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, 1996

                         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, 1996 and December 31, 1995         5

Statements of Operations - For the Three and Nine Months
  Ended September 30, 1996 and 1995                              6

Statements of Changes in Net Assets - For the Nine
  Months Ended September 30, 1996 and 1995                       7

Statements of Cash Flows - For the Nine Months Ended
 September 30, 1996 and 1995                                     8

Statement of Changes in Partners' Capital -
  For the Nine Months Ended September 30, 1996                   9

Schedule of Portfolio Investments - September 30, 1996          10

Supplemental Schedule of Realized Gains and Losses
  For the Nine Months Ended September 30, 1996                  15

Notes to Financial Statements                                   16


Item 2.  Management's Discussion and Analysis of
  Financial Condition and Results of Operations                 23


                           PART II - OTHER INFORMATION

Item 6.  Exhibits                                               27



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

<S>                                                              <C>              <C>                 <C>
                                                                                   September 30, 1996
ASSETS:                                                            Notes               Unaudited            December 31, 1995

    Investments                                                   2,10,12
        Enhanced Yield Investments at Value-
            Managed Companies
               (amortized cost of $50,657,091 at
               September 30, 1996 and $83,389,283
               at December 31, 1995)                                                 $   57,015,250          $     67,489,913
            Non-Managed Companies
               (amortized cost of $13,708,583 at
               September 30, 1996 and $2,121,174
               at December 31, 1995)                                                     15,573,733                 2,720,868
        Temporary Investments
               (at amortized cost)                                                        8,700,502                16,536,723

    Cash                                                                                     84,922                    39,180
    Interest Receivable                                            2,12                   1,015,950                   886,589
    Note Receivable                                                 3,4                   1,347,503                 1,245,982
    Prepaid Expenses                                                                          2,511                     6,923

TOTAL ASSETS                                                                         $   83,740,371          $     88,926,178
                                                                                     ==============          ================


LIABILITIES AND PARTNERS' CAPITAL

    Liabilities
        Professional Fees Payable                                    9               $       45,730          $         40,833
        Independent General Partners' Fees Payable                   8                       19,780                    10,547
        Fund Administrative Expenses Payable                         7                       15,852                    28,445
        Other Accrued Liabilities                                                             6,100                     4,241
            Total Liabilities                                                                87,462                    84,066

    Partners' Capital
        Managing General Partner                                    3,4                   1,069,497                 1,058,667
        Limited Partners (221,072 Units)                             4                   82,583,412                87,783,445
            Total Partners' Capital                                                      83,652,909                88,842,112

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                              $   83,740,371          $     88,926,178
                                                                                    ===============          ================

               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,
                                                             1996              1995               1996               1995  
INVESTMENT INCOME- Notes 2,12:     
      Interest                                           $   1,171,274      $   1,855,528     $   3,500,251      $   5,677,183
      Discount                                                   4,950              6,778            16,511             19,592
      Dividend                                                       -                  -         1,852,195                  -
                    TOTAL INVESTMENT INCOME                  1,176,224          1,862,306         5,368,957          5,696,775

EXPENSES:
      Investment Advisory Fee- Note 6                          211,996            247,041           660,839            795,572
      Fund Administration Fees and Expenses- Note 7            175,810            184,540           593,088            637,269
      Independent General Partners'
       Fees and Expenses - Note 8                               47,262             37,100           141,382            124,664
      Professional Fees - Note 9                               101,931              7,748           109,233             25,281
      Insurance Fees                                                 -                  -             4,410                  -
      Valuation Expenses                                             -              2,700             9,446              6,381
                    TOTAL EXPENSES                             536,999            479,129         1,518,398          1,589,167

NET INVESTMENT INCOME                                          639,225          1,383,177         3,850,559          4,107,608

NET CHANGE IN UNREALIZED APPRECIATION
      (DEPRECIATION) ON INVESTMENTS- Note 12                15,051,391         (8,885,165)       23,522,984        (13,351,536)

NET REALIZED (LOSSES) GAINS ON INVESTMENTS- Note 10         (6,605,542)         2,261,832       (17,501,651)         2,302,586

NET INCREASE (DECREASE) IN NET ASSETS
      RESULTING FROM OPERATIONS                          $   9,085,074     $   (5,240,156)    $   9,871,892      $  (6,941,342)
                                                         =============     ==============     =============      =============

 

               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, 1996          September 30, 1995
FROM OPERATIONS:

     Net Investment Income                                                      $       3,850,559           $       4,107,608

     Net Change In Unrealized Appreciation
       (Depreciation) on Investments                                                   23,522,984                 (13,351,536)

     Net Realized (Losses) Gains on Investments                                       (17,501,651)                  2,302,586

