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

                                    FORM 10-Q

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

               For the quarterly period ended September 30, 2003
                                              ------------------

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


                            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  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                                   YES  [X]      NO  [ ]

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

                                   YES  [X]      NO  [ ]

<PAGE>

                            BELCREST CAPITAL FUND LLC
                               Index to Form 10-Q
                                                                            Page
PART I  FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements                           3

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

        Condensed Consolidated Statements of Operations (Unaudited)
        for the Three Months Ended September 30, 2003 and 2002 and
        for the Nine Months Ended September 30, 2003 and 2002                 4

        Condensed Consolidated Statements of Changes in Net Assets
        (Unaudited) for the Nine Months Ended September 30, 2003 and
        2002                                                                  6

        Condensed Consolidated Statements of Cash Flows (Unaudited)
        for the Nine Months Ended September 30, 2003 and 2002                 7

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

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

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                            17

Item 3. Quantitative and Qualitative Disclosures About Market Risk           22

Item 4. Controls and Procedures                                              24

PART II OTHER INFORMATION

Item 1. Legal Proceedings                                                    24

Item 2. Changes in Securities and Use of Proceeds                            24

Item 3. Defaults Upon Senior Securities                                      24

Item 4. Submission of Matters to a Vote of Security Holders                  24

Item 5. Other Information                                                    25

Item 6. Exhibits and Reports on Form 8-K                                     25

SIGNATURES                                                                   26

EXHIBIT INDEX                                                                27

                                        2
<PAGE>
PART I.   FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
-------------------------------------------------------------------------------

BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Assets and Liabilities

                                                September 30,
                                                     2003         December 31,
                                                 (Unaudited)         2002
                                                --------------    -------------
Assets:
 Investment in Belvedere Capital Fund Company
  LLC (Belvedere Capital)                       $2,576,595,863    $2,423,063,983
 Investment in Partnership Preference Units        519,524,909       547,878,187
 Investment in other real estate                   623,136,257       651,756,818
 Short-term investments                             62,795,058         2,564,911
                                                --------------    --------------
Total investments                               $3,782,052,087    $3,625,263,899
 Cash                                                7,401,421        12,216,034
 Receivable for investments sold                             -        73,554,369
 Escrow deposits - restricted                       14,598,481        13,475,591
 Dividends and interest receivable                   1,367,567         7,835,775
 Other assets                                        5,511,083         6,867,545
                                                --------------    --------------
Total assets                                    $3,810,930,639    $3,739,213,213
                                                --------------    --------------

Liabilities:
 Loan payable on Credit Facility                $  745,650,000   $   779,350,000
 Mortgages payable                                 537,619,358       541,017,537
 Payable for Fund Shares redeemed                    3,529,657         3,952,191
 Special Distributions payable                             932                 -
 Open interest rate swap agreements, at value       31,204,459        61,716,527
 Security deposits                                   2,152,726         2,231,784
 Swap interest payable                               4,823,321         5,089,784
 Accrued expenses:
  Interest expense                                   3,600,489         4,815,222
  Property taxes                                     7,995,955         9,169,540
  Other expenses and liabilities                     8,994,884         6,282,930
 Minority interests in controlled subsidiaries      19,229,886        26,096,166
                                                --------------    --------------
Total liabilities                               $1,364,801,667    $1,439,721,681
                                                --------------    --------------

Net assets                                      $2,446,128,972    $2,299,491,532

                                                --------------    --------------
Shareholders' Capital                           $2,446,128,972    $2,299,491,532
                                                --------------    --------------

Shares outstanding                                  26,339,106        27,724,437
                                                --------------    --------------

Net asset value and redemption price per Share  $        92.87    $        82.94
                                                --------------    --------------

       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      Nine Months      Nine Months
                                                         Ended            Ended             Ended           Ended
                                                      September 30,   September 30,     September 30,    September 30,
                                                         2003             2002              2003            2002
                                                      -------------   -------------     -------------    ---------------
<S>                                                   <C>             <C>               <C>              <C>
Investment Income:
 Dividends allocated from Belvedere Capital
  (net of foreign taxes of $78,362, $78,530,
  $348,826 and $300,567, respectively)                $  9,332,679    $  8,746,923      $ 27,087,005     $ 27,223,566
 Interest allocated from Belvedere Capital                  77,353         200,459           522,478          720,348
 Expenses allocated from Belvedere Capital              (3,992,143)     (4,046,391)      (11,336,229)     (13,849,800)
                                                      -------------   -------------     -------------    -------------
 Net investment income allocated from
  Belvedere Capital                                   $  5,417,889    $  4,900,991      $ 16,273,254     $ 14,094,114
 Dividends from Partnership Preference Units            11,826,889      13,092,134        39,409,885       39,294,777
 Rental income                                          27,339,096      33,903,937        83,424,249      105,717,460
 Interest                                                  112,858          23,215           345,570          135,290
                                                      ------------    ------------      ------------     ------------
Total investment income                               $ 44,696,732    $ 51,920,277      $139,452,958     $159,241,641
                                                      ------------    ------------      ------------     ------------

Expenses:
 Investment advisory and administrative fees          $  2,606,188    $  2,765,589      $  7,682,224     $  9,082,455
 Property management fees                                1,043,782       1,304,217         3,173,898        4,097,178
 Distribution and servicing fees                           882,495         829,002         2,513,164        3,016,826
 Interest expense on mortgages                          10,442,120      12,863,705        31,250,849       39,939,765
 Interest expense on Credit Facility                     3,066,680       4,996,571        10,046,752       15,433,995
 Interest expense on swap agreements                    11,408,892      11,680,481        35,910,572       33,650,608
 Property and maintenance expenses                       9,965,594      11,188,827        28,759,000       32,718,127
 Property taxes and insurance                            3,527,929       4,531,834        11,348,421       13,794,187
 Miscellaneous                                             675,984         330,422         1,408,765        1,190,409
                                                      ------------    ------------      ------------    -------------
Total expenses                                        $ 43,619,664    $ 50,490,648      $132,093,645    $ 152,923,550

Deduct-
 Reduction of investment advisory
  and administrative fees                                  626,999         610,857         1,765,015        2,145,019
                                                      ------------    ------------      ------------    -------------
Net expenses                                          $ 42,992,665    $ 49,879,791      $130,328,630    $ 150,778,531
                                                      ------------    ------------      ------------    -------------
Net investment income before
 minority interests in net income of
 controlled subsidiaries                              $  1,704,067    $  2,040,486      $  9,124,328    $   8,463,110
Minority interests in net income
 of controlled subsidiaries                               (360,764)       (535,236)       (1,911,727)      (2,992,585)
                                                      -------------   -------------     -------------   --------------
Net investment income                                 $  1,343,303    $  1,505,250      $  7,212,601    $   5,470,525
                                                      -------------   -------------     -------------   --------------
</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      Nine Months      Nine Months
                                                         Ended            Ended             Ended           Ended
                                                      September 30,   September 30,     September 30,    September 30,
                                                         2003             2002              2003            2002
                                                      -------------   -------------     -------------    ---------------
<S>                                                   <C>             <C>               <C>              <C>
Realized and Unrealized Gain (Loss)
Net realized gain (loss) -
 Investment transactions from Belvedere
   Capital  (identified cost basis)                   $  1,835,118    $ (54,420,240)     $ (3,244,424)   $(203,300,931)
 Investment transactions in Partnership
  Preference Units (identified cost)                     1,810,778                -         2,435,758          374,360
 Investment transactions in other real
  estate                                                         -                -                 -       (1,532,128)
                                                      -------------   --------------     -------------   --------------
Net realized gain (loss)                              $  3,645,896    $ (54,420,240)     $   (808,666)   $(204,458,699)
                                                      -------------   --------------     -------------   --------------

