UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (THE ACT)

For the Fiscal Year ~~Ended~~Ending December 31, ~~2009~~2010

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ACT

For the transition period from __ to __ Commission file number 000-30509

Commission file number 000-30509

Belcrest Capital Fund LLC (the Fund)

(Exact Name of Registrant as Specified in Its Charter)


Massachusetts		04-3453080

(State of Organization)		(I.R.S. Employer Identification No.)

Two International Place
Boston, Massachusetts 02110		617-482-8260

(Address and Zip Code of Principal Executive Offices)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Limited Liability Company Interests in the Fund (Shares)

Indicate by check mark if Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. þ Yes o No

Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes þ No

Indicate by check whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Act. ~~(Check one):~~


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

Aggregate market value of the Shares held by non-affiliates of Registrant, based on the closing net asset value on June 30, ~~2009~~2010 was $~~603~~543,~~438~~927,~~713~~419. 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 10% or more of the Registrant’s Shares are affiliates.

Incorporations by Reference: None.

The Exhibit Index is located on page 85.

Belcrest Capital Fund LLC
Index to Form 10-K

Item	Page		~~Page~~
PART I
1	Business			5
1 Business		5
Fund Overview	~~Fund Overview~~	5		5
Structure of the Fund	~~Structure of the Fund~~	5		5
Fund Management	~~Fund Management~~	5		5
The Fund’s Offering	~~The Fund’s Offering~~	6		6
The Fund’s Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth Portfolio	~~The Fund’s Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth Portfolio~~	6		6
Belvedere Company	~~Belvedere Company~~	6		6
The Portfolio	~~The Portfolio~~	7		7
The Portfolio’s Investment Objective and Policies	~~The Portfolio’s Investment Objective and Policies~~	7		7
The Portfolio’s Tax-Sensitive Management Strategies	~~The Portfolio’s Tax-Sensitive Management Strategies~~	7		7
The Fund’s Real Estate Investments	~~The Fund’s Real Estate Investments~~	8		8
Real Estate Joint Venture Investments	~~Real Estate Joint Venture Investments~~	9		9
Co-owned Property	~~Co-owned Property~~	9		10
Partnership Preference Units	~~Partnership Preference Units~~	10		10
Organization of Belcrest Realty	~~Organization of Belcrest Realty~~	10		10
Fund Borrowings	~~Fund Borrowings~~	10		10
Interest Rate Swap Agreements	~~Interest Rate Swap Agreements~~	11		11
The Eaton Vance Organization	~~The Eaton Vance Organization~~	11		11
Conflicts of Interest	~~Conflicts of Interest~~	11		11
1A	Risk Factors			12
1A Risk Factors		12
1B	Unresolved Staff Comments			12
1B Unresolved Staff Comments		12
2	Properties			12
2 Properties		12
3	Legal Proceedings			12
3 Legal Proceedings		12
4	Reserved			12
4 Removed and Reserved		12
PART II
5	Determining Net Asset Value, Market for Fund Shares, Related Shareholder Matters and Issuer Purchases of Equity Securities			13
5 Determining Net Asset Value, Market for Fund Shares, Related Shareholder Matters and Issuer Purchases of Equity Securities		12
Market Information, Restrictions on Transfers and Redemption of Shares	~~Market Information, Restrictions on Transfers and Redemption of Shares~~	12		13
Transfers of Fund Shares	~~Transfers of Fund Shares~~	12		13
Redemption of Fund Shares	~~Redemption of Fund Shares~~	13		13
Determining Net Asset Value	~~Determining Net Asset Value~~	14		14
Historic Net Asset Values	~~Historic Net Asset Values~~	15		15
Record Holders of Shares of the Fund	~~Record Holders of Shares of the Fund~~	15		15
Distributions	~~Distributions~~	15		16
	Income and Capital Gain Distributions			16
	Special Distributions			16
6	Selected Financial Data			16
	Table of Selected Financial Data			16

Item	Page		~~Page~~
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)			17
Income and Capital Gain Distributions		15
	Results of Operations			17
Special Distributions		16
	MD&A for the Year Ending December 31, 2009 Compared to the Year Ending December 31, 2008			18
6 Selected Financial Data		16
	Performance of the Fund			18
Table of Selected Financial Data		16
	Performance of the Portfolio			18
7 Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)		17
	Performance of Real Estate Investments			19
Results of Operations		17
	Performance of Interest Rate Swap Agreements			19
MD&A for the Year Ending December 31, 2010 Compared to the Year Ending December 31, 2009		17
	MD&A for the Year Ending December 31, 2008 Compared to the Year Ending December 31, 2007			20
Performance of the Fund		17
	Performance of the Fund			20
Performance of the Portfolio		18
	Performance of the Portfolio			20
Performance of Real Estate Investments		18
	Performance of Real Estate Investments			20
Performance of Interest Rate Swap Agreements		19
	Performance of Interest Rate Swap Agreements			21
MD&A for the Year Ending December 31, 2009 Compared to the Year Ending December 31, 2008		19
	Liquidity and Capital Resources			21
Performance of the Fund		19
	Outstanding Borrowings			21
Performance of the Portfolio		19
	Liquidity			22
Performance of Real Estate Investments		20
	Off-Balance Sheet Arrangements			22
Performance of Interest Rate Swap Agreements		20
	The Fund’s Contractual Obligations			22
Liquidity and Capital Resources		20
	Critical Accounting Estimates			23
Outstanding Borrowings		20
7A	Quantitative and Qualitative Disclosures About Market Risk			25
Liquidity		21
	Quantitative Information About Market Risk			25
Off-Balance Sheet Arrangements		21
	Interest Rate Risk			25
The Fund’s Contractual Obligations		22
	Qualitative Information About Market Risk			26
Critical Accounting Estimates		22
	Risks Associated with Equity Investing			26
7A Quantitative and Qualitative Disclosures About Market Risk		24
	Risks of Investing in Foreign Securities			26
Quantitative Information About Market Risk		24
	Risks of Certain Investment Techniques			27
Interest Rate Risk		24
	Risks of Real Estate Investments			27
Qualitative Information About Market Risk		26
	Risks of Interest Rate Swap Agreements			30
Risks Associated with Equity Investing		26
	Risks of Leverage			30
Risks of Investing in Foreign Securities		26
8	Financial Statements and Supplementary Data			30
Risks of Certain Investment Techniques		26
9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			31
Risks of Real Estate Investments		27
9A	Controls and Procedures			31
Risks of Interest Rate Swap Agreements		29
	Fund Governance			31
Risks of Leverage		29
	Disclosure Controls and Procedures			31
8 Financial Statements and Supplementary Data		29
	Internal Control Over Financial Reporting			31
9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		30
9B	Other Information			34
9A Controls and Procedures		30
Fund Governance		30
Disclosure Controls and Procedures		30
Internal Control Over Financial Reporting		30
9B Other Information		33

Item	Page		~~Page~~
PART III
10	Directors, Executive Officers and Corporate Governance			34
10 Directors, Executive Officers and Corporate Governance		33
Management	~~Management~~	33		34
Compliance with Section 16(a) of the Act	~~Compliance with Section 16(a) of the Act~~	34		35
Code of Ethics	~~Code of Ethics~~	34		35
11	Executive Compensation			35
11 Executive Compensation		34
12	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters			35
12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		34
Security Ownership of Certain Beneficial Owners	~~Security Ownership of Certain Beneficial Owners~~	34		35
Security Ownership of Management	~~Security Ownership of Management~~	34		35
Changes in Control	~~Changes in Control~~	34		36
13	Certain Relationships and Related Transactions, and Director Independence			36
13 Certain Relationships and Related Transactions, and Director Independence		35
The Fund’s Investment Advisory and Administrative Fee	~~The Fund’s Investment Advisory and Administrative Fee~~	36		36
Belcrest Realty’s Management Fee	~~Belcrest Realty’s Management Fee~~	36		37
The Portfolio’s Investment Advisory Fee	~~The Portfolio’s Investment Advisory Fee~~	36		37
Servicing Fees Paid by the Fund	~~Servicing Fees Paid by the Fund~~	36		37
Servicing Fees Paid by Belvedere Company	~~Servicing Fees Paid by Belvedere Company~~	36		37
Distribution Fees Paid to EV Distributors	~~Distribution Fees Paid to EV Distributors~~	36		37
Certain Real Estate Investment Transactions	~~Certain Real Estate Investment Transactions~~	36		38
14	Principal Accounting Fees and Services			38
14 Principal Accounting Fees and Services		37
PART IV
15	Exhibits and Financial Statement Schedules			39
15 Exhibits and Financial Statement Schedules		38
APPENDIX A		39		40
FINANCIAL STATEMENTS		40		41
SIGNATURES		84
EXHIBIT INDEX		85

PART I

Item 1. Business.

Fund Overview. Belcrest Capital Fund LLC (the Fund) is a private investment company organized by Eaton Vance Management (Eaton Vance) to provide diversification and tax-sensitive ~~investment~~ investment management to investors holding large and concentrated positions in equity securities of ~~selected~~ 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 Massachusetts limited liability company, commenced its investment operations on November 24, 1998. Limited liability company interests of the Fund (Shares) were issued to Shareholders at seven closings during 1998 and 1999. 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 October 22, 1999 and, while the Fund is not prohibited from doing so, no future offering is anticipated. As of December 31, ~~2009~~2010, the Fund had net assets of approximately $~~652~~648.70 million.

Structure of the Fund. The Fund is structured to provide tax-free diversification and tax-sensitive investment management to Shareholders. To meet the objective of tax-free diversification, the Fund must satisfy specific requirements of the Internal Revenue Code of 1986, as amended (the Code). In order for the contributions of appreciated stock to the Fund by Shareholders to be nontaxable, not more than 80% of the Fund’s assets (calculated in the manner prescribed) may consist of “stocks and securities” as defined in the Code. To meet this requirement, the Fund normally invests at least 20% of its assets as so determined in certain real estate investments (see “The Fund’s Real Estate Investments” below). The Fund invests up to 80% of its assets in a diversified portfolio of common stocks (see “The Fund’s Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth Portfolio” below). The Fund may also invest cash on a temporary basis in short-term instruments including in ~~an investment company or~~ a pooled investment vehicle advised by an affiliate of Eaton Vance (the EV money market ~~funds~~fund). The Fund acquires its real estate investments with borrowed funds, as described below under “Fund Borrowings”. See Appendix A for a chart detailing the investment structure of the Fund.

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

There is no trading market for the Fund’s Shares. As described further under “Redemption of Fund Shares” in Item 5(a), Fund Shares generally may be redeemed on any business day. The Fund satisfies redemption requests principally by distributing securities, but may also distribute cash. The value of securities and cash distributed to satisfy a redemption will equal the net asset value of the number of Shares redeemed. Under most circumstances, a redemption from the Fund that is met by distributing securities as described herein will not result in the recognition of capital gains by the Fund or by the redeeming Shareholder. The redeeming Shareholder would generally recognize capital gains upon the sale of the securities received upon the redemption.

The Fund intends to distribute at the end of each year, or shortly thereafter, an amount approximately equal to the taxes payable on its net investment income allocated to Shareholders. Prior to December 31, 2009, the Fund had distributed all of its net investment income to Shareholders. The Fund also intends to make annual capital gain distributions to such Shareholders equal to approximately 18% of the amount of its net realized capital gains, if any, other than certain precontribution gains. The Fund’s distributions generally are based on determinations of net investment income and net realized capital gains for federal income tax purposes. Such amounts may differ from net investment income or loss and net realized gain or loss as set forth in the Fund’s consolidated financial statements due to differences in the treatment of various income, gain, loss, expense and other items for federal income tax purposes and under generally accepted accounting principles (GAAP). See Note 2 to the Fund’s consolidated financial statements. The Fund intends to pay any distributions on the last business day of each fiscal year of the Fund (which concludes on December 31) or shortly thereafter. See “Distributions” in Item 5(c).

Fund Management. The manager of the Fund is Eaton Vance, a Massachusetts business trust registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act). Eaton Vance and its subsidiary, Boston Management and Research (Boston Management), provide management and advisory services to the Fund, its real estate subsidiary and the investment portfolio in which the Fund invests. Boston Management is also registered as an investment adviser under the Advisers Act. Eaton Vance and Boston Management provide advisory, administration and/or management services to over 150 investment companies, as ~~well as separate accounts managed for~~ individual and institutional investors. As of December 31, 2009, Eaton Vance and its affiliates managed over $160 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

well as separate accounts managed for individual and institutional investors. As of December 31, 2010, Eaton Vance and its affiliates managed over $188.7 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~~ services to the Fund, its subsidiaries and the investment portfolio in which the Fund invests. See “The Eaton Vance Organization — Conflicts of Interest” below.

The Fund’s Offering. Shares of the Fund were privately offered and sold only to “accredited investors” as defined in Rule 501(a) under the Securities Act of 1933, as amended (the Securities Act), who were “qualified purchasers” (as defined in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended (the 1940 Act)). The offering was conducted by Eaton Vance Distributors, Inc. (EV Distributors), an affiliate 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 November 24, 1998, February 23, 1999, April 29, 1999, July 28, 1999, September 7, 1999, September 29, 1999 and October 22, 1999. At the seven closings, an aggregate of 33,519,482 Shares were issued in exchange for Shareholder contributions totaling approximately $3.6 billion.

The Fund is registered under the Act and files periodic reports (such as reports on Form 10-Q and Form 10-K) thereunder. Copies of the reports filed by the Fund are available: at the public reference room of the Securities and Exchange Commission (SEC) in Washington, DC (call 1-202-551-8690 for information on the operation of the public reference room); on the EDGAR Database on the SEC’s Internet site (http://www.sec.gov); or, upon payment of copying fees, by writing to the SEC’s public reference section, 100 F Street, NE, Washington, DC 20549-0102, or by electronic mail at publicinfo@sec.gov. The Fund does not have a website. The Fund intends to provide Shareholders with an annual and semiannual report containing the Fund’s consolidated financial statements, audited by the Fund’s independent registered public accounting firm in the case of the annual report.

The Fund’s Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth Portfolio. At each Fund closing, all of the securities accepted for contribution to the Fund were contributed by the Fund to Belvedere Capital Fund Company LLC (Belvedere Company), a Massachusetts limited liability company, in exchange for shares of Belvedere Company. Belvedere Company, in turn, immediately thereafter contributed the securities received from the Fund to Tax-Managed Growth Portfolio (the Portfolio) in exchange for an interest in the Portfolio. The Portfolio is a diversified, open-end management investment company registered under the 1940 Act with net assets of approximately $9.50 billion as of December 31, ~~2009~~2010. As of December 31, ~~2009~~2010, the Fund’s investment in the Portfolio through Belvedere Company had a value of approximately $~~705~~659.49 million (equal to approximately 8283.70% 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, ~~2009~~2010, the investment assets of Belvedere Company consisted exclusively of an interest in the Portfolio with a value of approximately $6.74 billion. As of such date, the Fund owned approximately 10.53% of Belvedere Company’s outstanding shares. As of December 31, ~~2009~~2010, the other investors in Belvedere Company included eleven other investment funds sponsored by the Eaton Vance organization (investment fund investors), as well as qualified individual investors who acquired shares of Belvedere Company in exchange for portfolios of acceptable securities (non-investment fund investors).

Belvedere Company considers for acceptance equity securities that (i) are listed on the New York Stock Exchange (NYSE), the NYSE Amex, the NASDAQ Global or Global Select Market (NASDAQ) or a major foreign exchange, (ii) had a trading price during the last twelve months of at least $10.00 per share and (iii) are issued by issuers having an equity market capitalization of at least $500 million. Because Belvedere Company only accepts contributions of diversified baskets of securities (as described below), it is not subject to the requirement that not more than 80% of its assets consist of “stocks and securities” as defined in the Code. For investors that own a diversified basket of securities, investing in Belvedere Company (rather than in the Fund) avoids the costs and risks of investing in real estate and the associated financial leverage to which the Fund is subject. See “Risks of Real Estate Investments” and “Risks of Leverage” in Item 7A(b).

Belvedere Company provides a vehicle through which investment fund and non-investment fund investors contributing a “diversified basket of securities” can acquire an indirect interest in the Portfolio. A “diversified basket of securities” means a group of securities that is diversified such that not more than 25% of the value of the securities are investments in the securities of any one issuer and not more than 50% of the value of the securities are investments in the securities of five or fewer issuers. The securities contributed to Belvedere Company at each Fund closing constituted a diversified basket of securities. Because the Fund is required to hold a ~~percentage~~ ~~of its investments in non-Portfolio assets in order to meet~~

percentage of its investments in non-Portfolio assets in order to meet certain tax requirements (see “Structure of the Fund” above and “The Fund’s Real Estate Investments” below), it does not satisfy the conditions of the 1940 Act for investing directly in the Portfolio.

The Portfolio. The Portfolio was organized in 1995 by Eaton Vance as the successor to the investment operations of Eaton Vance Tax-Managed Growth Fund 1.0 (Tax-Managed Growth 1.0), a mutual fund established in 1966 by Eaton Vance and managed from inception for long-term, after-tax returns. As of December 31, ~~2009~~2010, investors in the Portfolio included ~~six~~five investors in addition to 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~~ sponsored by or affiliated with Eaton Vance. As of December 31, ~~2009~~2010, Belvedere Company owned ~~approximately~~ approximately 70.7% of the Portfolio’s net assets.

The Fund invests in the Portfolio (on an indirect basis through Belvedere Company) because it is a well-established investment portfolio that has an investment objective and policies that are compatible to those of the Fund. Investing in the Portfolio enables the Fund to participate in a substantially larger and more diversified investment portfolio than it could achieve by managing the contributed securities directly. The audited financial statements of the Portfolio for the ~~year~~ year ending December 31, ~~2009~~2010 are included ~~beginning~~in onItem 8 ~~page 68~~ of this Annual Report on Form 10-K. ~~The~~ The Portfolio’s audited financial statements include information about the assets and liabilities of of the Portfolio, including Portfolio income and expenses. For a discussion of the Portfolio’s performance for the year ending December 31, ~~2009~~2010, see “Performance of the Portfolio” in Item 7(a). For a description of the investment advisory fee payable by the Portfolio, see “The Portfolio’s Investment Advisory Fee” in Item 13.

The Portfolio’s Investment Objective and Policies. The investment objective of the Portfolio is to achieve long-term, after-tax returns for its investors by investing in a diversified portfolio of equity securities. The Portfolio invests primarily in common stocks of domestic and foreign growth companies that are considered by its investment adviser to be high in quality and attractive in their long-term investment prospects. The Portfolio seeks to invest in a broadly diversified portfolio of stocks and to invest primarily in established companies with characteristics of above-average growth, predictability and stability that are acquired with the expectation of being held for a period of years. Under normal market conditions, the Portfolio invests primarily in common stocks. The Portfolio has acquired securities through contributions from Belvedere Company, Tax-Managed Growth 1.0 and Eaton Vance Tax-Managed Growth Fund 1.1, and through purchases of securities with cash invested in the Portfolio by certain of these and other investors.

Although the Portfolio may, in addition to investing in common stocks, invest in investment-grade preferred stocks and debt securities, purchases of such securities are normally limited to securities convertible into common stocks and temporary investments in short-term notes and government obligations. During periods in which the investment adviser to the Portfolio believes that returns on common stock investments may be unfavorable, the Portfolio may invest a significant portion of its assets in U.S. government obligations and high quality short-term notes, including such investments held through the EV money market ~~funds~~fund. 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~~ 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 minimizing the sale of securities’ holdings with large accumulated capital gains. The Portfolio generally seeks to avoid net realized short-term capital gains.

When the Portfolio decides to sell a particular appreciated security, the Portfolio will select for sale the share lots resulting in the most favorable tax treatment, generally those with holding periods sufficient to qualify for long-term capital gain treatment that have the highest cost basis. The Portfolio may, when deemed prudent by its investment adviser, sell securities to realize capital losses that can be used to offset realized gains. While the Portfolio generally retains the securities contributed to the Portfolio by Belvedere Company, the Portfolio has the flexibility to sell contributed securities. Securities acquired by the Portfolio with cash may be sold in accordance with its management strategies. In lieu of selling a security, the Portfolio may hedge its exposure to that security by using the techniques described below. The Portfolio also disposes of appreciated securities through its practice of settling redemptions by investors in the Portfolio that contributed securities primarily by distributing securities as described in Item 5(a) under “Redemption of Fund Shares.” The Portfolio may also settle redemptions by investors with distributions of securities upon request. As described in Item 5(a), settling redemptions with appreciated securities can result in certain tax benefits to the Portfolio, Belvedere Company, the Fund and the redeeming Shareholder.

To reduce its exposure to adverse price movements in individual securities or groups of securities holdings with large accumulated gains, the Portfolio may use various investment techniques, including, but not limited to, the purchase or sale of futures contracts on stocks and stock indexes and options thereon, the purchase of put options and sale of call options on securities held, covered short sales (on individual securities held or an index or basket securities whose constituents are held in whole or in part), equity collars, equity swap agreements, forward sales of stocks, and the purchase and sale of forward currency exchange contracts and currency options. 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. The Portfolio did not employ any of the techniques described above on securities holdings during the year ending December 31, ~~2009~~2010. 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~~ Belvedere Company, the Fund invests in certain real estate investments through Belcrest Realty ~~Corporation~~ Corporation (Belcrest Realty). The ownership structure of Belcrest Realty is described below under “Organization of Belcrest Realty.” As referred to above under “Fund Overview — Structure of the Fund”, the Fund invests in real estate investments to satisfy certain requirements of the Code for contributions of appreciated stocks to the Fund by Shareholders to be nontaxable. As of December 31, ~~2009~~2010, the real estate investments of Belcrest Realty totaled approximately $~~144~~130.27 million and represented 16.94% of the Fund’s total assets. The Fund acquires its real estate investments with borrowed funds, as described below under “Fund Borrowings”. The Fund seeks a return on its real estate investments over the long term that exceeds the cost of the borrowings incurred to acquire such investments. For a description of material real estate investment transactions during the ~~year~~ year ending December 31, ~~2009~~2010, see “Performance of Real Estate Investments” in Item 7(a).

At December 31, ~~2009~~2010, Belcrest Realty held investments in: ~~two~~one real estate joint ~~ventures~~venture (Real Estate Joint ~~Ventures~~Venture), ~~Allagash Property Trust (Allagash) and~~ Lafayette Real Estate LLC (Lafayette), in which Belcrest Realty owns a majority economic interest; a tenancy-in-common interest in real property (Co-owned Property), Bel Stamford I LLC (Bel Stamford I ); and a portfolio of preferred equity interests in real estate operating partnerships (Partnership Preference Units) affiliated with publicly traded real estate investment trusts (REITs). Certain of the Partnership Preference Units are held indirectly through Bel Holdings LLC (Bel Holdings). Bel Holdings is a Delaware limited liability company formed in 2003 and treated as a partnership for tax purposes. At December 31, ~~2009~~2010, Bel Holdings’ sole investment was Partnership Preference Units issued by Vornado Realty L.P. At December 31, ~~2009~~2010, Belcrest Realty owned 15% of Bel Holdings’ outstanding units. Information included herein about Belcrest Realty’s Partnership Preference Units includes the Partnership Preference Units held directly through Belcrest Realty and indirectly through Bel Holdings. As of December 31, ~~2009~~2010, approximately 5042.32% of the real estate investments of the Fund consisted of its investments in ~~Real Estate Joint Ventures~~ Lafayette, approximately 12.62% was the investment in Co-owned Property and approximately 4855.16% was investments in Partnership Preference Units.

In the future, Belcrest Realty may invest in other types of real estate investments, including one or more wholly owned real properties (Wholly Owned Property) and other real property investments held directly or indirectly through affiliates. Real Estate Joint Ventures, Co-owned Property and Wholly Owned Property are sometimes referred to herein as Subsidiary Real Estate Investments. Belcrest Realty may purchase real estate investments from, and sell them to, real estate investment affiliates of other investment funds advised by Boston Management. See “Certain Real Estate Investment Transactions” in Item 13.

Boston Management serves as manager of Belcrest Realty. In that capacity, Boston Management manages the investment and reinvestment of Belcrest Realty’s assets and administers its affairs. See “Belcrest Realty’s Management Fee” in Item 13 for a description of the management fee payable by Belcrest Realty to Boston Management.

Real Estate Joint Venture Investments. At December 31, ~~2009~~2010, Belcrest Realty owned a majority economic interest in the Real Estate Joint ~~Ventures~~Venture, ~~Allagash and~~ Lafayette.

A board of ~~trustees or~~ managers controls the business of ~~each Real Estate Joint Venture~~Lafayette. Each of Belcrest Realty and the unaffiliated minority investor of ~~the~~Lafayette ~~Real Estate Joint Venture~~ (the Operating Partner) has representation on the board and the unanimous consent of the board is required for all major decisions (which include such actions as: (i) capital transactions (i.e., acquisitions, dispositions or financings); (ii) organizational events (i.e., mergers or liquidation); and (iii) operating plans (i.e., annual budgets)). The board of ~~each~~Lafayette ~~Real Estate Joint Venture~~ has delegated the day-to-day administration of ~~the~~Lafayette ~~Real Estate Joint Venture~~ and the day-to-day management of its real properties to the Operating Partner. Through its control of the day-to-day operations of ~~the~~Lafayette ~~Real Estate Joint Venture~~ and its properties, as well as its required consent to all major decisions affecting ~~the Real Estate Joint Venture~~Lafayette, ~~each~~the Operating Partner has significant participating rights and responsibilities with respect to ~~the Real Estate Joint Venture~~Lafayette. ~~Each~~The Operating Partner receives management-related fees from ~~the~~Lafayette ~~Real Estate Joint Ventures~~ and, in addition, is reimbursed for certain payroll and other direct expenses incurred.

At December 31, ~~2009~~2010, the assets of ~~Allagash and~~ Lafayette consisted of ~~19 industrial distribution and related properties located in seven states (Florida, New Jersey, New York, North Carolina, Ohio, Pennsylvania and South Carolina) and~~ 12 office properties located in one state (Virginia)~~, respectively~~. At December 31, ~~2009~~2010, the average occupancy rate of the properties owned by ~~Allagash~~ ~~and~~ Lafayette was approximately 9296% ~~and 95%, respectively~~. The properties held by ~~each~~Lafayette ~~Real Estate Joint Venture~~ were acquired from or in conjunction with the Operating Partner ~~thereof~~. Distributable cash flows from operations of ~~each~~Lafayette ~~Real Estate Joint Venture~~ are allocated per ~~each~~ the Real Estate Joint Venture agreement in a manner that provides Belcrest Realty: 1) a priority with respect to a fixed annual preferred return; and 2) participation on a pro rata or reduced basis in distributable cash flows in excess of the annual preferred return of Belcrest Realty and the subordinated preferred return of ~~each~~the Operating Partner. Distributable cash flows from dispositions of real properties or liquidation of ~~each~~Lafayette ~~Real Estate Joint Venture~~ are allocated on a pro rated ~~basis~~ basis up until the return of Belcrest Realty and ~~each~~the Operating Partner’s contributed capital with ~~any~~ any excess allocated in a manner similar to that of cash flows from operations.

Financing for ~~the~~Lafayette ~~Real Estate Joint Ventures~~ consists ~~primarily~~ of fixed-rate mortgage notes secured by the real properties held by ~~each~~Lafayette ~~Real Estate Joint Venture~~ that are without recourse to Fund Shareholders and generally without recourse to Belcrest Realty and the Fund, as described under “Risks of Real Estate Investments” in Item 7A(b). ~~Allagash’s mortgage notes mature in May~~ ~~2012 and~~ Lafayette’s mortgage notes mature inbetween ~~December~~March ~~2019~~2017 and January 2020. Both Belcrest Realty and the ~~each~~ Operating Partner invested equity in ~~the Real Estate Joint Ventures~~Lafayette. Belcrest Realty’s equity in ~~the~~Lafayette ~~Real Estate Joint Ventures~~ was acquired using the proceeds of Fund borrowings.

~~Each~~The Operating Partner of ~~the~~Lafayette ~~Real Estate Joint Ventures~~ also serves as an operating partner of ~~other~~ another Real Estate Joint Venture ~~Ventures~~ in which a real estate investment ~~affiliates~~affiliate of ~~other~~another investment ~~funds~~ fund advised by Boston Management ~~hold~~holds a majority economic interest. The persons serving as ~~trustees~~ or managers of ~~the~~Lafayette ~~Real Estate Joint Ventures~~ on behalf of Belcrest Realty are employees or affiliates of Boston Management. See “Directors, Executive Officers and Corporate Governance” in Item 10. No director of Belcrest Realty or ~~trustee or~~ manager of ~~the~~Lafayette ~~Real Estate Joint Ventures~~ is a Shareholder of the Fund. No company in the Eaton Vance organization has a material financial interest in ~~the Real Estate Joint Ventures~~Lafayette.

The Operating Partner of Allagash is ProLogis, a publicly owned REIT. Common shares of ProLogis are traded on the NYSE under the symbol “PLD”. Pursuant to an agreement with ProLogis, Allagash may be liquidated at any time upon unanimous consent of the board or after August 4, 2012 by either Belcrest Realty or ProLogis.

The Operating Partner of Lafayette is Duke Realty Limited Partnership (Duke), a subsidiary of Duke Realty Corporation. Duke Realty Corporation is a publicly owned REIT traded on the NYSE under the symbol “DRE”. Pursuant to an agreement with Duke, Lafayette may be liquidated at any time upon the unanimous consent of the board or after December 5, 2016 by either Belcrest Realty or Duke.

The sale to Belcrest Realty by anDuke ~~Operating Partner~~ of its interest in aLafayette ~~Real Estate Joint Venture~~ would not affect the REIT qualification of ~~the Real Estate Joint Venture~~Lafayette. If Belcrest Realty were to dispose of its interest in Lafayette pursuant to a ~~Real~~liquidation ~~Estate~~agreement ~~Joint~~or otherwise, it may acquire an interest in a different real estate investment to replace the investment sold.

Co-owned Property. At December 31, 2010, Belcrest Realty owned Co-owned Property through its subsidiary, Bel Stamford I . Bel Stamford I owns a 10% tenancy-in-common interest in an office property located in Connecticut. The other investors in the Co-owned Property are real estate investment affiliates of other investment funds advised by Boston Management. The Co-owned Property is financed through a fixed-rate mortgage note secured by the real property held by Bel Stamford I that is without recourse to Fund Shareholders and generally without recourse to Belcrest Realty and the Fund as described under “Risks of Real Estate Investments” in Item 7A(b). Belcrest Realty’s equity in the Co-owned Property was acquired using the proceeds of Fund borrowings.

Venture pursuant to a liquidation agreement or otherwise, it may acquire an interest in a different real estate investment to replace the investment sold.

Co-owned Property. At December 31, 2009, Belcrest Realty owned Co-owned Property through its subsidiary, Bel Stamford I. Bel Stamford I owns a 10% tenancy-in-common interest in an office property located in Connecticut. The other investors in the Co-owned Property are real estate investment affiliates of other investment funds advised by Boston Management. The Co-owned Property is financed through a fixed-rate mortgage note secured by the real property held by Bel Stamford I that is without recourse to Fund Shareholders and generally without recourse to Belcrest Realty and the Fund as described under “Risks of Real Estate Investments” in Item 7A(b). Belcrest Realty’s equity in the Co-owned Property was acquired using the proceeds of Fund borrowings.

The Bel Stamford I property is leased on a net basis through December 2017 (with the option to extend the lease for eight option periods of five years each) to a single tenant that is obligated to make specified rental payments and to bear all costs and expenses associated with the operation and maintenance of the property, including real estate taxes, repairs and insurance.

Partnership Preference Units. At December 31, ~~2009~~2010, Belcrest Realty held investments in ~~Partnership~~ Partnership Preference Units. The assets of the partnerships that issued the Partnership Preference Units owned by Belcrest Realty consisted primarily of direct or indirect ownership interests in real properties, including manufactured home communities, office and industrial properties, ~~self-storage facilities, shopping centers~~ and multifamily properties. The Partnership Preference Units owned by Belcrest Realty as of December 31, ~~2009~~2010 are listed in Item 7A(a) and in the consolidated portfolio of investments included in the Fund’s consolidated financial statements, ~~which~~in ~~begin~~Section 8 ~~on page 41~~ of this Annual Report on Form 10-K. Eaton Vance is not involved in the management or operation of the real estate operating partnerships that issued the Partnership Preference Units owned by Belcrest Realty.

The Partnership Preference Units held by Belcrest Realty were issued by partnerships that are not publicly traded partnerships within the meaning of Code Section 7704(b). The Partnership Preference Units are perpetual life instruments (subject to call provisions) and are not, by their terms, readily convertible or exchangeable into cash or securities of an affiliated public company. The 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 Belcrest Realty normally pays regular quarterly distributions at fixed rates from the net profits or gross income of the issuing partnership, with preferential rights over common and other subordinated units. None of the Partnership Preference Units is or will be registered under the Securities Act and each issue is thus subject to restrictions on transfer.

Organization of Belcrest Realty. Belcrest Realty operates in such a manner as to qualify for taxation as a REIT under the Code. As a REIT, Belcrest Realty generally is not subject to federal income tax on that portion of its ordinary income or taxable gain that is distributed to stockholders each year. The Fund owns 100% of the common stock issued by Belcrest Realty, and intends to hold all of the common stock at all times.

Belcrest Realty also has issued preferred shares to satisfy certain provisions of the Code, which require that a REIT be beneficially owned in the aggregate by 100 or more persons. The preferred shares of Belcrest Realty are owned by not less than 100 charitable organizations that received the preferred shares as gifts. Each charitable organization that received a preferred share was an “accredited investor” (as defined in the Securities Act) with total assets in excess of $5 million at the time the organization received the preferred shares. Eaton Vance selected the charitable organizations from the charities for which it has matched employee contributions and/or based on suggestions from its employees. As of December 31, ~~2009~~2010, the total value of the preferred shares outstanding of Belcrest Realty was $210,000. Dividends on preferred shares are cumulative and payable annually at a dividend rate of 8%. The dividends paid on preferred shares have priority over payments on common shares. For the year ending December 31, ~~2009~~2010, Belcrest Realty paid distributions to preferred shareholders in the amount of $16,800.

Fund Borrowings. The Fund has entered into a credit ~~arrangements~~arrangement with ~~Dresdner~~Bank ~~Kleinwort~~of ~~Holdings~~America ~~I, Inc.~~ (the ~~DKH Credit Facility) and Merrill Lynch Mortgage Capital, Inc. (the Merrill Lynch Credit~~ ~~Facility) (collectively, the~~ Credit Facility) to ~~finance~~purchase its interests in real estate investments, ~~and~~ to pay selling commissions and ~~the Fund’s~~ organizational expenses, asand ~~well as~~ to provide for ~~any~~the ~~ongoing~~ liquidity needs of the Fund. ~~The Credit Facility is secured by a pledge of the Fund’s assets,~~ excluding the Fund’s investment in and the assets of the Subsidiary Real Estate Investments. At December 31, 2009, the total principal amount outstanding under the Credit Facility was $194.5 million.

As of December 31, 2010, the lender’s total commitment under the Credit Facility was $200.0 million. The principal amount outstanding under the Credit Facility was $144.0 million as of December 31, 2010. The unused commitment amount totaled $56.0 million as of December 31, 2010.

The Credit Facility may be terminated by the lender on or after September 23, 2011 provided 180 days’ notice is given. The Fund may terminate the Credit Facility upon 30 days’ notice. The Fund pays a rate of interest equal to three-month LIBOR plus 1.75% per annum on outstanding borrowings under the Credit Facility. A loan structure fee equal to 0.25% of the total amount available under the Credit Facility was paid at closing and is amortized over the term of the Credit Facility. A commitment fee is paid on the unused commitment amount equal to 0.40% per annum. The Fund will incur an additional fee if outstanding borrowings fall below certain levels.

Obligations under the Credit Facility are without recourse to Fund Shareholders. The Fund is required under the Credit Facility to maintain at all times a specified asset coverage ratio. The rights of the lender to receive payments of interest on and repayments of

~~The~~principal ~~DKH~~of ~~Credit~~borrowings ~~Facility~~are issenior ato ~~term~~the ~~credit~~rights ~~arrangement~~of Shareholders. ~~Borrowings~~Under ~~under~~ the ~~DKH~~terms ~~Credit~~of ~~Facility~~the Credit ~~accrue~~Facility, ~~interest~~The atFund ais ~~rate~~not ofpermitted ~~the~~to ~~one-month~~make ~~London~~distributions ~~Interbank~~of ~~Offered~~cash ~~Rate~~or ~~(LIBOR) plus~~securities ~~0.30%~~while ~~per~~there is ~~annum.~~outstanding Asany event of ~~December 31,~~default ~~2009,~~under ~~outstanding~~the ~~borrowings~~Credit ~~under~~Facility. During such periods, the ~~DKH~~Fund would not be able to honor redemption requests or make cash distributions. The Credit Facility ~~totaled~~is ~~$194.5~~secured by ~~million~~a pledge of the Fund’s assets, excluding the Fund’s real estate investments.

~~The~~As ~~Merrill~~described ~~Lynch~~above, ~~Credit~~financing ~~Facility~~for isthe aSubsidiary ~~revolving~~Real ~~credit~~Estate ~~arrangement.~~Investments ~~The~~consists ~~Fund~~primarily ~~may~~of fixed-rate ~~borrow~~mortgage upnotes ~~to $33.0 million~~secured ~~under~~by the ~~Merrill~~real ~~Lynch~~properties ~~Credit~~held ~~Facility.~~by ~~Borrowings under~~ the ~~Merrill~~Subsidiary ~~Lynch~~Real ~~Credit~~Estate ~~Facility~~Investments ~~accrue~~that ~~interest~~are atwithout arecourse ~~rate~~to ofFund ~~the~~Shareholders ~~one-month~~and ~~LIBOR~~generally ~~plus~~without ~~0.38%~~recourse ~~per annum. As of December 31,~~to ~~2009,~~Belcrest ~~there~~Realty ~~were~~and ~~no outstanding borrowings under~~ the ~~Merrill Lynch Credit Facility~~Fund. ~~The~~See ~~unused~~“Risks ~~loan commitment~~of ~~amount~~Real ~~totaled~~Estate ~~$33.0 million~~Investments” asin ~~of December~~Item ~~31, 2009~~7A(b). ~~A commitment fee of 0.10% per~~ ~~annum is paid on the unused commitment amount.~~

~~Any~~Interest ~~increase~~Rate inSwap Agreement. The Fund has entered into an interest rate swap agreement with Merrill Lynch Capital Services, Inc. (MLCS) to fix the ~~size~~cost of a portion of its borrowings under the Credit Facility. ~~will~~Pursuant beto ~~subject~~the toagreement, ~~lender~~the ~~consent~~Fund ~~and~~makes ~~may~~periodic ~~result~~payments into the counterparty at a ~~change~~predetermined tofixed ~~the~~rate ~~terms~~in ofexchange for floating rate payments that fluctuate with the ~~DKH~~one-month ~~Credit~~LIBOR. ~~Facility~~The interest rate swap agreement currently in effect extends until July 10, 2015, and~~/or~~ provides for the ~~Merrill~~Fund ~~Lynch~~to ~~Credit~~make ~~Facility~~payments ~~including~~to MLCS at a fixed rate of 6.29%. The variable floating rate payment from MLCS was 0.56% on December 31, 2010. See Note 10 to the ~~interest~~Fund’s consolidated ~~rates~~financial ~~and~~statements ~~fees~~included ~~paid~~in ~~thereunder~~this Annual Report on Form 10-K.

On December 21, 2009, the Fund entered into a credit arrangement with Bank of America (the New Credit Facility) to refinance the existing Credit Facility on or before April 1, 2010 (the Refinancing Date). On the Refinancing Date, the Fund will borrow under the New Credit Facility to repay and terminate the Credit Facility. Under the New Credit Facility, the Fund may borrow to finance its real estate investments, pay ordinary course Fund expenses and provide for ongoing liquidity needs of the Fund. All Fund borrowings under the New Credit Facility will be secured by a pledge of the Fund’s assets, excluding the Fund’s real estate investments.

Obligations under the Credit Facility and the New Credit Facility are without recourse to Fund Shareholders. As described above, financing for the Subsidiary Real Estate Investments consists primarily of fixed-rate mortgage notes secured by the real properties held by the Subsidiary Real Estate Investments that are without recourse to Fund Shareholders and generally without recourse to Belcrest Realty and the Fund. See “Risks of Real Estate Investments” in Item 7A(b).

