400,000   |  | $    
|Valero Energy Corp.                           |  | 206,040   |  |      
|Williams Cos., Inc. (The)                     |  | 219,065   |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Paper and Forest Products  0.1%              |  |           |  |      
|                                             
|International Paper Co.                       |  | 111,913   |  | $    
|Louisiana-Pacific Corp.                       |  | 70,750    |  |      
|MeadWestvaco Corp.                            |  | 73,347    |  |      
|Neenah Paper, Inc.                            |  | 38,811    |  |      
|Weyerhaeuser Co.                              |  | 89,778    |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Personal Products  0.4%                      |  |           |  |      
|                                             
|Avon Products, Inc.                           |  | 173,400   |  | $    
|Estee Lauder Cos., Inc. (The), Class A        |  | 2,092,312 |  |      
|                                             
|                                              |  |           |  | $    
|                                             
|Pharmaceuticals 
      6.1%                  |  |           |  |      
|                                             
|Abbott Laboratories                           |  | 3,078,014 |  | $    
|Allergan, Inc.                                |  | 38,300    |  |      
|Andrx Corp.(1)                                |  | 180,170   |  |      
|Bristol-Myers Squibb Co.                      |  | 4,973,196 |  |      
|Elan Corp. PLC (ADR)(1)                       |  | 31,838    |  |      
|Eli Lilly & Co.                               |  | 3,585,323 |  |      
|Forest Laboratories, Inc.(1)                  |  | 56,800    |  |      
|GlaxoSmithKline PLC (ADR)                     |  | 434,293   |  |      
|Johnson & Johnson                             |  | 3,505,021 |  |      
|King Pharmaceuticals, Inc.(1)                 |  | 505,637   |  |      
|Merck & Co., Inc.                             |  | 2,605,384 |  |      
|Mylan Laboratories, Inc.                      |  | 27,992    |  |      
|Novo Nordisk A/S (ADR)                        |  | 292,277   |  |      
|Pfizer, Inc.                                  |  | 8,223,321 |  |      
|Schering-Plough Corp.                         |  | 2,461,993 |  |      
|Sepracor, Inc.(1)                             |  | 4,000     |  |      
|Shering AG (ADR)                              |  | 25,000    |  |      
|Teva Pharmaceutical Industries, Ltd. (ADR)    |  | 1,676,190 |  |      
|Watson Pharmaceuticals, Inc.(1)               |  | 668,041   |  |      
|Wyeth                                         |  | 890,144   |  |      
|                                             
|                                              |  |           |  | $    
|                                             

S e e   n o t e s   t o 
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68



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5P 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
|----------------------------------------------------- |  | ---------- |  | -----
|                                                     
|Real Estate  0.1%                                    |  |            |  |      
|                                                     
|AvalonBay Communities, Inc.                           |  | 28,867     |  | $    
|Forest City Enterprises, Inc., Class A                |  | 77,326     |  |      
|Jones Lang LaSalle, Inc.                              |  | 1,835      |  |      
|Plum Creek Timber Co., Inc.                           |  | 198,791    |  |      
|ProLogis                                              |  | 126,355    |  |      
|Trammell Crow Co.(1)                                  |  | 65,491     |  |      
|                                                     
|                                                      |  |            |  | $    
|                                                     
|Road & Rail 
      0.2%                              |  |            |  |      
|                                                     
|ANC Rental Corp.(1)                                   |  | 50,667     |  | $    
|Burlington Northern Santa Fe Corp.                    |  | 194,233    |  |      
|CSX Corp.                                             |  | 38,134     |  |      
|Florida East Coast Industries, Inc.                   |  | 121,978    |  |      
|Heartland Express, Inc.                               |  | 653,154    |  |      
|Kansas City Southern(1)                               |  | 15,215     |  |      
|Norfolk Southern Corp.                                |  | 3,990      |  |      
|Union Pacific Corp.                                   |  | 10,453     |  |      
|                                                     
|                                                      |  |            |  | $    
|                                                     
|Semiconductors &
      Semiconductor Equipment  2.2%
|                                                     
|Agere Systems, Inc.(1)                                |  | 8,329      |  | $    
|Altera Corp.(1)                                       |  | 66,116     |  |      
|Analog Devices, Inc.                                  |  | 574,160    |  |      
|Applied Materials, Inc.                               |  | 1,123,242  |  |      
|Broadcom Corp., Class A(1)                            |  | 576,281    |  |      
|Conexant Systems, Inc.(1)                             |  | 134,174    |  |      
|Cypress Semiconductor Corp.(1)                        |  | 152,742    |  |      
|Freescale Semiconductor, Inc., Class B(1)             |  | 101,523    |  |      
|Intel Corp.                                           |  | 10,662,764 |  |      
|KLA-Tencor Corp.                                      |  | 148,373    |  |      
|Linear Technology Corp.                               |  | 95,760     |  |      
|LSI Logic Corp.(1)                                    |  | 132,810    |  |      
|Maxim Integrated Products, Inc.                       |  | 304,351    |  |      
|Mindspeed Technologies, Inc.(1)                       |  | 44,724     |  |      
|Skyworks Solutions, Inc.(1)                           |  | 98,685     |  |      
|Taiwan Semiconductor Manufacturing Co., Ltd. (ADR)    |  | 909        |  |      
|Teradyne, Inc.(1)                                     |  | 27,996     |  |      
|Texas Instruments, Inc.                               |  | 1,820,303  |  |      
|Xilinx, Inc.                                          |  | 58,684     |  |      
|                                                     
|                                                      |  |            |  | $    
|                                                     

