UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                      For the Period Ended: September 30, 1997

                         Commission File Number 01-16532

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

              Delaware                            13-3486106
      (State or other jurisdiction      (IRS Employer Identification No.)
    of incorporation or organization)

                           1345 Avenue of the Americas
                            New York, New York 10105
              (Address of principal executive offices and zip code)

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

           Securities registered pursuant to Section 12(b) of the Act:

        Title of each class         Name of each exchange on which registered
               None                              Not Applicable

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

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

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


<PAGE>
               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.

                                TABLE OF CONTENTS

                         PART I - FINANCIAL INFORMATION

                                                           Page
Item 1.  Financial Statements

Statements of Assets, Liabilities and Partners'
  Capital as of September 30, 1997 and December 31, 1996         5

Statements of Operations - For the Three and Nine Months
  Ended September 30, 1997 and 1996                              6

Statements of Changes in Net Assets - For the Nine
  Months Ended September 30, 1997 and 1996                       7

Statements of Cash Flows - For the Nine Months Ended
 September 30, 1997 and 1996                                     8

Statement of Changes in Partners' Capital -
  For the Nine Months Ended September 30, 1997                   9

Schedule of Portfolio Investments - September 30, 1997          10

Supplemental Schedule of Realized Gains and Losses
  For the Nine Months Ended September 30, 1997                  13

Notes to Financial Statements                                   14


Item 2.  Management's Discussion and Analysis of
  Financial Condition and Results of Operations                 21


                           PART II - OTHER INFORMATION

Item 6.  Exhibits                                               25



<PAGE>
<TABLE>
<CAPTION>
               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
             STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL

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

                                                                                  September 30, 1997
ASSETS:                                                            Notes                  Unaudited          December 31, 1996
                                                                 --------           ------------------       -----------------
    Investments                                                   2,10,12
        Enhanced Yield Investments at Value-
            Managed Companies
               (amortized cost of $12,155,290 at
               September 30, 1997 and $46,361,524
               at December 31, 1996)                                                 $     4,847,290          $     47,988,305
            Non-Managed Companies
               (amortized cost of $10,729,275 at
               September 30, 1997 and $12,961,638
               at December 31, 1996)                                                       6,114,440                14,814,796
        Temporary Investments
               (at amortized cost)                                                         8,872,305                20,550,637

    Cash                                                                                      79,717                    62,948
    Interest Receivable                                            2,12                       95,608                   876,677
    Note Receivable                                                 3,4                      846,890                 1,178,728
    Receivable  for Investment Sold                                                          498,474                    77,712
    Prepaid Expenses                                                                               -                     2,511
                                                                                     ---------------          ---------------- 
TOTAL ASSETS                                                                         $    21,354,724          $     85,552,314
                                                                                     ===============          ================


LIABILITIES AND PARTNERS' CAPITAL

    Liabilities
        Professional Fees Payable                                    9               $        60,905          $         52,641
        Independent General Partners' Fees Payable                   8                         9,117                    20,846
        Fund Administrative Expenses Payable                         7                        54,729                    43,085
        Other Accrued Liabilities                                                              3,249                     6,101
                                                                                     ---------------          ----------------
            Total Liabilities                                                                128,000                   122,673

    Partners' Capital
        Managing General Partner                                    3,4                      730,946                 1,099,814
        Limited Partners (221,072 Units)                             4                    20,495,778                84,329,827
                                                                                     ---------------          ----------------
            Total Partners' Capital                                                       21,226,724                85,429,641

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                              $    21,354,724          $     85,552,314
                                                                                     ===============          ================



               See the Accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<S>                                                       <C>                <C>               <C>                 <C>
                                                             For the Three Months Ended                For the Nine Months Ended
                                                           -------------------------------------------------------------------------
                                                           September 30,      September 30,       September 30,        September 30,
                                                               1997               1996                 1997               1996
                                                           ------------       ------------        -------------       -------------
INVESTMENT INCOME- Notes 2,12:
      Interest                                             $   231,192       $   1,171,274        $   1,856,007       $   3,500,251
      Discount                                                      --               4,950                   --              16,511
      Dividend                                                      --                  --               67,331           1,852,195
                                                           -----------       -------------        -------------       -------------
                    TOTAL INVESTMENT INCOME                    231,192           1,176,224            1,923,338           5,368,957

EXPENSES:
      Investment Advisory Fee- Note 6                          218,587             211,996              687,608             660,839
      Fund Administration Fees and Expenses - Note 7           101,196             175,810              330,334             593,088
      Independent General Partners'
       Fees and Expenses - Note 8                               36,844              47,262              106,885             141,382
      Professional Fees - Note 9                                 6,212             101,931              110,730             109,233
      Insurance Fees                                                --                  --                5,126               4,410
      Valuation Expenses                                         1,700                  --                4,400               9,446
                                                           -----------       -------------        -------------       -------------
                    TOTAL EXPENSES                             364,539             536,999            1,245,083           1,518,398
                                                           -----------       -------------        -------------       -------------

NET INVESTMENT INCOME                                         (133,347)            639,225              678,255           3,850,559

NET CHANGE IN UNREALIZED DEPRECIATION
      ON INVESTMENTS- Note 12                                3,394,533          15,051,391          (15,402,772)         23,522,984

NET REALIZED GAINS (LOSSES) ON INVESTMENTS - Note 10        (4,303,311)         (6,605,542)          12,855,950         (17,501,651)
                                                           -----------       -------------        -------------       -------------

NET INCREASE (DECREASE) IN NET ASSETS
      RESULTING FROM OPERATIONS                            $(1,042,125)      $   9,085,074        $  (1,868,567)      $   9,871,892
                                                           ===========       =============        =============       =============




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



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

<S>                                                                           <C>                         <C>
                                                                                       For the Nine Months Ended
                                                                                ----------------------------------------------
                                                                                September 30, 1997          September 30, 1996
                                                                                ------------------          ------------------
    FROM OPERATIONS:

         Net Increase (Decrease) in Net Assets
           Resulting from Operations                                            $      (1,868,567)          $       9,871,892

         Cash Distributions to Partners                                               (62,002,512)                (15,020,637)

         Reduction in Managing General Partners'
           Contribution                                                                  (331,838)                    (40,458)
                                                                                -----------------           -----------------

         Total Decrease                                                               (64,202,917)                 (5,189,203)

     NET ASSETS:

         Beginning of Period                                                           85,429,641                  88,842,112

         End of Period                                                          $      21,226,724           $      83,652,909
                                                                                =================           =================




               See the Accompanying Notes to Financial Statements.

