SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-K



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

         For the year ended                   Commission File Number
          December 31, 1995                          1-16531


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

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

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


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


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


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


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

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

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

<PAGE>


                                     Part I


Item 1.       Business

Formation


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

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

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

       The Funds  jointly  offered an aggregate  of  1,000,000  units of limited
partnership  interest  ("Units") to investors  in a public  offering  registered
under the Securities Act pursuant to a Registration  Statement on Form N-2 (File
No.  33-20093),  which was declared  effective  under the  Securities Act by the
Commission  on July  15,  1988.  Merrill  Lynch,  Pierce,  Fenner  & Smith  (the
"Agent"),   an   affiliate   of  ML  Fund   Administrators,   Inc.   (the  "Fund
Administrator"), acted as selling agent for the Units offered by the Fund.


<PAGE>


       On October 13, 1988,  the Fund issued  284,611  Units to  investors,  and
Equitable  Capital,  as Managing General  Partner,  admitted 18,288 investors as
limited partners of the Fund (the "Limited  Partners").  The net proceeds of the
offering  of such  Units to the Fund was  $264,688,230  after  giving  effect to
volume discounts of $737,600 and the payment of $19,185,170 in sales commissions
to the Agent.  Equitable  Capital,  in its capacity as Managing General Partner,
contributed a demand  promissory  note in the principal  amount of $2,641,836 as
required by the Amended and Restated Agreement of Limited Partnership,  dated as
of October 13, 1988 (the  "Partnership  Agreement"),  pursuant to which the Fund
had been organized . Equitable  Capital reduced this note by $367 resulting from
actual  syndication  expenses paid in excess of original  estimates.  The public
offering has been concluded.

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

Investments

       As set forth in the Partnership  Agreement,  the Fund's investment period
ended on October 12, 1991,  three years after the Fund's  operations  commenced.
Thereafter, the Fund is not permitted to acquire new Enhanced Yield Investments,
but can make follow-on  investments in existing portfolio companies.  During the
year ended  December  31,  1995,  the Fund made a  follow-on  investment  in one
Managed  Company  (as defined in the  Prospectus)  at a total cost of $1,869 and
paid $457 in additional consideration to exercise warrants.

       During  the year  ended  December  31,  1994,  the Fund made a  follow-on
investment in one Managed Company at a total cost of $461. During the year ended
December  31,  1993,  the Fund made two  follow-on  investments  in one  Managed
Company at a total cost of $988.

       As of  December  31,  1995,  the Fund had a total  of 14  Enhanced  Yield
Investments  at a  net  cost  of  $114,540,430  (inclusive  of  the  receipt  of
securities  having a capitalized  cost of $854,000  received as  payment-in-kind
interest on certain Enhanced Yield Investments). During 1995, 1994 and 1993, the
Fund  received  $21,907,154,   $54,858,990  and   $61,470,419,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.

       New Investments in 1995

       The Fund's investment period ended on October 12, 1991. Accordingly,  the
Fund made no new investments in 1995.

       Follow-on Investments in 1995

       In 1995, the Fund made a single follow-on investment as described 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 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 9, 1995, the Fund acquired 186,879.68 shares of Common Stock of
RI Holdings, Inc. for a total cost of $1,869.

       As  of  December  31,  1995,  the  Fund's   investment  in  Rowe  totaled
$14,882,644 which includes senior subordinated PIK notes.

Competition

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

Item 2. Properties

       The Fund does not own or lease any physical properties.

Item 3. Legal Proceedings

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

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

       None.
                                     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,  1995 was 17,964.  The
Managing  General Partner holds a general partner  interest in the Fund and does
not hold any Units. Pursuant to the terms of the Partnership Agreement, the Fund
generally  makes  distributions  within 45 days  after the end of each  calendar
quarter of cash  income  received  from  investments  in excess of  expenses  of
operation,  reserves for expenses and certain  investments and liabilities.  Net
cash receipts  representing  cumulative income and gains are distributed as soon
as practicable after the related  disposition.  Such distributions are allocated
among the Managing General Partner, and the Limited Partners, in general,  first
99% to the Limited  Partners and 1% to the Managing  General  Partner  until the
Limited Partners have received a cumulative priority return of 10% noncompounded
on an annual basis on their investments in Enhanced Yield  Investments,  second,
70% to the Limited  Partners and 30% to the Managing  General  Partner until the
Managing General Partner has received 20% of all current and prior distributions
on such investments and, thereafter,  80% to the Limited Partners and 20% to the
Managing General Partner.  The Fund's  distribution  procedures are described in
detail in the Prospectus under the caption "Distributions and Allocations";  the
information under such caption is incorporated by reference in this Item 5.



<PAGE>


       On  February  7, 1996,  the  Independent  General  Partners  approved  an
aggregate cash  distribution  of $14,524,791 for the three months ended December
31, 1995, which was paid on February 14, 1996. The amount distributed to Limited
Partners was  $14,503,777,  or $50.96 per Unit(of  which  $5,381,994  is capital
returned  from  investments  during  the  fourth  quarter  of 1995),  to Limited
Partners of record at December 31, 1995. On a per Unit basis,  this distribution
to Limited  Partners  includes  $24.74 of realized  gains,  $7.31 of income from
operations and $18.91 of return of capital.  The Managing General  Partner's one
percent allocation of $146,503 was reduced, in accordance with the provisions of
the Partnership  Agreement,  by its one percent allocation of realized gains and
capital  returned  from  investments  during  the  fourth  quarter  of 1995,  of
$125,488, resulting in a net distribution of $21,015.

<PAGE>





Item 6. Selection Financial Data


                                                            For the Years Ended
<TABLE>
<S>                                         <C>               <C>               <C>              <C>                 <C>
                             December 31, 1995      December 31, 1994    December 31, 1993   December 31, 1992    December 31, 1991
TOTAL FUND
INFORMATION:
Cash Distributions             $   41,174,256  (a)    $   54,554,528 (c) $   45,172,973      $   22,883,377        $   19,948,644
to Partners
Net Assets                        112,353,878            157,930,203        219,924,070         245,894,872           245,538,953
Total Assets                      112,437,110            158,039,361        220,036,182         268,779,984           327,009,175
Outstanding Loan Payable                    -                      -                  -          22,702,377            81,122,484
Net Investment Income               5,215,211              6,924,128         15,218,052          21,588,983            24,846,105
Net Change in Unrealized
Appreciation (Depreciation)
  on Investments                    2,627,096            (15,853,762)         1,053,093          32,754,922           (45,706,229)
Net Realized Gains (Losses)
  on Investments                  (11,988,596)             1,758,116          3,120,202         (31,104,609)            1,300,000

PER UNIT OF LIMITED
PARTNERSHIP INTEREST:

Cash Distributions           $        144.38   (a)     $     191.33  (c)  $      157.98       $      79.76         $       69.39


Cumulative Cash Distributions         795.94   (b)           651.56              460.23             302.25                222.49
Investment Income                      27.77                  36.53               70.47             103.31                113.60
Expenses                               (9.63)                (12.44)             (17.54)            (28.21)               (27.17)
Net Investment                         18.14                  24.09               52.93              75.10                 86.43
Income

Net Unrealized Appreciation
 (Depreciation)on Investments           9.14                 (55.15)               3.66             113.94               (158.99)


Net Realized Gains (Losses)
  on Investments                      (41.70)                  6.12               10.85            (108.20)                 4.52
Net Asset Value                       390.82                 548.47              764.75             855.28                854.20

</TABLE>

(a) Includes Return of Capital of $25,324,686 or $88.98 per LP Unit.
(b) Includes Return of Capital of $247.96 per LP Unit.
(c) Includes Return of Capital of $26,517,207 or $93.17 per LP Unit.


<PAGE>


Item 7.       Management's Discussion and Analysis
              of Financial Condition and Results of Operations

Liquidity and Capital Resources

       Net Proceeds of Offering


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


       Investments


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


       As of  December  31,  1995,  the Fund had a total  of 14  Enhanced  Yield
Investments  at a  net  cost  of  $114,540,430  (inclusive  of  the  receipt  of
securities  having a capitalized  cost of $854,000  received as  payment-in-kind
interest on certain Enhanced Yield Investments).


       Credit Agreement


       On June 27, 1989,  the Fund entered into the Credit  Agreement with Wells
Fargo Bank, N.A. ("Wells Fargo"),  with a maximum term of seven years,  pursuant
to which  Wells  Fargo  agreed to provide up to  $130,000,000  for  purposes  of
financing investments by the Fund in Enhanced Yield Investments.


       On October 15, 1991,  the last day of the revolving  period of the Credit
Facility, the Fund borrowed $24 million bringing outstanding borrowings to $82.5
million the maximum borrowings  permitted at that date. The additional borrowing
provided a reserve  primarily to fund  follow-on  investments  and to insure for
adequate  liquidity  needs.  Pursuant to the Credit  Agreement,  the outstanding
borrowings  at that date were  converted  from a  revolving  loan to a term loan
payable in four  annual  installments.  The Fund repaid the term loan in full on
June  18,  1993,  resulting  in the  termination  of  the  Credit  Agreement  in
accordance with its terms.