|Security                                 |  | Shares    |  | Value
|---------------------------------------- |  | --------- |  | -----
|                                        
|Software  1.7%                          |  |           |  |      
|                                        
|Adobe Systems, Inc.                      |  | 608,276   |  | $    
|Cadence Design Systems, Inc.(1)          |  | 450,000   |  |      
|Cognos, Inc.(1)(2)                       |  | 77,000    |  |      
|Computer Associates International, Inc.  |  | 38,744    |  |      
|Compuware Corp.(1)                       |  | 150,944   |  |      
|Electronic Arts, Inc.(1)                 |  | 21,405    |  |      
|Fair Isaac Corp.                         |  | 564,515   |  |      
|Intuit, Inc.(1)                          |  | 573,111   |  |      
|Jack Henry & Associates, Inc.            |  | 201,006   |  |      
|Microsoft Corp.                          |  | 7,149,319 |  |      
|Oracle Corp.(1)                          |  | 1,014,698 |  |      
|Parametric Technology Corp.(1)           |  | 94,600    |  |      
|Reynolds and Reynolds Co. (The), Class A |  | 216,412   |  |      
|SAP AG (ADR)                             |  | 400,000   |  |      
|Siebel Systems, Inc.                     |  | 179,184   |  |      
|Symantec Corp.(1)                        |  | 90,220    |  |      
|Wind River Systems, Inc.(1)              |  | 91,910    |  |      
|                                        
|                                         |  |           |  | $    
|                                        
|Specialty
      Retail  2.0%            |  |           |  |      
|                                        
|Abercrombie & Fitch Co., Class A         |  | 11,225    |  | $    
|AutoNation, Inc.(1)                      |  | 1,370,088 |  |      
|Best Buy Co., Inc.                       |  | 170,415   |  |      
|Burlington Coat Factory Warehouse Corp.  |  | 95,284    |  |      
|CarMax, Inc.(1)                          |  | 67,797    |  |      
|Circuit City Stores, Inc.                |  | 216,000   |  |      
|Gap, Inc. (The)                          |  | 540,888   |  |      
|Home Depot, Inc. (The)                   |  | 4,485,692 |  |      
|Limited Brands, Inc.                     |  | 692,655   |  |      
|Lowes Companies, Inc.                   |  | 879,145   |  |      
|Office Depot, Inc.(1)                    |  | 80,276    |  |      
|OfficeMax, Inc.                          |  | 2,192     |  |      
|Payless ShoeSource, Inc.(1)              |  | 23,100    |  |      
|Pep Boys (The) - Manny, Moe & Jack       |  | 62,500    |  |      
|RadioShack Corp.                         |  | 625,064   |  |      
|Sherwin-Williams Co. (The)               |  | 53,386    |  |      
|Staples, Inc.                            |  | 300,587   |  |      
|Tiffany & Co.                            |  | 57,286    |  |      
|TJX Companies, Inc. (The)                |  | 1,716,834 |  |      
|Too, Inc.(1)                             |  | 38,284    |  |      
|                                        
|                                         |  |           |  | $    
|                                        



