<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, 1998
-------------
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_____
-----
<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,
1998 1997
----------------- -----------------
<S> <C> <C>
ASSETS
------
Accrued interest $ 4,912 $ 88,083
Equity in commodity futures trading accounts:
Cash and options premiums 175,121 19,393,407
Net unrealized profit on open contracts (35,138) 703,331
Investment 20,256,506 6,996,472
Receivable from investment 788,249 162,042
----------------- -----------------
TOTAL $ 21,189,650 $ 27,343,335
================= =================
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Redemptions payable $ 722,730 $ 532,040
Profit shares payable - 83,463
Brokerage commissions payable - 147,339
Administrative fees payable - 4,210
----------------- -----------------
Total liabilities 722,730 767,052
----------------- -----------------
PARTNERS' CAPITAL:
General Partner (1177 and 2518 Units) 206,065 489,837
Limited Partners (115724 and 134097 Units) 20,260,855 26,086,446
----------------- -----------------
Total partners' capital 20,466,920 26,576,283
----------------- -----------------
TOTAL $ 21,189,650 $ 27,343,335
================= =================
NET ASSET VALUE PER UNIT
(Based on 116901 and 136615 Units outstanding) $ 175.08 $ 194.53
================= =================
</TABLE>
See notes to financial statements.
2
<PAGE>
THE SECTOR STRATEGY FUND/SM/ 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,
1998 1997 1998 1997
------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUES:
Trading (loss) profits:
Realized $ (226,016) $ (1,159,271) $ (485,459) $ 201,886
Change in unrealized (619,879) (298,601) (738,428) (693,718)
------------------ ----------------- ----------------- -----------------
Total trading results (845,895) (1,457,872) (1,223,887) (491,832)
------------------ ----------------- ----------------- -----------------
Interest income 152,419 291,271 397,623 587,207
Loss from investment (310,176) (473,633) (911,395) (367,080)
------------------ ----------------- ----------------- -----------------
Total revenues (1,003,652) (1,640,234) (1,737,659) (271,705)
------------------ ----------------- ----------------- -----------------
EXPENSES:
Profit shares (991) (83,370) 147,261 98,807
Brokerage commissions 247,506 492,798 662,248 1,036,054
Administrative fees 7,071 14,079 18,921 29,601
------------------ ----------------- ----------------- -----------------
Total expenses 253,586 423,507 828,430 1,164,462
------------------ ----------------- ----------------- -----------------
NET LOSS $ (1,257,238) $ (2,063,741) $ (2,566,089) $ (1,436,167)
================== ================= ================= =================
NET LOSS PER UNIT:
Weighted average number of units
outstanding 126,065 153,985 129,955 157,566
================== ================= ================= =================
Weighted average net loss
per Limited Partner
and General Partner Unit $ (9.97) $ (13.40) $ (19.75) $ (9.11)
================== ================= ================= =================
</TABLE>
See notes to financial statements.
3
<PAGE>
THE SECTOR STRATEGY FUND/SM/ L.P.
---------------------------------
(a Delaware limited partnership)
------------------------------
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
------------------------------------------
For the six months ended June 30, 1998 and 1997
-----------------------------------------------
<TABLE>
<CAPTION>
Units Limited Partners General Partner Total
---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
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
================ ================= ================= =================
PARTNERS' CAPITAL,
December 31, 1997 136,615 $ 26,086,446 $ 489,837 $ 26,576,283
Net Loss - (2,516,838) (49,251) (2,566,089)
Redemptions (19,714) (3,308,753) (234,521) (3,543,274)
---------------- ----------------- ----------------- -----------------
PARTNERS' CAPITAL,
June 30, 1998 116,901 $ 20,260,855 $ 206,065 $ 20,466,920
================ ================= ================= =================
</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 Fund/SM/ L.P. (the "Partnership"
or the "Fund") as of June 30, 1998 and the results of its operations for the
six months ended June 30, 1998 and 1997. 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 generally 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,
1997 (the "Annual Report").
2. INVESTMENTS
Many of the multi-advisor funds (the "Multi-Advisor Funds") sponsored by
Merrill Lynch Investment Partners Inc. ("MLIP") allocate their assets to a
number of the same Trading Advisors. However, because different Multi-Advisor
Funds have historically allocated assets to slightly different Advisor
groups, the Multi-Advisor Funds have often been required to open and maintain
individual trading accounts with each Advisor. MLIP has decided to
consolidate the trading accounts of nine of its Multi-Advisor Funds
(including the Partnership) as of June 1, 1998. The consolidation is achieved
by having these Multi-Advisor Funds close their existing trading accounts and
invest in a limited liability company, ML Multi-Manager Portfolio L.L.C. ("MM
LLC ") which will open a single account with each Advisor selected. MM LLC is
managed by MLIP, initially has no investors other than the Multi-Advisor
Funds and serves solely as the vehicle through which the assets of such
Multi-Advisor Funds are combined in order to be managed through single rather
than multiple accounts.
As of June 30, 1998 the Partnership had an investment in MM LLC. of
$20,256,056 and as of December 31, 1997, the Partnership had an investment in
the ML JWH Financials and Metals Portfolio L.L.C. ("JWH LLC") of $6,996,472.
During the second quarter of 1998, the Partnership withdrew its investment in
JWH LLC.
5
<PAGE>
Total revenues and fees with respect to such investment is set forth as
follows:
<TABLE>
<CAPTION>
For the three months Total Brokerage Administrative Profit Loss from
ended June 30, 1998 Revenue Commissions Fees Shares Investment
--------------- ----------------- ------------------ --------------- --------------------
<S> <C> <C> <C> <C> <C>
MM LLC $ 224,173 $ 154,412 $ 4,411 $ 45,920 $ 19,430
JWH LLC (244,546) 82,697 2,363 $ - (329,606)
--------------------------------------------------------------------------------------------------
TOTAL $ (20,373) $ 237,109 $ 6,774 $ 45,920 $ (310,176)
=============== ================= ================== =============== ====================
For the three months Total Brokerage Administrative Profit Loss from
ended June 30, 1997 Revenue Commissions Fees Shares Investment
--------------- ----------------- ------------------ --------------- --------------------
JWH LLC $ (326,394) $ 143,149 $ 4,090 $ - $ (473,633)
=============== ================= ================== =============== ====================
For the six months Total Brokerage Administrative Profit Loss from
ended June 30, 1998 Revenue Commissions Fees Shares Investment
--------------- ----------------- ------------------ --------------- --------------------
MM LLC $ 224,173 $ 154,412 $ 4,412 $ 45,920 $ 19,429
JWH LLC (700,366) 224,056 6,402 $ - (930,824)
--------------------------------------------------------------------------------------------------
TOTAL $ (476,193) $ 378,468 $ 10,814 $ 45,920 $ (911,395)
=============== ================= ================== =============== ====================
For the six months Total Brokerage Administrative Profit Loss from
ended June 30, 1997 Revenue Commissions Fees Shares Investment
--------------- ----------------- ------------------ --------------- --------------------
JWH LLC $ (55,358) $ 301,658 $ 8,618 $ 1,446 $ (367,080)
=============== ================= ================== =============== ====================
</TABLE>
6
<PAGE>
Condensed statements of financial condition and statements of operations for
JWH LLC and MM LLC are set forth as follows:
Statements of Financial Condition
<TABLE>
<CAPTION>
MM LLC JWH LLC
----------------------------- ------------------------------
June 30, December 31,
1998 1997
----------------------------- ------------------------------
<S> <C> <C>
Assets $ 123,484,970 $ 62,481,438
============================= ==============================
Liabilities $ 3,872,011 $ 1,122,533
Members' Capital 119,612,959 61,358,905
----------------------------- ------------------------------
Total $ 123,484,970 $ 62,481,438
============================= ==============================
Statements of Operations
<CAPTION>
MM LLC
For the three months For the six months
ended June 30, 1998 ended June 30, 1998
----------------------------- ------------------------------
<S> <C> <C>
Revenues $ 1,307,775 $ 1,307,775
Expenses 1,187,403 1,187,403
----------------------------- ------------------------------
Net Income $ 120,372 $ 120,372
============================= ==============================
<CAPTION>
JWH LLC
For the three months For the three months For the six months For the six months
ended June 30, 1998 ended June 30, 1997 ended June 30, 1998 ended June 30, 1997
----------------------- ------------------------ ------------------------- -----------------------------
<S> <C> <C> <C> <C>
Revenues $ (3,235,723) $ (2,656,425) $ (7,262,323) $ (374,729)
Expenses 991,700 1,242,115 2,333,897 2,729,950
----------------------- ------------------------ ------------------------- -----------------------------
Net Loss $ (4,227,423) $ (3,898,540) $ (9,596,220) $ (3,104,679)
======================= ======================== ========================= =============================
</TABLE>
7
<PAGE>
3. FAIR VALUE AND OFF-BALANCE SHEET RISK
As of June 1, 1998, the Partnership invested all of its assets in MM LLC. The
Partnership is thus, invested indirectly in the trading of derivative
instruments. The only derivative instruments held by the Partnership at June
30, 1998 were offsetting commitments to purchase and sell the same derivative
instrument on the same date in the future. These commitments were economically
offsetting but were not, as a technical matter, offset in the forward market
until the settlement date.
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,
1998 1997 1998 1997
----------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Interest rates and
Stock indices $ (320,068) $ (760,230) $ 46,963 $ (711,954)
Commodities 146,976 167,094 262,150 737,517
Currencies (180,229) (485,967) 65,894 183,687
Energy (191,911) (333,245) (1,390,575) (719,112)
Metals (300,663) (45,524) (208,319) 18,030
----------------- ---------------- ---------------- --------------
$ (845,895) $ (1,457,872) $ (1,223,887) $ (491,832)
================= ================ ================ ==============
</TABLE>
The contract/notional values of the Partnership's open derivative instrument
positions as of June 30, 1998 and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------------------- ------------------------------------------------
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 rates and
Stock indices $ - $ - $ 82,771,267 $ 65,284,299
Commodities - - 745,270 8,158,197
Currencies 2,016,100 2,016,100 17,541,232 36,204,865
Energy - - 772,649 4,558,618
Metals 1,759,657 1,759,657 1,466,026 8,489,672
--------------- ---------------- ------------------- ----------------------
$ 3,775,757 $ 3,775,757 $ 103,296,444 $ 122,695,651
=============== ================ =================== ======================
</TABLE>
8
<PAGE>
The contract/notional values of the Partnership's exchange-traded and non-
exchange traded open derivative instrument positions as of June 30, 1998 and
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------------------- --------------------------------------------
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 $ - $ - $ 89,274,821 $ 100,878,257
Non-Exchange
traded 3,775,757 3,775,757 14,021,623 21,817,394
------------------- ------------------ ------------------- -------------------
$ 3,775,757 $ 3,775,757 $ 103,296,444 $ 122,695,651
=================== ================== =================== ===================
</TABLE>
The average fair values, based on contract/notional values, 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, 1998 and the year ended December 31,
1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------------------- --------------------------------------------
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 rates and
Stock indices $ 110,022,612 $ 25,213,417 $ 77,150,089 $ 37,849,496
Commodities 2,241,355 5,645,904 3,925,015 3,897,478
Currencies 17,783,591 22,120,810 18,669,147 28,646,929
Energy 1,806,250 2,157,156 3,139,779 2,312,458
Metals 3,474,251 5,355,620 5,072,385 7,398,721
------------------- ------------------ ------------------- -------------------
$ 135,328,059 $ 60,492,907 $ 107,956,415 $ 80,105,082
=================== ================== =================== ===================
</TABLE>
The gross unrealized profit and the net unrealized profit (loss) on the
Partnership's open derivative instrument positions as of June 30, 1998 and
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------------------------------- -------------------------------------------
Gross Net Gross Net
Unrealized Unrealized Unrealized Unrealized
Profit (Loss) Profit Profit (Loss)
-------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Exchange
traded $ - $ - $ 1,076,647 $ 709,701
Non-Exchange
traded 164,503 (35,138) 362,223 (6,370)
-------------------- ------------------- ------------------- -------------------
$ 164,503 $ (35,138) $ 1,438,870 $ 703,331
==================== =================== =================== ===================
</TABLE>
9
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The significant variations in both the statement of financial condition and the
statement of operations line items is primarily due to the Partnership placing
assets under the management of Advisors not through opening managed accounts
with them but rather through investing in MM LLC.
MONTH-END NET ASSET VALUE PER UNIT
- -------------------------------------------------------------------------
Jan. Feb. Mar. Apr. May Jun
- -------------------------------------------------------------------------
1997 $198.92 $199.62 $198.24 $192.04 $184.00 $184.90
- -------------------------------------------------------------------------
1998 $190.87 $188.05 $184.76 $174.28 $174.87 $175.08
- -------------------------------------------------------------------------
Performance Summary
January 1, 1997 to June 30, 1997
In the currency markets, the U.S. dollar rallied and started 1997 on a
strong note, rising to a four-year high versus the Japanese yen and two-and-a-
half year highs versus the Deutsche mark and the Swiss franc. January, February
and March were all profitable months for the Fund's currency positions.
Global interest rate markets began the year on a volatile note, as investors
evaluated economic data for signs of inflation. Profits were incurred in
January and March. Losses were incurred from positions in interest rates for
February.
In the energy markets, a slump in crude oil prices was characteristic of its
lackluster performance from the beginning of the year. Early in 1997,
volatility returned in the energy markets, reflecting the impact of a winter
significantly warmer than normal. January and March saw losses in energy;
however, February proved profitable.
Agricultural commodity trading proved profitable in February and March.
Soybean prices reached their highest level in over eight years, on continued
demand and fears that inventories could fall to critically low levels before the
next harvest.
April 1, 1997 to June 30, 1997
In the currency markets, the dollar underwent a significant correction in
the Spring against the Japanese yen due to the G7 finance ministers'
determination that a further dollar advance would be counter-productive to their
current goals. Currency trading was unprofitable for the quarter.
Global interest rate trading provided varied results during the quarter.
Losses were incurred in April and June. During April, U.S. bond prices moved in
a directionless pattern, as investors remained concerned over inflation and its
impact on further increases in interest rates by the U.S. Federal Reserve.
Energy trading was unprofitable for the quarter. In June crude oil trended
downward during the beginning of the month, before a sudden price reversal
occurred amid speculation that Iraq exports could be delayed until August. Price
movement of heating oil and unleaded gas proved to be trendless.
Agricultural commodity trading proved profitable for the quarter. May's
profits were due to coffee prices surging beyond three dollars a pound for the
first time in twenty years, on the possibility of frost in Brazil and reports of
poor crops in smaller countries.
January 1, 1998 to June 30, 1998
January 1, 1998 to March 31, 1998
The Fund's positions in the global interest rate markets were profitable
during the quarter. In Europe, an extended bond market rally continued despite
an environment of robust growth in the United States, Canada and the United
Kingdom, as well as a strong pick-up in growth in continental Europe.
Gold prices drifted sideways and lower as Asian demand continued to slow and
demand in the Middle East was affected by low oil prices. Initially buoyed on
concerns about a U.S.-led military strike against Iraq, crude oil fell to a nine
year low, as the globally warm winter, the return of Iraq as a producer and the
Asian economic crisis added to OPEC's supply glut problems.
10
<PAGE>
Trading results in stock index markets were mixed, but profitable, despite a
strong first-quarter performance by the U.S. equity market as several
consecutive weekly gains were recorded with most market averages setting new
highs. Results in currency trading were also mixed, but profitable. In
particular, the Swiss franc weakened versus the U.S. dollar.
Agricultural commodity markets provided profitable trading results overall.
Live cattle and hog prices trended downward throughout the quarter. Cotton
prices moved mostly upward during the quarter, but prices dropped off sharply at
the end of March.
March 31, 1998 to June 30, 1998
As swings in the U.S. dollar and developments in Japan affected bond
markets, the Fund's interest rate trading during the quarter resulted in losses,
particularly in Eurodollar deposits and U.S. Treasury bonds. Early in the
quarter, Treasury trading was range-bound, as concern that the economy might be
overheating was balanced by the potential impact of the Asian recession.
Additionally, Australian bonds and bills saw a dramatic drop in prices in early
June, as dollar-bloc currencies remained under pressure versus the U.S. dollar
due to the Japanese/Asian crisis.
Metals and energy trading also resulted in losses. The depressed gold market
weakened further following news of a European Central Bank consensus that ten to
fifteen percent of reserves should be made up of gold bullion which was at the
low end of expectations. Despite production cuts initiated by OPEC at the end of
March, world oil supplies remained excessive and oil prices stood at relatively
low levels throughout the quarter.
Results in currency trading were unprofitable, despite strong gains realized
from Japanese yen positions, which weakened during June to an eight-year low
versus the U.S. dollar. Trading results in stock index markets were also
unprofitable, as the Asia-Pacific region's equity markets weakened across the
board. In particular, Hong Kong's Hang Seng index trended downward during most
of the quarter and traded at a three-year low.
Agricultural commodity trading produced profits. The U.S. soybean crop got
off to a good start which contributed to higher yield expectations and a more
burdensome supply outlook and soybean prices traded in a volatile pattern for
the second half of the quarter. Sugar futures maintained mostly a downtrend, as
no major buyers emerged to support the market. Similarly, coffee prices trended
downward, as good weather conditions in Central America and Mexico increased the
prospects of more output from these countries
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
11
<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.
Item 2. Changes in Securities and Use of Proceeds
(a) None.
(b) None.
(c) None.
(d) None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Effective May 11, 1998, Jo Ann Di Dario became a Vice President, Treasurer
and Chief Financial Officer of Merrill Lynch Investment Partners Inc. (AMLIP@).
Ms. Di Dario was born in 1946. Before joining MLIP, she was self-employed for
one year. From February 1996 to May 1997, she worked as a consultant for Global
Asset Management, an international mutual fund organizer and operator
headquartered in London, where she offered advice on restructuring the back
office operations. From May 1992 to January 1996, Ms. Di Dario served as Vice
President of Meridian Bank Corporation, a regional bank holding company. She
was responsible for managing the treasury operations of the bank holding company
and its wholly-owned subsidiary, Meridian Investment Company Inc. Ms. Di Dario
managed the domestic treasury operation of First Fidelity Bank, a regional bank,
from September 1991 to May 1992. From 1985 until December 1990, Ms. Di Dario
was Vice President, Secretary and Controller of Caxton Corporation, a commodity
pool operator and commodity trading advisor. Her background includes seven
years of public accounting experience. She graduated with high honors from
Stockton State College with a Bachelor of Science Degree in Accounting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
There are no exhibits required to be filed with this report.
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed during the first six months of
fiscal 1998.
12
<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 11, 1998 By /s/ JOHN R. FRAWLEY, JR.
------------------------
John R. Frawley, Jr.
Chairman, Chief Executive Officer,
President and Director
Date: August 11, 1998 By /s/ JO ANN DI DARIO
-------------------
Jo Ann Di Dario
Vice President, Chief Financial Officer
and Treasurer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> DEC-31-1998 JAN-01-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 0 0
<RECEIVABLES> 21,189,650 27,343,335
<SECURITIES-RESALE> 0 0
<SECURITIES-BORROWED> 0 0
<INSTRUMENTS-OWNED> 0 0
<PP&E> 0 0
<TOTAL-ASSETS> 21,189,650 27,343,335
<SHORT-TERM> 0 0
<PAYABLES> 722,730 767,052
<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> 20,466,920 26,576,283
<TOTAL-LIABILITY-AND-EQUITY> 21,189,650 27,343,335
<TRADING-REVENUE> (1,223,887) (491,832)
<INTEREST-DIVIDENDS> 397,623 587,207
<COMMISSIONS> 828,430 1,164,462
<INVESTMENT-BANKING-REVENUES> (911,395) (367,080)
<FEE-REVENUE> 0 0
<INTEREST-EXPENSE> 0 0
<COMPENSATION> 0 0
<INCOME-PRETAX> (2,566,089) (1,436,167)
<INCOME-PRE-EXTRAORDINARY> (2,566,089) (1,436,167)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,566,089) (1,436,167)
<EPS-PRIMARY> (19.75) (9.11)
<EPS-DILUTED> (19.75) (9.11)
</TABLE>