       Proceeds from Investments


       During the year ended  December 31, 1995, the Fund received the following
proceeds:


       During the year ended  December  31, 1995,  the Fund  received a total of
$946,000  and  $27,814  from  Western  Pioneer,  Inc.  and MTI  Holdings,  Inc.,
respectively,  as principal  paydowns of the senior  notes held by the Fund.  No
gain or loss has been  recorded  on the  transactions  and the  amounts  will be
distributed as return of capital to the Limited Partners.


       On August 3, 1995, the Fund sold its American  Safety Razor Company 13.5%
Series B  Subordinated  Notes for $3,106,218 and recognized a gain of $60,906 on
the sale.


       During the year ended  December 31, 1995,  the Fund received  $98,988 and
$151,621  from  Polaris  Pool  Systems,   Inc.  and  Haddon   Craftsman,   Inc.,
respectively.  The monies  represent  proceeds from the sale of the  investments
from  prior  years  that have been held in escrow  for  future  adjustments  and
expenses  not  paid  on  the  sale  dates.  These  proceeds  were  recorded  and
distributed as gains.


        On September 15, 1995,  the Fund sold its common stock  investment in JP
Foodservice,  Inc.  for  $8,344,264,  which  resulted  in a gain to the  Fund of
$3,954,003.


       During the year ended December 31, 1995, the Fund received total proceeds
of $521,630 from Multi-Turf,  Inc. as paydown of the equity held, which resulted
in a gain of $482,318 to the Fund.


       On October 26, 1995, Apollo Radio Holding Company,  Inc. repaid its 15.0%
Subordinated  Note.  The  Fund  received  total  proceeds  of  $3,513,363  which
represented all outstanding  principal,  accrued interest and a realized gain of
$529,415.


       On November 21,  1995,  Lexmark  International  Group,  Inc.  ("Lexmark")
(formerly Lexmark Holding, Inc.) completed the initial public offering of shares
of common  stock held by  certain  existing  shareholders  of  Lexmark.  After a
fifteen to one stock split,  Equitable Capital Partners,  L.P. (the "Fund") held
1,859,803  shares of Lexmark  common stock.  The Fund sold 532,327 shares in the
offering  representing  28.6%  of the  shares  held by the Fund  for  total  net
proceeds of $10,034,364 or a net price of $18.85 per share.  The initial cost of
the shares sold by the Fund was  $3,548,847.  As a result,  the Fund  realized a
gain of  $6,485,517.  The shares of Lexmark  common  stock are listed on the New
York Stock Exchange under the symbol LXK.


       For  additional  information,  refer  to  the  Supplemental  Schedule  of
Realized Gains and Losses and Note 11 to the Financial Statements.


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


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


Participation in Enhanced Yield Investments


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


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




<PAGE>


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


Results of Operations


       For the year ended December 31, 1995, the Fund had net investment  income
of  $5,215,211,  a decrease  of  $1,708,917  from the net  investment  income of
$6,924,128  for the year ended  December 31, 1994.  The Fund had net  investment
income of  $15,218,052  for the same period in 1993.  Net  investment  income is
comprised  of  investment  income  (primarily  interest  income  and  accrual of
discount)  offset by expenses.  The decrease in the 1995 net  investment  income
versus the  comparative  period in 1994  reflects  the  decrease in interest and
discount  income  (excluding  temporary  investments)  partially  offset  by the
decrease in Investment  Advisory Fees, Fund Administration Fees and Expenses and
Valuation Expenses.


       For the year ended December 31, 1995,  the Fund had investment  income of
$7,984,889,  as  compared  to  $10,501,426  for the  same  period  in  1994  and
$20,258,741 for the same period in 1993. The decrease in 1995 investment  income
of 24% versus  1994 was  primarily  due to a  decrease  in the amount of accrual
status debt  securities  held by the Fund due to the sales and repayments of two
investments during 1995. (See Note 13 to the Financial Statements). The decrease
in the 1994 amount of investment income of 48% versus the comparative  period in
1993 was  primarily  due to the  sale and  non-accrual  status  of  investments.
Additionally,  investment  income  decreased  due to  the  reversal  of  accrued
interest on obligations issued by Western Pioneer, Inc. and Tulip Holdings Corp.
in 1994.


       The Fund incurred  expenses of $2,769,678 for the year ended December 31,
1995, as compared to $3,577,298  for the same period in 1994 and  $5,040,689 for
the same period in 1993. The decrease in the 1995 expenses  versus 1994 expenses
of $807,620 was primarily  due to the decrease in  Investment  Advisory Fees and
Fund Administration Fees and Expenses.  The decrease in the 1994 expenses versus
1993 expenses of $1,463,391 was primarily due to elimination of interest expense
and loan fees due to the repayment of the Fund's term loan in June, 1993 and the
reduction of the Investment Advisory Fee.

       The Fund  experienced a decrease in net assets  resulting from operations
for the year ended  December 31, 1995 in the amount of $4,146,289 as compared to
a decrease of $7,171,518 for the same period in 1994. The decrease in net assets
resulting from  operations in 1995 versus 1994 is  attributable to a decrease in
net  investment  income of  $1,708,917,  a  decrease  in net  realized  gains of
$13,746,712 offset by a change in unrealized appreciation of $18,480,858 and the
(see Statement of Operations in the Financial  Statements).  The decrease in net
assets  resulting  from  operations  in 1994 of  $7,171,518  as  compared  to an
increase in 1993 of $19,391,347 was attributable to a decrease in net investment
income of $8,293,924,  change in unrealized depreciation of $16,906,855, and the
decrease in net realized gains of $1,362,086.

       For the year ended  December 31, 1995,  the Fund  incurred an  Investment
Advisory Fee of $1,442,458 (as described in Note 6 to the Financial Statements).
For the years ended  December 31, 1994 and 1993,  the Fund  incurred  Investment
Advisory  Fees of  $1,855,152  and  $2,318,660,  respectively.  The  decrease in
Investment Advisory Fees is due to a decrease in the Fund's Available Capital on
which the Investment Advisory Fee is based, resulting primarily from redemptions
of debt obligations held by the Fund and the payment of the Fund's term loan.

       The Fund  Administration Fees and Expenses (as described in Note 7 to the
Financial Statements) for the years ended December 31, 1995, 1994 and 1993, were
$1,077,666,  $1,459,516 and $1,069,374,  respectively.  The decrease of $381,850
from 1994 to 1995 is due primarily to a decrease in the administrative  expenses
reimbursed to the Fund Administrator  under the Fund's  Administrative  Services
Agreement.  During the years ended December 31, 1995 and 1994, the Fund incurred
a total of $173,962  and  $473,142,  respectively,  of  administrative  expenses
consisting primarily of printing, audit and tax return preparation and custodian
fees paid for by the Fund Administrator.

<PAGE>


       For the years ended  December  31, 1995 and 1994,  the Fund did not incur
any  interest  or loan fees.  For the year ended  December  31,  1993,  the Fund
incurred  interest  expense of $387,140 in connection  with the Fund's term loan
under the Credit Agreement.  Loan fees for the year ended December 31, 1993 were
$824,116.  The decrease in Loan Fees from 1993 to 1994 was due to the  principal
amount of the Fund's term loan being repaid in full on June 18, 1993.

       Independent  General  Partners' Fees and Expenses  incurred for the years
ended  December 31, 1995,  1994 and 1993 were  $167,152,  $164,518 and $173,862,
respectively.  The  changes  are  attributable  to  fluctuations  in legal  fees
incurred by the  Independent  General  Partners.  (See Note 10 to the  Financail
Statements).

       The Fund incurred professional fees of $69,167,  $62,601 and $105,140 for
the years ended  December  31,  1995,  1994 and 1993,  respectively,  which were
primarily  comprised  of legal  fees  reimbursed  to  Equitable  Life for  legal
services. (see Note 10 to the Financial Statements).

Unrealized Appreciation/Depreciation and Non-Accrual of Investments

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


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


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


       For the years ended  December  31, 1995 and 1994,  the Fund  recorded net
unrealized  appreciation  on Enhanced  Yield  Investments  of $2,627,096 and net
unrealized  depreciation  of  $15,853,762,  respectively.  For  the  year  ended
December 31, 1993,  the Fund recorded net  unrealized  appreciation  on Enhanced
Yield Investments of $1,053,093. The change of $18,480,858 from 1994 to 1995, in
unrealized  appreciation was primarily the result of unrealized  appreciation in
Lexmark  International  Group, Inc., the reversal of unrealized  depreciation in
Color Your World, Corp. and Ampex Recording Media Corp., offset by writedowns in
U.S.  Leather  Holdings,  Inc.,  Pergament Home Centers,  Inc. and Tulip Holding
Corp. (See Note 13 to the Financial Statements).


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



<PAGE>


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


         U.S. Leather Holdings, Inc. 15%
           Senior Subordinated Note                  October 1, 1995
         MTI Holdings, Inc. 5%
           Senior Secured Note                       October 1, 1995
         Western Pioneer, Inc. 10%
           Senior Subordinated Note                  November 30, 1994
         RI Holdings, Inc. 16%
           Senior Subordinated Notes                 April 25, 1994
         Tulip Holding, Corp. 14.5% and 16.5%
           Subordinated Notes                        January 1, 1994

Realized Gains and Losses on Investments


     For the year ended  December  31,  1995,  the Fund  recorded  net losses of
$11,988,596 on transactions involving nine Enhanced Yield Investments. (See Note
11 to the Financial  Statements and the Supplemental  Schedule of Realized Gains
and Losses). For the years ended December 31, 1994 and 1993, the Fund realized a
net gain on investments of $1,758,116 and $3,120,202, respectively.