|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 5

P 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  0.8%                            |  |          
|                                                                        
|Coach, Inc.(1)                                                           |  | 731,440   |  | $              
|NIKE, Inc., Class B                                                      |  | 1,529,222 |  |                
|                                                                        
|                                                                         |  |           |  | $              
|                                                                        
|Thrifts & Mortgage
      Finance  0.6%                                  |  |           |  |                
|                                                                        
|Countrywide Financial Corp.                                              |  | 999,998   |  | $              
|Fannie Mae                                                               |  | 335,606   |  |                
|Freddie Mac                                                              |  | 151,086   |  |                
|Golden West Financial Corp.                                              |  | 89,168    |  |                
|MGIC Investment Corp.                                                    |  | 85,000    |  |                
|Radian Group, Inc.                                                       |  | 1,796     |  |                
|Washington Mutual, Inc.                                                  |  | 875,535   |  |                
|                                                                        
|                                                                         |  |           |  | $              
|                                                                        
|Tobacco  0.3%                                                           |  |           |  |                
|                                                                        
|Altria Group, Inc.                                                       |  | 700,409   |  | $              
|                                                                         |  |           |  |                
|                                                                         |  |           |  | $              
|                                                                        
|Trading
      Companies & Distributors  0.0%                            |  |          
|                                                                        
|United Rentals, Inc.(1)                                                  |  | 397,333   |  | $              
|                                                                        
|                                                                         |  |           |  | $              
|                                                                        
|Wireless
      Telecommunication Services  0.6%                        
|                                                                        
|Alltel Corp.                                                             |  | 1,682,674 |  | $              
|Sprint Nextel Corp.                                                      |  | 297,303   |  |                
|Telephone & Data Systems, Inc., Special Shares                           |  | 25,844    |  |                
|Telephone and Data Systems, Inc.                                         |  | 25,844    |  |                
|Vodafone Group PLC (ADR)                                                 |  | 332,062   |  |                
|                                                                        
|                                                                         |  |           |  | $              
|                                                                        
|Total Common Stocks                                                      |  |           |  |                
|(identified cost $14,184,947,956)                                        |  |           |  | $18,969,682,297
|                                                                        
|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          
|                                                                        
|Oil, Gas &
      Consumable Fuels  0.0%                                 |  |           |  |                
|                                                                         |  |           |  |                
|Enron Corp.(1)(3)                                                        |  | 11,050    |  | $              
|                                                                        
|                                                                         |  |           |  | $              
|                                                                        
|Total Convertible
      Preferred Stocks                                 |  |           |  |                
|(identified cost $16,626,069)                                            |  |           |  | $              
|                                                                        

|P r e f e r r e d S t o c k s  0 . 0 %            |  |                                                                     |  |                 |  |                
|-------------------------------------------------- |  | ------------------------------------------------------------------- |  | --------------- |  | ---------------
|Security                                           |  | Shares                                                              |  | Value           |  |                
|                                                  
|Commercial Banks 
      0.0%                      |  |                                                                     |  |                 |  |                
|                                                  
|Wachovia Corp. (Dividend Equalization              |  |                                                                     |  |                 |  |                
|Preferred Shares)(1)                               |  | 166,518                                                             |  | $               |  | 666            
|                                                  
|                                                   |  |                                                                     |  |                 |  | $              
|                                                  
|Total Preferred Stocks                             |  |                                                                     |  |                 |  |                
|                                                   |  | (identified cost $39,407)                                           |  |                 |  | $              
|                                                  
|R i g h t s  0 . 0 %                              |  |                                                                     |  |                 |  |                
|                                                   |  |                                                                     |  |                 |  |                
|Security                                           |  | Shares                                                              |  | Value           |  |                
|                                                  
|Computers and Business
      Equipment  0.0%     
|                                                  
|Seagate Technology, Inc. (Tax Refund Rights)(1)(3) |  | 197,392                                                             |  | $               |  | 0              
|                                                   |  |                                                                     |  |                 |  |                
|                                                   |  |                                                                     |  |                 |  | $              
|                                                  
|Diversified Telecommunication Services  0.0%     
|                                                  
|McLeodUSA, Inc., (Escrow Rights)(1)(3)             |  | 1,592,200                                                           |  | $               |  | 0              
|                                                  
|                                                   |  |                                                                     |  |                 |  | $              
|                                                  
|Total Rights                                       |  |                                                                     |  |                 |  |                
|                                                   |  | (identified cost $0)                                                |  |                 |  | $              
|                                                  
|W a r r a n t s  0 . 0 %                          |  |                                                                     |  |                 |  |                
|                                                   |  |                                                                     |  |                 |  |                
|Security                                           |  | Shares                                                              |  | Value           |  |                
|                                                  
|Communications Equipment  0.0%                    |  |                                                                     |  |                
|                                                  
|Lucent Technologies, Inc.(1)                       |  | 18,106                                                              |  | $               |  | 10,230         
|                                                  
|                                                   |  |                                                                     |  |                 |  | $              
|                                                  
|Total Warrants                                     |  |                                                                     |  |                 |  |                
|                                                   |  | (identified cost $0)                                                |  |                 |  | $              
|                                                  
|Total Investments  99.7%                          |  |                                                                     |  |                 |  |                
|                                                   |  | (identified cost $14,201,613,432)                                   |  |                 |  | $18,969,693,193
|                                                  
|Other Assets, Less Liabilities  0.3%              |  | $                                                                   |  | 62,913,660     
|                                                  
|Net Assets  100.0%                                |  |                                                                     |  | $19,032,606,853
|                                                  
|ADR - American
      Depository Receipt            |  |                                                                     |  |                 |  |                
|(1)                                                |  | Non-income
      producing security.                                |  |                 |  |                
|(2)                                                |  | Foreign
      security.                                             |  |                 |  |                
|(3)                                                |  | Security valued at
      fair value using methods determinedin good
|                                                   |  | faith by or at the
      direction of the Trustees.                 |  |                 |  |                
|(4)                                                |  | Security subject to restrictions on resale (see Note 7).            |  |                

