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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2008

or



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

For the transition period  to

Commission File Number 0-19509





EQUUS TOTAL RETURN, INC.

(Exact name of registrant as specified in its
charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 76-0345915                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                              |  |           
|--------------------------------------------- |  | ----------
|2727 Allen Parkway, 13th Floor Houston, Texas |  | 77019     
|(Address of principal executive offices)      |  | (Zip Code)

Registrants telephone number, including area code: (713) 529-0900





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 whether
the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



|                           |  |                      |  |                          |  |                             
|-------------------------- |  | -------------------- |  | ------------------------ |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈ |  | Non-accelerated filer  x |  | Smaller Reporting Company   ̈

Indicate by check mark whether the registrant is a shell
company.    Yes   ̈    No  x

There were 8,496,202 shares of the registrants common stock, $.001 par value, outstanding, as of May 15, 2008. The net asset value of a share at March 31, 2008 was $ 12.20.









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EQUUS TOTAL RETURN, INC.

(A Delaware Corporation)

INDEX



|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  | PAGE
|PART I. FINANCIAL INFORMATION                                                                 |  |     
|Item 1. Financial Statements                                                                  |  |     
|Balance SheetsMarch 31, 2008 and December 31, 2007                                           |  | 3   
|Statements of OperationsFor the three months ended March 31, 2008 and 2007                   |  | 4   
|Statements of Changes in Net AssetsFor the three months ended March 31, 2008 and 2007        |  | 5   
|Statements of Cash FlowsFor the three months ended March 31, 2008 and 2007                   |  | 6   
|Selected Per Share Data and RatiosFor the three months ended March 31, 2008 and 2007         |  | 7   
|Schedule of Portfolio SecuritiesMarch 31, 2008                                               |  | 8   
|Notes to Financial Statements                                                                 |  | 12  
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 20  
|Item 3. Quantitative and Qualitative Disclosure about Market Risk                             |  | 25  
|Item 4. Controls and Procedures                                                               |  | 25  
|PART II. OTHER INFORMATION                                                                    |  |     
|Item 6. Exhibits                                                                              |  | 25  
|SIGNATURE                                                                                     |  | 26  



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EQUUS TOTAL RETURN, INC.

BALANCE SHEETS



|                                                                                                          |  |               |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|(in thousands, except per share amounts)                                                                  |  | March 31,2008 |         |   | December 31,2007 |  
|                                                                                                          |  | (unaudited)   |         |   |                  |  
|Assets                                                                                                    |  |               |         |   |                  |   |         |  
|                                                                                                          |  |              
|Investments in portfolio securities at fair value:                                                        |  |               |         |   |                  |   |         |  
|Control investments (cost at $29,062 and $27,610, respectively)                                           |  | $             | 31,771  |   |                  |   | 29,812  |  
|Affiliate investments (cost at $18,050 and $14,721, respectively)                                         |  |               | 35,440  |   |                  |   | 32,111  |  
|Non-affiliate investments (cost at $16,126 and $12,952, respectively)                                     |  |               | 13,145  |   |                  | $ | 10,179  |  
|                                                                                                          |  |               |         |   |                  |   |         |  
|Total investments in portfolio securities at fair value                                                   |  |               | 80,356  |   |                  |   | 72,102  |  
|Restricted cash & temporary investments, at cost which approximates fair value                            |  |               | 35,349  |   |                  |   | 30,296  |  
|Cash                                                                                                      |  |               |        |   |                  |   | 28      |  
|Temporary cash investments, at cost which approximates fair value                                         |  |               | 22,846  |   |                  |   | 30,912  |  
|Accounts receivable                                                                                       |  |               | 8       |   |                  |   | 107     |  
|Accrued interest and dividends receivable due from portfolio companies                                    |  |               | 1,377   |   |                  |   | 1,023   |  
|Escrowed receivables, at fair value                                                                       |  |               | 262     |   |                  |   | 262     |  
|                                                                                                          |  |               |         |   |                  |   |         |  
|Total assets                                                                                              |  | $             | 140,198 |   |                  | $ | 134,730 |  
|                                                                                                          |  |               |         |   |                  |   |         |  
|Liabilities and net assets                                                                                |  |               |         |   |                  |   |         |  
|                                                                                                          |  |              
|Liabilities:                                                                                              |  |               |         |   |                  |   |         |  
|Bank overdraft                                                                                            |  | $             | 262     |   |                  | $ |        |  
|Accounts payable and accrued liabilities                                                                  |  |               | 110     |   |                  |   | 108     |  
|Due to adviser                                                                                            |  |               | 1,166   |   |                  |   | 1,410   |  
|Borrowing under margin account                                                                            |  |               | 34,999  |   |                  |   | 29,996  |  
|                                                                                                          |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                         |  |               | 36,537  |   |                  |   | 31,514  |  
|                                                                                                          |  |               |         |   |                  |   |         |  
|Commitments and contingencies                                                                             |  |               |        |   |                  |   |        |  
|                                                                                                          |  |              
|Net assets:                                                                                               |  |               |         |   |                  |   |         |  
|Preferred stock, $.001 par value, 5,000 shares authorized, no shares outstanding                          |  |               |        |   |                  |   |        |  
|Common stock, $.001 par value, 50,000 shares authorized, 8,496 and 8,401 shares outstanding, respectively |  |               | 8       |   |                  |   | 8       |  
|Additional paid-in capital                                                                                |  |               | 89,658  |   |                  |   | 89,021  |  
|Undistributed net investment losses                                                                       |  |               | (3,548  | ) |                  |   | (3,772  | )
|Undistributed net capital gains                                                                           |  |               | 425     |   |                  |   | 1,141   |  
|Net unrealized appreciation of portfolio securities                                                       |  |               | 17,118  |   |                  |   | 16,818  |  
|                                                                                                          |  |               |         |   |                  |   |         |  
|Total net assets                                                                                          |  | $             | 103,661 |   |                  | $ | 103,216 |  
|                                                                                                          |  |               |         |   |                  |   |         |  
|Net assets per share                                                                                      |  | $             | 12.20   |   |                  | $ | 12.29   |  
|                                                                                                          |  |               |         |   |                  |   |         |  

The accompanying notes are an integral part of these financial statements.



3



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EQUUS TOTAL RETURN, INC.

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Unaudited)



|                                                                           |  |      |        |      |   |        |  
|-------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | -
|(in thousands, except per share amounts)                                   |  | 2008 |        | 2007 |  
|Investment income:                                                         |  |      |        |      |   |        |  
|Interest and dividend income from portfolio securities:                    |  |      |        |      |   |        |  
|Control investments                                                        |  | $    | 395    |      | $ | 422    |  
|Affiliate investments                                                      |  |      | 247    |      |   | 73     |  
|Non-affiliate investments                                                  |  |      | 441    |      |   | 183    |  
|                                                                           |  |      |        |      |   |        |  
|Total interest and dividend income                                         |  |      | 1,083  |      |   | 678    |  
|Interest from temporary cash investments                                   |  |      | 251    |      |   | 533    |  
|                                                                           |  |      |        |      |   |        |  
|Total investment income                                                    |  |      | 1,334  |      |   | 1,211  |  
|                                                                           |  |      |        |      |   |        |  
|Expenses:                                                                  |  |      |        |      |   |        |  
|Management fee                                                             |  |      | 502    |      |   | 460    |  
|Incentive fee                                                              |  |      | 17     |      |   | 263    |  
|Professional fees                                                          |  |      | 173    |      |   | 160    |  
|Administrative fees                                                        |  |      | 113    |      |   | 113    |  
|Director fees and expenses                                                 |  |      | 90     |      |   | 88     |  
|Mailing, printing and other expenses                                       |  |      | 24     |      |   | 100    |  
|Interest expense                                                           |  |      | 6      |      |   | 22     |  
|                                                                           |  |      |        |      |   |        |  
|Total expenses                                                             |  |      | 925    |      |   | 1,206  |  
|                                                                           |  |      |        |      |   |        |  
|Net investment income                                                      |  |      | 409    |      |   | 5      |  
|                                                                           |  |      |        |      |   |        |  
|Net realized gain on portfolio securities                                  |  |      |        |      |   |        |  
|Control investments                                                        |  |      | 74     |      |   | 1,472  |  
|Affiliate investments                                                      |  |      | 351    |      |   | 124    |  
|Non-affiliate investments                                                  |  |      |       |      |   |       |  
|                                                                           |  |      |        |      |   |        |  
|Total net realized gain on portfolio securities                            |  |      | 425    |      |   | 1,596  |  
|                                                                           |  |      |        |      |   |        |  
|Net unrealized appreciation of portfolio securities:                       |  |      |        |      |   |        |  
|End of period                                                              |  |      | 17,118 |      |   | 7,119  |  
|Beginning of period                                                        |  |      | 16,818 |      |   | 9,292  |  
|                                                                           |  |      |        |      |   |        |  
|Net change in unrealized appreciation of portfolio securities              |  |      | 300    |      |   | (2,173 | )
|                                                                           |  |      |        |      |   |        |  
|Net increase (decrease) in net assets resulting from operations            |  | $    | 1,134  |      | $ | (572   | )
|                                                                           |  |      |        |      |   |        |  
|Net increase (decrease) in net assets resulting from operations per share: |  |      |        |      |   |        |  
|Basic and diluted                                                          |  | $    | 0.13   |      | $ | (0.07  | )
|                                                                           |  |      |        |      |   |        |  
|Weighted average shares outstanding, in thousands                          |  |      |        |      |   |        |  
|Basic and diluted                                                          |  |      | 8,402  |      |   | 8,165  |  
|                                                                           |  |      |        |      |   |        |  

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Unaudited)



|                                                                |  |      |         |   |      |   |        |  
|--------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | -
|(in thousands)                                                  |  | 2008 |         |   | 2007 |  
|Operations:                                                     |  |      |         |   |      |   |        |  
|Net investment income                                           |  | $    | 409     |   |      | $ | 5      |  
|Net realized gain on portfolio securities                       |  |      | 425     |   |      |   | 1,596  |  
|Net change in unrealized appreciation of portfolio securities   |  |      | 300     |   |      |   | (2,173 | )
|                                                                |  |      |         |   |      |   |        |  
|Net increase (decrease) in net assets resulting from operations |  |      | 1,134   |   |      |   | (572   | )
|                                                                |  |      |         |   |      |   |        |  
|Capital share transactions:                                     |  |      |         |   |      |   |        |  
|Dividends declared                                              |  |      | (1,327  | ) |      |   | (1,021 | )
|Shares issued in dividend                                       |  |      | 638     |   |      |   | 455    |  
|                                                                |  |      |         |   |      |   |        |  
|Decrease in net assets from capital share transactions          |  |      | (689    | ) |      |   | (566   | )
|                                                                |  |      |         |   |      |   |        |  
|Increase (decrease) in net assets                               |  |      | 445     |   |      |   | (1,138 | )
|Net assets at beginning of period                               |  |      | 103,216 |   |      |   | 93,236 |  
|                                                                |  |      |         |   |      |   |        |  
|Net assets at end of period                                     |  | $    | 103,661 |   |      | $ | 92,098 |  
|                                                                |  |      |         |   |      |   |        |  

