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 0-16531

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

              Delaware                               13-3486115
      (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, 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,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 $60,996,883 at
             September 30, 1996 and $110,558,741
             at December 31, 1995)                                                 $     64,277,096        $    83,988,222
             Non-Managed Companies
             (amortized cost of $20,668,068 at
             September 30, 1996 and $4,092,050
             at December 31, 1995)                                                       30,004,871              5,330,092
        Temporary Investments
             (at amortized cost )                                                        10,001,856             20,356,353

     Cash                                                                                   252,750                 74,501
     Interest Receivable                                            2,12                  1,173,731                751,346
     Note Receivable                                                3,4                   1,867,405              1,928,690
     Prepaid Expenses                                                                         2,650                  7,906

TOTAL ASSETS                                                                       $    107,580,359        $   112,437,110
                                                                                   ================        ===============


LIABILITIES AND PARTNERS' CAPITAL

     Liabilities
        Professional Fees Payable                                    9             $         85,662        $        25,484
        Independent General Partners' Fees Payable                   8                       22,795                 15,273
        Fund Administrative Expenses Payable                         7                       23,928                 36,617
        Other Accrued Liabilities                                                            11,663                  5,858
             Total Liabilities                                                              144,048                 83,232

     Partners' Capital
        Managing General Partner                                    3,4                   1,492,702              1,448,956
        Limited Partners (284,611 Units)                             4                  105,943,609            110,904,922
             Total Partners' Capital                                                    107,436,311            112,353,878

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                            $    107,580,359        $   112,437,110
                                                                                   ================        ===============


               See the Accompanying Notes to Financial Statements.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                        EQUITABLE CAPITAL PARTNERS, 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                                           $      1,141,590     $     2,038,993      $     3,411,384    $    6,256,498
     Discount                                                     10,172              12,766               33,645            36,889
     Dividend                                                          -                   -            3,760,524                 -
          TOTAL INVESTMENT INCOME                              1,151,762           2,051,759            7,205,553         6,293,387

EXPENSES:
     Investment Advisory Fee- Note 6                             249,764             338,234              824,674         1,104,449
     Fund Administration Fees and Expenses- Note 7               229,860             237,577              767,058           820,415
     Independent General Partners'
      Fees and Expenses- Note 8                                   49,636              38,000              147,971           128,469
     Professional Fees - Note 9                                  123,906               7,570              141,179            37,257
     Insurance Fees                                                    -                   -                5,256                 -
     Valuation Expenses                                                -               5,750               19,021            13,235
          TOTAL EXPENSES                                         653,166             627,131            1,905,159         2,103,825

NET INVESTMENT INCOME                                            498,596           1,424,628            5,300,394         4,189,562

NET CHANGE IN UNREALIZED APPRECIATION
     (DEPRECIATION) ON INVESTMENTS- Note 12                   29,715,206         (12,918,142)          37,949,493       (22,543,056)

NET REALIZED (LOSSES) GAINS ON INVESTMENTS- Note 10          (12,705,316)          4,567,590          (25,779,920)        4,650,333

NET INCREASE (DECREASE) IN NET ASSETS
     RESULTING FROM OPERATIONS                          $     17,508,486     $    (6,925,924)     $    17,469,967    $  (13,703,161)
                                                        ================     ================     ===============    ==============

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

<PAGE>
<TABLE>
<CAPTION>

                        EQUITABLE CAPITAL PARTNERS, 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                                                       $       5,300,394          $       4,189,562

   Net Change In Unrealized Appreciation
      (Depreciation) on Investments                                                   37,949,493                (22,543,056)

   Net Realized (Losses) Gains on Investments                                        (25,779,920)                 4,650,333

   Net Increase (Decrease) in Net Assets
      Resulting from Operations                                                       17,469,967                (13,703,161)

   Cash Distributions to Partners                                                    (22,326,249)               (28,513,725)

   Reduction in Managing General Partners' Contribution                                  (61,285)                  (207,142)

   Total Decrease                                                                     (4,917,567)               (42,424,028)

NET ASSETS:

   Beginning of Period                                                               112,353,878                157,930,203

   End of Period                                                               $     107,436,311          $     115,506,175
                                                                               =================          =================