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

70



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5F 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, 2005                                                      |  |                 
|Assets                                                                       |  |                 
|                                                                            
|Investments, at value (identified cost,
      $14,201,613,432)               |  | $ 18,969,693,193
|Cash                                                                         |  |                 
|Receivable for investments sold                                              |  |                 
|Dividends and interest receivable                                            |  |                 
|Tax reclaim receivable                                                       |  |                 
|                                                                            
|Total assets                                                                 |  | $ 19,048,190,777
|                                                                            
|Liabilities                                                                  |  |                 
|                                                                            
|Demand note payable                                                          |  | $               
|Payable to affiliate for investment adviser fee                              |  |                 
|Payable to affiliate for Trustees fees                                      |  |                 
|Accrued expenses                                                             |  |                 
|                                                                            
|Total liabilities                                                            |  | $               
|                                                                            
|Net Assets applicable to investors interest in
      Portfolio              |  | $ 19,032,606,853
|                                                                            
|Sources of Net Assets                                                        |  |                 
|                                                                            
|Net proceeds from capital contributions and
      withdrawals                |  | $ 14,264,573,420
|Net unrealized appreciation (computed on the basis of identified
      cost) |  |                 
|                                                                            
|Total                                                                        |  | $ 19,032,606,853
|                                                                            

|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, 2005                                         |  |                  |  |             
|                                                          |  |                  |  |             
|Investment Income                                         |  |                  |  |             
|                                                         
|Dividends (net of foreign taxes, $4,483,174)              |  | $  314,591,123  
|Interest                                                  |  |                  |  | 1,772,594   
|                                                         
|Total investment income                                   |  | $  316,363,717  
|                                                         
|Expenses                                                  |  |                  |  |             
|                                                         
|Investment adviser fee                                    |  | $                |  | 80,617,092  
|Trustees fees and expenses                               |  |                  |  | 34,741      
|Custodian fee                                             |  |                  |  | 2,335,402   
|Legal and accounting services                             |  |                  |  | 107,743     
|Miscellaneous                                             |  |                  |  | 453,249     
|                                                         
|Total expenses                                            |  | $                |  | 83,548,227  
|                                                         
|Deduct                                                   |  |                  |  |             
|Reduction of custodian fee                                |  | $                |  | 267         
|Reduction of investment adviser fee                       |  |                  |  | 88,889      
|                                                         
|Total expense reductions                                  |  | $                |  | 89,156      
|                                                         
|Net expenses                                              |  | $                |  | 83,459,071  
|                                                         
|Net investment income                                     |  | $232,904,646    
|                                                         
|Realized and
      Unrealized Gain (Loss)                 |  |                  |  |             
|                                                         
|Net realized gain (loss)                                 |  |                  |  |             
|Investment transactions (identified cost
      basis)     |  | $    101,182,645
|Securities sold short                                     |  |                  |  | (30,244,833)
|Foreign currency transactions                             |  |                  |  | (48,663)    
|                                                         
|Net realized gain                                         |  | $                |  | 70,889,149  
|                                                         
|Change in unrealized appreciation (depreciation)         |  |                  |  |             
|Investments (identified cost basis)                       |  | $  523,919,934  
|Securities sold short                                     |  |                  |  | 27,299,373  
|Foreign currency                                          |  |                  |  | (199,704)   
|                                                         
|Net change in unrealized appreciation (depreciation)      |  | $  551,019,603  
|                                                         
|Net realized and unrealized gain                          |  | $  621,908,752  
|                                                         
|Net increase in net assets from operations                |  | $  854,813,398  
|                                                         



