BELCREST CAPITAL FUND LLC - FORM 10-K - March 7, 2012

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (THE ACT) For the Fiscal Year Ending December 31, 2011

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ACT For the transition period from _________ to ________

Commission file number 000-30509

Belcrest Capital Fund LLC (the Fund)

(Exact Name of Registrant as Specified in Its Charter)

Massachusetts		04-3453080
(State of Organization)		(I.R.S. Employer Identification No.)
Two International Place
Boston, Massachusetts 02110		617-482-8260
(Address and Zip Code of Principal Executive Offices)		(Registrant’s telephone number, including area code)

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

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

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

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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

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

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

Aggregate market value of the Shares held by non-affiliates of Registrant, based on the closing net asset value on June 30, 2011 was $681,480,492. Calculation of holdings by non-affiliates is based upon the assumption, for these purposes only, that the Registrant’s manager, its executive officers and directors and persons holding 10% or more of the Registrant’s Shares are affiliates.

Incorporations by Reference: None.

The Exhibit Index is located on page 79.

 

 

Belcrest Capital Fund LLC
Index to Form 10-K

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

Item						Page
				Income and Capital Gain Distributions			15
				Special Distributions			15
6				Selected Financial Data			16
				Table of Selected Financial Data			16
7				Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)			17
				Results of Operations			17
				MD&A for the Year Ending December 31, 2011 Compared to the Year Ending December 31, 2010			17
				Performance of the Fund			17
				Performance of the Portfolio			18
				Performance of Real Estate Investments			18
				MD&A for the Year Ending December 31, 2010 Compared to the Year Ending December 31, 2009			19
				Performance of the Fund			19
				Performance of the Portfolio			19
				Performance of Real Estate Investments			19
				Liquidity and Capital Resources			20
				Outstanding Borrowings			20
				Liquidity			20
				Off-Balance Sheet Arrangements			21
				The Fund’s Contractual Obligations			21
				Critical Accounting Estimates			21
7A				Quantitative and Qualitative Disclosures About Market Risk			23
				Quantitative Information About Market Risk			23
				Interest Rate Risk			23
				Qualitative Information About Market Risk			24
				Risks Associated with Equity Investing			24
				Risks of Investing in Foreign Securities			25
				Risks of Certain Investment Techniques			25
				Risks of Real Estate Investments			25
				Risks of Interest Rate Swap Agreements			27
				Risks of Leverage			28
8				Financial Statements and Supplementary Data			29
9				Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			29
9A				Controls and Procedures			29
				Fund Governance			29
				Disclosure Controls and Procedures			29
				Internal Control Over Financial Reporting			29
9B				Other Information			32

Item						Page
				PART III
10				Directors, Executive Officers and Corporate Governance			32
				Management			32
				Compliance with Section 16(a) of the Act			33
				Code of Ethics			33
11				Executive Compensation			33
12				Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters			33
				Security Ownership of Certain Beneficial Owners			33
				Security Ownership of Management			33
				Changes in Control			33
13				Certain Relationships and Related Transactions, and Director Independence			33
				The Fund’s Investment Advisory and Administrative Fee			34
				Belcrest Realty’s Management Fee			34
				The Portfolio’s Investment Advisory Fee			34
				Servicing Fees Paid by the Fund			35
				Servicing Fees Paid by Belvedere Company			35
				Certain Real Estate Investment Transactions			35
14				Principal Accounting Fees and Services			35
				PART IV
15				Exhibits and Financial Statement Schedules			35
APPENDIX A							36
FINANCIAL STATEMENTS							37
SIGNATURES							78
EXHIBIT INDEX							79

PART I

Item 1. Business.

Fund Overview. Belcrest Capital Fund LLC (the Fund) is a private investment company organized by Eaton Vance Management (Eaton Vance) to provide diversification and tax-sensitive investment management to investors holding large and concentrated positions in equity securities of selected public companies. The Fund’s investment objective is to achieve long-term, after-tax returns for persons who have invested in the Fund (Shareholders). The Fund, a Massachusetts limited liability company, commenced its investment operations on November 24, 1998. Limited liability company interests of the Fund (Shares) were issued to Shareholders at seven closings during 1998 and 1999. At each Fund closing, the Fund accepted contributions of stock from investors in exchange for Shares of the Fund. The Fund discontinued offering Shares on October 22, 1999 and, while the Fund is not prohibited from doing so, no future offering is anticipated. As of December 31, 2011, the Fund had net assets of approximately $633.0 million.

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

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

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

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

Fund Management. The manager of the Fund is Eaton Vance, a Massachusetts business trust registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act). Eaton Vance and its subsidiary, Boston Management and Research (Boston Management), provide management and advisory services to the Fund, its real estate subsidiary and the investment portfolio in which the Fund invests. Boston Management is also registered as an investment adviser under the Advisers Act. Eaton Vance and Boston Management provide advisory, administration and/or management services to over 150 investment companies, as well as separate accounts managed for individual and institutional investors. As of December 31, 2011, Eaton Vance and its affiliates

managed over $184.5 billion on behalf of clients. The fees payable to the Eaton Vance organization, as well as other fees payable by the Fund, are described in Item 13. The Eaton Vance organization is subject to certain conflicts of interest in providing services to the Fund, its subsidiaries and the investment portfolio in which the Fund invests. See “The Eaton Vance Organization — Conflicts of Interest” below.

The Fund’s Offering. Shares of the Fund were privately offered and sold only to “accredited investors” as defined in Rule 501(a) under the Securities Act of 1933, as amended (the Securities Act), who were “qualified purchasers” (as defined in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended (the 1940 Act)). The offering was conducted by Eaton Vance Distributors, Inc. (EV Distributors), an affiliate of Eaton Vance, as placement agent and by certain subagents appointed by EV Distributors. The Shares were offered and sold in reliance upon an exemption from registration provided by Rule 506 under the Securities Act. The Fund issued Shares to Shareholders at closings taking place on November 24, 1998, February 23, 1999, April 29, 1999, July 28, 1999, September 7, 1999, September 29, 1999 and October 22, 1999. At the seven closings, an aggregate of 33,519,482 Shares were issued in exchange for Shareholder contributions totaling approximately $3.6 billion.

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

The Fund’s Investment in Belvedere Capital Fund Company LLC and Tax-Managed Growth Portfolio. At each Fund closing, all of the securities accepted for contribution to the Fund were contributed by the Fund to Belvedere Capital Fund Company LLC (Belvedere Company), a Massachusetts limited liability company, in exchange for shares of Belvedere Company. Belvedere Company, in turn, immediately thereafter contributed the securities received from the Fund to Tax-Managed Growth Portfolio (the Portfolio) in exchange for an interest in the Portfolio. The Portfolio is a diversified, open-end management investment company registered under the 1940 Act with net assets of approximately $8.1 billion as of December 31, 2011. As of December 31, 2011, the Fund’s investment in the Portfolio through Belvedere Company had a value of approximately $618.0 million (equal to approximately 86.7% of the Fund’s total assets on a consolidated GAAP basis).

Belvedere Company. Belvedere Company was organized in 1997 by Eaton Vance to offer tax-free diversification and tax-sensitive investment management to certain qualified investors who contributed diversified portfolios of equity securities. As of December 31, 2011, the investment assets of Belvedere Company consisted exclusively of an interest in the Portfolio with a value of approximately $5.8 billion. As of such date, the Fund owned approximately 10.7% of Belvedere Company’s outstanding shares. As of December 31, 2011, the other investors in Belvedere Company included ten other investment funds sponsored by the Eaton Vance organization (investment fund investors), as well as qualified individual investors who acquired shares of Belvedere Company in exchange for portfolios of acceptable securities (non-investment fund investors).

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

Belvedere Company provides a vehicle through which investment fund and non-investment fund investors contributing a “diversified basket of securities” can acquire an indirect interest in the Portfolio. A “diversified basket of securities” means a group of securities that is diversified such that not more than 25% of the value of the securities are investments in the securities of any one issuer and not more than 50% of the value of the securities are investments in the securities of five or fewer issuers. The securities contributed to Belvedere Company at each Fund closing constituted a diversified basket of securities. Because the Fund is required to hold a percentage of its investments in non-Portfolio assets in order to meet certain tax requirements (see “Structure of the Fund” above and “The Fund’s Real Estate Investments” below), it does not satisfy the conditions of the 1940 Act for investing directly in the Portfolio.

The Portfolio. The Portfolio was organized in 1995 by Eaton Vance as the successor to the investment operations of Eaton Vance Tax-Managed Growth Fund 1.0 (Tax-Managed Growth 1.0), a mutual fund established in 1966 by Eaton Vance and managed from inception for long-term, after-tax returns. As of December 31, 2011, investors in the Portfolio included five investors in addition to Belvedere Company and Tax-Managed Growth 1.0, each of which acquired or is acquiring on a continuous basis interests in the Portfolio with cash. All investors in the Portfolio are sponsored by or affiliated with Eaton Vance. As of December 31, 2011, Belvedere Company owned approximately 71.4% of the Portfolio’s net assets.

