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                         01-16532
           December 31, 1996                  Commission File Number

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


            Delaware                                 13-3486106
  (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  (Retirement Fund), L.P. (the "Retirement Fund"
or the  "Registrant")  was formed along with Equitable  Capital  Partners,  L.P.
(collectively  with  the  Retirement  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  Retirement  Fund seeks  current  income and
capital appreciation  potential by investing in privately  structured,  friendly
leveraged  acquisitions  and leveraged  recapitalizations.  The Retirement  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  Retirement  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 Retirement 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
Retirement Fund's investment objective and policies, its management arrangements
and  certain  provisions  of  the  Investment  Company  Act  applicable  to  the
Retirement Fund are set forth in the information  contained in the Prospectus of
the  Retirement  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  Retirement
Fund.
<PAGE>
      On  October  13,  1988,  the  Retirement  Fund  issued  221,072  Units  to
investors,  and Equitable Capital, as Managing General Partner,  admitted 26,304
investors as limited  partners of the Retirement Fund (the "Limited  Partners").
The net  proceeds  of the  offering  of such  Units to the  Retirement  Fund was
$205,596,960 after giving effect to volume discounts of $223,270 and the payment
of $15,251,770  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  $2,052,050  as required  by the Amended and  Restated
Agreement of Limited Partnership, dated as of October 13, 1988 (the "Partnership
Agreement"), pursuant to which the Retirement Fund had been organized. Equitable
Capital reduced this note by $218,504 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 Retirement  Fund
incurred $431,479 in organizational  expenses and $2,043,437 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 Retirement Fund have been paid and
have been  accounted  for as a charge to the capital  account of the  Retirement
Fund's  partners.  The net proceeds  available for  investment by the Retirement
Fund after such offering  less the return of capital to the Limited  Partners of
$65,065,910 equaled $138,066,135.

Investments

      As  set  forth  in  the  Partnership  Agreement,   the  Retirement  Fund's
investment  period ended on October 12, 1991,  three years after the  Retirement
Fund's operations commenced. Thereafter, the Retirement 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,  1996,  the
Retirement  Fund made a follow-on  investment in one Managed Company (as defined
in the Prospectus) at a total cost of $2,232.

     During  the year  ended  December  31,  1995,  the  Retirement  Fund made a
follow-on  investment  in one  Managed  Company at a total cost of $920 and paid
$359 in additional  consideration  to exercise  warrants.  During the year ended
December  31,  1994,  the  Retirement  Fund made a follow-on  investment  in one
Managed Company at a total cost of $227.

     As of December  31,  1996,  the  Retirement  Fund had a total of 9 Enhanced
Yield  Investments  at a net cost of  $59,323,162  (inclusive  of the receipt of
securities  having a capitalized  cost of $422,439  received as  payment-in-kind
interest on certain Enhanced Yield Investments). During 1996, 1995 and 1994, the
Retirement Fund received $20,659,748, $13,479,835 and $28,095,324, respectively,
in  principal  payments  and  prepayments  relating  to certain  Enhanced  Yield
Investments.

      Pending investments in Enhanced Yield Investments, the net proceeds of the
public  offering  were  invested 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>
      New Investments in 1996

      The  Retirement  Fund's  investment  period  ended on  October  12,  1991.
Accordingly, the Retirement Fund made no new investments in 1996.

      Follow-on Investments in 1996

      In 1996,  the  Retirement  Fund  made a  single  follow-on  investment  as
discussed below:

RI Holdings, Inc. ("Rowe")

      Rowe is engaged in the design, engineering and manufacturing of jukeboxes,
bill acceptors and currency changers.

     Under the terms of Rowe's senior  subordinated  notes,  the Retirement Fund
receives  common stock at a nominal cost of one cent per share for each interest
payment date on which Rowe delivers payment-in-kind securities in lieu of making
a cash payment.  On May 1, 1996, the Retirement Fund acquired  223,212.92 shares
of Common Stock of RI Holdings, Inc., for a total cost of $2,232.

      As of December 31, 1996, the Retirement  Fund's investment in RI Holdings,
Inc. totaled $7,330,251, which includes the senior subordinated PIK note.

Competition

      The  Retirement  Fund  competes  with  other  entities  having  a  similar
investment objective. In addition, since Enhanced Yield Investments are selected
and managed  exclusively by Alliance Corporate on behalf of the Retirement Fund,
other  entities  which  compete  with  Alliance  Corporate  with respect to such
investments  therefore  compete with the Retirement  Fund.  Competitors  include
other private and public mezzanine funds, other business development  companies,
investment  partnerships and corporations,  small business investment  companies
and large  industrial  and  financial  companies  investing  directly or through
affiliates and individuals.

Employees

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

Item 2.    Properties

      The Retirement Fund does not own or lease any physical properties.

Item 3.    Legal Proceedings

      The  Retirement   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,  1996 was  25,224.  The
Managing General Partner holds a general partner interest in the Retirement Fund
and does not hold any Units. Pursuant to the terms of the Partnership Agreement,
the Retirement Fund generally makes  distributions  of cash interest,  dividends
and other income  received from  investments  in excess of expenses of operation
and reserves for expenses and certain investments and liabilities within 45 days
after  the  end  of  each  calendar  quarter.  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%  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.
The  Retirement  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, 1997, the Independent General Partners approved an aggregate
cash  distribution  of $16,012,999  for the three months ended December 31, 1996
which was paid on February 14, 1997. The amount  distributed to Limited Partners
was $16,003,402 or $72.39 per Unit (of which $4,728,730 is capital returned from
investments during the fourth quarter of 1996), to Limited Partners of record at
December 31, 1996. On a per Unit basis,  this  distribution to Limited  Partners
includes $46.70 of realized gains, $4.30 of income from operations and $21.39 of
return of capital.  The Managing  General  Partner's  one percent  allocation of
$161,651 was reduced by its one percent allocation of realized gains and capital
returned from investments  during the fourth quarter of 1996, of $152,054 (which
is being held as a Deferred  Distribution  Amount  pursuant  to the  Partnership
Agreement), resulting in a net distribution of $9,597.
<PAGE>
Item 6. Selection Financial Data


<TABLE>
<CAPTION>
                                                                 For the Years Ended

<S>                              <C>                  <C>                 <C>                  <C>                <C>
                                   December 31, 1996   December 31, 1995   December 31, 1994   December 31, 1993  December 31, 1992
TOTAL FUND INFORMATION:            -----------------   -----------------   -----------------   -----------------  -----------------
Cash Distributions to Partners           $19,384,272(a)      $26,397,957(c)     $ 30,860,830        $ 45,145,869       $ 39,262,688
Net Assets                                85,429,641          88,842,112         115,578,330         145,821,277        174,588,494
Total Assets                              85,552,314          88,926,178         115,662,552         145,923,297        174,662,492
Net Investment Income                      4,579,169           4,999,345           5,797,964          10,909,633         16,145,611
Net Change in Unrealized
 Appreciation (Depreciation) 
 on Investments                           18,779,614          (6,915,689)         (5,675,676)          4,082,028         12,769,101
Net Realized (Losses)
 Gains on Investments                     (7,321,494)          1,744,317             642,557           1,633,125        (11,466,984)


PER UNIT OF LIMITED
PARTNERSHIP INTEREST:

Cash Distributions                      $      87.44 (a)      $   119.13 (c)     $    139.31         $    203.56         $   176.91


Cumulative Cash
 Distributions                                962.43 (b)          874.99              755.86              615.55             412.99
Investment Income                              29.00               32.00               38.24               61.20              86.84
Expenses                                        8.49               (9.62)             (12.28)             (12.34)            (14.54)
Net Investment Income                          20.51               22.38               24.09               52.93              75.10
Net Unrealized Appreciation
  (Depreciation) on Investments                84.10              (30.97)             (25.42)              18.28              57.18
Net Realized (Losses) Gains 
 on Investments                               (32.79)               7.81                2.88                7.45             (51.35)
Net Asset Value                               381.46              397.85              516.98              652.87             781.84

</TABLE>

(a) Includes Return of Capital of $6,484,042 or $29.33 per LP Unit.
(b) Includes Return of Capital of $398.10 per LP Unit.
(c) Includes Return of Capital of $16,458,810 or $74.45 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  Retirement  Fund  completed the initial  public
offering of Units,  admitting  26,304  Limited  Partners who  purchased  221,072
Units.  The net proceeds  available for investment by the Retirement  Fund after
such offering less return of capital to Limited Partners were $181,514,467 after
volume discounts,  sales  commissions and  organizational,  offering,  sales and
marketing expenses.

      Investments

     During  the year  ended  December  31,  1996,  the  Retirement  Fund made a
follow-on investment in one Managed Company at a total cost of $2,232.

