10

Who are the executive officers of the Fund?

The name, address and age of each executive officer, their position, term of office and length of time served with the Fund, along with certain business information, are set forth in the table below.

11

12

There are no arrangements or understandings between any of the executive officers and any other person pursuant to which any of such officers was or is to be selected as an officer.

Executive Compensation

During 2006, the Fund did not directly compensate, and does not currently compensate, its executive officers. However, executive officers of the Fund do receive compensation from the Fund’s administrator, Equus Capital Administration Company, Inc., as employees of Equus Capital Administration Company, Inc. In addition, executive officers of the Fund may serve as directors of portfolio companies and in such capacities may receive and retain directors’ fees and other compensation directly from the portfolio companies.

Grants of Plan-Based Awards

During 2006, the Fund did not grant any plan-based awards to its executive officers.

Outstanding Equity Awards

As of December 31, 2006, there were no unexercised options, stock that had not vested or equity incentive plan awards for any executive officer of the Fund.

Options Exercised and Stock Vested

During 2006, there were no stock options, SARs or similar instruments exercised by any executive officer of the Fund and there was no vesting of stock, including restricted stock, restricted stock units or similar instruments by any executive officer of the Fund.

13

Pension Benefits

The Fund does not have any plan that provides for payments or other benefits at, following, or in connection with the retirement of its executive officers.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

During 2006, the Fund did not have any defined contribution or other plan that provided for the deferral of compensation by any executive officer of the Fund on a basis that was not tax-qualified.

INVESTMENT ADVISER AND ADMINISTRATOR

Who is the Fund’s investment adviser?

The Fund’s investment adviser is Moore, Clayton Capital Advisors, Inc. (“MCCA”) and its principal offices are located at 2727 Allen Parkway, 13^th Floor, Houston, Texas 77019. MCCA is a wholly-owned subsidiary of MCC,Moore, Clayton & Co., Inc. (“MCC”), an international private equity investment and advisory firm with offices in Salt Lake City, Los Angeles, San Francisco, New York, London, Cape Town, and Johannesburg. MCC specializes in strategic and financial advisory services for,firm. MCC is a wholly-owned subsidiary of MCC Global NV, an international financial advisory and investment in, emergingfirm traded on theGeregelter Markt (General Standard) of the Frankfurt Stock Exchange. The principal shareholders of MCC Global NV are Anthony R. Moore and established companies operating in traditional industries.Sharon Clayton.

EstablishedMCC formed MCCA on February 3, 2005, for the purpose of managing the Fund. Following shareholder approval, MCCA became the Fund’s investment adviser on June 30, 2005. MCCA is registered as an investment adviser under the Investment Advisers Act of 1940. MCCA and MCC share many of the same personnel resources.

The officers and directors of MCCA are:

For a description of the business background of each Messrs. Moore, Douglass, Denos and Forbes and Mss. Clayton, Douglass and Hudson, see “Governance of the Fund – Who are the Executive Officers of the Fund?” above. A description of the business background of each of Mr. Chiles and Ms. Clark is set out below.

Brett M. Chiles has been Assistant Vice President of MCCA since July 2005. From 2000 to 2003, he served as internal wholesaler for AIM Investments in 1999, MCC provides introductions and commercial opportunities through its worldwide contact networkfinancial dealer division. From 2003 to 2005, he obtained his MBA from Rice University. During 2004, Mr. Chiles interned for Murphree Venture Partners, an early-stage investment company.

Dawn D. Clark has been Assistant Secretary of professionals, financial intermediaries, and business executives. The firm works with its clientsMCCA since July 2005. She served as Manager of Human Resources for Equus Capital Management Corporation (the Fund’s former investment adviser) from 1991 to explore the risks and rewards of a variety of transactional and strategic alternatives such as international agreements and negotiations, joint ventures, mergers and acquisitions, divestitures, privatizations, restructurings and recapitalizations.2005.

14

Who is the Fund’s administrator?

The Fund’s administrator is Equus Capital Administration Company, Inc. (the “Administrator”) and its principal offices are located at 2727 Allen Parkway, 13^th Floor, Houston, Texas 77019. The AdministratorEquus Capital Administration Company, Inc. is a wholly-owned subsidiary of MCC and was formed for the purpose of managing the Fund’s administrative and business operations.

PROPOSAL 1—TO AUTHORIZE THE FUND TO OFFER AND SELL, OR TO ISSUE RIGHTS TO ACQUIRE, SHARES OFINFORMATION REGARDING THE FUND’S COMMON STOCK AT A PRICE BELOW THE CURRENT NET ASSET VALUE OF SUCH STOCK

Stockholder AuthorizationINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Investment Company Act generally prohibitsAudit Committee has selected the accounting firm of UHY LLP (“UHY”) to audit the Fund’s financial statements for, and otherwise act as the Fund’s independent registered public accounting firm with respect to the fiscal year ending December 31, 2007. The Fund’s employment of UHY is conditioned on the Fund’s right to terminate such employment at any time without any penalty. UHY has served as the Fund’s independent registered public accounting firm since September 19, 2005.

A representative of UHY is expected to be present at the annual meeting and will be available to make a statement, if he or she so desires, and to respond to appropriate questions of the stockholders.