The Fund invests in the Portfolio (on an indirect basis through Belvedere Company) because it is a well-established investment portfolio that has an investment objective and policies that are compatible to those of the Fund. Investing in the Portfolio enables the Fund to participate in a substantially larger and more diversified investment portfolio than it could achieve by managing the contributed securities directly. The audited financial statements of the Portfolio for the year ending December 31, 2011 are included in Item 8 of this Annual Report on Form 10-K. The Portfolio’s audited financial statements include information about the assets and liabilities of the Portfolio, including Portfolio income and expenses. For a discussion of the Portfolio’s performance for the year ending December 31, 2011, see “Performance of the Portfolio” in Item 7(a). For a description of the investment advisory fee payable by the Portfolio, see “The Portfolio’s Investment Advisory Fee” in Item 13.

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

Although the Portfolio may, in addition to investing in common stocks, invest in investment-grade preferred stocks and debt securities, purchases of such securities are normally limited to securities convertible into common stocks and temporary investments in short-term notes and government obligations. During periods in which the investment adviser to the Portfolio believes that returns on common stock investments may be unfavorable, the Portfolio may invest up to 100% of its assets in cash and cash equivalents, including such investments held through the EV money market fund. The Portfolio’s holdings represent a number of different industries. Not more than 25% of the Portfolio’s assets may be invested in the securities of issuers having their principal business activity in the same industry, determined as of the time of acquisition of any such securities.

The Portfolio’s Tax-Sensitive Management Strategies. In its operations, the Portfolio seeks to achieve long-term, after-tax returns in part by minimizing the taxes incurred by investors in the Portfolio in connection with the Portfolio’s investment income and realized capital gains. Taxes on investment income are minimized by investing primarily in lower-yielding securities and stocks that pay dividends that qualify for favorable federal tax treatment. Taxes on realized capital gains are minimized by minimizing the sale of securities’ holdings with large accumulated capital gains. The Portfolio generally seeks to avoid net realized short-term capital gains.

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

To reduce its exposure to adverse price movements in individual securities or groups of securities holdings with large accumulated gains, the Portfolio may use various investment techniques, including, but not limited to, the purchase or sale of futures contracts on stocks and stock indexes and options thereon, the purchase of put options and sale of call options on securities held, covered short sales (on individual securities held or an index or basket securities whose constituents are held in whole or in part), equity collars,

equity swap agreements, forward sales of stocks, and the purchase and sale of forward currency exchange contracts and currency options. By using these techniques rather than selling such securities, the Portfolio can, within certain limits, reduce its exposure to price declines in the securities without realizing substantial capital gains under current tax law.

The Portfolio’s ability to utilize covered short sales, certain equity swaps, forward sales, futures contracts and certain equity collar strategies as a tax-efficient management technique with respect to holdings of appreciated securities is limited to circumstances in which the hedging transaction is closed out within 30 days after the end of the Portfolio’s taxable year in which the hedging transaction was initiated and the underlying appreciated securities position is held unhedged for at least the next 60 days after such hedging transaction is closed. In addition, dividends received on stock for which the Portfolio is obligated to make related payments (pursuant to a short sale or otherwise) with respect to positions in substantially similar or related property are subject to federal income tax at ordinary rates and do not qualify for favorable tax treatment. Also, the holding periods required to receive tax-advantaged treatment of qualified dividends on a stock are suspended whenever the Portfolio has an option (other than a qualified covered call option not in the money when written) or contractual obligation to sell or an open short sale of substantially identical stock, is the grantor of an option (other than a qualified covered call option not in the money when written) to buy substantially identical stock or has diminished risk of loss in such stock by holding positions with respect to substantially similar or related property. The use of these investment techniques may require the Portfolio to commit or make available cash and, therefore, may not be available at such times as the Portfolio has limited holdings of cash. The Portfolio did not employ any of the techniques described above on securities holdings during the year ending December 31, 2011. See “Risks of Certain Investment Techniques” in Item 7A(b).

The Fund’s Real Estate Investments. Separate from its investment in the Portfolio through Belvedere Company, the Fund invests in certain real estate investments through Belcrest Realty Corporation (Belcrest Realty). The ownership structure of Belcrest Realty is described below under “Organization of Belcrest Realty.” As referred to above under “Fund Overview — Structure of the Fund”, the Fund invests in real estate investments to satisfy certain requirements of the Code for contributions of appreciated stocks to the Fund by Shareholders to be nontaxable. As of December 31, 2011, the real estate investments of Belcrest Realty totaled approximately $93.4 million and represented 13.1% of the Fund’s total assets. The Fund acquires its real estate investments with borrowed funds, as described below under “Fund Borrowings”. The Fund seeks a return on its real estate investments over the long term that exceeds the cost of the borrowings incurred to acquire such investments. For a description of material real estate investment transactions during the year ending December 31, 2011, see “Performance of Real Estate Investments” in Item 7(a).

At December 31, 2011, Belcrest Realty held investments in: one real estate joint venture (Real Estate Joint Venture), Lafayette Real Estate LLC (Lafayette), in which Belcrest Realty owns a majority economic interest; a tenancy-in-common interest in real property (Co-owned Property), Bel Stamford I LLC (Bel Stamford I ); and preferred equity interests in real estate operating partnerships (Partnership Preference Units) affiliated with publicly traded real estate investment trusts (REITs). Certain of the Partnership Preference Units are held indirectly through Bel Holdings LLC (Bel Holdings). Bel Holdings is a Delaware limited liability company formed in 2003 and treated as a partnership for tax purposes. At December 31, 2011, Bel Holdings’ sole investment was Partnership Preference Units issued by Vornado Realty L.P. At December 31, 2011, Belcrest Realty owned 15% of Bel Holdings’ outstanding units. Information included herein about Belcrest Realty’s Partnership Preference Units includes the Partnership Preference Units held directly through Belcrest Realty and indirectly through Bel Holdings. As of December 31, 2011, approximately 81.0% of the real estate investments of the Fund consisted of its investments in Lafayette, approximately 2.1% was the investment in Co-owned Property and approximately 16.9% was investments in Partnership Preference Units.

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

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

Real Estate Joint Venture Investments. At December 31, 2011, Belcrest Realty owned a majority economic interest in the Real Estate Joint Venture, Lafayette.

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

At December 31, 2011, the assets of Lafayette consisted of 12 office properties located in one state (Virginia). At December 31, 2011, the average occupancy rate of the properties owned by Lafayette was approximately 94%. The properties held by Lafayette were acquired from or in conjunction with the Operating Partner. Distributable cash flows from operations of Lafayette are allocated per the Real Estate Joint Venture agreement in a manner that provides Belcrest Realty: 1) a priority with respect to a fixed annual preferred return; and 2) participation on a pro rata or reduced basis in distributable cash flows in excess of the annual preferred return of Belcrest Realty and the subordinated preferred return of the Operating Partner. Distributable cash flows from dispositions of real properties or liquidation of Lafayette are allocated on a pro rated basis up until the return of Belcrest Realty and the Operating Partner’s contributed capital with any excess allocated in a manner similar to that of cash flows from operations.

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

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

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

The sale to Belcrest Realty by Duke of its interest in Lafayette would not affect the REIT qualification of Lafayette. If Belcrest Realty were to dispose of its interest in Lafayette pursuant to a liquidation agreement or otherwise, it may acquire an interest in a different real estate investment to replace the investment sold.

Co-owned Property. At December 31, 2011, Belcrest Realty owned Co-owned Property through its subsidiary, Bel Stamford I . Bel Stamford I owns a 10% tenancy-in-common interest in an office property located in Connecticut. The other investors in the Co-owned Property are real estate investment affiliates of other investment funds advised by Boston Management. The Co-owned Property is financed through a fixed-rate mortgage note secured by the real property held by Bel Stamford I that is without recourse to Fund Shareholders and generally without recourse to Belcrest Realty and the Fund as described under “Risks of Real Estate Investments” in Item 7A(b). Belcrest Realty’s equity in the Co-owned Property was acquired using the proceeds of Fund borrowings.

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

Partnership Preference Units. At December 31, 2011, Belcrest Realty held investments in Partnership Preference Units. The assets of the partnerships that issued the Partnership Preference Units owned by Belcrest Realty consisted primarily of direct or indirect ownership interests in real properties, including office and industrial properties. The Partnership Preference Units owned by Belcrest Realty as of December 31, 2011 are listed in Item 7A(a) and in the consolidated portfolio of investments included in the Fund’s consolidated financial statements in Section 8 of this Annual Report on Form 10-K. Eaton Vance is not involved in the management

or operation of the real estate operating partnerships that issued the Partnership Preference Units owned by Belcrest Realty.

The Partnership Preference Units held by Belcrest Realty were issued by partnerships that are not publicly traded partnerships within the meaning of Code Section 7704(b). The Partnership Preference Units are perpetual life instruments (subject to call provisions) and are not, by their terms, readily convertible or exchangeable into cash or securities of an affiliated public company. The Partnership Preference Units are not rated by a nationally recognized rating agency, and such interests may not be as high in quality as issues that are rated investment grade.