     Net Increase (Decrease) in Net Assets
       Resulting from Operations                                                        9,871,892                  (6,941,342)

     Cash Distributions to Partners                                                   (15,020,637)                (19,662,409)

     Reduction in Managing General Partners'
       Contribution                                                                       (40,458)                   (142,253)

     Total Decrease                                                                    (5,189,203)                (26,746,004)

NET ASSETS:

     Beginning of Period                                                               88,842,112                 115,578,330

     End of Period                                                              $      83,652,909           $      88,832,326
                                                                                =================           =================

               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, 1996          September 30, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
       Interest and Discount Income                                          $       2,905,311           $       5,200,443
       Fund Administration Fees & Expenses                                            (605,681)                   (659,915)
       Investment Advisory Fee                                                        (660,839)                   (795,572)
       Independent General Partners' Fees and Expenses                                (131,146)                   (122,731)
       Valuation Expenses                                                               (7,586)                     (9,717)
       Sale (Purchase) of Temporary Investments, Net                                 8,250,397                  11,132,486
       Proceeds from Sales and Principal Payments of
            Enhanced Yield Investments                                               5,419,496                   4,891,556
       Professional Fees                                                              (103,199)                    (32,055)
       Insurance Fees                                                                     (375)                     (3,477)
Net Cash Provided by Operating Activities                                           15,066,378                  19,601,018
CASH FLOWS FROM FINANCING ACTIVITIES:
       Cash Distributions to Partners                                              (15,020,637)                (19,662,409)
Net Cash Used in Financing Activities                                              (15,020,637)                (19,662,409)
Net Decrease in Cash                                                                    45,741                     (61,391)
Cash at the Beginning of the Period                                                     39,181                      85,291
Cash at the End of the Period                                                $          84,922           $          23,900
                                                                             =================           =================


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


Net Increase (Decrease) In Net Assets
     Resulting From Operations                                               $       9,871,892           $      (6,941,342)

Adjustments to Reconcile Net Decrease in Net Assets
       Resulting from Operations to Net Cash Provided by Operating
       Activities:
Decrease in Investments                                                             31,171,546                  13,721,454
Increase in Accrued Interest                                                        (2,463,649)                   (496,332)
Increase (Decrease) in Other Accrued Liabilities                                         1,859                      (3,336)
Decrease in Fund Administration Expenses Payable                                       (12,593)                    (22,646)
Decrease (Increase) in Prepaid Expenses                                                  4,412                      (3,477)
Net Change in Unrealized (Appreciation)
   Depreciation on Investments                                                     (23,522,984)                 13,351,536
Increase in Independent General
    Partners' Fees Payable                                                              10,236                       1,934
Increase (Decrease) in Professional Fees Payable                                         5,659                      (6,773)
Total Adjustments                                                                    5,194,486                  26,542,360
Net Cash Provided by Operating Activities                                    $      15,066,378           $      19,601,018
                                                                             =================           =================

               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, 1996

Partners' Capital at January 1, 1996                                          $ 1,058,667        $ 87,783,445       $   88,842,112
Cash Distributions to Partners                                                    (47,431)        (14,973,206)         (15,020,637)
Reduction in Managing General Partners' Contribution                 3            (40,458)                  -              (40,458)
Allocation of Net Investment Income                                 11             38,506           3,812,053            3,850,559
Allocation of Net Unrealized Appreciation
  on Investments                                                    12            235,230          23,287,754           23,522,984
Allocation of Net Realized Losses on Investments                                 (175,017)        (17,326,634)         (17,501,651)
Partners' Capital at September 30, 1996                                       $ 1,069,497        $ 82,583,412       $   83,652,909
                                                                              ===========        ============       ==============


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



<PAGE>
<TABLE>
<CAPTION>
                                                EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                                       SCHEDULE OF PORTFOLIO INVESTMENTS
                                                                 SEPTEMBER 30, 1996
                                                                    (UNAUDITED)
<S>                 <C>                                            <C>         <C>            <C>           <C>         <C>
    PRINCIPAL                                                      INVESTMENT   INVESTMENT    AMORTIZED      VALUE      % OF TOTAL
  AMOUNT/SHARES                            INVESTMENT                 DATE         COST          COST       (NOTE 2)    INVESTMENTS
------------------ ----------------------------------------------  ----------  ------------  ------------ ------------- -----------