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Unaudited)



|                                                                                                                                             |  |      |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|(in thousands)                                                                                                                               |  | 2008 |         |   | 2007 |  
|Reconciliation of increase (decrease) in net assets from operations to net cash provided by (used in) operating activities:                  |  |      |         |   |      |   |         |  
|Net increase (decrease) in net assets resulting from operations                                                                              |  | $    | 1,134   |   |      | $ | (572    | )
|Adjustments to reconcile increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: |  |      |         |   |      |   |         |  
|Net realized gain on portfolio securities                                                                                                    |  |      | (425    | ) |      |   | (1,596  | )
|Net change in unrealized appreciation of portfolio securities                                                                                |  |      | (300    | ) |      |   | 2,173   |  
|Increase in accrued interest and dividends receivable due from portfolio companies                                                           |  |      | (354    | ) |      |   | (166    | )
|Increase in escrowed receivables                                                                                                             |  |      |        |   |      |   | (1,308  | )
|Decrease in accounts receivable and other                                                                                                    |  |      | 99      |   |      |   | 130     |  
|Accrued interest or dividends exchanged for portfolio securities                                                                             |  |      | (221    | ) |      |   | (112    | )
|Increase (decrease) in accounts payable and accrued liabilities                                                                              |  |      | 2       |   |      |   | (49     | )
|Decrease in due to adviser                                                                                                                   |  |      | (244    | ) |      |   | (1,500  | )
|Purchase of portfolio securities                                                                                                             |  |      | (10,600 | ) |      |   | (7,619  | )
|Proceeds from dispositions of portfolio securities                                                                                           |  |      | 3,292   |   |      |   | 1,596   |  
|Principal payments from portfolio securities                                                                                                 |  |      |        |   |      |   | 1,697   |  
|(Purchases) sales of restricted temporary cash investments                                                                                   |  |      | (5,053  | ) |      |   | 3       |  
|                                                                                                                                             |  |      |         |   |      |   |         |  
|Net cash used in operating activities                                                                                                        |  | $    | (12,670 | ) |      | $ | (7,323  | )
|                                                                                                                                             |  |      |         |   |      |   |         |  
|Cash flows from financing activities:                                                                                                        |  |      |         |   |      |   |         |  
|Bank overdraft                                                                                                                               |  |      | 262     |   |      |   | 98      |  
|Borrowings under margin account                                                                                                              |  |      | 34,999  |   |      |   | 29,976  |  
|Repayments under margin account                                                                                                              |  |      | (29,996 | ) |      |   | (29,979 | )
|Dividends paid                                                                                                                               |  |      | (689    | ) |      |   | (566    | )
|Cash paid for deferred costs                                                                                                                 |  |      |        |   |      |   | (93     | )
|                                                                                                                                             |  |      |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                                                                                          |  |      | 4,576   |   |      |   | (564    | )
|                                                                                                                                             |  |      |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                                                                                    |  |      | (8,094  | ) |      |   | (7,887  | )
|Cash and cash equivalents at beginning of period                                                                                             |  |      | 30,940  |   |      |   | 51,499  |  
|                                                                                                                                             |  |      |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                                                                                   |  | $    | 22,846  |   |      | $ | 43,612  |  
|                                                                                                                                             |  |      |         |   |      |   |         |  
|Non-cash financing activities:                                                                                                               |  |      |         |   |      |   |         |  
|Shares issued in lieu of cash dividend                                                                                                       |  | $    | 638     |   |      | $ | 455     |  
|                                                                                                                                             |  |      |         |   |      |   |         |  
|Supplemental disclosure of cash flow information                                                                                             |  |      |         |   |      |   |         |  
|Interest paid                                                                                                                                |  | $    | 11      |   |      | $ | 30      |  
|                                                                                                                                             |  |      |         |   |      |   |         |  

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

SUPPLEMENTAL INFORMATIONSELECTED PER SHARE DATA AND RATIOS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Unaudited)



|                                                                                           |  |      |       |     |      |   |       |   
|------------------------------------------------------------------------------------------ |  | ---- | ----- | --- | ---- | - | ----- | --
|                                                                                           |  | 2008 |       |     | 2007 |  
|Investment income                                                                          |  | $    | 0.16  |     |      | $ | 0.15  |   
|                                                                                           |  |     
|Expenses                                                                                   |  |      | 0.11  |     |      |   | 0.15  |   
|                                                                                           |  |      |       |     |      |   |       |   
|Net investment income                                                                      |  |      | 0.05  |     |      |   | 0.00  |   
|Net realized gain on portfolio securities                                                  |  |      | 0.05  |     |      |   | 0.20  |   
|Net change in unrealized appreciation of portfolio securities                              |  |      | 0.04  |     |      |   | (0.27 | ) 
|                                                                                           |  |      |       |     |      |   |       |   
|Increase (decrease) in net assets resulting from operations                                |  |      | 0.14  |     |      |   | (0.07 | ) 
|                                                                                           |  |      |       |     |      |   |       |   
|Capital Transactions:                                                                      |  |      |       |     |      |   |       |   
|Dividend declared                                                                          |  |      | (0.16 | )   |      |   | (0.13 | ) 
|Dilutive effect of shares issued in common stock dividend and exercise of options          |  |      | (0.07 | )   |      |   | (0.01 | ) 
|                                                                                           |  |      |       |     |      |   |       |   
|Decrease in net assets from capital transactions                                           |  |      | (0.23 | )   |      |   | (0.14 | ) 
|                                                                                           |  |      |       |     |      |   |       |   
|Net decrease in net assets                                                                 |  |      | (0.09 | )   |      |   | (0.21 | ) 
|Net assets at beginning of period                                                          |  |      | 12.29 |     |      |   | 11.42 |   
|                                                                                           |  |      |       |     |      |   |       |   
|Net assets at end of period                                                                |  | $    | 12.20 |     |      | $ | 11.21 |   
|                                                                                           |  |      |       |     |      |   |       |   
|Weighted average number of shares outstanding during period, in thousands                  |  |      | 8,402 |     |      |   | 8,165 |   
|Market value per share at end of period                                                    |  | $    | 6.75  |     |      | $ | 8.75  |   
|                                                                                           |  |     
|Ratio of expenses to average net assets                                                    |  |      | 0.89  | %   |      |   | 1.30  | % 
|Ratio of net investment income (loss) to average net assets                                |  |      | 0.40  | %   |      |   | (0.01 | )%
|Ratio of increase (decrease) in net assets resulting from operations to average net assets |  |      | 1.10  | %   |      |   | (0.62 | )%
|Total return on market price                                                               |  |      | 9.48  | % * |      |   | 3.92  | % 



|* | Adjusted for dividends and can be calculated as the March 31, 2008 market value plus year-to-date dividends paid less the December 31, 2007 market value, divided by the
December 31, 2007 market value.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES

March 31, 2008



|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|-------------------------------------------------------------------------------------------------- |  | ------------------------------ |  | ------------------------- |  | ----------------------------------------------------- |  | ---------------------- |  | ----------------- |  | -------------
|Name and Location of Portfolio Company                                                             |  | Industry                       |  | Date of InitialInvestment |  | Investment                                            |  | Principal              |  | Cost ofInvestment |  | FairValue (3)
|                                                                                                   |  |                                |  |                           |  |                                                       |  | (amounts in thousands)
|Control investments: Majority-owned
(7):                                                          
|Creekstone Florida Holdings, LLC Houston,
TX                                                       |  | Real estate                    |  | December 2005(4)          |  | 17-19.8% subordinated promissory note(1)              |  | $4,000                 |  | $  4,154          |  | $  4,154     
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|Equus Media Development Company, LLC
Houston, TX                                                   |  | Media                          |  | January 2007(4)           |  | Member Interest                                       |  |                        |  | 5,000             |  | 5,000        
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|Riptide Entertainment, LLC Miami,
FL                                                               |  | Entertainment and leisure      |  | December 2005(4)          |  | Member interest (64.67%)                              |  |                        |  | 65                |  | 65           
|                                                                                                   |  |                                |  |                           |  | 8% promissory notes                                   |  | 6,435                  |  | 6,435             |  | 6,435        
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|Spectrum Management, LLC Carrollton, TX                                                            |  | Business products and
services |  | December 1999             |  | 285,000 units of Class A equity interest              |  |                        |  | 2,850             |  | 6,663        
|                                                                                                   |  |                                |  |                           |  | 16% subordinated promissory note(1)(2)                |  | 1,304                  |  | 1,304             |  | 1,304        
|                                                                                                   |  |                                |  |                           |  | 12.75% subordinated promissory note(2)                |  | 386                    |  | 386               |  | 386          
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|Total Control investments: Majority-owned (represents 29.9% of total investments at fair value     |  |                                |  | $20,194                   |  | $24,007                                              
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|Control Investments: Non-majority-owned (6):                                                      
|ConGlobal Industries Holding, Inc. Houston, TX                                                     |  | Shipping products and services |  | February 1997             |  | 24,397,303 shares of common stock                     |  |                        |  | $  1,370          |  | $           
|                                                                                                   |  |                                |  |                           |  | Promissory note(2)                                    |  | $3,266                 |  | $  3,266          |  | 3,367        
|                                                                                                   |  |                                |  |                           |  | Member interest in CCI-ANI Finance, LLC(2)            |  |                        |  | 2,734             |  | 2,819        
|                                                                                                   |  |                                |  |                           |  | Member interest (66.7%) in JL Madre, LLC(1)           |  |                        |  | 864               |  | 892          
|                                                                                                   |  |                                |  |                           |  | Member interest (28.3%) in JL Madre(1) Equipment, LLC |  |                        |  | 69                |  | 121          
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|HealthSPAC, LLC El Segundo, CA                                                                     |  | Healthcare                     |  | December 2006(4)          |  | Member interest (40%)                                 |  |                        |  | 565               |  | 565          
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|Total Control Investments: Non-majority-owned (represents 9.6% of total investments at fair value) |  | $  8,868                       |  | $  7,764                 
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              
|Total Control Investments: (represents 39.5% of total investments at fair value)                   |  | $29,062                        |  | $31,771                  
|                                                                                                   |  |                                |  |                           |  |                                                       |  |                        |  |                   |  |              

The accompanying notes are an integral part of these financial statements.



