ML GLOBAL HORIZONS LP, S-1/A, 1996-11-26

ML GLOBAL HORIZONS LP
S-1/A, 1996-11-26
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

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<PAGE>

As filed with the Securities and Exchange Commission on November 26, 1996
REGISTRATION NO. 333-10749
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------------
ML GLOBAL HORIZONS L.P.
(Exact name of registrant as specified in its charter)

DELAWARE 6793 13-3716393
(State of Organization) (Primary Standard Industrial (IRS Employer
Classification Code Number) Identification Number)

C/O MERRILL LYNCH INVESTMENT PARTNERS INC.
MERRILL LYNCH WORLD HEADQUARTERS
SIXTH FLOOR, SOUTH TOWER
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10080-6106
(212) 236-4167
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

JOHN R. FRAWLEY, JR.
C/O MERRILL LYNCH INVESTMENT PARTNERS INC.
MERRILL LYNCH WORLD HEADQUARTERS
SIXTH FLOOR, SOUTH TOWER
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10080-6106
(212) 236-4167
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------------

COPIES TO:
Kathleen H. Pender
Steven Zoric
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603

---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

---------------------

PURSUANT TO THE PROVISIONS OF RULE 429 OF THE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, THE FORM OF
PROSPECTUS SET FORTH HEREIN ALSO RELATES TO THE REGISTRANT'S REGISTRATION
STATEMENT ON FORM S-1 (REG. NO. 33-80202) DECLARED EFFECTIVE JUNE 17, 1994 AND
TO THE REGISTRANT'S REGISTRATION STATEMENT ON FORM S-1 (REGISTRATION NO.
33-88994) DECLARED EFFECTIVE ON MARCH 1, 1995. THIS REGISTRATION STATEMENT
CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 4 WITH RESPECT TO REGISTRATION
STATEMENT NO. 33-80202 AND POST-EFFECTIVE AMENDMENT NO. 3 WITH RESPECT TO
REGISTRATION STATEMENT NO. 33-88994.

================================================================================

<PAGE>

ML GLOBAL HORIZONS L.P.

CROSS REFERENCE SHEET

FORM S-1 ITEM NO. PROSPECTUS HEADING
- ----------------- --------------------------
<S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus......... Cover Page

2. Inside Front and Outside Back Cover
Pages of Prospectus............................ Inside Cover Page; Table of Contents

3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges............. Summary; Risk Factors

4. Use of Proceeds.................................. Use of Proceeds and Interest Income

5. Determination of Offering Price.................. Inside Cover Page; Plan of Distribution

6. Dilution......................................... Not Applicable

7. Selling Security Holders......................... Not Applicable

8. Plan of Distribution............................. Inside Cover Page; Plan of Distribution

9. Description of Securities to Be
Registered..................................... Cover Page; The Limited Partnership Agreement

10. Interests of Named Experts and
Counsel........................................ Legal Matters; Experts

11. Information with Respect to the
Registrant..................................... Summary; Risk Factors; Investment Factors; Selected Financial Data;
Management's Discussion and Analysis of Financial Condition and Results
of Operations; The Advisor Selection Process; The Advisors; MLIP and MLF;
Use of Proceeds and Interest Income; Charges; Certain Litigation;
Conflicts of Interest; The Limited Partnership Agreement; Index to
Financial Statements

12. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities................................ Not Applicable
</TABLE>

<PAGE>

ML GLOBAL HORIZONS L.P.

PROSPECTUS SUPPLEMENT DATED DECEMBER __, 1996
TO
PROSPECTUS DATED NOVEMBER __, 1996
__________________________

As of November 1, 1996, the Net Asset Value per Unit of the Fund had risen
to $138.94 from the initial $100 Net Asset Value per Unit as of January 4, 1994.
__________________________

As of December 1, 1996 the Fund's Advisors were as follows. The allocation
of the Fund's assets among such Advisors is set forth below in the parentheses
following each Advisors' name. The accompanying Prospectus sets forth more
detailed information concerning the core Advisors. See "The Advisors" and "The
Core Advisors" in the Prospectus.

<TABLE>
<CAPTION>
ANNUALIZED ASSETS UNDER
WORST/BEST STANDARD MANAGEMENT GENERAL
MONTHLY DEVIATION IN STRATEGY
RATE OF RETURN/1/ OF RETURN/2/ FUND PROGRAM/3/ CLASSIFICATION/4/
------------------ ---------------- --------------- -------------------
<S> <C> <C> <C> <C>
CORE ADVISORS
ARA Portfolio Management Company, L.L.C. (14.46)%/14.48% 21.5% $99 million Technical;
Gamma Program (15%) trend-following
Chesapeake Capital Corporation (10.98)%/15.99% 17.8% $711 million Technical;
Diversified Program (38%) trend-following
John W. Henry & Company, Inc. (27.7)%/39.4%/5/ 31.2% $912 million Technical;
Financial and Metals Portfolio (38%) trend-following
NON-CORE ADVISORS
Di Tomasso Group Inc. (6.07)%/6.97% 31.4% $13 million Discretionary;
Turbo Trading Program (4.5%) fundamental
Graham Capital Management, L.P. Mean reversion;
Natural Resources Program (4.5%)/6/ N/A N/A N/A Trend-following

</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

PERFORMANCE AND ASSETS UNDER MANAGEMENT INFORMATION IS CURRENT AS OF AUGUST 31,
1996.
PERFORMANCE FIGURES ARE NOT AUDITED.
_________________________

Futures trading is highly leveraged, as is each Advisor's trading program.
No Advisor has been asked to make any special adjustments to its leveraging
policies in the case of the Fund. See "Risk Factors" in the Prospectus.

In considering the leverage at which the different Advisors trade and the
volatility of their performance, prospective investors should recognize that due
to the limited percentage of the Fund's assets allocated to each of them,
neither of the non-core Advisors, individually, is likely to have a material
effect, over the short-term, on either the overall return or the overall
performance volatility of the Fund. The current non-core Advisors each receive
Consulting Fees of 2% per annum of the Fund's assets managed by each of them
respectively, plus quarterly Profit Shares of either 20% or 23% of any
cumulative New Trading Profit achieved by each such Advisor.
_________________________

1 The lowest and the highest monthly rate of return for the program traded for
the Fund. All performance information is presented for the period from
January 1, 1991 (or inception, if later) through August 31, 1996.

2 An annualized standard deviation of 2% and a mean return of 1% would mean
that approximately two-thirds of all monthly returns during a year have
historically fallen between (1)% and 3%, i.e., within a range (deviation) of
2% above or below the mean. Standard deviation is one widely accepted measure
of risk, as standard deviation indicates the variability of returns. In
general, the more variable an Advisor's historical returns, the greater the
risk that substantial losses have been included within the historical range
of returns.

3 Assets under management in the program used for the Fund (notional funds
excluded).

4 See "The Core Advisors" in the Prospectus for a description of these strategy
classifications.

5 (27.7)% is the worst Monthly Rate of Return of any individual account, not of
the Financial and Metals Portfolio on a composite basis.

6 This Advisor began trading client accounts pursuant to this program in
September 1996.
_________________________

THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT.
_________________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________________

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Selling Agent
MERRILL LYNCH INVESTMENT PARTNERS INC.
General Partner

<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Preliminary Prospectus dated November 26, 1996--Subject to Completion
ML GLOBAL HORIZONS L.P.
$100,000,000
UNITS OF LIMITED PARTNERSHIP INTEREST

ML GLOBAL HORIZONS L.P. (THE "FUND"), a limited partnership, trades in
the international futures and forward markets under the direction of multiple
independent professional advisors (THE "TRADING ADVISORS" OR THE "ADVISORS")
applying proprietary strategies. The Fund's objective is achieving, through
speculative trading, substantial capital appreciation over time.

MERRILL LYNCH INVESTMENT PARTNERS INC. ("MLIP") is the general partner
of the Fund, and MERRILL LYNCH FUTURES INC. ("MLF") is its commodity broker.
The Fund trades under the direction of multiple independent trading advisors
selected and monitored by MLIP. The Fund currently implements a more
concentrated multiple advisor strategy than many multi-advisor funds, allocating
the predominant portion of its assets among a limited group of Advisors.

The Fund began trading January 4, 1994 with an initial capitalization
of approximately $35.8 million. The Units are continuously offered and sold as
of the beginning of each calendar month at Net Asset Value. As of October 1,
1996, the Fund's aggregate capitalization was $81,077,111, and the Net Asset
Value per Unit, originally $100, had risen to $128.97 during 2 3/4 years of
trading.