Change in unrealized appreciation
 (depreciation) -
  Investment in Belvedere Capital
   (identified cost basis)                            $ 53,492,307    $(388,020,095)     $242,362,840    $(615,592,266)
  Investments in Partnership Preference
   Units (identified cost basis)                        (3,412,486)      18,049,461        32,570,355       33,098,871
  Investments in other real estate
   (net of minority interests in
   unrealized gain (loss) of controlled
   subsidiaries of  $(4,536,698),
   $(5,548,478), $(8,778,003)
   and $(41,445,190), respectively)                     (6,116,615)      (1,769,838)      (31,008,924)     (40,756,598)
  Interest rate swap agreements                         11,264,926      (12,548,231)       30,512,068      (17,733,740)
                                                     --------------   --------------     -------------   --------------
Net change in unrealized appreciation
 (depreciation)                                      $  55,228,132    $(384,288,703)     $274,436,339    $(640,983,733)
                                                     -------------    --------------     ------------    --------------
Net realized and unrealized gain (loss)              $  58,874,028    $(438,708,943)     $273,627,673    $(845,442,432)
                                                     --------------   --------------     ------------    --------------

Net increase (decrease) in net assets
 from operations                                     $  60,217,331    $(437,203,693)     $280,840,274    $(839,971,907)
                                                     ==============   ==============     =============   ==============
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       5
<PAGE>

BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
                                                                 Nine Months             Nine Months
                                                                    Ended                   Ended
                                                              September 30, 2003      September 30, 2002
                                                              ------------------      ------------------
<S>                                                            <C>                   <C>
Increase (Decrease) in Net Assets:
 Net investment income                                         $    7,212,601        $      5,470,525
 Net realized loss from investment transactions                      (808,666)           (204,458,699)
 Net change in unrealized appreciation (depreciation)
  of investments                                                  274,436,339            (640,983,733)
                                                               ---------------        ----------------
Net increase (decrease) in net assets from operations          $  280,840,274        $   (839,971,907)
                                                               ---------------        ----------------

Transactions in Fund Shares -
 Net asset value of Fund Shares issued to Shareholders in
  payment of distributions declared                            $    4,796,611        $              -
 Net asset value of Fund Shares redeemed                         (127,104,831)           (185,416,710)
                                                               ---------------       -----------------
Net decrease in net assets from Fund Share transactions        $ (122,308,220)       $   (185,416,710)
                                                               ---------------       -----------------

Distributions -
 Distributions to Shareholders                                 $  (11,893,682)       $              -
 Special Distributions to Shareholders                                   (932)                      -
                                                               ---------------       -----------------
Total distributions                                            $  (11,894,614)       $              -
                                                               ---------------       -----------------

Net increase (decrease) in net assets                          $   146,637,440       $ (1,025,388,617)

Net assets:
 At beginning of period                                        $ 2,299,491,532       $  3,253,990,369
                                                               ----------------      -----------------
 At end of period                                              $ 2,446,128,972       $  2,228,601,752
                                                               ================      =================
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       6
<PAGE>

BELCREST CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
                                                                                       Nine Months            Nine Months
                                                                                          Ended                  Ended
                                                                                      September 30,          September 30,
                                                                                           2003                  2002
                                                                                      -------------          -------------
<S>                                                                                   <C>                    <C>
Cash Flows From (For) Operating Activities -
Net increase (decrease) in net assets from operations                                 $ 280,840,274          $(839,971,907)
Adjustments to reconcile net increase (decrease) in net assets from operations
 to net cash flows from operating activities -
  Net investment income allocated from Belvedere Capital                                (16,273,254)           (14,094,114)
  Increase in escrow deposits                                                            (1,122,890)              (528,515)
  Decrease in receivable for investments sold                                            73,554,369                      -
  Increase in interest receivable from other real estate investments                       (173,113)                     -
  Decrease in other assets                                                                1,356,462              2,390,405
  Decrease (increase) in dividends and interest receivable                                6,468,208             (3,780,668)
  (Decrease) increase in interest payable for open swap agreements                         (266,463)               368,796
  Increase (decrease) in security deposits, accrued interest and accrued
   other expenses and liabilities                                                         1,418,163               (239,401)
  Decrease in accrued property taxes                                                     (1,173,585)              (851,580)
  Proceeds from sales of Partnership Preference Units                                    56,919,348             35,374,360
  Proceeds from sale of investment in other real estate                                           -             31,588,186
  Improvements to rental property                                                        (4,553,214)            (5,788,406)
  Decrease in cash due to sale of majority interest in
   controlled subsidiary                                                                          -             (1,195,835)
  Net (increase) decrease in investment in Belvedere Capital                            (23,700,000)            19,977,702
  (Increase) decrease in short-term investments                                         (60,230,147)             4,417,717
  Minority interests in net income of controlled subsidiaries                             1,911,727              2,992,585
  Net realized loss from investment transactions                                            808,666            204,458,699
  Net change in unrealized (appreciation) depreciation of
   investments                                                                         (274,436,339)           640,983,733
                                                                                     ---------------       -----------------
Net cash flows from operating activities                                             $   41,348,212        $    76,101,757
                                                                                     ---------------       -----------------

Cash Flows From (For) Financing Activities -
 Repayment of Credit Facility                                                        $ (33,700,000)        $   (67,000,000)
 Payments on mortgages                                                                  (3,398,179)             (3,146,138)
 Payments for Fund Shares redeemed                                                      (1,967,575)             (3,520,473)
 Distributions paid to Shareholders                                                     (7,097,071)                      -
 Distributions paid to minority shareholders                                                     -              (1,946,213)
                                                                                     --------------        ----------------
Net cash flows for financing activities                                              $ (46,162,825)        $   (75,612,824)
                                                                                     --------------        ----------------

Net (decrease) increase in cash                                                      $   (4,814,613)       $       488,933

Cash at beginning of period                                                          $   12,216,034        $    12,170,155
                                                                                     ---------------       ---------------
Cash at end of period                                                                $    7,401,421        $    12,659,088
                                                                                     ===============       ===============
</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>
                                                                                       Nine Months            Nine Months
                                                                                          Ended                  Ended
                                                                                      September 30,          September 30,
                                                                                           2003                  2002
                                                                                      -------------          -------------
<S>                                                                                    <C>                  <C>
Supplemental Disclosure and Non-cash Investing and
 Financing Activities -
  Interest paid on loan - Credit Facility                                              $   10,951,833       $   15,920,432
  Interest paid on mortgages                                                           $   30,845,363       $   39,435,437
  Interest paid on swap agreements                                                     $   36,177,035       $   33,281,812
  Market value of securities distributed in payment of
   redemptions                                                                         $  125,559,790       $  172,660,387
  Market value of real property and other assets, net
   of current liabilities, disposed of in conjunction with
   sale of other real estate                                                           $            -       $  148,197,322
  Mortgage disposed of in conjunction with sale of
   other real estate                                                                   $            -       $  107,369,483
  Partnership Preference Units exchanged for a real estate
   equity investment and an investment in note receivable                              $   (6,440,043)      $            -
  Market value of real estate equity investment                                        $    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 September 30, 2003
Condensed Consolidated Financial Statements (Continued)