8



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES

MARCH 31, 2008

(Unaudited)

(Continued)



|                                                                                  |  |                                |  |                           |  |                                                                                                                           |  |                        |  |                   |  |              
|--------------------------------------------------------------------------------- |  | ------------------------------ |  | ------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- |  | ----------------- |  | -------------
|Name and Location of Portfolio Company                                            |  | Industry                       |  | Date of InitialInvestment |  | Investment                                                                                                                |  | Principal              |  | Cost ofInvestment |  | FairValue (3)
|                                                                                  |  |                                |  |                           |  |                                                                                                                           |  | (amounts in thousands)
|Affiliate Investments (5):                                                       
|Infinia Corporation Kennewick, WA                                                 |  | Alternative energy             |  | June 2007(4)              |  | 666,667 Class A Shares Preferred Stock                                                                                    |  |                        |  | $  3,000          |  | $20,740      
|                                                                                  |  |                                |  |                           |  | 160,720 Class B Shares Preferred Stock                                                                                    |  |                        |  | 5,000             |  | 5,000        
|                                                                                  |  |                                |  |                           |  |                                                                                                                           |  |                        |  |                   |  |              
|Nickent Golf, Inc. City of Industry, CA                                           |  | Entertainment and leisure      |  | June 2007(4)              |  | 13% Promissory Note                                                                                                       |  | $6,127                 |  | 6,127             |  | 6,127        
|                                                                                  |  |                                |  |                           |  | 3,000,000 shares Class A Convertible Preferred Stock                                                                      |  |                        |  | 3,000             |  | 3,000        
|                                                                                  |  |                                |  |                           |  | Warrants to buy 463,917 shares of common stock at $0.97 per share through August 4, 2009, warrant terms subject to change |  |                        |  |                  |  |             
|                                                                                  |  |                                |  |                           |  |                                                                                                                           |  |                        |  |                   |  |              
|PalletOne, Inc. South Bartow, FL                                                  |  | Shipping products and services |  | October 2001              |  | 350,000 shares of common stock                                                                                            |  |                        |  | 350               |  |             
|                                                                                  |  |                                |  |                           |  |                                                                                                                           |  |                        |  |                   |  |              
|RP&C International Investments LLC New York, NY                                   |  | Healthcare                     |  | September 2006(4)         |  | Membership Interest (17.2%)                                                                                               |  |                        |  | 573               |  | 573          
|                                                                                  |  |                                |  |                           |  |                                                                                                                           |  |                        |  |                   |  |              
|Total Affiliate Investments (represents 44.1% of total investments at fair value) |  |                                |  | $18,050                   |  | $35,440                                                                                                                  
|                                                                                 

The accompanying notes are an integral part of these financial statements.



9



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES

MARCH 31, 2008

(Unaudited)

(Continued)



|                                                                                      |  |                                |  |                           |  |                                                                                  |  |                        |  |                   |  |              
|------------------------------------------------------------------------------------- |  | ------------------------------ |  | ------------------------- |  | -------------------------------------------------------------------------------- |  | ---------------------- |  | ----------------- |  | -------------
|Name and Location of Portfolio Company                                                |  | Industry                       |  | Date of InitialInvestment |  | Investment                                                                       |  | Principal              |  | Cost ofInvestment |  | FairValue (3)
|                                                                                      |  |                                |  |                           |  |                                                                                  |  | (amounts in thousands)
|Non-Affiliate Investments (less than 5% owned):                                      
|1848 Capital Partners LLC New York, NY                                                |  | Entertainment and leisure      |  | January 2008(4)           |  | Promissory note(1)                                                               |  | $3,000                 |  | $  3,000          |  | $  3,000     
|                                                                                      |  |                                |  |                           |  |                                                                                  |  |                        |  |                   |  |              
|Big Apple Entertainment New York, NY                                                  |  | Entertainment and leisure      |  | October 2007(4)           |  | Promissory note(1)                                                               |  | 3,000                  |  | 3,000             |  | 3,000        
|                                                                                      |  |                                |  |                           |  |                                                                                  |  |                        |  |                   |  |              
|The Bradshaw Group Richardson, TX                                                     |  | Business products and services |  | May 2000                  |  | 576,828 Class B Shares 12.25% preferred stock                                    |  |                        |  | 1,795             |  | 277          
|                                                                                      |  |                                |  |                           |  | 38,750 Class C shares preferred stock                                            |  |                        |  |                  |  |             
|                                                                                      |  |                                |  |                           |  | 788,649 Class D shares 15% preferred stock                                       |  |                        |  |                  |  |             
|                                                                                      |  |                                |  |                           |  | 2,218,109 Class E shares 8% preferred stock                                      |  |                        |  |                  |  |             
|                                                                                      |  |                                |  |                           |  | Warrant to buy 2,229,450 shares of common stock through May 2008                 |  |                        |  |                  |  |             
|                                                                                      |  |                                |  |                           |  |                                                                                  |  |                        |  |                   |  |              
|Sovereign Business Forms, Inc. Houston,
TX                                            |  | Business products and services |  | August 1996               |  | 29,854 shares of preferred stock(1)(2)                                           |  |                        |  | 3,053             |  | 1,590        
|                                                                                      |  |                                |  |                           |  | 15% promissory notes(1)(2)                                                       |  | 5,278                  |  | 5,278             |  | 5,278        
|                                                                                      |  |                                |  |                           |  | Warrant to buy 551,894 shares of common stock at $1 per share through Aug 2008   |  |                        |  |                  |  |             
|                                                                                      |  |                                |  |                           |  | Warrant to buy 25,070 shares of common stock at $1.25 per share through Aug 2008 |  |                        |  |                  |  |             
|                                                                                      |  |                                |  |                           |  | Warrant to buy 273,450 shares of common stock at $1 per share through Oct 2009   |  |                        |  |                  |  |             
|                                                                                      |  |                                |  |                           |  |                                                                                  |  |                        |  |                   |  |              
|Total Non-Affiliate Investments (represents 16.4% of total investments at fair value) |  | $16,126                        |  | $13,145                  
|                                                                                      |  |                                |  |                           |  |                                                                                  |  |                        |  |                   |  |              
|Total Investments                                                                     |  | $63,238                        |  | $80,356                  
|                                                                                      |  |                                |  |                           |  |                                                                                  |  |                        |  |                   |  |              



|(1) | Income-producing. All other securities are considered non-income producing.
|--- | ---------------------------------------------------------------------------

|(2) | Income on these securities is paid-in-kind by the issuance of additional securities or through accretion of original issue discount.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(3) | See BusinessValuation.
|--- | -------------------------

|(4) | Investments subsequent to June 30, 2005 were selected, and are managed, by the Adviser.
|--- | ---------------------------------------------------------------------------------------

|(5) | Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns at least 5% but not more than 25% voting securities of the
company.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Non-majority owned control investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns more than 25% but not more than 50% of the
voting securities of the company.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Majority owned investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns more than 50% of the voting securities of the company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The accompanying notes are an integral part of these
financial statements.



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES

MARCH 31, 2008

(Unaudited)

(Continued)



Substantially all of the Funds portfolio securities are restricted from public sale without
prior registration under the Securities Act of 1933. The Fund negotiates certain aspects of the method and timing of the disposition of the Funds investment in each portfolio company, including registration rights and related costs.

As defined in the Investment Company Act of 1940, all of the Funds investments are in eligible portfolio companies. The Fund
provides significant managerial assistance to all of the portfolio companies in which it has invested. The Fund provides significant managerial assistance to portfolio companies that comprise 93% of the total value of the investments in portfolio
companies as of March 31, 2008.

The Funds investments in portfolio securities consist of the following types of securities as
of March 31, 2008 (in thousands):



|                              |  |      |        |            |   |                                      |  |      
|----------------------------- |  | ---- | ------ | ---------- | - | ------------------------------------ |  | -----
|Type of Securities            |  | Cost |        | Fair Value |   | Fair Value asPercentage of NetAssets
|Secured and subordinated debt |  | $    | 32,950 |            | $ | 33,051                               |  | 31.9%
|Preferred stock               |  |      | 15,847 |            |   | 30,606                               |  | 29.5%
|Limited liability company     |  |      | 12,720 |            |   | 16,699                               |  | 16.1%
|Common stock                  |  |      | 1,721  |            |   |                                     |  | 0.0% 
|Options and warrants          |  |      |       |            |   |                                     |  | 0.0% 
|                              |  |      |        |            |   |                                      |  |      
|Total                         |  | $    | 63,238 |            | $ | 80,356                               |  | 77.5%
|                              |  |      |        |            |   |                                      |  |      

Two notes receivable included in secured and subordinated debt with an estimated fair value of
$7.7 million provide that all or a portion of interest is paid in kind or that the original issue discount is accreted over the life of the notes, by adding such amount to the principal of the notes. In addition, cash payments of interest are
currently being received on notes aggregating $25.3 million in fair value.

The following is a summary by industry of the Funds
investments in portfolio securities as of March 31, 2008 (in thousands):



|                               |  |           |        |                                     |      
|------------------------------ |  | --------- | ------ | ----------------------------------- | -----
|Industry                       |  | FairValue |        | FairValue asPercentageof Net Assets
|Alternative energy             |  | $         | 25,740 |                                     | 24.8%
|Entertainment and leisure      |  |           | 21,627 |                                     | 20.9%
|Business products and services |  |           | 15,497 |                                     | 14.9%
|Shipping products and services |  |           | 7,200  |                                     | 6.9% 
|Media                          |  |           | 5,000  |                                     | 4.8% 
|Real estate                    |  |           | 4,154  |                                     | 4.0% 
|Healthcare                     |  |           | 1,138  |                                     | 1.1% 
|                               |  |           |        |                                     |      
|Total                          |  | $         | 80,356 |                                     | 77.5%
|                               |  |           |        |                                     |      



The accompanying notes are an
integral part of these financial statements.