     As of December  31,  1996,  the  Retirement  Fund had a total of 9 Enhanced
Yield  Investments  at a net cost of  $59,323,162  (inclusive  of the receipt of
securities  having a capitalized  cost of $422,439  received as  payment-in-kind
interest on certain Enhanced Yield Investments).

      Proceeds from Investments

      During the year ended December 31, 1996, the Retirement  Fund received the
following proceeds:

     During the year ended  December 31, 1996,  the  Retirement  Fund received a
total of $354,750  and  $146,632  from Western  Pioneer,  Inc. and U.S.  Leather
Holdings, Inc., respectively,  as principal paydowns of the senior notes held by
the Retirement Fund. No gain or loss has been recorded on these transactions.

     During the year ended  December  31, 1996,  the  Retirement  Fund  received
additional  proceeds of $131,366  from  Polaris  Pool  Systems,  Inc.  The money
represents  proceeds from the sale of the investment  from prior years that have
been held in escrow for future  adjustments  and  expenses  not paid on the sale
dates. These proceeds were recorded and distributed as gains.

     During March 1996, the Retirement  Fund sold its remaining ASR  Acquisition
Corp. common stock for $1,007,354 and recognized a gain of $990,330 on the sale.

     On April 9, 1996, the Equitable investors foreclosed on the common stock of
United States Leather Holdings,  Inc. All securities held by the Retirement Fund
have been  surrendered  and  cancelled in exchange  for 621.90  shares of common
stock in Leather  U.S.,  Inc.  The  shares  will have a cost basis of 50% of the
original par value of the 15% Senior Debentures surrendered.

     On May 8, 1996, the Retirement Fund received  dividend income of $1,852,198
from Bank United Corp.

     On August 6, 1996, a comprehensive  restructuring  closed for MTI Holdings,
Inc. The Retirement Fund recognized a loss of $746,099 on this transaction.

     On August 14, 1996, the Retirement  Fund sold 102,197 shares of Bank United
Corp. (formerly USAT Holdings Inc.) common stock for $1,926,413 and recognized a
gain of $1,267,487.

     On September  12, 1996,  the  Retirement  Fund sold its Tulip Holding Corp.
14.5%  Subordinated  Notes for $2,929 and recognized a loss of $4,383,283 on the
sale. The 16.5% Subordinated  Notes,  Series A Exchangeable  Preferred Stock and
Class A Common Stock were deemed worthless resulting in a total realized loss of
$2,742,846 to the Retirement Fund.

     On September  30, 1996,  the  Retirement  Fund sold 18,053  shares of Ampex
Recording Media Corp. Class A Common Stock for $143,746 which resulted in a loss
of $1,220 to the Retirement  Fund. The Retirement Fund sold its remaining 17,829
shares of Ampex Recording Media Corp. Class A Common Stock on November 29, 1996,
for $143,752 and recognized a gain of $467 on the sale.
<PAGE>
     During the fourth quarter of 1996, the Retirement  Fund sold 585,520 shares
of Lexmark International Group, Inc. common stock for $13,627,380 resulting in a
gain of $9,723,894 to the Retirement Fund.

     On November 6, 1996,  the Apollo Radio Holding Co.,  Inc.  common stock and
warrants held by the Retirement Fund were redeemed. The Retirement Fund received
proceeds  of  $817,614  which  resulted  in a realized  gain of  $702,864 to the
Retirement Fund.

     On December 17, 1996,  the  Retirement  Fund sold its American  Paper Group
Ltd. 5% Subordinated Notes and common stock for $545,836 resulting in no gain or
loss to the Retirement Fund.

     During the year ended  December 31, 1996,  the  Retirement  Fund received a
total of $103,367 from  Pergament Home Centers,  Inc., as principal  paydowns of
the Floating Rate Demand Note held by the  Retirement  Fund. No gain or loss has
been recorded on these transactions.

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

      The Retirement  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 Retirement 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.

      The Retirement  Fund, which is designed for tax-exempt  investors,  is not
permitted to borrow to finance  investments.  The Partnership  Agreement imposes
certain limits on the use of proceeds from the  disposition  of investments  for
reinvestments.

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

Participation in Enhanced Yield Investments

      The Retirement Fund is invested  primarily in Enhanced Yield  Investments,
also known in the securities industry as "high yield securities". The securities
in which the Retirement  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 Retirement  Fund cannot  eliminate its risks  associated with
participation in Enhanced Yield Investments,  it has established risk management
policies.  The Retirement 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  Retirement  Fund's  investment
guidelines  or that have  otherwise  been  approved by the  Independent  General
Partners.

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

     For  the  year  ended  December  31,  1996,  the  Retirement  Fund  had net
investment income of $4,579,169,  a decrease of $420,176 from the net investment
income of $4,999,345 for the year ended  December 31, 1995. The Retirement  Fund
had net  investment  income  of  $5,797,964  for the same  period  in 1994.  Net
investment  income is comprised of  investment  income  (primarily  interest and
dividend  income)  offset by expenses.  The decrease in the 1996 net  investment
income versus the  comparative  period in 1995 reflects the decrease in interest
and discount income partially offset by the decrease in Investment Advisory Fees
and Fund Administration Fees and Expenses.

     For the year ended December 31, 1996,  the  Retirement  Fund had investment
income of $6,475,628,  as compared to $7,146,704 for the same period in 1995 and
$8,539,846 for the same period in 1994. The decrease in 1996  investment  income
of 9.4%  versus  1995 was  primarily  due to a decrease in the amount of accrual
status  debt  securities  held  by the  Retirement  Fund  due to the  sales  and
repayments  of  Enhanced  Yield  Investments  during  1996.  (See Note 12 to the
Financial  Statements).  The  decrease in the 1995 of  investment  income of 16%
versus the  comparative  period in 1994 was  primarily  due to a decrease in the
amount of accrual status debt  securities held by the Retirement Fund due to the
sales and repayments of Enhanced Yield Investments during 1995.

     The  Retirement  Fund incurred  expenses of  $1,896,459  for the year ended
December 31,  1996,  as compared to  $2,147,359  for the same period in 1995 and
$2,741,882 for the same period in 1994. The decrease in the 1996 expenses versus
the 1995 expenses of $250,900 was primarily due to a decrease in the  Investment
Advisory Fee and the Fund Administration Fees and Expenses. The decrease in 1995
expenses  versus 1994  expenses of $594,523 was primarily due to the decrease in
the Investment Advisory Fee and the Fund Administrative Fees and Expenses.

     The Retirement  Fund  experienced an increase in net assets  resulting from
operations for the year ended December 31, 1996 in the amount of $16,037,289, as
compared to a decrease of $172,027 for the same period in 1995.  The increase in
net assets in 1996 versus 1995 is  attributable to an increase in net unrealized
appreciation  of $25,695,303  offset by a decrease in net  investment  income of
$420,176 and an increase in net realized losses of $9,065,811 (see Statements of
Operations in the Financial  Statements).  The decrease in net assets  resulting
from  operations  in 1995  versus  1994 is  attributable  to a  decrease  in net
investment  income of $798,619,  an increase in net unrealized  depreciation  of
$1,240,013 offset by an increase in net realized gains of $1,101,760.

     For the year ended  December  31, 1996,  the  Retirement  Fund  incurred an
Investment  Advisory Fee of $842,503  (as  described in Note 6 to the Financial
Statements). For the years ended December 31, 1995 and 1994, the Retirement Fund
incurred  Investment  Advisory Fees of $1,037,207 and $1,278,599,  respectively.
The decrease in Investment  Advisory Fees is due to a decrease in the Retirement
Fund's  Available  Capital  on  which  the  Investment  Advisory  Fee is  based,
resulting  primarily  from  the  redemption  of  debt  obligations  held  by the
Retirement Fund (which is a component of Available Capital).

     The Fund  Administration  Fees and Expenses (as  described in Note 7 to the
Financial Statements) for the years ended December 31, 1996, 1995 and 1994, were
$680,441, $837,092, and $1,133,720,  respectively. The decrease of $156,651 from
1995 to 1996 is due primarily to a decrease in the Retirement  Fund's  Available
Capital on which the Fund Administration Fee is based,  resulting primarily from
redemptions  of  debt  obligations  held  by the  Retirement  Fund  (which  is a
component of Available Capital).  During the years ended December 31, 1996, 1995
and 1994,  the  Retirement  Fund  incurred  a total of  $146,468,  $135,139  and
$367,552,  respectively,  of administrative  expenses,  consisting  primarily of
printing,  audit and tax return  preparation  and custodian fees paid for by the
Fund Administrator.

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

     Independent  General  Partners'  Fees and  Expenses  incurred for the years
ended December 31, 1996, 1995 and 1994, were $183,611,  $161,236,  and $160,979,
respectively.  The  changes  are  attributable  to  fluctuations  in legal  fees
incurred  by the  Independent  General  Partners  (See  Note 9 to the  Financial
Statements).