Change in the Fund’s independent registered public accounting firm

On September 19, 2005, the Fund elected not to continue with PricewaterhouseCoopers LLP (“PwC”) as its independent registered public accounting firm and engaged UHY as the Fund’s new independent registered public accounting firm. The decision to change independent registered public accounting firms was approved by the Audit Committee. The report of PwC on the financial statements of the Fund as of and for the years ended December 31, 2004 and 2003 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.

During the years ended December 31, 2004 and 2003, and through September 19, 2005, there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to PwC’s satisfaction would have caused PwC to make reference to it in PwC’s reports on the financial statements for such years.

During the years ended December 31, 2004 and 2003, and through September 19, 2005, there have been no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act). The Fund did not consult with UHY during the years ended December 31, 2004 and 2003, and through September 19, 2005, on any matter which was the subject of any disagreement or any reportable event as defined in Item 304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K under the Exchange Act, respectively, or on the application of accounting principles to a business development company (“BDC”), from offeringspecified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Fund’s financial statements.

Audit Fees and selling,All Other Fees

Aggregate fees for professional services billed to the Fund by UHY and PwC for the years ended December 31, 2006 and 2005, were as follows:

15

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee pre-approves all audit and permitted non-audit services (including the fees and terms thereof) to be performed by any independent registered public accounting firm engaged by the Fund and any non-audit services provided by the Fund’s independent registered public accounting firm to MCCA, and any entity controlling, controlled by, or issuing rightsunder common control with MCCA, subject to acquire, sharesthede minimis exception for non-audit services set forth in Rule 2-01(c)(7)(i)(C) of its common stock at a price belowRegulation S-X under the then current net asset value of such stock unless the policy and practice of doing so isExchange Act that are approved by the Fund’s stockholders within one year immediately priorAudit Committee before completion of the audit. Audit services include those typically associated with the annual audit such as evaluation of internal controls. Non-audit services include certain services that are audit-related such as consultations regarding financial accounting and reporting standards, and tax services. Certain services may not be provided by the independent registered public accounting firm to any such sales. At all times since their listing, sharesthe Fund or to MCCA without jeopardizing the independent registered public accounting firm’s independence. These services are deemed prohibited services and include certain management functions; human resources services; broker-dealer, investment adviser or investment banking services; legal services; and expert services unrelated to the audit. Other services are conditionally prohibited and may be provided if the Audit Committee reasonably concludes that the results of the services will not be subject to audit procedures during an audit of the Fund’s common stock have traded on the NYSE at a price below their net asset value.or MCCA’s financial statements. These types of services include bookkeeping; financial information systems design and implementation; appraisal or valuation services; actuarial services; and internal audit outsourcing services.

Accordingly, the Fund is requesting that its stockholders authorize the offer and sale, or the issuance of rights to acquire, sharesThe Audit Committee procedures require approval of the Fund’s common stock at a price below net asset value per share at the time of sale, subject to certain conditions discussed below. If approved, the authorization would be effective for a period expiring on the first anniversaryengagement of the approval by the stockholders of this Proposalindependent registered public accounting firm for each fiscal year and would permit the Fund to engage in such transactions at various times within that period.

The Fund has retained an investment banking firm to advise on available financing options, including a common stock offering and a rights offering. If stockholders approve Proposal 1 and Proposal 2 below, the Fund should have greater flexibility in taking advantage of changing market and financial conditions in connection with an equity offering. Asapproval of the date of this Proxy Statement, the Board has not approved the terms of a specific offering. This Proxy Statement is not an offer of securities. Securities may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements.

In a common stock offering, investors are offered an ownership interest in a corporation. Stockholders typically are entitled to vote on the selection of corporate directors and other important matters, as well as to receive distributions on their holdings to the extent such distributions are declared.

7

In a rights offering, each stockholder receives the right to purchase a specified number of additional shares of the Fund’s common stock, pro-rata, based on the number of shares held as of a specified record date. Rights issued in a rights offering may be transferable (in which case rights not exercisedengagement by a stockholder may be separately transferred) or non-transferable (in which case rights may only be exercised by the receiving stockholder). If stockholders approve this Proposal, the Fund will be authorized to sell common stock and to issue transferable rights and/or non-transferable rights.

Generally, common stock offerings for BDCs are priced based on the market price of the currently outstanding shares of common stock, less a small discount of approximately five per cent. Since the Fund’s shares typically trade at a market price below net asset value, stockholder approval would permit the Fund to offer and sell shares of its common stock in accordance with pricing standards that market conditions generally require.

Investment Company Act Conditions

The Fund’s ability to issue shares or rights to acquire shares at below net asset value is governed by the Investment Company Act. Specifically, Section 63(2) of the Investment Company Act provides that the Fund may offer and sell, or issue rights to acquire, shares of its common stock at prices below the then current net asset value with stockholder approval, provided that:

Without the approval of its stockholders to offer and sell, or issue rights to acquire, shares of common stock at prices below its net asset value per share, the Fund would be prohibited from selling such securities to raise capital when the market price for its common stock is below its net asset value. The Fund’s shares have for the most part traded at a discount to net asset value since they began trading, which is not uncommonpersons named as proxies will vote for a BDC likesubstitute nominee designated by the Fund.

Board Approval

On November 14, 2006,Board. The Fund is the Board unanimously approved, and is recommending that the stockholders vote in favor of, Proposal 1 to offer and sell, or issue rights to acquire, shares of the Fund’s common stock at prices that may be less than net asset value. The Board concluded that the Proposal isonly fund in the best interests of the Fund and its stockholders. In doing so, the Board, including the fund complex.

