<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 June 30, 1997
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 0-18702
THE SECTOR STRATEGY FUND/SM/ L.P.
---------------------------------------
(Exact Name of Registrant as
specified in its charter)
Delaware 13-3568563
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
c/o Merrill Lynch 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)
212-236-5662
----------------------------------------------
(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 12 pages.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE SECTOR STRATEGY FUND/SM/ L.P.
-----------------------------------
(a Delaware limited partnership)
------------------------------
STATEMENTS OF FINANCIAL CONDITION
---------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------------- ----------------
<S> <C> <C>
ASSETS
- ------
Accrued interest $90,393 $89,553
Equity in commodity futures trading accounts:
Cash and option premiums 21,998,821 20,280,086
Net unrealized profit on open contracts (95,560) 598,158
Investment 6,357,006 7,321,993
Receivable from outside investments 95,645 4,251,647
---------------- ----------------
TOTAL $28,446,305 $32,541,437
================ ================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
LIABILITIES:
Redemptions payable $323,390 $229,669
Profit shares payable 51,808 205,317
Brokerage commissions payable 160,463 153,046
Administrative fees payable 4,585 4,373
---------------- ----------------
Total liabilities 540,246 592,405
---------------- ----------------
PARTNERS' CAPITAL:
General Partners (2518 and 2518 Units) 465,579 489,672
Limited Partners (148407 and 161771 Units) 27,440,480 31,459,360
---------------- ----------------
Total partners' capital 27,906,059 31,949,032
---------------- ----------------
TOTAL $28,446,305 $32,541,437
================ ================
NET ASSET VALUE PER UNIT
(Based on 150925 and 164289 Units outstanding) $184.90 $194.47
================ ================
</TABLE>
See notes to financial statements.
2
<PAGE>
THE SECTOR STRATEGY FUND(S/M) L.P.
----------------------------------
(a Delaware limited partnership)
------------------------------
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
------------------ -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
REVENUES:
Trading profits (loss):
Realized $(1,159,271) $1,731,934 $201,886 $1,928,129
Change in unrealized (298,601) (704,734) (693,718) (414,081)
---------------- ------------------ ------------------ ------------------
Total trading results (1,457,872) 1,027,200 (491,832) 1,514,048
---------------- ------------------ ------------------ ------------------
Interest income 291,271 372,283 587,207 760,055
Income (loss) from investment (473,633) - (367,080) -
---------------- ------------------ ------------------ ------------------
Total revenues (1,640,234) 1,399,483 (271,705) 2,274,103
---------------- ------------------ ------------------ ------------------
EXPENSES:
Profit shares (83,370) 126,631 98,807 170,866
Brokerage commissions 492,798 722,688 1,036,054 1,490,174
Administrative fees 14,079 20,648 29,601 42,576
---------------- ------------------ ------------------ ------------------
Total expenses 423,507 869,967 1,164,462 1,703,616
---------------- ------------------ ------------------ ------------------
NET INCOME (LOSS) $(2,063,741) $529,516 $(1,436,167) $570,487
================ ================== ================== ==================
NET INCOME (LOSS) PER UNIT:
Weighted average number of units
outstanding 153,985 186,705 157,566 192,212
================ ================== ================== ==================
Weighted average net income (loss)
per Limited Partner
and General Partner Unit $(13.40) $2.84 $(9.11) $2.97
================ ================== ================== ==================
</TABLE>
See notes to financial statements.
3
<PAGE>
THE SECTOR STRATEGY FUND(S/M) L.P.
----------------------------------
(a Delaware limited partnership)
------------------------------
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
-------------------------------------------
For the six months ended June 30, 1997 and 1996
-----------------------------------------------
<TABLE>
<CAPTION>
Units Limited General Total
Partners Partner
-------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL,
December 31, 1995 200,460 $34,248,684 $435,363 $34,684,047
Net Income - 562,999 7,488 570,487
Redemptions (24,301) (4,250,901) - (4,250,901)
-------------- ---------------- --------------- ---------------
PARTNERS' CAPITAL,
June 30, 1996 176,159 $30,560,782 $442,851 $31,003,633
============== ================ =============== ===============
PARTNERS' CAPITAL,
December 31, 1996 164,289 $31,459,360 $489,672 $31,949,032
Net Loss - (1,412,074) (24,093) (1,436,167)
Redemptions (13,364) (2,606,806) - (2,606,806)
-------------- ---------------- --------------- ---------------
PARTNERS' CAPITAL,
June 30, 1997 150,925 $27,440,480 $465,579 $27,906,059
============== ================ =============== ===============
</TABLE>
See notes to financial statements.