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2008 AND 2007

(Unaudited)

(1) Organization and Business Purpose

Equus Total Return, Inc. (the Fund), formerly Equus II Incorporated, a Delaware corporation, was formed by Equus Investments II, L.P. (the Partnership) on August 16, 1991. On July 1,
1992, the Partnership was reorganized and all of the assets and liabilities of the Partnership were transferred to the Fund in exchange for shares of common stock of the Fund. The shares of the Fund trade on the New York Stock Exchange under the
symbol EQS. On August 11, 2006, shareholders of the Fund approved the change of the Funds investment strategy to a total return investment objective. This new strategy seeks to provide the highest total return, consisting of capital
appreciation and current income. In connection with this strategic investment change, the shareholders also approved the change of name from Equus II Incorporated to Equus Total Return, Inc.

The Fund seeks to achieve capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned companies in
transactions negotiated directly with such companies. The Fund seeks to invest primarily in companies which intend to grow either by acquiring other businesses, including leveraged buyouts, or internally. The Fund may also invest in
recapitalizations of existing businesses or special situations from time to time. The Funds investments in portfolio companies consist principally of equity securities such as common and preferred stock, but also include other equity-oriented
securities such as debt convertible into common or preferred stock or debt combined with warrants, options or other rights to acquire common or preferred stock. The Fund elected to be treated as a business development company under the Investment
Company Act of 1940 (Investment Company Act). For tax purposes, the Fund has elected to be treated as a regulated investment company (RIC). With shareholder approval on June 30, 2005, the Fund entered into an investment
advisory agreement with Moore Clayton Capital Advisors, Inc. (the Adviser). Prior to this agreement, the Funds adviser was Equus Capital Management Corporation.

The Fund elected to retain the Adviser in part to provide the Fund with enhanced investment opportunities in both the United States and internationally.
Effective August 11, 2006, the Fund began to employ a total return investment style. The total return style combines both growth and income investments and is intended to strike a balance between the potential for gain and the risk of
loss. In the growth category, the Fund is a growth-at-reasonable-price investor. The Fund invests primarily in privately owned companies and is open to virtually any potential growth investment in the privately owned
arena. However, the Funds primary aim is to identify and acquire only those equity securities that meet its criteria for selling at reasonable prices. The income investments made by the Fund consist principally of purchasing
debt financing with the objective of generating regular interest income back to the fund as well as long-term capital appreciation through the exercise and sale of warrants received in connection with the financing.

The Fund has decided to further the total return investment objective, with authorization from the Board of Directors (which includes all of the
Funds independent directors) and approval of a majority of the shareholders, by amending the Funds Restated Certificate of Incorporation to change the name of the Fund from Equus II Incorporated to Equus Total Return,
Inc. This proposal was approved by a majority of the shareholders on August 11, 2006.

(2) Liquidity and Financing Arrangements

Liquidity and Revolving Line of CreditAs of March 31, 2008, the Fund had cash and temporary cash investments of $22.8
million. The Fund had $80.4 million of its total assets of $140.2 million invested in portfolio securities. Restricted assets totaled $35.3 million, of which $35.0 million was invested in U.S. Treasury Bills for the purpose of satisfying the
diversification requirement to maintain the Funds pass-through tax treatment and $0.3 million represented a required 1% brokerage margin deposit. These securities are held by a securities brokerage firm and are pledged along with cash to
secure the payment of the margin account balance. The U.S. Treasury bills were sold and the margin loan was repaid to the brokerage firm on April 2, 2008.



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##### Table of Contents

On February 19, 2008, the Fund revised its managed distribution policy to pay 10% of the
Funds market value based on the 2007 year-end closing price of $6.31 and announced the declaration of a first quarter dividend of $0.158 per share accordingly. A dividend in the amount of $1.3 million was paid on March 31, 2008 to
shareholders of record as of February 29, 2008. The dividend was payable in shares of common stock or in cash by specific election of the shareholders, and such election was made by March 24, 2008. The fund paid $ 0.7 million in cash,
and issued 95,023 additional shares of its common stock at an effective price of $6.71 per share. The classification of this dividend as between ordinary income, capital gain and return of capital will not be known until December 31, 2008,
since any purchase or sale of a portfolio company during the remainder of the year will affect the classification.

Under certain
circumstances, the Fund may be called on to make follow-on investments in certain portfolio companies. If the Fund does not have sufficient funds to make follow-on investments, the portfolio company in need of the investment may be negatively
impacted. Also, the Funds equity interest in the estimated fair value of the portfolio company could be reduced.

RIC Borrowings,
Restricted Cash and Temporary InvestmentsDuring the three months ended March 31,2008 and March 31, 2007, the Fund borrowed sufficient funds to maintain the Funds RIC status by utilizing a margin account with a securities
brokerage firm. There is no assurance that such arrangement will be available in the future. If the Fund is unable to borrow funds to make qualifying investments, it may no longer qualify as a RIC. The Fund would then be subject to corporate income
tax on the Funds net investment income and realized capital gains, and distributions to stockholders would be subject to income tax as ordinary dividends. Failure to continue to qualify as a RIC could be material to us and the Funds
stockholders.

As of March 31, 2008, the Fund borrowed $35.0 million to make qualifying investments to maintain its RIC status by
utilizing a margin account with a securities brokerage firm. The Fund collateralized such borrowings with restricted cash and temporary investments in U.S. Treasury bills of $35.3 million. The U.S. Treasury bills were sold and the total amount
borrowed was repaid on April 2, 2008.

As of December 31, 2007, the Fund borrowed $30.0 million to make qualifying investments to
maintain its RIC status by utilizing a margin account with a securities brokerage firm. The Fund collateralized such borrowings with restricted cash and temporary investments in U.S. Treasury bills of $30.3 million. The U.S. Treasury bills matured
and the total amount borrowed was repaid on January 3, 2008.

(3) Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements:

Use of EstimatesThe preparation of financial statements in accordance with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Although management believes the estimates and assumptions used in preparing these interim financial
statements and related notes are reasonable in light of known facts and circumstances, actual results could differ from those estimates.

Valuation of InvestmentsPortfolio investments are carried at fair value with the net change in unrealized appreciation or depreciation included in the determination of net assets. Valuations of portfolio securities are
performed in accordance with accounting principles generally accepted in the United States of America and the financial reporting policies of the Securities and Exchange Commission (SEC). The applicable methods prescribed by such
principles and policies are described below:

Publicly-traded portfolio securitiesInvestments in companies
whose securities are publicly traded are valued at their quoted market price at the close of business on the valuation date, less a discount to reflect the estimated effects of restrictions on the sale of such securities (Valuation
Discount), if applicable.



13



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##### Table of Contents

Privately-held portfolio securitiesThe fair value of investments for which
no market exists is determined on the basis of procedures established in good faith by the Board of Directors of the Fund. As a general principle, the current fair value of an investment would be the amount the Fund might reasonably
expect to receive for it upon its current sale, in an orderly manner. Appraisal valuations are necessarily subjective and the Advisers estimate of values may differ materially from amounts actually received upon the disposition of portfolio
securities.

Generally, cost is the primary factor used to determine fair value until significant developments affecting the portfolio
company (such as results of operations or changes in general market conditions) provide a basis for use of an appraisal valuation. Thereafter, portfolio investments are carried at appraised values as determined quarterly by the Adviser, subject to
the approval of the Board of Directors. Appraisal valuations are based upon such factors as a portfolio companys earnings, cash flow and net worth, the market prices for similar securities of comparable companies, an assessment of the
companys current and future financial prospects and various other factors and assumptions. In the case of unsuccessful operations, the appraisal may be based upon liquidation value.

Most of the Funds common equity investments are appraised at a multiple of free cash flow generated by the portfolio company in its most recent
fiscal year, less outstanding funded indebtedness and other senior securities such as preferred stock. Projections of current year free cash flow may be utilized and adjustments for non-recurring items are considered. Multiples utilized are
estimated based on the Advisers experience in the private company marketplace, and are necessarily subjective in nature.

From time
to time, portfolio companies are in default of certain covenants in their loan agreements. When the Adviser has a reasonable belief that the portfolio company will be able to restructure the loan agreements to adjust for any defaults, the portfolio
companys securities continue to be valued assuming that the company is a going concern. In the event a portfolio company cannot generate adequate cash flow to meet the principal and payments on such indebtedness or is not successful in
refinancing the debt upon its maturity, the Funds investment could be reduced or eliminated through foreclosure on the portfolio companys assets or the portfolio companys reorganization or bankruptcy.

The Fund may also use, when available, third-party transactions in a portfolio companys securities as the basis of valuation (the private
market method). The private market method will be used only with respect to completed transactions or firm offers made by sophisticated, independent investors.

The fair values of debt securities, which are generally held to maturity, are determined on the basis of the terms of the debt securities and the financial condition of the issuer. Certificates of deposit purchased by
the Fund generally will be valued at their face value, plus interest accrued to the date of valuation.

Because of the inherent uncertainty
of the valuation of portfolio securities, which do not have readily ascertainable market values, amounting to $80.4 million (including no publicly traded securities) and $72.1 million (including no publicly traded securities) as of
March 31, 2008 and December 31, 2007, respectively, the Funds estimate of fair value may materially differ from the value that would have been used had a ready market existed for the securities. Appraised values do not reflect
brokers fees or other normal selling costs which might become payable on disposition of such investments.

On a daily basis, the Fund
adjusts its net asset value for the changes in the value of its publicly held securities and material changes in the value of its private securities and reports those amounts to Lipper Analytical Services, Inc. Weekly and daily net asset values
appear in various publications, including Barrons and The Wall Street Journal.

Investment
TransactionsInvestment transactions are recorded on the accrual method. Realized gains and losses on investments sold are computed on a specific identification basis.

Escrowed Receivables, at Estimated Fair Value In May of 2007, the Fund sold its interest in The Drilltec Corporation (Drilltec).
A portion of the proceeds from the sale was placed in a cash escrow account to secure the representations and warranties made to the respective purchasers. As of March 31, 2008, the amount receivable from the Drilltec escrow is valued at $0.3
million. The Fund is not aware of any claims against the escrow that have been made as of March 31, 2008 and is anticipating a final payment from The Drilltec Corporation escrow account by May 2008.



14



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##### Table of Contents

Cash FlowsFor purposes of the Statements of Cash Flows, the Fund considers all highly liquid
temporary cash investments purchased with an original maturity of three months or less to be cash equivalents. The Fund includes its investing activities within cash flows from operations. The Fund excludes Restricted Cash & Temporary
Investments used for purposes of complying with RIC requirements from cash equivalents.

Income TaxesThe Fund intends to
comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is
distributed to stockholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund borrows money from time to time to maintain its tax status under the Internal Revenue Code as a RIC. See Note 2 for
further discussion of the Funds RIC borrowings.

