EQUITABLE CAPITAL PARTNERS L P, 10-K, 1996-03-25

EQUITABLE CAPITAL PARTNERS L P
10-K, 1996-03-25

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

Part I

Item 1. Business

Formation

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

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

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

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

<PAGE>

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

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

Investments

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

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

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

Pending investments in Enhanced Yield Investments, the net proceeds of
the public offering were invested in certain temporary investments, consisting
principally of commercial paper with maturities of less than sixty days.
Currently, proceeds that are not invested in Enhanced Yield Investments or
returned to Limited Partners are held in such temporary investments.

New Investments in 1995

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

Follow-on Investments in 1995

In 1995, the Fund made a single follow-on investment as described below:

RI Holdings, Inc. ("Rowe")

Rowe is engaged in the design, engineering and manufacturing of
jukeboxes, bill acceptors and currency changers.

Under the terms of Rowe's senior subordinated notes, the Fund receives
common stock at a nominal cost of one cent per share for each interest payment
date on which Rowe delivers payment-in-kind securities in lieu of making a cash
payment. On May 9, 1995, the Fund acquired 186,879.68 shares of Common Stock of
RI Holdings, Inc. for a total cost of $1,869.

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

Competition

The Fund competes with other entities having a similar investment
objective. In addition, since Enhanced Yield Investments are selected and
managed exclusively by Alliance Corporate on behalf of the Fund, other entities
which compete with Alliance Corporate with respect to such investments therefore
compete with the Fund. Competitors include other private and public mezzanine
funds, other business development companies, investment partnerships and
corporations, small business investment companies and large industrial and
financial companies investing directly or through affiliates and individuals.

Employees

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

Item 2. Properties

The Fund does not own or lease any physical properties.

Item 3. Legal Proceedings

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

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

None.
Part II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters

The Units are illiquid securities and are subject to significant
restrictions on transfer. The information in the Prospectus under the caption
"Transferability of Units" is incorporated in this Item 5 by reference. There is
no established trading market for the Units. The Partnership Agreement contains
restrictions that are intended to prevent the development of a public market.

The number of holders of Units as of December 31, 1995 was 17,964. The
Managing General Partner holds a general partner interest in the Fund and does
not hold any Units. Pursuant to the terms of the Partnership Agreement, the Fund
generally makes distributions within 45 days after the end of each calendar
quarter of cash income received from investments in excess of expenses of
operation, reserves for expenses and certain investments and liabilities. Net
cash receipts representing cumulative income and gains are distributed as soon
as practicable after the related disposition. Such distributions are allocated
among the Managing General Partner, and the Limited Partners, in general, first
99% to the Limited Partners and 1% to the Managing General Partner until the
Limited Partners have received a cumulative priority return of 10% noncompounded
on an annual basis on their investments in Enhanced Yield Investments, second,
70% to the Limited Partners and 30% to the Managing General Partner until the
Managing General Partner has received 20% of all current and prior distributions
on such investments and, thereafter, 80% to the Limited Partners and 20% to the
Managing General Partner. The Fund's distribution procedures are described in
detail in the Prospectus under the caption "Distributions and Allocations"; the
information under such caption is incorporated by reference in this Item 5.

<PAGE>

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

<PAGE>

Item 6. Selection Financial Data

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

PER UNIT OF LIMITED
PARTNERSHIP INTEREST:

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

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

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

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

</TABLE>

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

<PAGE>

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

Liquidity and Capital Resources

Net Proceeds of Offering

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

Investments

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

Credit Agreement

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

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

Proceeds from Investments

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

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

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

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

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

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

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

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

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

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

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

Participation in Enhanced Yield Investments

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

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

<PAGE>

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

Results of Operations

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

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

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

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

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

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

<PAGE>

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

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

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

Unrealized Appreciation/Depreciation and Non-Accrual of Investments

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

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

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

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

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

<PAGE>

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

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

Realized Gains and Losses on Investments

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

<PAGE>

Item 8. Financial Statements and Supplementary Data

EQUITABLE CAPITAL PARTNERS, L.P.

TABLE OF CONTENTS

Independent Auditors' Report

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

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

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

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

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

Schedule of Portfolio Investments - December 31, 1995

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

Notes to Financial Statements

<PAGE>

INDEPENDENT AUDITORS' REPORT

Equitable Capital Partners, L.P.:

We have audited the accompanying statements of assets, liabilities and partners'
capital of Equitable Capital Partners, L.P. (the "Fund") as of December 31, 1995
and 1994, including the schedule of portfolio investments as of December 31,
1995, and the related statements of operations, cash flows, changes in net
assets and changes in partners' capital for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Fund's General Partners. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

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

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

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

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

<PAGE>

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

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

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

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

TOTAL LIABILITIES AND PARTNERS' CAPITAL

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

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

</TABLE>

See the Accompanying Notes to Financial Statements.