                   ENHANCED YIELD INVESTMENTS
                   MANAGED COMPANIES

                   CONSUMER PRODUCTS MANUFACTURING

                   LEXMARK INTERNATIONAL GROUP, INC. - NOTE 12
  $    24,103,269  Lexmark International, Inc.,
                    Sr. Sub. Nts. 14.25% due 03/31/01*             03/27/91    $ 24,103,269  $ 24,103,269  $ 24,103,269
  1,001,430 Shares Lexmark International Group, Inc.,
                    Class B Common Stock (c)                       03/27/91       6,676,200     6,676,200    20,404,136
                                                                               ------------  ------------  ------------
                                                                                 30,779,469    30,779,469    44,507,405       54.75
                                                                               ------------  ------------  ------------------------

                   MISCELLANEOUS MANUFACTURING

                   QUANTEGY ACQUISITION CORP. - NOTES 10, 12
                    (FORMERLY AMPEX RECORDING MEDIA)
    123.50 Shares  Quantegy Acquisition Corp., Common Stock        11/13/95       2,722,290     2,722,290     2,722,290
    17,829 Shares  Ampex Recording Media Corp.,
                       Class A Common Stock **(d)                  12/31/90 &
                                                                   06/28/91         143,285       143,285       112,323
                                                                               ------------   -----------  ------------
                                                                                  2,865,575     2,865,575     2,834,613        3.49 
                                                                               ------------   -----------  -------------------------
                     RI HOLDINGS, INC. - NOTES 10, 12
   $    12,011,595   RI Holdings, Inc.,
                      Sr. Sub. Nts. 16% due 08/31/01*(a)(b)         04/25/94      5,823,918     5,823,918       240,232
      150,191 Shares RI Holdings, Inc., Common Stock**              09/01/89      1,501,910     1,501,910             0
   104,211.03 Shares RI Holdings, Inc., Common Stock**               various          1,044         1,044             0
     22,687.5 Shares RI Holdings, Inc., Common Stock**              04/25/94            227           227             0
    92,045.09 Shares RI Holdings, Inc., Common Stock**              05/09/95            920           920             0
   223,212.92 Shares RI Holdings, Inc., Common Stock**              05/01/96          2,232         2,232             0
                                                                                -----------  ------------    ----------
                                                                                  7,330,251     7,330,251       240,232        0.30
                                                                                -----------  ------------    -----------------------



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


<PAGE>
<TABLE>
<CAPTION>
                                  EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                            SCHEDULE OF PORTFOLIO INVESTMENTS
                                                   SEPTEMBER 30, 1996
                                                (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
-------------------  -----------------------------------------  ------------  ------------- -------------  -----------  -----------

                     LEATHER AND LEATHER PRODUCTS

                     LEATHER U.S., INC. - NOTE 12
                     (FORMERLY UNITED STATES LEATHER HOLDINGS, INC.)
       621.90 Shares Leather U.S., Inc., Common Stock               04/09/96   $ 7,308,000   $  7,308,000    $ 7,308,000
                                                                               -----------   ------------    -----------
                                                                                 7,308,000      7,308,000      7,308,000       8.99
                                                                               -----------   ------------    ----------------------

                     DISTRIBUTION SERVICES

                     WB BOTTLING CORPORATION
      1,615 Shares   WB Bottling Corp., Preferred Stock**           09/12/90       161,500        161,500              0
     21,463 Shares   WB Bottling Corp., Common Stock**              09/12/90 &
                                                                    08/11/92        87,296         87,296              0
                                                                               -----------   ------------    -----------
                                                                                   248,796        248,796              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         2.61
                                                                               -----------   -----------   ------------------------


                     TOTAL INVESTMENT IN  MANAGED  COMPANIES                   $50,657,091   $50,657,091   $57,015,250        70.14%
                     ---------------------------------------                   -----------   -----------   -------------------------


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


<PAGE>
<TABLE>
<CAPTION>
               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                              SEPTEMBER 30, 1996
                             (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

                     DISTRIBUTION SERVICES

                     WESTERN PIONEER, INC. - NOTES 10,12
   $     4,730,800   Western Pioneer, Inc.,
                       Sr. Sub. Nts. 10% due 11/30/07*(b)           11/30/94     $ 653,289    $   653,289    $ 2,365,400
     81,081 Warrants Western Pioneer, Inc.,
                       Common Stock Purchase Warrants **            11/30/94             0              0              0
                                                                                 ---------    -----------    -----------
                                                                                   653,289        653,289      2,365,400       2.91
                                                                                 ---------    -----------    ----------------------
                     BROADCASTING

                     APOLLO RADIO HOLDING CO., INC. - NOTE 12
      29.75 Shares   Apollo Radio Holding Co., Inc.,
                      Common Stock**                                06/01/90        61,788         61,788        461,147
       25.5 Shares   Apollo Radio Holding Co., Inc.,
                      Common Stock**                                04/03/90        52,962         52,962        395,275
     9.2083 Warrants Apollo Radio Holding Co., Inc.,
                      Common Stock Purchase Warrants**              04/03/90             0              0              0
                                                                                 ---------    -----------    -----------
                                                                                   114,750        114,750        856,422       1.05
                                                                                 ---------    -----------    ----------------------

