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

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year Ended December 31, 2004
                          Commission File No. 000-50258
                                              ---------

                      Belrose Capital Fund LLC (the Fund)
             (Exact name of registrant as specified in its charter)
          Securities registered pursuant to Section 12(g) of the Act:


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

       The Eaton Vance Building
           255 State Street
        Boston, Massachusetts                            02109
        ---------------------                            -----
    (Address of principal executive offices)          (Zip Code)


    Registrant's telephone number:                    617-482-8260
                                                      ------------

            Limited Liability Company Interests in the Fund (Shares)
            --------------------------------------------------------
                                (Title of class)

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

                                        YES  [X]     NO  [ ]


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

                                        YES  [X]     NO  [ ]


Aggregate market value of the Shares held by non-affiliates of registrant, based
on the closing net asset value on June 30, 2004 was $1,667,123,112.  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.

                           Incorporation by Reference:
                          ---------------------------
None.

                    The Exhibit Index is located on page 83.

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                            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................................................  3
              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.................................  6
              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

  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........................... 12
           Distributions.................................................. 12
              Income and Capital Gain Distributions....................... 12
              Special Distributions....................................... 12

  6     Selected Financial Data........................................... 13
           Table of Selected Financial Data............................... 13

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  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,
            2004 Compared to the Year Ended December 31, 2003............. 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,
            31, 2003 Compared to the Period Ended December 31, 2002....... 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................................ 19
              Outstanding Borrowings...................................... 19
              Liquidity................................................... 19
           Off-Balance Sheet Arrangements................................. 20
           The Fund's Contractual Obligations............................. 20
           Critical Accounting Estimates.................................. 21

  7A    Quantitative and Qualitative Disclosures About Market Risk........ 23
           Quantitative Information About Market Risk..................... 23
              Interest Rate Risk.......................................... 23
           Qualitative Information About Market Risk...................... 25
              Risks Associated with Equity Investing...................... 25
              Risks of Investing in Foreign Securities.................... 25
              Risks of Certain Investment Techniques...................... 25
              Risks of Real Estate Investments............................ 26
              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 Disclosures........................................ 30

  9A    Controls and Procedures........................................... 30

  9B    Other Information................................................. 30

                                    PART III
                                    --------

 10     Directors and Executive Officers.................................. 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.... 32
           Security Ownership of Certain Beneficial Owners................ 32

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           Security Ownership of Management............................... 32
           Changes in Control............................................. 32

 13     Certain Relationships and Related Transactions.................... 33
           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.................... 34

 14     Principal Accountant Fees and Services............................ 35

                                     PART IV
                                     -------

 15     Exhibits, Financial Statements and Reports on Form 8-K............ 37

APPENDIX A................................................................ 38

FINANCIAL STATEMENTS...................................................... 39

SIGNATURES................................................................ 82

EXHIBIT INDEX............................................................. 83

<PAGE>

                                     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, 2004, the Fund had net assets of approximately $1.7 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 each year the amount of its net investment income
for such  year,  if any.  The Fund also  intends  to make  annual  capital  gain
distributions  equal to  approximately  18% of the  amount  of its net  realized
capital gains,  if any,  other than certain  precontribution  gains.  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.  The
Fund's income distributions are not expected to be significant. 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 individual and institutional  investors. As of
October 31, 2004,  Eaton Vance and its affiliates  managed more than $90 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
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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  $19.1
billion as of December 31, 2004. As of December 31, 2004, the Fund's  investment
in the Portfolio  through  Belvedere  Company had a value of approximately  $1.8
billion  (equal  to  approximately  75.3%  of  the  Fund's  total  assets  on  a
consolidated basis).

BELVEDERE  COMPANY.  Belvedere  Company was  organized in 1997 by Eaton Vance to
offer  tax-free  diversification  and  tax-sensitive  investment  management  to
certain  qualified  investors who contributed  diversified  portfolios of equity
securities.  As of December 31, 2004, the investment assets of Belvedere Company
consisted  exclusively  of  an  interest  in  the  Portfolio  with  a  value  of
approximately $12.8 billion. As of such date, the Fund owned approximately 13.7%
of Belvedere  Company's  outstanding  shares. As of December 31, 2004, the other
investors in Belvedere  Company  included seven 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, 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  Investing in Real Estate"
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.

                                        2
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THE  PORTFOLIO.  The  Portfolio  was  organized  in 1995 by  Eaton  Vance as the
successor to the investment  operations of Eaton Vance  Tax-Managed  Growth Fund
1.0  (Tax-Managed  Growth 1.0), a mutual fund established in 1966 by Eaton Vance
and managed from inception for long-term,  after-tax returns. As of December 31,
2004, 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,
2004, Belvedere Company owned approximately 66.9% 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, 2004 are included as pages 39
to 81 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,  2004,  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
and  Tax-Managed  Growth 1.0,  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 in the  securities  of
issuers  having  their  principal   business  activity  in  the  same  industry,
determined as of the time of acquisition of any such securities.

THE PORTFOLIO'S  TAX-SENSITIVE  MANAGEMENT  STRATEGIES.  In its operations,  the
Portfolio seeks to achieve  long-term,  after-tax  returns in part by minimizing
the  taxes  incurred  by  investors  in the  Portfolio  in  connection  with the
Portfolio's  investment  income and realized capital gains.  Taxes on investment
income are minimized by investing  primarily in  lower-yielding  securities  and
stocks that pay  dividends  that qualify for  favorable  federal tax  treatment.
Taxes on realized capital gains are minimized by 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
the  tax-management  strategies  described above. 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

                                        3
<PAGE>

constituents are held in whole or in part, forward sales of stocks held, and the
purchase and sale of futures  contracts on stocks and stock  indexes and options
thereon.  By using these  techniques  rather than selling such  securities,  the
Portfolio can, within certain  limits,  reduce its exposure to price declines in
the securities  without  realizing  substantial  capital gains under current tax
law.

The Portfolio's  ability to utilize  covered short sales,  certain equity swaps,
forward  sales,  futures  contracts and certain  equity  collar  strategies as a
tax-efficient  management  technique  with  respect to holdings  of  appreciated
securities  is limited to  circumstances  in which the  hedging  transaction  is
closed out within 30 days after the end of the Portfolio's taxable year in which
the hedging transaction was initiated and the underlying  appreciated securities
position  is held  unhedged  for at least the next 60 days  after  such  hedging
transaction is closed.  In addition,  dividends  received on stock for which the
Portfolio is obligated  to make  related  payments  (pursuant to a short sale or
otherwise)  with  respect  to  positions  in  substantially  similar  or related
property are subject to federal  income tax at ordinary rates and do not qualify
for favorable  tax  treatment.  Also,  the holding  periods  required to receive
tax-advantaged  treatment  of  qualified  dividends  on a  stock  are  suspended
whenever the Portfolio has an option (other than a qualified covered call option
not in the money when  written)  or  contractual  obligation  to sell or an open
short sale of substantially  identical stock, is the grantor of an option (other
than a  qualified  covered  call  option not in the money when  written)  to buy
substantially  identical  stock or has diminished  risk of loss in such stock by
holding positions with respect to substantially similar or related property. The
use of these  investment  techniques may require the Portfolio to commit or make
available  cash  and,  therefore,  may not be  available  at such  times  as the
Portfolio has limited holdings of cash. At December 31, 2004, the Portfolio held
a short position on a security with a value equal to  approximately  1.0% of the
Portfolio's net assets.  The Portfolio paid commissions  totaling  approximately
$90,000 in  connection  with  entering  into this short  position  in 2004.  The
Portfolio  did not otherwise  employ any of the  techniques  described  above on
securities  holdings  during the year ended  December  31,  2004.  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, 2004, the  consolidated  real
estate  investments of Belrose Realty totaled  approximately  $558.0 million and
represented  23.9%  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 real estate  investment  transactions
during the year  ended  December  31,  2004,  see  "Performance  of Real  Estate
Investments" in Item 7.

At December 31, 2004, Belrose Realty held investments in three real estate joint
ventures (Real Estate Joint  Ventures) that are controlled by Belrose Realty and
in a portfolio of  income-producing  preferred  equity  interests in real estate
operating partnerships that generally are affiliated with and controlled by real
estate  investment   trusts  (REITs)  that  are  publicly  traded   (Partnership
Preference  Units).  As  of  December  31,  2004,  approximately  89.0%  of  the
consolidated real estate  investments of Belrose Realty consisted of investments
in Real  Estate  Joint  Ventures  and  approximately  11.0% was  investments  in
Partnership Preference Units.

In the  future,  Belrose  Realty  may  invest  in  other  types  of real  estate
investments,  such as in 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  subsidiaries of other investment funds advised by
Boston Management. See "Certain Real Estate 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, 2004,  Belrose  Realty
owned  a  controlling  interest  in  three  Real  Estate  Joint  Ventures,   Bel
Communities   Property  Trust  (Bel   Communities),   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.  With respect to each Real Estate Joint  Venture,
Belrose Realty owns a majority economic interest therein and controls a majority
of its board.  Belrose  Realty's  approval is required  for all major  decisions
affecting each Real Estate Joint Venture.

The day-to-day  operating  management of the real properties  owned by each Real
Estate  Joint  Venture is  provided by the real estate  operating  company  (the
Operating  Partner) that is the principal  minority  investor in the Real Estate

                                        4
<PAGE>

Joint Venture or an affiliated  company thereof.  The Operating  Partner (or its
affiliate)  receives certain fees from the Real Estate Joint Ventures (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. For the year ended December 31, 2004,
such fees totaled approximately $2.8 million.

At December 31, 2004, the assets of the Real Estate Joint Ventures  consisted of
18 multifamily  properties and 18 industrial  distribution  properties  acquired
from  or in  conjunction  with  the  Operating  Partner  thereof.  See  Item  2.
Distributable  cash flows from each Real Estate Joint Venture are allocated in a
manner that provides Belrose Realty: 1) a priority position versus the Operating
Partner with respect to a fixed annual preferred return; and 2) participation on
a pro rata or reduced basis in distributable  cash flows in excess of the annual
preferred return of Belrose Realty and the subordinated  preferred return of the
Operating  Partner.  A portion  of  Belrose  Realty's  investment  in  Deerfield
represents a partial interest in certain management  contracts pursuant to which
Deerfield  may receive cash flows from  management  fees and certain  other fees
over the life of the contracts.

Financing for the Real Estate Joint  Ventures  consists  primarily of fixed-rate
secured  mortgage debt  obligations  of the Real Estate Joint  Ventures that are
generally  without  recourse to Belrose  Realty and the Fund,  as  described  in
"Risks of Real Estate  Investments"  in Item 7A(b).  Both Belrose Realty and the
respective  Operating Partner invested equity in the Real Estate Joint Ventures.
Belrose Realty's equity in the Real Estate Joint Ventures was acquired using the
proceeds of Fund borrowings.

A board  controlled by Belrose Realty  oversees the performance of the Operating
Partner and controls the major  decisions of each Real Estate Joint Venture.  In
the case of Bel Communities,  Belrose Realty controls three of the four seats on
the board of trustees.  In the case of Katahdin and  Deerfield,  Belrose  Realty
controls  three  of the five  seats  on the  board  of  managers  and  trustees,
respectively.  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
a Real  Estate  Joint  Venture  is a  Shareholder  of the Fund.  Each  Operating
Partners  of Belrose  Realty's  Real  Estate  Joint  Ventures  also serves as an
operating partner of other Real Estate Joint Ventures that are majority owned by
real estate subsidiaries of other investment funds advised by Boston Management.
Eaton Vance and its affiliates do not have a material  financial interest in the
Real Estate Joint Ventures.

The Operating  Partner of Bel Communities is ERP Operating  Limited  Partnership
(ERP),  an affiliate of Equity  Residential.  Equity  Residential  is a publicly
owned,  self-administered  and  self-managed  REIT.  Equity  Residential  is the
largest publicly traded apartment  company in America.  As of December 31, 2004,
Equity  Residential owned or had investments in 939 apartment  communities in 32
states and the  District  of Columbia  consisting  of 200,149  apartment  units.
Equity Residential's  corporate  headquarters are located in Chicago,  Illinois.
Equity  Residential's  common  shares are traded on the New York Stock  Exchange
under the symbol "EQR". ERP owns 25% of the issued and outstanding shares of Bel
Communities  that  are  entitled  to  vote  for  election  of  trustees  of  Bel
Communities.  Belrose  Realty  owns the  balance of such  shares.  Pursuant to a
buy/sell  agreement  entered into at the time Bel Communities  was  established,
either  Belrose  Realty or ERP can give notice  after  November  27, 2009 to the
other party either to buy the other's equity  interest in Bel  Communities or to
sell its own equity  interest  in Bel  Communities.  Any such sale would be at a
negotiated  price.  The sale to Belrose  Realty by the Operating  Partner of the
Operating  Partner's  interest  in Bel  Communities  would not  affect  the REIT
qualification of Bel Communities.

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 and a recognized  leader in apartment
investment and operations with a current market  capitalization of $11.8 billion
as of December  31,  2004.  Archstone-Smith  owns and  operates a  portfolio  of
high-rise  and  garden  apartment   communities   concentrated  in  the  greater
Washington,  D.C. metropolitan area, Southern California,  the San Francisco Bay
area, Chicago,  Boston, Southeast Florida, Seattle and the greater New York City
metropolitan  area.  As of December  31, 2004,  Archstone-Smith  owned or had an
ownership position in 235 communities,  representing approximately 81,000 units,
including units under construction. Archstone-Smith's corporate headquarters are
located in Englewood, Colorado.  Archstone-Smith is traded on the New York Stock
Exchange  under the  symbol  "ASN".  Archstone-Smith  owns 25% of the issued and
outstanding  shares  of  Katahdin  that are  entitled  to board  representation.
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 to the other party
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 sale to Belrose Realty by the Operating  Partner of the Operating  Partner's
interest in Katahdin would not affect the REIT qualification of Katahdin.

The Operating Partner of Deerfield is ProLogis.  ProLogis, a publicly owned REIT
with  its  headquarters  in  Aurora,  Colorado,  operates  a global  network  of
industrial distribution  properties.  As of December 31, 2004, ProLogis owned or
had  ownership  interests in 1,994  distribution  facilities  aggregating  297.9
million  square  feet in 72 markets in North  America,  Europe and Asia.  Common

                                        5
<PAGE>

shares of ProLogis  are traded on the New York Stock  Exchange  under the symbol
"PLD".  ProLogis owns 20% of the issued and outstanding shares of Deerfield that
are entitled to representation on the board of trustees. 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  operating
documents   prohibit  any  transfer  of  shares  that  would  adversely   affect
Deerfield's qualification as a REIT.

The buy/sell or liquidation  agreement applicable to a Real Estate Joint Venture
continues  indefinitely,  but  could  be  terminated  upon  the  receipt  of the
requisite  approval  of the owners of the voting  interests  in the Real  Estate
Joint  Venture.  If Belrose  Realty  were to dispose of its  interest  in a Real
Estate Joint Venture 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,  2004  consisted  of
direct or indirect ownership interests in real properties, including multifamily
properties,  self-storage  facilities and office and industrial properties.  The
Partnership Preference Units owned by Belrose Realty as of December 31, 2004 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 39
to 81 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  of the  issuing
partnership,  with preferential rights over common and other subordinated units.
None of the  Partnership  Preference  Units are 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 and each Real
Estate  Joint  Venture  operate in such a manner as to qualify  for  taxation as
REITs  under the Code.  As REITs,  Belrose  Realty  and each Real  Estate  Joint
Venture 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  relevant
Operating  Partner  own all of the  common  shares  of each  Real  Estate  Joint
Venture.

Belrose  Realty and the Real Estate Joint  Ventures  also have issued  preferred
shares to satisfy  certain  provisions of the Code,  which require  (among other
things)  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 or
the  Operating  Partners.  As of  December  31,  2004,  the  total  value of the
preferred shares outstanding of Belrose Realty, Bel Communities and Katahdin was
$210,000, $220,000 and $216,000, respectively. Dividends on preferred shares are
cumulative  and payable  annually at a dividend  rate of 8% per year for Belrose
Realty,  Bel  Communities  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,  2004,  Belrose  Realty,  Bel  Communities  and
Katahdin paid or accrued  distributions  to preferred  shareholders  of $16,800,
$17,600 and $17,280, respectively.  Deerfield issued preferred shares on January
28, 2005 and is expected to make its first distribution on or about December 31,
2005.

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,

                                        6
<PAGE>

the Credit  Facility).  The Credit Facility is secured by a pledge of the Fund's
assets,  excluding the assets of Bel  Communities,  Deerfield and Katahdin,  and
expires  in June  2010.  At  December  31,  2004,  the  total  principal  amount
outstanding under the Credit Facility was $236.0 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, 2004,  outstanding  borrowings  under the DrKW Credit
Facility totaled $216.0 million.

The MLMC Credit Facility is a revolving credit agreement. The Fund may borrow up
to $57.0  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,
2004,  outstanding  borrowings  under the MLMC  Credit  Facility  totaled  $20.0
million.  There was a $0.8  million  letter of credit  issued as of December 31,
2004. The unused loan commitment amount totaled $36.2 million.  A commitment fee
of 0.10% per annum is paid on the unused  commitment  amount.  The Fund pays all
fees associated with issuing letters of credit.

Obligations under the Credit Facility are without recourse to Fund Shareholders.
As  described  above,  financing  for the Real Estate  Joint  Ventures  consists
primarily of fixed-rate  secured  mortgage debt  obligations  of the Real Estate
Joint Ventures that are without recourse to Fund Shareholders, and generally are
without  recourse to Belrose  Realty and the Fund, as described  under "Risks of
Real Estate Investments" in Item 7A(b).

INTEREST  RATE SWAP  AGREEMENTS.  The Fund has entered into  interest  rate swap
agreements with Merrill Lynch Capital  Services,  Inc. (MLCS) to fix the cost of
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 entered into 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 39 to 81 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, 2004, the assets of the Fund  represented
approximately 2.4% 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  interests  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.

                                        7
<PAGE>

Belrose   Realty  may  purchase  real  estate   investments   from  real  estate
subsidiaries of other  investment  funds advised by Boston  Management.  Belrose
Realty may also co-invest with such entities in real estate investments and sell
real estate  investments to such entities.  In any such transaction,  the assets
purchased  and sold  will be valued in good  faith by Boston  Management,  after
consideration of factors,  data and information that Boston Management considers
relevant.  Transaction  prices  generally  will  include  an  allocation  of the
original  costs incurred in creating and acquiring the  transferred  real estate
investments.  Real estate  investments  are often  difficult to value and others
could in good  faith  arrive  at  valuations  different  from  those  of  Boston
Management. See "Critical Accounting Estimates" in Item 7(e).

ITEM 2. PROPERTIES.
-------------------

The Fund does not own any physical  properties,  other than  indirectly  through
Belrose  Realty's  investments.  At  December  31,  2004,  Belrose  Realty  held
investments in Partnership  Preference Units of three issuers and owned majority
interests in three Real Estate Joint Ventures,  Bel  Communities,  Deerfield and
Katahdin, whose assets are reflected in the consolidated financial statements of
the Fund.  At December  31,  2004,  Bel  Communities  owned  twelve  multifamily
residential properties located in eleven states (Texas, Arizona,  Georgia, North
Carolina,  Oregon,  Minnesota,  Maryland,  Washington,  Oklahoma,  Tennessee and
Florida).  At December  31, 2004,  Katahdin  owned six  multifamily  residential
properties located in five states (Florida,  Texas,  North Carolina,  New Mexico
and  Washington).  At December 31, 2004,  Deerfield  owned  eighteen  industrial
distribution  properties  located in six states  (Florida,  Georgia,  Ohio,  New
Jersey, 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 any of them
is 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, 2004.

                                        8
<PAGE>

                                     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,  as amended
(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 of the Fund 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, 2004,  the total number of
Shares redeemed and the average price paid per Share were as follows:

                       Total No. of Shares     Average Price Paid Per
       Month Ended         Redeemed(1)                 Share
     ------------------------------------------------------------------
       October             125,298.74                 $ 95.87
     ------------------------------------------------------------------
       November             35,565.94                 $101.44
     ------------------------------------------------------------------
       December             62,033.90                 $103.21
     ------------------------------------------------------------------
       Total               222,898.58                 $101.38
     ------------------------------------------------------------------

(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.

                                        9
<PAGE>

The Fund satisfies  redemption requests  principally by distributing  securities
drawn from the  Portfolio,  but may also  distribute  cash.  If  requested  by a
redeeming   Shareholder,   the  Fund  will  satisfy  a  redemption   request  by
distributing  securities  that were  contributed  by the redeeming  Shareholder,
provided  that  such  securities  are  held  in the  Portfolio  at the  time  of
redemption.  The securities contributed by a Shareholder will not be distributed
to any other  Shareholder  in the Fund (or to any other  investor  in  Belvedere
Company  or  the  Portfolio)  during  the  first  seven  years  following  their
contribution unless the contributing Shareholder has withdrawn from the Fund.

Under  most  circumstances,  a  redemption  from the Fund that is  settled  with
securities  as described  herein will not result in the  recognition  of capital
gains by the Fund or by the redeeming  Shareholder.  The  redeeming  Shareholder
would generally recognize capital gains upon the sale of the securities received
through  redemption.  If a redeeming  Shareholder  receives  cash in addition to
securities to settle a  redemption,  the amount of cash received will be taxable
to the Shareholder to the extent it exceeds such Shareholder's tax basis in Fund
Shares.   Shareholders   should   consult  their  tax  advisors  about  the  tax
consequences of redeeming Fund Shares.

A  Shareholder  redemption  request  within  seven  years of a  contribution  of
securities  by  such   Shareholder  is  ordinarily   satisfied  by  distributing
securities that were contributed by such  Shareholder,  prior to distributing to
such  Shareholder  any  other  securities  held  in  the  Portfolio.  Securities
contributed by a Shareholder  may be distributed  to other  Shareholders  in the
Fund (or to other  investors  in  Belvedere  Company or the  Portfolio)  after a
holding  period of at least  seven years and,  if so  distributed,  would not be
available  to meet  subsequent  redemption  requests  made  by the  contributing
Shareholder.

If  requested  by a redeeming  Shareholder  making a  redemption  of at least $1
million  occurring  more  than  seven  years  after  such  Shareholder's   final
contribution  of securities to the Fund, the Fund will  generally  distribute to
the  redeeming  Shareholder a diversified  basket of securities  representing  a
range of industry groups that is drawn from the Portfolio,  but the selection of
individual securities would be made by Boston Management in its sole discretion.
No interests in a Real Estate Joint  Venture,  Partnership  Preference  Units or
other real estate investments will be distributed to meet a redemption  request,
and  "restricted  securities"  will be distributed  only to the  Shareholder who
contributed such securities or such Shareholder's successor in interest.

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 a 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 outstanding an 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 New York Stock
Exchange  (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

                                       10
<PAGE>

through  Belvedere  Company and in real estate  investments held through Belrose
Realty.  The  trustees of the  Portfolio  have  established  procedures  for the
valuation of the Portfolio's assets under normal market conditions.  Pursuant to
these  procedures,  marketable  securities listed on U.S.  securities  exchanges
generally  are valued at the last sale price on the day of the  valuation or, if
there  were no sales,  at the mean  between  the  closing  bid and asked  prices
therefor  on  the  exchange  where  such  securities  are  principally   traded.
Marketable  securities listed on the NASDAQ 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. The daily
valuation  of foreign  securities  generally  is  determined  as of the close of
trading  on the  principal  exchange  on which  such  securities  trade.  Events
occuring  after  the  close of  trading  on  foreign  exchanges  may  result  in
adjustments to the valuations of foreign  securities to more accurately  reflect
their fair value as of the close of regular  trading on the NYSE.  When  valuing
foreign equity securities that meet certain criteria,  the Portfolio uses 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 securities held by the
Portfolio.  All other  securities 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  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, 2004 and 2003,  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)
   -------------     --------     -------     -----------     ----------------
     12/31/04        $103.91      $93.76        $102.03            6.54%
      9/30/04        $ 97.52      $91.21        $ 95.77           -2.71%
      6/30/04        $ 98.94      $93.82        $ 98.44            1.62%
      3/31/04        $ 99.06      $93.84        $ 96.87            1.07%
     12/31/03        $ 95.84      $87.50        $ 95.84           12.04%
      9/30/03        $ 89.11      $83.47        $ 85.54            2.53%
      6/30/03        $ 86.26      $74.16        $ 83.43           13.63%
      3/31/03        $ 80.32      $69.02        $ 73.42           -4.48%

(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(a).

                                       11
<PAGE>

(b) RECORD HOLDERS OF SHARES OF THE FUND.
-----------------------------------------

As of March 1, 2005, there were 626 record holders of Shares of the Fund.