<PAGE>

EQUITABLE CAPITAL PARTNERS, L.P.
STATEMENTS OF OPERATIONS

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

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

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

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

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

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

</TABLE>

See the Accompanying Notes to Financial Statements

<PAGE>

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

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

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

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

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

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

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

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

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

FROM OPERATIONS:

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

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

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

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

NET ASSETS:

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

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

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

<PAGE>

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

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

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

FOR THE YEAR ENDED DECEMBER 31, 1994

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

FOR THE YEAR ENDED DECEMBER 31, 1995

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

</TABLE>

See the Accompanying Notes to Financial Statements.

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

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

ENHANCED YIELD INVESTMENTS
MANAGED COMPANIES

CONSUMER PRODUCTS MANUFACTURING

LEXMARK INTERNATIONAL GROUP, INC.
$ 19,667,348 Lexmark International, Inc.,
Sr. Sub. Nts. 14.25% due 03/31/01* 03/27/91 $ 19,667,348 $ 19,667,348 $ 19,667,348
1,327,476 Shares Lexmark International Group, Inc.,
Class B Common Stock** (d) 03/27/91 8,849,843 8,849,843 21,803,793
----------- ------------ ------------
28,517,191 28,517,191 41,471,141 37.81
----------- ------------ -------------------------

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

BANKING AND FINANCE

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

</TABLE>

See the Accompanying Notes to Financial Statements.

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

MISCELLANEOUS MANUFACTURING

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

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

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

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

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

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

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

PRINTING, PUBLISHING AND ALLIED LINES

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

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

See the Accompanying Notes to Financial Statements.

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

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

NON-MANAGED COMPANIES

CONSUMER PRODUCTS MANUFACTURING

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

DISTRIBUTION SERVICES

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

BROADCASTING

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

</TABLE>

See the Accompanying Notes to Financial Statements.

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

HEALTH SERVICES

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

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

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

TEMPORARY INVESTMENTS

COMMERCIAL PAPER

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

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

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

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

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

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

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

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

</TABLE>

See the Accompanying Notes to Financial Statements.

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

<S> <C> <C> <C> <C> <C><C>
PAR VALUE OR
DATE OF NUMBER OF AMORTIZED NET REALIZED
SECURITY TRANSACTION SHARES COST PROCEEDS GAIN (LOSS)
Polaris Pool Systems, Inc.
Common Stock 3/22/95 - $ - $ 82,743 (A) $ 82,743

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

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

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

See the Accompanying Notes to Financial Statements.

<PAGE>

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

1. Organization and Purpose

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

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

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

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

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

2. Significant Accounting Policies

Basis of Accounting

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

<PAGE>

Valuation of Investments

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

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

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

Interest Receivable on Investments

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

Payment-In-Kind Securities

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

Income Taxes

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

Deferred Organization Expenses

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

<PAGE>

Investment Transactions

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

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

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

Sales, Marketing and Offering Expenses and Sales Commissions

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

3. Note Receivable

On July 22, 1993, pursuant to the terms of the Fund's Amended and
Restated Agreement of Limited Partnership, Alliance Corporate, as the successor
Managing General Partner of the Fund, has contributed a non-interest bearing
promissory note (the "Note") to the Fund in an aggregate amount equal to 1.01%
of the aggregate Net Capital Contributions of all Limited Partners (less
distributions representing returns of capital). Net Capital Contributions are
comprised of gross offering proceeds, after giving effect to volume discounts
(and after netting of sales commissions, organization, offering and sales and
marketing expenses), less returns of capital distributed to Limited Partners.
The principal amount of the Note is reduced proportionally as such Limited
Partners receive distributions representing additional returns of capital. Such
distributions received for the year ended December 31, 1995 resulted in a
$255,780 reduction of the principal amount of the Note. The promissory note of
Equitable Capital was cancelled upon the contribution of Alliance Corporate's
note.

4. Capital Contributions

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

The Limited Partners' total capital contributions were $283,873,400,
after giving effect to volume discounts allowed of $737,600. Equitable Capital's
aggregate capital contribution was in the form of a promissory note in the
principal amount of $2,641,469. On July 22, 1993, Equitable Capital's note was
canceled and Alliance Corporate made a capital contribution in the form of a
promissory note on such date, as described in Note 3. Sales, marketing and
offering expenses and selling commissions have been charged against proceeds
resulting in net capital contributed by Limited Partners of $261,531,542.