     The Retirement Fund incurred professional fees of $171,200,  $105,443,  and
$146,956 for the years ended  December 31,  1996,  1995 and 1994,  respectively,
which were primarily  comprised of legal fees reimbursed to Debevoise & Plimpton
and Equitable Life for legal services (see Note 9 to the Financial Statements).
<PAGE>
Unrealized Appreciation/Depreciation, and Non-Accrual of Investments

      The General  Partners of the  Retirement  Fund  determine,  on a quarterly
basis, the fair value of the Retirement 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  Retirement
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  Retirement  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 Retirement Fund invests.
Therefore,  the fair values presented  herein are not necessarily  indicative of
the amount which the Retirement Fund could realize in a current transaction.

     For the years  ended  December  31,  1996 and  1995,  the  Retirement  Fund
recorded  net  unrealized   appreciation   on  Enhanced  Yield   Investments  of
$18,779,614 and net unrealized depreciation of $6,915,689, respectively. For the
year ended  December 31,  1994,  the  Retirement  Fund  recorded net  unrealized
depreciation  on  Enhanced  Yield  Investments  of  $5,675,676.  The  change  of
$25,695,303  from 1995 to 1996,  in  unrealized  appreciation  was primarily the
result of unrealized  appreciation in Bank United Corp.,  Lexmark  International
Group,   Inc.  and  Western  Pioneer,   Inc.  and  the  reversal  of  unrealized
depreciation in Leather U.S., Inc., Tulip Holding Corp., MTI Holdings,  Inc. and
WB Bottling  Corporation,  offset by writedowns in RI Holdings,  Inc., Pergament
Home Centers, Inc., U.S. Leather Holdings,  Inc. and Tulip Holding Corp. and the
reversal  of  unrealized  appreciation  in Lexmark  International  Group,  Inc.,
American  Safety Razor Company and Apollo Radio Holding Corp.,  Inc.(See Note 12
to the Financial Statements).

      Alliance  Corporate  continues to monitor the Retirement  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
        RI Holdings, Inc. 16%
          Senior Subordinated Notes                April 25, 1994

Realized Gains and Losses on Investments

     For the year ended  December 31, 1996,  the  Retirement  Fund  recorded net
realized  losses of  $7,321,494  on  transactions  involving  10 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, 1995
and 1994,  the  Retirement  Fund realized net gains on investments of $1,744,317
and $642,557, respectively.
<PAGE>
Item 8. Financial Statements and Supplementary Data


               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.


                                TABLE OF CONTENTS


Independent Auditors' Report

Statements of Assets, Liabilities and Partners' Capital 
  As of December 31, 1996 and 1995

Statements of Operations
  For the Years Ended December 31, 1996, 1995 and 1994

Statements of Cash Flows
  For the Years Ended December 31, 1996, 1995 and 1994

Statements of Changes in Net Assets
  For the Years Ended December 31, 1996, 1995 and 1994

Statements of Changes in  Partners'  Capital
  For the Years Ended December 31, 1996, 1995 and 1994

Schedule of Portfolio Investments - December 31, 1996

Supplemental Schedule of Realized Gains and Losses
  For the Year Ended December 31, 1996

Notes to Financial Statements




<PAGE>


                          INDEPENDENT AUDITORS' REPORT

Equitable Capital Partners (Retirement Fund), L.P.

     We have audited the  accompanying  statements  of assets,  liabilities  and
partners'  capital of Equitable  Capital Partners  (Retirement  Fund), L.P. (the
"Retirement  Fund") as of December 31, 1996 and 1995,  including the schedule of
portfolio  investments,  as of December 31, 1996, 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,  1996.  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, 1996, 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 Retirement Fund as of December 31, 1996
and 1995, 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  Retirement  Fund
include  securities  valued at $40,903,485 and  $28,806,626,  as of December 31,
1996 and 1995 respectively,  representing 47.8 and 32.4 percent of total assets,
respectively,  whose values have been  estimated by the General  Partners of the
Retirement 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, 1996 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  Retirement
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 21, 1997
<PAGE>


               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
             STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL

<TABLE>
<S>                                                           <C>        <C>                 <C>
                                                                                    For the Years Ended
ASSETS:                                                        Notes     December 31, 1996    December 31, 1995
                                                                         -----------------    ----------------- 
    Investments                                              2,10,12
        Enhanced Yield Investments at Value-
            Managed Companies
               (amortized cost of $46,361,524 at
               December 31, 1996 and $83,389,283
               at December 31, 1995)                                           $47,988,305          $67,489,913
            Non-Managed Companies
               (amortized cost of $12,961,638 at
               December 31, 1996 and $2,121,174
               at December 31, 1995)                                            14,814,796            2,720,868
        Temporary Investments
               (at amortized cost)                                              20,550,637           16,536,723

    Cash                                                                            62,948               39,180
    Interest Receivable                                          2,12              876,677              886,589
    Note Receivable                                               3,4            1,178,728            1,245,982
    Prepaid Expenses & Other Assets                                                 80,223                6,923

TOTAL ASSETS                                                                   $85,552,314          $88,926,178
                                                                               ===========          ===========


LIABILITIES AND PARTNERS' CAPITAL

    Liabilities
        Professional Fees Payable                                   9          $    52,641          $    40,833
        Independent General Partners' Fees Payable                  8               20,846               10,547
        Fund Administrative Expenses Payable                        7               43,085               28,445
        Other Accrued Liabilities                                                    6,101                4,241
            Total Liabilities                                                      122,673               84,066

    Partners' Capital
        Managing General Partner                                   3,4           1,099,814            1,058,667
        Limited Partners (221,072 Units)                             4          84,329,827           87,783,445
            Total Partners' Capital                                             85,429,641           88,842,112

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                        $85,552,314          $88,926,178
                                                                               ===========          ===========

</TABLE>


                             See the Accompanying Notes to Financial Statements


<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                             STATEMENTS OF OPERATIONS

<S>                                                          <C>                  <C>               <C>
                                                                                  For the Years Ended

                                                               December 31, 1996    December 31, 1995     December 31, 1994
                                                               -----------------    -----------------     -----------------
INVESTMENT INCOME- Notes 2,12:
      Interest                                                      $  4,603,229         $  7,121,657          $  7,622,188
      Discount                                                            20,204               25,047               917,658
      Dividend                                                         1,852,195                   --                    --
                   TOTAL INVESTMENT INCOME                             6,475,628            7,146,704             8,539,846

EXPENSES:
      Investment Advisory Fee- Note 6                                    842,503            1,037,207             1,278,599
      Fund Administration Fees and Expenses- Note 7                      680,441              837,092             1,133,720
      Independent General Partners'
       Fees and Expenses - Note 8                                        183,611              161,236               160,979
      Professional Fees - Note 9                                         171,200              105,443               146,956
      Insurance Fees                                                       4,410                   --                 2,755
      Valuation Expenses                                                  14,294                6,381                18,873
                   TOTAL EXPENSES                                      1,896,459            2,147,359             2,741,882

NET INVESTMENT INCOME                                                  4,579,169            4,999,345             5,797,964

NET CHANGE IN UNREALIZED APPRECIATION
      (DEPRECIATION) ON INVESTMENTS- Note 12                          18,779,614           (6,915,689)           (5,675,676)

NET REALIZED (LOSSES) GAINS ON INVESTMENTS- Note 10                   (7,321,494)           1,744,317               642,557

NET INCREASE (DECREASE) IN NET ASSETS
      RESULTING FROM OPERATIONS                                     $ 16,037,289         $   (172,027)         $    764,845
                                                                    ============         ============          ============


</TABLE>


                             See the Accompanying Notes to Financial Statements


<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                           STATEMENTS OF CASH FLOWS



<S>                                                            <C>               <C>               <C>
                                                                                  For the Years Ended
                                                               December 31, 1996   December 31, 1995    December 31, 1994
                                                               -----------------   -----------------    -----------------
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
       Interest and Discount Income                                 $  3,990,822        $  7,249,650         $  9,648,662
       Fund Administration Fees & Expenses                              (665,800)           (848,815)          (1,093,552)
       Investment Advisory Fee                                          (842,503)         (1,037,207)          (1,278,599)
       Independent General Partners' Fees and Expenses                  (172,309)           (161,259)            (160,413)
       Valuation Expenses                                                (12,435)            (12,466)             (23,346)
       (Purchase) Sale of Temporary Investments, Net                  (3,390,853)          7,779,486           (4,156,369)
       Purchase of Enhanced Yield Investments                                  -                (920)                (227)
       Proceeds from Sales and Principal Payments of
            Enhanced Yield Investments                                20,659,748          13,479,835           28,095,324
       Professional Fees                                                (158,255)            (89,535)            (149,295)
       Insurance Fees                                                       (375)             (6,923)              (4,318)
Net Cash Provided by Operating Activities                             19,408,040          26,351,846           30,877,867
CASH FLOWS FROM FINANCING ACTIVITIES:
       Cash Distributions to Partners                                (19,384,272)        (26,397,957)         (30,860,830)
Net Cash Used in Financing Activities                                (19,384,272)        (26,397,957)         (30,860,830)
Net Increase (Decrease) in Cash                                           23,768             (46,111)              17,037
Cash at the Beginning of the Period                                       39,180              85,291               68,254
Cash at the End of the Period                                        $    62,948        $     39,180         $     85,291
                                                                     ===========        ============         ============