Nominees for Director

Independent Directors considered and evaluated factors including the following, as discussed more fully below:

Prior to approving Proposal 1, the Board met on several occasions to consider and evaluate material that management provided on the merits of the Fund possibly raising additional capital and the merits of publicly offering the Fund’s shares at a price below their net asset value. The Board also met with one of the Fund’s financial advisors, a national investment services firm. The firm advised the Board on the objectives of a possible

8

offering, the mechanics of an offering, establishing size parameters of an offering, the possible effect of dilution, comparable company analysis, comparable company liquidity, and other matters. The Board further met with an investment banking firm, which discussed with the Directors similar matters, as well as case studies of other business development companies that recently engaged in secondary offerings. The Independent Directors also met on several occasions with their independent counsel without management present to consider and evaluate the issues presented.

The Board evaluated a full range of offering sizes. However, the Board has not yet drawn any definite conclusions regarding the size of a contemplated capital raise at this time. The Board expects that any increase in capital would be from a public offering of the Fund’s common stock or rights to acquire additional shares of common stock; however, the Board has not excluded the possibility of one or more private placements.

In determining whether or not to actually offer and sell common stock or issue rights, the Board of Directors has a duty to act in the best interest of the Fund and its stockholders, and must comply with the other requirements of Section 63(2) of the Investment Company Act. If stockholders do not approve Proposal 1, the Board will consider and evaluate the options for the Fund to determine what alternatives are in the best interest of the Fund and its stockholders, including the Fund growing solely through investment returns.

Possible Benefits to Fund Stockholders

The Board believes that the Fund’s ability to offer and sell, or issue rights to acquire, shares of common stock below net asset value is in the best interests of the Fund and its stockholders. In reaching that conclusion, the Board considered the following possible benefits to Fund stockholders:

Greater Investment Opportunities

With more assets, the Board believes that the Fund may have better access to capital markets to take advantage of attractive investment opportunities. An increase in the capital will not only give the Fund more capital to invest in its total return strategy, but may provide qualitative differences in its investment profile that may be beneficial. A larger pool of capital may allow the Fund to participate in investments at a higher and more meaningful level.

Based on discussions with management, the Board believes that greater deal flow, which may be achieved with more capital, may enable the Fund to be a more significant participant in the private equity market and to compete more effectively for the more attractive investment opportunities. With more capital to invest in portfolio opportunities, the Fund intends to compete for high quality investment opportunities with other funds and private equity investment vehicles with greater resources. Management has represented to the Board that such investment opportunities may be funded with proceeds of an offering. However, management has not identified specific companies in which to invest the proceeds of an offering given that specific investment opportunities will change depending on the timing of an offering.

A larger pool of invested capital spread over a range of investment opportunities within the Fund’s investment strategy of seeking businesses that will benefit from current social trends and major demographic shifts will be more likely to provide the Fund with an earnings stream that is characteristic of a total return fund. These businesses could include, but not necessarily be limited to, subsets of the energy sector developing renewable and alternative sources of energy, as well as medical technology and services directed toward an aging population, real estate transactions in properties whose values may be expected to appreciate due to demand from the increased number of retirees, and leisure time and entertainment industries. Since the beginning of the fourth quarter of 2005, the Fund has committed a total of $28.7 million to investments in companies in these industries and is reviewing additional opportunities in similar companies.

The Fund selected MCCA as adviser in part to obtain access to the potential deal flow that can be generated from the MCC network of industry contacts. The Board believes that with additional capital the Fund may be better able to utilize the contacts that MCC has developed over seven years in its various industry concentrations.

9

Regular Quarterly Dividends

A consistent stream of earnings derived from a larger and more diversified portfolio could provide the Fund with a larger and, more importantly, more predictable cash flow, which might support a sustainable regular dividend. On October 23, 2006, the Fund announced a managed distribution policy for it to pay quarterly dividends to stockholders at the annual rate of a minimum of $0.50 per share, commencing in the fourth quarter of 2006. This is the first time the Fund has had a policy to pay a regular quarterly dividend. Although management will seek to generate Fund income sufficient to pay Fund dividends, proceeds from a future offering may be used to pay such dividends.

Reduced Discount

The share price of the Fund has consistently traded at a significant discount to the net asset value of the Fund. In this regard, the investment banking firm that met with the Board provided the Directors with a stock trading analysis of several BDCs. The analysis suggested that the stock of a BDC with a larger, more diverse investment portfolio, among other characteristics, trades closer, or at a premium, to its net asset value. The investment banking firm and a financial advisor to the Fund further suggested to the Directors that the stock of a BDC that pays a regular quarterly dividend may trade closer to its net asset value. Based on this information, the Board hopes that a combination of a larger, more diverse Fund investment portfolio and a regular quarterly dividend may result in a Fund share market price that is closer to its net asset value.

Reduced Expenses Per Share

An offering that increases the Fund’s total assets may reduce its expenses per share due to the spreading of fixed expenses over a larger asset base. The Fund must bear certain fixed expenses, such as governance and certain compliance costs that do not generally vary based on the size of the Fund. On a per share percentage basis, these fixed expenses will be reduced on a relative basis when supported by a larger asset base.