(c) DISTRIBUTIONS.
------------------

INCOME AND CAPITAL GAIN DISTRIBUTIONS.  The Fund intends to distribute each year
the amount of its net  investment  income for such year,  if any.  The Fund also
intends to make annual capital gain distributions  equal to approximately 18% of
the amount of its net realized capital gains, if any, other than 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 generally accepted  accounting  principles.  Because the Portfolio invests
primarily in lower yielding  securities,  seeks to avoid net realized short-term
capital gains and bears certain ongoing expenses, it is not expected that income
distributions  will be significant.  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 and realized
post-contribution  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  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.
On  January  17,  2003,  the Fund  made a  distribution  of $0.05  per  Share to
Shareholders of record on January 16, 2003.

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 precontribution gains allocated to a
Shareholder in connection with a tender offer or other  extraordinary  corporate
event  involving  a  security   contributed  by  such  Shareholder)  (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
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 in connection with a tender offer or other  extraordinary  corporate
event involving a security contributed by such Shareholder.  For the years ended
December 31, 2004 and 2003, the Fund made no Special Distributions.

                                       12
<PAGE>

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, 2004 and
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 39 to 81 of this Annual Report
on Form 10-K. The other consolidated data referred to below is as of each period
end.
<TABLE>
<CAPTION>
                                 Year Ended         Year Ended           Year Ended
                              December 31, 2004  December 31, 2003  December 31, 2002(1)(2)
                              -----------------  -----------------  -----------------------
<S>                            <C>                 <C>                 <C>
Total investment income        $   90,895,859      $   82,312,956      $   44,487,727
Interest expense               $   30,873,176      $   29,114,183      $   16,926,050
Net expenses (including
 interest expense)             $   71,503,398      $   65,089,736      $   37,590,944
Net investment income          $   17,520,056      $   15,279,642      $    5,431,684
Minority interests in net
 income of controlled
 subsidiaries                  $   (1,872,405)     $   (1,943,578)     $   (1,465,099)
Net realized gain              $   37,095,580      $    2,449,130      $    5,188,827
Net change in unrealized
 appreciation (depreciation)   $   62,187,846      $  311,836,713      $ (129,398,897)
Net increase (decrease) in
 net assets from operations    $  116,803,482      $  329,565,485      $ (118,778,386)
Total assets                   $2,333,068,841      $2,193,109,315      $1,791,207,727
Loan payable                   $  236,000,000      $  183,300,000      $  155,300,000
Mortgages payable              $  359,850,000      $  344,219,483      $  344,219,483
Net assets                     $1,694,227,425      $1,632,454,758      $1,242,001,655
Shares outstanding                 16,604,562          17,032,796          16,160,271
Net asset value and
redemption price per Share     $       102.03      $        95.84      $        76.86
Net increase (decrease) in
 net assets from operations
 per Share                     $         6.96      $        19.03      $       (23.14)
Distribution paid per Share    $         0.77(5)   $         0.05(4)   $         0.00(3)
</TABLE>
(1)  The Fund commenced operations on March 19, 2002.

(2)  Certain  amounts  have been  reclassified  to conform with the current year
     presentation.

(3)  On January 17,  2003,  the Fund made a  distribution  of $0.05 per Share to
     Shareholders of record on January 16, 2003.

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

(5)  On January 27,  2005,  the Fund made a  distribution  of $1.29 per Share to
     Shareholders of record on January 26, 2005.

                                       13
<PAGE>

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 notes appearing on pages 39 to 81
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
increases  and  decreases  in 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 Belrose Realty's  controlled  subsidiaries.  The Fund's
investment  income 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 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  and interest  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, 2004 COMPARED TO
THE YEAR ENDED DECEMBER 31, 2003.
--------------------------------------------------------------------------------

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  whether,  through current returns and changes in valuation,  the real
----------------------
(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.   Returns  are  calculated  by
     determining the percentage change in net asset value with all distributions
     invested.  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
<PAGE>
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, 2004 was 7.32%.  This
return  reflects 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.
The combined impact on performance of the Fund's investment  activities  outside
of the  Portfolio  was  negative  for the year  ended  December  31,  2004.  The
performance of the Fund trailed that of the Portfolio by approximately 2.35% for
the year.

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  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  healthcare   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
healthcare, 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,   healthcare  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,
healthcare  and  consumer  discretionary  stocks.  Among  industry  groups,  the
Portfolio benefited from  overweightings of air freight & logistics,  oil & 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.

Looking  forward,  Boston  Management  believes that corporate  earnings and the
economy will remain on track as we enter 2005.  The  longer-term  success of the
Portfolio will be determined by the  performance of the U.S.  equity markets and
the execution of the Portfolio's  investment strategy. The Portfolio maintains a
broadly diversified portfolio of stocks,  emphasizing investments in established
growth companies that are considered by Boston  Management to be high in quality
and attractive in their long-term investment  prospects.  The Portfolio seeks to
minimize  trading  costs and defer the  recognition  of taxable gains by holding
most  successful  investments  for the  long-term.  Stock  selection  and  asset
allocation are based on Boston Management's detailed fundamental analysis.

PERFORMANCE OF REAL ESTATE  INVESTMENTS.  The Fund's real estate investments are
held through  Belrose Realty.  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
ProLogis or an affiliate  thereof  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.

                                       15
<PAGE>

In November 2004,  Belrose Realty sold its interest in Bel Apartment  Properties
Trust (Bel  Apartment),  a Real Estate Joint Venture,  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 in 2003 (and
the  longer  period of time for which  investments  in such  Real  Estate  Joint
Ventures were held) versus 2002, offset in part by increased rent concessions or
reduced apartment rental rates and lower occupancy levels at properties owned by
the Real Estate Joint Ventures during 2003.

During the year ended  December  31,  2004,  property  operating  expenses  were
approximately $31.8 million compared to approximately $28.6 million for the year
ended December 31, 2003, an increase of $3.2 million or 11% (property  operating
expenses  are  before   certain   operating   expenses  of  Belrose   Realty  of
approximately $3.9 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 through the Real Estate Joint Ventures
during the year (and the  longer  period of time for which  investments  in such
Real Estate Joint Ventures were held).

The near-term outlook for multifamily  property operations continues to be weak.
While the recent pick-up in economic and  employment  growth is expected to lead
to  improved  supply-demand  balance  in  the  apartment  industry,   oversupply
conditions  continue to exist in many major markets.  Boston Management  expects
that multifamily real estate operating results for 2005 will be similar to 2004.
In 2004,  certain  industrial  markets in the United  States began to experience
increased  demand for space after  several  years of  occupancy  and rental rate
declines. For many industrial distribution  properties,  reduced rent levels are
likely to continue over the near term as above-market leases mature and space is
released at current market rates. Boston Management expects that improvements in
multifamily and industrial  distribution  property  operating  performance  will
occur over the longer term.

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 as
compared to December 31, 2002 resulted from declines in capitalization  rates in
a  lower-return  environment,  which more than offset the impact of lower income
expectations on proerty values. The capitalization rate, a term commonly used in
the real estate industry,  is the rate of return percentage applied to actual or
projected income levels to estimate the value of a real estate investment.

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

                                       16
<PAGE>

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 at December 31, 2004.  At December 31, 2003,
the  estimated  fair  value  of  Partnership   Preference  Units  had  increased
principally  due to a greater  number of units held as compared to December  31,
2002.

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  compared  to the year ended
December  31,  2002,  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 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.

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.

MD&A AND RESULTS OF OPERATIONS  FOR THE YEAR ENDED DECEMBER 31, 2003 COMPARED TO
THE PERIOD ENDED DECEMBER 31, 2002.
--------------------------------------------------------------------------------

PERFORMANCE  OF THE FUND.  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%.

The Fund  had a total  return  of  -23.14%  for the  period  from  the  start of
business, March 19, 2002, to December 31, 2002. This return reflected a decrease
in the Fund's net asset value per Share from $100.00 to $76.86.  For comparison,
the S&P 500 Index had a total return of -23.45%  over the same  period.  For the
period from the start of  business,  March 19, 2002,  to December 31, 2002,  the
performance of the Fund trailed that of the Portfolio by approximately 1.83%.

PERFORMANCE OF THE PORTFOLIO.  U.S. equities experienced a successful 2003, with
most major indices posting their first annual gains since 1999.  Strength in the
broader market was a function of a favorable  economic environment: historically

                                       17
<PAGE>

low  inflation  and  interest  rates,  coupled with robust  earnings  growth and
continued  consumer  strength.  While the  Portfolio's  performance for the year
ended December 31, 2003 of 23.88% was strong,  the Portfolio trailed the S&P 500
Index,  which had a total return of 28.67% for the year. The total return of the
Portfolio for the period from March 19, 2002 to December 31, 2002 was -21.31%.

The Portfolio's sector allocation in 2003 was substantially  unaltered from 2002
in that the  Portfolio  continued  to  maintain  overweighted  positions  in the
industrial,  consumer  discretionary  and  financials  sectors.  Although  these
sectors  generally  performed well during 2003,  the sub-par  performance of the
Portfolio's  holdings across the constituent  industries,  and multi-line retail
and  aerospace/defense  names  in  particular,  hindered  its  performance.  The
Portfolio's  continued  underweight of the best  performing  sector of the year,
information  technology,  was another  factor  contributing  to the  Portfolio's
relative underperformance versus the S&P 500 Index. As in 2002, lack of earnings
visibility  and  unattractive  valuations  caused  Boston  Management  to remain
cautious on the technology sector. A similar rationale prompted a de-emphasis of
the telecommunications sector, the underweighting of which had a positive impact
on the Portfolio's return in 2003.

During the year, Boston Management increased the Portfolio's  allocation to more
economically  sensitive sectors, such as consumer discretionary and energy, from
2002  levels.   This  shift,   particularly   with  respect  to  investments  in
pro-cyclical industries, such as consumer electronics,  energy services, and oil
and gas, was particularly beneficial. Financial and health care investments also
contributed to relative performance in 2003, with strong performance by consumer
finance,  pharmaceuticals  and  biotechnology  investments.  While the Portfolio
remained  underweighted in the materials and the utilities  sectors during 2003,
stock  selections in the electric and gas utilities groups  positively  impacted
returns for the year.

Unlike  in  2002,  the  market  favored  lower  quality  and  higher  volatility
securities in 2003, something that is not unusual when coming out of an economic
slowdown or bear market. The Portfolio's policy of investing primarily in higher
quality   securities   and  its   valuation   discipline   contributed   to  its
underperformance  versus its benchmark and the Portfolio's more aggressive peers
during 2003.

PERFORMANCE  OF REAL ESTATE  INVESTMENTS.  At December 31, 2003, the Fund's real
estate  investments held through Belrose Realty included  majority  interests in
three Real Estate Joint Ventures (Bel Apartments,  Bel Communities and Katahdin)
and investments in Partnership  Preference  Units.  During 2002,  Belrose Realty
acquired interests in Real Estate Joint Ventures,  which increased the number of
properties  held  through  Real  Estate  Joint   Ventures,   and  also  acquired
Partnership Preference Units during 2003 and 2002.

During the year ended  December  31,  2003,  the Fund's real  estate  operations
continued to be impacted by weak multifamily market  fundamentals.  While rental
income from real estate operations increased to $64.7 million for the year ended
December  31, 2003  compared  to $37.9  million for the period from the start of
business,  March 19, 2002, to December 31, 2002, an increase of $26.8 million or
71%, this increase was  principally due to the greater number of properties held
through Real Estate Joint Ventures  during the year ended December 31, 2003 (and
the  longer  period of time for which  investments  in such  Real  Estate  Joint
Ventures  were  held).  This  increase  was  offset  in part by  increased  rent
concessions  and/or reduced apartment rental rates and lower occupancy levels, a
trend that continued from 2002.

Property  operating  expenses  totaled $28.6 million for the year ended December
31, 2003  compared to $16.3  million for the period from the start of  business,
March 19,  2002,  to December  31,  2002,  an  increase of $12.3  million or 75%
(property  operating  expenses are before certain operating  expenses of Belrose
Realty of  approximately  $3.2 million for the year ended  December 31, 2003 and
approximately $1.7 million for the period from the start of business,  March 19,
2002, to December 31,  2002).  The increase in property  operating  expenses was
principally  due to the greater  number of  properties  held through Real Estate
Joint Ventures during the year ended December 31, 2003 (and the longer period of
time for which investments in such Real Estate Joint Ventures were held).  While
the U.S.  economy  showed signs of strength  during the year ended  December 31,
2003,  significant  employment  growth  did not  occur in most  markets  and low
interest  rates have  contributed to continued  apartment  move-outs (due to new
home purchases) and ongoing development of new multifamily properties.

At December 31,  2003,  the  estimated  fair value of the real  properties  held
through Belrose Realty was $473.5 million compared to $470.6 million at December
31, 2002,  an increase of $2.9  million or 1%. The modest  increase in estimated
real   property   values  at  December  31,  2003   resulted  from  declines  in
capitalization rates in a lower-return  environment,  which more than offset the
impact of lower  income  expectations  on property  values.  Belrose  Realty saw


                                       18
<PAGE>

unrealized  appreciation  in the  estimated  fair value of its other real estate
investments  (which  includes the Real Estate Joint  Ventures) of  approximately
$3.6 million during the year ended  December 31, 2003 compared to  approximately
$1.0  million in  unrealized  depreciation  during the period  from the start of
business, March 19, 2002, to December 31, 2002.

For  the  year  ended  December  31,  2003,  Belrose  Realty's   investments  in
Partnership  Preference  Units  continued to benefit from low interest rates and
tighter  spreads  on real  estate  securities.  In  addition,  the fair value of
Belrose  Realty's  Partnership  Preference  Units  also  increased  due  to  the
acquisition of additional  Partnership Preference Units during 2003. At December
31, 2003, the estimated fair value of the Partnership  Preference  Units totaled
$56.7  million  compared to $41.8  million at December 31, 2002,  an increase of
$14.9 million or 36%. The increase in value, due primarily to the greater number
of  Partnership  Preference  Units held at  December  31,  2003,  also  reflects
increases in the per unit value of the Partnership  Preference  Units.  The Fund
saw  unrealized  appreciation  in the  estimated  fair value of its  Partnership
Preference  Units of  approximately  $6.8 million during the year ended December
31, 2003 compared to unrealized  appreciation of approximately  $0.8 million for
the period from the start of business, March 19, 2002, to December 31, 2002.

Distributions  received  from  Partnership  Preference  Units for the year ended
December 31, 2003  totaled $4.6 million  compared to $1.7 million for the period
from the start of business, March 19, 2002, to December 31, 2002, an increase of
$2.9 million. The increase was due to a larger number of Partnership  Preference
Units held during the year ended  December  31, 2003 and the longer  period they
were held.

PERFORMANCE  OF INTEREST RATE SWAP  AGREEMENTS.  For the year ended December 31,
2003,  net  realized  and  unrealized  losses on the Fund's  interest  rate swap
agreements  totaled  approximately  $3.7  million,  compared to net realized and
unrealized  losses of $13.6  million for the period from the start of  business,
March 19, 2002, to December 31, 2002. Net realized and unrealized losses on swap
agreements  in 2003  consisted of $0.8  million of net  realized and  unrealized
gains due to changes in swap  agreement  valuations,  offset by $4.5  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  statement of  operations).  In 2002, the Fund had net realized and
unrealized  losses of $11.6 million due to swap agreement  valuation changes and
$2.0 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.  The  negative  impact on 2002 Fund
performance  from changes in swap  valuations  was due primarily to a decline in
swap rates during the period.

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 will  continue to use the
Credit Facility for such purpose in the future.  The Credit Facility may also be
used for other  purposes,  including  any  liquidity  needs of the Fund.  In the
future, the Fund may increase the size of the Credit Facility (subject to lender
consent) and the amount of outstanding borrowings thereunder. As of December 31,
2004,  the Fund had  outstanding  borrowings  of $236.0  million and unused loan
commitments of $36.2 million under the Credit Facility.

As of December 31, 2004, Bel Communities, Deerfield and Katahdin had outstanding
borrowings  consisting of fixed-rate secured mortgage debt obligations of $121.0
million, $123.0 million and $115.9 million, respectively.

LIQUIDITY.  The Fund may redeem  shares of Belvedere  Company at any time.  Both
Belvedere  Company and the Portfolio  normally follow the practice of satisfying
redemptions  by  distributing  securities  drawn from the  Portfolio.  Belvedere
Company and the Portfolio may also satisfy  redemptions by distributing cash. As
of December 31, 2004, the Portfolio had cash and short-term investments totaling
$29.9 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 no outstanding borrowings at
December 31, 2004.  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, 2004,  illiquid assets (consisting of restricted  securities not
available for current  public sale)  constituted  0.02% of the net assets of the
Portfolio.

                                       19
<PAGE>

The  liquidity of Belrose  Realty's  Real Estate Joint  Venture  investments  is
extremely  limited,  and relies  principally  upon buy/sell  and/or  liquidation
agreements with the Operating Partners,  described in "Real Estate Joint Venture
Investments" under "The Fund's Real Estate  Investments" in Item 1. Transfers of
Belrose  Realty's  interest in the Real Estate Joint  Ventures to parties  other
than the  Operating  Partners are  restricted  by terms of the Real Estate Joint
Venture's operative agreement, 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
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, 2004, the
Fund did not have any such off-balance sheet arrangements.

(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, 2004:
<TABLE>
<CAPTION>
                                                                        Payments due:
-------------------------------------------------------------------------------------------------------------------
Type of Obligation                        Total       Less than 1 Year   1-3 Years    3-5 Years   More than 5 years
-------------------------------------------------------------------------------------------------------------------
<S>                                   <C>               <C>             <C>          <C>            <C>
Long Term Debt:
 Mortgage Debt(1)                     $359,850,000      $       --      $        --  $        --    $359,850,000
 Borrowings under Credit Facility(2)  $236,000,000      $       --      $        --  $        --    $236,000,000
Purchase Obligations(3)
Other Long Term Liabilities:
 Interest Rate Swap Agreements(4)     $ 48,971,834      $8,218,575      $16,437,151  $16,437,151    $  7,878,957
-------------------------------------------------------------------------------------------------------------------
Total                                 $644,821,834      $8,218,575      $16,437,151  $16,437.151    $603,728,957
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  The property held by Belrose Realty is financed primarily through mortgages
     issued to each Real Estate Joint  Venture.  Each mortgage is secured by the
     underlying  property and is generally  without recourse to the other assets
     of the Fund or  Belrose  Realty,  as  described  in "Risks  of Real  Estate
     Investments"  in Item 7A(b).  The  mortgages  mature  during 2010 and 2012.
     Mortgage  obligations  cannot be prepaid or  otherwise  disposed of without
     incurring  a  substantial  prepayment  penalty or  without  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 Bel  Communities,  Deerfield  and  Katahdin,  and expires in June
     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, 2004,
     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 will 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 certain swaps.

                                       20
<PAGE>

(e) CRITICAL ACCOUNTING ESTIMATES.
----------------------------------

The Fund's  consolidated  financial  statements are prepared in accordance  with
accounting  principles  generally accepted in the United States of America.  The
preparation of these financial  statements  requires the Fund to make estimates,
judgments  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  revenues  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  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 the 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  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

     8    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,  2004,  the  estimated  fair value of the Fund's real estate
investments  represented  23.9% of the Fund's total  assets.  As of December 31,
2004,  adjusting for the minority  interest of the Operating Partner that is the
principal  minority investor in each Real Estate Joint Venture,  the Fund's real
estate  investments  represented  26.9% 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 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

                                       21
<PAGE>

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 recalculated 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.

THE REAL ESTATE JOINT VENTURES.  Boston Management determines the estimated fair
value of the Fund's  interest in each Real Estate Joint Venture based  primarily
on annual  appraisals of the properties  owned by such Real Estate Joint Venture
(provided  such  appraisals are available) and an allocation of the equity value
of the Real Estate Joint  Venture  between the Fund and the  Operating  Partner.
Appraisals of the 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,  neighborhood change, 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 each Real Estate Joint Venture 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 Fund's Real Estate Joint  Ventures  were to change,  it
could materially impact the estimated fair value of the Fund's 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 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
by Boston Management to reflect significant changes in economic circumstances or
recent  independent  evaluations  of  similar  properties,  and the  results  of
operations and distributions.

                                       22
<PAGE>

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 duration of the
joint venture,  and (iii) the projected  property values and cash flows from the
properties based on estimates made by the appraisers.  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 Ventures
were to change  (because,  for example,  the  appraisers'  estimates of property
values or projected  cash flows of the Real Estate Joint Ventures  changed),  it
may materially  impact the estimated fair value of the Fund's equity interest in
each Real Estate Joint Venture. When the properties owned by a Real Estate Joint
Venture  have not been  appraised  (such as when the Real Estate  Joint  Venture
recently acquired the properties),  Boston Management allocates equity interests
in the Real Estate Joint Venture based on the contractual ownership interests of
Belrose  Realty and the Operating  Partner.  As of December 31, 2004, all of the
properties  owned by the Real Estate Joint Ventures have been  appraised  except
for certain properties owned by Deerfeild,  which have been valued in good faith
by Boston Management.

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 the Real Estate Joint Ventures. 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 39 to 81 of this
Annual Report on Form 10-K.

                                       23
<PAGE>
<TABLE>
<CAPTION>
                                                         Interest Rate Sensitivity
                                                     Cost, Principal (Notional) Amount
                                                 by Contractual Maturity and Callable Date
                                                 for the Twelve Months Ended December 31,*

                                                                                                               Estimated
                                                                                                             Fair Value as
                                                                                                              of December
                                 2005       2006-2007      2008         2009      Thereafter      Total        31, 2004
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>          <C>          <C>         <C>           <C>           <C>
Rate sensitive
liabilities:
------------------------
Long-term debt:
------------------------
Fixed-rate mortgages                                                             $359,850,000  $359,850,000  $496,847,049

Average interest rate                                                                    6.67%         6.67%
------------------------
Variable-rate Credit
Facility                                                                         $236,000,000  $236,000,000  $236,000,000

Average interest rate                                                                    2.71%         2.71%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive derivative
financial instruments:
------------------------
Pay fixed/receive
variable interest rate
swap agreements                                                                  $192,838,000  $192,838,000  $    556,139

verage pay rate                                                                         4.26%         4.26%

Average receive rate                                                                     2.67%         2.67%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive
investments:
------------------------
Fixed-rate Partnership
Preference Units:
------------------------
Essex Portfolio, L.P.,
7.875% Series B
Cumulative Redeemable
Preferred Units,
Callable 12/31/09,
Current Yield: 7.76%                                                 $11,370,510               $ 11,370,510  $ 11,423,745

Essex Portfolio, L.P.,
7.875% Series D
Cumulative Redeemable
Preferred Units,
Callable 7/28/10,
Current Yield: 7.74%                                                             $ 12,642,150  $ 12,642,150  $ 12,713,050


                                       24
<PAGE>

Liberty Property L.P.,
7.45% Series B
Cumulative Redeemable
Preferred Units,
Callable 8/31/09,
Current Yield: 7.25%                                                 $18,130,840               $ 18,130,840  $ 17,983,000

PSA Institutional
Partners, L.P., 6.4%
Series NN Cumulative
Redeemable Perpetual
Preferred Units,
Callable 3/17/ 10,
Current Yield:  6.69%                                                            $ 17,727,904  $ 17,727,904  $ 17,461,600
</TABLE>
*    The amounts  listed  reflect the Fund's  positions as of December 31, 2004.
     The Fund's current positions may differ.

                                       24
<PAGE>

(b) QUALITATIVE INFORMATION ABOUT MARKET RISK.
----------------------------------------------

RISKS  ASSOCIATED  WITH  EQUITY  INVESTING.  The  Fund  invests  primarily  in a
diversified  portfolio of common stocks and is thereby  subject to general stock
market risk.  There can be no assurance  that the  performance  of the Fund will
match that of the U.S.  stock market or that of other equity funds.  In managing
the Portfolio for long-term,  after-tax  returns,  Boston  Management  generally
seeks to avoid or minimize sales of securities  with large  accumulated  capital
gains,   including   contributed   securities.   Such  securities  constitute  a
substantial  portion of the assets of the Portfolio.  Although the Portfolio may
utilize certain management strategies in lieu of selling appreciated securities,
the  Portfolio's,  and hence the Fund's,  exposure to losses during stock market
declines  may  nonetheless  be higher  than  funds  that do not follow a general
policy of avoiding sales of highly-appreciated securities.

RISKS OF INVESTING IN FOREIGN  SECURITIES.  The Portfolio  invests in securities
issued  by  foreign  companies  and the Fund may  acquire  foreign  investments.
Foreign  investments  involve  considerations  and possible  risks not typically
associated with investing in the United States. The value of foreign investments
to U.S.  investors  may be  adversely  affected  by changes in  currency  rates.
Foreign  brokerage  commissions,  custody fees and other costs of investing  are
generally higher than in the United States, and foreign  investments may be less
liquid,  more  volatile and subject to more  government  regulation  than in the
United States.  Foreign investments could be adversely affected by other factors
not  present  in  the  United  States,  including  expropriation,   confiscatory
taxation, lack of uniform accounting and auditing standards, armed conflict, and
potential difficulty in enforcing  contractual  obligations.  These risks can be
more significant for investments in emerging markets.