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


<PAGE>
<TABLE>
<CAPTION>
                        EQUITABLE CAPITAL PARTNERS, 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                                          $       6,398,571            $       6,822,785
        Fund Administration Fees & Expenses                                            (779,746)                    (849,566)
        Investment Advisory Fee                                                        (824,674)                  (1,104,449)
        Independent General Partners' Fees and Expenses                                (140,449)                    (126,670)
        Valuation Expenses                                                              (13,216)                     (19,762)
        Sale (Purchase)of Temporary Investments, Net                                 10,823,692                   13,872,040
        Proceeds from Sales and Principal Payments of
            Enhanced Yield Investments                                                7,121,320                    9,888,786
        Professional Fees                                                               (80,625)                     (40,442)
        Insurance Fees                                                                     (375)                      (3,967)
            Net Cash Provided by Operating Activities                                22,504,498                   28,438,755
CASH FLOWS FROM FINANCING ACTIVITIES:
        Cash Distributions to Partners                                              (22,326,249)                 (28,513,725)
            Net Cash Used in Financing Activities                                   (22,326,249)                 (28,513,725)
Net Increase (Decrease) in Cash                                                         178,249                      (74,970)
Cash at the Beginning of the Period                                                      74,501                      157,275
Cash at the End of the Period                                                 $         252,750            $          82,305
                                                                              =================            =================


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

Net Increase (Decrease) In Net Assets
     Resulting From Operations                                                $      17,469,967            $     (13,703,161)

Adjustments to Reconcile Net Decrease in Net Assets
        Resulting from Operations to Net Cash Provided by Operating
        Activities:
Decrease in Investments                                                              43,724,932                   19,110,494
Increase (Decrease) in Accrued Interest                                                (806,981)                     529,397
Increase (Decrease) in Other Accrued Liabilities                                          5,805                       (6,527)
Decrease in Fund Administration Expenses Payable                                        (12,688)                     (29,151)
Decrease (Increase) in Prepaid Expenses                                                   5,256                       (3,967)
Net Change in Unrealized (Appreciation)
  Depreciation on Investments                                                       (37,949,493)                  22,543,056
Increase in Independent General
   Partners' Fees Payable                                                                 7,522                        1,799
Increase (Decrease) in Professional Fees Payable                                         60,178                       (3,185)
        Total Adjustments                                                             5,034,531                   42,141,916
Net Cash Provided by Operating Activities                                     $      22,504,498            $      28,438,755
                                                                              =================            =================

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



<PAGE>
<TABLE>
<CAPTION>
                        EQUITABLE CAPITAL PARTNERS, L.P.
                   STATEMENTS 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                                           $ 1,448,956      $  110,904,922       $  112,353,878
Cash Distributions to Partners                                                     (69,669)        (22,256,580)         (22,326,249)
Reduction in Managing General Partners' Contribution                 3             (61,285)                  -              (61,285)
Allocation of Net Investment Income                                 11              53,004           5,247,390            5,300,394
Allocation of Net Unrealized Appreciation
   on Investments                                                   12             379,495          37,569,998           37,949,493
Allocation of Net Realized Losses on Investments                                  (257,799)        (25,522,121)         (25,779,920)
Partners' Capital at September 30, 1996                                        $ 1,492,702      $  105,943,609       $  107,436,311
                                                                               ===========      ==============       ==============



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


<PAGE>
<TABLE>
<CAPTION>

                                            EQUITABLE CAPITAL PARTNERS,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
  $     19,667,348  Lexmark International, Inc.,
                     Sr. Sub. Nts. 14.25% due 03/31/01*              03/27/91    $19,667,348   $ 19,667,348  $  19,667,348
   1,327,476 Shares Lexmark International Group, Inc.,
                     Class B Common Stock (c)                        03/27/91      8,849,843      8,849,843     27,047,325
                                                                                 -----------   ------------  -------------
                                                                                  28,517,191     28,517,191     46,714,673     44.80
                                                                                 -----------   ------------  -----------------------
                      MISCELLANEOUS MANUFACTURING

                    QUANTEGY ACQUISITION CORP. - NOTES 10, 12
                    (FORMERLY AMPEX RECORDING MEDIA CORP.)
        162 Shares  Quantegy Acquisition Corp., Common Stock          11/13/95     3,464,732     3,464,732     3,464,732
     22,690 Shares  Ampex Recording Media Corp.,
                     Class A Common Stock **(d)                       12/31/90 &
                                                                      06/28/91       182,360       182,360       142,947
                                                                                ------------    ----------   -----------
                                                                                   3,647,092     3,647,092     3,607,679        3.46
                                                                                ------------    ----------   -----------------------

                    RI HOLDINGS, INC. - NOTE 12
  $     24,387,177  RI Holdings, Inc.,
                     Sr. Sub. Nts. 16% due 08/31/01*(a)(b)            04/25/94    11,824,318    11,824,318       487,744
     304,934 Shares RI Holdings, Inc., Common Stock**                 09/01/89     3,049,340     3,049,340             0
  212,407.91 Shares RI Holdings, Inc., Common Stock**                  various         2,124         2,124             0
    46,062.5 Shares RI Holdings, Inc., Common Stock**                 04/25/94           461           461             0
  186,879.68 Shares RI Holdings, Inc., Common Stock**                 05/09/95         1,869         1,869             0
  453,189.90 Shares RI Holdings, Inc., Common Stock**                 05/01/96         4,532         4,532             0
                                                                                ------------   -----------   -----------
                                                                                  14,882,644    14,882,644       487,744        0.47
                                                                                ------------   -----------   -----------------------