Liquidity

If the Fund issues additional shares, the Fund’s market capitalization and the amount of its publicly tradable common stock will increase, which may afford all holders of the Fund’s common stock greater liquidity. With approximately eight million shares currently outstanding, there is limited daily trading volume in the Fund’s shares. The Board believes that this low trading volume subjects the shares to significant price volatility due to their relatively low trading volume. For example, a stockholder who buys additional Fund shares, or who sells some or all of such stockholder’s shares, may experience significant swings in the share price while executing that purchase or sale, even for relatively small numbers of shares. Greater liquidity in the Fund’s shares could reduce this effect. A larger number of shares outstanding may absorb the effect of purchases or sales with less volatility in price.

A relatively low percentage of the Fund’s shares are now held by institutional investors as compared to the shareholder profile of other BDCs. The Board of Directors believes that the low historic liquidity of the Fund’s shares, among other factors, has impaired institutional investment. The Board believes that an increase in the liquidity of the Fund’s shares as a result of a proposed offering, together with an orderly underwritten placement of shares in connection with the offering, may result in an increase in institutional ownership of the Fund’s shares.

Dilution

An offering of the Fund’s common stock or rights to acquire additional shares of common stock below their net asset value will have the immediate effect of diluting the interest of current stockholders. In reaching its recommendation to the stockholders, the Board considered the effect of dilution to the Fund’s net asset value.

10

Any issuance of common stock, or rights to acquire common stock, below net asset value will have the effect of causing immediate dilution of the aggregate net asset value of outstanding shares of common stock, irrespective of whether stockholders purchase shares of common stock or exercise all or any portion of their rights in an offering.

The precise extent of any dilution cannot be estimated in advance of the determination of the terms of a common stock or rights offering; however, as a general proposition the amount of dilution of net asset value will increase as the size of any equity financing increases. Another factor that will influence the amount of dilution in an offering is the amount the Fund receives from such offering. The Board would expect that the net proceeds to the Fund will be equal to the price that investors pay per share, typically 95% of the market price, less the amount of any underwriting discount and commission.

As previously discussed, the Board evaluated a full range of offering sizes. The following example indicates how an offering to double the number of issued shares of the Fund would immediately affect the net asset value of the common stock based on the assumptions set forth below. It does not include any effects or influence on market share price due to investment performance over time, dividend policy, greater trading volume or other qualitative aspects of the Fund’s shares.These are intended to be indicative calculations and are not projections of future results of the Fund.

17

Interested Directors*

18

There are no arrangements or understandings between any of the directors and any other person pursuant to which any of such directors was or is to be selected as a director.

19

Dollar Range of Equity Securities Beneficially Owned by Current Directors/Director Nominees

To further elaborate on the noted example, an assumed rate of return on the total portfolio of 11% after one year would generate a return on portfolio of $13.5 million for a total net asset value of $167.5 million. Therefore, one year after the offering in this example, the net asset value per share would be $10.33 and the residual dilution to the September 30, 2006 net asset value would be 9.9%. However, an assumed rate of return on the total portfolio of 0.0% after one year would generate a return on portfolio of $0.0. In this latter case, one year after the offering, the net asset value per share would remain at $9.51 and the residual dilution would remain at 17.1%.

The discount to net asset value is a result of market perception that moves the share price and thus net asset value is only one determinant of market value. Market price will incorporate a discount or premium factor based on the market assessment of future earnings and the likelihood of those earnings supporting growth in dividend yield.

Notwithstanding the dilutive effect of any equity financing on the Fund’s net asset value, the Board has considered the Fund’s need to obtain additional capital for investment and other factors discussed in this proxy statement. With more capital to invest, the Board believes that the Fund may be able to make investments with more significant earnings and growth potential. The Board further believes that over time the value of the incremental assets available for investment, taken together with the other factors previously discussed, may be reflected positively in the market price of the Fund’s shares and that such increases may exceed the initial dilutive effects that the Fund is likely to experience in its net asset value per share. In the Board’s view, the Fund’s market share price is an important gauge of the true economic impact on stockholders of any equity financing.

11

Gross Amount of Management and Administration Fees

In reaching its recommendation to the stockholders, the Board also considered the effect of the gross amount of the management fees payable to MCCA. The issuance of additional shares of common stock will increase the aggregate management fees that the Fund pays to MCCA as the management fee is calculated based on a percentage of assets under management. The increase in the Fund’s asset base resulting from an increase in capital in connection with an offering of common stock or a rights offering would increase assets of the Fund under management, and would thereby increase the gross amount of management fees paid to MCCA. This increase, however, will not increase or decrease the management fee as a percentage of assets under management. MCCA has advised the Board that it intends to use a significant portion of any increase in gross management fees to hire additional professional personnel, such as investment staff, who will provide services to the Fund. The Administrator does not believe that the Fund’s fees under the administration agreement, dated as of June 30, 2005, between the Fund and the Administrator, will increase as a result of any increase in the size of the Fund from the issuance of additional shares.

The Independent Directors also considered the potential conflict of interest inherent in any proposal by management to have the Fund issue additional shares of common stock. The Independent Directors concluded, however, that the benefits to the Fund of having a larger capital base, as discussed above, would outweigh any advantages to MCCA or the Administrator as a result of such increase in assets under management.

Other Considerations

In reaching its recommendation to the stockholders, the Board also considered the effect of the following factors:

Potential Investors

Presently, the Fund has not solicited any potential buyers of the shares or rights that the Fund may elect to issue in any future offering to comply with the federal securities laws. No shares or rights are earmarked for management or other affiliated persons of the Fund. However, members of management and other affiliated persons of the Fund may participate in a common stock or rights offering.