The minimum initial investment is 50 Units (or $5,000, if less); the
minimum investment for existing Limited Partners is 20 Units (or $2,000, if
less). Any whole number of Units over the minimum may be purchased.

Units may be redeemed as of the end of any calendar month, subject to
3% redemption charges payable to MLIP through the end of the twelfth month after
sale.

No distributions to the Unitholders have been made or are presently
contemplated by MLIP.
_________________________

THE UNITS ARE SPECULATIVE SECURITIES.
AN INVESTMENT IN THE FUND INVOLVES SIGNIFICANT RISKS.
_________________________

THE FOLLOWING ARE CERTAIN OF THE SIGNIFICANT RISKS OF THIS INVESTMENT.

. INVESTORS MAY LOSE ALL OR SUBSTANTIALLY ALL OF THEIR INVESTMENT IN THE
FUND. THE FUND HAS NO "PRINCIPAL PROTECTION" FEATURE ASSURING THE RETURN OF
SUBSCRIBERS' INITIAL INVESTMENTS AS OF A SPECIFIED FUTURE DATE.

. THE PAST PERFORMANCE OF THE FUND AND ITS ADVISORS IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS.
. THE FUND TRADES WITH A HIGH DEGREE OF LEVERAGE IN VOLATILE MARKETS.
. THE FUND IS SUBJECT TO SUBSTANTIAL CHARGES. ESTIMATED GROSS TRADING
PROFITS OF APPROXIMATELY 8.16% OF THE FUND'S AVERAGE MONTH-END NET ASSETS MUST
BE EARNED DURING THE FIRST YEAR AFTER A UNIT IS SOLD IN ORDER FOR THE
REDEMPTION VALUE OF SUCH UNIT TO EQUAL ITS INITIAL SUBSCRIPTION PRICE.

. CERTAIN GENERAL TYPES OF MARKET CONDITIONS--IN PARTICULAR, TRENDLESS
PERIODS WITHOUT MAJOR PRICE MOVEMENTS--MAKE IT DIFFICULT FOR THE ADVISORS TO
TRADE SUCCESSFULLY.

SEE "RISK FACTORS" BEGINNING AT PAGE 9.

------------------------

SUBSCRIBERS WILL BE REQUIRED TO MAKE CERTAIN REPRESENTATIONS AND
WARRANTIES IN THEIR SUBSCRIPTION AGREEMENTS AND POWERS OF ATTORNEY.

------------------------

THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

------------------------

<TABLE>
<CAPTION>
UNITS OF LIMITED
PARTNERSHIP INTEREST PRICE TO PUBLIC (1) SELLING COMMISSIONS (2)(3) PROCEEDS TO FUND (1)(2)(3)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
PER UNIT............... NET ASSET VALUE NONE NET ASSET VALUE
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES ON PAGE (i).
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SELLING AGENT
MERRILL LYNCH INVESTMENT PARTNERS INC.
GENERAL PARTNER

THE DATE OF THIS PROSPECTUS IS NOVEMBER ___, 1996

<PAGE>

NOTES TO COVER PAGE
- -------------------

(1) The Units are continuously offered on a best efforts basis
without any firm underwriting commitment exclusively through MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED AND ITS AFFILIATES ("MLPF&S" OR
THE "SELLING AGENT").

All Units for which subscriptions are accepted during a month
are sold at a single closing date as of the beginning of the immediately
following month. Units participate in the profits and losses of the Fund
on and after the date of such closing, and subscribers' Merrill Lynch
customer securities accounts are debited in the amount of their
subscriptions on a designated settlement date approximately five business
days after such closing date.

There is no minimum number of Units that must be sold as of the
beginning of any given calendar month for any Units then to be sold.

(2) See "Plan of Distribution -- Selling Agent Compensation"
at page 55 for information relating to indemnification arrangements with
respect to the Selling Agent.

(3) No selling commissions are paid from the proceeds of
subscriptions. MLIP credits the Selling Agent with production credits of
5% per Unit on all Units at the time of sale. No such initial production
credits are payable on sales to officers and employees of MERRILL LYNCH &
CO., INC. ("ML&CO.") and its affiliates, who purchase Units at 97% rather
than 100% of the Net Asset Value per Unit with MLIP contributing the
difference to the Fund to avoid diluting other investors' interests.

Beginning with the thirteenth full month after Units are sold
(Units are sold as of the beginning of the month immediately following the
month in which the related subscriptions were accepted), the Selling Agent
receives ongoing production credits on all such Units which remain
outstanding (including Units purchased at a 3% discount by officers and
employees of ML&Co. and its affiliates) and which were sold by Financial
Consultants (the individual MLPF&S brokers) registered with the COMMODITY
FUTURES TRADING COMMISSION (THE "CFTC") and who have passed either the
Series 3 National Commodity Futures Examination or the Series 31 Managed
Futures Fund Examination. Such ongoing production credits continue to
accrue from the beginning of the thirteenth month after the sale of a Unit
for as long as such Unit remains outstanding. These ongoing production
credits equal 2% per annum of the average month-end Net Asset Value per
Unit.

MLIP provides all initial and ongoing production credits to the
Selling Agent at no additional cost to the Fund.

_________________________

REGULATORY NOTICES
- ------------------

THIS PROSPECTUS MUST BE ACCOMPANIED BY: (1) A PROSPECTUS
SUPPLEMENT CONTAINING CERTAIN CFTC-REQUIRED INFORMATION REGARDING THE
CURRENT ADVISORS; AND (2) SUMMARY FINANCIAL INFORMATION FOR THE FUND
CURRENT WITHIN 60 CALENDAR DAYS.

__________________________

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION ABOUT THE FUND OR THE UNITS OR TO MAKE ANY
REPRESENTATION CONCERNING THE FUND OR THE UNITS NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, MLIP, MLF,
MLPF&S, ANY TRADING ADVISOR OR ANY OTHER PERSON.

_________________________

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO
ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION MAY NOT LAWFULLY BE MADE.

_________________________

THE BOOKS AND RECORDS OF THE FUND ARE MAINTAINED AT ITS
PRINCIPAL OFFICE, C/O MERRILL LYNCH INVESTMENT PARTNERS INC., MERRILL
LYNCH WORLD HEADQUARTERS, SIXTH FLOOR, SOUTH TOWER, WORLD FINANCIAL
CENTER, NEW YORK, NEW YORK 10080-6106. LIMITED PARTNERS MAY INSPECT AND
COPY SUCH BOOKS AND RECORDS DURING NORMAL BUSINESS HOURS, FOR ANY PURPOSE
REASONABLY RELATED TO THEIR INTEREST AS LIMITED PARTNERS.

_________________________

-i-

<PAGE>

REGULATORY NOTICES (CONT'D)
- --------------------------

MLIP DISTRIBUTES MONTHLY REPORTS INCLUDING SUMMARY PERFORMANCE
INFORMATION FOR THE FUND TO ALL LIMITED PARTNERS. LIMITED PARTNERS ALSO
RECEIVE CERTIFIED AUDITED FINANCIAL STATEMENTS AND ALL TAX INFORMATION
RELATING TO THE FUND NECESSARY FOR THE PREPARATION OF LIMITED PARTNERS'
ANNUAL FEDERAL INCOME TAX RETURNS.

_________________________

THE FUND IS SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE
SECURITIES EXCHANGE ACT OF 1934, AND IN ACCORDANCE THEREWITH FILES REPORTS
AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC"). REPORTS, PROXIES (IF ANY), INFORMATION STATEMENTS (IF ANY), AND
OTHER INFORMATION FILED BY THE FUND CAN BE INSPECTED AND COPIED AT THE
PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC AT 450 FIFTH STREET,
N.W. WASHINGTON, DC 20549 AND AT ITS REGIONAL OFFICES LOCATED AT 7 WORLD
TRADE CENTER, SUITE 1300, NEW YORK, NY 10048 AND CITICORP CENTER, 500
WEST MADISON STREET, SUITE 1400, CHICAGO, IL 60661. COPIES OF SUCH
MATERIAL CAN BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE SEC, 450
FIFTH STREET, N.W., WASHINGTON, DC 20549, AT PRESCRIBED RATES. THE FUND
IS AN ELECTRONIC FILER. THE SEC MAINTAINS A WEB SITE THAT CONTAINS
REPORTS, PROXY AND INFORMATION STATEMENTS, AND OTHER INFORMATION REGARDING
REGISTRANTS THAT FILE ELECTRONICALLY WITH THE SEC, AT HTTP://WWW.SEC.GOV.

_________________________

ML GLOBAL HORIZONS L.P. IS NOT A "MUTUAL FUND" OR ANY OTHER TYPE
OF "INVESTMENT COMPANY" WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT
OF 1940, AND IS NOT SUBJECT TO REGULATION THEREUNDER.