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


<PAGE>
<TABLE>
<CAPTION>
                                              EQUITABLE CAPITAL PARTNERS,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.)
      795.00 Shares Leather U.S., Inc., Common Stock                  04/09/96  $  9,342,000   $ 9,342,000   $ 9,342,000
                                                                                ------------   -----------   -----------
                                                                                   9,342,000     9,342,000     9,342,000       8.96
                                                                                ------------   -----------   -----------------------

                    DISTRIBUTION SERVICES

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

                    MISCELLANEOUS RETAIL

                    R&S/STRAUSS, INC.
                    (FORMERLY WSR ACQUISITION CORPORATION)
  $      1,815,000  R&S/Strauss, Inc., Sr. Sub. Nt. 15% due 05/31/00* 06/13/90     1,815,000     1,815,000     1,815,000
  $      2,310,000  R&S/Strauss, Inc., Sr. Sub. Nt. 15% due 05/31/00* 06/13/90     2,310,000     2,310,000     2,310,000
                                                                                 -----------  ------------   -----------
                                                                                   4,125,000     4,125,000     4,125,000       3.95
                                                                                 -----------  ------------   -----------------------


                    TOTAL INVESTMENT IN  MANAGED  COMPANIES                     $ 60,996,883  $ 60,996,883   $64,277,096      61.64%
                    ---------------------------------------                     ------------  ------------   -----------------------

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


<PAGE>
<TABLE>
<CAPTION>
                                          EQUITABLE CAPITAL PARTNERS,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
  $      9,460,000  Western Pioneer, Inc.,
                      Sr. Sub. Nts. 10% due 11/30/07*(b)              11/30/94   $ 1,219,460  $  1,219,460   $  4,730,000
   162,161 Warrants Western Pioneer, Inc.,
                     Common Stock Purchase Warrants **                11/30/94             0             0              0
                                                                                 -----------  ------------   ------------
                                                                                   1,219,460     1,219,460      4,730,000      4.53
                                                                                 -----------  ------------   -----------------------
                    BROADCASTING

                    APOLLO RADIO HOLDING CO., INC. - NOTE 12
      57.75 Shares  Apollo Radio Holding Co., Inc., Common Stock**    06/01/90       119,942       119,942        895,172
       49.5 Shares  Apollo Radio Holding Co., Inc., Common Stock**    04/03/90       102,808       102,808        767,295
   17.8749 Warrants Apollo Radio Holding Co., Inc., Common Stock
                      Purchase Warrants**                             04/03/90             0             0              0
                                                                                 -----------  ------------  -------------
                                                                                     222,750       222,750      1,662,467      1.59
                                                                                 -----------  ------------  ------------------------
                    HEALTH SERVICES

                    MTI HOLDINGS, INC. - NOTES 10,12
  $        221,310  MTI Holdings, Inc.,
                     Sr. Sec. Nt. 12% due 07/15/03* (b)               08/06/96       221,310       221,310        221,310
   15,772 Shares    MTI Holdings, Inc., Common Stock**                08/06/96       236,580       236,580        236,580
    4,397 Warrants  MTI Holdings, Inc., Common Stock
                     Purchase Warrants                                08/06/96             0             0              0 
                                                                                   ---------    ----------     ----------
                                                                                     457,890       457,890        457,890      0.44
                                                                                   ---------    ----------     ---------------------
                    PRINTING, PUBLISHING AND ALLIED LINES

                    AMERICAN PAPER GROUP, LTD.
  $      1,209,417  American Paper Group, Ltd.,
                     Sub. Nts. 5% due 12/31/00*                       01/18/94       820,467       935,846        935,846
      2,021 Shares  American Paper Holdings Inc., Common Stock**      01/18/94       136,903       136,903        136,903
                                                                                   ---------    ----------     ----------
                                                                                     957,370     1,072,749      1,072,749      1.03
                                                                                   ---------    ----------     ---------------------

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


<PAGE>
<TABLE>
<CAPTION>
                                              EQUITABLE CAPITAL PARTNERS,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
  $      3,236,800  Pergament Acq. Corp., Home Centers, Inc.
                     Floating Rate Demand Note due 07/31/00* (b)      10/18/91  $  3,236,800   $  3,236,800    $ 2,427,600
     380.80 Shares  Pergament Holding, Corp., Common Stock Class B ** 02/28/89     8,568,000      8,568,000              0
    139.0545 Shares Pergament Holding, Corp., Common Stock Class C ** 02/28/89             0              0              0
                                                                                 -----------   ------------    -----------
                                                                                  11,804,800     11,804,800      2,427,600     2.33
                                                                                 -----------   ------------    ---------------------

