SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-K



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

         For the year ended                   Commission File Number
          December 31, 1997                          1-16531


                        EQUITABLE CAPITAL PARTNERS, L.P.
      (Exact name of registrant as specified in its governing instruments)

              Delaware                               13-3486115
  (State or other jurisdiction of          (IRS Employer Identification No.)
   incorporation or organization)

                          1345 Avenue of the Americas
                            New York, New York 10105
              (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code:  (212) 969-1000


           Securities registered pursuant to Section 12(b) of the Act:
     Title of each class            Name of each exchange on which registered
           None                                  Not Applicable


           Securities registered pursuant to Section 12(g) of the Act:
                      Units of Limited Partnership Interest
                                (Title of Class)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ___.

     Indicate by check mark 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. [X]

     Selected  information  from the Prospectus,  dated July 15, 1988, and filed
with  the  Securities  and  Exchange  Commission  on July  19,  1988  (File  No.
33-20093),  is incorporated by reference into Parts I, II and III of this Annual
Report on Form 10-K.

<PAGE>
                                     Part I


Item 1.       Business

Formation

       Equitable  Capital  Partners,  L.P. (the "Fund" or the  "Registrant") was
formed along with  Equitable  Capital  Partners  (Retirement  Fund),  L.P.  (the
"Retirement  Fund," and collectively  with the Fund referred to as the "Funds").
The  Certificates of Limited  Partnership  were filed under the Delaware Revised
Uniform Limited  Partnership  Act on February 2, 1988 and the Funds'  operations
commenced  on October  13,  1988.  The Fund  seeks  current  income and  capital
appreciation potential by investing in privately structured,  friendly leveraged
acquisitions and leverage recapitalizations.  The Fund pursues this objective by
investing   primarily  in  subordinated   debt  and  related  equity  securities
("Mezzanine  Investments") issued in conjunction with the "mezzanine  financing"
of   leveraged   acquisitions   and   leveraged   recapitalizations.   Mezzanine
Investments,   follow-on  investments,  bridge  investments  and  certain  other
investments  which the Fund is  permitted to invest in are referred to herein as
"Enhanced Yield Investments."

       On July 22, 1993,  Equitable Capital Management  Corporation  ("Equitable
Capital"),  formerly the Managing General Partner and investment  adviser of the
Funds,  transferred   substantially  all  of  the  assets  comprising  Equitable
Capital's business to Alliance Capital Management L.P. ("Alliance  Capital") and
its  wholly-owned  subsidiary,  Alliance  Corporate  Finance Group  Incorporated
("Alliance  Corporate").  In  connection  with  such  transaction,  the  limited
partners  of the Funds  voted to  approve a new  investment  advisory  agreement
between  the Funds  and  Alliance  Corporate  and also  voted to admit  Alliance
Corporate  as  Managing  General  Partner  of the Funds (the  "Managing  General
Partner") to succeed  Equitable  Capital.  Accordingly,  on July 22,  1993,  the
closing date of the transaction described above, Alliance Corporate was admitted
as the  successor  Managing  General  Partner  of the Funds.  Equitable  Capital
assigned all of its interest as General Partner to Alliance Corporate. Robert F.
Shapiro,  Robert W. Lear, Alton G. Marshall and William G. Sharwell, who are not
affiliated  with  Alliance  Corporate or  "interested  persons" of the Funds for
purposes  of the  Investment  Company  Act of 1940 as amended  (the  "Investment
Company  Act"),   serve  as  the  Funds'   independent   general  partners  (the
"Independent General Partners"). Messrs. Shapiro and Lear have served since June
1988, and Mr. Marshall and Dr. Sharwell since 1989. The Managing General Partner
is an  indirect  partially-owned  subsidiary  of The  Equitable  Life  Assurance
Society of the United States ("Equitable  Life") and is a registered  investment
adviser  under the  Investment  Advisers Act of 1940,  as amended.  In addition,
Alliance Corporate was admitted as the successor investment adviser to the Funds
(the  "Investment  Adviser")  pursuant to a new  investment  advisory  agreement
executed as of July 22, 1993 and since such date, has been responsible,  subject
to the supervision of the Independent  General  Partners,  for the management of
the Funds' investments.

       The Fund elected to operate as a business  development  company under the
Investment  Company Act of 1940,  as amended.  As such, it is subject to certain
provisions  of the  Investment  Company  Act.  The  description  of  the  Fund's
investment  objective  and policies,  its  management  arrangements  and certain
provisions of the Investment Company Act applicable to the Fund are set forth in
the  information  contained in the  Prospectus of the Fund,  dated July 15, 1988
(the  "Prospectus"),  filed with the  Securities  and Exchange  Commission  (the
"Commission")  pursuant  to Rule 424(b)  under the  Securities  Act of 1933,  as
amended (the "Securities  Act"), on July 19, 1988 under the following  captions:
"Investment Objective and Policies," "Management Arrangements" and "Regulation."
Such information is incorporated by reference into this Item 1.

       The Funds  jointly  offered an aggregate  of  1,000,000  units of limited
partnership  interest  ("Units") to investors  in a public  offering  registered
under the Securities Act pursuant to a Registration  Statement on Form N-2 (File
No.  33-20093),  which was declared  effective  under the  Securities Act by the
Commission  on July  15,  1988.  Merrill  Lynch,  Pierce,  Fenner  & Smith  (the
"Agent"),   an   affiliate   of  ML  Fund   Administrators,   Inc.   (the  "Fund
Administrator"), acted as selling agent for the Units offered by the Fund.
<PAGE>
       On October 13, 1988,  the Fund issued  284,611  Units to  investors,  and
Equitable  Capital,  as Managing General  Partner,  admitted 18,288 investors as
limited partners of the Fund (the "Limited  Partners").  The net proceeds of the
offering  of such  Units to the Fund was  $264,688,230  after  giving  effect to
volume discounts of $737,600 and the payment of $19,185,170 in sales commissions
to the Agent.  Equitable  Capital,  in its capacity as Managing General Partner,
contributed a demand  promissory  note in the principal  amount of $2,641,836 as
required by the Amended and Restated Agreement of Limited Partnership,  dated as
of October 13, 1988 (the  "Partnership  Agreement"),  pursuant to which the Fund
had been organized . Equitable  Capital reduced this note by $367 resulting from
actual  syndication  expenses paid in excess of original  estimates.  The public
offering has been concluded.

     In  connection  with its  organization  and  offering,  the  Fund  incurred
$554,631 in  organizational  expenses  and  $2,633,942  in  offering,  sales and
marketing   expenses.   The   organizational   expenses  were   amortized  on  a
straight-line  basis over a sixty  month  period that  commenced  on October 13,
1988.  Such expenses were fully  amortized as of October 31, 1993. The offering,
sales and marketing  expenses  incurred by the Fund have been paid and accounted
for as a charge to the capital account of the Fund's partners.  The net proceeds
available  for  investment  by the Fund after such  offering  less the return of
capital distributed to the Limited Partners of $45,247,457 equaled $216,252,200.

Investments

     As set forth in the Partnership  Agreement,  the Fund's  investment  period
ended on October 12, 1991,  three years after the Fund's  operations  commenced.
Thereafter, the Fund is not permitted to acquire new Enhanced Yield Investments,
but can make follow-on  investments in existing portfolio companies.  During the
year ended December 31, 1997, the Fund made no follow-on investments.

     During  the  year  ended  December  31,  1996,  the Fund  made a  follow-on
investment in one Managed Company (as defined in the Prospectus) at a total cost
of $4,532.

     During  the  year  ended  December  31,  1995,  the Fund  made a  follow-on
investment  in one  Managed  Company  at a total cost of $1,869 and paid $457 in
additional consideration to exercise warrants.

     As of  December  31,  1997,  the  Fund  had a  total  of 7  Enhanced  Yield
Investments  at a cost of  $30,698,278.  During  1997,  1996  and  1995 the Fund
received $61,774,551,  $28,181,211 and $21,907,154,  respectively,  in principal
payments and prepayments relating to certain Enhanced Yield Investments.

     The Fund invests in certain temporary  investments,  consisting principally
of commercial paper with maturities of less than sixty days. Currently, proceeds
that are not  invested  in  Enhanced  Yield  Investments  or returned to Limited
Partners are held in such temporary investments.
 <PAGE>

Competition

     The Fund has completed its investment period and reinvestment period and no
longer has to compete for investments.

Employees

       The Fund has no employees.  The Managing General Partner,  subject to the
supervision of the Independent General Partners, manages and controls the Fund's
investments.  Certain  officers of Alliance  Corporate  have been  designated as
agents of the Fund with titles  corresponding  to the titles of the offices held
by such  persons  with  Alliance  Corporate.  The  Fund  Administrator  performs
administrative services for the Fund on behalf of the Managing General Partner.

Item 2. Properties

       The Fund does not own or lease any physical properties.

Item 3. Legal Proceedings

        The Fund is not party to any material pending legal proceedings.

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

       None.

<PAGE>
                                     Part II


Item 5.       Market for Registrant's Common Equity and Related
              Stockholder Matters


       The  Units  are  illiquid  securities  and  are  subject  to  significant
restrictions on transfer.  The  information in the Prospectus  under the caption
"Transferability of Units" is incorporated in this Item 5 by reference. There is
no established trading market for the Units. The Partnership  Agreement contains
restrictions that are intended to prevent the development of a public market.

     The number of holders of Units as of  December  31,  1997 was  16,832.  The
Managing  General Partner holds a general partner  interest in the Fund and does
not hold any Units. Pursuant to the terms of the Partnership Agreement, the Fund
generally  makes  distributions  within 45 days  after the end of each  calendar
quarter of cash  income  received  from  investments  in excess of  expenses  of
operation,  reserves for expenses and certain  investments and liabilities.  Net
cash receipts  representing  cumulative income and gains are distributed as soon
as practicable after the related  disposition.  Such distributions are allocated
among the Managing General Partner, and the Limited Partners, in general,  first
99% to the Limited  Partners and 1% to the Managing  General  Partner  until the
Limited Partners have received a cumulative priority return of 10% noncompounded
on an annual basis on their investments in Enhanced Yield  Investments,  second,
70% to the Limited  Partners and 30% to the Managing  General  Partner until the
Managing General Partner has received 20% of all current and prior distributions
on such investments and, thereafter,  80% to the Limited Partners and 20% to the
Managing General Partner.  The Fund's  distribution  procedures are described in
detail in the Prospectus under the caption "Distributions and Allocations";  the
information under such caption is incorporated by reference in this Item 5.

     On February 5, 1998, the Independent General Partners approved an aggregate
cash  distribution  of $2,410,665  for the three months ended December 31, 1997,
which was paid on February 13, 1998 to the Limited Partners. The amount that was
distributed  to Limited  Partners  on record as of December  31,  1997  includes
$987,600 of return of capital.  On a per Unit basis,  the  distribution of $8.47
includes  $5.00 of net  realized  gains  and $3.47 of  return  of  capital.  The
Managing General Partner's one percent  allocation of $24,350 was reduced by its
one percent  allocation of realized gains and capital  returned from investments
during the fourth  quarter of 1997, of which $24,245 is being held as a Deferred
Distribution  Amount  resulting in a net  distribution  to the Managing  General
Partner of $105.