</TABLE>



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

<S>                                                                        <C>                         <C>

                                                                                           For the Nine Months Ended
                                                                                   ----------------------------------------------
INCREASE (DECREASE) IN CASH                                                       September 30, 1997           September 30, 1996
   CASH FLOWS FROM OPERATING ACTIVITIES:
         Interest and Discount Income                                              $       1,894,684            $       2,905,311
         Fund Administration Fees & Expenses                                                (318,690)                    (605,681)
         Investment Advisory Fee                                                            (687,608)                    (660,839)
         Independent General Partners' Fees and Expenses                                    (118,614)                    (131,146)
         Valuation Expenses                                                                   (7,251)                      (7,586)
         Sale (Purchase) of Temporary Investments, Net                                    12,488,055                    8,250,397
         Proceeds from Sales and Principal Payments of
              Enhanced Yield Investments                                                  48,873,786                    5,419,496
         Professional Fees                                                                  (102,090)                    (103,199)
         Insurance Fees                                                                       (2,991)                        (375)
                                                                                   -----------------            -----------------
   Net Cash Provided by Operating Activities                                              62,019,281                   15,066,378
   CASH FLOWS FROM FINANCING ACTIVITIES:
         Cash Distributions to Partners                                                  (62,002,512)                 (15,020,637)
   Net Cash Used in Financing Activities                                                 (62,002,512)                 (15,020,637)
                                                                                   -----------------            -----------------
   Net Increase in Cash                                                                       16,769                       45,741
                                                                                   -----------------            -----------------
   Cash at the Beginning of the Period                                                        62,948                       39,181
   Cash at the End of the Period                                                   $          79,717            $          84,922
                                                                                   =================            =================


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

   Net (Decrease) Increase In Net Assets
        Resulting From Operations                                                  $      (1,868,567)           $       9,871,892

   Adjustments to Reconcile Net (Decrease) Increase in Net Assets
         Resulting from Operations to Net Cash Provided by Operating
         Activities:
   Decrease in Investments                                                                48,505,893                   31,171,546
   Decrease (Increase) in Accrued Interest and Investment
      Income                                                                                 (28,655)                  (2,463,649)
   Decrease in Prepaid Expenses                                                                2,511                        4,412
   (Decrease) Increase in Other Accrued Liabilities                                           (2,852)                       1,859
   Increase (Decrease) in Fund Administration Expenses Payable                                11,644                      (12,593)
   Net Change in Unrealized (Appreciation)
      Depreciation on Investments                                                         15,402,772                  (23,522,984)
   (Decrease) Increase in Independent General
       Partners' Fees Payable                                                                (11,729)                      10,236
   Increase in Professional Fees Payable                                                       8,264                        5,659
                                                                                   -----------------            -----------------
   Total Adjustments                                                                      63,887,848                    5,194,486
                                                                                   -----------------            -----------------
   Net Cash Provided by Operating Activities                                       $      62,019,281            $      15,066,378
                                                                                   =================            =================




               See the Accompanying Notes to Financial Statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                                   (UNAUDITED)

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

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

Partners' Capital at January 1, 1997                                             $ 1,099,814      $ 84,329,827      $   85,429,641
Cash Distributions to Partners                                                       (18,345)      (61,984,167)        (62,002,512)
Reduction in Managing General Partners' Contribution               3                (331,838)                -            (331,838)
Allocation of Net Investment Income                               11                   6,783           671,472             678,255
Allocation of Net Unrealized Depreciation
  on Investments                                                  12                (154,028)      (15,248,744)        (15,402,772)
Allocation of Net Realized Gains on Investments                                      128,560        12,727,390          12,855,950
                                                                                 -----------      ------------      --------------
Partners' Capital at September 30, 1997                                          $   730,946      $ 20,495,778      $   21,226,724
                                                                                 ===========      ============      ==============




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



<PAGE>
<TABLE>
<CAPTION>
                                                EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                                       SCHEDULE OF PORTFOLIO INVESTMENTS
                                                                   SEPTEMBER 30, 1997
                                                                     (UNAUDITED)
<S>                 <C>                                            <C>         <C>            <C>           <C>         <C>

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

                   ENHANCED YIELD INVESTMENTS
                   MANAGED COMPANIES

                   MISCELLANEOUS MANUFACTURING

                   QUANTEGY ACQUISITION CORP.
                    (FORMERLY AMPEX RECORDING MEDIA)
    123.50 Shares  Quantegy Acquisition Corp., Common Stock        11/13/95    $  2,722,290   $ 2,722,290  $  2,722,290
                                                                               ------------   -----------  ------------
                                                                                  2,722,290     2,722,290     2,722,290       13.73%
                                                                               ------------   -----------  ------------------------

                     LEATHER AND LEATHER PRODUCTS

                     LEATHER U.S., INC. - NOTE 12
                     (FORMERLY UNITED STATES LEATHER HOLDINGS, INC.)
       621.90 Shares Leather U.S., Inc., Common Stock               04/09/96     7,308,000      7,308,000             0
                                                                               -----------   ------------    ----------
                                                                                 7,308,000      7,308,000             0        0.00
                                                                               -----------   ------------    ----------------------
                    MISCELLANEOUS RETAIL