|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 5F I N A N C I A L 
       S T A T E M E N T SC O N TDS 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, 2005 |  | December 31, 2004
|                                          
|From operations                           |  |                   |  |                  
|Net investment income                      |  | $                 |  | 232,904,646      
|Net realized gain from investment          |  |                   |  |                  
|transactions, securities sold
      short  |  |                   |  |                  
|and foreign currency
      transactions    |  |                   |  | 70,889,149       
|Net change in unrealized                   |  |                   |  |                  
|appreciation
      (depreciation)          |  |                   |  |                  
|of investments, securities
      sold      |  |                   |  |                  
|short and foreign
      currency           |  |                   |  | 551,019,603      
|                                          
|Net increase in net assets from operations |  | $                 |  | 854,813,398      
|                                          
|Capital transactions                      |  |                   |  |                  
|Contributions                              |  | $                 |  | 1,237,495,815    
|Withdrawals                                |  |                   |  | (2,200,844,762)  
|                                          
|Net decrease in net assets from            |  |                   |  |                  
|capital transactions                       |  | $                 |  | (963,348,947)    
|                                          
|Net increase (decrease) in net assets      |  | $                 |  | (108,535,549)    
|                                          
|Net Assets                                 |  |                   |  |                  
|                                          
|At beginning of year                       |  | $19,141,142,402   |  | $17,609,589,005  
|                                          
|At end of year                             |  | $19,032,606,853   |  | $19,141,142,402  
|                                          

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

72



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5F I N A N C I A
      L   S T A T E M E N T SC O N TDS u p p l e m e n t a r
      y   D a t a
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                      |  | Year Ended December 31,
|----------------------------------------------------- |  | -----------------------
|                                                      |  |                        
|                                                      |  | 2005                   
|                                                     
|Ratios/Supplemental
      Data                        |  |                        
|                                                     
|Ratios (As a percentage of average daily net assets): |  |                        
|Expenses                                              |  | 0.45%                 
|Expenses after custodian fee
      reduction          |  | 0.45%                 
|Net investment income                                 |  | 1.25%                 
|Portfolio Turnover                                    |  | 0%(1)                  
|                                                     
|Total Return                                          |  | 4.70%                  
|                                                     
|Net assets, end of year (000s omitted)               |  | $19,032,607            
|                                                     

|   |  | The operating expenses of the Portfolio reflect a reduction of
      theinvestment adviser fee.Had such action not been
      taken, the ratios
      would have changed by less than 0.005%.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 
|(1) |  | Amounts to less than 1%.                                                                                                                                                                     



|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 5N 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
|----------------------------------------------------------------------------------------------------------------------------------------------------

1 Significant Accounting Policies

Tax-Managed Growth Portfolio (the Portfolio) is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Portfolio, which was
organized as a trust under the laws of the State of New York on December 1,
1995, seeks to 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
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 National Market System generally are valued at
the official NASDAQ closing price. Unlisted or listed
securities for which closing sales prices or closing
quotations are not available are valued at the mean between the latest available
bid and asked prices 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 were acquired with a remaining maturity of more
than 60 days, their amortized cost value will be based on their value on the
sixty-first day prior to maturity. Other fixed income and
debt securities, including listed securities and securities
for which price quotations are available, will normally be
valued on the basis of valuations furnished by a pricing
service. Foreign securities and currencies are valued in
U.S. dollars, based on foreign currency exchange rate quotations supplied by an
independent quotat< /FONT>ion 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.

B Income Taxes -- The Portfolio is
treated as a partnership for federal tax purposes. No provision is made by the Portfolio for federal or
state taxes on any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment
of any taxes on its share of such taxable income. Since some of
the Portfolios investors are regulated investment
companies that invest all or
substantially all of their assets
in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification requirements (under the Internal Revenue
Code) in order for its investors to satisfy them. The Portfolio will
allocate, at least annually among its investors, each investors distributive share of the Portfolios net investment income, net realized capital gains, and any other items of income, gain,
loss, deduction or credit.