Each issue of Partnership Preference Units held by Belcrest Realty normally pays regular quarterly distributions at fixed rates from the net profits or gross income of the issuing partnership, with preferential rights over common and other subordinated units. None of the Partnership Preference Units is or will be registered under the Securities Act and each issue is thus subject to restrictions on transfer.

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

Belcrest Realty also has issued preferred shares to satisfy certain provisions of the Code, which require that a REIT be beneficially owned in the aggregate by 100 or more persons. The preferred shares of Belcrest Realty are owned by not less than 100 charitable organizations that received the preferred shares as gifts. Each charitable organization that received a preferred share was an “accredited investor” (as defined in the Securities Act) with total assets in excess of $5 million at the time the organization received the preferred shares. Eaton Vance selected the charitable organizations from the charities for which it has matched employee contributions and/or based on suggestions from its employees. As of December 31, 2011, the total value of the preferred shares outstanding of Belcrest Realty was $210,000. Dividends on preferred shares are cumulative and payable annually at a dividend rate of 8%. The dividends paid on preferred shares have priority over payments on common shares. For the year ending December 31, 2011, Belcrest Realty paid distributions to preferred shareholders in the amount of $16,800.

Fund Borrowings. The Fund has entered into a credit arrangement with Bank of America (the Credit Facility) to purchase its interests in real estate investments, to pay selling commissions and organizational expenses, and to provide for the liquidity needs of the Fund.

As of December 31, 2011, the lender’s total commitment under the Credit Facility was $135.0 million. The principal amount outstanding under the Credit Facility was $78.0 million as of December 31, 2011. The unused commitment amount totaled $57.0 million as of December 31, 2011.

The Credit Facility may be terminated by the lender on or after March 25, 2013 provided 180 days’ notice is given. The Fund may terminate the Credit Facility upon 30 days’ notice. The Fund pays a rate of interest equal to the three-month London Interbank Offered Rate (LIBOR) plus 1.25% per annum on outstanding borrowings under the Credit Facility. A commitment fee is paid on the unused commitment amount equal to 0.25% per annum. The Fund will incur an additional fee if outstanding borrowings fall below certain levels.

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

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

Interest Rate Swap Agreement. The Fund has entered into an interest rate swap agreement with Merrill Lynch Capital Services, Inc. (MLCS) to fix the cost of a portion of its borrowings under the Credit Facility. Pursuant to the agreement, the Fund makes periodic payments to the counterparty at a predetermined fixed rate in exchange for floating rate payments that fluctuate with the one-month LIBOR. The interest rate swap agreement currently in effect extends until July 10, 2015, and provides for the Fund to make payments to MLCS at a fixed rate of 6.29%. The variable floating rate payment from MLCS was 0.60% on December 31, 2011. See Note 10 to

the Fund’s consolidated financial statements included in this Annual Report on Form 10-K.

The Eaton Vance Organization. The Eaton Vance organization sponsors the Fund. Eaton Vance serves as the Fund’s manager. Boston Management serves as the Fund’s investment adviser and as manager of Belcrest Realty. EV Distributors served as the Fund’s placement agent. The Fund’s business affairs are conducted by Eaton Vance (as its manager) and its investment operations are conducted by Boston Management (as its investment adviser). The Fund’s officers are employees of Eaton Vance. Eaton Vance, Boston Management and EV Distributors are wholly owned subsidiaries of Eaton Vance Corp., a publicly traded holding company that, through its affiliates and subsidiaries, engages primarily in investment management, administration and marketing activities.

As described above, the Fund pursues its objective primarily by investing in Belvedere Company. Belvedere Company invests exclusively in the Portfolio. Boston Management acts as investment adviser of the Portfolio and manager of Belvedere Company. EV Distributors acts as placement agent for Belvedere Company and the Portfolio. As of December 31, 2011, the assets of the Fund represented approximately 0.39% of assets under management by Eaton Vance and its affiliates. The offices of the Fund, Eaton Vance, Boston Management and EV Distributors are located at Two International Place, Boston, Massachusetts 02110.

Conflicts of Interest. Boston Management and other Eaton Vance affiliates are subject to certain conflicts of interest in their dealings with the Fund, Belcrest Realty, Belvedere Company and the Portfolio, as well as with other investment companies advised by Boston Management that invest in the Portfolio. Eaton Vance and Boston Management have determined and will determine which of their sponsored investment companies invest in the Portfolio, the securities each of them contributes to the Portfolio when making an investment therein and, subject to the rights of redeeming investors in the Portfolio, the securities and/or cash received in redemptions from the Portfolio. Such determinations are inherently subject to potential conflicts of interest. In addition, Portfolio management activities with respect to securities contributed to the Portfolio may have different tax consequences for the contributing investor in the Portfolio than for other investors in the Portfolio. Gains and losses on sales of other securities may also be allocated disproportionately. Boston Management manages the Portfolio in pursuit of long-term, after-tax returns for all investors in the Portfolio and, with respect to contributed securities, takes into account the tax position of the contributing investor in the Portfolio. Whenever conflicts of interest arise, Eaton Vance, Boston Management and other Eaton Vance affiliates will endeavor to exercise their discretion in a manner that they believe is equitable to all interested persons.

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

Item 1A. Risk Factors.

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

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

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

Item 3. Legal Proceedings.

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

Item 4. Removed and Reserved.

PART II

Item 5. Determining Net Asset Value, Market for Fund Shares, Related Shareholder Matters and Issuer Purchases of Equity Securities.

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

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

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

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

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

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

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

Redemption of Fund Shares. Shares of the Fund may generally be redeemed on any business day. The redemption price will be based on the net asset value next computed after receipt by the Fund of a written redemption request from a Shareholder, including a proper form of signature guarantee and such other documentation the Fund and the transfer agent may then require. The Fund may, at its discretion, accept redemption requests submitted by facsimile transmission, although an original letter of instruction and supporting documents must be delivered before proceeds are delivered. Once accepted, a redemption request may not be revoked without the consent of the Fund. Settlement of redemptions will ordinarily occur within five business days of receipt by the Fund’s transfer agent of the original redemption request in good order, and (if applicable) promptly following registration and processing of stock certificates by the transfer agent of the issuer of the distributed securities. The right to redeem is available to all Shareholders and all outstanding Fund Shares generally are eligible for redemption. During each month in the quarter ending December 31, 2011, the total number of Shares redeemed and the average price paid per Share were as follows:

Month Ending		Total No. of Shares Redeemed(1)		Average Price Paid Per Share
October		16,390.665		$96.40
November		19,022.889		$100.61
December		36,470.921		$102.29
Total		71,884.475		$101.03

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

Under most circumstances, a redemption from the Fund that is settled with securities as described herein will not result in the recognition of capital gains by the Fund or by the redeeming Shareholder. The redeeming Shareholder will generally recognize capital gains upon the sale of the securities received through redemption. If a redeeming Shareholder receives cash in addition to securities to settle a redemption, the amount of cash received will be taxable to the Shareholder to the extent it exceeds such Shareholder’s tax basis in Fund Shares. Shareholders should consult their tax advisors about the tax consequences of redeeming Fund Shares.

Securities contributed by a Shareholder may be distributed to other Shareholders in the Fund (or to other investors in Belvedere Company or the Portfolio) after a holding period of at least seven years and, if so distributed, would not be available to meet subsequent redemption requests made by the contributing Shareholder.

If requested by a redeeming Shareholder making a redemption of at least $1 million, the Fund will generally distribute to the redeeming Shareholder a diversified basket of securities representing a range of industry groups that is drawn from the Portfolio. The selection of individual securities will be made by Boston Management in its sole discretion. No interests in Subsidiary Real Estate Investments, Partnership Preference Units or other real property investments will be distributed to meet a redemption request, and “restricted securities” will be distributed only to the Shareholder who contributed such securities or such Shareholder’s successor in interest. The Fund will not provide a redeeming Shareholder with a diversified basket of securities if such a distribution is expected to cause, directly or indirectly, any other Shareholder, any investor in Belvedere Company or any investor in the Portfolio to realize taxable gain.

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

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

The right of a Shareholder to redeem can be suspended and the payment of the redemption price may be deferred while there is an outstanding event of default under the Credit Facility (see Item 7A(b)), when the NYSE is closed, during periods when trading on the NYSE is restricted or during any emergency as determined by the SEC, at any time when it is impracticable for the Portfolio or the Fund to dispose of or value its assets, or during any other period permitted by order of the SEC for the protection of investors.

A capital account for each Shareholder is maintained on the books of the Fund. The account reflects the value of such Shareholder’s interest in the Fund, which is adjusted for profits, liabilities and distributions allocable to such account in accordance with Article 6 of the Fund’s LLC Agreement.

Determining Net Asset Value. Boston Management, as investment adviser, is responsible for determining the value of the Fund’s assets. The Fund’s custodian, State Street Bank and Trust Company, calculates the value of the assets of the Fund, Belvedere Company, the Portfolio and the EV money market fund each day that the NYSE is open for trading, as of the close of regular trading on the NYSE. The Fund’s net asset value per Share is calculated by dividing the value of the Fund’s total assets, less its liabilities, by the number of Shares outstanding.