<PAGE>
Item 6. Selection Financial Data


                                                        For the Years Ended
<TABLE>
<S>                          <C>                    <C>                   <C>                    <C>               <C>
                             December 31, 1997      December 31, 1996      December 31, 1995  December 31, 1994    December 31, 1993
TOTAL FUND INFORMATION:      -----------------      -----------------      -----------------  -----------------    -----------------
Cash Distributions                $ 81,951,834(a)       $  27,348,085 (c)   $   41,174,256 (d)   $   54,554,528      $   45,172,973
Net Assets                          24,731,786            110,708,174          112,353,878          157,930,203         219,924,070
Total Assets                        24,840,604            110,843,385          112,437,110          158,039,361         220,036,182
Net Investment Income                  461,348              5,918,157            5,215,211            6,924,128          15,218,052
Net Change in Unrealized
  Appreciation (Depreciation)
  on Investments                   (22,097,649)            31,877,152            2,627,096          (15,853,762)          1,053,093
Net Realized (Losses) Gains
  on Investments                    17,973,591            (12,010,831)         (11,988,596)           1,758,116           3,120,202

PER UNIT OF LIMITED
PARTNERSHIP INTEREST:

Cash Distributions                $     287.88 (a)      $       95.83 (c)   $       144.38 (d)   $       191.33       $      157.98


Cumulative Cash Distributions         1,179.65 (b)             891.77               795.94               651.56              460.23
Investment Income                         9.13                  28.80                27.77                36.53               70.47
Expenses                                  7.52                  (8.22)               (9.63)              (12.44)             (17.54)
Net Investment Income                     1.60                  20.59                18.14                24.09               52.93

Net Unrealized Appreciation
 (Depreciation) on Investments          (76.87)                110.88                 9.14               (55.15)               3.66


Net Realized (Losses) Gains
  on Investments                         62.52                 (41.78)              (41.70)                6.12               10.85
Net Asset Value                          82.91                 383.53               390.82               548.47              764.75

</TABLE>

(a) Includes Return of Capital of $35,826,833 or $125.88 per LP Unit.
(b) Includes Return of Capital of $402.40 per LP Unit.
(c) Includes Return of Capital of $8,128,490 or $28.56 per LP Unit.
(d) Includes Return of Capital of $25,324,686 or $88.98 per LP Unit.
<PAGE>
Item 7.       Management's Discussion and Analysis
              of Financial Condition and Results of Operations

Liquidity and Capital Resources

       Net Proceeds of Offering

       On October 13, 1988, the Fund  completed the initial  public  offering of
Units,  admitting 18,288 Limited  Partners who purchased  284,611 Units. The net
proceeds  available  for  investment  by  the  Fund  after  such  offering  were
$261,499,657  after volume  discounts,  sales  commissions  and  organizational,
offering, sales and marketing expenses.

     Investments

     As of  December  31,  1997,  the  Fund  had a  total  of 7  Enhanced  Yield
Investments at a net cost of $30,698,278.

     Proceeds from Investments

     During the year ended  December 31, 1997,  the Fund  received the following
proceeds:

     During the year  ended  December  31,  1997,  the Fund  received a total of
$200,373  from  Pergament  Home  Centers,  Inc.  as a  principal  paydown of the
Floating Rate Demand Note held by the Fund. No gain, loss or income was recorded
on this transaction.

     During the year ended  December  31,  1997,  the Fund  received  additional
proceeds of $2,716 from Polaris Pool Systems, Inc. This represents proceeds from
the sale of the investments from prior years that were held in escrow for future
adjustments and expenses.

     On March 24, 1997, the Fund received a prepayment of Lexmark International,
Inc.'s 14.25% Senior Subordinated Notes outstanding,  in the principal amount of
$19,667,348  together with a prepayment  penalty of  $3,312,387  and $646,154 of
accrued interest. The transaction resulted in a gain of $3,312,387 to the Fund.

     On April 8, 1997,  the Fund received a dividend of $13,771 from Bank United
Corp.

     On  July  2,  1997,  the  Fund  sold  its  RI  Holdings  Inc.,  16%  Senior
Subordinated  Notes for $409,189 and realized a loss of $11,415,129 on the sale.
Additionally,  the  write-off  of the common  stock  resulted  in an  additional
realized loss of $3,058,326.

     During  the year  ended  December  31,  1997,  the Fund sold the  remaining
877,908  shares of Bank United Corp.  Class A Common Stock for  $24,900,080  and
realized a gain of $19,009,662.

     On September 19, 1997, the Fund received additional proceeds of $8,826 from
Haddon Craftsman.  This represents proceeds from the sale of the investment from
prior years that have been held in escrow.

     During the year ended  December 31, 1997,  the Fund sold 458,982  shares of
Lexmark International Group, Inc. Class B Common Stock for $13,173,350 resulting
in a gain of $10,113,455.

     All of the proceeds received during the fourth quarter of 1997 are expected
to be  distributed  to Limited  Partners on record as of December 31,  1997,  on
Febuary 13, 1998.

       For  additional  information,  refer  to  the  Supplemental  Schedule  of
Realized Gains and Losses and Note 10 to the Financial Statements.

       The Fund's  Enhanced Yield  Investments  are typically  issued in private
placement  transactions and are subject to certain restrictions on transfer, and
are thus relatively illiquid. The balance of the Fund's assets at the end of the
period covered by this report was invested in Temporary  Investments,  comprised
of commercial paper with maturities of less than sixty days.

       All cash  dividends,  interest and other  income  received by the Fund in
excess  of  expenses  of  operation   and  reserves  for  expenses  and  certain
investments and liabilities are distributed to the Limited  Partners of the Fund
and to Alliance Corporate, as the Managing General Partner, within 45 days after
the end of each calendar quarter.  Before each quarterly cash distribution,  the
Fund will analyze the then current cash  projections and determine the amount of
any additional reserves it deems necessary.
<PAGE>
Participation in Enhanced Yield Investments

     The Fund invested  primarily in Enhanced Yield  Investments,  also known in
the securities industry as "high yield securities".  The securities in which the
Fund has invested were issued in  conjunction  with the  mezzanine  financing of
privately  structured,  friendly leveraged  acquisitions,  recapitalizations and
other   leveraged   financings,   and  are  generally   linked  with  an  equity
participation.   Enhanced  Yield  Investments  are  debt  and  preferred  equity
securities that are below investment grade, i.e., unrated or rated by Standard &
Poor's Corporation as BB or lower or by Moody's Investor Services, Inc. as Ba or
lower.  Risk of loss upon  default by the issuer is  significantly  greater with
Enhanced  Yield  Investments  than  with  investment  grade  securities  because
Enhanced Yield Investments are generally unsecured and are often subordinated to
other creditors of the issuer.  Also,  these issuers usually have high levels of
indebtedness  and are more sensitive to adverse economic  conditions,  such as a
recession or increasing  interest rates, than investment grade issuers.  Most of
these  securities are subject to resale  restrictions  and generally there is no
quoted market for such securities.

     Although the Fund cannot eliminate its risks associated with  participation
in Enhanced Yield Investments,  it has established risk management policies. The
Fund subjects each prospective  investment to rigorous analysis,  and makes only
those investments that have been recommended by the Managing General Partner and
that meet the Fund's investment  guidelines or that have otherwise been approved
by the Independent General Partners.

       Fund  investments  are measured  against  specified  Fund  investment and
performance  guidelines.  To limit the  exposure  of the  Fund's  capital in any
single  issuer,  the Fund limits the amount of its  investment  in a  particular
issuer.  The Fund also  continually  monitors  portfolio  companies  in order to
minimize the risks associated with participation in Enhanced Yield Investments.

Results of Operations

     For the year ended December 31, 1997, the Fund had net investment income of
$461,348,  a decrease of $5,456,809 from the net investment income of $5,918,157
for the year ended  December 31,  1996.  The Fund had net  investment  income of
$5,215,211 for the same period in 1995.  Net  investment  income is comprised of
investment income  (primarily  interest and dividend income) offset by expenses.
The decrease in the 1997 net investment income versus the comparative  period in
1996 reflects a decrease in interest and dividend income partially offset by the
decrease in Fund Administration Fees and Expenses.

     For the year ended  December 31, 1997,  the Fund had  investment  income of
$2,623,310,  as  compared  to  $8,279,977,  for the  same  period  in  1996  and
$7,984,889 for the same period in 1995. The decrease in 1997  investment  income
of 68% versus  1996 was  primarily  due to a  decrease  in the amount of accural
status securities held by the Fund due to sales and repayments of Enhanced Yield
Investments  during  1997.  The increase in the 1996  investment  income of 3.7%
versus  the  comparative  period in 1995 was  primarily  due to an  increase  in
dividend income  partially  offset by a decrease in the amount of accural status
debt  securities  held by the Fund due to the sales and  repayments  of Enhanced
Yield investments during 1996.

     The Fund incurred  expenses of $2,161,962,  for the year ended December 31,
1997, as compared to $2,361,820  for the same period in 1996 and  $2,769,678 for
the same period in 1995. The decrease in the 1997 expenses  versus 1996 expenses
of $199,858 was primarily  due to the decrease in the  Professional  Fees,  Fund
Administration  Fees and Expenses and  Independent  General  Partners'  Fees and
Expenses  paid by the  Fund.  The  decrease  in the 1996  expenses  versus  1995
expenses  of  $407,858  was  primarily  due to the  decrease  in the  Investment
Advisory Fee and Fund Administration Fees and Expenses.

     The Fund experienced a decrease in net assets resulting from operations for
the year ended  December 31, 1997 in the amount of  $3,662,710 as compared to an
increase of $25,784,478  for the same period in 1996. The decrease in net assets
resulting from  operations in 1997 versus 1996 is attributable to an decrease in
net investment income of $5,456,809,  an increase in unrealized  depreciation of
$53,974,801  offset by an increase in net  realized  gains of  $29,984,422  (see
Statement of Operations in the Financial Statements). The increase in net assets
resulting  from  operations in 1996 of  $25,784,478 as compared to a decrease in
1995 of $4,146,289 was  attributable  to a increase in net investment  income of
$702,946,  an increase in unrealized  appreciation  of $29,250,056  offset by an
increase in net realized losses of $22,235.
<PAGE>
     For the year ended  December  31,  1997,  the Fund  incurred an  Investment
Advisory Fee of $1,213,855.  Investment Advisory Fee for the year ended December
31, 1997,  reflects an adjustment for the difference  between the Minimum Amount
due to the Investment Advisor and what was paid for the quarters ending December
31, 1996 and 1997 (as described in Note 6 to the Financial Statements).  For the
years ended  December 31, 1996 and 1995, the Fund incurred  Investment  Advisory
Fees of $1,037,447 and $1,442,458, respectively.

     The Fund  Administration  Fees and Expenses (as  described in Note 7 to the
Financial Statements) for the years ended December 31, 1997, 1996 and 1995, were
$701,134, $916,209 and $1,077,666,  respectively.  The decrease of $215,075 from
1996 to 1997 is  primarily  due to the Fund  Administration  Fee  changing to an
annual fee of $300,000 plus 100% of all direct  out-of-pocket  expenses incurred
by the Fund Administrator on behalf of the Fund. During the years ended December
31, 1997,  1996 and 1995,  the Fund  incurred a total of $401,134,  $192,068 and
$173,962,  respectively,  of  administrative  expenses  consisting  primarily of
printing,  audit and tax return  preparation  and custodian fees paid for by the
Fund Administrator.

     Independent  General  Partners'  Fees and  Expenses  incurred for the years
ended  December 31,  1997,  1996 and 1995 were  $151,406,  $192,279 and $167,152
respectively.  The  changes  are  attributable  to  fluctuations  in legal  fees
incurred  by the  Independent  General  Partners.  (See Note 9 to the  Financial
Statements).

     The Fund incurred  professional  fees of $82,050,  $183,323 and $69,167 for
the years ended December 31, 1997, 1996 and 1995,  respectively,  which included
reimbursed  legal fees to  Debevoise  & Plimpton  and  Equitable  Life for legal
services (See Note 9 to the Financial Statements).

Unrealized Appreciation/Depreciation and Non-Accrual of Investments

       The General  Partners of the Fund determine,  on a quarterly  basis,  the
fair  value  of the  Fund's  portfolio  securities  that do not  have a  readily
ascertainable   market  value.   They  are  assisted  in  connection  with  such
determination by the Managing General Partner, which has established a valuation
committee comprised of senior executives to assess the Fund's portfolio and make
recommendations regarding the value of its portfolio securities.  This valuation
committee  uses  available   market   information  and   appropriate   valuation
methodologies.  In addition, the Managing General Partner has retained Arthur D.
Little,  Inc., a nationally  recognized  independent  valuation  consultant,  to
review such valuations.