<PAGE>


Item 8.  Financial Statements and Supplementary Data

                        EQUITABLE CAPITAL PARTNERS, L.P.


                                TABLE OF CONTENTS


Independent Auditors' Report

Statements of Assets, Liabilities and Partners' Capital as of
     December 31, 1995 and 1994

Statements of Operations
     For the Years Ended December 31, 1995, 1994 and 1993

Statements of Cash Flows
     For the Years Ended December 31, 1995, 1994 and 1993

Statements of Changes in Net Assets
     For the Years Ended December 31, 1995, 1994 and 1993

Statements of Changes in  Partners'  Capital  For the Years Ended  December  31,
     1995, 1994 and 1993

Schedule of Portfolio Investments - December 31, 1995

Supplemental Schedule of Realized Gains and Losses
     For the Year Ended December 31, 1995

Notes to Financial Statements


<PAGE>



                          INDEPENDENT AUDITORS' REPORT

Equitable Capital Partners, L.P.:

We have audited the accompanying statements of assets, liabilities and partners'
capital of Equitable Capital Partners, L.P. (the "Fund") as of December 31, 1995
and 1994,  including  the schedule of portfolio  investments  as of December 31,
1995,  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,  1995.   These   financial   statements   are  the
responsibility of the Fund's General Partners.  Our responsibility is to express
an opinion on these financial statements based on 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 included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian.  An audit also includes assessing the accounting  principles used
and significant estimates made by management,  as well as evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial  position of the Fund as of December 31, 1995 and 1994,
the results of its operations,  its cash flows and the changes in its net assets
and partners'  capital for the respective  stated  periods,  in conformity  with
generally accepted accounting principles.

As explained in Note 2, the financial  statements of the Fund include securities
valued  at  $46,116,681  and  $118,270,752  as of  December  31,  1995 and 1994,
respectively,  representing 41.0 and 74.8 percent of total assets, respectively,
whose  values have been  estimated  by the  General  Partners of the Fund in the
absence of readily  ascertainable market values. We have reviewed the procedures
used by the General  Partners  in  arriving  at their  estimate of value of such
securities   and  have   inspected   underlying   documentation   and,   in  the
circumstances,  we believe the procedures  are reasonable and the  documentation
appropriate.  However,  because of the inherent uncertainty of valuation,  those
estimated values may differ  significantly  from the values that would have been
used had a ready market for the securities existed, and the differences could be
material.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial  statements taken as a whole.  The  supplemental  schedule of realized
gains and losses for the year  ended  December  31,  1995 is  presented  for the
purpose of additional analysis and is not a required part of the basic financial
statements.  This schedule is the responsibility of the Fund's General Partners.
Such schedule has been subjected to the auditing procedures applied in our audit
of the basic financial  statements and, in our opinion,  is fairly stated in all
material respects when considered in relation to the basic financial  statements
taken as a whole.

Deloitte & Touche LLP
New York, New York
February 20, 1996


<PAGE>



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

<TABLE>
<S>                                            <C>         <C>                     <C>
ASSETS:                                          Notes      December 31, 1995      December 31, 1994

  Investments                                   2,11,13
     Enhanced Yield Investments
     Value-Managed Companies
        (amortized cost of $110,558,741
        at December 31, 1995 and
        $125,851,772 at December 31, 1994)                  $     83,988,222         $   108,250,458
     Non-Managed Companies
        (amortized cost of $4,092,050
        at December 31, 1995 and
        $23,400,149 at December 31, 1994)                          5,330,092              13,041,887
     Temporary Investments
         (at amortized cost)                                      20,356,353              31,713,674
  Cash                                                                74,501                 157,275
  Interest Receivable                            2,13                751,346               2,691,595
  Note Receivable                                                  1,928,690               2,184,472
  Prepaid Expenses                               3,4                   7,906                       -

TOTAL ASSETS                                               $     112,437,110         $   158,039,361


TOTAL LIABILITIES AND PARTNERS' CAPITAL

  Liabilities
     Professional Fees Payable                  10         $          25,484         $        27,132
     Independent General 
     Partners' Fees Payable                      8                    15,273                  12,325
     Fund Administrative Expenses Payable        7                    36,617                  51,707
     Other Accrued Liabilities                                         5,858                  17,994
Total Liabilities                                                     83,232                 109,158
  Partners' Capital
     Managing General Partner                  3,4                 1,448,956               1,828,320
     Limited Partners (284,611 Units)           4                110,904,922             156,101,883
Total Partner's Capital                                          112,353,878             157,930,203

TOTAL LIABILITIES AND PARTNERS' CAPITAL                    $     112,437,110        $    158,039,361

</TABLE>





               See the Accompanying Notes to Financial Statements.

<PAGE>




                        EQUITABLE CAPITAL PARTNERS, L.P.
                            STATEMENTS OF OPERATIONS

  <TABLE>
  <S>                                                           <C>                   <C>                      <C>
                                                                                      For the Years Ended
                                                                December 31, 1995      December 31, 1994       December 31, 1993
 INVESTMENT INCOME - Notes 2,13
   Interest                                                      $    7,936,925        $      9,384,869        $    19,511,354
   Discount                                                              47,964               1,116,557                747,387
        TOTAL INVESTMENT INCOME                                       7,984,889              10,501,426             20,258,741

 EXPENSES:
   Investment Advisory Fee - Note 6                                   1,442,458               1,855,152              2,318,660
   Fund Administration Fees and Expenses - Note 7                     1,077,666               1,459,516              1,069,374
   Interest Expense - Note 9                                                  -                       -                387,140
   Loan Fees - Note 9                                                         -                       -                824,116
   Independent General Partners' Fees and Expenses - Note 8             167,152                 164,518                173,862
   Amortization of Deferred Organization Expenses - Note 2                    -                       -                 92,080
   Professional Fees - Note 10                                           69,167                  62,601                105,140
   Insurance Fees                                                             -                   2,755                 30,748
   Valuation Expenses                                                    13,235                  32,756                 39,569
        TOTAL EXPENSES                                                2,769,678               3,577,298              5,040,689

 NET INVESTMENT INCOME                                                5,215,211               6,924,128             15,218,052

 NET CHANGE IN UNREALIZED APPRECIATION
  (DEPRECIATION) ON INVESTMENTS-Note 13                               2,627,096             (15,853,762)             1,053,093

 NET REALIZED GAINS (LOSSES) ON INVESTMENTS - Note 11               (11,988,596)              1,758,116              3,120,202

 NET INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS                                    $    (4,146,289)        $    (7,171,518)       $    19,391,347

   </TABLE>

               See the Accompanying Notes to Financial Statements



<PAGE>



                        EQUITABLE CAPITAL PARTNERS, L.P.
                             STATEMENTS OF CASH FLOW

<TABLE>
<S>                                                       <C>                       <C>                        <C>
                                                                                    For the Years Ended
INCREASE (DECREASE) IN CASH                               December 31, 1995          December 31, 1994          December 31, 1993

CASH FLOWS FROM OPERATING ACTIVITIES:
    Interest and Discount Income                           $    9,797,734             $    13,169,441           $   16,448,404
    Fund Administration Fees and Expenses                      (1,092,756)                 (1,407,807)              (1,069,374)
    Investment Advisory Fee                                    (1,442,458)                 (1,855,152)              (2,318,660)
    Independent General Partners'Fees and Expenses               (164,204)                   (166,193)                (185,724)
    Interest Expense                                                    -                           -                 (410,961)
    Valuation Expenses                                            (25,370)                    (47,262)                 (43,069)
    Sale (Purchase) of Temporary Investments, Net              12,191,972                  (9,775,337)              (5,832,300)
    Purchase of Enhanced Yield Investments                         (1,869)                       (461)                    (988)
    Proceeds from Sales and Principal Payments of
     Enhanced Yield Investments                                21,907,154                  54,858,990               61,470,419
    Professional Fees                                             (70,815)                    (88,469)                (149,192)
    Insurance Fees                                                 (7,906)                     (4,343)                  (6,285)
    Net Cash Provided by Operating Activities                  41,091,482                  54,683,407               67,902,270

CASH FLOWS FROM FINANCING ACTIVITIES:
           Loan Repayments - Net                                        -                      -                   (22,702,377)
           Cash Distributions to Partners                     (41,174,256)                (54,554,528)             (45,172,973)
Net Cash Applied to Financing Activities                      (41,174,256)                (54,554,528)             (67,875,350)
Net Increase (Decrease) in Cash                                   (82,774)                    128,879                   26,920
Cash at the Beginning of the Period                               157,275                      28,396                    1,476
Cash at the End of the period                              $       74,501            $        157,275           $       28,396
</TABLE>