The Fund’s net assets are valued in accordance with the Fund’s valuation procedures and reflect the value of its directly held assets, including its interests in the EV money market fund, if any, and liabilities, as well as the net asset value of the Fund’s investment in the Portfolio held through Belvedere Company and in real estate investments held through Belcrest Realty. The trustees of the Portfolio have established procedures for the valuation of the Portfolio’s assets under normal market conditions. Pursuant to these procedures, marketable securities listed on U.S. securities exchanges generally are valued at the last sale price on the day of the valuation or, if there were no sales, at the mean between the closing bid and asked prices therefor on the exchange where such securities are principally traded. Marketable securities listed on the NASDAQ generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sale prices are not available are valued at the mean between the last available bid and asked prices or by a third party pricing service. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded, or in the absence of a sale on such day, at the mean between the latest bid and asked prices therefor. Futures positions on securities or currencies are generally valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. Other fixed income and debt securities, including listed securities and securities for which price quotations are available, will normally be valued on the basis of valuations furnished by a pricing service. The EV money market fund generally values its investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 under the 1940 Act. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If amortized cost is determined not to approximate fair value, the EV money market fund may value its investment securities based on available market quotations provided by a third party pricing service.

Foreign securities and currencies held by the Portfolio are valued in U.S. dollars, as calculated by the Portfolio’s custodian based on foreign currency exchange rate quotations supplied by a third party pricing service. Valuation of foreign securities may be adjusted from prices in effect at the close of trading on foreign exchanges to more accurately reflect their fair value as of the close of regular trading on the NYSE. In adjusting the value of foreign equity securities the Portfolio may rely on a third party pricing service. Investments for which valuations or market quotations are not readily available are valued at fair value as determined in good faith by or at the direction of the Portfolio’s trustees, considering relevant factors, data and information including, in the case of restricted securities, the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded.

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

Historic Net Asset Values. Set forth below are the high and low net asset values per Share (NAVs) of the Fund for each quarter during the two years ending December 31, 2011 and 2010, the closing NAV on the last business day of each quarter, and the percentage change in NAV during each such quarter.

								Quarterly %
						NAV at		Change
Quarter Ending		High NAV		Low NAV		Quarter End		in NAV(1)
12/31/11		$104.10		$89.74		$102.44		11.18%
9/30/11		$108.33		$90.27		$92.14		-12.77%
6/30/11		$106.98		$100.07		$105.63		2.23%
3/31/11		$103.84		$97.74		$103.33		6.38%
12/31/10		$97.29		$85.41		$97.13		13.30%
9/30/10		$86.23		$74.18		$85.73		14.80%
6/30/10		$87.61		$74.57		$74.68		-11.87%
3/31/10		$84.99		$76.18		$84.74		5.49%

(b) Record Holders of Shares of the Fund.

As of February 3, 2012, there were 309 record holders of Shares of the Fund.

(c) Distributions.

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

Shareholder distributions with respect to net investment income, realized post-contribution gains and certain other realized gains are made pro rata in proportion to the number of Shares held as of the record date of the distribution. All income and capital gain distributions are paid by the Fund in cash or, at the election of the Shareholder, are reinvested in Fund Shares at the net asset value as of the date of reinvestment. Distributions are generally not taxable to the recipient Shareholder unless the distributions exceed the recipient Shareholder’s tax basis in Fund Shares. The Fund’s Credit Facility prohibits the Fund from making any distribution to Shareholders while there is any event of default outstanding under the Credit Facility (see Item 7A(b)).

On January 24, 2012, the Fund paid a distribution of $0.45 per Share to Shareholders of record on January 20, 2012. On January 20, 2011, the Fund paid a distribution of $0.40 per Share to Shareholders of record on January 18, 2011. On January 27, 2010, the Fund paid a distribution of $0.25 per Share to Shareholders of record on January 26, 2010.

Special Distributions. In addition to the pro rata income and capital gain distributions described above, the Fund also makes distributions to Shareholders of allocated precontribution gain (other than certain precontribution gains allocated to a Shareholder in

connection with a taxable tender offer or other taxable corporate event involving a security contributed by such Shareholder or such Shareholder’s predecessor in interest) (a Special Distribution). Special Distributions generally equal approximately 18% of the amount of realized precontribution gains plus approximately 4% of the allocated precontribution gain or such other percentage as deemed appropriate to compensate Shareholders receiving such distributions for taxes that may be due on income specially allocated in connection with the precontribution gain and Special Distributions. Special Distributions are paid by the Fund in cash and are made solely to the Shareholders to whom the precontribution gain is allocated. The Fund does not intend to make Special Distributions to a Shareholder in respect of realized precontribution gain allocated to a Shareholder or such Shareholder’s predecessor in interest in connection with a taxable tender offer or other taxable corporate event involving a security contributed by such Shareholder or such Shareholder’s predecessor in interest. There were no Special Distributions paid or accrued during the years ending December 31, 2011 and 2010. Special Distributions of $1,044,908 were accrued during the year ending December 31, 2008, and subsequently paid during the year ending December 31, 2009.

Item 6. Selected Financial Data.

Table of Selected Financial Data. The consolidated data referred to below reflects the Fund’s historical results for the years ending December 31, 2011, 2010, 2009, 2008 and 2007. The following information should be read in conjunction with all of the consolidated financial statements and related notes included in this Annual Report on Form 10- K. The other consolidated data referred to below is as of each year end.

		Year Ending
		December 31,			Year Ending				Year Ending				Year Ending				Year Ending
		2011			December 31, 2010				December 31, 2009				December 31, 2008				December 31, 2007
Total investment income		$	19,307,403		$	31,313,705			$	37,034,877			$	52,905,639			$	62,784,512
Interest expense		$	2,165,128		$	3,874,651			$	1,624,286			$	15,958,913			$	39,563,027
Net expenses (including interest expense)		$	5,641,676		$	8,916,506			$	7,158,753			$	24,499,274			$	50,756,115
Net investment income		$	13,665,727		$	22,397,199			$	29,876,124			$	28,406,365			$	12,028,397
Net realized gain (loss)		$	21,145,140		$	(137,648,888	)		$	(83,700,939	)		$	(57,972,820	)		$	90,888,612
Net change in unrealized appreciation (depreciation)		$	2,191,701		$	234,813,836			$	97,581,241			$	(666,744,381)			$	(25,034,956	)
Net increase (decrease) in net assets from operations		$	37,002,568		$	119,562,147			$	43,756,426			$	(696,310,836)			$	77,882,053
Total assets		$	712,663,498		$	795,318,287			$	852,749,058			$	1,137,207,908			$	2,365,720,320
Loan payable-Credit Facility		$	78,000,000		$	144,000,000			$	194,500,000			$	316,000,000			$	542,000,000
Net assets		$	633,024,154		$	648,036,131			$	652,677,231			$	808,881,477			$	1,820,458,058
Shares outstanding			6,179,628			6,671,766				8,125,199				10,826,294				13,707,598
Net asset value and redemption price per Share		$	102.44		$	97.13			$	80.33			$	74.71			$	132.81
Net increase (decrease) in net assets from operations per Share		$	5.71		$	17.05			$	6.85			$	(55.82)			$	4.51
Distribution paid per Share(1)(2)		$	0.40		$	0.25			$	1.23			$	2.20			$	2.02

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

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

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

(a) Results of Operations.

Increases and decreases in the Fund’s net asset value per share are based on net investment income or loss and realized and unrealized gains and losses on investments. The Fund’s net investment income or loss is determined by subtracting the Fund’s total expenses from its investment income. The Fund’s investment income generally includes the net investment income allocated to the Fund from Belvedere Company, net investment income allocated to the Fund from the Real Estate Joint Ventures and Co-owned Property, distribution income from the Partnership Preference Units and interest earned on the Fund’s short-term investments, including investments in the EV money market fund. The net investment income of Belvedere Company allocated to the Fund includes dividends, interest and expenses allocated to Belvedere Company by the Portfolio less the expenses of Belvedere Company allocated to the Fund. The Fund’s total expenses generally include the Fund’s investment advisory and administrative fees, servicing fee, interest expense on the Fund’s Credit Facility and other miscellaneous expenses. The Fund’s realized and unrealized gains and losses are the result of transactions in, or changes in value of, security investments held through the Fund’s indirect interest (through Belvedere Company) in the Portfolio, real estate investments held through Belcrest Realty, the Fund’s interest rate swap agreements and any other direct investments of the Fund, as well as periodic payments made by the Fund pursuant to interest rate swap agreements.