Interest Rate Swap Agreements. The Fund has entered into interest rate swap agreements with Merrill Lynch Capital Services, Inc. (MLCS) to fix the cost of a portion of its borrowings under the Credit Facility. Pursuant to the agreements, the Fund makes periodic payments to the counterparty at predetermined fixed rates in exchange for floating rate payments that fluctuate with the one-month LIBOR. The interest rate swap agreements currently in effect extend until July 10, 2015, 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 4.09%. The variable floating rate payments from MLCS were 0.53% on December 31, 2009. See Note 10 to the Fund’s consolidated financial statements beginning on page 41 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 Belcrest 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, ~~2009~~2010, the assets of the Fund represented approximately 0.5242% 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 Two International Place, Boston, Massachusetts 02110.

Conflicts of Interest. Boston Management and other Eaton Vance affiliates are subject to certain conflicts of interest in their dealings with the Fund, Belcrest 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. Gains and losses on sales of other securities may also be allocated disproportionately. Boston Management manages the Portfolio in pursuit of long-term, after-tax returns for all investors in the Portfolio and, with respect to contributed securities, takes into account the tax position of the contributing investor in the Portfolio. Whenever conflicts of interest arise, Eaton Vance, Boston Management and other Eaton Vance affiliates will endeavor to exercise their discretion in a manner that they believe is equitable to all interested persons.

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.

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

Item 1A. Risk Factors.

The Fund invests primarily in a diversified portfolio of common stocks and is thereby subject to general stock market risk. There can be no assurance that the performance of the Fund will match that of the U.S. stock market or that of other equity funds. In managing the Portfolio for long-term, after-tax returns, Boston Management generally seeks to avoid or minimize sales of securities with large accumulated capital gains, including contributed securities. Such securities constitute a substantial portion of the assets of the Portfolio. Although the Portfolio may utilize certain management strategies in lieu of selling appreciated securities, the Portfolio’s, and hence the Fund’s, exposure to losses during stock market declines may nonetheless be higher than funds that do not follow a general policy of avoiding sales of highly appreciated securities. The Fund is also subject to risks associated with real estate investments and certain other risks, which are described under “Qualitative Information About Market Risk” in Item 7A(b).

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Fund does not own any physical properties, other than indirectly through Belcrest Realty’s investments as described in “The Fund’s Real Estate Investments” in Item 1 above.

Item 3. Legal Proceedings.

Although in the ordinary course of business the Fund and its subsidiaries may become involved in legal proceedings, the Fund is not aware of any material pending legal proceedings to which they are subject.

Item 4. Removed and Reserved.

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 Amended and Restated Operating Agreement of the Fund as amended from time to time (the LLC Agreement). The LLC Agreement and all amendments thereto have been filed as exhibits to the Fund’s registration statement on Form 10 and/or periodic reports on Forms 10-Q and 10-K. All such summaries are qualified in their entirety by the actual provisions of the LLC Agreement, which are incorporated by reference herein.

(a) Market Information, Restrictions on Transfers and Redemption of Shares.

Transfers of Fund Shares. There is no established public trading market for the Shares of the Fund. Other than transfers to the Fund in a redemption, transfers of Shares are expressly prohibited by the LLC Agreement without the consent of Eaton Vance. Eaton Vance’s consent to a transfer may be withheld in its sole discretion for any reason or for no reason.

The Shares have not been and will not be registered under the Securities Act, and may not be resold unless an exemption from such registration is available. Shareholders have no right to require registration of the Shares and the Fund does not intend to register the Shares under the Securities Act or take any action to cause an exemption (whether pursuant to Rule 144 of the Securities Act or otherwise) to be available.

The Fund is not and will not be registered under the 1940 Act, and no transfer of Shares may be made if, as determined by Eaton Vance or counsel to the Fund, such transfer would result in the Fund being required to be registered under the 1940 Act. In addition, no transfer of Shares may be made unless, in the opinion of counsel to the Fund, such transfer would not result in termination of the Fund for purposes of Section 708 of the Code or result in the classification of the Fund as an association or a publicly traded partnership taxable as a corporation under the Code.

In no event shall all or any part of a Shareholder’s Shares be assigned to a minor or an incompetent, unless in trust for the benefit of such person. Shares may be sold, transferred, assigned or otherwise disposed of by a Shareholder only if it is determined by Eaton Vance or counsel to the Fund that such transfer, assignment or disposition would not violate federal securities or state securities or “blue sky” laws (including investor qualification standards).

There are no outstanding options or warrants to purchase, or securities convertible into, Shares of the Fund. Shares of the Fund cannot be sold pursuant to Rule 144 under the Securities Act, and the Fund does not propose to publicly offer any of its Shares at any time.

Redemption of Fund Shares. Shares of the Fund may generally be redeemed on any business day. The redemption price will be based on the net asset value next computed after receipt by the Fund of a written redemption request from a Shareholder, including a proper form of signature guarantee and such other documentation the Fund and the transfer agent may then require. The Fund may, at its discretion, accept redemption requests submitted by facsimile transmission, although an original letter of instruction and supporting documents must be delivered before proceeds are delivered. Once accepted, a redemption request may not be revoked without the consent of the Fund. Settlement of redemptions will ordinarily occur within five business days of receipt by the Fund’s transfer agent of the original redemption request in good order, and (if applicable) promptly following registration and processing of stock certificates by the transfer agent of the issuer of the distributed securities. The right to redeem is available to all Shareholders and all outstanding Fund Shares generally are eligible for redemption. During each month in the quarter ending ~~December~~ December 31, ~~2009~~2010, the total number of Shares redeemed and the average price paid per Share were as follows:

	Total No. of Shares		Average Price Paid
Month Ending	Total No. of Shares Redeemed(1)		Average Price Paid Per Share
Month Ending	Redeemed(1)		Per Share
October		181,436.572	$	88.13
October		395,122.985	$	76.15
November		48,464.362	$	91.37
November		256,111.306	$	78.00
December		83,656.304	$	95.81
December		274,415.661	$	79.28
Total		313,557.238	$	93.63
Total		925,649.952	$	78.39


⁽¹⁾		All Shares redeemed during the periods were redeemed at the option of Shareholders pursuant to the Fund’s redemption policy. The Fund has not announced any plans or programs to repurchase Shares other than at the option of Shareholders.

The Fund satisfies redemption requests principally by distributing securities drawn from the Portfolio, but may also distribute cash. If requested by a redeeming Shareholder, the Fund will satisfy a redemption request by distributing securities that were contributed by the redeeming Shareholder, provided that such securities are held in the Portfolio at the time of redemption.

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 will 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.

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, the Fund will generally distribute to the redeeming Shareholder a diversified basket of securities representing a range of industry groups that is drawn from the Portfolio. The selection of individual securities will be made by Boston Management in its sole discretion. No interests in Subsidiary Real Estate Investments, Partnership Preference Units or other real property investments will be distributed to meet a redemption request, and “restricted securities” will be distributed only to the Shareholder who contributed such securities or such Shareholder’s successor in interest. The Fund will not provide a redeeming Shareholder with a diversified basket of securities if such a distribution is expected to cause, directly or indirectly, any other Shareholder, any investor in Belvedere Company or any investor in the Portfolio to realize taxable gain.

Other than as set forth above, the allocation of each redemption between securities and cash and the selection of securities to be distributed will be at the sole discretion of Boston Management. Distributed securities may include securities contributed by Shareholders as well as other readily marketable securities held in the Portfolio. One or more foreign securities may be distributed to settle a redemption. The value of securities and cash distributed to meet a redemption will equal the net asset value of the number of Shares being redeemed. The Fund’s Credit Facility prohibits the Fund from honoring redemption requests while there is an event of default outstanding under the Credit Facility.

settle a redemption. The value of securities and cash distributed to meet a redemption will equal the net asset value of the number of Shares being redeemed. The Fund’s Credit Facility prohibits the Fund from honoring redemption requests while there is any event of default outstanding under the Credit Facility.

The Fund may compulsorily redeem all or a portion of the Shares of a Shareholder if the Fund has determined that such redemption is necessary or appropriate to avoid registration of the Fund or Belvedere Company under the 1940 Act, or to avoid adverse tax or other consequences to the Portfolio, Belvedere Company, the Fund or Shareholders including those redemptions arising as the result of applicable anti-money laundering requirements.

The right of a Shareholder to redeem can be suspended and the payment of the redemption price may be deferred while there is an outstanding event of default under the Credit Facility (see Item 7A(b)), 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.

Determining Net Asset Value. Boston Management, as investment adviser, is responsible for determining the value of the Fund’s assets. The Fund’s custodian, State Street Bank and Trust Company, calculates the value of the assets of the Fund, Belvedere Company, the Portfolio and the EV money ~~markets~~market ~~funds~~fund each day that the NYSE is open for trading, as of the close of regular ~~trading~~ trading on the NYSE. The Fund’s net asset value per Share is calculated by dividing the value of ~~the~~ 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, including its interests in the EV money market ~~funds~~fund, if any, and liabilities, as well as the net asset value of the Fund’s investment in the Portfolio held through Belvedere Company and in real estate investments held through Belcrest 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 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 a third party pricing service. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded, or in the absence of a sale on such day, at the mean between the latest bid and asked prices therefor. Futures positions on securities or currencies are generally valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. Other fixed income and debt securities, including listed securities and securities for which price quotations are available, will normally be valued on the basis of valuations furnished by a pricing service. The EV money market fund generally values its investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 under the 1940 Act. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If amortized cost is determined not to approximate fair value, the EV money market fund may value its investment securities based on available market quotations provided by a third party pricing service.

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 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 a third party pricing service. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded, or in the absence of a sale on such day, at the mean between the latest bid and asked prices therefor. Futures positions on securities or currencies are generally valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. Other fixed income and debt securities, including listed securities and securities for which price quotations are available, will normally be valued on the basis of valuations furnished by a pricing service. The EV money market funds generally value their investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 under the 1940 Act, pursuant to which each fund must comply with certain conditions. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If amortized cost is determined not to approximate fair value, the EV money market funds may value their investment securities based on available market quotations provided by a third party 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 a third party pricing service. Valuation of foreign securities may be adjusted from prices in effect at the close of trading on foreign exchanges to more accurately reflect their fair value as of the close of regular trading on the NYSE. In adjusting the value of foreign equity securities the Portfolio may rely on a third party pricing service. Investments for which valuations or market quotations are not readily available are valued at fair value as determined in good faith by or at the direction of the Portfolio’s trustees, considering relevant factors, data and information including, in the case of restricted securities, the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded.

~~The Fund’s real estate investments are valued each day as determined in good faith by Boston~~14 Management after consideration of relevant factors, data and information. The procedures for valuing real estate investments are described under “Critical Accounting Estimates” in Item 7(e). The Fund’s interest rate swap agreements are normally valued by a third party pricing service. Fixed liabilities of the Fund generally are stated at principal value.

~~Historic~~The ~~Net~~Fund’s ~~Asset~~real ~~Values.~~estate ~~Set~~investments ~~forth below~~ are ~~the~~valued ~~high~~each ~~and~~day ~~low~~as ~~net~~determined ~~asset~~in ~~values~~good ~~per~~faith ~~Share~~by ~~(NAVs)~~Boston Management after consideration of relevant ~~the~~factors, ~~Fund~~data and information. The procedures for ~~each~~valuing ~~quarter~~real ~~during~~estate ~~the~~investments ~~two~~are described ~~years~~under ~~ending~~“Critical ~~December~~Accounting Estimates” in Item ~~31,~~7(e). ~~2009~~The ~~and~~Fund’s ~~2008,~~interest ~~the~~rate ~~closing~~swap ~~NAV~~agreement onis ~~the~~normally ~~last~~valued ~~business~~by ~~day~~a ofthird ~~each~~party ~~quarter,~~pricing ~~and~~service. ~~the~~Fixed ~~percentage~~liabilities ~~change~~of inthe ~~NAV~~Fund generally ~~during~~are ~~each~~stated ~~such quarter~~at amounts payable.

					NAV at		Quarterly %
Quarter Ending	High NAV		Low NAV		Quarter End		Change in NAV(1)
12/31/09	$	80.83	$	72.71	$	80.33		7.38	%
9/30/09	$	76.13	$	60.87	$	74.81		17.66	%
6/30/09	$	68.19	$	60.91	$	63.58		6.09	%
3/31/09	$	77.35	$	54.02	$	59.93		-19.78	%
12/31/08	$	105.04	$	66.47	$	74.71		-29.08	%
9/30/08	$	117.12	$	99.23	$	105.35		-6.33	%
6/30/08	$	126.14	$	112.47	$	112.47		-3.73	%
3/31/08	$	130.74	$	112.65	$	116.83		-12.03	%

Historic Net Asset Values. Set forth below are the high and low net asset values per Share (NAVs) of the Fund for each quarter during the two years ending December 31, 2010 and 2009, the closing NAV on the last business day of each quarter, and the percentage change in NAV during each such quarter.


							Quarterly %
					NAV at		Change
Quarter Ending	High NAV		Low NAV		Quarter End		in NAV⁽¹⁾
12/31/10	$	97.29	$	85.41	$	97.13		13.30	%
9/30/10	$	86.23	$	74.18	$	85.73		14.80	%
6/30/10	$	87.61	$	74.57	$	74.68		-11.87	%
3/31/10	$	84.99	$	76.18	$	84.74		5.49	%
12/31/09	$	80.83	$	72.71	$	80.33		7.38	%
9/30/09	$	76.13	$	60.87	$	74.81		17.66	%
6/30/09	$	68.19	$	60.91	$	63.58		6.09	%
3/31/09	$	77.35	$	54.02	$	59.93		-19.78	%


⁽¹⁾		Shares, when redeemed, may be worth more or less than their original cost. Changes in NAV are historical. Data is for the stated time period only. For information about the performance of the Fund, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)” in Item 7(a).

(b) Record Holders of Shares of the Fund.

As of February 1711, ~~2010~~2011, there were ~~419~~339 record holders of Shares of the Fund.

(c) Distributions.

Income and Capital Gain Distributions. The Fund intends to distribute each year, or shortly thereafter, an amount approximately equal to the taxes payable on its net investment income allocated to Shareholders. Prior to December 31, 2009, the Fund had distributed all of its net investment income to Shareholders. The Fund also intends to make annual capital gain distributions to such Shareholders equal to approximately 18% of the amount of its net realized capital gains, if any, other than certain precontribution gains allocated to a Shareholder in connection with a taxable tender offer or other taxable corporate event for a security contributed to the Fund by that Shareholder or that Shareholder’s predecessor in interest. The Fund’s net investment income and net realized gains include the Fund’s allocated share of the net investment income and net realized gains of Belvedere Company and, indirectly, the Portfolio, as well as income and capital gains, if any, distributed by Belcrest Realty. The Fund’s distributions generally are based on determinations of net investment income and net realized capital gains for federal income tax purposes. Such amounts may differ from net investment income or loss and net realized gain or loss as set forth in the Fund’s consolidated financial statements due to differences in the treatment of various income, gain, loss, expense and other items for federal income tax purposes and under GAAP. The amount of the Fund’s ~~distribution~~distributions may be adjusted in the future to ~~redirect~~reflect changes in effective tax rates. In determining the Fund’s capital gain distributions for any year, the net capital gains realized by the Fund for that year will be reduced by the cumulative amount of any Fund capital losses from prior years not previously applied against net realized capital gains for distribution purposes. The Fund intends to pay distributions, if any, on the last business day of each fiscal year of the Fund (which concludes on December 31) or shortly thereafter. The Fund’s distribution rates with respect to realized gains may be adjusted in the future to reflect changes in the effective maximum marginal individual federal tax rate applicable to long-term capital gains.

Shareholder distributions with respect to net investment income, realized post-contribution gains and certain other realized gains are made pro rata in proportion to the number of Shares held as of the record date of the distribution. All income and capital gain distributions are paid by the ~~Fund~~ Fund in cash or, at the election of the Shareholder, are reinvested in Fund Shares at the net asset value as of the date of reinvestment. 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 anany event of default outstanding under the Credit Facility (see Item 7A(b)).

~~On January 27, 2010, the Fund made a distribution of $0.25 per Share to Shareholders of record on~~15 January 26, 2010. On January 22, 2009, the Fund made a distribution of $1.23 per Share to Shareholders of record on January 20, 2009. On January 30, 2008, the Fund made a distribution of $2.20 per Share to Shareholders of record on January 29, 2008.

~~Special~~On ~~Distributions.~~January 20, ~~In addition to the pro rata income and capital gain distributions described above~~2011, the Fund ~~also~~paid ~~makes~~a ~~distributions~~distribution ~~to Shareholders~~ of allocated precontribution gain (other than certain precontribution gains allocated to a Shareholder in connection with a taxable tender offer or other taxable corporate event involving a security contributed by such Shareholder or such Shareholder’s predecessor in interest) (a Special Distribution)$0.40 ~~Special~~per ~~Distributions~~Share ~~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~~of ~~such~~record ~~distributions for taxes that may be due~~ on ~~income specially allocated~~ inJanuary 18, ~~connection with the precontribution gain and Special Distributions~~2011. ~~Special~~On ~~Distributions~~January 27, ~~are paid~~2010, by the Fund inpaid ~~cash and 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~~distribution ~~in respect~~ of ~~realized~~ ~~precontribution~~$0.25 ~~gain~~per ~~allocated~~Share to ~~a Shareholder or such Shareholder’s predecessor in~~ ~~interest~~Shareholders inof ~~connection~~record ~~with~~on aJanuary 26, ~~taxable tender offer or other taxable corporate event involving a security contributed by such Shareholder or such Shareholder’s predecessor in interest~~2010. ~~There~~On ~~were no~~January 22, ~~Special~~2009, ~~Distributions accrued during~~ the ~~year~~Fund ~~ending~~paid ~~December 31,~~a ~~2009.~~distribution ~~Special Distributions~~ of $1~~,044,908~~.23 ~~for~~per ~~the~~Share ~~year~~to ~~ending~~Shareholders ~~December 31,~~of ~~2008~~record ~~were~~on ~~paid during the year ending December~~January 3120, 2009.

Special Distributions. In addition to the pro rata income and capital gain distributions described above, the Fund also makes distributions to Shareholders of allocated precontribution gain (other than certain precontribution gains allocated to a Shareholder in connection with a taxable tender offer or other taxable corporate event involving a security contributed by such Shareholder or such Shareholder’s predecessor in interest) (a Special Distribution). Special Distributions generally equal approximately 18% of the amount of realized precontribution gains plus approximately 4% of the allocated precontribution gain or such other percentage as deemed appropriate to compensate Shareholders receiving such distributions for taxes that may be due on income specially allocated in connection with the precontribution gain and Special Distributions. Special Distributions are paid by the Fund in cash and are made solely to the Shareholders to whom the precontribution gain is allocated. The Fund does not intend to make Special Distributions to a Shareholder in respect of realized precontribution gain allocated to a Shareholder or such Shareholder’s predecessor in interest in connection with a taxable tender offer or other taxable corporate event involving a security contributed by such Shareholder or such Shareholder’s predecessor in interest. There were no Special Distributions accrued during the years ending December 31, 2010 and 2009. Special Distributions of $1,044,908 were accrued during the year ending December 31, 2008, and subsequently paid during the year ending December 31, 2009.

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 ending December 31, 2010, 2009, 2008, 2007, ~~2006~~ and ~~2005~~2006. The ~~following~~ following information should be read in conjunction with all of the consolidated financial statements and related notes ~~beginning~~included onin ~~page 41 of~~ this Annual Report on Form 10- K. The other consolidated ~~data~~ data referred to below is as of each year end.

	Year Ending			~~Year Ending~~			~~Year Ending~~			~~Year Ending~~			~~Year Ending~~
	December 31, 2009			December 31, 2008			December 31, 2007			December 31, 2006			December 31, 2005
	December 31,			Year Ending			Year Ending			Year Ending			Year Ending
Total investment income	$	37,034,877		$	52,905,639		$	62,784,512		$	69,868,249		$	80,926,133
	2010			December 31, 2009			December 31, 2008			December 31, 2007			December 31, 2006
Interest expense	$	1,624,286		$	15,958,913		$	39,563,027		$	37,455,783		$	28,127,161
Total investment income	$	31,313,705		$	37,034,877		$	52,905,639		$	62,784,512		$	69,868,249
Interest expense	$	3,874,651		$	1,624,286		$	15,958,913		$	39,563,027		$	37,455,783
Net expenses (including interest expense)	$	8,916,506		$	7,158,753		$	24,499,274		$	50,756,115		$	49,447,828
Net investment income	$	22,397,199		$	29,876,124		$	28,406,365		$	12,028,397		$	20,420,421
Net realized gain (loss)	$	(137,648,888	)	$	(83,700,939	)	$	(57,972,820	)	$	90,888,612		$	101,373,735
Net change in unrealized appreciation (depreciation)	$	234,813,836		$	97,581,241		$	(666,744,381	)	$	(25,034,956	)	$	155,063,776
Net increase (decrease) in net assets from operations	$	119,562,147		$	43,756,426		$	(696,310,836	)	$	77,882,053		$	276,857,932
Total assets	$	795,318,287		$	852,749,058		$	1,137,207,908		$	2,365,720,320		$	3,025,200,546
Loan payable-Credit Facility	$	144,000,000		$	194,500,000		$	316,000,000		$	542,000,000		$	849,000,000
Net assets	$	648,036,131		$	652,677,231		$	808,881,477		$	1,820,458,058		$	2,167,202,610
Shares outstanding		6,671,766			8,125,199			10,826,294			13,707,598			16,629,737
Net asset value and redemption price per Share	$	97.13		$	80.33		$	74.71		$	132.81		$	130.32
Net increase (decrease) in net assets from operations per Share	$	17.05		$	6.85		$	(55.82	)	$	4.51		$	14.76
Distribution paid per Share(1)(2)	$	0.25		$	1.23		$	2.20		$	2.02		$	1.94


⁽¹⁾		The Fund makes Special Distributions which are not made on a pro rata basis. See Item 5(c). Special Distributions made during the year ending December 31, 2008 amounted to $0.084 per Share. There were no Special Distributions made during the years ending December 31, 2010, 2009, 2007 and 2006.

⁽²⁾		Distributions of net investment income and net realized capital gains are normally paid at the end of each year, or shortly thereafter, to Shareholders of record on the record date. See “Distributions” in Item 5(c).

	Year Ending			Year Ending			Year Ending			Year Ending		Year Ending
	December 31, 2009			December 31, 2008			December 31, 2007			December 31, 2006		December 31, 2005
Net expenses (including interest expense)	$	7,158,753		$	24,499,274		$	50,756,115		$	49,447,828	$	40,966,932
Net investment income	$	29,876,124		$	28,406,365		$	12,028,397		$	20,420,421	$	39,959,201
Net realized gain (loss)	$	(83,700,939	)	$	(57,972,820	)	$	90,888,612		$	101,373,735	$	(1,549,360	)
Net change in unrealized appreciation (depreciation)	$	97,581,241		$	(666,744,381	)	$	(25,034,956	)	$	155,063,776	$	119,113,048
Net increase (decrease) in net assets from operations	$	43,756,426		$	(696,310,836	)	$	77,882,053		$	276,857,932	$	157,522,889
Total assets	$	852,749,058		$	1,137,207,908		$	2,365,720,320		$	3,025,200,546	$	3,219,910,946
Loan payable—Credit Facility	$	194,500,000		$	316,000,000		$	542,000,000		$	849,000,000	$	660,000,000
Mortgage note payable	$	—		$	—		$	—		$	—	$	46,111,019
Net assets	$	652,677,231		$	808,881,477		$	1,820,458,058		$	2,167,202,610	$	2,507,057,725
Shares outstanding		8,125,199			10,826,294			13,707,598			16,629,737		21,336,023
Net asset value and redemption price per Share	$	80.33		$	74.71		$	132.81		$	130.32	$	117.50
Net increase (decrease) in net assets from operations per Share	$	6.85		$	(55.82	)	$	4.51		$	14.76	$	7.28
Distribution paid per Share(1)(2)	$	1.23		$	2.20		$	2.02		$	1.94	$	1.66

(1)		The Fund makes Special Distributions which are not made on a pro rata basis. See Item 5(c). Special Distributions made during the year ending December 31, 2008 amounted to $0.084 per Share. There were no Special Distributions made during the years ending December 31, 2009, 2007, 2006 and 2005.
(2)		Distributions of net investment income and net realized capital gains are normally paid at the end of each year, or shortly thereafter, to Shareholders of record on the record date. See “Distributions” in Item 5(c).

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

The information in this report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Act. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “might,” “expect,” “anticipate,” “estimate,” and similar words, although some forward-looking statements are expressed differently. The actual results of the Fund could differ materially from those contained in the forward-looking statements due to a number of factors. The Fund undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Factors that could affect the Fund’s performance include a decline in the U.S. stock markets or in general economic conditions, adverse developments affecting the real estate industry, or fluctuations in interest rates.

The following discussion should be read in conjunction with the Fund’s consolidated financial statements and related notes which are included onin ~~pages 41 of~~ this Annual Report on Form 10-K.

(a) Results of Operations.

Increases and decreases in the Fund’s net asset value per share are based on net investment income or loss and realized and unrealized gains and losses on investments. The Fund’s net investment income or loss is determined by subtracting the Fund’s total expenses from its investment income. The Fund’s investment income generally includes the net investment income allocated to the Fund from Belvedere Company, net investment income allocated to the Fund from the Real Estate Joint Ventures and Co-owned Property, distribution income from the Partnership Preference Units and interest earned on the Fund’s short-term investments, including investments in anthe EV money market fund. The net investment income of Belvedere Company allocated to the Fund includes dividends, interest and expenses allocated to Belvedere Company by the Portfolio less the expenses of Belvedere Company allocated to the Fund. The Fund’s total expenses generally include the Fund’s investment advisory and administrative fees, ~~distribution and~~ servicing ~~fees~~fee, interest expense on the Fund’s Credit Facility 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 Belcrest 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.

Company) in the Portfolio, real estate investments held through Belcrest 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 for the Year Ending December 31, ~~2009~~2010 Compared to the Year Ending December 31, ~~2008~~2009.(1)

Performance of the Fund. 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 (the Index) as the Fund’s primary performance benchmark. The Index is aan ~~broad-based,~~ unmanaged index of ~~common~~large-cap stocks ~~commonly~~ commonly used as a measure of U.S. stock market performance. Eaton Vance’s primary focus in pursuing total return is on the Fund’s common stock portfolio, which consists of its indirect interest in the Portfolio. The Fund invests in the Portfolio through its interest in Belvedere Company. The Fund’s performance will differ from that of the Portfolio primarily due to its investments outside ~~the Portfolio. In measuring the performance of the Fund’s real estate~~ investments, Eaton Vance considers whether, through current returns and changes in valuation, the real estate investments achieve returns that over the long-term exceed the cost of the borrowings incurred to acquire such investments and thereby add to Fund returns. The Fund has entered into interest rate swap agreements to fix the cost of a portion of its borrowings under the Credit Facility.

~~The~~1 ~~Fund’s~~Past ~~total~~performance is no guarantee of future results. Investment return ~~for~~and ~~the~~principal ~~year~~value ~~ending~~will ~~December 31~~fluctuate so that Shares, ~~2009~~when ~~was~~redeemed, 9may be worth more or less than their original cost.~~51%.~~ ~~This~~Total ~~return~~returns ~~reflects~~are ~~an increase~~historical inand are calculated by determining the ~~Fund’s~~percentage change in net asset value ~~per~~with ~~Share~~all ~~from~~distributions ~~$74.71~~reinvested toexcept ~~$80.33~~for ~~and~~special adistributions. ~~distribution~~Performance ofis ~~$1.23 per~~for ~~Share~~the ~~during~~stated ~~the~~time period. ~~For~~only; ~~comparison~~due to market volatility, ~~the~~current ~~Index~~performance ~~had~~of athe ~~total~~Fund ~~return~~and of ~~26.47%~~the ~~over~~Portfolio ~~the~~may ~~same period.~~be ~~The~~lower ~~combined~~or ~~impact~~higher onthan the quoted return. The performance of the Fund’s ~~investment~~and ~~activities~~the ~~outside~~Portfolio is compared to that of their benchmark, the ~~Portfolio~~ ~~was~~S&P ~~negative~~500 ~~for~~Index. ~~the~~It ~~year~~is ~~ending~~not ~~December 31,~~possible ~~2009~~to invest directly in an index.

~~The Fund had a total return of -42.72% for the year ending December 31, 2008. This return reflected~~17 a decrease in the Fund’s net asset value per Share from $132.81 to $74.71 and a distribution of $2.20 per Share during the period. For comparison, the Index had a total return of -36.99% over the same period.

the Portfolio and from maintaining an investment in the Portfolio that exceeds its net assets. In measuring the performance of the Fund’s real estate investments, Eaton Vance considers whether, through current returns and changes in valuation, the real estate investments achieve returns that over the long-term exceed the cost of the borrowings incurred to acquire such investments and thereby add to Fund returns. The Fund has entered into interest rate swap agreements to fix the cost of a portion of its borrowings under the Credit Facility.

The Fund’s total return for the year ending December 31, 2010 was 21.26%. This return reflects an increase in the Fund’s net asset value per Share from $80.33 to $97.13 and a distribution of $0.25 per Share during the period. For comparison, the Index had a total return of 15.06% over the same period. The combined impact on performance of the Fund’s investment activities outside of the Portfolio was positive for the year ending December 31, 2010.

The Fund had a total return of 9.51% for the year ending December 31, 2009. This return reflected an increase in the Fund’s net asset value per Share from $74.71 to $80.33 and a distribution of $1.23 per Share during the period. For comparison, the Index had a total return of 26.47% over the same period.

Performance of the Portfolio. For the year ending December 31, 2010 the Portfolio had a total return of 12.86%. The Portfolio underperformed the Index, which had a total return of 15.06% over the same period.

The year ending December 31, 2010 was bracketed by solid quarters at both ends, with some weakness in the middle. The weakness came as a variety of concerns — including a stubborn European credit crisis, a devastating oil spill in the Gulf of Mexico and growing political uncertainties in the U.S. — caused a spike in the volatility at mid-year, taking many markets down. The year ended on a decidedly higher note, however, as equity investors seemed encouraged by the continued modest growth of the U.S. economy and by ongoing signs of improvements in corporate business fundamentals.

For the year ending December 31, 2010, the Portfolio posted double-digit returns but underperformed the Index, due to industry allocation and security selection.The consumer discretionary and industrials sectors, followed by materials and energy, all of which saw returns in excess of 20%, recorded the strongest gains for the Index, while the health care and utilities sectors posted the lowest returns.

Relative to the Index, the Portfolio’s overweight and stock selection in the health sector detracted the most from performance. Selection in pharmaceuticals, in particular, was detrimental to performance. Although an underweight in the underperforming financials sector was positive, this was offset by the weak performance of the Portfolio’s holdings in commercial banks and a lack of exposure to REITs. In energy, one of the top-performing sectors for the Index, the Portfolio’s underweight and stock selection combined to have a negative impact on performance.

On the positive side, an overweight in industrials made a positive contribution, as did an underweight in the lagging utilities sector. Portfolio investments within the machinery and electrical equipment industries positively contributed to returns, along with holdings in textiles, apparel and luxury goods, software, insurance, diversified financial services, and computers and peripherals industries.

Performance of Real Estate Investments. The Fund’s real estate investments are held through Belcrest Realty. As of December 31, 2010, real estate investments included: a Real Estate Joint Venture (Lafayette); a Co-owned Property (Bel Stamford I); and a portfolio of Partnership Preference Units. Lafayette owns office properties. Bel Stamford I owns an interest in an office property leased to a single tenant.

During the year ending December 31, 2010, Belcrest Realty sold its interest in a Real Estate Joint Venture, Allagash Property Trust (Allagash), to a third party for approximately $42.3 million. The sale resulted in a gain of $14.8 million as compared to the fair value at December 31, 2009, but a $137.6 million loss against the financial reporting cost basis of the investment as the decline in the fair value was recognized in prior periods. The net proceeds from the sale were used to pay down a portion of the Fund’s Credit Facility.

The Fund’s real estate investments produced positive returns for the year ending December 31, 2010, due principally to the net investment income generated during the period and the increases in the fair value of Lafayette and sale of Allagash. The return of investor interest and increased capital allocations to commercial real estate have helped to ease the value declines that began in 2008 and are now beginning to produce positive value increases in certain segments. Commercial real estate fundamentals are also beginning to stabilize and several asset classes have shown early signs of improvement in performance. Transaction activity increased in 2010, more than doubling 2009 levels. However, the volume is still well below historical pre-recession levels and continues to be focused generally on high quality properties concentrated in certain core markets. Significant uncertainty remains on

commercial real estate investment values and a further recovery will be largely dependent on continued recovery of the economy, job growth, and the availability and attractiveness of debt financing.

The fair value of Partnership Preference Units increased from December 31, 2009 due to a tightening of credit spreads, as the general market and demand for preferred and other fixed income securities improved during the period.

During the year ending December 31, 2010, the Fund’s net investment income from real estate investments held through Belcrest Realty was approximately $23.0 million compared to approximately $24.7 million for the year ending December 31, 2009, a decrease of $1.7 million or 7%. The decrease was due to lower distributions from investments in Partnership Preference Units principally due to fewer average holdings of Partnership Preference Units during the period, and to decreases in the net investment income from Real Estate Joint Ventures, due to the sale of Allagash during the year.

The fair value of the Fund’s real estate investments was approximately $130.7 million at December 31, 2010 compared to approximately $144.2 million at December 31, 2009, a net decrease of $13.5 million or 9%. This net decrease was principally due to the sale of Allagash during the year, partially offset by an increase in the fair value of Belcrest Realty’s investments in Lafayette and Partnership Preference Units.

Performance of Interest Rate Swap Agreements. For the year ending December 31, 2010, net realized and unrealized losses on the Fund’s interest rate swap agreements totaled approximately $0.4 million, compared to approximately $3.4 million of net realized and unrealized losses for the year ending December 31, 2009. Net realized and unrealized losses on swap agreements for the year ending December 31, 2010 consisted of $2.9 million of periodic net payments made pursuant to outstanding swap agreements (and classified as net realized losses on interest rate swap agreements in the Fund’s consolidated financial statements), partially offset by $2.5 million of net unrealized gains. The positive contribution to Fund performance from changes in swap agreement valuations for the year ending December 31, 2010 was attributable to a decrease in the outstanding notional balance as certain of the Fund’s swap agreements were terminated during the period.

MD&A for the Year Ending December 31, 2009 Compared to the Year Ending December 31, 2008.

Performance of the Fund. The Fund had a total return of 9.51% for the year ending December 31, 2009. This return reflected an increase in the Fund’s net asset value per Share from $74.71 to $80.33 and a distribution of $1.23 per Share during the period. For comparison, the Index had a total return of 26.47% over the same period. The combined impact on performance of the Fund’s investment activities outside of the Portfolio was negative for the year ending December 31, 2009.

The Fund had a total return of -42.72% for the year ending December 31, 2008. This return reflected a decrease in the Fund’s net asset value per Share from $132.81 to $74.71 and a distribution of $2.20 per Share during the period. For comparison, the Index had a total return of -36.99 over the same period.

Performance of the Portfolio. For the year ending December 31, 2009 the Portfolio had a total return of 23.32%. The Portfolio underperformed the Index, which had a total return of 26.47% over the same period, due in part to differences in sector allocation and stock selection versus the Index.

Each of the 10 economic sectors represented in the Index registered positive results for the year. The information technology (IT) sector gained more than 60%, followed by materials and consumer discretionary, each of which advanced more than 40%. In contrast, telecommunication services was the only sector with single-digit returns, while utilities, energy, and consumer staples had returns ranging between 11% and 15%, reflecting the dominance of cyclical stocks over defensive stocks during the period.

Best-performing industries for the Index included real estate management and development, automobiles, internet and catalog retailers, paper and forest products, auto components, energy equipment and services, wireless telecommunication services and multiline retailers. Conversely, construction materials, diversified consumer services, construction and engineering, biotechnology, thrifts and mortgage companies and commercial banks each posted losses for the year.

During the year ending December 31, 2009, the Portfolio remained overweighted in the health care, industrials, consumer staples and consumer discretionary sectors, while continuing to underweight IT, financials, materials, energy, telecommunications and utilities. While management selectively increased the Portfolio’s overall exposure to specific areas within the IT sector, stock selection in this space proved to have the largest negative impact on relative performance for the year. Underweighting stronger performing industries such as computers and peripherals and software, hurt returns, as did stock selection in the communication equipment industry. An overweight allocation and stock selection in health care also detracted, as did stock selection in financials, where a number of lower-

1 Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that Shares, when redeemed, may be worth more or less than their original cost. Total returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested except for special distributions. Performance is for the stated time period only; due to market volatility, current performance of the Fund and of the Portfolio may be lower or higher than the quoted return. The performance of the Fund and the Portfolio is compared to that of their benchmark, the S&P 500 Index. It is not possible to invest directly in an index.19

18priced, lower-quality companies represented in the Index saw their stock prices ascend further than the higher-quality names held by the Portfolio.

and utilities. While management selectively increased the Portfolio’s overall exposure to specific areas within the IT sector, stock selection in this space proved to have the largest negative impact on relative performance for the year. Underweighting stronger performing industries such as computers and peripherals and software, hurt returns, as did stock selection in the communication equipment industry. An overweight allocation and stock selection in health care also detracted, as did stock selection in financials, where a number of lower-priced, lower-quality companies represented in the Index saw their stock prices ascend further than the higher-quality names held by the Portfolio.

In contrast, the Portfolio benefited from its investments in the energy, utilities, industrials and telecommunication services sectors. Stock selection in the energy sector lifted returns, as management’s emphasis on the more specialized exploration and production companies over the mega-cap and more-defensive integrated oil names keyed relative gains. The Portfolio’s de-emphasis of the lagging telecommunication services and utilities sectors also helped relative performance, as did security selection among industrial conglomerates and machinery stocks.

Performance of Real Estate Investments. ~~The Fund’s real estate investments are held through Belcrest Realty.~~ As of December 31, 2009, real estate investments included: two Real Estate Joint Ventures (Allagash and Lafayette); a Co-owned Property (Bel Stamford I); and a portfolio of Partnership Preference Units. Allagash owns industrial distribution properties and Lafayette owns office properties. Bel Stamford I owns an interest in an office property leased to a single tenant.

During the year ending December 31, 2009, Allagash sold one property for approximately $8.7 million. Belcrest Realty recognized a net loss of approximately $2.0 million on the sale transaction.

During the year ending December 31, 2009, Belcrest Realty sold certain of its Partnership Preference Units for approximately $23.2 million (representing a sale to the issuer of such Partnership Preference Units), recognizing a loss of approximately $12.7 million on the sale transaction.

The Fund’s real estate investments produced negative returns for the year ending December 31, 2009, with decreases in the fair value of real property investments more than offsetting net investment income and increases in the fair value of Partnership Preference Units. Valuations of the real property investments decreased during the period due to further widening of capitalization rates and discount rates as well as weakening in other market metrics. The increases in capitalization rates and discount rates reflect the re-pricing of risk by commercial real estate investors and the reduced availability and increased cost of debt financing. These factors, along with general economic conditions, have kept transactional activity at levels significantly below that of recent years and have caused continued downward pressure on the valuations of real property investments. The fair value of Partnership Preference Units increased from December 31, 2008 due to the tightening of credit spreads, as the general market for preferreds and other fixed income securities improved during the period.

During the year ending December 31, 2009, the Fund’s net investment income from real estate investments held through Belcrest Realty was approximately $24.7 million compared to approximately $26.6 million for the year ending December 31, 2008, a decrease of $1.9 million or 7%. The decrease was due to lower distributions from investments in Partnership Preference Units principally due to fewer average holdings of Partnership Preference Units during the period, and to decreases in the net investment income from Real Estate Joint Ventures, partially offset by an increase in the net investment income from Co-owned Property related to the acquisition of Bel Stamford I in June 2008.

The fair value of the Fund’s real estate investments was approximately $144.2 million at December 31, 2009 compared to approximately $262.3 million at December 31, 2008, a net decrease of $118.1 million or 45%. This net decrease was principally due to decreases in the fair value of Belcrest Realty’s investments in the Real Estate Joint Ventures, fewer Partnership Preference Units held by Belcrest Realty at the end of the period, and a decrease in the fair value of Bel Stamford I, partially offset by a net increase in the fair value of continuing investments in Partnership Preference Units.