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

<TABLE>
<S>                                                         <C>                     <C>                        <C>
 Net Increase (Decrease) In Net Assets
     Resulting From Operations                             $   (4,146,289)            $    (7,171,518)          $   19,391,347
 Adjustments to Reconcile Net Increase (Decrease) in
Net Assets Resulting from Operations to Net Cash
Provided by Operating Activities:
 Decrease in Investments                                        46,085,852                 43,333,548               52,534,150
 (Increase) Decrease in Accrued Interest                         1,812,846                  2,667,814               (3,836,032)
 Amortization of Deferred Organization Expenses                          -                          -                   92,080
 Increase (Decrease) in Other Accrued Liabilities                  (10,370)                   (27,118)                   9,112
 Increase (Decrease)in Fund Administration
   Expenses Payable                                                (15,090)                    51,707                        -
 Decrease in Interest Payable                                            -                          -                  (23,821)
 (Increase) Decrease in Prepaid Expenses                            (7,906)                     2,755                   20,325
 Net Change in Unrealized Depreciation
 (Appreciation) on Investments                                  (2,627,096)                15,853,762               (1,053,093)
 (Increase) Decrease in Independent General
   Partners' Fees Payable                                            1,945                     (1,675)                 (11,862)
 Decrease in Professional Fees Payable                              (2,410)                   (25,868)                 (44,052)
 Decrease in Prepaid Loan Fees                                           -                          -                  824,116
 Total Adjustments                                              45,237,771                 61,854,925               48,510,923
 Net Cash Provided by Operating Activities                  $   41,091,482            $    54,683,407           $   67,902,270


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


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


<S>                                                                    <C>                  <C>                   <C>
                                                                                            For the Years Ended
                                                                      December 31, 1995      December 31, 1994     December 31, 1993

 FROM OPERATIONS:

      Net (Decrease) Increase in Net Assets Resulting                  $   (4,146,289)        $   (7,171,518)         $  19,391,347
         from Operations

      Cash Distributions to Partners                                      (41,174,256)           (54,554,528)           (45,172,973)

      Reduction in Managing General Partners' Contribution                   (255,780)              (267,821)              (189,176)

      Total Decrease                                                      (45,576,325)           (61,993,867)           (25,970,802)

  NET ASSETS:

      Beginning of Period                                                 157,930,203            219,924,070            245,894,872

      End of Period                                                   $   112,353,878         $  157,930,203          $ 219,924,070


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


<PAGE>


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

<S>                                                            <C>               <C>                <C>              <C>
                                                                                  Managing
                                                                                  General            Limited
                                                                Notes             Partner            Partners              Total
FOR THE YEAR ENDED DECEMBER 31, 1993

 Partners' Capital at January 1, 1993                                         $  2,473,151          $ 243,421,721     $ 245,894,872
 Cash Distribution to Partners                                                    (210,127)           (44,962,846)      (45,172,973)
 Reduction in Managing General Partners' Contribution             3               (189,176)                     -          (189,176)
 Allocation of Net Investment Income                             12                152,181             15,065,871        15,218,052
 Allocation of Net Unrealized Appreciation on Investments        13                 10,531              1,042,562         1,053,093
 Allocation of Net Realized Gains on Investments                 11                 31,202              3,089,000         3,120,202
 Partners' Capital at December 31, 1993                                       $  2,267,762          $ 217,656,308     $ 219,924,070

 FOR THE YEAR ENDED DECEMBER 31, 1994

 Partners' Capital at January 1, 1994                                         $  2,267,762          $ 217,656,308     $ 219,924,070
 Cash Distribution to Partners                                                     (99,905)           (54,454,623)      (54,554,528)
 Reduction in Managing General Partners' Contribution             3               (267,821)                     -          (267,821)
 Allocation of Net Investment Income                             12                 69,241              6,854,887         6,924,128
 Allocation of Net Unrealized Depreciation on Investments        13               (158,538)           (15,695,224)      (15,853,762)
 Allocation of Net Realized Gains on Investments                 11                 17,581              1,740,535         1,758,116
 Partners' Capital at December 31, 1994                                       $  1,828,320          $ 156,101,883     $ 157,930,203

 FOR THE YEAR ENDED DECEMBER 31, 1995

 Partners' Capital at January 1, 1995                                         $  1,828,320          $ 156,101,883     $ 157,930,203
 Cash Distribution to Partners                                                     (82,120)           (41,092,136)      (41,174,256)
 Reduction in Managing General Partners' Contribution              3              (255,780)                     -          (255,780)
 Allocation of Net Investment Income                              12                52,152              5,163,059         5,215,211
 Allocation of Net Unrealized Appreciation on Investments         13                26,271              2,600,825         2,627,096
 Allocation of Net Realized Losses on Investments                 11              (119,887)           (11,868,709)      (11,988,596)
 Partners' Capital at December 31, 1995                                       $  1,448,956          $ 110,904,922     $ 112,353,878

</TABLE>



                           See the Accompanying Notes to Financial Statements.




<PAGE>
<TABLE>
<CAPTION>
                        EQUITABLE CAPITAL PARTNERS, L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                DECEMBER 31, 1995
<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.
$     19,667,348   Lexmark International, Inc.,
                     Sr. Sub. Nts. 14.25% due 03/31/01*           03/27/91  $ 19,667,348   $ 19,667,348   $ 19,667,348
1,327,476 Shares   Lexmark International Group, Inc.,
                     Class B Common Stock** (d)                   03/27/91     8,849,843      8,849,843     21,803,793
                                                                              -----------   ------------   ------------
                                                                              28,517,191     28,517,191     41,471,141       37.81
                                                                              -----------   ------------   -------------------------


                   TULIP HOLDING CORPORATION - NOTE 12
$      8,530,088   Tulip Holding Corp.,
                     Sub. Nt. 14.5% due 12/29/97*(a)(b)          12/29/89      8,499,467      8,516,694        426,504
$        428,255   Tulip Holding Corp.,
                     Sub. Nt. 16.5% due 06/30/94*(a)(b)(c)       12/31/91        428,255        428,255              0
$      1,390,676   Tulip Holding Corp.,
                     Sub. Nt. 16.5% due 06/30/94*(a)(b)(c)       12/31/92      1,390,676      1,390,676              0
$        627,804   Tulip Holding Corp.,
                     Sub. Nt. 16.5% due 06/30/94*(a)(b)(c)       12/31/93        627,804        627,804              0
2,843.3625 Shares  Tulip Holding Corp.,
                     Series A Exchangeable Pref. Stock 15%*(b)   12/29/89      2,843,362      2,843,362              0
 153,104 Warrants  Tulip Holding Corp.,
                     Common Stock Purchase Warrants**            12/29/89         30,621         30,621              0
                                                                            -------------- --------------- --------------
                                                                              13,820,185      13,837,412        426,504       0.39
                                                                            -------------- --------------- -------------------------


                    BANKING AND FINANCE

                    USAT HOLDINGS INC.
       603 Shares   USAT Holdings Inc., Common Stock**           01/05/90 &
                                                                 12/19/91      7,229,058      7,229,058      7,229,058
                                                                            -------------- --------------- --------------
                                                                               7,229,058       7,229,058      7,229,058       6.59
                                                                            -------------- --------------- -------------------------

</TABLE>

               See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                               EQUITABLE CAPITAL PARTNERS, L.P.
                                              SCHEDULE OF PORTFOLIO INVESTMENTS
                                                      DECEMBER 31, 1995
                                                         (CONTINUED)
<S>                     <C>                                         <C>            <C>          <C>           <C>         <C>
    PRINCIPAL                                                       INVESTMENT    INVESTMENT      AMORTIZED     VALUE    % OF TOTAL
  AMOUNT/SHARES                  INVESTMENT                           DATE          COST            COST       (NOTE 2)  INVESTMENTS
----------------  ------------------------------------------------ ------------ -------------- --------------- -------- ------------

                  MISCELLANEOUS MANUFACTURING

                  QUANTEGY ACQUISITION CORP.
                   (FORMERLY AMPEX RECORDING MEDIA CORP.)
      162 Shares  Quantegy Acquisition Corp., Common Stock          11/13/95     $ 3,464,732    $ 3,464,732    $ 3,464,732
 45,667 Warrants  Ampex Recording Media Corp.,
                   Warrants to Purchase Class A Common Stock **(e)  12/31/90 &
                                                                    06/28/91         366,865        366,865        182,668
                                                                                ------------   -------------   ------------
                                                                                   3,831,597      3,831,597      3,647,400      3.33
                                                                                ------------   -------------   ---------------------
                  RI HOLDINGS, INC. - NOTES 10, 12
$      22,584,916 RI Holdings, Inc.,
                    Sr. Sub. Nts. 16% due 08/31/01*(a)(b)           04/25/94      11,828,850     11,828,850      9,463,080
   304,934 Shares RI Holdings, Inc., Common Stock**                 09/01/89       3,049,340      3,049,340              0
212,407.91 Shares RI Holdings, Inc., Common Stock**                  various           2,124          2,124              0
  46,062.5 Shares RI Holdings, Inc., Common Stock**                 04/25/94             461            461              0
186,879.68 Shares RI Holdings, Inc., Common Stock**                 05/09/95           1,869          1,869              0
                                                                                -------------- --------------- --------------
                                                                                  14,882,644      14,882,644      9,463,080     8.63
                                                                                -------------- --------------- ---------------------
                  LEATHER AND LEATHER PRODUCTS