Realized and unrealized gains and losses on investments have the most significant impact on the Fund’s net asset value per share and result primarily from sales of such investments and changes in their underlying value. The investments of the Portfolio consist primarily of common stocks of domestic and foreign growth companies that are considered by its investment adviser to be high in quality and attractive in their long-term investment prospects. Because the securities holdings of the Portfolio are broadly diversified, the performance of the Portfolio cannot be attributed to one particular stock or one particular industry or market sector. The performance of the Portfolio and the Fund are substantially influenced by the overall performance of the U.S. stock market, as well as by the relative performance versus the overall market of specific stocks and classes of stocks in which the Portfolio maintains large positions.

MD&A for the Year Ending December 31, 2011 Compared to the Year Ending December 31, 2010.⁽¹⁾

Performance of the Fund. The Fund’s investment objective is to achieve long-term, after-tax returns for Shareholders. Eaton Vance, as the Fund’s manager, measures the Fund’s success in achieving its objective based on the investment returns of the Fund, using the S&P 500 Index (the Index) as the Fund’s primary performance benchmark. The Index is an unmanaged index of large-cap stocks commonly used as a measure of U.S. stock market performance. Eaton Vance’s primary focus in pursuing total return is on the Fund’s common stock portfolio, which consists of its indirect interest in the Portfolio. The Fund invests in the Portfolio through its interest in Belvedere Company. The Fund’s performance will differ from that of the Portfolio primarily due to its investments outside the Portfolio. In measuring the performance of the Fund’s real estate investments, Eaton Vance considers whether, through current

returns and changes in valuation, the real estate investments achieve returns that over the long-term exceed the cost of the borrowings incurred to acquire such investments and thereby add to Fund returns.

The Fund’s total return for the year ending December 31, 2011 was 5.89%. This return reflects an increase in the Fund’s net asset value per Share from $97.13 to $102.44 and a distribution of $0.40 per Share during the period. For comparison, the Index had a total return of 2.11% over the same period. The combined impact on performance of the Fund’s investment activities outside of the Portfolio was positive for the year ending December 31, 2011.

The Fund had a total return of 21.26% for the year ending December 31, 2010. This return reflected an increase in the Fund’s net asset value per Share from $80.33 to $97.13 and a distribution of $0.25 per Share during the period. For comparison, the Index had a total return of 15.06% over the same period.

Performance of the Portfolio. For the year ending December 31, 2011, the Portfolio had a total return of 0.80%. By comparison, the Index had a total return of 2.11% over the same period.

Amid widespread volatility in global markets, U.S. equity markets posted mixed results for the year ending December 31, 2011, with early- and late-year gains helping to offset mid-year losses. In the early months of the period, investor sentiment for U.S. equities was running high as U.S. and global economic conditions reaccelerated and corporate earnings results generally continued to beat consensus expectations. These and other factors enabled U.S. stocks to register broad-based gains through the first four months of the year. As the year progressed, however, U.S. stock returns first moderated and then faltered. From July 2011 to the market bottom on October 3, 2011, U.S. stocks registered broad-based declines as U.S. corporate profit growth slowed, the eurozone’s debt crisis worsened, and global economic activity decelerated. Investor confidence also was eroded by U.S. lawmakers’ partisan bickering over the federal debt ceiling and Standard & Poor’s resulting decision to downgrade the country’s long-term credit rating. At the same time, discouraging U.S. economic data raised the possibility of another recession. By the end of October 2011, the market had reversed course again, with the Index recording one of its best calendar months in several decades. Investors seemed to be encouraged by Europe’s plan to combat Greece’s debt problems, expand a eurozone bailout fund, and recapitalize the region’s banks. The U.S. economy also displayed signs of improvement in the fourth quarter, most notably a slight decline in the unemployment rate. The October market rally helped the Index gain roughly 10% during the fourth quarter and end the year in positive territory. For the year ending December 31, 2011, growth stocks outperformed value stocks across most market capitalizations, and large-cap stocks outpaced their small-cap counterparts.

The Portfolio underperformed the Index primarily as a result of security selection, which was partially offset by positive sector allocations during the period. The strongest gain for the Index came from the utilities sector, followed by the consumer staples and health care sectors, each of which delivered returns in excess of 10%. Financials and materials posted the lowest 12-month returns within the Index. The Portfolio’s security selection within the energy and consumer staples sectors detracted the most from performance relative to the Index. In addition, an underweight in the utilities sector hurt returns. The Portfolio’s underweight to high-dividend-paying tobacco, oil and gas, and utilities companies detracted from performance during the period. On the positive side, security selection within the consumer discretionary and materials sectors contributed to relative performance during the period. In addition, underweights in the financials and materials sectors helped lift relative returns.

Performance of Real Estate Investments. The Fund’s real estate investments are held through Belcrest Realty. As of December 31, 2011, real estate investments included: a Real Estate Joint Venture (Lafayette); a Co-owned Property (Bel Stamford I); and Partnership Preference Units. Lafayette owns office properties. Bel Stamford I owns an interest in an office property leased to a single tenant.

The Fund’s real estate investments produced positive returns during the year ending December 31, 2011, due principally to an increase in the fair value of Lafayette, the sale of Partnership Preference Units, and net investment income generated during the period. The pace of recovery of the commercial real estate sector was scaled back during the second half of the year as investors, lenders, and tenants pulled back on activity given concerns over the slowdown in the U.S. economic recovery and increased financial market volatility. Despite these concerns, transaction volumes and leasing activity outpaced prior year levels and well-located core property values continue to be supported by a low cost of financing environment. Going forward, the outlook for commercial real estate fundamentals and property values remains largely dependent on the economy, job growth and the availability of attractive debt financing. The fair value of the Fund’s continuing investments in Partnership Preference Units slightly increased during the period.

During the year ending December 31, 2011, Belcrest Realty generated approximately $67.3 million in net proceeds from the sales of Partnership Preference Units, which were used to pay down a portion of the Fund’s credit facility.

During the year ending December 31, 2011, the Fund’s net investment income from real estate investments held through Belcrest Realty was approximately $10.5 million compared to approximately $23.0 million for the year ending December 31, 2010, a decrease of $12.5 million or 54%. The decrease was principally due to the sale of Belcrest Realty’s interest in a Real Estate Joint Venture, Allagash Property Trust (Allagash), in November 2010, as well as lower distributions from investments in Partnership Preference Units principally due to fewer average holdings of Partnership Preference Units during the period.

The fair value of the Fund’s real estate investments was approximately $93.4 million at December 31, 2011 compared to approximately $130.7 million at December 31, 2010, a net decrease of $37.3 million or 29%. This net decrease was principally due to the sale of Partnership Preference Units during the period, partially offset by an increase in the fair value of Belcrest Realty’s investment in Lafayette.

MD&A for the Year Ending December 31, 2010 Compared to the Year Ending December 31, 2009.

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

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

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

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

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

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

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

Performance of Real Estate Investments. As of December 31, 2010, real estate investments included: Lafayette, Bel Stamford I, and a portfolio of Partnership Preference Units. Lafayette owns office properties. Bel Stamford I owns an interest in an office property leased to a single tenant.

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

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

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

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

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

(b) Liquidity and Capital Resources.

Outstanding Borrowings. The Fund has entered into a Credit Facility with Bank of America. The Credit Facility may be terminated by the lender on or after March 25, 2013 provided 180 days’ notice is given. The Fund may terminate the Credit Facility upon 30 days’ notice. In the event the lender exercises its ability to terminate the Credit Facility, the Fund will seek alternative financing arrangements.

In March 2011, the Fund amended the Credit Facility to decrease its total commitment by $65.0 million to an aggregate amount available for borrowing of $135.0 million.

The Fund pays a rate of interest equal to three-month LIBOR plus 1.25% per annum, reduced from 1.50% and 1.75% in August and March 2011, respectively, on outstanding borrowings under the Credit Facility. A commitment fee is paid on the unused commitment amount equal to 0.25% per annum, reduced from 0.40% in March 2011. The Fund will incur an additional fee if outstanding borrowings fall below certain levels.

As of December 31, 2011, the Fund had outstanding borrowings under the Credit Facility of $78.0 million. The unused portion of the Credit Facility totaled $57.0 million as of December 31, 2011.

Obligations under the Credit Facility are without recourse to Shareholders. The Fund is required under the Credit Facility to maintain at all times a specified asset coverage ratio. To comply with the terms of the Credit Facility, the Fund may be required to dispose of assets on unfavorable terms if market fluctuations or other factors reduce the required asset coverage to less than the prescribed amount. The rights of the lender under the Credit Facility to receive payments of interest on and repayments of principal of borrowings are senior to the rights of the Shareholders. Under the terms of the Credit Facility, the Fund is not permitted to make distributions of cash or securities while there is outstanding any event of default under the Credit Facility. During such periods, the Fund would not be able to honor redemption requests or make cash distributions. The Credit Facility is secured by a pledge of the Fund’s assets, excluding the Fund’s real estate investments. Following an event of default under the Credit Facility, the lender could elect to sell pledged assets of the Fund without regard to the tax or other consequences of such action for the Shareholders.