FINANCIAL HIGHLIGHTS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
--------------------------------------------------------------------------------
Net asset value - Beginning of period                               $ 82.940
--------------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS
--------------------------------------------------------------------------------
Net investment income (6)                                           $  0.266
Net realized and unrealized gain                                      10.094
--------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS                                        $ 10.360
--------------------------------------------------------------------------------

DISTRIBUTIONS
--------------------------------------------------------------------------------
Distributions to Shareholders                                       $ (0.430)
Special Distributions to Shareholders (9)                             (0.000)
--------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS                                                 $ (0.430)
--------------------------------------------------------------------------------

NET ASSET VALUE - END OF PERIOD                                     $ 92.870
--------------------------------------------------------------------------------

TOTAL RETURN (1)                                                       12.54%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                             AS A PERCENTAGE          AS A PERCENTAGE
                                                                             OF AVERAGE NET          OF AVERAGE GROSS
RATIOS                                                                          ASSETS(5)                ASSETS (2)(5)
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                       <C>
Expenses of Consolidated Real Property Subsidiaries
 Interest and other borrowing costs  (7)                                        1.38%  (8)                0.92%  (8)
 Operating expenses  (7)                                                        1.89%  (8)                1.26%  (8)
Belcrest Capital Fund LLC Expenses
 Interest and other borrowing costs  (4)                                        2.60%  (8)                1.75%  (8)
 Investment advisory and administrative fees,
  servicing fees and other Fund operating expenses (3)(4)                       1.17%  (8)                0.78%  (8)
                                                                         -------------------------------------------------------
Total expenses                                                                  7.04%  (8)                4.71%  (8)

Net investment income                                                           0.41%  (8)                0.27%  (8)
--------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted)                                                                $ 2,446,129
Portfolio Turnover of Tax-Managed Growth Portfolio (the Portfolio)                                                14%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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)  Annualized.
(9)  Special distributions amount to less than $0.001 per share.

       See notes to unaudited condensed consolidated financial statements

                                       9
<PAGE>

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

1    Basis of Presentation

The condensed consolidated interim financial statements of Belcrest Capital Fund
LLC (Belcrest Capital) and its subsidiaries  (collectively,  the Fund) have been
prepared by the Fund,  without audit, in accordance  with accounting  principles
generally  accepted  in the  United  States of  America  for  interim  financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with accounting principles
generally  accepted  in the United  States of  America  have been  condensed  or
omitted as permitted by such rules and regulations. All adjustments,  consisting
of normal recurring  adjustments,  have been included.  Management believes that
the disclosures are adequate to present fairly the financial  position,  results
of  operations,  cash flows and  financial  highlights  at the dates and for the
periods  presented.  It is suggested that these interim financial  statements be
read in conjunction with the financial statements and the notes thereto included
in the Fund's 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, 2002 has been  derived from the December 31,
2002 audited  financial  statements but does not include all of the  information
and footnotes required by accounting principles generally accepted in the United
States  of  America  for  complete  financial  statements  as  permitted  by the
instructions to Form 10-Q and Article 10 of Regulation S-X.

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

2    Investment Transactions

The following table summarizes the Fund's  investment  transactions for the nine
months ended September 30, 2003 and September 30, 2002:

                                           Nine Months Ended  Nine Months Ended
Investment Transaction                    September 30, 2003  September 30, 2002
--------------------------------------------------------------------------------
Increases in investment in Belvedere Capital  $ 23,700,000     $106,910,691
Decreases in investment in Belvedere Capital  $125,559,790     $299,548,777
Sales of Partnership Preference Units         $ 56,919,348     $ 35,374,360
Sales of other real estate (1)                $          -     $ 31,588,186
--------------------------------------------------------------------------------

(1)  During  the  nine  months  ended   September  30,  2002,   Belcrest  Realty
     Corporation  (Belcrest  Realty) sold its majority interest in Bel Apartment
     Properties  Trust (Bel  Apartment) to another fund sponsored by Eaton Vance
     Management, for which a loss of $1,532,128 was recognized.

During the nine months ended September 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 $3,352,436
as of September 30, 2003) earns interest of 8% per annum and matures in February
2013 or on demand.

                                       10
<PAGE>

3    Indirect Investment in Portfolio

The following  table  summarizes  the Fund's  investment in  Tax-Managed  Growth
Portfolio (the Portfolio)  through Belvedere Capital Fund Company LLC (Belvedere
Capital),  for the nine months ended  September 30, 2003 and September 30, 2002,
including  allocations  of income and expenses for the  respective  periods then
ended:
<TABLE>
<CAPTION>
                                                                                Nine Months            Nine Months
                                                                                   Ended                 Ended
                                                                             September 30, 2003     September 30, 2002
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                   <C>
Belvedere Capital's interest in the Portfolio (1)                               $9,775,572,306        $ 8,043,904,602
The Fund's investment in Belvedere Capital (2)                                  $2,576,595,863        $ 2,420,307,851
Income allocated to Belvedere Capital from the Portfolio                        $  102,346,416        $    88,799,143
Income allocated to the Fund from Belvedere Capital                             $   27,609,483        $    27,943,914
Expenses allocated to Belvedere Capital from the Portfolio                      $   31,352,609        $    32,657,939
Expenses allocated to the Fund from Belvedere Capital                           $   11,336,229        $    13,849,800
Realized loss allocated to Belvedere Capital from the Portfolio                 $  (10,803,952)       $  (613,666,720)
Realized loss allocated to Fund from Belvedere Capital                          $   (3,244,424)       $  (203,300,931)
Change in unrealized appreciation (depreciation) allocated to Belvedere
Capital from the Portfolio                                                      $  898,392,188        $(2,038,582,077)
Change in unrealized appreciation (depreciation) allocated to Fund from
Belvedere Capital                                                               $  242,362,840        $  (615,592,266)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

(2)  As of  September  30, 2003 and 2002,  the Fund's  investment  in  Belvedere
     Capital  represents  26.4% and 30.1% of  Belvedere  Capital's  net  assets,
     respectively.

A summary of the Portfolio's  Statement of Assets and Liabilities,  at September
30, 2003,  December 31, 2002 and September 30, 2002 and its  operations  for the
nine months ended  September 30, 2003,  for the year ended December 31, 2002 and
for the nine months ended September 30, 2002 follows:
<TABLE>
<CAPTION>
                                              September 30,          December 31,           September 30,
                                                  2003                   2002                    2002
                                              ------------------------------------------------------------
<S>                                          <C>                   <C>                    <C>
Investments, at value                        $15,720,495,292       $ 14,544,149,182       $13,713,440,772
Other assets                                      22,166,551             70,073,039            59,906,476
----------------------------------------------------------------------------------------------------------
Total assets                                 $15,742,661,843       $ 14,614,222,221       $13,773,347,248
Total liabilities                                    241,245             42,700,633            35,785,860
----------------------------------------------------------------------------------------------------------
Net assets                                   $15,742,420,598       $ 14,571,521,588       $13,737,561,388
==========================================================================================================
Dividends and interest                       $   166,725,898       $    213,292,082       $   155,639,717
----------------------------------------------------------------------------------------------------------
Investment adviser fee                       $    49,370,631       $     71,564,552       $    55,373,624
Other expenses                                     1,730,334              2,577,489             1,956,361
----------------------------------------------------------------------------------------------------------
Total expenses                               $    51,100,965       $     74,142,041       $    57,329,985
----------------------------------------------------------------------------------------------------------
Net investment income                        $   115,624,933       $    139,150,041       $    98,309,732
Net realized losses                              (17,942,587)          (459,996,840)         (503,906,340)
Net change in unrealized
 appreciation (depreciation)                   1,449,036,078         (3,312,547,564)       (4,125,048,140)
----------------------------------------------------------------------------------------------------------
Net increase (decrease) in
 net assets from operations                 $  1,546,718,424       $ (3,633,394,363)      $(4,530,644,748)
----------------------------------------------------------------------------------------------------------
</TABLE>