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

5. Sales, Marketing and Offering Expenses and Sales Commissions

The Fund expended a total of $535,631 for the reimbursement of sales and
marketing expenses. Aggregate sales and marketing expenses of the Funds may not
exceed $2,528,415 or .5% of the aggregate capital contributions and were
allocated proportionately to the number of Units issued by each Fund. Aggregate
sales and marketing expenses for the Funds totaled $951,683.

<PAGE>

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

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

6. Investment Advisory Fee

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

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

7. Fund Administration Fees and Expenses

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

In addition to the Fund Administration Fee, MLFAI is entitled to receive
reimbursement for a portion of direct out-of-pocket expenses incurred in
connection with the administration of the Retirement Fund, commencing on October
13, 1992. For the years ended December 31, 1995 and 1994, the Fund incurred
Administrative Expenses of $173,962 and $473,142 respectively, which consisted
primarily of printing, audit and tax return preparation and custodian fees paid
for by MLFAI on behalf of the Retirement Fund.

8. Independent General Partners' Fees and Expenses

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

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

<PAGE>

9. Loan Fees

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

10. Related Party Transactions

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

11. Investment Transactions

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

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

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

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

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

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

12. Allocation of Profits and Losses

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

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

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

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

For the year ended December 31, 1995, earnings were allocated 99% to the
Limited Partners, as a class, and 1% to the Managing General Partner.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

14. Income Taxes

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

Pursuant to Statement of Financial Accounting Standards No. 109
Accounting for Income Taxes, the Fund is required to disclose any difference
between the tax basis of the Fund's assets and liabilities versus the amounts
reported in the Financial Statements. Generally, the tax basis of the Fund's
assets approximate the amortized cost amounts reported in the Financial
Statements. This amount is computed annually and as of December 31, 1995, the
tax basis of the Fund's assets was greater than the amounts reported in the
Financial Statements by $60,536,688. This difference is primarily attributable
to unrealized depreciation on investments which has not been recognized for tax
purposes. Additionally, certain realized gains and losses due to restructuring
were treated differently for tax purposes, but not for financial reporting
purposes.

15. Subsequent Distributions

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

<PAGE>

Item 9. Disagreements on Accounting and Financial Disclosure

None.

Part III

Item 10. Directors and Executive Officers of the Registrant

The Fund

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

Independent General Partners

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

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

Mr. Lear, age 78, has been an Executive-in-Residence and Visiting Professor
at the Columbia University Graduate School of Business since 1977. He is also a
director of Cambrex Corp. and the Korea Fund (a closed-end investment fund). Mr.
Lear is a trustee of the Scudder Institutional Funds (mutual funds) and a member
of the advisory board of the Welsh, Carson, Anderson, Stowe Venture Capital
Funds.

Mr. Shapiro, age 61, is the President of RFS & Associates, Inc.
(consultants and investments). From 1986 to 1987 he was the Co-Chairman of
Wertheim Schroeder & Co. Inc. (investment bankers) and from 1974 to 1986 he was
the President of its predecessor, Wertheim & Co. Inc. Mr. Shapiro is a director
of TJX Companies, Inc. (specialty retailing), a director of American Building
Companies and the Burnham Fund Inc. (mutual fund). Mr. Shapiro was Chairman of
the Securities Industry Association in 1985.

Mr. Marshall, age 74, is Senior Fellow of the Nelson A. Rockefeller
Institute of Government. He is also President of Alton G. Marshall Associates,
Inc. (real estate consultants). He was Chairman and Chief Executive Officer of
Lincoln Savings Bank from 1984 to 1991. He is also a Director of New York State
Electric and Gas Corporation. He is a Trustee of EQK Realty Investors I and EQK
Green Acres (real estate investors), and a Trustee of The Hudson River Trust,
which is a mutual fund receiving investment advice from Alliance Capital.

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

<PAGE>

Managing General Partner

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

Management of Alliance Corporate and the Fund

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

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

Frank Savage Chairman of the Board of Directors

James R. Wilson President

William Gobbo, Jr. Senior Vice President

James D. Neidhart Senior Vice President

Laura Mah Vice President and Chief Accounting Officer

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

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

Mr. William Gobbo, Jr., age 51, is a Senior Vice President of Alliance
Corporate. Mr. Gobbo joined Alliance Corporate through the combination with
Equitable Capital. Mr. Gobbo joined Equitable Life in 1967 as an economist in
the office of Equitable's Chief Economist. He joined the Private Placement
Department in 1976 and in 1984 became head of an investment group that was
responsible for the Department's lending activities involving financial
institutions and heavy industrial companies.