                     HEALTH SERVICES

                     MTI HOLDINGS, INC. - NOTES 10,12
   $       113,805   MTI Holdings, Inc.,
                      Sr. Sec. Nt. 12% due 07/15/03* (b)            08/06/96       113,805        113,805       113,805
      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
                                                                                ----------     ----------   -----------
                                                                                   235,680        235,680       235,680        0.29
                                                                                ----------     ----------   -----------------------
                     PRINTING, PUBLISHING AND ALLIED LINES

                     AMERICAN PAPER GROUP, LTD.
   $       595,683   American Paper Group, Ltd.,
                      Sub. Nts. 5% due 12/31/00*                    01/18/94       404,111        460,940       460,940
        996 Shares   American Paper Holdings Inc.,
                      Common Stock**                                01/18/94        67,469         67,469        67,469
                                                                                ----------     ----------   -----------
                                                                                   471,580        528,409       528,409        0.65
                                                                                ----------     ----------   -----------------------
</TABLE>
                             See the Accompanying Notes to Financial Statements.


<PAGE>
<TABLE>
<CAPTION>
                                  EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                                            SCHEDULE OF PORTFOLIO INVESTMENTS
                                                   SEPTEMBER 30, 1996
                                                (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
-------------------  -----------------------------------------  ------------  ------------- -------------  -----------  -----------

 
                     MISCELLANEOUS RETAIL

                     PERGAMENT HOME CENTERS, INC.- NOTE 12
   $     2,543,200   Pergament Acq. Corp., Home Centers, Inc.
                      Floating Rate Demand Note due 07/31/00*(b)     10/18/91  $ 2,543,200   $ 2,543,200   $  1,907,400
      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
                                                                               -----------   -----------   ------------
                                                                                 9,275,200     9,275,200      1,907,400        2.35
                                                                               -----------   -----------   ------------------------


                     BANKING AND FINANCE

                     BANK UNITED CORP. - NOTES 10,12
                     (FORMERLY USAT HOLDINGS INC.)
     432,403 Shares  Bank United Corp., Class A Common Stock (c)   01/05/90 &
                                                                   12/19/91       2,901,255     2,901,255     9,680,422
                                                                               ------------  ------------  ------------
                                                                                  2,901,255     2,901,255     9,680,422       11.91
                                                                               ------------  ------------  ------------------------





                     TOTAL INVESTMENT IN NON-MANAGED  COMPANIES                $13,651,754    $13,708,583   $15,573,733       19.16%
                     ------------------------------------------                 ----------    -----------   ------------------------


                     TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS            $64,308,845    $64,365,674   $72,588,983       89.30%
                     ----------------------------------------------            -----------    -----------   ------------------------
</TABLE>


                             See the Accompanying Notes to Financial Statements.

<PAGE>
<TABLE>
<CAPTION>
                 EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                        SCHEDULE OF PORTFOLIO INVESTMENTS
                                 SEPTEMBER 30, 1996
                             (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
   $     5,000,000   Colgate Palmolive, 5.43% due 10/29/96           09/24/96  $  4,973,604  $ 4,978,884   $ 4,978,884
   $     3,770,000   Jefferson Smurfit, 5.50% due 12/24/96           09/24/96     3,717,587    3,721,618     3,721,618
                                                                               ------------  -----------   -----------
                     TOTAL INVESTMENT IN COMMERCIAL PAPER                      $  8,691,191  $ 8,700,502   $ 8,700,502        10.70%
                     ------------------------------------                      ------------  -----------   -------------------------


                     TOTAL TEMPORARY INVESTMENTS                               $  8,691,191  $ 8,700,502   $ 8,700,502        10.70%
                     ---------------------------                               ------------  -----------   -------------------------

                     TOTAL INVESTMENT PORTFOLIO                                $ 73,000,036  $73,066,176   $81,289,485       100.00%
                     --------------------------                                ============  ===========   =========================

                     SUMMARY OF  INVESTMENTS
                     Subordinated Notes                                        $ 35,766,592  $35,823,421   $31,316,046        38.53%
                     Preferred Stock                                                161,500      161,500             0         0.00
                     Common Stock and Warrants                                   28,380,753   28,380,753    41,272,937        50.77
                     Temporary Investments                                        8,691,191    8,700,502     8,700,502        10.70
                                                                               ------------  -----------   -------------------------

                     TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS            $ 73,000,036  $73,066,176   $81,289,485       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.
                     (d) Underlying security pubicly traded.