RISKS OF CERTAIN  INVESTMENT  TECHNIQUES.  In  managing  the  Portfolio,  Boston
Management may purchase or sell derivative instruments (which derive their value
by reference to other securities,  indexes,  instruments or currencies) to hedge
against  securities  price  declines and currency  movements,  to add investment
exposure  to  individual  securities  and  groups of  securities  and to enhance
returns.  Such transactions may include,  without  limitation,  the purchase and
sale of futures  contracts on stocks and stock indexes and options thereon,  the
purchase of put options and the sale of call options on 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

                                       25
<PAGE>

an equity swap may incur losses that substantially exceed the payments,  if any,
received from a counterparty.  Forward sales,  swaps, caps, floors,  collars and
over-the-counter  options are private contracts in which there is also a risk of
loss in the event of a default on an obligation to pay by the counterparty. Such
instruments  may be  difficult  to value,  may be illiquid and may be subject to
wide  swings in  valuation  caused  by  changes  in the price of the  underlying
security,  index,  instrument  or  currency.  In  addition,  if the  Fund or the
Portfolio  has  insufficient  cash  to meet  margin,  collateral  or  settlement
requirements,   it  may  have  to  sell   assets  to  meet  such   requirements.
Alternatively, should the Fund or the Portfolio fail to meet these requirements,
the counterparty or broker may liquidate positions of the Fund or the Portfolio.
The Portfolio may also have to sell or deliver securities  holdings in the event
that it is not able to purchase securities on the open market to cover its short
positions or to close out or satisfy an exercise  notice with respect to options
positions it has sold.  In any of these cases,  such sales may be made at prices
or in circumstances that Boston Management considers unfavorable.

The Portfolio's  ability to utilize  covered short sales,  certain equity swaps,
forward  sales,  futures and certain  equity collar  strategies  (combining  the
purchase  of a put  option  and the sale of a call  option)  as a  tax-efficient
management  technique  with  respect to holdings of  appreciated  securities  is
limited to circumstances  in which the hedging  transaction is closed out within
30  days  of the end of the  Portfolio's  taxable  year  in  which  the  hedging
transaction was initiated and the underlying  appreciated securities position is
held  unhedged for at least the next 60 days after such hedging  transaction  is
closed.  In  addition,  dividends  received on stock for which the  Portfolio is
obligated to make related payments  (pursuant to a short sale or otherwise) with
respect to positions in substantially similar or related property are subject to
federal  income  taxation at ordinary rates and do not qualify for favorable tax
treatment. Also, holding periods required to receive tax-advantaged treatment of
qualified  dividends  on a stock are  suspended  whenever the  Portfolio  has an
option  (other  than a  qualified  covered  call  option  not in the money  when
written)  or   contractual   obligation  to  sell  or  an  open  short  sale  of
substantially  identical  stock,  is the  grantor  of an  option  (other  than a
qualified   covered  call  option  not  in  the  money  when   written)  to  buy
substantially  identical  stock or has diminished  risk of loss in such stock by
holding  positions with respect to  substantially  similar or related  property.
There can be no assurance  that  counterparties  will at all times be willing to
enter into covered short sales,  forward sales of stocks,  interest rate hedges,
equity swaps and other derivative instrument  transactions on terms satisfactory
to the Fund or the Portfolio.  The Fund's and the  Portfolio's  ability to enter
into such  transactions may also be limited by covenants under the Fund's Credit
Facility,  the federal margin  regulations and other laws and  regulations.  The
Portfolio's use of certain investment  techniques may be constrained because the
Portfolio is a diversified,  open-end  management  investment company registered
under the 1940 Act and because  other  investors in the  Portfolio are regulated
investment companies under Subchapter M of the Code. Moreover,  the Fund and the
Portfolio are subject to restrictions under the federal securities laws on their
ability to enter into  transactions in respect of securities that are subject to
restrictions on transfer pursuant to the Securities Act.

RISKS  OF REAL  ESTATE  INVESTMENTS.  The  success  of the  Fund's  real  estate
investments  depends in part on many factors  related to the real estate market.
These factors include,  without  limitation,  general economic  conditions,  the
supply and demand for different types of real  properties,  the financial health
of tenants,  changing  transportation  and  logistics  patterns  (in the case of
industrial  distribution  properties),  the  timing  of  lease  expirations  and
terminations,  fluctuations  in rental rates and  operating  costs,  exposure to
adverse  environmental  conditions  and losses from  casualty  or  condemnation,
fluctuations   in  interest  rates,   availability   of  financing,   managerial
performance,  government rules and regulations,  and acts of God (whether or not
insured against).  There can be no assurance that Belrose Realty's  ownership of
real estate investments will be an economic success.

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 the 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. 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

                                       26
<PAGE>

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 the 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 had an economic
incentive  to maximize the prices at which it sold  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  investments 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 the 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 the Real Estate Joint  Ventures  owned by Belrose Realty on December
31, 2004 is  fixed-rate,  secured by the  underlying  properties  and  generally
without recourse to Belrose Realty and the Fund. In the case of Bel Communities,
Belrose  Realty  and the Fund may be  directly  or  indirectly  responsible  for
certain liabilities constituting exceptions to the generally non-recourse nature
of the  mortgage  indebtedness,  including  liabilities  associated  with fraud,
misrepresentation,  misappropriation  of funds, or breach of material covenants,
and liabilities  arising from  environmental  conditions  involving or affecting
Real Estate Joint Venture properties.  The Fund and Belrose Realty have received
indemnification  from  ERP  for  certain  of  such  potential  liabilities.  The
availability  of financing and other  financial  conditions  can have a material
impact on  property  values  and  therefore  on the value of 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  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 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.

Investments by Belrose Realty in Net Leased  Property will be subject to general
real estate market risks similar to Real Estate Joint  Ventures.  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.  These  appraisals  are conducted by  independent,  licensed
appraisers in a manner similar to the appraisals of properties owned by the Real
Estate Joint Ventures (described in "Critical Accounting  Estimates" in Item 7).

                                       27
<PAGE>

Because  the value of Net Leased  Property  will  reflect in part the  financial
status of its principal  tenant(s),  any reduction in the financial  status of a
major tenant could have an adverse  effect on 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  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 Bel Communities,
Deerfield and Katahdin.  In the event of default, the lender could elect to sell
assets  of  the  Fund  without  regard  to   consequences  of  such  action  for
Shareholders.  The rights of the lender to receive  payments  of interest on and
repayments  of principal of borrowings  under the Credit  Facility are senior to
the rights of the Shareholders.

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

                                       28
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
----------------------------------------------------

The consolidated  financial statements required by Item 8 are contained on pages
39 to 81 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, 2004 and 2003.
<TABLE>
<CAPTION>
                                                               2004
                                  ----------------------------------------------------------------
                                     First           Second            Third           Fourth
                                    Quarter          Quarter          Quarter          Quarter
                                  ----------------------------------------------------------------
<S>                               <C>              <C>              <C>              <C>
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


                                                              2003
                                  ----------------------------------------------------------------
                                      First           Second          Third           Fourth
                                    Quarter(2)      Quarter(2)      Quarter(2)        Quarter
                                  ----------------------------------------------------------------
Investment income                 $ 20,266,081     $ 20,405,058    $20,382,190      $ 21,259,627
Minority interest in net income
 of controlled subsidiaries       $   (514,701)    $   (458,996)   $  (526,835)     $   (443,046)
Net investment income             $  3,627,943     $  3,482,999    $ 3,541,356      $  4,627,344
Net increase (decrease) in
 net assets from operations       $(55,429,997)    $172,791,201    $36,188,944      $176,015,337

Per share data:(1)
Investment income                 $       1.22     $       1.18    $      1.19      $       1.24
Net investment income             $       0.22     $       0.20    $      0.21      $       0.27
Net increase (decrease) in
 net assets from operations       $      (3.33)    $      10.03    $      2.11      $      10.30
</TABLE>
(1)  Based on average Shares outstanding.
(2)  Certain  amounts  have been  reclassified  to  conform  with  current  year
     presentation.

                                       29
<PAGE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURES.
--------------------------------------------------------------------------------

There have been no changes in, or disagreements with,  accountants on accounting
and financial disclosures.

ITEM 9A. 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, processess,  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, 2004,  the Fund's  disclosure  controls and
procedures were effective.

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.  The Fund's  Chief  Executive  Officer and Chief  Financial
Officer  intend to report to the Board of  Directors  of Eaton  Vance,  Inc. 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.

ITEM 9B. OTHER INFORMATION.
---------------------------

None.

                                       30
<PAGE>

                                    PART III
                                    --------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
------------------------------------------

(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.  Information about Mr. Faust
appears  below.  Ms.  Green,  35, 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,  Senior 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, President and portfolio manager of Belrose
Realty, 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
subsidiaries of other investment funds advised by Boston Management.  Mr. Cross,
David  Carlson and Mr.  Dynner  serve as managers or trustees of the Real Estate
Joint Ventures owned by Belrose Realty. Mr. Dynner is also Vice President of Bel
Communities  and  Katahdin  and  secretary of Bel  Communities.  Mr.  Carlson is
secretary of Katahdin and Mr. Cross serves as Chairman of Katahdin and President
and Chairman of Bel Communities  and 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 (63) is Chairman, President and Chief Executive Officer of Eaton
Vance, Boston Management, Eaton Vance Corp. and Eaton Vance, Inc. and a Director
of Eaton Vance Corp. and 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.  (46) is  Executive  Vice  President  and Chief  Investment
Officer of Eaton Vance,  Boston  Management,  Eaton Vance Corp. and Eaton Vance,
Inc., and a Director of Eaton Vance Corp. He is also Chief Executive  Officer of
Belair Capital Fund LLC,  Belcrest Capital Fund LLC, Belmar Capital Fund LLC and

                                       31
<PAGE>

Belport Capital Fund LLC and is an officer of various other investment companies
managed by Eaton  Vance or Boston  Management.  Mr.  Faust has been  employed by
Eaton Vance since 1985.

Alan R. Dynner (64) 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 (62) 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, 2004 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.
------------------------------------------------------------------------

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 March 1, 2005, Eaton Vance, the manager
of the Fund,  beneficially  owned 102.20 Shares of the Fund. The Shares owned by
Eaton Vance represent less than 1% of the  outstanding  Shares of the Fund as of
March 1, 2005.  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.

                                       32
<PAGE>

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,  2004 and 2003 in
connection with services rendered by Eaton Vance and its affiliates. Each fee is
described following the table.

                                                  Year ended       Year ended
                                                 December 31,     December 31,
                                                     2004             2003
-------------------------------------------------------------------------------
Fund Advisory and Administrative Fees*           $ 1,217,128      $   992,781
-------------------------------------------------------------------------------
Belcrest Realty Management Fees*                 $ 3,014,234      $ 2,639,629
-------------------------------------------------------------------------------
Fund's Allocable Portion of the Portfolio's      $ 7,197,653      $ 6,267,847
Advisory Fees**
-------------------------------------------------------------------------------
Fund Servicing Fees                              $ 1,610,127      $ 1,385,329
-------------------------------------------------------------------------------
Fund's Allocable Portion of Belvedere
Company's Servicing Fees                         $ 2,494,434      $ 2,149,331
-------------------------------------------------------------------------------
Fund Distribution Fees*                          $ 1,641,602      $ 1,415,111
-------------------------------------------------------------------------------
Redemption Fees paid by Redeeming Shareholders   $   285,453      $   139,527
-------------------------------------------------------------------------------
Aggregate Compensation Paid by the Fund to
Eaton Vance and its Affiliates                   $ 5,872,964      $ 4,977,521
-------------------------------------------------------------------------------

*    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 shown  reflects  this
     waiver by Boston Management.

**   For years ended  December 31, 2004 and 2003,  advisory fees paid or payable
     by the Portfolio totaled $77,609,178 and $67,584,543, respectively. 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. For
     the year ended December 31, 2003,  Belvedere Company's allocable portion of
     that fee was $41,671,111, of which $6,267,847 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.

                                       33
<PAGE>

THE  PORTFOLIO'S  INVESTMENT  ADVISORY FEE.  Under the terms of the  Portfolio's
investment advisory agreement with Boston Management, Boston Management receives
a monthly advisory fee as follows:

                                                   Annual Fee Rate
        Average Daily Net Assets for the Month    (for each level)
       ------------------------------------------------------------
        Up to $500 million                             0.6250%
        $500 million but less than $1 billion          0.5625%
        $1 billion but less than $1.5 billion          0.5000%
        $1.5 billion but less than $7 billion          0.4375%
        $7 billion but less than $10 billion           0.4250%
        $10 billion but less than $15 billion          0.4125%
        $15 billion 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  and
Shareholders of the Fund who subscribed through a subagent,  EV Distributors has
assigned  servicing  responsibilities  and  fees  to  the  applicable  subagent,
beginning  twelve  months after the  issuance of shares of Belvedere  Company or
Shares of the Fund to such  persons.  The Fund  assumes its  allocated  share of
Belvedere  Company's  servicing fee. The servicing fee payable in respect of the
Fund's investment in Belvedere Company is credited toward the Fund servicing fee
described above.

DISTRIBUTION  FEES  PAID TO EV  DISTRIBUTORS.  Under  the  terms  of the  Fund's
placement  agreement with EV  Distributors,  EV Distributors  receives a 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
<PAGE>

CERTAIN REAL ESTATE INVESTMENT TRANSACTIONS.  During the year ended December 31,
2004,   Belrose  Realty  entered  into  the  following  real  estate  investment
transactions with real estate  subsidiaries of other investment funds managed by
Eaton Vance and advised by Boston Management:

     *    Belrose  Realty sold Bel Apartment,  a Real Estate Joint  Venture,  to
          Altavera Realty  Corporation,  realizing a loss of approximately  $1.5
          million on the transaction;

     *    Belrose Realty  purchased  Partnership  Preference Units from Belcrest
          Realty  Corporation,  which  realized  a gain  of  approximately  $0.7
          million on the transaction;

     *    Belrose Realty purchased Partnership Preference Units from Belair Real
          Estate  Corporation,  which  realized  a loss  of  approximately  $0.5
          million on the transaction;

     *    Belrose Realty  purchased  Partnership  Preference Units from Belshire
          Realty Corporation,  which realized a loss of approximately $27,000 on
          the transaction;

     *    Belrose  Realty  purchased  Partnership  Preference  Units from Belmar
          Realty  Corporation,  which  realized  a gain  of  approximately  $3.0
          million on the transactions;

     *    Belrose Realty sold  Partnership  Preference  Units to Belshire Realty
          Corporation,  realizing a gain of  approximately  $3.6  million on the
          transaction; and

     *    Belrose Realty sold  Partnership  Preference  Units to Belterra Realty
          Corporation, realizing a net loss of approximately $1.7 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.  See  "Critical
Accounting Estimates" in item 7(e).

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,  2004 and 2003 and fees  billed  for  other
services rendered by Deloitte & Touche LLP during those periods.

Year ended December 31,                                      2004       2003
--------------------------------------------------------------------------------
Audit fees                                                 $201,808   $ 87,656
Audit related fees(1)                                        39,790     35,040
Tax fees(2)                                                 210,492    124,117
All other fees(3)                                                --     30,900
                                                         -----------------------
Total                                                      $452,090   $277,713
                                                         -----------------------

(1)  Audit  related  fees  consist of assurance  and related  services  that are
     reasonably   related  to  the  performance  of  the  audit  of  the  Fund's
     consolidated  financial  statements.  The category includes fees related to
     the  performance  of audits and attest  services not required by statute or
     regulation  and  accounting  consultations  regarding  the  application  of
     generally accepted accounting principles to proposed transactions.

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

(3)  Other fees consist  primarily of the aggregate fees billed for professional
     services  rendered  by  Deloitte  &  Touche  LLP  related  to  agreed  upon
     procedures for the closing of the Fund on February 19, 2003.

                                       35
<PAGE>

The Directors of Eaton Vance, Inc. review all audit,  audit-related and tax fees
at least annually. The Directors  pre-approved all audit,  audit-related and tax
services for the years ended  December  31, 2004 and 2003.  The  Directors  have
concluded that the provision of the audit-related, tax and other services listed
above is compatible with maintaining the independence of Deloitte & Touche LLP.

                                       36
<PAGE>

                                     PART IV
                                     -------

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.
----------------------------------------------------------------

(a)  Please see the Fund's  consolidated  financial  statements  followed by the
     Portfolio's  financial statements on pages 39 to 81 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 83 hereof.

                                       37
<PAGE>

BELROSE 2004

                                                                     Appendix A



The Fund's Investment Structure as of December 31, 2004




[Chart depicting (1) the Fund investing in Belvedere Company and Belrose Realty;
(2)  Belvedere  Company  investing  in the  Portfolio;  and (3)  Belrose  Realty
investing in Bel  Communities,  Deerfield and Katahdin.  The Fund is followed by
footnote  (A);  Belvedere  Company is followed by footnote (B); the Portfolio is
followed by footnote  (C);  Belrose  Realty is followed by footnote (D); and Bel
Communities,  Deerfield  and  Katahdin  are each  followed by footnote  (E). The
footnotes appear below.]







(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 investments in Partnership Preference Units.
(E)  Belrose  Realty  owns a  majority  interest  in  these  Real  Estate  Joint
     Ventures.

                                       38
<Page>

BELROSE CAPITAL FUND LLC
CONSOLIDATED PORTFOLIOS OF INVESTMENTS

AS OF DECEMBER 31, 2004

INVESTMENT IN BELVEDERE CAPITAL
FUND COMPANY LLC -- 75.9%

<Table>
<Caption>
SECURITY                                                                        SHARES       VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>          <C>
Investment in Belvedere Capital Fund Company LLC
(Belvedere Company)                                                             10,328,495   $   1,757,804,676
--------------------------------------------------------------------------------------------------------------

TOTAL INVESTMENT IN BELVEDERE COMPANY
   (IDENTIFIED COST, $1,488,476,148)                                                         $   1,757,804,676
--------------------------------------------------------------------------------------------------------------
</Table>

PARTNERSHIP PREFERENCE UNITS -- 2.6%

<Table>
<Caption>
SECURITY                                                                        UNITS        VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>       <C>
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+(1)                                                                  225,000   $      11,423,745

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+(1)                                                                   500,000          12,713,050

Liberty Property L.P. (Pennsylvania Limited
Partnership affiliate of Liberty Property
Trust), 7.45% Series B Cumulative
Redeemable Preferred Units, Callable
from 8/31/09+(1)                                                                   700,000          17,983,000

PSA Institutional Partners, L.P. (California
Limited Partnership affiliate of Public Storage,
Inc.), 6.4% Series NN Cumulative
Redeemable Perpetual Preferred Units,
Callable from 3/17/10+(1)                                                          730,000          17,461,600
--------------------------------------------------------------------------------------------------------------

TOTAL PARTNERSHIP PREFERENCE UNITS
   (IDENTIFIED COST, $59,871,404)                                                            $      59,581,395
--------------------------------------------------------------------------------------------------------------
</Table>

OTHER REAL ESTATE INVESTMENTS -- 21.5%

<Table>
<Caption>
DESCRIPTION                                                                                  VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>
Rental property(1)(3)                                                                        $     496,847,049
Investment in management contracts(1)(3)                                                             1,542,829
--------------------------------------------------------------------------------------------------------------

TOTAL OTHER REAL ESTATE INVESTMENTS
   (IDENTIFIED COST, $528,935,061)                                                           $     498,389,878
--------------------------------------------------------------------------------------------------------------
</Table>

SHORT-TERM INVESTMENTS -- 0.0%

<Table>
<Caption>
                                                                                PRINCIPAL
                                                                                AMOUNT
                                                                                (000'S
SECURITY                                                                        OMITTED)     VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>          <C>
Investors Bank & Trust Company --
Time Deposit, 2.25%, 1/3/05                                                     $      721   $         721,000
--------------------------------------------------------------------------------------------------------------

TOTAL SHORT-TERM INVESTMENTS
   (AT AMORTIZED COST, $721,000)                                                             $         721,000
--------------------------------------------------------------------------------------------------------------

TOTAL INVESTMENTS -- 100.0%
   (IDENTIFIED COST, $2,078,003,613)                                                         $   2,316,496,949
--------------------------------------------------------------------------------------------------------------
</Table>

                 See notes to consolidated financial statements

                                       39
<Page>

INVESTMENT IN BELVEDERE CAPITAL
FUND COMPANY LLC -- 75.3%

<Table>
<Caption>
SECURITY                                                                        SHARES       VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>          <C>
Investment in Belvedere Capital Fund Company LLC
(Belvedere Company)                                                             10,478,270   $   1,640,828,100
--------------------------------------------------------------------------------------------------------------

TOTAL INVESTMENT IN BELVEDERE COMPANY
   (IDENTIFIED COST, $1,470,171,002)                                                         $   1,640,828,100
--------------------------------------------------------------------------------------------------------------
</Table>

PARTNERSHIP PREFERENCE UNITS -- 2.6%

<Table>
<Caption>
SECURITY                                                                        UNITS        VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>       <C>
Essex Portfolio, L.P. (California Limited
Partnership affiliate of Essex Property
Trust, Inc.), 7.875% Series B Cumulative
Redeemable Preferred Units, Callable
from 2/6/03+(1)(4)                                                                 400,000   $      19,272,880

Kilroy Realty, L.P. (Delaware Limited
Partnership affiliate of Kilroy Realty
Corporation), 8.075% Series A Cumulative
Redeemable Preferred Units, Callable
from 2/6/03+(1)                                                                    400,000          18,457,880

Prentiss Properties Acquisition Partners, L.P.
(Delaware Limited Partnership affiliate of
Prentiss Properties Trust), 8.30% Series B
Cumulative Redeemable Perpetual Preferred
Units, Callable from 6/25/03+(1)                                                   386,464          18,986,976
--------------------------------------------------------------------------------------------------------------

TOTAL PARTNERSHIP PREFERENCE UNITS
   (IDENTIFIED COST, $49,033,900)                                                            $      56,717,736
--------------------------------------------------------------------------------------------------------------
</Table>

OTHER REAL ESTATE INVESTMENTS -- 21.7%

<Table>
<Caption>
DESCRIPTION                                                                                  VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>
Rental property(1)(2)                                                                        $     473,491,403
--------------------------------------------------------------------------------------------------------------

TOTAL OTHER REAL ESTATE INVESTMENTS
   (IDENTIFIED COST, $473,683,334)                                                           $     473,491,403
--------------------------------------------------------------------------------------------------------------
</Table>

SHORT-TERM INVESTMENTS -- 0.4%

<Table>
<Caption>
                                                                         PRINCIPAL
                                                                         AMOUNT
                                                                         (000'S
SECURITY                                                                 OMITTED)            VALUE
--------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                 <C>
Investors Bank & Trust Company --
Time Deposit, 1.01%, 1/2/04                                              $           7,614   $       7,614,214
--------------------------------------------------------------------------------------------------------------

TOTAL SHORT-TERM INVESTMENTS
   (AT AMORTIZED COST, $7,614,214)                                                           $       7,614,214
--------------------------------------------------------------------------------------------------------------

TOTAL INVESTMENTS -- 100.0%
   (IDENTIFIED COST, $2,000,502,450)                                                         $   2,178,651,453
--------------------------------------------------------------------------------------------------------------
</Table>

The following footnotes are for the years ended December 31, 2004 and December
31, 2003:

+    Security  exempt from  registration  under the  Securities  Act of 1933. At
     December  31,  2004  and  2003,  the  value  of  these  securities  totaled
     $59,581,395 and $56,717,736, or 3.5% and 3.5% of net assets, respectively.
(1)  Investment  valued at fair value using methods  determined in good faith by
     or at the direction of the Manager of Belrose Realty Corporation.
(2)  At December 31, 2004,  rental  property  represents  eighteen  multi-family
     residential  properties  located in twelve  states and eighteen  industrial
     distribution properties located in six states. At December 31, 2003, rental
     property  represents  twenty-eight   multi-family   residential  properties
     located in twelve states.  None of the values of the individual  properties
     represent more than 5% of net assets.
(3)  See Note 5 - Investment transactions.
(4)  On January 8, 2004, the call date was changed to 12/31/09.