       For privately issued securities in which the Fund typically invests,  the
fair value of an investment is its initial cost,  adjusted for  amortization  of
discount or premium and as  subsequently  adjusted to reflect the  occurrence of
significant developments.  "Significant developments" are business,  economic or
market events that may affect a company in which an investment  has been made or
the securities comprising such investment. For example, significant developments
that could result in a writedown in value include, among other things, events of
default with respect to payment  obligations  or other  developments  indicating
that a portfolio  company's  performance may fall short of acceptable  levels. A
write-up in value of an investment could take place when a significant favorable
development  occurs,  such as a transaction  representing the partial sale of an
investment that would result in a capital gain or company performance  exceeding
expected levels on a sustained basis.

       Although the General  Partners use their best judgment in determining the
fair value of these investments, there are inherent limitations in any valuation
technique involving securities of the type in which the Fund invests. Therefore,
the fair values  presented  herein are not necessarily  indicative of the amount
which the Fund could realize in a current transaction.

     For the year ended  December  31,  1997 the Fund  recorded  net  unrealized
depreciation  on  Enhanced  Yield  Investments  of  $22,097,649  as  compared to
$31,877,152 of unrealized  appreciation at December 31, 1996. For the year ended
December 31, 1995,  the Fund recorded net  unrealized  appreciation  on Enhanced
Yield Investments of $2,627,096. The change of $53,974,801 from 1996 to 1997, in
unrealized  depreciation was primarily the result of unrealized  depreciation in
Pergament  Home  Centers,  Inc.  and  Western  Pioneer,  Inc.,  the  reversal of
depreciation on RI Holdings, Inc. and the reversal of unrealized appreciation in
Lexmark  International  Group,  Inc. and Bank United  Corp.  (See Note 12 to the
Financial Statements).
<PAGE>

         Alliance  Corporate  continues to monitor the Fund's portfolio closely.
As a matter of standard  procedure,  Alliance  Corporate  reviews each portfolio
company's financial statements at least quarterly, and often monthly. Investment
managers  routinely review and discuss  financial and operating results with the
companies'  management  and  equity  sponsors,  and  attend  periodic  board  of
directors meetings, as appropriate.  In some cases, Alliance Corporate officers,
acting on behalf of the Funds,  serve as  directors  on the boards of  portfolio
companies. When problems arise, communication with management and sponsors often
occurs on a daily basis.

    The  following  investments  have  been  on  non-accrual  status  as of  the
respective dates:

    Pergament Home Centers, Inc.
      Floating Rate Demand Note              July 1, 1996
    Western Pioneer, Inc. 10%
      Senior Subordinated Note               November 30, 1994

Realized Gains and Losses on Investments

     For the year ended December 31, 1997, the Fund recorded a net realized gain
of $17,973,591 on transactions  involving five Enhanced Yield Investments.  (See
Note 10 to the Financial  Statements and the  Supplemental  Schedule of Realized
Gains and  Losses).  For the years ended  December  31, 1996 and 1995,  the Fund
realized a net realized losses of $12,010,831 and $11,988,596, respectively.



<PAGE>
Item 8.  Financial Statements and Supplementary Data

                        EQUITABLE CAPITAL PARTNERS, L.P.


                                TABLE OF CONTENTS


Independent Auditors' Report

Statements of Assets, Liabilities and Partners' Capital as of
     December 31, 1997 and 1996

Statements of Operations
     For the Years Ended December 31, 1997, 1996 and 1995

Statements of Cash Flows
     For the Years Ended December 31, 1997, 1996 and 1995

Statements of Changes in Net Assets
     For the Years Ended December 31, 1997, 1996 and 1995

Statements of Changes in  Partners'  Capital 
     For the Years Ended December 31, 1997, 1996 and 1995

Schedule of Portfolio Investments - December 31, 1997

Supplementary Schedule of Realized Gains and Losses
     For the Year Ended December 31, 1997

Notes to Financial Statements


<PAGE>



                          INDEPENDENT AUDITORS' REPORT

Equitable Capital Partners, L.P.

     We have audited the  accompanying  statements  of assets,  liabilities  and
partners'  capital  of  Equitable  Capital  Partners,  L.P.  (the  "Fund") as of
December 31, 1997 and 1996, including the schedule of portfolio investments,  as
of December 31, 1997,  and the related  statements  of  operations,  cash flows,
changes in net assets and  changes in  partners'  capital  for each of the three
years in the period ended December 31, 1997. These financial  statements are the
responsibility of the Fund's General Partners.  Our responsibility is to express
an opinion on these financial statements based upon our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  Our procedures include
confirmation of securities owned as of December 31, 1997, by correspondence with
the custodian.  An audit also includes assessing the accounting  principles used
and significant estimates made by management,  as well as evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  such financial  statements present fairly, in all material
respects,  the financial  position of the Fund as of December 31, 1997 and 1996,
the results of operations,  its cash flows and the changes in its net assets and
partners'  capital  for  the  respective  stated  periods,  in  conformity  with
generally accepted accounting principles.

     As  explained  in Note 2, the  financial  statements  of the  Fund  include
securities  valued at $11,625,136 and  $44,569,548,  as of December 31, 1997 and
1996  respectively,   representing  46.8  and  40.2  percent  of  total  assets,
respectively,  whose values have been  estimated by the General  Partners of the
Fund in the absence of readily ascertainable market values. We have reviewed the
procedures  used by the General  Partners in arriving at their estimate of value
of such  securities and have  inspected  underlying  documentation,  and, in the
circumstances,  we believe the procedures  are reasonable and the  documentation
appropriate.  However,  because of the inherent uncertainty of valuation,  those
estimated values may differ  significantly  from the values that would have been
used had a ready market for the securities existed, and the differences could be
material.

     Our  audits  were  conducted  for the  purpose of forming an opinion on the
basic  financial  statements  taken as a whole.  The  supplemental  schedule  of
realized  gains and losses for the year ended December 31, 1997 is presented for
the  purposes of  additional  analysis  and is not a required  part of the basic
financial statements.  This schedule is the responsibility of the Fund's General
Partners. Such schedule has been subjected to the auditing procedures applied in
our audit of the basic  financial  statements  and,  in our  opinion,  is fairly
stated  in all  material  respects  when  considered  in  relation  to the basic
financial statements taken as a whole.


Deloitte & Touche LLP
New York, New York
February 20, 1998
<PAGE>



                        EQUITABLE CAPITAL PARTNERS, L.P.
             STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL

<TABLE>
<S>                                                               <C>             <C>                          <C>

ASSETS:                                                                Notes           December 31, 1997        December 31, 1996
                                                                      -------          -----------------        -----------------

     Investments                                                      2,10,12
         Enhanced Yield Investments at Value-
              Managed Companies
              (amortized cost of $16,931,732 at
              December 31, 1997 and $55,159,154
              at December 31, 1996)                                                     $      7,589,732          $    52,325,273
              Non-Managed Companies
              (amortized cost of $13,766,546 at
              December 31, 1997 and $19,239,803
              at December 31, 1996)                                                            7,555,572               28,618,359
         Temporary Investments
              (at amortized cost )                                                             8,098,650               27,105,414

     Cash                                                                                         47,134                   91,206
     Interest Receivable                                               2,12                       64,768                  753,608
     Note Receivable                                                    3,4                    1,484,748                1,846,593
     Receivable for Investment Sold                                                                    -                  100,282
     Prepaid Expenses                                                                                  -                    2,650

TOTAL ASSETS                                                                            $     24,840,604          $   110,843,385
                                                                                        ================          ===============


LIABILITIES AND PARTNERS' CAPITAL

     Liabilities
         Professional Fees Payable                                       9              $         41,548          $        40,107
         Independent General Partners' Fees Payable                      8                        12,396                   24,456
         Fund Administrative Expenses Payable                            7                        50,149                   58,985
         Other Accrued Liabilities                                                                 4,725                   11,663
              Total Liabilities                                                                  108,818                  135,211

     Partners' Capital
         Managing General Partner                                       3,4                    1,134,402                1,550,892
         Limited Partners (284,611 Units)                                4                    23,597,384              109,157,282
              Total Partners' Capital                                                         24,731,786              110,708,174

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                                 $     24,840,604          $   110,843,385
                                                                                        ================          ===============

</TABLE>

               See the Accompanying Notes to Financial Statements.

<PAGE>

                        EQUITABLE CAPITAL PARTNERS, L.P.
                            STATEMENTS OF OPERATIONS

<TABLE>
<S>                                                       <C>                    <C>                      <C>
                                                                                  For the Years Ended
                                                          -----------------------------------------------------------
                                                          December 31, 1997    December 31, 1996    December 31, 1995
                                                          -----------------    -----------------    -----------------
INVESTMENT INCOME- Notes 2,12:
     Interest                                             $       2,486,632    $       4,478,309    $       7,936,925
     Dividend and Discount                                          136,678            3,801,668               47,964
          TOTAL INVESTMENT INCOME                                 2,623,310            8,279,977            7,984,889

EXPENSES:
     Investment Advisory Fee- Note 6                              1,213,855            1,037,447            1,442,458
     Fund Administration Fees and Expenses- Note 7                  701,134              916,209            1,077,666
     Independent General Partners'
      Fees and Expenses- Note 8                                     151,406              192,279              167,152
     Professional Fees - Note 9                                      82,050              183,323               69,167
     Insurance Fees                                                   6,017                5,256                 --
     Valuation Expenses                                               7,500               27,306               13,235
          TOTAL EXPENSES                                          2,161,962            2,361,820            2,769,678

NET INVESTMENT INCOME                                               461,348            5,918,157            5,215,211

NET CHANGE IN UNREALIZED (DEPRECIATION)
     APPRECIATION ON INVESTMENTS- Note 12                       (22,097,649)          31,877,152            2,627,096

NET REALIZED GAINS (LOSSES)ON INVESTMENTS- Note 10               17,973,591          (12,010,831)         (11,988,596)

NET DECREASE IN NET ASSETS
     RESULTING FROM OPERATIONS                            $      (3,662,710)   $      25,784,478    $      (4,146,289)
                                                          =================    =================    =================



</TABLE>

               See the Accompanying Notes to Financial Statements



<PAGE>
                                            EQUITABLE CAPITAL PARTNERS, L.P.
                                                STATEMENTS OF CASH FLOW
               
<TABLE>
<S>                                                                      <C>                 <C>                   <C>
                                                                                             For the Years Ended
                                                                         -----------------------------------------------------------
INCREASE (DECREASE) IN CASH                                              December 31, 1997    December 31, 1996    December 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:                                    -----------------    -----------------    -----------------
      Interest and Discount Income                                       $       2,132,489    $       7,505,048    $      9,797,734
      Fund Administration Fees & Expenses                                         (709,970)            (893,841)         (1,092,756)
      Investment Advisory Fee                                                   (1,213,855)          (1,037,447)         (1,442,458)
      Independent General Partners' Fees and Expenses                             (163,466)            (183,096)           (164,204)
      Valuation Expenses                                                           (14,438)             (21,501)            (25,370)
      Sale (Purchase)of Temporary Investments, Net                              20,186,427           (6,016,884)         12,191,972
      Purchase of Enhanced Yield Investments                                          --                     --              (1,869)
      Proceeds from Sales and Principal Payments of
          Enhanced Yield Investments                                            61,774,551           28,181,211          21,907,154
      Professional Fees                                                            (80,234)            (168,325)            (70,815)
      Insurance Fees                                                                (3,742)                (375)             (7,906)
          Net Cash Provided by Operating Activities                             81,907,762           27,364,790          41,091,482
CASH FLOWS FROM FINANCING ACTIVITIES:
      Cash Distributions to Partners                                           (81,951,834)         (27,348,085)        (41,174,256)
          Net Cash Used in Financing Activities                                (81,951,834)         (27,348,085)        (41,174,256)
Net (Decrease) Increase in Cash                                                    (44,072)              16,705             (82,774)
Cash at the Beginning of the Period                                                 91,206               74,501             157,275
Cash at the End of the Period                                            $          47,134    $          91,206    $         74,501
                                                                         =================    =================    ================