C Futures Contracts -- Upon the
entering of a financial futures contract, the Portfolio
is required to deposit either in cash or securities an amount (initial margin) equal to a certain percentage
of the purchase price indicated in the
financial futures contract. Subsequent
payments are made or received by the Portfolio (margin
maintenance) each day, dependent on daily fluctuations in the value of the underlying
security, and are recorded for book purposes as unrealized
gains or losses by the Portfolio. The Portfolios investment in financial futures contracts is designed to
hedge against anticipated future
changes in the price of current or anticipated portfolio positions. Should prices move unexpectedly, the Portfolio may not achieve the anticipated
benefits of the financial futures
contracts and may realize a loss.

D Put Options -- Upon the purchase of a put option by the
Portfolio, the premium paid is
recorded as an investment, the value of which is
marked-to-market daily.



|Tax-Managed Growth Portfolio a
      s   o f   D e c e m b e r   3 1 , 
       2 0 0 5N 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
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 a
security short if it owns at least an equal amount of the security sold short or
another security exchangeable for an equal amount of the security sold short in
anticipation of a decline in the market price of the securities or in order to
hedge portfolio positions. The Portfolio will generally borrow the security sold
in order to make delivery to the buyer. Upon executing the transaction, the
Portfolio records the proceeds as deposits with brokers in
the Statement of Assets and Liabilities and establishes an offsetting payable
for securities sold short for the securities due on settlement. The proceeds are
retained by the broker as collateral for the short position. The liability is
marked-to-market and the Portfolio is required to pay the lending broker any
dividend or interest income earned while the short position is
open. A gain or loss is recorded when the security is delivered to the
broker. The Portfolio may recognize a loss on the transaction if the market
value of the securities sold increases before the securities are delivered.

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

G Indemnifications -- Under the Portfolio's organizational
documents, its officers and Trustees may be indemnified against certain
liabilities and expenses arising out of the performance of their duties to the
Portfolio. Interestholders in the Portfolio are jointly and severally liable for
the liabilities and obligations of the Portfolio in the
event that the Portfolio fails to satisfy such liabilities and obligations;
provided, however, that, to the extent assets are available in the Portfolio,
the Portfolio may, under certain circumstances, indemnify interestholders from
and against any claim or liability to which such holder may become subject by
reason of being or having been an interestholder in the Portfolio. Additionally,
in the normal course of business, the 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 a
trade-date basis. Dividend income is recorded on the ex-dividend date. However,
if the ex-dividend date has passed, certain dividends from foreign securities
are recorded as the Portfolio is informed of the ex-dividend date. Interest
income is recorded on the accrual basis.

I Expense Reduction -- Investors Bank & Trust Company
(IBT) serves as custodian of the Portfolio. Pursuant to the custodian agreement,
IBT receives a fee reduced by credits which are determined based on the average
daily cash balances the Portfolio maintains with IBT. All credit balances used
to reduce the Portfolios custodian fees are reported as a reduction of expenses
on the Statement of Operations. For the year ended December 31, 2005, there were
$267 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 Boston Management and
Research (BMR), a wholly-owned subsidiary of Eaton Vance Management (EVM), as
compensation for management and investment advisory services rendered to the
Portfolio. Under the advisory agreement, BMR receives a monthly advisory fee 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



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5N O T E S   T
      O   F I N A N C I A L   S T A T E M E N T SC O N TD
|-------------------------------------------------------------------------------------------------------------------------------------------------------

the Portfolios Board of Trustees and
BMR.Those reductions may not be changed without Trustee andinterestholder approval.For the year ended December 31, 2005, the
advisory fee was 0.43% of the Portfolios
average daily net assets.BMR has also agreed to reduce theinvestment adviser fee by an amount equal to that portion of commissions paid to broker dealersin execution of Portfolio
security transactions thatis consideration for third-party research services.For the year ended
December 31, 2005, BMR waived $88,889
ofits advisory fee.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 suchinvestment adviser
fee.Trustees of the
Portfolio that are not affiliated
with theinvestment adviser may elect to defer receipt
of all or a percentage of their annual
feesin accordance with the terms of the Trustees Deferred
Compensation Plan.For the year ended December 31, 2005, 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, 2005, purchases and
sales ofinvestments, other than
short-term obligations, aggregated $58,765,480 and $774,871,275,
respectively.In addition,investments having an aggregate market value of $1,057,904,697 at dates of withdrawal were distributedin payment for capital withdrawals andinvestors
contributed securities
with a value of $1,009,478,984,
during the year ended December 31,
2005.

