Back to GetFilings.com





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

FORM 10-Q

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

For the quarterly period ended September 30, 2003
------------------
Commission File No. 000-50258
---------


Belrose Capital Fund LLC
------------------------
(Exact name of registrant as specified in its charter)


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


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


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


None
----
(Former Name, Former Address and Former Fiscal Year,
if changed since last report)



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

YES [X] NO [ ]


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

YES [ ] NO [X]



BELROSE CAPITAL FUND LLC
Index to Form 10-Q

Page
PART I FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements 3

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

Condensed Consolidated Statements of Operations (Unaudited)
for the Three Months Ended September 30, 2003 and 2002 and
for the Nine Months Ended September 30, 2003 and the Period
from the Start of Business, March 19, 2002, to September 30,
2002 4

Condensed Consolidated Statements of Changes in Net Assets
(Unaudited) for the Nine Months Ended September 30, 2003 and
for the Period from the Start of Business, March 19, 2002, to
September 30, 2002 6

Condensed Consolidated Statements of Cash Flows (Unaudited) for
the Nine Months Ended September 30, 2003 and for the Period from
the Start of Business, March 19, 2002, to September 30, 2002 7

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

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

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk 20

Item 4. Controls and Procedures 22

PART II OTHER INFORMATION

Item 1. Legal Proceedings 22

Item 2. Changes in Securities and Use of Proceeds 22

Item 3. Defaults Upon Senior Securities 22

Item 4. Submission of Matters to a Vote of Security Holders 22

Item 5. Other Information 22

Item 6. Exhibits and Reports on Form 8-K 22

SIGNATURES 24

EXHIBIT INDEX 25

2


PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
- --------------------------------------------------------------------------------

BELROSE CAPITAL FUND LLC
Condensed Consolidated Statements of Assets and Liabilities
September 30,
2003 December 31,
(Unaudited) 2002
------------- ------------
Assets:
Investment in Belvedere Capital Fund
Company LLC (Belvedere Capital) $1,483,730,463 $1,264,314,536
Investment in Partnership Preference Units 56,765,736 41,849,305
Investment in other real estate 473,304,865 470,597,295
Short-term investments 1,091,036 -
-------------- --------------
Total investments $2,014,892,100 $1,776,761,136
Cash 7,866,909 7,214,141
Escrow deposits - restricted 2,589,328 3,239,060
Dividends and interest receivable 400,974 440,053
Other assets 3,254,207 3,553,337
-------------- --------------
Total assets $2,029,003,518 $1,791,207,727
-------------- --------------

Liabilities:
Loan payable - Credit Facility $ 171,300,000 $ 155,300,000
Mortgages payable 344,219,483 344,219,483
Payables for Fund Shares redeemed 34,674 -
Open interest rate swap agreements, at value 12,183,246 11,552,842
Security deposits 1,002,540 1,012,016
Swap interest payable 154,544 129,883
Accrued expenses:
Interest expense 2,297,396 2,438,911
Property taxes 3,672,028 2,575,189
Other expenses and liabilities 1,499,024 2,546,403
Minority interests in controlled subsidiaries 27,575,513 29,431,345
-------------- --------------
Total liabilities $ 563,938,448 $ 549,206,072
-------------- --------------

Net assets $1,465,065,070 $1,242,001,655

-------------- --------------
Shareholders' Capital $1,465,065,070 $1,242,001,655
-------------- --------------

Shares outstanding 17,126,971 16,160,271
-------------- --------------

Net asset value and redemption price per Share $ 85.54 $ 76.86

See notes to unaudited condensed consolidated financial statements

3


BELROSE CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited)



Three Months Three Months Nine Months
Ended Ended Ended Period Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002*
------------- ------------- ------------- -------------

Investment Income:
Dividends allocated from Belvedere Capital
(net of foreign taxes of $44,519, $23,870,
$195,966 and $44,140, respectively) $ 5,318,515 $ 2,506,725 $ 15,125,124 $ 3,868,211
Interest allocated from Belvedere Capital 44,016 60,388 290,984 92,903
Expenses allocated from Belvedere Capital (2,276,006) (1,111,602) (6,320,138) (1,789,316)
------------- ------------- ------------- -------------
Net investment income allocated from
Belvedere Capital $ 3,086,525 $ 1,455,511 $ 9,095,970 $ 2,171,798
Rental income 16,072,897 10,755,114 48,493,177 21,637,946
Dividends from Partnership Preference Units 1,198,456 794,707 3,393,494 919,588
Interest 24,312 24,277 70,688 48,273
------------ ------------ ------------ ------------
Total investment income $ 20,382,190 $ 13,029,609 $ 61,053,329 $ 24,777,605
------------ ------------ ------------ ------------

Expenses:
Investment advisory and administrative fees $ 1,284,136 $ 687,489 $ 3,652,975 $ 1,150,317
Property management fees 640,785 430,815 1,942,519 869,759
Distribution and servicing fees 731,562 345,130 2,028,314 560,581
Interest expense on mortgages 6,579,654 4,243,268 19,738,536 8,582,544
Interest expense on Credit Facility 653,188 594,072 2,133,780 1,002,400
Interest expense on swap agreements 1,189,097 682,741 3,371,735 1,136,450
Property and maintenance expenses 4,795,722 2,793,259 13,523,760 5,531,643
Property taxes and insurance 1,721,795 1,538,125 6,038,108 2,901,026
Organizational expenses - 16,968 - 685,324
Miscellaneous 279,318 234,265 865,029 577,236
------------ ------------ ------------ ------------
Total expenses $ 17,875,257 $ 11,566,132 $ 53,294,756 $ 22,997,280

Deduct-
Reduction of investment advisory
and administrative fees 372,161 177,576 1,022,522 286,880
------------ ------------ ------------ ------------
Net expenses $ 17,503,096 $ 11,388,556 $ 52,272,234 $ 22,710,400
------------ ------------ ------------ ------------
Net investment income before
minority interests in net income of
controlled subsidiaries $ 2,879,094 $ 1,641,053 $ 8,781,095 $ 2,067,205
Minority interests in net income
of controlled subsidiaries (526,835) (424,481) (1,500,532) (863,703)
------------- ------------- ------------- -------------
Net investment income $ 2,352,259 $ 1,216,572 $ 7,280,563 $ 1,203,502
------------- ------------- ------------- -------------

* For the period from start of business, March 19, 2002, to September 30, 2002.