                                       RECONCILIATION OF NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
                                              OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES

Net Increase (Decrease) In Net Assets
     Resulting From Operations                                           $      (3,662,710)   $      25,784,478    $     (4,146,289)

Adjustments to Reconcile Net Increase (Decrease) in Net Assets
      Resulting from Operations to Net Cash Provided by Operating
      Activities:
Decrease in Investments                                                         63,987,387           34,175,157          46,085,852
Decrease (Increase) in Accrued Interest and other Investment Income               (490,821)            (774,928)          1,812,846
Decrease (Increase)in Prepaid Expenses                                               2,650                5,256              (7,906)
Net Change in Unrealized Depreciation
  (Appreciation) on Investments                                                 22,097,649          (31,877,152)         (2,627,096)
Increase (Decrease) in Fund Administration Expenses Payable                         (8,836)              22,368             (15,090)
(Decrease) Increase in Other Accrued Liabilities                                    (6,938)               5,805             (10,370)
(Decrease) Increase in Independent General
   Partners' Fees Payable                                                          (12,060)               9,183               1,945
Increase (Decrease)in Professional Fees Payable                                      1,441               14,623              (2,410)
      Total Adjustments                                                         85,570,472            1,580,312          45,237,771
Net Cash Provided by Operating Activities                                $      81,907,762    $      27,364,790    $     41,091,482
                                                                         =================    =================    ================




</TABLE>
                          See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                              EQUITABLE CAPITAL PARTNERS, L.P.
                                            STATEMENTS OF CHANGES IN NET ASSETS

<S>                                                            <C>                     <C>                      <C>
                                                                                      For the Years Ended
                                                               -----------------------------------------------------------  
                                                               December 31, 1997    December 31, 1996    December 31, 1995
                                                               -----------------    -----------------    -----------------  
FROM OPERATIONS:

    Net Increase (Decrease) in Net Assets
       Resulting from Operations                               $      (3,662,710)   $      25,784,478    $      (4,146,289)

    Cash Distributions to Partners                                   (81,951,834)         (27,348,085)         (41,174,256)

    Reduction in Managing General Partners' Contribution                (361,844)             (82,097)            (255,780)

    Total Decrease                                                   (85,976,388)          (1,645,704)         (45,576,325)

NET ASSETS:

    Beginning of Period                                              110,708,174          112,353,878          157,930,203

    End of Period                                              $      24,731,786    $     110,708,174    $     112,353,878
                                                               =================    =================    =================




</TABLE>
                           See the Accompanying Notes to Financial Statements.


<PAGE>


<TABLE>
<CAPTION>
                        EQUITABLE CAPITAL PARTNERS, L.P.
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

<S>                                                                   <C>       <C>              <C>             <C>
                                                                                   Managing         Limited
                                                                        Notes   General Partner     Partners            Total
                                                                                -------------    -------------    -------------

FOR THE YEAR ENDED DECEMBER 31, 1995

Partners' Capital at January 1, 1995                                            $   1,828,320    $ 156,101,883    $ 157,930,203
Cash Distributions to Partners                                                        (82,120)     (41,092,136)     (41,174,256)
Reduction in Managing General Partners' Contribution                       3         (255,780)            --           (255,780)
Allocation of Net Investment Income                                       11           52,152        5,163,059        5,215,211
Allocation of Net Unrealized Appreciation
   on Investments                                                         12           26,271        2,600,825        2,627,096
Allocation of Net Realized Losses on Investments                                     (119,887)     (11,868,709)     (11,988,596)
Partners' Capital at December 31, 1995                                          $   1,448,956    $ 110,904,922    $ 112,353,878
                                                                                =============    =============    =============


FOR THE YEAR ENDED DECEMBER 31, 1996

Partners' Capital at January 1, 1996                                            $   1,448,956    $ 110,904,922    $ 112,353,878
Cash Distributions to Partners                                                        (73,813)     (27,274,272)     (27,348,085)
Reduction in Managing General Partners' Contribution                       3          (82,097)            --            (82,097)
Allocation of Net Investment Income                                       11           59,182        5,858,975        5,918,157
Allocation of Net Unrealized Appreciation
   on Investments                                                         12          318,772       31,558,380       31,877,152
Allocation of Net Realized Gains on Investments                                      (120,108)     (11,890,723)     (12,010,831)
Partners' Capital at December 31, 1996                                          $   1,550,892    $ 109,157,282    $ 110,708,174
                                                                                =============    =============    =============

FOR THE YEAR ENDED DECEMBER 31, 1997

Partners' Capital at January 1, 1997                                            $   1,550,892    $ 109,157,282    $ 110,708,174
Cash Distributions to Partners                                                        (18,019)     (81,933,815)     (81,951,834)
Reduction in Managing General Partners' Contribution                       3         (361,844)            --           (361,844)
Allocation of Net Investment Income                                       11            4,613          456,735          461,348
Allocation of Net Unrealized Depreciation
   on Investments                                                         12         (220,976)     (21,876,673)     (22,097,649)
Allocation of Net Realized Gains on Investments                                       179,736       17,793,855       17,973,591
Partners' Capital at December 31, 1997                                          $   1,134,402    $  23,597,384    $  24,731,786
                                                                                =============    =============    =============

</TABLE>
                           See the Accompanying Notes to Financial Statements.




<PAGE>
<TABLE>
<CAPTION>
                        EQUITABLE CAPITAL PARTNERS, L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                DECEMBER 31, 1997
                                
<S>                <C>                                        <C>           <C>            <C>           <C>           <C>


   PRINCIPAL                                                      INVESTMENT     INVESTMENT     AMORTIZED     VALUE      % OF TOTAL
 AMOUNT/SHARES                  INVESTMENT                            DATE          COST          COST       (NOTE 2)    INVESTMENTS
---------------  --------------------------------------------     -----------    ----------    ----------    ---------   -----------

                    ENHANCED YIELD INVESTMENTS
                    MANAGED COMPANIES

                    MISCELLANEOUS MANUFACTURING

                    QUANTEGY ACQUISITION CORP.
                    (FORMERLY AMPEX RECORDING MEDIA CORP.)
        162 Shares  Quantegy Acquisition Corp., Common Stock          11/13/95  $  3,464,732    $3,464,732   $ 3,464,732
                                                                                ------------    ----------   -----------
                                                                                   3,464,732     3,464,732     3,464,732      14.91%
                                                                                ------------    ----------   -----------------------

                    LEATHER AND LEATHER PRODUCTS

                    LEATHER U.S., INC. - NOTE 12
                    (FORMERLY UNITED STATES LEATHER HOLDINGS, INC.)
      795.00 Shares Leather U.S., Inc., Common Stock                  04/09/96     9,342,000     9,342,000             0
                                                                                ------------   -----------   -----------
                                                                                   9,342,000     9,342,000             0       0.00
                                                                                ------------   -----------   -----------------------

                    MISCELLANEOUS RETAIL

                    R&S/STRAUSS, INC.
                    (FORMERLY WSR ACQUISITION CORPORATION)
  $      1,815,000  R&S/Strauss, Inc., Sr. Sub. Nt. 15% due 05/31/00* 06/13/90     1,815,000     1,815,000     1,815,000
  $      2,310,000  R&S/Strauss, Inc., Sr. Sub. Nt. 15% due 05/31/00* 06/13/90     2,310,000     2,310,000     2,310,000
                                                                                 -----------  ------------   -----------
                                                                                   4,125,000     4,125,000     4,125,000      17.75
                                                                                 -----------  ------------   -----------------------




                    TOTAL INVESTMENT IN  MANAGED  COMPANIES                     $ 16,931,732  $ 16,931,732   $ 7,589,732      32.66%
                    ---------------------------------------                     ------------  ------------   -----------------------

</TABLE>
                             See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                              EQUITABLE CAPITAL PARTNERS, L.P.
                                             SCHEDULE OF PORTFOLIO INVESTMENTS
                                                    DECEMBER 31, 1997
                                                      (CONTINUED)
<S>               <C>                                                  <C>            <C>            <C>         <C>           <C>

  PRINCIPAL                                                           INVESTMENT    INVESTMENT    AMORTIZED    VALUE     % OF TOTAL
 AMOUNT/SHARES                       INVESTMENT                         DATE           COST         COST      (NOTE 2)   INVESTMENTS
---------------  ---------------------------------------------------- ------------ --------------- ----------- --------- -----------

                    NON-MANAGED COMPANIES

                    CONSUMER PRODUCTS MANUFACTURING

                    LEXMARK INTERNATIONAL GROUP, INC. - NOTES 10,12
     92,636 Shares  Lexmark International Group, Inc.,
                     Class B Common Stock (b)                         03/27/91   $   617,535   $    617,535  $   3,520,168
                                                                                 -----------   ------------  -------------
                                                                                     617,535        617,535      3,520,168    15.14%
                                                                                 -----------   ------------  -----------------------

                    DISTRIBUTION SERVICES

                    WESTERN PIONEER, INC. - NOTE 12
  $      9,460,000  Western Pioneer, Inc.,
                      Sr. Sub. Nts. 10% due 11/30/07*(a)              11/30/94     1,219,460     1,219,460      2,838,000
   162,161 Warrants Western Pioneer, Inc.,
                     Common Stock Purchase Warrants **                11/30/94             0             0              0
                                                                                 -----------  ------------   ------------
                                                                                   1,219,460     1,219,460      2,838,000     12.20
                                                                                 -----------  ------------   ----------------------

                    HEALTH SERVICES

                    MTI HOLDINGS, INC.
  $        220,102  MTI Holdings, Inc.,
                     Sr. Sec. Nt. 12% due 07/01/03*                   08/06/96       220,102       220,102        220,102
   15,772 Shares    MTI Holdings, Inc., Common Stock**                08/06/96       236,580       236,580        236,580
    4,397 Warrants  MTI Holdings, Inc., Common Stock
                     Purchase Warrants                                08/06/96             0             0              0
                                                                                   ---------    ----------     ----------
                                                                                     456,682       456,682        456,682      1.96
                                                                                   ---------    ----------     --------------------

                    MISCELLANEOUS RETAIL

                    PERGAMENT HOME CENTERS, INC.- NOTES 10, 12
  $      3,236,800  Pergament Acq. Corp., Home Centers, Inc.
                     Floating Rate Demand Note due 07/31/00* (a)      10/18/91     2,904,869     2,904,869        740,722
     380.80 Shares  Pergament Holding, Corp., Common Stock Class B ** 02/28/89     8,568,000     8,568,000              0
    139.0545 Shares Pergament Holding, Corp., Common Stock Class C ** 02/28/89             0             0              0
                                                                                 -----------   -----------    -----------
                                                                                  11,472,869    11,472,869        740,722      3.19
                                                                                 -----------   -----------    ---------------------


                    TOTAL INVESTMENT IN NON-MANAGED  COMPANIES                   $13,766,546   $13,766,546    $ 7,555,572     32.49%
                    ------------------------------------------                   -----------   -----------    ---------------------

                    TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS               $30,698,278   $30,698,278    $15,145,304     65.15%
                    ----------------------------------------------               -----------   -----------    ---------------------