Liquidity. The Fund’s investment in Belvedere Company is redeemable on a daily basis at its net asset value subject to certain restrictions of the Belvedere Company operating agreement. During the year ending December 31, 2011, Fund redemptions from Belvedere Company included redemptions of shares of Belvedere Company for cash in the amount of $1.0 million. Such proceeds were used to pay down outstanding debt under the Credit Facility. Both Belvedere Company and the Portfolio normally follow the practice of satisfying redemptions primarily by distributing securities drawn from the Portfolio. Belvedere Company and the Portfolio may also satisfy redemptions by distributing cash. As of December 31, 2011, the Portfolio had cash and short-term investments in the

amount of $70.8 million. The Portfolio participates in a $600.0 million multi-fund unsecured line of credit agreement with a group of banks. The Portfolio may temporarily borrow from the line of credit to satisfy redemption requests in cash or to settle investment transactions. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. The Portfolio had no outstanding borrowings at December 31, 2011. To ensure liquidity for investors in the Portfolio, the Portfolio may not invest more than 15% of its net assets in illiquid assets. As of December 31, 2011, the Portfolio held no illiquid assets.

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

(c) Off-Balance Sheet Arrangements.

The Fund does not have any relationships with unconsolidated entities that have been established solely for the purpose of facilitating off-balance sheet arrangements.

(d) The Fund’s Contractual Obligations.

The following table sets forth the amounts of payments due under the specified contractual obligations outstanding as of December 31, 2011:

		Payments due:
																		More than 5
Type of Obligation		Total				Less than 1 Year				1-3 Years				3-5 Years				Years
Long-Term Debt:
Borrowings under Credit Facility(1)		$	78,000,000			$	—			$	78,000,000			$	—			$	—
Service Agreements(2)
Other Long-Term Liabilities:
Interest Rate Swap Agreement(3)		$	857,649			$	243,423			$	486,846			$	127,380			$	—
Total		$	78,857,649			$	243,423			$	78,486,846			$	127,380			$	—

(e) Critical Accounting Estimates.

The Fund’s consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements

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

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

The need to fair value the Fund’s real estate investments introduces uncertainty into the Fund’s reported financial condition and performance because:

	•		such assets are, by their nature, difficult to value and fair values may not accurately reflect what the Fund could realize in a current sale between willing parties;
	•		property appraisals and other factors used to determine the fair value of the Fund’s real estate investments depend on estimates of future operating results and supply and demand assumptions that may not reflect actual current market conditions and full consideration of all factors relevant to valuations;
	•		property appraisals and other factors used to determine the fair value of the Fund’s real estate investments are not continuously updated and therefore may not be current as of specific dates; and
	•		if the Fund were forced to sell illiquid assets on a distressed basis, the proceeds may be substantially less than stated values.

As of December 31, 2011, the fair value of the Fund’s real estate investments represented 13.1% of the Fund’s total assets. Valuations of the Fund’s Partnership Preference Units and Subsidiary Real Estate Investments are inherently uncertain because they involve the use of assumptions and estimates. If the assumptions and estimates used in the valuations were to change, it could materially impact the fair value of the Fund’s holdings of Partnership Preference Units and Subsidiary Real Estate Investments.

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

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

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

Property appraisals are inherently uncertain because they apply assumed discount rates, capitalization rates, growth rates and inflation rates to the Appraiser’s estimated stabilized cash flows, and due to the unique characteristics of a property. If the assumptions and estimates used by the Appraisers to determine the value of the properties owned by the Subsidiary Real Estate Investments were to change, it could materially impact the fair value of the Subsidiary Real Estate Investments.

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

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

Boston Management determines the fair value of the Fund’s interest in Co-owned Property by applying the Fund’s ownership interest to the net asset value of the Co-owned Property.

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

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

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

(a) Quantitative Information About Market Risk.

Interest Rate Risk. The Fund’s primary exposure to interest rate risk arises from its real estate investments that are financed by the Fund with floating rate borrowings under the Credit Facility and by fixed-rate mortgage notes secured by the real property of the Subsidiary Real Estate Investments. Partnership Preference Units are fixed rate instruments whose values will generally decrease when interest rates rise and increase when interest rates fall. The interest rates on borrowings under the Credit Facility are reset at regular intervals based on the three-month LIBOR. The Fund has entered into an interest rate swap agreement to fix the cost of a portion of its borrowings under the Credit Facility. Pursuant to the agreement, the Fund makes periodic payments to the counterparty at predetermined fixed rates in exchange for floating rate payments that fluctuate with the one-month LIBOR. The Fund’s interest rate swap agreement will generally increase in value when interest rates rise and decrease in value when interest rates fall. In the future, the Fund may use other interest rate hedging arrangements (such as caps, floors and collars) to fix or limit borrowing costs. The use of interest rate hedging arrangements is a specialized activity that can expose the Fund to significant loss.

The following table summarizes the contractual maturities and weighted-average interest rates associated with the Fund’s significant non-trading financial instruments. The Fund has no market risk sensitive instruments held for trading purposes. This information should be read in conjunction with Notes 10 and 11 to the Fund’s consolidated financial statements included in this Annual Report on Form 10-K.

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

																								Fair Value as of
		2012				2013				2014				2015		2016		Thereafter		Total				December 31, 2011
Rate sensitive liabilities:
Long-term debt:
Variable-rate Credit Facility						$	78,000,000													$	78,000,000			$78,000,000
Average interest rate							1.83	%													1.83	%
Rate sensitive derivative financial instruments:
Pay fixed/receive variable interest rate swap agreement														$3,870,000						$	3,870,000			$(714,319)
Average pay rate														6.29	%						6.29	%
Average receive rate														0.60	%						0.60	%
Rate sensitive investments:
Fixed-rate Partnership Preference Units:
Liberty Property Limited Partnership, 7.45% Series B Cumulative Redeemable Preferred Units, Callable 8/31/09, Current Yield: 8.40%		$	6,250,000																	$	6,250,000			$5,542,500
Vornado Realty L.P., 7% Series D-10 Cumulative Redeemable Preferred Units, Callable 11/17/08, Current Yield: 8.17%(1)		$	7,325,696																	$	7,325,696			$10,277,210

(b) Qualitative Information About Market Risk.

Risks Associated with Equity Investing. The Fund invests primarily in a diversified portfolio of common stocks and is thereby subject to general stock market risk. There can be no assurance that the performance of the Fund will match that of the U.S. stock market or that of other equity funds. In managing the Portfolio for long-term, after-tax returns, Boston Management generally seeks to avoid or minimize sales of securities with large accumulated capital gains, including contributed securities. Such securities constitute a substantial portion of the assets of the Portfolio. Although the Portfolio may utilize certain management strategies in lieu of selling appreciated securities, the Portfolio’s, and hence the Fund’s, exposure to losses during stock market declines may nonetheless be higher than funds that do not follow a general policy of avoiding sales of highly appreciated securities.

Risks of Investing in Foreign Securities. The Portfolio invests in securities issued by foreign companies and the Fund may acquire foreign investments. Foreign investments involve considerations and possible risks not typically associated with investing in the United States. The value of foreign investments to U.S. investors may be adversely affected by changes in currency rates. Foreign brokerage commissions, custody fees and other costs of investing are generally higher than in the United States, and foreign investments may be less liquid, more volatile and subject to more government regulation than in the United States. Foreign investments could be adversely affected by other factors not present in the United States, including expropriation, confiscatory taxation, lack of uniform accounting and auditing standards, armed conflict, and potential difficulty in enforcing contractual obligations. These risks can be more significant for investments in emerging markets.

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

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

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

Risks of Real Estate Investments. The success of the Fund’s real estate investments depends in part on many factors related to the real estate market. These factors include, without limitation, general economic conditions, the supply and demand for different types of real properties, the financial health of tenants, changing transportation and logistics patterns (in the case of industrial distribution properties), the timing of lease expirations and terminations, fluctuations in rental rates and operating costs, exposure to adverse

environmental conditions and losses from casualty or condemnation, fluctuations in interest rates, availability and cost of financing, managerial performance, government rules and regulations, and acts of God (whether or not insured against). There can be no assurance that Belcrest Realty’s ownership of real estate investments will be an economic success.

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

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

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

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

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

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

Wholly Owned Property is generally illiquid, and the ongoing value of Belcrest Realty’s investments in Wholly Owned Property will be substantially uncertain. Wholly Owned Property held generally will be stated at fair value as described in Item 7(e). Because the value of Wholly Owned Property will reflect in part the creditworthiness of its tenant(s), any change in the financial status of a major tenant could affect the appraised value of a property and the value realized upon the disposition of such property. Tenants may hold

rights to renew or extend expiring leases, and exercise of such rights would extend Belcrest Realty’s risk exposure to a particular tenant beyond the initial lease term. Tenants may also hold options to purchase properties, including options to purchase at below market levels. A default by a major tenant could materially reduce the value of a Wholly Owned Property. The value received upon the disposition of Wholly Owned Property will depend on real estate market conditions, lease and mortgage terms, tenant credit quality, tenant purchase options, lender approvals and other factors affecting valuation as may then apply. Since valuations of Wholly Owned Property assume an orderly disposition of assets, amounts realized in a distressed sale may differ substantially from stated values.