In May 2006, the State of Texas enacted a bill that replaced the existing franchise
tax with a margin tax. Effective January 1, 2007, the margin tax applies to legal entities conducting business in Texas, including previously non-taxable entities such as limited partnerships and limited liability partnerships. The margin tax
is based on our Texas sourced taxable margin. The tax is calculated by applying a tax rate to a base that considers both revenue and expenses and therefore has the characteristics of an income tax. As a result, the Fund recorded $0.1 million in
state income tax for the year ended December 31, 2007 that is solely attributable to the Texas margin tax.

(4) Fair Value Measurement

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS 157). SFAS 157 defines fair value,
establishes a framework for measuring fair value, outlines a fair value hierarchy based on inputs used to measure fair value and enhances disclosure requirements for fair value measurements. SFAS 157 does not change existing guidance as to whether
an instrument is carried at fair value. The Fund adopted SFAS 157 for the quarter ending March 31, 2008. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.

The Fund has categorized all investments recorded at fair value in accordance with
SFAS 157 based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by SFAS 157 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these
assets and liabilities, are as follows:

Level 1  Inputs are unadjusted, quoted prices in active markets for identical assets at the
measurement date. The types of assets carried at Level 1 fair value generally are equities listed in active markets.

Level 2  Inputs
(other than quoted prices included in Level 1) are either directly or indirectly observable for the asset in connection with market data at the measurement date and for the extent of the instruments anticipated life. Fair valued assets that
are generally included in this category are warrants held in a public company.

Level 3  Inputs reflect managements best
estimate of what market participants would use in pricing the asset at the measurement date. It includes prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Generally, assets carried at
fair value and included in this category are debt, warrants and/or other equity investments held in a private company. For loan and debt securities, the Fund has performed a yield analysis assuming a hypothetical current sale of the security. The
yield analysis considers changes in interest rates and changes in leverage levels of the portfolio company as compared to the market interest rates and leverage levels. Assuming the credit quality of the portfolio company remains stable, the Fund
will use the value determined by the yield analysis as the fair value for that security.

The Fund will record unrealized depreciation on
investments when it determines that the fair value of a security is less than its cost basis, and will record unrealized appreciation when it determines that the fair value is greater than its cost basis.



15



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##### Table of Contents

Investments measured at fair value on a recurring basis are categorized in the tables below based on the
lowest level of significant input to the valuations:



|                                                   |  |                                                             |        |                                             |   |                                        |  |   |   |  |   |       
|-------------------------------------------------- |  | ----------------------------------------------------------- | ------ | ------------------------------------------- | - | -------------------------------------- |  | - | - |  | - | ------
|(in thousands)                                     |  | Total                                                       |        | Fair Value Measurement as of March 31, 2008
|                                                   |  | Quoted Prices inActive Marketsfor IdenticalAssets (Level 1) |        | SignificantOtherObservableInputs(Level 2)   |   | SignificantUnobservableInputs(Level 3)
|Investments in portfolio securities, at fair value |  | $                                                           | 80,356 |                                             | $ |                                       |  | $ |  |  | $ | 80,356
|                                                   |  |                                                             |        |                                             |   |                                        |  |   |   |  |   |       

A reconciliation of the fair value of investments utilizing significant unobservable inputs is as follows (in
thousands):



|                                          |  |                                                                     |       
|----------------------------------------- |  | ------------------------------------------------------------------- | ------
|                                          |  | Fair valuemeasurements usingsignificantunobservable inputs(Level 3)
|Fair value as of December 31, 2007        |  | $                                                                   | 72,102
|Total realized gains                      |  |                                                                     | 425   
|Change in unrealized appreciation         |  |                                                                     | 300   
|Purchases, issuances and settlements, net |  |                                                                     | 7,529 
|Transfers in (out) of Level 3             |  |                                                                     |      
|                                          |  |                                                                     |       
|Fair value as of March 31, 2008           |  | $                                                                   | 80,356
|                                          |  |                                                                     |       

(5) Related Party Transactions and Agreements

Moore, Clayton & Co., Inc., a Delaware corporation, formed Moore Clayton Capital Advisors, Inc. (MCCA) in February 2005 for the
purpose of managing the Fund. Moore, Clayton & Co., Inc., either directly or indirectly has a significant ownership interest in the Fund and, additionally, has one common director. MCCA has no direct ownership in the Fund and has two common
directors. MCCA acquired the outstanding stock of the two entities which owned the previous adviser, Equus Capital Management Corporation. Those two entities were individually owned by a current officer of the Fund and a previous officer of the
Fund who resigned with the change to the current adviser, Moore Clayton Capital Advisors, Inc.

The Fund entered into an investment
advisory agreement dated June 30, 2005 (the Advisory Agreement) with Moore Clayton Capital Advisors, Inc. (the Adviser). This agreement was renewed in June 2007. Pursuant to the Advisory Agreement, the Adviser performs
certain investment advisory services that are necessary for the operation of the Fund. The Adviser receives a base advisory fee at an annual rate of 2% of the net assets of the Fund, paid quarterly in arrears, as well as incentive fees in the
following amounts: (i) 20% of the excess, if any, of the Funds net investment income for a quarter that exceeds a quarterly hurdle rate equal to 2% (8% annualized) of the Funds net assets, and (ii) 20% of the Funds net realized
capital gain less unrealized capital depreciation paid on an annual basis. The advisory fees that the Fund pays represent the Advisers primary source of revenue. The Adviser is a wholly-owned subsidiary of MCC Global, NV, an international
private equity investment and advisory firm.

The Advisory Agreement presently continues year-to-year, provided such continuance is
approved at least annually by (i) a vote of a majority of the outstanding shares of the Fund, or (ii) a majority of the Independent Directors of the Fund. The Advisory Agreement may be terminated at any time, without the payment of any penalty, by
the Board of Directors or the holders of a majority of the Funds shares on 60 days written notice to the Adviser, and would automatically terminate in the event of its assignment (as defined in the 1940 Act).

The Fund also entered into an administration agreement dated June 30, 2005 (Administration Agreement) with Equus Capital Administration
Company, Inc. (the Administrator). This agreement was renewed in June 2007. Pursuant to the Administration Agreement, the Administrator provides (or arranges for suitable third parties to provide) all administrative services necessary
for the operation of the Fund. The Fund reimburses the Administrator for the costs and expenses incurred by the Administrator in performing its obligations and providing personnel and facilities under the Administrative Agreement, provided that such
reimbursements do not exceed $0.5 million per year.

The Administration Agreement presently continues year-to-year, provided such
continuance is approved at least annually by the Funds Board of Directors, including a majority of the Independent Directors. The Administration Agreement may be terminated at any time, without the payment of any penalty, by the Board of
Directors, or by the Administrator, upon 60 days written notice to the other party, and would automatically terminate in the event of its assignment (as defined in the 1940 Act).



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(6) Contractual Obligations

The Fund has entered into five contracts under which it expects to have material future commitments, including the Advisory Agreement between the Fund and the Adviser, pursuant to which the Adviser has agreed to serve
as the Funds investment advisor; the Administration Agreement between the Fund and the Administrator, pursuant to which the Administrator has agreed to furnish the Fund with the facilities and administrative services necessary to conduct the
Funds day-to-day operations and to provide managerial assistance on its behalf to portfolio companies to which the Fund is required to provide such assistance. The Advisory Agreement and the Administration Agreement may be terminated by either
party without penalty upon not more than 60 days written notice to the other, see Note 5.

The remaining three commitments as of
March 31, 2008 relate to the Funds portfolio company investments and are summarized as follows (in thousands):



|                                   |  |                    |        |                     |   |       
|---------------------------------- |  | ------------------ | ------ | ------------------- | - | ------
|Portfolio Company                  |  | OriginalCommitment |        | RemainingCommitment
|RP&C International Investments LLC |  | $                  | 11,100 |                     | $ | 7,795 
|Riptide Entertainment, LLC         |  |                    | 10,000 |                     |   | 3,500 
|HealthSPAC, LLC                    |  |                    | 5,000  |                     |   | 3,435 
|                                   |  |                    |        |                     |   |       
|                                   |  |                    |        |                     | $ | 14,730
|                                   |  |                    |        |                     |   |       

As compensation for services to the Fund, each Independent Director receives an annual fee of
$20,000 paid quarterly in arrears, a fee of $2,000 for each meeting of the Board of Directors attended in person, a fee of $1,000 for participation in each telephonic meeting of the Board and a fee of $1,000 for each committee meeting attended, and
reimbursement of all out-of-pocket expenses relating to attendance at such meetings. A quarterly fee of $2,500 is paid for the Chairman of the Independent Directors and the Chairman of the Audit Committee. An additional one-time fee of $5,000 was
paid to the Chairman of the Independent Directors and the Chairman of the Audit Committee in September 2007, as approved by the Compensation Committee. Effective December 18, 2007, an annual fee of $15,000 for the Chairman of the Board of
Directors was approved.

(7) Federal Income Tax Matters

The Fund is required to make distributions of any net taxable investment income on an annual basis, and may elect to distribute or retain net taxable realized capital gains. The Internal Revenue Service approved the
Funds request, effective October 31, 1998, to change its year end for determining capital gains for purposes of Section 4982 of the Internal Revenue Code from December 31 to October 31.

The Fund was not required to make a distribution of ordinary income for 2007 under income tax regulations. The aggregate cost of investments for federal
income tax purposes as of December 31, 2007 was $52.7 million. Such investments had unrealized appreciation of approximately $23.4 million and unrealized depreciation of $6.5 million for book purposes, or net unrealized appreciation of
approximately $16.8 million. The Fund had unrealized appreciation of $26.4 million and unrealized depreciation of approximately $7.0 million for tax purposes, or net unrealized appreciation of $19.4 million as of December 31, 2007.

The Fund adopted FASB Interpretation No. 48 entitled Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement
No. 109, referred to as FIN 48, as of January 1, 2007. FIN 48 clarifies the accounting for uncertain tax positions that may have been taken by an entity. Specifically, FIN 48 prescribes a more-likely-than-not recognition
threshold to measure a tax position taken or expected to be taken in a tax return through a two-step process: (1) determining whether it is more likely than not that a tax position will be sustained upon examination by taxing authorities, after
all appeals, based upon the technical merits of the position; and (2) measuring to determine the amount of benefit/expense to recognize in the financial statements, assuming taxing authorities have all relevant information concerning the issue.
The tax position is measured at the largest amount of benefit/expense that is greater than 50 percent likely of being realized upon ultimate settlement. This pronouncement also specifies how to present a liability for unrecognized tax benefits in a
classified balance sheet, but does not change the classification requirements for deferred taxes. Under FIN 48, if a tax position previously failed the more-likely-than-not recognition threshold, it should be recognized in the first subsequent
financial reporting period in which the threshold is met. Similarly, a position that no longer meets this recognition threshold should no longer be recognized in the first financial reporting period that the threshold is no longer met.