</TABLE>

                             See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                               EQUITABLE CAPITAL PARTNERS, L.P.
                                              SCHEDULE OF PORTFOLIO INVESTMENTS
                                                     DECEMBER 31, 1997
                                                         (CONCLUDED)
<S>             <C>                                                 <C>           <C>          <C>         <C>            <C>
   PRINCIPAL                                                        INVESTMENT    INVESTMENT    AMORTIZED     VALUE     % OF TOTAL
 AMOUNT/SHARES                        INVESTMENT                       DATE          COST          COST      (NOTE 2)   INVESTMENTS
--------------  -------------------------------------------------- ------------ --------------- ---------- ---------- --------------

                   TEMPORARY INVESTMENTS

                   COMMERCIAL PAPER

$      8,100,000   Federal Home Loan Mortgage Disc Note,
                     6.00% due 1/02/98                               12/31/97   $   8,097,300  $  8,098,650   $  8,098,650
                                                                                -------------  ------------   ------------
                   TOTAL INVESTMENT IN COMMERCIAL PAPER                         $   8,097,300  $  8,098,650   $  8,098,650    34.84%
                                                                                -------------  ------------   ---------------------


                   TOTAL TEMPORARY INVESTMENTS                                  $   8,097,300  $  8,098,650   $  8,098,650    34.84%
                                                                                -------------  ------------   ---------------------

                   TOTAL INVESTMENT PORTFOLIO                                   $  38,795,578  $ 38,796,928   $ 23,243,954   100.00%
                                                                                =============  ============   =====================


                   SUMMARY OF INVESTMENTS
                   Subordinated Notes                                           $   8,469,431  $  8,469,431   $  7,923,824    34.09%
                   Common Stock and Warrants                                       22,228,847    22,228,847      7,221,480    31.07
                   Temporary Investments                                            8,097,300     8,098,650      8,098,650    34.84
                                                                                -------------  ------------   ---------------------
                                                                                $  38,795,578  $ 38,796,928   $ 23,243,954   100.00%
                                                                                =============  ============   =====================

                   *  Restricted Security
                  **  Restricted Non-income Producing Security
                  (a) Non-accrual investment status.
                  (b) Publicly traded class of securities.

</TABLE>
                             See the Accompanying Notes to Financial Statements.




<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS, L.P.
                      SUPPLEMENTAL SCHEDULE OF REALIZED GAINS AND LOSSES
                            FOR THE YEAR ENDED DECEMBER 31, 1997

<S>                                             <C>                 <C>        <C>            <C>             <C>

                                                              PAR VALUE OR
                                                DATE OF         NUMBER OF       AMORTIZED         NET           REALIZED
SECURITY                                      TRANSACTION        SHARES          COST           PROCEEDS       GAIN (LOSS)
----------------------------------           -----------     --------------   ------------    ------------    ------------         

Polaris Pool Systems, Inc. 
   Common Stock                                 1/15/97        $       --     $       --      $      1,100(A) $      1,100

Lexmark International Group, Inc. 
   Common Stock                                 various              30,002        200,014         772,125         572,111

Bank United Corp. 
   Common Stock                                 various             779,543      5,230,428      21,811,613      16,581,185

Lexmark International, Inc. 
   14.25% Sr. Sub. Note                         3/24/97        $ 19,667,348     19,667,348      22,979,735       3,312,387
                                                                              ------------    ------------    ------------
Total Net Realized Gains for the
  Three Months Ended March 31, 1997                                           $ 25,097,790    $ 45,564,573    $ 20,466,783
                                                                              ============    ============    ============


Polaris Pool Systems, Inc.                      5/15/97        $       --     $       --      $      1,616(A) $      1,616

Lexmark International Group, Inc. 
   Common Stock                                 various             226,641      1,510,948       5,888,318       4,377,370

Bank United Corp. 
   Common Stock                                 various              98,365        659,990       3,088,467       2,428,477
                                                                              ------------    ------------    ------------

Total Net Realized Gains for the
  Three Months Ended June 30, 1997                                            $  2,170,938    $  8,978,401    $  6,807,463
                                                                              ============    ============    ============

RI Holdings, Inc. 
   16% Sr. Sub. Nts.                            7/02/97        $ 26,338,272   $ 11,824,318    $    409,189    $(11,415,129)
   Common Stock                                                   1,203,474      3,058,326            --       (3,058,326)

Lexmark International Group, Inc. 
   Common Stock                                 various             140,921        939,478       4,676,509      3,737,031

Haddon Craftsman                                9/19/97                --               --           8,826(A)       8,826
   Common Stock                                                               ------------    ------------    ------------


Total Net Realized Loss for the
  Three Months Ended September 30, 1997                                       $ 15,822,122    $  5,094,524    $(10,727,598)
                                                                              ============    ============    ============

Lexmark International Group, Inc. 
   Common Stock                                 various              61,418   $    409,455    $  1,836,398    $  1,426,943
                                                                              ------------    ------------    ------------
Total Net Realized Gain for the
  Three Months Ended December 31, 1997                                        $    409,455    $  1,836,398    $  1,426,943
                                                                              ============    ============    ============

Total Net Realized Gains for the
  Year Ended December 31, 1997                                                $ 43,500,305    $ 61,473,896    $ 17,973,591
                                                                              ============    ============    ============

(A) Proceeds represent a distribution to the Fund from the escrow account.
</TABLE>

                             See the Accompanying Notes to Financial Statements.


<PAGE>
                        EQUITABLE CAPITAL PARTNERS, L.P.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997



1.  Organization and Purpose

    Equitable  Capital  Partners,  L.P.  (the  "Fund")  was  formed  along  with
Equitable Capital Partners  (Retirement  Fund), L.P. (the "Retirement Fund," and
collectively  with the Fund referred to as the "Funds") and the  Certificates of
Limited  Partnership  were filed  under the  Delaware  Revised  Uniform  Limited
Partnership Act on February 2, 1988. The Funds' operations  commenced on October
13, 1988.

    On July 22,  1993,  Equitable  Capital  Management  Corporation  ("Equitable
Capital"),  formerly the Managing General Partner and investment  adviser of the
Funds,  transferred   substantially  all  of  the  assets  comprising  Equitable
Capital's business to Alliance Capital Management L.P. ("Alliance  Capital") and
its  wholly-owned  subsidiary,  Alliance  Corporate  Finance Group  Incorporated
("Alliance  Corporate").  In  connection  with  such  transaction,  the  limited
partners,  (the  "Limited  Partners")  of  the  Funds  voted  to  approve  a new
investment  advisory agreement between the Funds and Alliance Corporate and also
voted to admit Alliance  Corporate as Managing  General  Partner of the Funds to
succeed Equitable  Capital.  Accordingly,  on July 22, 1993, the closing date of
the  transaction  described  above,  (i) Alliance  Corporate was admitted as the
successor  Managing General Partner of the Funds (ii) Equitable Capital withdrew
from the Funds as Managing  General  Partner and assigned all of its interest as
General  Partner to Alliance  Corporate and (iii) Alliance  Corporate  succeeded
Equitable  Capital  as the  investment  adviser to the Funds  pursuant  to a new
investment advisory agreement.  Alliance Corporate (the "Investment Adviser") is
a registered investment adviser under the Investment Advisers Act of 1940.

    Prior to July 22, 1993,  Equitable  Capital was responsible,  subject to the
supervision of the independent  general partners of the Funds (the  "Independent
General Partners"), for the management of the Fund's investments. As of July 22,
1993,  Alliance  Corporate  assumed  such  responsibilities  in its  capacity as
Managing General Partner and Investment Adviser of the Funds.

     The Funds elected to operate as business  development  companies  under the
Investment  Company Act of 1940, as amended.  The Funds seek current  income and
capital  appreciation  potential  through  investments in  privately-structured,
friendly  leveraged  acquisitions  and other leveraged  transactions.  The Funds
pursued this objective by investing  primarily in subordinated  debt and related
equity securities  ("Enhanced Yield Investments") issued in conjunction with the
"mezzanine   financing"  of  friendly   leveraged   acquisitions  and  leveraged
recapitalizations.

    As stated in the Partnership  Agreement,  the Fund will terminate on October
13, 1998, subject to the right of the Independent General Partners to extend the
term of the Fund for up to two additional one year periods, after which the Fund
will liquidate any remaining investments within five years.

2.     Significant Accounting Policies

       Basis of Accounting

       For financial reporting purposes, the Fund's records are maintained using
the accrual method of accounting.

       Valuation of Investments

     Securities  are valued at market or fair  value.  Market  value is used for
securities  for which market  quotations are readily  available.  For securities
without a readily  ascertainable  market value,  fair value is determined,  on a
quarterly  basis,  in good faith by the General  Partners of the Fund. The total
value of securities without a readily  ascertainable market value is $11,625,136
and $44,569,548,  as of December 31, 1997 and 1996,  respectively,  representing
46.8%  and  40.2%  of  total  assets,  respectively.  In  connection  with  such
determination,   the  Managing  General  Partner  has  established  a  valuation
committee comprised of senior executives to assess the Fund's portfolio and make
recommendations  regarding the value of the Fund's  portfolio  securities.  This
valuation committee uses available market information and appropriate  valuation
methodologies.  In addition, the Managing General Partner has retained Arthur D.
Little,  Inc., a nationally  recognized  independent  valuation  consultant,  to
review such valuations.
<PAGE>
       For privately issued securities in which the Fund typically invests,  the
fair value of an investment is its initial cost,  adjusted for  amortization  of
discount or premium and as  subsequently  adjusted to reflect the  occurrence of
significant developments.  "Significant developments" are business,  economic or
market events that may affect a company in which an investment  has been made or
the securities comprising such investment. For example, significant developments
that could result in a write down in value include,  among other things,  events
of default with respect to payment obligations or other developments  indicating
that a portfolio  company's  performance may fall short of acceptable  levels. A
write up in value of an investment could take place when a significant favorable
development  occurs,  such as a transaction  representing the partial sale of an
investment that would result in a capital gain, or company performance exceeding
expected levels on a sustained  basis.  Although the General  Partners use their
best  judgment in  determining  the fair value of these  investments,  there are
inherent limitations in any valuation technique involving securities of the type
in which the Fund invests.  Therefore,  the fair values presented herein are not
necessarily  indicative  of the amount which the Fund could realize in a current
transaction.

       Temporary  Investments  with  maturities of 60 days or less are valued at
amortized cost, which  approximates  market value.  Temporary  Investments which
mature in more than 60 days, for which market quotations are readily  available,
are valued at the most recent bid price or the equivalent  quoted yield obtained
from one or more of the market makers.

    Interest Receivable on Investments

    Investments will generally be placed on non-accrual status in the event of a
default  (after  applicable  grace period  expires) or if the  Managing  General
Partner  determines  that  there  is no  reasonable  expectation  of  collecting
interest.

    Payment-In-Kind Securities

     All  payment-in-kind  securities received in lieu of cash interest payments
from the Fund's  portfolio  companies  were  recorded at face value,  unless the
Managing General Partner  determines that there is no reasonable  expectation of
collecting the full principal, amounts of such securities.

    Income Taxes

     As discusssed in Note 13, no provision for income taxes has been made since
all income and losses are  allocated  to the Fund's  partners  ("Partners")  for
inclusion in their respective tax returns.

    Investment Transactions

    Enhanced Yield  Investments - The Fund records  transactions  on the date on
which it  obtains  an  enforceable  right to demand  the  securities  or payment
thereof.

    Temporary Investments - The Fund records transactions on the trade date.

    Realized  gains and losses on  investments  are  determined  on the basis of
specific identification for accounting and tax purposes.

    Sales, Marketing and Offering Expenses and Sales Commissions

    Sales  commissions and selling discounts have been allocated to the specific
Partners' accounts to which they are applicable.  Sales,  marketing and offering
expenses are  allocated  between the Funds in  proportion to the number of units
issued  by  each  Fund  and to the  Partners  in  proportion  to  their  capital
contributions.