                    BANKING AND FINANCE

                    BANK UNITED CORP. - NOTES 10,12
                    (FORMERLY USAT HOLDINGS INC.)
     877,908 Shares  Bank United Corp., Class A Common Stock (c)     01/05/90 &
                                                                     12/19/91      5,890,419      5,890,419     19,654,165
                                                                                 -----------    -----------    -----------
                                                                                   5,890,419      5,890,419     19,654,165    18.85
                                                                                 -----------    -----------    ---------------------


                    TOTAL INVESTMENT IN NON-MANAGED  COMPANIES                   $20,552,689    $20,668,068    $30,004,871    28.77%
                    ------------------------------------------                   -----------    -----------    ---------------------


                    TOTAL INVESTMENT IN ENHANCED YIELD INVESTMENTS               $81,549,572    $81,664,951    $94,281,967    90.41%
                    ----------------------------------------------               -----------    -----------    ---------------------


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


<PAGE>
<TABLE>
<CAPTION>
                                          EQUITABLE CAPITAL PARTNERS,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   $ 4,978,883  $  4,978,883
  $      3,230,000  Jefferson Smurfit, 5.50% due 12/24/96             09/24/96    3,185,094     3,188,548     3,188,548
  $      1,855,000  Morgan Guaranty Trust Co., 5.47% due 12/13/96     09/24/96    1,832,451     1,834,425     1,834,425
                                                                               ------------   -----------  -----------
                    TOTAL INVESTMENT IN COMMERCIAL PAPER                       $  9,991,149   $10,001,856  $ 10,001,856        9.59%
                    ------------------------------------                       ------------   -----------  -------------------------

                    TOTAL TEMPORARY INVESTMENTS                                $  9,991,149   $10,001,856  $ 10,001,856        9.59%
                    ---------------------------                                ------------   -----------  -------------------------

                    TOTAL INVESTMENT PORTFOLIO                                 $ 91,540,721   $91,666,807  $104,283,823      100.00%
                    --------------------------                                 ============  ============  =========================

                    SUMMARY OF INVESTMENTS
                    Subordinated Notes                                         $ 41,114,703  $ 41,230,082  $ 32,594,848       31.26%
                    Preferred Stock                                                 313,500       313,500             0        0.00
                    Common Stock and Warrants                                    40,121,369    40,121,369    61,687,119       59.15
                    Temporary Investments                                         9,991,149    10,001,856    10,001,856        9.59
                                                                               ------------  ------------  -------------------------
                                                                               $ 91,540,721   $91,666,807  $104,283,823      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, 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     $          -    $         -   $   177,185(A)  $   177,185

ASR Acquisition Corp.
   Common Stock                                               various          219,745         34,561     2,045,112       2,010,551

Total Net Realized Gains for the Three
   Months Ended March 31, 1996                                                            $    34,561   $ 2,222,297     $ 2,187,736
                                                                                          ===========   ===========     ============





Polaris Pool Systems, Inc.
   Common Stock                                               6/03/96                -    $        -    $    85,169(A) $     85,169

U.S. Leather Holdings, Inc.
   15% Sr. Sub. Deb.*                                         4/09/96     $ 18,684,000    $21,875,262   $ 9,342,000(B) $(12,533,262)
   8% Sr. Pref. Stock                                         4/09/96         3,800.89      2,576,000             -      (2,576,000)
   Jr. Sub. Pref. Stock                                       4/09/96          191,504              -             -               -
   Warrants                                                   4/09/96          191,504        238,247             -        (238,247)

Total Net Realized Losses for the Three
   Months Ended June 30, 1996                                                             $24,689,509   $ 9,427,169    $(15,262,340)
                                                                                          ===========   ===========    ============



MTI Holdings, Inc.,
   5% Sr. Sec. Note                                           8/06/96      $   915,779    $   915,779   $   221,310(B) $   (694,469)
   Common Stock                                               8/06/96           43,436        990,000       236,580(B)     (753,420)

Bank United Corp.
   Common Stock                                               8/14/96          207,492      1,338,639     3,911,224       2,572,585

Tulip Holding Corp.
   14.5% Sub Note                                             9/12/96      $ 8,530,073      8,514,414         5,687      (8,508,727)
   16.5% Sub Note                                             9/12/96      $ 2,446,735      2,446,735             -      (2,446,735)
   15% Exch. Preferred Stock                                  9/12/96       2,843.3625      2,843,362             -      (2,843,362)
   Common Stock                                               9/12/96          153,104         30,636             -         (30,636)

Ampex Recording Media Corp.
   Common Stock                                               9/30/96           22,977        184,505       183,953            (552)

Total Net Realized Losses for the Three
   Months Ended September 30, 1996                                                        $17,264,070   $ 4,558,754    $(12,705,316)
                                                                                          ===========   ===========    ============

Total Net Realized Losses for the Nine                                                    $41,988,140   $16,208,220    $(25,779,920)
  Months Ended September 30, 1996                                                         ===========   ===========    ============



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


               See the Accompanying Notes to Financial Statements.

