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

                                    FORM 10-Q

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

               For the quarterly period ended June 30, 2004
                                              -------------

[ ]  Transition  Report  Pursuant  to  Section 13  or 15(d)  of  the  Securities
     Exchange Act of 1934

               For the transition period from _________ to _____________


                          Commission File No. 000-30509
                                              ---------


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


             Massachusetts                             04-3453080
             -------------                             ----------
        (State of organization)          ( I.R.S. Employer Identification No.)


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


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


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


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

                                   YES [X]      NO [ ]


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

                                   YES [X]      NO [ ]

\<PAGE>

                            BELCREST CAPITAL FUND LLC
                               Index to Form 10-Q

PART I    FINANCIAL INFORMATION                                             Page

Item 1.   Condensed Consolidated Financial Statements                         3

          Condensed Consolidated Statements of Assets and Liabilities
          as of June 30, 2004 (Unaudited) and December 31, 2003               3

          Condensed Consolidated Statements of Operations (Unaudited)
          for the Three Months Ended June 30, 2004 and 2003 and for
          the Six Months Ended June 30, 2004 and 2003                         4

          Condensed Consolidated Statements of Changes in Net Assets
          for the Six Months Ended June 30, 2004 (Unaudited) and the
          Year Ended December 31, 2003                                        6

          Condensed Consolidated Statements of Cash Flows (Unaudited)
          for the Six Months Ended June 30, 2004 and 2003                     7

          Financial Highlights (Unaudited) for the Six Months Ended
          June 30, 2004                                                       9

          Notes to Condensed Consolidated Financial Statements as of
          June 30, 2004 (Unaudited)                                          10

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                          18

Item 3.   Quantitative and Qualitative Disclosures About Market Risk         24

Item 4.   Controls and Procedures                                            27

PART II   OTHER INFORMATION

Item 1.   Legal Proceedings                                                  27

Item 2.   Changes in Securities, Use of Proceeds and Issuer Purchases
          of Equity Securities                                               27

Item 3.   Defaults Upon Senior Securities                                    28

Item 4.   Submission of Matters to a Vote of Security Holders                28

Item 5.   Other Information                                                  28

Item 6.   Exhibits and Reports on Form 8-K                                   28

SIGNATURES                                                                   29

EXHIBIT INDEX                                                                30

                                        2
<PAGE>

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

BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Assets and Liabilities


                                                June 30, 2004     December 31,
                                                 (Unaudited)          2003
                                                -------------     ------------
Assets:
 Investment in Belvedere Capital Fund
  Company LLC (Belvedere Company)               $2,791,311,368   $2,801,412,510
 Investment in Partnership Preference Units        490,352,610      458,160,352
 Investment in other real estate                   505,901,007      613,004,358
 Short-term investments                             14,816,000       48,059,348
                                                --------------   --------------
Total investments                               $3,802,380,985   $3,920,636,568
 Cash                                                3,335,486        5,842,185
 Escrow deposits - restricted                        7,406,374       10,925,963
 Open interest rate swap agreements, at value       11,003,861        3,006,128
 Distributions and interest receivable               1,554,495          676,240
 Other assets                                        5,022,416        7,425,731
                                                --------------   --------------
Total assets                                    $3,830,703,617   $3,948,512,815
                                                --------------   --------------

Liabilities:
 Loan payable - Credit Facility                 $  690,000,000   $  652,000,000
 Mortgages payable                                 396,103,507      513,988,494
 Payable for Fund Shares redeemed                    4,100,000                -
 Distributions payable to minority shareholders              -           16,800
 Special Distributions payable                               -            1,059
 Security deposits                                   1,883,189        2,017,195
 Due to bank - cash overdraft                                -        6,723,986
 Swap interest payable                                 387,459          397,212
 Accrued expenses:
  Interest expense                                   2,890,598        3,552,170
  Property taxes                                     4,325,918        8,998,462
  Other expenses and liabilities                     6,075,713        8,629,435
 Minority interests in controlled subsidiaries      10,218,086       23,003,410
                                                --------------   --------------
Total liabilities                               $1,115,984,470   $1,219,328,223
                                                --------------   --------------

Net assets                                      $2,714,719,147   $2,729,184,592

                                                --------------   --------------
Shareholders' Capital                           $2,714,719,147   $2,729,184,592
                                                --------------   --------------

Shares outstanding                                  25,037,939       26,024,771
                                                --------------   --------------

Net asset value and redemption price per Share  $       108.42   $       104.87
                                                --------------   --------------

       See notes to unaudited condensed consolidated financial statements

                                       3
<PAGE>

BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
                                                     Three Months      Three Months       Six Months        Six Months
                                                         Ended             Ended             Ended             Ended
                                                     June 30, 2004     June 30, 2003     June 30, 2004     June 30, 2003
                                                     -------------     -------------     -------------     -------------
<S>                                                  <C>               <C>               <C>               <C>
Investment Income:
 Dividends allocated from Belvedere Company
  (net of foreign taxes of $232,683, $164,063,
  $349,131 and $270,464, respectively)               $ 10,672,509      $  9,017,540      $ 20,436,957      $ 17,754,326
 Interest allocated from Belvedere Company                 32,147           270,744            79,566           445,125
 Expenses allocated from Belvedere Company             (4,147,327)       (3,779,091)       (8,383,203)       (7,344,086)
                                                     -------------     -------------     -------------     -------------
 Net investment income allocated from
  Belvedere Company                                  $  6,557,329      $  5,509,193      $ 12,133,320      $ 10,855,365
 Distributions from Partnership Preference Units       11,426,255        13,761,364        24,935,907        27,582,996
 Rental income                                         21,305,123        27,829,915        45,896,352        56,085,153
 Interest                                                 210,314           102,235           398,723           232,712
                                                     -------------     -------------     -------------     -------------
Total investment income                              $ 39,499,021      $ 47,202,707      $ 83,364,302      $ 94,756,226
                                                     -------------     -------------     -------------     -------------

Expenses:
 Investment advisory and administrative fees         $  2,576,359      $  2,543,883      $  5,205,572      $  5,076,036
 Property management fees                                 793,189         1,047,140         1,732,562         2,130,116
 Distribution and servicing fees                          970,114           841,720         1,972,715         1,630,669
 Interest expense on mortgages                          8,297,581        10,460,223        17,942,775        20,808,729
 Interest expense on Credit Facility                    2,584,072         3,358,045         5,056,824         6,980,072
 Property and maintenance expenses                      8,042,515         9,803,574        17,334,642        18,793,406
 Property taxes and insurance                           3,016,817         3,966,456         6,335,757         7,820,492
 Miscellaneous                                            377,876           445,721           699,179           732,781
                                                     -------------     -------------     -------------     -------------
Total expenses                                       $ 26,658,523      $ 32,466,762      $ 56,280,026      $ 63,972,301
Deduct-
 Reduction of investment advisory
  and administrative fees                                 672,247           591,171         1,355,445         1,138,016
                                                     -------------     -------------     -------------     -------------
Net expenses                                         $ 25,986,276      $ 31,875,591      $ 54,924,581      $ 62,834,285
                                                     -------------     -------------     -------------     -------------
Net investment income before
 minority interests in net income of
 controlled subsidiaries                             $ 13,512,745      $ 15,327,116      $ 28,439,721      $ 31,921,941
Minority interests in net income (loss)
 of controlled subsidiaries                               120,908          (593,558)         (124,797)       (1,550,963)
                                                     -------------     -------------     -------------     -------------
Net investment income                                $ 13,633,653      $ 14,733,558      $ 28,314,924      $ 30,370,978
                                                     -------------     -------------     -------------     -------------
</TABLE>
       See notes to unaudited condensed consolidated financial statements

                                       4
<PAGE>



BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited) (Continued)
<TABLE>
<CAPTION>
                                                     Three Months      Three Months       Six Months        Six Months
                                                         Ended             Ended             Ended             Ended
                                                     June 30, 2004     June 30, 2003     June 30, 2004     June 30, 2003
                                                     -------------     -------------     -------------     -------------
<S>                                                  <C>               <C>               <C>               <C>
Realized and Unrealized Gain (Loss)
Net realized gain (loss) -
 Investment transactions and foreign currency
  transactions allocated from Belvedere Company
  (identified cost basis)                            $ 10,588,185      $  5,373,336      $ 20,886,828      $ (5,079,542)
 Investment transactions in Partnership Preference
  Units (identified cost basis)                        (1,819,877)                -          (725,501)          624,980
 Investment transactions in other real estate                   -                 -       (14,221,385)                -
 Interest rate swap agreements(1)                      (5,207,455)      (12,211,185)      (10,136,122)      (24,501,680)
                                                     -------------     -------------     -------------     -------------
Net realized gain (loss)                             $  3,560,853      $ (6,837,849)     $ (4,196,180)     $(28,956,242)
                                                     -------------     -------------     -------------     -------------

Change in unrealized appreciation (depreciation) -
 Investments and foreign currency allocated from
  Belvedere Company (identified cost basis)          $ 18,087,307      $296,363,723      $ 60,936,323      $188,870,533
 Investments in Partnership Preference Units
  (identified cost basis)                              (8,932,756)        3,194,118       (15,871,280)       35,982,841
 Investments in other real estate (net of minority
  interests in unrealized gain (loss) of
  controlled subsidiaries of  $(15,860,162),
  $(74,162), $(9,734,526) and $(4,241,305),
  respectively)                                        13,303,926          (287,912)       24,388,223       (24,892,309)
 Interest rate swap agreements                         16,690,969        10,312,089         7,997,733        19,247,142
                                                     -------------     -------------     -------------     -------------
Net change in unrealized appreciation (depreciation) $ 39,149,446      $309,582,018      $ 77,450,999      $ 219,208,207
                                                     -------------     -------------     -------------     -------------

Net realized and unrealized gain                     $ 42,710,299      $302,744,169      $  73,254,819     $ 190,251,965
                                                     -------------     -------------     -------------     -------------

Net increase in net assets
   from operations                                   $ 56,343,952      $317,477,727      $101,569,743      $ 220,622,943
                                                     =============     =============     =============     =============
</TABLE>
(1) Amount represents periodic payments made in connection with interest rate
swap agreements. (Note 4)

       See notes to unaudited condensed consolidated financial statements

                                       5
<PAGE>

BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Changes in Net Assets

                                                 Six Months
                                                    Ended          Year Ended
                                                June 30, 2004     December 31,
                                                 (Unaudited)          2003
                                                ---------------  ---------------
Increase (Decrease) in Net Assets:
 Net investment income                          $   28,314,924   $   56,327,694
 Net realized loss from investment transactions,
  foreign currency transactions and interest
  rate swap agreements                              (4,196,180)     (36,317,202)
 Net change in unrealized appreciation
  (depreciation) of investments, foreign
  currency and interest rate swap agreements        77,450,999      575,006,241
                                                ---------------  ---------------
Net increase in net assets from operations      $  101,569,743   $  595,016,733
                                                ---------------  ---------------

Transactions in Fund Shares -
 Net asset value of Fund Shares issued to
  Shareholders in payment of distributions
  declared                                      $    4,033,847   $    4,796,611
 Net asset value of Fund Shares redeemed          (109,930,473)    (158,225,543)
                                                ---------------  ---------------
Net decrease in net assets from Fund Share
 transactions                                   $ (105,896,626)  $ (153,428,932)
                                                ---------------  ---------------

Distributions -
 Distributions to Shareholders                  $  (10,138,562)  $  (11,893,682)
 Special Distributions to Shareholders                       -           (1,059)
                                                ---------------  ---------------
Total distributions                             $  (10,138,562)  $  (11,894,741)
                                                ---------------  ---------------