                 See notes to consolidated financial statements

                                       40
<Page>

BELROSE CAPITAL FUND LLC
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<Table>
<Caption>
ASSETS                                                                   DECEMBER 31, 2004   DECEMBER 31, 2003
--------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                 <C>
Investments, at value (identified cost, $2,078,003,613 and
  $2,000,502,450, respectively)                                          $   2,316,496,949   $   2,178,651,453
Cash                                                                             5,348,786           6,535,905
Escrow deposits -- restricted                                                    2,160,740           2,436,133
Distributions and interest receivable                                                  343             400,960
Open interest rate swap agreements, at value                                       556,139           1,423,867
Other assets                                                                     8,505,884           3,660,997
--------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                             $   2,333,068,841   $   2,193,109,315
--------------------------------------------------------------------------------------------------------------

LIABILITIES

Loan payable -- Credit Facility                                          $     236,000,000   $     183,300,000
Mortgages payable                                                              359,850,000         344,219,483
Payable for Fund Shares redeemed                                                 3,958,764                  --
Distributions payable to minority shareholders                                          --              16,800
Security deposits                                                                1,443,878             968,110
Swap interest payable                                                               46,549              79,280
Accrued expenses:
   Interest expense                                                              2,166,072           2,319,122
   Property taxes                                                                1,188,106           1,959,252
   Other expenses and liabilities                                                4,354,953           1,782,021
Minority interests in controlled subsidiaries                                   29,833,094          26,010,489
--------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                        $     638,841,416   $     560,654,557
--------------------------------------------------------------------------------------------------------------
NET ASSETS                                                               $   1,694,227,425   $   1,632,454,758
--------------------------------------------------------------------------------------------------------------

SHAREHOLDERS' CAPITAL                                                    $   1,694,227,425   $   1,632,454,758
--------------------------------------------------------------------------------------------------------------

FUND SHARES OUTSTANDING                                                         16,604,562          17,032,796
--------------------------------------------------------------------------------------------------------------

NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (NOTE 4)                  $          102.03   $           95.84
--------------------------------------------------------------------------------------------------------------
</Table>

                 See notes to consolidated financial statements

                                       41
<Page>

CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                 FOR THE YEAR ENDED    FOR THE YEAR ENDED    FOR THE PERIOD ENDED
INVESTMENT INCOME                                                DECEMBER 31, 2004     DECEMBER 31, 2003     DECEMBER 31, 2002*
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                   <C>                   <C>
Dividends allocated from Belvedere Company
   (net of foreign taxes, $352,093, $248,681, and $69,347,
   respectively)                                                 $       26,977,973    $       21,290,041    $          7,907,555
Interest allocated from Belvedere Company                                   117,249               335,885                 233,924
Expenses allocated from Belvedere Company                                (9,996,601)           (8,692,174)             (3,413,514)
---------------------------------------------------------------------------------------------------------------------------------
Net investment income allocated from Belvedere Company           $       17,098,621    $       12,933,752    $          4,727,965
Rental income                                                            68,052,061            64,679,823              37,921,512
Distributions from Partnership Preference Units                           5,475,556             4,591,951               1,714,294
Interest                                                                    269,621               107,430                 123,956
---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME                                          $       90,895,859    $       82,312,956    $         44,487,727
---------------------------------------------------------------------------------------------------------------------------------

EXPENSES

Investment advisory and administrative fees                      $        5,872,964    $        4,977,521    $          2,163,168
Property management fees                                                  2,621,208             2,590,322               1,523,512
Distribution and servicing fees                                           3,251,729             2,800,440               1,067,618
Interest expense on mortgages                                            26,491,201            26,317,765              15,144,576
Interest expense on Credit Facility                                       4,381,975             2,796,418               1,781,474
Property and maintenance expenses                                        20,756,004            17,974,998              10,136,354
Property taxes and insurance                                              8,456,423             8,068,145               4,686,889
Organizational expenses                                                          --                    --                 666,365
Miscellaneous                                                             1,313,496               979,238                 969,112
---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES                                                   $       73,145,000    $       66,504,847    $         38,139,068
---------------------------------------------------------------------------------------------------------------------------------
Deduct --
   Reduction of investment advisory and administrative fees      $        1,641,602    $        1,415,111    $            548,124
---------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES                                                     $       71,503,398    $       65,089,736    $         37,590,944
---------------------------------------------------------------------------------------------------------------------------------
Net investment income before minority interests in net
   income of controlled subsidiaries                             $       19,392,461    $       17,223,220    $          6,896,783
Minority interests in net income of controlled subsidiaries              (1,872,405)           (1,943,578)             (1,465,099)
---------------------------------------------------------------------------------------------------------------------------------

NET INVESTMENT INCOME                                            $       17,520,056    $       15,279,642    $          5,431,684
---------------------------------------------------------------------------------------------------------------------------------

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)                            $       37,885,739    $       19,117,006    $          7,233,500
   Investment transactions in Partnership Preference Units
      (identified cost basis)                                             4,995,589                    --                      --
   Investment transactions in other real estate (net of
      minority interests in realized loss of controlled
      subsidiaries of $(4,035,005), $0 and $0, respectively).            (1,548,753)                   --                      --
   Investment transactions (identified cost basis)                               --               (14,942)                     --
   Interest rate swap agreements(1)                                      (4,236,995)          (16,652,934)             (2,044,673)
---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN                                                $       37,095,580    $        2,449,130    $          5,188,827
---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
   Investments, securities sold short and foreign currency
      allocated from Belvedere Company (identified cost
      basis)                                                     $       98,671,430    $      288,392,438    $       (117,735,340)
   Investments in Partnership Preference Units (identified
      cost basis)                                                        (7,973,845)            6,834,831                 849,005
   Investment in other real estate (net of minority
      interests in unrealized appreciation (depreciation) of
      controlled subsidiaries of $(2,711,241), $(5,418,472)
      and $2,553,526, respectively)                                     (27,642,011)            3,632,735                (959,720)
   Interest rate swap agreements                                           (867,728)           12,976,709             (11,552,842)
---------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)             $       62,187,846    $      311,836,713    $       (129,398,897)
---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)                          $       99,283,426    $      314,285,843    $       (124,210,070)
---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS            $      116,803,482    $      329,565,485    $       (118,778,386)
---------------------------------------------------------------------------------------------------------------------------------
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.

(1)  Amounts  include  periodic  payments made in connection  with interest rate
     swap  agreements of  $4,297,449,  $4,477,357 and  $2,044,673,  respectively
     (Note 2).

                 See notes to consolidated financial statements

                                       42
<Page>

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                               YEAR ENDED            YEAR ENDED            PERIOD ENDED
INCREASE (DECREASE) IN NET ASSETS                              DECEMBER 31, 2004     DECEMBER 31, 2003     DECEMBER 31, 2002*
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                   <C>                   <C>
Net investment income                                          $       17,520,056    $       15,279,642    $        5,431,684
Net realized gain from investment transactions, securities
   sold short, foreign currency transactions and interest
   rate swap agreements                                                37,095,580             2,449,130             5,188,827
Net change in unrealized appreciation (depreciation) of
   investments, securities sold short, foreign
   currency and interest rate swap agreements                          62,187,846           311,836,713          (129,398,897)
-----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS          $      116,803,482    $      329,565,485    $     (118,778,386)
-----------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares --
   Investment securities contributed                           $               --    $       95,047,136    $    1,378,394,239
   Less -- Selling commissions                                                 --              (325,083)           (6,404,936)
-----------------------------------------------------------------------------------------------------------------------------
Net contributions                                              $               --    $       94,722,053    $    1,371,989,303
Net asset value of Fund Shares issued to Shareholders in in
   payment of distributions declared                                    5,415,563               348,050                    --
Net asset value of Fund Shares redeemed                               (47,331,125)          (33,374,471)          (11,209,262)
-----------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET ASSETS FROM FUND SHARE
   TRANSACTIONS                                                $      (41,915,562)   $       61,695,632    $    1,360,780,041
-----------------------------------------------------------------------------------------------------------------------------
Distributions --
   Distributions to Shareholders                               $      (13,115,253)   $         (808,014)   $               --
-----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                            $      (13,115,253)   $         (808,014)   $               --
-----------------------------------------------------------------------------------------------------------------------------

NET INCREASE IN NET ASSETS                                     $       61,772,667    $      390,453,103    $    1,242,001,655
-----------------------------------------------------------------------------------------------------------------------------

NET ASSETS

At beginning of period                                         $    1,632,454,758    $    1,242,001,655    $               --
-----------------------------------------------------------------------------------------------------------------------------
AT END OF PERIOD                                               $    1,694,227,425    $    1,632,454,758    $    1,242,001,655
-----------------------------------------------------------------------------------------------------------------------------
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.

                 See notes to consolidated financial statements

                                       43
<Page>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                               YEAR ENDED            YEAR ENDED            PERIOD ENDED
INCREASE (DECREASE) IN CASH                                    DECEMBER 31, 2004     DECEMBER 31, 2003     DECEMBER 31, 2002*
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                   <C>                   <C>
Cash Flows From (For) Operating Activities --
Net increase (decrease) in net assets from operations          $      116,803,482    $      329,565,485    $     (118,778,386)
Adjustments to reconcile net increase (decrease) in net
  assets from operations to net cash flows for operating
  activities --
   Net investment income allocated from Belvedere Company             (17,098,621)          (12,933,752)           (4,727,965)
   Decrease in escrow deposits                                            196,902               802,927             1,670,179
   (Increase) decrease in other assets                                 (3,587,852)             (107,660)              426,784
   Decrease (increase) in distributions and interest
      receivable                                                          400,617                39,093              (440,053)
   (Decrease) increase in interest payable for open swap
      agreements                                                          (32,731)              (50,603)              129,883
   Increase (decrease) in security deposits, accrued
      interest and accrued other expenses and liabilities               4,289,644              (928,077)              256,032
   Increase (decrease) in accrued property taxes                          367,112              (615,937)              580,812
   Purchases of Partnership Preference Units                          (86,271,304)           (8,033,600)          (41,000,300)
   Proceeds from sale of common stock                                          --            10,140,535                    --
   Proceeds from sales of Partnership Preference Units                 80,429,389                    --                    --
   Payments for investments in other real estate                     (162,599,200)                   --          (103,804,186)
   Proceeds from sale of investment in other real estate               32,404,340                    --                    --
   Cash assumed in connection with acquisition of other
      real estate                                                              --                    --             5,131,583
   Decrease in cash due to sale of majority interest in
      controlled subsidiary                                            (2,216,606)                   --                    --
   Improvements to rental property                                     (5,938,197)           (4,679,844)           (2,192,281)
   Decrease (increase) in short-term investments                        6,893,214            (7,614,214)                   --
   Net decrease (increase) in investment in Belvedere
      Company                                                                  --             1,651,419              (565,008)
   Net interest incurred on interest rate swap agreements              (4,297,449)           (4,477,357)           (2,044,673)
   Proceeds from (payments for) termination of interest rate
      swap agreements                                                      60,454           (12,175,577)                   --
   Increase in minority interest                                               --                    --               210,000
   Minority interests in net income of controlled
      subsidiaries                                                      1,872,405             1,943,578             1,465,099
   Net realized gain from investment transactions,
      securities sold short, foreign currency transactions
      and interest rate swap agreements                               (37,095,580)           (2,449,130)           (5,188,827)
   Net change in unrealized (appreciation) depreciation of
      investments, securities sold short, foreign currency
      and interest rate swap agreements                               (62,187,846)         (311,836,713)          129,398,897
-----------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FOR OPERATING ACTIVITIES                        $     (137,607,827)   $      (21,759,427)   $     (139,472,410)
-----------------------------------------------------------------------------------------------------------------------------
Cash Flows From (For) Financing Activities --
   Proceeds from Credit Facility                               $      228,000,000    $       28,000,000    $      155,300,000
   Repayment of Credit Facility                                      (175,300,000)                   --                    --
   Proceeds from mortgage                                             123,000,000                    --                    --
   Payments on behalf of investors (selling commissions)                       --              (325,083)           (6,404,936)
   Payments for Fund Shares redeemed                                   (6,693,147)           (6,204,599)           (2,338,426)
   Distributions paid to minority shareholders                           (286,455)                   --                    --
   Distributions paid to Shareholders                                  (7,699,690)             (459,964)                   --
   Return of capital distributed to minority shareholders             (24,600,000)                   --                    --
   Capital contributed to controlled subsidiaries                              --                70,837               129,913
-----------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES                       $      136,420,708    $       21,081,191    $      146,686,551
-----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                                $       (1,187,119)   $         (678,236)   $        7,214,141
-----------------------------------------------------------------------------------------------------------------------------
CASH AT BEGINNING OF PERIOD                                    $        6,535,905    $        7,214,141    $               --
-----------------------------------------------------------------------------------------------------------------------------
CASH AT END OF PERIOD                                          $        5,348,786    $        6,535,905    $        7,214,141
-----------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE AND NON-CASH INVESTING AND FINANCING
  ACTIVITIES

Securities contributed by Shareholders, invested in
  Belvedere Company                                            $               --    $       95,047,136    $    1,378,394,239
Interest paid on loan -- Credit Facility                       $        4,329,878    $        2,852,392    $        1,384,304
Interest paid on mortgages                                     $       25,521,341    $       25,904,530    $       12,782,797
Interest paid on swap agreements                               $        4,330,180    $        4,527,960    $        1,914,790
Market value of securities distributed in payment of
  redemptions                                                  $       36,679,214    $       27,169,872    $        8,870,836
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
  acquisition of other real estate                             $      203,196,919    $               --    $      466,466,022
Mortgages assumed in conjunction with acquisition of other
  real estate                                                  $               --    $               --    $      344,219,483
Market value of minority interests assumed in conjunction
  with the acquisition of other real estate                    $       40,639,384    $               --    $       27,459,148
Market value of real property and other assets, net of
  current liabilities, disposed of in conjunction with
  sale of other real estate                                    $      143,874,457    $               --    $               --
Mortgage disposed of in conjunction with sale of other real
  estate                                                       $      107,369,483    $               --    $               --
Market value of minority interests disposed of in
  conjunction with sale of other real estate                   $        7,073,281    $               --    $               --
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.

                 See notes to consolidated financial statements

                                       44
<Page>

FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                               YEAR ENDED            YEAR ENDED            PERIOD ENDED
                                                               DECEMBER 31, 2004     DECEMBER 31, 2003     DECEMBER 31, 2002*
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                   <C>                   <C>
Net asset value -- Beginning of period                         $           95.840    $           76.860    $          100.000
-----------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS

Net investment income(1)                                       $            1.036    $            0.897    $            0.621
Net realized and unrealized gain (loss)                                     5.924                18.133               (23.761)
-----------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS                            $            6.960    $           19.030    $          (23.140)
-----------------------------------------------------------------------------------------------------------------------------

DISTRIBUTIONS

Distributions to Shareholders                                  $           (0.770)   $           (0.050)   $               --
-----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                            $           (0.770)   $           (0.050)   $               --
-----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD                               $          102.030    $           95.840    $           76.860
-----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2)                                                              7.32%                24.77%               (23.14)%
-----------------------------------------------------------------------------------------------------------------------------

RATIOS AS A PERCENTAGE OF AVERAGE NET ASSETS(3):

Expenses of Consolidated Real Property Subsidiaries
   Interest and other borrowing costs(4)                                     1.29%                 1.51%                 2.11%(9)
   Operating expenses(4)                                                     1.57%                 1.65%                 2.31%(9)
Belrose Capital Fund LLC Expenses
   Interest and other borrowing costs(5)(6)                                  0.27%                 0.20%                 0.32%(9)
   Investment advisory and administrative fees, servicing
      fees and other Fund operating expenses(5)(7)                           1.11%                 1.12%                 1.36%(9)
                                                               --------------------------------------------------------------
Total expenses                                                               4.24%                 4.48%                 6.10%(9)
Net investment income                                                        1.07%                 1.08%                 0.98%(9)
-----------------------------------------------------------------------------------------------------------------------------

RATIOS AS A PERCENTAGE OF AVERAGE GROSS ASSETS(3)(8):

Expenses of Consolidated Real Property Subsidiaries
   Interest and other borrowing costs(4)                                     0.98%                 1.14%                 1.50%(9)
   Operating expenses(4)                                                     1.18%                 1.25%                 1.65%(9)
Belrose Capital Fund LLC Expenses
   Interest and other borrowing costs(5)(6)                                  0.20%                 0.15%                 0.23%(9)
   Investment advisory and administrative fees, servicing
      fees and other Fund operating expenses(5)(7)                           0.84%                 0.84%                 0.97%(9)
                                                               --------------------------------------------------------------
Total expenses                                                               3.20%                 3.38%                 4.35%(9)
Net investment income                                                        0.80%                 0.81%                 0.70%(9)
-----------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA

Net assets, end of period (000's omitted)                      $        1,694,227    $        1,632,455    $        1,242,002
Portfolio turnover of Tax-Managed Growth Portfolio (the
   Portfolio)                                                                   3%                   15%                   23%
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.
(1)  Calculated using average shares outstanding.
(2)  Returns are  calculated by determining  the percentage  change in net asset
     value with all distributions reinvested. Total return is not computed on an
     annualized basis.
(3)  For the purpose of calculating  ratios,  the income and expenses of Belrose
     Realty Corporation's  (Belrose Realty) controlled  subsidiaries are reduced
     by the  proportionate  interests  therein of  investors  other than Belrose
     Realty.
(4)  Includes Belrose Realty's  proportional  share of expenses  incurred by its
     majority-owned subsidiaries.
(5)  Includes  the expenses of Belrose  Capital  Fund LLC (Belrose  Capital) and
     Belrose Realty.  Does not include expenses of the real estate  subsidiaries
     majority-owned by Belrose Realty.
(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 Company's 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  (Note 1)),  without  reduction by any
     liabilities.  For this purpose,  the assets of Belrose Realty's  controlled
     subsidiaries  are  reduced  by  the  proportionate   interests  therein  of
     investors other than Belrose Realty. (9) Annualized.

                 See notes to consolidated financial statements

                                       45
<Page>

BELROSE CAPITAL FUND LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1   ORGANIZATION

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

B SUBSIDIARIES -- Belrose Capital invests in real estate through its subsidiary,
Belrose Realty.  Belrose Realty invests directly in Partnership Preference Units
and indirectly in real property through controlled  subsidiaries,  Bel Apartment
Properties  Trust (Bel  Apartment)(for  the period during which  Belrose  Realty
maintained  an  interest  in  Bel  Apartment),   Katahdin   Property  Trust  LLC
(Katahdin),  Bel  Communities  Property  Trust (Bel  Communities)  and Deerfield
Property Trust (Deerfield).

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, 2004 and December 31, 2003. 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 after the occurrence of certain tax events or
after  December 31, 2005.  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.

Bel Apartment -- Bel Apartment, a formerly majority-owned  subsidiary of Belrose
Realty,  was  acquired  in March  2002.  Belrose  Realty  subsequently  sold its
interest in Bel Apartment in November 2004. Bel Apartment owned ten multi-family
residential  properties  consisting  of  2,530  units  (collectively,   the  Bel
Apartment Properties) located in seven states (Texas,  Arizona,  Georgia,  North
Carolina,  Washington,  Tennessee  and  Florida).  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.
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.  Belrose  Realty  did not own an
interest in Bel Apartment as of December 31, 2004.

Katahdin -- Katahdin,  a  majority-owned  subsidiary of Belrose Realty since May
2002, owns six  multi-family  residential  properties  consisting of 2,476 units
(collectively,  the Katahdin Properties) located in five states (Florida,  North
Carolina,  New Mexico,  Texas and  Washington).  The average  occupancy rate was
approximately 97% at December 31, 2004.  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 has
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.

Bel  Communities  -- Bel  Communities,  a  majority-owned  subsidiary of Belrose
Realty since  October  2002,  owns twelve  multi-family  residential  properties
consisting of 2,624 units (collectively, the Bel Communities Properties) located
in  eleven  states  (Texas,  Arizona,   Georgia,  North  Carolina,   Washington,
Tennessee,  Minnesota,  Maryland,  Oregon,  Oklahoma and  Florida).  The average

                                       46
<Page>

occupancy rate was approximately  94% at December 31, 2004.  Belrose Realty owns
Class A shares of Bel  Communities,  representing 75% of the voting interests in
Bel  Communities,  and a  minority  shareholder  (the Bel  Communities  Minority
Shareholder)  owns Class B shares,  representing  25% of the voting interests in
Bel Communities. 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.  Pursuant to a buy/sell  agreement entered into at the time
Bel  Communities was  established,  either Belrose Realty or the Bel Communities
Minority  Shareholder  can give notice after November 27, 2009 either to buy the
other's equity interest in Bel Communities or to sell its own equity interest in
Bel Communities.

Deerfield  -- On May 3,  2004,  Belrose  Realty  entered  into an  agreement  to
establish and acquire a majority interest in a controlled subsidiary, Deerfield.
On June 30, 2004,  Deerfield  acquired a majority  interest in three  industrial
distribution  properties  located in two states (Georgia and Ohio). On August 4,
2004,   Deerfield  acquired  an  additional   fifteen  industrial   distribution
properties located in five states (Florida,  New Jersey, Ohio,  Pennsylvania and
South  Carolina).  On December  31, 2004,  Deerfield  owns  eighteen  industrial
distribution  properties  located in six states (Florida,  Georgia,  New Jersey,
Ohio,  Pennsylvania  and  South  Carolina).   The  average  occupancy  rate  was
approximately 74% at December 31, 2004.  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  a  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 Minority Shareholder has the right either to
purchase  either 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.

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.

2   SIGNIFICANT 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.

A PRINCIPLES OF CONSOLIDATION -- The consolidated  financial  statements include
the accounts of Belrose  Capital and its  majority  owned  subsidiaries  for the
periods  during  which  Belrose  Capital  was  invested in such  majority  owned
subsidiaries.  Belrose Capital and Belrose Realty consolidate all investments in
affiliates  in which  their  ownership  exceeds  50  percent.  The  accompanying
consolidated  financial  statements  include the accounts of Belrose Capital and
Belrose Realty and may also include Bel Apartment, Katahdin, Bel Communities and
Deerfield  (collectively,  the Fund).  All  material  intercompany  accounts and
transactions have been eliminated.

B BASIS OF  PRESENTATION  -- Belrose  Capital is an  investment  company and, as
such,  presents its assets at fair value. Fixed liabilities are generally stated
at their principal value.

C INVESTMENT 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  cost at which the Fund's  investments  of  contributed
securities is carried in the consolidated  financial  statements 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  basis of the Fund's  investment in Partnership  Preference
Units and other real estate  purchased  by the Fund is the  purchase  cost.  The

                                       47
<Page>

initial  cost at which the Fund's  investments  in real  estate  contributed  is
carried  in the  consolidated  financial  statements  is  the  market  value  on
contribution date. The initial tax basis of real estate investments  contributed
is the  contributor's tax basis at the time of contribution or value at the time
of contribution, depending on the taxability of the contribution.

D  INVESTMENT  AND OTHER  VALUATIONS  -- The Fund's  investments  may consist of
shares  of  Belvedere  Company,  Partnership  Preference  Units,  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.  Additionally, the Fund has entered into interest
rate swap  agreements  (Note 7).  The  valuation  policy  followed  by the Fund,
Belvedere Company and the Portfolio is as follows:

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  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 held by the
Portfolio 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  quotation  service.  The daily  valuation of 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  (NYSE).  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 securities
held by the Portfolio. 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. 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 the Fund has entered.

Market  prices for the Fund's real  estate  investments  (including  Partnership
Preference  Units and joint  ventures)  are not readily  available and therefore
they are stated in the Fund's  consolidated  financial  statements  at estimated
fair value.  The estimated fair value of an investment  represents the amount at
which Boston  Management (as manager of Belrose Realty)  believes the investment
could be sold in a current  transaction  between  willing  parties in an orderly
disposition,  that is, other than in a forced or  liquidation  sale.  In valuing
these  investments,  Boston  Management  considers  relevant  factors,  data and
information. With respect to investments in Partnership Preference Units, Boston
Management  considers  information from dealers and similar firms with knowledge
of such issues and/or the prices of comparable  preferred equity  securities and
other  fixed  or  adjustable   rate   instruments   having  similar   investment
characteristics.  Real estate  investments,  other than  Partnership  Preference
Units, are primarily valued based upon independent  valuations (ie, 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.  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.  Interim
valuations  of  properties  may be  adjusted to reflect  significant  changes in
economic  circumstances  or recent  evaluations of similar  properties,  and the

                                       48
<Page>

results of operations  and  distributions.  The equity value of each real estate
joint venture between Belrose Realty and the respective Minority  Shareholder is
estimated  using a  financial  model that  considers  (i) the terms of the joint
venture  agreements  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.  If detailed real  property  valuations  have not been  performed on
every  property  within a joint venture  (such as when a joint venture  recently
acquired the properties) then Boston Management  allocates equity interest 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 independent  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 lower 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  adjustments  have been made to mortgage notes payable at December
31, 2004 and 2003.

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

E INTEREST  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  that fluctuate with 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 Statement of Operations.
Belrose Capital is exposed to credit loss in the event of non-performance by the
swap counterparty. Risks may arise from the unanticipated movements in the value
of interest rates.

F RENTAL OPERATIONS -- The apartment units held by Bel Apartment (for the period
during which Belrose Realty  maintained an interest in Bel Apartment),  Katahdin
and Bel  Communities  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, 2004,  the minimum  lease  payments  expected to be received by
Deerfield from leases with lease periods greater than one year are as follows:

<Table>
<Caption>
TWELVE MONTHS ENDING DECEMBER 31,        AMOUNT
-------------------------------------------------------
<S>                                      <C>
2005                                     $   11,805,678
2006                                          8,912,432
2007                                          6,970,711
2008                                          6,589,912
2009                                          5,392,180
Thereafter                                   13,492,992
-------------------------------------------------------
                                         $   53,163,905
-------------------------------------------------------
</Table>

The  mortgage  escrow  accounts  consist  of  deposits  for real  estate  taxes,
insurance,  reserve for  replacements  and capital repairs as required under the
mortgage  agreements.  The mortgage  escrow  accounts are held and controlled by
mortgage lenders (Note 8).