</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, 1996
                                   (UNAUDITED)

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

Polaris Pool Systems, Inc.
   Common Stock                                    1/22/96           $         -     $          -     $    87,270 (A) $     87,270

ASR Acquisition Corp.
   Common Stock                                    various               108,241           17,024       1,007,354          990,330

Total Net Realized Gains for the Three
   Months Ended March 31, 1996                                                       $     17,024     $ 1,094,624     $  1,077,600
                                                                                     ============     ===========     ============




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

U.S. Leather Holdings, Inc.
   15% Sr. Sub. Deb.*                              4/09/96           $14,616,000     $ 17,112,740     $ 7,308,000 (B) $ (9,804,740)
   8% Sr. Pref. Stock                              4/09/96           $  2,986.41        2,024,000               -       (2,024,000)
   Jr. Sub. Pref. Stock                            4/09/96               150,231                -               -                -
   Warrants                                        4/09/96               150,231          186,918               -         (186,918)

Total Net Realized Losses for the Three
   Months Ended June 30, 1996                                                        $ 19,323,658     $ 7,349,949     $(11,973,709)
                                                                                     ============     ===========     ============



MTI Holdings, Inc.
   5% Sr. Sec. Note                                8/06/96           $   471,360     $    471,360     $   113,805 (B) $   (357,555)
   Common Stock                                    8/06/96                22,376          510,000         121,875 (B)     (388,125) 

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

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

Ampex Recording Media Corp.
   Common Stock                                    9/30/96                18,053          144,966         143,746           (1,220)

Total Net Realized Losses for the Three                                              $  8,914,310     $ 2,308,768      $(6,605,542)
   Months Ended September 30, 1996                                                   ============     ===========      ===========


 Total Net Realized Losses for the Nine                                              $ 28,254,992     $10,753,341     $(17,501,651)
   Months Ended  September 30, 1996                                                  ============     ===========     ============



(A) Proceeds  represent a distribution  to the  Retirement  Fund from the escrow
    account.
(B) Proceeds represent fair value of exchange.
 *  Includes Payment-in-Kind Notes.

                                                See the Accompanying Notes to Financial Statements.

</TABLE>


<PAGE>


               EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
                          NOTES TO FINANCIAL STATEMENTS
                                 September 30, 1996
                                   (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
$42,392,102  and  $28,806,626  as of  September  30, 1996 and December 31, 1995,
respectively,  representing  50.6% and 32.4% of total assets,  respectively.  In
connection with such determination, the Managing General Partner has established
a valuation  committee  comprised of senior  executives to assess the Retirement
Fund's portfolio and make recommendations  regarding the value of the Retirement
Fund's  portfolio  securities.  This valuation  committee uses available  market
information and appropriate valuation  methodologies.  In addition, the Managing
General  Partner has retained  Arthur D. Little,  Inc., a nationally  recognized
independent valuation consultant, to review such valuations.

    For privately  issued  securities  in which the  Retirement  Fund  typically
invests,  the fair value of an  investment  is its initial  cost,  adjusted  for
amortization of discount or premium and as subsequently  adjusted to reflect the
occurrence of significant developments. "Significant developments" are business,
economic or market events that may affect a company in which an  investment  has
been made or the securities comprising such investment. For example, significant
developments  that could  result in a writedown  in value  include,  among other
things,  events  of  default  with  respect  to  payment  obligations  or  other
developments indicating that a portfolio company's performance may fall short of
acceptable  levels.  A 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

    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, 1996,  resulted in a $40,458  reduction of the
principal  amount of the Note.  The  promissory  note of  Equitable  Capital was
canceled upon the contribution of Alliance Corporate's Note.

4.  Capital Contributions

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

    The Limited Partners' total capital  contributions were $220,848,730,  after
giving  effect to volume  discounts  allowed of  $223,270.  Equitable  Capital's
aggregate  capital  contribution  was in the  form of a  promissory  note in the
principal amount of $2,051,783.  On July 22, 1993,  Equitable Capital's note was
canceled and Alliance Corporate,  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 as of June 30, 1996.

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

6.  Investment Advisory Fee

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

     The Investment  Advisory Fee is calculated and paid quarterly,  in advance.
The  Investment  Advisory Fees paid by the  Retirement  Fund for the nine months
ended September 30, 1996 and 1995 were $660,839 and $795,572,  respectively. The
decrease  from 1995 to 1996  Investment  Advisory  Fees is due  primarily to the
return of capital to Limited  Partners,  which  reduced  the  Retirement  Fund's
Available Capital, on which the Investment Advisory Fee is based.