                     R&S/STRAUSS, INC.
                     (FORMERLY WSR ACQUISITION CORP.)
   $       935,000   R&S/Strauss, Inc.,
                      Sr. Sub. Nt. 15% due 05/31/00*                06/13/90       935,000       935,000       935,000
   $     1,190,000   R&S/Strauss, Inc.,
                      Sr. Sub. Nt. 15% due 05/31/00*                06/13/90     1,190,000     1,190,000     1,190,000
                                                                               -----------   -----------   -----------
                                                                                 2,125,000     2,125,000     2,125,000        10.71
                                                                               -----------   -----------   ------------------------



                     TOTAL INVESTMENT IN  MANAGED  COMPANIES                   $12,155,290   $12,155,290   $ 4,847,290        24.44%
                     ---------------------------------------                   -----------   -----------   -------------------------


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


<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                              SEPTEMBER 30, 1997
                                           (CONTINUED)(UNAUDITED)
<S>                 <C>                                          <C>            <C>           <C>           <C>         <C>
    PRINCIPAL                                                      INVESTMENT   INVESTMENT    AMORTIZED      VALUE       % OF TOTAL
  AMOUNT/SHARES                    INVESTMENT                         DATE         COST         COST        (NOTE 2)     INVESTMENTS
-------------------  -------------------------------------------- ------------  ---------- ------------- ------------- -------------


                     NON-MANAGED  COMPANIES

                     CONSUMER PRODUCTS MANUFACTURING

                     LEXMARK INTERNATIONAL GROUP, INC. - NOTES 10,12
    115,883 Shares   Lexmark International Group, Inc.,
                     Class B Common Stock (c)                       03/27/91   $   772,525   $    772,525   $  3,824,139
                                                                               -----------   ------------   ------------
                                                                                   772,525        772,525      3,824,139      19.28%
                                                                               -----------   ------------   -----------------------

                     DISTRIBUTION SERVICES

                     WESTERN PIONEER, INC. - NOTE 12
   $     4,730,800   Western Pioneer, Inc.,
                       Sr. Sub. Nts. 10% due 11/30/07*(b)           11/30/94       653,289        653,289      1,419,240
     81,081 Warrants Western Pioneer, Inc.,
                       Common Stock Purchase Warrants **            11/30/94             0              0              0
                                                                                 ---------    -----------    -----------
                                                                                   653,289        653,289      1,419,240       7.16
                                                                                 ---------    -----------    ----------------------

                     HEALTH SERVICES

                     MTI HOLDINGS, INC.
   $       113,386   MTI Holdings, Inc.,
                      Sr. Sec. Nt. 12% due 07/01/03*                08/06/96       113,386        113,386       113,386
      8,125 Shares   MTI Holdings, Inc., Common Stock**             08/06/96       121,875        121,875       121,875
     2,264 Warrants  MTI Holdings, Inc., Common Stock
                      Purchase Warrants                             08/06/96             0              0             0
                                                                                ----------     ----------   -----------
                                                                                   235,261        235,261       235,261        1.19
                                                                                ----------     ----------   -----------------------

                     MISCELLANEOUS RETAIL

                     PERGAMENT HOME CENTERS, INC.- NOTES 10,12
   $     2,543,200   Pergament Acq. Corp., Home Centers, Inc.
                      Floating Rate Demand Note due 07/31/00*(b)     10/18/91    2,336,200      2,336,200       635,800
      299.2 Shares   Pergament Holdings, Corp.,
                      Common Stock Class B **                        02/28/89    6,732,000      6,732,000             0
   109.2571 Shares   Pergament Holdings, Corp.,
                      Common Stock Class C **                        02/28/89            0              0             0
                                                                               -----------    -----------   -----------
                                                                                 9,068,200      9,068,200       635,800        3.21
                                                                               -----------    -----------   -----------------------

                     TOTAL INVESTMENT IN NON-MANAGED  COMPANIES                $10,729,275    $10,729,275   $ 6,114,440       30.84%
                     ------------------------------------------                 ----------    -----------   ------------------------


                     TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS            $22,884,565    $22,884,565   $10,961,730       55.28%
                     ----------------------------------------------            -----------    -----------   ------------------------
</TABLE>


                             See the Accompanying Notes to Financial Statements.

<PAGE>
<TABLE>
<CAPTION>
                              EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                                 SEPTEMBER 30, 1997
                                             (CONCLUDED) (UNAUDITED)

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

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

                     TEMPORARY INVESTMENTS

                     COMMERCIAL PAPER

   $    3,500,000    UNIFUNDING, 5.51% due 10/10/97                   7/15/97  $  3,453,395   $    3,495,178   $  3,495,178
   $    2,500,000    AAFC, 5.53% due 11/19/97                         7/15/97     2,451,228        2,481,183      2,481,183
   $    1,300,000    ALAMO FUNDING, 5.54% due 11/15/97                9/05/97     1,291,998        1,297,199      1,297,199
   $    1,600,000    WINDMILL FUNDING CORP, 5.65% due 10/06/97        9/30/97     1,598,493        1,598,745      1,598,745
                                                                               ------------   --------------   ------------
                     TOTAL INVESTMENT IN COMMERCIAL PAPER                      $  8,795,114   $    8,872,305   $  8,872,305   44.73%
                     ------------------------------------                      ------------   --------------   --------------------


                     TOTAL TEMPORARY INVESTMENTS                               $  8,795,114   $    8,872,305   $  8,872,305   44.73%
                     ---------------------------                               ------------   --------------   --------------------

                     TOTAL INVESTMENT PORTFOLIO                                $ 31,679,679   $   31,756,870   $ 19,834,035  100.00%
                     --------------------------                                ============   ==============   ====================