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

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

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

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

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

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

Risks of Interest Rate Swap Agreements. Interest rate swap agreements are subject to changes in valuation caused principally by movements in interest rates. Interest rate swap agreements are private contracts in which there is a risk of loss in the event of a default on an obligation to pay by the counterparty. Interest rate swap agreements may be difficult to value and may be illiquid. Fluctuations in the value of Partnership Preference Units derived from changes in general interest rates can be expected to be offset in part (but not entirely) by changes in the value of interest rate swap agreements applying to those Partnership Preference Units for which they were purchased, or other interest rate hedges that may be entered into by the Fund with respect to its borrowings. The risks of interest rate swap agreements include changes in market conditions that will affect the value of the agreement or the cash

flows and the possible inability of the counterparty to fulfill its obligations under the agreement. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the agreement’s remaining life, to the extent that amount is positive.

Risks of Leverage. Although intended to add to returns, the borrowing of funds to purchase real estate investments exposes the Fund to the risk that the returns achieved on the real estate investments will be lower than the cost of borrowing to purchase such assets and that the leveraging of the Fund to buy such assets will therefore diminish the returns achieved by the Fund as a whole. In addition, there is a risk that the availability of financing will be interrupted at some future time, requiring the Fund to sell assets to repay outstanding borrowings or a portion thereof. It may be necessary to make such sales at unfavorable prices. The Fund’s obligations under the Credit Facility are secured by a pledge of its assets, excluding the Fund’s real estate investments. In the event of default, the lender could elect to sell assets of the Fund without regard to consequences of such action for Shareholders. The rights of the lender to receive payments of interest on and repayments of principal of borrowings under the Credit Facility are senior to the rights of the Shareholders. Under the terms of the Credit Facility, the Fund is not permitted to make distributions of cash or securities while there is a default or event of default outstanding under the Credit Facility. During such periods, the Fund would not be able to honor redemption requests or make cash distributions.

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

Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements required by Item 8 begin on page 37 of this Annual Report on Form 10-K. The following is a summary of unaudited quarterly results of operations of the Fund for the years ending December 31, 2011 and 2010.

		2011
		First				Second				Third				Fourth
		Quarter				Quarter				Quarter				Quarter
Investment income		$	5,357,487			$	4,958,865			$	4,206,607			$	4,784,444
Net investment income		$	3,576,339			$	3,637,400			$	2,908,798			$	3,543,190
Net increase (decrease) in net assets from operations		$	43,805,338			$	15,090,361			$	(86,100,758	)		$	64,207,627
Per share data(1) :
Investment income		$	0.81			$	0.76			$	0.66			$	0.77
Net investment income		$	0.54			$	0.56			$	0.46			$	0.57
Net increase (decrease) in net assets from operations		$	6.59			$	2.32			$	(13.55	)		$	10.32

		2010
		First				Second				Third				Fourth
		Quarter				Quarter				Quarter				Quarter
Investment income		$	7,949,443			$	8,511,368			$	8,290,427			$	6,562,467
Net investment income		$	6,076,732			$	6,106,968			$	5,749,297			$	4,464,202
Net increase (decrease) in net assets from operations		$	30,722,748			$	(68,113,307	)		$	79,194,029			$	77,758,677
Per share data(1) :
Investment income		$	1.00			$	1.14			$	1.16			$	0.96
Net investment income		$	0.76			$	0.82			$	0.80			$	0.65
Net increase (decrease) in net assets from operations		$	3.87			$	(9.11	)		$	11.07			$	11.39

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

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

Item 9A. Controls and Procedures.

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

Disclosure Controls and Procedures. Eaton Vance, as the Fund’s manager, evaluated the effectiveness of the Fund’s disclosure controls and procedures (as defined by Rule 13a-15(e) of the Act) as of the end of the period covered by this report, with the participation of the Fund’s Chief Executive Officer and Chief Financial Officer. The Fund’s disclosure controls and procedures are the controls and other procedures that the Fund designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based on that evaluation, the Fund’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2011, the Fund’s disclosure controls and procedures were effective.

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

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

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

Management assessed the effectiveness of the Fund’s internal control over financial reporting as of December 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on its assessment and those criteria, management believes that the Fund maintained effective internal control over financial reporting as of December 31, 2011.

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

March 7, 2012.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of Belcrest Capital Fund LLC and Subsidiaries

We have audited the internal control over financial reporting of Belcrest Capital Fund LLC and subsidiaries (the “Fund”) as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Fund’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Fund’s internal control over financial reporting based on our audit.

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

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Fund maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial highlights as of and for the year ended December 31, 2011 of the Fund and our report dated March 7, 2012 expressed an unqualified opinion on those financial statements and financial highlights.

DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 7, 2012

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

(a) Management.

Pursuant to the Fund’s LLC Agreement, the Fund’s manager, Eaton Vance, has the authority to conduct the Fund’s business. Eaton Vance appointed Thomas E. Faust Jr. to serve indefinitely as the Fund’s Chief Executive Officer on October 16, 2002. Eaton Vance appointed Andrew C. Frenette to serve indefinitely as the Fund’s Chief Financial Officer on January 22, 2007. Information about Messrs. Faust and Frenette appears below. As members of the Eaton Vance organization, Messrs. Faust and Frenette receive no compensation from the Fund for serving as Fund officers. There are no other officers of the Fund. The Fund does not have a board of directors or similar governing body.

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

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

The directors of Belcrest Realty are Messrs. Faust and Frenette. Mr. Frenette (37) is the President and portfolio manager of Belcrest Realty and the head of Boston Management’s real estate investment group, which has primary responsibility for providing research and analysis relating to the Fund’s real estate investments held through Belcrest Realty. Mr. Frenette is a Vice President of Eaton Vance and Boston Management and has been employed by the Eaton Vance organization since 2006. Prior to joining Eaton Vance, Mr. Frenette was Manager of Finance — Investments and Acquisitions for GE Real Estate, a business unit of GE Commercial Finance. A majority of Mr. Frenette’s time is spent managing the real estate investments of Belcrest Realty and the real estate investment affiliates of other investment funds advised by Boston Management. Mr. Frenette serves on the board of managers of Lafayette. Other officers of Eaton Vance and Boston Management also serve as officers and/or directors of Lafayette. As disclosed under “The Eaton Vance Organization” in Item 1, Eaton Vance and Boston Management are wholly owned subsidiaries of Eaton Vance Corp. The non-voting common stock of Eaton Vance Corp. is listed and traded on the NYSE. All shares of the voting common stock of Eaton Vance Corp. are held in a voting trust, the voting trustees of which are senior officers of the Eaton Vance organization. Eaton Vance, Inc., a wholly owned subsidiary of Eaton Vance Corp., is the sole trustee of Eaton Vance and of Boston Management, each of which is a Massachusetts business trust. The names of the executive officers and the directors of Eaton Vance, Inc. and their ages and principal occupations (in addition to their responsibilities described above) are set forth below.

Thomas E. Faust Jr. (53) is Chief Executive Officer and President of Eaton Vance Corp., President and Director of Eaton Vance, Inc., Chief Executive Officer and President of Eaton Vance and Boston Management, and Director of EV Distributors. He is also an officer of various other investment companies managed by Eaton Vance or Boston Management. Mr. Faust has been employed by Eaton Vance since 1985.

Frederick S. Marius (48) is Vice President, Secretary and Chief Legal Officer of Eaton Vance, Boston Management, Eaton Vance Corp., EV Distributors and Eaton Vance, Inc. and a Director of Eaton Vance, Inc. He is also an officer of various investment companies managed by Eaton Vance or Boston Management and has been employed by Eaton Vance since 2004.

Robert J. Whelan (50) is Vice President and Treasurer of Eaton Vance, Boston Management, Eaton Vance Corp. and Eaton Vance, Inc. and a Director of Eaton Vance, Inc. He is also the Chief Financial Officer of Eaton Vance Corp. and Eaton Vance, Inc. and Vice President and Director of EV Distributors. He has been employed by Eaton Vance since 2007. Prior to joining Eaton Vance, Mr. Whelan was Executive Vice President and Chief Financial Officer for Boston Private Wealth Management Group from December 2004 to April 2007.

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

Section 16(a) of the Act requires the Fund’s officers and directors and persons who own more than ten percent of the Fund’s Shares to file forms reporting their affiliation with the Fund and reports of ownership and changes in ownership of the Fund’s Shares with the SEC. Eaton Vance, as manager of the Fund, and the Directors and executive officers of Eaton Vance, Inc., the sole trustee of Eaton Vance, also comply with Section 16(a). These persons and entities are required by SEC regulations to furnish the Fund with copies of all Section 16(a) forms they file. To the best of the Fund’s knowledge, during the year ending December 31, 2011 no Section 16(a) filings were required by such persons or entities.

(c) Code of Ethics.