Required Stockholder Vote

If the stockholders approve this Proposal, during a one-year period commencing on the date of such approval, the Fund will be permitted, but not required or otherwise obligated, to offer and sell, or to issue rights to acquire, newly issued shares of its common stock at a price below net asset value at the time sold. The Board believes that the Proposal is important because of the flexibility it would provide in raising additional capital even if the Fund’s common stock is trading at prices below net asset value. Approval of this Proposal requires the affirmative vote of the holders of:

The Board including its Independent Directors, unanimously recommends that each stockholder vote “FOR” this Proposal to authorize the Fund to offer and sell, or to issue rights to acquire, shares of its common stock at a price below the current net asset value of such stock.

12

PROPOSAL 2—APPROVAL TO AMEND THE FUND’S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

The authorized capital stock“For” each of the Fund currently consists of 25,000,000 shares of common stock, $.001 par value, and 5,000,000 shares of preferred stock, $.001 par value. On the Record Date, 8,163,691 shares of the Fund’s common stock were outstanding.

The Board of Directors of the Fund believes that it is in the best interests of the Fund to have additional shares of common stock available for issuance at the Board’s discretion for future equity financings, stock splits, stock dividends, and other corporate purposes. Accordingly, the Board has proposed an amendment to the Restated Certificate of Incorporation of the Fund to increase the number of shares of the Fund’s common stock available for issuance from 25,000,000 to 50,000,000.

If this Proposal 2 is approvedpersons nominated by the stockholders of the Fund, the additional shares of the Fund’s common stock may be issued from time to time upon authorization of the Board, without further approval by the stockholders unless required by the Investment Company Act, other applicable law, or the rules of the NYSE.

Management of the Fund is considering various options with respect to possible equity offerings, including the issuance of shares of common stock and rights to acquire shares. The Fund has retained an investment banking firm to advise on available financing options. If stockholders approve this Proposal 2 and Proposal 1 above, the Fund will have greater flexibility in taking advantage of changing market and financial conditions in connection with an equity offering. As of the date of this Proxy Statement, the Board has not approved the terms of a specific offering. This Proxy Statement is not an offer of securities. Securities may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements.

Issuance of new shares of common stock, other than pro rata to all existing stockholders, would be potentially dilutive to the voting power of existing stockholders and could also be dilutive with regard to dividends and other economic aspects of common stock.

The increase in authorized shares is not being proposed as a means of preventing or dissuading a change in control or takeover of the Fund. However, use of these shares for such a purpose is possible. Shares of authorized but unissued or unreserved common stock and preferred stock, for example, could be issued in an effort to dilute the stock ownership and voting power of persons seeking to obtain control of the Fund or could be issued to purchasers who would support the Board in opposing a takeover proposal. The proposed amendment therefore may have the effect of discouraging unsolicited takeover attempts.

The proposed amendment does not change the terms of the Fund’s common stock, which does not have preemptive rights. The additional shares of common stock for which authorization is sought will have the same voting rights and rights to dividends and distributions, and will be identical in all other respects to the Fund’s common stock now authorized.

Approval of the amendment of the Fund’s Restated Certificate of Incorporation requires the affirmative vote of the holders of a majority of the outstanding shares of the Fund’s common stock.

The Board, including its Independent Directors, unanimously recommends that each stockholder vote “FOR” the amendment of the Fund’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 25,000,000 to 50,000,000 shares.Board.

13

OTHER MATTERS

The Board knows of no other matter that is likely to come before the specialannual meeting. However, if any other matter properly comes before the meeting, the individuals named as proxy holders will vote in accordance with their discretion on such matters.

In the event that sufficient votes in favor of the proposalsproposal set forth in the Notice of the SpecialAnnual Meeting are not received by the time scheduled for the specialannual meeting, the chairman of the meeting or the holders of a majority of the shares of the Fund, present in person or represented by proxy, although not constituting a quorum, may adjourn the meeting.

ANNUAL AND QUARTERLY REPORTS

A copy of the Fund’s 2005Fund��s 2006 Annual Report to Stockholders and copies of the Fund’s quarterly reports on Form 10-Q are available without charge upon request. Please direct your request to Equus Total Return, Inc., Attention: Investor Relations, P.O. Box 130197, Houston, Texas 77219-0197, (713) 529-0900 or toll-free at (800) 856-0901. Copies also may be requested through the Fund’s website atwww.equuscap.com. (Information contained on the Fund’s website is not incorporated into this proxy statement.) Copies are also posted via EDGAR on the SEC’s website at www.sec.gov.

ADDITIONAL INFORMATION

Stockholder Proposals for the 20072008 Annual Meeting.Stockholders. Stockholders interested in submitting a proposal for inclusion in the proxy materials for the annual meeting of stockholders in 20072008 may do so by following the procedures prescribed in SEC Rule 14a-8.14a-8 under the Exchange Act. To be eligible for inclusion, the Fund’s Secretary

20

must receive stockholder proposals no later than January 1, 2007.2, 2008. Proposals should be sent to the Fund, c/o Moore, Clayton Capital Advisors,Equus Total Return, Inc., Attention: Secretary, 2727 Allen Parkway, 13^th Floor, Houston, Texas 77019, Attention: President.77019. Submission of a stockholder proposal does not guarantee inclusion in the Fund’s proxy statement or form of proxy because certain SEC rules must be met.