                     SUMMARY OF  INVESTMENTS
                     Subordinated Notes                                        $  5,227,875   $    5,227,875   $  4,293,426   21.65%
                     Common Stock and Warrants                                   17,656,690       17,656,690      6,668,304   33.62
                     Temporary Investments                                        8,795,114        8,872,305      8,872,305   44.73
                                                                               ------------   --------------   --------------------

                     TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS            $ 31,679,679   $   31,756,870   $ 19,834,035  100.00%
                     ----------------------------------------------            ============   ==============   ====================


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

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




<PAGE>
<TABLE>
<CAPTION>
               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
               SUPPLEMENTAL SCHEDULE OF REALIZED GAINS AND LOSSES
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
                                   (UNAUDITED)

<S>                                               <C>                 <C>              <C>             <C>              <C>
                                                            PAR VALUE
                                            DATE OF         OR NUMBER       AMORTIZED        NET            REALIZED
SECURITY                                  TRANSACTION       OF SHARES         COST        PROCEEDS         GAIN (LOSS)

Polaris Pool Systems, Inc.
   Common Stock                             1/15/97               --      $      --      $       542 (A)  $       542

Lexmark International Group, Inc.
   Common Stock                             various             22,641        150,941        582,684          431,743

Bank United Corp.
   Common Stock                             various            383,872      2,575,631     10,740,739        8,165,108

Lexmark International Inc.
   14.25% Sr. Sub. Note                     3/24/97        $24,103,269     24,103,269     28,162,757        4,059,488

Total Net Realized Gains for the
  Three Months Ended March 31, 1997                                       $26,829,841    $39,486,722      $12,656,881
                                                                          ===========    ===========      ===========

Polaris Pool Systems, Inc.
   Common Stock                             5/15/97               --      $      --      $       796 (A)  $       796

Lexmark International Group, Inc.
   Common Stock                             various            171,037      1,140,252      4,443,681        3,303,429

Bank United Corp.
   Common Stock                             various             48,531        325,624      1,523,779        1,198,155


Total Net Realized Gains for the
 Three Months Ended June 30, 1997                                         $ 1,465,876    $ 5,968,256      $ 4,502,380
                                                                          ===========    ===========      ===========

RI Holdings, Inc.
   16% Sr. Sub. Note                        7/02/97        $12,972,582    $ 5,823,918    $   202,165      $(5,621,753)

RI Holdings, Inc.
   Common Stock                             7/02/97            592,348      1,506,333              -       (1,506,333)


Haddon Craftsman
   Common Stock                             9/19/97               --             --            4,546 (A)        4,546

Lexmark International Group, Inc.
   Common Stock                             various            106,349        708,997      3,529,226        2,820,229


Total Net Realized Losses for the 
   Three Months Ended September 30, 1997                                  $ 8,039,248    $ 3,735,937      $(4,303,311)
                                                                          ===========    ===========      ===========

Total Net Realized Gain for the 
   Nine Months Ended September 30, 1997                                   $36,334,965    $49,190,915      $12,855,950
                                                                          ===========    ===========      ===========




                                              See the Accompanying Notes to Financial Statements.

</TABLE>


<PAGE>


               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                          NOTES TO FINANCIAL STATEMENTS
                                 SEPTEMBER 30, 1997
                                   (UNAUDITED)

1.  Organization and Purpose

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

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

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

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

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


<PAGE>
2.  Significant Accounting Policies

Basis of Accounting

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

Valuation of Investments

     Securities  are valued at market or fair  value.  Market  value is used for
securities  for which market  quotations are readily  available.  For securities
without a readily  ascertainable  market value,  fair value is determined,  on a
quarterly  basis, in good faith by the General  Partners of the Retirement Fund.
The total value of securities  without a readily  ascertainable  market value is
$7,137,591  and  $40,903,485  as of  September  30, 1997 and  December 31, 1996,
respectively,  representing  33.4% and 47.8% of total assets,  respectively.  In
connection with such determination, the Managing General Partner has established
a valuation  committee  comprised of senior  executives to assess the Retirement
Fund's portfolio and make recommendations  regarding the value of the Retirement
Fund's  portfolio  securities.  This valuation  committee uses available  market
information and appropriate valuation  methodologies.  In addition, the Managing
General  Partner has retained  Arthur D. Little,  Inc., a nationally  recognized
independent valuation consultant, to review such valuations.

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

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

    Interest Receivable on Investments

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


<PAGE>



    Payment-In-Kind Securities

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

    Income Taxes

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

    Investment Transactions

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

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

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

    Sales, Marketing and Offering Expenses and Sales Commissions

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

3.  Note Receivable

     On July 22, 1993,  pursuant to the terms of the  Retirement  Fund's Amended
and  Restated  Agreement  of Limited  Partnership,  Alliance  Corporate,  as the
successor  Managing  General  Partner of the Retirement  Fund, has contributed a
non-interest  bearing  promissory note (the "Note") to the Retirement Fund in an
aggregate  amount equal to 1.01% of the aggregate Net Capital  Contributions  of
all Limited Partners (less distributions  representing returns of capital).  Net
Capital  Contributions  are comprised of gross offering  proceeds,  after giving
effect  to  volume   discounts   (and  after   netting  of  sales   commissions,
organization,  offering  and sales and  marketing  expenses),  less  returns  of
capital  distributed to Limited  Partners.  The principal  amount of the Note is
reduced   proportionally   as  such  Limited  Partners   receive   distributions
representing  additional returns of capital. Such distributions received for the
nine months ended  September 30, 1997,  resulted in a $331,838  reduction of the
principal  amount of the Note.  The  promissory  note of  Equitable  Capital was
canceled upon the contribution of Alliance Corporate's Note.