7.  Fund Administration Fee and Expenses

     As compensation  for its services during the fourth through seventh year of
operation  of  the  Funds,  ML  Fund  Administrators,  Inc.  ("MLFAI"),  as  the
Retirement Fund  administrator,  is entitled to receive from the Funds an annual
amount equal to the greater of the (i) Minimum Fee and (ii) the Funds'  prorated
proportion  (based on the  number of Units  issued by the Funds) of 0.45% of the
excess of the aggregate  net offering  proceeds of the Units issued by the Funds
over 50% of the aggregate amount of capital  reductions of the Funds (subject to
an  annual  maximum  of $3.2  million).  The  Minimum  Fee is 1.0% 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.
The Retirement Fund Administration Fees paid by the Retirement Fund for the nine
months  ended   September   30,  1996  and  1995  were  $489,705  and  $530,576,
respectively.

     In addition to the Retirement Fund Administration Fee, MLFAI is entitled to
receive reimbursement for a portion of direct out-of-pocket expenses incurred in
connection with the administration of the Retirement Fund, commencing on October
13, 1992. For the nine months ended  September 30, 1996 and 1995, the Retirement
Fund incurred  Administrative  expenses of $103,383 and $106,693,  respectively,
which  consisted  primarily of printing,  audit and tax return  preparation  and
custodian fees paid for by MLFAI on behalf of the Retirement Fund.

8.  Independent General Partners' Fees and Expenses

    As compensation  for their  services,  each  Independent  General Partner is
entitled to a $30,000 annual fee (payable quarterly) from the Retirement Fund in
addition  to  $500  for  each  meeting  attended  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, 1996 and 1995, the Retirement Fund
incurred $141,382 and $124,664,  respectively,  of Independent General Partners'
Fees and Expenses.

9.  Related Party Transactions

     For the nine months ended  September  30, 1996,  the  Retirement  Fund paid
expenses  of  $99,751  as  reimbursement  for  amounts  paid for legal  services
provided by Equitable  Life in connection  with the Retirement  Fund's  Enhanced
Yield Investments.  For the nine months ended September 30, 1995, the Retirement
Fund paid expenses of $18,445 as  reimbursement  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.

<PAGE>

10. Investment Transactions

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

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

     During the three  months ended  September  30, 1996,  the  Retirement  Fund
received a total of $118,250 from Western Pioneer, Inc. as principal paydowns of
the senior notes held by the Retirement  Fund. No gain,  loss or income has been
recorded on this  transaction  and the amount will be  distributed  as return of
capital to the Limited Partners.

     On August 6, 1996 a  comprehensive  restructuring  closed for MTI Holdings,
Inc. The existing note was exchanged for new 12% Senior Secured Notes and equity
of the reorganized  company consisting of common stock and common stock purchase
warrants. The Retirement Fund recognized a loss of $745,680 on this transaction.

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

     On September  12, 1996,  the  Retirement  Fund sold its Tulip Holding Corp.
14.5%  Subordinated  Notes for $2,930 and recognized a loss of $4,383,283 on the
sale. The 16.5% Subordinated  Notes,  Series A Exchangeable  Preferred Stock and
Class A Common Stock were deemed worthless resulting in a total realized loss of
$2,742,846 to the Retirement Fund.

     On September  30, 1996,  the  Retirement  Fund sold 18,053  shares of Ampex
Recording Media Corp. Class A Common Stock for $143,746 which resulted in a loss
of $1,220 to the Retirement Fund.

     As of September  30,  1996,  the  Retirement  Fund had  investments  in six
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 six  Non-Managed
Companies  (a  Non-Managed  Company  is  one to  which  such  assistance  is not
provided)  totaling   $65,054,525   (including  $422,439   capitalized  cost  of
payment-in-kind  securities),  consisting  of  $36,124,147  in senior  notes and
subordinated  notes,  $161,500 in  preferred  stock and  purchase  warrants  and
$28,768,878 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, 1996,  earnings were allocated 99%
to the Limited Partners, as a class, and 1% to the Managing General Partner.

<PAGE>

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

     For the nine months ended  September 30, 1996, the Retirement Fund recorded
net  unrealized  appreciation  on Enhanced  Yield  Investments of $23,522,984 as
compared to  $13,351,536  of unrealized  depreciation  for the nine months ended
September 30, 1995.  Such  appreciation  was the result of  adjustments in value
made with  respect to the  following  investments  during the nine months  ended
September 30, 1996:

     The amount includes the reversal of $9,878,056,  $2,024,000 and $186,918 of
unrealized  depreciation of U.S.  Leather  Holdings,  Inc.  senior  subordinated
notes, senior subordinated  preferred stock and non-voting common stock purchase
warrants,  respectively,  due to a restructuring  on April 9, 1996. On March 31,
1996, U.S. Leather  Holdings,  Inc. 15% Senior  Subordinated  Notes were written
down from 60% to 50% of par, resulting in unrealized  depreciation of $1,439,686
to the Retirement Fund.