The Fund is a flow-through, non-tax paying entity; further, the Funds net operating loss carry-forwards have been exhausted. Based upon an
examination of the Funds tax position, the Fund determined that the aggregate exposure under FIN 48 did not have a material impact on its financial statements at January 1, 2008 or March 31, 2008. Therefore, the Fund has not recorded
an adjustment to its financial statements related to the adoption of FIN 48. The Fund will continue to evaluate its tax positions in accordance with FIN 48, and recognize any future impact under FIN 48 as a charge to income in the applicable period
in accordance with the standard.

The Funds accounting policy related to income tax penalties and interest assessments is to accrue
for these costs and record a charge to expenses during the period that the Fund takes an uncertain tax position through resolution with the taxing authorities or expiration of the applicable statute of limitations.



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(8) Dividends

On February 19, 2008, the Fund revised its managed distribution policy to pay 10% of the Funds market value based on the 2007 year-end closing price of $6.31 and announced the declaration of a first quarter dividend of $0.158 per
share accordingly. A dividend in the amount of $1.3 million was paid on March 31, 2008 to shareholders of record as of February 29, 2008. The dividend was payable in shares of common stock or in cash by specific election of the
shareholders, and such election was made by March 24, 2008. The fund paid $ 0.7 million in cash, and issued 95,023 additional shares of its common stock at an effective price of $6.71 per share. The classification of this dividend as
between ordinary income, capital gain and return of capital will not be known until December 31, 2008, since any purchase or sale of a portfolio company during the remainder of the year will affect the classification.

The Fund paid a $0.125 dividend for shareholders of record as of the close of business on February 26, 2007 on March 30, 2007. The Fund paid
$0.6 million in cash and issued 52,650 additional shares of common stock at $8.633 per share, in payment of such dividend.

(9) Portfolio Securities

During the three months ended March 31, 2008, the Fund invested $3.0 million in a new portfolio company and made follow-on investments
of $7.8 million in several follow-on investments, including $0.2 million in the form of interest and dividends paid in kind or original issue discount/premium amortization.

The following table includes significant new and follow-on investments during the quarter ended March 31, 2008 (in thousands):



|                           |  |      |       |           |   |      |  |         |       |       |   |     |  |   |       
|-------------------------- |  | ---- | ----- | --------- | - | ---- |  | ------- | ----- | ----- | - | --- |  | - | ------
|                           |  | New  |       | Follow-On |   |     
|Portfolio Company          |  | Cash |       | Noncash   |   | Cash |  | Noncash |       | Total
|Infinia Corporation        |  | $    |      |           | $ |     |  | $       | 5,000 |       | $ |    |  | $ | 5,000 
|1848 Capital Partners LLC  |  |      | 3,000 |           |   |     |  |         |      |       |   |    |  |   | 3,000 
|Riptide Entertainment, LLC |  |      |      |           |   |     |  |         | 1,600 |       |   |    |  |   | 1,600 
|Nickent Golf, Inc.         |  |      |      |           |   |     |  |         | 1,000 |       |   | 60  |  |   | 1,060 
|Various others             |  |      |      |           |   |     |  |         |      |       |   | 161 |  |   | 161   
|                           |  |      |       |           |   |      |  |         |       |       |   |     |  |   |       
|                           |  | $    | 3,000 |           | $ |     |  | $       | 7,600 |       | $ | 221 |  | $ | 10,821
|                           |  |      |       |           |   |      |  |         |       |       |   |     |  |   |       

During the three months ended March 31, 2008, the Fund realized net capital gains of
$0.4 million, including the following significant transactions (in thousands):



|                                   |  |                                |  |           |  |                      |    
|---------------------------------- |  | ------------------------------ |  | --------- |  | -------------------- | ---
|Portfolio Company                  |  | Industry                       |  | Type      |  | Realized Gain/(Loss)
|RP&C International Investments LLC |  | Healthcare                     |  | Affiliate |  | $                    | 351
|JL Madre Equipment, LLC            |  | Shipping products and services |  | Control   |  |                      | 72 
|Alenco Window Holdings             |  | Residential building products  |  | Control   |  |                      | 2  
|                                   |  |                                |  |           |  |                      |    
|                                   |  |                                |  |           |  | $                    | 425
|                                   |  |                                |  |           |  |                      |    

Net unrealized appreciation on investments increased by $0.3 million during the three months
ended March 31, 2008, from a net unrealized appreciation of $16.8 million to a net unrealized appreciation of $17.1 million. Such increase in appreciation resulted primarily from increase in estimated fair market value of ConGlobal Industries
Holding, Inc., resulting from an increase in operations for the period. The increase was partially offset by the decrease in fair market value of Spectrum Management, LLC, resulting from declining sales.

During the three months ended March 31, 2007, the Fund invested $5.1 million in two new companies and made follow-on investments of $2.6 million in
three follow-on investments, including $0.1 million in the form of interest and dividends paid in kind or original issue discount/premium amortization.



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##### Table of Contents

The following table includes significant new and follow-on investments during the quarter ended
March 31, 2007 (in thousands):



|                                     |  |      |       |           |   |      |  |         |       |       |   |     |  |   |      
|------------------------------------ |  | ---- | ----- | --------- | - | ---- |  | ------- | ----- | ----- | - | --- |  | - | -----
|                                     |  | New  |       | Follow-On |   |     
|Portfolio Company                    |  | Cash |       | Noncash   |   | Cash |  | Noncash |       | Total
|Equus Media Development Company, LLC |  | $    | 5,000 |           | $ |     |  | $       |      |       | $ |    |  | $ | 5,000
|RP&C International Investments LLC   |  |      |      |           |   |     |  |         | 2,009 |       |   |    |  |   | 2,009
|Riptide Entertainment, LLC           |  |      |      |           |   |     |  |         | 360   |       |   |    |  |   | 360  
|ConGlobal Industries Holding, Inc.   |  |      |      |           |   |     |  |         |      |       |   | 101 |  |   | 101  
|Equus Media Finance Company, LLC     |  |      | 100   |           |   |     |  |         |      |       |   |    |  |   | 100  
|Various others                       |  |      |      |           |   |     |  |         | 150   |       |   | 11  |  |   | 161  
|                                     |  |      |       |           |   |      |  |         |       |       |   |     |  |   |      
|                                     |  | $    | 5,100 |           | $ |     |  | $       | 2,519 |       | $ | 112 |  | $ | 7,731
|                                     |  |      |       |           |   |      |  |         |       |       |   |     |  |   |      

During the three months ended March 31, 2007, the Fund realized net capital gains of $1.6
million, including the following significant transactions (in thousands):



|                               |  |                                |  |         |  |                      |      
|------------------------------ |  | ------------------------------ |  | ------- |  | -------------------- | -----
|Portfolio Company              |  | Industry                       |  | Type    |  | Realized Gain/(Loss)
|Champion Window Holdings, Inc. |  | Residential building products  |  | Control |  |                      | 1,414
|Cedar Lodge Holdings, Inc.     |  | Real estate                    |  | Control |  |                      | 124  
|JL Madre Equipment, LLC        |  | Shipping products and services |  | Control |  |                      | 58   
|                               |  |                                |  |         |  |                      |      
|                               |  |                                |  |         |  | $                    | 1,596
|                               |  |                                |  |         |  |                      |      

Net unrealized appreciation on investments decreased by $2.2 million during the three months
ended March 31, 2007, from a net unrealized appreciation of $9.3 million to a net unrealized appreciation of $7.1 million. Such decrease in appreciation resulted primarily from decrease in estimated fair market value of ConGlobal
Industries Holding, Inc., resulting from a decline in operations for the period. The decrease was partially offset by the increase in fair market value of The Drilltec Corporation, resulting from a pending sale.

(10) Recent Accounting Pronouncements

In December
2007, the FASB issued SFAS No. 141R, Business Combinations, (SFAS No. 141R) which replaces SFAS No. 141. SFAS No. 141R requires most assets acquired and liabilities assumed in a business
combination, contingent consideration and certain acquired contingencies to be measured at their fair value as of the date of the acquisition. SFAS No. 141R also requires that acquisition related costs and restructuring costs be recognized
separately from the business combination. SFAS No. 141R is effective for business combinations completed in fiscal years beginning after December 15, 2008. The Fund believes that the adoption of SFAS No. 141R will not have a material
impact on its financial position, results of operation or cash flows.

(11) Subsequent Events

On April 2, 2008, the Fund sold U.S. Treasury bills for $35.0 million and repaid the margin loan.

On May 8, 2008, the fun invested an additional $3.0 million as a follow-on investment in Riptide Entertainment, LLC in the form of an 8% promissory
note.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Overview

Equus Total Return, Inc. is a business development company which invests in equity
and equity-oriented securities issued by privately-owned companies in transactions negotiated directly with such companies. The Fund made one new investment other than follow-on investments during the three months ended March 31, 2008 and made
two new investments other than follow-on investments during the three months ended March 31, 2007.

The valuation of the Funds
investments is the most significant area of judgment impacting the financial statements. The Funds portfolio investments are valued at estimates of fair value, with the net change in unrealized appreciation or depreciation included in the
determination of net assets. Almost all of the long-term investments are in privately-held or restricted securities, the valuation of which is necessarily subjective. Actual values may differ materially from the Funds estimated fair value.
Portfolio valuations are determined quarterly by the Adviser, subject to the approval of the Board of Directors, and are based on a number of relevant factors.

Most of the Funds portfolio companies utilize leverage, and the leverage magnifies the return on its investments. For example, if a portfolio company has a total enterprise value of $10.0 million and $7.5
million in funded indebtedness, its equity is valued at $2.5 million. If the enterprise value increases or decreases by 20%, to $12.0 million or $8.0 million, respectively, the value of the equity increases or decreases by 80%, to $4.5 million or
$0.5 million, respectively. This disproportionate increase or decrease adds a level of volatility to the Funds equity-oriented portfolio securities.