4
<PAGE>
THE SECTOR STRATEGY FUND(SM) L.P.
(A Delaware Limited Partnership)
------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared without audit. In the
opinion of management, the financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly the financial position of The SECTOR Strategy FundSM L.P. (the
"Partnership"or the "Fund") as of June 30, 1997 and the results of its
operations for the six months ended June 30, 1997 and 1996. However, the
operating results for the interim periods may not be indicative of the
results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with general accepted
accounting principles have been omitted. It is suggested that these
financial statements be read in conjunction with the financial statements
and notes thereto included in the Partnership's Annual Report on Form
10-K filed with the Securities and Exchange Commission for the year ended
December 31, 1996 (the "Annual Report").
2. INVESTMENT
At June 30, 1997, the Partnership had an investment in the ML JWH
Financials and Metals Portfolio L.L.C. ("JWH LLC").
Total revenues and fees with respect to such investment is set forth as
follows:
<TABLE>
<CAPTION>
Income (loss)
For the three months Total Brokerage Administrative Profit from
ended June 30, 1997 Revenue Commissions Fees Shares Investments
--------------- ---------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
JWH LLC $(326,394) $143,149 $4,090 $ - $(473,633)
<CAPTION>
Income (loss)
For the six months Total Brokerage Administrative Profit from
ended June 30, 1997 Revenue Commissions Fees Shares Investments
--------------- ---------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
JWH LLC $(55,358) $301,658 $8,618 $1,446 $(367,080)
</TABLE>
5
<PAGE>
3. FAIR VALUE AND OFF-BALANCE SHEET RISK
The Partnership's revenues by reporting category for the respective
periods were as follows:
<TABLE>
<CAPTION>
For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Interest rate &
Stock indices $(760,230) $(132,752) $(711,954) $(564,072)
Commodities 167,094 413,945 737,517 475,575
Currencies (485,967) 277,378 183,687 1,073,228
Energy (333,245) 269,727 (719,112) 439,027
Metals (45,524) 198,902 18,030 90,290
-------------- -------------- -------------- --------------
$(1,457,872) $1,027,200 $(491,832) $1,514,048
============== ============== ============== ==============
</TABLE>
The contract/notional values of the Partnership's open derivative
instrument positions as of June 30, 1997 and December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
1997 1996
----------------------------------------------- ------------------------------------------------
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 &
Stock indices $82,196,551 $40,644,409 $42,735,419 $6,385,831
Commodities 3,516,739 3,389,280 904,420 3,430,113
Currencies 20,801,744 18,223,880 19,592,956 23,538,327
Energy - 3,913,549 3,032,640 -
Metals 6,922,786 7,426,010 1,911,070 4,170,523
------------------- ------------------- ------------------- -------------------
$113,437,820 $73,597,128 $68,176,505 $37,524,794
=================== =================== =================== ===================
</TABLE>
The contract/notional value of the Partnership's exchange-traded and
non-exchange-traded open derivative instrument positions as of June 30, 1997 and
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------------------- ------------------------------------------------
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>
Exchange
traded $99,398,913 $56,713,609 $52,198,423 $15,604,964
Non-Exchange
traded 14,038,907 16,883,519 15,978,082 21,919,830
------------------- ------------------- ------------------ -------------------
$113,437,820 $73,597,128 $68,176,505 $37,524,794
=================== =================== ================== ===================
</TABLE>
6
<PAGE>
The average fair value of the Partnership's derivative instrument positions
which were open as of the end of each calendar month during the six months ended
June 30, 1997 and the year ended December 31, 1996 was as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------------------- ------------------------------------------------
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 &
Stock indices 47,420,602 33,745,448 71,153,009 40,875,010
Commodities 4,878,656 2,438,927 7,364,336 2,460,805
Currencies 18,003,727 20,215,596 43,682,609 47,984,354
Energy 3,134,461 1,961,496 2,998,134 1,830,883
Metals 6,168,710 5,541,639 4,032,918 8,151,036
------------------- ------------------- ------------------- -------------------
$79,606,156 $63,903,106 $129,231,006 $101,302,088
=================== =================== =================== ===================
</TABLE>
As of June 30, 1997 and December 31, 1996, $16,562,542 and $15,919,987 of the
Partnership's assets, respectively, were held in segregated accounts at MLF in
accordance with Commodity Futures Trading Commission regulations.