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

Net Increase (Decrease) In Net Assets
     Resulting From Operations                                      $ 16,037,289        $   (172,027)        $    764,845

Adjustments to Reconcile Net Increase (Decrease) in Net Assets
       Resulting from Operations to Net Cash Provided by Operating
       Activities:
Decrease in Investments                                               24,590,390          19,514,082           23,343,753
(Increase) Decrease in Accrued Interest                               (2,484,809)            101,181            1,108,636
Increase (Decrease) in Other Accrued Liabilities                           1,859              (6,086)             (56,193)
Increase (Decrease) in Fund Administration Expenses Payable               14,640             (11,723)              40,168
Decrease (Increase) in Prepaid Expenses                                    4,412              (6,923)               2,755
Net Change in Unrealized (Appreciation)
   Depreciation on Investments                                       (18,779,614)          6,915,689            5,675,676
Increase in Independent General
    Partners' Fees Payable                                                11,303                 981                  566
Increase (Decrease) in Professional Fees Payable                          12,570              16,672               (2,339)
Total Adjustments                                                      3,370,751          26,523,873           30,113,022
Net Cash Provided by Operating Activities                           $ 19,408,040        $ 26,351,846         $ 30,877,867
                                                                    ============        ============         ============
</TABLE>

                              See the Accompanying Notes to Financial Statements


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

<S>                                                                <C>                 <C>             <C>
                                                                                 For the Years Ended
                                                               December 31, 1996    December 31, 1995    December 31, 1994
                                                               -----------------    -----------------    -----------------
FROM OPERATIONS:

     Net Increase (Decrease) in Net Assets
       Resulting from Operations                                   $  16,037,289       $    (172,027)        $    764,845

     Cash Distributions to Partners                                  (19,384,272)        (26,397,957)         (30,860,830)

     Reduction in Managing General Partners'
       Contribution                                                      (65,488)           (166,234)            (146,962)

     Total Decrease                                                   (3,412,471)        (26,736,218)         (30,242,947)

NET ASSETS:

     Beginning of Period                                              88,842,112         115,578,330          145,821,277

     End of Period                                                 $  85,429,641       $  88,842,112        $ 115,578,330
                                                                   =============       =============        =============


</TABLE>


                             See the Accompanying Notes to Financial Statements



<PAGE>


                              EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                  STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<S>                                                           <C>        <C>                 <C>                 <C>
                                                                               Limited            Managing
                                                               Notes      General Partner         Partners              Total
                                                                          ---------------        -----------        --------------


FOR THE YEAR ENDED DECEMBER 31, 1994

Partners' Capital at January 1, 1994                                          $ 1,490,875        $144,330,402       $  145,821,277
Cash Distributions to Partners                                                    (63,290)        (30,797,540)         (30,860,830)
Reduction in Managing General Partners' Contribution                 3           (146,962)                  -             (146,962)
Allocation of Net Investment Income                                 11             57,980           5,739,984            5,797,964
Allocation of Net Unrealized Depreciation
  on Investments                                                    12            (56,757)         (5,618,919)          (5,675,676)
Allocation of Net Realized Gains on Investments                                     6,426             636,131              642,557
Partners' Capital at December 31, 1994                                        $ 1,288,272        $114,290,058       $  115,578,330
                                                                              ===========        ============       ==============

FOR THE YEAR ENDED DECEMBER 31, 1995

Partners' Capital at January 1, 1995                                          $ 1,288,272        $114,290,058       $  115,578,330
Cash Distributions to Partners                                                    (61,650)        (26,336,307)         (26,397,957)
Reduction in Managing General Partners' Contribution                 3           (166,234)                  -             (166,234)
Allocation of Net Investment Income                                 11             49,993           4,949,352            4,999,345
Allocation of Net Unrealized Depreciation
  on Investments                                                    12            (69,157)         (6,846,532)          (6,915,689)
Allocation of Net Realized Gains on Investments                                    17,443           1,726,874            1,744,317
Partners' Capital at December 31, 1995                                        $ 1,058,667        $ 87,783,445       $   88,842,112
                                                                              ===========        ============       ==============

FOR THE YEAR ENDED DECEMBER 31, 1996

Partners' Capital at January 1, 1996                                          $ 1,058,667        $ 87,783,445       $   88,842,112
Cash Distributions to Partners                                                    (53,737)        (19,330,535)         (19,384,272)
Reduction in Managing General Partners' Contribution                 3            (65,488)                  -              (65,488)
Allocation of Net Investment Income                                 11             45,791           4,533,378            4,579,169
Allocation of Net Unrealized Appreciation
  on Investments                                                    12            187,796          18,591,818           18,779,614
Allocation of Net Realized Losses on Investments                                  (73,215)         (7,248,279)          (7,321,494)
Partners' Capital at December 31, 1996                                        $ 1,099,814        $ 84,329,827       $   85,429,641
                                                                              ===========        ============       ==============


</TABLE>

                            See the Accompanying Notes to Financial Statements


<PAGE>
<TABLE>
<CAPTION>
                                                EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                                       SCHEDULE OF PORTFOLIO INVESTMENTS
                                                                DECEMBER 31, 1996

<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

                   CONSUMER PRODUCTS MANUFACTURING

                   LEXMARK INTERNATIONAL GROUP, INC. - NOTE 12
  $    24,103,269  Lexmark International, Inc.,
                    Sr. Sub. Nts. 14.25% due 03/31/01*             03/27/91    $ 24,103,269  $ 24,103,269  $ 24,103,269
    415,910 Shares Lexmark International Group, Inc.,
                    Class B Common Stock (c)                       03/27/91       2,772,714     2,772,714    11,489,514
                                                                               ------------  ------------  ------------
                                                                                 26,875,983    26,875,983    35,592,783       42.70
                                                                               ------------  ------------  ------------------------

                   MISCELLANEOUS MANUFACTURING

                   QUANTEGY ACQUISITION CORP. - NOTES 10, 12
                    (FORMERLY AMPEX RECORDING MEDIA)
    123.50 Shares  Quantegy Acquisition Corp., Common Stock        11/13/95       2,722,290     2,722,290     2,722,290
                                                                               ------------   -----------  ------------
                                                                                  2,722,290     2,722,290     2,722,290        3.27
                                                                               ------------   -----------  -------------------------
                     RI HOLDINGS, INC. - NOTES 10, 12
   $  12,972,582     RI Holdings, Inc.,
                      Sr. Sub. Nts. 16% due 08/31/01*(a)(b)         04/25/94      5,823,918     5,823,918       240,232
      150,191 Shares RI Holdings, Inc., Common Stock**              09/01/89      1,501,910     1,501,910             0
   104,211.03 Shares RI Holdings, Inc., Common Stock**               various          1,044         1,044             0
     22,687.5 Shares RI Holdings, Inc., Common Stock**              04/25/94            227           227             0
    92,045.09 Shares RI Holdings, Inc., Common Stock**              05/09/95            920           920             0
   223,212.92 Shares RI Holdings, Inc., Common Stock**              05/01/96          2,232         2,232             0
                                                                                -----------  ------------    ----------
                                                                                  7,330,251     7,330,251       240,232        0.29
                                                                                -----------  ------------    -----------------------

                     LEATHER AND LEATHER PRODUCTS

                     LEATHER U.S., INC. - NOTE 12
                     (FORMERLY UNITED STATES LEATHER HOLDINGS, INC.)
       621.90 Shares Leather U.S., Inc., Common Stock               04/09/96     7,308,000      7,308,000      7,308,000
                                                                               -----------   ------------    -----------
                                                                                 7,308,000      7,308,000      7,308,000       8.77
                                                                               -----------   ------------    ----------------------
                    MISCELLANEOUS RETAIL

                     R&S/STRAUSS, INC.
                     (FORMERLY WSR ACQUISITION CORP.)
   $       935,000   R&S/Strauss, Inc.,
                      Sr. Sub. Nt. 15% due 05/31/00*                06/13/90       935,000       935,000       935,000
   $     1,190,000   R&S/Strauss, Inc.,
                      Sr. Sub. Nt. 15% due 05/31/00*                06/13/90     1,190,000     1,190,000     1,190,000
                                                                               -----------   -----------   -----------
                                                                                 2,125,000     2,125,000     2,125,000         2.55
                                                                               -----------   -----------   ------------------------