Performance of Interest Rate Swap Agreements. For the year ending December 31, 2009, net realized and unrealized losses on the Fund’s interest rate swap agreements totaled approximately $3.4 million, compared to approximately $17.9 million of net realized and unrealized losses for the year ending December 31, 2008. Net realized and unrealized losses on swap agreements for the year ending December 31, 2009 consisted of $8.0 million of periodic net payments made pursuant to outstanding swap agreements (and classified as net realized losses on interest rate swap agreements in the Fund’s consolidated financial statements) and $1.7 million of net realized losses due to the early termination of a certain swap agreement, partially offset by $6.3 million of net unrealized gains. The positive contribution to Fund performance from changes in swap agreement valuations for the year ending December 31, 2009 was attributable to an increase in swap rates during the period and a decrease in the remaining term of the agreements.

MD&A for the Year Ending December 31, 2008 Compared to the Year Ending December 31, 2007.

Performance of the Fund. The Fund had a total return of -42.72% for the year ending December 31, 2008. This return reflected a decrease in the Fund’s net asset value per Share from $132.81 to $74.71 and a distribution of $2.20 per Share during the period. For comparison, the Index had a total return of -36.99% over the same period.

The Fund had a total return of 3.50% for the year ending December 31, 2007. This return reflected an increase in the Fund’s net asset value per Share from $130.32 to $132.81 and a distribution of $2.02 per Share during the period. For comparison, the Index had a total return of 5.49% over the same period.

Performance of the Portfolio. Global equity markets suffered profound losses during 2008, a year that will likely go down as one of the worst in modern financial market history. The U.S. economy held up relatively well during the first half of the year, but the simultaneous bursting of the housing, credit and commodity bubbles created a global financial crisis of unforeseen levels. Equity markets collapsed during the second half of the year, as a series of catastrophic events on Wall Street induced panic and fear among market participants. Additionally, commodity prices collapsed during the second half of 2008. After peaking at more than $145 per barrel in July, oil prices traded down to approximately $44 per barrel at year end. The U.S. economy was officially declared in recession during the fourth quarter as unemployment continued to rise. The Federal Reserve responded to the crises with a dramatic cut in interest rates.

Equity markets posted double-digit declines for the year ending December 31, 2008. The Index suffered its worst loss since 1937, while the Dow Jones Industrials Average experienced the third-worst loss in its history. On average, small-capitalization stocks slightly outperformed large-capitalization stocks and value-style investments fared better than growth-style investments.

For the year ending December 31, 2008, all ten sectors in the Index registered declines. Consumer staples, health care and utilities were relatively stronger during the year, while the financials, materials and information technology sectors produced the weakest results. Market-leading industries of 2008 included food and staples retailing, biotechnology, and household products. In contrast, the thrifts and mortgage finance, independent power producers, wireless telecommunication services, and capital markets industries realized the most significant losses.

The Portfolio’s performance for the year ending December 31, 2008 was -32.76%, which outperformed the return of the Index by 4.23%. The Portfolio outperformed its benchmark due in part to differences in sector allocation and relatively stronger stock selection versus the Index. For comparison, the total return of the Portfolio for the year ending December 31, 2007 was 4.72%, which trailed the Index by 0.77%.

During the year ending December 31, 2008, the Portfolio remained overweight in the industrials, consumer staples and consumer discretionary sectors, while continuing to underweight the technology, materials, telecommunications and utilities sectors. The Portfolio benefited from its relatively stronger investments in eight of the ten economic sectors. Its commitment to consumer staples and health care, including investment selections in beverages, food products and pharmaceutical stocks, added to results. The Portfolio’s underweight exposure to the information technology sector, specifically computers and peripherals, software and semiconductors, also proved beneficial. Stock selection within the energy equipment and services and chemicals industries additionally boosted the Portfolio’s results. An underweight position in the materials sector — one of the worst performing sectors in the Index — added value relative to the benchmark. A shift during the year to reduce the Portfolio’s overweight exposure to financials, combined with selectiveness within the sector, added to the Portfolio’s relative performance.

During the year ending December 31, 2008, the Portfolio’s underweight positions in the relatively strong-performing electric utilities and telecommunications sectors hurt its performance versus its benchmark.

Performance of Real Estate Investments. As of December 31, 2008, real estate investments included: two Real Estate Joint Ventures (Allagash and Lafayette); a Co-owned Property (Bel Stamford I); and a portfolio of Partnership Preference Units. Allagash owns industrial distribution properties and Lafayette owns office properties. Bel Stamford I owns an interest in an office property leased to a single tenant.

In June 2008, Belcrest Realty acquired Bel Stamford I for approximately $7.2 million from the real estate investment affiliate of another investment fund advised by Boston Management. The acquisition was financed with proceeds from the Fund’s Credit Facility and the assumption of a mortgage note secured by the real property. The other investors in the Co-

owned Property are real estate investment affiliates of other investment funds advised by Boston Management.

During the year ending December 31, 2008, Belcrest Realty sold certain of its Partnership Preference Units and certain debt and common equity investments in two private real estate companies for approximately $58.8 million (including sales to real estate investment affiliates of other investment funds advised by Boston Management), recognizing a loss of approximately $17.1 million on the sales transactions. The Fund’s real estate investments produced negative returns for the year ending December 31, 2008, with decreases in investment values and other factors more than offsetting the net investment income generated during the period. Valuations of the Subsidiary Real Estate Investments decreased throughout the year, at a rate which accelerated in the fourth quarter due to further widening in capitalization rates and discount rates. The increases in capitalization rates and discount rates reflected the re-pricing of risk by commercial real estate investors and the reduced availability and increased cost of debt financing. These factors, along with general economic uncertainty, caused a significant decrease in transactional activity during the year, driving down the valuations of real property investments. Similarly, the fair values of Partnership Preference Units decreased from December 31, 2007 due to a continued widening of credit spreads as the general market for preferred and other fixed income securities weakened substantially as a result of the ongoing global financial crisis.

During the year ending December 31, 2008, the Fund’s net investment income from real estate investments held through Belcrest Realty was approximately $26.6 million compared to approximately $31.3 million for the year ending December 31, 2007, a decrease of $4.7 million or 15%. The decrease was due to lower distributions from investments in Partnership Preference Units principally due to fewer Partnership Preference Units held on average during the period and decreases in the net investment income of Allagash, partially offset by the acquisition of Bel Stamford I in June 2008.

The fair value of the Fund’s real estate investments was approximately $262.3 million at December 31, 2008 compared to approximately $377.8 million at December 31, 2007, a net decrease of $115.5 million or 31%. This net decrease was due principally to fewer Partnership Preference Units held by Belcrest Realty, a net decline in the fair value of continuing investments in Partnership Preference Units and a decrease in the fair value of Belcrest Realty’s investments in the Real Estate Joint Ventures, partially offset by the acquisition of Bel Stamford I mentioned above.

Performance of Interest Rate Swap Agreements. For the year ending December 31, 2008, net realized and unrealized losses on the Fund’s interest rate swap agreements totaled approximately $17.9 million, compared to approximately $7.7 million of net realized and unrealized losses for the year ending December 31, 2007. Net realized and unrealized losses on swap agreements for the year ending December 31, 2008 consisted of $11.1 million of net unrealized losses due to changes in swap agreement valuations, $6.1 million of periodic net payments made pursuant to outstanding swap agreements (and classified as net realized losses on interest rate swap agreements in the Fund’s consolidated financial statements) and $0.7 million of realized losses resulting from swaps terminated during the year. The negative contribution to Fund performance from changes in swap agreement valuations in 2008 was attributable to a decrease in swap rates during the year.

(b) Liquidity and Capital Resources.

Outstanding Borrowings. ~~The~~On ~~Fund~~March 24, ~~has~~2010, ~~entered into~~ the ~~Credit~~Fund ~~Facility~~terminated ~~primarily~~and torepaid ~~finance~~its ~~the~~credit arrangements ~~Fund’s~~with ~~real~~Dresdner ~~estate~~Kleinwort ~~investments~~Holdings ~~and~~I, toInc. ~~satisfy~~and ~~the~~Merrill ~~liquidity~~Lynch ~~needs~~Mortgage ofCapital, ~~the Fund~~Inc. Onusing ~~December 21,~~proceeds ~~2009,~~from ~~the~~its ~~Fund~~credit ~~entered~~arrangement ~~into the New Credit Facility~~ with Bank of America ~~to refinance~~ (the ~~existing~~ Credit Facility ~~on or before April 1, 2010~~). ~~The Fund intends to use the New Credit Facility for the~~ ~~same purposes.~~

~~As of December 31, 2009, the Fund had outstanding borrowings of $194.5 million and unused loan~~20 ~~commitments of $33.0 million under the Credit Facility.~~

~~During~~The Credit Facility may be terminated by the ~~year~~lender ~~ending~~on ~~December~~or after September 3123, ~~2009,~~2011 ~~the~~provided ~~Fund~~180 days’ ~~decreased~~notice ~~the~~is ~~Merrill~~given. ~~Lynch~~Belcrest Capital may terminate the Credit Facility byupon a30 days’ notice. ~~net~~In ~~amount~~the ofevent ~~$10.0 million~~the lender exercises its ability to anterminate ~~aggregate~~the ~~amount~~Credit ~~available~~Facility ~~for~~Belcrest ~~borrowing~~Capital will ofseek ~~$33~~alternative financing arrangements.~~0 million.~~

~~Obligations~~During ~~under~~ the ~~Credit~~year ~~Facility~~ending ~~are~~December 31, ~~without recourse to Shareholders. The Fund is required under the Credit Facility to maintain at all times a specified asset coverage ratio. To comply with the terms of the Credit Facility~~2010, the Fund ~~may~~decreased beits ~~required~~initial tocommitment ~~dispose~~ of ~~assets on unfavorable~~$230.0 ~~terms~~million ~~if market fluctuations or other factors reduce the required asset coverage to less than the prescribed amount. The rights of the lenders~~ under ~~the~~ Credit Facility toby ~~receive~~an ~~payments~~aggregate ~~of interest~~net onamount ~~and repayments~~ of ~~principal of borrowings will be senior to the rights of the Shareholders~~$30.0 million ~~Under the terms of the Credit Facility, the Fund is not permitted~~ to ~~make distributions of cash or securities while there is outstanding~~ an ~~event~~aggregate ~~of default under the Credit~~amount ~~Facility.~~available ~~During~~for ~~such~~borrowing ~~periods,~~of ~~the Fund would not be able to honor redemption requests or make cash~~$200.0 million.

21As of December 31, 2010, the Fund had outstanding borrowings under the Credit Facility of $144.0 million and an unused loan commitment of $56.0 million.

~~distributions.~~Obligations ~~The~~under the Credit Facility isare ~~secured~~without byrecourse ato ~~pledge~~Shareholders. ofThe ~~the~~ Fund’s ~~assets,~~is ~~excluding~~required under the ~~Fund’s~~ ~~investment~~Credit inFacility ~~and~~to ~~the~~maintain ~~assets~~at ofall ~~the~~times ~~Subsidiary~~a ~~Real~~specified ~~Estate~~asset ~~Investments~~coverage ratio. ~~Following~~To ancomply ~~event~~with ofthe ~~default~~terms ~~under~~of the Credit Facility, the ~~lender~~Fund ~~could~~may ~~elect~~be required to ~~sell~~dispose ~~pledged~~of assets ofon ~~the Fund~~unfavorable ~~without~~terms ~~regard~~if tomarket ~~the~~fluctuations ~~tax~~ or other ~~consequences~~factors ofreduce ~~such~~the ~~action~~required ~~for~~asset coverage to less than the prescribed ~~Shareholders~~amount. The ~~New~~rights of the lender under the Credit Facility ~~contains~~to ~~similar~~receive ~~provisions~~payments ~~restricting~~of interest ~~redemptions~~on and ~~cash~~repayments ~~distributions~~of inprincipal of borrowings are senior to the ~~case~~rights of the Shareholders. anUnder ~~event~~the terms of ~~default~~the byCredit Facility, the Fund is not permitted to make distributions of cash or securities while there is outstanding any event of default under the ~~New~~ Credit Facility. InDuring ~~addition~~such periods, the ~~lender~~Fund would ~~have similar~~not ~~rights~~be able to honor redemption requests or make cash distributions. The Credit Facility is secured by a pledge of the Fund’s assets, inexcluding the Fund’s real estate investments. Following an event of a default under the ~~New~~ Credit Facility, the lender could elect to sell pledged assets of the Fund without regard to the tax or other consequences of such action for the Shareholders.

Liquidity. The Fund’s investment ~~may~~in ~~redeem~~Belvedere ~~shares~~Company is redeemable on a daily basis at its net asset value subject to certain restrictions of the Belvedere Company atoperating ~~any time~~agreement. During the year ending December 31, ~~2009~~2010, Fund redemptions from Belvedere Company included redemptions of shares of Belvedere Company for cash in the amount of $~~106.~~1.5 million. Such proceeds were used to pay down outstanding debt under the Credit Facility. Both Belvedere Company and the Portfolio normally follow the practice of satisfying redemptions primarily by distributing securities drawn from the Portfolio. Belvedere Company and the Portfolio may also satisfy redemptions by distributing cash. As of December 31, ~~2009~~2010, the Portfolio had cash and short-term investments in the amount of $~~109~~102.9 million. The Portfolio participates in a $450.0 million multi-fund unsecured line of credit agreement with a group of banks. The Portfolio may temporarily borrow from the line of credit to satisfy redemption requests in cash or to settle investment transactions. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. The Portfolio had no outstanding borrowings at December 31, ~~2009~~2010. 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, ~~2009~~ 2010, the Portfolio held no illiquid assets.

The liquidity of Belcrest Realty’s ~~investments~~investment in ~~Real~~Lafayette ~~Estate Joint Ventures~~ is extremely limited and relies principally upon a liquidation ~~agreements~~agreement with the Operating ~~Partners~~Partner that ~~are~~is described in “Real Estate Joint Venture Investments” under “The Fund’s Real Estate Investments” in Item 1. ~~Transfers~~ A transfer of Belcrest Realty’s interest in ~~the~~Lafayette ~~Real Estate Joint Ventures~~ to ~~parties~~a party other than the Operating ~~Partners~~Partner ~~are~~ is restricted by the terms of the operative agreements of ~~the~~Lafayette ~~Real Estate Joint Ventures~~ and lender consent requirements. Belcrest Realty’s interest in Co-owned Property is generally illiquid. The Partnership Preference Units held by Belcrest Realty are not registered under the Securities Act and are subject to substantial restrictions on transfer. As such, they are considered illiquid.

(c) Off-Balance Sheet Arrangements.

The Fund does not have any relationships with unconsolidated entities that have been established solely for the purpose of facilitating 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 as of December 31, ~~2009~~2010:

	Payments due:
									More
									More than 5
			Less than 1		1-3		3-5		than 5
Type of Obligation	Total		Less than 1 Year		1-3 Years		3-5 Years		Years
Type of Obligation	Total		Year		Years		Years		Years
Long-Term Debt:
Borrowings under Credit Facility(1)	$	~~194~~144,~~500~~000,000	$	~~194~~144,~~500~~000,000	$	—	$	—	$	—
Service Agreements(2)
Other Long-Term Liabilities:
Interest Rate Swap Agreements(3)	$	5,346,482	$	4,245,410	$	486,846	$	486,846	$	127,380
Interest Rate Swap Agreement(3)	$	1,101,072	$	243,423	$	486,846	$	370,803	$	—
Total	$	~~199~~145,~~846~~101,~~482~~072	$	~~198~~144,~~745~~243,~~410~~423	$	486,846	$	~~486~~370,~~846~~803	$	~~127,380~~—

(1) The Fund has entered into a Credit Facility and a New Credit Facility, each as described in “Liquidity and Capital Resources” above. The Credit Facility is secured by a pledge of the Fund’s assets, excluding the Fund’s investments in and the assets of the Subsidiary Real Estate Investments and expires on June 25, 2010. The Fund expects to terminate the Credit Facility and borrow under its New Credit Facility on or before April 1, 2010. All Fund borrowings under the New Credit Facility will be secured by a pledge of the Fund’s assets, excluding the Fund’s real estate


⁽¹⁾		The Fund has entered into a Credit Facility, as described in “Liquidity and Capital Resources” above. The Credit Facility is secured by a pledge of the Fund’s assets, excluding the Fund’s real estate investments. The Credit Facility is primarily used to finance the Fund’s equity in its real estate investments and to satisfy the liquidity needs of the Fund. Amount does not reflect interest.

⁽²⁾		The Fund and Belcrest Realty have entered into agreements with certain service providers pursuant to which the Fund and Belcrest 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 Belcrest Realty (as applicable) or the service provider. For the year ending December 31, 2010, fees paid to Eaton Vance and its affiliates equaled approximately 1.37% of the Fund’s average 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.

⁽³⁾		The Fund has entered into an interest rate swap agreement to fix the cost of a portion of its borrowings under the Credit Facility. Pursuant to the agreements, the Fund makes payments to the counterparty, MLCS, at a predetermined fixed rate in exchange for floating rate payments that fluctuate with the one-month LIBOR. The amounts disclosed in the table represent the fixed interest amounts payable by the Fund. The periodic floating rate payments that the Fund expects to receive pursuant to the agreements reduce the fixed interest cost to the Fund. The swap agreement expires on July 10, 2015.

		investments. The Credit Facility is primarily used to finance the Fund’s equity in its real estate investments and to satisfy the liquidity needs of the Fund. Amount does not reflect interest.
(2)		The Fund and Belcrest Realty have entered into agreements with certain service providers pursuant to which the Fund and Belcrest 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 Belcrest Realty (as applicable) or the service provider. For the year ending December 31, 2009, fees paid to Eaton Vance and its affiliates equaled approximately 1.39% of the Fund’s average 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.
(3)		The Fund has entered into interest rate swap agreements to fix the cost of a portion of its borrowings under the Credit Facility. Pursuant to the agreements, the Fund makes payments to the counterparty, MLCS, at predetermined fixed rates in exchange for floating rate payments that fluctuate with the one-month LIBOR. The amounts disclosed in the table represent the fixed interest amounts payable by the Fund. The periodic floating rate payments that the Fund expects to receive pursuant to the agreements reduce the fixed interest cost to the Fund. The swap agreements expire on June 25, 2010 and July 10, 2015 and are subject to the Fund’s right to terminate earlier in the case of some swaps.

(e) Critical Accounting Estimates.

The Fund’s consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires the Fund to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates are deemed critical when a different estimate could have reasonably been used or where changes in the estimate are reasonably likely to occur from period to period, and where such different or changed estimates would materially impact the Fund’s financial condition, changes in financial condition or results of operations. The Fund’s significant accounting policies are discussed in Note 2 of the notes to the consolidated financial statements; critical estimates inherent in these accounting policies are discussed in the following paragraphs.

The Fund has determined that the valuation of the Fund’s real estate investments involve critical estimates. The Fund’s investments in real estate are an important component of its total investment program. Market prices for these investments are not readily available and therefore the investments are stated in the Fund’s consolidated financial statements at fair value. The fair value of an investment represents the amount at which Boston Management believes the investment could be sold in a current transaction between market participants in an orderly disposition, that is, other than in a forced liquidation or distressed sale. Boston Management makes valuation determinations in accordance with the Fund’s valuation procedures. The Fund reports the fair value of its real estate investments on its consolidated statements of assets and liabilities, with any changes to fair value recorded as unrealized appreciation or depreciation in the Fund’s consolidated statements of operations.

The need to fair value 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 fair values may not accurately reflect what the Fund could realize in a current sale between willing parties;

	•		property appraisals and other factors used to determine the 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 fair value of the Fund’s real estate investments are not continuously updated and therefore may not be current as of specific dates; and

	•		if the Fund were forced to sell illiquid assets on a distressed basis, the proceeds may be substantially less than stated values.

As of December 31, ~~2009~~2010, the fair value of the Fund’s real estate investments represented 16.94% of the Fund’s total assets. Valuations of the Fund’s Partnership Preference Units and Subsidiary Real Estate Investments are inherently uncertain because they involve the use of assumptions and estimates. If the assumptions and estimates used in the valuations were to change, it could materially impact the fair value of the Fund’s holdings of Partnership Preference Units and Subsidiary Real Estate Investments.

The fair value of property held by the Fund’s Subsidiary Real Estate Investments is based on appraisals provided by independent, licensed appraisers (Appraisers) and valuations, if applicable, prepared by Boston Management. Appraisers may perform other valuation services for the Fund.

The appraisals of properties are conducted by Appraisers on at least an annual basis. Appraisals of properties may be conducted more frequently than once a year if Boston Management determines that significant changes in economic circumstances, that may materially impact fair values, have occurred since the most recent appraisal. Each appraisal is conducted in accordance with the Uniform Standards of Professional Appraisal Practices (as well as other relevant standards). Boston Management reviews the appraisal of each property and generally relies on the assumptions and estimates made by the Appraiser when determining fair value.

In deriving the fair value of a property, an Appraiser considers numerous factors, including the expected future cash flows from the property, recent sale prices for similar properties and, if applicable, the replacement cost of the property, in order to derive an indication of the amount that a prudent, informed purchaser-investor would pay for the property. More specifically, the Appraiser considers the revenues and expenses of the property and the estimated future growth or decline thereof, which may be based on tenant credit quality, property condition, change in market or submarket conditions, market trends, interest rates, inflation rates or other factors deemed relevant by the Appraiser. The Appraiser estimates operating cash flows from the property and the sale proceeds of a hypothetical transaction at the end of a hypothetical holding period. The cash flows are discounted to their present values using a market-derived discount rate and are added together to obtain a value indication. This value indication is compared to the value indication that results from applying a market-derived capitalization rate to a single year’s stabilized net operating income for the property. The assumed capitalization rate may be extracted from local market transactions or, when transaction evidence is lacking, obtained from trade sources. The Appraiser considers the value indications derived by these two methods, as well as the value indicated by recent market transactions involving similar properties, in order to produce a final value estimate for the property. 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. If the assumptions and estimates used by the Appraisers to determine the value of the properties owned by the Subsidiary Real Estate Investments were to change, it could materially impact the fair value of the Subsidiary Real Estate Investments.

For those properties not appraised by Appraisers in a given quarter, Boston Management will review the fair values of such properties and, if Boston Management believes it is warranted based on the appraisals of appraised properties or for other reasons, Boston Management may prepare a valuation of such properties considering results of operations, market conditions, significant changes in economic circumstances, recent independent appraisals of similar properties and/or other relevant facts or circumstances. In determining valuations, Boston Management follows a process consistent with industry practice and the practice of Appraisers, as described above. Valuations may occur more frequently than quarterly if it is determined by Boston Management that the current property valuation has changed materially since the most recent appraisal or valuation.

Boston Management determines the 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 Belcrest Realty and the Operating Partner. This allocation is generally calculated by a third party specialist, using current valuations of the properties owned by the Real Estate Joint Venture. The specialist uses a financial ~~model that considers (i) the terms of the joint venture agreement relating to allocation~~ of distributable cash flow, (ii) the expected duration of the joint venture, and (iii) the projected property values and cash flows from the properties based on estimates used in the property valuations. The estimated allocation of equity interests between Belcrest Realty and the Operating Partner of a Real Estate Joint Venture is prepared quarterly and reviewed by Boston Management. Interim allocations of equity interests may be conducted more frequently than quarterly if Boston Management determines that significant changes in economic circumstances that may materially impact the allocation of equity interests have occurred since the most recent allocation.

~~Boston Management determines the fair value of the Fund’s interest in Co-owned Property by,~~23 ~~applying the Fund’s ownership interest to the fair value of the property, net of associated mortgage debt, if any.~~

~~Mortgage~~model ~~notes~~that ~~payable,~~considers ~~which~~(i) the ~~are~~terms ~~generally~~of ~~without~~the ~~recourse~~joint venture agreement relating to allocation of distributable cash flow, (ii) the ~~Fund~~expected ~~and~~duration ~~Belcrest~~of ~~Realty~~the joint venture, ~~are~~and (iii) the ~~generally~~projected ~~stated~~property atvalues and cash flows from the ~~amounts~~properties ~~payable~~based on estimates used in the property valuations. AThe ~~mortgage~~estimated ~~note~~allocation ~~payable~~of ~~may~~equity beinterests ~~adjusted~~between toBelcrest ~~the~~Realty ~~fair~~and ~~value~~the Operating Partner of ~~the~~a ~~real~~Real ~~property~~Estate ~~securing~~Joint ~~the~~Venture ~~mortgage~~is ~~note~~prepared ifquarterly ~~the~~and ~~fair~~reviewed ~~value~~by Boston Management. Interim allocations of ~~the~~equity ~~real~~interests ~~property~~may isbe ~~less~~conducted more frequently than quarterly if Boston Management determines that significant changes in economic circumstances that may materially impact the ~~outstanding~~allocation ~~principal~~of ~~balance~~equity interests have occurred since the most recent allocation.

~~The~~Boston ~~fair~~Management ~~value~~determines of the ~~Partnership~~fair ~~Preference~~value Units is based on analysis and calculations performed on at least 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~~the ~~Preference Units~~Fund’s ~~based~~interest onin ~~descriptions~~Co-owned ofProperty ~~such issue provided~~ by ~~Boston Management and certain publicly~~applying ~~available information including, but not limited to,~~ the ~~trading~~Fund’s ~~prices~~ownership ofinterest ~~publicly issued debt and/or preferred stock instruments of the same or similar issuers, which may be adjusted~~ to ~~reflect~~ the ~~illiquidity~~net ~~and~~asset ~~other~~value ~~structural characteristics~~ of the ~~Partnership~~Co-owned ~~Preference Units (such as call provisions)~~Property. ~~Daily valuations of Partnership~~

24Mortgage notes payable, if applicable, which are generally without recourse to the Fund and Belcrest Realty, are generally stated at the amounts payable. A mortgage note payable may be adjusted to the fair value of the real property securing the mortgage note if the fair value of the real property is less than the outstanding principal balance.

The fair value of the Partnership Preference Units is based on analysis and calculations performed on at least a monthly basis by a third party service provider. The service provider calculates an estimated price and yield (before accrued distributions) for each issue of Partnership Preference Units based on descriptions of such issue provided by Boston Management and certain publicly available information including, but not limited to, the trading prices of publicly issued debt and/or preferred stock instruments of the same or similar issuers, which may be adjusted to reflect the illiquidity and other structural characteristics of the Partnership Preference Units (such as call provisions). Daily valuations of Partnership Preference Units are determined by adjusting prices from the service provider to account for accrued distributions under the terms of the Partnership Preference Units. If changes in relevant markets, events that materially affect an issuer or other events that have a significant effect on the price or yield of Partnership Preference Units occur, relevant prices or yields may be adjusted to take such occurrences into account. Boston Management reviews the analysis and calculations performed by the service provider. Boston Management generally relies on the assumptions and estimates made by the service provider when determining the fair value of the Partnership Preference Units.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

(a) Quantitative Information About Market Risk.

Interest Rate Risk. The Fund’s primary exposure to interest rate risk arises from its real estate investments that are financed by the Fund with floating rate borrowings under the Credit Facility and by fixed-rate mortgage notes secured by the real property of the Subsidiary Real Estate Investments. 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 the ~~one~~three-month LIBOR. The Fund has entered into an interest rate swap ~~agreements~~ agreement to fix the cost of a portion of its borrowings under the Credit Facility. Pursuant to the ~~agreements~~ agreement, the Fund makes periodic payments to the counterparty at predetermined fixed rates in exchange for floating rate payments that fluctuate with the one-month LIBOR. The Fund’s interest rate swap ~~agreements~~agreement 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 10 and 11 to the Fund’s consolidated financial statements ~~beginning~~included onin ~~page 41 of~~ this Annual Report on Form 10-K.

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

																		Fair Value as
												Fair Value as of
																		of December
	2011			2012-2014	2015			Thereafter	Total			December 31, 2010
	2010			2011	2012			2013	2014			Thereafter			Total			31, 2009
Rate sensitive liabilities:
Rate sensitive liabilities:
Long-term debt:
Long-term debt:
Variable-rate Credit Facility	$	144,000,000							$	144,000,000		$	144,000,000
Variable-rate Credit Facility	$	194,500,000													$	194,500,000		$	194,500,000
Average interest rate		2.05	%							2.05	%
Average interest rate		0.53	%													0.53	%
Rate sensitive derivative financial instruments:
Rate sensitive derivative financial instruments:
Pay fixed/receive variable interest rate swap agreement					$	3,870,000			$	3,870,000		$	(710,801	)
Pay fixed/receive variable interest rate
Average pay rate						6.29	%			6.29	%
swap agreements(1)	$	210,965,000										$	3,870,000		$	214,835,000		$	(3,241,582	)
Average receive rate						0.56	%			0.56	%
Average pay rate		4.05	%										6.29	%		4.09	%
Rate sensitive investments:
Average receive rate		0.53	%										0.53	%		0.53	%
Fixed-rate Partnership Preference Units:
Rate sensitive investments:
Essex Portfolio, L.P., 7.875% Series B Cumulative Redeemable Preferred Units, Callable 12/31/09, Current Yield: 8.90%	$	15,209,090							$	15,209,090		$	13,272,660
Fixed-rate Partnership Preference Units:
Liberty Property Limited Partnership, 7.45% Series B Cumulative Redeemable Preferred Units, Callable 8/31/09, Current Yield: 8.70%	$	6,250,000							$	6,250,000		$	5,352,500
MHC Operating Limited Partnership, 8.0625% Series D Cumulative Redeemable Perpetual Preference Units, Callable 3/24/10, Current Yield: 10.00%	$	37,500,000							$	37,500,000		$	30,240,000
MHC Operating Limited Partnership, 7.95% Series F Cumulative Redeemable Perpetual Preference Units, Callable 6/30/10, Current Yield: 10.00%	$	17,500,000							$	17,500,000		$	13,916,000
Vornado Realty L.P., 7% Series D-10 Cumulative Redeemable Preferred Units, Callable 11/17/08, Current Yield: 8.57%(1)	$	7,936,273							$	7,936,273		$	9,799,658


*		The amounts listed reflect the Fund’s positions as of December 31, 2010. The Fund’s current positions may differ.

⁽¹⁾		Belcrest Realty’s interest in these Partnership Preference Units is held through Bel Holdings.

										Fair Value as
										of December
	2010		2011	2012	2013	2014	Thereafter	Total		31, 2009
Essex Portfolio, L.P.,
7.875% Series B
Cumulative Redeemable
Preferred Units,
Callable 12/31/09,
Current Yield: 9.29%	$	15,209,090						$	15,209,090	$	12,714,660
Liberty Property
Limited Partnership,
7.45% Series B
Cumulative Redeemable
Preferred Units,
Callable 8/31/09,
Current Yield: 9.60%	$	6,250,000						$	6,250,000	$	4,850,000
MHC Operating Limited
Partnership, 8.0625%
Series D Cumulative
Redeemable Perpetual
Preference Units,
Callable 3/24/10,
Current Yield: 10.40%	$	37,500,000						$	37,500,000	$	29,070,000
MHC Operating Limited
Partnership, 7.95%
Series F Cumulative
Redeemable Perpetual
Preference Units,
Callable 6/30/10,
Current Yield: 10.40%	$	17,500,000						$	17,500,000	$	13,377,000
Vornado Realty L.P., 7%
Series D-10 Cumulative
Redeemable Preferred
Units,
Callable 11/17/08,
Current Yield: 9.07%(2)	$	8,634,869						$	8,634,869	$	9,262,977

*		The amounts listed reflect the Fund’s positions as of December 31, 2009. The Fund’s current positions may differ.
(1)		The interest rate swap agreement with a notional amount of $3,870,000 has an effective date of June 25, 2010.
(2)		Belcrest Realty’s interest in these Partnership Preference Units is held through Bel Holdings.

(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.

changes in currency rates. Foreign brokerage commissions, custody fees and other costs of investing are generally higher than in the United States, and foreign investments may be less liquid, more volatile and subject to more government regulation than in the United States. Foreign investments could be adversely affected by other factors not present in the United States, including expropriation, confiscatory taxation, lack of uniform accounting and auditing standards, armed conflict, and potential difficulty in enforcing contractual obligations. These risks can be more significant for investments in emerging markets.

Risks of Certain Investment Techniques. In managing the Portfolio, Boston Management may purchase or sell derivative instruments (which derive their value by reference to other securities, indexes, instruments or currencies) to hedge against securities price declines and currency movements, to add investment exposure to individual securities and groups of securities and to enhance returns. Such transactions may include, without limitation, the purchase and sale of futures contracts on stocks and stock indexes and options thereon, the purchase of put options and the sale of call options on securities held, equity swaps, forward sales of stocks, and the purchase and sale of forward currency exchange contracts and currency futures. The Portfolio may engage in short sales of individual securities held and short sales of index or basket securities whose constituents are held in whole or in part. The Portfolio may enter into private contracts for the forward sale of stock held and may also lend portfolio securities.

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

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

~~Risks of Real Estate Investments. The success of the Fund’s real estate investments depends in part~~26 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

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 and cost of financing, managerial performance, government rules and regulations, and acts of God (whether or not insured against). There can be no assurance that Belcrest Realty’s ownership of real estate investments will be an economic success.

Interests in the Real Estate Joint Venture, Co-owned Property and Partnership Preference Units are not registered under the federal securities laws and are subject to restrictions on transfer. Due to their illiquidity, they may be difficult to value and the ongoing value of the investments is uncertain. See “Critical Accounting Estimates” in Item 7(e).

The performance of the Real Estate Joint Venture is substantially influenced by the property management capabilities of the Operating Partner and conditions in the specific real estate submarkets in which the properties owned by the Real Estate Joint Venture are located. The Operating Partner is subject to substantial conflicts of interest in structuring, operating and winding up the Real Estate Joint Venture. The Operating Partner has an economic incentive to maximize the prices at which it sells properties to the Real Estate Joint Venture and has a similar incentive to minimize the prices at which it may acquire properties from the Real Estate Joint Venture. The Operating Partner may devote greater attention or more resources to managing other properties in which it holds an interest than to managing properties held by the Real Estate Joint Venture. Future investment opportunities identified by the Operating Partner will more likely be pursued independently, rather than through the Real Estate Joint Venture. Financial difficulties encountered by the Operating Partner in its other businesses may interfere with the operations of the Real Estate Joint Venture.

Belcrest Realty’s investment in the Real Estate Joint Venture may be significantly concentrated in terms of geographic regions, property types and operators, increasing the Fund’s exposure to regional, property type and operator-specific risks. Given a lack of stand-alone operating history, limited diversification and relatively high financial leverage, the Real Estate Joint Venture is 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 Venture may not be sufficient for Belcrest Realty to receive its fixed annual preferred return, or any returns in excess thereof.

The debt of Lafayette is fixed-rate, secured by its underlying properties and without recourse to Fund Shareholders and generally without recourse to Belcrest Realty and the Fund. Belcrest Realty and the Fund may be directly or indirectly responsible for certain liabilities constituting exceptions to the generally non-recourse nature of the mortgage indebtedness, including liabilities associated with fraud, misrepresentation, misappropriation of funds, breach of material covenants or liabilities arising from environmental conditions involving or affecting Real Estate Joint Venture properties. To the extent practicable, the Fund and Belcrest Realty will seek indemnification from the Operating Partner 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 Lafayette normally cannot be refinanced prior to maturity without substantial penalties.

The ongoing value of Belcrest Realty’s investments in Lafayette is substantially uncertain. The real property held through Lafayette is stated at the fair value as described in Item 7(e). The policies for estimating the fair value of real estate investments involve significant judgments that are based upon a number of factors, which may include, without limitation, general economic conditions, the supply and demand for different types of real properties, the financial health of tenants, the timing of lease expirations and terminations, fluctuations in rental rates and operating costs, exposure to adverse environmental conditions and losses from casualty or condemnation, interest rates, availability of financing, managerial performance and government rules and regulations. Given that such valuations include many assumptions, fair values may differ from amounts ultimately realized.

~~(in~~obligations ~~the~~due ~~case~~to offinancial distress ~~industrial~~or ~~distribution~~other ~~properties),~~reasons. ~~the~~A ~~timing~~major oftenant’s failure to meet its lease ~~expirations~~obligations ~~and~~would expose ~~terminations,~~Belcrest ~~fluctuations~~Realty into ~~rental~~substantial ~~rates~~loss ~~and~~of ~~operating~~income ~~costs,~~without ~~exposure~~a tocommensurate ~~adverse~~reduction ~~environmental~~in debt service ~~conditions~~costs and ~~losses~~other ~~from~~expenses, ~~casualty~~and ormay ~~condemnation,~~transfer ~~fluctuations~~to inBelcrest ~~interest~~Realty ~~rates~~all the costs, ~~availability~~expenses and liabilities of property ownership and ~~cost~~management borne by the tenant under the terms of ~~financing,~~the ~~managerial~~lease. Re-leasing ~~performance,~~a ~~government~~property ~~rules~~could involve considerable time and ~~regulations,~~expense. Re-leasing opportunities may be limited by the nature and ~~acts~~location of ~~God (whether~~the orproperty, which may not ~~insured~~be ~~against)~~well suited to the needs of other possible tenants. ~~There~~Even ~~can~~if bea noproperty ~~assurance~~is ~~that~~re-leased, ~~Belcrest~~the ~~Realty’s~~property ~~ownership~~may ofnot generate sufficient ~~real~~rental ~~estate~~income ~~investments~~to ~~will~~cover bedebt anservice ~~economic~~and ~~success~~other expenses.

Interests in Real Estate Joint Ventures, Co-owned Property and Partnership Preference Units are not registered under the federal securities laws and are subject to restrictions on transfer. Due to their illiquidity, they may be difficult to value and the ongoing value of the investments is uncertain. See “Critical Accounting Estimates” in Item 7(e).

The performance of Real Estate Joint Ventures is substantially influenced by the property management capabilities of the Operating Partner and conditions in the specific real estate submarkets in which the properties owned by the Real Estate Joint Venture are located. The Operating Partner is subject to substantial conflicts of interest in structuring, operating and winding up the Real Estate Joint Venture. The Operating Partner has an economic incentive to maximize the prices at which it sells properties to the Real Estate Joint Venture and has a similar incentive to minimize the prices at which it may acquire properties from the Real Estate Joint Venture. The Operating Partner may devote greater attention or more resources to managing other properties in which it holds an interest than to managing properties held by the Real Estate Joint Venture. Future investment opportunities identified by the Operating Partner will more likely be pursued independently, rather than through the Real Estate Joint Venture. Financial difficulties encountered by the Operating Partner in its other businesses may interfere with the operations of the Real Estate Joint Venture.

Belcrest Realty’s investment in the Real Estate Joint Ventures may be significantly concentrated in terms of geographic regions, property types and operators, increasing the Fund’s exposure to regional, property type and operator-specific risks. Given a lack of stand-alone operating history, limited diversification and relatively high financial leverage, the Real Estate Joint Ventures are not equivalent in quality to real estate companies whose preferred equity or senior debt securities are rated investment grade. Distributable cash flows from a Real Estate Joint Venture may not be sufficient for Belcrest Realty to receive its fixed annual preferred return, or any returns in excess thereof.

The debt of each Real Estate Joint Venture is fixed-rate, secured by its underlying properties and without recourse to Fund Shareholders and generally without recourse to Belcrest Realty and the Fund. Belcrest Realty and the Fund may be directly or indirectly responsible for certain liabilities constituting exceptions to the generally non-recourse nature of the mortgage indebtedness, including liabilities associated with fraud, misrepresentation, misappropriation of funds, breach of material covenants or liabilities arising from environmental conditions involving or affecting Real Estate Joint Venture properties. To the extent practicable, the Fund and Belcrest Realty will seek indemnification from the Operating Partners for certain of such potential liabilities. The availability of financing and other financial conditions can have a material impact on property values and therefore on the value of 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 Belcrest Realty’s investments in the Real Estate Joint Venture is substantially uncertain. The real property held through the Real Estate Joint Venture is stated at the fair value as described in Item 7(e). The policies for estimating the fair value of real estate investments involve significant judgments that are based upon a number of factors, which may include, without limitation, general economic conditions, the supply and demand for different types of real properties, the financial health of tenants, the timing of lease expirations and terminations, fluctuations in rental rates and operating costs, exposure to adverse environmental conditions and losses from casualty or condemnation, interest rates, availability of financing, managerial performance and government rules and regulations. Given that such valuations include many assumptions, fair values may differ from amounts ultimately realized.

Belcrest Realty’s investments in Wholly Owned Property will be subject to general real estate market risks similar to those of an investment in a Real Estate Joint Venture. In addition, investments in Wholly Owned Property will be subject to risks specific to these types of investments, including a concentration of risk exposure to specific real estate submarkets and individual properties and tenants. Principal among the risks of investing in the Wholly Owned Property is the risk that a major tenant fails to satisfy its lease obligations due to financial distress or other reasons. A major tenant’s failure to meet its lease obligations would expose Belcrest Realty to substantial loss of income without a commensurate reduction in debt service costs and other expenses, and may transfer to Belcrest Realty all the costs, expenses and liabilities of property ownership and management borne by the tenant under the terms of the lease. Re-leasing a property could involve considerable time and expense. Re-leasing opportunities may be limited by the nature and location of the property, which may not be well suited to the needs of other possible tenants. Even if a property is re-leased, the property may not generate sufficient rental income to cover debt service and other expenses.

Wholly Owned Property is generally illiquid, and the ongoing value of Belcrest Realty’s investments in Wholly Owned Property will be substantially uncertain. Wholly Owned Property held generally will be stated at fair value as described in Item 7(e). Because the value of Wholly Owned Property will reflect in part the creditworthiness of its tenant(s), any change in the financial status of a major tenant could affect the appraised value of a property and the value realized upon the disposition of such property. Tenants may hold rights to renew or extend expiring leases, and exercise of such rights would extend Belcrest Realty’s risk exposure to a particular tenant beyond the initial lease term. Tenants may also hold options to purchase properties, including options to purchase at below market levels. A default by a major tenant could materially reduce the value of a Wholly Owned Property. The value received upon the disposition of Wholly Owned Property will depend on real estate market conditions, lease and mortgage terms, tenant credit quality, tenant purchase options, lender approvals and other factors affecting valuation as may then apply. Since valuations of Wholly Owned Property assume an orderly disposition of assets, amounts realized in a distressed sale may differ substantially from stated values.

The leveraged nature of most anticipated Wholly Owned Property investments means that a relatively small decline in the value of a property could result in the loss by Belcrest Realty of all or a substantial portion of its equity in such property. Because the mortgage debt obligations of Wholly Owned Property will be without recourse to Shareholders and generally without recourse to Belcrest Realty and the Fund (except certain liabilities associated with fraud, misrepresentation, misappropriation of funds, or breach of material covenants or liabilities arising from environmental conditions involving or affecting the property), the potential loss from Wholly Owned Property is normally limited to the amount of equity invested in such property by Belcrest Realty. Mortgage debt associated with Wholly Owned Property generally cannot be refinanced prior to maturity without substantial penalties. The terms of the outstanding lease and mortgage debt obligations and restrictions on refinancing such debt may limit Belcrest Realty’s ability to dispose of Wholly Owned Property.

Substantially all of the rental payments on certain Wholly Owned Property that is leased on a net basis may be dedicated to servicing the associated mortgage debt, in which case significant amounts of cash would not be available to offset operating expenses and the cost of Fund borrowings used to finance Belcrest Realty’s equity in the properties. Such costs and expenses generally must be provided from other sources of cash flow for Belcrest Realty and the Fund, which may include additional Fund borrowings under the Credit Facility. Realized returns on investments in net leased property may be deferred until the property is re-leased following the initial lease term or sold.

The risks of investing in Co-owned Property are substantially the same as investing in Wholly Owned Property, as well as certain additional risks relating to the ownership of real properties as tenants-in-common. Included in these risks are the inability to make independent decisions regarding the property and the risk that other owners may not properly perform their obligations relating to the property.

The Co-owned Property is financed through mortgage notes. The mortgage notes are secured by the real property and are generally without recourse to Belcrest Realty and the Fund, except that there may be recourse for certain liabilities arising from actions such as fraud, misrepresentation, misappropriation of funds or breach of material covenants and liabilities arising from environmental conditions.

The success of investments in Partnership Preference Units depends upon factors relating to the issuing partnerships that may affect such partnerships’ profitability and their ability to make distributions to holders of Partnership Preference Units. Investments in Partnership Preference Units are valued primarily by referencing market trading prices for comparable preferred equity securities or other fixed-rate instruments having similar investment characteristics. The valuations of Partnership Preference Units fluctuate over time to reflect, among other factors, changes in interest rates, changes in the perceived riskiness of such units (including call risk), changes in the perceived riskiness of comparable or similar securities trading in the public market and the relationship between supply and demand for comparable or similar securities trading in the public market. The valuation of Partnership Preference Units will be adversely affected by increases in interest rates and increases in the perceived riskiness of such units or comparable or similar securities. Because the Partnership Preference Units are not rated by a nationally recognized rating agency, they may be subject to more credit risk than securities that are rated investment grade.

Changes in the fair value of real estate investments and other factors will cause the performance of the Fund to deviate from the performance of the Portfolio. Over time, the performance of the Fund can be expected to be more volatile than the performance of the Portfolio.

29Risks of Interest Rate Swap Agreements. Interest rate swap agreements are subject to changes in valuation caused principally by movements in interest rates. Interest rate swap agreements are private contracts in which there is a risk of loss in the event of a default on an obligation to pay by the counterparty. Interest rate swap agreements may be difficult to value and may be illiquid. Fluctuations in the value of Partnership Preference Units derived from changes in general interest rates can be expected to be offset in part (but not entirely) by changes in the value of interest rate swap agreements applying to those Partnership Preference Units for which they were purchased, or other interest rate hedges that may be entered into by the Fund with respect to its borrowings. The risks of interest rate swap agreements include changes in market conditions that will affect the value of the agreement or the cash flows and the possible inability of the counterparty to fulfill its obligations under the agreement. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the agreement’s remaining life, to the extent that amount is positive.

Risks of ~~Interest~~Leverage. ~~Rate~~Although ~~Swap~~intended ~~Agreements.~~to ~~Interest~~add ~~rate~~to ~~swap~~returns, ~~agreements~~the ~~are~~borrowing ~~subject~~of funds to ~~changes~~purchase inreal ~~valuation~~estate ~~caused~~investments ~~principally~~exposes bythe ~~movements~~Fund into ~~interest~~the ~~rates.~~risk ~~Interest~~that ~~rate~~the ~~swap~~returns ~~agreements~~achieved ~~are~~on the real estate ~~private~~investments ~~contracts~~will inbe ~~which~~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 ~~loss~~financing inwill be interrupted at some future time, requiring the ~~event~~Fund ofto sell assets to repay outstanding borrowings or a ~~default~~portion thereof. onIt anmay ~~obligation~~be necessary to make such sales at unfavorable prices. The Fund’s obligations ~~pay~~under the Credit Facility are secured by a pledge of its assets, excluding the ~~counterparty~~Fund’s real estate investments. ~~Interest~~In ~~rate~~the ~~swap~~event ~~agreements~~of ~~may~~default, bethe ~~difficult~~lender could elect to ~~value~~sell ~~and~~assets ~~may~~of ~~be illiquid.~~the ~~Fluctuations~~Fund inwithout regard ~~the~~to ~~value~~consequences of ~~Partnership~~such ~~Preference~~action ~~Units~~for ~~derived~~Shareholders. ~~from~~The ~~changes~~rights inof ~~general~~the lender to receive payments of interest ~~rates~~on ~~can~~and berepayments ~~expected~~of toprincipal beof ~~offset~~borrowings inunder ~~part~~the ~~(but~~Credit ~~not~~Facility ~~entirely)~~are senior byto ~~changes~~the inrights of the ~~value~~Shareholders. Under the terms of ~~interest~~ ~~rate~~the ~~swap~~Credit ~~agreements~~Facility, ~~applying~~the Fund is not permitted to ~~those~~make ~~Partnership~~distributions ~~Preference~~of ~~Units~~cash ~~for~~or ~~which~~securities ~~they~~while ~~were purchased,~~there is a default or ~~other~~event ~~interest~~of ~~rate~~default outstanding ~~hedges~~under ~~that~~the ~~may~~Credit beFacility. ~~entered~~During ~~into~~such byperiods, the Fund ~~with~~would ~~respect~~not be able to ~~its~~honor ~~borrowings~~redemption requests or make cash distributions.

Risks of Leverage. Although intended to add to returns, the borrowing of funds to purchase real estate investments exposes the Fund to the risk that the returns achieved on the real estate investments will be lower than the cost of borrowing to purchase such assets and that the leveraging of the Fund to buy such assets will therefore diminish the returns achieved by the Fund as a whole. In addition, there is a risk that the availability of financing will be interrupted at some future time, requiring the Fund to sell assets to repay outstanding borrowings or a portion thereof. It may be necessary to make such sales at unfavorable prices. The Fund’s obligations under the Credit Facility are secured by a pledge of its assets, excluding the Fund’s investment in Subsidiary Real Estate Investments. 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. The lender under the New Credit Facility would have similar rights to Fund assets in the event of a default under the New Credit Facility. Under the terms of the Credit Facility, the Fund is not permitted to make distributions of cash or securities while there is a default or 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. The New Credit Facility contains similar provisions restricting redemptions and cash distributions in the case of an event of default by the Fund under the New Credit Facility.

In addition, the rights of lenders under the mortgage notes used to finance Subsidiary Real Estate Investments are senior to Belcrest Realty’s right to receive cash distributions from the Subsidiary Real Estate Investments.

Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements required by Item 8 begin on page 4140 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 ending December 31, ~~2009~~2010 and ~~2008~~2009.

	2009
	2010
	First			Second			Third		Fourth
	Quarter			Quarter			Quarter		Quarter
Investment income	$	97,~~981~~949,~~040~~443		$	98,~~695~~511,~~841~~368		$	8,~~263~~290,~~379~~427	$	96,~~094~~562,~~617~~467
Net investment income	$	76,~~999~~076,~~802~~732		$	76,~~892~~106,~~929~~968		$	65,~~585~~749,~~769~~297	$	74,~~397~~464,~~624~~202
Net increase (decrease) in net assets from operations	$	~~(145~~30,~~471~~722,~~589~~748	)	$	37(68,~~993~~113,~~435~~307	)	$	~~104~~79,~~289~~194,~~968~~029	$	4677,~~944~~758,~~612~~677
Per share data(1):
Per share data(1) :
Investment income	$	01.9400		$	01.9914		$	01.8916	$	10.0796
Net investment income	$	0.76		$	0.8082		$	0.7180	$	0.8765
Net increase (decrease) in net assets from operations	$	~~(13~~3.7687	)	$	3(9.8711	)	$	11.2607	$	511.5239

	2008
	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
Investment income	$	12,789,141		$	13,938,723		$	13,584,887		$	12,592,888
Net investment income	$	5,056,054		$	7,666,869		$	7,824,963		$	7,858,479
Net decrease in net assets from operations	$	(188,201,971	)	$	(53,690,167	)	$	(87,365,764	)	$	(367,052,934	)
Per share data(1):
Investment income	$	0.94		$	1.07		$	1.08		$	1.10
Net investment income	$	0.37		$	0.59		$	0.62		$	0.68
Net decrease in net assets from operations	$	(13.85	)	$	(4.11	)	$	(6.92	)	$	(31.95	)


	2009
	First			Second		Third		Fourth
	Quarter			Quarter		Quarter		Quarter

Investment income	$	9,981,040		$	9,695,841	$	8,263,379	$	9,094,617
Net investment income	$	7,999,802		$	7,892,929	$	6,585,769	$	7,397,624
Net increase (decrease) in net assets from operations	$	(145,471,589	)	$	37,993,435	$	104,289,968	$	46,944,612

Per share data⁽¹⁾:
Investment income	$	0.94		$	0.99	$	0.89	$	1.07
Net investment income	$	0.76		$	0.80	$	0.71	$	0.87
Net increase (decrease) in net assets from operations	$	(13.76	)	$	3.87	$	11.26	$	5.52


⁽¹⁾		Based on average Shares outstanding.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

Item 9A. Controls and Procedures.

Fund Governance. As the Fund’s manager, the complete and entire management, control and operation of the Fund are vested in Eaton Vance. The Fund’s Chief Executive Officer and Chief Financial Officer intend to report to the Audit Committee of the Board of Directors of Eaton Vance, Inc. (the sole trustee of Eaton Vance) any significant deficiency in the design or operation of internal control over financial reporting which could adversely affect the Fund’s ability to record, process, summarize and report financial data, and any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund’s internal control over financial reporting.

Disclosure Controls and Procedures. Eaton Vance, as the Fund’s manager, evaluated the ~~effectiveness~~ effectiveness of the Fund’s disclosure controls and procedures (as defined by Rule 13a-15(e) of the Act) as of the end of the period covered by this report, with the participation of the Fund’s Chief ~~Executive~~ Executive Officer and Chief Financial Officer. The Fund’s disclosure controls and procedures are the controls and other procedures that the Fund designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based on that evaluation, the Fund’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, ~~2009~~2010, the Fund’s disclosure controls and procedures were effective.

Internal Control Over Financial Reporting. The Fund’s Chief Executive Officer and Chief Financial Officer have established and maintain internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Act.

3130

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

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

Management assessed the effectiveness of the Fund’s internal control over financial reporting as of December 31, ~~2009~~2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on its assessment and those criteria, management believes that the Fund ~~maintained~~ maintained effective internal control over financial reporting as of December 31, ~~2009~~2010.

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

~~March~~February 128, ~~2010~~2011.

3231

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of Belcrest Capital Fund LLC and Subsidiaries

We have audited the internal control over financial reporting of Belcrest Capital Fund LLC and subsidiaries (the “Fund”) as of December 31, ~~2009~~2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Fund’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Fund’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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, the Fund maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2009~~2010, 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 and financial highlights as of and ~~for~~ for the year ended December 31, ~~2009~~2010 of the Fund and our report dated ~~March~~February 128, ~~2010~~2011 expressed an unqualified opinion on those financial statements and financial highlights.

DELOITTE & TOUCHE LLP Boston, Massachusetts ~~March~~February 128, ~~2010~~2011

3332

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

(a) Management.

Pursuant to the Fund’s LLC Agreement, the Fund’s manager, Eaton Vance, has the authority to conduct the Fund’s business. Eaton Vance appointed Thomas E. Faust Jr. to serve indefinitely as the Fund’s Chief Executive Officer on October 16, 2002. Eaton Vance appointed Andrew C. Frenette to serve indefinitely as the Fund’s Chief Financial Officer on January 22, 2007. Information about MrMessrs. ~~Faust~~ ~~appears~~Faust ~~below. Mr. Frenette, 35, is a Vice President of Eaton Vance~~ and ~~Boston Management. He also serves as Chief Financial Officer of Belport Capital Fund LLC and Belrose Capital Fund LLC. Mr.~~ Frenette ~~has~~appears ~~been an employee of Eaton Vance since 2006~~below. Prior to joining Eaton Vance, Mr. Frenette was Manager of Finance — Investments and Acquisitions for GE Real Estate, a business unit of GE Commercial Finance. Mr. Frenette serves as a Vice President of Belcrest Realty, as well as the REIT subsidiary of each of the other above-mentioned funds. As members of the Eaton Vance organization, Messrs. Faust and Frenette receive no compensation from the Fund for serving as Fund officers. There are no other officers of the Fund. The Fund does not have a board of directors or similar governing body.

The Audit Committee of the Board of Directors of Eaton Vance, Inc., the sole trustee of Eaton Vance, oversees the accounting and financial reporting processes of the Fund, audits of the Fund’s financial statements and otherwise serves as the Fund’s audit committee. The Fund has no nominating or compensation committee. The members of the Audit Committee of the Board of Directors of Eaton Vance, Inc. are Frederick S. Marius and Robert J. Whelan. The Fund’s audit committee financial expert (as that term is defined in Item 7(d)(3)(iv) of Schedule 14A under the Act) is Mr. Whelan. Messrs. Marius and Whelan are senior officers of Eaton Vance and, as such, are not independent of Fund management. Information about Messrs. Marius and Whelan appears below.

Boston Management is investment adviser to the Fund and the Portfolio and manager of Belcrest Realty. The Co-Portfolio Managers of the Fund and of the Portfolio are Duncan W. Richardson, Lewis R. Piantedosi, Yana S. Barton and Michael A. Allison. Mr. Richardson is Executive Vice President and Chief Equity Investment Officer of Eaton Vance, Boston Management and Eaton Vance Corp. and a Director of Eaton Vance Corp. Mr. Richardson has been employed by Eaton Vance since 1987. Messrs. Piantedosi and Allison and Ms. Barton are each a Vice President of Eaton Vance and Boston Management. Mr. Piantedosi became Co-Portfolio Manager of the Fund and of the Portfolio on May 1, 2006, has been employed by the Eaton Vance organization since 1993 and manages other Eaton Vance portfolios. Ms. Barton and Mr. Allison became Co-Portfolio Managers of the Fund and of the Portfolio on March 1, 2008, have been employed by the Eaton Vance organization since 1997 and 2000, respectively, and manage other Eaton Vance portfolios. Boston Management has an experienced team of analysts that provides Messrs. Richardson, Piantedosi, Allison and Ms. Barton with research and recommendations on investments.

The directors of Belcrest Realty are MrMessrs. Faust and ~~William R~~Frenette. ~~Cross, each of whom is described below.~~ Mr. ~~Cross~~Frenette (36) is the President and portfolio manager of Belcrest Realty and the head of Boston Management’s real estate investment group, which has primary responsibility for providing research and analysis relating to the Fund’s real estate investments held through Belcrest Realty. Mr. ~~Cross~~ Frenette is a Vice President of Eaton Vance and Boston Management and has been employed by the Eaton Vance organization since 2006. ~~1996~~Prior to joining Eaton Vance, Mr. Frenette was Manager of Finance — Investments and Acquisitions for GE Real Estate, a business unit of GE Commercial Finance. A majority of Mr. ~~Cross~~ Frenette’s time is spent managing the real estate investments of Belcrest Realty and the real estate investment affiliates of other investment funds advised by Boston Management. Mr. ~~Cross~~ Frenette serves on the board of managers of Lafayette. Other officers of Eaton Vance and Boston Management also serve as ~~Chairman~~officers and/or directors of ~~the~~Lafayette.2 ~~Board~~As disclosed under “The Eaton Vance Organization” in Item 1, Eaton Vance and ~~President~~Boston Management are wholly owned subsidiaries of Eaton ~~the~~Vance ~~Real~~Corp. The non-voting common stock of Eaton Vance Corp. is listed and traded on the ~~Estate~~NYSE. ~~Joint~~All ~~Ventures~~shares of the voting common stock of Eaton Vance Corp. ~~Other~~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 ~~Boston~~of Boston Management, ~~also~~each ~~serve~~of aswhich is a Massachusetts business trust. The names of the executive officers and~~/or~~ the directors of ~~the~~Eaton ~~Real~~Vance, ~~Estate~~Inc. ~~Joint~~and ~~Ventures~~their ages and principal occupations (in addition to their responsibilities described above) are set forth below.

AsThomas ~~disclosed under “The Eaton Vance Organization” in Item 1, Eaton Vance and Boston Management are wholly owned subsidiaries of Eaton Vance Corp~~E. ~~The~~Faust ~~non-voting common stock of Eaton Vance Corp~~Jr. (52) is ~~listed~~ ~~and~~Chief ~~traded~~Executive onOfficer ~~the~~and ~~NYSE.~~President ~~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~~President ~~organization. Eaton Vance, Inc., a wholly owned subsidiary of Eaton Vance Corp., is the sole trustee of Eaton Vance~~ and ofDirector ~~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.~~

34 2 Prior to December 1, 2010, William R. Cross, a Vice President of Eaton Vance and Boston Management, held the following positions currently held by Mr. Frenette: director of Belcrest Realty; President and portfolio manager of Belcrest Realty; head of Boston Management’s real estate investment group; and board member of Lafayette. Mr. Frenette assumed these positions when Mr. Cross transferred to another role within the Eaton Vance organization.

~~Thomas E. Faust Jr. (51) is Chief Executive Officer and President of Eaton Vance Corp., President~~33 and Director of Eaton Vance, Inc., Chief Executive Officer and President of Eaton Vance and Boston Management, and Director of EV Distributors. He is also Chief Executive Officer of Belport Capital Fund LLC and Belrose 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.

~~Frederick~~Chief S.Executive ~~Marius~~Officer ~~(46) is~~and ~~Vice~~ President, ~~Secretary and Chief Legal Officer~~ of Eaton Vance~~, Boston~~ ~~Management, Eaton Vance Corp., EV Distributors~~ and ~~Eaton Vance~~Boston Management, ~~Inc.~~ and a Director of ~~Eaton Vance,~~EV ~~Inc~~Distributors. He is also an officer of various ~~investment~~other investment companies managed by Eaton Vance or Boston Management. ~~and~~Mr. Faust has been employed by Eaton Vance since ~~2004~~1985.

~~Robert~~Frederick JS. ~~Whelan~~Marius (4847) is Vice President, Secretary and ~~Treasurer~~Chief Legal Officer of Eaton Vance, Boston Management, Eaton Vance Corp., EV Distributors and Eaton Vance, Inc. and a Director of Eaton Vance, Inc. He is also ~~the~~an ~~Chief Financial~~officer ~~Officer~~ of ~~Eaton~~various ~~Vance~~investment ~~Corp.~~companies ~~and~~managed by Eaton Vance, ~~Inc.~~or ~~and~~Boston Management ~~Vice President~~ and ~~Director of EV Distributors. He~~ has been employed by Eaton Vance since ~~2007. Prior to joining Eaton Vance, Mr. Whelan was Executive Vice President and Chief Financial Officer for Boston Private Wealth Management Group from December~~ 2004 ~~to April 2007~~.

Robert J. Whelan (49) is Vice President and Treasurer of Eaton Vance, Boston Management, Eaton Vance Corp. and Eaton Vance, Inc. and a Director of Eaton Vance, Inc. He is also the Chief Financial Officer of Eaton Vance Corp. and Eaton Vance, Inc. and Vice President and Director of EV Distributors. He has been employed by Eaton Vance since 2007. Prior to joining Eaton Vance, Mr. Whelan was Executive Vice President and Chief Financial Officer for Boston Private Wealth Management Group from December 2004 to April 2007.

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

Section 16(a) of the 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 ending December 31, ~~2009~~2010 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, Two International Place, Boston, MA 02110 or by calling (800) 225-6265. If the Fund makes any substantive amendments to the Code of Ethics or grants any waiver, including an implicit waiver, from a provision of the Code of Ethics as applicable to the principal executive officer or principal financial officer, the Fund will disclose the nature of such amendment or waiver in a report on Form 8-K.

Item 11. Executive Compensation.

As noted in Item 10, the officers of the Fund receive no compensation from the Fund (nor does any other officer of Belcrest Realty or a Subsidiary Real Estate Investment of the Fund performing policy making functions for the Fund). The Fund’s manager, Eaton Vance, and its affiliates receive certain fees from the Fund for services provided to the Fund, which are described in Item 13 below.

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

Security Ownership of Certain Beneficial Owners. As of ~~March~~February 111, ~~2010~~2011, the following ~~person~~ person beneficially owned the percentage of Fund Shares indicated:

Name and Address of
Beneficial Owner	~~Percent of Class~~	Percent of Class
Jeff Broad & Cindy Quane, Trustees, The Eli & Edyth Broad 1980 Family Trust and the Jeffrey Broad 1997 Trust Los Angeles, CA	11%
Jeff Broad & Cindy Quane Trust			13.52	%
SCA Investment Co. Ltd. as pledged to Merrill Lynch Bank USA as Pledgee			5.46	%
Acuitya Mutual Insurance Company			5.25	%

To the knowledge of the Fund, no other person beneficially owned more than 5% of the Shares of the Fund as of December 31, ~~2009~~2010.

Security Ownership of Management. As of February 1711, ~~2010~~2011, Eaton Vance, the manager of the Fund, beneficially owned 113 Shares of the Fund. The Shares owned by Eaton Vance represent less than 1% of the outstanding Shares of the Fund as of February 11, 2011. None of the other entities or individuals named in response to Item 10 above beneficially owned Shares of the Fund as of such date.

Fund as of February 17, 2010. None of the other entities or individuals named in response to Item 10 above beneficially owned Shares of the Fund as of such date.

Changes in Control. Not applicable.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Messrs. Faust and Frenette are currently the only “related persons” of the Fund (as that term is defined in Regulation S-K under the Securities Act and the Act). The Fund has instituted written policies and procedures to determine the existence of a reportable transaction under Item 404(a) of Regulation S-K. In accordance with such policies and procedures, Eaton Vance circulates an Executive Officer Questionnaire to each related person annually to determine the existence of a potential reportable transaction. Any transaction, or proposed transaction, in which the Fund was or is to be a participant and the amount of which exceeds $120,000 (and in which a related person had or will have a direct or indirect material interest) is required to be reviewed by the Audit Committee of the Board of Directors of Eaton Vance, Inc. The Fund did not have any reportable transactions under Item 404(a) of Regulation S-K during the year ending December 31, ~~2009~~2010.

The table below sets forth the fees paid or payable by, or allocable to, the Fund and Belcrest Realty for the years ending December 31, ~~2009~~2010 and ~~2008~~2009 in connection with services rendered by Eaton Vance and its affiliates. Each fee is described in the following table.

	Year ending		Year ending
	December		December 31,
	31, 2009		31, 2008
	31, 2010		2009
Fund Advisory and Administrative Fees*	$	~~997~~947,~~271~~890	$	1997,~~191,207~~271
Belcrest Realty Management Fees	$	3,~~637~~253,~~121~~258	$	43,~~524~~637,~~851~~121
Fund’s Allocable Portion of the Portfolio’s Advisory Fees**	$	32,~~238~~988,~~375~~131	$	63,~~655~~238,~~478~~375
Fund Servicing Fees	$	~~237~~245,~~556~~133	$	~~451~~237,~~732~~556
Fund’s Allocable Portion of Belvedere Company’s Servicing Fees	$	1983,~~081,255~~166	$	21,~~318~~081,~~528~~255
Fund Distribution Fees		—	$	1,304,533	*
Aggregate Compensation Paid by the Fund to Eaton Vance and its Affiliates	$	4,201,148	$	4,634,392
Aggregate Compensation Paid by the Fund to Eaton Vance and its Affiliates	$	4,634,392	$	7,020,591

*		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 Belcrest Realty, respectively, exceeds 0.60% of the average daily gross assets of the Fund. If the Fund invests in anthe EV money market fund, the advisory and administrative fee paid to Boston Management by the EV money market fund in respect of the Fund’s investment therein will be credited towards the Fund’s advisory and administrative fee payments, as applicable, reducing the amount of such fees otherwise payable. The amounts shown are net of reductions and amounts waived by Boston Management.
**		For the years ending December 31, ~~2009~~2010 and ~~2008~~2009, advisory fees paid or payable by the Portfolio totaled $4140,~~375~~626,~~335~~632 and $6841,~~300~~375,~~344~~335, respectively. For the year ending December 31, ~~2009~~2010, Belvedere Company’s allocable portion of that fee was $2928,~~752~~742,~~815~~601 of which $32,~~238~~988,~~375~~131 was allocable to the Fund. For the year ending December 31, ~~2008~~2009, Belvedere Company’s allocable portion of that fee was $5029,~~952~~752,~~553~~815, of which $63,~~655~~238,~~478~~375 was allocable to the Fund. The advisory fee payable by the Portfolio is reduced by the Portfolio’s allocable portion of the advisory fee paid by anthe EV money market fund, as applicable.

~~The Fund’s Investment Advisory and Administrative Fee. Under the terms of the Fund’s investment~~35 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 investment 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 advisory and management fees for such month payable by the Portfolio and Belcrest Realty, respectively, exceeds 1/20 of 1% of the average daily gross investment assets of the Fund. The term gross investment assets as used in the agreement means the value of all assets of the Fund other than the Fund’s investment in Belcrest Realty minus the sum of the Fund’s liabilities other than the principal amount of money borrowed.

36The 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 investment 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 Fund’s attributable share of the monthly advisory and management fees for such month payable by the Portfolio and Belcrest Realty, respectively, exceeds 1/20 of 1% of the average daily gross investment assets of the Fund. The term gross investment assets as used in the agreement means the value of all assets of the Fund other than the Fund’s investment in Belcrest Realty minus the sum of the Fund’s liabilities other than the principal amount of money borrowed.

Belcrest Realty’s Management Fee. Under the terms of Belcrest 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 investment assets of Belcrest Realty. The term gross investment assets as used in the agreement means the value of all assets of Belcrest Realty minus the sum of Belcrest Realty’s liabilities other than the principal amount of money borrowed. For this purpose, the assets and liabilities of Belcrest Realty includes its ratable share of the assets and liabilities of its direct and indirect subsidiaries, real estate joint ventures, and co-owned real property investments.

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	Annual Fee Rate
Average Daily Net Assets for the Month	(for each level)
Month	(for each level)
Up to $500 million		0.6250	%
$500 million but less than $1 billion		0.5625	%
$1 billion but less than $1.5 billion		0.5000	%
$1.5 billion but less than $7 billion		0.4375	%
$7 billion but less than $10 billion		0.4250	%
$10 billion but less than $15 billion		0.4125	%
$15 billion but less than $20 billion		0.4000	%
$20 billion but less than $25 billion		0.3900	%
$25 billion and over		0.3800	%

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 0.20% 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’s servicing fee described above.

~~Distribution~~Certain ~~Fees~~Real ~~Paid~~Estate toInvestment ~~EV Distributors~~Transactions. ~~Under~~During the ~~terms~~year ofending ~~the Fund’s placement agreement with EV Distributors~~December 31, ~~EV Distributors receives a distribution fee at an annual rate of 0.10% of the~~2010, ~~average~~Belcrest ~~daily~~Realty ~~net~~did ~~assets~~not ofenter ~~the~~into ~~Fund~~any asreal ~~compensation~~estate ~~for~~investment ~~its~~transactions ~~services~~with ~~as placement agent~~affiliates. ~~The~~ ~~distribution fee accrued from the Fund’s initial closing and expired on November 24, 2008.~~

3736

Certain Real Estate Investment Transactions. During the year ending December 31, 2009, Belcrest Realty did not enter into any real estate investment transactions with affiliates.

Item 14. Principal Accounting Fees and Services.

The following table presents fees for the professional audit services rendered by Deloitte & Touche LLP for the audit of the Fund’s annual financial statements for the years ending December 31, ~~2009~~2010 and ~~2008~~2009 and fees billed for other services rendered by Deloitte & Touche LLP during those periods, including fees charged by Deloitte & Touche LLP to the Fund’s consolidated subsidiaries.

	Year ending December 31,
	2009		2008
	2010		2009
Audit fees	$	~~113~~88,~~825~~443	$	~~114~~113,~~550~~825
Tax fees (1)	$	~~235~~183,~~000~~500	$	235,~~442~~000
Total	$	~~348~~271,~~825~~943	$	~~349~~348,~~992~~825


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

The Audit Committee of the Board of Directors of Eaton Vance, Inc. reviews all audit, audit-related, tax and other fees at least annually. The Audit Committee of the Board of Directors of Eaton Vance, Inc., pre-approved all audit and tax services for the years ending December 31, ~~2009~~2010 and ~~2008~~2009. The Audit Committee of the Board of Directors of Eaton Vance, Inc. has concluded that the provision of the tax services listed above is compatible with maintaining the independence of Deloitte & Touche LLP.

3837

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Please see the Fund’s consolidated financial statements which begin on page 4140 of this Annual Report on Form 10-K. Please see the Portfolio’s financial statements which begin on page 6874 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 85 hereof.

3938

Appendix A

Belcrest Capital Fund LLC’s (The Fund) Investment Structure as of December 31, ~~2009~~2010

(A) The Fund is a Massachusetts limited liability company. Eaton Vance Management is the manager of the Fund; Boston Management and Research (ABoston Management) is the Fund’s investment adviser. (B) Belvedere Capital Fund Company LLC (BBelvedere Company) ~~Belcrest~~is ~~Realty~~a ~~Corporation~~Massachusetts limited liability company. Boston Management is the manager of Belvedere Company. (DC) Tax-Managed Growth Portfolio (Cthe Portfolio) ~~Allagash~~is ~~Lafayette~~a Massachusetts trust. Boston Management is the investment adviser of the Portfolio. (D) Belcrest Realty ~~Bel~~Corporation ~~Bel~~(Belcrest ~~Property~~Realty) ~~Real~~is ~~Estate~~a ~~Subsidiary~~Delaware ~~Holdings~~corporation. ~~LLC~~Boston Management is the manager of Belcrest Realty. Belcrest Realty also holds direct investments in partnership preference units. (GE) ~~Stamford~~Lafayette IReal Estate LLC is a Delaware limited liability company. Belcrest Realty owns a majority economic interest in this real estate joint venture. (HF) ~~Trust~~Bel Holdings LLC (EBel Holdings) ~~LLC~~is a Delaware limited liability company. Belcrest Realty owns a minority interest in Bel Holdings, which owns partnership preference units issued by Vornado Realty L.P. (EG) Bel Stamford I LLC (FBel Stamford I) is a Delaware limited liability company. Bel Stamford I is a wholly owned subsidiary of Belcrest Realty and owns a tenancy-in-common interest in real property.

(A) The Fund is a Massachusetts limited liability company. Eaton Vance Management is the manager of the Fund; Boston Management and Research (Boston Management) is the Fund’s investment adviser. (B) Belvedere Capital Fund Company LLC (Belvedere Company) is a Massachusetts limited liability company. Boston Management is the manager of Belvedere Company. (C) Tax-Managed Growth Portfolio (the Portfolio) is a Massachusetts trust. Boston Management is the investment adviser of the Portfolio. (D) Belcrest Realty Corporation (Belcrest Realty) is a Delaware corporation. Boston Management is the manager of Belcrest Realty. Belcrest Realty also holds direct investments in partnership preference units. (E) Allagash Property Trust is a Maryland real estate investment trust and Lafayette Real Estate LLC is a Delaware limited liability company. Belcrest Realty owns a majority economic interest in these real estate joint ventures. (F) Belcrest Realty Subsidiary LLC (Belcrest Subsidiary) is a Delaware limited liability company. Belcrest Subsidiary is a wholly owned subsidiary of Belcrest Realty. (G) Bel Holdings LLC (Bel Holdings) is a Delaware limited liability company. Belcrest Realty owns a minority interest in Bel Holdings, which owns partnership preference units issued by Vornado Realty L.P. (H) Bel Stamford I LLC (Bel Stamford I) is a Delaware limited liability company. Bel Stamford I is a wholly owned subsidiary of Belcrest Realty and owns a tenancy-in-common interest in real property.39

40 Belcrest Capital Fund LLC December 31, 2010

Belcrest Capital Fund LLC

Consolidated Portfolios of Investments

Investment in Belvedere Capital Fund Company LLC — 108.1% and 107.9%
Investment in Belvedere Capital Fund Company LLC — 101.8% and 108.1%
	December 31, 2009				December 31, 2008
	December 31, 2010				December 31, 2009
Security	Shares		Value		Shares		Value
Investment in Belvedere Capital Fund Company LLC (Belvedere Company)(1)		43,~~359~~634,~~219~~344	$	~~705~~659,~~444~~946,~~925~~022		64,~~488~~359,~~307~~219	$	~~872~~705,~~416~~444,~~210~~925
Total Investment in Belvedere Company
(identified cost, $406,197,404 and $749,176,948)			$	705,444,925			$	872,416,210
(identified cost, $294,300,162 and $406,197,404)			$	659,946,022			$	705,444,925
Partnership Preference Units — 10.6% and 9.2%
Partnership Preference Units — 11.2% and 10.6%
Security	Units		Value		Units		Value
Bel Holdings LLC†(2)(3)		73,986	$	9,262,977		82,209	$	6,972,285
Bel Holdings LLC†(2)(3)(4)		68,002	$	9,799,658		73,986	$	9,262,977
Essex Portfolio, L.P. (California Limited Partnership affiliate of Essex Property Trust, Inc.), 7.875% Series B Cumulative Redeemable Preferred Units, Callable from 12/31/09†(2)		300,000		1213,~~714~~272,660		300,000		912,~~636~~714,~~600~~660
Liberty Property Limited Partnership (Pennsylvania Limited Partnership affiliate of Liberty Property Trust), 7.45% Series B Cumulative Redeemable Preferred Units, Callable from 8/31/09†(2)		250,000		45,~~850~~352,~~000~~500		250,000		34,~~817~~850,~~500~~000
MHC Operating Limited Partnership (Illinois Limited Partnership affiliate of Equity Lifestyle Properties, Inc.), 8.0625% Series D Cumulative Redeemable Perpetual Preference Units, Callable from 3/24/10†(2)		1,500,000		2930,~~070~~240,000		1,500,000		2229,~~065~~070,000
MHC Operating Limited Partnership (Illinois Limited Partnership affiliate of Equity Lifestyle Properties, Inc.), 7.95% Series F Cumulative Redeemable Perpetual Preference Units, Callable from 6/30/10†(2)		700,000		13,~~377~~916,000		700,000		1013,~~157~~377,000
PSA Institutional Partners, L.P. (California Limited Partnership affiliate of Public Storage, Inc.), 6.4% Series NN Cumulative Redeemable Perpetual Preferred Units, Callable from 3/17/10†(2)		—		—		1,400,000		21,854,000
Total Partnership Preference Units
(identified cost, $85,093,960 and $121,054,966)			$	69,274,637			$	74,502,385
(identified cost, $84,395,363 and $85,093,960)			$	72,580,818			$	69,274,637
Real Estate Joint Ventures — 11.1% and 22.6%
Real Estate Joint Ventures — 8.5% and 11.1%
Description			Value				Value
Investment in Allagash Property Trust (a majority economic interest of 87.1% and 80.6% in Allagash Property Trust which invests in nineteen industrial distribution properties located in seven states, net of associated mortgage debt)(2)(4)			$	27,493,165			$	107,790,943
Investment in Allagash Property Trust (a majority economic interest of — % and 87.1% in Allagash Property Trust which invests in nineteen industrial distribution properties located in seven states)(2)(4)			$	—			$	27,493,165
Investment in Lafayette Real Estate LLC (a majority economic interest of 68.9% and 69.9% in Lafayette Real Estate LLC which invests in twelve office properties located in Virginia, net of associated mortgage debt)(2)				45,082,179				75,455,226
Investment in Lafayette Real Estate LLC (a majority economic interest of 65.7% and 68.9% in Lafayette Real Estate LLC which invests in twelve office properties located in Virginia)(2)(4)				55,149,311				45,082,179
Total Real Estate Joint Ventures
(identified cost, $262,241,300 and $260,284,212)			$	72,575,344			$	183,246,169
(identified cost, $82,935,329 and $262,241,300)			$	55,149,311			$	72,575,344

See notes to consolidated financial statements 41 40

Belcrest Capital Fund LLC December 31, 2010

Consolidated Portfolios of Investments (continued)

Co-owned Property — 0.4% and 0.6%
Co-owned Property — 0.5% and 0.4%
	December 31, 2009					December 31, 2008
	December 31, 2010					December 31, 2009
Description			Value					Value
Bel Stamford I LLC (a single member LLC with a 10.0% tenancy-in-common interest in an office property located in Connecticut, net of associated mortgage debt)(2)			$	2,335,863				$	4,581,534
Bel Stamford I LLC (a single member LLC with a 10.0% tenancy-in-common interest in an office property located in Connecticut)(2)(4)			$	2,926,700				$	2,335,863
Total Co-owned Property
(identified cost, $8,036,995 and $7,482,667)			$	2,335,863				$	4,581,534
(identified cost, $8,627,832 and $8,036,995)			$	2,926,700				$	2,335,863
Short-Term Investment — 0.2% and 0.1%
Short-Term Investments — 0.5% and 0.2%
	Interest					Interest
	(000’s					(000’s
Description	omitted)		Value			omitted)		Value
Cash Management Portfolio, 0.00% and 0.75%(5)		1,338	$	1,338,012			699	$	698,542
Cash Management Portfolio, — % and 0.00%(1)(4)(5)		—	$	—			1,338	$	1,338,012
Total Short-Term Investment
Eaton Vance Cash Reserves Fund, LLC, 0.22% and — %(1)(4)(5)		3,231		3,230,918			—		—
(identified cost, $1,338,012 and $698,542)			$	1,338,012				$	698,542
Total Short-Term Investments
Total Investments — 130.4% and 140.4%
(identified cost, $3,230,918 and $1,338,012)			$	3,230,918				$	1,338,012
(identified cost, $762,907,671 and $1,138,697,335)			$	850,968,781				$	1,135,444,840
Total Investments — 122.5% and 130.4%
Other Assets, Less Liabilities — (30.4)% and (40.4)%			$	(198,291,550	)			$	(326,563,363	)
(identified cost, $473,489,604 and $762,907,671)			$	793,833,769				$	850,968,781
Net Assets — 100.0% and 100.0%			$	652,677,231				$	808,881,477
Other Assets, Less Liabilities — (22.5)% and (30.4)%			$	(145,797,638	)			$	(198,291,550	)
Net Assets — 100.0% and 100.0%			$	648,036,131				$	652,677,231

The percentage shown for each investment category is based on net assets. The percentages as of December 31, 2008 were previously presented based on total investments as follows:


†		Security exempt from registration under the Securities Act of 1933. At December 31, 2010 and 2009, the value of these securities totaled $72,580,818 and $69,274,637 or 11.2% and 10.6% of net assets, respectively.

(1)		Investment has been pledged as collateral for the Credit Facility (Note 11A).

(2)		Investment valued at fair value using methods determined in good faith by or at the direction of the manager of Belcrest Realty Corporation.

(3)		The sole investment of Bel Holdings LLC is as follows: Vornado Realty L.P. (Delaware limited partnership affiliate of Vornado Realty Trust), 7% Series D-10 Cumulative Redeemable Preferred Units, callable from 11/17/08. This security is exempt from registration under the Securities Act of 1933.

(4)		Investment is presented as other affiliated investments in the Consolidated Statements of Assets and Liabilities.

(5)		Affiliated investment company available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of December 31, 2010 and 2009, respectively.

~~Investment~~See innotes ~~Belvedere~~to ~~Capital~~consolidated financial ~~Fund Company LLC — 76.8%~~statements 41

~~Partnership~~Belcrest ~~Preference Units — 6.6%~~ Capital Fund LLC December 31, 2010

Real Estate Joint Ventures — 16.1%

Co-owned Property — 0.4%

Short-Term Investment — 0.1%

†		Security exempt from registration under the Securities Act of 1933. At December 31, 2009 and 2008, the value of these securities totaled $69,274,637 and $74,502,385 or 10.6% and 9.2% of net assets, respectively.
(1)		Shares have been pledged as collateral for the Credit Facility (Note 11A).
(2)		Investment valued at fair value using methods determined in good faith by or at the direction of the manager of Belcrest Realty Corporation.
(3)		The sole investment of Bel Holdings LLC is as follows: Vornado Realty L.P. (Delaware limited partnership affiliate of Vornado Realty Trust), 7% Series D-10 Cumulative Redeemable Preferred Units, callable from 11/17/08. This security is exempt from the Securities Act of 1933.
(4)		At December 31, 2008, the investment in Allagash Property Trust consisted of twenty industrial distribution properties located in eight states, net of associated mortgage debt.
(5)		Affiliated investment company available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of December 31, 2009 and 2008, respectively.

See notes to consolidated financial statements 42

Belcrest Capital Fund LLC

Consolidated Financial Statements

Consolidated Statements of Assets and Liabilities

	December 31,
Assets	~~2009~~2010		~~2008~~2009
Investment in Belvedere Company, at value (identified cost, $406,197,404 and $749,176,948, respectively)	$	705,444,925	$	872,416,210
Investment in Belvedere Company, at value (identified cost, $294,300,162 and $406,197,404, respectively)	$	659,946,022	$	705,444,925
Unaffiliated investments, at value (identified cost, $355,372,255 and $388,821,845, respectively)		144,185,844		262,330,088
Other affiliated investments, at value (identified cost, $102,730,352 and $280,251,177, respectively)		71,106,587		85,512,196
Affiliated investment, at value (identified cost, $1,338,012 and $698,542, respectively)		1,338,012		698,542
Unaffiliated investments, at value (identified cost, $76,459,090 and $76,459,090, respectively)		62,781,160		60,011,660
Cash		1,~~212~~222,~~932~~976		1,~~761~~212,~~897~~932
Interest receivable from affiliated investment		—663		~~1,171~~—
Other assets		~~567~~260,~~345~~879		—567,345
Total assets	$	~~852~~795,~~749~~318,~~058~~287	$	1852,~~137~~749,~~207,908~~058
Liabilities
Loan payable — Credit Facility	$	~~194~~144,~~500~~000,000	$	~~316~~194,~~000~~500,000
Payable for Fund shares redeemed		~~568~~1,~~252~~546,143		~~486~~568,~~035~~252
Special Distributions payable		—		1,066,441
Interest payable for open interest rate swap agreements		1,848		61,852
Interest payable for open interest rate swap agreements		61,852		83,769
Open interest rate swap agreements, at value		710,801		3,241,582
Open interest rate swap agreements, at value		3,241,582		9,509,218
Payable to affiliate for investment advisory and administrative fees		238,957		367,161
Payable to affiliate for investment advisory and administrative fees		367,161		448,379
Payable to affiliate for servicing fee		70,992		56,209
Payable to affiliate for servicing fee		56,209		73,715
Other accrued expenses:
Interest expense		70137,~~764~~324		4870,~~918~~764
Other expenses and liabilities		1576,~~206,007~~091		~~609~~1,~~956~~206,007
Total liabilities	$	~~200~~147,~~071~~282,~~827~~156	$	~~328~~200,~~326~~071,~~431~~827
Net Assets	$	~~652~~648,~~677~~036,~~231~~131	$	~~808~~652,~~881~~677,~~477~~231
Shareholders’ Capital	$	~~652~~648,~~677~~036,~~231~~131	$	~~808~~652,~~881~~677,~~477~~231
Shares Outstanding (unlimited number of shares authorized)		86,~~125~~671,~~199~~766		108,~~826~~125,~~294~~199
Net Asset Value and Redemption Price Per Share	$	80.33	$	74.71
Net Asset Value and Redemption Price per Share	$	97.13	$	80.33

See notes to consolidated financial statements 43 42

Belcrest Capital Fund LLC December 31, 2010

Consolidated Financial Statements (continued)

Consolidated Statements of Operations

	Year Ended December 31,
Investment Income	~~2009~~2010			~~2008~~2009			~~2007~~2008
Dividends allocated from Belvedere Company (net of foreign taxes, $222,476, $419,463 and $719,054, respectively)	$	16,798,122		$	34,587,301		$	43,340,042
Dividends allocated from Belvedere Company (net of foreign taxes, $150,341, $222,476 and $419,463, respectively)	$	12,472,682		$	16,798,122		$	34,587,301
Interest allocated from Belvedere Company		5310,~~352~~225			~~509~~53,~~043~~352			~~563~~509,~~451~~043
Security lending income allocated from Belvedere Company, net		—			~~80,317~~—			~~160~~80,~~717~~317
Expenses allocated from Belvedere Company		(4,~~525~~127,~~297~~587	)		(94,~~404~~525,~~427~~297	)		(139,~~371~~404,~~603~~427	)
Net investment income allocated from Belvedere Company	$	128,~~326~~355,~~177~~320		$	2512,~~772~~326,~~234~~177		$	3025,~~692~~772,~~607~~234
Net investment income from Real Estate Joint Ventures		17,706,930			17,965,150			18,607,933
Net investment income allocated from Real Estate Joint Ventures		16,300,186			17,706,930			17,965,150
Distributions from Partnership Preference Units		6,~~447~~061,~~403~~563			86,~~429~~447,~~406~~403			128,~~671~~429,~~094~~406
Net investment income from Co-owned Property		552,265			241,961			—
Net investment income allocated from Co-owned Property		589,670			552,265			241,961
Interest		~~256~~240			~~404,323~~256			~~263~~404,~~776~~323
Interest allocated from affiliated investment		13,581			109,863			606,702
Interest allocated from affiliated investments		7,475			13,581			109,863
Expenses allocated from affiliated investment		(11,735	)		(17,298	)		(57,600	)
Expenses allocated from affiliated investments		(749	)		(11,735	)		(17,298	)
Total investment income	$	3731,~~034~~313,~~877~~705		$	5237,~~905~~034,~~639~~877		$	6252,~~784~~905,~~512~~639
Expenses
Investment advisory and administrative fees	$	4,~~634~~201,~~392~~148		$	74,~~020~~634,~~591~~392		$	97,~~048~~020,~~086~~591
Distribution and servicing fees		~~237~~245,~~556~~133			1237,~~756,265~~556			21,~~729~~756,~~803~~265
Interest expense on Credit Facility		13,~~624~~874,~~286~~651			151,~~958~~624,~~913~~286			3915,~~563~~958,~~027~~913
Custodian and transfer agent fee		6048,~~946~~644			5860,~~904~~946			7558,~~889~~904
Miscellaneous		~~601~~546,~~573~~985			1601,~~009,134~~573			1,~~369~~009,~~375~~134
Total expenses	$	78,~~158~~916,~~753~~561		$	257,~~803~~158,~~807~~753		$	5225,~~786~~803,~~180~~807
Deduct —
Reduction of investment advisory and administrative fees	$	—		$	~~1,304,533~~—		$	21,~~030~~304,~~065~~533
Net expenses	$	7,158,753		$	24,499,274		$	50,756,115
Reduction of custodian and transfer agent fee		55			—			—
Net investment income	$	29,876,124		$	28,406,365		$	12,028,397
Total expense reductions	$	55		$	—		$	1,304,533
Net expenses	$	8,916,506		$	7,158,753		$	24,499,274
Net investment income	$	22,397,199		$	29,876,124		$	28,406,365

See notes to consolidated financial statements 44 43

Belcrest Capital Fund LLC December 31, 2010

Consolidated Financial Statements (continued)

Consolidated Statements of Operations (continued)

	Year Ended December 31,
Realized and Unrealized Gain (Loss)	~~2009~~2010			~~2008~~2009			~~2007~~2008
Net realized gain (loss) —
Investment transactions in Belvedere Company (investments and foreign currency) (identified cost basis)(1)	$	(59,270,474	)	$	(26,802,134	)	$	86,463,901
Investments and foreign currency transactions allocated from Belvedere Company (identified cost basis)(1)	$	2,770,704		$	(59,270,474	)	$	(26,802,134	)
Investment transactions in Partnership Preference Units (identified cost basis)		~~(12~~119,~~744,455~~339	)		(1712,~~127~~744,~~051~~455	)		(117,~~003~~127,~~902~~051	)
Investment transactions in Real Estate Joint Ventures		(2137,~~033~~644,~~278~~457	)		—(2,033,278	)		—
Investment transactions in other real estate		—			~~(7,279,512~~—	)		—(7,279,512	)
Investment transactions in affiliated investment		1,947			—			—
Investment transactions allocated from affiliated investments		383			1,947			—
Interest rate swap agreements(2)		(92,~~654~~894,~~679~~857	)		(69,~~764~~654,~~123~~679	)		5(6,~~428~~764,~~613~~123	)
Net realized gain (loss)	$	(83,700,939	)	$	(57,972,820	)	$	90,888,612
Net realized loss	$	(137,648,888	)	$	(83,700,939	)	$	(57,972,820	)
Change in unrealized appreciation (depreciation) —
Investment in Belvedere Company (investments and foreign currency) (identified cost basis)	$	176,008,259		$	(608,715,768	)	$	(14,189,615	)
Investments and foreign currency allocated from Belvedere Company (identified cost basis)	$	66,398,339		$	176,008,259		$	(608,715,768	)
Investment in Partnership Preference Units (identified cost basis)		304,~~733~~004,~~258~~778			(630,~~190~~733,~~383~~258	)		(76,~~017~~190,~~232~~383	)
Investment in Real Estate Joint Ventures		~~(112~~161,~~627~~879,~~913~~938	)		(45112,~~057~~627,~~317~~913	)		9(45,~~256~~057,~~405~~317	)
Investment in Co-owned Property		~~(2,799,999~~—	)		(2,~~901~~799,~~133~~999	)		—(2,901,133	)
Investment in other real estate		—			~~7,279,512~~—			—7,279,512
Interest rate swap agreements		62,~~267~~530,~~636~~781			~~(11~~6,~~159~~267,~~292~~636	)		(1311,~~084~~159,~~514~~292	)
Net change in unrealized appreciation (depreciation)	$	97234,~~581~~813,~~241~~836		$	~~(666~~97,~~744~~581,~~381~~241	)	$	(25666,~~034~~744,~~956~~381	)
Net realized and unrealized gain (loss)	$	1397,~~880~~164,~~302~~948		$	~~(724~~13,~~717~~880,~~201~~302	)	$	65(724,~~853~~717,~~656~~201	)
Net increase (decrease) in net assets from operations	$	43119,~~756~~562,~~426~~147		$	~~(696~~43,~~310~~756,~~836~~426	)	$	77(696,~~882~~310,~~053~~836	)

(1)		Amounts include net realized gain (loss) from redemptions in-kind of $6,775,108, $(19,875,475), and $31,309,922 ~~and $58~~,~~508,103,~~ respectively.
(2)		Amounts include net interest ~~earned (~~incurred) in connection with periodic settlement of interest rate swap agreements of $(72,~~958~~894,~~380~~857), $(67,~~083~~958,~~785~~380) and $5(6,~~428~~083,~~613~~785), respectively (Note 2F2G).

See notes to consolidated financial statements 45 44

Belcrest Capital Fund LLC December 31, 2010

Consolidated Financial Statements (continued)

Consolidated Statements of Changes in Net Assets

	Year Ended December 31,
Increase (Decrease) in Net Assets	~~2009~~2010			~~2008~~2009			~~2007~~2008
From operations —
Net investment income	$	2922,~~876~~397,~~124~~199		$	2829,~~406~~876,~~365~~124		$	1228,~~028~~406,~~397~~365
Net realized gain (loss) from investment transactions, foreign currency transactions and interest rate swap agreements		(83,700,939	)		(57,972,820	)		90,888,612
Net realized loss from investment transactions, foreign currency transactions and interest rate swap agreements		(137,648,888	)		(83,700,939	)		(57,972,820	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and interest rate swap agreements		97234,~~581~~813,~~241~~836			~~(666~~97,~~744~~581,~~381~~241	)		(25666,~~034~~744,~~956~~381	)
Net increase (decrease) in net assets from operations	$	43119,~~756~~562,~~426~~147		$	~~(696~~43,~~310~~756,~~836~~426	)	$	77(696,~~882~~310,~~053~~836	)
Transactions in Fund shares —
Net asset value of Fund shares issued to Shareholders in payment of distributions declared	$	4600,~~083,889~~452		$	94,~~706~~083,~~988~~889		$	129,~~542~~706,~~139~~988
Net asset value of Fund shares redeemed		(~~190~~122,~~776~~796,~~429~~610	)		(~~293~~190,~~939~~776,~~716~~429	)		(~~403~~293,~~916~~939,~~398~~716	)
Net decrease in net assets from Fund share transactions	$	(~~186~~122,~~692~~196,~~540~~158	)	$	(~~284~~186,~~232~~692,~~728~~540	)	$	(~~391~~284,~~374~~232,~~259~~728	)
Distributions —
Distributions to Shareholders	$	(132,~~268~~007,~~132~~089	)	$	(2913,~~966~~268,~~576~~132	)	$	(3329,~~252~~966,~~346~~576	)
Special Distributions		—			~~(1,066,441~~—	)		—(1,066,441	)
Total distributions	$	(132,~~268~~007,~~132~~089	)	$	(3113,~~033~~268,~~017~~132	)	$	(3331,~~252~~033,~~346~~017	)
Net decrease in net assets	$	(~~156~~4,~~204~~641,~~246~~100	)	$	(1156,~~011~~204,~~576,581~~246	)	$	(~~346~~1,~~744~~011,~~552~~576,581	)
Net Assets
At beginning of year	$	~~808~~652,~~881~~677,~~477~~231		$	1808,~~820~~881,~~458,058~~477		$	21,~~167~~820,~~202~~458,~~610~~058
At end of year	$	~~652~~648,~~677~~036,~~231~~131		$	~~808~~652,~~881~~677,~~477~~231		$	1808,~~820~~881,~~458,058~~477

See notes to consolidated financial statements 46 45

Belcrest Capital Fund LLC December 31, 2010

Consolidated Financial Statements (continued)

Consolidated Statements of Cash Flows

	Year Ended December 31,
Increase (Decrease) in Cash	~~2009~~2010			~~2008~~2009			~~2007~~2008
Cash Flows From Operating Activities —
Net increase (decrease) in net assets from operations	$	43119,~~756~~562,~~426~~147		$	~~(696~~43,~~310~~756,~~836~~426	)	$	77(696,~~882~~310,~~053~~836	)
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash flows provided by operating activities —
Net investment income allocated from Belvedere Company		(128,~~326~~355,~~177~~320	)		(2512,~~772~~326,~~234~~177	)		(3025,~~692~~772,~~607~~234	)
Net investment income from Real Estate Joint Ventures		(17,706,930	)		(17,965,150	)		(18,607,933	)
Net investment income allocated from Real Estate Joint Ventures		(16,300,186	)		(17,706,930	)		(17,965,150	)
Net payments from Real Estate Joint Ventures		13,716,564			10,825,385			107,712,314
Payments from Real Estate Joint Ventures		15,679,809			13,716,564			10,825,385
Net investment income from Co-owned Property		(552,265	)		(241,961	)		—
Net investment income allocated from Co-owned Property		(589,670	)		(552,265	)		(241,961	)
Payments to Co-owned Property		(21,~~063~~167	)		(82,~~334~~063	)		—(8,334	)
(Increase) decrease in affiliated investment and interest receivable from affiliated investment		(638,299	)		3,511,598			(978,968	)
Amortization of deferred loan costs — Credit Facility		310,466			—			—
Decrease in distributions and interest receivable		—			470			561,842
(Increase) decrease in affiliated investment and interest receivable from affiliated investment		(1,893,186	)		(636,352	)		3,511,598
Decrease in interest receivable for open interest rate swap agreements		—			21,380			42,024
Decrease in distributions and interest receivable		—			—			470
(Increase) decrease in other assets		(567,345	)		222,282			(222,282	)
Decrease in interest receivable for open interest rate swap agreements		—			—			21,380
Decrease in payable to affiliate for investment advisory and administrative fees		(81,218	)		(87,080	)		(65,395	)
(Increase) decrease in other assets		(4,000	)		(567,345	)		222,282
Decrease in payable to affiliate for distribution and servicing fees		(17,506	)		(246,898	)		(63,418	)
Increase (decrease) in interest payable for open interest rate swap agreements		(60,004	)		(21,917	)		83,769
Increase (decrease) in interest payable for open interest rate swap agreements		(21,917	)		83,769			—
Decrease in payable to affiliate for investment advisory and administrative fees		(128,204	)		(81,218	)		(87,080	)
Increase (decrease) in accrued interest and other accrued expenses and liabilities		634,697			(381,309	)		(745,734	)
Increase (decrease) in payable to affiliate for distribution and servicing fees		14,783			(17,506	)		(246,898	)
Increases in Partnership Preference Units		(7,997	)		(13,374	)		(25,436	)
Increase (decrease) in accrued interest and other accrued expenses and liabilities		28,444			634,697			(381,309	)
Proceeds from sales of Partnership Preference Units		23,224,548			58,797,083			147,861,725
Increases in Partnership Preference Units		(6,151	)		(7,997	)		(13,374	)
Purchase of investment in Real Estate Joint Ventures		—			—			(43,390	)
Proceeds from sales of Partnership Preference Units		824,087			23,224,548			58,797,083
Purchase of investment in Co-owned Property		—			(7,232,372	)		—
Proceeds from sale of investment in Real Estate Joint Venture		42,281,891			—			—
Decreases in investment in Belvedere Company		106,100,000			205,000,000			90,000,000
Purchase of investment in Co-owned Property		—			—			(7,232,372	)
Net proceeds from sales of affiliated investment		1,947			—			—
Decreases in investment in Belvedere Company		1,500,000			106,100,000			205,000,000
Proceeds from sale of interest rate swap agreement		—			~~51,166~~—			—51,166
Payments for termination of interest rate swap agreements		~~(1,696,299~~—	)		(~~710~~1,~~151~~696,299	)		—(710,151	)
Net interest earned (incurred) on interest rate swap agreements		(7,958,380	)		(6,083,785	)		5,428,613
Net interest incurred on interest rate swap agreements		(2,894,857	)		(7,958,380	)		(6,083,785	)
Net realized (gain) loss from investment transactions, foreign currency transactions and interest rate swap agreements		83,700,939			57,972,820			(90,888,612	)
Net realized loss from investment transactions, foreign currency transactions and interest rate swap agreements		137,648,888			83,700,939			57,972,820
Net change in unrealized (appreciation) depreciation of investments, foreign currency and interest rate swap agreements		(97234,~~581~~813,~~241~~836	)		~~666~~(97,~~744~~581,~~381~~241	)		25666,~~034~~744,~~956~~381
Net cash flows provided by operating activities	$	~~131~~52,~~977~~803,~~484~~934		$	~~248~~131,~~176~~977,~~850~~484		$	~~312~~248,~~189~~176,~~752~~850
Cash Flows From Financing Activities —
Proceeds from Credit Facility	$	—		$	11,000,000		$	22,000,000
Proceeds from Credit Facility (Note 11A)	$	193,000,000		$	—		$	11,000,000
Repayments of Credit Facility		(121,500,000	)		(237,000,000	)		(329,000,000	)
Repayments of Credit Facility (Note 11A)		(243,500,000	)		(121,500,000	)		(237,000,000	)
Payments for Fund shares redeemed		(758,965	)		(2,206,897	)		(7,388,714	)
Payment for deferred loan costs — Credit Facility		(575,000	)		—			—
Distributions paid to Shareholders		(9,205,776	)		(20,259,588	)		(20,710,207	)
Payments for Fund shares redeemed		(295,453	)		(758,965	)		(2,206,897	)
Payment of Special Distributions		(1,044,908	)		—			—
Distributions paid to Shareholders		(1,406,637	)		(9,205,776	)		(20,259,588	)
Payment of Special Distributions		—			(1,044,908	)		—
Distributions paid to minority investors		(16,800	)		(16,800	)		(16,800	)
Net cash flows used in financing activities	$	(~~132~~52,~~526~~793,~~449~~890	)	$	(~~248~~132,~~483~~526,~~285~~449	)	$	(~~335~~248,~~115~~483,~~721~~285	)
Net decrease in cash	$	(548,965	)	$	(306,435	)	$	(22,925,969	)
Net increase (decrease) in cash	$	10,044		$	(548,965	)	$	(306,435	)
Cash at beginning of year	$	1,~~761~~212,~~897~~932		$	21,~~068~~761,~~332~~897		$	242,~~994~~068,~~301~~332
Cash at end of year	$	1,~~212~~222,~~932~~976		$	1,~~761~~212,~~897~~932		$	21,~~068~~761,~~332~~897

See notes to consolidated financial statements 47 46

Belcrest Capital Fund LLC December 31, 2010

Consolidated Financial Statements (continued)

Consolidated Statements of Cash Flows (continued)

	Year Ended December 31,
Supplemental Disclosure and Non-cash Operating and Financing Activities	~~2009~~2010		~~2008~~2009		~~2007~~2008
Interest paid on loan — Credit Facility	$	13,~~594~~497,~~785~~625	$	161,~~319~~594,~~582~~785	$	3916,~~844~~319,~~647~~582
Interest paid (received) on interest rate swap agreements, net	$	7,980,297	$	5,978,636	$	(5,470,637	)
Interest paid on interest rate swap agreements, net	$	2,954,861	$	7,980,297	$	5,978,636
Reclassification of dividends receivable	$	—	$	—	$	3,385,800
Reinvestment of distributions paid to Shareholders	$	600,452	$	4,083,889	$	9,706,988
Reinvestment of distributions paid to Shareholders	$	4,083,889	$	9,706,988	$	12,542,139
Market value of securities distributed in payment of redemptions	$	121,523,266	$	189,935,247	$	292,595,991
Market value of securities distributed in payment of redemptions	$	189,935,247	$	292,595,991	$	401,372,011
Swap interest receivable sold in conjunction with the sale of the interest rate swap agreement	$	—	$	—	$	21,353
Swap interest receivable sold in conjunction with the sale of the interest rate swap agreement	$	—	$	21,353	$	—

See notes to consolidated financial statements 48 47

Belcrest Capital Fund LLC December 31, 2010

Consolidated Financial Statements (continued)

Financial Highlights

	Year Ended December 31,
	2009			2008			2007
	2010			2009			2008
Net asset value — Beginning of year	$	7480.~~710~~330		$	~~132~~74.~~810~~710		$	~~130~~132.~~320~~810
Income (loss) from operations
Net investment income(1)	$	3.~~134~~048		$	23.~~239~~134		$	02.~~797~~239
Net realized and unrealized gain (loss)		314.~~716~~002			~~(58~~3.~~055~~716	)		3(58.~~713~~055	)
Total income (loss) from operations	$	617.~~850~~050		$	~~(55~~6.~~816~~850	)	$	4(55.~~510~~816	)
Distributions
Distributions to Shareholders	$	(10.~~230~~250	)	$	(21.~~200~~230	)	$	(2.~~020~~200	)
Special Distributions(1)		—			~~(0.084~~—	)		—(0.084	)
Total distributions	$	(10.~~230~~250	)	$	(21.~~284~~230	)	$	(2.~~020~~284	)
Net asset value — End of year	$	8097.~~330~~130		$	7480.~~710~~330		$	~~132~~74.~~810~~710
Total Return(2)		921.5126	%		~~(42~~9.7251	)%		3(42.5072	)%
Ratios as a percentage of average net assets
Investment advisory and administrative fees, distribution and servicing fees and other operating expenses(3)(4)		1.5250	%		1.3052	%		1.2130	%
Interest and other borrowing costs(3)(5)		0.2563	%		10.1525	%		1.9515	%
Total expenses		12.7713	%		21.4577	%		32.1645	%
Net investment income(5)		43.5366	%		24.0653	%		02.5906	%
Ratios as a percentage of average gross assets(6)
Investment advisory and administrative fees, distribution and servicing fees and other operating expenses(3)(4)		0.77	%		0.7877	%		0.7978	%
Interest and other borrowing costs(3)(5)		0.1232	%		0.7012	%		10.2770	%
Total expenses		01.8909	%		10.4889	%		21.0648	%
Net investment income(5)		21.2687	%		12.2426	%		01.3924	%
Supplemental Data
Net assets, end of year (000’s omitted)	$	~~652~~648,~~677~~036		$	~~808~~652,~~881~~677		$	1808,~~820,458~~881
Portfolio turnover of Tax-Managed Growth Portfolio(7)		2	%		13	%		23	%

(1)		Calculated using average shares outstanding.
(2)		Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested (except for Special Distributions).
(3)		Includes the expenses of Belcrest Capital Fund LLC (Belcrest Capital) and Belcrest Realty Corporation (Belcrest Realty).
(4)		Includes Belcrest Capital’s share of Belvedere Capital Fund Company LLC’s allocated expenses, including those expenses allocated from Tax-Managed Growth Portfolio ~~(the Portfolio)~~.
(5)		Ratios do not include net interest earned or incurred in connection with interest rate swap agreements. Had such amounts been included, ratios would be lower or higher.
(6)		Average gross assets means the average daily amount of the value of all assets of Belcrest Capital (not including its investment in Belcrest Realty) plus all assets of Belcrest Realty minus the sum of their liabilities other than the principal amount of money borrowed. For this purpose, the assets and liabilities of Belcrest Realty include its ratable share of the assets and liabilities of its direct and indirect subsidiaries, real estate joint ventures and co-owned real property investments.
(7)		~~Excludes~~Includes the value of portfolio securities contributed or distributed as a result of in-kind shareholder transactions. The ~~portfolio~~ turnover ~~rate~~rates offor the ~~Portfolio~~years ~~including~~ended ~~in-kind~~December ~~contributions and distributions was 3%~~31, 3%2009 and 6%2008 ~~for~~were ~~the~~previously ~~years~~presented ~~ended~~in ~~December~~a ~~31,~~footnote ~~2009,~~to ~~2008~~the ~~and~~Financial ~~2007, respectively~~Highlights.

See notes to consolidated financial statements 49 48

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements

1 Organization

Belcrest Capital Fund LLC (Belcrest Capital) is a Massachusetts 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 Belcrest Capital is to achieve long-term, after-tax returns for Belcrest Capital shareholders (Shareholders). Belcrest 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 1940 Act). The Portfolio is organized as a Massachusetts business trust under the laws of the Commonwealth of Massachusetts. ~~Prior~~ ~~to December 14, 2009, the Portfolio was organized as a trust under the laws of the state of New York.~~ Belcrest 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 ~~Belcrest~~ Belcrest Capital and Belvedere Company is directly and ~~substantially~~ substantially affected by the performance of the Portfolio. The ~~audited~~ audited financial statements of the Portfolio, including the ~~Portfolio~~ Portfolio of Investments, are included elsewhere in this report and should be read in conjunction with these financial statements.

Separate from its investment in the Portfolio through Belvedere Company, Belcrest Capital invests in real estate investments through a controlled subsidiary, Belcrest Realty Corporation (Belcrest Realty). Such investments include preferred equity interests in real estate operating partnerships (Partnership Preference Units) ~~generally~~ affiliated with publicly traded real estate ~~estate~~ investment trusts (REITs), ~~investments~~an investment in a real estate joint ~~joint~~venture ~~ventures~~ (Real Estate Joint ~~Ventures~~Venture) and a tenancy-in-common interest in real property (Co-owned Property). In November 2010, Belcrest Realty sold its interest in the Allagash Property Trust (Allagash) Real Estate Joint Venture. Belcrest Realty previously invested in certain debt and common ~~equity~~ equity investments in two private real estate companies that were sold in June 2008.

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 (GAAP).

Management has evaluated all subsequent events and transactions through ~~March~~February 128, ~~2010~~2011, the date the consolidated financial statements were issued, for possible adjustment to and/or disclosure in the consolidated financial statements.

A Principles of Consolidation. The consolidated financial statements include the accounts of Belcrest Capital and its subsidiaries (collectively, the Fund). All material intercompany accounts and transactions have been eliminated.

Investments in which the Fund cannot exercise a majority voting interest, but in which the Fund has the ability to exercise significant influence over operating and financial policies, are presented using the equity method and stated at fair value (Note 2E2F). Real Estate Joint Ventures and Co-owned Property are presented using the equity method. Under the equity method, Real Estate Joint Ventures and Co-owned Property are initially recognized onin the Consolidated Statements of Assets and Liabilities at cost (provided such cost is indicative of fair value) and are subsequently adjusted to reflect the Fund’s proportionate share of the net increase (decrease) in net assets from operations of Real Estate Joint Ventures and Co-owned Property. Real Estate Joint Ventures and Co-owned Property are also adjusted to reflect distributions, contributions, advances in the form of loans, interest earned on advances and certain other adjustments, as appropriate.

B ~~Basis~~Reclassification ofand Presentation. ~~Belcrest~~The ~~Capital~~December 31, is2009 anConsolidated ~~investment~~Statement ~~company~~of Assets and, Liabilities ashad ~~such,~~previously ~~presents~~not ~~its~~provided separate disclosure of ~~assets~~other ataffiliated ~~fair value~~investments. ~~Fixed~~The ~~liabilities~~presentation ~~are~~herein ~~generally~~has ~~stated at~~been ~~amounts payable.~~

49 50

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

~~C Cash~~corrected so that such presentation is made. ~~The~~ Specifically, ~~Fund~~investments ~~considers~~with ~~deposits~~a inmarket ~~banks~~value ~~that~~and ~~can~~cost beof ~~liquidated~~$85,512,196 ~~without~~and ~~prior~~$280,251,177, ~~notice~~respectively, orwere ~~penalty~~reclassified from unaffiliated investments and affiliated investment to beother ~~cash.~~affiliated investments.

DC ~~Investment~~Basis of ~~Costs~~Presentation. ~~The financial~~Belcrest ~~reporting~~Capital ~~cost basis of the Fund’s investment in Belvedere Company~~ is ~~the~~an ~~aggregate initial fair value of securities contributed to the Fund adjusted for the estimated allocation of the Fund’s share of net~~ investment ~~income~~company ~~or loss~~ and, ~~net realized gain or loss of Belvedere Company~~ as ~~well~~such, aspresents ~~other~~its ~~adjustments~~assets ~~including~~at ~~the~~fair value ~~of securities and cash contributed to Belvedere Company and received from Belvedere Company for redemptions or distributions~~. ~~The~~Fixed ~~tax~~liabilities ~~cost~~are ~~basis~~generally ~~of the~~stated ~~Fund’s investment in Belvedere Company is the aggregate~~at ~~tax~~amounts cost basis of securities contributed to the Fund adjusted for the Fund’s share of income or loss and net realized capital gain or loss of Belvedere Company determined in accordance with income tax regulations as well as other adjustments including, but not limited to, basis adjustments determined in accordance with the income tax regulations, and the tax cost basis of securities and cash contributed to Belvedere Company and received from Belvedere Company for redemptions or distributionspayable.

~~The financial reporting cost basis of the Fund’s Partnership Preference Units purchased by the Fund is the purchase cost~~D Cash. The ~~financial reporting cost basis of the~~ Fund’s ~~real~~considers ~~estate~~deposits ~~investments~~in ~~accounted~~banks ~~for~~that ~~using~~can ~~the equity~~be ~~method~~liquidated ~~is the purchase cost adjusted to reflect the~~without ~~Fund’s~~prior ~~proportionate~~notice ~~share of the net investment income~~ or ~~loss~~ ~~and~~penalty ~~net~~to ~~realized~~be ~~gain or loss of such real estate investment as well as other adjustments, as appropriate~~cash. ~~The tax~~ ~~cost basis of the Fund’s real estate investments purchased~~ ~~by the Fund is typically the purchase cost adjusted for certain items including depreciation of real estate assets and distributions treated as a return of capital for tax purposes.~~

E Investment ~~and Other~~ ~~Valuations~~Costs. The ~~Fund~~financial ~~invests~~reporting incost ~~shares~~basis of ~~Belvedere~~the ~~Company,~~Fund’s ~~Partnership~~investment ~~Preference~~in Belvedere ~~Units,~~Company ~~Real~~is ~~Estate~~the ~~Joint~~aggregate ~~Ventures~~initial ~~and~~fair ~~Co-owned~~value ~~Property.~~of ~~The~~all securities ~~Real~~contributed ~~Estate~~to ~~Joint~~Belvedere ~~Ventures~~Company ~~and~~by ~~Co-owned~~the ~~Property~~Fund ~~are~~adjusted ~~referred~~for tothe ~~herein~~estimated ~~collectively~~allocation asof ~~Subsidiary~~the ~~Real~~Fund’s ~~Estate~~share ~~Investments.~~of ~~The~~net investment ~~Fund~~income ~~may~~or ~~also~~loss ~~invest~~and ~~cash~~net onrealized again ~~temporary~~or ~~basis~~loss inof ~~Cash~~Belvedere ~~Management~~Company ~~Portfolio~~as ~~(Cash~~well ~~Management),~~as another ~~affiliated~~adjustments ~~investment~~including the value of ~~company~~securities ~~managed~~and bycash ~~Boston~~contributed ~~Management~~to ~~and~~Belvedere ~~Research~~Company ~~(Boston~~and ~~Management),~~received afrom ~~subsidiary~~Belvedere ofCompany ~~Eaton~~for ~~Vance~~redemptions ~~Management (Eaton~~or ~~Vance)~~distributions. ~~Additionally,~~The ~~Belcrest~~tax ~~Capital~~cost ~~has~~basis ~~entered~~of ~~into~~the ~~interest~~Fund’s investment ~~rate~~in ~~swap agreements (Note 10).~~ Belvedere Company~~’s only~~ ~~investment~~ is ~~an interest in~~ the ~~Portfolio,~~aggregate ~~the~~tax ~~value~~cost basis of all ~~which~~securities iscontributed ~~derived~~to ~~from~~Belvedere aCompany ~~proportional~~by ~~interest~~the ~~therein.~~Fund ~~Valuation~~adjusted for the Fund’s share of ~~securities~~income byor ~~the~~loss ~~Portfolio~~and isnet ~~discussed~~realized capital ingain ~~Note 1A~~or loss of Belvedere Company determined in ~~the~~accordance ~~Portfolio’s~~with ~~Notes~~income totax ~~Financial~~regulations ~~Statements,~~as ~~which~~well ~~are~~as other ~~included~~adjustments ~~elsewhere~~including, inbut ~~this~~not ~~report.~~limited ~~Boston~~to, ~~Management~~basis ~~makes~~adjustments ~~valuation~~determined ~~determinations~~ in accordance with the ~~Fund’s~~income tax regulations, and ~~policies.~~the ~~The~~tax ~~valuation~~cost ~~policies~~basis ~~followed~~of bysecurities ~~the~~and ~~Fund~~cash ~~are~~contributed asto ~~follows:~~Belvedere Company and received from Belvedere Company for redemptions or distributions.

The financial reporting cost basis of the Fund’s Partnership Preference Units purchased by the Fund is the purchase cost. The financial reporting cost basis of the Fund’s real estate investments accounted for using the equity method is the purchase cost adjusted to reflect the Fund’s proportionate share of the net investment income or loss and net realized gain or loss of such real estate investment as well as other adjustments, as appropriate, including cash contributions and distributions. The tax cost basis of the Fund’s real estate investments purchased by the Fund is typically the purchase cost adjusted for certain items including depreciation of real estate assets and distributions treated as a return of capital for tax purposes.

F Investment and Other Valuations. The Fund invests in shares of Belvedere Company, Partnership Preference Units, Real Estate Joint Ventures and Co-owned Property. The Real Estate Joint Ventures and Co-owned Property are referred to herein collectively as Subsidiary Real Estate Investments. The Fund may also invest cash on a temporary basis in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund). Prior to February 2010, the Fund invested cash in Cash Management Portfolio (Cash Management). Cash Reserves Fund and Cash Management are affiliated investment companies managed by Eaton Vance Management (Eaton Vance) and Boston Management and Research (Boston Management), respectively. Boston Management is a subsidiary of Eaton Vance which is wholly owned by Eaton Vance Corp. Additionally, Belcrest Capital has entered into interest rate swap agreements (Note 10). Belvedere Company’s only investment is an interest in the Portfolio, the value of which is derived from a proportional interest therein. Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio’s Notes to Financial Statements, which are included elsewhere in this report. Boston Management makes valuation determinations in accordance with the Fund’s policies. The valuation policies followed by the Fund are as follows:

Market prices for the Fund’s investments in Partnership Preference Units and Subsidiary Real Estate Investments are not readily available. Such investments are stated in the Fund’s consolidated financial statements at fair value which represents the amount at which Boston Management, as manager of Belcrest Realty, believes would be received to sell an asset in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants under current market conditions. In valuing these investments, Boston Management considers relevant factors, data and information.


Belcrest Capital Fund LLC	December 31, 2010

Notes to Consolidated Financial Statements (continued)

Valuations of the Fund’s Partnership Preference Units and Subsidiary Real Estate Investments are inherently uncertain because they involve the use of assumptions and estimates. If the assumptions and estimates used in the valuations were to change, it could materially impact the fair value of the Fund’s holdings of Partnership Preference Units and Subsidiary Real Estate Investments.

Belcrest Capital Fund LLC December 31, 2009

Notes to Consolidated Financial Statements (continued)

Each appraisal is conducted in accordance with the Uniform Standards of Professional Appraisal Practices (as well as other relevant standards). Boston Management reviews the appraisal of each property and generally relies on the assumptions and estimates made by the Appraiser when determining fair value.

Boston Management determines the 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 Belcrest Realty and the unaffiliated minority investor of the Real Estate Joint Venture (the Operating Partner). This allocation is generally calculated by a third party specialist, using current valuations of the properties owned by the Real Estate Joint Venture. The specialist uses a financial model that considers (i) the terms of the joint venture agreement relating to allocation of distributable cash flow, (ii) the expected duration of the joint venture, and (iii) the projected property values and cash flows from the properties based on estimates used in the property valuations. The estimated allocation of equity interests between Belcrest Realty and the Operating Partner of a Real Estate Joint Venture is prepared quarterly and reviewed by Boston Management. Interim allocations of equity interests may be conducted more frequently than quarterly if Boston Management determines that significant changes in economic circumstances that may materially impact the allocation of equity interests have occurred since the most recent allocation.

Boston Management determines the fair value of the Fund’s interest in Co-owned Property by applying the Fund’s ownership interest to the ~~fair~~net asset value of the ~~property, net of~~Co-owned ~~associated mortgage debt, if any~~Property.

The fair value of the Partnership Preference Units is based on analysis and calculations performed on at least a monthly basis by a third party service provider. The service provider calculates an estimated price and yield (before accrued distributions) for each issue of Partnership Preference Units based on descriptions of such issue provided by Boston Management and certain publicly available information including, but not limited to, the trading prices of publicly issued debt and/or preferred stock instruments of the same or similar issuers, which may be adjusted to reflect the illiquidity and other structural characteristics of the Partnership Preference Units (such as call provisions). Daily valuations of Partnership Preference Units are determined by adjusting prices from the service ~~provider to account for accrued distributions under the~~ terms of the Partnership Preference Units. If changes in relevant markets, events that materially affect an issuer or other events that have a significant effect on the price or yield of Partnership Preference Units occur, relevant prices or yields may be adjusted to take such occurrences into account. Boston Management reviews the analysis and calculations performed by the service provider. Boston Management generally relies on the assumptions and estimates made by the service provider when determining the fair value of the Partnership Preference Units.

~~Cash Management generally values its investment securities~~51 ~~utilizing the amortized cost valuation technique permitted by~~ Rule 2a-7 under the 1940 Act, pursuant to which Cash Management must comply with certain conditions. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a

52 Belcrest Capital Fund LLC December 31, 2010

Belcrest Capital Fund LLC December 31, 2009

Notes to Consolidated Financial Statements (continued)

~~constant~~provider ~~amortization~~ to ~~maturity~~account offor ~~any~~accrued ~~discount~~distributions orunder ~~premium~~the terms of the Partnership Preference Units. If changes in relevant ~~amortized~~markets, ~~cost~~events isthat ~~determined~~materially ~~not~~affect toan ~~approximate~~issuer ~~fair~~or ~~value~~other events that have a significant effect on the price or yield of Partnership Preference Units occur, ~~Cash~~relevant prices or yields may be adjusted to take such occurrences into account. Boston Management ~~may~~reviews ~~value~~the ~~its~~analysis ~~investment~~and ~~securities~~calculations ~~based~~performed by the service provider. Boston Management generally relies on the ~~available~~assumptions ~~market~~and ~~quotations~~estimates ~~provided~~made by athe ~~third~~service ~~party~~provider ~~pricing~~when ~~service~~determining the fair value of the Partnership Preference Units.

Cash Reserves Fund and Cash Management generally value their investment securities utilizing the amortized cost valuation technique in accordance with Rule 2a-7 under the 1940 Act. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If amortized cost is determined not to approximate fair value, Cash Reserves Fund and Cash Management may value their investment securities based on available market quotations provided by a third party pricing service.

Interest rate swap agreements are normally valued on the basis of valuations furnished daily by a third party pricing service. The valuations are based on the present value of fixed and projected floating rate cash flows over the term of the agreement. Future cash flows are discounted to their present value using swap quotations provided by electronic data services or by broker-dealers.

Changes in the fair value of the Fund’s investments are recorded as unrealized appreciation (depreciation) in the Consolidated Statements of Operations.

FG Interest Rate Swaps. Belcrest Capital has entered into interest rate swap agreements to fix the cost of a portion of its borrowings under the Credit Facility (Note 11A). Pursuant to the agreements, Belcrest Capital makes periodic payments to the counterparty at predetermined fixed rates in exchange for floating rate payments that fluctuate with the one-month London Interbank Offered Rate (LIBOR). Net interest paid and accrued or received and earned is recorded as realized gains or losses and changes in the underlying values of the swaps are recorded as unrealized appreciation (depreciation), each in the Consolidated Statements of Operations.

GH Income. Belvedere Company’s net investment income or loss consists of Belvedere Company’s pro rata share of the net investment income or loss of the Portfolio, less all expenses of Belvedere Company, determined in accordance with GAAP.

The Fund’s net investment income or loss consists of the Fund’s pro rata share of the net investment income or loss of Belvedere Company, the Fund’s pro rata share of the net investment income or loss of Cash Reserves Fund and Cash Management, plus all net investment income earned on the Fund’s real estate investments, less all expenses of the Fund, determined in accordance with GAAP.

Distributions from Partnership Preference Units are recorded on the ex-dividend date or on the date the Fund is informed of the distribution. Income or loss from the Real Estate Joint Ventures and Co-owned Property is recorded based on the Fund’s proportional interest in the net investment income or loss earned or incurred by the Real Estate Joint Ventures and Co-owned Property.

Interest income is recorded on the accrual basis.

HI Deferred Loan Costs. Deferred loan costs are amortized over the term of the related debt and are included in other assets. Amortization expense of deferred loan costs is included in interest expense.

IJ Income Taxes. Belcrest Capital, Belvedere Company and the Portfolio are treated as partnerships for federal income tax purposes. As a result, Belcrest 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~~ ~~Belcrest Realty is to comply with the provisions of the Internal~~ Revenue Code of 1986, as amended, applicable to REITs. Belcrest Realty will generally not be subject to federal income tax to the extent that it distributes its taxable income to its stockholders each year and maintains its qualification as a REIT. Subsidiaries of Belcrest Realty are generally treated as pass-through entities for federal income tax purposes.

~~In the event the Fund recognizes an uncertain tax position,~~52 ~~related interest expense and penalties will be recognized as tax~~ ~~expense when incurred.~~

~~Net~~Belcrest ~~investment~~Capital ~~income~~Fund ~~and~~LLC ~~capital~~December ~~gains~~31, ~~determined in accordance with income tax regulations may differ from such amounts determined in accordance with GAAP. Such differences could be significant and are primarily due to~~ 2010

Belcrest Capital Fund LLC December 31, 2009

Notes to Consolidated Financial Statements (continued)

~~differences~~partnership inincome, ~~the~~gain, ~~cost~~loss ~~basis~~and ofdeduction. ~~securities~~The ~~and~~policy ~~other~~of ~~contributed~~Belcrest ~~investments,~~Realty ~~depreciation~~is to comply with the provisions of ~~real~~the ~~estate~~Internal Revenue ~~assets~~Code of 1986, as amended, applicable to REITs. Belcrest ~~periodic~~Realty ~~payments~~will ~~made~~generally ornot ~~received~~be insubject ~~connection~~to ~~with~~federal ~~interest~~income tax to ~~rate~~the ~~swap~~extent ~~agreements~~that it distributes its taxable income to its stockholders each year and ~~the~~maintains ~~character~~its ofqualification ~~distributions~~as ~~received~~a ~~from~~REIT. Subsidiaries of Belcrest Realty ~~and~~are ~~real~~generally ~~estate~~treated ~~investments~~as pass-through ~~thereof~~entities for federal income tax purposes.

~~The~~In ~~Fund~~the ~~files~~event ~~numerous~~the ~~U.S.~~Fund ~~federal,~~recognizes ~~state~~an ~~and~~uncertain ~~local~~tax ~~income~~position, ~~and~~related ~~franchise~~interest ~~tax~~expense ~~returns.~~and ~~With~~penalties ~~few~~will ~~exceptions~~be ~~the~~recognized ~~Fund~~as ~~is not subject to U.S. federal, state or local~~ tax ~~examinations by~~ ~~taxing~~expense ~~authorities~~when ~~for years prior to 2006~~incurred.

~~J Investment~~Net investment income and capital gains determined in accordance ~~Transactions. Investment~~with income tax regulations may differ from such amounts ~~transactions~~determined ~~for~~in ~~financial~~accordance ~~statement~~with ~~purposes~~GAAP. ~~are~~Such ~~accounted~~differences ~~for~~could be onsignificant aand ~~trade~~are ~~date~~primarily due to differences in the cost basis. ~~Realized~~of ~~gains~~securities and ~~losses~~other oncontributed investments, ~~sold~~depreciation ~~are~~of ~~determined~~real onestate assets, periodic payments made or received in connection with interest rate swap agreements and the ~~basis~~character of ~~identified~~distributions ~~cost.~~received from Belcrest Realty and real estate investments thereof.

~~K Use of Estimates.~~ The ~~preparation~~ ofFund ~~financial~~files ~~statements~~numerous inU.S. ~~conformity~~federal, ~~with~~state ~~GAAP requires management to make estimates~~ and ~~assumptions~~local ~~that~~income, ~~affect~~and ~~the~~franchise ~~reported~~tax ~~amounts~~returns. ofWith ~~assets~~few ~~and~~exceptions ~~liabilities~~the atFund ~~the~~is not ~~date~~subject ofto ~~the~~U.S. ~~financial~~federal, ~~statements~~state ~~and~~or ~~the~~local ~~reported~~tax ~~amounts~~examinations ofby ~~income~~taxing ~~and~~authorities ~~expense~~for ~~during~~years ~~the~~prior ~~reporting~~to ~~period~~2007. ~~Actual results~~ ~~could differ from those estimates.~~

LK ~~Indemnifications and~~Investment ~~Guarantees~~Transactions. ~~Under~~Investment ~~Belcrest~~transactions ~~Capital’s~~for ~~operating~~financial ~~agreement,~~statement ~~Belcrest Capital’s~~purposes ~~officers,~~are ~~its~~accounted ~~manager, investment adviser, and~~for ~~any~~on ~~affiliate,~~a ~~associate,~~trade ~~officer,~~date ~~employee~~basis. orRealized ~~trustee~~gains ~~thereof,~~ and ~~any~~losses ~~manager,~~on ~~director, officer or employee of Belcrest~~investments ~~Realty~~sold orare ~~any~~determined ~~other~~on ~~subsidiary may be indemnified against certain liabilities and expenses arising out of their duties to~~ the ~~Fund.~~basis ~~Shareholders also may be indemnified against personal liability for the liabilities~~ of ~~Belcrest~~identified ~~Capital~~cost. ~~Additionally,~~ ~~in the normal course of business, the Fund enters into~~ agreements with service providers, lenders and counterparties that may contain indemnification or guarantee clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve possible future claims that may be made against the Fund that have not yet occurred.

L Expense Reduction. State Street Bank and Trust Company (SSBT) serves as custodian and transfer agent of the Fund. Pursuant to the custodian and transfer agent agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Fund maintains with SSBT. All credit balances used to reduce the Fund’s custodian and transfer agent fees are reported as a reduction of expenses in the Consolidated Statements of Operations.

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

N Indemnifications and Guarantees. Under Belcrest Capital’s operating agreement, Belcrest Capital’s officers, its manager, investment adviser, and any affiliate, associate, officer, employee or trustee thereof, and any manager, director, officer or employee of Belcrest Realty or any other subsidiary may be indemnified against certain liabilities and expenses arising out of their duties to the Fund. Shareholders also may be indemnified against personal liability for the liabilities of Belcrest Capital. Additionally, in the normal course of business, the Fund enters into agreements with service providers, lenders and counterparties that may contain indemnification or guarantee clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve possible future claims that may be made against the Fund that have not yet occurred.

3 Fair Value Measurements

GAAP establishes a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three levels of the fair value hierarchy are described below.

• Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2 – Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; • Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.


•	Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

•	Level 2 – Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;

~~In determining the fair value of its investments, the Fund uses~~53 ~~appropriate valuation techniques based on available inputs. The~~ Fund maximizes its use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Accordingly, when available, the Fund measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value. If market data is not readily available, fair value is based upon other significant unobservable inputs such as inputs that reflect the Fund’s own assumptions about the inputs market participants would use in valuing the investment. Investments valued using unobservable inputs are classified to the lowest level of any input that is most significant to the valuation. Thus, a valuation may be classified as Level 3 even though the valuation may include significant inputs that are readily observable.

~~The~~Belcrest Capital Fund’s ~~investments~~LLC inDecember ~~Belvedere Company and Cash Management are classified as Level 1 within the fair value hierarchy. Interest rate swap agreements are classified as Level 2 within the fair value hierarchy~~31, ~~while the~~ 2010

Notes to Consolidated Financial Statements (continued)


•	Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In determining the fair value of its investments, the Fund uses appropriate valuation techniques based on available inputs. The Fund maximizes its use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. If market data is not readily available, fair value is based upon other significant unobservable inputs such as inputs that reflect the Fund’s own assumptions about the inputs market participants would use in valuing the investment. Investments valued using unobservable inputs are classified to the lowest level of any input that is most significant to the valuation. Thus, a valuation may be classified as Level 3 even though the valuation may include significant inputs that are readily observable. The Fund’s assets classified as Level 3 as of December 31, 2010 and 2009 represent 16.4% and 16.9% of the Fund’s total assets, respectively.

The following tables present for each of the hierarchy levels, the Fund’s assets and liabilities that are measured at fair value as of December 31, 2010 and 2009.


	Fair Value Measurements at December 31, 2010
Description	Total		Level 1		Level 2		Level 3

Assets
Investment in Belvedere Company⁽¹⁾	$	659,946,022	$	—	$	659,946,022	$	—
Partnership Preference Units		72,580,818		—		—		72,580,818
Real Estate Joint Venture		55,149,311		—		—		55,149,311
Co-owned Property		2,926,700		—		—		2,926,700
Short-Term Investment		3,230,918		—		3,230,918		—


Total	$	793,833,769	$	—	$	663,176,940	$	130,656,829


Liabilities
Interest Rate Swap Agreement	$	710,801	$	—	$	710,801	$	—


⁽¹⁾		Belvedere Company’s only investment is an interest in the Portfolio, a management investment company registered under the 1940 Act that invests primarily in a diversified portfolio of equity securities. Belvedere Company’s investment in the Portfolio is classified as Level 1. However, because the Fund invests in the Portfolio through Belvedere Company, which is not registered under the 1940 Act, the Fund’s investment in Belvedere Company is classified as Level 2. The Fund’s investment in Belvedere Company is redeemable on a daily basis at its net asset value subject to certain restrictions of the Belvedere Company operating agreement. The fair value of the Fund’s investment in Belvedere Company is the Fund’s pro rata share of the net asset value of Belvedere Company. The transfer of the Fund’s investment in Belvedere Company from Level 1 to Level 2 for the year ended December 31, 2010 takes into consideration these items along with accounting guidance regarding fair value measurements.

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

Fund’s real estate investments are classified as Level 3 within the fair value hierarchy. The Fund’s assets classified as Level 3 as of December 31, 2009 and 2008 represent 16.9% and 23.1% of the Fund’s total assets, respectively.


	Fair Value Measurements at December 31, 2009
Description	Total		Level 1		Level 2		Level 3

Assets
Investment in Belvedere Company	$	705,444,925	$	705,444,925	$	—	$	—
Partnership Preference Units		69,274,637		—		—		69,274,637
Real Estate Joint Ventures		72,575,344		—		—		72,575,344
Co-owned Property		2,335,863		—		—		2,335,863
Short-Term Investment		1,338,012		1,338,012		—		—


Total	$	850,968,781	$	706,782,937	$	—	$	144,185,844


Liabilities
Interest Rate Swap Agreements	$	3,241,582	$	—	$	3,241,582	$	—

The following tables present ~~for~~the ~~each~~changes ofin the ~~hierarchy levels,~~Level 3 ~~the~~fair ~~Fund’s~~value ~~assets~~category ~~and~~for ~~liabilities~~the ~~that~~years ~~are~~ended ~~measured at fair value as of~~ December 31, 2010, 2009 and 2008.

				Fair Value Measurements
	Level 3 Fair Value Measurements for the
				at December 31, 2009
	Year Ended December 31, 2010
Description	December 31, 2009			Level 1			Level 2		Level 3
	Partnership			Real Estate
Assets
	Preference			Joint			Co-owned
Investment in Belvedere Company	$	705,444,925		$	705,444,925		$	—	$	—
	Units			Ventures			Property		Total
Partnership Preference Units		69,274,637			—			—		69,274,637
Beginning balance as of December 31, 2009	$	69,274,637		$	72,575,344		$	2,335,863	$	144,185,844
Real Estate Joint Ventures		72,575,344			—			—		72,575,344
Net realized gain (loss)		119,339			(137,644,457	)		—		(137,525,118	)
Co-owned Property		2,335,863			—			—		2,335,863
Net change in unrealized appreciation (depreciation)		4,004,778			161,879,938			—		165,884,716
Short-Term Investment		1,338,012			1,338,012			—		—
Net sales		(817,936	)		(42,281,891	)		—		(43,099,827	)
Total	$	850,968,781		$	706,782,937		$	—	$	144,185,844
Net investment income(1)		—			16,300,186			589,670		16,889,856
Liabilities
Other(2)		—			(15,679,809	)		1,167		(15,678,642	)
Interest Rate Swap Agreements	$	3,241,582		$	—		$	3,241,582	$	—
Ending balance as of December 31, 2010	$	72,580,818		$	55,149,311		$	2,926,700	$	130,656,829
Total	$	3,241,582		$	—		$	3,241,582	$	—
Net change in unrealized appreciation (depreciation) from investments still held at December 31, 2010	$	4,054,780		$	9,711,775		$	—	$	13,766,555

			Fair Value Measurements
			at December 31, 2008
Description	December 31, 2008		Level 1		Level 2		Level 3
Assets
Investment in Belvedere Company	$	872,416,210	$	872,416,210	$	—	$	—
Partnership Preference Units		74,502,385		—		—		74,502,385
Real Estate Joint Ventures		183,246,169		—		—		183,246,169
Co-owned Property		4,581,534		—		—		4,581,534
Short-Term Investment		698,542		—		698,542		—
Total	$	1,135,444,840	$	872,416,210	$	698,542	$	262,330,088
Liabilities
Interest Rate Swap Agreements	$	9,509,218	$	—	$	9,509,218	$	—
Total	$	9,509,218	$	—	$	9,509,218	$	—

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

The following tables present the changes in the Level 3 fair value category for the years ended December 31, 2009 and 2008.


	Level 3 Fair Value Measurements for the
	Year Ended December 31, 2009
	Partnership			Real Estate
	Preference			Joint			Co-owned
	Units			Ventures			Property			Total

Beginning balance as of December 31, 2008	$	74,502,385		$	183,246,169		$	4,581,534		$	262,330,088
Net realized loss		(12,744,455	)		(2,033,278	)		—			(14,777,733	)
Net change in unrealized appreciation (depreciation)		30,733,258			(112,627,913	)		(2,799,999	)		(84,694,654	)
Net sales		(23,216,551	)		—			—			(23,216,551	)
Net investment income⁽¹⁾		—			17,706,930			552,265			18,259,195
Other⁽²⁾		—			(13,716,564	)		2,063			(13,714,501	)


Ending balance as of December 31, 2009	$	69,274,637		$	72,575,344		$	2,335,863		$	144,185,844


Net change in unrealized appreciation (depreciation) from investments still held at December 31, 2009	$	17,322,191		$	(112,627,913	)	$	(2,799,999	)	$	(98,105,721	)

	Level 3 Fair Value Measurements for the
	Year Ended December 31, 2009
	Year Ended December 31, 2008
	Partnership			Real Estate
	Preference			Joint			Co-owned			Other
	Units			Ventures			Property			~~Total~~Real Estate			Total
Beginning balance as of December 31, 2008	$	74,502,385		$	183,246,169		$	4,581,534		$	262,330,088
Beginning balance as of December 31, 2007	$	156,603,528		$	221,163,721		$	—		$	0		$	377,767,249
Net realized loss		(1217,~~744~~127,~~455~~051	)		~~(2,033,278~~—	)		—			(147,~~777~~279,~~733~~512	)		(24,406,563	)
Net change in unrealized appreciation (depreciation)		30(6,~~733~~190,~~258~~383	)		(~~112~~45,~~627~~057,~~913~~317	)		(2,~~799~~901,~~999~~133	)		~~(84~~7,~~694~~279,~~654~~512	)		(46,869,321	)
Net sales		(23,216,551	)		—			—			(23,216,551	)
Net purchases (sales)		(58,783,709	)		—			7,232,372			—			(51,551,337	)
Net investment income(1)		—			17,~~706~~965,~~930~~150			~~552~~241,~~265~~961			~~18,259,195~~—			18,207,111
Other(2)		—			(1310,~~716~~825,~~564~~385	)		28,~~063~~334			~~(13,714,501~~—	)		(10,817,051	)
Net transfers in and/or out of Level 3		—			—			—			—
Ending balance as of December 31, 2008	$	74,502,385		$	183,246,169		$	4,581,534		$	—		$	262,330,088
Ending balance as of December 31, 2009	$	69,274,637		$	72,575,344		$	2,335,863		$	144,185,844
Net change in unrealized appreciation (depreciation) from investments still held at December 31, 2008	$	(34,894,968	)	$	(45,057,317	)	$	(2,901,133	)	$	—		$	(82,853,418	)
Net change in unrealized appreciation (depreciation) from investments still held at December 31, 2009	$	17,322,191		$	(112,627,913	)	$	(2,799,999	)	$	(98,105,721	)

	Level 3 Fair Value Measurements for the
	Year Ended December 31, 2008
	Partnership			Real Estate
	Preference			Joint			Co-owned			Other
	Units			Ventures			Property			Real Estate			Total
Beginning balance as of December 31, 2007	$	156,603,528		$	221,163,721		$	—		$	0		$	377,767,249
Net realized loss		(17,127,051	)		—			—			(7,279,512	)		(24,406,563	)
Net change in unrealized appreciation (depreciation)		(6,190,383	)		(45,057,317	)		(2,901,133	)		7,279,512			(46,869,321	)
Net purchases (sales)		(58,783,709	)		—			7,232,372			—			(51,551,337	)
Net investment income(1)		—			17,965,150			241,961			—			18,207,111
Other(2)		—			(10,825,385	)		8,334			—			(10,817,051	)
Net transfers in and/or out of Level 3		—			—			—			—			—
Ending balance as of December 31, 2008	$	74,502,385		$	183,246,169		$	4,581,534		$	—		$	262,330,088
Net change in unrealized appreciation (depreciation) from investments still held at December 31, 2008	$	(34,894,968	)	$	(45,057,317	)	$	(2,901,133	)	$	—		$	(82,853,418	)


⁽¹⁾		Represents net investment income recorded using the equity method of accounting.
⁽²⁾		Represents net capital contributions (distributions) recorded using the equity method of accounting.

Belcrest Capital Fund LLC December 31, 2009

Notes to Consolidated Financial Statements (continued)

4 Shareholder Transactions

Belcrest Capital may issue an unlimited number of full and fractional Fund shares. Transactions in Fund shares were as follows:

	Year Ended
	Year Ended December 31,
	December 31,			December 31,			December 31,
	2010			2009			2008
	2009			2008			2007
Issued to Shareholders electing to receive payment of distributions in Fund shares		7,630			60,075			80,603
Issued to Shareholders electing to receive payment of distributions in Fund shares		60,075			80,603			97,181
Redemptions		(1,461,063	)		(2,761,170	)		(2,961,907	)
Redemptions		(2,761,170	)		(2,961,907	)		(3,019,320	)
Net decrease		(1,453,433	)		(2,701,095	)		(2,881,304	)
Net decrease		(2,701,095	)		(2,881,304	)		(2,922,139	)

~~At March 1, 2010, one Shareholder owned 11% of the~~56 ~~Fund’s shares outstanding.~~


Belcrest Capital Fund LLC	December 31, 2010

Notes to Consolidated Financial Statements (continued)

At December 31, 2010, one Shareholder owned 13% of the Fund’s shares outstanding.

5 Distributions to Shareholders

Belcrest Capital intends to distribute at the end of each year, or shortly thereafter, an amount approximately equal to the taxes payable on its net investment income allocated to Shareholders. Prior to December 31, 2009, the Fund had distributed all of its net investment income to Shareholders.

Belcrest Capital also intends to distribute at the end of each year, or shortly thereafter, approximately 18% 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 with respect to a security contributed by that Shareholder or such Shareholder’s predecessor in interest. Whenever a distribution in respect of a precontribution gain is made, Belcrest 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 accrued during the ~~year~~years ended December 31, 2010 and 2009. Special Distributions of $1,044,908 ~~for the year ended December 31, 2008~~ were ~~paid~~accrued during the year ended December 31, ~~2009. There~~2008 ~~were~~and nosubsequently ~~Special Distributions~~ paid ~~or accrued~~ during the year ~~year~~ ended December 31, ~~2007~~2009.

The Fund’s distributions generally are based on determinations of net investment income and net realized capital gains for federal income tax purposes. Such amounts may differ from net investment income or loss and net realized gain or loss as set forth in the Fund’s consolidated financial statements due to differences in the treatment of various income, gain, loss, expense and other items for federal income tax purposes and under GAAP. The amount of the Fund’s distributions may be adjusted in the future to reflect changes in effective tax rates. In determining the Fund’s capital gain distributions for any year, the net capital gains realized by the Fund for that year will be reduced by the cumulative amount of any Fund capital losses from prior years not previously applied against net realized capital gains for distribution purposes.

In addition, Belcrest Realty intends to distribute to Belcrest Capital substantially all of its taxable income earned during the year.

6 Investment Transactions

The following table summarizes the Fund’s investment transactions, other than short-term investments, for the years ended December 31, 2010, 2009 and 2008.


	Year Ended December 31,
Investment Transactions	2010		2009		2008

Decreases in investment in Belvedere Company	$	123,023,266	$	296,035,247	$	497,595,991
Increases in Partnership Preference Units	$	6,151	$	7,997	$	13,374
Decreases in Partnership Preference Units⁽¹⁾	$	824,087	$	23,224,548	$	58,797,083
Decreases in investment in Real Estate Joint Ventures	$	57,961,700	$	13,716,564	$	10,825,385
Increases in investment in Co-owned Property⁽²⁾	$	1,167	$	2,063	$	7,240,706
Decrease in investment in other real estate	$	—	$	—	$	0


⁽¹⁾		Decreases in Partnership Preference Units for the year ended December 31, 2008 include Partnership Preference Units sold to real estate investment affiliates of other investment funds advised by Boston Management of $15,060,784 for which net realized losses of $3,152,633 were recognized.
⁽²⁾		Increases in investment in Co-owned Property for the year ended December 31, 2008 include the purchase of Co-owned Property from the real estate investment affiliate of another investment fund advised by Boston Management for $7,232,372.

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

6 Investment Transactions

The following table summarizes the Fund’s investment transactions, other than short-term investments, for the years ended December 31, 2009, 2008 and 2007.

	Year Ended
	December 31,		December 31,		December 31,
Investment Transactions	2009		2008		2007
Decreases in investment in Belvedere Company	$	296,035,247	$	497,595,991	$	491,372,011
Increases in Partnership Preference Units	$	7,997	$	13,374	$	25,436
Decreases in Partnership Preference Units(1)	$	23,224,548	$	58,797,083	$	147,861,725
Increase in investment in Real Estate Joint Ventures	$	—	$	—	$	43,390
Decreases in investment in Real Estate Joint Ventures	$	13,716,564	$	10,825,385	$	107,712,314
Increases in investment in Co-owned Property(2)	$	2,063	$	7,240,706	$	—
Decrease in investment in other real estate	$	—	$	0	$	—

(1)		Decreases in Partnership Preference Units for the years ended December 31, 2008 and 2007 include Partnership Preference Units sold to real estate investment affiliates of other investment funds advised by Boston Management of $15,060,784 and $147,861,725, for which net realized losses of $3,152,633 and $1,003,902 were recognized, respectively.
(2)		Increases in investment in Co-owned Property for the year ended December 31, 2008 include the purchase of Co-owned Property from the real estate investment affiliate of another investment fund advised by Boston Management for $7,232,372.

7 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, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008, including allocations of income, expenses and net realized and unrealized gains (losses).

	Year Ended
	Year Ended December 31,
	December 31,			December 31,			December 31,
	2010			2009			2008
	2009			2008			2007
Belvedere Company’s interest in the Portfolio(1)	$	6,395,233,719		$	6,702,473,451		$	7,830,200,429
Belvedere Company’s interest in the Portfolio(1)	$	6,702,473,451		$	7,830,200,429		$	14,763,099,076
The Fund’s investment in Belvedere Company(2)	$	659,946,022		$	705,444,925		$	872,416,210
The Fund’s investment in Belvedere Company(2)	$	705,444,925		$	872,416,210		$	1,979,757,869
Income allocated to Belvedere Company from the Portfolio	$	120,267,234		$	154,559,605		$	270,863,516
Income allocated to Belvedere Company from the Portfolio	$	154,559,605		$	270,863,516		$	298,751,556
Income allocated to the Fund from Belvedere Company	$	12,482,907		$	16,851,474		$	35,176,661
Income allocated to the Fund from Belvedere Company	$	16,851,474		$	35,176,661		$	44,064,210
Expenses allocated to Belvedere Company from the Portfolio	$	29,967,675		$	31,400,023		$	53,705,900
Expenses allocated to Belvedere Company from the Portfolio	$	31,400,023		$	53,705,900		$	67,348,884
Expenses allocated to the Fund from Belvedere Company(3)	$	4,127,587		$	4,525,297		$	9,404,427
Expenses allocated to the Fund from Belvedere Company(3)	$	4,525,297		$	9,404,427		$	13,371,603
Net realized gain (loss) from investments and foreign currency transactions allocated to Belvedere Company from the Portfolio	$	27,472,227		$	(540,322,752	)	$	(203,248,973	)
Net realized gain (loss) from investment transactions and foreign currency transactions allocated to Belvedere Company from the Portfolio	$	(540,322,752	)	$	(203,248,973	)	$	581,142,259
Net realized gain (loss) from investments and foreign currency transactions allocated to the Fund from Belvedere Company	$	2,770,704		$	(59,270,474	)	$	(26,802,134	)
Net realized gain (loss) from investment transactions and foreign currency transactions allocated to the Fund from Belvedere Company	$	(59,270,474	)	$	(26,802,134	)	$	86,463,901
Net change in unrealized appreciation (depreciation) of investments and foreign currency allocated to Belvedere Company from the Portfolio	$	639,001,126		$	1,646,321,220		$	(4,579,608,072	)
Net change in unrealized appreciation (depreciation) of investments and foreign currency allocated to Belvedere Company from the Portfolio	$	1,646,321,220		$	(4,579,608,072	)	$	(99,671,823	)
Net change in unrealized appreciation (depreciation) of investments and foreign currency allocated to the Fund from Belvedere Company	$	66,398,339		$	176,008,259		$	(608,715,768	)
Net change in unrealized appreciation (depreciation) of investments and foreign currency allocated to the Fund from Belvedere Company	$	176,008,259		$	(608,715,768	)	$	(14,189,615	)

(1)		As of December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008, the value of Belvedere Company’s interest in the Portfolio represents 70.7%, 7370.97% and 7473.39% of the Portfolio’s net assets, respectively.
(2)		As of December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008, the Fund’s investment in Belvedere Company represents 10.53%, 1110.15% and 1311.41% of Belvedere Company’s net assets, respectively.
(3)		Expenses allocated to the Fund from Belvedere Company represent:


	Year Ended December 31,
	2010		2009		2008

Expenses allocated from the Portfolio	$	3,115,773	$	3,418,261	$	7,015,888
Servicing fee (see Note 12)	$	983,166	$	1,081,255	$	2,318,528
Operating expenses	$	28,648	$	25,781	$	70,011

8 Investment in Real Estate Joint Ventures

At December 31, 2010, Belcrest Realty owned a majority economic interest in one Real Estate Joint Venture, Lafayette Real Estate LLC (Lafayette). At December 31, 2009, Belcrest Realty owned a majority economic interest in two Real Estate Joint Ventures, Lafayette and Allagash. In November 2010, Belcrest Realty sold its interest in Allagash to a third party for $42,281,891.

A board of managers controls the business of the Real Estate Joint Venture. Each of Belcrest Realty and the Operating Partner of the Real Estate Joint Venture has representation on the board and the unanimous consent of the board is required for all major decisions (which include such actions as (i) capital transactions (i.e., acquisitions, dispositions or financings); (ii) organizational events (i.e., mergers or liquidation); and (iii) operating plans (i.e., annual budgets)). The board of the Real Estate Joint Venture has delegated the day-to-day administration of the Real Estate Joint Venture and the day-to-day management of its real properties to the Operating Partner. Through its control of the day-to-day operations of the Real Estate Joint Venture and its

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

~~(3)~~ properties, ~~Expenses~~as ~~allocated~~well as its required consent to all major decisions affecting the ~~Fund~~Real Estate Joint Venture, the Operating Partner has significant participating rights and responsibilities with respect to the Real Estate Joint Venture. The Operating Partner receives management-related fees from ~~Belvedere~~the Real ~~Company~~Estate ~~represent:~~Joint Venture and, in addition, is reimbursed for certain payroll and other direct expenses incurred.

	Year Ended
	December 31,		December 31,		December 31,
	2009		2008		2007
Expenses allocated from the Portfolio	$	3,418,261	$	7,015,888	$	9,928,133
Servicing fee (see Note 12)	$	1,081,255	$	2,318,528	$	3,359,465
Operating expenses	$	25,781	$	70,011	$	84,005

Distributable cash flows from operations of the Real Estate Joint Venture are allocated per the Real Estate Joint Venture agreement in a manner that provides Belcrest Realty: 1) a priority with respect to a fixed annual preferred return; and 2) participation on a pro rata or reduced basis in distributable cash flows in excess of the annual preferred return of Belcrest Realty and the subordinated preferred return of the Operating Partner. Distributable cash flows from dispositions of real properties or liquidation of the Real Estate Joint Venture are allocated on a pro rata basis up until the return of Belcrest Realty and the Operating Partner’s contributed capital with any excess allocated in a manner similar to that of cash flows from operations.

~~8 Investment in~~The Real Estate Joint ~~Ventures~~Venture is financed through mortgage notes secured by the real property. The mortgage notes are without recourse to Fund Shareholders and generally without recourse to Belcrest Capital and Belcrest Realty. Lafayette’s mortgage notes mature between March 2017 and January 2020.

AtPursuant ~~December 31,~~to ~~2009~~an ~~and~~agreement ~~2008,~~with ~~Belcrest~~the ~~Realty~~Lafayette ~~owned~~Operating aPartner, ~~majority~~Lafayette ~~economic~~may ~~interest~~be inliquidated ~~two~~at ~~Real~~any ~~Estate~~time ~~Joint~~upon ~~Ventures,~~unanimous consent ~~Lafayette~~of ~~Real~~the ~~Estate~~board ~~LLC~~or ~~(Lafayette)~~after ~~and~~December 5, ~~Allagash~~2016 ~~Property~~by either Belcrest ~~Trust~~Realty ~~(Allagash)~~or the Lafayette Operating Partner.

ACombined ~~board of trustees or managers controls the business of each Real Estate Joint Venture. Each of Belcrest Realty~~ and ~~the Operating~~condensed ~~Partner~~financial ofdata ~~the Real Estate Joint Venture has representation on the board and the unanimous consent~~ of the ~~board~~ is required for all major decisions (which include such actions as (i) capital transactions (i.e., acquisitions, dispositions or financings); (ii) organizational events (i.e., mergers or liquidation); and (iii) operating plans (i.e., annual budgets)). The board of each Real Estate Joint ~~Venture~~Ventures has delegated the day-to-day administration of the Real Estate Joint Venture and the day-to-day management of its real properties to the Operating Partner. Through its control of the day-to-day operations of the Real Estate Joint Venture and its properties, as well as its required consent to all major decisions affecting the Real Estate Joint Venture, each Operating Partner has significant participating rights and responsibilities with respect to the Real Estate Joint Venture. Each Operating Partner receives management-related fees from the Real Estate Joint Venture and, in addition, is ~~reimbursed~~presented ~~for certain payroll and other direct expenses incurred~~below.

Distributable cash flows from operations of each Real Estate Joint Venture are allocated per each Real Estate Joint Venture agreement in a manner that provides Belcrest Realty: 1) a priority with respect to a fixed annual preferred return; and 2) participation on a pro rata or reduced basis in distributable cash flows in excess of the annual preferred return of Belcrest Realty and the subordinated preferred return of each Operating Partner. Distributable cash flows from dispositions of real properties or liquidation of each Real Estate Joint Venture is allocated on a pro rata basis up until the return of Belcrest Realty and each Operating Partner’s contributed capital with any excess allocated in a manner similar to that of cash flows from operations.


	December 31,
	2010		2009

Investment in real estate	$	336,400,000	$	645,699,200
Other assets		8,048,778		14,638,408


Total assets	$	344,448,778	$	660,337,608


Mortgage notes payable, at face⁽¹⁾	$	255,408,696	$	552,859,762
Other liabilities		4,848,969		9,991,469


Total liabilities	$	260,257,665	$	562,851,231


Shareholders’ equity	$	84,191,113	$	97,486,377


Total liabilities and shareholders’ equity	$	344,448,778	$	660,337,608

The Real Estate Joint Ventures are financed through mortgage notes secured by the real properties held by the respective entities. The mortgage notes are without recourse to Fund Shareholders and generally without recourse to Belcrest Capital and Belcrest Realty. Lafayette’s mortgage notes mature in December 2019 and January 2020 and Allagash’s mortgage notes mature in May 2012.

Pursuant to an agreement with the Lafayette Operating Partner, Lafayette may be liquidated at any time upon unanimous consent of the board or after December 5, 2016 by either Belcrest Realty or the Lafayette Operating Partner. Pursuant to an agreement with the Allagash Operating Partner, Allagash may be liquidated at any time upon unanimous consent of the board or after August 4, 2012 by either Belcrest Realty or the Allagash Operating Partner.

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

Combined and condensed financial data of the Real Estate Joint Ventures is presented below.


	Year Ended December 31,
	2010⁽²⁾		2009			2008

Revenues	$	74,421,093	$	80,016,600		$	80,541,966
Expenses		52,763,919		57,573,784			57,041,036


Net investment income before realized and unrealized gain (loss)	$	21,657,174	$	22,442,816		$	23,500,930
Realized loss		—		(2,435,063	)		—
Change in net unrealized appreciation (depreciation)		15,463,028		(149,782,397	)		(58,230,489	)


Net increase (decrease) in net assets resulting from operations	$	37,120,202	$	(129,774,644	)	$	(34,729,559	)

	At December 31,		At December 31,
(1)	The mortgage notes payable generally cannot be prepaid or otherwise disposed of without incurring a substantial prepayment penalty. The Real Estate Joint Venture generally has no current plans to prepay or otherwise dispose of the mortgage notes payable without the sale of the related real property.
	2009		2008
(2)	Includes the results of operations of Allagash through the date of sale in November 2010.
Assets
Investment in real estate	$	645,699,200	$	810,946,172
Other assets		14,638,408		16,632,243
Total assets	$	660,337,608	$	827,578,415
Liabilities and Shareholders’ Equity
Mortgage notes payable, at face(1)	$	552,859,762	$	564,076,546
Other liabilities		9,606,547		11,441,135
Total liabilities	$	562,466,309	$	575,517,681
Noncontrolling interest	$	384,922	$	9,887,682
Shareholders’ equity		97,486,377		242,173,052
Total liabilities and shareholders’ equity	$	660,337,608	$	827,578,415

(1) The mortgage notes payable generally cannot be prepaid or otherwise disposed of without incurring a substantial prepayment penalty. The Real Estate Joint Ventures generally have no current plans to prepay or otherwise dispose of the mortgage notes payable without the sale of the related real property.

	Year Ended
	December 31,			December 31,			December 31,
	2009			2008			2007
Revenues	$	80,016,600		$	80,541,966		$	77,875,136
Expenses		56,009,105			55,963,584			52,518,542
Net investment income before realized and unrealized gain (loss)	$	24,007,495		$	24,578,382		$	25,356,594
Realized loss		(2,435,063	)		—			—
Change in net unrealized appreciation (depreciation)		(159,422,067	)		(64,526,593	)		23,472,666
Noncontrolling interest		8,074,991			5,218,652			(13,813,910	)
Net investment income (loss)	$	(129,774,644	)	$	(34,729,559	)	$	35,015,350

9 Investment in Co-owned Property

At December 31, ~~2009~~2010 and ~~2008~~2009, Belcrest Realty held an investment in Co-owned Property through Bel Stamford I LLC. The other investors in the Co-owned Property are real estate investment affiliates of other investment funds advised by Boston Management. The Co-owned Property is financed through a mortgage note secured by the real property. The mortgage note is generally without recourse to Belcrest Capital and Belcrest Realty, except that there may be recourse for certain liabilities arising from actions such as fraud, misrepresentation, misappropriation of funds or breach of material covenants and liabilities arising from environmental conditions.

10 Interest Rate Swap Agreements

Belcrest Capital has entered into interest rate swap agreements with Merrill Lynch Capital Services, Inc. to fix the cost of a portion of its borrowings under the Credit Facility (Note 11A). Pursuant to the agreements, Belcrest Capital makes periodic payments to the counterparty at predetermined fixed rates in exchange for floating rate payments that fluctuate with one-month LIBOR. 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. The risks of interest rate swap agreements include changes in market conditions that will affect the value of the agreement or the cash flows and the possible inability of the counterparty to fulfill its obligations under the agreement. Belcrest Capital’s maximum risk of loss from counterparty credit risk is the discounted net value of the

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

cash flows to be received from/paid to the counterparty over the 10agreement’s remaining life, to the extent that the amount is positive. See Note ~~Interest Rate~~2 ~~Swap~~for ~~Agreements~~additional accounting and valuation policies. The following table summarizes Belcrest Capital’s interest rate swap agreements.

Belcrest Capital has entered into interest rate swap agreements with Merrill Lynch Capital Services, Inc. to fix the cost of a portion of its borrowings under the Credit Facility (Note 11A). Pursuant to the agreements, Belcrest Capital makes periodic payments to the counterparty at predetermined fixed rates in exchange for floating rate payments that fluctuate with one-month LIBOR. See Note 2F for additional information. 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. The risks of interest rate swap agreements include changes in market conditions that will affect the value of the agreement or the cash flows and the possible inability of the counterparty to fulfill its obligations under the agreement. Belcrest Capital’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the agreement’s remaining life, to the extent that the amount is positive. The following table summarizes Belcrest Capital’s interest rate swap agreements.


Derivatives Not Designated as	Liability Derivatives at December 31,
Hedging Instruments	2010			2009

Notional amount⁽¹⁾	$	3,870,000		$	214,835,000
Average notional amount during the respective period	$	82,554,000		$	234,970,000
Weighted average fixed interest rate		6.29%			4.09%
Floating rate		LIBOR + 0.30%			LIBOR + 0.30%
lnitial optional termination date		—			3/2010
Final termination dates		7/2015			6/2010 – 7/2015
Fair value	$	(710,801	)	$	(3,241,582	)

Derivatives Not Designated as	Liability Derivatives at
Hedging Instruments	December 31, 2009			December 31, 2008
Notional amount(1)(2)	$	214,835,000		$	302,088,000
Average notional amount during the respective period	$	234,970,000		$	487,277,000
Weighted average fixed interest rate		4.09%			4.17%
Floating rate		LIBOR + 0.30%			LIBOR + 0.30%
Initial optional termination dates		3/2010			3/2009 – 3/2010
Final termination dates		6/2010 – 7/2015			6/2010 – 7/2015
Fair value	$	(3,241,582	)	$	(9,509,218	)


⁽¹⁾		During the year ended December 31, 2009, interest rate swap agreements were terminated for which an aggregate realized loss of $1,696,299 was recognized.

(1)		During the years ended December 31, 2009 and 2008, interest rate swap agreements were terminated for which aggregate realized losses of $1,696,299 and $710,151, respectively, were recognized.
(2)		At December 31, 2009 and 2008, interest rate swap agreements held with aggregate notional amounts of $80,965,000 and $120,965,000, respectively, have initial optional termination dates. Interest rate swap agreement with a notional amount of $3,870,000 has an effective date of June 25, 2010.

11 Debt

A Credit Facility. ~~Belcrest~~On March 24, 2010, Belcrest Capital ~~has~~terminated ~~entered~~and ~~into~~repaid its credit arrangements with Dresdner Kleinwort Holdings I, Inc. ~~(DKH)~~ and Merrill Lynch Mortgage Capital, Inc. ~~(Merrill~~using ~~Lynch)~~proceeds ~~(collectively,~~from its credit arrangement with Bank of America (the Credit Facility). The Credit Facility ~~matures~~may be terminated by the lender on ~~June~~or after September 2523, ~~2010~~2011 provided 180 days’ notice is given. Belcrest Capital may terminate the Credit Facility upon 30 days’ notice.

~~The~~During ~~credit~~the ~~arrangement~~year ~~with~~ended ~~DKH~~December 31, is2010, aBelcrest ~~term~~Capital decreased ~~loan~~its ~~facility~~initial ~~that~~commitment of $230,000,000 under the ~~accrues~~Credit ~~interest~~Facility atby aan ~~rate~~aggregate net amount of $30,000,000 to an ~~one-month LIBOR~~aggregate ~~plus~~amount ~~0.30%~~available ~~per~~for ~~annum.~~borrowing ~~During~~of ~~the~~$200,000,000. ~~year ended~~At December 31, ~~2009~~2010, Belcrest Capital ~~made~~had ~~repayments to~~outstanding ~~decrease~~borrowings under the ~~term~~Credit ~~loan~~Facility ~~with~~of ~~DKH~~$144,000,000. byThe anfair value ~~aggregate~~of ~~amount~~the ofCredit Facility approximates its carrying value at ~~$121~~December 31,~~500,000~~ 2010 and 2009.

~~The~~Belcrest ~~credit~~Capital ~~arrangement~~pays ~~with~~a ~~Merrill~~rate ~~Lynch~~of isinterest aequal ~~revolving loan~~to ~~facility~~three-month LIBOR plus 1.75% ~~During~~per ~~the~~annum ~~year~~on ~~ended~~outstanding ~~December 31,~~borrowings ~~2009,~~under ~~Belcrest~~the ~~Capital~~Credit ~~decreased~~Facility. ~~the~~A ~~amount~~loan ofstructure ~~the~~fee ~~revolving~~equal ~~loan~~to ~~facility~~0.25% byof athe ~~net~~total amount ~~of $10,000,000 to an aggregate amount~~ available ~~for borrowing~~under ofthe ~~$33,000,000.~~Credit ~~Borrowings~~Facility ~~under~~was ~~this~~paid ~~credit~~at ~~arrangement~~closing ~~accrue~~and ~~interest~~is atamortized aover ~~rate~~the term of ~~one-month LIBOR~~ ~~plus~~the ~~0.38%~~Credit ~~per annum~~Facility. A commitment fee ~~of 0.10% per annum~~ is paid on the unused commitment amount ~~and~~equal ~~is included in~~to ~~Credit~~0.40% ~~Facility~~per ~~interest~~annum. ~~expense~~Belcrest inCapital ~~the~~will ~~accompanying~~incur an additional fee ~~consolidated~~if ~~financial~~outstanding ~~statements~~borrowings fall below certain levels.

Obligations under the Credit Facility are without recourse to Shareholders. Belcrest Capital is required under the Credit Facility to maintain at all times a specified asset coverage ratio. The rights of the lender to receive payments of interest on and repayments of principal of borrowings are senior to the rights of Shareholders. Under the terms of the Credit Facility, Belcrest Capital is not permitted to make distributions of cash or securities while there is outstanding any event of default under the Credit Facility. During such periods, Belcrest Capital would not be able to honor redemption requests or make cash distributions. The Credit Facility is secured by a pledge of Belcrest Capital’s assets, excluding the Fund’s real estate investments.

Borrowings under the Credit Facility have been used to purchase the Fund’s interests in real estate investments, to pay selling commissions and organizational expenses and to provide for the liquidity needs of the Fund. Additional borrowings under the Credit Facility may be made in the future for these purposes.

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

ofB Average ~~the~~Borrowings ~~Credit~~and Average ~~Facility,~~Interest Rate. During ~~Belcrest~~the ~~Capital is not permitted to~~year ~~make~~ended ~~distributions~~December 31, of2010, ~~cash~~the oraverage ~~securities~~balance ~~while~~of ~~there is~~borrowings ~~outstanding any event of default~~ under the Credit Facility~~. During~~ ~~such~~was ~~periods~~approximately $185,600,000 ~~Belcrest~~with ~~Capital would not be able to honor~~a ~~redemption~~weighted ~~requests~~average orinterest ~~make~~rate ~~cash~~of ~~distributions~~2.09%. The ~~Credit~~weighted average ~~Facility~~interest israte ~~secured~~includes byall acosts ~~pledge~~ of ~~Belcrest~~borrowings ~~Capital’s assets,~~under ~~excluding~~ the ~~Fund’s Real Estate Joint Ventures and~~Credit ~~Co-owned Property~~Facility.

The following table summarizes Belcrest Capital’s Credit Facility. The fair value of the Credit Facility approximates its carrying value.

	At December 31, 2009		At December 31, 2008
Total amount available under the Credit Facility	$	227,500,000	$	359,000,000
DKH borrowings outstanding	$	194,500,000	$	316,000,000
Merrill Lynch borrowings outstanding	$	—	$	—

On December 21, 2009, Belcrest Capital entered into a credit arrangement with Bank of America (the new Credit Facility) to refinance the existing Credit Facility on or before April 1, 2010 (the Refinancing Date). On the Refinancing Date, Belcrest Capital will borrow under the new Credit Facility to repay and terminate the existing Credit Facility. The new Credit Facility will have a minimum initial term of 540 days from the Refinancing Date but may be terminated by the lender any time thereafter upon 180 days’ notice. Belcrest Capital may terminate the new Credit Facility upon 30 days’ notice subject to an early termination fee.

The maximum aggregate amount that will be available for borrowing under the new Credit Facility is $230,000,000.

Belcrest Capital will pay a rate of interest equal to three-month LIBOR plus 1.75% per annum on outstanding borrowings under the new Credit Facility. A loan structure fee payable equal to 0.25% of the total amount available under the new Credit Facility is payable on the Refinancing Date. A commitment fee of 0.25% per annum will be paid on the unused commitment amount through the Refinancing Date and 0.40% per annum thereafter. The commitment fee may be increased if outstanding borrowings fall below certain levels.

Obligations under the new Credit Facility will be without recourse to Shareholders. Borrowings under the new Credit Facility will be secured by a pledge of Belcrest Capital’s assets, excluding the Fund’s real estate investments. The new Credit Facility contains provisions requiring the maintenance of specified asset coverage ratios and restricting redemptions and cash distributions in the case of any event of default by Belcrest Capital.

B Average Borrowings and Average Interest Rate. During the year ended December 31, 2009, the average balance of borrowings under the Credit Facility was approximately $232,700,000 with a weighted average interest rate of 0.70%. The weighted average interest rate includes all costs of borrowings under the Credit Facility.

12 Management Fee and Other Transactions with Affiliates

Belcrest 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 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. For the years ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008, the advisory fee applicable to the Portfolio was 0.4546%, 0.4345% and 0.43% of average daily net assets, respectively.

Belcrest Capital Fund LLC December 31, 2009

Notes to Consolidated Financial Statements (continued)

Subject to the fee waiver described below, Boston Management is entitled to receive a monthly advisory and administrative fee of 1/20 of 1% (equivalent to 0.60% annually) of the average daily gross investment assets of Belcrest Capital. The term “gross investment assets” means the value of all assets of Belcrest Capital, other than Belcrest Capital’s investment in Belcrest Realty, minus the sum of Belcrest Capital’s liabilities other than the principal amount of money borrowed. Belcrest 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 investment assets of Belcrest Realty. The term “gross investment assets” means the value of all assets of Belcrest Realty minus the sum of Belcrest Realty’s liabilities other than the principal amount of money borrowed. For this purpose, the assets and liabilities of Belcrest Realty include its ratable share of the assets and liabilities of its direct and indirect subsidiaries, real estate joint ventures and co-owned real property investments.

As compensation for its services as placement agent, Belcrest Capital paid Eaton Vance Distributors, Inc. (EV Distributors) a monthly distribution fee at a rate of 1/120 of 1% (equivalent to 0.10% annually) of Belcrest Capital’s average daily net assets. Distribution fees accrued from Belcrest Capital’s initial closing, November 24, 1998, and continued for a period of ten years. Distribution fees were subject to the fee waiver described below. As a result of the fee waiver, payment of distribution fees did not result in higher expenses for the Fund. Similarly, termination of distribution fees does not reduce Fund expenses.

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

Boston Management has agreed to waive that portion of the monthly investment advisory and administrative fee payable by Belcrest Capital to the extent that such fee, together with the monthly distribution fee payable by Belcrest Capital to EV Distributors and Belcrest Capital’s attributable share of the monthly investment advisory fee and management fee payable by the Portfolio and Belcrest Realty, respectively, exceeds 0.60% of the average daily gross investment assets of Belcrest ~~Capital~~ Capital (as described above). InPrior ~~addition~~to February 2010, ~~if Belcrest Capital invests~~Cash ~~in Cash~~ Management,’s ~~the~~ advisory and administrative fees paid to Boston Management ~~by Cash Management~~ in respect of Belcrest Capital’s investment therein ~~will~~was be credited towards Belcrest Capital’s advisory and administrative fee payments, reducing the amount of such fees otherwise payable by Belcrest Capital. Eaton Vance does not currently receive a fee for advisory services provided to Cash Reserves Fund.

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. Pursuant to a servicing agreement between Belcrest Capital and EV Distributors, Belcrest Capital pays a servicing fee to EV Distributors on a quarterly basis at an annual rate of 0.20% of Belcrest Capital’s average daily net assets. Belcrest Capital’s allocated share of the servicing fee payable by Belvedere Company is credited towards Belcrest Capital’s servicing fee payment, reducing the amount of such fee that would otherwise be payable by Belcrest Capital. With respect to Shareholders who subscribe through a subagent, EV Distributors has assigned servicing responsibilities and fees to the applicable subagent.

62 63

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

~~The~~Belvedere ~~table~~Company ~~below~~is ~~sets~~credited ~~forth~~towards ~~the~~Belcrest ~~fees~~Capital’s servicing ~~paid~~fee orpayment, ~~payable~~reducing ~~by,~~the oramount of such fee that ~~allocable~~would ~~to,~~otherwise ~~the~~be ~~Fund~~payable ~~for~~by ~~the~~Belcrest ~~years~~Capital. ~~ended~~With ~~December 31,~~respect to ~~2009,~~Shareholders ~~2008~~who ~~and~~subscribe ~~2007~~through ina ~~connection~~subagent, ~~with~~EV ~~the services rendered by~~Distributors ~~Eaton~~has ~~Vance~~assigned servicing responsibilities and ~~its~~fees ~~affiliates~~to the applicable subagent.

	Year Ended
	December 31,		December 31,		December 31,
	2009		2008		2007
Advisory fee allocated to Belvedere Company from the Portfolio	$	29,752,815	$	50,952,553	$	64,755,126
Advisory fee allocated to the Fund from Belvedere Company	$	3,238,375	$	6,655,478	$	9,542,951
Advisory fee allocated to the Fund from Cash Management	$	11,100	$	16,532	$	55,474
Advisory and administrative fees incurred directly by the Fund	$	4,634,392	$	7,020,591	$	9,048,086
Distribution fee incurred directly by the Fund	$	—	$	1,304,533	$	2,030,065
Reduction of advisory and administrative fees	$	—	$	1,304,533	$	2,030,065
Servicing fee of Belvedere Company	$	9,934,858	$	17,747,191	$	22,797,451
Servicing fee allocated to the Fund from Belvedere Company	$	1,081,255	$	2,318,528	$	3,359,465
Servicing fee incurred directly by the Fund	$	237,556	$	451,732	$	699,738
Servicing fee paid or accrued to subagents	$	1,318,795	$	2,770,236	$	4,059,179

The table below sets forth the fees paid or payable by, or allocable to, the Fund for the years ended December 31, 2010, 2009 and 2008 in connection with the services rendered by Eaton Vance and its affiliates.


	Year Ended December 31,
	2010		2009		2008

Advisory fee allocated to Belvedere Company from the Portfolio	$	28,742,601	$	29,752,815	$	50,952,553
Advisory fee allocated to the Fund from Belvedere Company	$	2,988,131	$	3,238,375	$	6,655,478
Advisory fee allocated to the Fund from Cash Management	$	274	$	11,100	$	16,532
Advisory and administrative fees incurred directly by the Fund	$	4,201,148	$	4,634,392	$	7,020,591
Distribution fee incurred directly by the Fund	$	—	$	—	$	1,304,533
Reduction of advisory and administrative fees	$	—	$	—	$	1,304,533
Servicing fee of Belvedere Company	$	9,457,376	$	9,934,858	$	17,747,191
Servicing fee allocated to the Fund from Belvedere Company⁽¹⁾	$	983,166	$	1,081,255	$	2,318,528
Servicing fee incurred directly by the Fund⁽¹⁾	$	245,133	$	237,556	$	451,732


⁽¹⁾		Amounts include servicing fee paid or accrued to subagents of $1,228,281, $1,318,795 and $2,770,236, respectively.

13 Segment Information

Belcrest Capital pursues its investment objective primarily by investing indirectly in the Portfolio through Belvedere Company. The Portfolio is a diversified investment company that emphasizes investments in common stocks of domestic and foreign growth companies that are considered by its investment adviser to be high in quality and attractive in their long-term investment prospects. The Fund’s investment income includes the Fund’s pro rata share of Belvedere Company’s net investment income. Separate from its investment in Belvedere Company, Belcrest Capital invests in real estate investments through Belcrest Realty (Note 1). The Fund’s investment income from real estate investments primarily consists of distribution income from Partnership Preference Units, and net investment income from Real Estate Joint Ventures and Co-owned Property.

Belcrest Capital evaluates performance of the reportable segments based on the net increase (decrease) in net assets from operations of the respective segment, which includes net investment income (loss), net realized gain (loss) and the net change in unrealized appreciation (depreciation).

The Fund’s Credit Facility borrowings and related interest expense are centrally managed by the Fund. A portion of the Credit Facility borrowings and related interest expense have been approximated and allocated to the real estate segment for presentation purposes herein. Credit Facility borrowings allocated to the real estate segment primarily represent estimated net amounts borrowed to purchase the Fund’s interests in real estate investments. The Fund’s interest rate swap agreement balances are presented as part of the real estate segment for presentation purposes ~~herein. The accounting~~ policies of the reportable segments are the same as those for Belcrest Capital on a consolidated basis (Note 2). No reportable segments have been aggregated. Reportable information by segment is as follows:


Belcrest Capital Fund LLC	December 31, 2010

Notes to Consolidated Financial Statements (continued)

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


	Year Ended December 31,
	2010			2009			2008

Investment income
The Portfolio*	$	8,355,320		$	12,326,177		$	25,772,234
Real Estate		22,951,419			24,706,598			27,038,531
Unallocated		6,966			2,102			94,874


Total investment income	$	31,313,705		$	37,034,877		$	52,905,639


Interest expense
The Portfolio*	$	—		$	—		$	—
Real Estate		3,487,186			1,494,343			15,160,967
Unallocated⁽¹⁾		387,465			129,943			797,946


Total interest expense	$	3,874,651		$	1,624,286		$	15,958,913


Net realized gain (loss)
The Portfolio*	$	2,770,704		$	(59,270,474	)	$	(26,802,134	)
Real Estate		(140,419,975	)		(24,432,412	)		(31,170,686	)
Unallocated		383			1,947			—


Total net realized loss	$	(137,648,888	)	$	(83,700,939	)	$	(57,972,820	)


Net change in unrealized appreciation (depreciation)
The Portfolio*	$	66,398,339		$	176,008,259		$	(608,715,768	)
Real Estate		168,415,497			(78,427,018	)		(58,028,613	)
Unallocated		—			—			—


Total net change in unrealized appreciation (depreciation)	$	234,813,836		$	97,581,241		$	(666,744,381	)


Net increase (decrease) in net assets from operations
The Portfolio*	$	76,576,473		$	128,066,691		$	(610,936,875	)
Real Estate		43,868,256			(83,552,151	)		(82,524,315	)
Unallocated⁽²⁾		(882,582	)		(758,114	)		(2,849,646	)


Net increase (decrease) in net assets from operations	$	119,562,147		$	43,756,426		$	(696,310,836	)

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Notes to Consolidated Financial Statements (continued)

	Year Ended
	December 31,
	December 31,			December 31,			December 31,
	2010			2009
	2009			2008			2007
Segment assets
Investment income
The Portfolio*	$	659,946,022		$	705,444,925
The Portfolio*	$	12,326,177		$	25,772,234		$	30,692,607
Real Estate		130,892,020			144,707,801
Real Estate		24,706,598			27,038,531			31,279,027
Unallocated(3)		4,480,245			2,596,332
Unallocated		2,102			94,874			812,878
Segment assets	$	795,318,287		$	852,749,058
Total investment income	$	37,034,877		$	52,905,639		$	62,784,512
Net assets
Interest expense
The Portfolio*	$	658,320,276		$	704,791,545
The Portfolio*	$	—		$	—		$	—
Real Estate		528,030			(39,343,736	)
Real Estate		1,494,343			15,160,967			38,376,136
Unallocated(4)		(10,812,175	)		(12,770,578	)
Unallocated(1)		129,943			797,946			1,186,891
Net assets	$	648,036,131		$	652,677,231
Total interest expense	$	1,624,286		$	15,958,913		$	39,563,027
Net realized gain (loss)
The Portfolio*	$	(59,270,474	)	$	(26,802,134	)	$	86,463,901
Real Estate		(24,432,412	)		(31,170,686	)		4,424,711
Unallocated		1,947			—			—
Total net realized gain (loss)	$	(83,700,939	)	$	(57,972,820	)	$	90,888,612
Net change in unrealized appreciation (depreciation)
The Portfolio*	$	176,008,259		$	(608,715,768	)	$	(14,189,615	)
Real Estate		(78,427,018	)		(58,028,613	)		(10,845,341	)
Unallocated		—			—			—
Total net change in unrealized appreciation (depreciation)	$	97,581,241		$	(666,744,381	)	$	(25,034,956	)
Net increase (decrease) in net assets from operations
The Portfolio*	$	128,066,691		$	(610,936,875	)	$	101,085,900
Real Estate		(83,552,151	)		(82,524,315	)		(19,684,861	)
Unallocated(2)		(758,114	)		(2,849,646	)		(3,518,986	)
Net increase (decrease) in net assets from operations	$	43,756,426		$	(696,310,836	)	$	77,882,053

Belcrest Capital Fund LLC December 31, 2009

Notes to Consolidated Financial Statements (continued)

	At December 31, 2009			At December 31, 2008
Segment assets
The Portfolio*	$	705,444,925		$	872,416,210
Real Estate		144,707,801			262,330,088
Unallocated(3)		2,596,332			2,461,610
Segment assets	$	852,749,058		$	1,137,207,908
Net assets
The Portfolio*	$	704,791,545		$	870,757,329
Real Estate		(39,343,736	)		(49,070,564	)
Unallocated(4)		(12,770,578	)		(12,805,288	)
Net assets	$	652,677,231		$	808,881,477


*		Belcrest Capital invests indirectly in the Portfolio through Belvedere Company.
⁽¹⁾		Unallocated interest expense represents interest incurred on unallocated Credit Facility borrowings. Such borrowings are used to finance ongoing operations of the Fund and are not allocable to reportable segments.
⁽²⁾		Unallocated amounts pertain to the overall operation of Belcrest Capital and do not pertain to either segment. Primarily included in these amounts are the following expenses.

	Year Ended
	Year Ended December 31,
	December 31,		December 31,		December 31,
	2010		2009		2008
	2009		2008		2007
Interest expense on Credit Facility	$	387,465	$	129,943	$	797,946
Audit expense	$	292,815	$	289,592	$	287,121
Distribution and servicing fees	$	245,133	$	237,556	$	1,756,265
Distribution and servicing fees	$	237,556	$	1,756,265	$	2,729,803
Audit expense	$	206,391	$	292,815	$	289,592
Interest expense on Credit Facility	$	129,943	$	797,946	$	1,186,891

(3)		Primarily includes cash held by the Fund and the Fund’s ~~investment~~investments in Cash Reserves Fund and Cash Management.
(4)		Amounts include unallocated liabilities, net of unallocated assets. Unallocated liabilities primarily consist of outstanding ~~unallocated~~ Credit Facility borrowings. ~~Such~~that ~~borrowings~~ are used to finance ongoing operations of the Fund and are not allocable to reportable segments. As of December 31, ~~2009~~2010 and ~~2008~~2009, such borrowings totaled approximately $14,989,000.

14 Subsequent Event

On January 2720, ~~2010~~2011, the Fund ~~made~~paid a distribution of $0.2540 per share to Shareholders of record on January 2618, ~~2010~~2011.

65 66

Belcrest Capital Fund LLC December 31, ~~2009~~2010

Report of Independent Registered Public Accounting Firm

To the Shareholders of Belcrest Capital Fund LLC and Subsidiaries

We have audited the accompanying consolidated statements of assets and liabilities of Belcrest Capital Fund LLC and subsidiaries (collectively, the “Fund”), including the consolidated portfolios of investments, as of December 31, ~~2009~~ 2010 and ~~2008~~2009, and the related consolidated statements of operations, changes in net assets, cash flows, and the financial highlights for each of the three years in the period ended December 31, ~~2009~~2010. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and 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. An audit also includes 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, ~~2009~~2010 and ~~2008~~2009, by correspondence with the custodian. 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 Belcrest Capital Fund LLC and subsidiaries as of December 31, ~~2009~~2010 and ~~2008~~2009, the results of their operations, the changes in their net assets, their cash flows, and the financial highlights for each of the three years in the period ended December 31, ~~2009~~2010, 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 Fund’s internal control over financial reporting as of December 31, ~~2009~~2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~Commission~~ and our report dated ~~March~~February 128, ~~2010~~2011 expressed an unqualified ~~unqualified~~ opinion on the Fund’s internal control over financial ~~financial~~ reporting.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

~~March~~February 128, ~~2010~~2011

66 67

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Portfolio of Investments As of December 31, 2010

Common Stocks — 98.5%
Common Stocks — 98.7%
Security	Shares		Value
Aerospace & Defense — 4.8%
Aerospace & Defense — 4.5%
Boeing Co. (The)		~~960~~970,~~677~~517	$	5263,~~001~~335,~~446~~939
General Dynamics Corp.		473,021		3233,~~245~~565,~~842~~570
Honeywell International, Inc.		~~293~~290,~~134~~022		1115,~~490~~417,~~853~~570
Lockheed Martin Corp.		19,800		1,~~491~~384,~~930~~218
Northrop Grumman Corp.		143,~~701,074~~336		952,~~004~~807,~~983~~306
Raytheon Co.		5853,~~153~~403		2,~~996~~474,~~042~~695
Rockwell Collins, Inc.		~~147~~166,~~928~~153		89,~~189~~680,~~294~~074
United Technologies Corp.		3,~~657~~535,~~193~~573		~~253~~278,~~845~~320,~~766~~307
			$	~~457~~406,~~266~~985,~~156~~679
Air Freight & Logistics — 2.4%
Air Freight & Logistics — 1.5%
FedEx Corp.		1713,~~156,039~~997	$	9666,~~471~~408,~~455~~861
United Parcel Service, Inc., Class B		2992,~~262,306~~540		~~129~~72,~~788~~038,~~495~~553
			$	~~226~~138,~~259~~447,~~950~~414
Auto Components — 0.2%
Auto Components — 0.3%
Johnson Controls, Inc.		~~740~~748,~~109~~655	$	2028,~~160~~598,~~569~~621
WABCO Holdings, Inc.		1,156		29,813
			$	28,598,621
			$	20,190,382
Automobiles — 0.0%(2)
Automobiles — 0.0%
DaimlerChrysler AG(1)		17,284	$	1,168,053
DaimlerChrysler AG		17,284	$	921,237
Harley-Davidson, Inc.		800		27,736
Harley-Davidson, Inc.		133,800		3,371,760
			$	1,195,789
			$	4,292,997
Beverages — 5.3%
Beverages — 5.0%
Brown-Forman Corp., Class A		393,146	$	27,327,579
Brown-Forman Corp., Class A		393,146	$	22,153,777
Brown-Forman Corp., Class B		156,213		10,875,549
Brown-Forman Corp., Class B		156,213		8,368,330
Coca-Cola Co. (The)		2,684,790		176,578,638
Coca-Cola Co. (The)		2,871,938		163,700,466
Coca-Cola Enterprises, Inc.		31,501		788,470
Coca-Cola Enterprises, Inc.		54,516		1,155,739
Molson Coors Brewing Co., Class B		186,000		9,335,340
Molson Coors Brewing Co., Class B		186,000		8,399,760
PepsiCo, Inc.		3,866,073		252,570,549
PepsiCo, Inc.		4,422,231		268,871,645
			$	477,476,125
			$	472,649,717
Biotechnology — 1.8%
Biotechnology — 1.9%
Amgen, Inc.(1)		2,830,119	$	155,373,533
Amgen, Inc.(1)		2,920,204	$	165,195,940
Biogen Idec, Inc.(1)		3,543		237,558
Biogen Idec, Inc.(1)		13,543		724,550
Genzyme Corp.(1)		22,226		1,582,491
Genzyme Corp.(1)		23,267		1,140,316
Gilead Sciences, Inc.(1)		246,207		8,922,542
Gilead Sciences, Inc.(1)		246,207		10,655,839
			$	166,116,124
			$	177,716,645
Capital Markets — 4.2%
Building Products — 0.0%
Ameriprise Financial, Inc.		73,681	$	4,240,342
Masco Corp.		140,317	$	1,937,778
Bank of New York Mellon Corp. (The)		866,758		26,176,092
			$	1,937,778
Charles Schwab Corp. (The)		718,360		12,291,140
Capital Markets — 4.0%
E*Trade Financial Corp.(1)		4,593		73,488
Ameriprise Financial, Inc.		74,124	$	2,877,494
Federated Investors, Inc., Class B		31,821		832,756
Bank of New York Mellon Corp. (The)		894,847		25,028,871
Franklin Resources, Inc.		539,468		59,994,236
Charles Schwab Corp. (The)		718,360		13,519,535
Goldman Sachs Group, Inc. (The)		557,466		93,743,483
Credit Suisse Group AG		47,576		2,356,978
Legg Mason, Inc.		96,941		3,516,050
E*Trade Financial Corp.(1)		45,935		80,386
Morgan Stanley		2,576,626		70,109,993
Federated Investors, Inc., Class B		293,517		8,071,718
Northern Trust Corp.		714,489		39,589,835
Franklin Resources, Inc.		539,468		56,832,954
State Street Corp.		759,119		35,177,574
Goldman Sachs Group, Inc. (The)		557,466		94,122,559
T. Rowe Price Group, Inc.		323,743		20,894,373
Legg Mason, Inc.		104,784		3,160,285
UBS AG(1)		29,488		485,667
Morgan Stanley		2,837,118		83,978,693
Waddell & Reed Financial, Inc., Class A		273,635		9,656,579
Northern Trust Corp.		715,649		37,500,008
			$	376,781,608
Piper Jaffray Cos., Inc.(1)		504		25,507
Chemicals — 1.2%
State Street Corp.		531,412		23,137,678
Air Products and Chemicals, Inc.		7,660	$	696,677
T. Rowe Price Group, Inc.		323,743		17,239,315
Ashland, Inc.		30,391		1,545,686
UBS AG(1)		94,307		1,462,702
Dow Chemical Co. (The)		152,627		5,210,686
Waddell & Reed Financial, Inc., Class A		273,635		8,356,813
E.I. Du Pont de Nemours & Co.		926,633		46,220,454
			$	377,751,496
Ecolab, Inc.		380,814		19,200,642
Chemicals — 1.0%
Monsanto Co.		347,901		24,227,826
Ashland, Inc.		30,391	$	1,204,092
PPG Industries, Inc.		4,400		369,908
Dow Chemical Co. (The)		152,627		4,217,084
Sigma-Aldrich Corp.		173,486		11,547,228
E.I. Du Pont de Nemours & Co.		978,736		32,954,041
			$	109,019,107
Ecolab, Inc.		380,814		16,976,688
Commercial Banks — 3.1%
Monsanto Co.		29,739		2,431,163
Bank of Montreal		33,047	$	1,902,516
PPG Industries, Inc.		4,400		257,576
BB&T Corp.		909,195		23,902,736
Sigma-Aldrich Corp.		809,485		40,903,277
Comerica, Inc.		209,267		8,839,438
			$	98,943,921
Fifth Third Bancorp		1,280,030		18,790,840
Commercial Banks — 2.8%
First Horizon National Corp.(1)		8,756		103,146
Bank of Hawaii Corp.		616	$	28,989
HSBC Holdings PLC		220,592		2,252,569
Bank of Montreal		33,047		1,754,135
HSBC Holdings PLC ADR		35,973		1,836,062
BB&T Corp.		1,043,443		26,472,149
KeyCorp		111,426		986,120
City National Corp.		52,552		2,396,371
M&T Bank Corp.		17,293		1,505,356
Comerica, Inc.		230,933		6,828,689
Marshall & Ilsley Corp.		157,890		1,092,599
Fifth Third Bancorp		1,588,904		15,491,814
PNC Financial Services Group, Inc.		111,383		6,763,176
First Horizon National Corp.(1)		69,184		927,066
HSBC Holdings PLC		220,592		2,509,220
HSBC Holdings PLC ADR		103,266		5,895,456
KeyCorp		180,824		1,003,573
M&T Bank Corp.		25,938		1,734,993
Marshall & Ilsley Corp.		158,431		863,449

See notes to financial statements
67


Tax-Managed Growth Portfolio	December 31, 2010

Portfolio of Investments (continued)


Security	Shares		Value


Commercial Banks (continued)


Regions Financial Corp.		250,097	$	1,750,679
Royal Bank of Canada		148,562		7,778,706
Societe Generale		492,017		26,473,686
SunTrust Banks, Inc.		269,585		7,955,453
Synovus Financial Corp.		10,960		28,934
Toronto-Dominion Bank		17,915		1,331,264
Trustmark Corp.		102,713		2,551,391
U.S. Bancorp		2,819,198		76,033,770
Wells Fargo & Co.		2,679,137		83,026,456
Zions Bancorporation		63,405		1,536,303


			$	276,441,200




Commercial Services & Supplies — 0.1%

Avery Dennison Corp.		31,594	$	1,337,690
Cintas Corp.		61,121		1,708,943
Pitney Bowes, Inc.		15,870		383,737
Waste Management, Inc.		108,828		4,012,488


			$	7,442,858




Communications Equipment — 4.0%

Cisco Systems, Inc.⁽¹⁾		6,781,530	$	137,190,352
Juniper Networks, Inc.⁽¹⁾		459,780		16,975,078
Motorola, Inc.⁽¹⁾		1,148,557		10,417,412
Nokia Oyj ADR		1,721,613		17,767,046
QUALCOMM, Inc.		3,122,231		154,519,212
Telefonaktiebolaget LM Ericsson ADR		1,750,000		20,177,500


			$	357,046,600




Computers & Peripherals — 3.1%

Apple, Inc.⁽¹⁾		326,406	$	105,285,519
Dell, Inc.⁽¹⁾		4,030,315		54,610,768
EMC Corp.⁽¹⁾		2,586,992		59,242,117
Hewlett-Packard Co.		938,911		39,528,153
Lexmark International, Inc., Class A⁽¹⁾		9,624		335,108
NetApp, Inc.⁽¹⁾		417,589		22,950,692


			$	281,952,357




Construction & Engineering — 0.0%⁽²⁾

Jacobs Engineering Group, Inc.⁽¹⁾		15,479	$	709,712


			$	709,712



Construction Materials — 0.0%⁽²⁾

Vulcan Materials Co.		22,102	$	980,445


			$	980,445




Consumer Finance — 0.6%

American Express Co.		788,648	$	33,848,772
Capital One Financial Corp.		80,225		3,414,376
Discover Financial Services		830,375		15,386,849
SLM Corp.⁽¹⁾		10,200		128,418


			$	52,778,415




Containers & Packaging — 0.0%⁽²⁾

Bemis Co., Inc.		79,135	$	2,584,549


			$	2,584,549




Distributors — 0.1%

Genuine Parts Co.		188,424	$	9,673,688


			$	9,673,688




Diversified Consumer Services — 0.0%⁽²⁾

Apollo Group, Inc., Class A⁽¹⁾		10,812	$	426,966
H&R Block, Inc.		22,181		264,176


			$	691,142




Diversified Financial Services — 2.2%

Bank of America Corp.		4,173,500	$	55,674,490
Citigroup, Inc.⁽¹⁾		50,008		236,538
CME Group, Inc.		22,581		7,265,437
ING Groep NV ADR⁽¹⁾		191,170		1,871,554
IntercontinentalExchange, Inc.⁽¹⁾		13,162		1,568,252
JPMorgan Chase & Co.		2,983,514		126,560,664
Moody’s Corp.		179,602		4,766,637


			$	197,943,572




Diversified Telecommunication Services — 0.4%

AT&T, Inc.		490,329	$	14,405,866
CenturyLink, Inc.		4,871		224,894
Deutsche Telekom AG ADR		50,092		641,177
Frontier Communications Corp.		34,263		333,379
Telefonos de Mexico SA de CV ADR		283,026		4,568,040

See notes to financial statements
68

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Portfolio of Investments (continued)

Security	Shares		Value
Commercial Banks (continued)
Diversified Telecommunication Services (continued)
PNC Financial Services Group, Inc.		81,695	$	4,312,679
Verizon Communications, Inc.		380,097	$	13,599,871
Regions Financial Corp.		250,097		1,323,013
Windstream Corp.		130,837		1,823,868
Royal Bank of Canada		252,530		13,522,981
			$	35,597,095
Societe Generale		669,675		46,528,985
Electric Utilities — 0.0%(2)
SunTrust Banks, Inc.		321,840		6,530,134
Duke Energy Corp.		47,340	$	843,125
Synovus Financial Corp.		52,977		108,603
Exelon Corp.		9,202		383,171
Toronto-Dominion Bank		17,915		1,123,629
Southern Co.		68,451		2,616,882
Trustmark Corp.		205,425		4,630,280
			$	3,843,178
U.S. Bancorp		2,933,385		66,030,496
Electrical Equipment — 1.5%
Wells Fargo & Co.		2,165,006		58,433,512
Emerson Electric Co.		2,154,387	$	123,166,305
Westamerica Bancorporation		1,968		108,968
Rockwell Automation, Inc.		125,000		8,963,750
Zions Bancorporation		63,409		813,537
			$	132,130,055
			$	269,372,721
Electronic Equipment, Instruments & Components — 0.6%
Commercial Services & Supplies — 0.1%
Corning, Inc.		2,838,521	$	54,840,226
Avery Dennison Corp.		56,594	$	2,065,115
Flextronics International, Ltd.(1)		161,054		1,264,274
Cintas Corp.		208,456		5,430,279
Tyco Electronics, Ltd.		9,230		326,742
Pitney Bowes, Inc.		15,870		361,201
			$	56,431,242
Waste Management, Inc.		108,828		3,679,475
Energy Equipment & Services — 1.6%
			$	11,536,070
Baker Hughes, Inc.		136,681	$	7,814,053
Communications Equipment — 3.9%
Halliburton Co.		846,351		34,556,511
Cisco Systems, Inc.(1)		7,187,656	$	172,072,485
Schlumberger, Ltd.		1,164,706		97,252,951
Juniper Networks, Inc.(1)		109,780		2,927,833
Transocean, Ltd.(1)		75,667		5,259,613
Motorola, Inc.(1)		1,151,307		8,934,142
			$	144,883,128
Nokia Oyj ADR		1,721,613		22,122,727
Food & Staples Retailing — 2.8%
QUALCOMM, Inc.		3,168,806		146,588,965
Costco Wholesale Corp.		873,262	$	63,058,249
Telefonaktiebolaget LM Ericsson ADR		1,750,000		16,082,500
CVS Caremark Corp.		1,474,872		51,281,299
			$	368,728,652
Kroger Co. (The)		35,843		801,450
Computers & Peripherals — 4.6%
Safeway, Inc.		168,709		3,794,265
Apple, Inc.(1)		291,406	$	61,445,869
Sysco Corp.		616,760		18,132,744
Dell, Inc.(1)		4,062,859		58,342,655
Wal-Mart Stores, Inc.		1,980,219		106,793,211
EMC Corp.(1)		2,038,992		35,621,190
Walgreen Co.		338,399		13,184,025
Hewlett-Packard Co.		1,117,077		57,540,636
			$	257,045,243
International Business Machines Corp.		1,581,888		207,069,139
Food Products — 3.0%
Lexmark International, Inc., Class A(1)		34,181		888,023
Archer-Daniels-Midland Co.		1,490,873	$	44,845,460
NetApp, Inc.(1)		417,589		14,360,886
Campbell Soup Co.		54,780		1,903,605
			$	435,268,398
ConAgra Foods, Inc.		3,600		81,288
Construction & Engineering — 0.0%
General Mills, Inc.		40,967		1,458,015
Jacobs Engineering Group, Inc.(1)		64,781	$	2,436,413
H.J. Heinz Co.		7,500		370,950
			$	2,436,413
Hershey Co. (The)		505,971		23,856,533
Construction Materials — 0.0%
Kraft Foods, Inc., Class A		227,987		7,183,870
Vulcan Materials Co.		34,690	$	1,827,122
McCormick & Co., Inc.		10,600		493,218
			$	1,827,122
Nestle SA		2,750,000		161,105,094
Consumer Finance — 0.5%
Sara Lee Corp.		1,492,627		26,135,899
American Express Co.		420,726	$	17,047,818
Unilever NV		72,175		2,266,295
Capital One Financial Corp.		407,705		15,631,410
			$	269,700,227
Discover Financial Services		1,105,050		16,255,285
Health Care Equipment & Supplies — 1.1%
SLM Corp.(1)		10,200		114,954
Bard (C.R.), Inc.		25,000	$	2,294,250
			$	49,049,467
Baxter International, Inc.		218,222		11,046,398
Containers & Packaging — 0.1%
Becton, Dickinson and Co.		63,708		5,384,600
Bemis Co., Inc.		133,186	$	3,948,965
Boston Scientific Corp.(1)		36,529		276,524
Temple-Inland, Inc.		90,660		1,913,832
CareFusion Corp.(1)		108,138		2,779,147
			$	5,862,797
Covidien PLC		192,021		8,767,679
Distributors — 0.1%
Medtronic, Inc.		1,353,900		50,216,151
Genuine Parts Co.		188,424	$	7,152,575
St. Jude Medical, Inc.(1)		66,365		2,837,104
			$	7,152,575
Stryker Corp.		131,368		7,054,461
Diversified Consumer Services — 0.4%
Zimmer Holdings, Inc.(1)		225,425		12,100,814
Apollo Group, Inc., Class A(1)		10,887	$	659,535
			$	102,757,128
H&R Block, Inc.		1,506,291		34,072,302
Health Care Providers & Services — 1.0%
			$	34,731,837
AmerisourceBergen Corp.		473,884	$	16,168,922
Diversified Financial Services — 1.8%
Cardinal Health, Inc.		216,467		8,292,851
Bank of America Corp.		2,830,245	$	42,623,490
CIGNA Corp.		58,467		2,143,400
Citigroup, Inc.		119,611		395,912
Express Scripts, Inc.(1)		281,972		15,240,587
CME Group, Inc.		28,751		9,658,898
Henry Schein, Inc.(1)		558,701		34,298,654
ING Groep NV ADR(1)		191,170		1,875,378
McKesson Corp.		3,166		222,823
IntercontinentalExchange, Inc.(1)		13,162		1,478,093
Medco Health Solutions, Inc.(1)		133,872		8,202,337
JPMorgan Chase & Co.		2,683,320		111,813,944
PharMerica Corp.(1)		19,678		225,313
Moody’s Corp.		179,602		4,813,334
UnitedHealth Group, Inc.		99,570		3,595,473
			$	172,659,049
WellPoint, Inc.(1)		53,673		3,051,847
Diversified Telecommunication Services — 1.0%
			$	91,442,207
AT&T, Inc.		1,500,639	$	42,062,911
Hotels, Restaurants & Leisure — 2.2%
CenturyTel, Inc.		11,539		417,827
Carnival Corp.		533,768	$	24,612,042
Deutsche Telekom AG ADR		1,374,898		20,211,001
International Game Technology		459,500		8,128,555
McLeodUSA, Inc., Class A(1)(2)		947		0
Interval Leisure Group, Inc.(1)		28,570		461,120
Telefonos de Mexico SA de CV ADR		704,876		11,686,844
Marriott International, Inc., Class A		401,544		16,680,138
Telmex Internacional SAB de CV ADR		283,026		5,023,711
McDonald’s Corp.		860,566		66,057,046

See notes to financial statements
69

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Portfolio of Investments (continued)

Security	Shares		Value
Diversified Telecommunication Services (continued)
Hotels, Restaurants & Leisure (continued)
Verizon Communications, Inc.		444,858	$	14,738,146
Starbucks Corp.		2,322,271	$	74,614,567
Windstream Corp.		247,947		2,724,938
Yum! Brands, Inc.		210,518		10,325,908
			$	96200,~~865~~879,~~378~~376
Electric Utilities — 0.0%
Household Durables — 0.2%
Duke Energy Corp.		47,382	$	815,444
D.R. Horton, Inc.		417,028	$	4,975,144
Exelon Corp.		9,202		449,702
Fortune Brands, Inc.		117,078		7,053,950
Southern Co. (The)		68,451		2,280,787
Leggett & Platt, Inc.		263,428		5,995,621
			$	3,545,933
Newell Rubbermaid, Inc.		49,838		906,055
Electrical Equipment — 1.1%
			$	18,930,770
Emerson Electric Co.		2,283,488	$	97,276,589
Household Products — 1.7%
Rockwell Automation, Inc.		125,000		5,872,500
Clorox Co. (The)		27,272	$	1,725,772
SunPower Corp., Class B(1)		1		21
Colgate-Palmolive Co.		588,454		47,294,048
			$	103,149,110
Energizer Holdings, Inc.(1)		27,000		1,968,300
Electronic Equipment, Instruments & Components — 0.8%
Kimberly-Clark Corp.		520,234		32,795,552
Agilent Technologies, Inc.(1)		456,730	$	14,190,601
Procter & Gamble Co.		1,067,349		68,662,561
Corning, Inc.		2,838,521		54,811,841
			$	152,446,233
Flextronics International, Ltd.(1)		161,054		1,177,305
Independent Power Producers & Energy Traders — 0.0%(2)
National Instruments Corp.		35,783		1,053,809
AES Corp. (The)(1)		93,180	$	1,134,932
Tyco Electronics, Ltd.		10,142		248,986
			$	1,134,932
			$	71,482,542
Industrial Conglomerates — 2.0%
Energy Equipment & Services — 1.3%
3M Co.		827,587	$	71,420,758
Baker Hughes, Inc.		136,681	$	5,532,847
General Electric Co.		5,671,964		103,740,222
Halliburton Co.		846,488		25,470,824
Textron, Inc.		33,277		786,668
Schlumberger, Ltd.		1,175,550		76,516,550
Tyco International, Ltd.		22,764		943,340
Transocean, Ltd.(1)		196,993		16,311,020
			$	176,890,988
			$	123,831,241
Insurance — 2.8%
Food & Staples Retailing — 3.2%
Aegon NV ADR(1)		5,136,862	$	31,488,964
Costco Wholesale Corp.		873,262	$	51,670,913
Aflac, Inc.		119,981		6,770,528
CVS Caremark Corp.		1,958,996		63,099,261
Allstate Corp. (The)		60,964		1,943,532
Kroger Co. (The)		69,668		1,430,284
AON Corp.		25,900		1,191,659
Safeway, Inc.		186,891		3,978,909
Berkshire Hathaway, Inc., Class A(1)		654		78,774,300
Sysco Corp.		1,717,782		47,994,829
Berkshire Hathaway, Inc., Class B(1)		940,459		75,340,171
Wal-Mart Stores, Inc.		2,002,154		107,015,131
Chubb Corp.		24,930		1,486,825
Walgreen Co.		893,009		32,791,291
Cincinnati Financial Corp.		135,528		4,294,882
			$	307,980,618
Hartford Financial Services Group, Inc.		10,762		285,085
Food Products — 2.6%
Manulife Financial Corp.		65,344		1,122,610
Archer-Daniels-Midland Co.		1,574,460	$	49,296,342
Marsh & McLennan Cos., Inc.		24,256		663,159
Campbell Soup Co.		54,780		1,851,564
Old Republic International Corp.		164,555		2,242,885
ConAgra Foods, Inc.		100,372		2,313,575
Progressive Corp.		1,166,022		23,168,857
Del Monte Foods Co.		17,418		197,520
Torchmark Corp.		252,479		15,083,096
General Mills, Inc.		27,469		1,945,080
Travelers Companies, Inc. (The)		76,466		4,259,921
H.J. Heinz Co.		114,878		4,912,183
			$	248,116,474
Hershey Co. (The)		512,481		18,341,695
Internet & Catalog Retail — 0.1%
Kraft Foods, Inc., Class A		242,546		6,592,400
Amazon.com, Inc.(1)		59,077	$	10,633,860
Nestle SA		2,750,000		133,467,372
Expedia, Inc.		1		25
Sara Lee Corp.		2,026,393		24,681,467
HSN, Inc.(1)		60,017		1,838,921
Unilever NV		72,175		2,333,418
Liberty Media Corp. - Interactive, Class A(1)		11,902		187,695
			$	~~245~~12,~~932~~660,~~616~~501
Health Care Equipment & Supplies — 1.5%
Internet Software & Services — 1.9%
Baxter International, Inc.		224,448	$	13,170,608
Akamai Technologies, Inc.(1)		200,000	$	9,410,000
Becton, Dickinson and Co.		63,708		5,024,013
AOL, Inc.(1)		38,254		907,002
Boston Scientific Corp.(1)		434,359		3,909,231
eBay, Inc.(1)		1,260,217		35,071,839
CareFusion Corp.(1)		315,076		7,880,051
Google, Inc., Class A(1)		199,296		118,375,845
Covidien PLC		193,320		9,258,095
Google, Inc., Class A(1)(3)		3,500		2,076,989
Hospira, Inc.(1)		48,238		2,460,138
IAC/InterActiveCorp(1)		13,368		383,662
Medtronic, Inc.		1,746,454		76,809,047
VeriSign, Inc.		14,758		482,144
St. Jude Medical, Inc.(1)		66,365		2,440,905
			$	166,707,481
Stryker Corp.		155,879		7,851,625
IT Services — 5.1%
Zimmer Holdings, Inc.(1)		240,888		14,238,890
Accenture PLC, Class A		2,738,000	$	132,765,620
			$	143,042,603
Automatic Data Processing, Inc.		1,314,993		60,857,876
Health Care Providers & Services — 1.1%
Broadridge Financial Solutions, Inc.		10,202		223,730
AmerisourceBergen Corp.		586,036	$	15,277,959
DST Systems, Inc.		600		26,610
Cardinal Health, Inc.		300,019		9,672,613
Fidelity National Information Services, Inc.		79,251		2,170,685
CIGNA Corp.		49,467		1,744,701
Fiserv, Inc.(1)		44,653		2,614,880
Express Scripts, Inc.(1)		196,994		17,030,131
International Business Machines Corp.		1,572,831		230,828,678
Henry Schein, Inc.(1)		818,371		43,046,315
Paychex, Inc.		757,686		23,420,074
McKesson Corp.		6,462		403,875
Total System Services, Inc.		32,405		498,389
Medco Health Solutions, Inc.(1)		146,516		9,363,838
Western Union Co.		146,520		2,720,876
PharMerica Corp.(1)		25,547		405,686
			$	456,127,418
UnitedHealth Group, Inc.		201,101		6,129,558
Leisure Equipment & Products — 0.0%(2)
WellPoint, Inc.(1)		53,673		3,128,599
Mattel, Inc.		22,565	$	573,828
			$	~~106~~573,~~203,275~~828
Health Care Technology — 0.0%
IMS Health, Inc.		56,530	$	1,190,522
			$	1,190,522

See notes to financial statements
70

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Portfolio of Investments (continued)

Security	Shares		Value
Hotels, Restaurants & Leisure — 1.7%
Life Sciences Tools & Services — 0.2%
Carnival Corp.(1)		537,768	$	17,041,868
Agilent Technologies, Inc.(1)		453,887	$	18,804,538
Darden Restaurants, Inc.		147,345		5,167,389
Thermo Fisher Scientific, Inc.(1)		18,700		1,035,232
International Game Technology		459,500		8,624,815
			$	19,839,770
Interval Leisure Group, Inc.(1)		85,966		1,071,996
Machinery — 3.6%
Marriott International, Inc., Class A		401,544		10,942,074
Caterpillar, Inc.		121,835	$	11,411,066
McDonald’s Corp.		865,066		54,014,721
Danaher Corp.		44,183		2,084,112
Starbucks Corp.(1)		2,222,271		51,245,569
Deere & Co.		2,623,301		217,865,148
Yum! Brands, Inc.		246,105		8,606,292
Dover Corp.		434,443		25,393,194
			$	156,714,724
Illinois Tool Works, Inc.		1,203,805		64,283,187
Household Durables — 0.2%
Parker Hannifin Corp.		30,763		2,654,847
D.R. Horton, Inc.		417,028	$	4,533,094
WABCO Holdings, Inc.(1)		1,156		70,435
Fortune Brands, Inc.		117,078		5,057,770
			$	323,761,989
Leggett & Platt, Inc.		313,428		6,393,931
Media — 3.0%
Newell Rubbermaid, Inc.		49,838		748,069
Ascent Media Corp., Class A(1)		755	$	29,264
			$	16,732,864
CBS Corp., Class B		79,463		1,513,770
Household Products — 2.6%
Comcast Corp., Class A		201,884		4,435,391
Clorox Co. (The)		31,145	$	1,899,845
Comcast Corp., Special Class A		1,949,528		40,569,678
Colgate-Palmolive Co.		680,288		55,885,659
DIRECTV, Class A(1)		30,225		1,206,884
Energizer Holdings, Inc.(1)		76,555		4,691,290
Discovery Communications, Inc., Class A(1)		7,555		315,043
Kimberly-Clark Corp.		530,925		33,825,232
Discovery Communications, Inc., Class C(1)		7,555		277,193
Procter & Gamble Co.		2,495,665		151,312,169
Gannett Co., Inc.		5,643		85,153
			$	247,614,195
Liberty Global, Inc., Series A(1)		2,381		84,240
Independent Power Producers & Energy Traders — 0.0%
Liberty Global, Inc., Series C(1)		2,382		80,726
AES Corp. (The)(1)		93,180	$	1,240,226
Liberty Media Corp. – Capital, Class A(1)		7,556		472,703
			$	1,240,226
Liberty Media Corp. – Starz, Series A(1)		3,022		200,903
Industrial Conglomerates — 1.8%
McGraw-Hill Cos., Inc. (The)		184,936		6,733,520
3M Co.		901,357	$	74,515,183
New York Times Co. (The), Class A(1)		5,269		51,636
General Electric Co.		6,321,340		95,641,874
News Corp., Class A		97		1,412
Textron, Inc.		18,236		343,019
Omnicom Group, Inc.		192,607		8,821,401
Tyco International, Ltd.(1)		23,014		821,140
Time Warner Cable, Inc.		125,310		8,274,219
			$	171,321,216
Time Warner, Inc.		372,024		11,968,012
Insurance — 2.7%
Viacom, Inc., Class B		83,155		3,293,770
Aegon NV ADR(1)		5,178,488	$	33,194,108
Walt Disney Co. (The)		4,877,202		182,943,847
Aflac, Inc.		262,505		12,140,856
Washington Post Co., Class B		1,500		659,250
Allstate Corp. (The)		124,523		3,740,671
WPP PLC, ADR		37,400		2,322,914
AON Corp.		274,044		10,506,847
			$	274,340,929
Berkshire Hathaway, Inc., Class A(1)		638		63,289,600
Metals & Mining — 0.4%
Berkshire Hathaway, Inc., Class B(1)		22,738		74,717,068
Alcoa, Inc.		52,760	$	811,976
Chubb Corp.		25,054		1,232,156
Freeport-McMoRan Copper & Gold, Inc.		225,000		27,020,250
Cincinnati Financial Corp.		179,991		4,722,964
Nucor Corp.		230,000		10,078,600
Hartford Financial Services Group, Inc.		11,362		264,280
			$	37,910,826
Lincoln National Corp.		54,170		1,347,750
Multiline Retail — 1.5%
Manulife Financial Corp.		69,765		1,279,490
Macy’s, Inc.		26,301	$	665,415
Marsh & McLennan Cos., Inc.		172,845		3,816,418
Sears Holdings Corp.(1)		410		30,238
MetLife, Inc.		81		2,863
Target Corp.		2,290,940		137,754,222
Old Republic International Corp.		216,805		2,176,722
			$	138,449,875
Progressive Corp.(1)		1,205,542		21,687,700
Oil, Gas & Consumable Fuels — 8.4%
Torchmark Corp.		278,479		12,239,152
Anadarko Petroleum Corp.		2,267,534	$	172,695,389
Travelers Companies, Inc. (The)		98,892		4,930,755
Apache Corp.		2,145,162		255,767,665
			$	251,289,400
BP PLC ADR		217,447		9,604,634
Internet & Catalog Retail — 0.1%
Chevron Corp.		622,819		56,832,234
Amazon.com, Inc.(1)		43,801	$	5,892,111
ConocoPhillips		361,015		24,585,122
Expedia, Inc.(1)		119,213		3,064,966
Devon Energy Corp.		568,727		44,650,757
HSN, Inc.(1)		60,017		1,211,743
Exxon Mobil Corp.		2,296,100		167,890,832
Liberty Media Corp. – Interactive, Class A(1)		11,902		129,018
Hess Corp.		39,579		3,029,377
Ticketmaster Entertainment, Inc.(1)		80,619		985,164
Marathon Oil Corp.		175,831		6,511,022
			$	11,283,002
Murphy Oil Corp.		78,679		5,865,519
Internet Software & Services — 1.7%
Royal Dutch Shell PLC ADR, Class A		102,313		6,832,462
Akamai Technologies, Inc.(1)		200,000	$	5,066,000
Royal Dutch Shell PLC ADR, Class B		9,594		639,632
AOL, Inc.(1)		48,584		1,131,035
Spectra Energy Corp.		8,313		207,742
eBay, Inc.(1)		1,260,217		29,665,508
Williams Cos., Inc.		2,000		49,440
Google, Inc., Class A(1)		199,296		123,559,534
			$	755,161,827
IAC/InterActiveCorp(1)		13,368		273,777
Paper & Forest Products — 0.0%(2)
VeriSign, Inc.(1)		14,758		357,734
Neenah Paper, Inc.		975	$	19,188
			$	~~160~~19,~~053,588~~188
IT Services — 2.9%
Personal Products — 0.0%(2)
Accenture PLC, Class A		2,738,000	$	113,627,000
Estee Lauder Cos., Inc., Class A		13,035	$	1,051,924
Acxiom Corp.(1)		68,785		923,095
			$	1,051,924
Automatic Data Processing, Inc.		1,339,373		57,351,952
Pharmaceuticals — 8.2%
Broadridge Financial Solutions, Inc.		18,597		419,548
Abbott Laboratories		3,085,358	$	147,819,502
Computer Sciences Corp.(1)		150,923		8,682,600
Allergan, Inc.		81,962		5,628,331
DST Systems, Inc.(1)		600		26,130
Bristol-Myers Squibb Co.		1,558,972		41,281,579
Fidelity National Information Services, Inc.		106,171		2,488,648
Eli Lilly & Co.		1,575,548		55,207,202
Fiserv, Inc.(1)		47,355		2,295,771
GlaxoSmithKline PLC ADR		459,388		18,017,197
Paychex, Inc.		757,686		23,215,499
Hospira, Inc.(1)		18,399		1,024,640
Total System Services, Inc.		52,739		910,803
Western Union Co.		3,213,318		60,571,044
			$	270,512,090

See notes to financial statements
71

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Portfolio of Investments (continued)

Security	Shares		Value
Leisure Equipment & Products — 0.0%
Pharmaceuticals (continued)
Mattel, Inc.		22,565	$	450,849
Johnson & Johnson		2,596,000	$	160,562,600
			$	450,849
King Pharmaceuticals, Inc.(1)		52,305		734,885
Life Sciences Tools & Services — 0.2%
Merck & Co., Inc.		1,909,105		68,804,144
Life Technologies Corp.(1)		344,969	$	18,017,731
Novo Nordisk A/S ADR		249,848		28,125,390
Thermo Fisher Scientific, Inc.(1)		18,700		891,803
Pfizer, Inc.		7,447,685		130,408,964
			$	18,909,534
Teva Pharmaceutical Industries, Ltd. ADR		1,671,886		87,155,417
Machinery — 2.5%
			$	744,769,851
Caterpillar, Inc.		159,554	$	9,092,982
Real Estate Investment Trusts (REITs) — 0.0%(2)
Danaher Corp.		94,953		7,140,466
Weyerhaeuser Co.		11,615	$	219,872
Deere & Co.		2,623,301		141,894,351
			$	219,872
Dover Corp.		578,638		24,077,127
Real Estate Management & Development — 0.0%(2)
Illinois Tool Works, Inc.		1,183,752		56,808,259
Forest City Enterprises, Inc., Class A(1)		56,500	$	942,985
Parker Hannifin Corp.		37,997		2,047,278
			$	942,985
			$	241,060,463
Road & Rail — 0.2%
Media — 3.4%
Norfolk Southern Corp.		11,040	$	693,533
Ascent Media Corp., Class A(1)		755	$	19,275
Union Pacific Corp.		132,257		12,254,933
CBS Corp., Class B		79,463		1,116,455
			$	12,948,466
Comcast Corp., Class A		288,237		4,859,676
Semiconductors & Semiconductor Equipment — 3.8%
Comcast Corp., Class A Special		2,012,974		32,227,714
Analog Devices, Inc.		560,289	$	21,106,087
DIRECTV(1)		30,225		1,008,004
Applied Materials, Inc.		1,065,614		14,971,877
Discovery Communications, Inc., Class A(1)		7,555		231,712
Broadcom Corp., Class A		897,422		39,082,728
Discovery Communications, Inc., Class C(1)		7,555		200,359
Cypress Semiconductor Corp.(1)		52,742		979,946
Gannett Co., Inc.		320,258		4,755,831
Intel Corp.		10,592,848		222,767,593
Liberty Capital, Class A(1)		7,556		180,437
KLA-Tencor Corp.		142,065		5,489,392
Liberty Global, Inc., Series A(1)		2,381		52,168
Linear Technology Corp.		123,388		4,267,991
Liberty Global, Inc., Series C(1)		2,382		52,047
Maxim Integrated Products, Inc.		223,099		5,269,598
Liberty Media Corp. - Starz, Series A(1)		3,022		139,465
NVIDIA Corp.(1)		134,500		2,071,300
McGraw-Hill Cos., Inc. (The)		299,599		10,039,562
Texas Instruments, Inc.		897,287		29,161,827
New York Times Co. (The), Class A(1)		5,269		65,125
Verigy, Ltd.(1)		284		3,698
News Corp., Class A		97		1,328
Xilinx, Inc.		23,107		669,641
Omnicom Group, Inc.		2,032,655		79,578,443
			$	345,841,678
Time Warner Cable, Inc.		133,705		5,534,050
Software — 3.7%
Time Warner, Inc.		531,114		15,476,662
Activision Blizzard, Inc.		846,350	$	10,528,594
Viacom, Inc., Class B(1)		83,155		2,472,198
Adobe Systems, Inc.(1)		409,776		12,612,905
Walt Disney Co. (The)		4,870,943		157,087,912
CA, Inc.		45,408		1,109,772
Washington Post Co., Class B		1,500		659,400
Electronic Arts, Inc.(1)		21,405		350,614
WPP PLC, ADR		46,597		2,266,944
Microsoft Corp.		3,224,770		90,035,578
			$	318,024,767
Oracle Corp.		6,883,600		215,456,680
Metals & Mining — 0.5%
Symantec Corp.(1)		185,171		3,099,763
Alcoa, Inc.		52,760	$	850,491
			$	333,193,906
BHP Billiton, Ltd. ADR		190,000		14,550,200
Specialty Retail — 2.4%
Freeport-McMoRan Copper & Gold, Inc.(1)		225,000		18,065,250
Best Buy Co., Inc.		148,536	$	5,093,299
Nucor Corp.		230,000		10,729,500
Gap, Inc. (The)		89,138		1,973,515
			$	44,195,441
Home Depot, Inc.		3,203,173		112,303,245
Multiline Retail — 1.3%
Limited Brands, Inc.		41,877		1,286,880
JC Penney Co., Inc.		88,822	$	2,363,553
Lowe’s Companies, Inc.		663,831		16,648,882
Macy’s, Inc.		94,265		1,579,881
Staples, Inc.		246,198		5,605,929
Nordstrom, Inc.		131,384		4,937,411
TJX Companies, Inc. (The)		1,701,405		75,525,368
Sears Holdings Corp.(1)		4,107		342,729
			$	218,437,118
Target Corp.		2,290,940		110,812,768
Textiles, Apparel & Luxury Goods — 3.0%
			$	120,036,342
Coach, Inc.		10,800	$	597,348
Oil, Gas & Consumable Fuels — 9.0%
Hanesbrands, Inc.(1)		236,598		6,009,589
Anadarko Petroleum Corp.		4,381,890	$	273,517,574
NIKE, Inc., Class B		3,058,444		261,252,287
Apache Corp.		2,145,656		221,367,330
VF Corp.		12,000		1,034,160
BP PLC ADR		226,725		13,143,248
			$	268,893,384
Chevron Corp.		655,424		50,461,094
Thrifts & Mortgage Finance — 0.0%(2)
ConocoPhillips		1,176,165		60,066,747
Tree.com, Inc.(1)		13,436	$	126,836
Devon Energy Corp.		568,771		41,804,668
			$	126,836
Exxon Mobil Corp.		2,496,998		170,270,294
Tobacco — 0.2%
Hess Corp.		35,579		2,152,529
Altria Group, Inc.		249,178	$	6,134,762
Marathon Oil Corp.		177,334		5,536,367
Philip Morris International, Inc.		255,585		14,959,390
Murphy Oil Corp.		78,679		4,264,402
			$	21,094,152
Royal Dutch Shell PLC ADR, Class A		127,794		7,681,697
Wireless Telecommunication Services — 0.1%
Royal Dutch Shell PLC ADR, Class B		9,594		557,699
America Movil SAB de CV ADR, Series L		30,500	$	1,748,870
Spectra Energy Corp.		218,914		4,489,926
Sprint Nextel Corp.(1)		135,160		571,727
Williams Cos., Inc.		2,000		42,160
Vodafone Group PLC ADR		258,159		6,823,142
			$	~~855~~9,~~355~~143,~~735~~739
Paper & Forest Products — 0.0%
Total Common Stocks
International Paper Co.		283	$	7,579
(identified cost $6,402,982,764)			$	8,927,310,824
Neenah Paper, Inc.		1,886		26,310
Weyerhaeuser Co.		4,754		205,087
			$	238,976
Personal Products — 0.0%
Avon Products, Inc.		10,400	$	327,600
Estee Lauder Cos., Inc., Class A		13,035		630,373
			$	957,973

See notes to financial statements
72

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Portfolio of Investments (continued)

Preferred Stocks — 0.0%(2)
Security	Shares		Value
Pharmaceuticals — 10.1%
Commercial Banks — 0.0%(2)
Abbott Laboratories		3,397,401	$	183,425,680
Wells Fargo & Co.		166	$	10
Allergan, Inc.		82,562		5,202,232
Total Preferred Stocks
Bristol-Myers Squibb Co.		2,140,192		54,039,848
(identified cost $4,929)			$	10
Eli Lilly & Co.		2,884,751		103,014,458
Short-Term Investments — 1.1%
GlaxoSmithKline PLC ADR		448,388		18,944,393
	Interest
Johnson & Johnson		3,081,962		198,509,172
	(000’s
King Pharmaceuticals, Inc.(1)		152,305		1,868,782
Description	omitted)		Value
Merck & Co., Inc.		2,489,783		90,976,671
Eaton Vance Cash Reserves Fund, LLC, 0.22%(4)(5)	$	101,693	$	101,692,564
Novo Nordisk A/S ADR		353,594		22,576,977
Total Short-Term Investments
Pfizer, Inc.		9,948,483		180,962,906
(identified cost $101,692,564)			$	101,692,564
Teva Pharmaceutical Industries, Ltd. ADR		1,671,886		93,926,556
Total Investments — 99.8%
			$	953,447,675
(identified cost $6,504,680,257)			$	9,029,003,398
Real Estate Management & Development — 0.0%
Other Assets, Less Liabilities — 0.2%			$	16,213,819
Forest City Enterprises, Inc., Class A(1)		56,500	$	665,570
Net Assets — 100.0%			$	9,045,217,217
Forestar Real Estate Group, Inc.(1)		30,220		664,236
			$	1,329,806
Road & Rail — 0.2%
Burlington Northern Santa Fe Corp.		54,168	$	5,342,048
Norfolk Southern Corp.		12,365		648,173
Union Pacific Corp.		132,257		8,451,223
			$	14,441,444
Semiconductors & Semiconductor Equipment — 3.3%
Analog Devices, Inc.		560,289	$	17,693,927
Applied Materials, Inc.		1,065,614		14,854,659
Broadcom Corp., Class A(1)		976,646		30,715,517
Cypress Semiconductor Corp.(1)		52,742		556,955
Intel Corp.		11,004,150		224,484,660
KLA-Tencor Corp.		143,189		5,177,714
Linear Technology Corp.		123,388		3,768,269
Maxim Integrated Products, Inc.		223,099		4,528,910
Texas Instruments, Inc.		552,587		14,400,417
Verigy, Ltd.(1)		3,524		45,354
Xilinx, Inc.		24,830		622,240
			$	316,848,622
Software — 3.1%
Activision Blizzard, Inc.(1)		96,350	$	1,070,448
Adobe Systems, Inc.(1)		440,317		16,194,859
CA, Inc.		45,408		1,019,864
Electronic Arts, Inc.(1)		21,405		379,939
Microsoft Corp.		3,425,420		104,441,056
Oracle Corp.		6,981,637		171,329,372
Symantec Corp.(1)		186,371		3,334,177
			$	297,769,715
Specialty Retail — 2.3%
Abercrombie & Fitch Co., Class A		3,578	$	124,693
Best Buy Co., Inc.		148,536		5,861,230
Gap, Inc. (The)		89,138		1,867,441
Home Depot, Inc.		3,945,465		114,142,302
Limited Brands, Inc.		42,136		810,697
Lowe’s Companies, Inc.		1,003,622		23,474,719
Sherwin-Williams Co. (The)		500		30,825
Staples, Inc.		257,430		6,330,204
TJX Companies, Inc. (The)		1,701,405		62,186,353
			$	214,828,464
Textiles, Apparel & Luxury Goods — 2.2%
Coach, Inc.		10,800	$	394,524
Hanesbrands, Inc.(1)		236,598		5,704,378
NIKE, Inc., Class B		3,058,444		202,071,395
			$	208,170,297
Thrifts & Mortgage Finance — 0.0%
Tree.com, Inc.(1)		13,436	$	122,939
			$	122,939
Tobacco — 0.4%
Altria Group, Inc.		310,619	$	6,097,451
Philip Morris International, Inc.		566,282		27,289,130
			$	33,386,581
Wireless Telecommunication Services — 0.1%
America Movil SAB de CV ADR, Series L		22,000	$	1,033,560
Sprint Nextel Corp.(1)		229,998		841,792
Telephone and Data Systems, Inc.		24,450		738,390

See notes to financial statements 73

Tax-Managed Growth Portfolio as of December 31, 2009

Portfolio of Investments (continued)

Security	Shares		Value
Wireless Telecommunication Services (continued)
Telephone and Data Systems, Inc., Special Shares		9,066	$	307,519
Vodafone Group PLC ADR		258,909		5,978,209
			$	8,899,470
Total Common Stocks
(identified cost $7,498,546,989)			$	9,334,094,379
Preferred Stocks — 0.0%
Security	Shares		Value
Commercial Banks — 0.0%
Wells Fargo & Co.		166	$	116
Total Preferred Stocks
(identified cost $4,929)			$	116
Convertible Preferred Stocks — 0.0%
Security	Shares		Value
Independent Power Producers & Energy Traders — 0.0%
Enron Corp.(1)(2)		11,050	$	0
Total Convertible Preferred Stocks
(identified cost $16,626,069)			$	0

Short-Term Investments — 1.1%
	Interest
	(000’s
Description	omitted)	Value
Cash Management Portfolio, 0.00%(3)	$109,919	$	109,919,346
Total Short-Term Investments
(identified cost $109,919,346)		$	109,919,346
Total Investments — 99.6%
(identified cost $7,625,097,333)		$	9,444,013,841
Other Assets, Less Liabilities — 0.4%		$	35,465,423
Net Assets — 100.0%		$	9,479,479,264

ADR - American Depositary Receipt

(1)		Non-income producing security.
(2)		~~Security~~Amount ~~valued~~is atless ~~fair~~than ~~value using methods determined in good faith by or at the direction of the Trustees~~0.05%.
(3)		~~Affiliated~~Security ~~investment~~subject ~~company available~~ to ~~Eaton~~restrictions ~~Vance~~on ~~portfolios~~resale ~~and~~(See ~~funds~~Note ~~which invests in high quality, U~~5).~~S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of December 31, 2009.~~
(4)		Affiliated investment company available to Eaton Vance portfolios and funds which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of December 31, 2010.
(5)		Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC and Cash Management Portfolio, an affiliated investment company, for the year ended December 31, 2010 was $117,723 and $0, respectively.

See notes to financial statements 74 73

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Financial Statements

Statement of Assets and Liabilities

As of December 31, 2009
Assets	December 31, 2010
Assets
Unaffiliated investments, at value (identified cost, $6,402,987,693)	$	8,927,310,833
Unaffiliated investments, at value (identified cost, $7,515,177,987)	$	9,334,094,495
Affiliated investments, at value (identified cost, $101,692,564)		101,692,564
Affiliated investments, at value (identified cost, $109,919,346)		109,919,346
Cash		1,201,444
Cash		1,618,404
Dividends receivable		10,718,987
Dividends receivable		13,680,323
Interest receivable from affiliated investment		18,551
Receivable for investments sold		217,~~882~~012,~~113~~596
Tax reclaims receivable		21,~~217~~287,~~408~~305
Total assets	$	9,~~483~~049,~~412~~242,~~089~~280
Liabilities
Payable to affiliates:
Investment adviser fee	$	3,~~590~~440,~~334~~053
Trustees’ fees		12,625
Accrued expenses		~~329~~572,~~866~~385
Total liabilities	$	34,~~932~~025,~~825~~063
Net Assets applicable to investors’ interest in Portfolio	$	9,~~479~~045,~~479~~217,~~264~~217
Sources of Net Assets
Net proceeds from capital contributions and withdrawals	$	76,~~660~~520,~~385~~732,~~213~~717
Net unrealized appreciation		12,~~819~~524,~~094~~484,~~051~~500
Total	$	9,~~479~~045,~~479~~217,~~264~~217

Statement of Operations

For the Year Ended
	Year Ended
December 31, 2009
Investment Income	December 31, 2010
Investment Income
Dividends (net of foreign taxes, $2,024,341)	$	169,815,633
Dividends (net of foreign taxes, $2,803,433)	$	214,044,957
Interest allocated from affiliated investments		139,296
Interest income allocated from affiliated investment		671,602
Expenses allocated from affiliated investments		(21,573	)
Expenses allocated from affiliated investment		(544,398	)
Total investment income	$	169,933,356
Total investment income	$	214,172,161
Expenses
Investment adviser fee	$	4140,~~375~~626,~~335~~632
Trustees’ fees and expenses		50,500
Custodian fee		1,~~295~~303,~~412~~697
Legal and accounting services		~~170~~151,~~213~~995
Miscellaneous		229,130
Printing and postage		44,943
Total expenses	$	43,120,590
Miscellaneous		159,324
Net investment income	$	171,051,571
Total expenses	$	42,337,091
Deduct —
Reduction of custodian fee	$	165
Total expense reductions	$	165
Net expenses	$	42,336,926
Net investment income	$	127,596,430
Realized and Unrealized Gain (Loss)
Net realized gain (loss) —
Investment transactions(1)	$	~~(446~~232,~~325~~534,~~786~~485	)
Investment transactions allocated from affiliated investment		(59,244	)
Investment transactions allocated from affiliated investments		11,247
Foreign currency transactions		20(5,~~155~~664	)
Net realized loss	$	(446,364,875	)
Net realized gain	$	232,540,068
Change in unrealized appreciation (depreciation) —
Investments	$	2705,~~039~~406,~~474,627~~632
Foreign currency		65(16,~~756~~183	)
Net change in unrealized appreciation (depreciation)	$	2705,~~039~~390,~~540,383~~449
Net realized and unrealized gain	$	1937,~~593~~930,~~175,508~~517
Net increase in net assets from operations	$	1,~~764~~065,~~227~~526,~~079~~947

(1) Includes $268,975,439 of net realized ~~losses~~gains ~~of $67,236,452~~ from redemptions in-kind.

See notes to financial statements 75 74

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Financial Statements (continued)

Statements of Changes in Net Assets

Increase (Decrease)	Year Ended			Year Ended
in Net Assets	December 31, ~~2009~~2010			December 31, ~~2008~~2009
From operations —
Net investment income	$	~~171~~127,~~051~~596,~~571~~430		$	~~291~~171,~~159~~051,~~659~~571
Net realized loss from investment transactions and foreign currency transactions		(446,364,875	)		(57,601,117	)
Net realized gain (loss) from investment transactions and foreign currency transactions		232,540,068			(446,364,875	)
Net change in unrealized appreciation (depreciation) from investments and foreign currency		2705,~~039~~390,~~540,383~~449			(62,~~326~~039,~~916~~540,~~620~~383	)
Net increase (decrease) in net assets from operations	$	1,764,227,079		$	(6,093,358,078	)
Net increase in net assets from operations	$	1,065,526,947		$	1,764,227,079
Capital transactions —
Contributions	$	~~362~~175,~~235~~936,~~165~~921		$	1362,~~174~~235,~~044,484~~165
Withdrawals		(31,~~249~~675,~~726~~725,~~036~~915	)		(43,~~342~~249,~~104~~726,~~580~~036	)
Net decrease in net assets from capital transactions	$	(21,~~887~~499,~~490~~788,~~871~~994	)	$	(32,~~168~~887,~~060~~490,~~096~~871	)
Net decrease in net assets	$	(1434,~~123~~262,~~263,792~~047	)	$	(91,~~261~~123,~~418~~263,~~174~~792	)
Net Assets
At beginning of year	$	109,~~602~~479,~~743~~479,~~056~~264		$	1910,~~864~~602,~~161~~743,~~230~~056
At end of year	$	9,~~479~~045,~~479~~217,~~264~~217		$	109,~~602~~479,~~743~~479,~~056~~264

See notes to financial statements 76 75

Tax-Managed Growth Portfolio ~~as of~~ December 31, ~~2009~~2010

Financial Statements (continued)

Supplementary Data

	Year Ended December 31,
	2009			2008			2007			2006			2005
	2010			2009			2008			2007			2006
Ratios/Supplemental Data
Ratios (as a percentage of average daily net assets):
Expenses(1)		0.4748	%		0.4547	%		0.4445	%		0.4544	%		0.45	%~~(2)~~
Net investment income		1.8643	%		1.8486	%		1.5284	%		1.3952	%		1.2539	%~~(2)~~
Portfolio Turnover(3)		2	%		1	%		2	%		1	%		0	%(4)
Portfolio Turnover		2	%		3	%		3	%		6	%		7	%
Total Return		2312.3286	%		~~(32~~23.7632	)%		4(32.7276	)%		134.6972	%		413.7069	%
Net assets, end of year (000’s omitted)	$	9,~~479~~045,~~479~~217		$	109,~~602~~479,~~743~~479		$	1910,~~864~~602,~~161~~743		$	2019,~~387~~864,~~292~~161		$	1920,~~032~~387,~~607~~292

(1)		Excludes the effect of custody fee credits, if any, of less than 0.005%.
(2)		The investment adviser waived a portion of its investment adviser fee equal to less than 0.01% of average daily net assets for the year ended December 31, 2005.
(3)		Excludes the value of the portfolio securities contributed or distributed as a result of in-kind shareholder transactions. The total turnover rate of the Portfolio including in-kind contributions and distributions was 3%, 3%, 6%, 7% and 6% for the years ended December 31, 2009, 2008, 2007, 2006 and 2005, respectively.
(4)		Amounts to less than 1%.


(1)		Excludes the effect of custody fee credits, if any, of less than 0.005%.

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