4 Federal Income Tax Basis of UnrealizedAppreciation (Depreciation)

The cost and unrealized appreciation (depreciation)in value of theinvestments owned at December 31, 2005 as computed
on a federalincome tax
basis, were as follows:

|Aggregate cost                |  | $
      4,152,013,829
|----------------------------- |  | ---------------------
|                             
|Gross unrealized appreciation |  | $14,819,049,235      
|Gross unrealized depreciation |  | (1,369,871)          
|                             
|Net unrealized appreciation   |  | $14,817,679,364      
|                             

Unrealized
depreciation on foreign currencyis
$46,328.

5 Financial Instruments

The Portfolio may tradein financialinstruments with off-balance sheet riskin
the normal course ofitsinvesting
activities to
assistin managing exposure to various marketrisks.These financialinstrumentsinclude written options, forward foreign currency exchange contracts and financial
futures contracts and mayinvolve, to
a varying degree, elements of
riskin excess of the amounts recognized for financial statement
purposes.

The notional or contractual amounts of theseinstruments represent theinvestment the Portfolio hasin particular classes of financialinstruments and does not
necessarily represent the amounts
potentially subject to risk.The measurement of the
risks associated with theseinstrumentsis meaningful only when all related and
offsetting transactions are considered.The Portfolio did
not have any open obligations under these financialinstruments at December 31,
2005.

6 Line of Credit

The Portfolio participates with other portfolios and funds
managed by BMR and EVM andits
affiliatesin
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.Interestis charged to each
participating
portfolio or fund based onits 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 creditis allocated among the
participating
portfolios and funds at the end of
each quarter.At December 31, 2005 the
Portfolio had a balance
outstanding pursuant to this line
of credit of $8,000,000.The Portfolio did not have any
significant borrowings or allocated fees during the year ended December 31, 2005.

7 Restricted Securities

At December 31, 2005, the Portfolio owned the following securities (representing 0.03%
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 determinedin
good faith by or at the direction
of the Trustees.

|                  |  | Date of     |  | Eligible   |  |        |  |            |  |           
|----------------- |  | ----------- |  | ---------- |  | ------ |  | ---------- |  | ----------
|Common Stocks     |  | Acquisition |  | for Resale |  | Shares |  | Cost       |  | Fair Value
|                 
|Caterpillar, Inc. |  | 2/17/05     |  | 2/18/06    |  | 34,186 |  | $1,580,520 |  | $1,974,662
|Progressive Corp. |  | 10/14/05    |  | 10/15/06   |  | 9,470  |  | 1,031,533  |  | 1,104,524 
|Sysco Corp.       |  | 5/19/05     |  | 5/20/06    |  | 60,000 |  | 2,220,777  |  | 1,862,224 
|                 
|                  |  |             |  |            |  |        |  | $4,832,830 |  | $4,941,410
|                 



|Tax-Managed Growth Portfolioa s   o f   D e c e m b e r   3 1
      ,   2 0 0 5REPORT 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 ofinvestments, as of December 31, 2005, and the
related statement of operations for
the year then ended, the statements of changesin net assets for each of the two yearsin the period then ended, and the supplementary data for each
of the five yearsin the period then ended.These
financial statements and supplementary data are the
responsibility of
the Portfolios management.Our responsibilityis to express an opinion on
these financial statements and supplementary data based on our
audits.

We conducted our auditsin
accordance with the standards of the
Public Company Accounting Oversight Board (United
States).Those standards
require that we plan and perform the
audits to obtain reasonable assurance about whether the
financial statements and supplementary data are free of
material misstatement.The Portfoliois not required to have, nor were we engaged to perform, an audit ofitsinternal control over financial
reporting.Our auditsincluded consideration
ofinternal control over financial
reporting as a basis for designing audit procedures that are appropriatein
the circumstances, but not for the
purpose of expressing an
opinion on the effectiveness of the
Portfoliosinternal control over financial reporting.Accordingly, we express no such
opinion.An audit alsoincludes examining, on a test basis, evidence supporting the amounts
and disclosuresin the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial
statement presentation.Our proceduresincluded confirmation of securities owned as of December 31,
2005 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, 2005, the
results ofits operations for the year then ended, the changesinits net assets for each of the two yearsin the period then ended, and the supplementary data for each of the five yearsin the period then ended,in conformity with
accounting principles
generally acceptedin the
United States of America.