Net (decrease) increase in net assets           $  (14,465,445)  $  429,693,060

Net assets:
 At beginning of period                         $2,729,184,592   $2,299,491,532
                                                ---------------  ---------------
 At end of period                               $2,714,719,147   $2,729,184,592
                                                ===============  ===============

       See notes to unaudited condensed consolidated financial statements

                                       6
<PAGE>

BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
                                                                         Six Months           Six Months
                                                                            Ended                Ended
                                                                        June 30, 2004        June 30, 2003
                                                                        --------------     --------------
<S>                                                                     <C>                <C>
Cash Flows From (For) Operating Activities -
Net increase in net assets from operations                              $ 101,569,743      $ 220,622,943
Adjustments to reconcile net increase in net assets from
 operations to net cash flows (for) from operating activities -
  Net investment income allocated from Belvedere Company                  (12,133,320)       (10,855,365)
  Decrease in escrow deposits                                               1,597,988          1,437,150
  Decrease in receivable for investments sold                                       -         73,554,369
  Increase in interest receivable from other real estate investments         (141,312)          (105,359)
  Decrease in other assets                                                  1,947,737          1,022,858
  (Increase) decrease in distributions and interest receivable               (878,255)         1,815,781
  Decrease in interest payable for open swap agreements                        (9,753)          (393,375)
  Increase in security deposits, accrued interest and accrued
   other expenses and liabilities                                             511,833          1,452,320
  Decrease in due to bank - cash overdraft                                 (6,723,986)                 -
  Decrease in accrued property taxes                                       (4,427,497)        (3,325,726)
  Purchases of Partnership Preference Units                              (139,065,289)                 -
  Proceeds from sales of Partnership Preference Units                      90,276,250                  -
  Payments for investments in other real estate                           (39,182,672)                 -
  Proceeds from sale of investment in other real estate                    28,699,431                  -
  Improvements to rental property                                          (2,161,810)        (2,292,729)
  Decrease in cash due to sale of majority interest in
   controlled subsidiary                                                     (983,616)                 -
  Net increase in investment in Belvedere Company                                   -        (23,700,000)
  Interest incurred on interest rate swap agreements                      (10,136,122)       (24,501,680)
  Decrease in short-term investments                                       33,243,348          1,016,852
  Minority interests in net income of controlled subsidiaries                 124,797          1,550,963
  Net realized loss from investment transactions                            4,196,180         28,956,242
  Net change in unrealized (appreciation) depreciation of
   investments                                                            (77,450,999)      (219,208,207)
                                                                        --------------     --------------
Net cash flows (for) from operating activities                          $ (31,127,324)     $  47,047,037
                                                                        --------------     --------------

Cash Flows From (For) Financing Activities -
 Proceeds from (Repayment of) Credit Facility                           $  38,000,000      $ (37,200,000)
 Repayments on mortgages                                                   (2,597,977)        (2,289,183)
 Payments for Fund Shares redeemed                                         (1,772,860)        (1,400,326)
 Distributions paid to Shareholders                                        (6,105,774)        (7,097,071)
 Distributions paid to minority shareholders                                  (16,800)                 -
 Capital contributed to controlled subsidiaries                             1,114,036                  -
                                                                        --------------     --------------
Net cash flows from (for) financing activities                          $  28,620,625      $ (47,986,580)
                                                                        --------------     --------------

Net decrease in cash                                                    $  (2,506,699)     $    (939,543)

Cash at beginning of period                                             $   5,842,185      $  12,216,034
                                                                        --------------     --------------
Cash at end of period                                                   $   3,335,486      $  11,276,491
                                                                        ==============     ==============
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       7
<PAGE>



BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
<TABLE>
<CAPTION>
                                                                         Six Months           Six Months
                                                                            Ended                Ended
                                                                        June 30, 2004        June 30, 2003
                                                                        --------------     --------------
<S>                                                                     <C>                <C>
Supplemental Disclosure and Non-cash Investing and
 Financing Activities -
  Interest paid on loan - Credit Facility                               $   4,968,301      $   6,954,019
  Interest paid on mortgages                                            $  18,378,973      $  20,539,336
  Interest paid on swap agreements                                      $  10,145,875      $  24,895,055
  Market value of securities distributed in payment of
   redemptions                                                          $ 104,057,613      $  56,798,118
  Market value of real property and other assets, net
   of current liabilities, assumed in conjunction with
   acquisition of other real estate investment                          $  48,978,340      $           -
  Market value of real property and other assets, net
   of current liabilities, disposed of in conjunction with
   sale of other real estate                                            $ 155,855,342      $           -
  Mortgage disposed of in conjunction with sale of other
   real estate                                                          $ 120,901,649      $           -
  Partnership Preference Units exchanged for an equity investment
   in real estate companies and an investment in note receivable        $           -      $  (6,440,043)
  Market value of an equity investment in real estate companies         $           -      $   3,087,607
  Investment in note receivable                                         $           -      $   3,352,436
</TABLE>
       See notes to unaudited condensed consolidated financial statements

                                       8
<PAGE>

BELCREST CAPITAL FUND LLC as of June 30, 2004
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FINANCIAL HIGHLIGHTS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30,  2004
--------------------------------------------------------------------------------
Net asset value - Beginning of period                                 $ 104.870
--------------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS
--------------------------------------------------------------------------------
Net investment income(6)                               ,              $   1.106
Net realized and unrealized gain                                          2.834
--------------------------------------------------------------------------------
Total income from operations                                          $   3.940
--------------------------------------------------------------------------------

DISTRIBUTIONS
--------------------------------------------------------------------------------
Distributions to Shareholders                                         $  (0.390)
--------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                                   $  (0.390)
--------------------------------------------------------------------------------

NET ASSET VALUE - END OF PERIOD                                       $ 108.420
--------------------------------------------------------------------------------

TOTAL RETURN(1)                                                            3.77%
--------------------------------------------------------------------------------

                                               As a Percentage  As a Percentage
                                               of Average Net   of Average Gross
RATIOS                                           Assets(5)       Assets (2)(5)
--------------------------------------------------------------------------------
Expenses of Consolidated Real Property
 Subsidiaries
  Interest and other borrowing costs(7)          1.30%(9)          0.94%(9)
  Operating expenses(7)                          1.87%(9)          1.35%(9)
Belcrest Capital Fund LLC Expenses
 Interest and other borrowing costs(4)(8)        0.37%(9)          0.27%(9)
 Investment advisory and administrative fees,
  servicing fees and other Fund operating
  expenses(3)(4)                                 1.08%(9)          0.78%(9)
                                               ---------------------------------
Total expenses                                   4.62%(9)          3.34%(9)

Net investment income                            2.09%(9)          1.51%(9)
--------------------------------------------------------------------------------

SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Net assets, end of period (000's omitted)                          $  2,714,719
Portfolio turnover of Tax-Managed Growth Portfolio (the Portfolio)         1.73%
--------------------------------------------------------------------------------
(1)  Returns are  calculated by determining  the percentage  change in net asset
     value with all distributions reinvested. Total return is not computed on an
     annualized basis.
(2)  Average  Gross Assets is defined as the average  daily amount of all assets
     of  Belcrest  Capital  Fund  LLC  (Belcrest  Capital)  (not  including  its
     investment  in Belcrest  Realty  Corporation  (Belcrest  Realty))  plus all
     assets of Belcrest Realty minus the sum of each entity's  liabilities other
     than the principal amount of money borrowed.  For this purpose,  the assets
     and liabilities of Belcrest Realty's controlled subsidiaries are reduced by
     the  proportionate  interests  therein of  investors  other  than  Belcrest
     Realty.
(3)  Includes  Belcrest  Capital's share of Belvedere Capital Fund Company LLC's
     allocated expenses, including those expenses allocated from the Portfolio.
(4)  Includes the expenses of Belcrest  Capital and  Belcrest  Realty.  Does not
     include expenses of the real estate subsidiaries majority-owned by Belcrest
     Realty.
(5)  For the purpose of calculating  ratios, the income and expenses of Belcrest
     Realty's controlled subsidiaries are reduced by the proportionate interests
     therein of investors other than Belcrest Realty.
(6)  Calculated using average shares outstanding.
(7)  Includes Belcrest Realty's  proportional shares of expenses incurred by its
     majority-owned subsidiaries.
(8)  Ratios do not include  interest  incurred in connection  with interest rate
     swap agreements. Had such amounts been included, ratios would be higher.
(9)  Annualized.

      See notes to unaudited condensed consolidated financial statements

                                       9
<PAGE>

BELCREST CAPITAL FUND LLC as of June 30, 2004
Notes to Condensed Consolidated Financial Statements (Unaudited)

1    Organization and Basis of Presentation

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

The balance  sheet at  December  31,  2003 and the  statement  of changes in net
assets for the year then  ended have been derived  from the  December  31,  2003
audited  financial  statements  but do not  include all of the  information  and
footnotes  required by accounting  principles  generally  accepted in the United
States  of  America  for  complete  financial  statements  as  permitted  by the
instructions to Form 10-Q and Article 10 of Regulation S-X.

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

During the quarter ended June 30, 2004,  Belcrest Realty  Corporation  (Belcrest
Realty) made an indirect investment in real property through a newly established
controlled subsidiary,  Allagash Property Trust (Allagash),  as described below.
The consolidated  financial  statements include the accounts of Allagash and all
material intercompany accounts and transactions have been eliminated.

SUBSIDIARY-

Allagash  - On May 3,  2004,  Belcrest  Realty  entered  into  an  agreement  to
establish and acquire a majority interest in a controlled subsidiary,  Allagash.
On June 30, 2004 ,  Allagash  acquired a majority  interest  in five  industrial
properties located in three states (California,  Florida and North Carolina). On
August 4, 2004,  Allagash acquired an additional sixteen  industrial  properties
located in six states  (Florida,  New York, New Jersey,  Ohio,  Pennsylvania and
South  Carolina).  Belcrest  Realty owns 100% of the Class A Units of  Allagash,
representing 60% of the voting interests in Allagash and a minority  shareholder
(the Allagash Minority Shareholder) owns 100% of the Class B units, representing
40% of the voting interests in Allagash. The Class B equity interest is recorded
as a minority interest on the Consolidated Statements of Assets and Liabilities.
The primary  distinctions between the two classes of shares are the distribution
priority and voting rights.  Belcrest Realty has priority in  distributions  and
has greater  voting rights than the holder of the Class B units.  From and after
August 4, 2012, either Belcrest Realty or the Allagash Minority  Shareholder may
cause a liquidation of Allagash and, if Belcrest Realty makes that election, the
Allagash  Minority  Shareholder  has the right  either to purchase the shares of
Allagash  owned by  Belcrest  Realty or to acquire  the assets of  Allagash,  in
either case at a price determined through an appraisal of the assets.

                                       10
<PAGE>

2    Investment Transactions

The following table  summarizes the Fund's  investment  transactions for the six
months ended June 30, 2004 and June 30, 2003:

                                              Six Months Ended  Six Months Ended
         Investment Transaction                June 30, 2004     June 30, 2003
--------------------------------------------------------------------------------
Increases in investment in Belvedere Company    $          -      $ 23,700,000
Decreases in investment in Belvedere Company    $104,057,613      $ 56,798,118
Acquisition of other real property(1)           $ 39,182,672      $          -
Sales of other real property(2)                 $ 28,699,431      $          -
Purchases of Partnership Preference Units(3)    $139,065,289      $          -
Sales of Partnership Preference Units(4)        $ 90,276,250      $          -

(1)  On June 30, 2004,  Belcrest Realty purchased an indirect investment in real
     property through a controlled subsidiary,  Allagash, as described below. At
     the date of the transaction, the value of Belcrest Realty's interest in its
     real property investment in Allagash was $39,192,344.
(2)  During  the six  months  ended  June 30,  2004,  Belcrest  Realty  sold its
     majority   interest  in  Casco  Property  Trust,  LLC  (Casco)  to  another
     investment  fund  advised  by  Boston   Management  and  Research   (Boston
     Management), for which a loss of $14,221,385 was recognized.
(3)  Purchases of Partnership  Preference Units during the six months ended June
     30,  2004  represent  Partnership  Preference  Units  purchased  from other
     investment funds advised by Boston Management.  There were no purchases for
     the six months ended June 30, 2003.
(4)  Sales of  Partnership  Preference  Units for the six months  ended June 30,
     2004 include  Partnership  Preference  Units sold to other investment funds
     advised by Boston Management for which a loss of $1,660,672 was recognized.
     There were no sales for the six months ended June 30, 2003.