The Fund derives its cash flow from interest and dividends received and sales of securities from its investment portfolio. The Fund pays certain advisory fees to the Adviser, administrative fees to the Administrator
and interest expense on its existing debt. The Fund also spends its cash on new investments, or follow-on investments which may be required by certain portfolio companies. Because the investments are illiquid, the Fund utilizes leverage to provide
the required funds, and the leverage is then repaid from the sale of portfolio securities. The Fund has maintained substantial amounts of cash and cash equivalents since May 2004.

Since the Fund is a closed-end business development company, stockholders have no right to present their shares to the Fund for redemption. Because the
shares continue to trade at a discount, the Board of Directors has determined that it would be in the best interest of the Funds stockholders for the Fund to be authorized to attempt to reduce or eliminate the market value discount from net
asset value. Accordingly, from time to time the Fund may, but is not required to, repurchase its shares (including by means of tender offers) to attempt to reduce or eliminate the discount or to increase the net asset value of those shares.

Significant Accounting Policies

The
following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements:

Use of
EstimatesThe preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Although management believes the estimates and assumptions used in preparing these interim financial statements and related notes are reasonable in light of known facts and circumstances, actual results could
differ from those estimates.



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##### Table of Contents

Valuation of InvestmentsPortfolio investments are carried at fair value with the net change
in unrealized appreciation or depreciation included in the determination of net assets. Valuations of portfolio securities are performed in accordance with accounting principles generally accepted in the United States of America and the financial
reporting policies of the Securities and Exchange Commission (SEC). The applicable methods prescribed by such principles and policies are described below:

Publicly-traded portfolio securitiesInvestments in companies whose securities are publicly traded are valued at their quoted
market price at the close of business on the valuation date, less a discount to reflect the estimated effects of restrictions on the sale of such securities (Valuation Discount), if applicable.

Privately-held portfolio securitiesThe fair value of investments for which no market exists is determined on the basis of
procedures established in good faith by the Board of Directors of the Fund. As a general principle, the current fair value of an investment would be the amount the Fund might reasonably expect to receive for it upon its current sale, in
an orderly manner. Appraisal valuations are necessarily subjective and the Advisers estimate of values may differ materially from amounts actually received upon the disposition of portfolio securities.

Generally, cost is the primary factor used to determine fair value until significant developments affecting the portfolio company (such as results of
operations or changes in general market conditions) provide a basis for use of an appraisal valuation. Thereafter, portfolio investments are carried at appraised values as determined quarterly by the Adviser, subject to the approval of the Board of
Directors. Appraisal valuations are based upon such factors as a portfolio companys earnings, cash flow and net worth, the market prices for similar securities of comparable companies, an assessment of the companys current and future
financial prospects and various other factors and assumptions. In the case of unsuccessful operations, the appraisal may be based upon liquidation value.

Most of the Funds common equity investments are appraised at a multiple of free cash flow generated by the portfolio company in its most recent fiscal year, less outstanding funded indebtedness and other senior
securities such as preferred stock. Projections of current year free cash flow may be utilized and adjustments for non-recurring items are considered. Multiples utilized are estimated based on the Advisers experience in the private company
marketplace, and are necessarily subjective in nature.

From time to time, portfolio companies are in default of certain covenants in their
loan agreements. When the Adviser has a reasonable belief that the portfolio company will be able to restructure the loan agreements to adjust for any defaults, the portfolio companys securities continue to be valued assuming that the company
is a going concern. In the event a portfolio company cannot generate adequate cash flow to meet the principal and payments on such indebtedness or is not successful in refinancing the debt upon its maturity, the Funds investment could be
reduced or eliminated through foreclosure on the portfolio companys assets or the portfolio companys reorganization or bankruptcy.

The Fund may also use, when available, third-party transactions in a portfolio companys securities as the basis of valuation (the private market method). The private market method will be used only with respect to
completed transactions or firm offers made by sophisticated, independent investors.

The fair values of debt securities, which are
generally held to maturity, are determined on the basis of the terms of the debt securities and the financial condition of the issuer. Certificates of deposit purchased by the Fund generally will be valued at their face value, plus interest accrued
to the date of valuation.

Because of the inherent uncertainty of the valuation of portfolio securities, which do not have readily
ascertainable market values, amounting to $80.4 million (including no publicly traded securities) and $72.1 million (including no publicly traded securities) as of March 31, 2008 and December 31, 2007, respectively, the Funds
estimate of fair value may materially differ from the value that would have been used had a ready market existed for the securities. Appraised values do not reflect brokers fees or other normal selling costs which might become payable on
disposition of such investments.

On a daily basis, the Fund adjusts its net asset value for the changes in the value of its publicly held
securities and material changes in the value of its private securities and reports those amounts to Lipper Analytical Services, Inc. Weekly and daily net asset values appear in various publications, including Barrons and The Wall
Street Journal.

Federal Income TaxesThe Fund intends to comply with the requirements of the Code necessary for us to
qualify as a RIC. So long as it complies with these requirements, the Fund generally will not be subject to corporate-level federal income taxes on otherwise taxable income (including net realized capital gains) distributed to stockholders.
Therefore, the



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##### Table of Contents

Fund did not record a provision for federal income taxes in its financial statements. The Fund may borrow money from time to time to maintain its status as a
RIC under the Code.

Liquidity and Capital Resources

Because of the nature and size of the portfolio investments, the Fund may periodically borrow funds to make qualifying investments to maintain its tax status as a RIC. During the three months ended March 31, 2008
and 2007, the Fund borrowed such funds by utilizing a margin account with a securities brokerage firm. There is no assurance that such arrangement will be available in the future. If the Fund is unable to borrow funds to make qualifying investments,
it may no longer qualify as a RIC. The Fund would then be subject to corporate income tax on its net investment income and realized capital gains, and distributions to stockholders would be subject to income tax as ordinary dividends.

The Fund has the ability to borrow funds and issue forms of senior securities representing indebtedness or stock, such as preferred stock, subject to
certain restrictions. Net taxable investment income and net taxable realized gains from the sales of portfolio investments are intended to be distributed at least annually, to the extent such amounts are not reserved for payment of expenses and
contingencies or to make follow-on or new investments. Pursuant to the restrictions in the existing line of credit, the Fund is not allowed to incur additional indebtedness unless approved by the lender.

The Fund reserves the right to retain net long-term capital gains in excess of net short-term capital losses for reinvestment or to pay contingencies and
expenses. Such retained amounts, if any, will be taxable to the Fund as long-term capital gains and stockholders will be able to claim their proportionate share of the federal income taxes paid on such gains as a credit against their own federal
income tax liabilities. Stockholders will also be entitled to increase the adjusted tax basis of their Fund shares by the difference between their undistributed capital gains and their tax credit.

Results of Operations

Investment Income and Expense

Net investment income after all expenses was $0.4 million and $5,000 for the three months ended March 31, 2008 and 2007,
respectively. The net investment income generated at March 31, 2008 compared to 2007, is due primarily to the increase in total investment income and a decline in total expenses for the three months ended March 31, 2008 as compared to the
three months ended March 31, 2007. Total income from portfolio securities was $1.1 million and $0.7 million for the three months ended March 31, 2008 and 2007, respectively.

Interest from temporary cash investments decreased from $0.5 million to $0.3 million for the three months ended March 31, 2008 as compared to the
three months ended March 31, 2007. The cash in temporary investments (excluding the margin account) decreased $8.0 million to $22.8 as of March 31, 2008, primarily due to the increase in new and follow-on investments.

The incentive fees are calculated as follows: (i) 20% of the excess, if any, of the Funds net investment income for a quarter that exceeds a
quarterly hurdle rate equal to 2% (8% annualized) of the Funds net assets, and (ii) 20% of the Funds net realized capital gain less unrealized capital depreciation paid on an annual basis. The proceeds of any sale are compared to
the fair market valuation of the Funds portfolio companies at March 31, 2005. Incentive fee expense accrual decreased by $0.2 million for the three months ended March 31, 2008 as compared to the three months ended March 31,
2007, as net realized capital gains also declined during the period.

The Adviser receives management fee compensation at an annual rate of
2% of the net assets of the Fund paid quarterly in arrears. Such fees amounted to $0.5 million and were materially unchanged for the three months ended March 31, 2008 and 2007, respectively.

Professional fees remained approximately constant for the three months ended March 31, 2008, as compared to the three months ended March 31,
2007.



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##### Table of Contents

Administrative fees were unchanged for the three months ended March 31, 2008 and 2007, respectively.
The Fund reimburses the Administrator, ECAC, for the costs and expenses incurred in performing its obligations and providing personnel and facilities under the Administrative Agreement, provided that such reimbursements do not exceed $450,000 per
year. The Administrator receives $112,500 per quarter.

Realized Gains and Losses on Sales of Portfolio Securities

During the three months ended March 31, 2008, the Fund realized net capital gains of $0.4 million, including the following significant
transactions (in thousands):



|                                   |  |                                |  |           |  |                      |    
|---------------------------------- |  | ------------------------------ |  | --------- |  | -------------------- | ---
|Portfolio Company                  |  | Industry                       |  | Type      |  | Realized Gain/(Loss)
|RP&C International Investments LLC |  | Healthcare                     |  | Affiliate |  | $                    | 351
|JL Madre Equipment, LLC            |  | Shipping products and services |  | Control   |  |                      | 72 
|Alenco Window Holdings             |  | Residential building products  |  | Control   |  |                      | 2  
|                                   |  |                                |  |           |  |                      |    
|                                   |  |                                |  |           |  | $                    | 425
|                                   |  |                                |  |           |  |                      |    

During the three months ended March 31, 2007, the Fund realized net capital gains of $1.6
million, including the following significant transactions (in thousands):



|                               |  |                                |  |         |  |                      |      
|------------------------------ |  | ------------------------------ |  | ------- |  | -------------------- | -----
|Portfolio Company              |  | Industry                       |  | Type    |  | Realized Gain/(Loss)
|Champion Window Holdings, Inc. |  | Residential building products  |  | Control |  |                      | 1,414
|Cedar Lodge Holdings, Inc.     |  | Real estate                    |  | Control |  |                      | 124  
|JL Madre Equipment, LLC        |  | Shipping products and services |  | Control |  |                      | 58   
|                               |  |                                |  |         |  |                      |      
|                               |  |                                |  |         |  | $                    | 1,596
|                               |  |                                |  |         |  |                      |      

Changes in Unrealized Appreciation/Depreciation of Portfolio Securities

Net unrealized appreciation on investments increased by $0.3 million during the three months ended March 31, 2008, from a net unrealized
appreciation of $16.8 million to a net unrealized appreciation of $17.1 million. Such increase in appreciation resulted primarily from increase in estimated fair market value of ConGlobal Industries Holding, Inc., resulting from an increase in
operations for the period. The increase was partially offset by the decrease in fair market value of Spectrum Management, LLC, resulting from declining sales.