4.  Capital Contributions

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

    The Limited Partners' total capital  contributions were $220,848,730,  after
giving  effect to volume  discounts  allowed of  $223,270.  Equitable  Capital's
aggregate  capital  contribution  was in the  form of a  promissory  note in the
principal amount of $2,052,050.  On July 22, 1993,  Equitable Capital's note was
canceled and Alliance Corporate,  as successor Managing General Partner,  made a
capital  contribution  in the  form  of a  promissory  note,  on such  date,  as
described  in Note  3.  Sales,  marketing  and  offering  expenses  and  selling
commissions  have  been  charged  against  proceeds  resulting  in  net  capital
contributed by Limited Partners of $203,146,793.

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

5.  Sales, Marketing and Offering Expenses and Sales Commissions

    The Retirement  Fund expended a total of $416,052 for the  reimbursement  of
sales and marketing  expenses.  Aggregate  sales and  marketing  expenses of the
Funds may not exceed $2,528,415 or 0.5% of the aggregate  capital  contributions
and were allocated  proportionately  to the number of Units issued by each Fund.
Aggregate sales and marketing expenses for the Funds totaled $951,683.

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

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

6.  Investment Advisory Fee

    As of July 22,  1993,  Alliance  Corporate  has been  receiving  a quarterly
Investment  Advisory  Fee, at the annual rate of 1.0% of the  Retirement  Fund's
Available Capital, with a minimum annual payment of $2,000,000  collectively for
the  Funds,  less  80%  of  commitment,   transaction,  investment  banking  and
"break-up"  or  other  fees  related  to  the  Retirement   Fund's   investments
("Deductible  Fees").  Available  Capital is defined as the sum of the aggregate
Net Capital  Contributions of the Partners less the cumulative amount of returns
of capital distributed to Partners and realized losses from investments.

     As stated in the Partnership  Agreement,  the Retirement  Fund's  allocable
share of the Minimum  Amount is $874,350 or  $218,588  per  quarter.  Investment
Advisory  Fee  for the  nine  months  ended  September  30,  1997,  reflect  and
adjustment for the  difference  between the Minimum Amount due to the Investment
Advisor and what was paid for the  quarters  ending  December 31, 1996 and March
31, 1997.

     The Investment  Advisory Fee is calculated and paid quarterly,  in advance.
The  Investment  Advisory Fees paid by the  Retirement  Fund for the nine months
ended September 30, 1997 and 1996 were $687,608 and $660,839, respectively.

7.  Fund Administration Fee and Expenses

     As compensation  for its services during the fourth through seventh year of
operation  of  the  Funds,  ML  Fund  Administrators,  Inc.  ("MLFAI"),  as  the
Retirement Fund  administrator,  is entitled to receive from the Funds an annual
amount equal to the greater of the (i) Minimum Fee and (ii) the Funds'  prorated
proportion  (based on the  number of Units  issued by the Funds) of 0.45% of the
excess of the aggregate  net offering  proceeds of the Units issued by the Funds
over 50% of the aggregate amount of capital  reductions of the Funds (subject to
an  annual  maximum  of $3.2  million).  The  Minimum  Fee is 1.0% of the  gross
offering  price  of Units in the  Funds,  but not  greater  than  $500,000.  The
Retirement Fund Administration Fee is calculated and paid quarterly, in advance.

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

     The Retirement Fund Administration Fees paid by the Retirement Fund for the
nine  months  ended  September  30,  1997 and 1996 were  $75,000  and  $489,705,
respectively.

     Beginning October 13, 1996, MLFAI is entitled to receive  reimbursement for
all direct-out-of-pocket expenses incurred in connection with the administration
of the  Retirement  Fund,  commencing  on October 13, 1992.  For the nine months
ended September 30, 1997 and 1996, the Retirement  Fund incurred  Administrative
expenses of $255,334 and $103,383,  respectively,  which consisted  primarily of
printing,  audit and tax return preparation and custodian fees paid for by MLFAI
on behalf of the Retirement Fund.
<PAGE>
8.  Independent General Partners' Fees and Expenses

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

     For the nine months ended  September 30, 1997 and 1996, the Retirement Fund
incurred $106,885 and $141,382,  respectively,  of Independent General Partners'
Fees and Expenses.

9.  Related Party Transactions

     For the nine months ended  September 30, 1997 and 1996, the Retirement Fund
paid expenses of $9,108 and $99,751,  respectively, as reimbursement for amounts
paid for legal  services  provided  by  Equitable  Life in  connection  with the
Retirement  Fund's  Enhanced Yield  Investments.  The Retirement  Fund is paying
Alliance  Corporate an Investment  Advisory Fee for its services as described in
Note 6.  Additionally,  the  Retirement  Fund paid sales  commissions  to Equico
Securities, a related party, as described in Note 5.

10. Investment Transactions

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

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

     On  January  2,  April 2 and July 1, 1997,  the  Retirement  Fund  received
$51,224, $50,878 and $52,755, respectively, from Pergament Home Centers, Inc. as
a principal  paydown of the  Floating  Rate  Demand Note held by the  Retirement
Fund. No gain, loss or income has been recorded on this transaction.

     On January 15 and May 15, 1997,  the  Retirement  Fund received  additional
proceeds of $542 and $796,  respectively,  from Polaris Pool  Systems,  Inc. The
money represents proceeds from the sale of the investments from prior years that
have been held in escrow for future  adjustments  and  expenses  not paid on the
sale dates.

     On March 24, 1997,  the  Retirement  Fund  received a prepayment of Lexmark
International,  Inc.'s  14.25% Senior  Subordinated  Notes  outstanding,  in the
principal amount of $24,103,269 together with a prepayment penalty of $4,059,488
and  $791,892  of  accrued  interest.  The  transaction  resulted  in a gain  of
$4,059,488 to the Retirement Fund.

     On April 8, 1997,  the  Retirement  Fund received a dividend of $6,794 from
Bank United Corp.