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.

G INCOME -- 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  accrued  expenses  of  Belvedere  Company,  determined  in
accordance with accounting principles generally accepted in the United States of
America.  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

                                       49
<Page>

expenses  of the  Fund  determined  in  accordance  with  accounting  principles
generally accepted in the United States of America.

H DEFERRED 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.

I INCOME  TAXES -- Belrose  Capital,  Belvedere  Company and the  Portfolio  are
treated as partnerships  for federal income tax purposes.  As a result,  Belrose
Capital,  Belvedere  Company and the Portfolio do not incur  federal  income tax
liability,   and  the   shareholders   and  partners  thereof  are  individually
responsible for taxes on items of partnership income,  gain, loss and deduction.
The policy of Belrose Realty, Bel Apartment (for the period during which Belrose
Realty maintained an interest in Bel Apartment),  Katahdin,  Bel Communities and
Deerfield  is to comply  with the  Internal  Revenue  Code of 1986,  as amended,
applicable to REITs.  Belrose  Realty,  Katahdin,  Bel Communities and Deerfield
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 REITs.

Net investment income and capital gains determined in accordance with income tax
regulations may differ from such amounts determined in accordance with generally
accepted  accounting  principles.  Such differences could be significant and are
primarily  due  to  differences  in the  cost  basis  of  securities  and  other
contributed  investments,  depreciation on 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.

J OTHER -- Investment transactions are accounted for on a trade date basis.

K USE OF ESTIMATES -- The preparation of 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.

L  RECLASSIFICATIONS  --  Certain  amounts  in  the  prior  years'  consolidated
financial  statements  have been  reclassified  to conform with the current year
presentation.

M  INDEMNIFICATIONS   --  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 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.

3   DISTRIBUTIONS TO SHAREHOLDERS

Belrose  Capital  intends  to  distribute  at the end of each  year,  or shortly
thereafter,  the amount of its net  investment  income for the year, if any, and
18% of the  amount 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 tax rates), if any, other than  precontribution
gains  allocated to a  Shareholder  in  connection  with a tender offer or other
extraordinary  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, 2004,  2003, and for the period from
the start of business, March 19, 2002, to December 31, 2002.

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

                                       50
<Page>

(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 generally accepted accounting principles.

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

4   SHAREHOLDER 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:

<Table>
<Caption>
                                                YEAR ENDED      YEAR ENDED      PERIOD ENDED
                                                DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                                2004            2003            2002*
--------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>
Issued at Belrose Capital closings                        --       1,283,497      16,306,636
Issued to Shareholders electing to
   receive payment of distributions
   in Fund Shares                                     56,826           4,413              --
Redemptions                                         (485,060)       (415,385)       (146,365)
--------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE                             (428,234)        872,525      16,160,271
--------------------------------------------------------------------------------------------
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.

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, 2004,  2003,  and for the period from the start of business,
March 19,  2002,  to December  31,  2002,  EV  Distributors  received  $285,453,
$139,527, and $91,020 in redemption fees, respectively.

In connection with the offering of Fund Shares,  for the year ended December 31,
2003 and for the period from the start of  business,  March 19, 2002 to December
31,  2002,  EV  Distributors,   the  Placement  Agent,   received  $325,083  and
$6,404,936,  respectively  in selling  commissions  paid by  Belrose  Capital on
behalf of  Shareholders.  EV  Distributors,  in turn paid  these  amounts to the
applicable  subagent  on behalf of  Shareholders  investing  in Belrose  Capital
through such subagent. In addition, for the year ended December 31, 2003 and for
the period from the start of business,  March 19, 2002 to December 31, 2002,  EV
Distributors made payments to subagents from its own resources totaling $950,471
and  $13,760,016,  respectively,  approximately  equal  to 1.0% of the  value of
investments in Belrose Capital made through  subagents.  There were no offerings
of shares during the year ended December 31, 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  participate  in the  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 $102.03 and
$95.84 as of December 31, 2004 and 2003,  respectively,  between  Preferred  and
Common Shares that have been restructured is as follows:

<Table>
<Caption>
                                              PER SHARE VALUE AT            PER SHARE VALUE AT
                                              DECEMBER 31, 2004             DECEMBER 31, 2003
                                           ---------------------------------------------------------
                                           PREFERRED      COMMON         PREFERRED      COMMON
DATE OF CONTRIBUTION                       SHARES         SHARES         SHARES         SHARES
----------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>            <C>
February 19, 2003                          $      79.48   $      22.55   $      74.80   $      21.04
----------------------------------------------------------------------------------------------------
</Table>

                                       51
<Page>

5   INVESTMENT TRANSACTIONS

The following table summarizes the Fund's  investment  transactions,  other than
short-term  obligations,  for the years and period ended December 31, 2004, 2003
and 2002:

<Table>
<Caption>
                                                YEAR ENDED       YEAR ENDED       PERIOD ENDED
                                                DECEMBER 31,     DECEMBER 31,     DECEMBER 31,
INVESTMENT TRANSACTION                          2004             2003             2002*
-------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>              <C>
Increases in investment in
 Belvedere Company                              $          --    $ 95,047,136     $ 1,389,421,823
Decreases in investment in
 Belvedere Company(1)                           $  36,679,214    $ 38,976,768     $    19,333,412
Acquisition of other
 real property(2)                               $ 162,599,200    $         --     $   103,804,186
Sale of other
 real property(3)                               $  32,404,340    $         --     $            --
Sale of common stock(1)                         $          --    $ 10,140,535     $            --
Purchases of Partnership
 Preference Units(4)                            $  86,271,304    $  8,033,600     $    41,000,300
Sales of Partnership
 Preference Units(5)                            $  80,429,389    $         --     $            --
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.
(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 June 30,  2004 and August 4, 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). Purchases of other real
     estate investments during the period from the start of business,  March 19,
     2002,  to  December  31,  2002  represent   amounts  purchased  from  other
     investment funds advised by Boston Management.
(3)  During the year ended  December 31, 2004,  Belrose Realty sold its majority
     interest in Bel  Apartment  to another  investment  fund  advised by Boston
     Management  for which a loss of $1,548,753  was  recognized.  There were no
     sales of other real  property for the periods  ended  December 31, 2003 and
     2002.
(4)  Purchases of Partnership Preference Units during the periods ended December
     31, 2004, 2003 and 2002 represent  Partnership  Preference  Units purchased
     from other investment funds advised by Boston Management.
(5)  Sales of Partnership  Preference Units for the year ended December 31, 2004
     include Partnership Preference Units sold to other investment funds advised
     by Boston  Management for which a gain of $1,946,870 was recognized.  There
     were  no sales  of Partnership  Preference  Units  for  the  periods  ended
     December 31, 2003 and 2002.

A portion of the Fund's investment in Deerfield represents a partial interest in
certain property management contracts.  Other interested parties to the property
management contracts include an affiliate of the Deerfield Minority Shareholder.
This  partial  interest  provides  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.  The
estimated  fair value of  Deerfield's  interest in the  management  contracts is
$1,542,829.  Such value is estimated based upon discounting  expected cash flows
over the terms of the  agreements.  The value of such interests will be reviewed
at least annually however will be adjusted when there is a significant change in
economic circumstances since the most recent valuation.

6   INDIRECT INVESTMENT IN THE PORTFOLIO

The following table  summarizes the Fund's  investment in the Portfolio  through
Belvedere  Company,  for the years ended December 31, 2004 and 2003, and for the
period  from the start of  business,  March 19,  2002,  to  December  31,  2002,
including allocations of income,  expenses and net realized and unrealized gains
(losses) for the years and period then ended:

<Table>
<Caption>
                                                YEAR ENDED         YEAR ENDED         PERIOD ENDED
                                                DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                                2004               2003               2002*
------------------------------------------------------------------------------------------------------
<S>                                             <C>                <C>                <C>
Belvedere Company's
 interest in
 the Portfolio(1)                               $ 12,806,516,230   $ 11,100,012,615   $  8,753,268,522
The Fund's investment in
 Belvedere Company(2)                           $  1,757,804,676   $  1,640,828,100   $  1,264,314,536
Income allocated to
 Belvedere Company
 from the Portfolio                             $    189,728,234   $    143,671,130   $     98,462,745
Income allocated to the
 Fund from
 Belvedere Company                              $     27,095,222   $     21,625,926   $      8,141,479
Expenses allocated to
 Belvedere Company from
 the Portfolio                                  $     51,953,817   $     43,085,940   $     32,901,573
Expenses allocated to
 the Fund from
 Belvedere Company(3)                           $      9,996,601   $      8,692,174   $      3,413,514
Net realized gain from
 investment transactions,
 securities sold short
 and foreign currency
 transactions allocated
 to Belvedere Company
 from the Portfolio                             $    276,250,393   $    128,352,887   $     61,658,923
</Table>

                                       52
<Page>

<Table>
<Caption>
                                                YEAR ENDED         YEAR ENDED         PERIOD ENDED
                                                DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                                2004               2003               2002*
------------------------------------------------------------------------------------------------------
<S>                                             <C>                <C>                <C>
Net realized gain from
 investment transactions,
 securities sold short and
 foreign currency transactions
 allocated to the Fund from
 Belvedere Company                              $     37,885,739   $     19,117,006   $      7,233,500

Net change in unrealized
 appreciation (depreciation)
 of investments, securities
 sold short and foreign
 currency allocated to
 Belvedere Company
 from the Portfolio                             $    691,783,587   $  1,892,271,872   $ (2,373,856,566)

Net change in unrealized
 appreciation (depreciation)
 of investments, securities
 sold short and foreign
 currency allocated
 to the Fund from
 Belvedere Company                              $     98,671,430   $    288,392,438   $   (117,735,340)
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.
(1)  As of December 31, 2004,  2003 and 2002,  the value of Belvedere  Company's
     interest  in  the  Portfolio  represents  66.9%,  63.0%  and  60.1%  of the
     Portfolio's net assets, respectively.
(2)  As of December 31, 2004, 2003 and 2002, the Fund's  investment in Belvedere
     Company  represents  13.7%,  14.8% and  14.4% of  Belvedere  Company's  net
     assets, respectively.
(3)  Allocated  expenses  include  $7,441,023,   $6,481,012  and  $2,547,591  of
     expenses  allocated  from the  Portfolio,  operating  expenses  of $61,144,
     $61,831  and  $20,930  and  service  fees  of  $2,494,434,  $2,149,331  and
     $844,993,  for the years ended December 31, 2004,  2003, and for the period
     from  the  start of  business,  March  19,  2002,  to  December  31,  2002,
     respectively (Note 9).

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  open at  December  31, 2004 and 2003 are listed
below.

<Table>
<Caption>
                                                                               UNREALIZED
             NOTIONAL                           INITIAL                        APPRECIATION         UNREALIZED
             AMOUNT                             OPTIONAL       FINAL           (DEPRECIATION) AT    APPRECIATION AT
EFFECTIVE    (000'S      FIXED     FLOATING     TERMINATION    TERMINATION     DECEMBER 31,         DECEMBER 31,
DATE         OMITTED)    RATE      RATE         DATE           DATE            2004                 2003
-------------------------------------------------------------------------------------------------------------------
<S>          <C>         <C>       <C>          <C>            <C>             <C>                  <C>
                                   LIBOR +
10/03        $ 31,588    4.180%    0.30%         7/09          6/10            $         324,014    $       210,531
                                   LIBOR +
10/03          37,943    4.160%    0.30%        11/09          6/10                      373,892            252,843
                                   LIBOR +
10/03          83,307    4.045%    0.30%           --          6/10                    1,104,607            960,493
                                   LIBOR +
06/04          40,000    4.875%    0.00%           --          6/12                   (1,246,374)*               --
-------------------------------------------------------------------------------------------------------------------
TOTAL                                                                          $         556,139    $     1,423,867
-------------------------------------------------------------------------------------------------------------------
</Table>

*    On May 3,  2004,  Belrose  Capital  entered  into  a  $108,168,000  forward
     interest rate swap agreement 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, 2004.

On October 1, 2003, new interest rate swap agreements were entered into to fix a
portion of the cost of Belrose  Capital's  borrowings  under the credit facility
(Note 8B)  established  on July 15, 2003.  Concurrently,  all interest rate swap
agreements  outstanding  on  September  30, 2003 were  terminated,  resulting in
realized losses of $12,175,577.

8   DEBT

A MORTGAGES -- Rental property held by Belrose Realty's controlled  subsidiaries
is financed  through  mortgages  issued to those  controlled  subsidiaries.  The
mortgages are secured by the rental  property of Katahdin,  Bel  Communities and
Deerfield.  The  mortgages  are generally  without  recourse to Belrose  Realty,
Belrose Capital and its  Shareholders,  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 mortgages.  Belrose  Capital and Belrose Realty

                                       53
<Page>

have received  indemnification  from Bel Communities  Minority Shareholder (Note
1B), as applicable for certain of such potential liabilities.

The estimated fair value of the aggregated  rental  property  securing the loans
was $496,847,049  and $473,491,403 at December 31, 2004 and 2003,  respectively.
Amounts outstanding at December 31, 2004 and 2003 are as follows:

<Table>
<Caption>
                                     ANNUAL         MONTHLY        BALANCE AT         BALANCE AT
MATURITY                             INTEREST       INTEREST       DECEMBER 31,       DECEMBER 31,
DATE                                 RATE           PAYMENT*       2004               2003
----------------------------------------------------------------------------------------------------
<S>                                     <C>         <C>            <C>                <C>
May 1, 2010                             8.330%      $    745,323   $           --     $  107,369,483
December 1, 2010                        7.540%           760,283      121,000,000        121,000,000
June 1, 2011                            6.765%           653,104      115,850,000        115,850,000
September 1, 2012                       5.720%           586,300      123,000,000(1)              --
----------------------------------------------------------------------------------------------------
                                                                   $  359,850,000     $  344,219,483
----------------------------------------------------------------------------------------------------
</Table>

*    Mortgages  provide  for  monthly  payments  of  interest  only  through the
     respective  maturity  date,  with the entire  principal  balance due on the
     respective maturity date.
(1)  On October 6, 2004,  Deerfield  obtained first  mortgage  financing for its
     investment  in real  properties  in the  amount of  $123,000,000.  Interest
     payments  are due  monthly,  starting  December  1,  2004,  with the unpaid
     principal due on September 1, 2012.

The  estimated  market  value of the  mortgage  notes  payable is  approximately
$392,500,000 and $393,000,000 at December 31, 2004 and 2003,  respectively.  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  mortgages 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  different
assumptions  or  estimation  methodologies  may have a  material  effect  on the
estimated market value.

B CREDIT  FACILITY -- On July 15, 2003,  Belrose  Capital  refinanced its credit
facility  with  Merrill  Lynch  Mortgage   Capital  Inc.  with  two  new  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,  Bel  Apartment  (for the period during which
Belrose Realty  maintained an interest in Bel  Apartment),  Bel  Communities and
Deerfield.

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.

The credit  arrangement  with Merrill Lynch is a revolving  loan facility in the
amount of  $57,000,000,  including  the ability to issue letters of credit up to
$10,000,000.  This credit  arrangement  accrues  interest at a rate of one-month
LIBOR plus 0.38% per annum.  A commitment  fee of 0.10% per annum is paid on the
unused commitment amount.  Belrose Capital pays all fees associated with issuing
the letters of credit. Letters of credit were issued as a substitute for funding
certain mortgage escrow accounts required by the lender of Bel Apartment and Bel
Communities.  The  letter  of credit  for Bel  Communities  expires  in 2005 and
automatically extends for one-year periods not to extend beyond June 15, 2010.

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.  Belrose  Realty's
proceeds  from  this  financing  were  distributed  to  Belrose  Realty  and the
Deerfield Minority  Shareholders in accordance with their equity interests.  The
proceeds 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.

<Table>
<Caption>
                                                     AT DECEMBER 31, 2004   AT DECEMBER 31, 2003
------------------------------------------------------------------------------------------------
<S>                                                  <C>                    <C>
Total amount available under Credit Facility         $        273,000,000   $        234,000,000
DrKW borrowings outstanding                          $        216,000,000   $        177,000,000
Merrill Lynch borrowings outstanding                 $         20,000,000   $          6,300,000
Outstanding letters of credit                        $            752,525   $          2,080,452
</Table>

                                       54
<Page>

Borrowings  under the  Credit  Facility  have been used to  purchase  the Fund's
interests in real estate  investments,  to pay organizational  costs and selling
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.

9   MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Belrose  Capital and the Portfolio have engaged Boston  Management as investment
adviser.  Under the terms of the advisory  agreement with the Portfolio,  Boston
Management  receives a monthly  advisory fee of 5/96 of 1% (0.625%  annually) of
the average daily net assets of the Portfolio up to $500,000,000  and at reduced
rates as daily net assets  exceed that level.  Certain of the  advisory fee rate
reductions  are  pursuant  to an  agreement  between  the  Portfolio's  Board of
Trustees and Boston  Management.  Those  reductions  may not be changed  without
Trustee and interest  holder  approval.  For the years ended  December 31, 2004,
2003 and for the period from the start of business,  March 19, 2002, to December
31, 2002,  the advisory fee  applicable to the Portfolio was 0.43%,  0.44%,  and
0.44% (annualized) 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. 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 1/20th 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.  With respect to  Shareholders  who
subscribe through a subagent, EV Distributors assigns servicing responsibilities
and fees to the applicable  subagent  beginning twelve months after the issuance
of Fund Shares to such persons.  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.

Management  services for the real property held by Bel Apartment (for the period
during which Belrose Realty maintained an interest in Bel Apartment),  Katahdin,
Bel  Communities  and Deerfield 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  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 a REIT administration fee.

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, 2004 and 2003 and for

                                       55
<Page>

the period from the start of business,  March 19, 2002, to December 31, 2002, in
connection  with the  services  rendered by Eaton  Vance,  its  affiliates,  and
affiliates of Belrose Realty's controlled subsidiaries.

<Table>
<Caption>
                                                YEAR ENDED         YEAR ENDED         PERIOD ENDED
                                                DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                                2004               2003               2002*
------------------------------------------------------------------------------------------------------
<S>                                             <C>                <C>                <C>
Advisory fee allocated to
 Belvedere Company from
 the Portfolio                                  $     50,252,861   $     41,671,111   $     31,748,787
Advisory fee allocated to
 the Fund from
 Belvedere Company                              $      7,197,653   $      6,267,847   $      2,454,868
Advisory and
 administrative fee and
 management fee incurred
 directly by the Fund                           $      5,872,964   $      4,977,521   $      2,163,168
Distribution fees                               $      1,641,602   $      1,415,111   $        548,124
Reduction of advisory and
 administrative fees                            $      1,641,602   $      1,415,111   $        548,124
Servicing fees of
 Belvedere Company                              $     17,418,515   $     14,288,579   $     10,956,348
Servicing fees allocated to
 the Fund from
 Belvedere Company                              $      2,494,434   $      2,149,331   $        844,993
Servicing fees incurred directly
 by the Fund                                    $      1,610,127   $      1,385,329   $        519,494
Servicing fees paid or
 accrued to subagents                           $      4,104,537   $      1,471,244   $             --
Property management fees                        $      2,621,208   $      2,590,322   $      1,523,512
REIT administration fees                        $        189,583   $             --   $             --
</Table>

*    For the period from the start of business,  March 19, 2002, to December 31,
     2002.

10  SEGMENT INFORMATION

Belrose  Capital  pursues  its  investment   objective  primarily  by  investing
indirectly  in the  Portfolio  through  Belvedere  Company.  The  Portfolio is a
diversified  investment company that emphasizes  investments in common stocks of
domestic and foreign  growth  companies  that are  considered by its  investment
adviser to be high in  quality  and  attractive  in their  long-term  investment
prospects.  Separate from its investment in Belvedere  Company,  Belrose Capital
invests in real estate assets through its  subsidiary  Belrose  Realty.  Belrose
Realty invests  directly in Partnership  Preference Units and indirectly in real
property through controlled  subsidiaries,  Bel Apartment (for the period during
which Belrose Realty  maintained an interest in Bel  Apartment),  Katahdin,  Bel
Communities and Deerfield (Note 1 and Note 5).

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
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:

<Table>
<Caption>
                                                TAX-
                                                MANAGED
FOR THE YEAR ENDED                              GROWTH              REAL
DECEMBER 31, 2004                               PORTFOLIO*          ESTATE              TOTAL
--------------------------------------------------------------------------------------------------------
<S>                                             <C>                 <C>                 <C>
Revenue                                         $     17,098,621    $     73,646,315    $     90,744,936
Interest expense
 on mortgages                                                 --         (26,491,201)        (26,491,201)
Interest expense on
 Credit Facility                                              --          (3,724,679)         (3,724,679)
Operating expenses                                    (1,217,128)        (35,726,434)        (36,943,562)
Minority interest in net
 income of
 controlled subsidiaries                                      --          (1,872,405)         (1,872,405)
--------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                           $     15,881,493    $      5,831,596    $     21,713,089
Net realized gain (loss)                              37,885,739            (790,159)         37,095,580
Net change in unrealized
 appreciation (depreciation)                          98,671,430         (36,483,584)         62,187,846
--------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
 IN NET ASSETS FROM
 OPERATIONS OF
 REPORTABLE SEGMENTS                            $    152,438,662    $    (31,442,147)   $    120,996,515
--------------------------------------------------------------------------------------------------------

<Caption>
                                                TAX-
                                                MANAGED
FOR THE YEAR ENDED                              GROWTH             REAL
DECEMBER 31, 2003                               PORTFOLIO*         ESTATE             TOTAL
------------------------------------------------------------------------------------------------------
<S>                                             <C>                <C>                <C>
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                                              --         (2,572,705)        (2,572,705)
Operating expenses                                      (922,781)       (31,784,810)       (32,707,591)
Minority interests in net
 income of
 controlled subsidiaries                                      --         (1,943,578)        (1,943,578)
------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                           $     12,010,971   $      6,730,580   $     18,741,551
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   $     13,521,921   $    333,027,394
------------------------------------------------------------------------------------------------------
</Table>

                                       56
<Page>

<Table>
<Caption>
                                 TAX-
                                 MANAGED
FOR THE PERIOD ENDED             GROWTH             REAL
DECEMBER 31, 2002(1)             PORTFOLIO*         ESTATE             TOTAL
--------------------------------------------------------------------------------------
<S>                              <C>                <C>                <C>
Revenue                          $     4,727,965    $    39,749,324    $    44,477,289
Interest expense
 on mortgages                                 --        (15,144,576)       (15,144,576)
Interest expense on
 Credit Facility                              --         (1,692,400)        (1,692,400)
Operating expenses                      (344,298)       (17,996,501)       (18,340,799)
Minority interest in net
 income of
 controlled subsidiaries                      --         (1,465,099)        (1,465,099)
--------------------------------------------------------------------------------------
NET INVESTMENT INCOME            $     4,383,667    $     3,450,748    $     7,834,415
Net realized gain (loss)               7,233,500         (2,044,673)         5,188,827
Net change in unrealized
 appreciation (depreciation)        (117,735,340)       (11,663,557)      (129,398,897)
--------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS
 FROM OPERATIONS OF
 REPORTABLE SEGMENTS             $  (106,118,173)   $   (10,257,482)   $  (116,375,655)
--------------------------------------------------------------------------------------
</Table>

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

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

<Table>
<Caption>
                                 YEAR ENDED         YEAR ENDED         PERIOD ENDED
                                 DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                 2004               2003               2002(1)
--------------------------------------------------------------------------------------
<S>                              <C>                <C>                <C>
Revenue:
  Revenue from
    reportable segments          $    90,744,936    $    82,283,190    $    44,477,289
  Unallocated amounts:
    Interest earned on cash
      not invested in the
      Portfolio or in
      subsidiaries                       150,923             29,766             10,438
--------------------------------------------------------------------------------------
TOTAL REVENUE                    $    90,895,859    $    82,312,956    $    44,487,727
--------------------------------------------------------------------------------------
Net increase (decrease) in net
  assets from operations:
  Net increase (decrease) in
    net assets from operations
    of reportable segments       $   120,996,515    $   333,027,394    $  (116,375,655)
  Unallocated investment
    income:
    Interest earned on cash
      not invested in the
      Portfolio or in
      subsidiaries                       150,923             29,766             10,438
  Unallocated expenses(2):
    Distribution and
      servicing fees                  (3,251,729)        (2,800,440)        (1,067,618)
    Audit, tax and legal fees           (309,465)          (294,771)          (503,175)
    Interest expense on
      Credit Facility                   (657,296)          (223,713)           (89,074)
    Other operating expenses            (125,466)          (172,751)          (753,302)
--------------------------------------------------------------------------------------
TOTAL NET INCREASE (DECREASE)
  IN NET ASSETS FROM
  OPERATIONS                     $   116,803,482    $   329,565,485    $  (118,778,386)
--------------------------------------------------------------------------------------
</Table>

(1)  For the period from the start of business,  March 19, 2002, to December 31,
     2002.
(2)  Unallocated  expenses  represent costs incurred that pertain to the overall
     operation  of  Belrose  Capital,  and do not  pertain  to either  operating
     segment.