_________________________

-ii-

<PAGE>

COMMODITY FUTURES TRADING COMMISSION
RISK DISCLOSURE STATEMENT

YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION
PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD
BE AWARE THAT FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES
AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET
VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL.
IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO
WITHDRAW YOUR PARTICIPATION IN THE POOL.

FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES
FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR
THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING
PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE
DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED
THIS POOL AT PAGES 34-40 AND A STATEMENT OF THE PERCENTAGE RETURN
NECESSARY TO BREAKEVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL
INVESTMENT, AT PAGE 7.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER
FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL.
THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU
SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION
OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGES 9-11.

YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE
FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED
OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED
STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR
DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED
STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF
THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES
JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED.

-1-
<PAGE>

ML GLOBAL HORIZONS L.P.

TABLE OF CONTENTS
<TABLE>
<CAPTION>

PROSPECTUS SECTION PAGE PROSPECTUS SECTION PAGE
- ------------------ ---- ------------------ ----
<S> <C> <S> <C>
SUMMARY......................................................... 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
The Fund.................................................... 4 OF OPERATIONS........................................ 20
Risk Factors................................................ 4
Performance of the Fund..................................... 5 THE ADVISOR SELECTION PROCESS......................... 23
Fund Operations............................................. 6
Breakeven Table............................................. 7 THE ADVISORS.......................................... 25
Federal Income Tax Consequences............................. 8
Suitability................................................. 8 MLIP AND MLF.......................................... 27
Background.......................................... 27
RISK FACTORS.................................................... 9 Principals.......................................... 27
(1) Investors May Lose All or MLF................................................. 28
Substantially All of Their Investment.................. 9
(2) Past Performance Not Necessarily FIDUCIARY OBLIGATIONS OF MLIP......................... 28
Indicative of Future Results........................... 9
(3) Volatile Markets; Highly Leveraged USE OF PROCEEDS AND INTEREST INCOME................... 30
Trading................................................ 9
(4) Substantial Charges...................................... 9 CHARGES............................................... 33
(5) Importance of General Market Charges Paid by the Fund............................ 34
Conditions............................................. 9 Brokerage Commissions......................... 35
(6) No Diversification Benefits if the Use of Fund Assets............................ 36
the Fund is Not Profitable............................. 9 Administrative Fees........................... 36
(7) No Assurance of Non-Correlation; Bid-Ask Spreads............................... 36
Limitations on Non-Correlation F/X Desk Service Fees;
Even if Achieved....................................... 9 EFP Differentials........................... 36
(8) Combining Independent Trading Annual Incentive Overrides.................... 36
Strategies............................................. 10 Profit Shares................................. 39
(9) Systematic Strategies.................................... 10 Extraordinary Expenses........................ 40
(10) Discretionary Strategies................................. 10 Charges Paid by Merrill Lynch....................... 40
(11) Increased Assets Under Management........................ 10 Selling Commissions; Ongoing
(12) No Assurance of Advisors' Continued Compensation................................ 40
Services............................................... 10 Consulting Fees............................... 41
(13) Changes in Trading Strategy.............................. 10 Redemption Charges................................. 41
(14) Illiquid Markets......................................... 10
(15) Redemptions Restricted................................... 10 CERTAIN LITIGATION.................................... 41
(16) Trading on Non-U.S. Exchanges............................ 11
(17) Conflicts of Interest.................................... 11 CONFLICTS OF INTEREST................................. 46
(18) Limited Partners Taxed Currently......................... 11 Merrill Lynch Affiliated Entities.................. 46
(19) Investment Advisory Fees................................. 11 General............................................ 46
(20) Taxation of Interest Income.............................. 11 MLIP............................................... 47
(21) Tax Audit................................................ 11 MLF and MLIB....................................... 47
(22) Bankruptcy or Default.................................... 11 The Trading Advisors............................... 47
(23) Regulatory Change........................................ 11 Financial Consultants.............................. 48
Proprietary Trading................................ 48
INVESTMENT FACTORS.............................................. 12
THE LIMITED PARTNERSHIP AGREEMENT..................... 48
PERFORMANCE OF THE OTHER MLIP
MULTI-ADVISOR FUTURES FUNDS.................................... 14 FEDERAL INCOME TAX CONSEQUENCES....................... 50

SELECTED FINANCIAL DATA......................................... 19

</TABLE>

-2-
<PAGE>
ML GLOBAL HORIZONS L.P.

Table of Contents (cont'd)
<TABLE>
<CAPTION>

PROSPECTUS SECTION PAGE
- ------------------ ----

<S> <C>
PLAN OF DISTRIBUTION.................... 53
General............................... 53
Subscription Procedure................ 53
Purchases by Employee Benefit Plans... 54
Selling Agent Compensation............ 55

LEGAL MATTERS........................... 55

EXPERTS................................. 55

ADDITIONAL INFORMATION.................. 56

INDEX OF TERMS.......................... 57

INDEX TO FINANCIAL STATEMENTS........... 58

THE CORE ADVISORS....................... 77

PERFORMANCE OF THE
SINGLE-ADVISOR FUTURES
FUNDS OPERATED BY MLIP............... 108

THE ROLE OF MANAGED FUTURES
IN AN INVESTMENT PORTFOLIO........... 110
APPENDIX I -- INCENTIVE OVERRIDE AND
PROFIT SHARE CALCULATIONS IN AN
OPEN-END FUND........................ APPI-1

APPENDIX II -- BLUE SKY GLOSSARY........ APPII-1

EXHIBIT A -- FOURTH AMENDED AND
RESTATED LIMITED PARTNERSHIP
AGREEMENT............................. LPA-1

EXHIBIT B -- SUBSCRIPTION REQUIREMENTS.. SR-1
</TABLE>
EXHIBIT C -- SUBSCRIPTION AGREEMENT
AND POWER OF ATTORNEY SA-(i)

____________________

MERRILL LYNCH INVESTMENT PARTNERS INC.
GENERAL PARTNER

MERRILL LYNCH WORLD HEADQUARTERS
SOUTH TOWER, SIXTH FLOOR
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10080-6106
TELEPHONE: (212) 236-4167

-3-
<PAGE>

SUMMARY

The nature of an investment in the Fund is complex and must be
carefully reviewed by any person considering purchasing Units.
The following summary is qualified in its entirety by the
information set forth elsewhere in this Prospectus.

--------------------

THE FUND

ML GLOBAL HORIZONS L.P. (THE "FUND") is a limited partnership which
trades in the international futures and forward markets with the objective of
achieving significant profits over time. The general partner of the Fund is
MERRILL LYNCH INVESTMENT PARTNERS INC. ("MLIP").

The Fund's assets are allocated and reallocated by MLIP to the trading
management of independent professional advisors (the "Trading Advisors" or the
"Advisors") applying proprietary strategies in numerous markets.

The Fund offers its Units, and receives and processes subscriptions,
on a continuous basis throughout each month. Investors whose subscriptions are
accepted during a month are admitted to the Fund as Limited Partners as of the
beginning of the immediately following month. Investors' customer securities
accounts are debited in the amount of their subscriptions on a single monthly
settlement date within approximately five business days of the issuance of the
Units.

The Fund began trading on January 4, 1994 with an initial
capitalization of $35,835,000. A total of an additional $80,346,819 was invested
in the Units through October 1, 1996, and Units with an aggregate Net Asset
Value of $53,776,736 had been redeemed. As of October 1, 1996, the
capitalization of the Fund was $81,077,111, and the Net Asset Value per Unit,
originally $100 as of January 4, 1994, had risen to $128.97. As of October 1,
1996, the Fund had 3,064 Limited Partners.

Through October 1, 1996, the net gain in the Net Asset Value per Unit
was 28.97%. The highest month-end Net Asset Value per Unit through October 1,
1996 was $128.97 (October 1, 1996) and the lowest $97.36 (March 1, 1994). See
"--Performance of the Fund," below at page 5, and "Selected Financial Data" at
page 19.

RISK FACTORS

THE FOLLOWING ARE CERTAIN OF THE SIGNIFICANT RISKS OF THIS INVESTMENT.

. INVESTORS MUST BE PREPARED TO LOSE ALL OR SUBSTANTIALLY ALL OF THEIR
INVESTMENT. THE FUND HAS NO "PRINCIPAL PROTECTION" FEATURE ASSURING THE
RETURN OF SUBSCRIBERS' INITIAL INVESTMENTS AS OF A SPECIFIED FUTURE DATE.
SEE "RISK FACTORS -- (1) INVESTORS MAY LOSE ALL OR SUBSTANTIALLY ALL OF
THEIR INVESTMENT" AT PAGE 9.