|DELOITTE & TOUCHE LLPBoston, MassachusettsFebruary 17,
      2006
|-----------------------------------------------------------------

Belrose Capital Fund LLC

Investment Adviser of

Tax-Managed Growth Portfolio and Belrose Capital
Fund LLC



| | Boston Management and ResearchThe Eaton Vance Building255 State
      StreetBoston, MA
02109
| | --------------------------------------------------------------------------------------------

Manager of Belrose Realty Corporation



| | Boston Management and ResearchThe Eaton Vance Building255 State
      StreetBoston, MA
02109
| | --------------------------------------------------------------------------------------------

Manager of Belrose Capital Fund LLC



| | Eaton Vance ManagementThe Eaton Vance Building255 State
      StreetBoston, MA
02109
| | ------------------------------------------------------------------------------------



| | Custodian and Transfer AgentInvestors Bank & Trust Company200
      Clarendon StreetBoston, MA
  02116
| | ------------------------------------------------------------------------------------------------------

Independent Registered Public Accounting Firm



| | Deloitte & Touche LLP200 Berkeley StreetBoston, MA
      02116
| | --------------------------------------------------------------

78



|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.



|Date: March 15,
2006
|--------------------

BELROSE CAPITAL FUND LLC(Registrant)By:
    
    /s/ Michelle A. GreenMichelle A. GreenDuly Authorized Officer andPrincipal Accounting Officer


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: March 15,
2006
|--------------------

By:
    
    /s/ Michelle A. GreenMichelle A. GreenChief Financial Officer




|Date: March 15,
2006
|--------------------

79

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
      herewith.                                                                                                                                                                                                                                                                                                                               
|                  |  |                                                                                                                                                                                                                                                                                                                                                                             
|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
      herewith.                                                                                                                                                                                                                                                                                                                               
|                  |  |                                                                                                                                                                                                                                                                                                                                                                             
|4.2               |  | Copy of Loan and Security Agreement among the
      Fund, Merrill Lynch Mortgage Capital, Inc., the lenders                                                                                                                                                                                                                                                                 
|                  |  | referred to therein and Merrill Lynch Capital
      Services, Inc., dated June 30, 2003 filed as Exhibit 4.2 to
      the                                                                                                                                                                                                                                                   
|                  |  | Funds Form 10-Q for the period ended June
      30, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                                                             
|                  |  |                                                                                                                                                                                                                                                                                                                                                                             
|4.2(a)            |  | Copy of Amendment No. 1 to Loan and Security
      Agreement among the Fund, Merrill Lynch Mortgage                                                                                                                                                                                                                                                                         
|                  |  | Capital, Inc., as Agent, the Lenders referred
      to therein and Merrill Lynch Capital Services, Inc. dated                                                                                                                                                                                                                                                               
|                  |  | September 29, 2003 filed as Exhibit 4.2(a) to
      the Funds 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 herewith.                                                                                                                                                                                                                                                                                                                                            
|                  |  |                                                                                                                                                                                                                                                                                                                                                                             
|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
      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(2)             |  | Copy of Management Agreement between Belrose
      Realty Corporation and Boston Management and  Research dated March 14, 2001 filed as Exhibit 10(2) to the Funds
      Initial Registration Statement on Form 10 and
      incorporated herein by reference.                                                                                                             
|                  | 
|                  |  |                                                                                                                                                                                                                                                                                                                                                                             
|10(3)             |  | Copy of Investor Servicing Agreement between
      the Fund and Eaton Vance Distributors, Inc. dated                                                                                                                                                                                                                                                                        
|                  |  | December 5, 2000 filed as Exhibit 10(3) the
      Funds Initial Registration Statement on Form 10 and                                                                                                                                                                                                                                                                      
|                  |  | incorporated herein by
      reference.                                                                                                                                                                                                                                                                                                                                     

80

|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.
|         | 
|         | 
|         |  |                                                                                                                                                                                                                                                                                           
|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, 2005 filed electronically with
      the Securities and Exchange Commission under the                                                                                                                                                                                        
|         |  | Investment Company Act of 1940 on March 8,
      2006 incorporated herein by reference pursuant to Rule                                                                                                                                                                                   
|         |  | 12b-32.                                                                                                                                                                                                                                                                                   

81