                     TOTAL INVESTMENT IN  MANAGED  COMPANIES                   $46,361,524   $46,361,524   $47,988,305        57.58%
                     ---------------------------------------                   -----------   -----------   -------------------------


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


<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                                DECEMBER 31, 1996
                                                  (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

                     DISTRIBUTION SERVICES

                     WESTERN PIONEER, INC. - NOTES 10,12
   $     4,730,800   Western Pioneer, Inc.,
                       Sr. Sub. Nts. 10% due 11/30/07*(b)           11/30/94     $ 653,289    $   653,289    $ 2,365,400
     81,081 Warrants Western Pioneer, Inc.,
                       Common Stock Purchase Warrants **            11/30/94             0              0              0
                                                                                 ---------    -----------    -----------
                                                                                   653,289        653,289      2,365,400       2.84
                                                                                 ---------    -----------    ----------------------

                     HEALTH SERVICES

                     MTI HOLDINGS, INC. - NOTES 10,12
   $       113,386   MTI Holdings, Inc.,
                      Sr. Sec. Nt. 12% due 07/01/03*                08/06/96       113,386        113,386       113,386
      8,125 Shares   MTI Holdings, Inc., Common Stock**             08/06/96       121,875        121,875       121,875
     2,264 Warrants  MTI Holdings, Inc., Common Stock
                      Purchase Warrants                             08/06/96             0              0             0
                                                                                ----------     ----------   -----------
                                                                                   235,261        235,261       235,261        0.28
                                                                                ----------     ----------   -----------------------

                     MISCELLANEOUS RETAIL

                     PERGAMENT HOME CENTERS, INC.- NOTE 12
   $     2,543,200   Pergament Acq. Corp., Home Centers, Inc.
                      Floating Rate Demand Note due 07/31/00*(b)     10/18/91    2,439,833      2,439,833     1,804,033
      299.2 Shares   Pergament Holdings, Corp.,
                      Common Stock Class B **                        02/28/89    6,732,000      6,732,000             0
     109.2571 Shares Pergament Holdings, Corp.,
                      Common Stock Class C **                        02/28/89            0              0             0
                                                                               -----------    -----------   -----------
                                                                                 9,171,833      9,171,833     1,804,033        2.16
                                                                               -----------    -----------   -----------------------


                     BANKING AND FINANCE

                     BANK UNITED CORP. - NOTES 10,12
                     (FORMERLY USAT HOLDINGS INC.)
     432,403 Shares  Bank United Corp., Class A Common Stock (c)   01/05/90 &
                                                                   12/19/91      2,901,255      2,901,255    10,410,102
                                                                               -----------   ------------  ------------
                                                                                 2,901,255      2,901,255    10,410,102       12.49
                                                                               -----------   ------------  ------------------------



                     TOTAL INVESTMENT IN NON-MANAGED  COMPANIES                $12,961,638    $12,961,638   $14,814,796       17.77%
                     ------------------------------------------                 ----------    -----------   ------------------------


                     TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS            $59,323,162    $59,323,162   $62,803,101       75.35%
                     ----------------------------------------------            -----------    -----------   ------------------------
</TABLE>


                             See the Accompanying Notes to Financial Statements.

<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                                 DECEMBER 31, 1996
                                                    (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

   $     2,000,000   ASCC Commercial Paper, 5.34% due 2/27/97       12/03/96   $  1,974,487   $    1,983,090   $  1,983,090
   $     4,100,000   ASCC Commercial Paper, 5.33% due 3/18/97       12/11/96      4,041,118        4,053,866      4,053,866
   $     4,200,000   Old Line Funding, 5.50% due 2/27/97            12/18/96      4,154,442        4,163,425      4,163,425
   $     2,000,000   Barclays U.S. Funding, 5.52% due 1/21/97       12/19/96      1,989,880        1,993,867      1,993,867
   $       600,000   Barton Capital Corp., 5.52% due 2/14/97        12/19/96        594,756          595,952        595,952
   $     3,800,000   Receivable Capital Corp., 5.60% due 2/21/97    12/26/96      3,766,307        3,769,853      3,769,853
   $     4,000,000   Triple A Funding, 5.65% due 1/16/97            12/31/96      3,989,955        3,990,584      3,990,584
                                                                               ------------   --------------   ------------
                     TOTAL INVESTMENT IN COMMERCIAL PAPER                      $ 20,510,945   $   20,550,637   $ 20,550,637   24.65
                     ------------------------------------                      ------------   --------------   --------------------


                     TOTAL TEMPORARY INVESTMENTS                               $ 20,510,945   $   20,550,637   $ 20,550,637   24.65
                     ---------------------------                               ------------   --------------   --------------------

                     TOTAL INVESTMENT PORTFOLIO                                $ 79,834,107   $   79,873,799   $ 83,353,738  100.00%
                     --------------------------                                ============   ==============   ====================




                     SUMMARY OF  INVESTMENTS
                     Subordinated Notes                                        $ 35,258,695   $   35,258,695   $ 30,751,320   36.89
                     Common Stock and Warrants                                   24,064,467       24,064,467     32,051,781   38.46
                     Temporary Investments                                       20,510,945       20,550,637     20,550,637   24.65
                                                                               ------------   --------------   --------------------

                     TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS            $ 79,834,107   $   79,873,799   $ 83,353,738  100.00%
                     ----------------------------------------------            ============   ==============   ====================


                       * Restricted Security
                      ** Restricted Non-income Producing Security
                     (a) Includes receipt of payment-in-kind securities.
                     (b) Non-accrual investment status.
                     (c) Pubicly traded class of securities.

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

<PAGE>
<TABLE>
<CAPTION>
                             EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                             SUPPLEMENTAL SCHEDULE OF REALIZED GAINS AND LOSSES
                                    FOR THE YEAR ENDED DECEMBER  31, 1996

<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                                    1/22/96     $         -  $          -  $    87,270 (A)  $     87,270

ASR Acquisition Corp.
   Common Stock                                    various         108,241        17,024    1,007,354           990,330
Total Net Realized Gains for the
 Three Months Ended March 31, 1996                                          $     17,024  $ 1,094,624      $  1,077,600
                                                                            ============  ===========      ============

Polaris Pool Systems, Inc.
   Common Stock                                    6/03/96               -             -       41,949 (A)        41,949

U.S. Leather Holdings, Inc.
   15% Sr. Sub. Deb. *                             4/09/96     $14,616,000    17,112,740    7,308,000 (B)    (9,804,740)
   8% Sr. Pref. Stock                              4/09/96        2,986.41     2,024,000            -        (2,024,000)
   Jr. Sub. Pref. Stock                            4/09/96         150,231             -            -                 -
   Warrants                                        4/09/96         150,231       186,918            -          (186,918)
Total Net Realized Losses for the
 Three Months Ended June 30, 1996                                           $ 19,323,658  $ 7,349,949      $(11,973,709)
                                                                            ============  ===========      ============

MTI Holdings, Inc.
   5% Sr.Sec. Note                                 8/06/96     $   471,360       471,360      113,386 (B)      (357,974)
   Common Stock                                    8/06/96          22,376       510,000      121,875 (B)      (388,125)

Bank United Corp.
   Common Stock                                    8/14/96         102,197       658,926    1,926,413         1,267,487

Tulip Holding Corp.
   14.5% Sub. Note                                 9/12/96     $ 4,394,282     4,386,212        2,929        (4,383,283)
   16.5% Sub. Note                                 9/12/96     $ 1,262,303     1,262,303            -        (1,262,303)
   15% Exch. Preferred Stock                       9/12/96       1,464.763     1,464,763            -        (1,464,763)
   Common Stock                                    9/12/96          78,872        15,780            -           (15,780)

Ampex Recording Media Corp.
   Common Stock                                    9/30/96          18,053       144,966      143,746            (1,220)
Total Net Realized Losses for the
 Three Months Ended September 30, 1996                                      $  8,914,310  $ 2,308,349      $ (6,605,961)
                                                                            ============  ===========      ============

Lexmark International Group, Inc.
   Common Stock                                    various         585,520     3,903,486   13,627,380         9,723,894

Polaris Pool Systems, Inc.
   Common Stock                                    10/28/96              -             -        2,147 (A)         2,147

Apollo Radio Holding Co., Inc.
   Common Stock                                    11/06/96          55.25       114,750      817,614           702,864
   Warrants                                        11/06/96         9.2083             -            -                 -

Ampex Recording Media Corp.
   Common Stock                                    11/29/96         17,829       143,285      143,752               467

American Paper Group, Ltd.
    5% Sub. Note                                   12/17/96      $ 595,683       464,633      464,633                 -
    Common Stock                                   12/17/96            996        67,469       67,469                 -

WB Bottling Corporation
    Preferred Stock                                12/31/96          1,615       161,500            -          (161,500)
    Common Stock                                   12/31/96         21,463        87,296            -           (87,296)
              
Total Net Realized Gains for the
 Three Months Ended December 31, 1996                                       $  4,942,419  $15,122,995      $ 10,180,576
                                                                            ============  ===========      ============

Total Net Realized Losses for the
 Year Ended December 31, 1996                                               $ 33,197,411  $25,875,917      $ (7,321,494)
                                                                            ============  ===========      ============


 (A)  Proceeds represent a distribution to the Retirement Fund from the escrow account. 
 (B)  Proceeds represent fair value of exchange.
  *   Includes Payment in Kind Notes.
</TABLE>
                            See the Accompanying Notes to Financial Statements.