     On March 31, 1996,  Pergament  Home Centers,  Inc. Class B Common Stock was
written down from 25% of cost to zero,  resulting in unrealized  depreciation of
$1,683,000.  On June 30, 1996, Pergament Home Centers, Inc. Floating Rate Demand
Note  was  written  down  from  100%  to 75% of  par,  resulting  in  unrealized
depreciation of $635,800 to the Retirement Fund.

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

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

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

     On March 31, 1996, Apollo Radio common stock was written up, pending a cash
distribution  expected  in the  second  half of 1996,  resulting  in  unrealized
appreciation of $231,672 to the Retirement Fund.

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

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

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

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

     Due to an increase in the quoted  market price of Bank United Corp.  common
stock, the Retirement Fund recorded total unrealized  appreciation of $6,779,167
at September 30, 1996.  The equity was valued at 90% of the closing market price
at September 30, 1996, due to contractual restrictions on resale.
<PAGE>
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, 1995
    Western Pioneer, Inc. 10%
      Senior Subordinated Note             November 30, 1994
    RI Holdings, Inc. 16%
      Senior Subordinated Notes            April 25, 1994

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

13. Income Taxes

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

    Pursuant to Statement of Financial Accounting Standards No. 109 - Accounting
for Income Taxes,  the  Retirement  Fund is required to disclose any  difference
between the tax 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
1995, the tax basis of the Retirement Fund's assets was greater than the amounts
reported  in  the  Financial  Statements  by  $38,950,769.  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, 1996, the Independent General Partners approved an aggregate
cash  distribution  of $4,363,635 for the three months ended  September 30, 1996
which is expected to be paid on November 14, 1996 to the Limited  Partners.  The
amount  distributed  to Limited  Partners on record as of September 30, 1996 was
$4,357,329  or $19.71 per Unit (of which  $2,478,217  is capital  returned  from
investments  and the reserve in the third quarter of 1996). On a per Unit basis,
this distribution to Limited Partners includes $5.68 of realized gains, $2.82 of
income from operations, $3.49 of return of capital and $7.72 of capital returned
from reserve.  The Managing General Partner's one percent  allocation of $44,013
was reduced by its one percent allocation of realized gains and capital returned
from  investments  during the third quarter of 1996, of $37,707  (which is being
held as a Deferred  Distribution Amount pursuant to the Partnership  Agreement),
resulting in a net distribution to the Managing General Partners of $6,306.
<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, 1996,  the  Retirement  Fund had a total of 12 Enhanced
Yield  Investments  at a net cost of  $65,054,525  (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,  1996,  the  Retirement  Fund
received proceeds from the following investments:

     On January 10 and June 3, 1996,  the  Retirement  Fund received  additional
proceeds of $87,270 and $41,949,  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.

     During the nine months  ended  September  30,  1996,  the  Retirement  Fund
received a total of $354,750 and $146,632  from Western  Pioneer,  Inc. and U.S.
Leather Holdings, Inc., respectively,  as principal paydowns of the senior notes
held by the Retirement  Fund. No gain, loss or income has been recorded on these
transactions.

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

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

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

     On August 6, 1996, a comprehensive  restructuring  closed for MTI Holdings,
Inc. The Retirement Fund recognized a loss of $745,680 on this transaction.

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

     On September  12, 1996,  the  Retirement  Fund sold its Tulip Holding Corp.
14.5%  Subordinated  Notes for $2,930 and recognized a loss of $4,383,283 on the
sale. The 16.5% Subordinated  Notes,  Series A Exchangeable  Preferred Stock and
Class A Common Stock were deemed worthless resulting in a total realized loss of
$2,742,846 to the Retirement Fund.

     On September  30, 1996,  the  Retirement  Fund sold 18,053  shares of Ampex
Recording Media Corp. Class A Common Stock for $143,746 which resulted in a loss
of $1,220 to the Retirement Fund.

     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, 1996,  net  investment
income decreased by $743,952 and $257,049, respectively, as compared to the same
periods  in 1995.  Net  investment  income is  comprised  of  investment  income
(primarily interest and dividend income) offset by expenses. The decrease in the
1996 net investment income versus the comparative  periods in 1995, reflects the
decrease in interest income  partially offset by the increase in dividend income
and the decrease in Investment  Advisory Fees and Fund  Administration  Fees and
Expenses.