. THE PAST PERFORMANCE OF THE FUND AND THE ADVISORS IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS. SEE "COMMODITY FUTURES TRADING COMMISSION--
RISK DISCLOSURE STATEMENT" AT PAGE 1 AND "RISK FACTORS -- (2) PAST
PERFORMANCE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS" AT PAGE 9.

. THE FUND TRADES WITH A HIGH DEGREE OF LEVERAGE IN VOLATILE MARKETS. SEE
"RISK FACTORS -- (3) VOLATILE MARKETS; HIGHLY LEVERAGED TRADING" AT PAGE 9.

. THE FUND IS SUBJECT TO SUBSTANTIAL CHARGES. ESTIMATED GROSS TRADING PROFITS
OF APPROXIMATELY 8.16% OF THE FUND'S AVERAGE MONTH-END NET ASSETS MUST BE
EARNED DURING THE FIRST YEAR AFTER A UNIT IS SOLD IN ORDER FOR THE
REDEMPTION VALUE OF SUCH UNIT TO EQUAL ITS INITIAL SUBSCRIPTION PRICE. SEE
"-- BREAKEVEN TABLE," BELOW AT PAGE 7, "RISK FACTORS -- (4) SUBSTANTIAL
CHARGES" AT PAGE 9 AND "CHARGES" AT PAGE 33.

. CERTAIN GENERAL TYPES OF MARKET CONDITIONS -- IN PARTICULAR, TRENDLESS
PERIODS WITHOUT MAJOR PRICE MOVEMENTS -- MAKE IT DIFFICULT FOR THE
ADVISORS' TO TRADE SUCCESSFULLY. SEE "RISK FACTORS -- (5) IMPORTANCE OF
GENERAL MARKET CONDITIONS" AT PAGE 9.

NO SUBSCRIBER SHOULD INVEST MORE THAN 10% OF HIS OR
HER READILY MARKETABLE ASSETS IN THE FUND.

SEE "RISK FACTORS" AT PAGES 9 THROUGH 11.

-4-
<PAGE>

SUMMARY (cont'd)

PERFORMANCE OF THE FUND
ML GLOBAL HORIZONS L.P.
OCTOBER 1, 1996

Type of Pool: Selected-Advisor/Publicly-Offered/Non-"Principal Protected"/(1)/
Inception of Trading: January 4, 1994
Aggregate Subscriptions: $116,181,819
Current Capitalization: $81,077,111
Worst Monthly Drawdown/(2)/: (6.42)% (2/96)
Worst Peak-to-Valley Drawdown/(3)/: (6.42)% (2/96)
_____________

Net Asset Value per Unit (October 1, 1996): $128.97

MONTHLY RATES OF RETURNS/(4)/
------------------------------------------------
MONTH 1996 1995 1994
------------------------------------------------
<S> <C> <C> <C>
January 1.25% (2.74)% (1.40)%
------------------------------------------------
February (6.42)% 5.48% (1.26)%
------------------------------------------------
March 1.37% 9.13% 1.28%
------------------------------------------------
April 7.63% 1.76% 0.40%
------------------------------------------------
May (3.87)% 2.09% 3.29%
------------------------------------------------
June 3.35% (0.29)% 2.67%
------------------------------------------------
July (3.12)% (3.15)% (2.23)%
------------------------------------------------
August 0.45% (0.29)% (1.96)%
------------------------------------------------
September 3.77% (1.21)% 1.52%
------------------------------------------------
October -- (0.11)% 2.06%
------------------------------------------------
November -- 1.89% (0.37)%
------------------------------------------------
December -- 6.12% 0.18%
------------------------------------------------
Compound Annual 3.72% 19.48% 4.08%
Rate of Return (9 mos.)
------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
_________________________

(1) PURSUANT TO APPLICABLE CFTC REGULATIONS, A MULTI-ADVISOR
FUND IS DEFINED AS ONE THAT ALLOCATES NO MORE THAN 25% OF ITS TRADING
ASSETS TO ANY SINGLE MANAGER. AS THE FUND CURRENTLY ALLOCATES MORE THAN
25% OF ITS TRADING ASSETS TO CERTAIN ADVISORS, IT IS REFERRED TO AS A
SELECTED-ADVISOR FUND. APPLICABLE CFTC REGULATIONS DEFINE A "PRINCIPAL
PROTECTED" FUND AS ONE WHICH IS DESIGNED TO LIMIT THE LOSS OF
PARTICIPANTS' INITIAL INVESTMENT. THE FUND HAS NO SUCH FEATURE.

(2) WORST MONTHLY DRAWDOWN REPRESENTS THE LARGEST NEGATIVE
MONTHLY RATE OF RETURN EXPERIENCED BY THE FUND; A DRAWDOWN IS MEASURED ON
THE BASIS OF MONTH-END NET ASSET VALUE ONLY, AND DOES NOT REFLECT INTRA-
MONTH FIGURES.

(3) WORST PEAK-TO-VALLEY DRAWDOWN REPRESENTS THE GREATEST
PERCENTAGE DECLINE FROM A MONTH-END CUMULATIVE MONTHLY RATE OF RETURN
WITHOUT SUCH CUMULATIVE MONTHLY RATE OF RETURN BEING EQUALLED OR EXCEEDED
AS OF A SUBSEQUENT MONTH-END. FOR EXAMPLE, IF THE MONTHLY RATE OF RETURN
WAS (1)% IN EACH OF JANUARY AND FEBRUARY, 1% IN MARCH AND (2)% IN APRIL,
THE PEAK-TO-VALLEY DRAWDOWN WOULD STILL BE CONTINUING AT THE END OF APRIL
IN THE AMOUNT OF APPROXIMATELY (3)%, WHEREAS IF THE MONTHLY RATE OF RETURN
HAD BEEN APPROXIMATELY 3% IN MARCH, THE PEAK-TO-VALLEY DRAWDOWN WOULD HAVE
ENDED AS OF THE END OF FEBRUARY AT APPROXIMATELY THE (2)% LEVEL.

(4) MONTHLY RATE OF RETURN IS THE NET PERFORMANCE OF THE FUND
DURING THE MONTH OF DETERMINATION (INCLUDING INTEREST INCOME AND AFTER ALL
EXPENSES HAVE BEEN ACCRUED OR PAID) DIVIDED BY THE TOTAL EQUITY OF THE
FUND AS OF THE BEGINNING OF SUCH MONTH.

-5-
<PAGE>

SUMMARY (cont'd)

FUND OPERATIONS

THE FUND'S MULTI-ADVISOR APPROACH

The Fund trades in diverse international futures and forward
markets with the ability rapidly to deploy and redeploy its capital across
different sectors of the global economy. The Fund offers investors
professional management in the global commodity markets. These markets
are traded through futures, options on futures and forward contracts and
offer the ability to trade either side of a market (long or short). The
Fund's use of a limited number of Advisors, and allocation of the
predominant portion of its assets to a still smaller group of Advisors, is
intended to enhance its profit potential beyond that of the broadly
diversified multi-advisor funds while retaining the potential risk control
benefits of combining independent non-correlated strategies into an
overall trading portfolio. (Core Advisors is the term used by MLIP to
identify as Advisors allocated 10% or more of the Fund's assets for
management.) See "The Advisor Selection Process" at page 23.

During its first 2 1/2 years of operation, the Fund retained
only three Advisors at any one time. Two of these Advisors remain as core
Advisors to the Fund. In July 1996, MLIP began allocating 9% of the
Fund's assets to two non-core Advisors, but approximately 90% of the
Fund's assets continues to be traded by only three Advisors. See "-- The
Advisors," below.

The Fund offers investors the opportunity to diversify a limited
portion of the risk segment of their portfolios into an investment field
that has historically often demonstrated a low degree of performance
correlation with traditional stock and bond holdings. If such non-
correlation is achieved in the future and the Fund is profitable,
investing in the Units has the potential to enhance the reward/risk ratio
of an overall portfolio. Since it began trading, the Fund's returns have,
in fact, frequently been significantly non-correlated (not, however,
negatively correlated) with the United States stock and bond markets. See
"The Role of Managed Futures in an Investment Portfolio" at page 110.

MLIP

MLIP is one of the largest managed futures sponsors in the
United States (or elsewhere) in terms of both financial and personnel
resources and assets under management. As of October 1, 1996, MLIP was
serving as sponsor or trading manager for futures funds with total capital
of approximately $1.6 billion.