<PAGE>
3.     Note Receivable

     On July 22, 1993,  pursuant to the terms of the Fund's Amended and Restated
Agreement of Limited Partnership,  Alliance Corporate, as the successor Managing
General Partner of the Fund, has contributed a non-interest  bearing  promissory
note  (the  "Note")  to the Fund in an  aggregate  amount  equal to 1.01% of the
aggregate Net Capital  Contributions of all Limited Partners (less distributions
representing  returns of capital).  Net Capital  Contributions  are comprised of
gross  offering  proceeds,  after giving effect to volume  discounts  (and after
netting of sales  commissions,  organization,  offering and sales and  marketing
expenses),  less  returns  of  capital  distributed  to  Limited  Partners.  The
principal amount of the Note is reduced proportionally as returns of capital are
received  by the  Fund.  Such  return of  capital  received  for the year  ended
December 31, 1997 resulted in a $361,844  reduction of the  principal  amount of
the Note.  The  promissory  note of  Equitable  Capital was  cancelled  upon the
contribution of Alliance Corporate's note.

4.     Capital Contributions

    On October 13,  1988,  the Fund closed the  initial  public  offering of its
units of Limited Partner  interests  ("Units").  Equitable  Capital,  the Fund's
Managing General Partner at that time, accepted  subscriptions for 284,611 Units
and admitted 18,288 Limited Partners.

    The Limited Partners' total capital  contributions were $283,873,400,  after
giving  effect to volume  discounts  allowed of  $737,600.  Equitable  Capital's
aggregate  capital  contribution  was in the  form of a  promissory  note in the
principal amount of $2,641,469.  On July 22, 1993,  Equitable Capital's note was
cancelled and Alliance Corporate,  as successor Managing General Partner, made a
capital contribution in the form of a promissory note on such date, as described
in Note 3. Sales,  marketing and offering expenses and selling  commissions have
been charged against  proceeds  resulting in net capital  contributed by Limited
Partners of $261,531,542.

    Allocation of income,  loss and distributions of cash are made in accordance
with the Partnership Agreement as further discussed in Note 11.

5.     Sales, Marketing and Offering Expenses and Sales Commissions

    The Fund  expended a total of $535,631  for the  reimbursement  of sales and
marketing expenses.  Aggregate sales and marketing expenses of the Funds may not
exceed  $2,528,415  or 0.5% of the  aggregate  capital  contributions  and  were
allocated  proportionately to the number of Units issued by each Fund. Aggregate
sales and marketing expenses for the Funds totalled $951,683.

    The Fund also paid $2,098,311 for the  reimbursement  of offering  expenses.
These expenses,  along with the offering expenses of the Retirement Fund and the
organizational  expenses  of the  Funds,  may not exceed  $6,000,000.  Aggregate
offering and organizational expenses for the Funds totalled $4,711,806.

     For their  services as selling  agent,  the Fund paid sales  commissions to
Merrill Lynch, Pierce, Fenner & Smith Incorporated in the amount of $19,185,170,
of which Equico Securities  Corporation,  an affiliate of Equitable  Capital,  a
related party, received $317,150 as a selected dealer.

6.   Investment Advisory Fee

     Alliance Corporate has been receiving a quarterly  Investment Advisory Fee,
at the  annual  rate of 1.0% of the  Fund's  Available  Capital,  with a minimum
annual payment of $2,000,000 collectively for the Funds, less 80% of commitment,
transaction,  investment  banking and  "break-up"  or other fees  related to the
Fund's investments  ("Deductible Fees"). Available Capital is defined as the sum
of the aggregate Net Capital  Contributions  of the Partners less the cumulative
amount of returns of Capital  distributed  to Partners and realized  losses from
investments.

     As stated in the  Partnership  Agreement,  the  Fund's  allocable  share of
Minimum  Amount is $1,125,650 or $281,413 per quarter.  Investment  Advisory Fee
for the year ended December 31, 1997,  reflects an adjustment for the difference
between the Minimum Amount due to the  Investment  Advisor and what was paid for
the quarters ending December 31, 1996 and March 31, 1997.

     The  Investment  Advisory Fee is calculated  and paid quarterly in advance.
The  Investment  Advisory Fees paid by the Fund for the years ended December 31,
1997, 1996 and 1995 were  $1,213,855,  $1,037,447 and $1,442,458,  respectively.
The decrease from 1995 to 1996 in the  Investment  Advisory Fee is due primarily
to the return of capital  distributed  to Limited  Partners,  which  reduced the
Fund's Available Capital, on which the Investment Advisory Fee is based.
<PAGE>
7.     Fund Administration Fees and Expenses

     In accordance with the Partnership  Agreement,  beginning October 13, 1996,
the Fund Administration Fee is an annual fee of $300,000 plus 100% of all direct
out-of-pocket expenses incurred by the Fund Administrator on behalf of the Fund.

     As compensation  for its services during the fourth through seventh year of
operation of the Funds,  ML Fund  Administrators,  Inc.  ("MLFAI"),  as the Fund
administrator,  received from the Funds an annual amount equal to the greater of
the (i) Minimum Fee and (ii) the Funds' prorated proportion (based on the number
of Units  issued by the  Funds)  of 0.45% of the  excess  of the  aggregate  net
offering  proceeds  of the Units  issued by the Funds over 50% of the  aggregate
amount of capital  reductions of the Funds (subject to an annual maximum of $3.2
million).  The  Minimum  Fee is 1% of the gross  offering  price of Units in the
Funds, but not greater than $500,000.  The Fund Administration Fee is calculated
and paid quarterly in advance. The Fund Administration Fees paid by the Fund for
the years ended December 31, 1997,  1996 and 1995,  were $300,000,  $724,141 and
$903,704, respectively.

     In addition to the Fund  Administration  Fee,  MLFAI is entitled to receive
reimbursement  for a  portion  of  direct  out-of-pocket  expenses  incurred  in
connection with the administration of the Fund,  commencing on October 13, 1992.
For the years ended December 31, 1997 and 1996, the Fund incurred Administrative
Expenses of $401,134 and $192,068  respectively,  which  consisted  primarily of
printing,  audit and tax return preparation and custodian fees paid for by MLFAI
on behalf of the Fund.

8.     Independent General Partners' Fees and Expenses

       As compensation for their services,  each Independent  General Partner is
entitled to a $30,000 annual fee (payable  quarterly)  from the Fund in addition
to $500 for each  meeting  attended  plus  reimbursement  for any  out-of-pocket
expenses.  In accordance with the Fund's  Partnership  Agreement,  the amount of
such fee is reviewed annually by the Independent General Partners.

     For the years ended  December 31, 1997,  1996 and 1995,  the Fund  incurred
$151,406, $192,279 and $167,152,  respectively, of Independent General Partners'
Fees and Expenses.

9.   Related Party Transactions

     For the  years  ended  December  31,  1997,  1996 and  1995,  the Fund paid
expenses of $32,246,  $76,426 and $44,530,  respectively,  as reimbursement  for
amounts paid for legal services  provided by Equitable  Life in connection  with
the Fund's Enhanced Yield Investments.  The Fund is paying Alliance Corporate an
Investment  Advisory Fee for its services as described in Note 6.  Additionally,
the Fund paid  sales  commissions  to Equico  Securities,  a related  party,  as
described in Note 5.
<PAGE>
10. Investment Transactions

     The Fund invested  primarily in Enhanced Yield  Investments,  also known in
the securities industry as "high yield securities".  The securities in which the
Fund has invested were issued in  conjunction  with the  mezzanine  financing of
privately  structured,  friendly leveraged  acquisitions,  recapitalizations and
other   leveraged   financings,   and  are  generally   linked  with  an  equity
participation.   Enhanced  Yield  Investments  are  debt  and  preferred  equity
securities that are unrated or are rated by Standard & Poor's  Corporation as BB
or lower and by Moody's  Investor  Services,  Inc. as Ba or lower.  Risk of loss
upon  default  by the  issuer  is  significantly  greater  with  Enhanced  Yield
Investments  than  with  investment  grade  securities  because  Enhanced  Yield
Investments  are  generally  unsecured  and  are  often  subordinated  to  other
creditors  of the  issuer.  Also,  these  issuers  usually  have high  levels of
indebtedness  and are more sensitive to adverse economic  conditions,  such as a
recession or increasing  interest rates, than investment grade issuers.  Most of
these  securities are subject to resale  restrictions  and generally there is no
quoted market for such securities.

     Although the Fund cannot eliminate its risks associated with  participation
in Enhanced Yield Investments,  it has established risk management policies. The
Fund subjected each prospective  investment to rigorous analysis,  and made only
those investments that were recommended by the Managing General Partner and that
met the Fund's  investment  guidelines  or that were  otherwise  approved by the
Independent  General  Partners.  Fund investments are measured against specified
Fund investment and performance guidelines.  To limit the exposure of the Fund's
capital in any single issuer, the Fund limited the amount of its investment in a
particular  issuer. The Fund also continually  monitors  portfolio  companies in
order to minimize the risks  associated  with  participation  in Enhanced  Yield
Investments.

     During the  year-ended  December  31,  1997,  the Fund  received a total of
$200,373  from  Pergament  Home  Centers,  Inc.  as a  principal  paydown of the
Floating  Rate  Demand Note held by the Fund.  No gain,  loss or income has been
recorded on this transaction.

     During the  year-ended  December 31,  1997,  the Fund  received  additional
proceeds of $2,716 from Polaris Pool Systems, Inc. The money represents proceeds
from the sale of the investments  from prior years that have been held in escrow
for future adjustments and expenses not paid on the sale dates.

     On March 24, 1997, the Fund received a prepayment of Lexmark International,
Inc.'s 14.25% Senior Subordinated Notes outstanding,  in the principal amount of
$19,667,348  together with a prepayment  penalty of  $3,312,387  and $646,154 of
accrued interest. The transaction resulted in a gain of $3,312,387 to the Fund.

     On April 8, 1997,  the Fund received a dividend of $13,771 from Bank United
Corp.

     On  July  2,  1997,  the  Fund  sold  its  RI  Holdings  Inc.,  16%  Senior
Subordinated  Notes for $409,189 and realized a loss of $11,415,129 on the sale.
Additionally,  the  write-off  of the common  stock  resulted  in an  additional
realized loss of $3,058,326.

     On September 19, 1997, the Fund received additional proceeds of $8,826 from
Haddon Craftsman.  This represents proceeds from the sale of the investment from
prior years that have been held in escrow.

     During  the  year-ended  December  31,  1997,  the Fund sold the  remaining
877,908  shares of Bank United Corp.  Class A Common Stock for  $24,900,080  and
realized a gain of $19,009,662.

     During the  year-ended  December 31, 1997,  the Fund sold 458,982 shares of
Lexmark International Group, Inc. Class B Common Stock for $13,173,350 resulting
in a gain of $10,113,455.

     All of the proceeds received during the fourth quarter of 1997 are expected
to be  distributed  to Limited  Partners on record as of December 31,  1997,  on
February 13, 1998.

     As of December 31, 1997,  the Fund had remaining  investments  in 3 Managed
Companies  (a Managed  Company is one to which the Fund,  the  Managing  General
Partner  or  other  persons  in  the  Fund's  investor  group  make  significant
managerial  assistance  available)  and 4 Non-Managed  Companies (a  Non-Managed
Company is one to which such  assistance is not provided)  totaling  $30,698,278
consisting of $8,469,431 in senior notes and subordinated  notes and $22,228,847
in common stock and purchase warrants.
<PAGE>
11.    Allocation of Profits and Losses

    Pursuant to the terms of the Partnership  Agreement,  net investment  income
and gains and losses on investments are generally allocated between the Managing
General  Partner  and the  Limited  Partners  based upon cash  distributions  as
follows:

    first,  99% to the Limited  Partners and 1% to the Managing  General Partner
    until the Limited Partners have received a cumulative priority return of 10%
    non-compounded  on an annual basis on their  investments  in Enhanced  Yield
    Investments;

    second,  70% to the Limited Partners and 30% to the Managing General Partner
    until the Managing General Partner has received 20% of all current and prior
    distributions on such investments;

    and thereafter, 80% to the Limited Partners and 20% to the Managing
    General Partner.

