NOTES TO FINANCIAL STATEMENT
  NOTE 1 > ORGANIZATION
    The Beldon II Fund (the Fund) was established in 1988 as a private foundation organized to distribute monies to public charities involved in environmental preservation. In accordance with the donor's wishes, the Fund will spend out its assets and close during 2009.
       
  NOTE 2 > SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    BASIS OF ACCOUNTING
    The Fund's financial statements are presented on the accrual basis of accounting. Revenue is recognized when earned and expenses are recognized when incurred.
    ACCOUNTING ESTIMATES
    The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingencies, if any, at the date of financial statements and revenue and expenses during the reporting period. Actual results could differ from these estimates.
    INVESTMENTS
    Investments are reported at their fair value. Fair value is determined using quoted market prices for marketable securities and at the values reported by the Funds for alternative investments. Some of the values reported for alternative investments are based on unaudited numbers. Also, the fair value of these investments can be based on significant estimates made by the fund managers. Actual values could differ. Management believes it will not have to adjust these values. Realized gains and losses on sale are determined by comparison of purchase cost to proceeds. For donated investments, cost is the donor's cost. Invested cash includes receivables and payables for pending trades.
    FIXED ASSETS, DEPRECIATION AND AMORTIZATION
    Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful life of the assets as follows:
   
Equipment
 3-7 years
    Furniture and fixtures 7 years
    Leasehold improvements 10 years
    CASH AND CASH EQUIVALENTS
    Cash and cash equivalents are checking accounts and operating money market funds.
             
  NOTE 3 > INVESTMENTS
    The Fund's investments consist of the following as of December 31, 2006 and 2005:
       
     
2006
2005
     
COST
FAIR VALUE
COST
FAIR VALUE
  Invested cash
$ 16,130,527
$ 16,130,527
$ (228,781)
$ (228,781)
  Comman stocks
715,247
840,455
4,849,524
6,690,986
  Bond fund
-
-
9,496,862
9,328,515
  Stock fund
158,867
204,164
169,667
188,024
  Alternative investments
10,924,950
15,450,015
22,632,761
29,154,449
     
$ 27,929,591
$ 32,625,161
$ 36,920,033
$ 45,133,193
             
    The Fund's gain on sale of investments and change in urealized gain was comprised of the following:
         
2006
2005
      Realized Gains
$ 5,796,838
$ 2,534,966
      Change in unrealized appreciation, net of change in deferred Federal excise tax
(3,482,415)
(484,378
         
2,314,423
2,050,588
             
  NOTE 4> FEDERAL EXCISE TAXES
   

The Fund's investment income, reduced by certain allowable expenses, is subject to federal excise tax at a rateof either 1% or 2%. The Fund was required to pay excise tax at the 1% rate for 2006 and 2005. One of the Fund's alternative investments also generates unrelated business income taxes.

The Fund is also required to make minimum annual charitable distributions within certain time periods. The :required distribution is 5% of the average fair market value of investment assets, less the excise tax on investment income. The Fund has satisfied this requirement.

Deferred excise taxes are recorded on the unrealized appreciation on investments using the Fund's normal 1% excise tax rate.
             
  NOTE 5> LEASE COMMITMENTS
    The Fund is subject to a 1O-year lease for office space at 99 Madison Avenue, New York, NY, that commenced June 1, 1999. A security deposit of $33,750 was required under the terms of the lease. Minimum lease payments required by the lease are $135,000 per year, terminating May 31 , 2009.
             
  NOTE 6>
RETIREMENT PLAN
    The Fund maintains a defined contribution plan. All full-time, permanent employees are eligible to participate after three months of service. Effective January 1, 2002, the plan was amended to provide improved benefits. Full vesting occurs after two years of service instead of graduated vesting over six years. Each year the Fund contributes 10% of participants' gross salary to the plan. In addition, the Fund will match elective contributions by employees up to 5% of salary. Contributions for the years ended December 31, 2006 and 2005 were $151,038 and $144,338, respectively.
             
  NOTE 7> LONG TERM GRANTS PAYABLE
   

The Foundation estimates its long term grant commitments will be paid as follows:

               2008    $75,000
             
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