                  UNITED STATES LEATHER HOLDINGS, INC.
$   18,684,000    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 01/31/04*                 08/06/93      18,556,021     18,569,686     11,210,400
$       46,341    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 08/05/98 *(a)             11/30/93          46,341         46,341              0
$      561,907    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 08/05/98 *(a)             02/28/94         561,907        561,907              0
$      530,436    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 08/05/98 *(a)             11/30/94         530,436        530,436              0
$      730,090    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 08/05/98 *(a)             02/28/95         730,090        730,090              0
$      320,008    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 08/05/98 *(a)             05/31/95         320,008        320,008              0
$      515,070    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 08/05/98 *(a)             08/31/95         515,070        515,070              0
$      723,459    U.S. Leather Holdings, Inc.,
                    Sr. Sub. Deb. 15% due 08/05/98 *(a)             11/30/95         723,459        723,459
 3,800.89 Shares  U.S. Leather Holdings, Inc.,
                    Sr. Sub. Pref. Stock 8% redeemable
                    03/31/01*(a)(b)                                 12/30/88       2,576,000      2,576,000              0
  191,504 Shares  U.S. Leather Holdings, Inc.,
                    Jr. Sub. Pref. Stock *(a)(b)                    08/06/93               0              0              0
191,504 Warrants  U.S. Leather Holdings, Inc.,
                    Non-Voting Common Stock Purchase Warrants **    08/06/93         238,247        238,247              0
                                                                                -------------- --------------- --------------
                                                                                  24,797,579     24,811,244     11,210,400     10.22
                                                                                -------------- --------------- ---------------------
</TABLE>
                             See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                               EQUITABLE CAPITAL PARTNERS, L.P.
                                             SCHEDULE OF PORTFOLIO INVESTMENTS
                                                      DECEMBER 31, 1995
                                                         (CONTINUED)
<S>               <C>                                                  <C>            <C>            <C>         <C>           <C>

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

                  WB BOTTLING CORPORATION - NOTE 12
   3,135 Shares   WB Bottling Corp., Preferred Stock**                  09/12/90     $   313,500   $   313,500     $      0
  41,663 Shares   WB Bottling Corp., Common Stock**                     09/12/90 &
                                                                        08/11/92         169,456       169,456            0
                                                                                     ------------  ------------   ---------
                                                                                         482,956       482,956            0     0.00
                                                                                     ------------  ------------   ------------------
                  MISCELLANEOUS RETAIL

                  PERGAMENT HOME CENTERS, INC.- Note 12
$     3,236,800   Pergament Acq. Corp., Home Centers, Inc.
                    Floating Rate Demand Note due 07/31/00*             10/18/91       3,236,800     3,236,800    3,236,800
  380.80 Shares   Pergament Holding, Corp., Common Stock Class B **     02/28/89       8,568,000     8,568,000    2,142,000
139.0545 Shares   Pergament Holding, Corp., Common Stock Class C **     02/28/89               0             0            0
                                                                                     ------------  ------------  ----------
                                                                                      11,804,800    11,804,800    5,378,800     4.90
                                                                                     ------------  ------------  -------------------

                  R&S STRAUSS, INC.
                   (FORMERLY WSR ACQUISITION CORPORATION)
$    1,815,000    R&S Strauss, Inc., Sr. Sub. Nt. 15% due 05/31/00*     06/13/90       1,815,000     1,815,000    1,815,000
$    2,310,000    R&S Strauss, Inc., Sr. Sub. Nt. 15% due 05/31/00*     06/13/90       2,310,000     2,310,000    2,310,000
                                                                                     ------------  ------------  -----------
                                                                                       4,125,000     4,125,000    4,125,000     3.76
                                                                                     ------------  ------------  -------------------

                  PRINTING, PUBLISHING AND ALLIED LINES

                  AMERICAN PAPER GROUP, LTD.
$    1,209,417    American Paper Group, Ltd.,
                    Sub. Nts. 5% due 12/31/00*                          01/18/94         820,467       899,936      899,936
  2,021 Shares    American Paper Holdings Inc., Common Stock**          01/18/94         136,903       136,903      136,903
                                                                                     ------------  ------------ -------------
                                                                                         957,370     1,036,839    1,036,839     0.95
                                                                                     ------------  ------------ --------------------



                   TOTAL INVESTMENT IN  MANAGED  COMPANIES                         $ 110,448,380  $110,558,741   $83,988,222   76.58
                                                                                   -------------- ------------ ---------------------
</TABLE>

                             See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                               EQUITABLE CAPITAL PARTNERS, L.P.
                                              SCHEDULE OF PORTFOLIO INVESTMENTS
                                DECEMBER 31, 1995
                                                         (CONTINUED)
<S>                <C>                                        <C>            <C>         <C>           <C>          <C>

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


                  NON-MANAGED COMPANIES

                  CONSUMER PRODUCTS MANUFACTURING

                  AMERICAN SAFETY RAZOR COMPANY - NOTE 12
 216,593 Shares   ASR Acquisition Corp., Common Stock (d)        04/14/89    $  34,056     $   34,056   $  1,705,670
   3,152 Shares   ASR Acquisition Corp., Common Stock (d)        05/22/89          505            505         24,822
                                                                            ------------  ------------   --------------
                                                                                34,561         34,561      1,730,492           1.58
                                                                            ------------  ------------   ---------------------------

                  DISTRIBUTION SERVICES

                  WESTERN PIONEER, INC.-Note 10
$    9,460,000    Western Pioneer, Inc.,
                    Sr. Sub. Nts. 10% due 12/01/02*(b)          11/30/94     1,928,960      1,928,960      1,928,960
162,161 Warrants  Western Pioneer, Inc.,
                    Common Stock Purchase Warrants **           11/30/94             0              0              0
                                                                           ------------- ------------  --------------
                                                                             1,928,960      1,928,960      1,928,960           1.76
                                                                           ------------- ------------  -----------------------------

                   BROADCASTING

                   APOLLO RADIO HOLDING CO., INC.
    57.75 Shares   Apollo Radio Holding Co., Inc.,
                     Common Stock**                            06/01/90        119,942        119,942       653,018
     49.5 Shares   Apollo Radio Holding Co., Inc.,
                     Common Stock**                            04/03/90        102,808        102,808       559,732
17.8749 Warrants   Apollo Radio Holding Co., Inc.,
                     Common Stock Purchase Warrants**          04/03/90              0              0             0
                                                                           -------------  ------------- -------------
                                                                               222,750        222,750     1,212,750           1.11
                                                                           -------------  ------------- ----------------------------

</TABLE>

                             See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                        EQUITABLE CAPITAL PARTNERS, L.P.
                                              SCHEDULE OF PORTFOLIO INVESTMENTS
                                DECEMBER 31, 1995
                                   (CONTINUED)
<S>             <C>                                                 <C>           <C>          <C>         <C>            <C>
   PRINCIPAL                                                        INVESTMENT    INVESTMENT    AMORTIZED     VALUE     % OF TOTAL
 AMOUNT/SHARES                        INVESTMENT                       DATE          COST          COST      (NOTE 2)   INVESTMENTS
--------------  -------------------------------------------------- ------------ --------------- ---------- ---------- --------------

                 HEALTH SERVICES

                 MTI HOLDINGS, INC. - NOTES 10, 12
$      915,779   MTI Holdings, Inc., Sr. Sec. Nt. 5% due 08/15/99*    07/01/94   $   915,779   $    915,779   $  457,890
 43,436 Shares   MTI Holdings, Inc., Class B Common Stock**           07/01/94       990,000        990,000            0
                                                                                --------------- ------------ -----------
                                                                                   1,905,779      1,905,779      457,890        0.42
                                                                                --------------- ------------ -----------------------


                  TOTAL INVESTMENT IN NON-MANAGED  COMPANIES                     $ 4,092,050   $  4,092,050   $5,330,092        4.87
                  ------------------------------------------                    -------------- --------------- ---------------------


                  TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS              $  114,540,430   $114,650,791  $89,318,314       81.45
                  ----------------------------------------------                -------------- ------------- -----------------------

                  TEMPORARY INVESTMENTS

                  COMMERCIAL PAPER

$    5,000,000    Greenwich Funding, 5.67% due 02/21/96              12/15/95   $  4,946,450   $ 4,959,838   $ 4,959,838
$   10,000,000    Dynamic Funding Corp, 6.08% due 01/02/96           12/27/95      9,989,867     9,998,315     9,998,315
$    5,400,000    International Securitization, 6.00% due 01/03/96   12/29/95      5,395,500     5,398,200     5,398,200
                                                                                --------------- ------------  ------------
                  TOTAL INVESTMENT IN COMMERCIAL PAPER                          $ 20,331,817   $20,356,353   $20,356,353       18.55
                  ------------------------------------                          --------------- ------------ -----------------------
</TABLE>
                             See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                               EQUITABLE CAPITAL PARTNERS, L.P.
                                              SCHEDULE OF PORTFOLIO INVESTMENTS
                                DECEMBER 31, 1995
                                   (CONCLUDED)
<S>               <C>                                       <C>            <C>          <C>             <C>            <C>

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


                   TOTAL TEMPORARY INVESTMENTS                           $ 20,331,817    $ 20,356,353      $20,356,353        18.55
                   ---------------------------
                                                                         --------------- --------------- ---------------------------

                    TOTAL INVESTMENT PORTFOLIO                          $ 134,872,247    $135,007,144     $109,674,667       100.00%
                    --------------------------                           =============== =============== ===========================




                     SUMMARY OF INVESTMENTS
                     Subordinated Notes                                  $ 75,452,738    $ 75,563,099     $ 51,415,918        46.89
                     Preferred Stock                                        5,732,862       5,732,862                -         0.00
                     Common Stock and Warrants                             33,354,830      33,354,830       37,902,396        34.56
                     Temporary Investments                                 20,331,817      20,356,353       20,356,353        18.55

                                                                        --------------- --------------- ----------------------------
                     TOTAL INVESTMENT PORTFOLIO                          $134,872,247    $135,007,144     $109,674,667       100.00%
                                                                        =============== =============== ============================



                   * Restricted Security
                  ** Restricted Non-income Producing Security
                 *** Affiliated Companies
                (a)  Includes receipt of payment-in-kind securities.
                (b)  Non-accrual investment status.
                (c)  Includes capitalized deferred income.
                (d)  Publicly traded class of securities.
                (e)  Underlying security publicly traded.