See notes to unaudited condensed consolidated financial statements

4


BELROSE CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited) (Continued)



Three Months Three Months Nine Months
Ended Ended Ended Period Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002*
------------- ------------- ------------- -------------

Realized and Unrealized Gain (Loss)
Net realized gain (loss) -
Investment transactions from Belvedere
Capital (identified cost basis) $ 1,072,597 $ (11,402,524) $ (1,848,037) $ (13,420,785)
------------ -------------- ------------- --------------
Net realized gain (loss) $ 1,072,597 $ (11,402,524) $ (1,848,037) $ (13,420,785)
------------ -------------- ------------- --------------

Change in unrealized appreciation
(depreciation) -
Investment in Belvedere Capital
(identified cost basis) $ 29,866,436 $ (96,759,842) $139,042,412 $(158,899,616)
Investments in Partnership Preference Units
(identified cost basis) (289,158) 882,842 6,882,831 987,612
Investments in other real estate
(net of minority interests in unrealized
gain (loss) of controlled subsidiaries of
$1,186,107, $756,424, $(3,462,083)
and $946,235, respectively) (1,125,102) (756,424) 2,822,783 (2,744,572)
Interest rate swap agreements 4,311,912 (7,761,968) (630,404) (10,467,740)
------------- -------------- ------------- --------------
Net change in unrealized appreciation
(depreciation) $ 32,764,088 $(104,395,392) $148,117,622 $(171,124,316)
------------ -------------- ------------ --------------

Net realized and unrealized gain (loss) $ 33,836,685 $(115,797,916) $146,269,585 $(184,545,101)
------------ -------------- ------------ --------------

Net increase (decrease) in net assets from
operations $ 36,188,944 $(114,581,344) $153,550,148 $(183,341,599)
============ ============== ============ ==============

* For the period from start of business, March 19, 2002, to September 30, 2002.


See notes to unaudited condensed consolidated financial statements

5


BELROSE CAPITAL FUND LLC
Condensed Consolidated Statements of Changes in Net Assets (Unaudited)

Nine Months
Ended Period Ended
September 30, September 30,
2003 2002*
------------------- -------------
Increase (Decrease) in Net Assets:
Net investment income $ 7,280,563 $ 1,203,502
Net realized loss from investment
transactions (1,848,037) (13,420,785)
Net change in unrealized appreciation
(depreciation) of investments 148,117,622 (171,124,316)
--------------- --------------
Net increase (decrease) in net assets
from operations $ 153,550,148 $(183,341,599)
-------------- --------------

Transactions in Fund Shares -
Investment securities contributed $ 95,047,136 $ 935,665,736
Less - Selling commissions (325,083) (4,284,627)
--------------- --------------
Net contributions $ 94,722,053 $ 931,381,109
Net asset value of Fund Shares issued to
Shareholders in payment of distributions
declared $ 348,050 $ -
Net asset value of Fund Shares redeemed (24,748,822) (4,028,564)
--------------- --------------
Net increase in net assets from Fund Share
transactions $ 70,321,281 $ 927,352,545
--------------- --------------

Distributions -
Distributions to Shareholders $ (808,014) $ -
--------------- --------------
Total distributions $ (808,014) $ -
--------------- ---------------

Net increase in net assets $ 223,063,415 $ 744,010,946

Net assets:
At beginning of period $1,242,001,655 $ -
-------------- --------------
At end of period $1,465,065,070 $ 744,010,946
============== ==============

* For the period from start of business, March 19, 2002, to September 30, 2002.

See notes to unaudited condensed consolidated financial statements

6


BELROSE CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)


Nine Months
Ended Period Ended
September 30, September 30,
2003 2002*
------------- -------------

Cash Flows From (For) Operating Activities -
Net increase (decrease) in net assets from operations $ 153,550,148 $(183,341,599)
Adjustments to reconcile net increase (decrease) in net assets from operations
to net cash flows for operating activities -
Net investment income allocated from Belvedere Capital (9,095,970) (2,171,798)
Decrease in escrow deposits 649,732 897,219
Decrease (increase) in other assets 299,130 (148,657)
Decrease (increase) in dividends and interest receivable 39,079 (401,084)
Increase in interest payable for open swap agreements 24,661 96,117
(Decrease) increase in security deposits, accrued interest and
other expenses and liabilities (1,198,370) 678,830
Increase in accrued property taxes 1,096,839 1,608,133
Purchases of Partnership Preference Units (8,033,600) (33,135,680)
Payments for investments in other real estate - (64,553,951)
Cash assumed in connection with acquisition of other
real estate - 3,625,569
Improvements to rental property (3,346,868) (1,241,643)
Increase in short-term investments (1,091,036) -
Net decrease (increase) in investment in Belvedere Capital 1,651,420 (1,087,522)
Increase in minority interest - 210,000
Minority interests in net income of controlled subsidiaries 1,500,532 863,703
Net realized loss from investment transactions 1,848,037 13,420,785
Net change in unrealized (appreciation) depreciation of investments (148,117,622) 171,124,316
-------------- ---------------
Net cash flows for operating activities $ (10,223,888) $ (93,557,262)
-------------- ---------------

Cash Flows From (For) Financing Activities -
Proceeds from Credit Facility $ 16,000,000 $ 105,500,000
Payments on behalf of investors (selling commissions) (325,083) (4,284,627)
Payments for Fund Shares redeemed (4,444,014) (1,250,646)
Distributions paid to minority shareholders - (160,007)
Distributions paid to Shareholders (459,964) -
Capital contributed to controlled subsidiaries 105,717 -
-------------- ---------------
Net cash flows from financing activities $ 10,876,656 $ 99,804,720
-------------- ---------------

Net increase in cash $ 652,768 $ 6,247,458

Cash at beginning of period $ 7,214,141 $ -
------------- ---------------
Cash at end of period $ 7,866,909 $ 6,247,458
============= ===============

* For the period from start of business, March 19, 2002, to September 30, 2002.

See notes to unaudited condensed consolidated financial statements

7


BELROSE CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)


Nine Months
Ended Period Ended
September 30, September 30,
2003 2002*
------------- -------------

Supplemental Disclosure and Non-cash Investing and
Financing Activities -
Securities contributed by Shareholders, invested in
Belvedere Capital $ 95,047,136 $ 935,665,736
Interest paid on loan - Credit Facility $ 2,190,433 $ 688,310
Interest paid on mortgages $ 19,428,610 $ 7,084,355
Interest paid on swap agreements $ 3,347,074 $ 1,040,333
Market value of securities distributed in payment of
redemptions $ 20,270,134 $ 2,777,918
Market value of real property and other assets, net
of current liabilities, assumed in conjunction with
acquisition of other real estate $ - $ 317,807,773
Mortgage assumed in conjunction with acquisition of
other real estate $ - $ 223,219,483

* For the period from start of business, March 19, 2002, to September 30, 2002.