     During the nine months ended  September 30, 1997, the Retirement  Fund sold
432,403  shares of Bank United Corp.  Class A Common Stock for  $12,264,518  and
realized a gain of $9,363,263.

     On July 2, 1997, the Retirement  Fund sold its RI Holdings Inc., 16% Senior
Subordinated  Notes for $202,165 and realized a loss of  $5,261,753 on the sale.
The write-off of the common stocks resulted in a realized loss of $1,506,333.
<PAGE>
     On September 19, 1997, the Retirement Fund received  additional proceeds of
$4,546 from Haddon  Craftsman.  This  represents  proceeds  from the sale of the
investment from prior years that have been held in escrow.

     During the nine months ended  September 30, 1997, the Retirement  Fund sold
300,027  shares of Lexmark  International  Group,  Inc. Class B Common Stock for
$8,555,591 resulting in a gain of $6,555,401.

     All of the proceeds  received during the third quarter of 1997 are expected
to be  distributed  to Limited  Partners on record as of September  30, 1997, on
November 14, 1997.

     As of September 30, 1997, the Retirement Fund had remaining  investments in
3 Managed  Companies (a Managed Company is one to which the Retirement Fund, the
Managing  General  Partner or other persons in the  Retirement  Fund's  investor
group  make  significant  managerial  assistance  available)  and 4  Non-Managed
Companies  (a  Non-Managed  Company  is  one to  which  such  assistance  is not
provided)  totaling   $22,884,565   (including  $422,439   capitalized  cost  of
payment-in-kind  securities),  consisting  of  $5,227,875  in  senior  notes and
subordinated notes and $17,656,690 in common stock and purchase warrants.

11.  Allocation  of Profits and Losses

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

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

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

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

     For the nine months ended  September 30, 1997,  earnings were allocated 99%
to the Limited Partners, as a class, and 1% to the Managing General Partner.

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

     For the nine months ended  September 30, 1997, the Retirement Fund recorded
net  unrealized  depreciation  on Enhanced  Yield  Investments of $15,402,772 as
compared to  $23,522,984  of unrealized  appreciation  for the nine months ended
September 30, 1996.  Such  depreciation  was the result of  adjustments in value
made with  respect to the  following  investments  during the nine months  ended
September 30, 1997:

     The  amount  includes  the  reversal  of  $6,545,973,   and  $1,106,041  of
unrealized  appreciation  of Bank United  Corp.  Class A Common Stock due to the
sale of 383,872  shares in February 1997 and the remaining  48,531 shares in May
1997. Due to an increase in the quoted market price of Bank United Corp. Class A
Common Stock and the equity being valued at 100% of the closing  market price as
compared to 90% at December 31, 1996,  the Retirement  Fund recorded  unrealized
appreciation of $143,167 at March 31, 1997.

     Due to the sale of 22,641 shares of Lexmark International Group, Inc. Class
B Common Stock in January 1997,  171,037 shares in May and June 1997 and 106,349
shares  in  July  through  September  1997  the  the  Retirement  Fund  reversed
$1,801,801, $1,646,224 and $2,217,161 of unrealized appreciation, respectively.

     During the first quarter  Leather U.S.,  Inc. common stock was written down
from 100% to 15% of the par. In the second  quarter  ended June 30, 1997 Leather
U.S.,  Inc.  common  stock  was  written  down  from 15% to 0% of the  par.  The
writedowns  resulted in unrealized  depreciation of $7,308,000 to the Retirement
Fund.   

     On March 31, 1997,  Pergament Home Center,  Inc.  Floating Rate Demand Note
was written down from 75% to 50% of par, resulting in unrealized depreciation of
$532,433 to the Retirement  Fund. In the third quarter ended September 30, 1997,
Pergament  Home Centers,  Inc.,  Floating Rate Demand Note was written down from
50% of par to 25% of par. This writedown resulted in unrealized  depreciation of
$532,167.

<PAGE>
     Due to the sale of the 16% Senior  Subordinated  Notes and the write-off of
the common  stocks of RI Holdings,  Inc., in July the  Retirement  Fund reversed
depreciation of $5,583,688 and $1,506,333, respectively.

     During the three months ended September 30, 1997,  Western  Pioneer,  Inc.,
10% Senior  Subordinated  Notes were written down from 50% of par to 30% of par.
This writedown resulted in unrealized depreciation of $946,160.

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

    Pergament Home Centers, Inc.
      Floating Rate Demand Note            July 1, 1996
    MTI Holdings, Inc. 12%
      Senior Secured Note                  October 1, 1996
    Western Pioneer, Inc. 10%
      Senior Subordinated Note             November 30, 1994

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

13. Income Taxes

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

    Pursuant to Statement of Financial Accounting Standards No. 109 - Accounting
for Income Taxes,  the  Retirement  Fund is required to disclose any  difference
between the tax bases of the Retirement Fund's assets and liabilities versus the
amounts reported in the Financial  Statements.  Generally,  the tax bases of the
Retirement Fund's assets  approximate the amortized cost amounts reported in the
Financial  Statements.  This amount is computed  annually  and as of December 31
1996, the tax basis of the Retirement Fund's assets was greater than the amounts
reported  in  the  Financial  Statements  by  $21,205,814.  This  difference  is
primarily  attributable to unrealized  depreciation on investments which has not
been  recognized  for tax purposes.  Additionally,  certain  realized  gains and
losses due to restructurings  were treated differently for tax purposes than for
financial reporting purposes.

14. Subsequent Events

     On November 6, 1997, the Independent General Partners approved an aggregate
cash  distribution of $3,853,285,  for the three months ended September 30, 1997
which will be paid on November 14, 1997 to the Limited Partners. The amount that
will be  distributed  to Limited  Partners  on record as of  September  30, 1997
includes  $1,421,493 of return of capital. On a per Unit basis, the distribution
of $17.43  includes $11.00 of net realized gains and $6.43 of return of capital.
The Managing General  Partner's one percent  allocation of $38,922 is being held
as a Deferred  Distribution  Amount resulting in no distribution to the Managing
General Partner.

