[ARTHUR ANDERSEN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Independent General Partners of
Equus Capital Partners, L.P.:
We have examined management's assertion about Equus Capital Partners, L.P.'s
(the "Partnership's") compliance with the requirements of subsections (b) and
(c) of Rule 17f-2 under the Investment Company Act of 1940 ("the Act") as of
December 31, 1999, included in the accompanying Management Statement Regarding
Compliance with Certain Provisions of the Investment Company Act of 1940.
Management is responsible for the Partnership's compliance with those
requirements. Our responsibility is to express an opinion on management's
assertion about the Partnership's compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Partnership's compliance with
those requirements and performing such other procedures as we considered
necessary in the circumstances. Included among our procedures were the following
tests performed as of December 31, 1999:
o Count and inspection of all securities located in the vault of
Southwest Guaranty Trust in Houston, Texas;
o Confirmation of all securities hypothecated, pledged, placed in
escrow, or out for transfer with brokers, pledgees and/or transfer
agents;
o Reconciliation of all such securities to the books and records of
the Partnership and the custodian.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Partnership's
compliance with specified requirements.
In our opinion, management's assertion that Equus Capital Partners, L.P. was in
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of December 31, 1999, with respect to
securities reflected in the investment account of the Partnership is fairly
stated, in all material respects.
This report is intended solely for the information and use of management of
Equus Capital Partners, L.P. and the Securities and Exchange Commission and
should not be used for any other purpose.
/s/ ARTHUR ANDERSEN, LLP
Houston, Texas
December 31, 1999
<PAGE>
MANAGEMENT STATEMENT REGARDING COMPLIANCE WITH CERTAIN PROVISIONS OF THE
INVESTMENT COMPANY ACT OF 1940
We, as members of management of Equus Capital Corporation, managing general
partner of Equus Capital Partners, L.P. (the "Partnership"), are responsible for
complying with the requirements of subsections (b) and (c) Rule 17f-2, "Custody
of Investments by Registered Management Investment Companies," of the Investment
Company Act of 1940. We are also responsible for establishing and maintaining
effective internal controls over compliance with those requirements. We have
performed an evaluation of the Partnership's compliance with the requirements of
subsections (b) and (c) of Rule 17f-2 as of December 31, 1999 and from June 30,
1999 through December 31, 1999.
Based on this evaluation, we assert that the Partnership was in compliance with
the requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
Company Act of 1940 as of December 31, 1999 and from June 30, 1999 through
December 31, 1999, with respect to securities reflected in the investment
account of the Partnership.
Equus Capital Corporation
Managing General Partner of
Equus Capital Partners, L.P.
By: /s/ NOLAN LEHMANN
Nolan Lehmann
President