The Fund has adopted a Code of Ethics that applies to the principal executive officer and principal financial officer (who is also the Fund’s principal accounting officer). A copy of the Code of Ethics is available at no cost by request to the Fund’s Chief Financial Officer, Two International Place, Boston, MA 02110 or by calling (800) 225-6265. If the Fund makes any substantive amendments to the Code of Ethics or grants any waiver, including an implicit waiver, from a provision of the Code of Ethics as applicable to the principal executive officer or principal financial officer, the Fund will disclose the nature of such amendment or waiver in a report on Form 8-K.

Item 11. Executive Compensation.

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

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

Security Ownership of Certain Beneficial Owners. As of February 3, 2012, the following person beneficially owned the percentage of Fund Shares indicated:

Name and Address of
Beneficial Owner				Percent of Class
Jeff Broad & Cindy Quane Trust		Los Angeles, CA		14.70%
SCA Investment Co. Ltd. as pledged to Merrill Lynch Bank USA as Pledgee		Salt Lake City, UT		5.93%
Acuitya Mutual Insurance Company		Sheboygan, WI		5.71%

To the knowledge of the Fund, no other person beneficially owned more than 5% of the Shares of the Fund as of December 31, 2011.

Security Ownership of Management. As of February 3, 2012, Eaton Vance, the manager of the Fund, beneficially owned 114 Shares of the Fund. The Shares owned by Eaton Vance represent less than 1% of the outstanding Shares of the Fund as of February 3, 2012. None of the other entities or individuals named in response to Item 10 above beneficially owned Shares of the Fund as of such date.

Changes in Control. Not applicable.

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

Messrs. Faust and Frenette are currently the only “related persons” of the Fund (as that term is defined in Regulation S-K under the Securities Act and the Act). The Fund has instituted written policies and procedures to determine the existence of a reportable transaction under Item 404(a) of Regulation S-K. In accordance with such policies and procedures, Eaton Vance circulates an Executive Officer Questionnaire to each related person annually to determine the existence of a potential reportable transaction. Any transaction, or proposed transaction, in which the Fund was or is to be a participant and the amount of which exceeds $120,000 (and

in which a related person had or will have a direct or indirect material interest) is required to be reviewed by the Audit Committee of the Board of Directors of Eaton Vance, Inc. The Fund did not have any reportable transactions under Item 404(a) of Regulation S-K during the year ending December 31, 2011.

The table below sets forth the fees paid or payable by, or allocable to, the Fund and Belcrest Realty for the years ending December 31, 2011 and 2010 in connection with services rendered by Eaton Vance and its affiliates. Each fee is described in the following table.

		Year ending			Year ending
		December			December 31,
		31, 2011			2010
Fund Advisory and Administrative Fees*		$	941,076		$	947,890
Belcrest Realty Management Fees		$	1,694,674		$	3,253,258
Fund’s Allocable Portion of the Portfolio’s Advisory Fees**		$	2,939,950		$	2,988,131
Fund Servicing Fees		$	330,646		$	245,133
Fund’s Allocable Portion of Belvedere Company’s Servicing Fees		$	964,892		$	983,166
Aggregate Compensation Paid by the Fund to Eaton Vance and its Affiliates		$	2,635,750		$	4,201,148

The Fund’s Investment Advisory and Administrative Fee. Under the terms of the Fund’s investment advisory and administrative agreement, Boston Management is entitled to receive a monthly advisory and administrative fee at the rate of 1/20 of 1% (equivalent to 0.60% annually) of the average daily gross investment assets of the Fund. The term gross investment assets as used in the agreement means the value of all assets of the Fund other than the Fund’s investment in Belcrest Realty minus the sum of the Fund’s liabilities other than the principal amount of money borrowed. The advisory fee payable to Boston Management in respect of the Fund’s indirect investment in the Portfolio is credited towards the Fund’s advisory and administrative fee payment, reducing the amount of such fee that would otherwise be payable by the Fund.

Belcrest Realty’s Management Fee. Under the terms of Belcrest Realty’s management agreement with Boston Management, Boston Management receives a monthly management fee at the rate of 1/20 of 1% (equivalent to 0.60% annually) of the average daily gross investment assets of Belcrest Realty. The term gross investment assets as used in the agreement means the value of all assets of Belcrest Realty minus the sum of Belcrest Realty’s liabilities other than the principal amount of money borrowed. For this purpose, the assets and liabilities of Belcrest Realty includes its ratable share of the assets and liabilities of its direct and indirect subsidiaries, real estate joint ventures, and co-owned real property investments.

The Portfolio’s Investment Advisory Fee. Under the terms of the Portfolio’s investment advisory agreement with Boston Management, Boston Management receives a monthly advisory fee as follows:

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

In accordance with the terms of the 1940 Act, the Portfolio’s Board of Trustees considers the continuation of the Portfolio’s investment advisory agreement annually.

Servicing Fees Paid by the Fund. Pursuant to a servicing agreement between the Fund and EV Distributors, the Fund pays a servicing fee to EV Distributors for providing certain services and information to the Shareholders of the Fund. The servicing fee is paid on a quarterly basis at an annual rate of 0.20% of the Fund’s average daily net assets. With respect to Shareholders who subscribed through a subagent, EV Distributors has assigned servicing responsibilities and fees to the applicable subagent, beginning twelve months after the issuance of Shares of the Fund to such persons. The Fund’s allocated share of the servicing fee paid by Belvedere Company is credited toward the Fund’s servicing fee payment, thereby reducing the amount of the servicing fee payable by the Fund.

Servicing Fees Paid by Belvedere Company. Pursuant to a servicing agreement between Belvedere Company and EV Distributors, Belvedere Company pays a servicing fee to EV Distributors for providing certain services and information to direct and indirect investors in Belvedere Company. The servicing fee is paid on a quarterly basis, at an annual rate of 0.15% of Belvedere Company’s average daily net assets. With respect to investors in Belvedere Company and Shareholders of the Fund who subscribed through a subagent, EV Distributors has assigned servicing responsibilities and fees to the applicable subagent, beginning twelve months after the issuance of shares of Belvedere Company or Shares of the Fund to such persons. The Fund assumes its allocated share of Belvedere Company’s servicing fee. The servicing fee payable in respect of the Fund’s investment in Belvedere Company is credited toward the Fund’s servicing fee described above.

Certain Real Estate Investment Transactions. During the year ending December 31, 2011, Belcrest Realty did not enter into any real estate investment transactions with affiliates.

Item 14. Principal Accounting Fees and Services.

The following table presents fees for the professional audit services rendered by Deloitte & Touche LLP for the audit of the Fund’s annual financial statements for the years ending December 31, 2011 and 2010 and fees billed for other services rendered by Deloitte & Touche LLP during those periods, including fees charged by Deloitte & Touche LLP to the Fund’s consolidated subsidiaries.

		Year ending December 31,
		2011				2010
Audit fees		$	73,758			$	88,443
Tax fees (1)		$	225,417			$	183,500
Total		$	299,175			$	271,943

The Audit Committee of the Board of Directors of Eaton Vance, Inc. reviews all audit, audit-related, tax and other fees at least annually. The Audit Committee of the Board of Directors of Eaton Vance, Inc., pre-approved all audit and tax services for the years ending December 31, 2011 and 2010. The Audit Committee of the Board of Directors of Eaton Vance, Inc. has concluded that the provision of the tax services listed above is compatible with maintaining the independence of Deloitte & Touche LLP.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)		Please see the Fund’s consolidated financial statements which begin on page 37 of this Annual Report on Form 10-K. Please see the Portfolio’s financial statements which begin on page 62 of this Annual Report on Form 10-K.
		For fiscal year 2011, the Lafayette Real Estate Joint Venture was deemed significant to the Fund under Rule 3-09 of Regulation S-X, and as such the financial statements of Lafayette are required to be filed as financial statement schedules herein within 90 days of its fiscal year end. Accordingly, the financial statements of Lafayette will be filed via an amendment to this Annual Report on Form 10-K on or before March 30, 2012, provided that the Fund’s duty to file reports under Section 13(a) of the Act has not been suspended pursuant to Rule 12g-4(a)(1).
(b)		Reports on Form 8-K:
		None.
(c)		A list of the exhibits filed as a part of this Form 10-K is included in the Exhibit Index appearing on page 79 hereof.

Appendix A

Belcrest Capital Fund LLC’s (The Fund) Investment Structure as of
December 31, 2011

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

Consolidated Portfolios of Investments

 

 

See notes to consolidated financial statements
37

Consolidated Portfolios of Investments (continued)

 

 

 

See notes to consolidated financial statements
38

Consolidated Financial Statements

 

Consolidated Statements of Assets and Liabilities

 

 

See notes to consolidated financial statements
39

Consolidated Financial Statements (continued)

 

Consolidated Statements of Operations

 

 

See notes to consolidated financial statements
40

Consolidated Financial Statements (continued)

 

Consolidated Statements of Operations (continued)

 

 

See notes to consolidated financial statements
41

Consolidated Financial Statements (continued)

 

Consolidated Statements of Changes in Net Assets

 

 

See notes to consolidated financial statements
42

Consolidated Financial Statements (continued)

 

Consolidated Statements of Cash Flows