<PAGE>
                   EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996



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  advisor 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 Funds' 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 have 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 have
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 Retirement Fund will terminate
on October 13, 1998, subject to the right of the Independent General Partners to
extend  the  term of the  Retirement  Fund  for up to two  additional  one  year
periods,   after  which  the  Retirement   fund  will  liquidate  any  remaining
investments within five years.
<PAGE>
2.    Significant Accounting Policies

      Basis of Accounting

      For  financial  reporting  purposes,  the  Retirement  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 Retirement Fund.
The total value of securities  without a readily  ascertainable  market value is
$40,903,485  and  $28,806,626  as of December  31, 1996 and 1995,  respectively,
representing 47.8% and 32.4% 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  Retirement  Fund's
portfolio and make recommendations  regarding the value of the Retirement 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.

     For privately  issued  securities in which the  Retirement  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 Retirement Fund invests. Therefore, the fair
values presented  herein are not necessarily  indicative of the amount which the
Retirement 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  Retirement  Fund's  portfolio  companies  are  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.
<PAGE>
      Income Taxes

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

      Investment Transactions

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

      Temporary  Investments - The Retirement  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  are  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.

3.    Note Receivable

     On July 22, 1993,  pursuant to the terms of the  Retirement  Fund's Amended
and  Restated  Agreement  of Limited  Partnership,  Alliance  Corporate,  as the
successor  Managing  General  Partner of the Retirement  Fund, has contributed a
non-interest  bearing  promissory note (the "Note") to the Retirement 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  such  Limited  Partners   receive   distributions
representing  additional returns of capital. Such distributions received for the
year ended December 31, 1996,  resulted in a $65,488  reduction of the principal
amount of the Note. The promissory  note of Equitable  Capital was canceled upon
the contribution of Alliance Corporate's Note.

4.    Capital Contributions

      On October  13,  1988,  the  Retirement  Fund  closed the  initial  public
offering of its units of Limited Partner interests ("Units"). Equitable Capital,
the  Retirement   Fund's  Managing  General  Partner  at  that  time,   accepted
subscriptions for 221,072 Units and admitted 26,304 Limited Partners.

      The Limited Partners' total capital contributions were $220,848,730, after
giving  effect to volume  discounts  allowed of  $223,270.  Equitable  Capital's
aggregate  capital  contribution  was in the  form of a  promissory  note in the
principal amount of $2,051,783.  On July 22, 1993,  Equitable Capital's note was
canceled and Alliance  Corporate  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 $203,146,793.

      Allocation  of  income,  loss  and  distributions  of  cash  are  made  in
accordance with the Partnership Agreement as further discussed in Note 11.
<PAGE>
5.    Sales, Marketing and Offering Expenses and Sales Commissions

     The Retirement Fund expended a total of $416,052 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 totaled $951,683.

     The Retirement Fund also paid $1,627,385 for the  reimbursement of offering
expenses.  These expenses, along with the offering expenses of Equitable Capital
Partners  and  the  organizational   expenses  of  the  Funds,  may  not  exceed
$6,000,000. Aggregate offering and organizational expenses for the Funds totaled
$4,711,806.  

      For their  services  as  selling  agent,  the  Retirement  Fund paid sales
commissions to Merrill Lynch, Pierce,  Fenner & Smith Incorporated in the amount
of  $15,251,770,  of  which  Equico  Securities  Corporation,  an  affiliate  of
Equitable Capital, a related party, received $168,150 as a selected dealer.

6.    Investment Advisory Fee

      As of July 22, 1993,  Alliance  Corporate  has been  receiving a quarterly
Investment  Advisory  Fee, at the annual rate of 1.0% of the  Retirement  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  Retirement   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.  Since
becoming the successor Managing General Partner of the Retirement Fund, Alliance
Corporate has not received any Deductible Fees.  Alliance Corporate is a related
party of the Retirement Fund.

     The Investment  Advisory Fee is calculated and paid quarterly,  in advance.
The  Investment  Advisory Fees paid by the  Retirement  Fund for the years ended
December 31,  1996,  1995 and 1994 were  $842,503,  $1,037,207  and  $1,278,599,
respectively.  The decrease in the Investment Advisory Fees, is due primarily to
the return of  capital  distributed  to  Limited  Partners,  which  reduced  the
Retirement  Fund's Available  Capital,  on which the Investment  Advisory Fee is
based.

7.    Fund Administration Fee and Expenses

     As compensation  for its services during the fourth through seventh year of
operation  of  the  Funds,  ML  Fund  Administrators,  Inc.  ("MLFAI"),  as  the
Retirement Fund  administrator,  is entitled to receive 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 Retirement Fund
Administration Fee is calculated and paid quarterly,  in advance. The Retirement
Fund  Administration  Fees  paid by the  Retirement  Fund  for the  years  ended
December  31,  1996,  1995 and 1994  were  $553,973,  $701,954  and  $766,168,
respectively.

     In addition to the Retirement 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 Retirement Fund, commencing on October
13, 1992. For the years ended  December 31, 1996 and 1995,  the Retirement  Fund
incurred  Administrative  expenses of $146,468 and $135,139 respectively,  which
consisted primarily of printing,  audit and tax return preparation and custodian
fees paid for by MLFAI on behalf of the Retirement 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 Retirement Fund in
addition  to  $500  for  each  meeting  attended  plus   reimbursement  for  any
out-of-pocket  expenses.  In accordance with the Retirement  Fund's  Partnership
Agreement,  the  amount  of such fee is  reviewed  annually  by the  Independent
General Partners.

     For the years ended December 31, 1996,  1995 and 1994, the Retirement  Fund
incurred $183,611, $161,236 and $160,979,  respectively,  of Independent General
Partners' Fees and Expenses.
<PAGE>
9.    Related Party Transactions

     For the years ended December 31, 1996,  1995 and 1994, the Retirement  Fund
paid expenses of $102,008, $26,408 and $36,782,  respectively, as reimbursement
for amounts paid for legal  services  provided by Equitable  Life in  connection
with the Retirement  Fund's Enhanced Yield  Investments.  The Retirement Fund is
paying  Alliance  Corporate  an  Investment  Advisory  Fee for its  services  as
described in Note 6. Additionally, the Retirement Fund paid sales commissions to
Equico Securities, a related party, as described in Note 5.

10.   Investment Transactions

      The Retirement Fund is invested  primarily in Enhanced Yield  Investments,
also known in the securities industry as "high yield securities". The securities
in which the Retirement  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 Retirement  Fund cannot  eliminate its risks  associated with
participation in Enhanced Yield Investments,  it has established risk management
policies.  The Retirement Fund subjects each prospective  investment to rigorous
analysis and will make only those  investments that have been recommended by the
Managing  General  Partner  and  that  meet  the  Retirement  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 Retirement Fund's capital
in any single issuer, the Retirement Fund limits the amount of its investment in
a particular  issuer.  The Retirement 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, 1996,  the  Retirement  Fund received a
total of $354,750  and  $146,632  from Western  Pioneer,  Inc. and U.S.  Leather
Holdings, Inc., respectively,  as principal paydowns of the senior notes held by
the Retirement Fund. No gain or loss has been recorded on these transactions.

    During the year ended  December  31, 1996,  the  Retirement  Fund  received
additional  proceeds of $131,366  from  Polaris  Pool  Systems,  Inc.  The money
represents  proceeds from the sale of the investment  from prior years that have
been held in escrow for future  adjustments  and  expenses  not paid on the sale
dates. These proceeds were recorded and distributed as gains.

    During March 1996, the Retirement  Fund sold its remaining ASR  Acquisition
Corp. common stock for $1,007,354 and recognized a gain of $990,330 on the sale.

     On April 9, 1996, the Equitable investors foreclosed on the common stock of
United States Leather Holdings,  Inc. All securities held by the Retirement Fund
have been  surrendered  and  cancelled in exchange  for 621.90  shares of common
stock in Leather  U.S.,  Inc.  The  shares  will have a cost basis of 50% of the
original par value of the 15% Senior Debentures surrendered.

     On May 8, 1996, the Retirement Fund received  dividend income of $1,852,198
from Bank United Corp.

     On August 6, 1996, a comprehensive  restructuring  closed for MTI Holdings,
Inc. The Retirement Fund recognized a loss of $746,099 on this transaction.