The gross unrealized profit and the net unrealized profit (loss) on the
Partnership's open derivative instrument positions as of June 30, 1997 and
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------------------ -------------------------------------------------
Gross Net Gross Net
Unrealized Unrealized Unrealized Unrealized
Profit Profit (Loss) Profit Profit (Loss)
------------------ ---------------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
Exchange
traded $621,330 $(17,622) $621,352 $481,708
Non-Exchange
traded 213,630 (77,938) 361,146 116,450
------------------ ---------------------- -------------------- ----------------------
$834,960 $(95,560) $982,498 $598,158
================== ====================== ==================== ======================
</TABLE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Operational Overview: Advisor Selections
- ----------------------------------------
Due to the nature of the Fund's business, its results of operations
depend on Merrill Lynch Investment Partners Inc.'s, ("MLIP") ability to select
Advisors and determine the appropriate percentage of assets to allocate to them
for trading, as well as the Advisors' ability to recognize and capitalize on
trends and other profit opportunities in different sectors of the world
commodity markets. MLIP's Advisor selection procedure and leveraging analysis,
as well as the Advisors' trading methods, are confidential, so that
substantially the only information that can be furnished regarding the Fund's
results of operations is contained in the performance record of its trading.
Unlike operating businesses, general economic or seasonal conditions do not
directly affect the profit potential of the Fund, and its past performance is
not necessarily indicative of future results. Because of the speculative nature
of its trading, operational or economic trends have little relevance to the
Fund's results. MLIP believes, however, that there are certain market
conditions, for example, markets with strong price trends, in which the Fund has
a better likelihood of being profitable than in others.
7
<PAGE>
As of July 1, 1997, the Partnership's assets were allocated as follows:
<TABLE>
<CAPTION>
Trading Advisor Sector % Allocation
- --------------- ------ ------------
<S> <C> <C>
John W. Henry & Company, Inc. Financials\Metals 22.79
Graham Capital Management, L.P. Diversified 17.11
AIS Futures Management, Inc. Diversified 19.32
Meridian Capital Management Diversified 15.82
Allied Irish Capital Management Ltd. Financials 6.54
Telesis Management Inc. Diversified 18.42
--------
100.00%
</TABLE>
MLIP expects to continue to change both allocations and Advisor
selections from time to time without advance notice to existing investors.
MLIP's Advisor Selections
- -------------------------
MLIP has no timetable or schedule for making Advisor changes or
reallocations, and generally intends to make a medium- to long-term commitment
to all Advisors selected. However, there can be no assurance as to the frequency
or number of the Advisor changes which may take place in the future, or as to
how long any of the current Advisors will continue to manage assets for the
Fund.
Results of Operations - General
- -------------------------------
MLIP believes that multi-Advisor futures funds should be regarded as
medium-to long-term investments but, 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.
Markets in which sustained price trends occur with some frequency
tend to be more favorable to managed futures investments than "whipsaw,"
"choppy" markets, but (i) this is not always the case, (ii) it is impossible to
predict when trending markets will occur and (iii) different Advisors are
affected differently by trends in general as well as by particular types of
trends.
The Fund controls credit risk in its trading in the derivatives
markets by trading only through Merrill Lynch entities which MLIP believes to be
creditworthy. The Fund attempts to control the market risk inherent in its
derivatives trading by utilizing a multi-advisor, multi-strategy structure. This
structure purposefully attempts to diversify the Fund's Advisor group among
different strategy types and market sectors in an effort to reduce risk
(although the Fund's portfolio currently emphasizes technical and trend-
following approaches).
Performance Summary
- -------------------
During the first six months of 1996, the Fund's average month-end
Net Assets equalled $33,292,100, and the Fund recognized gross trading gains of
$1,514,048 or 4.55% of average month-end Net Assets. Brokerage commissions of
$1,490,174 or 4.48%, Administrative expenses of $42,576 or .13% and Profit
shares of $170,866 or .51% of average month-end Net Assets were paid. Interest
income of $760,055 or 2.28% of average month-end Net Assets resulted in net
income of $570,487 or 1.71% of average month-end Net Assets, which resulted in a
1.72% increase in the Net Asset Value per Unit since December 31, 1995.
During the first six months of 1997, the Fund's average month-end
Net Assets equalled $30,328,453, and the Fund recognized gross trading losses of
$491,832 or 1.62% of average month-end Net Assets. Brokerage commissions of
$1,036,054 or 3.42%, Administrative expenses of $29,601 or .10% and Profit
shares of $98,807 or .33% of average month-end Net Assets were paid. Interest
income of $587,207 or 1.94% and Losses from Investments of $367,080 or 1.21% of
average month-end Net Assets resulted in a net loss of $1,436,167 or 4.74% of
average month-end Net Assets which resulted in a 4.92% decrease in the Net Asset
Value per Unit since December 31, 1996.
During the first six months of 1997 and 1996, the Fund experienced 7
profitable months and 5 unprofitable months.
<TABLE>
<CAPTION>
MONTH-END NET ASSET VALUE PER UNIT
- -----------------------------------------------------------------------
Jan. Feb. Mar. April May June
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 $181.96 $170.88 $173.16 $175.80 $173.86 $176.00
- -----------------------------------------------------------------------
1997 $198.92 $199.62 $198.24 $192.04 $184.00 $184.90
- -----------------------------------------------------------------------
</TABLE>
8
<PAGE>
Importance of Market Factors
- ----------------------------
Comparisons between the Fund's performance in a given period in one
fiscal year to the same period in a prior year are unlikely to be meaningful,
given the uncertainty of price movements in the markets traded by the Fund. In
general, MLIP expects that the Fund is most likely to trade successfully in
markets which exhibit strong and sustained price trends. The current Advisor
group emphasizes technical and trend-following methods. Consequently, one would
expect that in trendless, "choppy" markets the Fund would likely be
unprofitable, while in markets in which major price movements occur, the Fund
would have its best profit potential (although there could be no assurance that
the Fund would, in fact, trade profitably). However, trend-followers not
infrequently will miss major price movements, and market corrections can result
in rapid and material losses (sometimes as much as 5% in a single day). Although
MLIP monitors market conditions and Advisor performance on an ongoing basis in
overseeing the Fund's trading, MLIP does not attempt to "market forecast" or to
"match" trading styles with predicted market conditions. Rather, MLIP
concentrates on quantitative and qualitative analysis of prospective Advisors,
as well as on statistical studies of the historical performance parameters of
different Advisor combinations in selecting Advisors and allocating and
reallocating Fund assets among them.
Because managed futures advisors' strategies are proprietary and
confidential and market movements unpredictable, selecting advisors to implement
speculative trading strategies involves considerable uncertainty. Furthermore,
the concentration of the Fund's current Advisor portfolio, both in terms of the
number of managers retained and the common emphasis of their strategies on
technical and trend-following methods, increases the risk that unexpectedly bad
performance, turbulent market conditions or a combination of the two will result
in significant losses.
Liquidity
- ---------
Most of the Partnership's assets are held as cash which, in turn, is
used to margin its futures positions and earns interest income and is withdrawn,
as necessary, to pay redemptions and fees.
The futures contracts in which the Partnership 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 to the daily limit for several consecutive days with little
or no trading. Such market conditions could prevent the Partnership 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 large spreads between "bid" and "ask" prices quoted. (Forward contracts
are the bank version of currency futures contracts and are not traded on
exchanges.)
Capital Resources
- -----------------
The Partnership does not have, nor does it expect to have, any
capital assets and has no material commitments for capital expenditures. The
Partnership uses its assets to supply the necessary margin or premiums for, and
to pay any losses incurred in connection with, its trading activity and to pay
redemptions and fees.
Inflation is not a significant factor in the Fund's profitability,
although inflationary cycles can give rise to the type of major price movements
which can have a materially favorable or adverse impact on the Fund's
performance.
Changes in the level of prevailing interest rates (a factor
generally associated with inflation) could have a material effect on the
percentage of the total capital which is committed to trading, as interest rates
affect the calculation of the discounted minimum Net Asset Value per Unit which
Merrill Lynch & Co., Inc. has guaranteed to investors .
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending proceedings to which the Partnership or the General
Partner is a party.
John W. Henry & Company, Inc. ("JWH") is one of the Advisors
retained by the Fund, managing approximately 22.79% of the Fund's assets
committed to trading July 1, 1997. In September 1996, JWH was named as a
co-defendant in a class action lawsuit brought in the California Superior Court,
Los Angeles County and in the New York Supreme Court, New York County. In
November, JWH was named as a co-defendant in a class action complaint filed in
Superior Court of the State of Delaware for Newcastle County that contained the
same allegations as the New York and California complaints. The actions, which
seek unspecified damages, purport to be brought on behalf of investors in
certain Dean Witter, Discover & Co. ("Dean Witter") commodity pools, some of
which are advised by JWH, and are primarily directed at Dean Witter's alleged
fraudulent selling practices in connection with the marketing of those pools.