     For the year ended  December 31, 1997,  earnings were  allocated 99% to the
Limited Partners, as a class, and 1% to the Managing General Partner.

12.    Unrealized Appreciation/Depreciation and Non-Accrual of Investments

     For the year ended  December 31,  1997,  the Fund  recorded net  unrealized
depreciation on Enhanced Yield Investments of $22,097,649. Such depreciation was
the  result  of  adjustments  in  value  made  with  respect  to  the  following
investments during the year ended December 31, 1997:

     The  amount  includes  the  reversal  of  $13,293,616,  and  $2,241,777  of
unrealized  appreciation  of Bank United  Corp.  Class A Common Stock due to the
sale of 779,543  shares in February 1997 and the remaining  98,365 shares in May
1997. Due to an increase in the quoted market price of Bank United Corp. Class A
Common Stock and the equity being valued at 100% of the closing  market price as
compared to 90% at December 31, 1996, the Fund recorded unrealized  appreciation
of $290,177 at March 31, 1997.

     Due to the sale of 30,002 shares of Lexmark International Group, Inc. Class
B Common Stock in January,  226,641  shares in May and June,  140,921  shares in
July through  September  1997 and 61,418 shares in the fourth  quarter 1997, the
Fund reversed $2,389,245, $2,178,374 and $2,936,608 and $1,154,159 of unrealized
appreciation, respectively.

     During the first quarter,  Leather U.S., Inc. common stock was written down
from 100% to 15% of the par. In the second  quarter  ended June 30, 1997 Leather
U.S.,  Inc.  common  stock  was  written  down  from 15% to 0% of the  par.  The
writedowns resulted in unrealized depreciation of $9,342,000 to the Fund.

     On March 31, 1997,  Pergament Home Center,  Inc.  Floating Rate Demand Note
was written down from 75% to 50% of par, resulting in unrealized depreciation of
$677,642 to the Fund. In the third quarter ended  September 30, 1997,  Pergament
Home Centers,  Inc.,  Floating Rate Demand Note was written down from 50% of par
to 25% of par. This writedown resulted in unrealized depreciation of $677,305.

     Due to the sale of the 16% Senior  Subordinated  Notes and the write-off of
the  common  stocks  of RI  Holdings  Inc.,  in  July  1997  the  Fund  reversed
depreciation of $11,336,574 and $3,058,326, respectively.

     During the three months ended September 30, 1997,  Western  Pioneer,  Inc.,
10% Senior  Subordinated  Notes were  written down from 50% of par to 30% of par
This writedown resulted in unrealized depreciation of $1,892,000.

     For the years ended  December  31,  1996 and 1995,  the Fund  recorded  net
unrealized  appreciation  of  $31,877,152  and net  unrealized  appreciation  of
$2,627,096 , respectively.

    The  following  investments  have  been  on  non-accrual  status  as of  the
respective dates:

    Pergament Home Centers, Inc.
      Floating Rate Demand Note              July 1, 1996
    Western Pioneer, Inc. 10%
      Senior Subordinated Note               November 30, 1994

     Alliance Corporate  continues to monitor the Fund's portfolio closely. As a
matter  of  standard  procedure,   Alliance  Corporate  reviews  each  portfolio
company's financial statements at least quarterly, and often monthly. Investment
managers  routinely review and discuss  financial and operating results with the
companies'  management  and  equity  sponsors,  and  attend  periodic  board  of
directors meetings, as appropriate.  In some cases, Alliance Corporate officers,
acting on behalf of the Funds,  serve as  directors  on the boards of  portfolio
companies. When problems arise, communication with management and sponsors often
occurs on a daily basis.
<PAGE>
13. Income Taxes

       No  provision  for income taxes has been made since all income and losses
are  allocated to the Fund's  partners for  inclusion  in their  respective  tax
returns.

     Pursuant to Statement of Financial  Accounting Standards No. 109 Accounting
for Income Taxes,  the Fund is required to disclose any  difference  between the
tax basis of the Fund's assets and  liabilities  versus the amounts  reported in
the  Financial  Statements.  Generally,  the  tax  basis  of the  Fund's  assets
approximate  the amortized  cost amounts  reported in the Financial  Statements.
This amount is computed  annually and as of December 31, 1997,  the tax basis of
the  Fund's  assets was  greater  than the  amounts  reported  in the  Financial
Statements  by  $37,057,962.   This  difference  is  primarily  attributable  to
unrealized  depreciation  on investments  which has not been  recognized for tax
purposes.  Additionally,  certain realized gains and losses due to restructuring
were treated  differently  for tax  purposes,  but not for  financial  reporting
purposes.

14.  Subsequent Distributions

     On February 5, 1998, the Independent General Partners approved an aggregate
cash  distribution  of $2,410,665  for the three months ended December 31, 1997,
which was paid on February 13, 1998 to the Limited Partners. The amount that was
distributed  to Limited  Partners  on record as of December  31,  1997  includes
$987,600 of return of capital.  On a per Unit basis,  the  distribution of $8.47
includes  $5.00 of net  realized  gains  and $3.47 of  return  of  capital.  The
Managing General Partner's one percent  allocation of $24,350 was reduced by its
one percent  allocation of realized gains and capital  returned from investments
during  the  fourth  quarter  of 1997,  of  24,245 is being  held as a  Deferred
Distribution  Amount  resulting in a net  distribution  to the Managing  General
Partner of $105.

15.  Subsequent Events

     In January 1998 through  February 1998 the Fund sold its  remaining  92,636
shares of Lexmark  International  Group,  Inc.  common stock.  The Fund received
$3,724,832 of net proceeds and realized a gain of $3,107,226.
<PAGE>
Item 9.       Disagreements on Accounting and Financial Disclosure

       None.

                                    Part III

Item 10.      Directors and Executive Officers of the Registrant

The Fund

       The Fund's general partners (the "General  Partners") are responsible for
the management and  administration  of the Fund. The General Partners consist of
Alliance  Corporate  succeeding  Equitable  Capital,  as  the  Managing  General
Partner,  and four individuals  serving as Independent  General  Partners.  Each
Independent  General  Partner is not an "interested  person" of the Fund as such
term  is  defined  in the  Investment  Company  Act of  1940,  as  amended  (the
"Investment Company Act").

Independent General Partners

       The Independent General Partners provide overall guidance and supervision
with  respect to the  operations  of the Fund and  perform  the  various  duties
imposed on the  directors of business  development  companies by the  Investment
Company Act of 1940. The  Independent  General  Partners  supervise the Managing
General Partner and must, with respect to any Enhanced Yield Investment,  either
certify that it meets the Fund's investment  guidelines or specifically  approve
it. The Independent  General Partners are also responsible for approving certain
transactions  pursuant to the  conditions  of an  exemptive  order issued by the
Securities  and  Exchange  Commission  (the  "Commission")  under which the Fund
operates.  In  addition,  if a  portfolio  company is in material  default  with
respect to its payment  obligations under any lending agreement to which it is a
party or has a ratio of earnings before interest, taxes and depreciation to cash
fixed charges of 1.1 to 1 or less for the latest fiscal year for which financial
statements  are  available,  the  Independent  General  Partners are required to
approve  any  changes in the terms of the Fund's  investment  in such  portfolio
company.

     Messrs.  Robert W. Lear and Robert F.  Shapiro  have served as  Independent
General  Partners of the Fund and the Retirement  Fund since June 1988. On April
12, 1989, Mr. Alton G. Marshall and Dr. William G. Sharwell were admitted to the
Fund and the Retirement Fund, increasing the total number of Independent General
Partners to four. Each  Independent  General Partner shall hold office until his
removal or withdrawal pursuant to the provisions of the Partnership Agreement.

     Mr. Lear, age 80, has been an Executive-in-Residence and Visiting Professor
at the Columbia  University Graduate School of Business since 1977. He is also a
director of Cambrex Corp. and the Korea Fund (a closed-end investment fund). Mr.
Lear is a trustee of the Scudder Institutional Funds (mutual funds) and a member
of the advisory  board of the Welsh,  Carson,  Anderson,  Stowe Venture  Capital
Funds.

     Mr.  Shapiro,  age  63,  is  the  President  of  RFS  &  Associates,   Inc.
(consultants  and  investments).  From  1986 to 1987 he was the  Co-Chairman  of
Wertheim Schroeder & Co. Inc.  (investment bankers) and from 1974 to 1986 he was
the President of its predecessor,  Wertheim & Co. Inc. Mr. Shapiro is a director
of TJX Companies,  Inc. (specialty  retailing),  a director of American Building
Companies and the Burnham Fund Inc.  (mutual fund).  Mr. Shapiro was Chairman of
the Securities Industry Association in 1985.

     Mr.  Marshall,  age 76, is  Senior  Fellow  of the  Nelson  A.  Rockefeller
Institute of Government.  He is also President of Alton G. Marshall  Associates,
Inc. (real estate  consultants).  He was Chairman and Chief Executive Officer of
Lincoln  Savings Bank from 1984 to 1991. He is also a Director of New York State
Electric and Gas Corporation.  He is a Trustee of EQK Realty Investors I and EQK
Green Acres (real  estate  investors),  and a Trustee of The Hudson River Trust,
which is a mutual fund receiving investment advice from Alliance Capital.

     Dr. Sharwell,  age 77, served as the President of Pace University from 1984
to 1990,  after  retiring in 1984 as Senior Vice President of AT&T. He is also a
director of USLife Corporation,  American Biogenetic  Sciences,  Inc. and United
States Life Insurance Company.
<PAGE>
Managing General Partner

       The Managing  General Partner is responsible  for purchasing  investments
for the Fund which the Independent General Partners have reviewed for compliance
with  the   investment   guidelines   or  otherwise   approved,   for  providing
administrative  services to the Fund and for the  admission of assignee  Limited
Partners to the Fund.

Management of Alliance Corporate and the Fund

       The senior officers of Alliance Corporate  responsible for overseeing the
management of the Fund are:

                             Position with Alliance Corporate Finance
                             Group Incorporated
                             ----------------------------------------

James R. Wilson              President

William Gobbo, Jr.           Senior Vice President

Andy Pitsillos               Vice President and Chief Accounting Officer


       James R. Wilson, age 51, is the President of Alliance Corporate and is in
charge of Alliance Corporate's Finance Department. He has specialized in private
placement  investment  management for over 20 years. He joined Equitable Life in
1970. From 1975 to 1978, he was in charge of the Private Placement  Department's
Atlanta regional office, responsible for making direct placement loans to middle
market  companies.  He then  returned to the home office to supervise the credit
review and approval  procedures of all six regional offices. In 1980, Mr. Wilson
joined  the  Investment   Recovery  Division  of  Equitable  Capital  Management
Corporation and  subsequently  became its head.  During his tenure in investment
recovery,   he  was  instrumental  in  a  number  of  major  restructurings  and
recapitalizations  of  troubled  companies  and  served as  chairman  of several
creditors'  committees.  Mr. Wilson was elected senior vice president and deputy
head of Equitable Capital's Corporate Finance Department in 1985, and in 1991 he
became executive vice president and head of the Corporate Finance Department. He
was named  President of Alliance  Corporate  Finance Group in 1993 in connection
with the Alliance  Capital/Equitable  Capital  merger.  Mr. Wilson has served on
several  corporate Boards and presently is a director of US Leather,  Inc. He is
active in private placement industry events, has been a speaker at many industry
conferences on leveraged buyouts and mezzanine finance and served as Chairman of
the annual  Private  Placement  Conference in 1994.  Mr. Wilson is a graduate of
Denison University and holds an MBA from the University of Pittsburgh.