On May 3, 2004,  Belcrest  Realty  entered into an  agreement  to establish  and
acquire a majority interest in a controlled  subsidiary,  Allagash.  On June 30,
2004,  Allagash  acquired  a  majority  interest  in  five  separate  industrial
properties.  The seller  retained a minority  interest in the  properties and an
affiliate of the Allagash  Minority  Shareholder  manages the  properties.  When
Allagash  acquired the real estate  investment,  a portion of the real  estate's
purchase price was allocated to the estimated  fair value of favorable  in-place
leases in accordance  with Statement of Financial  Accounting  Standards 141. At
June 30, 2004, the real estate  investment  balance  includes the estimated fair
value of net in-place  leases totaling  $391,274 at acquisition.  The properties
are leased under  fixed-term  operating leases on a long-term basis. At June 30,
2004, the minimum lease  payments  expected to be received by Allagash on leases
with lease periods greater than one year are as follows:

     Twelve Months Ending June 30,               Amount
     ------------------------------------------------------
     2005                                     $ 3,893,115
     2006                                       3,530,899
     2007                                       2,098,175
     2008                                       1,608,795
     2009                                       1,208,628
     Thereafter                                 2,411,312
                                              -----------
                                              $14,750,924
                                              ===========

On August 4,  2004,  the Fund  made an  additional  investment  in  Allagash  of
$380,489,883.   Allagash   concurrently  acquired  a  majority  interest  in  an
additional sixteen industrial properties.  An affiliate of the Allagash Minority
Shareholder  manages the properties.  All of the Allagash  properties are leased
under fixed-term operating leases on a long-term basis.

                                       11
<PAGE>

In  May  2004,  Bel  Alliance  Properties,  LLC  (Bel  Alliance),  a  controlled
subsidiary of Belcrest Realty, agreed to sell all of its multifamily residential
properties to an affiliate of the Bel Alliance minority shareholder (Affiliate).
According to the agreement,  Bel Alliance is expected to receive net proceeds of
$51,278,004  as  consideration  for  all of  its  interest  in  the  multifamily
properties and expects not to retain any contingent  liabilities associated with
the mortgage  debt secured by the  properties or other  liabilities.  Concurrent
with this  sale,  Belcrest  Realty has  agreed to buy the  outstanding  minority
interest in Bel Alliance for a nominal  amount.  Although  there is no assurance
that the transaction  will be consummated,  the transaction is expected to close
by the end of  September  2004.  The  Fund  had an  increase  in net  unrealized
appreciation  of $14,240,859  for the quarter ended June 30, 2004 as a result of
the terms of the agreement.

During  the six months  ended  June 30,  2003,  the Fund  exchanged  Partnership
Preference  Units in the amount of  $6,440,043  for an equity  investment in two
private real estate  companies  affiliated with the issuer of such formerly held
Partnership  Preference Units and a note receivable in the amounts of $3,087,607
and $3,352,436,  respectively. The secured note receivable (valued at $3,735,199
as of June 30, 2004 and $3,457,794 as of June 30, 2003) earns interest of 8% per
annum and matures in February 2013 or on demand.


3    Indirect Investment in the Portfolio

The following  table  summarizes  the Fund's  investment in  Tax-Managed  Growth
Portfolio (the Portfolio)  through Belvedere Capital Fund Company LLC (Belvedere
Company),  for the six months ended June 30, 2004 and June 30,  2003,  including
allocations of income,  expenses and net realized and unrealized  gains (losses)
for the respective periods then ended:
<TABLE>
<CAPTION>
                                                                                Six Months Ended      Six Months Ended
                                                                                  June 30, 2004         June 30, 2003
----------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                   <C>
Belvedere Company's interest in the Portfolio(1)                                $ 11,762,239,521      $  9,599,217,401
The Fund's investment in Belvedere Company(2)                                   $  2,791,311,368      $  2,584,612,221
Income allocated to Belvedere Company from the Portfolio                        $     83,686,364      $     66,798,353
Income allocated to the Fund from Belvedere Company                             $     20,516,523      $     18,199,451
Expenses allocated to Belvedere Company from the Portfolio                      $     25,387,360      $     20,113,419
Expenses allocated to the Fund from Belvedere Company                           $      8,383,203      $      7,344,086
Net realized gain (loss) from investment transactions and foreign currency
 transactions allocated to Belvedere Company from the Portfolio                 $     72,573,659      $    (17,889,099)
Net realized gain (loss) from investment transactions and foreign currency
 transactions allocated to the Fund from Belvedere Company                      $     20,886,828      $     (5,079,542)
Net change in unrealized appreciation (depreciation) of investments and
 foreign currency allocated to Belvedere Company from the Portfolio             $    255,505,090      $    698,962,649
Net change in unrealized appreciation (depreciation) of investments and
 foreign currency allocated to the Fund from Belvedere Company                  $     60,936,323      $    188,870,533
  ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  As of June 30, 2004 and 2003, the value of Belvedere  Company's interest in
     the Portfolio  represents  64.7% and 61.7% of the  Portfolio's  net assets,
     respectively.
(2)  As of June 30, 2004 and 2003,  the Fund's  investment in Belvedere  Company
     represents 23.7% and 26.9% of Belvedere Company's net assets, respectively.

A summary of the  Portfolio's  Statement of Assets and  Liabilities  at June 30,
2004,  December 31, 2003 and June 30, 2003 and its operations for the six months
ended June 30, 2004, for the year ended December 31, 2003 and for the six months
ended June 30, 2003 follows:

                                       12
<PAGE>
<TABLE>
<CAPTION>
                                        June 30,         December 31,         June 30,
                                          2004               2003               2003
                                  ----------------------------------------------------------
<S>                                 <C>                <C>                   <C>
Investments, at value               $ 18,156,546,589   $ 17,584,390,762   $ 15,616,951,272
Other assets                              30,174,170         25,462,745         26,660,614
--------------------------------------------------------------------------------------------
Total assets                        $ 18,186,720,759   $ 17,609,853,507   $ 15,643,611,886
Total liabilities                            138,607            264,502         93,843,137
--------------------------------------------------------------------------------------------
Net assets                          $ 18,186,582,152   $ 17,609,589,005   $ 15,549,768,749
============================================================================================
Dividends and interest              $    131,109,908   $    232,925,912   $    109,393,140
--------------------------------------------------------------------------------------------
Investment adviser fee              $     38,780,667   $     67,584,543   $     31,979,032
Other expenses                             1,025,267          2,295,653            985,298
--------------------------------------------------------------------------------------------
Total expenses                      $     39,805,934   $     69,880,196   $     32,964,330
--------------------------------------------------------------------------------------------
Net investment income               $     91,303,974   $    163,045,716   $     76,428,810
Net realized gain (loss) from
 investment transactions and
 foreign currency transactions           118,166,339         70,909,770        (29,306,399)
Net change in unrealized
 appreciation (depreciation) from
 investments and foreign currency        397,547,485      3,174,709,110      1,126,151,279
       -------------------------------------------------------------------------------------
Net increase in net assets from
operations                          $    607,017,798   $  3,408,664,596   $  1,173,273,690
--------------------------------------------------------------------------------------------
</TABLE>

4    Interest Rate Swap Agreements

Belcrest  Capital has entered into  interest rate swap  agreements  with Merrill
Lynch Capital Services,  Inc. in connection with its real estate investments and
the associated borrowings. Under such agreements, Belcrest Capital has agreed to
make  periodic  payments  at fixed rates in  exchange  for  payments at floating
rates.  The  notional  or  contractual  amounts  of  these  instruments  may not
necessarily  represent the amounts  potentially subject to risk. The measurement
of  the  risks  associated  with  these  investments  is  meaningful  only  when
considered in conjunction  with all related assets,  liabilities and agreements.
Interest  rate swap  agreements  open at June 30, 2004 and December 31, 2003 are
listed below.
<TABLE>
<CAPTION>
              Notional                                    Initial                        Unrealized        Unrealized
               Amount                                    Optional          Final        Appreciation      Appreciation
Effective      (000's      Fixed        Floating        Termination     Termination     at June 30,      at December 31,
  Date        omitted)     Rate           Rate             Date            Date             2004              2003
------------------------------------------------------------------------------------------------------------------------
  <S>         <C>          <C>        <C>                  <C>            <C>           <C>                <C>
  02/04       $ 78,620     5.00%      LIBOR + 0.30%        08/04          06/10         $   655,028        $        -
  10/03         78,620     5.05%      LIBOR + 0.30%        02/04          06/10                   -*          197,524
  10/03        128,116     4.865%     LIBOR + 0.30%        07/04          06/10           1,552,824           451,953
  10/03        170,000     4.795%     LIBOR + 0.30%        09/04          06/10           2,426,987           695,087
  10/03         63,526     4.69%      LIBOR + 0.30%        02/05          06/10           1,098,759           305,966
  10/03         55,375     4.665%     LIBOR + 0.30%        03/05          06/10             993,589           272,239
  10/03         80,965     4.145%     LIBOR + 0.30%        03/10          06/10           2,500,869           527,521
  10/03         47,253     4.045%     LIBOR + 0.30%          -            06/10           1,691,706           544,812
  06/10          3,870     6.29%      LIBOR + 0.30%          -            07/15              18,775            11,026
  06/04        248,768     4.875%     LIBOR + 0.00%          -            06/12              65,324**               -
-------------------------------------------------------------------------------------------------------------------------
                                                                                        $11,003,861        $3,006,128
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
*  Agreement was terminated on the Initial Optional Termination Date.

** On May 3, 2004,  Belcrest  Capital entered into a forward  interest rate swap
agreement  with Merrill  Lynch Capital  Services,  Inc. in  anticipation  of its
future  investment  in a  controlled  subsidiary,  Allagash,  for the purpose of
hedging  the  interest  rate of  substantially  all of the  expected  fixed-rate
mortgage  financing  of the real property  over the expected  8-year  term. Such
agreement was terminated in July 2004 and the Fund realized a loss of $3,758,467
upon termination.

                                       13
<PAGE>

5    Debt

Credit  Facility  - In August  2004,  additional  borrowings  under  the  Credit
Facility  in the amount of  $138,000,000  were used to  purchase  an  additional
interest in the real estate  investment  Allagash,  a real estate  subsidiary of
Belcrest  Realty.  This borrowing  accrues interest at a rate of one-month LIBOR
plus 0.38% per annum.

On August 4, 2004,  Allagash acquired a majority interest in sixteen  industrial
properties  (see Note 2). To finance  the Fund's  investment  in the  properties
acquired by Allagash,  Belcrest Capital increased the amount available under its
credit arrangement with Merrill Lynch Mortgage Capital,  Inc. (Merrill Lynch) by
$138,000,000  under a temporary  arrangement  (the  Temporary  Arrangement)  and
borrowed that amount.  The borrowing  under the  Temporary  Arrangement  accrues
interest  at a rate of  one-month  LIBOR  plus  0.90% and is for a term of sixty
days,  subject to a  thirty-day  extension.  Any unused  amount of the  increase
pertaining to the Temporary  Arrangement is subject to a commitment fee of 0.10%
per annum. The assets of Belcrest Capital, excluding the assets of Bel Alliance,
Bel Santa Ana LLC (Bel Santa Ana), and Allagash secure all borrowings  under the
credit arrangement with Merrill Lynch.

Allagash  expects to obtain first mortgage  financing for its investment in real
properties  in the third and fourth  quarters of 2004.  The  proceeds  from such
first  mortgage   financing  will  be  used  to  repay  Belcrest  Capital,   and
accordingly,  Belcrest  Capital will repay its  borrowings  under the  Temporary
Arrangement and a portion of other borrowings under the Credit Facility.

Mortgages - In February 2004, in conjunction with the sale of Belcrest  Realty's
majority  interest in Casco (Note 2), the mortgage  payable by Casco was assumed
by the buyer. At the time of the transaction, the loan balance was $120,901,649.

Rental property held by Belcrest  Realty's  controlled  subsidiaries is financed
through  mortgages  issued to the  controlled  subsidiaries.  The  mortgages are
secured by a rental property or properties.  The mortgages are generally without
recourse to Belcrest Realty and Belcrest  Capital,  except, in the case of Casco
(for the  period  from  January  1, 2004 to  February  24,  2004),  for  certain
liabilities associated with fraud, misrepresentation, misappropriation of funds,
or breach of material  covenants,  and  liabilities  arising from  environmental
conditions  involving or affecting the rental property subject to the mortgages.
Belcrest  Capital and Belcrest  Realty have  received  indemnification  from the
Casco  Minority  Shareholder  for  certain of such  potential  liabilities.  The
mortgage  debt  obligation  of Bel Santa Ana is  generally  without  recourse to
Belcrest  Realty,  Belcrest  Capital  and  Shareholders.  Belcrest  Capital  and
Belcrest Realty may, however, be directly or indirectly  responsible for certain
liabilities  constituting exceptions to the generally non-recourse nature of the
mortgage   indebtedness,    including   liabilities   associated   with   fraud,
misrepresentation, misappropriation of funds, or breach of material covenants.

The mortgage  agreements  relating to the rental properties held by Bel Alliance
require certain  covenants be met,  including a covenant that trade payables and
accrued  expenses  incurred in the ordinary  course of business in the aggregate
will not exceed 1% of the outstanding principal balance of the loan. At June 30,
2004, this covenant was not met for certain  mortgage  agreements,  of which the
aggregate principal balance at June 30, 2004 totaled $167,038,894, or 42% of the
total Bel Alliance mortgages outstanding.  The mortgage agreements provide for a
cure  period of 30 days after  written  notification  from the  lenders,  with a
further  extension of up to 60 additional days. As of June 30, 2004, the lenders
had not  provided  such  notice.  It is uncertain as to whether the lenders will
seek to enforce the  provisions  of the  mortgage  agreements.  Bel Alliance may
choose  not to commit  additional  equity  to cure  certain  of these  technical
defaults.   If  the  lenders  pursue  enforcement  and  a  mutually   acceptable
arrangement  with  the  lenders  cannot  be  reached,  the  result  could  be  a
foreclosure  on some or all of those  investment  properties  that  secure  such
mortgages.  Based on the current  valuations of the affected  properties and the
related  mortgages,  however,  the Fund's current net investment in Bel Alliance
would  not be  negatively  impacted  if a  foreclosure  on some or all of  those
investment properties that secure such mortgages were to occur. The eventual

                                       14
<PAGE>

outcome of this matter  cannot be  determined  at this time.  The  mortgages are
generally without recourse to the other assets of Bel Alliance, Belcrest Capital
and Belcrest Realty.  The technical default of certain mortgage  agreements does
not affect Belcrest Capital's liquidity.

During the six months  ended June 30,  2004,  Bel  Alliance  chose not to commit
additional  equity to rental  properties  operating  at deficits  for payment of
principal  and interest due on certain  mortgages  related to rental  properties
operating at deficits. The rental properties are the only source of security for
these  mortgages.  As a result,  Bel Alliance has reduced the carrying  value of
certain  mortgage notes by $16,817,675 as of June 30, 2004 and $22,432,314 as of
December 31, 2003 to the estimated fair value of the underlying real estate.

6    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 to be high in quality
and  attractive  in their  long-term  investment  prospects.  Separate  from its
investment in Belvedere Company,  Belcrest Capital invests in real estate assets
through its subsidiary  Belcrest  Realty.  Belcrest Realty invests  directly and
indirectly in  Partnership  Preference  Units,  debt and equity  investments  in
private  real  estate  companies  and  in  real  property   through   controlled
subsidiaries Bel Santa Ana, Bel Alliance, Casco (Note 2) and Allagash (Note 1).

Management  services for the real  property held by Bel Alliance are provided by
an affiliate of its minority shareholder.  The management agreement provides for
a  management  fee and allows for  reimbursement  of  payroll  and other  direct
expenses  incurred  by the  manager in  conjunction  with  managing  properties.
Belcrest Realty is currently  disputing  certain  expenditures,  allocations and
reimbursements by the property manager under the management agreement.

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
unrealized   appreciation   (depreciation).   The  accounting  policies  of  the
reportable  segments are the same as those for the Fund on a consolidated basis.
No reportable segments have been aggregated.  Reportable  information by segment
is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended                  Tax Managed            Real
June 30, 2004                            Growth Portfolio*        Estate              Total
-----------------------------------------------------------------------------------------------
<S>                                      <C>                   <C>               <C>
Revenue                                    $  6,557,329        $ 32,807,759      $  39,365,088
Interest expense on mortgages                         -          (8,297,581)        (8,297,581)
Interest expense on Credit Facility                   -          (2,480,709)        (2,480,709)
Operating expenses                             (585,153)        (13,459,041)       (14,044,194)
Minority interest in net income of
 controlled subsidiaries                              -             120,908            120,908
-----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                      $  5,972,176        $  8,691,336      $  14,663,512
Net realized gain (loss)                     10,588,185          (7,027,332)         3,560,853
Change in unrealized appreciation
 (depreciation)                              18,087,307          21,062,139         39,149,446
-----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
 OPERATIONS OF REPORTABLE SEGMENTS         $ 34,647,668        $ 22,726,143      $  57,373,811
-----------------------------------------------------------------------------------------------

                                       15
<PAGE>

For the Three Months Ended                  Tax Managed            Real
June 30, 2003                            Growth Portfolio*        Estate             Total
-----------------------------------------------------------------------------------------------
Revenue                                    $  5,509,193        $ 41,665,584      $ 47,174,777
Interest expense on mortgages                         -         (10,460,223)      (10,460,223)
Interest expense on Credit Facility                   -          (3,290,885)       (3,290,885)
Operating expenses                             (344,123)        (16,753,045)      (17,097,168)
Minority interest in net income of
 controlled subsidiaries                              -            (593,558)         (593,558)
-----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                      $  5,165,070        $ 10,567,873      $ 15,732,943
Net realized gain (loss)                      5,373,336         (12,211,185)       (6,837,849)
Change in unrealized appreciation
 (depreciation)                             296,363,723          13,218,295       309,582,018
-----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
 OPERATIONS OF REPORTABLE SEGMENTS         $306,902,129        $ 11,574,983      $318,477,112
-----------------------------------------------------------------------------------------------


For the Six Months Ended                    Tax Managed            Real
June 30, 2004                            Growth Portfolio*        Estate             Total
-----------------------------------------------------------------------------------------------
Revenue                                    $ 12,133,320        $ 70,995,901      $ 83,129,221
Interest expense on mortgages                         -         (17,942,775)      (17,942,775)
Interest expense on Credit Facility                   -          (4,854,551)       (4,854,551)
Operating expenses                           (1,137,178)        (28,653,002)      (29,790,180)
Minority interest in net income of
 controlled subsidiaries                              -            (124,797)         (124,797)
-----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                      $ 10,996,142        $ 19,420,776      $ 30,416,918
Net realized gain (loss)                     20,886,828         (25,083,008)       (4,196,180)
Change in unrealized appreciation
 (depreciation)                              60,936,323          16,514,676        77,450,999
-----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
 OPERATIONS OF REPORTABLE SEGMENTS         $ 92,819,293        $ 10,852,444      $103,671,737
-----------------------------------------------------------------------------------------------


For the Six Months Ended                    Tax Managed            Real
June 30, 2003                            Growth Portfolio*        Estate             Total
-----------------------------------------------------------------------------------------------
Revenue                                    $ 10,855,365        $ 83,795,387      $ 94,650,752
Interest expense on mortgages                         -         (20,808,729)      (20,808,729)
Interest expense on Credit Facility                   -          (6,840,471)       (6,840,471)
Operating expenses                             (693,912)        (32,548,882)      (33,242,794)
Minority interest in net income of
 controlled subsidiaries                            -            (1,550,963)       (1,550,963)
-----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                      $ 10,161,453        $ 22,046,342      $ 32,207,795
Net realized loss                            (5,079,542)        (23,876,700)      (28,956,242)
Change in unrealized appreciation
 (depreciation)                             188,870,533          30,337,674       219,208,207
-----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
 OPERATIONS OF REPORTABLE SEGMENTS         $193,952,444        $ 28,507,316      $222,459,760
-----------------------------------------------------------------------------------------------


                                                    Tax-Managed Growth           Real
At June 30, 2004                                        Portfolio*              Estate            Total
------------------------------------------------------------------------------------------------------------
Segment assets                                        $2,791,311,368        $1,024,558,717    $3,815,870,085
Segment liabilities                                        4,100,000         1,096,720,711     1,100,820,711
------------------------------------------------------------------------------------------------------------
NET ASSETS (LIABILITIES) OF REPORTABLE SEGMENTS       $2,787,211,368        $  (72,161,994)   $2,715,049,374
------------------------------------------------------------------------------------------------------------

At December 31, 2003
------------------------------------------------------------------------------------------------------------
Segment assets                                        $2,801,412,510        $1,099,020,956    $3,900,433,466
Segment liabilities                                            1,059         1,197,408,196     1,197,409,255
------------------------------------------------------------------------------------------------------------
NET ASSETS (LIABILITIES) OF REPORTABLE SEGMENTS       $2,801,411,451        $  (98,387,240)   $2,703,024,211
------------------------------------------------------------------------------------------------------------
</TABLE>
*    Belcrest Capital invests indirectly in Tax-Managed Growth Portfolio through
     Belvedere Company.

                                       16
<PAGE>

The following tables reconcile the reported segment information to the condensed
consolidated financial statements for the periods indicated:
<TABLE>
<CAPTION>
                                             Three Months      Three Months       Six Months        Six Months
                                                 Ended             Ended             Ended             Ended
                                             June 30, 2004     June 30, 2003     June 30, 2004     June 30, 2003
                                           -----------------------------------------------------------------------
<S>                                          <C>               <C>               <C>               <C>
Revenue:
 Revenue from reportable segments            $ 39,365,088      $  47,174,777     $  83,129,221     $  94,650,752
 Unallocated amounts:
 Interest earned on cash not invested in
  the Portfolio or in subsidiaries                133,933             27,930           235,081           105,474
                                           -----------------------------------------------------------------------
TOTAL REVENUE                                $ 39,499,021      $  47,202,707     $  83,364,302     $  94,756,226
                                           -----------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations:
 Net increase in net assets from
  operations of reportable segments          $ 57,373,811      $ 318,477,112     $ 103,671,737     $ 222,459,760
Unallocated amounts:
 Interest earned on cash not invested
  in the Portfolio or in subsidiaries             133,933             27,930           235,081           105,474
Unallocated amounts(1):
 Distribution and servicing fees                 (970,114)          (841,720)       (1,972,715)       (1,630,669)
 Interest expense on Credit Facility             (103,363)           (67,160)         (202,273)         (139,601)
 Audit, tax and legal fees                        (61,321)           (80,076)         (114,625)         (112,201)
 Other operating expenses                         (28,994)           (38,359)          (47,462)          (59,820)
                                           -----------------------------------------------------------------------
TOTAL NET INCREASE IN NET ASSETS FROM
 OPERATIONS                                  $ 56,343,952      $ 317,477,727     $ 101,569,743     $ 220,622,943
                                           -----------------------------------------------------------------------
</TABLE>

                                       June 30, 2004     December 31, 2003
                                     --------------------------------------
Net assets:
 Net assets of reportable segments     $2,715,049,374     $2,703,024,211
 Unallocated cash(2)                           17,532             20,001
 Short-term investments(2)                 14,816,000         48,059,348
 Loan payable-Credit Facility(3)          (14,989,056)       (14,989,056)
 Other liabilities                           (174,703)        (6,929,912)
                                     --------------------------------------
TOTAL NET ASSETS                       $2,714,719,147     $2,729,184,592
                                     --------------------------------------

(1)  Unallocated amounts represent expenses incurred that pertain to the overall
     operation  of  Belcrest  Capital,  and do not  pertain to either  operating
     segment.
(2)  Unallocated  cash  and  short-term  investments  represents  cash  and cash
     equivalents not invested in the Portfolio or real estate assets.
(3)  Unallocated amount of loan payable - Credit Facility represents  borrowings
     not specifically used to fund real estate investments.  Such borrowings are
     generally used to pay selling commissions,  organization expenses and other
     liquidity needs of the Fund.

                                       17
<PAGE>

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

THE INFORMATION IN THIS REPORT CONTAINS  FORWARD-LOOKING  STATEMENTS  WITHIN THE
MEANING OF THE FEDERAL SECURITIES LAWS. FORWARD-LOOKING STATEMENTS TYPICALLY ARE
IDENTIFIED BY USE OF TERMS SUCH AS "MAY," "WILL," "SHOULD,"  "MIGHT,"  "EXPECT,"
"ANTICIPATE,"  "ESTIMATE,"  AND SIMILAR  WORDS,  ALTHOUGH  SOME  FORWARD-LOOKING
STATEMENTS ARE EXPRESSED  DIFFERENTLY.  THE ACTUAL  RESULTS OF BELCREST  CAPITAL
FUND  LLC (THE  FUND)  COULD  DIFFER  MATERIALLY  FROM  THOSE  CONTAINED  IN THE
FORWARD-LOOKING  STATEMENTS DUE TO A NUMBER OF FACTORS.  THE FUND  UNDERTAKES NO
OBLIGATION  TO UPDATE  PUBLICLY  ANY  FORWARD-LOOKING  STATEMENTS,  WHETHER AS A
RESULT OF NEW INFORMATION,  FUTURE EVENTS,  OR OTHERWISE,  EXCEPT AS REQUIRED BY
APPLICABLE  LAW.  FACTORS  THAT COULD  AFFECT THE FUND'S  PERFORMANCE  INCLUDE A
DECLINE IN THE U.S.  STOCK MARKETS OR IN GENERAL  ECONOMIC  CONDITIONS,  ADVERSE
DEVELOPMENTS  AFFECTING THE REAL ESTATE  INDUSTRY,  OR  FLUCTUATIONS IN INTEREST
RATES.

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

RESULTS OF  OPERATIONS  FOR THE  QUARTER  ENDED JUNE 30,  2004  COMPARED  TO THE
QUARTER ENDED JUNE 30, 2003
--------------------------------------------------------------------------------

(a) RESULTS OF OPERATIONS.
--------------------------

Increases and decreases from  operations in the Fund's net asset value per share
are derived from net  investment  income (or loss) and  realized and  unrealized
gains and losses on investments.  The Fund's net investment  income (or loss) is
determined by subtracting  the Fund's total expenses from its investment  income
and  then  deducting  the  minority  interest  in net  income  (or  loss) of the
controlled  subsidiaries of Belcrest Realty Corporation  (Belcrest Realty).  The
Fund's  investment  income includes the net investment  income  allocated to the
Fund from Belvedere Capital Fund Company LLC (Belvedere Company),  rental income
from  the  properties  owned  by  Belcrest  Realty's  controlled   subsidiaries,
partnership income allocated to the income-producing  preferred equity interests
in real estate operating  partnerships  (Partnership  Preference Units) owned by
Belcrest  Realty and interest  earned on the Fund's  short-term  investments (if
any).  The net  investment  income of  Belvedere  Company  allocated to the Fund
includes  dividends,  interest  and expenses  allocated to Belvedere  Company by
Tax-Managed  Growth  Portfolio  (the  Portfolio)  less the expenses of Belvedere
Company  allocated  to the Fund.  The Fund's total  expenses  include the Fund's
investment  advisory and administrative  fees,  distribution and servicing fees,
interest  expense  from  mortgages  on  properties  owned by  Belcrest  Realty's
controlled  subsidiaries,   interest  expense  on  the  Fund's  Credit  Facility
(described  in Item 2(b)  below),  property  management  fees,  property  taxes,
insurance,  maintenance and other expenses  relating to the properties  owned by
Belcrest Realty's controlled subsidiaries, and other miscellaneous expenses. The
Fund's  realized and unrealized  gains and losses are the result of transactions
in, or  changes  in value of,  security  investments  held  through  the  Fund's
indirect  interest  (through  Belvedere  Company) in the Portfolio,  real estate
investments  held  through  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  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.

PERFORMANCE  OF THE  FUND.(1)  The  Fund's  investment  objective  is to achieve
long-term,  after-tax  returns for  Shareholders.  Eaton Vance Management (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  Standard &
Poor's  500  Composite  Index (the S&P 500) as the  Fund's  primary  performance
benchmark.  The S&P 500 is a broad-based unmanaged index of common stocks widely
used as a measure of U.S. stock market performance.  Eaton Vance's primary focus
in pursuing total return is on the Fund's common stock portfolio, which consists
of its indirect  interest in the Portfolio.  In measuring the performance of the











-----------------------------
(1)  Total  returns  are  historical  and  are  calculated  by  determining  the
     percentage  change in net asset  value with all  distributions  reinvested.
     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. The Portfolio's total return for the
     period  reflects  the total  return of  another  fund that  invests  in the
     Portfolio,  adjusted  for certain  fund  expenses.  Performance  is for the
     stated time period only and is not  annualized;  due to market  volatility,
     the Fund's current  performance may be lower or higher.  The performance of
     the Fund and the Portfolio is compared to that of their benchmark,  the S&P
     500. It is not possible to invest directly in an Index.

                                       18
<PAGE>

Fund's  real  estate  investments  held  through  Belcrest  Realty,  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  borrowing  incurred  to acquire  such  investments  and thereby add to Fund
returns. The Fund has entered into interest rate swap agreements to fix the cost
of borrowings under the Credit Facility used to acquire Belcrest Realty's equity
in its real  estate  investments  and to mitigate in part the impact of interest
rate changes on the Fund's net asset value.

The Fund's  total  return was 2.10% for the quarter  ended June 30,  2004.  This
return reflects an increase in the Fund's net asset value per share from $106.19
to $108.42 during the period. For comparison,  the S&P 500 had a total return of
1.72% over the same period.  The  performance  of the Fund  exceeded that of the
Portfolio by  approximately  0.79% during the period.  Last year, the Fund had a
total return  performance  of 14.75% for the quarter  ended June 30, 2003.  This
return reflected an increase in the Fund's net asset value per share from $79.01
to $90.66 during the period.  For comparison,  the S&P 500 had a total return of
15.39% over the same period.  The  performance  of the Fund exceeded that of the
Portfolio by approximately 1.21% during that period.

PERFORMANCE  OF THE  PORTFOLIO.  For  the  quarter  ended  June  30,  2004,  the
Portfolio's total return was 1.31%. This compares to a total return of 1.72% for
the S&P 500. In the second  quarter,  U.S.  equity  returns  were  supported  by
strengthening  employment  trends,  robust  manufacturing  activity  and  rising
corporate profits. At the same time,  uncertainty over the situation in Iraq and
the prospect of rising  interest  rates and  inflation  weighed on investors and
held back returns.  During the quarter, growth stocks outperformed value stocks,
and small-caps performed better than large-caps and mid-caps.

The Portfolio's modest  underperformance  during the quarter was attributable in
part to a relative  overweighting of certain weaker performing  industry groups,
specifically  specialty  retail  and  media.  In  addition,  the  Portfolio  was
underweight internet software and communications equipment stocks, which rallied
during the period.  Concerns about future trends in consumer spending caused the
Portfolio to trim its relative  overweighting of the  discretionary  and staples
sectors during the quarter. The Portfolio also reduced healthcare and technology
investments during the quarter, mainly in the lagging biotech and semi-conductor
groups. During the quarter, the Portfolio continued to overweight airfreight and
machinery holdings, which contributed positively to the Portfolio's performance.
The  Portfolio  benefited  from the  strong  performance  of stocks in the food,
staples retailing and commercial bank industries during the quarter,  as well as
from  increased  exposure  to energy  stocks.  Material  stocks  were also solid
performers  during the quarter and,  despite the Portfolio's  underweight of the
sector versus the S&P 500, the  performance of the  Portfolio's  holdings in the
metals  and  mining  group was  noteworthy.  Valuation  and  regulatory  concern
prompted a continued de-emphasis of multi-line utilities and diversified telecom
companies.

For the quarter  ended June 30, 2003,  the  Portfolio's  total return was 13.54%
compared to the 15.39% total return for the S&P 500. During the quarter, the S&P
500 posted its best quarterly  return in five years,  with favorable  fiscal and
monetary policy developments, progress in Iraq and signs of an improving economy
contributing to a stronger market. The Portfolio's relative underperformance was
attributable primarily to its lower exposure to higher-volatility, lower-quality
stocks that were the strongest performers in the sharp market rally.

PERFORMANCE OF REAL ESTATE  INVESTMENTS.  The Fund's real estate investments are
held  through  Belcrest  Realty.  As of June 30, 2004,  real estate  investments
consisted  primarily of a portfolio of  Partnership  Preference  Units issued by
partnerships  affiliated with publicly traded and private real estate investment
trusts  (REITs)  and  three  subsidiary   companies:   Allagash  Property  Trust
(Allagash),  Bel Alliance  Properties,  LLC (Bel Alliance) and Bel Santa Ana LLC
(Bel Santa Ana).  Allagash and Bel Alliance are real estate joint  ventures that
operate industrial and multifamily  properties,  respectively (Real Estate Joint
Ventures). Bel Santa Ana owns a property subject to a long-term triple net lease
(Net Leased  Property).  As of June 30, 2004,  the  estimated  fair value of the
Fund's real estate investments represented 26.0% of the Fund's total assets on a
consolidated  basis.  After adjusting for minority interests in Allagash and Bel
Alliance, the Fund's real estate investments represented 36.3% of the Fund's net
assets as of June 30, 2004.

On June 30, 2004,  Belcrest Realty's newly formed subsidiary Allagash acquired a
majority  interest in certain  industrial  properties from ProLogis,  a publicly
traded REIT,  for  approximately  $39.2  million.  ProLogis  retained a minority
interest in the properties. In May 2004, Belcrest Realty entered into agreements
with ProLogis to form ProLogis Six Rivers Limited  Partnership  (Six Rivers) (in
association  with  subsidiaries  of other  investment  funds  advised  by Boston
Management)   and  to  merge  Six  Rivers  with  Keystone   Property   Trust,  a
publicly-traded  REIT  (Keystone).   The  transactions   contemplated  by  these
agreements were consummated on August 4, 2004. As a result of the  transactions,
Allagash acquired a partnership  interest in Six Rivers.  In addition,  Prologis
acquired a minority  interest in  Allagash.  Through its interest in Six Rivers,
Allagash  owns a  majority  of  the  economic  interest  in  certain  industrial
properties   acquired  through  the  merger  of  Six  Rivers  and  Keystone  for
approximately  $475.6  million.  It is anticipated  that in the third and fourth
quarters of 2004 Allagash will obtain first  mortgage  financing  secured by the

                                       19
<PAGE>

properties  equal to  approximately  60-65% of the property value.  The Fund has
provided  interim  financing for Allagash,  as described below in "Liquidity and
Capital Resources."

Rental income from  multifamily  real estate  property  operations fell to $21.3
million for the quarter  ended June 30, 2004 from $27.8  million for the quarter
ended June 30,  2003,  a decrease of $6.5 million or 23%. The decrease in rental
income was  principally due to the sale of Belcrest  Realty's  interest in Casco
Property  Trust,  LLC  (Casco)  in  February  2004 and also due to lower  rental
revenue for Bel Alliance. Bel Alliance's rental income declined to approximately
$20.1  million for the  quarter  ended June 30,  2004 from  approximately  $21.4
million for the quarter  ended June 30,  2003, a decrease of $0.3 million or 1%.
Rental  revenue for Bel Alliance  was  adversely  affected by reduced  apartment
rental rates,  increased rent  concessions and lower occupancy levels during the
quarter. Rental income from commercial office properties (through Bel Santa Ana)
was $1.2 million for the quarters ended June 30, 2004 and 2003.  Belcrest Realty
does not record property  operating expenses for Bel Santa Ana, as such expenses
are assumed by the tenant under the terms of the lease agreement.

Property operating  expenses for multifamily  property  operations  decreased to
approximately   $11.9   million  for  the  quarter  ended  June  30,  2004  from
approximately  $14.8 million for the quarter ended June 30, 2003, a net decrease
of $2.9 million or 20% (property operating expenses are before certain operating
expenses of Belcrest Realty of approximately  $1.6 million for the quarter ended
June 30, 2004 and  approximately  $2.0  million  for the quarter  ended June 30,
2003).  The  net  decrease  in  multifamily   property  operating  expenses  was
principally due to the sale of Belcrest  Realty's  interest in Casco in February
2004 and  also  due to  lower  property  operating  expenses  for Bel  Alliance.
Property operating  expenses for Bel Alliance were  approximately  $12.0 million
for the quarter ended June 30, 2004 compared to approximately  $12.6 million for
the quarter ended June 30, 2003, a decrease of $0.6 million or 5%. The near-term
outlook for  multifamily  property  operations  continues to be weak.  While the
recent pick-up in economic and employment growth is expected to lead to improved
supply-demand balance in the apartment industry,  oversupply conditions continue
to exist in most major  markets.  As a result,  Boston  Management  expects that
multifamily real estate operating results in 2004 will continue to be similar to
2003.

Because  Allagash held no investments in property until June 30, 2004, it had no
significant  impact on real estate  operations during the quarter then ended. As
of August  4,  2004,  Allagash  owns a  controlling  interest  in 21  industrial
properties, which consist of industrial distribution properties located in eight
states.  ProLogis,  the largest REIT  specializing  in  industrial  distribution
properties,  provides day-to-day operating  management of these properties.  The
terms of the  Allagash  joint  venture  are  similar to the Bel  Alliance  joint
venture.   Belcrest   Realty's   investment   in  Allagash  will  be  valued  in
substantially  the same  manner  as its  investment  in Bel  Alliance  and it is
subject to substantially similar risks, as well as risks specifically associated
with industrial  distribution  properties (such as changing  transportation  and
logistics patterns and tenant credit).  The mortgage financing to be obtained by
Allagash will be secured by the properties it owns and is expected to be without
recourse  to  Belcrest  Realty,  the Fund or its  Shareholders.  Pursuant  to an
agreement between Belcrest Realty and ProLogis,  Belcrest Realty is obligated to
make capital contributions to Allagash if required to fund certain items such as
debt service, insurance or property taxes. In 2004, industrial properties in the
United States have experienced  increased demand for space in most markets after
three years of occupancy and rental rate declines.  However, reduced rent levels
may  continue  over the near term as  above-market  leases  mature  and space is
released at current market rates. As a result,  Boston  Management  expects that
improvements in industrial  property  operating  performance will occur over the
longer term.

At June 30, 2004, the estimated fair value of the real  properties  held through
Belcrest Realty was $499.1 million  compared to $624.9 million at June 30, 2003,
a net decrease of $125.8 million or 20%. The net decrease was principally due to
the  February  2004 sale of Casco, offset in part by the  properties acquired by
Allagash on June 30, 2004.

The Fund saw net  unrealized  appreciation  of the  estimated  fair value in its
other real estate  investments  (which includes  Allagash,  Bel Alliance and Bel
Santa Ana) of approximately $13.3 million during the quarter ended June 30, 2004
compared  to  unrealized  depreciation  of  approximately  $0.3  million for the
quarter ended June 30, 2003.  Net unrealized  appreciation  of $13.3 million for
the quarter  ended June 30, 2004  included  approximately  $14.2  million of net
unrealized appreciation as a result of the agreement to sell Bel Alliance.

In May 2004,  Bel  Alliance  agreed to sell all of its  multifamily  residential
properties to an affiliate of the minority interest holder in Bel Alliance. Upon
consummation  of the  transaction,  Belcrest  Realty is  expected to receive net
proceeds of approximately $51.3 million as consideration for all of its interest
in  the  multifamily  residential  properties  and  expects  not to  retain  any
contingent  liabilities  associated  with  the  mortgage  debt  secured  by  the
properties or other liabilities.  Concurrent with this sale, Belcrest Realty has
agreed to buy the  outstanding  minority  interest in Bel Alliance for a nominal
amount.  Although  there  can be no  assurance  that  the  transaction  will  be
consummated,  it is expected to close by the end of September  2004.  Reflecting

                                       20
<PAGE>
the anticipated  sale, an increase of approximately  $14.2 million of unrealized
appreciation is reported on the Fund's  unaudited  financial  statements for the
quarter ended June 30, 2004 included in Item 1 above.

During the quarter ended June 30, 2004, Belcrest Realty sold certain Partnership
Preference Units totaling  approximately $36.2 million (including sales to other
investment  funds  advised  by  Boston   Management),   recognizing   losses  of
approximately $1.8 million on the transactions.  At June 30, 2004, the estimated
fair value of Belcrest  Realty's  Partnership  Preference  Units totaled  $490.4
million  compared to $578.0  million at June 30,  2003,  a net decrease of $87.7
million or 15%. This net decrease was due to fewer Partnership  Preference Units
held at June 30, 2004 and to decreases in the per unit values of the Partnership
Preference  Units held at June 30, 2004 due  principally  to their lower average
coupon rates.  In the current low interest rate  environment,  many issuers have
been  redeeming  Partnership  Preference  Units as call  protections  expire  or
restructuring the terms of outstanding  Partnership  Preference Units in advance
of their  call  dates.  As a  result,  many of the  higher-yielding  Partnership
Preference  Units held by Belcrest  Realty  during the six months ended June 30,
2003 were no longer held at June 30, 2004. Boston Management  expects this trend
to continue through 2004.

The  Fund  saw  unrealized  depreciation  of the  estimated  fair  value  in its
Partnership  Preference Units of  approximately  $8.9 million during the quarter
ended June 30, 2004 compared to unrealized  appreciation of  approximately  $3.2
million  for the quarter  ended June 30,  2003.  For the quarter  ended June 30,
2004, net unrealized  depreciation  of $8.9 million  consisted of  approximately
$8.7  million of  unrealized  depreciation  as a result of decreases in per unit
values of the Partnership  Preference  Units held by Belcrest Realty at June 30,
2004, and approximately $0.2 million of unrealized  depreciation  resulting from
the  recharacterization  of  previously  recorded  unrealized   appreciation  to
realized gains due to sales of Partnership  Preference  Units during the quarter
ended  June 30,  2004.  During the  quarter  ended  June 30,  2004,  Partnership
Preference  Unit values  were  negatively  affected by the rising  trend in U.S.
interest  rates,  partly offset by tighter spreads for  credit-sensitive  income
securities,  including real estate-related securities. In a rising interest rate
environment, values of outstanding Partnership Preference Units generally can be
expected to decline.  During the quarter ended June 30, 2003,  Belcrest Realty's
investments in Partnership  Preference Units generally  benefited from declining
interest  rate  levels  and  tightening  spreads  in   credit-sensitive   income
securities, particularly in real estate-related securities.

Distributions  received from Partnership  Preference Units for the quarter ended
June 30, 2004 totaled  $11.4  million  compared to $13.8 million for the quarter
ended  June 30,  2003,  a decrease  of $2.4  million or 17%.  The  decrease  was
principally due to fewer Partnership  Preference Units held on average,  as well
as to lower average distribution rates for the Partnership Preference Units held
during the quarter ended June 30, 2004.

PERFORMANCE  OF INTEREST  RATE SWAP  AGREEMENTS.  For the quarter ended June 30,
2004,  net  realized  and  unrealized  gains on the  Fund's  interest  rate swap
agreements  totaled  approximately  $11.5 million,  compared to net realized and
unrealized  losses of approximately  $1.9 million for the quarter ended June 30,
2003. Net realized and unrealized gains on swap agreements for the quarter ended
June 30, 2004  consisted  of $16.7  million of  unrealized  appreciation  due to
changes in swap agreement  valuations offset in part by $5.2 million of periodic
payments made pursuant to outstanding  swap  agreements  (and  classified as net
realized  losses on interest rate swap  agreements).  For the quarter ended June
30, 2003,  unrealized  appreciation of $10.3 million on swap agreement valuation
changes was offset by $12.2 million of swap  agreement  periodic  payments.  The
positive  contribution  to Fund  performance for the quarter ended June 30, 2004
from changes in swap  agreement  valuations was  attributable  to an increase in
swap rates during the quarter.  The positive  contribution for the quarter ended
June 30, 2003 from changes in swap  valuations was due primarily to the exercise
of early  termination  options on a number of swap  agreements and the remaining
swaps approaching their initial optional termination dates. The appreciation was
offset in part by a slight decline in swap rates.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2003
--------------------------------------------------------------------------------

PERFORMANCE  OF THE FUND.  The Fund's  total return was 3.77% for the six months
ended June 30,  2004.  This return  reflects an increase in the Fund's net asset
value per share from  $104.87 to $108.42 and a  distribution  of $0.39 per share
during the period. For comparison,  the S&P 500 had a total return of 3.44% over
the same period.  The  performance of the Fund exceeded that of the Portfolio by
approximately  0.32% during the period.  Last year,  the Fund had a total return
performance  of 9.86%  for the six  months  ended  June 30,  2003.  This  return
reflected  an  increase  in the Fund's net asset  value per share from $82.94 to
$90.66 and a distribution of $0.43 per share. For comparison,  the S&P 500 had a
total  return  of  11.75%  over the same  period.  The  performance  of the Fund
exceeded that of the Portfolio by 1.67% during that period.

PERFORMANCE  OF THE  PORTFOLIO.  For the six  months  ended June 30,  2004,  the
Portfolio's  total return was 3.45%,  in line with the 3.44% total return of the
S&P 500. In the period,  U.S.  equity returns were supported by a  strengthening
economy and rising corporate  profits.  Geopolitical  concerns,  higher interest
rates and rising inflation were negative factors that held back returns.  In the
                                       21
<PAGE>

period, small-cap stocks sharply outperformed large-caps and mid-caps, and value
stocks performed modestly better than growth stocks.

The  Portfolio's  performance  during  the first six  months of 2004 was  driven
primarily by its  diversified  industry  exposure and positive stock  selection.
Concerns about future trends in consumer  spending  caused the Portfolio to trim
its relative  overweighting of the  discretionary and staples sectors during the
period.  The Portfolio  also  decreased  positions in healthcare  and technology
stocks during the period.  The  underweighting  of  semiconductor  equipment and
software   industries  added  to  performance.   The  Portfolio   maintained  an
overweighting of industrials  stocks, and benefited from advances in airfreight,
machinery and building stocks. While the consumer staples and financials sectors
generally did not perform well during the period,  the  Portfolio's  holdings in
those  sectors were  positive  contributors  to  performance.  Another  positive
contributor  was the  Portfolio's  growing  exposure to the energy  sector.  The
Portfolio's  oil  exploration  and gas  investments  benefited  from the current
supply-demand  imbalances  and  associated  energy price  increases.  The strong
performance  of the  Portfolio's  holdings  in the  cyclical  metals  and mining
industries  during the period was also  noteworthy.  The Portfolio  continued to
underweight the utilities and telecom sectors.

For the six months ended June 30, 2003, the  Portfolio's  total return was 8.19%
compared to an 11.75% total return for the S&P 500.  Market  performance  during
the first six  months  of 2003 was  volatile,  with war  angst,  a  questionable
economic recovery and the SARS outbreak among the concerns weighing on investors
toward the beginning of the year. From mid-March  through the end of the period,
the U.S.  market  rallied  sharply,  with favorable  fiscal and monetary  policy
developments, progress in Iraq and signs of an improving economy contributing to
the strength.  The Portfolio's relative  underperformance  during the period was
attributable primarily to its lower exposure to higher-volatility, lower-quality
stocks that were the strongest performers in the market rally.

PERFORMANCE  OF REAL ESTATE  INVESTMENTS.  During the six months  ended June 30,
2004,  Belcrest Realty  purchased and sold certain real estate  investments.  In
February  2004,  Belcrest  Realty  sold  its  majority  interest  in  Casco  for
approximately  $28.7  million to  another  fund  advised  by Boston  Management.
Belcrest  Realty  recognized  a loss of  $14.2  million  on the  sale.  The loss
represented the realization of previously  recorded  unrealized  depreciation of
the value of Belcrest  Realty's  investment in Casco.  Belcrest  Realty's  newly
formed subsidiary  Allagash acquired certain  industrial  properties on June 30,
2004 and August 4, 2004.  In May 2004,  Bel  Alliance  agreed to sell all of its
real  estate  assets to an  affiliate  of the  minority  interest  holder in Bel
Alliance.

Rental income from  multifamily  real estate  property  operations fell to $45.9
million for the six months  ended June 30,  2004 from $56.1  million for the six
months  ended June 30,  2003,  a net  decrease of $10.2  million or 18%. The net
decrease in rental income was  principally  due to the sale of Casco in February
2004 and also due to lower  rental  revenue  for Bel  Alliance.  Bel  Alliance's
rental income declined to approximately $40.0 million for the quarter ended June
30, 2004 from  approximately  $43.2  million  for the six months  ended June 30,
2003,  a decrease of $3.2  million or 7%.  Rental  revenue for Bel  Alliance was
adversely affected by reduced apartment rental rates, increased rent concessions
and lower occupancy levels during the period. As noted above,  Belcrest Realty's
other  Real  Estate  Joint  Venture,   Allagash,   acquired  certain  industrial
properties on June 30, 2004.  Because these properties were acquired on the last
day of the six month  period,  they had no  significant  impact  on real  estate
operating  results  for  the  period.   Rental  income  from  commercial  office
properties  (through  Bel Santa Ana) was $2.3  million for the six months  ended
June 30,  2004 and 2003.  Belcrest  Realty  does not record  property  operating
expenses for Bel Santa Ana, as such expenses are assumed by the tenant under the
terms of the lease agreement.

Property operating  expenses for multifamily  property  operations  decreased to
approximately  $25.4  million  for the six  months  ended  June  30,  2004  from
approximately  $28.7  million  for the six  months  ended June 30,  2003,  a net
decrease of $3.3 million or 11% (property  operating expenses are before certain
operating  expenses of Belcrest Realty of approximately $3.3 million for the six
months  ended June 30, 2004 and  approximately  $3.8  million for the six months
ended June 30,  2003).  This net decrease in expenses was  primarily  due to the
sale of Casco in February 2004 and also due to lower property operating expenses
for  Bel   Alliance.   Property   operating   expenses  for  Bel  Alliance  were
approximately  $23.8  million for the six months ended June 30, 2004 compared to
approximately  $24.2  million for the six months ended June 30, 2003, a decrease
of $0.4 million or 2%. The near-term outlook for multifamily property operations
continues to be weak. While the recent pick-up in economic and employment growth
is expected to lead to improved supply-demand balance in the apartment industry,
oversupply  conditions  continue  to exist in most major  markets.  As a result,
Boston Management expects that multifamily real estate operating results in 2004
will continue to be similar to 2003.

                                       22
<PAGE>

At June 30, 2004, the estimated fair value of the real  properties  held through
Belcrest Realty was $499.1 million  compared to $624.9 million at June 30, 2003,
a net  decrease  of  $125.8  million  or 20%.  The net  decrease  was due to the
February  2004  sale of  Casco,  offset in part by the  properties  acquired  by
Allagash on June 30, 2004.

The Fund saw net  unrealized  appreciation  of the  estimated  fair value in its
other real estate  investments  (which includes  Allagash,  Bel Alliance and Bel
Santa Ana and formerly  also  included  Casco) of  approximately  $24.4  million
during the six months ended June 30, 2004 compared to unrealized depreciation of
approximately  $24.9  million  for the six  months  ended  June  30,  2003.  Net
unrealized  appreciation of $24.4 million for the six months ended June 30, 2004
included approximately $14.2 million of unrealized  appreciation in the value of
Belcrest  Realty's interest in Bel Alliance as a result of the agreement to sell
its  real  estate   assets  and   approximately   $15.0  million  of  unrealized
appreciation due to the  recharacterization  of previously  recorded  unrealized
depreciation  to  realized  losses  in the  amount of $15.0  million  due to the
February 2004 sale of Casco.

During the six months ended June 30, 2004,  Belcrest Realty sold (or experienced
scheduled  redemptions of) certain of its Partnership  Preference Units totaling
approximately  $90.3 million  (including sales to other investment funds advised
by Boston  Management),  recognizing losses of approximately $0.7 million on the
transactions.  During the six months ended June 30, 2004,  Belcrest  Realty also
acquired  interests  in  additional  Partnership  Preference  Units  from  other
investment  funds advised by Boston  Management  totaling  approximately  $139.1
million.  At June 30,  2004,  the  estimated  fair  value of  Belcrest  Realty's
Partnership  Preference  Units totaled $490.4 million compared to $578.1 million
at June 30,  2003,  a decrease of $87.7  million or 15%. The decrease was due to
fewer Partnership Preference Units held at June 30, 2004 and to decreases in the
per unit values of the  Partnership  Preference  Units held at June 30, 2004 due
principally  to their lower average  coupon  rates.  In the current low interest
rate environment,  many issuers have been redeeming Partnership Preference Units
as call protections expire or restructuring the terms of outstanding Partnership
Preference  Units in  advance  of their  call  dates.  As a result,  many of the
higher-yielding  Partnership Preference Units held by Belcrest Realty during the
six months  ended June 30,  2003 were no longer  held at June 30,  2004.  Boston
Management expects this trend to continue through 2004.

The Fund saw net  unrealized  depreciation  of the  estimated  fair value in its
Partnership  Preference  Units of  approximately  $15.9  million  during the six
months  ended  June  30,  2004  compared  to  net  unrealized   appreciation  of
approximately  $36.0 million for the six months ended June 30, 2003. For the six
months  ended  June 30,  2004,  net  unrealized  depreciation  of $15.9  million
consisted of approximately $14.4 million of unrealized  depreciation as a result
of  decreases  in per unit values of the  Partnership  Preference  Units held by
Belcrest  Realty at June 30, 2004 and  approximately  $1.4 million of unrealized
depreciation   resulting  from  the   reclassification  of  previously  recorded
unrealized appreciation to realized gains due to sales of Partnership Preference
Units  during the six months  ended June 30,  2004.  During the six months ended
June 30, 2004,  Partnership  Preference Unit values were negatively  affected by
the rising trend in U.S.  interest  rates,  partly offset by tighter spreads for
credit-sensitive income securities, including real estate-related securities. In
a rising interest rate environment, values of outstanding Partnership Preference
Units generally can be expected to decline. During the six months ended June 30,
2003,  Belcrest Realty's  investments in Partnership  Preference Units generally
benefited   from   declining   interest   rates  and   tightening   spreads   in
credit-sensitive   income  securities,   particularly  in  real   estate-related
securities.

Distributions  received  from  Partnership  Preference  Units for the six months
ended June 30, 2004 totaled $24.9 million  compared to $27.6 million for the six
months  ended June 30, 2003, a decrease of $2.7 million or 10%. The decrease was
principally  due to fewer  Partnership  Preference  Units held on average and to
lower  average  distribution  rates for the  Partnership  Preference  Units held
during  the six  months  ended  June 30,  2004,  partially  offset by a one-time
special  distribution from one issuer made in connection with a restructuring of
its Partnership Preference Units.

PERFORMANCE OF INTEREST RATE SWAP AGREEMENTS.  For the six months ended June 30,
2004,  net  realized  and  unrealized  losses on the Fund's  interest  rate swap
agreements  totaled  approximately  $2.1  million,  compared to net realized and
unrealized  losses of  approximately  $5.3 million for the six months ended June
30, 2003.  Net realized and  unrealized  losses on swap  agreements  for the six
months ended June 30, 2004 consisted of $8.0 million of unrealized  appreciation
due to changes in swap agreement  valuations offset by $10.1 million of periodic
payments made pursuant to outstanding  swap  agreements  (and  classified as net
realized losses on interest rate swap agreements). For the six months ended June
30, 2003,  unrealized  appreciation of $19.2 million on swap agreement valuation
changes were offset by $24.5 million of swap agreement  periodic  payments.  The
positive contribution to Fund performance for the six months ended June 30, 2004
from changes in swap  agreement  valuations was  attributable  to an increase in
swap rates during the period. The positive  contribution to Fund performance for
the six months ended June 30, 2003 from changes in swap valuations was primarily
due to the exercise of early termination  options on a number of swap agreements

                                       23
<PAGE>

and many of the remaining  swap  contracts  approaching  their initial  optional
termination  dates.  Swap rates  declined  during the six months  ended June 30,
2003,  offsetting some of the appreciation  from approaching  early  termination
dates.

(b) LIQUIDITY AND CAPITAL RESOURCES.
------------------------------------

OUTSTANDING BORROWINGS.  The Fund has entered into credit arrangements with DrKW
Holdings,  Inc. and Merrill Lynch  Mortgage  Capital,  Inc.  (collectively,  the
Credit  Facility)  primarily to finance the Fund's real estate  investments  and
will  continue to use the Credit  Facility for such  purpose in the future.  The
Credit  Facility may also be used for other  purposes,  including any short-term
liquidity  needs of the Fund.  In the future,  the Fund may increase the size of
the Credit  Facility  (subject to lender  consent) and the amount of outstanding
borrowings thereunder.  As of June 30, 2004, the Fund had outstanding borrowings
of $690.0 million and unused loan commitments of $138.0 million under the Credit
Facility.

In August  2004,  the Fund made  borrowings  under its credit  arrangement  with
Merrill Lynch Mortgage  Capital,  Inc. (MLMC) in the amount of $138 million.  At
that time, the Fund also  temporarily  increased the amount  available under its
credit  arrangement with MLMC by $138 million and borrowed that amount. The Fund
used the total  proceeds from these  borrowings to finance the  acquisitions  by
Allagash of interests in certain  industrial  properties.  The  additional  $138
million of borrowings is at a rate of LIBOR plus 0.90% and is for a period of up
to sixty-days  (subject to a 30-day extension,  if needed).  Allagash expects to
obtain  first  mortgage  financing  for its  properties  in the third and fourth
quarters  of 2004,  the  proceeds  from which  will be used to repay  borrowings
obtained by the Fund in August 2004 to facilitate the Allagash acquisitions.

The Fund has entered into interest rate swap agreements with respect to its real
estate investments and associated borrowings.  Pursuant to these agreements, the
Fund makes periodic  payments to the counterparty at predetermined  fixed rates,
in exchange for floating-rate  payments at a predetermined spread plus one-month
LIBOR.  During  the terms of the  outstanding  interest  rate  swap  agreements,
changes in the  underlying  values of the  agreements are recorded as unrealized
appreciation or depreciation.  As of June 30, 2004, the unrealized  appreciation
related to the interest rate swap agreements was approximately $11.0 million. As
of June 30, 2003, the unrealized  depreciation related to the interest rate swap
agreements was approximately $42.5 million.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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 Fund's  Credit  Facility and by  fixed-rate  secured
mortgage  debt  obligations  of the Real Estate  Joint  Ventures  and Net Leased
Property.  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 Fund's Credit  Facility
are reset at regular  intervals based on one-month  LIBOR.  The Fund has entered
into interest rate swap  agreements to fix the cost of its borrowings  under the
Credit  Facility  used to acquire  Belcrest  Realty's  equity in its real estate
investments  and to mitigate in part the impact of interest  rate changes on the
Fund's net asset value.  Under the terms of the interest  rate swap  agreements,
the Fund makes cash  payments  at fixed  rates in  exchange  for  floating  rate
payments that fluctuate with one and three month LIBOR. The Fund's interest rate
swap  agreements  will generally  increase in value when interest rates rise and
decrease  in value when  interest  rates fall.  In the future,  the Fund may use
other interest rate hedging  arrangements  (such as caps, floors and collars) to
fix or limit borrowing costs. The use of interest rate hedging arrangements is a
specialized activity that can expose the Fund to significant loss.

The following table summarizes the contractual  maturities and  weighted-average
interest rates  associated  with the Fund's  significant  non-trading  financial
instruments.  The Fund has no market risk sensitive instruments held for trading
purposes.  This information should be read in conjunction with Note 4 and Note 5
to the Fund's unaudited condensed  consolidated  financial  statements in Item 1
above.

                                       24
<PAGE>

                            Interest Rate Sensitivity
                        Cost, Principal (Notional) Amount
                    by Contractual Maturity and Callable Date
                      for the Twelve Months Ended June 30,*
<TABLE>
<CAPTION>
                                                                                                                      Estimated
                                                                                                                   Fair Value as of
                                                                                                                       June 30,
                                     2005        2006-2008       2009         Thereafter           Total                 2004
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>            <C>          <C>            <C>              <C>                  <C>
Rate sensitive liabilities:
--------------------------------
Long-term debt:
--------------------------------
Fixed-rate mortgages                                          $94,833.608    $318,087,574     $412,921,182         $407,000,000

Average interest rate                                                7.22%           7.95%            7.78%
--------------------------------
Variable-rate Credit Facility                                                $690,000,000     $690,000,000         $690,000,000

Average interest rate                                                                1.67%            1.67%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive derivative
financial instruments:
--------------------------------
Pay fixed/receive variable
interest rate swap
agreements(**)                                                               $876,493,000     $876,493,000         $ 11,003,861

Average pay rate(**)                                                                 4.74%            4.74%

Average receive rate(**)                                                             1.65%            1.65%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive investments:
--------------------------------
Fixed-rate Partnership
Preference Units:
--------------------------------
Cabot Industrial Properties,
L.P., 8.625% Series B
Cumulative Redeemable
Preferred Units, Callable
4/29/04, Current Yield: 8.55%     $15,569,810                                                 $ 15,569,810         $ 14,624,700

Camden Operating, L.P., 7%
Series B Cumulative Redeemable
Perpetual Preferred Units,
Callable 12/2/08, Current
Yield: 7.29%                                                  $55,645,413                     $ 55,645,413         $ 53,564,600

Colonial Realty Limited
Partnership, 7.25% Series B
Cumulative Redeemable
Perpetual Preferred Units,
Callable 2/24/09, Current
Yield: 7.68%                                                  $34,244,840                     $ 34,244,840         $ 33,054,000

Liberty Property L.P., 9.25%
Series B Cumulative Redeemable
Preferred Units, Callable
7/28/04, Current Yield: 9.18%     $46,625,000                                                 $ 46,625,000         $ 46,979,350

                                       25
<PAGE>

                                                                                                                      Estimated
                                                                                                                   Fair Value as of
                                                                                                                       June 30,
                                     2005        2006-2008       2009         Thereafter           Total                 2004
------------------------------------------------------------------------------------------------------------------------------------
MHC Operating Limited
Partnership, 9% Series D
Cumulative Redeemable
Perpetual Preference Units,
Callable 9/29/04, Current
Yield: 8.96%                      $55,000,000                                                 $ 55,000,000         $ 55,242,000

National Golf Operating
Partnership, L.P., 9.30%
Series A Cumulative Redeemable
Preferred Units, Callable
2/6/03, Current Yield: 9.45%      $27,877,518                                                 $ 27,877,518         $ 31,055,040

National Golf Operating
Partnership, L.P., 9.30%
Series B Cumulative Redeemable
Preferred Units, Callable
2/6/03, Current Yield: 9.45%      $29,833,200                                                 $ 29,833,200         $ 29,520,000

PSA Institutional Partners,
L.P., 6.40% Series NN
Cumulative Redeemable
Perpetual Preferred Units,
Callable 3/17/10, Current
Yield: 7.04%                                                                 $ 55,375,000     $ 55,375,000         $ 50,324,800

Price Development Company,
L.P., 8.95% Series B
Cumulative Redeemable
Preferred Partnership Units,
Callable 7/28/04, Current
Yield: 8.94%                      $44,089,925                                                 $ 44,089,925         $ 44,446,000

Regency Centers, L.P., 9.125%
Series D Cumulative Redeemable
Preferred Units, Callable
9/29/04, Current Yield: 9.01%     $50,598,110                                                 $ 50,598,110         $ 50,615,000

Sun Communities Operating
L.P., 8.875% Series A
Cumulative Redeemable
Perpetual Preferred Units,
Callable
9/29/04, Current Yield: 8.82%     $20,942,560                                                 $ 20,942,560         $ 20,120,000

Urban Shopping Centers,
L.P., 9.45% Series D
Cumulative Redeemable
Perpetual Preferred Units,
Callable 10/1/04, Current         $60,000,000                                                 $ 60,000,000         $ 60,807,120
Yield: 9.32%
--------------------------------

                                       26
<PAGE>
                                                                                                                      Estimated
                                                                                                                   Fair Value as of
                                                                                                                       June 30,
                                     2005        2006-2008       2009         Thereafter           Total                 2004
------------------------------------------------------------------------------------------------------------------------------------
Note Receivable:
--------------------------------
Fixed-rate note receivable, 8%
                                                                             $ 3,352,436      $ 3,352,436          $ 3,735,200
</TABLE>
*    The amounts  listed  reflect the Fund's  positions as of June 30, 2004. The
     Fund's current positions may differ.

**   The terms disclosed are those of the interest rate swap agreements that are
     in  effect  as of June  30,  2004.  As  discussed  in Note 4 to the  Fund's
     unaudited  condensed  consolidated  financial  statements  in Item 1 above,
     during July 2004 certain  interest rate swap  agreements  were  terminated,
     resulting  in a change of the average pay rate and average  receive rate to
     4.68% and 1.67%, respectively.

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

Eaton Vance, as the Fund's manager, conducted an evaluation of the effectiveness
of the Fund's  disclosure  controls and procedures (as defined by Rule 13a-15(e)
of the 1934 Act) as of the end of the period  covered by this  report,  with the
participation of the Fund's Chief Executive Officer and Chief Financial Officer.
Based on that  evaluation,  the Chief  Executive  Officer  and  Chief  Financial
Officer  concluded  that the Fund's  disclosure  controls  and  procedures  were
effective.  There were no changes in the Fund's internal  control over financial
reporting  that  occurred  during  the  quarter  ended  June 30,  2004 that have
materially  affected,  or are reasonably likely to materially affect, the Fund's
internal control over financial reporting.

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

PART II. OTHER INFORMATION

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

Although in the  ordinary  course of  business,  the Fund,  Belcrest  Realty and
Belcrest  Realty's   controlled   subsidiaries  may  become  involved  in  legal
proceedings,  the Fund is not aware of any material pending legal proceedings to
which any of them is subject.

ITEM 2. CHANGES IN SECURITIES,  USE OF PROCEEDS  AND ISSUER PURCHASES  OF EQUITY
        SECURITIES.
--------------------------------------------------------------------------------

As  described  in the  Fund's  Annual  Report  on Form  10-K for the year  ended
December 31, 2003,  shares of the Fund may be redeemed by Fund  shareholders  on
any business  day.  Redemptions  are met at the net asset value per share of the
Fund (less any applicable  redemption  fee). The right to redeem is available to
all shareholders and all outstanding Fund shares are eligible. During each month
in the quarter ended June 30, 2004, the total number of shares  redeemed and the
average price paid per share were as follows:

--------------------------------------------------------------------------------
                                    Total No. of Shares    Average Price Paid
  Month Ended                           Redeemed(1)            Per Share
--------------------------------------------------------------------------------
  April 30, 2004                        134,347.32             $106.75
--------------------------------------------------------------------------------
  May 31, 2004                           92,266.30             $104.57
--------------------------------------------------------------------------------
  June 30, 2004                         316,089.29             $108.27
--------------------------------------------------------------------------------
  Total                                 542,702.91             $107.48
--------------------------------------------------------------------------------

                                       27
<PAGE>

(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.

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

None.

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

No matters were submitted to a vote of security  holders during the three months
ended June 30, 2004.

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

None.

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

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

4.2(b)    Form of  Amendment  No. 2 dated  August 3, 2004  to Loan  and Security
          Agreement among  the Fund,  Merrill Lynch Mortgage  Capital,  Inc., as
          Agent,  the Lenders  referred to therein  and  Merrill  Lynch  Capital
          Services, Inc.

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

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

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

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

(b)  Reports on Form 8-K:

     None.

                                       28
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned duly authorized officer on August 9, 2004.





                                      BELCREST CAPITAL FUND LLC



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

                                       29
<PAGE>

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

4.2(b)    Form of  Amendment  No. 2 dated  August 3, 2004  to Loan and  Security
          Agreement among  the Fund,  Merrill Lynch Mortgage  Capital,  Inc., as
          Agent,  the Lenders  referred to therein  and  Merrill  Lynch  Capital
          Services, Inc.

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

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

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

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

                                       30