<PAGE>

                        EQUITABLE CAPITAL PARTNERS, 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 Fund's investments. As of July 22,
1993,  Alliance  Corporate  assumed  such  responsibilities  in its  capacity as
Managing General Partner and Investment Adviser of the Funds.

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

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

2.  Significant Accounting Policies

    Basis of Accounting

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

    Valuation of Investments

     Securities  are valued at market or fair  value.  Market  value is used for
securities  for which market  quotations are readily  available.  For securities
without a readily  ascertainable  market value,  fair value is determined,  on a
quarterly  basis,  in good faith by the General  Partners of the Fund. The total
value of securities without a readily  ascertainable market value is $47,437,530
and  $46,116,681  as of September 30, 1996 and December 31, 1995,  respectively,
representing 44.1% and 41.0% of total assets,  respectively.  In connection with
such  determination,  the Managing  General  Partner has established a valuation
committee comprised of senior executives to assess the Fund's portfolio and make
recommendations  regarding the value of the Fund's  portfolio  securities.  This
valuation committee uses available market information and appropriate  valuation
methodologies.  In addition, the Managing General Partner has retained Arthur D.
Little,  Inc., a nationally  recognized  independent  valuation  consultant,  to
review such valuations.

<PAGE>

     For privately issued  securities in which the Fund typically  invests,  the
fair value of an investment is its initial cost,  adjusted for  amortization  of
discount or premium and as  subsequently  adjusted to reflect the  occurrence of
significant developments.  "Significant developments" are business,  economic or
market events that may affect a company in which an investment  has been made or
the securities comprising such investment. For example, significant developments
that could result in a writedown in value include, among other things, events of
default with respect to payment  obligations  or other  developments  indicating
that a portfolio  company's  performance may fall short of acceptable  levels. A
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 value of these  investments,  there are
inherent limitations in any valuation technique involving securities of the type
in which the Fund invests.  Therefore,  the fair values presented herein are not
necessarily  indicative  of the amount which the Fund could realize in a current
transaction.

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

    Interest Receivable on Investments

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

    Payment-In-Kind Securities

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

    Income Taxes

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

    Investment Transactions

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

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

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

    Sales, Marketing and Offering Expenses and Sales Commissions

    Sales  commissions and selling discounts 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.

<PAGE>

3.  Note Receivable

     On July 22, 1993,  pursuant to the terms of the Fund's Amended and Restated
Agreement of Limited Partnership,  Alliance Corporate, as the successor Managing
General Partner of the Fund, has contributed a non-interest  bearing  promissory
note  (the  "Note")  to the Fund in an  aggregate  amount  equal to 1.01% of the
aggregate Net Capital  Contributions of all Limited Partners (less distributions
representing  returns of capital).  Net Capital  Contributions  are comprised of
gross  offering  proceeds,  after giving effect to volume  discounts  (and after
netting of sales  commissions,  organization,  offering and sales and  marketing
expenses),  less  returns  of  capital  distributed  to  Limited  Partners.  The
principal amount of the Note is reduced  proportionally as such Limited Partners
receive   distributions   representing   additional  returns  of  capital.  Such
distributions  received for the nine months ended September 30, 1996 resulted in
a $61,284  reduction of the principal amount of the Note. The promissory note of
Equitable  Capital was cancelled upon the  contribution of Alliance  Corporate's
note.

4.  Capital Contributions

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

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

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

5.  Sales, Marketing and Offering Expenses and Sales Commissions

    The Fund  expended a total of $535,631  for the  reimbursement  of sales and
marketing expenses.  Aggregate sales and marketing expenses of the Funds may not
exceed  $2,528,415  or 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 totalled $951,683.

    The Fund also paid $2,098,311 for the  reimbursement  of offering  expenses.
These expenses,  along with the offering expenses of the Retirement Fund and the
organizational  expenses  of the  Funds,  may not exceed  $6,000,000.  Aggregate
offering and  organizational  expenses for the Funds  totalled  $4,711,806 as of
September 30, 1996.