<PAGE>

Mr. James D. Neidhart, age 51, is a Senior Vice President of Alliance
Corporate. He is head of the Investment Recovery Division of Alliance Corporate
responsible for the management of public and private investments in companies
that have encountered troubled financial situations. He has been actively
involved in over 20-25 restructurings, playing in most a leadership role
including chairmanship of committees critical to the restructuring process. Mr.
Neidhart, who joined Alliance Corporate through the combination with Equitable
Capital, had been employed by Equitable Capital in its workout group since 1986.
Prior to that, he had nine years of experience in private placement investments
and workout transactions with the Prudential Insurance Company of America, three
years of commercial lending experience with Harris Trust and Savings Bank and
served six years as an Officer in the U.S. Air Force.

Mrs. Laura Mah, age 40, is a Vice President of Alliance Capital and
co-manages the Insurance Services Group. She is responsible for accounting and
reporting for assets managed by Alliance Capital for insurance clients,
including mutual funds, partnerships, general, separate and advisory accounts.
Mrs. Mah joined Alliance Capital through the combination with Equitable Capital.
Prior to that, she was an Assistant Vice President with Shearson Lehman Hutton
for five years. She is a Certified Public Accountant.

The Investment Adviser

As a result of the combination of the businesses of Equitable Capital and
Alliance Capital, Equitable Capital's investment advisory agreement with the
Fund terminated in accordance with its terms on July 22, 1993. On that date,
Alliance Corporate succeeded Equitable Capital as the Fund's investment adviser.
As investment adviser to the Fund, Alliance Corporate is responsible for the
identification, management and liquidation of all investments for the Fund.

The Administrator

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

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

Item 11. Executive Compensation

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

The information with respect to the "Fund Administration Fee and
Expenses" payable to the Managing General Partner and the Administrator set
forth under the caption "Management Arrangements -- The Managing General
Partner" in the Prospectus is incorporated by reference into this Item 11. The
Fund paid $1,092,756 to the Administrator, through the Managing General Partner
in 1995.

<PAGE>

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

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

Item 12. Security Ownership of Certain Beneficial Owners and Management

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

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

Item 13. Certain Relationships and Related Transactions

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

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

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

<PAGE>

Part IV

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

(a) Financial Statements, Financial Statement
Schedules and Exhibits

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

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

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

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

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

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

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

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

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

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

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

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

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

</TABLE>
<PAGE>

SIGNATURES

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

EQUITABLE CAPITAL PARTNERS, L.P.

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

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

Dated: March 25, 1996 --------------------------------
Laura Mah
Title: Vice President and Chief
Accounting Officer

<PAGE>

Pursuant to the Requirements of the Securities and Exchange Act of 1934
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated on the 25th day of March, 1996.

Signature Title

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

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

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

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

________________________ Chairman of the Board of
Frank Savage Alliance Corporate

________________________ President and Director of
James R. Wilson Alliance Corporate

________________________
Dave H. Williams Director of Alliance Corporate

________________________
Bruce W. Calvert Director of Alliance Corporate

________________________
John D. Carifa Director of Alliance Corporate

<PAGE>

SIGNATURES

EQUITABLE CAPITAL PARTNERS, L.P.

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

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

Dated: March 25, 1996 /s/ Laura Mah
----------------------------
Laura Mah
Title: Vice President and Chief
Accounting Officer

<PAGE>

Signature Title

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

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

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

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

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

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

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

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

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

<ARTICLE> 6
<LEGEND>
This schedule contains summary information extracted from the fourth quarter of
1995 Form 10-K Balance Sheets and Statements of Operations and is qualified in
its entirety by reference to such financial statements.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 114,540,430
<INVESTMENTS-AT-VALUE> 89,318,314
<RECEIVABLES> 2,680,036
<ASSETS-OTHER> 7,906
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112,437,110
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 83,232
<TOTAL-LIABILITIES> 83,232
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 284,611
<SHARES-COMMON-PRIOR> 284,611
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (25,332,479)
<NET-ASSETS> 112,353,878
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,936,925
<OTHER-INCOME> 47,964
<EXPENSES-NET> 2,769,678
<NET-INVESTMENT-INCOME> 5,215,211
<REALIZED-GAINS-CURRENT> (11,988,596)
<APPREC-INCREASE-CURRENT> 2,627,096
<NET-CHANGE-FROM-OPS> (4,146,289)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,849,571
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 25,324,685
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (45,576,325)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,442,458
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,769,678
<AVERAGE-NET-ASSETS> 135,142,041
<PER-SHARE-NAV-BEGIN> 548.47
<PER-SHARE-NII> 18.32
<PER-SHARE-GAIN-APPREC> (42.12)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 144.67
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 394.76
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>