</TABLE>

                           See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS, L.P.
                      SUPPLEMENTAL SCHEDULE OF REALIZED GAINS AND LOSSES
                            FOR THE YEAR ENDED DECEMBER 31, 1995

<S>                                             <C>                 <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                                          3/22/95                  -        $     -        $ 82,743   (A)      $ 82,743

Total Net Realized Gains
  for the Three Months Ended March 31, 1995                                                   -          82,743              82,743
Total Net Realized Gains
  for the Three Months Ended June 30, 1995                                                    -               -                   -
Haddon Craftsman, Inc.
Common Stock                                          8/9/95                   -              -          54,118   (A)        54,118
Polaris Pool Systems, Inc.
Common Stock                                          8/9/95                   -              -          16,245   (A)        16,245
ASR Acquisition Corp.
Series B Subordinated 13.5% Notes                    8/29/95         $ 3,045,312      3,045,312       3,106,218              60,906
J.P. Foodservice, Inc.
Common Stock                                         9/19/95             507,490      4,390,261       8,344,264           3,954,003
Multi-Turf, Inc.
Common Stock                                         9/20/95              152.46         39,312         521,630             482,318

Total Net Realized Gains
  for the Three Months Ended September 30, 1995                                       7,474,885      12,042,475           4,567,590
Appolo Radio Holding Co., Inc.
Subordinated 15.0% Note                             10/27/95         $ 1,650,000      2,983,948       3,513,363             529,415
Ampex Recording Media
Subordinated Notes Series A & B                     11/13/95         $10,813,043     10,813,043       3,464,732          (7,348,311)
Lexmark International Group, Inc.
Common Stock                                        11/22/95             532,327      3,548,847      10,034,364           6,485,517
Haddon Craftsman, Inc.
Common Stock                                         12/7/95                   -              -          97,503  (A)         97,503
Color Your World
Sr. Partnersip Units                                12/31/95                   -     16,403,053               -         (16,403,053)

Total Net Realized Losses
  for the Three Months Ended December 31, 1995                                       33,748,891      17,109,962         (16,638,929)
Total Net Realized Losses
  for the Year Ended December 31, 1995                                              $41,223,776   $  29,235,180       $ (11,988,596)
                                                                        ================  ===============    ===============
(A) Proceeds represent a distribution to the Fund from the escrow account.
</TABLE>

                             See the Accompanying Notes to Financial Statements.


<PAGE>





                        EQUITABLE CAPITAL PARTNERS, L.P.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1995



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
Fund, 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,  (l)  Alliance  Corporate  was  admitted  as  the
successor Managing General Partner of the Funds, (ll) Equitable Capital withdrew
from the Funds as Managing  General  Partner and assigned all of its interest as
General  Partner to Alliance  Corporate and (lll) Alliance  Corporate  succeeded
Equitable  Capital  as the  investment  adviser  to the Fund  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 Fund  will  terminate  on
October 13, 1998,  subject to the right of the Independent  General  Partners to
extend the term of the Fund for up to two  additional  one year  periods,  after
which the Fund will liquidate any remaining investments within five years.

2.     Significant Accounting Policies



       Basis of Accounting


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




<PAGE>



       Valuation of Investments


       Securities  are valued at market or fair value.  Market value is used for
securities  for which market  quotations are readily  available.  For securities
without a readily  ascertainable  market value,  fair value is determined,  on a
quarterly  basis,  in good faith by the General  Partners of the Fund. The total
value of securities without a readily ascertainable market value is $46,116,681,
and  $118,270,752 as of December 31, 1995 and 1994,  respectively,  representing
41.0%  and  74.8%  of  total  assets,  respectively.  In  connection  with  such
determination,   the  Managing  General  Partner  has  established  a  valuation
committee comprised of senior executives to assess the Fund's portfolio and make
recommendations  regarding the value of the Fund's  portfolio  securities.  This
valuation committee uses available market information and appropriate  valuation
methodologies.  In addition, the Managing General Partner has retained Arthur D.
Little,  Inc., a nationally  recognized  independent  valuation  consultant,  to
review such valuations.


       For privately issued securities in which the Fund typically invests,  the
fair value of an investment is its initial cost,  adjusted for  amortization  of
discount or premium and as  subsequently  adjusted to reflect the  occurrence of
significant developments.  "Significant developments" are business,  economic or
market events that may affect a company in which an investment  has been made or
the securities comprising such investment. For example, significant developments
that could result in a write down in value include,  among other things,  events
of default with respect to payment obligations or other developments  indicating
that a portfolio  company's  performance may fall short of acceptable  levels. A
write up in value of an investment could take place when a significant favorable
development  occurs,  such as a transaction  representing the partial sale of an
investment that would result in a capital gain, or company performance exceeding
expected levels on a sustained  basis.  Although the General  Partners use their
best  judgment in  determining  the fair value of these  investments,  there are
inherent limitations in any valuation technique involving securities of the type
in which the Fund invests.  Therefore,  the fair values presented herein are not
necessarily  indicative  of the amount which the Fund could realize in a current
transaction.


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


       Interest Receivable on Investments


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


       Payment-In-Kind Securities


       All payment-in-kind securities received in lieu of cash interest payments
from the Fund's  portfolio  companies  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.


       Income Taxes


       As  discussed  in Note 14, no  provision  for income  taxes has been made
since all income and losses are  allocated to the Fund's  partners  ("Partners")
for inclusion in their respective tax returns.


       Deferred Organization Expenses


       Organization expenses of $554,631 were fully amortized on a straight-line
basis as of October 31, 1993.




<PAGE>



       Investment Transactions


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


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


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


       Sales, Marketing and Offering Expenses and Sales Commissions

       Sales  commissions  and selling  discounts  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  Fund's  Amended  and
Restated Agreement of Limited Partnership,  Alliance Corporate, as the successor
Managing  General  Partner of the Fund, has  contributed a non-interest  bearing
promissory  note (the "Note") to the Fund in an aggregate  amount equal to 1.01%
of the  aggregate  Net  Capital  Contributions  of all  Limited  Partners  (less
distributions  representing returns of capital).  Net Capital  Contributions are
comprised of gross offering  proceeds,  after giving effect to volume  discounts
(and after netting of sales  commissions,  organization,  offering and sales and
marketing  expenses),  less returns of capital  distributed to Limited Partners.
The  principal  amount of the Note is  reduced  proportionally  as such  Limited
Partners receive distributions  representing additional returns of capital. Such
distributions  received  for the year ended  December  31,  1995  resulted  in a
$255,780  reduction of the principal  amount of the Note. The promissory note of
Equitable  Capital was cancelled upon the  contribution of Alliance  Corporate's
note.



4.     Capital Contributions


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


       The Limited  Partners'  total capital  contributions  were  $283,873,400,
after giving effect to volume discounts allowed of $737,600. Equitable Capital's
aggregate  capital  contribution  was in the  form of a  promissory  note in the
principal amount of $2,641,469.  On July 22, 1993,  Equitable Capital's note was
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 $261,531,542.


       Allocation  of  income,  loss  and  distributions  of  cash  are  made in
accordance with the Partnership Agreement as further discussed in Note 12.

5.     Sales, Marketing and Offering Expenses and Sales Commissions



       The Fund expended a total of $535,631 for the  reimbursement of sales and
marketing expenses.  Aggregate sales and marketing expenses of the Funds may not
exceed  $2,528,415  or .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.




<PAGE>



       The Fund also paid $2,098,311 for the reimbursement of offering expenses.
These expenses,  along with the offering expenses of the Retirement Fund and the
organizational  expenses  of the  Funds,  may not exceed  $6,000,000.  Aggregate
offering and organizational expenses for the Funds totaled $4,711,806. (See Note
2 regarding the amortization of deferred organizational expenses).


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



6.     Investment Advisory Fee


       As of July 22, 1993,  Alliance  Corporate has been  receiving a quarterly
Investment  Advisory  Fee,  at the annual  rate of 1.0% of the Fund's  Available
Capital, with a minimum annual payment of $2,000,000 collectively for the Funds,
less 80% of commitment,  transaction, investment banking and "break-up" or other
fees related to the Fund's investments ("Deductible Fees"). Available Capital is
defined as the sum of the  aggregate Net Capital  Contributions  of the Partners
less the  cumulative  amount of returns of Capital  distributed  to Partners and
realized losses from investments.  Since becoming the successor Managing General
Partner of the Fund, Alliance Corporate has not received any Deductible Fees.
Alliance Corporate is a related party of the Fund.



       The Investment  Advisory Fee is calculated and paid quarterly in advance.
The  Investment  Advisory Fees paid by the Fund for the years ended December 31,
1995, 1994 and 1993 were  $1,442,458,  $1,855,152 and $2,318,660,  respectively.
The decrease in the  Investment  Advisory Fees is due primarily to the return of
capital  distributed  to Limited  Partners  which  reduced the Fund's  Available
Capital on which the Investment Advisory Fee is based.

7.     Fund Administration Fees 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 Fund
administrator,  is entitled to receive from the Funds an annual  amount equal to
the  greater  of the (l)  Minimum  Fee and (ll) the Funds'  prorated  proportion
(based on the number of Units issued by the Funds) of 0.45% of the excess of the
aggregate net offering proceeds of the Units issued by the Funds over 50% of the
aggregate  amount  of  capital  reductions  of the Funds  (subject  to an annual
maximum of $3.2  million).  The Minimum Fee is 1% of the gross offering price of
Units in the Funds, but not greater than $500,000.  The Fund  Administration Fee
is calculated and paid quarterly in advance.  The Fund  Administration Fees paid
by the Fund for the years ended December 31, 1995, 1994 and 1993, were $903,704,
$986,374 and $1,069,374, respectively.

       In addition to the Fund  Administration Fee, MLFAI is entitled to receive
reimbursement  for a  portion  of  direct  out-of-pocket  expenses  incurred  in
connection with the administration of the Retirement Fund, commencing on October
13,  1992.  For the years ended  December 31, 1995 and 1994,  the Fund  incurred
Administrative  Expenses of $173,962 and $473,142 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 Fund in addition
to $500  for each  meeting  attended  and  reimbursement  for any  out-of-pocket
expenses.  In accordance with the Fund's  Partnership  Agreement,  the amount of
such fee is reviewed annually by the Independent General Partners.

       For the years ended  December 31, 1995,  1994 and 1993, the Fund incurred
$167,152, $164,518 and $173,862,  respectively, of Independent General Partners'
Fees and Expenses.



<PAGE>


9.     Loan Fees

       In connection with a credit facility  entered into by the Fund with Wells
Fargo Bank,  N.A., a loan  underwriting fee of $1,625,000 and related legal fees
of $311,524 were originally being amortized on a straight line basis from May 2,
1990, the date of the first borrowing under such credit facility, to October 15,
1995, the date of maturity of the credit facility. However, because the loan was
fully repaid on June 18, 1993, the amortization of such fees was accelerated and
the balance of the prepaid loan fees and related legal fees was expensed at that
time.  For the year ended  December 31,  1993,  the Fund  incurred  loan fees of
$824,116.  No such fees have been incurred for the years ended December 31, 1995
and 1994.



10.    Related Party Transactions


       For the years ended  December 31, 1995,  1994 and 1993, the Fund incurred
expenses of $51,235,  $62,576, and $67,446,  respectively,  as reimbursement for
amounts paid for legal services  provided by Equitable  Life in connection  with
the Fund's Enhanced Yield Investments.  The Fund is paying Alliance Corporate an
Investment  Advisory Fee for its services as described in Note 6.  Additionally,
the Fund paid  sales  commissions  to Equico  Securities,  a related  party,  as
described in Note 5.

11.    Investment Transactions


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


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


         During the year ended  December 31, 1995,  the Fund received a total of
$946,000  and  $27,814  from  Western  Pioneer,  Inc.  and MTI  Holdings,  Inc.,
respectively,  as principal  paydowns of the senior  notes held by the Fund.  No
gain or loss has been  recorded  on the  transactions  and the  amounts  will be
distributed as return of capital to the Limited Partners.


     On August 3, 1995,  the Fund sold its American  Safety Razor  Company 13.5%
Series B  Subordinated  Notes for $3,106,218 and recognized a gain of $60,906 on
the sale.


       During the year ended  December 31, 1995,  the Fund received  $98,988 and
$151,621  from  Polaris  Pool  Systems,   Inc.  and  Haddon   Craftsman,   Inc.,
respectively.  The monies  represent  proceeds from the sale of the  investments
from  prior  years  that have been held in escrow  for  future  adjustments  and
expenses  not  paid  on  the  sale  dates.  These  proceeds  were  recorded  and
distributed as gains.


        On September 15, 1995,  the Fund sold its common stock  investment in JP
Foodservice,  Inc.  for  $8,344,264,  which  resulted  in a gain to the  Fund of
$3,954,003.


       During the year ended December 31, 1995, the Fund received total proceeds
of $521,630 from Multi-Turf,  Inc. as paydown of the equity held, which resulted
in a gain of $482,318 to the Fund.


       On October 26, 1995, Apollo Radio Holding Company,  Inc. repaid its 15.0%
Subordinated  Note.  The  Fund  received  total  proceeds  of  $3,513,363  which
represented all outstanding  principal,  accrued interest and a realized gain of
$529,415.


       On November 21,  1995,  Lexmark  International  Group,  Inc.  ("Lexmark")
(formerly Lexmark Holding, Inc.) completed the initial public offering of shares
of common  stock held by  certain  existing  shareholders  of  Lexmark.  After a
fifteen to one stock split,  Equitable Capital Partners,  L.P. (the "Fund") held
1,859,803  shares of Lexmark  common stock.  The Fund sold 532,327 shares in the
offering  representing  28.6%  of the  shares  held by the Fund  for  total  net
proceeds of $10,034,364 or a net price of $18.85 per share.  The initial cost of
the shares sold by the Fund was  $3,548,847.  As a result,  the Fund  realized a
gain of  $6,485,517.  The shares of Lexmark  common  stock are listed on the New
York Stock Exchange under the symbol LXK.


       As of  December  31,  1995,  the  Fund  had  investments  in ten  Managed
Companies  (a Managed  Company is one to which the Fund,  the  Managing  General
Partner  or  other  persons  in the  Fund's  investor  group  makes  significant
managerial  assistance  available) and four Non-Managed Companies (a Non-Managed
Company is one to which such assistance is not provided)  totaling  $114,540,430
(including $854,000 capitalized cost of payment-in-kind securities),  consisting
of $75,452,738 in senior notes and subordinated  notes,  $5,732,862 in preferred
stock  and  purchase  warrants  and  $33,354,830  in common  stock and  purchase
warrants.

12.    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, 1995,  earnings were allocated 99% to the
Limited Partners, as a class, and 1% to the Managing General Partner.

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

       For the year ended  December 31, 1995,  the Fund recorded net  unrealized
appreciation on Enhanced Yield Investments of $2,627,096.  Such appreciation was
the  result  of  adjustments  in  value  made  with  respect  to  the  following
investments during 1995:

       The  amount   includes  the  reversal  of   $16,403,054   of   unrealized
depreciation  of Color Your World Senior  Partnership  Units which were rendered
worthless  as of December 31, 1995.  On June 30, 1995,  Color Your World,  Corp.
senior  partnership  units were written down from 100% to zero. This resulted in
unrealized depreciation of $3,280,610 to the Fund.

       On March 31, 1995, Pergament Home Centers,  Inc. Class B Common Stock was
written down from 75% to 25% of cost,  resulting in unrealized  depreciation  of
$4,284,000.

     The RI Holdings,  Inc.  common stock purchased on May 9, 1995 was valued at
zero, resulting in unrealized depreciation of $1,869 to the Fund.

       On June 30, 1995,  MTI  Holdings,  Inc.  Class B Common Stock was written
down from 100% to zero and the 5% Senior Secured Note was written down from 100%
to 75% of par. On September 30, 1995, MTI Holdings,  Inc. 5% Senior Secured Note
was  written  down from 75% to 50% of par value.  These  writedowns  resulted in
total  unrealized  depreciation  of  $1,450,228  to the Fund.  Due to  principal
paydowns during the three months ended September 30, 1995,  $2,338 of unrealized
depreciation was reversed.

     The Tulip Holding Corp. 14.5%  Subordinated  Note was written down from 50%
to 25% of par on June 30, 1995 and 25% to 5% of par at September 30, 1995.  This
resulted in total unrealized depreciation of $3,838,540 to the Fund.

       On June 30, 1995, due to a default of an interest payment on senior notes
held by a third party,  the WB Bottling  Corporation  preferred and common stock
held by the Fund were  written  down from 100% to 10% of cost.  On December  31,
1995, WB Bottling Corporation preferred stock and common stock were written down
from 10% to zero.  This activity  resulted in total  unrealized  depreciation of
$482,956 to the Fund.

       Due to an increase in the quoted  market price of JP  Foodservice  common
stock  held  by the  Fund  at  June  30,  1995,  the  Fund  recorded  unrealized
appreciation  of $2,169,520.  The equity was valued at 90% of the closing market
price at June 30, 1995, due to contractual  restrictions  on resale.  Due to the
sale of the common stock  investment  in JP  Foodservice,  Inc. on September 15,
1995, the Fund reversed the unrealized appreciation recorded of $2,004,108.

       On September 30, 1995,  Ampex  Recording Media Corp. 14% and 18.4% Senior
Subordinated  Series A & B Notes were written down from 50% to 25% of par value,
which resulted in unrealized  depreciation  of $3,464,731 to the Fund. Due to an
increase in the quoted market price of Ampex Recording Media Corp. warrants held
by the Fund at December 31, 1995, the Fund recorded  unrealized  appreciation of
$79,756.  Due to a  restructuring,  $7,348,311  of unrealized  depreciation  was
reversed at December 31, 1995.

     On September 30, 1995, U.S. Leather Holdings,  Inc. 8% Senior  Subordinated
Preferred Stock and the 15% Senior  Subordinated  PIK Notes were written down to
zero. On December 31, 1995, U.S. Leather Holdings,  Inc. 15% Senior Subordinated
Note was  written  down from 100% to 60% of par.  These  writedowns  resulted in
total unrealized depreciation of $13,104,997 to the Fund.

       Due to a 15-to-1  stock  split and  initial  public  offering  of Lexmark
common stock on November 21, 1995, the Fund recorded unrealized  appreciation of
$8,614,408. The equity was valued at 90% of the closing market price at December
31, 1995, due to contractual restrictions on resale.

       Due to the decline in the quoted  market  price of American  Safety Razor
Company  common  stock,  the Fund  recorded  total  unrealized  depreciation  of
$1,291,002 at December 31, 1995.

     On December 31,  1995,  Apollo Radio  Holding  Co.,  Inc.  common stock was
written up from zero, resulting in unrealized  appreciation of $1,212,750 to the
Fund.

       For the years ended  December  31, 1994 and 1993,  the Fund  recorded net
unrealized  depreciation  of  $15,853,762  and net  unrealized  appreciation  of
$1,053,093, respectively.



<PAGE>


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


         U.S. Leather Holdings, Inc. 15%
           Senior Subordinated Note                  October 1, 1995
         MTI Holdings, Inc. 5%
           Senior Secured Note                       October 1, 1995
         Western Pioneer, Inc. 10%
           Senior Subordinated Note                  November 30, 1994
         RI Holdings, Inc. 16%
           Senior Subordinated Notes                 April 25, 1994
         Tulip Holding, Corp. 14.5% and 16.5%
           Subordinated Notes                        January 1, 1994

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

14.    Income Taxes

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

       Pursuant  to  Statement  of  Financial   Accounting   Standards  No.  109
Accounting  for Income  Taxes,  the Fund is required to disclose any  difference
between the tax basis of the Fund's  assets and  liabilities  versus the amounts
reported in the  Financial  Statements.  Generally,  the tax basis of the Fund's
assets  approximate  the  amortized  cost  amounts  reported  in  the  Financial
Statements.  This amount is computed  annually and as of December 31, 1995,  the
tax basis of the Fund's  assets was  greater  than the  amounts  reported in the
Financial Statements by $60,536,688.  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.

15.    Subsequent Distributions

       On  February  7, 1996,  the  Independent  General  Partners  approved  an
aggregate cash  distribution  of $14,524,791 for the three months ended December
31, 1995, which was paid on February 14, 1996. The amount distributed to Limited
Partners was  $14,503,777,  or $50.96 per Unit(of  which  $5,381,994  is capital
returned  from  investments  during  the  fourth  quarter  of 1995),  to Limited
Partners of record at December 31, 1995. On a per Unit basis,  this distribution
to Limited  Partners  includes  $24.74 of realized  gains,  $7.31 of income from
operations and $18.91 of return of capital.  The Managing General  Partner's one
percent allocation of $146,503 was reduced, in accordance with the provisions of
the Partnership  Agreement,  by its one percent allocation of realized gains and
capital returned from investments during the fourth quarter of 1995 of $125,488,
resulting in a net distribution of $21,015.


<PAGE>


Item 9.       Disagreements on Accounting and Financial Disclosure

       None.

                                    Part III

Item 10.      Directors and Executive Officers of the Registrant

The Fund

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

Independent General Partners

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

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

     Mr. Lear, age 78, 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  61,  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 74, 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 75, served as the President of Pace University from 1984
to 1990,  after  retiring in 1984 as Senior Vice President of AT&T. He is also a
director of USLife Corporation,  American Biogenetic  Sciences,  Inc. and United
States Life Insurance Company.



<PAGE>


Managing General Partner

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

Management of Alliance Corporate and the Fund

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

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

Frank Savage                 Chairman of the Board of Directors

James R. Wilson              President

William Gobbo, Jr.           Senior Vice President

James D. Neidhart            Senior Vice President

Laura Mah                    Vice President and Chief Accounting Officer



     Mr. Frank Savage,  age 57, is Chairman of Alliance  Corporate,  Chairman of
Alliance Capital Management International and a member of the Board of Directors
of Alliance Capital Management  Corporation.  He is Senior Vice President of The
Equitable  Life  Assurance  Society of the United  States.  He was  formerly the
Chairman of Equitable Capital Management  Corporation,  an investment management
subsidiary of Equitable Life,  which was combined with Alliance  Capital in July
of 1993.  Mr.  Savage is a  director  of  Lockheed  Corporation,  ARCO  Chemical
Company,  Lexmark Corporation,  Essence Communications,  Inc. and The Council on
Foreign Relations.  He is a member of the Board of Trustees of The Johns Hopkins
University  and Howard  University  and Chairman of the Advisory  Council of the
Johns Hopkins University Nitze School of Advanced International Studies.

       James R. Wilson, age 49, is the President of Alliance Corporate and is in
charge of Alliance Corporate's Finance Department. He has specialized in private
placement  investment  management for over 20 years. He joined Equitable Life in
1970. From 1975 to 1978, he was in charge of the Private Placement  Department's
Atlanta regional office, responsible for making direct placement loans to middle
market  companies.  He then  returned to the home office to supervise the credit
review and approval  procedures of all six regional offices. In 1980, Mr. Wilson
joined  the  Investment   Recovery  Division  of  Equitable  Capital  Management
Corporation and  subsequently  became its head.  During his tenure in investment
recovery,   he  was  instrumental  in  a  number  of  major  restructurings  and
recapitalizations  of  troubled  companies  and  served as  chairman  of several
creditors'  committees.  Mr. Wilson was elected senior vice president and deputy
head of Equitable Capital's Corporate Finance Department in 1985, and in 1991 he
became executive vice president and head of the Corporate Finance Department. He
was named  President of Alliance  Corporate  Finance Group in 1993 in connection
with the Alliance  Capital/Equitable  Capital  merger.  Mr. Wilson has served on
several  corporate Boards and presently is a director of US Leather,  Inc. He is
active in private placement industry events, has been a speaker at many industry
conferences on leveraged buyouts and mezzanine finance and served as Chairman of
the annual  Private  Placement  Conference in 1994.  Mr. Wilson is a graduate of
Denison University and holds an MBA from the University of Pittsburgh.

     Mr.  William  Gobbo,  Jr.,  age 51, 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 51, 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  restructurings,  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 40, 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
Fund  terminated  in  accordance  with its terms on July 22, 1993. On that date,
Alliance Corporate succeeded Equitable Capital as the Fund's investment adviser.
As investment  adviser to the Fund,  Alliance  Corporate is responsible  for the
identification, management and liquidation of all investments for the Fund.

The Administrator

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

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

Item 11.      Executive Compensation

       The information  with respect to compensation of the Independent  General
Partners set forth under the caption "Management Arrangements -- The Independent
General  Partners" in the Prospectus is incorporated by reference into this Item
11. The Fund paid Mr. Lear $36,250,  Mr. Shapiro  $36,250,  Mr. Marshall $36,540
and Dr.  Sharwell  $36,250 in fees with respect to their services as Independent
General Partners in 1995.

       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
Fund paid $1,092,756 to the Administrator,  through the Managing General Partner
in 1995.



<PAGE>


       The information with respect to the "Investment  Advisory Fee" payable to
Alliance  Corporate (and  distributions  from the Managing  General Partner) set
forth under the caption  "Management  Arrangements  -- Description of Investment
Advisory  Agreements" in the Prospectus is  incorporated  by reference into this
Item 11.  The Fund  paid  Alliance  Corporate  $1,442,458  with  respect  to the
Investment  Advisory Fees for 1995. The Managing General Partner's 1% allocation
of net investment income from Temporary  Investments,  which in 1995 amounted to
$5,157,  is credited  against the  Investment  Advisory Fees, as required by the
Partnership Agreement.

       Alliance  Corporate,  as  Managing  General  Partner,   received  $82,120
representing distributions of net investment income in 1995.

Item 12.      Security Ownership of Certain Beneficial Owners and Management

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

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

Item 13.      Certain Relationships and Related Transactions

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

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

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



<PAGE>


                                     Part IV

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

       (a)    Financial Statements, Financial Statement
              Schedules and Exhibits

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

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

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

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

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

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

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

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

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

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

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

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

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

</TABLE>
<PAGE>


                                   SIGNATURES


       Pursuant  to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 25th day of March,
1996.

                                  EQUITABLE CAPITAL PARTNERS, L.P.

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

Dated: March 25, 1996             -------------------------------
                                  Frank Savage
                                  Title:  Chairman of the Board

                                  
Dated: March 25, 1996             --------------------------------
                                  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 25th day of March, 1996.

                 Signature                               Title


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

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

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

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

________________________                     Chairman of the Board of
Frank Savage                                 Alliance Corporate

________________________                     President and Director of
James R. Wilson                              Alliance Corporate

________________________
Dave H. Williams                             Director of Alliance Corporate

________________________
Bruce W. Calvert                             Director of Alliance Corporate

________________________
John D. Carifa                               Director of Alliance Corporate






<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 25th day of March,
1996

                              EQUITABLE CAPITAL PARTNERS, L.P.

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

Dated: March 25, 1996                /s/  Frank Savage
                                     -----------------------------
                                     Frank Savage
                                     Title:  Chairman of the Board

Dated: March 25, 1996                /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 25th day of March, 1996.

                  Signature                              Title


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

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

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

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

/s/  Frank Savage                              Chairman of the Board of
Frank Savage                                   Alliance Corporate

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

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

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

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