In addition, under our by-laws no business may be brought before a stockholder meeting unless it is specified in the notice of the meeting or is otherwise properly brought before the meeting by or at the direction of the Board or by a stockholder entitled to vote who has delivered an appropriate notice to the Fund’s Secretary. To be properly brought before such a meeting a stockholder must deliver a written notice to the Fund at the address set forth in the following paragraph of the stockholder’s intention to present a proposal (containing certain information specified in the by-laws about the stockholder and the proposed action) not less than 60 nor more than 90 days’ prior to the meeting. However, in the event less than 70 days’ notice or prior public disclosure of the date of the meeting is given to stockholders, such notice to be timely must be received not later than the close of business on the fifth day following the day on which such notice is mailed or such public disclosure was made.

Stockholder proposals with respect to Director nominations require written notice of your intent to make such a nomination either by personal delivery or by U.S. mail, postage prepaid, to Kenneth I. Denos, Secretary, Equus Total Return, Inc., Attention: Secretary, 2727 Allen Parkway, 13^th Floor, Houston, Texas 77019, within the time limits described above for delivering a stockholder proposal notice and comply with the information requirements in our by-laws relating to Directordirector nominations by stockholders. These requirements are separate from and in addition to the SEC’sSEC requirements that a stockholder must meet in order to have a stockholder proposal included in the Fund’s proxy statement.

The proxy solicited by the Board of Directors for the 2007 Annual Meeting2008 annual meeting will confer discretionary authority to vote on any stockholder proposal presented at that meeting, unless the Fund is provided with notice of such proposal no later than March 17, 2007.2008.

14

A copy of the full text of the by-law provisions discussed above may be obtained by writing to the Corporate Secretary, 2727 Allen Parkway, 13^th Floor,Equus Total Return, Inc., Attention: Investor Relations, P.O. Box 130197, Houston, Texas 7701977219-0197 and is included as an exhibit to the Fund’s annual report on Form 10-K for the period ended December 31, 19952006 as filed with the SEC via EDGAR on March 1, 1996.30, 2007.

Communications with the Board. Interested parties who wish to communicate directly with the Board, or specified individual Directorsdirectors may do so by writing to the Board or individual Directorsdirectors in care of the Secretary, Equus Total Return, Inc., 2727 Allen Parkway, 13^th Floor, Houston, Texas 77019. At the direction of the Board, all mail received will be opened and screened for security purposes. The mail will then be logged in. All mail, other than trivial or obscene items, will be forwarded. Trivial items will be delivered to the Directorsdirectors at the next scheduled Board meeting. Mail addressed to a particular Directordirector will be forwarded or delivered to that Director.director. Mail addressed to “Independent Directors,” “Outside Directors” or “Non-Management Directors” will be forwarded or delivered to the Chairman of the Committee of Independent Directors. Mail addressed to the “Board of Directors” will be forwarded or delivered to the Chairman of the Board. Concerns relating to accounting, internal controls, or auditing matters are handled in accordance with procedures established by the Audit Committee with respect to such matters.

Corporate Governance. The Fund is a Delaware corporation subject to the provisions of the Delaware General Corporation Law (“DGCL”). The Fund’s day-to-day operations and requirements as to the place and time, conduct, and voting, at a meeting of stockholders are governed by the Fund’s certificate of incorporation and by-laws, the provisions of the DGCL, the provisions of the Investment Company1940 Act and NYSE rules. The Fund has adopted a code of business conduct and ethics applicable to our Directors,directors, officers (including our principal executive officer, principal financial officer and controller) and employees. Our code of business conduct and ethics meets NYSE listing standard requirements and the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. A copy of our certificate of incorporation and by-laws, code of business conduct and ethics is annexed to this proxy statement. A copy of our certificate of

21

incorporation and by-laws, corporate governance guidelines, and the charters of the Audit, Compensation, and Nominating and Corporate Governance Committees may be obtained by writing to the Secretary, Equus Total Return, Inc., 2727 Allen Parkway, 13^th Floor,Attention: Investor Relations, P.O. Box 130197, Houston, Texas 77019.77219-0197. Our code of business conduct and ethics, corporate governance guidelines and committee charters are also available by accessing the Fund’s website at www.equuscap.com. (Information contained on the Fund’s website is not incorporated into this proxy statement.) In the event that the Fund amends or waives any provisions of our code of business conduct and ethics applicable to our principal executive officer, principal financial officer or controller, we intend to disclose the same on the Fund’s website at www.equuscap.com.www.equuscap.com.

Proxy Solicitation Costs. The proxies being solicited hereby are being solicited by the Board of Directors of the Fund. The cost of soliciting proxies in the enclosed form will be paid by the Fund. Officers and regular employees of the Fund and MCCA may, but without compensation other than their regular compensation, solicit proxies by further mailing or personal conversations, or by telephone, telex, facsimile, or electronic means. Copies of solicitation material will be furnished to brokerage houses, fiduciaries and custodians to forward to beneficial owners of stock held in the name of such nominees. We will, upon request, reimburse brokerage firms and others for their responsible expenses in forwarding solicitation material to the beneficial owners of stock. In addition, the Fund has retained The Altman Group (“Altman”)MacKenzie Partners, Inc., a proxy solicitation firm, to assist in the solicitation of proxies. It is anticipated that AltmanMacKenzie Partners, Inc. will be paid approximately $20,000$5,000 by the Fund for such solicitation services (plusplus approximately $2,000 for reimbursement of out-of-pocket expenses). Altmanexpenses. MacKenzie Partners, Inc. may solicit proxies personally and by telephone. Authorization to permit Altman to execute proxies may be obtained by telephonic or electronically transmitted instructions from stockholders

22

ANNEX

CODE OF BUSINESS CONDUCT AND ETHICS

The Board of Directors (the “Board”) of Equus Total Return, Inc. (the “Fund”) has adopted the following Code of Business Conduct and Ethics for members of the Board, officers, and employees of the Fund (this “Code”). This Code is intended to focus the Board, each Director, Officer, and employee on areas of ethical risk, provide guidance to Directors, Officers, and employees to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and help foster a culture of honesty and accountability. Each Director, Officer, and employee must comply with the letter and spirit of this Code.