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

<PAGE>

6.  Investment Advisory Fee

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

     The  Investment  Advisory Fee is calculated  and paid quarterly in advance.
The  Investment  Advisory  Fees  paid by the  Fund  for the  nine  months  ended
September  30, 1996 and 1995 were  $824,674 and  $1,104,449,  respectively.  The
decrease from 1995 to 1996 in  Investment  Advisory Fees is due primarily to the
return of  capital to  Limited  Partners,  which  reduced  the 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 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 Fund  Administration Fee
is calculated and paid quarterly in advance.  The Fund  Administration Fees paid
by the Fund for the nine months ended  September 30, 1996 and 1995 were $630,453
and $683,070 respectively.

     In addition to the Fund  Administration  Fee,  MLFAI is entitled to receive
reimbursement  for a  portion  of  direct  out-of-pocket  expenses  incurred  in
connection with the administration of the Retirement Fund, commencing on October
13,  1992.  For the nine months  ended  September  30,  1996 and 1995,  the Fund
incurred Administrative Expenses of $136,605 and $137,345,  respectively,  which
consisted primarily of printing,  audit and tax return preparation and custodian
fees paid for by MLFAI on behalf of the Fund.

8.  Independent General Partners' Fees and Expenses

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

     For the nine months ended  September  30, 1996 and 1995,  the Fund incurred
$147,971 and $128,469,  respectively,  of Independent General Partners' Fees and
Expenses.

9. Related Party Transactions

     For the nine months ended  September  30, 1996,  the Fund paid  expenses of
$73,550  as  reimbursement  for  amounts  paid for legal  services  provided  by
Equitable Life in connection with the Fund's Enhanced Yield Investments. For the
nine months  ended  September  30,  1995,  the Fund paid  expenses of $34,192 as
reimbursement  for legal services  provided by Equitable Life in connection with
the Fund's Enhanced Yield Investments.  The Fund is paying Alliance Corporate an
Investment  Advisory Fee for its services as described in Note 6.  Additionally,
the Fund paid  sales  commissions  to Equico  Securities,  a related  party,  as
described in Note 5.

<PAGE>

10.  Investment  Transactions

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

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

     During the three months ended September 30, 1996, the Fund received a total
of $236,500 from Western Pioneer, Inc. as principal paydowns of the senior notes
held  by the  Fund.  No  gain,  loss  or  income  has  been  recorded  on  these
transactions  and the amounts  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 Fund recognized a loss of $1,447,889 on this transaction.

     On August 14,  1996,  the Fund sold  207,492  shares of Bank  United  Corp.
(formerly  USAT Holdings Inc.) common stock for $3,911,224 and recognized a gain
of $2,572,585.

     On  September  12,  1996,  the Fund  sold its  Tulip  Holding  Corp.  14.5%
Subordinated  Notes for $5,687 and  recognized a loss of $8,508,727 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
$5,320,733 to the Fund.

     On September 30, 1996, the Fund sold 22,977 shares of Ampex Recording Media
Corp.  Class A Comon Stock for $183,953  which resulted in a loss of $552 to the
Fund.

     As of September 30, 1996, the Fund had investments in six Managed Companies
(a Managed  Company is one to which the Fund,  the Managing  General  Partner or
other  persons  in  the  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  $82,997,461  (including
$854,000  capitalized  cost  of  payment-in-kind   securities),   consisting  of
$41,809,172 in senior notes and subordinated notes,  $313,500 in preferred stock
and purchase warrants and $40,874,789 in common stock.

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 Fund  recorded  net
unrealized appreciation on Enhanced Yield Investments of $37,949,493 compared to
$22,543,056 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 $12,626,984, $2,576,000 and $238,247 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 $1,840,387
to the 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
$2,142,000.  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 $809,200 to the Fund.

     On March 31, 1996, RI Holdings, Inc. senior subordinated notes were written
down to 30% of par,  resulting in unrealized  depreciation  of $2,145,567 to the
Fund.  On May 1, 1996,  the Fund  received  additional  shares of Class B Common
Stock from RI Holdings.  The Fund exchanged  outstanding debt for the new common
stock  issued,  resulting in unrealized  depreciation  of $1,360 to the 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 $3,658,076 to
the Fund. On September 30, 1996, RI Holdings,  Inc.  senior  subordinated  notes
were written down from 15% to 2% or par, resulting in unrealized depreciation of
$3,170,333 to the Fund.

     Due to an  increase  in the quoted  market  price of Lexmark  International
Group,  Inc. common stock,  the Fund recorded total  unrealized  appreciation of
$2,571,985 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 $2,671,546 to the Fund.

     Due to a decrease in the quoted market price of the Ampex  Recording  Media
Corp. Class A Common Stock,  the Fund recorded total unrealized  depreciation of
$22,690  at  September  30,  1996.  Also,  due to the  sale of  common  stock on
September 30, 1996, $16,773 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 Fund  recorded  total  unrealized  appreciation  of
$150,701 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 $449,717 to the Fund.