     In November  1997,  pursuant  to a Secondary  Offering of shares of Lexmark
International  Group, Inc common stock the Retirement Fund sold 40,986 shares of
common stock at a net price of $29.90 per share. The Fund received $1,225,481 of
net proceeds and realized a gain of $952,240.  The Fund continues to hold 74,897
shares of Lexmark common stock.

<PAGE> 

Item 2. Management's Discussion and Analysis
         of Financial Condition and Results of Operations

    Liquidity and Capital Resources

    Net Proceeds of Offering

    On October 13,  1988,  the  Retirement  Fund  completed  the initial  public
offering of Units,  admitting  26,304  Limited  Partners who  purchased  221,072
Units.  The net proceeds  available for investment by the Retirement  Fund after
such offering less return of capital to Limited Partners were $181,514,467 after
volume discounts,  sales  commissions and  organizational,  offering,  sales and
marketing expenses.

    Investments

     As of September  30, 1997,  the  Retirement  Fund had a total of 7 Enhanced
Yield  Investments  at a net cost of  $22,844,565  (inclusive  of the receipt of
securities  having a capitalized  cost of $422,439  received as  payment-in-kind
interest on certain Enhanced Yield Investments).

    Proceeds from Investments

     During the nine months  ended  September  30,  1997,  the  Retirement  Fund
received proceeds from the following investments:

     On  January  2, April 2, and July 1, 1997,  the  Retirement  Fund  received
$51,224 and $50,878 and $52,755, respectively, from Pergament Home Centers, Inc.
as a principal  paydown of the Floating Rate Demand Note held by the  Retirement
Fund. No gain, loss or income has been recorded on this transaction.

     On January 15 and May 15, 1997,  the  Retirement  Fund received  additional
proceeds of $542, and $796,  respectively,  from Polaris Pool Systems,  Inc. The
money represents proceeds from the sale of the investments from prior years that
have been held in escrow for future  adjustments  and  expenses  not paid on the
sale dates.

     On March 24, 1997,  the  Retirement  Fund  received a prepayment of Lexmark
International,  Inc.'s  14.25% Senior  Subordinated  Notes  outstanding,  in the
principal amount of $24,103,269 together with a prepayment penalty of $4,059,488
and  $791,892  of  accrued  interest.  The  transaction  resulted  in a gain  of
$4,059,488 to the Retirement Fund.

     On April 8, 1997,  the  Retirement  Fund received a dividend of $6,794 from
Bank United Corp.

     On July 2, 1997, the Retirement  Fund sold its RI Holdings Inc., 16% Senior
Subordinated  Notes for $202,165 and realized a loss of  $5,261,753 on the sale.
The write-off the common stock resulted in a realized loss of $1,506,333

     On September 19, 1997, the Retirement Fund received  additional proceeds of
$4,546 from Haddon  Craftsman.  This  represents  proceeds  from the sale of the
investment from prior years that have been held in escrow.

     During the nine months ended  September 30, 1997, the Retirement  Fund sold
432,403  shares of Bank United Corp.  Class A Common Stock for  $12,264,518  and
realized a gain of $9,363,263.

     For the three months ended  September 30, 1997,  the  Retirement  Fund sold
106,349  shares of Lexmark  International  Group,  Inc. Class B Common Stock for
$3,529,226 resulting in a gain $2,820,229.

     During the nine months ended  September 30, 1997, the Retirement  Fund sold
300,027  shares of Lexmark  International  Group,  Inc. Class B Common Stock for
$8,555,591 resulting in a gain of $6,555,401.

     All proceeds  received  during the third quarter of 1997 are expected to be
distributed  to Limited  Partners on record as of September 30, 1997 on November
14, 1997.

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

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

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


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

    Participation in Enhanced Yield Investments

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

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

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

    Results of Operations

     For the three and nine months  ended  September  30, 1997,  net  investment
income  decreased by $772,572 and $3,172,304,  respectively,  as compared to the
same periods in 1996.  Net investment  income is comprised of investment  income
(primarily interest and dividend income) offset by expenses. The decrease in the
1997 net investment income versus the comparative  periods in 1996, reflects the
decrease in interest and  dividend  income  partially  offset by the decrease in
Fund Administration Fees and Expenses.

     For the three and nine months ended September 30, 1997, the Retirement Fund
had investment income of $231,192 and $1,923,338,  respectively,  as compared to
$1,176,224  and  $5,368,957,  respectively,  for the same  periods in 1996.  The
decrease in 1997  investment  income of 64% was  primarily  due to a decrease in
interest and dividend income.
 <PAGE>
     The  Retirement  Fund incurred  expenses of $364,539 and $1,245,083 for the
three and nine months  ended  September  30,  1997,  as compared to $536,999 and
$1,518,398, respectively, for the same periods in 1996. The decrease in the 1997
expenses of $273,315 was primarily due to a decrease in Fund Administration Fees
and Expenses and  Independent  General  Parner's  Fees and Expenses  paid by the
Retirement Fund. The Retirement  Fund's major expenses consist of the Investment
Advisory Fee, the Fund  Administration Fees and Expenses and Independent General
Partners' Fees and Expenses.

     The Retirement  Fund  experienced an decrease in net assets  resulting from
operations  for the nine  months  ended  September  30,  1997 in the  amount  of
$1,868,567,  as compared to an increase of $9,871,892 for the comparative period
in 1996. The decrease in net assets for the nine months ended September 30, 1997
is  comprised  of net  investment  income of  $678,255,  net  realized  gains of
$12,855,950  offset by a net change in unrealized  depreciation  of $15,402,772.
For the  comparable  period in 1996, the increase in net assets was comprised of
net investment income of $3,850,559,  net realized losses of $17,501,651  offset
by a net change in unrealized  appreciation  of $23,522,984  (see  Statements of
Operations in the Financial Statements).