No code or policy can anticipate every situation that may arise. Accordingly, this Code is intended to serve as a source of guiding principles for Directors, Officers, and employees. Directors, Officers, and employees are encouraged to bring questions about particular circumstances that may implicate one or more of the provisions of this Code to the attention of the Chair of the Audit Committee, who may consult with legal counsel as appropriate.

Directors, Officers, and employees of the Fund should read and comply with this Code in conjunction with the Fund’s Code of Ethics and Insider Trading Policy.

A “conflict of interest” occurs when a Director’s, Officer’s, or employee’s private interest interferes in any way, or appears to interfere, with the interests of the Fund as a whole. Conflicts of interest arise when a Director, Officer, Employee or a member of his or her immediate family, receives improper personal benefits as a result of his or her position as a Director, Officer, or employee of the Fund or of Moore, Clayton Capital Advisors, Inc. (“MCCA”), the Fund’s Investment Advisor. Loans or guarantees of obligations may create conflicts of interest. Therefore, the Fund shall not make any personal loans or extensions of credit to nor become contingently liable for any indebtedness of Directors or Officers or any members of their families.

Directors, Officers, and employees must avoid conflicts of interest with the Fund. ProxiesAny situation that involves, or may reasonably be expected to involve, a conflict of interest with the Fund must be disclosed immediately to the Chair of the Audit Committee or to the attention of the individual designated in Section II below.

This Code does not attempt to describe all possible conflicts of interest which could develop. Some of the more common conflicts from which Directors, Officers, and employees must refrain, however, are set out below:

Relationship of Fund with third parties. Directors, Officers, and employees may not engage in any conduct or activities that are obtained telephonically will be recordedinconsistent with the Fund’s best interests or that disrupt or impair the Fund’s relationship with any person or entity with which the Fund has or proposes to enter into an investment, business or contractual relationship.

Compensation from non-Fund sources. Directors, Officers, and employees may not accept compensation, in accordanceany form, for services performed for the Fund from any source other than the Fund. Notwithstanding, Directors and Officers may accept board fees and non-employee director stock options from portfolio companies, if such fees and options are offered by the portfolio company to all non-employee directors and disclosed to the Fund and its Audit Committee.

Gifts. Directors, Officers, employees and members of their families may not offer, give or receive gifts from persons or entities who deal with procedures thatthe Fund or its portfolio companies, in those cases where any such gift is being made in order to influence the Directors’ or Officers’ actions as members of the Board and senior management of the Fund believes are reasonably designed to ensure that the identityor its portfolio companies, or where acceptance of the stockholder castinggifts could create the vote is accurately determined and that the voting instructionsappearance of the stockholder are accurately determined.a conflict of interest.

15A-1

Officers, Directors, and employees who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Fund and its portfolio companies should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal. Please consult the Fund’s policy on insider trading for additional policies related hereto.

PROXY 3.

Corporate Opportunities

Directors, Officers, and employees owe a duty to the Fund to advance its legitimate interests when the opportunity to do so arises. When an opportunity that relates to the Fund’s business has been presented to the Fund, MCCA or their agents, Officers and Directors are prohibited from: (a) taking for themselves personally opportunities that are discovered through the use of the Fund’s property or information, or the Director’s, Officer’s, and employee’s position with the Fund or MCCA; (b) using the Fund’s property, information, or position for personal gain; or (c) personally competing with the Fund, directly or indirectly, for business opportunities. However, if it has been determined that the Fund will not pursue an opportunity presented to the Fund, a Director, Officer, or employee may pursue such opportunity if such involvement is fully disclosed to the Fund and its Audit Committee and does not interfere with the fulfillment of the Director’s, Officer’s, and employee’s responsibility to the Fund.

The Fund requires honest and accurate recording and reporting of information in order to make responsible business decisions. All of the Fund’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Fund’s transactions and must conform both to applicable legal requirements and to the Fund’s system of internal controls. Periodic and other reports (financial and otherwise) to federal, state, and local government agencies must present a full, fair, accurate, timely, and understandable disclosure of the Fund. Business records and communications should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies. This applies equally to e-mail, internal memos, and formal reports. Records should always be retained or destroyed according to the Fund’s record retention policies.

Directors, Officers, and employees must maintain the confidentiality of information entrusted to them by the Fund or its portfolio companies, and any other confidential information about the Fund or its portfolio companies that comes to them, from whatever source, in their capacity as Director, Officer, or employee except when disclosure is authorized or required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Fund or its portfolio companies, if disclosed.

Theft, carelessness and waste of assets have a direct impact on the Fund’s profitability. Directors, Officers, and employees shall protect the Fund’s assets and ensure their efficient use. All Fund assets shall be used only for legitimate business purposes, and any suspected incident of fraud or theft should be immediately reported for investigation.