                                       57
<Page>

<Table>
<Caption>
                                 TAX-
                                 MANAGED
                                 GROWTH             REAL
AT DECEMBER 31, 2004             PORTFOLIO*         ESTATE             TOTAL
--------------------------------------------------------------------------------------
<S>                              <C>                <C>                <C>
Segment assets                   $ 1,757,804,676    $   574,172,316    $ 2,331,976,992
Segment liabilities                    3,958,764        624,933,575        628,892,339
--------------------------------------------------------------------------------------

NET ASSETS (LIABILITIES) OF
 REPORTABLE SEGMENTS             $ 1,753,845,912    $   (50,761,259)   $ 1,703,084,653
--------------------------------------------------------------------------------------

<Caption>
                                 TAX-
                                 MANAGED
                                 GROWTH             REAL
AT DECEMBER 31, 2003             PORTFOLIO*         ESTATE             TOTAL
--------------------------------------------------------------------------------------
<S>                              <C>                <C>                <C>
Segment assets                   $ 1,640,828,100    $   544,254,775    $ 2,185,082,875
Segment liabilities                           --        533,483,765        533,483,765
--------------------------------------------------------------------------------------

NET ASSETS OF
 REPORTABLE SEGMENTS             $ 1,640,828,100    $    10,771,010    $ 1,651,599,110
--------------------------------------------------------------------------------------
</Table>

*    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:

<Table>
<Caption>
                                           DECEMBER 31, 2004    DECEMBER 31, 2003
---------------------------------------------------------------------------------
<S>                                        <C>                  <C>
Net assets:
  Net assets of reportable segments        $   1,703,084,653    $   1,651,599,110
  Unallocated amounts:
    Cash(1)                                          370,849              412,226
    Short-term investments(1)                        721,000            7,614,214
    Loan payable -- Credit Facility(2)            (9,713,064)         (27,026,426)
    Other liabilities                               (236,013)            (144,366)
---------------------------------------------------------------------------------
TOTAL NET ASSETS                           $   1,694,227,425    $   1,632,454,758
---------------------------------------------------------------------------------
</Table>

(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.

11  SUBSEQUENT EVENT (UNAUDITED)

On  January  27,  2005,  the Fund  made a  distribution  of $1.29  per  share to
Shareholders of record on January 26, 2005.

                                       58
<Page>

BELROSE CAPITAL FUND LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE SHAREHOLDERS OF BELROSE CAPITAL FUND LLC AND SUBSIDIARIES

We  have  audited  the  accompanying   consolidated  statements  of  assets  and
liabilities,  including the  consolidated  portfolio of investments,  of Belrose
Capital Fund LLC and subsidiaries,  (collectively,  the Fund) as of December 31,
2004 and 2003, and the related consolidated statements of operations, changes in
net assets,  cash flows,  and financial  highlights for each of the two years in
the  period  ended  December  31,  2004 and for the  period  from  the  start of
business,  March 19, 2002 to December 31, 2002.  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, 2004 and 2003 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,  2004 and 2003,  the  results  of its
operations,  the changes in its net assets,  its cash flows,  and the  financial
highlights  for each of the two years in the period ended  December 31, 2004 and
for the period from the start of business,  March 19, 2002 to December 31, 2002,
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 Company's
internal control over financial  reporting as of December 31, 2004, based on the
criteria  established in INTERNAL  CONTROL--INTEGRATED  FRAMEWORK  issued by the
Committee of Sponsoring  Organizations of the Treadway Commission and our report
dated March 11, 2005 expressed an unqualified opinion on management's assessment
of the effectiveness of the Compay's  internal control over financial  reporting
and an  unqualified  opinion  on the  effectiveness  of the  Company's  internal
control over financial reporting.

/s/DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 11, 2005

                                       59
<Page>

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.

During the second  quarter of 2004,  the Fund acquired an interest in a new real
estate joint venture, Deerfield Property Trust ("Deerfield"). As of December 31,
2004, Deerfield owned 22 industrial distribution properties located in 8 states.
Management  concluded  that it was not  possible  to  conduct an  assessment  of
internal  control over financial  reporting of Deerfield.  Deerfield  represents
approximately 7.0% of the Fund's consolidated total assets and 6.1% of the total
investment  income  as of and  for  the  period  ended  December  31,  2004.  In
accordance  with  guidance  from  the  staff  of  the  Securities  and  Exchange
Commission, management intends to include an assessment of internal control over
financial  reporting  of  Deerfield  in its  report  on  internal  control  over
financial reporting for the fiscal year ended December 31, 2005.

Management  assessed  the  effectiveness  of the Fund's  internal  control  over
financial  reporting  as of  December  31,  2004.  In  making  this  assessment,
management   used  the  criteria  set  forth  by  the  Committee  of  Sponsoring
Organizations of the Treadway  Commission (COSO) in Internal  Control-Integrated
Framework.

Based on its assessment and those  criteria,  management  believes that the Fund
maintained  effective  internal control over financial  reporting as of December
31, 2004.

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 11, 2005

                                       60
<Page>

BELROSE CAPITAL FUND LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE SHAREHOLDERS OF BELROSE CAPITAL FUND LLC AND SUBSIDIARIES

We  have  audited   management's   assessment,   included  in  the  accompanying
Management's Report on Internal Control Over Financial  Reporting,  that Belrose
Capital Fund LLC and subsidiaries  (the "Fund")  maintained  effective  internal
control over  financial  reporting  as of December  31, 2004,  based on criteria
established in Internal Control -- Integrated  Framework issued by the Committee
of  Sponsoring  Organizations  of  the  Treadway  Commission.  As  described  in
Management's  Report on Internal  Control Over Financial  Reporting,  management
excluded from their assessment the internal control over financial  reporting at
Deerfield  Property  Trust,  which  was  acquired  on June 30,  2004.  Deerfield
Property Trust represents  approximately  7.0% of the Fund's  consolidated total
assets and 6.1% of the total  investment  income as of and for the period  ended
December 31, 2004.  Accordingly,  our audit did not include the internal control
over financial  reporting at Deerfield  Property Trust. 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 Company'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 Company maintained  effective
internal  control over  financial  reporting as of December 31, 2004,  is fairly
stated, in all material respects,  based on the criteria established in INTERNAL
CONTROL  --  INTEGRATED   FRAMEWORK   issued  by  the  Committee  of  Sponsoring
Organizations  of the  Treadway  Commission.  Also in our  opinion,  the Company
maintained, in all material respects,  effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in INTERNAL
CONTROL  --  INTEGRATED   FRAMEWORK   issued  by  the  Committee  of  Sponsoring
Organizations of the Treadway Commission.

We have also  audited,  in accordance  with the standards of the Public  Company
Accounting   Oversight  Board  (United  States),   the  consolidated   financial
statements  as of and for the year ended  December  31, 2004 of the Fund and our
report dated March 11, 2005 expressed an unqualified  opinion on those financial
statements.

/s/DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 11, 2005

                                       61
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
PORTFOLIO OF INVESTMENTS

COMMON STOCKS -- 99.8%

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
AEROSPACE AND DEFENSE -- 2.8%

Boeing Company (The)                                     796,801   $     41,250,388
General Dynamics                                         735,000         76,881,000
Honeywell International, Inc.                            277,798          9,836,827
Northrop Grumman Corp.                                 3,497,103        190,102,519
Raytheon Company                                         340,663         13,227,944
Rockwell Collins, Inc.                                   190,614          7,517,816
Teledyne Technologies Incorporated(1)                      6,117            180,023
United Technologies Corp.                              1,897,601        196,117,063
-----------------------------------------------------------------------------------
                                                                   $    535,113,580
-----------------------------------------------------------------------------------

AIR FREIGHT AND LOGISTICS -- 2.9%

FedEx Corporation                                      2,106,578   $    207,476,867
Robinson (C.H.) Worldwide, Inc.                        1,098,233         60,973,896
United Parcel Service, Inc. Class B                    3,401,734        290,712,188
-----------------------------------------------------------------------------------
                                                                   $    559,162,951
-----------------------------------------------------------------------------------

AIRLINES -- 0.0%

Southwest Airlines, Inc.                                 294,642   $      4,796,772
-----------------------------------------------------------------------------------
                                                                   $      4,796,772
-----------------------------------------------------------------------------------

AUTO COMPONENTS -- 0.2%

ArvinMeritor, Inc.                                         8,000   $        178,960
Borg-Warner Automotive, Inc.                             381,499         20,665,801
Dana Corp.                                                25,000            433,250
Delphi Automotive Systems Corp.                            6,199             55,915
Johnson Controls, Inc.                                   234,164         14,855,364
Visteon Corp.                                              9,828             96,020
-----------------------------------------------------------------------------------
                                                                   $     36,285,310
-----------------------------------------------------------------------------------

AUTOMOBILES -- 0.1%

DaimlerChrysler AG                                         7,000   $        336,350
Ford Motor Co.                                           145,050          2,123,532
General Motors Corp.                                      13,492            540,490
Harley-Davidson, Inc.                                    140,700          8,547,525
Honda Motor Co. Ltd. ADR                                  20,000            521,200
-----------------------------------------------------------------------------------
                                                                   $     12,069,097
-----------------------------------------------------------------------------------

BEVERAGES -- 4.0%

Anheuser-Busch Companies, Inc.                         4,421,625   $    224,309,036
Brown-Forman Corp. Class A                               547,732         27,802,876
Brown-Forman Corp. Class B                                45,820   $      2,230,518
Coca-Cola Company (The)                                3,442,924        143,328,926
Coca-Cola Enterprises, Inc.                            1,756,930         36,631,991
PepsiCo., Inc.                                         6,267,913        327,185,059
-----------------------------------------------------------------------------------
                                                                   $    761,488,406
-----------------------------------------------------------------------------------

BIOTECHNOLOGY -- 1.7%

Amgen, Inc.(1)                                         4,060,747   $    260,496,920
Applera Corp. - Celera Genomics Group(1)                  26,000            357,500
Biogen Idec Inc.(1)                                       11,200            746,032
Genzyme Corp. - General Division(1)                      564,926         32,805,253
Gilead Sciences, Inc.(1)                                 115,482          4,040,715
Incyte Pharmaceuticals, Inc.(1)                           14,294            142,797
Invitrogen Corp.(1)                                      429,910         28,859,858
Vertex Pharmaceuticals, Inc.(1)                           13,000            137,410
-----------------------------------------------------------------------------------
                                                                   $    327,586,485
-----------------------------------------------------------------------------------

BUILDING PRODUCTS -- 1.0%

American Standard Companies, Inc.(1)                     977,738   $     40,400,134
Masco Corporation                                      4,157,854        151,886,407
Water Pik Technologies(1)                                  2,141             37,960
-----------------------------------------------------------------------------------
                                                                   $    192,324,501
-----------------------------------------------------------------------------------

CAPITAL MARKETS -- 4.1%

Affiliated Managers Group(1)                              20,520   $      1,390,025
Bank of New York Co., Inc. (The)                         402,028         13,435,776
Bear Stearns Companies, Inc.                              88,001          9,003,382
Credit Suisse Group(1)                                   155,136          6,521,607
Federated Investors, Inc.                              1,666,768         50,669,747
Franklin Resources, Inc.                               1,462,116        101,836,379
Goldman Sachs Group, Inc.                                832,738         86,638,062
Investors Financial Services Corp.                       453,428         22,662,331
Knight Trading Group, Inc.(1)                          1,750,000         19,162,500
Legg Mason, Inc.                                          26,461          1,938,533
Lehman Brothers Holdings, Inc.                            99,493          8,703,648
Mellon Financial Corporation                             221,912          6,903,682
Merrill Lynch & Co., Inc.                              2,108,147        126,003,946
Morgan Stanley Dean Witter & Co.                       4,737,998        263,053,649
Northern Trust Corp.                                     368,571         17,905,179
Nuveen Investments Class A                               150,000          5,920,500
Piper Jaffray Companies, Inc.(1)                          41,059          1,968,779
Price (T. Rowe) Group, Inc.                              191,743         11,926,415
</Table>

                        See notes to financial statements

                                       62
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
CAPITAL MARKETS (CONTINUED)

Raymond James Financial, Inc.                            147,337   $      4,564,500
Schwab (Charles) & Co.                                   857,261         10,252,842
State Street Corp.                                       131,670          6,467,630
UBS AG                                                    63,392          5,314,785
Waddell & Reed Financial, Inc., Class A                  340,438          8,133,064
-----------------------------------------------------------------------------------
                                                                   $    790,376,961
-----------------------------------------------------------------------------------

CHEMICALS -- 1.0%

Airgas, Inc.                                             353,715   $      9,376,985
Arch Chemicals, Inc.                                       4,950            142,461
Bayer AG ADR                                              40,000          1,359,200
Dow Chemical Co. (The)                                   247,183         12,238,030
DuPont (E.I.) de Nemours & Co.                         1,328,903         65,182,692
Ecolab, Inc.                                             258,423          9,078,400
MacDermid, Inc.                                           61,937          2,235,926
Monsanto Company                                          19,181          1,065,505
Olin Corp.                                                 9,900            217,998
PPG Industries, Inc.                                      23,542          1,604,623
Rohm and Haas, Co.                                         2,601            115,042
RPM, Inc.                                                 70,138          1,378,913
Sigma-Aldrich Corp.                                      630,897         38,144,033
Solutia Inc.(1)                                           20,293             23,743
Valspar Corp.                                            818,316         40,923,983
-----------------------------------------------------------------------------------
                                                                   $    183,087,534
-----------------------------------------------------------------------------------

COMMERCIAL BANKS -- 8.6%

AmSouth Bancorporation                                   626,715   $     16,231,919
Associated Banc-Corp                                   1,061,378         35,248,363
Bank of America Corporation                            4,845,034        227,668,148
Bank of Hawaii Corp.                                      69,735          3,538,354
Bank of Montreal                                         267,204         12,863,201
Banknorth Group, Inc.                                     10,000            366,000
BB&T Corp.                                             1,826,737         76,814,291
Canadian Imperial Bank of Commerce                       100,000          6,026,000
City National Corp.                                      273,260         19,305,819
Colonial Bancgroup, Inc. (The)                           253,936          5,391,061
Comerica, Inc.                                           331,589         20,233,561
Commerce Bancshares, Inc.                                155,154          7,788,731
Compass Bancshares, Inc.                                 301,339         14,666,169
Fifth Third Bancorp                                    1,355,381         64,082,414
First Citizens BancShares, Inc.                           30,600          4,536,450
First Financial Bancorp                                   47,933            838,828
First Horizon National Corp.                             155,551   $      6,705,804
First Midwest Bancorp, Inc.                              815,329         29,588,289
Hibernia Corp. Class A                                   187,345          5,528,551
HSBC Holdings PLC ADR                                    592,965         50,485,040
Huntington Bancshares, Inc.                              586,532         14,534,263
Keycorp                                                  625,951         21,219,739
M&T Bank Corp.                                            47,419          5,113,665
Marshall & Ilsley Corp.                                  629,932         27,842,994
National City Corp.                                    1,677,060         62,973,603
North Fork Bancorporation, Inc.                        1,785,892         51,522,984
PNC Bank Corp.                                           156,003          8,960,812
Popular, Inc.                                              1,432             41,285
Regions Financial Corp.                                2,282,030         81,217,448
Royal Bank of Canada                                     349,353         18,669,424
Royal Bank of Scotland Group PLC                          50,837          1,707,348
S&T Bancorp, Inc.                                        100,000          3,769,000
Societe Generale                                         809,647         81,960,387
Southwest Bancorporation of Texas, Inc.                1,255,140         29,232,211
SunTrust Banks, Inc.                                   1,307,505         96,598,469
Synovus Financial Corp.                                1,345,581         38,456,705
TCF Financial Corporation                                 72,500          2,330,150
U.S. Bancorp                                           5,276,270        165,252,776
Valley National Bancorp                                  164,652          4,552,628
Wachovia Corp.                                         2,239,760        117,811,376
Wells Fargo & Company                                  2,391,184        148,612,086
Westamerica Bancorporation                               268,474         15,654,719
Whitney Holding Corp.                                    347,200         15,620,528
Zions Bancorporation                                     250,076         17,012,670
-----------------------------------------------------------------------------------
                                                                   $  1,638,574,263
-----------------------------------------------------------------------------------

COMMERCIAL SERVICES AND SUPPLIES -- 2.0%

Allied Waste Industries, Inc.(1)                       1,674,390   $     15,538,339
Apollo Group, Inc. Class A(1)                             18,411          1,485,952
Avery Dennison Corp.                                   1,157,598         69,421,152
Banta Corp.                                               42,341          1,895,183
Block (H&R), Inc.                                        732,354         35,885,346
Cendant Corp.                                            549,359         12,844,013
Century Business Services, Inc.(1)                       185,000            806,600
Cintas Corp.                                           1,399,270         61,371,982
Consolidated Graphics, Inc.(1)                            70,215          3,222,869
Deluxe Corporation                                        32,000          1,194,560
Donnelley (R.R.) & Sons Co.                               91,260          3,220,565
Equifax, Inc.                                             80,000          2,248,000
</Table>

                        See notes to financial statements

                                       63
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
COMMERCIAL SERVICES AND SUPPLIES (CONTINUED)

Gevity HR, Inc.                                           78,125   $      1,606,250
HNI Corp.                                              1,470,565         63,307,823
Hudson Highland Group, Inc.(1)                            11,581            333,533
Ikon Office Solutions, Inc.                               83,040            959,942
Imagistics International Inc.(1)                             809             27,231
Laureate Education Inc.(1)                               520,213         22,936,191
Manpower, Inc.                                             2,000             96,600
Miller (Herman) Inc.                                     541,800         14,969,934
Monster Worldwide Inc.(1)                                154,426          5,194,891
Navigant Consulting, Inc.(1)                             463,017         12,316,252
Pitney Bowes, Inc.                                        42,343          1,959,634
School Specialty Corp.(1)                                 49,197          1,897,036
ServiceMaster Co.                                      1,224,880         16,891,095
Steelcase Inc.                                           123,000          1,702,320
Waste Management, Inc.                                 1,145,998         34,311,180
-----------------------------------------------------------------------------------
                                                                   $    387,644,473
-----------------------------------------------------------------------------------

COMMUNICATIONS EQUIPMENT -- 1.2%

3Com Corp.(1)                                            873,949   $      3,644,367
ADC Telecommunications, Inc.(1)                          301,164            807,119
Alcatel S.A. ADR(1)                                       43,728            683,469
Avaya, Inc.(1)                                            56,571            973,021
Ciena Corp.(1)                                           380,378          1,270,463
Cisco Systems, Inc.(1)                                 4,475,139         86,370,183
Comverse Technology, Inc.(1)                             375,922          9,191,293
Corning, Inc.(1)                                       3,645,380         42,906,123
Enterasys Networks, Inc.(1)                               55,945            100,701
JDS Uniphase Corp.(1)                                     52,451            166,270
Lucent Technologies, Inc.(1)                             555,464          2,088,545
Motorola, Inc.                                           980,426         16,863,327
Nokia Corp., Class A, ADR                              2,050,478         32,130,990
Nortel Networks Corp.(1)                               1,135,030          3,961,255
Qualcomm, Inc.                                           758,638         32,166,251
Riverstone Networks, Inc.(1)                              28,706             30,572
Tellabs, Inc.(1)                                         110,405            948,379
-----------------------------------------------------------------------------------
                                                                   $    234,302,328
-----------------------------------------------------------------------------------

COMPUTERS AND PERIPHERALS -- 3.4%

Dell Inc.(1)                                           4,460,429   $    187,962,478
EMC Corp.(1)                                           1,388,652         20,649,255
Gateway, Inc.(1)                                          95,621            574,682
Hewlett-Packard Co.                                    1,094,183         22,945,018
International Business Machines Corp.                  2,426,216   $    239,176,373
Lexmark International Group, Inc.(1)                   1,804,885        153,415,225
McData Corp., Class A(1)                                  17,982            107,173
Network Appliance, Inc.(1)                               488,000         16,211,360
Palmone, Inc.(1)                                          65,230          2,058,007
Sun Microsystems, Inc.(1)                                366,670          1,972,685
-----------------------------------------------------------------------------------
                                                                   $    645,072,256
-----------------------------------------------------------------------------------

CONSTRUCTION AND ENGINEERING -- 0.1%

Dycom Industries, Inc.(1)                                149,711   $      4,569,180
Jacobs Engineering Group, Inc.(1)                        229,985         10,990,983
-----------------------------------------------------------------------------------
                                                                   $     15,560,163
-----------------------------------------------------------------------------------

CONSTRUCTION MATERIALS -- 0.1%

CRH plc                                                  329,450   $      8,812,801
Vulcan Materials Company                                 184,512         10,076,200
-----------------------------------------------------------------------------------
                                                                   $     18,889,001
-----------------------------------------------------------------------------------

CONSUMER FINANCE -- 1.2%

American Express Co.                                     772,583   $     43,550,504
Capital One Financial Corp.                            1,411,152        118,833,110
MBNA Corporation                                         456,002         12,854,696
Providian Financial Corp.(1)                             457,296          7,531,665
SLM Corp.                                                905,499         48,344,592
-----------------------------------------------------------------------------------
                                                                   $    231,114,567
-----------------------------------------------------------------------------------

CONTAINERS AND PACKAGING -- 0.1%

Bemis Co.                                                295,186   $      8,586,961
Caraustar Industries, Inc.(1)                            167,599          2,819,015
Sealed Air Corp.(1)                                       37,014          1,971,736
Sonoco Products Co.                                      160,690          4,764,459
Temple-Inland, Inc.                                       57,962          3,964,601
-----------------------------------------------------------------------------------
                                                                   $     22,106,772
-----------------------------------------------------------------------------------

DISTRIBUTORS -- 0.1%

Genuine Parts Company                                    323,060   $     14,234,024
-----------------------------------------------------------------------------------
                                                                   $     14,234,024
-----------------------------------------------------------------------------------

DIVERSIFIED FINANCIAL SERVICES -- 1.7%

Citigroup Inc.                                         4,110,278   $    198,033,194
Finova Group, Inc.(1)                                    175,587             28,094
</Table>

                        See notes to financial statements

                                       64
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)

ING groep, N.V. ADR                                      257,281   $      7,782,750
Moody's Corp.                                             67,543          5,866,110
Morgan (J.P.) Chase & Co.                              2,952,221        115,166,141
-----------------------------------------------------------------------------------
                                                                   $    326,876,289
-----------------------------------------------------------------------------------

DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.1%

Alltel Corp.                                           1,632,558   $     95,929,108
AT&T Corp.                                               495,955          9,452,902
BCE, Inc.                                              3,400,000         82,042,000
BellSouth Corp.                                          455,705         12,664,042
Cincinnati Bell Inc.(1)                                  169,013            701,404
Citizens Communications Co.                               13,568            187,103
Deutsche Telekom AG(1)                                 2,006,790         45,513,997
McLeodUSA(1)                                              21,974             15,821
PTEK Holdings, Inc.(1)                                    28,000            299,880
Qwest Communications International, Inc.(1)               59,924            266,063
RSL Communications Ltd.(1)(2)                            247,161                  0
SBC Communications, Inc.                               1,464,924         37,751,091
Sprint Corp. - FON Group                                 101,903          2,532,290
Talk America Holdings, Inc.(1)                             9,703             64,234
Telefonos de Mexico ADR                                2,000,000         76,640,000
Verizon Communications                                 1,050,565         42,558,388
-----------------------------------------------------------------------------------
                                                                   $    406,618,323
-----------------------------------------------------------------------------------

ELECTRIC UTILITIES -- 0.3%

Ameren Corp.                                               5,000   $        250,700
American Electric Power, Inc.                                960             32,966
Exelon Corp.                                           1,002,000         44,158,140
PG&E Corp.(1)                                             47,705          1,587,622
Southern Co. (The)                                        65,985          2,211,817
TECO Energy, Inc.                                         34,145            523,784
TXU Corp.                                                250,196         16,152,654
Wisconsin Energy Corp.                                     9,576            322,807
-----------------------------------------------------------------------------------
                                                                   $     65,240,490
-----------------------------------------------------------------------------------

ELECTRICAL EQUIPMENT -- 0.5%

American Power Conversion Corp.                           34,704   $        742,666
Baldor Electric Co.                                      149,060          4,103,622
Emerson Electric Co.                                   1,111,539         77,918,884
Rockwell International Corp.                             156,699          7,764,435
Roper Industries, Inc.                                    23,122          1,405,124
Thomas & Betts Corp.(1)                                  114,600          3,523,950
-----------------------------------------------------------------------------------
                                                                   $     95,458,681
-----------------------------------------------------------------------------------

ELECTRONIC EQUIPMENT AND INSTRUMENTS -- 0.7%

Agilent Technologies, Inc.(1)                            569,891   $     13,734,373
Arrow Electronics, Inc.(1)                                 8,750            212,625
Dionex Corp.(1)                                          139,750          7,919,633
Flextronics International Ltd.(1)                        293,053          4,049,992
Jabil Circuit, Inc.(1)                                 2,127,971         54,433,498
Molex, Inc., Class A                                      65,367          1,742,031
National Instruments Corp.                               735,687         20,047,471
PerkinElmer, Inc.                                        254,526          5,724,290
Plexus Corp.(1)                                          158,108          2,056,985
Sanmina Corp.(1)                                       1,140,602          9,660,899
Solectron Corporation(1)                               1,752,794          9,342,392
X-Rite Incorporated                                      288,000          4,610,880
-----------------------------------------------------------------------------------
                                                                   $    133,535,069
-----------------------------------------------------------------------------------

ENERGY EQUIPMENT AND SERVICES -- 0.7%

Baker Hughes, Inc.                                       457,426   $     19,518,367
Core Laboratories N.V.(1)                                 31,290            730,622
Grant Prideco, Inc.(1)                                    35,444            710,652
Halliburton Company                                      990,930         38,884,093
National-Oilwell, Inc.(1)                                514,062         18,141,248
Schlumberger Ltd.                                        567,476         37,992,518
Smith International, Inc.(1)                             140,000          7,617,400
Transocean Sedco Forex, Inc.(1)                          106,247          4,503,810
-----------------------------------------------------------------------------------
                                                                   $    128,098,710
-----------------------------------------------------------------------------------

FOOD AND STAPLES RETAILING -- 2.2%

Albertson's, Inc.                                      1,022,529   $     24,417,993
Casey's General Stores, Inc.                              89,966          1,632,883
Costco Wholesale Corp.                                   927,132         44,882,460
CVS Corp.                                                132,268          5,961,319
Kroger Co. (The)(1)                                    1,357,551         23,811,445
Safeway, Inc.(1)                                       1,649,342         32,558,011
Sysco Corp.(2)(3)                                         30,000          1,143,381
Sysco Corp.                                            1,749,792         66,789,561
Sysco Corp.(2)(3)                                         25,000            953,892
Walgreen Co.                                             800,825         30,727,655
Wal-Mart Stores, Inc.                                  3,481,821        183,909,785
Winn-Dixie Stores, Inc.                                  204,622            931,030
-----------------------------------------------------------------------------------
                                                                   $    417,719,415
-----------------------------------------------------------------------------------

FOOD PRODUCTS -- 2.8%

Archer-Daniels-Midland Co.                             1,143,641   $     25,514,631
</Table>

                        See notes to financial statements

                                       65
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
FOOD PRODUCTS (CONTINUED)

Campbell Soup Co.                                      1,242,265   $     37,131,301
Conagra Inc.                                           1,657,734         48,820,266
Dean Foods Co.(1)                                        443,988         14,629,405
Del Monte Foods, Co.(1)                                   99,492          1,096,402
General Mills, Inc.                                      186,227          9,257,344
Heinz (H.J.) Co.                                         292,208         11,393,190
Hershey Foods Corp.                                      507,333         28,177,275
JM Smucker Co.                                            12,365            582,021
Kellogg Co.                                               59,640          2,663,522
Kraft Foods, Inc.                                            465             16,559
McCormick & Co., Inc.                                      1,624             62,686
Nestle SA                                                275,000         71,773,953
Sara Lee Corp.                                         3,789,758         91,484,758
Smithfield Foods, Inc.(1)                              4,207,530        124,500,813
Tyson Foods, Inc.                                        315,272          5,801,005
Wrigley (Wm.) Jr. Company Class A                        902,761         62,462,034
-----------------------------------------------------------------------------------
                                                                   $    535,367,165
-----------------------------------------------------------------------------------

HEALTH CARE EQUIPMENT AND SUPPLIES -- 1.4%

Advanced Medical Optics(1)                                 3,558   $        146,376
Bausch & Lomb, Inc.                                       29,250          1,885,455
Baxter International, Inc.                               221,749          7,659,210
Becton & Dickinson and Co.                                64,173          3,645,026
Biomet, Inc.                                             419,890         18,219,027
Boston Scientific Corporation(1)                       1,110,370         39,473,654
Dentsply International, Inc.                              10,928            614,154
Edwards Lifesciences Corp.(1)                             10,353            427,165
Guidant Corp.                                             74,638          5,381,400
Hillenbrand Industries, Inc.                             586,943         32,598,814
Hospira, Inc.(1)                                         246,711          8,264,819
Lumenis Ltd.(1)                                          100,000            193,500
Medtronic, Inc.                                        2,312,831        114,878,316
St. Jude Medical, Inc.(1)                                 48,028          2,013,814
Steris Corp.(1)                                            8,125            192,725
Stryker Corp.                                             36,741          1,772,753
VISX, Inc.(1)                                             50,000          1,293,500
Waters Corp.(1)                                          165,841          7,759,700
Zimmer Holdings, Inc.(1)                                 285,489         22,873,379
-----------------------------------------------------------------------------------
                                                                   $    269,292,787
-----------------------------------------------------------------------------------

HEALTH CARE PROVIDERS AND SERVICES -- 1.9%

AmerisourceBergen Corp.                                  141,513   $      8,303,983
Andrx Group(1)                                           180,170   $      3,933,111
Beverly Enterprises, Inc.(1)                             357,143          3,267,858
Cardinal Health, Inc.                                  1,840,995        107,053,859
Caremark Rx, Inc.(1)                                     701,471         27,659,002
Cigna Corp.                                               11,836            965,463
Express Scripts, Inc.(1)                                  26,658          2,037,738
HCA Inc.                                                     140              5,594
Health Management Associates, Inc., Class A              856,502         19,459,725
IDX Systems Corp.(1)                                      60,000          2,067,600
IMS Health, Inc.                                         280,530          6,511,101
McKesson HBOC, Inc.                                        2,631             82,771
Medco Health Solutions, Inc.(1)                          170,891          7,109,066
Parexel International Corp.(1)                            27,837            565,091
Renal Care Group, Inc.(1)                                480,046         17,276,856
Schein (Henry), Corp.(1)                               1,188,477         82,765,538
Service Corp. International(1)                           142,389          1,060,798
Stewart Enterprises, Inc.(1)                             114,000            796,860
Sunrise Assisted Living, Inc.(1)                         144,000          6,675,840
Tenet Healthcare Corp.(1)                                  3,961             43,492
UnitedHealth Group, Inc.                                 201,976         17,779,947
Ventiv Health, Inc.(1)                                   160,833          3,268,127
WellPoint Inc.(1)                                        404,000         46,460,000
-----------------------------------------------------------------------------------
                                                                   $    365,149,420
-----------------------------------------------------------------------------------

HOTELS, RESTAURANTS AND LEISURE -- 1.9%

Brinker International, Inc.(1)                           304,144   $     10,666,330
Carnival Corporation                                     565,071         32,565,042
CBRL Group, Inc.                                          62,047          2,596,667
Darden Restaurants Inc.                                  184,714          5,123,966
Evans (Bob) Farms, Inc.                                   51,662          1,350,445
Gaylord Entertainment Co.(1)                             428,482         17,794,857
International Game Technology                            400,000         13,752,000
International Speedway Corporation                       118,344          6,248,563
Jack in the Box, Inc.(1)                                 500,000         18,435,000
Lone Star Steakhouse & Saloon, Inc.                      145,981          4,087,468
Marriott International, Inc.                             288,169         18,148,884
McDonald's Corp.                                         690,866         22,149,164
MGM Grand, Inc.(1)                                        94,445          6,869,929
Navigant International, Inc.(1)                           44,278            538,863
Outback Steakhouse, Inc.                               1,641,207         75,134,456
Papa John's International, Inc.(1)                       195,330          6,727,165
Royal Caribbean Cruises Ltd.                             500,000         27,220,000
Sonic Corp.(1)                                           159,765          4,872,833
</Table>

                        See notes to financial statements

                                       66
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                   <C>          <C>
HOTELS, RESTAURANTS AND LEISURE (CONTINUED)

Starbucks Corp.(1)                                     1,229,375   $     76,663,825
Yum! Brands, Inc.                                        236,779         11,171,233
-----------------------------------------------------------------------------------
                                                                   $    362,116,690
-----------------------------------------------------------------------------------

HOUSEHOLD DURABLES -- 0.6%

Blyth Industries, Inc.                                   708,382   $     20,939,772
D.R. Horton Inc.                                         468,942         18,903,052
Department 56, Inc.(1)                                   255,162          4,248,447
Fortune Brands Inc.                                      128,148          9,890,463
Helen of Troy Ltd.(1)                                     20,000            672,200
Interface, Inc. Class A(1)                                75,467            752,406
Leggett & Platt, Inc.                                  1,813,805         51,566,476
Maytag Corp.                                              27,073            571,240
Newell Rubbermaid, Inc.                                  374,251          9,053,132
Snap-On, Inc.                                             42,453          1,458,685
-----------------------------------------------------------------------------------
                                                                   $    118,055,873
-----------------------------------------------------------------------------------

HOUSEHOLD PRODUCTS -- 1.7%

Clorox Co. (The)                                          53,688   $      3,163,834
Colgate-Palmolive Co.                                    699,356         35,779,053
Energizer Holdings(1)                                    168,981          8,396,666
Kimberly-Clark Corp.                                   1,476,156         97,145,826
Procter & Gamble Co.                                   3,229,777        177,896,117
-----------------------------------------------------------------------------------
                                                                   $    322,381,496
-----------------------------------------------------------------------------------

INDUSTRIAL CONGLOMERATES -- 2.9%

3M Co.                                                   697,787   $     57,267,379
General Electric Co.                                  11,805,529        430,901,809
Teleflex, Inc.                                            33,700          1,750,378
Tyco International Ltd.                                2,017,132         72,092,298
-----------------------------------------------------------------------------------
                                                                   $    562,011,864
-----------------------------------------------------------------------------------

INSURANCE -- 5.9%

21st Century Insurance Group                              70,700   $        961,520
Aegon N.V. ADR                                         5,311,829         72,825,176
AFLAC Inc.                                             2,190,281         87,260,795
Allstate Corp. (The)                                     199,712         10,329,105
American International Group, Inc.                     5,670,853        372,404,917
AON Corp.                                                824,293         19,667,631
Berkshire Hathaway, Inc., Class A(1)                         450         39,555,000
Berkshire Hathaway, Inc., Class B(1)                      40,634        119,301,424
Chubb Corporation                                          7,077            544,221
Commerce Group, Inc.                                     120,000   $      7,324,800
Gallagher (Arthur J.) and Co.                            821,773         26,707,623
Hartford Financial Services Group, Inc.                   13,797            956,270
Jefferson-Pilot Corp.                                    186,921          9,712,415
Lincoln National Corp.                                    52,903          2,469,512
Manulife Financial Corp.                                  74,958          3,463,060
Marsh & McLennan Cos., Inc.                            1,080,587         35,551,312
MetLife, Inc.                                          1,869,700         75,741,547
Old Republic International Corp.                         240,548          6,085,864
Progressive Corp.(2)(3)                                   10,900            923,369
Progressive Corp.                                      1,991,008        168,917,119
Safeco Corp.                                             173,122          9,043,893
St. Paul Companies, Inc. (The)                           311,524         11,548,195
Torchmark Corp.                                          417,159         23,836,465
UICI                                                      43,597          1,477,938
UnumProvident Corp.                                       53,710            963,557
XL Capital Ltd., Class A                                 187,100         14,528,315
-----------------------------------------------------------------------------------
                                                                   $  1,122,101,043
-----------------------------------------------------------------------------------

INTERNET AND CATALOG RETAIL -- 0.5%

Amazon.com Inc.(1)                                        23,500   $      1,040,815
eBay, Inc.(1)                                            619,501         72,035,576
IAC/InterActivecorp(1)                                   806,192         22,267,023
-----------------------------------------------------------------------------------
                                                                   $     95,343,414
-----------------------------------------------------------------------------------

INTERNET SOFTWARE AND SERVICES -- 0.0%

Retek, Inc.(1)                                           110,742   $        681,063
-----------------------------------------------------------------------------------
                                                                   $        681,063
-----------------------------------------------------------------------------------

IT SERVICES -- 2.8%

Accenture Ltd.(1)                                      4,838,000   $    130,626,000
Acxiom Corp.                                             647,804         17,037,245
Affiliated Computer Services(1)                          183,730         11,058,709
Automatic Data Processing, Inc.                        1,553,046         68,877,590
BISYS Group, Inc. (The)(1)                               280,492          4,614,093
Ceridian Corp.(1)                                         27,490            502,517
Certegy, Inc.                                             42,862          1,522,887
Computer Sciences Corp.(1)                               362,598         20,439,649
CSG Systems International, Inc.(1)                        25,200            471,240
DST Systems, Inc.(1)                                     391,634         20,411,964
eFunds Corp.(1)                                           17,645            423,656
Electronic Data Systems Corp.                             77,336          1,786,462
</Table>

                        See notes to financial statements

                                       67
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
IT SERVICES (CONTINUED)

First Data Corp.                                       3,776,540   $    160,654,012
Fiserv, Inc.(1)                                          300,000         12,057,000
Gartner Group, Inc., Class A(1)                            4,811             59,945
Gartner Group, Inc., Class B(1)                           27,576            338,909
Keane, Inc.(1)                                            50,295            739,337
Paychex, Inc.                                          1,398,101         47,647,282
Perot Systems Corp.(1)                                   725,507         11,629,877
Safeguard Scientifics, Inc.(1)                            26,579             56,347
SunGard Data Systems, Inc.(1)                            773,601         21,916,116
-----------------------------------------------------------------------------------
                                                                   $    532,870,837
-----------------------------------------------------------------------------------

LEISURE EQUIPMENT AND PRODUCTS -- 0.0%

Eastman Kodak Co.                                        113,722   $      3,667,535
Mattel, Inc.                                               1,096             21,361
-----------------------------------------------------------------------------------
                                                                   $      3,688,896
-----------------------------------------------------------------------------------

MACHINERY -- 3.1%

Caterpillar, Inc.                                         53,830   $      5,248,963
Danaher Corporation                                    4,031,970        231,475,398
Deere & Co.                                            3,350,000        249,240,000
Donaldson Company, Inc.                                   80,440          2,620,735
Dover Corp.                                              165,567          6,943,880
Federal Signal Corp.                                     283,471          5,006,098
Illinois Tool Works, Inc.                                809,040         74,981,827
ITT Industries, Inc.                                       4,214            355,872
Nordson Corporation                                      163,978          6,570,598
Parker-Hannifin Corporation                               30,653          2,321,658
Tecumseh Products Co., Class A                           125,700          6,008,460
Wabtec                                                    94,504          2,014,825
-----------------------------------------------------------------------------------
                                                                   $    592,788,314
-----------------------------------------------------------------------------------

MEDIA -- 5.3%

ADVO, Inc.                                               750,000   $     26,737,500
Arbitron, Inc.(1)                                         11,555            452,725
Belo (A.H.) Corp.                                        542,924         14,246,326
Cablevision Systems Corp.(1)                             207,410          5,165,546
Catalina Marketing Corp.                                  88,490          2,621,959
Clear Channel Communications, Inc.                       145,017          4,856,619
Comcast Corp. Class A(1)                               1,968,785         65,521,165
Comcast Corp. Class A Special(1)                       1,280,622         42,055,626
Disney (Walt) Company                                  4,834,833        134,408,357
EchoStar Communications, Class A                          35,150          1,168,386
Entercom Communications Corp.(1)                         220,000   $      7,895,800
Gannett Co., Inc.                                      1,562,342        127,643,341
Havas Advertising, S.A. ADR                            3,142,938         17,565,880
Interpublic Group of Companies, Inc.(1)                1,134,505         15,202,367
Knight Ridder, Inc.                                       18,123          1,213,154
Lamar Advertising Co.(1)                                 241,409         10,327,477
Liberty Media Corp. Class A(1)                         1,013,104         11,123,882
Liberty Media Corp. Class B(1)                            32,876            381,362
Liberty Media International Inc. Class A(1)               50,655          2,341,781
Liberty Media International Inc. Class B(1)                1,643             80,408
McClatchy Co. (The)                                       48,066          3,451,619
McGraw-Hill Companies, Inc. (The)                        446,964         40,915,085
Meredith Corp.                                           190,000         10,298,000
New York Times Co. (The), Class A                        303,168         12,369,254
News Corp. Inc. - Class A                                187,934          3,506,848
Omnicom Group, Inc.                                    2,318,719        195,514,386
Proquest Company(1)                                      115,000          3,415,500
Publicis Groupe SA                                       360,784         11,681,944
Reuters Holdings plc ADR                                   1,431             61,461
Scripps (The E.W) Company                                 51,066          2,465,466
Time Warner Inc.(1)                                    4,102,164         79,746,068
Tribune Co.                                            1,428,878         60,212,919
Univision Communications, Inc.(1)                        401,298         11,745,992
Viacom, Inc., Class A                                     29,774          1,104,020
Viacom, Inc., Class B                                    971,451         35,351,102
Vivendi Universal S.A. ADR(1)                            490,725         15,737,551
Washington Post Co. (The)                                 14,970         14,715,809
Westwood One, Inc.(1)                                    122,400          3,296,232
WPP Group plc                                            139,450          1,529,144
WPP Group plc ADR                                        256,051         13,993,187
-----------------------------------------------------------------------------------
                                                                   $  1,012,121,248
-----------------------------------------------------------------------------------

METALS AND MINING -- 0.4%

Alcoa, Inc.                                              797,947   $     25,071,495
Allegheny Technologies, Inc.                              21,408            463,911
Inco, Ltd.(1)                                            200,000          7,356,000
Nucor Corp.                                              442,924         23,182,642
Phelps Dodge Corp.                                        14,862          1,470,149
Steel Dynamics, Inc.                                     311,800         11,810,984
Worthington Industries, Inc.                              75,160          1,471,633
-----------------------------------------------------------------------------------
                                                                   $     70,826,814
-----------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       68
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
MULTILINE RETAIL -- 1.8%

99 Cents Only Stores(1)                                1,142,232   $     18,458,469
Dollar General Corp.                                     101,456          2,107,241
Dollar Tree Stores, Inc.(1)                              813,306         23,325,616
Family Dollar Stores, Inc.                             2,618,411         81,772,976
Kohls Corp.(1)                                                55              2,704
May Department Stores Co. (The)                          607,760         17,868,144
Neiman Marcus Group, Inc. (The)                                6                401
Nordstrom, Inc.                                           65,692          3,069,787
Penney (J.C.) Company, Inc.                              223,408          9,249,091
Sears, Roebuck & Co.                                      23,074          1,177,466
Target Corp.                                           3,547,475        184,220,377
-----------------------------------------------------------------------------------
                                                                   $    341,252,272
-----------------------------------------------------------------------------------

MULTI-UTILITIES AND UNREGULATED POWER -- 0.1%

AES Corporation(1)                                        49,542   $        677,239
Dominion Resources, Inc.                                  10,464            708,831
Duke Energy Corp.                                        417,416         10,573,147
Dynegy, Inc.(1)                                           63,525            293,486
National Fuel Gas Co.                                      4,000            113,360
-----------------------------------------------------------------------------------
                                                                   $     12,366,063
-----------------------------------------------------------------------------------

OFFICE ELECTRONICS -- 0.0%

Xerox Corp.(1)                                            42,878   $        729,355
Zebra Technologies Corp., Class A(1)                      13,500            759,780
-----------------------------------------------------------------------------------
                                                                   $      1,489,135
-----------------------------------------------------------------------------------

OIL AND GAS -- 7.8%

Amerada Hess Corp.                                        18,947   $      1,560,854
Anadarko Petroleum Corp.                               2,557,003        165,719,364
Apache Corporation                                     2,075,352        104,950,551
Ashland, Inc.                                             85,716          5,004,100
BP plc ADR                                             5,081,540        296,761,936
Burlington Resources, Inc.                             4,259,405        185,284,118
ChevronTexaco Corporation                                311,976         16,381,860
ConocoPhillips                                         1,675,581        145,490,698
Devon Energy Corp.                                     1,015,400         39,519,368
El Paso Corp.                                            148,709          1,546,574
Exxon Mobil Corp.                                      6,231,588        319,431,201
Kerr - McGee Corp.                                       267,327         15,448,827
Kinder Morgan, Inc.                                    1,781,672        130,293,673
Marathon Oil Corp.                                         1,450             54,535
Murphy Oil Corporation                                    19,518          1,570,223
Newfield Exploration Company(1)                           60,000   $      3,543,000
Royal Dutch Petroleum Co.                                 83,074          4,766,786
Total Fina Elf SA ADR                                    400,000         43,936,000
Valero Energy Corp.                                      103,020          4,677,108
Williams Companies Inc (The)                             219,065          3,568,569
-----------------------------------------------------------------------------------
                                                                   $  1,489,509,345
-----------------------------------------------------------------------------------

PAPER AND FOREST PRODUCTS -- 0.2%

Georgia-Pacific Corp.                                    598,732   $     22,440,475
International Paper Co.                                  112,154          4,710,468
Louisiana-Pacific Corp.                                   70,750          1,891,855
MeadWestvaco Corp.                                        84,358          2,858,893
Neenah Paper Inc.(1)                                      44,890          1,463,414
Weyerhaeuser Co.                                          89,778          6,034,877
-----------------------------------------------------------------------------------
                                                                   $     39,399,982
-----------------------------------------------------------------------------------

PERSONAL PRODUCTS -- 1.5%

Avon Products, Inc.                                      173,400   $      6,710,580
Gillette Company                                       3,950,586        176,907,241
Lauder (Estee) Companies, Inc.                         2,092,312         95,765,120
-----------------------------------------------------------------------------------
                                                                   $    279,382,941
-----------------------------------------------------------------------------------

PHARMACEUTICALS -- 6.2%

Abbott Laboratories                                    2,821,474   $    131,621,762
Allergan, Inc.                                            38,300          3,104,981
Bristol-Myers Squibb Company                           4,566,981        117,006,053
Elan Corp., PLC ADR(1)                                    31,838            867,586
Forest Laboratories, Inc.(1)                              56,800          2,548,048
GlaxoSmithKline plc                                      430,517         20,402,201
Johnson & Johnson                                      3,181,341        201,760,646
King Pharmaceuticals, Inc.(1)                            505,637          6,269,899
Lilly (Eli) & Co.                                      3,412,870        193,680,373
Merck & Co., Inc.                                      2,317,124         74,472,365
Mylan Laboratories, Inc.                                  27,992            494,899
Novo Nordisk ADR                                         292,277         15,858,950
Pfizer, Inc.                                           8,662,582        232,936,830
Schering AG ADR                                           25,000          1,856,250
Schering-Plough Corp.                                  2,515,998         52,534,038
Sepracor, Inc.(1)                                          4,000            237,480
Teva Pharmaceutical Industries Ltd. ADR                2,282,011         68,140,848
Watson Pharmaceuticals, Inc.(1)                          865,911         28,410,540
Wyeth Corp.                                              790,783         33,679,448
-----------------------------------------------------------------------------------
                                                                   $  1,185,883,197
-----------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       69
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
REAL ESTATE -- 0.2%

AvalonBay Communities, Inc.                               28,867   $      2,173,685
Catellus Development Corp.                               419,601         12,839,791
Forest City Enterprises - Class A                         38,663          2,225,056
Jones Lang Lasalle, Inc.(1)                              154,567          5,782,351
Plum Creek Timber Co., Inc.                              198,791          7,641,526
Trammell Crow Co.(1)                                     764,200         13,839,662
-----------------------------------------------------------------------------------
                                                                   $     44,502,071
-----------------------------------------------------------------------------------

ROAD AND RAIL -- 0.2%

ANC Rental Corporation(1)                                459,525   $             46
Burlington Northern Santa Fe Corp.                       207,932          9,837,263
CSX Corporation                                           38,134          1,528,411
Florida East Coast Industries, Inc.                      121,978          5,501,208
Heartland Express, Inc.                                  653,154         14,676,370
Kansas City Southern Industries, Inc.(1)                  15,215            269,762
Norfolk Southern Corp.                                     3,990            144,398
Union Pacific Corp.                                        7,811            525,290
-----------------------------------------------------------------------------------
                                                                   $     32,482,748
-----------------------------------------------------------------------------------

SEMICONDUCTORS AND SEMICONDUCTOR
EQUIPMENT -- 2.0%

Agere Systems, Inc.(1)                                     6,495   $          8,898
Agere Systems, Inc., Class B(1)                          159,398            215,187
Altera Corp.(1)                                           66,116          1,368,601
Analog Devices, Inc.                                     778,870         28,755,880
Applied Materials, Inc.(1)                             1,741,642         29,782,078
Broadcom Corp. - Class A(1)                              530,892         17,137,194
Broadcom Corp. - Class A(1)(2)(3)                         35,000          1,128,105
Conexant Systems, Inc.(1)                                134,174            267,006
Cypress Semiconductor Corporation(1)                     152,742          1,791,664
Freescale Semiconductor-B(1)                             101,704          1,867,286
Intel Corp.                                            9,580,974        224,098,982
KLA-Tencor Corp.(1)                                      148,373          6,911,214
Linear Technologies Corp.                                187,760          7,277,578
LSI Logic Corporation(1)                                 132,810            727,799
Maxim Integrated Products Co.                            374,351         15,868,739
Mindspeed Technologies Inc.(1)                            44,724            124,333
Skyworks Solutions, Inc.(1)                               98,685            930,600
Taiwan Semiconductor ADR                                     866              7,352
Teradyne, Inc.(1)                                         27,996            477,892
Texas Instruments, Inc.                                1,912,604         47,088,310
Xilinx, Inc.                                              59,554          1,765,776
-----------------------------------------------------------------------------------
                                                                   $    387,600,474
-----------------------------------------------------------------------------------

SOFTWARE -- 2.1%

Adobe Systems, Inc.                                      258,794   $     16,236,736
Cadence Design Systems, Inc.(1)                          900,000         12,429,000
Cognos, Inc.(1)                                           77,000          3,392,620
Computer Associates International, Inc.                   33,070          1,027,154
Compuware Corp.(1)                                       150,944            976,608
Electronic Arts Inc.(1)                                   21,405          1,320,260
Fair, Isaac and Co., Inc.                                997,172         36,576,269
Henry (Jack) & Associates                                201,006          4,002,029
Intuit, Inc.(1)                                          921,314         40,547,029
Microsoft Corp.                                        7,312,311        195,311,827
Oracle Corp.(1)                                          817,568         11,217,033
PalmSource, Inc.(1)                                       20,208            257,450
Parametric Technology Corp.(1)                            94,600            557,194
Reynolds & Reynolds, Co.                                 216,412          5,737,082
Sap AG ADR                                               600,000         26,526,000
Siebel Systems, Inc.(1)                                  179,184          1,881,432
Symantec Corporation(1)                                1,499,722         38,632,839
VERITAS Software Corp.(1)                                243,942          6,964,544
Wind River Systems, Inc.(1)                               91,910          1,245,381
-----------------------------------------------------------------------------------
                                                                   $    404,838,487
-----------------------------------------------------------------------------------

SPECIALTY RETAIL -- 2.0%

Abercrombie & Fitch Co.                                   11,225   $        527,014
AutoNation, Inc.(1)                                    1,493,099         28,682,432
Best Buy Co., Inc.                                       113,610          6,750,706
Burlington Coat Factory Warehouse Corp.                  238,448          5,412,770
CarMax, Inc.(1)                                           67,797          2,105,097
Circuit City Stores, Inc.                                216,000          3,378,240
Gap, Inc. (The)                                          541,012         11,426,173
Home Depot, Inc. (The)                                 4,281,726        183,000,969
Limited Brands, Inc.                                     762,510         17,552,980
Lowe's Companies                                         875,941         50,445,442
Office Depot, Inc.(1)                                    205,276          3,563,591
Officemax Inc.                                             2,192             68,785
Payless Shoesource, Inc.(1)                               23,100            284,130
Pep Boys - Manny, Moe & Jack (The)                        83,415          1,423,894
Radioshack Corp.                                         631,599         20,766,975
Sherwin-Williams Co. (The)                                80,569          3,595,794
Staples, Inc.                                            158,266          5,335,147
Tiffany & Co.                                             57,286          1,831,433
TJX Companies, Inc. (The)                              1,716,834         43,144,038
Too, Inc.(1)                                              38,284            936,427
-----------------------------------------------------------------------------------
                                                                   $    390,232,037
-----------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       70
<Page>

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
TEXTILES, APPAREL AND LUXURY GOODS -- 0.7%

Coach, Inc.(1)                                           365,720   $     20,626,608
Nike Inc., Class B                                     1,329,222        120,547,143
Unifi, Inc.(1)                                             1,208              4,627
-----------------------------------------------------------------------------------
                                                                   $    141,178,378
-----------------------------------------------------------------------------------

THRIFTS AND MORTGAGE FINANCE -- 0.7%

Countrywide Financial Corp.                            1,499,998   $     55,514,926
Fannie Mae                                               345,171         24,579,627
Freddie Mac                                              135,586          9,992,688
Golden West Financial Corporation                         74,590          4,581,318
MGIC Investment Corp.                                     85,000          5,857,350
Radian Group, Inc.                                        30,800          1,639,792
Washington Mutual, Inc.                                  927,674         39,222,057
-----------------------------------------------------------------------------------
                                                                   $    141,387,758
-----------------------------------------------------------------------------------

TOBACCO -- 0.2%

Altria Group Inc.                                        763,945   $     46,677,040
UST, Inc.                                                    439             21,120
-----------------------------------------------------------------------------------
                                                                   $     46,698,160
-----------------------------------------------------------------------------------

TRADING COMPANIES AND DISTRIBUTORS -- 0.0%

United Rentals, Inc.(1)                                  401,179   $      7,582,283
-----------------------------------------------------------------------------------
                                                                   $      7,582,283
-----------------------------------------------------------------------------------

WIRELESS TELECOMMUNICATION SERVICES -- 0.1%

Nextel Communications, Inc., Class A(1)                  134,072   $      4,022,160
Telephone and Data Systems, Inc.                          70,844          5,451,446
Vodafone Group plc ADR                                   213,962          5,858,280
-----------------------------------------------------------------------------------
                                                                   $     15,331,886
-----------------------------------------------------------------------------------

TOTAL COMMON STOCKS
   (IDENTIFIED COST $14,860,534,853)                               $ 19,109,250,562
-----------------------------------------------------------------------------------
</Table>

CONVERTIBLE PREFERRED STOCKS -- 0.0%

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                       <C>      <C>
MULTI-UTILITIES AND UNREGULATED POWER -- 0.0%

Enron Corp.(1)(2)                                         11,050   $              0
-----------------------------------------------------------------------------------
                                                                   $              0
-----------------------------------------------------------------------------------

TOTAL CONVERTIBLE PREFERRED STOCKS
   (IDENTIFIED COST $4,500,777)                                    $              0
-----------------------------------------------------------------------------------
</Table>

PREFERRED STOCK -- 0.0%

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                      <C>       <C>
COMMERCIAL BANKS -- 0.0%

Wachovia Corp. (Dividend Equalization
   Preferred Shares)(1)                                  166,518   $            167
-----------------------------------------------------------------------------------
                                                                   $            167
-----------------------------------------------------------------------------------

TOTAL PREFERRED STOCKS
   (IDENTIFIED COST $39,407)                                       $            167
-----------------------------------------------------------------------------------
</Table>

WARRANTS -- 0.0%

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                       <C>      <C>
COMMUNICATIONS EQUIPMENT -- 0.0%

Lucent Technologies, Inc.                                 18,106   $         28,607
-----------------------------------------------------------------------------------
                                                                   $         28,607
-----------------------------------------------------------------------------------

TOTAL WARRANTS
   (IDENTIFIED COST $0)                                            $         28,607
-----------------------------------------------------------------------------------
</Table>

RIGHTS -- 0.0%

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
BANKS -- 0.0%

Bank United Corp. (Litigation Contingent
   Payment Rights)(1)(2)                                 102,072   $          6,124
-----------------------------------------------------------------------------------
                                                                   $          6,124
-----------------------------------------------------------------------------------

COMPUTERS AND BUSINESS EQUIPMENT -- 0.0%

Seagate Technology, Inc. (Tax Refund
   Rights)(1)(2)                                         197,392   $              0
-----------------------------------------------------------------------------------
                                                                   $              0
-----------------------------------------------------------------------------------

INTEGRATED TELECOMMUNICATION SERVICES -- 0.0%

McLeodUSA (Escrow Rights)(1)(2)                        1,592,200   $              0
-----------------------------------------------------------------------------------
                                                                   $              0
-----------------------------------------------------------------------------------

TOTAL RIGHTS
   (IDENTIFIED COST $50,596)                                       $          6,124
-----------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       71
<Page>

SHORT-TERM INVESTMENTS -- 0.1%

<Table>
<Caption>
                                                 PRINCIPAL
                                                 AMOUNT
SECURITY                                         (000'S OMITTED)   VALUE
-----------------------------------------------------------------------------------
<S>                                              <C>               <C>
Investors Bank & Trust Company--
Time Deposit, 2.25%, 1/3/05                      $         7,668   $      7,668,000
-----------------------------------------------------------------------------------

TOTAL SHORT-TERM INVESTMENTS
   (AT AMORTIZED COST, $7,668,000)                                 $      7,668,000
-----------------------------------------------------------------------------------
</Table>

COMMERCIAL PAPER -- 0.1%

<Table>
<Caption>
                                                 PRINCIPAL
                                                 AMOUNT
SECURITY                                         (000'S OMITTED)   VALUE
-----------------------------------------------------------------------------------
<S>                                              <C>                <C>
Societe Generale North America, 2.32%, 1/5/05    $        22,295   $     22,289,253
-----------------------------------------------------------------------------------

TOTAL COMMERCIAL PAPER
   (AT AMORTIZED COST, $22,289,253)                                $     22,289,253
-----------------------------------------------------------------------------------

TOTAL INVESTMENTS -- 100.0%
   (IDENTIFIED COST $14,895,082,886)                               $ 19,139,242,713
-----------------------------------------------------------------------------------
</Table>

SECURITIES SOLD SHORT -- -1.0%

<Table>
<Caption>
SECURITY                                              SHARES       VALUE
-----------------------------------------------------------------------------------
<S>                                                    <C>         <C>
American International Group, Inc.                     3,000,000   $   (197,010,000)
-----------------------------------------------------------------------------------

TOTAL SECURITIES SOLD SHORT
   (PROCEEDS $169,710,627)                                         $   (197,010,000)
-----------------------------------------------------------------------------------

OTHER ASSETS, LESS LIABILITIES
   EXCLUDING SECURITIES SOLD SHORT -- 1.0%                         $    198,909,689
-----------------------------------------------------------------------------------

NET ASSETS -- 100.0%                                               $ 19,141,142,402
-----------------------------------------------------------------------------------
</Table>

ADR - American Depositary Receipt
(1)  Non-income producing security.
(2)  Security valued at fair value using  methods determined in good faith by or
     at the direction of the Trustees.
(3)  Security subject to restrictions on resale (see Note 7).

                        See notes to financial statements

                                       72
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

AS OF DECEMBER 31, 2004

<Table>
<S>                                                                           <C>
ASSETS
Investments, at value (identified cost, $14,895,082,886)                      $ 19,139,242,713
Cash                                                                                     2,563
Deposits with brokers for securities sold short                                    169,710,627
Dividends and interest receivable                                                   24,103,436
Receivable for investments sold                                                      4,256,707
Tax reclaim receivable                                                               1,180,262
----------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                  $ 19,338,496,308
----------------------------------------------------------------------------------------------

LIABILITIES
Securities sold short, at value (proceeds received of $169,710,627)           $    197,010,000
Payable for dividends on securities sold short                                         225,000
Payable to affiliate for Trustees' fees                                                  6,053
Accrued expenses                                                                       112,853
----------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                             $    197,353,906
----------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO                     $ 19,141,142,402
----------------------------------------------------------------------------------------------

SOURCES OF NET ASSETS
Net proceeds from capital contributions and withdrawals                       $ 14,924,128,572
Net unrealized appreciation (computed on the basis of identified cost)           4,217,013,830
----------------------------------------------------------------------------------------------
TOTAL                                                                         $ 19,141,142,402
----------------------------------------------------------------------------------------------
</Table>

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED
DECEMBER 31, 2004

<Table>
<S>                                                                           <C>
INVESTMENT INCOME
Dividends (net of foreign taxes, $3,794,755)                                  $    291,107,513
Interest                                                                             1,157,693
----------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME                                                       $    292,265,206
----------------------------------------------------------------------------------------------

EXPENSES
Investment adviser fee                                                        $     77,609,178
Trustees' fees and expenses                                                             25,376
Custodian fee                                                                        1,999,827
Dividends on securities sold short                                                     225,000
Legal and accounting services                                                           94,573
Miscellaneous                                                                          304,587
----------------------------------------------------------------------------------------------
TOTAL EXPENSES                                                                $     80,258,541
----------------------------------------------------------------------------------------------
Deduct --
   Reduction of custodian fee                                                 $             39
   Reduction of investment adviser fee                                                  26,667
----------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS                                                      $         26,706
----------------------------------------------------------------------------------------------

NET EXPENSES                                                                  $     80,231,835
----------------------------------------------------------------------------------------------

NET INVESTMENT INCOME                                                         $    212,033,371
----------------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) --
   Investment transactions (identified cost basis)                            $    152,362,325
   Foreign currency transactions                                                        60,515
----------------------------------------------------------------------------------------------
NET REALIZED GAIN                                                             $    152,422,840
----------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
   Investments (identified cost basis)                                        $  1,345,093,649
   Securities sold short                                                           (27,299,373)
   Foreign currency                                                                     84,431
----------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)                          $  1,317,878,707
----------------------------------------------------------------------------------------------

NET REALIZED AND UNREALIZED GAIN                                              $  1,470,301,547
----------------------------------------------------------------------------------------------

NET INCREASE IN NET ASSETS FROM OPERATIONS                                    $  1,682,334,918
----------------------------------------------------------------------------------------------
</Table>

                        See notes to financial statements

                                       73
<Page>

STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
INCREASE (DECREASE)                             YEAR ENDED           YEAR ENDED
IN NET ASSETS                                   DECEMBER 31, 2004    DECEMBER 31, 2003
--------------------------------------------------------------------------------------
<S>                                             <C>                  <C>
From operations --
   Net investment income                        $     212,033,371    $     163,045,716
   Net realized gain from investment
      transactions, securities sold short
      and foreign currency transactions               152,422,840           70,909,770
   Net change in unrealized appreciation
      (depreciation) of investments,
      securities sold short and
      foreign currency                              1,317,878,707        3,174,709,110
--------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS      $   1,682,334,918    $   3,408,664,596
--------------------------------------------------------------------------------------
Capital transactions --
   Contributions                                $   1,775,098,351    $   1,351,483,956
   Withdrawals                                     (1,925,879,872)      (1,722,081,135)
--------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
   CAPITAL TRANSACTIONS                         $    (150,781,521)   $    (370,597,179)
--------------------------------------------------------------------------------------

NET INCREASE IN NET ASSETS                      $   1,531,553,397    $   3,038,067,417
--------------------------------------------------------------------------------------

NET ASSETS

At beginning of year                            $  17,609,589,005    $  14,571,521,588
--------------------------------------------------------------------------------------
AT END OF YEAR                                  $  19,141,142,402    $  17,609,589,005
--------------------------------------------------------------------------------------
</Table>

                       See notes to financial statements

                                       74
<Page>

SUPPLEMENTARY DATA

<Table>
<Caption>
                                                                              YEAR ENDED DECEMBER 31,
                                                     ------------------------------------------------------------------------
                                                         2004           2003           2002           2001           2000
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>            <C>            <C>            <C>            <C>
RATIOS/SUPPLEMENTAL DATA+

Ratios (As a percentage of average daily net
  assets):
   Net expenses                                              0.45%          0.45%          0.45%          0.45%          0.45%
   Net expenses after custodian fee reduction                0.45%            --             --             --             --
   Net investment income                                     1.18%          1.05%          0.85%          0.64%          0.67%
Portfolio Turnover                                              3%            15%            23%            18%            13%
-----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                              9.67%         23.88%        (19.52)%        (9.67)%           --
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S OMITTED)              $ 19,141,142   $ 17,609,589   $ 14,571,522   $ 18,335,865   $ 18,385,069
-----------------------------------------------------------------------------------------------------------------------------
+  The operating expenses of the Portfolio reflect a reduction of the investment
   adviser fee. Had such action not been taken, the ratios would have been as
   follows:
Ratios (As a percentage of average daily net assets):
   Expenses                                                  0.45%            --             --             --             --
   Expenses after custodian fee reduction                    0.45%            --             --             --             --
   Net investment income                                     1.18%            --             --             --             --
-----------------------------------------------------------------------------------------------------------------------------
</Table>

(1)  Total return is required to be disclosed for fiscal years  beginning  after
     December 15, 2000.

                        See notes to financial statements

                                       75
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
NOTES TO FINANCIAL STATEMENTS

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  provide  long-term
after-tax returns by investing in a diversified  portfolio of equity securities.
The  Declaration  of  Trust  permits  the  Trustees  to issue  interests  in the
Portfolio.  The  following  is a  summary  of  significant  accounting  policies
consistently  followed by the  Portfolio  in the  preparation  of its  financial
statements.  The policies are in conformity with accounting principles generally
accepted in the United States of America.

A INVESTMENT  VALUATIONS  --  Securities  listed on a U.S.  securities  exchange
generally  are valued at the last sale price on the day of  valuation  or, if no
sales took place on such date,  at the mean  between  the  closing bid and asked
prices  therefore on the exchange where such securities are principally  traded.
Equity  securities  listed on the NASDAQ  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  quotation  service.  The  daily
valuation  of 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 securities held by the Portfolio.  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 or losses, 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 asset in the  Statement  of Assets and  Liabilities,  the
value of which is marked-to-market  daily. When a purchased option expires,  the
Portfolio  will  realize a loss in the  amount  of the  premium  paid.  When the
Portfolio enters into a closing sale  transaction,  the Portfolio will realize a

                                       76
<Page>

gain or loss  depending  on whether the sales  proceeds  from the  closing  sale
transaction  are  greater  or less than the  premium  paid.  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 recognized  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 Fund enters into agreements  with the 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.

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 in the amount of 0.625%
annually of average daily net assets of the Portfolio up to $500,000,000  and at
reduced rates as daily net assets exceed that level. Certain of the advisory fee
rate reductions are pursuant to an agreement  between the  Portfolio's  Board of
Trustees  and BMR.  Those  reductions  may not be changed  without  Trustee  and
interestholder  approval. For the year ended December 31, 2004, the advisory fee
was 0.43% of the  Portfolio's  average daily net assets.  BMR has also agreed to

                                       77
<Page>

reduce  the  investment  adviser  fee by an  amount  equal  to that  portion  of
commissions   paid  to  broker  dealers  in  execution  of  Portfolio   security
transactions that is consideration for third-party  research  services.  For the
year ended December 31, 2004, BMR waived $26,667 of its 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 such  investment  adviser  fee.  Trustees  of the  Portfolio  who are not
affiliated  with the  Investment  Adviser may elect to defer receipt of all or a
percentage  of their annual fees in  accordance  with the terms of the Trustees'
Deferred Compensation Plan. For the year ended December 31, 2004, 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, 2004, purchases and sales of investments,  other
than  short-term   obligations,   aggregated   $534,673,041  and   $946,726,635,
respectively.  In  addition,  investments  having an  aggregate  market value of
$808,158,950  at dates of  withdrawal  were  distributed  in payment for capital
withdrawals.  During the year ended  December  31, 2004,  investors  contributed
securities with a value of $1,370,704,943.

4   FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION)

The cost and unrealized appreciation  (depreciation) in value of the investments
owned at December  31, 2004 as computed on a federal  income tax basis,  were as
follows:

<Table>
<S>                                     <C>
AGGREGATE COST                          $  4,833,216,291
--------------------------------------------------------
Gross unrealized appreciation           $ 14,307,238,475
Gross unrealized depreciation                 (1,212,053)
--------------------------------------------------------
NET UNREALIZED APPRECIATION             $ 14,306,026,422
--------------------------------------------------------
</Table>

5   FINANCIAL INSTRUMENTS

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

The  notional  or  contractual  amounts  of  these  instruments   represent  the
investment the Portfolio has in particular classes of financial  instruments and
does not  necessarily  represent the amounts  potentially  subject to risk.  The
measurement of the risks  associated  with these  instruments is meaningful only
when all related and offsetting  transactions are considered.  The Portfolio did
not have any open obligations under these financial  instruments at December 31,
2004.

6   LINE OF CREDIT

The Portfolio  participates  with other  portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement with
a group of banks.  Borrowings will be made by the Portfolio solely to facilitate
the  handling of unusual  and/or  unanticipated  short-term  cash  requirements.
Interest  is  charged  to each  participating  portfolio  or fund  based  on its
borrowings at an amount above either the Eurodollar  rate or Federal Funds rate.
In  addition,  a fee  computed  at an annual  rate of 0.1% on the  daily  unused
portion of the line of credit is allocated  among the  participating  portfolios
and funds at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the year ended December 31, 2004.

7   RESTRICTED SECURITIES

At December 31, 2004, the Portfolio owned the following securities (representing
0.02%  of net  assets)  which  were  restricted  as to  public  resale  and  not
registered  under the  Securities  Act of 1933.  The securities are eligible for
resale  after  December 15,  2005,  except for the 25,000  shares of Sysco Corp.
which are eligible for resale after March 3, 2005.  The securities are valued at
fair value using methods  determined in good faith by or at the direction of the
Trustees.

<Table>
<Caption>
                            DATE OF
COMMON STOCKS               ACQUISITION         SHARES       COST        FAIR VALUE
------------------------------------------------------------------------------------
<S>                            <C>              <C>      <C>            <C>
Broadcom Corp. - Class A       12/15/04         35,000   $  1,121,815   $  1,128,105
Progressive Corp.              12/15/04         10,900        943,939        923,369
Sysco Corp.                      3/3/04         25,000        994,756        953,892
Sysco Corp.                    12/15/04         30,000      1,115,824      1,143,381
------------------------------------------------------------------------------------
                                                         $  4,176,334   $  4,148,747
------------------------------------------------------------------------------------
</Table>

                                       78
<Page>

TAX-MANAGED GROWTH PORTFOLIO as of December 31, 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE TRUSTEES AND INVESTORS
OF TAX-MANAGED GROWTH PORTFOLIO:

We have audited the accompanying statement of assets and liabilities,  including
the portfolio of investments, of Tax-Managed Growth Portfolio (the Portfolio) as
of December 31, 2004, and the related  statement of operations for the year then
ended,  the statements of changes in net assets for each of the two years in the
period then ended and the  supplementary  data for each of the five years in the
period then ended.  These financial  statements and  supplementary  data are the
responsibility of the Portfolio's  management.  Our responsibility is to express
an opinion on these  financial  statements and  supplementary  data based on our
audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness of the Portfolio's  internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  Our procedures included confirmation
of  securities  owned  as of  December  31,  2004,  by  correspondence  with the
custodian.  We  believe  that our  audits  provide  a  reasonable  basis for our
opinion.

In our opinion,  the financial statements and supplementary data present fairly,
in all material respects, the financial position of Tax-Managed Growth Portfolio
at December 31, 2004, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
its  supplementary  data for each of the five years in the period  then ended in
conformity with accounting principles generally accepted in the United States of
America.

/s/DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 18, 2005

                                       79
<Page>

BELROSE CAPITAL FUND LLC

            INVESTMENT ADVISER OF
            TAX-MANAGED GROWTH PORTFOLIO AND
            BELROSE CAPITAL FUND LLC
            Boston Management and Research
            The Eaton Vance Building
            255 State Street
            Boston, MA 02109


            MANAGER OF BELROSE
            REALTY CORPORATION
            Boston Management and Research
            The Eaton Vance Building
            255 State Street
            Boston, MA 02109


            MANAGER OF BELROSE CAPITAL FUND LLC
            Eaton Vance Management
            The Eaton Vance Building
            255 State Street
            Boston, MA 02109


            CUSTODIAN AND TRANSFER AGENT
            Investors Bank & Trust Company
            200 Clarendon Street
            Boston, MA 02116

            INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            Deloitte & Touche LLP
            200 Berkeley Street
            Boston, MA 02116

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                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                  BELROSE CAPITAL FUND LLC
                                  (Registrant)

                                  By: /s/ Michelle A. Green
                                      ------------------------
                                      Michelle A. Green
                                      Duly Authorized Officer and
                                      Principal Accounting Officer


Date:  March 15, 2005



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, 2005



                                  By: /s/ Michelle A. Green
                                      -------------------------
                                      Michelle A. Green
                                      Chief Financial Officer

Date:  March 15, 2005

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<PAGE>

                                 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  dated September 29, 2003  to Loan and Security
               Agreement  between  the  Fund and DrKW  Holdings,  Inc.  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.

  4.2          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  dated September 29, 2003  to Loan and Security
               Agreement  among  Belport  Capital Fund,  Merrill Lynch  Mortgage
               Capital,  Inc.,  as Agent,  the  Lenders  referred to therein and
               Merrill Lynch Capital  Services,  Inc. 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 dated August 3, 2004 to Loan and Security
               Agreement  among Belport  Capital  Fund,  Merrill Lynch  Mortgage
               Capital,  Inc.,  as Agent,  the Lenders  referred to therein  and
               Merrill Lynch Capital Services,  Inc. 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.

 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.

 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.

 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,   2004  filed
               electronically  with the Securities and Exchange Commission under
               the   Investment   Company   Act  of  1940  on  March  __,   2005
               (incorporated herein by reference pursuant to Rule 12b-32).

                                       83