     Due to the sale of the Class B Common Stock  investment in ASR  Acquisition
Corp. in March 1996, the Fund reversed the unrealized  appreciation  recorded of
$1,695,930.

     On August 6, 1996,  the Fund  reversed a total of  $1,447,889 of unrealized
depreciation in MTI Holdings, Inc. due to a restructuring.

     Due to the sale of the Tulip Holding  Corproation 14.5%  Subordinated Notes
on September 12, 1996, the Fund reversed the unrealized depreciation recorded of
$8,516,679. The Fund also reversed $5,320,733 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 $426,504 to the 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 $3,510,540 to the Fund.

     Due to an increase in the quoted  market price of Bank United Corp.  common
stock,  the Fund  recorded  total  unrealized  appreciation  of  $13,763,746  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 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 Fund,  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 Fund's partners for inclusion in their respective tax returns.

    Pursuant to Statement of Financial Accounting Standards No. 109 - Accounting
for Income Taxes,  the Fund is required to disclose any  difference  between the
tax bases of the Fund's assets and  liabilities  versus the amounts  reported in
the  Financial  Statements.  Generally,  the  tax  bases  of the  Fund's  assets
approximate  the amortized  cost amounts  reported in the Financial  Statements.
This amount is computed  annually and as of December 31, 1995,  the tax basis of
the  Fund's  assets was  greater  than the  amounts  reported  in the  Financial
Statements  by  $60,536,688.   This  difference  is  primarily  attributable  to
unrealized  depreciation  on investments  which has not been  recognized for tax
purposes. Additionally,  certain realized gains and losses due to 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 $5,021,836 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
$5,017,692  or $17.63 per Unit (of which  $2,060,584  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 $8.95 of realized gains, $1.44 of
income from operations, $5.50 of return of capital and $1.74 of capital returned
from reserve.  The Managing General Partner's one percent  allocation of $50,684
was reduced by its one percent allocation of realized gains and capital returned
from  investments  during the third quarter of 1996, of $46,540  (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 $4,144.



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

Investments

     As of  September  30,  1996,  the  Fund had a total  of 12  Enhanced  Yield
Investments at a net cost of $82,997,461 (inclusive of the receipt of securities
having a capitalized cost of $854,000  received as  payment-in-kind  interest on
certain Enhanced Yield Investments).

Proceeds from Investments

     During the nine months ended September 30, 1996, the Fund received proceeds
from the following investments:

     On January 10 and June 3 1996,  the Fund  received  additional  proceeds of
$177,185 and $85,169,  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 Fund received a total
of $709,500 and $187,444 from Western Pioneer,  Inc. and U.S. Leather  Holdings,
Inc., respectively,  as principal paydowns of the senior notes held by the Fund.
No gain, loss or income has been recorded on the transactions.

     During March 1996, the Fund sold its remaining ASR Acquisition Corp. common
stock for $2,045,112 and recognized a gain of $2,010,551 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 Fund have been
surrendered  and cancelled in exchange for 795 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 Fund received  dividend  income of $3,760,524 from Bank
United Corp.

     On August 6, 1996, a comprehensive  restructuring  closed for MTI Holdings,
Inc. The Fund recognized a loss of $1,447,889 on this transaction.

     On August 14,  1996,  the Fund sold  207,492  shares of Bank  United  Corp.
(formerly  USAT Holdings Inc.) common stock for $3,911,224 and recognized a gain
of $2,572,585.

     On  September  12,  1996,  the Fund  sold its  Tulip  Holding  Corp.  14.5%
Subordinated  Notes for $5,687 and  recognized a loss of $8,508,727 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
$5,320,733 to the Fund.

     On September 30, 1996, the Fund sold 22,977 shares of Ampex Recording Media
Corp.  Class A Comon Stock for $183,953  which resulted in a loss of $552 to the
Fund.

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

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

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

<PAGE>

Participation in Enhanced Yield Investments

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

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

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

Results of Operations

     For the three  months  ended  September  30, 1996,  net  investment  income
decreased  by  $926,032,  as compared  to the same period in 1995.  For the nine
months ended September 30, 1996, net investment  income increased by $1,110,832,
as compared to the same period in 1995.  Net  investment  income is comprised of
investment income  (primarily  interest and dividend income) offset by expenses.
The increase in the 1996 net investment income versus the comparative  period in
1995,  reflects the increase in dividend income partially offset by the decrease
in Investment Advisory Fees and Fund Administration Fees and Expenses.

     For the  three and nine  months  ended  September  30,  1996,  the Fund had
investment  income of $1,151,762 and  $7,205,553,  respectively,  as compared to
$2,051,759  and  $6,293,387,  respectively,  for the same  periods in 1995.  The
increase in 1996  investment  income of 14% was  primarily due to an increase in
dividend income  partially  offset by a decrease in the amount of accrual status
debt  securities  held by the Fund due to the sales and  repayments  of Enhanced
Yield Investments.