                                       11
<PAGE>

4    Cancelable Interest Rate Swap Agreements

Belcrest  Capital has entered into  cancelable  interest rate swap agreements 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. As of September
30, 2003 and  December 31, 2002,  Belcrest  Capital has entered into  cancelable
interest rate swap  agreements  with Merrill Lynch  Capital  Services,  Inc., as
listed below.
<TABLE>
<CAPTION>
  Notional                                     Initial                           Unrealized            Unrealized
   Amount                                      Optional          Final            Depreciation          Depreciation
   (000's        Fixed        Floating       Termination      Termination      at September 30,      at December 31,
  omitted)        Rate          Rate             Date             Date               2003                  2002
----------------------------------------------------------------------------------------------------------------------
<S>              <C>        <C>                  <C>             <C>             <C>                   <C>
  $68,750        6.225%     LIBOR + 0.45%        11/03           11/05           $    448,795          $ 2,631,954
   24,528        6.295%     LIBOR + 0.45%        05/03           11/05                   -    *            524,357
   41,368        6.310%     LIBOR + 0.45%        02/03           11/05                   -    *            552,915
    9,030        6.505%     LIBOR + 0.45%        03/03           11/05                   -    *             72,358
   21,996        6.497%     LIBOR + 0.45%        04/03           11/05                   -    *            306,283
   20,018        6.439%     LIBOR + 0.45%        11/03           11/05                139,425              806,266
  111,000        6.4068%    LIBOR + 0.45%        02/04           11/05              2,073,549            5,541,030
   80,000        6.555%     LIBOR + 0.45%        04/04           11/05              2,251,885            4,704,347
   16,468        6.7195%    LIBOR + 0.45%        02/03           11/05                   -    *             73,907
   12,671        6.6176%    LIBOR + 0.45%        11/03           11/05                 91,511              531,221
   15,105        6.5903%    LIBOR + 0.45%        02/04           11/05                292,996              786,970
   26,516        7.308%     LIBOR + 0.45%        11/03           11/05                213,657            1,277,816
   40,193        7.301%     LIBOR + 0.45%        02/04           11/05                884,672            2,427,007
   10,109        7.237%     LIBOR + 0.45%        04/04           11/05                323,803              689,195
  155,000        7.231%     LIBOR + 0.45%        07/04           11/05              7,053,495           12,202,144
   17,674        7.700%     LIBOR + 0.45%        02/04           11/05                416,326            1,148,226
    9,833        7.635%     LIBOR + 0.45%        07/04           11/05                479,879              837,224
   43,000        7.6525%    LIBOR + 0.45%        09/04           11/05              2,439,077            3,931,451
   35,024        7.644%     LIBOR + 0.45%        07/04           11/05              1,711,794            2,986,988
  212,000        7.6224%    LIBOR + 0.45%        09/04           11/05             12,318,778           19,546,084
    1,907        7.58%      LIBOR + 0.45%        04/04           11/05                 64,817              138,784
----------------------------------------------------------------------------------------------------------------------
                                                                                  $31,204,459          $61,716,527
----------------------------------------------------------------------------------------------------------------------
</TABLE>

*    Agreement was terminated on the Initial Optional Termination Date.

On October 1, 2003, new current and forward  interest rate swap  agreements were
entered into to fix the cost of a portion of Belcrest Capital's borrowings under
the Credit  Facility (as defined in Note 5 below)  established on July 15, 2003.
At the same time, all interest rate swap agreements outstanding on September 30,
2003 were  terminated,  resulting in realized losses of  $31,431,345.  The table
below  identifies  the terms of the interest rate swap  agreements  effective on
October 1, 2003.

             Notional                                  Initial
              Amount                                   Optional        Final
Effective     (000's     Fixed        Floating       Termination   Termination
  Date       omitted)    Rate           Rate             Date         Date
---------    --------    ------     -------------    -----------  --------------
  10/03      $ 78,620    5.050%     LIBOR + 0.30%        2/04         6/10
  10/03       128,116    4.865%     LIBOR + 0.30%        7/04         6/10
  10/03       170,000    4.795%     LIBOR + 0.30%        9/04         6/10
  10/03        63,526    4.690%     LIBOR + 0.30%        2/05         6/10
  10/03        55,375    4.665%     LIBOR + 0.30%        3/05         6/10
  10/03        80,965    4.145%     LIBOR + 0.30%        3/10         6/10
  10/03        47,253    4.045%     LIBOR + 0.30%         -           6/10
   6/10         3,870    6.290%     LIBOR + 0.30%         -           7/15

                                       12
<PAGE>

5    Debt

A Credit  Facility - On July 15,  2003,  Belcrest  Capital  refinanced  its then
existing credit facility with Merrill Lynch  International Bank Limited with two
new  credit   arrangements   (collectively,   the  Credit   Facility)   totaling
$860,000,000.  The Credit Facility has a seven-year  maturity and will expire on
June 25, 2010.  Belcrest  Capital's  obligations  under the Credit  Facility are
secured  by a pledge of its  assets,  excluding  the assets of Bel Santa Ana LLC
(Bel Santa Ana), Bel Alliance Properties,  LLC (Bel Alliance) and Casco Property
Trust, LLC (Casco).

The credit arrangement with DrKW Holdings, Inc. is for $722,000,000. This credit
arrangement  accrues interest at a rate of one-month LIBOR plus 0.30% per annum.
As of September 30, 2003,  outstanding  borrowings under this credit arrangement
totaled $722,000,000.

The credit  arrangement with Merrill Lynch Mortgage Capital is for $138,000,000,
and  includes  the ability to issue  letters of credit up to  $10,000,000.  This
credit arrangement  accrues interest at a rate of one-month LIBOR plus 0.38% per
annum.  A  commitment  fee of 0.10% per annum is paid on the  unused  commitment
amount.  Belcrest  Capital pays all fees  associated with issuing the letters of
credit.  As of September  30,  2003,  outstanding  borrowings  under this credit
arrangement totaled $23,650,000 and there were no letters of credit issued.

B Mortgages - Rental  property  held by real estate  joint  ventures is financed
through mortgages that are secured by a rental property or properties,  mortgage
loan deposit accounts,  including all subaccounts thereunder,  and an assignment
of certain  leases and rents and are  generally  without  recourse  to the other
assets of Belcrest Capital and Belcrest Realty.

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  mortgage.  At
September 30, 2003, this covenant was not met for certain  mortgage  agreements,
of which the  aggregate  principal  balance at September  30, 2003 totals $241.3
million,  or 45% of the total  mortgages  outstanding.  The mortgage  agreements
provide for a cure period of 30 days after written notification from the lender;
with a further  extension of up to 60 additional  days. As of September 30, 2003
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 lender pursues enforcement and a mutually acceptable
arrangement with the lender cannot be reached, the result could be a foreclosure
on some or all of  those  investment  properties  that  secure  such  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,  based on the  current
valuations  of the  affected  properties.  The  eventual  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.