See notes to unaudited condensed consolidated financial statements

8


BELROSE CAPITAL FUND LLC as of September 30, 2003
Condensed Consolidated Financial Statements (Continued)

FINANCIAL HIGHLIGHTS (UNAUDITED)

For the Nine Months Ended September 30, 2003
- --------------------------------------------------------------------------------
Net asset value - Beginning of period $ 76.860
- --------------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS
- --------------------------------------------------------------------------------
Net investment income (6) $ 0.428
Net realized and unrealized gain 8.302
- --------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 8.730

DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions to Shareholders $(0.050)
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.050)
- --------------------------------------------------------------------------------

NET ASSET VALUE - END OF PERIOD $85.540
- --------------------------------------------------------------------------------

TOTAL RETURN (1) 11.36 %

As a Percentage As a Percentage
of Average Net of Average Gross
RATIOS Assets (5) Assets (2)(5)
- --------------------------------------------------------------------------------
Expenses of Consolidated Real Property
Subsidiaries
Interest and other borrowing costs (7) 1.55% (8) 1.16% (8)
Operating expenses (7) 1.69% (8) 1.27% (8)
Belrose Capital Fund LLC Expenses
Interest and other borrowing costs (4) 0.54% (8) 0.40% (8)
Investment advisory and administrative
fees, servicing fees and other Fund
operating expenses (3)(4) 1.13% (8) 0.85% (8)
----------------------------------
Total expenses 4.91% (8) 3.68% (8)

Net investment income 0.71% (8) 0.53% (8)
- --------------------------------------------------------------------------------

SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 1,465,065
Portfolio Turnover of Tax-Managed Growth Portfolio
(the Portfolio) 14%
- --------------------------------------------------------------------------------

(1) Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. Total return is not computed on an
annualized basis.

(2) Average Gross Assets is defined as the average daily amount of all assets
of Belrose Capital Fund LLC (Belrose Capital) (including Belrose Capital's
interest in Belvedere Capital Fund Company LLC (Belvedere Capital) and
Belrose Capital's ratable share of the assets of its directly and
indirectly controlled subsidiaries), without reduction by any liabilities.
For this purpose, the assets of Belrose Realty Corporation's (Belrose
Realty) controlled subsidiaries are reduced by the proportionate interests
therein of investors other than Belrose Realty.

(3) Includes Belrose Capital's share of Belvedere Capital's allocated expenses,
including those expenses allocated from the Portfolio.

(4) Includes the expenses of Belrose Capital and Belrose Realty. Does not
include expenses of the real estate subsidiaries majority-owned by Belrose
Realty.

(5) For the purpose of calculating ratios, the income and expenses of Belrose
Realty's controlled subsidiaries are reduced by the proportionate interest
therein of investors other than Belrose Realty.

(6) Calculated using average shares outstanding.

(7) Includes Belrose Realty's proportional share of expenses incurred by its
majority-owned subsidiaries.

(8) Annualized.

See notes to unaudited condensed consolidated financial statements

9


BELROSE CAPITAL FUND LLC as of September 30, 2003
Notes to Condensed Consolidated Financial Statements (Unaudited)

1 Basis of Presentation

The condensed consolidated interim financial statements of Belrose Capital Fund
LLC (Belrose Capital) and its subsidiaries (collectively, the Fund) have been
prepared by the Fund, without audit, in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted as permitted by such rules and regulations. All adjustments, consisting
of normal recurring adjustments, have been included. Management believes that
the disclosures are adequate to present fairly the financial position, results
of operations, cash flows and financial highlights at the dates and for the
periods presented. It is suggested that these interim financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Fund's registration statement on Form 10. Results for interim periods are
not necessarily indicative of those to be expected for the full fiscal year.

The balance sheet at December 31, 2002 has been derived from the December 31,
2002 audited financial statements but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements as permitted by the
instructions to Form 10-Q and Article 10 of Regulation S-X.

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

2 Estate Freeze

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 Shares, plus any returns
thereon in excess of the fixed annual priority of the Preferred Shares. The
existence of restructured Fund Shares does not adversely affect Shareholders who
do not make an election nor do the restructured Fund Shares have preferential
rights to Fund Shares that have not been restructured. Shareholders who
subdivide Fund Shares under this election sacrifice certain rights and
privileges that they would otherwise have with respect to the Fund Shares so
divided, including redemption rights and voting and consent rights. Upon the
twentieth anniversary of the issuance of the associated undivided Fund Shares to
the original holders thereof, Preferred and Common Shares will automatically
convert into full and fractional undivided Fund Shares. The allocation of
Belrose Capital's net asset value per Share of $85.54 as of September 30, 2003,
between Preferred and Common shares that have been restructured is as follows:

Per Share Value At
September 30, 2003
--------------------------------------
Preferred Common
Date of Contribution Shares Shares
- --------------------------------------------------------------------------------
February 19, 2003 $ 73.43 $ 12.11

10


3 Investment Transactions

The following table summarizes the Fund's investment transactions for the nine
months ended September 30, 2003 and the period from the start of business, March
19, 2002, to September 30, 2002:



Nine Months Ended Period Ended
Investment Transaction September 30, 2003 September 30, 2002
- -----------------------------------------------------------------------------------------------

Increases in investment in Belvedere Capital $ 95,047,136 $ 944,429,716
Decreases in investment in Belvedere Capital $ 21,921,554 $ 10,454,376
Purchases of Partnership Preference Units (1) $ 8,033,600 $ 33,135,680
Acquisitions of other real estate (2) $ - $ 64,553,951


(1) Purchases of Partnership Preference Units during the nine months ended
September 30, 2003 and the period from the start of business, March 19,
2002, to September 30, 2002, represent Partnership Preference Units
purchased from other funds sponsored by Eaton Vance Management (Eaton
Vance).

(2) Acquisitions of other real estate investments represent Real Estate Joint
Ventures purchased from other funds sponsored by Eaton Vance for the period
from the start of business, March 19, 2002, to September 30, 2002.