Net unrealized appreciation on investments decreased by $2.2 million during the three months ended March 31, 2007, from a net unrealized appreciation of $9.3 million to a net unrealized appreciation of
$7.1 million. Such decrease in appreciation resulted primarily from decrease in estimated fair market value of ConGlobal Industries Holding, Inc., resulting from a decline in operations for the period. The decrease was partially offset by the
increase in fair market value of The Drilltec Corporation, resulting from a pending sale.

Dividends

On February 19, 2008, the Fund revised its managed distribution policy to pay 10% of the Funds market value based on the 2007 year-end closing
price of $6.31 and announced the declaration of a first quarter dividend of $0.158 per share accordingly. A dividend in the amount of $1.3 million was paid on March 31, 2008 to shareholders of record as of February 29, 2008. The dividend
was payable in shares of common stock or in cash by specific election of the shareholders, and such election was made by March 24, 2008. The fund paid $ 0.7 million in cash, and issued 95,023 additional shares of its common stock at an
effective price of $6.71 per share. The classification of this dividend as between ordinary income, capital gain and return of capital will not be known until December 31, 2008, since any purchase or sale of a portfolio company during the
remainder of the year will affect the classification.

The Fund paid a $0.125 dividend for shareholders of record as of the close of
business on February 26, 2007 on March 30, 2007. The Fund paid $0.6 million in cash and issued 52,650 additional shares of common stock at $8.633 per share, in payment of such dividend.



23



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##### Table of Contents

Portfolio Investments

The following table includes significant new and follow-on investments during the quarter ended March 31, 2008 (in thousands):



|                           |  |      |       |           |   |      |  |         |       |       |   |     |  |   |       
|-------------------------- |  | ---- | ----- | --------- | - | ---- |  | ------- | ----- | ----- | - | --- |  | - | ------
|                           |  | New  |       | Follow-On |   |     
|Portfolio Company          |  | Cash |       | Noncash   |   | Cash |  | Noncash |       | Total
|Infinia Corporation        |  | $    |      |           | $ |     |  | $       | 5,000 |       | $ |    |  | $ | 5,000 
|1848 Capital Partners LLC  |  |      | 3,000 |           |   |     |  |         |      |       |   |    |  |   | 3,000 
|Riptide Entertainment, LLC |  |      |      |           |   |     |  |         | 1,600 |       |   |    |  |   | 1,600 
|Nickent Golf, Inc.         |  |      |      |           |   |     |  |         | 1,000 |       |   | 60  |  |   | 1,060 
|Various others             |  |      |      |           |   |     |  |         |      |       |   | 161 |  |   | 161   
|                           |  |      |       |           |   |      |  |         |       |       |   |     |  |   |       
|                           |  | $    | 3,000 |           | $ |     |  | $       | 7,600 |       | $ | 221 |  | $ | 10,821
|                           |  |      |       |           |   |      |  |         |       |       |   |     |  |   |       

The following table includes significant new and follow-on investments during the quarter ended
March 31, 2007 (in thousands):



|                                     |  |      |       |           |   |      |  |         |       |       |   |     |  |   |      
|------------------------------------ |  | ---- | ----- | --------- | - | ---- |  | ------- | ----- | ----- | - | --- |  | - | -----
|                                     |  | New  |       | Follow-On |   |     
|Portfolio Company                    |  | Cash |       | Noncash   |   | Cash |  | Noncash |       | Total
|Equus Media Development Company, LLC |  | $    | 5,000 |           | $ |     |  | $       |      |       | $ |    |  | $ | 5,000
|RP&C International Investments LLC   |  |      |      |           |   |     |  |         | 2,009 |       |   |    |  |   | 2,009
|Riptide Entertainment, LLC           |  |      |      |           |   |     |  |         | 360   |       |   |    |  |   | 360  
|ConGlobal Industries Holding, Inc.   |  |      |      |           |   |     |  |         |      |       |   | 101 |  |   | 101  
|Equus Media Finance Company, LLC     |  |      | 100   |           |   |     |  |         |      |       |   |    |  |   | 100  
|Various others                       |  |      |      |           |   |     |  |         | 150   |       |   | 11  |  |   | 161  
|                                     |  |      |       |           |   |      |  |         |       |       |   |     |  |   |      
|                                     |  | $    | 5,100 |           | $ |     |  | $       | 2,519 |       | $ | 112 |  | $ | 7,731
|                                     |  |      |       |           |   |      |  |         |       |       |   |     |  |   |      



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##### Table of Contents

Subsequent Events

On April 1, 2008, the Fund sold U.S. Treasury bills for $35.0 million and repaid the margin loan.

On
May 8, 2008, the fun invested an additional $3.0 million as a follow-on investment in Riptide Entertainment, LLC in the form of an 8% promissory note.



|Item 3. | Quantitative and Qualitative Disclosure about Market Risk
|------- | ---------------------------------------------------------

The Fund is subject to financial market risks, including changes in interest rates with respect to investments in debt securities and outstanding debt payable, as well as changes in marketable equity security prices.
The Fund does not use derivative financial instruments to mitigate any of these risks. The return on investments is generally not affected by foreign currency fluctuations.

The Funds investments in portfolio securities consist of some fixed rate debt securities. Since the debt securities are generally priced at a fixed
rate, changes in interest rates do not directly impact interest income. In addition, changes in market interest rates are not typically a significant factor in the determination of fair value of these debt securities, since the securities are
generally held to maturity. Their fair values are determined on the basis of the terms of the debt security and the financial condition of the issuer.

A major portion of the Funds investment portfolio consists of debt and equity investments in private companies. Modest changes in public market equity prices generally do not significantly impact the estimated
fair value of these investments. However, significant changes in market equity prices can have a longer-term effect on valuations of private companies, which could affect the carrying value and the amount and timing of gains or losses realized on
these investments. A small portion of the investment portfolio also consists of common stocks in publicly traded companies. These investments are directly exposed to equity price risk, in that a hypothetical ten percent change in these equity prices
would result in a similar percentage change in the fair value of these securities.

The Fund is classified as a non-diversified
investment company under the Investment Company Act, which means the Fund is not limited in the proportion of its assets that may be invested in the securities of a single user. The value of one segment called Alternative Energy includes one
portfolio company and was 24.8% of the net asset value and 32.0% of the Funds investments in portfolio company securities (at fair value) at March 31, 2008. Changes in business or industry trends or in the financial condition, results of
operations, or the markets assessment of any single portfolio company will affect the net asset value and the market price of the Funds common stock to a greater extent than would be the case if the Fund were a diversified
company holding numerous investments.



|Item 4. | Controls and Procedures
|------- | -----------------------

The Fund maintains
disclosure controls and other procedures that are designed to ensure that information required to be disclosed by the Fund in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is accumulated and communicated to the Funds management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.

The Funds management, with the participation of the Funds Chief Executive Officer and
Chief Financial Officer, have evaluated the effectiveness of the design and operations of the Funds disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31,
2008. Based on their evaluation, the Funds Chief Executive Officer and Chief Financial Officer concluded that the Funds disclosure controls and procedures were effective at a reasonable assurance level. There has been no change in the
Funds internal control over financial reporting during the quarter ended March 31, 2008, that has materially affected, or is reasonably likely to materially affect, the Funds internal control over financial reporting.

Part II. Other Information



|Item 6. | Exhibits
|------- | --------



|3. | Articles of Incorporation and by-laws
|-- | -------------------------------------



| | (a) | Restated Certificate of Incorporation of the Fund, as amended. [Incorporated by reference to Exhibit 3(a) to Registrants Annual Report on Form 10-K for the year ended
December 31, 2007]
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Certificate of Merger dated June 30, 1993, between the Fund and Equus Investments Incorporated [Incorporated by reference to Exhibit 3(c) to Registrants Annual Report on
Form 10-K for the year ended December 31, 2007]
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | (c) | Amended and Restated Bylaws of the Fund. [Incorporated by reference to Exhibit 3(c) to Registrants Annual Report on Form 10-K for the year ended December 31, 2007]
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10. | Material Contracts
|--- | ------------------



| | (a) | Investment Advisory Agreement dated June 30, 2005, between the Fund and Moore, Clayton Capital Advisors, Inc. [Incorporated by reference to Exhibit 10(a) to Registrants
Quarterly Report on Form 10-Q for the quarter ended June 30, 2005]
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Administration Agreement dated June 30, 2005, between the Fund and Equus Capital Administration Company. [Incorporated by reference to Exhibit 10(b) to Registrants
Quarterly Report on Form 10-Q for the quarter ended June 30, 2005]
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Safekeeping Agreement between the Fund and The Frost National Bank dated March 15, 2004. [Incorporated by reference to Exhibit 10(f) to Registrants Annual Report on
Form 10-K for the year ended December 31, 2004]
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Form of Indemnification Agreement between the Fund and its directors and certain officers. [Incorporated by reference to Exhibit 10(g) to Registrants Annual Report on Form
10-K for the year ended December 31, 2004]
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | Form of Release Agreement between the Fund and certain of its officers and former officers. [Incorporated by reference to Exhibit 10(h) to Registrants Annual Report on Form
10-K for the year ended December 31, 2004]
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | Joint Code of Ethics of the Fund and Moore Clayton Capital Advisors, Inc. (Rule 17j-1) [Incorporated by reference to Exhibit 3(c) to Registrants Annual Report on Form 10-K for
the year ended December 31, 2007]
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|31. | Rule 13a-14(a)/15d-14(a) Certifications
|--- | ---------------------------------------



| | 1. | Certification by Chairman and Chief Executive Officer
| | -- | -----------------------------------------------------



| | 2. | Certification by Chief Financial Officer
| | -- | ----------------------------------------



|32. | Section 1350 Certifications
|--- | ---------------------------



| | 1. | Certification by Chairman and Chief Executive Officer
| | -- | -----------------------------------------------------



| | 2. | Certification by Chief Financial Officer
| | -- | ----------------------------------------

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed by the undersigned, thereunto duly authorized.



|                   |  |                                         
|------------------ |  | ----------------------------------------
|                   |  | EQUUS TOTAL RETURN, INC.                
|                   | 
|Date: May 15, 2008 |  | /s/ Kenneth I. Denos                    
|                   |  | Kenneth I. Denos Chief Executive Officer



26