     On August 14, 1996, the Retirement  Fund sold 102,197 shares of Bank United
Corp. (formerly USAT Holdings Inc.) common stock for $1,926,413 and recognized a
gain of $1,267,487.
<PAGE>
     On September  12, 1996,  the  Retirement  Fund sold its Tulip Holding Corp.
14.5%  Subordinated  Notes for $2,929 and recognized a loss of $4,383,283 on the
sale. The 16.5% Subordinated  Notes,  Series A Exchangeable  Preferred Stock and
Class A Common Stock were deemed worthless resulting in a total realized loss of
$2,742,846 to the Retirement Fund.

     On September  30, 1996,  the  Retirement  Fund sold 18,053  shares of Ampex
Recording Media Corp. Class A Common Stock for $143,746 which resulted in a loss
of $1,220 to the Retirement  Fund. The Retirement Fund sold its remaining 17,829
shares of Ampex Recording Media Corp. Class A Common Stock on November 29, 1996,
for $143,752 and recognized a gain of $467 on the sale.

     During the fourth quarter of 1996, the Retirement  Fund sold 585,520 shares
of Lexmark International Group, Inc. common stock for $13,627,380 resulting in a
gain of $9,723,894 to the Retirement Fund.

     On November 6, 1996,  the Apollo Radio Holding Co.,  Inc.  common stock and
warrants held by the Retirement Fund were redeemed. The Retirement Fund received
proceeds  of  $817,614  which  resulted  in a realized  gain of  $702,864 to the
Retirement Fund.

     On December 17, 1996,  the  Retirement  Fund sold its American  Paper Group
Ltd. 5% Subordinated Notes and common stock for $545,836 resulting in no gain or
loss to the Retirement Fund.

     During the year ended  December 31, 1996,  the  Retirement  Fund received a
total of $103,367 from  Pergament Home Centers,  Inc., as principal  paydowns of
the Floating Rate Demand Note held by the  Retirement  Fund. No gain or loss has
been recorded on these transactions.

     As of December 31, 1996, the Retirement  Fund had  investments in 5 Managed
Companies (a Managed  Company is one to which the Retirement  Fund, the Managing
General  Partner or other persons in the Retirement  Fund's investor group makes
significant  managerial  assistance  available)  and 4 Non-Managed  Companies (a
Non-Managed  Company is one to which such  assistance is not provided)  totaling
$59,323,162 (including $422,439 capitalized cost of payment-in-kind securities),
consisting of $35,258,695 in senior notes and subordinated notes and $24,064,467
in common stock and purchase warrants.

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, 1996,  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, 1996,  the  Retirement  Fund  recorded net
unrealized  appreciation  on Enhanced  Yield  Investments of  $18,779,614.  Such
appreciation  was the result of  adjustments  in value made with  respect to the
following investments during 1996:

     The amount includes the reversal of $9,878,056,  $2,024,000 and $186,918 of
unrealized  depreciation of U.S.  Leather  Holdings,  Inc.  senior  subordinated
notes, senior subordinated  preferred stock and non-voting common stock purchase
warrants,  respectively,  due to a restructuring  on April 9, 1996. On March 31,
1996, U.S. Leather  Holdings,  Inc. 15% Senior  Subordinated  Notes were written
down from 60% to 50% of par, resulting in unrealized  depreciation of $1,439,686
to the Retirement Fund.
<PAGE>
     On March 31, 1996,  Pergament  Home Centers,  Inc. Class B Common Stock was
written down from 25% of cost to zero,  resulting in unrealized  depreciation of
$1,683,000.  On June 30, 1996, Pergament Home Centers, Inc. Floating Rate Demand
Note  was  written  down  from  100%  to 75% of  par,  resulting  in  unrealized
depreciation of $635,800 to the Retirement Fund.

     On March 31, 1996, RI Holdings, Inc. senior subordinated notes were written
down to 30% of par,  resulting in unrealized  depreciation  of $1,056,772 to the
Retirement Fund. On May 1, 1996, the Retirement Fund received  additional shares
of  Class B  Common  Stock  from RI  Holdings.  The  Retirement  Fund  exchanged
outstanding  debt for the new  common  stock  issued,  resulting  in  unrealized
depreciation of $670 to the Retirement Fund. On June 30, 1996, RI Holdings, Inc.
senior subordinated notes were written down from 30% to 15% of par, resulting in
unrealized  depreciation of $1,801,739 to the Retirement  Fund. On September 30,
1996, RI Holdings,  Inc. senior subordinated notes were written down from 15% to
2% of par, resulting in unrealized  depreciation of $1,561,507 to the Retirement
Fund.

     Due to the sale of 585,520  shares of  Lexmark  International  Group,  Inc.
common stock during the fourth  quarter of 1996,  the  Retirement  Fund reversed
$5,011,136 of unrealized  appreciation.  Due to an increase in the quoted market
price of the Lexmark International Group, Inc. common stock, the Retirement Fund
recorded total unrealized  appreciation of $1,940,270 at September 30, 1996. The
equity was valued at 100% of the closing  market price at September 30, 1996, as
compared to 90% at March 31,  1996,  resulting  in  unrealized  appreciation  of
$2,015,378 to the Retirement Fund.

     On November 29, 1996,  the  Retirement  Fund reversed a total of $30,962 of
unrealized  depreciation due to the sale of the remaining 17,829 shares of Ampex
Recording  Media  Corp.  Class A Common  Stock.  Due to a decrease in the quoted
market  price of the Ampex  Recording  Media  Corp.  Class A Common  Stock,  the
Retirement Fund recorded total  unrealized  depreciation of $17,829 at September
30, 1996.  Also, due to the sale of common stock on September 30, 1996,  $13,178
of unrealized depreciation was reversed. Due to an increase in the quoted market
price of the Ampex  Recording  Media Corp.  Class A Common Stock  Warrants,  the
Retirement Fund recorded total  unrealized  appreciation of $118,411 at June 30,
1996.  The equity was valued at 80% of the closing market price at September 30,
1996, due to contractual restrictions on resale.

     On November 6, 1996,  the  Retirement  Fund reversed a total of $741,672 of
unrealized  appreciation in Apollo Radio Holding Co., Inc. due to the redemption
of the common stock and warrants held by the Retirement Fund. On March 31, 1996,
Apollo Radio common stock was written up, pending a cash  distribution  expected
in the second half of 1996, resulting in unrealized  appreciation of $231,672 to
the Retirement Fund.

    Due to the sale of the Class B Common Stock  investment  in ASR  Acquisition
Corp. in March 1996,  the Retirement  Fund reversed the unrealized  appreciation
recorded of $835,374.

     On August 6, 1996,  the  Retirement  Fund  reversed a total of  $745,680 of
unrealized depreciation in MTI Holdings, Inc. due to a restructuring.

     Due to the sale of the Tulip Holding  Corporation 14.5%  Subordinated Notes
on September 12, 1996, the Retirement Fund reversed the unrealized  depreciation
recorded  of  $4,387,388.  The  Retirement  Fund  also  reversed  $2,742,846  of
unrealized  depreciation  for the 16.5%  Subordinated  Notes,  15%  Exchangeable
Preferred  Stock and Class A Common  Stock  which were  deemed  worthless  as of
September 30, 1996. On June 30, 1996,  Tulip  Holding  Corporation  subordinated
notes  were  written  down  from  5% of par to  zero,  resulting  in  unrealized
depreciation of $219,714 to the Retirement Fund.

     On September 30, 1996, the Western Pioneer,  Inc. senior  subordinated note
was  written  up to 50% of the  original  par  value,  resulting  in  unrealized
appreciation of $1,712,111 to the Retirement Fund.

     Due to an increase in the quoted  market price of Bank United Corp.  common
stock, the Retirement Fund recorded total unrealized appreciation of $729,680 at
December 31, 1996.  Due to an increase in the quoted market price of Bank United
Corp.  common stock, the Retirement Fund recorded total unrealized  appreciation
of $6,779,167 at September 30, 1996. The equity was valued at 90% of the closing
market price at December 31, 1996, due to contractual restrictions on resale.

     On December 31, 1996,  the  Retirement  Fund's  preferred  stock and common
stock  investments  in WB Bottling  Corporation  were rendered  worthless.  As a
result,  the  Retirement  Fund  reversed  a  total  of  $248,796  of  unrealized
depreciation.
<PAGE>
     For the years  ended  December  31,  1995 and  1994,  the  Retirement  Fund
recorded net unrealized depreciation of $6,915,689 and $5,675,676, 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
        RI Holdings, Inc. 16%
          Senior Subordinated Notes                April 25, 1994

      Alliance  Corporate  continues to monitor the Retirement  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.