6    Segment Information

Belcrest  Capital  pursues  its  investment  objective  primarily  by  investing
indirectly  in the  Portfolio  through  Belvedere  Capital.  The  Portfolio is a
diversified  investment company that emphasizes  investments in common stocks of
domestic and foreign growth  companies that are considered to be high in quality
and  attractive  in their  long-term  investment  prospects.  Separate  from its
investment in Belvedere Capital,  Belcrest Capital invests in real estate assets
through its subsidiary  Belcrest  Realty.  Belcrest  Realty invests  directly in
Partnership  Preference  Units and debt and equity  investments  in private real
estate  companies,  and  indirectly  in  investments  in real  property  through
controlled subsidiaries,  Bel Santa Ana, Bel Alliance and Casco. During the nine
months ended September 30, 2002, Belcrest Realty's controlled  subsidiaries also

                                       13
<PAGE>

included Bel  Apartment  (for the period from January 1, 2002 to March 19, 2002)
and Bel Communities Property Trust for the entire period.

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 Belcrest Capital 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
   SEPTEMBER 30, 2003                                  GROWTH PORTFOLIO*         ESTATE           TOTAL
   --------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                 <C>               <C>
    Revenue                                              $   5,417,889       $  39,245,095     $   44,662,984
    Interest expense on mortgages                                    -         (10,442,120)       (10,442,120)
    Interest expense on Credit Facility                              -          (3,005,346)        (3,005,346)
    Interest expense on swap agreements                              -         (11,408,892)       (11,408,892)
    Operating expenses                                        (394,197)        (16,725,721)       (17,119,918)
    Minority interest in net income of
       controlled subsidiaries                                       -            (360,764)          (360,764)
   --------------------------------------------------------------------------------------------------------------
    NET INVESTMENT INCOME (LOSS)                         $   5,023,692       $  (2,697,748)    $    2,325,944
    Net realized gain                                        1,835,118           1,810,778          3,645,896
    Change in unrealized appreciation
      (depreciation)                                        53,492,307           1,735,825         55,228,132
   --------------------------------------------------------------------------------------------------------------
    NET INCREASE IN NET ASSETS FROM
       OPERATIONS OF REPORTABLE SEGMENTS                 $  60,351,117       $     848,855     $   61,199,972
   --------------------------------------------------------------------------------------------------------------


   FOR THE THREE MONTHS ENDED                             TAX MANAGED            REAL
   SEPTEMBER 30, 2002                                  GROWTH PORTFOLIO*         ESTATE           TOTAL
   --------------------------------------------------------------------------------------------------------------
    Revenue                                              $   4,900,991      $   47,018,459     $   51,919,450
    Interest expense on mortgages                                    -         (12,863,705)       (12,863,705)
    Interest expense on Credit Facility                              -          (4,742,299)        (4,742,299)
    Interest expense on swap agreements                              -         (11,680,481)       (11,680,481)
    Operating expenses                                        (342,025)        (19,109,903)       (19,451,928)
    Minority interest in net income of
       controlled subsidiaries                                       -            (535,236)          (535,236)
   --------------------------------------------------------------------------------------------------------------
    NET INVESTMENT INCOME (LOSS)                         $   4,558,966      $   (1,913,165)    $    2,645,801
    Net realized loss                                      (54,420,240)                  -        (54,420,240)
    Change in unrealized appreciation
      (depreciation)                                      (388,020,095)          3,731,392       (384,288,703)
   --------------------------------------------------------------------------------------------------------------
    NET (DECREASE) INCREASE IN NET ASSETS FROM
       OPERATIONS OF REPORTABLE SEGMENTS                 $(437,881,369)     $    1,818,227     $ (436,063,142)
   --------------------------------------------------------------------------------------------------------------


   FOR THE NINE MONTHS ENDED                              TAX MANAGED            REAL
   SEPTEMBER 30, 2003                                  GROWTH PORTFOLIO*         ESTATE           TOTAL
   --------------------------------------------------------------------------------------------------------------
    Revenue                                              $  16,273,254      $  123,040,482     $  139,313,736
    Interest expense on mortgages                                    -         (31,250,849)       (31,250,849)
    Interest expense on Credit Facility                              -          (9,845,817)        (9,845,817)
    Interest expense on swap agreements                              -         (35,910,572)       (35,910,572)
    Operating expenses                                      (1,088,109)        (49,274,603)       (50,362,712)
    Minority interest in net income of
       controlled subsidiaries                                       -          (1,911,727)        (1,911,727)
   --------------------------------------------------------------------------------------------------------------
    NET INVESTMENT INCOME (LOSS)                         $  15,185,145      $   (5,153,086)    $   10,032,059
    Net realized gain (loss)                                (3,244,424)          2,435,758           (808,666)
    Change in unrealized appreciation
      (depreciation)                                       242,362,840          32,073,499        274,436,339
   --------------------------------------------------------------------------------------------------------------
    NET INCREASE IN NET ASSETS FROM
       OPERATIONS OF REPORTABLE SEGMENTS                 $ 254,303,561      $   29,356,171     $  283,659,732
   --------------------------------------------------------------------------------------------------------------

                                       14
<PAGE>

   FOR THE NINE MONTHS ENDED                              TAX MANAGED             REAL
   SEPTEMBER 30, 2002                                  GROWTH PORTFOLIO*         ESTATE           TOTAL
   --------------------------------------------------------------------------------------------------------------
    Revenue                                              $  14,094,114      $  145,111,381     $   159,205,495
    Interest expense on mortgages                                    -         (39,939,765)        (39,939,765)
    Interest expense on Credit Facility                              -         (14,970,975)        (14,970,975)
    Interest expense on swap agreements                              -         (33,650,608)        (33,650,608)
    Operating expenses                                      (1,367,961)        (57,098,975)        (58,466,936)
    Minority interest in net income of
       controlled subsidiaries                                       -          (2,992,585)         (2,992,585)
   --------------------------------------------------------------------------------------------------------------
    NET INVESTMENT INCOME (LOSS)                         $  12,726,153      $   (3,541,527)    $     9,184,626
    Net realized loss                                     (203,300,931)         (1,157,768)       (204,458,699)
    Change in unrealized appreciation
      (depreciation)                                      (615,592,266)        (25,391,467)       (640,983,733)
   --------------------------------------------------------------------------------------------------------------
    NET DECREASE IN NET ASSETS FROM OPERATIONS OF
       REPORTABLE SEGMENTS                               $(806,167,044)     $  (30,090,762)    $ (836,257,806)
   --------------------------------------------------------------------------------------------------------------


                                                     TAX-MANAGED GROWTH            REAL
AT SEPTEMBER 30, 2003                                    PORTFOLIO*               ESTATE          TOTAL
-----------------------------------------------------------------------------------------------------------------
Segment assets                                           $2,576,595,863     $1,168,046,366     $3,744,642,229
Segment liabilities                                           3,530,589      1,320,309,507      1,323,840,096
-----------------------------------------------------------------------------------------------------------------
NET ASSETS OF REPORTABLE SEGMENTS                        $2,573,065,274     $ (152,263,141)    $2,420,802,133
-----------------------------------------------------------------------------------------------------------------


AT DECEMBER 31, 2002
-----------------------------------------------------------------------------------------------------------------
Segment assets                                          $2,496,618,352      $1,232,168,876     $3,728,787,228
Segment liabilities                                          3,952,503       1,418,083,942      1,422,036,445
-----------------------------------------------------------------------------------------------------------------
NET ASSETS OF REPORTABLE SEGMENTS                       $2,492,665,849      $ (185,915,066)    $2,306,750,783
-----------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

<TABLE>
<CAPTION>
                                               Three Months      Three Months     Nine Months        Nine Months
                                                  Ended             Ended            Ended              Ended
                                               September 30,     September 30,   September 30,      September 30,
                                                   2003              2002            2003               2002
                                             -----------------------------------------------------------------------
<S>                                             <C>              <C>             <C>                <C>