JWH is essentially alleged to have aided and abetted or directly participated
with Dean Witter in those practices. JWH believes the allegations against it are
without merit; it intends to contest these allegations vigorously, and is
convinced that it will be shown to have acted properly and in the best interest
of the investors.
On June 24, 1997, the Commodity Futures Trading Commission("CFTC")
accepted an Offer of Settlement from Merrill Lynch Futures Inc. ("MLF") and
others, in a matter captioned "In the Matter of Mitsubishi Corporation and
Merrill Lynch Futures Inc., et al.", CFTC Docket No. 97-10, pursuant to which
MLF, without admitting or denying the allegations against it, consented to a
finding by the CFTC that MLF had violated Section 4c(a)(A) of the Commodity
Exchange Act (the "Act"), relating to wash sales, and CFTC Regulation 1.37(a),
relating to recordkeeping requirements . MLF agreed to cease and desist from
violating Section 4c(a)(A) of the Act and Regulation 1.37(a), and to pay a civil
monetary penalty of $175,000.
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
James M. Bernard, formerly a Senior Vice President of MLIP is
no longer with the firm.
Michael A. Karmelin has been appointed Chief Financial Officer, Vice
President and Treasurer of MLIP. Mr. Karmelin assumed these positions on April
14, 1997, when he completed his tenure as Chief Financial Officer of Merrill
Lynch, Hubbard Inc. ("ML Hubbard"), a sponsor of real estate limited
partnerships. Mr. Karmelin was born in 1947. Mr. Karmelin joined ML Hubbard in
January 1994 as a Vice President. From May 1994 until he joined MLIP, Mr.
Karmelin was the Chief Financial Officer of ML Hubbard, responsible for its
accounting, treasury and tax functions. Prior to joining ML Hubbard, Mr.
Karmelin held several senior financial positions with Merrill Lynch & Co., Inc.
("ML&Co.") and Merrill Lynch, Pierce, Fenner & Smith Incorporated from December
1985 to December 1993, including Vice President/Senior Financial Officer
Corporate Real Estate and Purchasing, Manager Commitment Control/Capital
Budgeting, and Senior Project Manager/Project Analysis. Prior to joining ML&Co.,
Mr. Karmelin was employed at Avco Corporation for 17 years, where he held a
variety of financial positions. Mr. Karmelin holds a B.B.A. degree in Accounting
from Baruch College, C.U.N.Y. and a Master of Business Administration degree in
Corporate Strategy and Finance from New York University. Mr. Karmelin passed the
Certified Public Accountant examination in 1974 and is a member of the Treasury
Management Association, the Institute of Management Accountants and The
Strategic Leadership Forum.
10
<PAGE>
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
-------------------
There were no reports on Form 8-K filed during the first six months
of fiscal 1997.
11
<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 SECTOR STRATEGY FUND(SM) L.P.
By: MERRILL LYNCH INVESTMENT PARTNERS INC.
(General Partner)
Date: August 12, 1997 By /s/ JOHN R. FRAWLEY, JR.
------------------------
John R. Frawley, Jr.
President, Chief Executive Officer
and Director
Date: August 12, 1997 By /s/ MICHAEL A. KARMELIN
-----------------------
Michael A. Karmelin
Chief Financial Officer, Vice President
and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1995
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 0 0
<RECEIVABLES> 28,446,305 31,998,922
<SECURITIES-RESALE> 0 0
<SECURITIES-BORROWED> 0 0
<INSTRUMENTS-OWNED> 0 0
<PP&E> 0 0
<TOTAL-ASSETS> 28,446,305 31,998,922
<SHORT-TERM> 0 0
<PAYABLES> 540,246 995,289
<REPOS-SOLD> 0 0
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 0 0
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 27,906,059 31,003,633
<TOTAL-LIABILITY-AND-EQUITY> 28,446,305 31,998,922
<TRADING-REVENUE> (491,832) 1,514,048
<INTEREST-DIVIDENDS> 587,207 760,055
<COMMISSIONS> 1,164,462 1,703,616
<INVESTMENT-BANKING-REVENUES> (367,080) 0
<FEE-REVENUE> 0 0
<INTEREST-EXPENSE> 0 0
<COMPENSATION> 0 0
<INCOME-PRETAX> (1,436,167) 570,487
<INCOME-PRE-EXTRAORDINARY> (1,436,167) 570,487
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,436,167) 570,487
<EPS-PRIMARY> (9.11) 2.97
<EPS-DILUTED> (9.11) 2.97
</TABLE>