     The Fund  incurred  expenses of $653,166 and  $1,905,159  for the three and
nine months ended September 30, 1996, as compared to $627,131 and $2,103,825 for
the same  periods in 1995.  The  decrease in the 1996  expenses of $198,666  was
primarily due to a decrease to Investment  Advisory Fees and Fund Administration
Fees and Expenses  paid by the Fund.  The Fund's major  expenses  consist of the
Investment   Advisory  Fee,  the  Fund  Administration  Fees  and  Expenses  and
Independent General Partners' Fees and Expenses.

     The Fund  experienced an increase in net assets  resulting from  operations
for the nine months ended  September  30, 1996 in the amount of  $17,469,967  as
compared to a decrease of $13,703,161  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  $5,300,394,  net realized  losses of  $25,779,920
offset by a net  change  in  unrealized  appreciation  of  $37,949,493.  For the
comparable  period in 1995,  the  decrease  in net assets was  comprised  of net
investment  income of $4,189,562,  net realized gains of $4,650,333  offset by a
net  change  in  unrealized  depreciation  of  $22,543,056  (see  Statements  of
Operations in the Financial Statements).

     For the three months ended  September 30, 1996 and 1995,  the Fund incurred
Investment  Advisory Fees of $249,764 and $338,234,  respectively.  For the nine
months ended September 30, 1996 and 1995, the Fund incurred  Investment Advisory
Fees of $824,674 and  $1,104,449,  respectively  (as  described in Note 6 to the
Financial Statements).  The decrease in the Investment Advisory Fees is due to a
decrease in the Fund's Available Capital on which the Investment Advisory Fee is
based, resulting primarily from redemptions of debt obligations held by the Fund
(which is a component of Available Capital).

<PAGE>

     The 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 $229,860 and $237,577 respectively, and for the nine months ended September
30, 1996 and 1995 were  $767,058 and $820,415,  respectively.  The decrease from
1995 to 1996 of $53,357 is primarily  due to a decrease in the Fund's  Available
Capital on which the Fund Administration Fee is based,  resulting primarily from
redemptions  of debt  obligations  held by the Fund  (which  is a  component  of
Available Capital). In accordance with the Partnership  Agreement,  beginning in
October  1996,  the Fund  Administration  Fee will  change to an  annual  fee of
$300,000  plus 100% of all direct  out-of-pocket  expenses  incurred by the Fund
Administrator on behalf of the Fund.

     Independent  General Partners' Fees and Expenses incurred for the three and
nine  months  ended  September  30,  1996 and 1995 were  $49,636  and  $147,971,
respectively and $38,000 and $128,469, respectively.

     The Fund incurred  Professional Fees of $123,906 and $141,179 for the three
and nine months  ended  September  30,  1996,  respectively.  Professional  Fees
incurred for the same periods in 1995 were $7,570 and $37,257, respectively.
(See Note 9 to the Financial Statements).

Unrealized  Appreciation/Depreciation and Non-Accrual of Investments

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

     For privately issued  securities in which the Fund typically  invests,  the
fair value of an investment is its initial cost,  adjusted for  amortization  of
discount or premium and as  subsequently  adjusted to reflect the  occurrence of
significant developments.  "Significant developments" are business,  economic or
market events that may affect a company in which an investment  has been made or
the securities comprising such investment. For example, significant developments
that could result in a writedown in value include, among other things, events of
default with respect to payment  obligations  or other  developments  indicating
that a portfolio  company's  performance may fall short of acceptable  levels. A
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 value of these investments, there are inherent limitations in any valuation
technique involving securities of the type in which the Fund invests. Therefore,
the fair values  presented  herein are not necessarily  indicative of the amount
which the Fund could realize in a current transaction.

     For the nine  months  ended  September  30,  1996,  the Fund  recorded  net
unrealized appreciation on Enhanced Yield Investments of $37,949,493 as compared
to $22,543,056 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.
<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 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

     During  the  three and nine  months  ended  September  30,  1996,  the Fund
recorded net realized losses of $12,705,316 and  $25,779,920,  respectively,  on
transactions  involving four Enhanced Yield Investments.  For the three and nine
months ended  September  30,  1995,  the Fund  recorded  net  realized  gains on
investments  of  $4,567,590  and  $4,650,333,   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 through 4 are  herewith  omitted as the  response to 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.**

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

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

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

***      Incorporated by reference to the Fund's  Quarterly  Report on Form 10-Q
         for the quarter  ended June 30,  1989,  filed with the  Securities  and
         Exchange Commission on August 14, 1989.

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

(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, 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, 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