     Mr.  William  Gobbo,  Jr.,  age 53, is a Senior Vice  President of Alliance
Corporate.  Mr. Gobbo joined Alliance  Corporate  through the  combination  with
Equitable  Capital.  Mr. Gobbo joined  Equitable Life in 1967 as an economist in
the office of  Equitable's  Chief  Economist.  He joined the  Private  Placement
Department  in 1976 and in 1984  became  head of an  investment  group  that was
responsible  for  the  Department's   lending  activities   involving  financial
institutions and heavy industrial companies.

     Mr. Andy Pitsillos, age 39, is Vice President and Chief Accounting Officer,
managing the  Partnership  Accounting  and  Advisory  Accounting  Groups.  He is
responsible  for the accounting  and financial  reporting for  partnerships  and
similarly structured entities managed by the firm and for Equitable  investments
in special purpose subsidiaries and externally managed limited partnerships.  He
has over 11 years experience in the insurance financial industry. Since 1984, he
has had  various  responsibilities  as Vice  President  of  Equitable  Capital's
Investment Reporting and analysis group, ensuring that proper statutory and GAAP
accounting/reporting  procedures  are  followed  for the  general  and  advisory
account assets managed by Alliance  Capital.  He  participated in the successful
demutualization of Equitable  companies.  Mr. Pitsillos holds a magna cum laude,
B.B.S.  and  M.B.A.  degrees in finance  from the City  University  of New York,
Bernard M. Baruch College.
<PAGE>
 
The Investment Adviser

       As a result of the combination of the businesses of Equitable Capital and
Alliance Capital,  Equitable  Capital's  investment  advisory agreement with the
Fund  terminated  in  accordance  with its terms on July 22, 1993. On that date,
Alliance Corporate succeeded Equitable Capital as the Fund's investment adviser.
As investment  adviser to the Fund,  Alliance  Corporate is responsible  for the
identification, management and liquidation of all investments for the Fund.

The Administrator

       The Administrator performs certain operating and administrative  services
for  the  Fund  on  behalf  of  the  Managing  General  Partner  pursuant  to an
administrative  services  agreement,  dated  October 13,  1988,  among the Fund,
Equitable Capital and the Administrator.

       The information contained in the Prospectus under the caption "Management
Arrangements" is incorporated by reference into this Item 10.

Item 11.      Executive Compensation

     The information  with respect to  compensation  of the Independent  General
Partners set forth under the caption "Management Arrangements -- The Independent
General  Partners" in the Prospectus is incorporated by reference into this Item
11. The Fund paid Mr. Lear $35,750,  Mr. Shapiro  $35,250,  Mr. Marshall $35,750
and Dr.  Sharwell  $35,250 in fees with respect to their services as Independent
General Partners in 1997.

     The information with respect to the "Fund  Administration Fee and Expenses"
payable  to  the   Administrator   set  forth  under  the  caption   "Management
Arrangements  --  the  Administrator"  in  the  Prospectus  is  incorporated  by
reference  into this Item 11. The Fund paid  $709,970  to the  Administrator  in
1997.

     The information  with respect to the  "Investment  Advisory Fee" payable to
Alliance  Corporate (and  distributions  from the Managing  General Partner) set
forth under the caption  "Management  Arrangements  -- Description of Investment
Advisory  Agreements" in the Prospectus is  incorporated  by reference into this
Item 11.  The Fund  paid  Alliance  Corporate  $1,213,855  with  respect  to the
Investment Advisory Fees for 1997.

     Alliance   Corporate,   as  Managing  General  Partner,   received  $18,019
representing distributions of net investment income in 1997.
<PAGE>
Item 12.      Security Ownership of Certain Beneficial Owners and Management

       As of the date of this  report,  no person or entity is known by the Fund
to be the  beneficial  owner of more than 5% of the total number of  outstanding
Units.

       The Independent  General  Partners and directors and officers of Alliance
Corporate  own as a  group  777  Units,  or  less  than  1% of the  total  Units
outstanding.

Item 13.      Certain Relationships and Related Transactions

     The Fund co-invests in Enhanced Yield  Investments with the Retirement Fund
and  certain  affiliates  of  Equitable  Capital  pursuant  to the  terms  of an
exemptive  order  granted  by the  Commission  on  August  11,  1988  permitting
coinvestments on certain terms and conditions, Equitable Capital Partners, L.P.,
et al. (812-6983) IC-16522, August 11, 1988 (the "Order"). On December 31, 1990,
the  Commission  granted a request to amend such Order to: (I) permit any person
serving as an officer,  director or  employee  of  Equitable  Life or any of its
subsidiaries to serve as a director of Equitable Capital;  (ii) permit Equitable
Life and its  subsidiaries  (other than  Equitable  Capital)  and certain  other
affiliates of Equitable Capital to invest as limited partners in sponsor limited
partnerships  which invest in transactions  in which the Funds also invest;  and
(iii) amend and restate all of the conditions and undertakings  contained in the
August 11,  1988 Order to conform  them to those  contained  in the  application
filed with the Commission on behalf of Equitable  Capital  Partners II, L.P. and
Equitable  Capital  Partners   (Retirement  Fund)  II,  L.P.  Equitable  Capital
Partners, L.P., et al. (812-7328) IC - 17925, December 31, 1990.

       Pursuant to such arrangements, the Fund co-invested in the Enhanced Yield
Investments  listed  above in Item 1 (with the  exception  of Color Your  World,
Inc.) with the Retirement Fund and one or more of the following:  Equitable Deal
Flow Fund,  L.P.,  Equitable  Capital Private Income and Equity  Partnership II,
L.P.,  Equitable  Life,  Equitable  Variable  Life  Insurance  Company,   Tandem
Insurance Group, Inc. and Royal Tandem Insurance Company.

        In connection  with the  transaction  that resulted in the succession of
Alliance  Corporate as Managing  General Partner of, and Investment  Adviser to,
the Fund and Equitable Capital Partners (Retirement Fund), L.P. (the "Retirement
Fund"),  Equitable Capital and Alliance  Corporate received two exemptive orders
from the Securities and Exchange Commission  permitting the Fund, the Retirement
Fund and Alliance to rely on the exemptive orders previously issued to Equitable
Capital and the Funds,  subject to the same  conditions and  undertakings  under
such orders as applied to Equitable Capital.
<PAGE>
                                    Part IV

Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K

       (a)    Financial Statements, Financial Statement
              Schedules and Exhibits

See Item 8.  Financial Statements and Supplementary Data "Table of Contents."

Exhibits
<TABLE>
<S>        <C>
3.1        Amended and Restated Certificate of Limited Partnership, dated as of April 12,
           1989*

4.1        Amended and Restated Agreement of Limited Partnership, dated as of October 13,
           1988**

10.1       Investment Advisory Agreement, dated July 22, 1993, between Registrant and
           Alliance Corporate Finance Group Incorporated****

10.2       Administrative Services Agreement, dated October 13, 1988, among the Registrant,
           Equitable Capital Management Corporation and ML Fund Administrators, Inc.**

10.3       Credit Agreement dated as of June 27, 1989, between Equitable Capital Partners,
           L.P. and Wells Fargo Bank, N.A.***

13.1       (a)  Forms 10-Q
                Form  8-K *****

28.1       Portions of Prospectus of Registrant and Equitable  Capital Partners,
           L.P., dated July 15, 1988, incorporated by reference into this Annual
           Report on Form 10-K

*          Incorporated  by reference to the Fund's  Annual  Report on Form 10-K
           for  the  fiscal  year  ended  December  31,  1989,  filed  with  the
           Securities and Exchange Commission on March 29, 1990.

**         Incorporated  by reference to the Fund's  Annual  Report on Form 10-K
           for  the  fiscal  year  ended  December  31,  1988,  filed  with  the
           Securities and Exchange Commission on March 29, 1989.

***        Incorporated  by reference to the Fund's  Annual  Report on Form 10-K
           for  the  fiscal  year  ended  December  31,  1992,  filed  with  the
           Securities and Exchange Commission on March 29, 1993.

****       Incorporated  by reference to the Fund's  Annual  Report on Form 10-K
           for  the  fiscal  year  ended  December  31,  1993,  filed  with  the
           Securities and Exchange Commission on March 28, 1994.

*****      Incorporated  by reference to the Fund's  Annual  Report on Form 10-K
           for  the  fiscal  year  ended  December  31,  1995,  filed  with  the
           Securities and Exchange Commission on November 22, 1995.

</TABLE>
<PAGE>


                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the  undersigned,  thereunto duly authorized on the 27th day of March,
1998.

                                  EQUITABLE CAPITAL PARTNERS, L.P.

                             By:  Alliance Corporate Finance Group Incorporated,
                                  as Managing General Partner,

Dated: March 27, 1998             -------------------------------
                                  James R. Wilson
                                  Title:  President


Dated: March 27, 1998             --------------------------------
                                  Andy Pitsillos
                                  Title:  Vice President and Chief
                                          Accounting Officer

<PAGE>
       Pursuant to the  Requirements  of the Securities and Exchange Act of 1934
this  report has been  signed  below by the  following  persons on behalf of the
Registrant in the capacities indicated on the 27th day of March, 1998.

         Signature                               Title


________________________            Independent General Partner of
Robert W. Lear                      Equitable Capital Partners, L.P.

________________________            Independent General Partner of
Robert F. Shapiro                   Equitable Capital Partners, L.P.

________________________            Independent General Partner of
Alton G. Marshall                   Equitable Capital Partners, L.P.

________________________            Independent General Partner of
William G. Sharwell                 Equitable Capital Partners, L.P.

________________________            President and Director of
James R. Wilson                     Alliance Corporate

________________________
Dave H. Williams                    Director of Alliance Corporate

________________________
Bruce W. Calvert                    Director of Alliance Corporate

________________________
John D. Carifa                      Director of Alliance Corporate

________________________
Frank Savage                        Director of Alliance Corporate

________________________            Co-Chairman, Co-Chief Executive Officer
Mark Arnold                         and Director of Alliance Corporate

________________________            Co-Chairman, Co-Chief Executive Officer
Alastair Tedford                    and Director of Alliance Corporate

<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the  undersigned,  thereunto duly authorized on the 27th day of March,
1998.

                              EQUITABLE CAPITAL PARTNERS, L.P.

                              By: Alliance Corporate Finance Group Incorporated,
                                  as Managing General Partner,

Dated: March 27, 1998                /s/  James R. Wilson
                                     -----------------------------
                                     James R. Wilson
                                     Title:  President

Dated: March 27, 1998                /s/  Andy Pitsillos
                                     ----------------------------
                                     Andy Pitsillos
                                     Title:  Vice President and Chief
                                             Accounting Officer



<PAGE>



       Pursuant to the  Requirements  of the Securities and Exchange Act of 1934
this  report has been  signed  below by the  following  persons on behalf of the
Registrant in the capacities indicated on the 27th day of March, 1998.

       Signature                              Title


/s/  Robert W. Lear                  Independent General Partner of
Robert W. Lear                       Equitable Capital Partners, L.P.

/s/  Robert F. Shapiro               Independent General Partner of
Robert F. Shapiro                    Equitable Capital Partners, L.P.

/s/  Alton G. Marshall               Independent General Partner of
Alton G. Marshall                    Equitable Capital Partners, L.P.

/s/  William G. Sharwell             Independent General Partner of
William G. Sharwell                  Equitable Capital Partners, L.P.

/s/  James R. Wilson                 President and Director of
James R. Wilson                      Alliance Corporate

/s/  Dave H. Williams
Dave H. Williams                     Director of Alliance Corporate

/s/  Bruce W. Calvert
Bruce W. Calvert                     Director of Alliance Corporate

/s/  John D. Carifa
John D. Carifa                       Director of Alliance Corporate

/s/  Frank Savage
Frank Savage                         Director of Alliance Corporate

/s/  Mark Arnold                     Co-Chairman, Co-Chief Executive Officer
Mark Arnold                          and Director of Alliance Corporate

/s/  Alastair Tedford                Co-Chairman, Co-Chief Executive Officer
Alastair Tedford                     and Director of Alliance Corporate