Revenue:
  Revenue from reportable segments              $ 44,662,984     $  51,919,450   $139,313,736       $ 159,205,495
  Unallocated revenue                                 33,748               827        139,222              36,146
                                             -----------------------------------------------------------------------
Total revenue                                   $ 44,696,732     $  51,920,277   $139,452,958       $ 159,241,641
                                             -----------------------------------------------------------------------
Net increase (decrease) in net assets
 from operations:
  Net increase (decrease) in net assets
     from operations of reportable segments     $61,199,972      $(436,063,142)  $283,659,732       $(836,257,806)
  Unallocated revenue                                33,748                827        139,222              36,146
  Unallocated expenses **                        (1,016,389)        (1,141,378)    (2,958,680)         (3,750,247)
                                             -----------------------------------------------------------------------
Total net increase (decrease) in net
 assets from operations                         $60,217,331      $(437,203,693)  $280,840,274       $(839,971,907)
                                             -----------------------------------------------------------------------
</TABLE>

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

                                       15
<PAGE>

                                    September 30, 2003        December 31, 2002
                                    ------------------        -----------------
Net assets:
 Net assets of reportable segments    $2,420,802,133           $2,306,750,783
 Unallocated cash                          3,493,352                7,861,074
 Short-term investments                   62,795,058  (1)           2,564,911
 Loan payable-Credit Facility            (40,796,633) (1)         (17,577,286)
 Other liabilities                          (164,938)                (107,950)
                                    ------------------        -----------------
Total net assets                       $2,446,128,972          $2,299,491,532
                                    ------------------        -----------------

(1)  Short-term  investments  represent  temporary  investments  of  cash.  Such
     amounts  may  be  used  to  finance  the  Fund's   equity  in  real  estate
     investments,  to reduce outstanding borrowings under the Credit Facility or
     for the short-term liquidity needs of the Fund.

                                       16
<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  SEPTEMBER 30, 2003 COMPARED TO THE
QUARTER ENDED SEPTEMBER 30, 2002
--------------------------------------------------------------------------------

PERFORMANCE  OF THE  FUND.(1)  The Fund's total return was 2.44% for the quarter
ended  September  30, 2003.  This return  reflects an increase in the Fund's net
asset value per share from $90.66 to $92.87 during the period.  For  comparison,
the  Standard  & Poor's  500 Index (the S&P 500),  an  unmanaged  index of large
capitalization  stocks  commonly used as a benchmark for the U.S. equity market,
had a total return of 2.65% over the same period.  The  performance  of the Fund
exceeded that of Tax-Managed  Growth  Portfolio (the Portfolio) by approximately
0.1% during the period.  Last year,  the Fund had a total return  performance of
-16.18%  for the quarter  ended  September  30,  2002.  This return  reflected a
decrease in the Fund's net asset  value per share from  $93.33 to $78.23  during
the period.  For comparison,  the S&P 500 had a total return of -17.27% over the
same  period.  The  performance  of the Fund  trailed  that of the  Portfolio by
approximately 1.1% during that period.

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

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

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

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

PERFORMANCE OF REAL ESTATE  INVESTMENTS.  The Fund's real estate investments are
held  through  Belcrest  Realty  Corporation  (Belcrest  Realty),  a  controlled
subsidiary  of  the  Fund.  Real  estate  investments  include  a  portfolio  of
income-producing  preferred  equity  interests  in operating  partnerships  (the
Partnership  Preference  Units) that are affiliated with real estate  investment
trusts, interests in real estate joint ventures (the Real Estate Joint Ventures)
that are  majority-owned  by Belcrest Realty and a property that is subject to a
long-term triple net lease (the Net Leased Property) that is wholly-owned by

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

                                       17
<PAGE>

Belcrest  Realty.  During the quarter  ended  September  30,  2003,  real estate
operations continued to be impacted by weak multifamily market fundamentals. The
sale of  Belcrest  Realty's  interest  in Bel  Communities  Property  Trust (Bel
Communities) in October 2002 reduced the scope of its real estate activities for
the quarter ended  September 30, 2003 as compared to the quarter ended September
30, 2002.

Rental income from real estate  operations fell to $27.3 million for the quarter
ended  September 30, 2003 from $33.9 million for the quarter ended September 30,
2002, a decrease of $6.6 million or 19%.  While this  decrease in rental  income
principally  resulted  from  the  sale  of  Belcrest  Realty's  interest  in Bel
Communities  in October 2002,  rental income was also affected by increased rent
concessions  or reduced  apartment  rental rates and lower  occupancy  levels at
properties owned by Belcrest  Realty's  remaining Real Estate Joint Ventures,  a
trend that has continued from 2002.

Property  operating  expenses  decreased to $14.5  million for the quarter ended
September 30, 2003 from $17.0 million for the quarter ended  September 30, 2002,
a  decrease  of $2.5  million or 15%  (property  operating  expenses  are before
certain operating  expenses of Belcrest Realty of approximately $2.2 million for
the quarter  ended  September  30, 2003 and  approximately  $2.1 million for the
quarter  ended  September 30,  2002).  This  decrease in operating  expenses was
principally due to fewer Real Estate Joint Ventures held as a result of the sale
of the Fund's interest in Bel Communities.  The decrease was partially offset by
modest  increases in property  and  maintenance  expenses,  as well as taxes and
insurance expenses of Belcrest Realty's remaining Real Estate Joint Ventures.

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

Because the number of Real Estate  Joint  Ventures  held by Belcrest  Realty was
reduced  during  October  2002,  the  total  estimated  fair  value  of the real
properties  held  through  Belcrest  Realty  was  lower at the end of the  third
quarter of 2003  compared to the third  quarter of 2002.  At September 30, 2003,
the estimated fair value of the real properties held through Belcrest Realty was
$616.5  million  compared to $816.7 million at September 30, 2002, a decrease of
$200.2  million or 25%. The decrease was also due, in part, to modest  decreases
in property values  resulting from declines in near-term  earnings  expectations
and the economic downturn. The Fund saw unrealized depreciation of the estimated
fair  value in its  other  real  estate  investments  (which  includes  Belcrest
Realty's interests in Real Estate Joint Ventures and the Net Leased Property) of
approximately  $6.1 million during the quarter ended September 30, 2003 compared
to approximately  $1.8 million for the quarter ended September 30, 2002. Despite
weak market conditions, declines in asset values for multifamily properties have
generally been modest as declines in capitalization  rates have partially offset
declining income level expectations.

During  the  quarter  ended  September  30,  2003,   Belcrest  Realty  sold  (or
experienced  scheduled  redemptions  of) certain of its  Partnership  Preference
Units,  recognizing gains of $1.8 million on the transactions.  At September 30,
2003,  the  estimated  fair value of the  Fund's  Partnership  Preference  Units
totaled  $519.5  million  compared to $568.8  million at  September  30, 2002, a
decrease of $49.3 million or 9%. This decrease in value was  principally  due to
fewer  Partnership  Preference  Units held at September  30, 2003.  The per unit
value of the  remaining  Partnership  Preference  Units also  declined  slightly
during the quarter.  The Fund saw unrealized  depreciation of the estimated fair
value in its Partnership  Preference Units of approximately  $3.4 million during
the quarter ended September 30, 2003 compared to  appreciation of  approximately
$18.1 million for the quarter ended September 30, 2002.

Dividends  received  from  Partnership  Preference  Units for the quarter  ended
September  30, 2003  totaled  $11.8  million  compared to $13.0  million for the
quarter ended September 30, 2002, a decrease of $1.2 million or 9%.

PERFORMANCE OF INTEREST RATE SWAP  AGREEMENTS.  For the quarter ended  September
30, 2003, interest rate swap agreement values appreciated by approximately $11.3
million,  due to a slight  increase in swap rates and a shortening  of effective
maturities as the Fund's interest rate swap agreements  approached their initial
optional  termination dates. For the quarter ended September 30, 2002, the value
of interest rate swap agreements decreased by approximately $12.5 million due to
a decline in swap rates.

On October 1, 2003, new interest rate swap  agreements  were entered into to fix
the cost of a portion of Fund borrowings  under the Credit Facility  established
on July 15,  2003.  At the same time,  the Fund made  payments of  approximately
$21.4 million to terminate all interest rate swaps  outstanding  as of September
30, 2003, realizing a loss in that amount on the transactions. The realized loss

                                       18
<PAGE>
approximated the value of the positions on the books of the Fund. See "Liquidity
and Capital  Resources"  below for a description of the Credit  Facility and the
Fund's interest rate swap agreements.

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

PERFORMANCE  OF THE FUND. The Fund's total return was 12.54% for the nine months
ended  September  30, 2003.  This return  reflects an increase in the Fund's net
asset  value per share  from  $82.94 to $92.87 and a  distribution  of $0.43 per
share  during the  period.  For  comparison,  the S&P 500 had a total  return of
14.71% over the same period.  The  performance  of the Fund exceeded that of the
Portfolio by  approximately  1.8% during the period.  Last year,  the Fund had a
total  return  performance  of -26.87% for the nine months ended  September  30,
2002.  This return  reflected a decrease in the Fund's net asset value per share
from  $106.98  to  $78.23.  For  comparison,  the S&P 500 had a total  return of
-28.15% over the same period.  The  performance  of the Fund trailed that of the
Portfolio by approximately 2.5% for the nine months ended September 30, 2002.

PERFORMANCE  OF THE  PORTFOLIO.  The total return of the  Portfolio for the nine
months  ended  September  30,  2003 was 10.74%  compared  to the  14.71%  return
achieved by the S&P 500 over the same period.  The total return of the Portfolio
for the nine months ended September 30, 2002 was -24.40%.

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

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

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

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

PERFORMANCE OF REAL ESTATE INVESTMENTS.  Rental income for the nine months ended
September 30, 2003  declined to $83.4  million from $105.7  million for the nine
months ended  September 30, 2002, a decrease of $22.3  million or 21%.  Property
operating  expenses  decreased  to  $43.3  million  for the  nine  months  ended
September  30, 2003 from $50.6  million for the nine months ended  September 30,
2002, a decrease of $7.3 million or 14% (property  operating expenses are before
certain operating  expenses of Belcrest Realty of approximately $6.0 million for
the nine months ended September 30, 2003 and approximately  $6.5 million for the
nine months ended  September  30,  2002).  While  decreases in rental income and
property  operating  expenses  were  principally  due to the  sale  of  Belcrest
Realty's  interest in Bel  Communities  in October  2002 and its interest in Bel
Apartment  Properties Trust in March 2002, weak multifamily market  fundamentals
in most  regions  combined  with  lower  occupancy  levels  and  increased  rent
concessions also impacted results during the period,  as did modest increases in
property  operating  expenses of Belcrest  Realty's  remaining Real Estate Joint
Ventures.

Because the number of Real Estate  Joint  Ventures  held by Belcrest  Realty was
reduced  during  2002,  the  estimated  fair value of the real  properties  held
through  Belcrest  Realty was lower at September  30, 2003 compared to September
30, 2002. At September 30, 2003, the estimated fair value of the real properties
held through  Belcrest  Realty was $616.5 million  compared to $816.7 million at
September  30, 2002, a decrease of $200.2  million or 25%. The decrease was also
due, in part, to modest  decreases in property values resulting from declines in
near-term  earnings  expectations.  The Fund saw unrealized  depreciation of the

                                       19
<PAGE>

estimated fair value in its other real estate investments of approximately $31.0
million  during  the  nine  months  ended   September  30,  2003,   compared  to
approximately  $40.8  million  for the nine months  ended  September  30,  2002.
Declines  in asset  values for  multifamily  properties  during the period  have
generally been modest as decreases in capitalization rates have partially offset
declining income level expectations.

During the nine months ended September 30, 2003 and September 30, 2002, Belcrest
Realty sold (or experienced scheduled redemptions of) certain of its Partnership
Preference   Units,   recognizing  gains  of  $2.4  million  and  $0.4  million,
respectively,  on the  transactions.  At September 30, 2003,  the estimated fair
value of the Fund's Partnership Preference Units totaled $519.5 million compared
to $568.8  million at September 30, 2002, a decrease of $49.3 million or 9%. The
decrease  was  principally  due to fewer  Partnership  Preference  Units held at
September  30,  2003,  offset in part by  increases in the per unit value of the
remaining   Partnership   Preference  Units  held  by  Belcrest   Realty.   This
appreciation  in per unit value  resulted  from  declines in interest  rates and
tighter spreads on real estate securities during the nine months ended September
30, 2003.  The Fund saw unrealized  appreciation  of the estimated fair value in
its Partnership  Preference Units of approximately $32.6 million during the nine
months ended September 30, 2003, compared to approximately $33.1 million for the
nine months ended September 30, 2002.

Dividends  received from Partnership  Preference Units for the nine months ended
September 30, 2003 totaled $39.4 million  compared to $39.3 million for the nine
months ended September 30, 2002, a decrease of $0.1 million or 0.3%.

PERFORMANCE  OF  INTEREST  RATE  SWAP  AGREEMENTS.  For the  nine  months  ended
September  30,  2003,   interest  rate  swap  agreement  values  appreciated  by
approximately  $30.5 million  compared to  depreciation of  approximately  $17.7
million for the nine months ended  September 30, 2002. The  appreciation  during
the first nine months of 2003 is  primarily  due to a  shortening  of  effective
maturities as the Fund's interest rate swap agreements  approached their initial
optional  termination dates. Swap rates did not change  significantly during the
nine months ended September 30, 2003. The depreciation for the nine months ended
September 30, 2002 was caused by declines in swap rates during the period.

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

Effective July 15, 2003, the Fund  refinanced its then existing  credit facility
with Merrill Lynch  International Bank by entering into new credit  arrangements
with DrKW Holdings,  Inc. (DrKW) and Merrill Lynch Mortgage Capital, Inc. (MLMC)
(collectively,  the Credit  Facility) which together total $860.0  million.  The
Credit  Facility  is  secured by a pledge of the Fund's  assets,  excluding  the
assets of Bel Santa Ana LLC, Bel  Alliance  Properties,  LLC and Casco  Property
Trust,  LLC, and has a seven-year  maturity.  The Credit Facility will expire in
June 2010.

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

The Credit  Facility  includes a $722.0  million credit  arrangement  with DrKW.
Borrowings  under  the DrKW  credit  arrangement  accrue  interest  at a rate of
one-month  LIBOR plus 0.30% per annum.  As of September  30,  2003,  outstanding
borrowings under the DrKW credit arrangement totaled $722.0 million.

The Credit Facility also includes a $138.0 million credit arrangement with MLMC,
including up to $10.0 million under letters of credit. Borrowings under the MLMC
credit  arrangement  accrue interest at a rate of one-month LIBOR plus 0.38% per
annum. As of September 30, 2003,  outstanding  borrowings  under the MLMC credit
arrangement  totaled  $23.7  million.  There were no amounts  outstanding  under
letters of credit at  September  30,  2003.  The unused loan  commitment  amount
totaled  approximately  $114.3  million.  A commitment fee of 0.10% per annum is
paid on the unused  commitment  amount.  The Fund pays all fees  associated with
issuing the letters of credit.

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
three-month  LIBOR.  During  the  terms of the  outstanding  interest  rate swap
agreements,  changes in the underlying  values of the agreements are recorded as
unrealized  gains or  losses.  On  October  1,  2003,  new  interest  rate  swap
agreements were entered into to fix the cost of Fund borrowings under the Credit
Facility  established on July 15, 2003. At the same time, all interest rate swap
agreements  outstanding  on September  30, 2003 were  terminated.  Under the new
interest  rate  swap  agreements  the  Fund  makes  periodic   payments  to  the

                                       20
<PAGE>

counterparty  at  predetermined  fixed  rates,  in  exchange  for  floating-rate
payments at a predetermined spread plus one-month LIBOR.

As of September  30, 2003 and September 30, 2002,  the  unrealized  depreciation
related to the interest rate swap agreements was approximately $31.2 million and
$67.6 million, respectively.

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

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

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

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

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

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

                                       21
<PAGE>

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

The Fund's  primary  exposure to interest  rate risk arises from its real estate
investments  that are financed by the Fund with floating rate  borrowings  under
the Fund's Credit Facility and by fixed-rate  secured  mortgage debt obligations
of the Real Estate Joint Ventures and Net Leased Properties.  The interest rates
on borrowings  under the Fund's Credit  Facility are reset at regular  intervals
based on a fixed and predetermined premium to LIBOR for short-term extensions of
credit.  The Fund has entered into  cancelable  interest rate swap agreements to
fix the cost of its  borrowings  under the  Credit  Facility  and to  attempt to
mitigate  the impact of  interest  rate  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  short-term  LIBOR.  In the future,  the Fund may use other  interest  rate
hedging  arrangements  (such  as  caps,  floors  and  collars)  to fix or  limit
borrowing costs. The use of interest rate hedging  arrangements is a specialized
activity that can expose the Fund to significant loss.

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

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

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

<TABLE>
<CAPTION>
                                                                                                                      Estimated
                                        2004-2005        2006        2007-2008     Thereafter          Total          Fair Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>             <C>          <C>              <C>              <C>
Rate sensitive liabilities:
---------------------------------------
Long-term debt:
---------------------------------------
Fixed-rate mortgages                                 $11,486,000                  $526,133,358     $537,619,358      $585,000,000
Average interest rate                                       6.90%                         7.57%            7.55%

---------------------------------------
Variable-rate Credit Facility                                                     $745,650,000     $745,650,000      $745,650,000
Average interest rate                                                                     1.42%            1.42%
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive derivative financial instruments:
---------------------------------------
Pay fixed/receive variable interest
rate swap agreements(1)                                                         $627,725,000     $627,725,000      $         --
Average pay rate(1)                                                                     4.69%            4.69%
Average receive rate(1)                                                                 1.42%            1.42%

(1)  The terms disclosed are those of the interest rate swap agreements  entered
     into that are  effective  on  October  1,  2003.  See Note 4 to the  Fund's
     unaudited condensed  consolidated  financial statements in Item 1 above for
     the terms of the interest  rate swap  agreements in effect on September 30,
     2003 and  terminated  on October 1, 2003, as well as the loss realized as a
     result of such termination.

------------------------------------------------------------------------------------------------------------------------------------

                                       22

<PAGE>

                                                                                                                      Estimated
                                        2004-2005        2006        2007-2008     Thereafter          Total          Fair Value
------------------------------------------------------------------------------------------------------------------------------------
Rate sensitive investments:
---------------------------------------
Fixed-rate Partnership Preference
Units:
---------------------------------------
Bradley Operating Limited
Partnership, 8.875% Series B
Cumulative Redeemable Perpetual
Preferred Units, Callable 2/23/04,
Current Yield: 8.83%                                                            $ 23,799,036     $ 23,799,036      $ 24,542,159

Camden Operating, L.P., 8.50% Series
B Cumulative Redeemable Perpetual
Preferred Units, Callable 2/23/04,
Current Yield: 8.39%                                                            $  4,076,090     $  4,076,090      $  4,304,400

Colonial Realty Limited Partnership,
8.875% Series B Cumulative Redeemable
Perpetual Preferred Units, Callable
2/23/04, Current Yield: 8.76%                                                   $ 50,744,840     $ 50,744,840      $ 52,148,900

Essex Portfolio, L.P., 9.125% Series
C Cumulative Redeemable Preferred
Unites, Callable 11/24/03, Current
Yield: 8.98%                                                                    $ 21,000,000     $ 21,000,000      $ 21,344,526

Liberty Property L.P., 9.25% Series B
Cumulative Redeemable Preferred
Units, Callable 7/28/04, Current
Yield: 8.99%                                                                    $ 64,025,574     $ 64,025,574      $ 65,971,800

MHC Operating Limited Partnership, 9%
Series D Cumulative Redeemable
Perpetual Preference Units, Callable
9/29/04, Current Yield: 9.01%                                                   $ 75,000,000     $ 75,000,000      $ 74,880,000

National Golf Operating Partnership,
L.P., 9.30% Series A Cumulative
Redeemable Preferred Units, Callable
2/6/03, Current Yield: 9.80%                                                    $ 27,877,518     $ 27,877,518      $ 29,963,064

National Golf Operating Partnership,
L.P., 9.30% Series B Cumulative
Redeemable Preferred Units, Callable
2/6/03, Current Yield: 9.80%                                                    $ 29,833,200     $ 29,833,200      $ 28,476,000

PSA Institutional Partners, L.P.,
9.50% Series N Cumulative Redeemable
Perpetual Preferred Units, Callable
3/17/05, Current Yield: 9.09%                                                   $ 55,375,000     $ 55,375,000      $ 57,855,800

                                       23
<PAGE>
                                                                                                                      Estimated
                                        2004-2005        2006        2007-2008     Thereafter          Total          Fair Value
------------------------------------------------------------------------------------------------------------------------------------

Price Development Company, L.P.,
8.95% Series B Cumulative Redeemable
Preferred Partnership Units, Callable
7/28/04, Current Yield: 9.25%                                                   $ 64,089,925     $ 64,089,925      $ 62,263,500

Regency Centers, L.P., 9.125% Series
D Cumulative Redeemable Preferred
Units, Callable 9/29/04, Current
Yield: 8.86%                                                                    $ 35,000,000     $ 35,000,000      $ 36,029,000

Urban Shopping Centers, L.P., 9.45%
Series D Cumulative Redeemable
Perpetual Preferred Units, Callable                                             $ 60,000,000     $ 60,000,000      $ 61,745,760
10/01/04, Current Yield: 9.18%
---------------------------------------
Note Receivable:
---------------------------------------
Fixed-rate note receivable, 8%
                                                                                $  3,352,436     $  3,352,436      $  3,352,436
</TABLE>

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

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

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

PART II. OTHER INFORMATION

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

Although in the  ordinary  course of  business,  the Fund,  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 AND USE OF PROCEEDS.
---------------------------------------------------

None.

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

None.

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

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

                                       24
<PAGE>

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

None.

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

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

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

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

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

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

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

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

(b)  Reports on Form 8-K:

     None.

                                       25
<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 November 10, 2003.


                                     BELCREST CAPITAL FUND LLC



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

                                       26
<PAGE>

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

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

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

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

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

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

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

                                       27