     For the three months ended September 30, 1997 and 1996, the Retirement Fund
incurred  Investment Advisory Fees of $218,587 and $211,996,  respectively.  For
the nine months ended  September 30, 1997 and 1996, the Retirement Fund incurred
Investment Advisory Fees of $687,608 and $660,839,  respectively,  (as described
in Note 6 to the Financial Statements).

     The Retirement Fund  Administration Fees and Expenses (as described in Note
7 to the Financial Statements) for the three months ended September 30, 1997 and
1996 were  $101,196  and  $175,810,  respectively  and for the nine months ended
September  30,  1997 and 1996 were  $330,334  and  $593,088,  respectively.  The
decrease  from 1997 to 1996 of  $262,754  is  primarily  the  result of the Fund
Administration Fee changing to an annual fee of $100,000 plus 100% of all direct
out-of-pocket  expenses incurred by the Retirement Fund  Administrator on behalf
of the Retirement Fund.

     Independent  General Partners' Fees and Expenses incurred for the three and
nine months  ended  September  30,  1997 and 1996,  were  $36,844 and  $106,885,
respectively, and $47,262 and $141,382, respectively.

     The Retirement Fund incurred  Professional  Fees of $6,212 and $110,730 for
the three and nine months ended September 30, 1997,  respectively.  Professional
Fees  incurred  for  the  same  periods  in 1996  were  $101,931  and  $109,233,
respectively. (See Note 9 to the Financial Statements).

Unrealized Appreciation/Depreciation and Non-Accrual of Investments

     The  General  Partners of the  Retirement  Fund  determine,  on a quarterly
basis, the fair value of the Retirement Fund's portfolio  securities that do not
have a readily  ascertainable market value. They are assisted in connection with
such  determination  by the Managing  General  Partner,  which has established a
valuation  committee  comprised of senior  executives  to assess the  Retirement
Fund's portfolio and make  recommendations  regarding the value of its portfolio
securities.  This  valuation  committee uses available  market  information  and
appropriate valuation  methodologies.  In addition, the Managing General Partner
has  retained  Arthur D.  Little,  Inc.,  a  nationally  recognized  independent
valuation consultant, to review such valuations.
 <PAGE>
    For privately  issued  securities  in which the  Retirement  Fund  typically
invests,  the fair value of an  investment  is its initial  cost,  adjusted  for
amortization of discount or premium and as subsequently  adjusted to reflect the
occurrence of significant developments. "Significant developments" are business,
economic or market events that may affect a company in which an  investment  has
been made or the securities comprising such investment. For example, significant
developments  that could result in a write-down  in value  include,  among other
things,  events  of  default  with  respect  to  payment  obligations  or  other
developments indicating that a portfolio company's performance may fall short of
acceptable  levels. A write-up in value of an investment could take place when a
significant favorable development occurs, such as a transaction representing the
partial  sale of an  investment  that would  result in a capital gain or company
performance exceeding expected levels on a sustained basis.

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

     For the nine months ended  September 30, 1997, the Retirement Fund recorded
net  unrealized  depreciation  on Enhanced  Yield  Investments of $15,402,772 as
compared to  $23,522,984  of unrealized  appreciation  for the nine months ended
September  30, 1996.  The change in  unrealized  depreciation  was primarily the
result of unrealized depreciation in Leather U.S., Inc., Pergament Home Centers,
Inc. and Western Pioneer, Inc. the reversal of depreciation on RI Holdings, Inc.
and the reversal of unrealized appreciation on Lexmark International Group, Inc.
and Bank United Corp.

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

    Pergament Home Centers, Inc.
      Floating Rate Demand Note            July 1, 1996
    MTI Holdings, Inc. 12%
      Senior Secured Note                  October 1, 1996
    Western Pioneer, Inc. 10%
      Senior Subordinated Note             November 30, 1994

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

Realized Gains and Losses on Investments

     For the three months ended September 30, 1997, the Retirement Fund recorded
net realized losses of $4,303,311. For the nine months ended September 30, 1997,
the Retirement Fund recorded net realized gains of $12,855,950.  on transactions
involving five Enhanced Yield  Investments.  For the three and nine months ended
September  30,  1996,  the  Retirement  Fund  recorded  net  realized  losses on
investments  of  $6,605,542  and  $17,501,651,   respectively,  on  transactions
involving  four  Enhanced  Yield  Investments  (see  Note  10 to  the  Financial
Statements and the Supplemental Schedule of Realized Gains and Losses).


<PAGE>



                          PART II - OTHER INFORMATION


Items 1 though 5 are  herewith  omitted as the  response  to all items is either
none or not applicable for the September 30, 1997, Form 10-Q.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits:  Exhibit 27 - Financial  Data Schedule for the quarter ending
September 30, 1997.

 3.1     Amended and Restated Certificate of Limited Partnership, dated
         as of April 12, 1989*

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

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

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

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

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

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

(b)  Reports on Form 8-K - None.


<PAGE>


                                SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized  on the  14th  day of
November, 1997.

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

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

Dated: November 14, 1997    /s/  James R. Wilson
                            -----------------------------
                            James R. Wilson
                            Title:  President



Dated: November 14, 1997    /s/ Andy Pitsillos
                            ------------------------------
                            Andy Pitsillos
                            Title:  Vice President and Chief
                                    Accounting Officer



<PAGE>


                                SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized  on the  14th  day of
November, 1997.



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

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




Dated: November 14, 1997
                             James R. Wilson
                             Title:  President



Dated: November 14, 1997
                             Andy Pitsillos
                             Title:  Vice President and Chief
                             Accounting Officer