13.   Income Taxes

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

      Pursuant to Statement of Financial Accounting Standards No. 109 Accounting
for Income Taxes,  the  Retirement  Fund is required to disclose any  difference
between the tax basis of the Retirement Fund's assets and liabilities versus the
amounts reported in the Financial  Statements.  Generally,  the tax basis of the
Retirement Fund's assets  approximate the amortized cost amounts reported in the
Financial  Statements.  This amount is computed  annually and as of December 31,
1996, the tax basis of the Retirement Fund's assets was greater than the amounts
reported  in  the  Financial  Statements  by  $21,205,814.  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, 1997, the Independent General Partners approved an aggregate
cash  distribution  of $16,012,999  for the three months ended December 31, 1996
which was paid on February 14, 1997. The amount  distributed to Limited Partners
was $16,003,402 or $72.39 per Unit (of which $4,728,730 is capital returned from
investments during the fourth quarter of 1996), to Limited Partners of record at
December 31, 1996. On a per Unit basis,  this  distribution to Limited  Partners
includes $46.70 of realized gains, $4.30 of income from operations and $21.39 of
return of capital.  The Managing  General  Partner's  one percent  allocation of
$161,651 was reduced by its one percent allocation of realized gains and capital
returned from investments  during the fourth quarter of 1996, of $152,054 (which
is being held as a Deferred  Distribution  Amount  pursuant  to the  Partnership
Agreement), resulting in a net distribution of $9,597.


15.  Subsequent Events

     In  January  1997,  the  Retirement  Fund sold  22,641  shares  of  Lexmark
International  Group, Inc. at an average price of $25.74 per share and generated
$582,684 of net proceeds, which includes realized gains of $431,743.

     Certain  shareholders  of Bank  United  Corp.  participated  in a secondary
offering of approximately 4.1 million shares of its common stock (which includes
the underwriters'  over-allotment  option) in February 1997. The Retirement Fund
sold an  aggregate  of 383,872  shares at a net price of $27.98  per share.  The
Retirement Fund received total net proceeds of $10,740,738.56 and realized gains
of  $8,165,107.78.  The Retirement Fund still holds 48,531 shares of Bank United
Corp., representing approximately 11% of its original shareholdings.  The shares
of Bank United Corp. are traded on the NASDAQ under the ticker symbol "BNKU".

     On February 21, 1997, the Retirement Fund received a prepayment notice from
Lexmark   International  Inc.  stating  that  it  will  prepay  its  outstanding
$24,103,269 of Senior  Subordinated Notes held by the Retirement Fund,  together
with accrued interest and a contractual  prepayment  premium, on March 24, 1997.
The amount of the prepayment  premium will be a function of interest rate levels
just prior to the time of prepayment.

     Total proceeds received by the Retirement Fund from these  transactions are
expected  to be  distributed  to the  Limited  Partners  as part of the  regular
quarterly cash distribution to be made in May 1997.
<PAGE>
Item 9.    Disagreements on Accounting and Financial Disclosure

      None.

                                  Part III

Item 10.   Directors and Executive Officers of the Registrant

The Retirement Fund

      The  Retirement  Fund's  general  partners  (the "General  Partners")  are
responsible for the management and  administration  of the Retirement  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 Retirement 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  Retirement  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  Retirement  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  Retirement  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 a portfolio company.

     Messrs.  Robert W. Lear and Robert F.  Shapiro  have served as  Independent
General  Partners of the Retirement  Fund and the Enhanced Yield Fund since June
1988. On April 12, 1989,  Mr. Alton G. Marshall and Dr. William G. Sharwell were
admitted to the  Retirement  Fund and the Enhanced  Yield 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 79, 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  62,  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 75, 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 76, 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 Retirement  Fund which the  Independent  General  Partners have reviewed for
compliance with the investment  guidelines or otherwise approved,  for providing
administrative services to the Retirement Fund and for the admission of assignee
Limited Partners to the Retirement Fund.

Management of Alliance Corporate and the Retirement Fund

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

                         Position with Alliance Corporate Finance
                         Group Incorporated

James R. Wilson          President

William Gobbo, Jr.       Senior Vice President

James D. Neidhart        Senior Vice President

Laura Mah                Vice President and Chief Accounting
                         Officer


      James R. Wilson,  age 50, 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   restructuring  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 52, 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.
<PAGE>
      Mr.  James D.  Neidhart,  age 52, is a Senior Vice  President  of Alliance
Corporate.  He is head of the Investment Recovery Division of Alliance Corporate
responsible  for the  management of public and private  investments in companies
that  have  encountered  troubled  financial  situations.  He has been  actively
involved  in  over  20-25  restructuring,  playing  in  most a  leadership  role
including  chairmanship of committees critical to the restructuring process. Mr.
Neidhart,  who joined Alliance  Corporate through the combination with Equitable
Capital, had been employed by Equitable Capital in its workout group since 1986.
Prior to that, he had nine years of experience in private placement  investments
and workout transactions with the Prudential Insurance Company of America, three
years of commercial  lending  experience  with Harris Trust and Savings Bank and
served six years as an Officer in the U.S. Air Force.

     Mrs.  Laura  Mah,  age 41, is a Vice  President  of  Alliance  Capital  and
co-manages the Insurance  Services Group.  She is responsible for accounting and
reporting  for  assets  managed  by  Alliance  Capital  for  insurance  clients,
including mutual funds,  partnerships,  general, separate and advisory accounts.
Mrs. Mah joined Alliance Capital through the combination with Equitable Capital.
Prior to that, she was an Assistant  Vice President with Shearson  Lehman Hutton
for five years. She is a Certified Public Accountant.

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

The Administrator

      The Administrator  performs certain operating and administrative  services
for the Retirement Fund on behalf of the Managing General Partner pursuant to an
administrative services agreement,  dated October 13, 1988, among the Retirement
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 Retirement Fund paid Mr. Lear $36,750, Mr. Shapiro $36,250, Mr. Marshall
$36,894 and Dr.  Sharwell  $35,500 in fees,  with  respect to their  services as
Independent General Partners in 1996.

     The information with respect to the "Fund  Administration Fee and Expenses"
payable to the Managing  General Partner and the  Administrator  set forth under
the caption  "Management  Arrangements -- The Managing  General  Partner" in the
Prospectus is  incorporated  by reference into this Item 11. The Retirement Fund
paid $665,800 to the Administrator,  through the Managing General Partner, in
1996.

     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 Retirement  Fund paid Alliance  Corporate  $842,503 with respect to
the  Investment  Advisory  Fee for  1996.  The  Managing  General  Partner's  1%
allocation of net investment  income from Temporary  Investments,  which in 1996
amounted to $1,237, is credited against the Investment Advisory Fees as required
by the Partnership Agreement.

     Alliance  Corporate,   as  Managing  General  Partner,   received  $53,737,
representing distributions of net investment income in 1996.
<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
Retirement  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,  13  Units,  or  less  than  1% of the  total  Units
outstanding.

Item 13.   Certain Relationships and Related Transactions

      The  Retirement  Fund  co-invests in Enhanced Yield  Investments  with the
Equitable  Capital  Partners,  L.P. and certain  affiliates of Equitable Capital
pursuant to the terms of an exemptive  order granted by the Commission on August
11, 1988 permitting  co-investments  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: (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 Retirement 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 (Retirement Fund), L.P., et al. (812-7328) IC - 17925, December
31, 1990.

      Pursuant to such  arrangements,  the  Retirement  Fund  co-invested in the
Enhanced  Yield  Investments  listed above in Item 1 with the Equitable  Capital
Partners, L.P. 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
Funds,  Equitable Capital and Alliance  Corporate  received two exemptive orders
from the  Securities and Exchange  Commission  permitting the Funds and Alliance
Corporate 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

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.**

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


<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 18th day of March,
1997.

                          EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.

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

Dated: March 18, 1997          _________________________________
                               James R. Wilson
                               Title:  President


Dated: March 18, 1997          _________________________________
                               Laura Mah
                               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 18th day of March, 1997.

      Signature                              Title

______________________     Independent General Partner of
Robert W. Lear             Equitable Capital Partners (Retirement Fund), L.P.

______________________     Independent General Partner of
Robert F. Shapiro          Equitable Capital Partners (Retirement Fund), L.P.

______________________     Independent General Partner of
Alton G. Marshall          Equitable Capital Partners (Retirement Fund), L.P.

______________________     Independent General Partner of
William G. Sharwell        Equitable Capital Partners (Retirement Fund), L.P.

______________________
James R. Wilson            President and Director of 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 and
Mark Arnold                Director of Alliance Corporate


________________________   Co-Chairman, Co-Chief Executive Officer and
Alastair Tedford           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 18th day of March,
1997.

                          EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.

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

Dated: March 18, 1997          /s/  James R. Wilson
                               James R. Wilson
                               Title:  President


Dated: March 18, 1997          /s/  Laura Mah
                               Laura Mah
                               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 18th day of March, 1997.

     Signature                                 Title


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

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

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

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

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

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