The conduct required by fair dealing requires honesty in fact and the observance of reasonable commercial standards of fair dealing. Directors, Officers, and employees shall deal fairly and honestly

A-2

with the Fund’s other Directors, Officers, and employees, portfolio companies (including the members of management thereof) vendors and co-investors. No Director, Officer, or employee should do anything that could be interpreted as dishonest or outside reasonable commercial standards of fair dealing. Directors, Officers, and employees should act at all times in good faith, responsibly, with due care, competence and diligence, and without misrepresentation of any material facts.

Directors, Officers, and employees shall comply, and oversee compliance by other Directors, Officers, and employees with all laws, rules and regulations applicable to the Fund.

Changes in or waivers of this Code may be made only by the Board of Directors of the Fund or, in the case of any change in or waiver of this Code for any of the Officers, only by the independent directors on the Board of Directors of the Fund. All changes in or waivers of this Code for Officers will be promptly disclosed as required by law or stock exchange regulations.

Directors, Officers, and employees should promote ethical behavior and take steps to create a working environment at the Fund and MCCA that: (a) encourages employees to talk to supervisors, managers and other appropriate personnel when in doubt about the best course of action in a particular situation; (b) encourages employees to report violations of laws, rules, regulations or this Code to appropriate personnel; and (c) fosters the understanding among employees that the Fund and MCCA will not permit retaliation for reports made in good faith.

A failure by any Director, Officer, or employee to comply with the laws or regulations governing the Fund’s business, this Code or any other Fund policy or requirement may result in disciplinary action, and, if warranted, legal proceedings. Directors, Officers, or employees should communicate any suspected violations of this Code promptly to the Chair of the Audit Committee of the Board. Please call the Fund’s outside general counsel Robert A. Robertson at Dechert LLP at 949-442-6037 for contact information. If you prefer to write, address your concerns to : Chair of the Audit Committee, Moore, Clayton Capital Advisors, Incorporated, c/o Robert A. Robertson, Dechert LLP, 4675 MacArthur Street, Suite 1400, Newport Beach, California 92660. Violations will be investigated by the Audit Committee or by a person or persons designated by the Audit Committee and appropriate action will be taken in the event of any violations of this Code.

Annually, each Director, Officer, and employee shall provide written certification that he or she has read and understands this Code and its contents and that he or she has not violated, and is not aware that any other Director, Officer, or employee has violated, this Code.

A-3

EQUUS TOTAL RETURN, INC.

2727 ALLEN PARKWAY, 13TH FLOOR, HOUSTON, TEXASAllen Parkway, 13th Floor, Houston, Texas 77019

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF EQUUS TOTAL RETURN, INC. (THE “FUND”This Proxy is Solicited by the Board of Directors of Equus Total Return, Inc. (the “Fund”)

FOR THE SPECIAL MEETING OF STOCKHOLDERS ON JANUARY 31,for the Annual Meeting of Stockholders on June 14, 2007

The undersigned hereby constitutes and appoints Sam P. Douglass or Anthony R. Moore, or Sam P. Douglass, with full power of substitution and revocation to each, the true and lawful attorneys and proxies of the undersigned at the SpecialAnnual Meeting of Stockholders of the Fund,EQUUS TOTAL RETURN, INC., to be held on January 31,June 14, 2007, at 9:00 a.m. local time, at Plaza IMeeting Room Plaza2, Ground Level, Riviana Building, 2777Wortham Tower, 2727 Allen Parkway, Houston, TXTexas 77019, and ator any adjournments or postponementsadjournment thereof (the “Special“Annual Meeting”) and to vote the shares of Common Stock, $.001 par value per share, of the Fund (“Shares”), standing in the name of the undersigned on the books of the Fund on December 8, 2006,April 23, 2007, the record date for the SpecialAnnual Meeting, with all powers the undersigned would possess if personally present at the SpecialAnnual Meeting.

This proxy when properly executed will be voted in the manner directed herein. If no direction is made, the proxy will be voted FOR each Proposal. The Board of Directors knows of no other matter to come before the meeting. If any other matter is properly brought before the meeting, the proxies will have discretion to vote the proxy on such matter in accordance with their discretion.

The undersigned hereby acknowledges previous receipt of the Notice of SpecialAnnual Meeting of Stockholders and the Proxy Statement and hereby revokes any proxy or proxies heretofore given by the undersigned.

(Continued and to be signed on the reverse side)

Signature(s) of Stockholder (s)                         Date

Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.

é FOLD HEREéANNUAL MEETING OF STOCKHOLDERS OF

Three simple methods to vote EQUUS TOTAL RETURN, INC.

June 14, 2007

Please date, sign and mail

your proxy:proxy card in the

envelope provided as soon

as possible.

ê    Please detach along perforated line and mail in the envelope provided.    ê

20900000000000000000  9                                                                                                       061407

SPECIAL MEETING OF STOCKHOLDERS OF EQUUS TOTAL RETURN, INC.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH PROPOSAL.

PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE            x

PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.

EVERY STOCKHOLDER’S VOTE IS IMPORTANT!

If you should have any questions about the proxy material or the execution of your vote, simply call 800-330-8705 between the hours of 10 am and 10 pm Eastern Standard Time. Representatives will be happy to assist you. Please have this proxy card available at the time of the call.

SCANNER BAR CODE

TAG ID: 12345678                                                                                                                                                                                    CUSIP: