<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 0-15298
THE FUTURES EXPANSION FUND LIMITED PARTNERSHIP
----------------------------------------------
(Exact Name of Registrant as
specified in its charter)
Delaware 13-3365950
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
c/o Merrill Lynch Investment Partners Inc.
(formerly ML Futures Investment Partners Inc.)
Merrill Lynch World Headquarters - South Tower, 6th Fl.
World Financial Center New York, New York 10080-6106
-----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
212-236-4161
----------------------------------------------------
(Registrant's telephone number, including area code)
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_____
-----
This document contains 15 pages.
There are no exhibits and no exhibit index filed with this document.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE FUTURES EXPANSION FUND LIMITED PARTNERSHIP
----------------------------------------------
(a Delaware limited partnership)
------------------------------
AND JOINT VENTURE
-----------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
ASSETS
- ------
<S> <C> <C>
Cash on deposit at brokers $ 20,000 $ 20,000
Accrued interest (Note 3) 45,357 35,340
Equity in commodity futures trading accounts:
Cash and options contracts 10,053,051 8,929,212
Net unrealized gain on open contracts (168,270) 171,149
------------- --------------
TOTAL $ 9,950,138 $9,155,701
============= ==============
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
LIABILITIES:
Redemptions payable $ 49,305 $ 78,972
Brokerage commissions payable (Note 3) 98,584 90,793
New profit share payable (Note 2) 342,947 122,596
------------- --------------
Total liabilities 490,836 292,361
------------- --------------
PARTNERS' CAPITAL: (Note 1)
General Partner (518 and 518 units) 117,156 101,500
Limited Partners (41,305 and 44,716 9,342,146 8,761,840
units)
------------- --------------
Total partners' capital 9,459,302 8,863,340
------------- --------------
TOTAL $ 9,950,138 $9,155,701
============= ==============
NET ASSET VALUE PER UNIT $226.17 $195.94
=========== ==========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
THE FUTURES EXPANSION FUND LIMITED PARTNERSHIP
----------------------------------------------
(a Delaware limited partnership)
------------------------------
AND JOINT VENTURE
-----------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
<TABLE>
<CAPTION>
For the three For the three For the nine For the nine
months ended months ended months ended months ended
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Trading (loss) profit:
Realized $ (19,205) $ 442,872 $2,585,412 $1,174,332
Change in unrealized (402,010) (899,212) (339,419) (884,618)
----------- ----------- ------------ ------------
Total trading results (421,215) (456,340) 2,245,993 289,714
----------- ----------- ------------ ------------
Interest income (Note 3) 124,361 71,460 359,004 188,931
----------- ----------- ------------ ------------
Total revenues (296,854) (384,880) 2,604,997 478,645
----------- ----------- ------------ ------------
EXPENSES:
Allocation of new trading profit
share to trading advisors (Note (119,857) (73,596) 339,769 866
2)
Brokerage commissions (Note 3) 302,431 256,778 910,999 789,440
----------- ----------- ------------ ------------
Total expenses 182,574 183,182 1,250,768 790,306
----------- ----------- ------------ ------------
NET (LOSS) INCOME $(479,428) $(568,062) $1,354,229 $ (311,661)
=========== =========== ============ ============
NET (LOSS) INCOME PER UNIT:
Weighted average number of units
outstanding (Note 4) 42,290 47,352 43,492 48,914
========= ========= ========== ==========
Weighted average net (loss)
income per unit $(11.34) $(12.00) $31.14 $(6.37)
========= ========= ========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
THE FUTURES EXPANSION FUND LIMITED PARTNERSHIP
----------------------------------------------
(a Delaware limited partnership)
------------------------------
AND JOINT VENTURE
-----------------
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
-------------------------------------------------------
For the nine months ended September 30, 1995 and 1994
-----------------------------------------------------
<TABLE>
<CAPTION>
Limited General
Units Partners Partner Total
------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL,
DECEMBER 31, 1993 51,769 $9,504,556 $105,815 $9,610,371
Net loss - (308,394) (3,267) (311,661)
Redemptions (5,142) (910,179) - (910,179)
-------- ---------- ---------- ----------
PARTNERS' CAPITAL,
SEPTEMBER 30, 1994 46,627 $8,285,983 $102,548 $8,388,531
======== ========== ========== ==========
PARTNERS' CAPITAL,
DECEMBER 31, 1994 45,234 $8,761,840 $101,500 $8,863,340
Net income - 1,338,573 15,656 1,354,229
Redemptions (3,411) (758,267) - (758,267)
-------- ---------- ---------- ----------
PARTNERS' CAPITAL,
SEPTEMBER 30, 1995 41,823 $9,342,146 $117,156 $9,459,302
======== ========== ========== ==========
See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
THE FUTURES EXPANSION FUND LIMITED PARTNERSHIP
----------------------------------------------
(a Delaware limited partnership)
------------------------------
AND JOINT VENTURE
-----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
for the nine months ended September 30, 1995 and 1994
-----------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Futures Expansion Fund Limited Partnership (the "Partnership"or the
"Fund") was organized under the Delaware Revised Uniform Limited Partnership
Act on August 13, 1986 and commenced activities on January 2, 1987. The
Partnership, through its joint venture, engages in the speculative trading of
commodity futures, options and forward contracts. Merrill Lynch Investment
Partners Inc. (formerly ML Futures Investment Partners Inc., the "General
Partner") (a wholly-owned subsidiary of Merrill Lynch Group, Inc., which in
turn is a wholly-owned subsidiary of Merrill Lynch & Co., Inc.) invests for
its account the lesser of $100,000 or 3% of the total contributions to the
Partnership, but in no event less than 1% of such total contributions. The
General Partner and each Limited Partner share in the profits and losses of
the Partnership in proportion to the amount of Partnership interest owned by
each.
The consolidated financial statements include the accounts of the Joint
Venture (the "Joint Venture") to which the Partnership has contributed
substantially all of its available capital (Note 2), representing a current
equity interest in the Joint Venture of approximately 99%. All related
transactions between the Partnership and the Joint Venture are eliminated in
consolidation.
The financial information included herein has been prepared by management
without audit by independent certified public accountants who do not express
an opinion thereon. The statement of financial condition as of December 31,
1994 has been derived from but does not include all the disclosures contained
in the audited financial statements for the year ended December 31, 1994. The
information furnished includes all adjustments which are, in the opinion of
management, necessary for a fair statement of results for the interim period.
The results of operations as presented, however, should not be considered
indicative of the results to be expected for the entire year.
Revenue Recognition
-------------------
Commodity futures, options and forward contract transactions are recorded on
the trade date and open contracts are reflected in the consolidated financial
statements at the market value on the last business day of the reporting
period. The difference between the original contract amount and market value
is reflected in income as an unrealized gain or loss. Market value or fair
value is based on quoted market prices. All commodity futures, options and
forward contracts are reflected at fair value in the financial statements.
The Partnership does not report open positions on a net basis.
5
<PAGE>
Operating Expenses, Organization Costs and Selling Commissions
--------------------------------------------------------------
The General Partner paid all organization costs and provides for all routine
operating expenses of the Partnership, including the Partnership's share of
any such costs incurred by the Joint Venture (Note 2). No selling commissions
were paid by Limited Partners.
Income Taxes
------------
No provision for income taxes has been made in the accompanying consolidated
financial statements as each partner is individually responsible for reporting
income or loss based on their respective share of the Partnership's income and
expenses as reported for income tax purposes.
Redemptions
-----------
A Limited Partner may require the Partnership to redeem some or all of their
units at 100% of Net Asset Value as of the last business day of any month upon
ten days' written notice to the General Partner.
Dissolution of the Partnership
------------------------------
The Partnership will terminate on December 31, 2006 regardless of its
financial condition at such time.
The Partnership will be dissolved upon a decline in net assets to less than
$250,000, a decline in the Net Asset Value per unit at any month-end to less
than $25, or under certain other circumstances defined in the Limited
Partnership Agreement.
2. JOINT VENTURE AGREEMENT
The Partnership and Millburn Partners entered into a Joint Venture Agreement
whereby Millburn Partners contributed $100,000 to the Joint Venture and the
Partnership contributed all of its available capital (except for an
administrative reserve). Subsequently, Millburn Partners entered into an
assignment with Millburn Ridgefield Corporation (the "Trading Manager"),
assigning its rights and obligations under the Joint Venture Agreement. The
Joint Venture Agreement was renewed for the year ended December 31, 1995. The
General Partner is the manager of the Joint Venture, while the Trading Manager
has sole discretion in determining the commodity futures, options and forward
trades to be made on its behalf, subject to the trading limitations outlined
in the Joint Venture Agreement.
Pursuant to the Joint Venture Agreement, the Trading Manager and the
Partnership share in the profits of the Joint Venture based on equity
ownership after 20% of annual New Trading Profits, as defined, are allocated
to the Trading Manager. Losses are allocated to the Trading Manager and the
Partnership based on equity ownership.
3. RELATED PARTY TRANSACTIONS
Substantially all of the Joint Venture's assets are held by MLF, as margin
deposits in respect of the Joint Venture's futures and options trading. The
Joint Venture pays MLF brokerage commissions at a flat rate equal to 11.92% of
the Joint Venture's month-end Net Assets.
6
<PAGE>
MLF pays interest which approximates the prevailing 91-day U.S. Treasury
bill rate on the Joint Venture's average daily "available assets". Available
assets are all of the Joint Venture's assets excluding the unrealized profit
and loss on open forward or options positions. The General Partner estimates
that the round-turn equivalent commission rate charged to the Joint Venture
during the quarters ended September 30, 1995 and 1994 and was approximately
$33.
The Joint Venture trades forward contracts through a Foreign Exchange Desk
(the "F/X Desk"). Through the F/X Desk, the Joint Venture has access to
Merrill Lynch International Bank ("MLIB") and a number of other
counterparties. The F/X Desk contacts at least two counterparties in addition
to MLIB for a price quote on each trade. All counterparties other than MLIB
are unaffiliated with any Merrill Lynch entity. The F/X Desk charges a
service fee (at current exchange rates) of approximately $5.00 to $9.00 per
futures-contract equivalent face amount trade on each purchase or sale of a
currency in the forward markets. No service fee is charged on trades executed
through MLIB (which receives a "bid-ask" spread on such trades). Trades are
executed with MLIB provided that its price (which includes no service charge)
is as good or better than the best price (including the service charge) quoted
by any of the other counterparties contacted. The General Partner estimates
the total amount of these fees at under 0.15 of 1% of the Joint Venture's
average month-end Net Assets.
The F/X Desk trades on the basis of credit lines provided by a Merrill
Lynch entity. The Joint Venture is not required to margin or otherwise
guarantee its F/X Desk trading.
The General Partner expects that, in the near future, certain of the Joint
Venture's currency trades will begin to be executed in the form of "exchange
of futures for physical" ("EFP") transactions involving Merrill Lynch
International Bank ("MLIB") and Merrill Lynch Futures Inc. ("MLF"). In these
transactions, a spot or forward (collectively referred to as "cash") currency
position is acquired and exchanged for an equivalent futures position on the
Chicago Mercantile Exchange's International Monetary Market ("IMM"). EFP
transactions permit currency trades to be executed at a single price, as well
as out of exchange hours, and converted into IMM contracts. They also give
trading advisors flexibility as to whether to liquidate positions in the cash
(i.e., spot or forward) or in the futures markets.
In its EFP trading with Merrill Lynch, the Joint Venture will acquire cash
currency positions through the F/X Desk in the same manner and on the same
terms as in the case of the Joint Venture's other F/X Desk trading. When the
Joint Venture exchanges these positions for futures, there will be a
"differential" between the prices of these two positions. This "differential"
reflects, in part, the different settlement dates of the cash and the futures
contracts as well as prevailing interest rates, but also includes a pricing
spread in favor of MLIB or another Merrill Lynch entity. These spreads are
expected to total no more than 0.15 of 1% of the Joint Venture's average
month-end Net Assets on an annual basis.
The Joint Venture, to the extent that it has executed currency EFP
transactions in the past, has both acquired its cash positions and effected
the exchange of positions for futures contracts through brokers other than MLF
(to which the futures positions were ultimately given up to be cleared).
7
<PAGE>
4. WEIGHTED AVERAGE UNITS
Weighted average number of units outstanding was computed for purposes of
disclosing net income per weighted average unit. The weighted average units
are equal to the number of units outstanding at the period end, adjusted
proportionately for units redeemed based on their respective time outstanding
during such period.
5. OFF-BALANCE SHEET RISK
The Joint Venture trades futures, options and forward contracts in interest
rates, stock indices, commodities, currencies, energy and metals. Risk arises
from changes in the value of these contracts (market risk) and the potential
inability of counterparties or brokers to perform under the terms of the
contracts (credit risk). Although numerous factors could have significant
influences on the market risk of these contracts, they are very interest rate
sensitive. All open contracts mature within one year from the balance sheet
date.
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
---------------------------------------- ----------------------------------------
Commitment to Commitment to Commitment to Commitment to
Purchase (Futures, Sell (Futures, Purchase (Futures, Sell (Futures,
Options & Forwards) Options & Forwards) Options & Forwards) Options & Forwards)
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Interest rate
and stock
indices $16,214,018 $ 7,060,190 $27,386,268 $23,095,364
Commodities 1,052,347 1,152,424 2,072,932 579,881
Currencies 28,178,092 25,367,574 20,133,927 33,508,943
Energy 837,400 1,805,623 - 1,408,032
Metals 2,129,275 6,153,083 3,336,012 2,369,320
----------- ----------- ----------- -----------
$48,411,132 $41,538,894 $52,929,139 $60,961,540
=========== =========== =========== ===========
</TABLE>
A portion of the amounts indicated as off-balance sheet risk in currencies
is due to offsetting commitments to purchase and to sell the same currency on
the same date in the future. These commitments are economically offsetting
but are not, as a technical matter, offset in the forward market until the
settlement date.
Outstanding contract amounts represent the Joint Venture's extent of
involvement in the particular class of financial instrument, but not the
credit risk associated with counterparty non-performance. The credit risk
associated with these instruments, from counterparty non-performance, is the
net unrealized gain, if any, included on the Statements of Financial
Condition. The Joint Venture also has credit risk because the sole
counterparty or broker with respect to most of the Joint Venture's assets is
MLF. At September 30, 1995 and December 31, 1994, $6,342,632 and $1,695,058
of these assets, respectively, were held in segregated accounts in accordance
with Commodity Futures Trading Commissions regulations.
The risks associated with exchange-traded contracts are typically perceived
to be less than those associated with over-the-counter transactions, because
exchanges typically (but not universally) provide clearinghouse arrangements
in which the collective credit (in some cases limited in amount, in some cases
not) of the members of the exchange is pledged to support the financial
8
<PAGE>
integrity of the exchange. Where as in over-the-counter transactions, on the
other hand, traders must rely solely on the credit of their respective
individual counterparties. Margins, which may be subject to loss in the event
of a default, are generally required in exchange trading, and counterparties
may require margin in the over-the-counter markets.
The notional value of exchange traded and non-exchange traded contracts are
as follows:
September 30, 1995
------------------- -------------------
Commitment to Commitment to
Purchase(Futures, Sell(Futures,
Options & Forwards) Options & Forwards)
------------------- -------------------
Exchange
traded $18,522,595 $12,462,762
Non-Exchange
traded 29,888,537 29,076,132
----------- ------------
$48,411,132 $41,538,894
=========== ============
The gross and net unrealized gain on open contracts are as follows:
September 30, 1995
------------------
Exchange Non-Exchange
Traded Traded
----------- ------------
Gross
unrealized gain $ 338,806 $ 408,617
=========== ===========
Net
unrealized gain $ 195,298 $ (314,431)
=========== ============
9
<PAGE>
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations
Operational Overview:
--------------------
Due to the nature of the Fund's business, its results of operations depend
on the Trading Advisor's ability to recognize and capitalize on trends or other
profit opportunities in futures and forward contracts and related options in
different sectors of the world commodity markets. However, the Trading
Advisor's methods are confidential, and therefore the only information that can
be furnished regarding the Fund's results of operations is contained in the
performance record of its trading. Unlike many businesses, general economic or
seasonal conditions will not necessarily affect the profit potential of the
Fund, and its past performance is not necessarily indicative of future results.
Liquidity:
---------
Most of the Partnership's assets are held as cash which, in turn, is used
to margin its futures positions and is withdrawn, as necessary, to pay
redemptions and fees. The Partnership has entered into an arrangement with the
Commodity Broker regarding the maintenance of the Partnership's assets, which
will eliminate the interest loss resulting from being unable to invest 100% of
the Partnership's available assets in Treasury bills. Under the arrangement,
the Partnership's assets are ordinarily deposited in cash accounts rather than
invested in U.S. Treasury bills and Merrill Lynch Futures Inc. credits the
Partnership with interest as if 100% of its cash assets were continuously
invested in 91-day U.S. Treasury bills. As a result, the Partnership is able to
earn a yield on all of its available assets. In the event that the
Partnership's assets are deposited as initial margin at an exchange clearing
house, such assets will be invested in U.S. Treasury bills, and any interest
earned on such Treasury bills will be paid to the Partnership.
The futures contracts in which the Joint Venture trades may become
illiquid under certain market conditions. Commodity exchanges limit
fluctuations in futures prices during a single day by regulations referred to as
"daily limits." During a single day, no trades may be executed at prices beyond
the daily limit. Once the price of a futures contract for a particular
commodity has increased or decreased by an amount equal to the daily limit,
positions in the commodity can generally neither be taken nor liquidated unless
traders are willing to effect trades at or within the limit. Futures contracts
have occasionally moved the daily limit for several consecutive days with little
or no trading. Such market conditions could prevent the Joint Venture from
promptly liquidating its futures (including its options) positions. There are
no limitations on the daily price moves in trading foreign currency forward
contracts through banks, although illiquidity may develop in the forward markets
due to exorbitant spreads between "bid" and "asked" prices quoted. (Forward
contracts are the bank version of currency futures contracts and are not traded
on exchanges.)
Risk Factors:
------------
The Fund experiences market risk because it's objective as a speculative
commodity pool is to profit from price changes in the futures, options and
forward contracts it trades. The General Partner monitors this market risk by
valuing and reporting each open position daily.
All of the fund's assets are maintained with MLF, the commodity broker of
the Fund and an affiliate of the General Partner. The General Partner monitors
daily the Fund's trading accounts to insure actual trading complies with the
terms of the prospectus. A substantial portion of the Fund's assets are
maintained with MLF in segregated accounts in accordance with Commodity Futures
Trading Commission regulations.
10
<PAGE>
Capital Resources:
-----------------
The Fund does not have, nor does it expect to have, any capital assets and
has no material commitments for capital expenditures. The Fund's use of assets
is solely to supply the necessary margin or premiums for, and to pay any losses
incurred in connection with, its trading activity. Due to the nature of the
Fund's business, substantially all its assets will be represented by either cash
or futures or forward contract positions. Inflation is not a significant factor
in the Fund's profitability, although inflationary cycles give rise to the type
of major price movements which can have a material impact on the Fund's
profitability.
1995:
----
Total assets of the Partnership and Partnership capital at September 30,
1995 were $9,950,138 and $9,459,302, respectively. During the third quarter of
1995, a total of 665 Units were redeemed by Unitholders, for an aggregate
redemption value of $152,575.
1994:
----
Total assets of the Partnership and Partnership capital at September 30,
1994 were $8,555,779 and $8,388,531, respectively. The Partnership permits Units
to be redeemed on a monthly basis. During the third quarter of 1994, a total of
955 Units were redeemed by Unitholders, for an aggregate redemption value of
$170,949.
Results of Operations - General:
-------------------------------
Unlike an operating business, it is difficult to identify "trends" in the
Fund's operations and virtually impossible to make any predictions regarding
future results based on results to date. In general, markets in which sustained
price trends occur with some frequency tend to be favorable to managed futures
investments, but this is not always the case. It is impossible to predict when
trending markets will occur and the Trading Advisor is affected differently by
trends in general and particular types of trends. Consequently, the results of
operations of the Fund are difficult to discuss other than in terms of how it
has performed in the past.
1995 Monthly Performance:
-------------------------
At September 30, 1995, the Net Asset Value per Unit was $226.17, a 4.8%
decrease from the Net Asset Value per Unit of $237.51 at June 30, 1995 and a
15.4% increase from the Net Asset Value per Unit of $195.94 at December 31,
1994.
During January 1995, the Fund's Net Asset Value decreased 3.3%, as
trading profits generated in the energy, metals and stock indices sectors were
offset by trading losses in the interest rates, currencies and agricultural
sectors.
During February 1995, the Fund's Net Asset Value increased by 6.1%, as
trading profits generated in the interest rates, currency, stock indices and
agriculture sectors were offset by trading losses in the energy and metals
sectors.
During March 1995, the Fund's Net Asset Value increased by 15.2%, as
trading profits generated in the currency, interest rates and stock indices
sectors were offset by trading losses in the agriculture, metals and energy
sectors.
11
<PAGE>
During April 1995, the Fund's Net Asset Value increased 3.8%, as trading
profits generated in the interest rate, agriculture, energy, currency and stock
indices sectors were offset by trading losses in the metals sectors.
During May 1995, the Fund's Net Asset Value decreased 1.9%, as trading
profits generated in the interest rate and stock indices sectors were offset by
trading losses in the currency, energy, metals and agriculture sectors.
During June 1995, the Fund's Net Asset Value increased 0.7%, as trading
profits generated in the agriculture, metals, energy and stock indices sectors
were offset by trading losses in the interest rate and currencies sectors.
During July 1995, the Fund's Net Asset Value decreased 3.1%, as trading
profits generated in the currency and metals sectors were offset by trading
losses in the interest rate, stock index, agricultural and energy sectors.
During August 1995, the Fund's Net Asset Value increased 0.6%, as trading
profits generated in the currency sector were offset by trading losses in the
metals, interest rate and stock index sectors.
During September 1995, the Fund's Net Asset Value decreased 2.3%, as
trading profits generated in the interest rate and agricultural sectors were
offset by trading losses in the currency, energy, stock index and metals
sectors.
The Partnership's overall operations were unprofitable in the third
quarter of 1995 as gross trading losses of $421,215, and interest income of
$124,361, after operating expenses of $182,574 (comprised of brokerage
commissions of $302,431 and profit shares of $(119,857)), resulted in a net loss
of $479,428.
The Partnership's operations were profitable during the first nine months
of 1995 with gross trading gains of $2,245,993 and interest income of $359,004,
less operating expenses of $1,250,768 (comprised of brokerage commissions of
$910,999 and profit shares of $339,769), resulting in net income of $1,354,229.
During the third quarter of 1995, the Fund experienced one profitable month
and two unprofitable months of trading operations, and during the first nine
months of 1994, the Fund experienced five profitable months and four
unprofitable months of trading operations.
The Net Asset Value of a Unit purchased on January 2, 1987 for $100 had
increased to $226.17 as of September 30, 1995.
1994 Monthly Performance:
------------------------
At September 30, 1994, the Net Asset Value per Unit was $179.91, a 6.21%
decrease from the Net Asset Value per Unit of $191.83 at June 30, 1994 and a
3.09% decrease from the Net Asset Value per Unit of $185.64 at December 31,
1993.
During January 1994, the Fund's Net Asset Value decreased 7.9%, as trading
profits generated in the energy and metals sectors were offset by trading losses
in the currencies, interest rates, agricultural and stock indices sectors.
12
<PAGE>
During February 1994, the Fund's Net Asset Value decreased 1.6%, as trading
profits generated in the interest rates, agricultural, stock index and metals
sectors were offset by trading losses in the currencies and energy sectors.
During March 1994, the Fund's Net Asset Value increased 6.7%, as trading
profits generated in the interest rates, currencies, stock index and
agricultural sectors were offset by trading losses in the energy and metals
sectors.
During April 1994, the Fund's Net Asset Value decreased 2.6%, as trading
profits generated in the interest rates sector were offset by trading losses in
the currencies, metals, agricultural, stock index and energy sectors.
During May 1994, the Fund's Net Asset Value increased 4.4%, as trading
profits generated in the agricultural, metals, energy, interest rates and stock
index sectors were offset by trading losses in the currencies sector.
During June 1994, the Fund's Net Asset Value increased 5.1%, as trading
profits generated in the currencies, metals and energy sectors were offset by
trading losses in the interest rates and agricultural sectors.
During July 1994, the Fund's Net Asset Value decreased 3.0%, as trading
profits generated in the energy and metals sectors were offset by trading losses
in the interest rates, currencies, stock indices and agriculture sectors.
During August 1994, the Fund's Net Asset Value decreased 6.2%, as trading
profits generated in the energy sector were offset by trading losses in the
currencies, interest rates, agriculture and stock indices sectors.
During September 1994, the Fund's Net Asset Value increased 3.1%, as
trading profits were generated in all sectors of the fund: currencies, stock
indices, energy, agriculture, interest rates and metals.
The Partnership's operations were unprofitable during the third quarter of
1994 with gross trading losses of $456,340 and interest income of $71,460, less
operating expenses of $183,182 (comprised of brokerage commissions of $256,778
and profit shares of $(73,596), resulting in a net loss of $568,062.
The Partnership's operations were unprofitable during the first nine months
of 1994 with gross trading gains of $289,714 and interest income of $188,931,
less operating expenses of $790,306 (comprised of brokerage commissions of
$789,306 and profit shares of $866), resulting in a net loss of $311,661.
During the third quarter of 1994, the Fund experienced one profitable month
and two unprofitable months of trading operations, and during the first nine
months of 1994, the Fund experienced four profitable months and five
unprofitable months of trading operations.
The Net Asset Value of a Unit purchased on January 2, 1987 for $100 had
increased to $179.91 as of September 30, 1994.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
There are no exhibits required to be filed with this document.
(b) Reports on Form 8-K
-------------------
A report on Form 8-K was filed on July 28, 1995 which reflects a name
change of the General Partner from ML Futures Investment Partners Inc. to
Merrill Lynch Investment Partners Inc.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE FUTURES EXPANSION FUND
LIMITED PARTNERSHIP
By: MERRILL LYNCH INVESTMENT PARTNERS INC.
(formerly ML FUTURES INVESTMENT PARTNERS INC.)
(General Partner)
Date: November 13, 1995 By /s/JOHN R. FRAWLEY, JR.
-----------------------
John R. Frawley, Jr.
President, Chief Executive Officer
and Director
Date: November 13, 1995 By /s/JAMES M. BERNARD
-------------------
James M. Bernard
Chief Financial Officer,
Treasurer and Vice President
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION, CONSOLIDATED STATEMENTS OF OPERATIONS,
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> SEP-30-1995 SEP-30-1994
<CASH> 20,000 0
<RECEIVABLES> 9,930,138 8,555,779
<SECURITIES-RESALE> 0 0
<SECURITIES-BORROWED> 0 0
<INSTRUMENTS-OWNED> 0 0
<PP&E> 0 0
<TOTAL-ASSETS> 9,950,138 8,555,779
<SHORT-TERM> 0 0
<PAYABLES> 490,836 167,248
<REPOS-SOLD> 0 0
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 0 0
<LONG-TERM> 0 0
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 9,459,302 8,388,531
<TOTAL-LIABILITY-AND-EQUITY> 9,950,138 8,555,779
<TRADING-REVENUE> 2,245,993 289,714
<INTEREST-DIVIDENDS> 359,004 188,931
<COMMISSIONS> 1,250,768 790,306
<INVESTMENT-BANKING-REVENUES> 0 0
<FEE-REVENUE> 0 0
<INTEREST-EXPENSE> 0 0
<COMPENSATION> 0 0
<INCOME-PRETAX> 1,354,229 (311,661)
<INCOME-PRE-EXTRAORDINARY> 1,354,229 (311,661)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,354,229 (311,661)
<EPS-PRIMARY> 31.14 (6.37)
<EPS-DILUTED> 31.14 (6.37)
</TABLE>