     For the three and nine months ended September 30, 1996, the Retirement Fund
had investment income of $1,176,224 and $5,368,957, respectively, as compared to
$1,862,306  and  $5,696,775,  respectively,  for the same  periods in 1995.  The
decrease in 1996 investment  income of 6% was primarily due to a decrease in the
amount of accrual status debt  securities held by the Retirement Fund due to the
sales and  repayments  of  Enhanced  Yield  Investments  partially  offset by an
increase in dividend income.
 <PAGE>
     The  Retirement  Fund incurred  expenses of $536,999 and $1,518,398 for the
three and nine months  ended  September  30,  1996,  as compared to $479,129 and
$1,589,167, respectively, for the same periods in 1995. The decrease in the 1996
expenses of $70,769 was primarily due to a decrease in Investment  Advisory Fees
and Fund  Administration  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 Independent General Partners' Fees and Expenses.

     The Retirement  Fund  experienced an increase in net assets  resulting from
operations  for the nine  months  ended  September  30,  1996 in the  amount  of
$9,871,892,  as compared to a decrease of $6,941,342 for the comparative  period
in 1995. The increase in net assets for the nine months ended September 30, 1996
is 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.
For the  comparable  period in 1995, the decrease in net assets was comprised of
net investment income of $4,107,608,  net realized gains of $2,302,586 offset by
a net change in  unrealized  depreciation  of  $13,351,536  (see  Statements  of
Operations in the Financial Statements).

     For the three months ended September 30, 1996 and 1995, the Retirement Fund
incurred  Investment Advisory Fees of $211,996 and $247,041,  respectively.  For
the nine months ended  September 30, 1996 and 1995, the Retirement Fund incurred
Investment Advisory Fees of $660,839 and $795,572,  respectively,  (as described
in Note 6 to the Financial Statements).  The decrease in the Investment Advisory
Fees is due to a decrease in the Retirement Fund's Available  Capital,  on which
the Investment  Advisory Fee is based,  resulting  primarily from redemptions of
debt  obligations held by the Retirement Fund (which is a component of Available
Capital).

     The Retirement Fund  Administration Fees and Expenses (as described in Note
7 to the Financial Statements) for the three months ended September 30, 1996 and
1995 were  $175,810  and  $184,540,  respectively  and for the nine months ended
September  30,  1996 and 1995 were  $593,088  and  $637,269,  respectively.  The
decrease  from 1995 to 1996 of $44,181  is  primarily  due to a decrease  in the
Retirement Fund's Available Capital on which the Retirement Fund  Administration
Fee is based,  resulting  primarily from redemptions of debt obligations held by
the Retirement Fund (which is a component of Available  Capital).  In accordance
with the Partnership  Agreement,  beginning in October 1996, the Retirement Fund
Administration  Fee will  change 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,  1996 and 1995,  were  $47,262 and  $141,382,
respectively, and $37,100 and $124,664, respectively.

     The Retirement Fund incurred Professional Fees of $101,931 and $109,233 for
the three and nine months ended September 30, 1996,  respectively.  Professional
Fees   incurred   for  the  same  periods  in  1995  were  $7,748  and  $25,281,
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, 1996, the Retirement Fund recorded
net  unrealized  appreciation  on Enhanced  Yield  Investments of $23,522,984 as
compared to  $13,351,536  of unrealized  depreciation  for the nine months ended
September  30, 1995.  The change in  unrealized  appreciation  was primarily the
result of unrealized  appreciation in Lexmark  International  Group,  Inc., Bank
United Corp. and Western Pioneer, Inc., the reversal of unrealized  depreciation
in U.S.  Leather  Holdings,  Inc.,  Tulip Holding Corp.  and MTI Holdings,  Inc.
offset by  unrealized  depreciation  in RI  Holdings,  Inc. and  Pergament  Home
Centers, Inc.

  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, 1995
    Western Pioneer, Inc. 10%
      Senior Subordinated Note             November 30, 1994
    RI Holdings, Inc. 16%
      Senior Subordinated Notes            April 25, 1994

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

Realized Gains and Losses on Investments

     For the three and nine months ended September 30, 1996, the Retirement Fund
recorded net realized  losses of $6,605,542 and  $17,501,651,  respectively,  on
transactions  involving  four Enhanced Yield  Investments.  During the three and
nine months ended  September 30, 1995, the Retirement Fund recorded net realized
gains on investments of $2,261,832 and $2,302,586, respectively, on transactions
involving  three  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, 1996, 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, 1996.

 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  12th  day of
November, 1996.

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

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

Dated: November 12, 1996   /s/ James R. Wilson
                             James R. Wilson
                             Title:  President

Dated: November 12, 1996   /s/ Laura Mah
                             Laura Mah
                             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 12th day of November, 1996.

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

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




Dated: November 12, 1996
                             James R. Wilson
                             Title:  President



Dated: November 12, 1996
                             Laura Mah
                             Title:  Vice President and Chief
                             Accounting Officer