4 Indirect Investment in Portfolio

The following table summarizes the Fund's investment in Tax-Managed Growth
Portfolio (the Portfolio) through Belvedere Capital Fund Company LLC (Belvedere
Capital), for the nine months ended September 30, 2003 and for the period from
the start of business, March 19, 2002, to September 30, 2002, including
allocations of income and expenses for the respective periods then ended:




Nine Months Ended Period Ended
September 30, 2003 September 30, 2002
- --------------------------------------------------------------------------------------------------------------------------

Belvedere Capital's interest in the Portfolio (1) $ 9,775,572,306 $ 8,043,904,602
The Fund's investment in Belvedere Capital (2) $ 1,483,730,463 $ 763,826,737
Income allocated to Belvedere Capital from the Portfolio $ 102,346,416 $ 64,163,061
Income allocated to the Fund from Belvedere Capital $ 15,416,108 $ 3,961,114
Expenses allocated to Belvedere Capital from the Portfolio $ 31,352,609 $ 22,903,987
Expenses allocated to the Fund from Belvedere Capital $ 6,320,138 $ 1,789,316
Realized loss allocated to Belvedere Capital from the Portfolio $ (10,803,952) $ (549,816,840)
Realized loss allocated to the Fund from Belvedere Capital $ (1,848,037) $ (13,420,785)
Change in unrealized appreciation (depreciation) allocated to Belvedere
Capital from the Portfolio $ 898,392,188 $ (2,273,134,307)
Change in unrealized appreciation (depreciation) allocated to the Fund
from Belvedere Capital $ 139,042,412 $ (158,899,616)
- --------------------------------------------------------------------------------------------------------------------------


(1) As of September 30, 2003 and 2002, the value of Belvedere Capital's
interest in the Portfolio represents 62.1% and 58.6% of the Portfolio's net
assets, respectively.

(2) As of September 30, 2003 and 2002, the Fund's investment in Belvedere
Capital represents 15.2% and 9.5% of Belvedere Capital's net assets,
respectively.

A summary of the Portfolio's Statement of Assets and Liabilities at September
30, 2003, December 31, 2002 and September 30, 2002 and its operations for the
nine months ended September 30, 2003, for the period from the Fund's start of
business, March 19, 2002, to December 31, 2002 and for the period from the
Fund's start of business, March 19, 2002, to September 30, 2002 follows:

11

September 30, December 31, September 30,
2003 2002 2002
--------------------------------------------------
Investments, at value $15,720,495,292 $14,544,149,182 $13,713,440,772
Other assets 22,166,551 70,073,039 59,906,476
- --------------------------------------------------------------------------------
Total assets $15,742,661,843 $14,614,222,221 $13,773,347,248
Total liabilities 241,245 42,700,633 35,785,860
- --------------------------------------------------------------------------------
Net assets $15,742,420,598 $14,571,521,588 $13,737,561,388
================================================================================
Dividends and interest $ 166,725,898 $ 169,418,860 $ 111,766,495
- --------------------------------------------------------------------------------
Investment adviser fee $ 49,370,631 $ 54,761,871 $ 38,570,943
Other expenses 1,730,334 2,016,295 1,395,167
- --------------------------------------------------------------------------------
Total expenses $ 51,100,965 $ 56,778,166 $ 39,966,110
- --------------------------------------------------------------------------------
Net investment income $ 115,624,933 $ 112,640,694 $ 71,800,385
Net realized losses (17,942,587) (344,617,301) (388,526,801)

Net change in unrealized
appreciation (depreciation) 1,449,036,078 (3,469,590,930) (4,282,091,506)
- --------------------------------------------------------------------------------
Net increase (decrease) in
net assets from operations $ 1,546,718,424 $(3,701,567,537) $(4,598,817,922)
- --------------------------------------------------------------------------------

5 Interest Rate Swap Agreements

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



Notional Unrealized Unrealized
Amount Depreciation Depreciation
Effective (000's Fixed Floating Termination at September 30, at December 31,
Date omitted) Rate Rate Date 2003 2002
- --------------------------------------------------------------------------------------------------

03/02 $35,136 5.660% LIBOR + 0.38% 03/07 $3,282,579 $ 3,478,871
03/07 31,588 7.140% LIBOR + 0.38% 07/09 1,212,616 1,134,349
05/02 32,966 5.159% LIBOR + 0.38% 03/07 2,519,232 2,591,755
03/07 32,966 6.874% LIBOR + 0.38% 11/10 1,426,791 1,309,376
07/02 29,588 4.540% LIBOR + 0.38% 03/07 1,639,445 1,580,735
03/07 29,588 6.500% LIBOR + 0.38% 07/09 743,637 683,659
10/02 36,631 3.550% LIBOR + 0.38% 03/07 798,814 480,992
03/07 36,631 5.480% LIBOR + 0.38% 11/09 117,998 67,648
12/02 7,865 3.685% LIBOR + 0.38% 03/07 207,544 146,897
03/07 7,865 5.727% LIBOR + 0.38% 07/09 89,916 78,560
02/03 8,034 3.320% LIBOR + 0.38% 03/07 112,468 -
03/07 8,034 5.480% LIBOR + 0.38% 07/09 32,206 -
- --------------------------------------------------------------------------------------------------
Total $12,183,246 $11,552,842
- --------------------------------------------------------------------------------------------------


On October 1, 2003, new interest rate swap agreements were entered into to fix
the cost of a portion of Belrose Capital's borrowings under the Credit Facility
(as defined in Note 6 below) established on July 15, 2003. At the same time, all
interest rate swap agreements outstanding on September 30, 2003 were terminated,
resulting in realized losses of $12,175,577. The table below identifies the
terms of the interest rate swap agreements effective on October 1, 2003.

Notional Initial
Amount Optional Final
Effective (000's Fixed Floating Termination Termination
Date omitted) Rate Rate Date Date
- --------------------------------------------------------------------------------
10/03 $31,588 4.180% LIBOR + 0.30% 7/09 6/10
10/03 37,943 4.160% LIBOR + 0.30% 11/09 6/10
10/03 83,307 4.045% LIBOR + 0.30% - 6/10

12


6 Debt

Credit Facility - On July 15, 2003, Belrose Capital refinanced its then existing
credit facility with Merrill Lynch Mortgage Capital, Inc. with two new credit
arrangements (collectively, the Credit Facility) totaling $225,000,000. On
November 4, 2003, the Credit Facility was increased to $234,000,000. 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 Bel Apartment Properties Trust (Bel Apartment),
Katahdin Property Trust, LLC (Katahdin) and Bel Communities Property Trust (Bel
Communities).

The credit arrangement with DrKW Holdings, Inc. (DrKW) was for $168,000,000, and
was increased to $177,000,000 as of November 4, 2003. This credit arrangement
accrues interest at a rate of one-month LIBOR plus 0.30% per annum. As of
September 30, 2003, outstanding borrowings under this credit arrangement totaled
$168,000,000. As of November 4, 2003, outstanding borrowings totaled
$177,000,000.

The credit arrangement with Merrill Lynch Mortgage Capital (MLMC) is for
$57,000,000, and includes the ability to issue letters of credit up to
$10,000,000. This credit arrangement accrues interest at a rate of one-month
LIBOR plus 0.38% per annum. A commitment fee of 0.10% per annum is paid on the
unused commitment amount. Belrose Capital pays all fees associated with issuing
the letters of credit. As of September 30, 2003, outstanding borrowings under
this credit arrangement totaled $3,300,000, as well as letters of credit
outstanding for $2,080,452. The letters of credit were issued as a substitute
for funding certain mortgage escrow accounts required by the lender of Bel
Communities and Bel Apartment. The letters of credit expire in 2004 and
automatically extend for one-year periods not to extend beyond June 15, 2010.
Fees paid or accrued under the terms of the letter of credit issued under the
existing Credit Facility totaled $19,550 for the nine months ended September 30,
2003. As of November 4, 2003, amounts outstanding under the MLMC credit
arrangement totaled $6,300,000.

7 Segment Information

Belrose Capital pursues its investment objective primarily by investing
indirectly in the Portfolio through Belvedere Capital. The Portfolio is a
diversified investment company that emphasizes investments in common stocks of
domestic and foreign growth companies that are considered to be high in quality
and attractive in their long-term investment prospects. Separate from its
investment in Belvedere Capital, Belrose Capital invests in real estate assets
through its subsidiary Belrose Realty Corporation (Belrose Realty). Belrose
Realty invests directly in Partnership Preference Units and indirectly in real
property through controlled subsidiaries, Bel Apartment, Katahdin and Bel
Communities. Belrose Realty did not hold an investment in controlled subsidiary
Bel Communities for the period from the start of business, March 19, 2002, to
September 30, 2002.

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. No reportable segments have been aggregated. Reportable information by
segment is as follows:




TAX-MANAGED
FOR THE THREE MONTHS ENDED GROWTH REAL
SEPTEMBER 30, 2003 PORTFOLIO* ESTATE TOTAL
- ------------------------------------------------------------------------------------------------------------------------

Revenue $ 3,086,525 $ 17,291,184 $ 20,377,709
Interest expense on mortgages - (6,579,654) (6,579,654)
Interest expense on Credit Facility - (599,191) (599,191)
Interest expense on swap agreements - (1,189,097) (1,189,097)
Operating expenses (239,468) (7,992,486) (8,231,954)
Minority interest in net income of controlled
subsidiaries - (526,835) (526,835)
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 2,847,057 $ 403,921 $ 3,250,978
Net realized gain 1,072,597 - 1,072,597
Change in unrealized appreciation (depreciation) 29,866,436 2,897,652 32,764,088
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS OF
REPORTABLE SEGMENTS $ 33,786,090 $ 3,301,573 $ 37,087,663
- ------------------------------------------------------------------------------------------------------------------------

13


TAX-MANAGED
FOR THE THREE MONTHS ENDED GROWTH REAL
SEPTEMBER 30, 2002 PORTFOLIO* ESTATE TOTAL
- ------------------------------------------------------------------------------------------------------------------------
Revenue $ 1,455,511 $ 11,573,150 $ 13,028,661
Interest expense on mortgages - (4,243,268) (4,243,268)
Interest expense on Credit Facility - (564,368) (564,368)
Interest expense on swap agreements - (682,741) (682,741)
Operating expenses (112,430) (5,212,912) (5,325,342)
Minority interest in net income of controlled
subsidiaries - (424,481) (424,481)
- -------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 1,343,081 $ 445,380 $ 1,788,461
Net realized loss (11,402,524) - (11,402,524)
Change in unrealized appreciation (depreciation) (96,759,842) (7,635,550) (104,395,392)
- -------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS OF
REPORTABLE SEGMENTS $(106,819,285) $ (7,190,170) $(114,009,455)
- -------------------------------------------------------------------------------------------------------------------------


TAX-MANAGED
FOR THE NINE MONTHS ENDED GROWTH REAL
SEPTEMBER 30, 2003 PORTFOLIO* ESTATE TOTAL
- ------------------------------------------------------------------------------------------------------------------------
Revenue $ 9,095,970 $ 51,945,066 $ 61,041,036
Interest expense on mortgages - (19,738,536) (19,738,536)
Interest expense on Credit Facility - (2,005,753) (2,005,753)
Interest expense on swap agreements - (3,371,735) (3,371,735)
Operating expenses (658,521) (23,956,756) (24,615,277)
Minority interest in net income of controlled
subsidiaries - (1,500,532) (1,500,532)
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 8,437,449 $ 1,371,754 $ 9,809,203
Net realized loss (1,848,037) - (1,848,037)
Change in unrealized appreciation (depreciation) 139,042,412 9,075,210 148,117,622
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS OF
REPORTABLE SEGMENTS $ 145,631,824 $ 10,446,964 $ 156,078,788
- ------------------------------------------------------------------------------------------------------------------------


TAX-MANAGED
FOR THE PERIOD ENDED GROWTH REAL
SEPTEMBER 30, 2002 (1) PORTFOLIO* ESTATE TOTAL
- ------------------------------------------------------------------------------------------------------------------------
Revenue $ 2,171,798 $ 22,603,756 $ 24,775,554
Interest expense on mortgages - (8,582,544) (8,582,544)
Interest expense on Credit Facility - (952,280) (952,280)
Interest expense on swap agreements - (1,136,450) (1,136,450)
Operating expenses (186,367) (10,235,387) (10,421,754)
Minority interest in net income of controlled
subsidiaries - (863,703) (863,703)
- -----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 1,985,431 $ 833,392 $ 2,818,823
Net realized loss (13,420,785) - (13,420,785)
Change in unrealized appreciation (depreciation) (158,899,616) (12,224,700) (171,124,316)
- -----------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS OF
REPORTABLE SEGMENTs $(170,334,970) $(11,391,308) $(181,726,278)
- -----------------------------------------------------------------------------------------------------------------------


* Belrose Capital invests indirectly in Tax-Managed Growth Portfolio through
Belvedere Capital.
(1) For the period from the start of business, March 19, 2002, to September 30,
2002.

14


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



Three Months Three Months Nine Months
Ended Ended Ended Period Ended
September 30, September 30, September 30, September 30,
2003 2002 2003 2002 (1)
---------------------------------------------------------------------


Revenue:
Revenue from reportable segments $ 20,377,709 $ 13,028,661 $ 61,041,036 $ 24,775,554
Unallocated revenue 4,481 948 12,293 2,051
---------------------------------------------------------------------
TOTAL REVENUE $ 20,382,190 $ 13,029,609 $ 61,053,329 $ 24,777,605
---------------------------------------------------------------------

Net increase (decrease) in net assets from
operations:
Net increase (decrease) in net assets
from operations of reportable segments $ 37,087,663 $(114,009,455) $156,078,788 $(181,726,278)
Unallocated revenue 4,481 948 12,293 2,051
Unallocated expenses ** (903,200) (572,837) (2,540,933) (1,617,372)
---------------------------------------------------------------------

TOTAL NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 36,188,944 $(114,581,344) $153,550,148 $(183,341,599)
---------------------------------------------------------------------


** Unallocated expenses include costs of Belrose Capital to operate the Fund
such as servicing and distribution fees as well as other miscellaneous and
administrative costs of Belrose Capital.

(1) For the period from the start of business, March 19, 2002, to September 30,
2002.

TAX-MANAGED GROWTH REAL
AT SEPTEMBER 30, 2003 PORTFOLIO* ESTATE TOTAL
- --------------------------------------------------------------------------------
Segment assets $1,483,730,463 $543,453,053 $2,027,183,516
Segment liabilities 34,674 548,777,183 548,811,857
- --------------------------------------------------------------------------------
NET ASSETS OF REPORTABLE SEGMENTS $1,483,695,789 $ (5,324,130) $1,478,371,659
- --------------------------------------------------------------------------------

AT DECEMBER 31, 2002
- --------------------------------------------------------------------------------
Segment assets $1,264,314,536 $524,810,142 $1,789,124,678
Segment liabilities - 542,037,048 542,037,048
- --------------------------------------------------------------------------------
NET ASSETS OF REPORTABLE SEGMENTS $1,264,314,536 $(17,226,906) $1,247,087,630
- --------------------------------------------------------------------------------

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

September 30, December 31,
2003 2002
-------------- ----------------
Net assets:
Net assets of reportable segments $1,478,371,659 $1,247,087,630
Unallocated cash 728,967 2,083,049
Short-term investments 1,091,036 -
Other assets - -
Loan payable - Credit Facility (15,026,426) (7,071,301)
Other liabilities (100,166) (97,723)
--------------- ----------------
Total net assets $1,465,065,070 $ 1,242,001,655
--------------- ----------------

15


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
- --------------------------------------------------------------------------------

The information in this report contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements typically are
identified by use of terms such as "may," "will," "should," "might," "expect,"
"anticipate," "estimate," and similar words, although some forward-looking
statements are expressed differently. The actual results of Belrose Capital Fund
LLC (the Fund) could differ materially from those contained in the
forward-looking statements due to a number of factors. The Fund undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise, except as required by
applicable law. Factors that could affect the Fund's performance include a
decline in the U.S. stock markets or in general economic conditions, adverse
developments affecting the real estate industry, or fluctuations in interest
rates.

The following discussion should be read in conjunction with the Fund's unaudited
condensed consolidated financial statements and related notes in Item 1 above.

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

PERFORMANCE OF THE FUND.(1) The Fund's total return was 2.53% for the quarter
ended September 30, 2003. This return reflects an increase in the Fund's net
asset value per share from $83.43 to $85.54 during the period. For comparison,
the Standard & Poor's 500 Index (the S&P 500), an unmanaged index of large
capitalization stocks commonly used as a benchmark for the U.S. equity market,
had a total return of 2.65% over the same period. The performance of the Fund
exceeded that of Tax-Managed Growth Portfolio (the Portfolio) by approximately
0.2% during the period. Last year, the Fund had a total return performance of
- -16.19% for the quarter ended September 30, 2002. This return reflected a
decrease in the Fund's net asset value per share from $85.95 to $72.03 during
the period. For comparison, the S&P 500 had a total return of -17.27% over the
same period. The performance of the Fund trailed that of the Portfolio by
approximately 1.1% during that period.

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

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

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

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

PERFORMANCE OF REAL ESTATE INVESTMENTS. The Fund's real estate investments are
held through Belrose Realty Corporation (Belrose Realty), a controlled
subsidiary of the Fund. Real estate investments include interests in real estate
joint ventures (the Real Estate Joint Ventures) that are majority-owned by
Belrose Realty and a portfolio of income-producing preferred equity interests in
operating partnerships (the Partnership Preference Units) that are affiliated
with real estate investment trusts. During 2002, the Fund acquired interests in
Real Estate Joint Ventures, which increased the number of properties held by the

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

16


Fund through Real Estate Joint Ventures. The Fund also acquired Partnership
Preference Units during both 2003 and 2002.

During the quarter ended September 30, 2003, real estate operations continued to
be impacted by weak multifamily market fundamentals. Rental income from real
estate operations increased to $16.1 million for the quarter ended September 30,
2003 compared to $10.8 million for the quarter ended September 30, 2002, an
increase of $5.3 million o4 49%. This increase in rental income was principally
attributable to the greater number of properties held through Real Estate Joint
Ventures for the quarter ended September 30, 2003, 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 the quarter.

Property operating expenses totaled $7.2 million for the quarter ended September
30, 2003 compared to $4.8 million for the quarter ended September 30, 2002, an
increase of $2.4 million or 50% (property operating expenses are before certain
operating expenses of Belrose Realty of approximately $0.8 million for the
quarter ended September 30, 2003 and approximately $0.4 million for the quarter
ended September 30, 2002). The increase in operating expenses was principally
due to the greater number of Real Estate Joint Ventures held during the quarter
ended September 30, 2003.

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

At September 30, 2003, the estimated fair value of the real properties held
through Belrose Realty was $473.3 million compared to $300.3 million at
September 30, 2002, an increase of $173.0 million or 58%. The increase in real
property value was primarily due to the greater number of Real Estate Joint
Ventures held during the quarter ended September 30, 2003. The Fund saw
unrealized depreciation in the estimated fair value of its other real estate
investments (which includes Real Estate Joint Ventures) of approximately $1.1
million during the quarter ended September 30, 2003 compared to approximately
$0.8 million in unrealized depreciation during the quarter ended September 30,
2002.

Because the Fund acquired additional Partnership Preference Units over the past
twelve months, the estimated fair value of Partnership Preference Units has
increased. At September 30, 2003, the estimated fair value of Belrose Realty's
Partnership Preference Units totaled $56.8 million compared to $34.1 million at
September 30, 2002, an increase of $22.7 million or 67%. The increase in value
was due principally to the greater number of Partnership Preference Units held
at September 30, 2003. The Fund saw unrealized depreciation in the estimated
fair value of its Partnership Preference Units of approximately $0.3 million
during the quarter ended September 30, 2003 compared to unrealized appreciation
of approximately $0.9 million during the quarter ended September 30, 2002.

Dividends received from Partnership Preference Units for the quarter ended
September 30, 2003 totaled $1.2 million compared to $0.8 million for the quarter
ended September 30, 2002, an increase of $0.4 million or 50%. The increase was
due to a larger number of Partnership Preference Units being held during the
quarter ended September 30, 2003.

PERFORMANCE OF INTEREST RATE SWAP AGREEMENTS. For the quarter ended September
30, 2003, interest rate swap agreement values appreciated by approximately $4.3
million due to an increase in swap rates during the period. For the quarter
ended September 30, 2002, interest rate swap agreement values decreased by
approximately $7.8 million due to a decline in swap rates.

On October 1, 2003, new interest rate swap agreements were entered into to fix
the cost of a portion of Fund borrowings under the Credit Facility established
on July 15, 2003. At the same time, the Fund made payments of approximately
$12.2 million to terminate all interest rate swaps outstanding as of September
30, 2003, realizing a loss in that amount on the transactions. The realized loss
approximated the value of the positions on the books of the Fund. See "Liquidity
and Capital Resources" for a description for the Credit Facility and the Fund's
interest rate swap agreements.

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

PERFORMANCE OF THE FUND. The Fund's total return was 11.36% for the nine months
ended September 30, 2003. This return reflects an increase in the Fund's net
asset value per share from $76.86 to $85.54 and a distribution of $0.05 per
share during the period. For comparison, the S&P 500 had a total return of
14.71% over the same period. The performance of the Fund exceeded that of the
Portfolio by approximately 0.6% during the period. Last year, the Fund had a

17



total return performance of -27.97% for the period from the start of business,
March 19, 2002, to September 30, 2002. This return reflected a decrease in the
Fund's net asset value per share from $100.00 to $72.03. For comparison, the S&P
500 had a total return of -29.40% over the same period. The performance of the
Fund trailed that of the Portfolio by approximately 2.2% for the period from the
start of business, March 19, 2002, to September 30, 2002.

PERFORMANCE OF THE PORTFOLIO. The total return of the Portfolio for the nine
months ended September 30, 2003 was 10.74% compared to the 14.71% return
achieved by the S&P 500 over the same period. The total return of the Portfolio
for the period from the start of business, March 19, 2002, to September 30, 2002
was -25.77%.

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

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

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

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

PERFORMANCE OF REAL ESTATE INVESTMENTS. For the nine months ended September 30,
2003, rental income from real estate operations increased to $48.5 million
compared to $21.6 million for the period from the start of business, March 19,
2002, to September 30, 2002, an increase of $26.9 million or 125%. Property
operating expenses totaled $21.5 million for the nine months ended September 30,
2003 compared to $9.3 million for the period from the start of business, March
19, 2002, to September 30, 2002, an increase of $12.2 million or 131% (property
operating expenses are before certain operating expenses of Belrose Realty of
approximately $2.5 million for the nine months ended September 30, 2003 and
approximately $0.9 million for the period from the start of business, March 19,
2002, to September 30, 2002).

The increases in rental income and operating expenses during the period were
principally due to the greater number of Real Estate Joint Ventures held through
Belrose Realty (and the longer period of time for which investments in such Real
Estate Joint Ventures were held) during the nine months ended September 30, 2003
compared to the period from the start of business, March 19, 2002, to September
30, 2002. As in 2002, Real Estate Joint Venture operations during the nine
months ended September 30, 2003 were affected by weak multifamily market
fundamentals in most regions with lower occupancy levels and increased rent
concessions.

At September 30, 2003, the estimated fair value of the real properties held
through Belrose Realty was $473.3 million compared to $300.3 million at
September 30, 2002, an increase of $173.0 million or 58%. The increase in real
property value was primarily due to the greater number of Real Estate Joint
Ventures held at September 30, 2003. The Fund saw unrealized appreciation in the
estimated fair value of its other real estate investments of approximately $2.8
million during the nine months ended September 30, 2003 compared to unrealized
depreciation of approximately $2.7 million during the period from the start of
business, March 19, 2002, to September 30, 2002.

Because Belrose Realty acquired Partnership Preference Units over the past year,
the estimated fair value of the Fund's Partnership Preference Units has
increased. At September 30, 2003, the estimated fair value of the Fund's
Partnership Preference Units totaled $56.8 million compared to $34.1 million at
September 30, 2002, an increase of $22.7 million or 67%. The increase in value,
due principally to the greater number of Partnership Preference Units held at

18


September 30, 2003, was also a result of net increases in the per unit value of
the Partnership Preference Units held by Belrose Realty during the period. The
Fund saw unrealized appreciation in the estimated fair value of its Partnership
Preference Units of approximately $6.9 million during the nine months ended
September 30, 2003 compared to unrealized appreciation of approximately $1.0
million for the period from the start of business, March 19, 2002, to September
30, 2002.

Dividends received from Partnership Preference Units for the nine months ended
September 30, 2003 totaled $3.4 million compared to $0.9 million for the period
from the start of business, March 19, 2002, to September 30, 2002, an increase
of $2.5 million. The increase was primarily due to a larger number of
Partnership Preference Units held during the first three quarters of 2003.

PERFORMANCE OF INTEREST RATE SWAP AGREEMENTS. For the nine months ended
September 30, 2003, interest rate swap agreement values depreciated by
approximately $0.6 million due to a modest decline in short-term swap rates
during the period. For the period from the start of business, March 19, 2002, to
September 30, 2002, valuations of interest rate swap agreements depreciated by
approximately $10.5 million, also due to swap rate declines.

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------

Effective July 15, 2003, the Fund refinanced its then existing credit facility
with Merrill Lynch Mortgage Capital, Inc. by entering into new credit
arrangements with DrKW Holdings, Inc. (DrKW) and Merrill Lynch Mortgage Capital,
Inc. (MLMC) (collectively, the Credit Facility) which together total $225.0
million. The Credit Facility is secured by a pledge of the Fund's assets,
excluding the assets of Bel Apartment Properties Trust, Katahdin Property Trust,
LLC and Bel Communities Property Trust, and has a seven-year maturity. The
Credit Facility will expire in June 2010.

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

The Credit Facility includes a $168.0 million credit arrangement with DrKW.
Borrowings under the DrKW credit arrangement accrue interest at a rate of
one-month LIBOR plus 0.30% per annum. As of September 30, 2003, outstanding
borrowings under the DrKW credit arrangement totaled $168.0 million.

The Credit Facility also includes a $57.0 million credit arrangement with MLMC,
including up to $10.0 million under letters of credit. Borrowings under the MLMC
credit arrangement accrue interest at a rate of one-month LIBOR plus 0.38% per
annum. As of September 30, 2003, outstanding borrowings under the MLMC credit
arrangement totaled $3.3 million, with an additional $2.1 million outstanding
under a letter of credit. The unused loan commitment amount totaled
approximately $51.6 million. A commitment fee of 0.10% per annum is paid on the
unused commitment amount. The Fund pays all fees associated with issuing the
letters of credit.

On November 4, 2003, the total commitment under the Credit Facility increased to
$234.0 million. Thereafter the amount outstanding under the DrKW credit
arrangement increased to approximately $177.0 million and the amount outstanding
under the MLMC credit arrangement increased to approximately $6.3 million with
an additional $2.1 million outstanding under letters of credit.

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

As of September 30, 2003 and September 30, 2002, the unrealized depreciation
related to the interest rate swap agreements was approximately $12.2 million and
$10.5 million, respectively.

19


CRITICAL ACCOUNTING POLICIES AND ESTIMATES
- ------------------------------------------

The Fund's discussion and analysis of its financial condition and results of
operations are based upon its unaudited condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires the Fund to make estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. The Fund bases these estimates, judgments and assumptions on
historical experience and on other various factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.

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

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
- -------------------------------------------------------------------

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

20


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 LIBOR. In the future, the Fund may
use other interest rate hedging arrangements (such as caps, floors and collars)
to fix or limit borrowing costs. The use of interest rate hedging arrangements
is a specialized activity that can expose the Fund to significant loss.

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

The following table summarizes the contractual maturities and weighted-average
interest rates associated with the Fund's significant non-trading financial
instruments. The Fund has no market risk sensitive instruments held for trading
purposes. This information should be read in conjunction with Note 5 and Note 6
to the Fund's unaudited condensed consolidated financial statements in Item 1
above.




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

Estimated
2004-2008 Thereafter Total Fair Value

- -----------------------------------------------------------------------------------------------------------------------------------
Rate sensitive liabilities:
- -----------------------------------------------------
Long-term debt:
- -----------------------------------------------------
Fixed-rate mortgages $344,219,483 $344,219,483 $398,000,000

Average interest rate 7.53% 7.53%
- -----------------------------------------------------
Variable-rate Credit Facility $171,300,000 $171,300,000 $171,300,000

Average interest rate 1.42% 1.42%
- ------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive derivative financial instruments:
- ----------------------------------------------------
Pay fixed/receive variable interest rate
swap agreements(1) $152,838,000 $152,838,000 $ --

Average pay rate(1) 4.10% 4.10%

Average receive rate(1) 1.42% 1.42%

(1) The terms disclosed are those of the interest rate swap agreements entered
into that are effective on October 1, 2003. See Note 5 to the Fund's
unaudited condensed consolidated financial statements in Item 1 above for
the terms of the interest rate swap agreements in effect on September 30,
2003 and terminated on October 1, 2003, as well as the loss realized as a
result of such terminations.
- ------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive investments:
- ----------------------------------------------------
Fixed-rate Partnership Preference Units:
- ----------------------------------------------------
Essex Portfolio, L.P., 7.875% Series B Cumulative Redeemable
Preferred Units, Callable 2/6/03, Current Yield: 8.15% $ 16,616,170 $ 16,616,170 $ 19,324,880

Kilroy Realty, L.P., 8.075% Series A Cumulative Redeemable
Preferred Units, Callable 2/06/03, Current Yield: 8.75% $ 15,898,220 $ 15,898,220 $ 18,453,880

Prentiss Properties Acquisition Partners, L.P., 8.30% Series B
Cumulative Redeemable Perpetual Preferred Units, Callable
6/25/03, Current Yield: 8.45% $ 16,519,510 $ 16,519,510 $ 18,986,976


21


ITEM 4. CONTROLS AND PROCEDURES.
- ---------------------------------

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

As the Fund's manager, the complete and entire management, control and operation
of the Fund are vested in Eaton Vance. The Fund's organizational structure does
not provide for a board of directors or a board audit committee. As such, the
Fund's Chief Executive Officer and Chief Financial Officer intend to report to
Eaton Vance any significant deficiency in the design or operation of internal
control over financial reporting which could adversely affect the Fund's ability
to record, process, summarize and report financial data, and any fraud, whether
or not material, that involves management or other employees who have a
significant role in the Fund's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.
- ---------------------------

Although in the ordinary course of business, the Fund, Belrose Realty and
Belrose Realty's 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 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
- ---------------------------------------------------

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
- -----------------------------------------

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- -------------------------------------------------------------

No matters were submitted to a vote of security holders during the three months
ended September 30, 2003.

ITEM 5. OTHER INFORMATION.
- ---------------------------

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
- ------------------------------------------

(a) The following is a list of all exhibits filed as part of this Form 10-Q:

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

4.1(a) Amendment dated November 4, 2003 to Loan and Security Agreement between
Belrose Capital Fund LLC and DrKW Holdings, Inc., as Lender

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

4.2(a) Amendment dated November 4, 2003 to Loan and Security Agreement among
Belrose Capital Fund LLC, Merrill Lynch Mortgage Capital, Inc., as
Agent, the Lenders referred to therein and Merrill Lynch Capital
Services, Inc

31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

22


32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K:

None.

23


SIGNATURES

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





BELROSE CAPITAL FUND LLC



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

24


EXHIBIT INDEX
-------------

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

4.1(a) Amendment dated November 4, 2003 to Loan and Security Agreement between
Belrose Capital Fund LLC and DrKW Holdings, Inc., as Lender

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

4.2(a) Amendment dated November 4, 2003 to Loan and Security Agreement among
Belrose Capital Fund LLC, Merrill Lynch Mortgage Capital, Inc., as
agent, the Lenders referred to therein and Merrill Lynch Capital
Services, Inc

31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

25