THE ADVISORS

From the commencement of trading until early December 1994
(approximately its first year of trading), the Fund allocated its assets
approximately equally among three Advisors, Athena Global Investments,
L.P. ("Athena"), Chesapeake Capital Corporation ("Chesapeake") and John W.
Henry & Company, Inc. ("JWH"). In early December 1994, Athena ceased
managing its Fund account in conjunction with Athena discontinuing its
advisory operations in general. As of January 1, 1995, ARA Portfolio
Management Company, L.L.C. ("ARA") was added as an Advisor, and the Fund's
assets were allocated 20% to ARA, 40% to Chesapeake and 40% to JWH. On
July 1, 1996, the Fund began allocating assets to non-core Advisors. At
that time, the balance of the Fund's assets were reallocated 15% to ARA,
38% to Chesapeake, 38% to JWH and 9% to the non-core Advisors. To date,
the Fund's Advisor combinations have been subject to significantly fewer
changes than those of most MLIP multi-advisor funds.

As of August 31, 1996, the current core Advisors were
collectively managing approximately $2.4 billion in managed futures
accounts in which their clients (and in certain cases the Advisors
themselves) had invested, and approximately $1.72 billion in the trading
programs used for the Fund. Many of the Fund's Advisors also manage
accounts for other futures funds for which MLIP acts as sponsor or trading
manager.

See "The Core Advisors" at page 77 for certain performance and
other information relating to the current core Advisors. The accompanying
Prospectus Supplement identifies the current non-core Advisors.

THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS OBJECTIVE OR AVOID
SUBSTANTIAL LOSSES.
NO ADVISOR OR MERRILL LYNCH ENTITY HAS GUARANTEED THE SUCCESS OF
THE FUND, OR THE MAXIMUM LOSS WHICH AN INVESTOR MIGHT INCUR.

-6-
<PAGE>

SUMMARY (cont'd)

BREAKEVEN TABLE

===========================================================================================================
COLUMN II
COLUMN I BREAKEVEN
BREAKEVEN DOLLAR RETURN
PERCENTAGE RETURN REQUIRED
REQUIRED ($5,000 INITIAL INVESTMENT)
EXPENSES FIRST TWELVE MONTHS FIRST TWELVE MONTHS
AND INTEREST INCOME OF INVESTMENT OF INVESTMENT
- -----------------------------------------------------------------------------------------------------------
Brokerage Commission/(1)/ 7.25% $ 362.50
- -----------------------------------------------------------------------------------------------------------

Administrative Fee/(2)/ 0.25% $ 12.50
- -----------------------------------------------------------------------------------------------------------

F/X Desk Service and Related Fees/(3)/ 0.25% $ 12.50
- -----------------------------------------------------------------------------------------------------------

Profit Shares/(4)/ 2.00% $ 100.00
- -----------------------------------------------------------------------------------------------------------

Incentive Override/(5)/ 0.31% $ 15.50
- -----------------------------------------------------------------------------------------------------------

Redemption Charge/(6)/ 3.10% $ 155.00
- -----------------------------------------------------------------------------------------------------------

Interest Income/(7)/ (5.00)% $(250.00)
- -----------------------------------------------------------------------------------------------------------

RETURN ON $5,000 INITIAL
INVESTMENT REQUIRED TO 8.16% $ 408.00
BREAKEVEN/(8)/

============================================================================================================
</TABLE>

NOTES TO BREAKEVEN TABLE

(1) Brokerage Commissions include the Consulting Fees payable to the
Advisors by Merrill Lynch Futures. Consulting Fees range from 2% to 4%
per annum of Fund assets being managed, depending on the Advisor.

(2) Beginning October 1, 1996, the annual Brokerage Commissions payable to
MLF was reduced to 7.25% from 7.50%, with 0.25% per annum being
recharacterized as an Administrative Fee payable directly to MLIP by
the Fund. This recharacterization had no effect on investors.

(3) Estimated; paid on a per-transaction basis. The bid-ask spreads paid
on forward currency trades are difficult to estimate and are not
included as an expense in the Breakeven Table. The F/X Desk is the
Foreign Exchange Service Desk organized by MLIP through which the Fund
trades forward currency contracts. See "Charges" at page 33.

(4) It is not possible to predict the Profit Shares which might be paid in
a breakeven year. MLIP believes, based on the experience of the Fund
to date, that 2.0% of average month-end capitalization is a reasonable
estimate of breakeven Profit Share expense, however, actual Profit
Shares could differ.

(5) No Incentive Override might, in fact, be due despite the approximately
3.1% Net Asset Value gain necessary to offset the redemption charge of
$155 (based on an initial $5,000 investment). See "Charges -- Annual
Incentive Overrides" at page 36. However, for purposes of the
Breakeven Table, the Incentive Override has been estimated at 10% of
such 3.1% gain.

(6) Redemption charges would equal 3.1% of the initial $5,000 investment
because these charges would equal 3% of the $5,155 year-end Net Asset
Value necessary in order for the investor to receive net redemption
proceeds of $5,000 after subtracting the 3% redemption charge.

(7) Estimated; based on current 91-day Treasury bill rates and net of the
yield earned on the Fund's assets but retained by MLF. See "Use of
Proceeds and Interest Income" on Page 30.

(8) On the Cover Page and in "--Risk Factors," above, the required
breakeven percentage returns have been rounded up to the nearest 1/4
of 1%.

-7-
<PAGE>

SUMMARY (cont'd)

FEDERAL INCOME TAX CONSEQUENCES

In the opinion of counsel, the Fund is properly characterized as
a partnership for federal income tax purposes. Limited Partners pay tax
each year on their allocable share of the Fund's taxable income, if any,
whether or not they receive any distributions from the Fund or redeem any
Units. Substantially all of the Fund's trading gains and losses are
treated as capital gains or losses for tax purposes; interest income
received by the Fund is treated as ordinary income. The Fund could incur
significant capital losses, and investors nevertheless be required to pay
tax on their allocable share of the Fund's ordinary income.

SUITABILITY

THE FUND TRADES AT A HIGH DEGREE OF LEVERAGE IN HIGHLY VOLATILE
MARKETS. AN INVESTMENT IN THE UNITS IS SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS
OBJECTIVE OR AVOID SUBSTANTIAL LOSSES.

NO SUBSCRIBER SHOULD INVEST MORE THAN 10% OF HIS OR HER READILY
MARKETABLE ASSETS IN THE FUND. SUBSCRIBERS MUST BE PREPARED TO LOSE ALL OR
SUBSTANTIALLY ALL OF THEIR INVESTMENT.

THE UNITS ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.

-8-
<PAGE>

RISK FACTORS

AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.

NO SUBSCRIBER SHOULD INVEST MORE THAN 10% OF
HIS OR HER READILY MARKETABLE ASSETS IN THE FUND.

_______________

(1) INVESTORS MAY LOSE ALL OR SUBSTANTIALLY ALL OF THEIR INVESTMENT

INVESTORS MUST BE PREPARED TO LOSE ALL OR SUBSTANTIALLY ALL OF THEIR
INVESTMENT. THE FUND HAS NO "PRINCIPAL PROTECTION" FEATURE ASSURING THE RETURN
OF SUBSCRIBERS' INITIAL INVESTMENTS AS OF A SPECIFIED FUTURE DATE.

(2) PAST PERFORMANCE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

Past performance is not necessarily indicative of future results.
Neither the Advisors' nor the Fund's past performance to date is representative
of how they or it, respectively, may trade in the future.

(3) VOLATILE MARKETS; HIGHLY LEVERAGED TRADING

Futures and forward trading is highly leveraged, and market price
levels are volatile and materially affected by unpredictable factors such as
weather and governmental intervention. The combination of leverage and
volatility creates a high degree of risk.

(4) SUBSTANTIAL CHARGES

The Fund is subject to substantial charges. The Incentive Override is
paid to MLIP on the basis of the overall cumulative profitability (if any) of
the Fund, but cumulative profitability on an overall Fund basis may not
correspond to the investment experience of any given investor. Units may be
subject to paying their pro rata share (allocated equally to each outstanding
Unit) of an Incentive Override despite the Net Asset Value of such Units falling
below their initial purchase price.

The Profit Shares paid to the Advisors are based on the individual
performance of each Advisor, not the overall performance of the Fund.
Historically, the Fund has paid substantial Profit Shares to certain Advisors
during periods when the performance of the Fund as a whole was breakeven or
unprofitable.

(5) IMPORTANCE OF GENERAL MARKET CONDITIONS

Overall market or economic conditions -- which neither MLIP nor any
Advisor can predict or control -- have a material effect on performance.
Furthermore, such overall conditions can adversely affect the performance of
numerous Advisors at or about the same time, despite their implementing
different and independent strategies. Consequently, the multi-advisor structure
of the Fund does not assure that its performance will not be adversely affected
by future market or economic conditions.

(6) NO DIVERSIFICATION BENEFITS IF THE FUND IS NOT PROFITABLE

If the Fund does not trade successfully -- after deduction of all fees
and charges -- it cannot serve as an effective diversification for a traditional
portfolio.

(7) NO ASSURANCE OF NON-CORRELATION; LIMITATIONS ON NON-CORRELATION EVEN IF
ACHIEVED

Not only is the past performance of the Fund not necessarily
indicative of its future results (due to the speculative character of managed
futures), but also there can be no assurance, however the Fund may perform, that
the Fund's results will be non-correlated with (i.e., unrelated to) the general
stock and bond markets. If the Fund is not non-correlated to these markets, the
Fund cannot help diversify an overall portfolio. Investors should evaluate an
investment in the Fund in terms of the alternative of an investment in a cash
equivalent, such as 91-day Treasury bills, which can be relied upon to

-9-
<PAGE>

(i) be generally non-correlated with equity and debt price levels, (ii)
generate a positive yield and cash flow, (iii) be highly liquid, (iv) have
almost no risk of loss of principal, and (v) incur virtually no costs or
expenses.

Even if the Fund's past performance is both profitable and non-
correlated to the general stock and bond markets, there are highly likely to be
significant periods during which the Fund's results are similar to those of an
investor's stock and bond holdings, thereby reducing or eliminating the Fund's
diversification benefits. During unfavorable economic cycles, an investment in
the Fund may increase rather than mitigate a portfolio's aggregate losses.

(8) COMBINING INDEPENDENT TRADING STRATEGIES

Combining independent trading strategies involves substantial
opportunity costs, as one Advisor's profits are frequently offset by
another Advisor's losses. Different Advisors often take opposite
positions for the Fund, eliminating the profit potential of the combined
positions.

(9) SYSTEMATIC STRATEGIES

Most of the Fund's assets have been allocated since inception to
Advisors which rely on technical, systematic strategies. The widespread
use of technical trading systems frequently results in numerous managers
attempting to execute similar trades at or about the same time, altering
trading patterns and affecting market liquidity. Furthermore, the profit
potential of trend-following systems may be diminished by the changing
character of the markets, which may make historical price data (on which
technical programs are based) only marginally relevant to future market
patterns.

(10) DISCRETIONARY STRATEGIES

Certain of the Fund's Advisors may be discretionary rather than
systematic traders. Discretionary trading managers may be prone to emotionalism
and a lack of discipline in their trading. Relying on subjective trading
judgment may produce less consistent results than those obtained by more
systematic approaches.

(11) INCREASED ASSETS UNDER MANAGEMENT

There appears to be a tendency for the rates of return achieved by
managed futures advisors to decline as assets under management increase. None of
the Advisors has agreed to limit the amount of additional equity which it may
manage, and most of them are at or near their all-time high in assets under
management.

(12) NO ASSURANCE OF ADVISORS' CONTINUED SERVICES

There is no assurance that any Trading Advisor will be willing or able
to continue to provide advisory services to the Fund. There is severe
competition for the services of qualified Advisors, and the Fund may not be able
to retain satisfactory replacement or additional Advisors on acceptable terms.
MLIP must allocate Advisor availability among its different funds, including the
Fund, and, accordingly, may not at all times select for the Fund those Advisors
which MLIP would otherwise believe to be in its best interests.

(13) CHANGES IN TRADING STRATEGY

An Advisor may make certain changes in its trading strategies without
the knowledge of MLIP.

(14) ILLIQUID MARKETS

Certain positions held by the Fund may become illiquid, preventing a
Trading Advisor from acquiring positions otherwise indicated by its strategy or
making it impossible for a Trading Advisor to close out positions against which
the market is moving.

(15) REDEMPTIONS RESTRICTED

Investors' limited ability to redeem Units could result in there being
a substantial difference between a Unit's redemption value and its Net Asset
Value as of the date by which irrevocable redemption requests must be received.
Redemption charges of 3% apply through the end of the twelfth month after a Unit
is sold.

-10-
<PAGE>

(16) TRADING ON NON-U.S. EXCHANGES

The Trading Advisors trade extensively on non-U.S. exchanges. These
exchanges are not regulated by any United States governmental agency. The Fund
could incur substantial losses trading on foreign exchanges to which it would
not have been subject had the Trading Advisors limited their trading to U.S.
markets.

The profits and losses derived from trading foreign futures and
options will generally be denominated in foreign currencies; consequently, the
Fund will be subject to a certain degree of exchange-rate risk in trading such
contracts.

(17) CONFLICTS OF INTEREST

The Fund is subject to a number of material actual and potential
conflicts of interest, raising the possibility that investors will be
disadvantaged to the benefit of MLIP, the Trading Advisors or their respective
principals and affiliates. No formal policies or procedures have been adopted to
resolve these conflicts. See "Conflicts of Interest" at page 46.

(18) LIMITED PARTNERS TAXED CURRENTLY

Each year, Limited Partners are taxed on their allocable share of any
Fund profits. If an investor purchased stocks or bonds, on the other hand, there
would generally be no tax due on the appreciation in the value of such holdings
until disposition.

All performance information in this Prospectus is presented
exclusively on a pre-tax basis.

(19) INVESTMENT ADVISORY FEES

Limited Partners could be required to treat the Profit Shares and
Incentive Overrides, as well as certain other expenses of the Fund, as
investment advisory fees, which are subject to substantial restrictions on
deductibility for individual taxpayers. MLIP has not, to date, been classifying
the Profit Shares, the Incentive Overrides or such expenses as investment
advisory fees, a position to which the Internal Revenue Service (the "IRS") may
object.

(20) TAXATION OF INTEREST INCOME

The Fund's trading losses are almost exclusively capital losses for
tax purposes. Capital losses may be offset against ordinary income only to the
extent of $3,000 per year for individual taxpayers. If an individual Limited
Partner had, for example, an allocable trading loss of $10,000 and allocable
interest income of $5,000, he or she would incur a net loss of $5,000 but would
recognize taxable interest income of $2,000.

(21) TAX AUDIT

There can be no assurance that the Fund's tax returns will not be
audited by the IRS. If such an audit were to result in an adjustment, Limited
Partners could be required to pay back taxes, interest and penalties, and could
themselves be audited.

Prospective investors are strongly urged to consult their own tax
advisers and counsel with respect to the possible tax consequences of an
investment in the Fund, particularly since such tax consequences differ among
investors. See "Federal Income Tax Consequences" at page 50.

(22) BANKRUPTCY OR DEFAULT

In the event of the bankruptcy of MLF, the Fund could be unable to
recover its assets, and investors could incur substantial losses, despite the
Fund having been otherwise highly profitable.

(23) REGULATORY CHANGE

Future regulatory changes could be materially adverse to the
Fund.
____________________

-11-
<PAGE>

INVESTMENT FACTORS

The following summarizes certain of the principal potential advantages
which MLIP believes may be associated with an investment in the Fund. There are
also substantial risks associated with such an investment. See "Risk Factors"
beginning at page 9.

____________________

(1) MLIP

MLIP is a major sponsor of futures funds. MLIP's experience and
familiarity with the industry assist MLIP in its ongoing monitoring of the
Trading Advisors' performance as well as in the administration of the Fund. MLIP
combines experience in its trading advisor selection process with an active
approach to its general partner and trading manager roles.

(2) THE TRADING ADVISORS

The Advisors selected by MLIP for the Fund generally satisfy MLIP's
criteria of having performed successfully for a significant period of time (no
less than approximately 12-18 months) prior to their selection. MLIP evaluates
successful performance in a variety of ways, including cumulative profitability,
performance volatility and the duration and frequency of drawdowns. Although
MLIP uses a variety of statistical measures in assessing prospective Advisors'
performance, because of the inherent uncertainty of future performance, MLIP
relies heavily on its subjective evaluation of a prospective Advisor's abilities
in the selection process. Other than in exceptional circumstances, prospective
Advisors who do not satisfy MLIP's quantitative past performance criteria are
not given further consideration. However, even Advisors which are considered
eligible on the basis of past performance must also meet MLIP's qualitative
standards (e.g., trading discipline, market view, reputation in the industry,
past experience, willingness to negotiate fees, etc.) in order to be selected.

(3) MARKET AND STRATEGY DIVERSIFICATION

In its asset allocation, MLIP emphasizes broad diversification and
participation in numerous global markets. MLIP focuses on combining Advisors
that collectively implement a wide range of qualitatively different strategies
and trading methods. Although since inception the Advisor group selected for the
Fund has emphasized technical, trend-following methods, in the future MLIP may
favor fundamental and/or discretionary Advisors for the Fund. See "The Core
Advisors -- Futures Trading Methods in General" at pages 77-78.

(4) PORTFOLIO DIVERSIFICATION

The performance of the Fund should exhibit a substantial degree of
non-correlation (not, however, necessarily negative correlation) with the
performance of traditional stock and bond portfolio components. Unlike short
selling in the securities markets, selling futures short is no more difficult
than establishing a long position. The profit and loss potential of futures
trading is not dependent upon economic prosperity or interest rate or currency
stability. Diversifying assets among different investments that generate
positive but non-correlated returns has the potential to decrease risk without a
corresponding decrease in returns --enhancing the reward/risk profile of a
portfolio. Non-correlation without positive performance will not provide any
diversification advantages, and there can be no assurance that the Fund will
trade profitably.

Non-correlated performance must be distinguished from negatively
correlated performance. MLIP has no expectation that the performance of the Fund
will be inversely related to that of the general debt and equity markets, i.e.,
likely to be profitable when the latter are unprofitable or vice versa. This
would be negative correlation. Non-correlation means only that the performance
of the Fund has, in MLIP's judgment, a good likelihood of being unrelated to the
performance of stocks and bonds, reflecting MLIP's belief that certain factors
which affect stock and bond prices may affect the Fund differently and that
certain factors which affect the former may not affect the latter. The Net Asset
Value per Unit may decline more or less than, or be more or less profitable
than, stocks and bonds during both bear and bull markets.

(5) GLOBAL TRADING

As global markets and investing become more complex, professionally
managed futures may increasingly be included in traditional portfolios of stocks
and bonds managed by advisors seeking improved balance and diversification. By
allocating a limited portion of the risk segment of their portfolios to a
managed futures investment such as the Fund, in

-12-
<PAGE>

which selected advisors specialize in global futures and forward trade with the
ability to move capital rapidly among the world's economies and markets,
investors have the potential, if their futures investment is, in fact,
profitable as well as non-correlated with stock and bonds, to add a valuable
aspect of diversification to a traditionally structured portfolio, enhancing
their prospects for superior performance as well as reducing both the volatility
of their portfolios over time and their dependence on any single nation's
economy.

(6) THE INCENTIVE OVERRIDE AS AN ALTERNATIVE TO HIGHER FIXED-RATE COSTS

MLIP structured the Fund to provide for an annual 10% Incentive
Override payable to MLIP, in return for a reduction in Brokerage Commissions
from MLIP's typical rates for public funds of 9% or 10% of average month-end
assets per annum to 7.50% per annum (which, effective October 1, 1996, was
restructured to 7.25% per annum plus a 0.25% annual Administrative Fee payable
by the Fund directly to MLIP). Because of the Incentive Override, a potentially
significant portion of MLIP's net compensation from the Fund is directly linked
to the Fund's overall profitability. If the Fund generates Net New Gain in
excess of 20% of the Fund's average month-end assets in a given calendar year,
MLIP will recognize a higher net overall return from the Fund than MLIP would
under MLIP's more typical fee structure.

(7) SMALL MINIMUM INVESTMENT; SMALLER MINIMUM ADDITIONAL INVESTMENT

The initial minimum investment in the Fund is 50 Units (or $5,000, if
less), and the minimum additional investment for existing Limited Partners only
20 Units (or $2,000, if less). Any greater number of whole Units may be
purchased.

The small minimum investment required by the Fund makes it possible
for first-time investors to gain exposure to managed futures through investing
in the Fund without having to commit large amounts of capital and also permits
smaller investors who wish to do so to include an investment in the Fund as a
limited portion of the risk segment of their portfolios.

(8) MERRILL LYNCH EMPLOYEE DISCOUNT

Officers and employees of ML&Co. and its affiliates subscribe for
Units at the discounted price of 97% of the Net Asset Value per Unit. MLIP
itself provides the remaining 3% of the Net Asset Value per Unit to the Fund so
that other subscribers' investments are not diluted. (Due to regulatory
considerations, the employee discount is not available to retirement accounts.
Such accounts are free to purchase Units, but must do so at 100% of the Net
Asset Value per Unit.)

The discount permits eligible investors to share in a portion of the
benefit derived by MLIP from not having to pay initial selling commissions on
sales of Units within the Merrill Lynch organization.

(9) ADMINISTRATIVE CONVENIENCE

The Fund is structured in order to minimize the administrative burden
to Limited Partners. Limited Partners receive, directly from MLIP, monthly
unaudited statements of account and annual certified financial reports as well
as all Fund-related tax information necessary for Limited Partners to complete
their federal income tax returns. The approximate Net Asset Value per Unit is
available at any time upon request.

-13-
<PAGE>

PERFORMANCE OF THE OTHER MLIP
MULTI-ADVISOR FUTURES FUNDS

The following performance summaries present the past performance of
other funds sponsored by MLIP which allocate their assets to more than one
advisor. The performance of certain single advisor futures funds sponsored by
MLIP is set forth beginning at page 108. MLIP, in general, specializes in
sponsoring multi-advisor and selected advisor funds.

The MLIP funds without "principal protection" features, such as the
Fund, generally trade at 100% leverage -- i.e., with 100% of their capital
allocated to trading. MLIP funds with "principal protection" features generally
allocate less than all of their capital to trading as a means of managing the
risk of losses which could lead to the further deleveraging or even termination
of their trading. Different MLIP "principal protection" funds have, however,
come over time to allocate substantially different percentages of their assets
to trading. ML Principal Protection L.P. and ML Principal Protection Plus Ltd.
each have allocated only 60% of their respective assets to trading since
inception. The SECTOR Strategy Funds(SM) (with the exception of The SECTOR
Strategy Fund(SM) IV L.P. (Series B Units) and The SECTOR Strategy Fund(SM)
International IV Ltd. (Series B Shares) which do not have "principal protection"
features) each began trading with approximately 70% of their respective assets
allocated to trading, although certain of these funds have traded at
significantly more or less than 70% leverage over time.

A number of the offshore funds sponsored by MLIP began operations
investing in a domestic MLIP fund implementing the same trading strategy.
Consequently, the subscriptions to such offshore funds are also reflected as
subscriptions to their domestic counterparts.

All but one of the "principal protected" MLIP funds are also multi-
advisor or selected advisor funds.

The fee structures of the various MLIP multi-advisor and selected
advisor funds vary somewhat, and certain of such funds implement yield
enhancement strategies. Furthermore, the Fund is the only such fund from which
MLIP receives incentive compensation comparable to the Incentive Override.
However, to date, the aggregate fees of such funds, as a percentage of their
respective assets allocated to trading, have not differed materially.

ML Global Horizons Ltd. (see page 15) is an offshore counterpart of
the Fund. The ML Global Horizons Ltd. Series B Shares are traded in the same
manner as the ML Global Horizons Ltd. Series A Shares, but have had their
incentive compensation waived to the extent of their loss carryforward as
investors in another MLIP fund which dissolved.

The MLIP funds are each different investments, have different advisors
and different numbers of advisors, and many allocate different percentages of
their assets to trading in general as well as among such advisors.

As of the date of this Prospectus, each of the current Advisors is
managing one or more accounts for MLIP funds. However, no MLIP fund has the same
Advisor group as does the Fund.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS, AND
MATERIAL DIFFERENCES EXIST BETWEEN SUBSTANTIALLY ALL OF THE FOLLOWING FUNDS AND
THE FUND.

INVESTORS SHOULD NOTE THAT INTEREST INCOME MAY CONSTITUTE A
SIGNIFICANT PORTION OF A COMMODITY POOL'S INCOME AND, IN CERTAIN INSTANCES, MAY
GENERATE PROFITS WHERE THERE HAVE BEEN REALIZED AND UNREALIZED LOSSES FROM
COMMODITY TRADING.

-14-
<PAGE>

- --------------------------------------------------------------------------------
MLIP SELECTED-ADVISOR AND MULTI-ADVISOR FUNDS
WITHOUT "PRINCIPAL PROTECTION" FEATURES
SEPTEMBER 1, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
WORST
WORST MONTHLY PEAK-TO-VALLEY
TYPE OF INCEPTION AGGREGATE CURRENT DRAWDOWN/(1)/ DRAWDOWN/(3)/
NAME OF FUND OFFERING OF TRADING SUBSCRIPTIONS CAPITALIZATION % MONTH % PERIOD
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ML Global Horizons Ltd.
(Series A) Private Jan. 1994 $ 89,637,253 $42,727,028 (6.29)% (2/96) (6.29)% (2/96)
(offshore counterpart of
the Fund)
- ----------------------------------------------------------------------------------------------------------------------------------
ML Global Horizons Ltd.
(Series B) Private Sept. 1994 $ 3,708,415 $ 2,163,629 (5.66)% (2/96) (5.73)% (6/95-9/95)
(offshore counterpart of
the Fund)
- ----------------------------------------------------------------------------------------------------------------------------------
ML Futures Investments
II L.P. Public May 1988 $269,809,880 $13,467,354 (10.34)% (1/91) (17.81)% (11/90-8/91)
- ----------------------------------------------------------------------------------------------------------------------------------
ML Futures Investments L.P. Public Mar. 1989 $ 86,500,700 $23,557,474 (5.09)% (2/91) (10.85)% (6/95-7/96)
- ----------------------------------------------------------------------------------------------------------------------------------
The John W. Henry &
Co./Millburn L.P. Public Jan. 1990 $ 18,182,000 $11,829,594 (15.99)% (1/92) (34.39)% (1/92-5/92)
(Series A Units)
- ----------------------------------------------------------------------------------------------------------------------------------
The John W. Henry &
Co./Millburn L.P. Public Jan. 1991 $ 50,636,000 $25,202,606 (15.01)% (1/92) (32.28)% (1/92-5/92)
(Series B Units)
- ----------------------------------------------------------------------------------------------------------------------------------
The John W. Henry &
Co./Millburn L.P. Public Jan. 1992 $ 40,000,000 $13,665,489 (9.54)% (2/96) (24.13)% (1/92-5/92)
(Series C Units)
- ----------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy
Fund(SM) IV L.P. Public July 1992 $ 13,353,600 $ 922,319 (7.04)% (2/96) (11.45)% (2/96-7/96)
(Series B Units)
- ----------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy
Fund(SM) International IV Private July 1992 $ 9,131,000 $ 499,712 (7.32)% (2/96) (10.79)% (1/94-1/95)
Ltd. (Series B Shares)
- ----------------------------------------------------------------------------------------------------------------------------------
The JLI Trading Co. Fund Private Mar. 1995 $ 14,300,136 $14,968,310 (6.93)% (2/96) (8.22)% (5/96-7/96)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
RATE OF
RETURN 1996
JAN. 1, 1991- COMPOUND 1995 1994 1993 1992 1991
AUG. 31, 1996 RATE OF COMPOUND COMPOUND COMPOUND COMPOUND COMPOUND
(OR RETURN RATE OF RATE OF RATE OF RATE OF RATE OF
NAME OF FUND DISSOLUTION) (8 MONTHS) RETURN RETURN RETURN RETURN RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ML Global Horizons Ltd.
(Series A) 25.21% 0.38% 19.77% 4.15% N/A N/A N/A
(offshore counterpart of
the Fund)
- ----------------------------------------------------------------------------------------------------------------------------------
ML Global Horizons Ltd.
(Series B) 27.95% 0.47% 22.62% 3.86% N/A N/A N/A
(offshore counterpart of (4 mos.)
the Fund)
- ----------------------------------------------------------------------------------------------------------------------------------
ML Futures Investments
II L.P. 18.07% (7.36)% 17.07% (1.36)% 18.67% (3.17)% (3.95)%
- ----------------------------------------------------------------------------------------------------------------------------------
ML Futures Investments L.P. 34.28% (6.29)% 11.80% 2.95% 16.56% 4.06% 2.64%
- ----------------------------------------------------------------------------------------------------------------------------------
The John W. Henry &
Co./Millburn L.P. 53.00% (3.97)% 34.89% (8.64)% 20.64% (16.65)% 28.57%
(Series A Units)
- ----------------------------------------------------------------------------------------------------------------------------------
The John W. Henry &
Co./Millburn L.P. 64.23% (3.97)% 34.49% (8.43)% 19.74% (13.88)% 34.67%
(Series B Units)
- ----------------------------------------------------------------------------------------------------------------------------------
The John W. Henry &
Co./Millburn L.P. 28.11% (4.27)% 35.08% (7.88)% 14.78% (6.30)% N/A
(Series C Units)
- ----------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy
Fund(SM) IV L.P. 15.38% (7.62)% 12.01% (7.44)% 19.56% 0.76% N/A
(Series B Units) (6 mos.)
- ----------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy
Fund(SM) International IV 18.96% (4.85)% 14.51% (9.37)% 19.56% 0.76% N/A
Ltd. (Series B Shares) (6 mos.)
- ----------------------------------------------------------------------------------------------------------------------------------
The JLI Trading Co. Fund 4.67% 2.17% 2.45% N/A N/A N/A N/A
(10 mos.)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

PURCHASERS OF UNITS WILL ACQUIRE NO INTEREST IN THESE FUNDS. THESE FUNDS (OTHER
THAN ML GLOBAL HORIZONS LTD.) ARE
EACH TRADED PURSUANT TO MATERIALLY DIFFERENT PROGRAMS AND WITH MATERIALLY
DIFFERENT OBJECTIVES THAN THE FUND

THE NOTES ON PAGE 18 ARE AN INTEGRAL PART OF THE ABOVE PERFORMANCE INFORMATION.

-15-
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
WORST
WORST MONTHLY PEAK-TO-VALLEY
TYPE OF INCEPTION AGGREGATE CURRENT DRAWDOWN/(1)/ DRAWDOWN/(3)/
NAME OF FUND OFFERING OF TRADING SUBSCRIPTION CAPITALIZATION % MONTH % PERIOD
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Futures Opportunities Private Dec. 1988 $ 45,310,202 dissolved as of (8.94)% (1/92) (17.34)% (1/92-5/92)
Limited 7/31/92
- ----------------------------------------------------------------------------------------------------------------------------------
ML Futures Investments Ltd. Private Mar. 1989 $ 68,202,237 dissolved as of (6.17)% (2/94) (11.10)% (1/94-2/94)
8/31/94
- ----------------------------------------------------------------------------------------------------------------------------------
Canadian Diversified Futures
Fund Limited Partnership Public July 1989 $ 13,060,222 MLIP ceased (6.42)% (4/91) (18.38)% (12/90-8/91)
functioning as
general partner
as of 12/31/91
- ----------------------------------------------------------------------------------------------------------------------------------
Currency Investment Partners Private April 1991 $ 55,114,566 dissolved as of (5.13)% (8/91) (16.10)% (7/91-5/94)
Ltd. 8/31/94
- ----------------------------------------------------------------------------------------------------------------------------------
dissolved as of
The Managed Futures Trust Private May 1991 $ 11,090,759 9/24/93 (6.22)% (7/91) (14.50)% (1/92-5/92)
Fund L.P.
- ----------------------------------------------------------------------------------------------------------------------------------
dissolved as of
Commodity Trading Company, Private July 1991 $ 25,797,626 10/31/94 (6.47)% (2/94) (23.31)% (1/92-12/92)
Ltd.
- ----------------------------------------------------------------------------------------------------------------------------------
dissolved as of
ML Institutional Partners Public Feb. 1992 $ 57,312,700 12/31/94 (3.58)% (1/94) (8.78)% (10/93-4/94)
L.P.
- ----------------------------------------------------------------------------------------------------------------------------------
MLIP resigned
Permal F/X, Financials & Private July 1992 $106,495,710 as trading (5.67)% (2/94) (12.24)% (2/94-4/94)
Futures Ltd. manager as of
3/31/96
- ----------------------------------------------------------------------------------------------------------------------------------
dissolved as of
Daiwa Hudson River Fund Private Feb. 1994 $ 7,044,701 2/29/96 (4.72)% (3/94) (17.21)% (2/94-1/95)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

- ----------------------------------------------------------------------------------------------------------------------------------
Currency Investment Partners (14.25)% N/A N/A (4.05)% (2.06)% (1.57)% (7.52)%
Ltd. (8 mos.) (9 mos.)

- ----------------------------------------------------------------------------------------------------------------------------------
The Managed Futures Trust 36.19% N/A N/A N/A 20.58% 2.63% 10.06%
Fund L.P. (8-2/3 mos.) (8 mos.)

- ----------------------------------------------------------------------------------------------------------------------------------
Commodity Trading Company, (14.46)% N/A N/A (6.21)% 14.91% (23.31)% 3.50%
Ltd. (10 mos.) (6 mos.)

- ----------------------------------------------------------------------------------------------------------------------------------
ML Institutional Partners (0.35)%* N/A N/A (4.06)% 7.65% (3.51)% N/A
L.P. (composite) (11 mos.)

- ----------------------------------------------------------------------------------------------------------------------------------
Permal F/X, Financials & 21.22% 6.63% 14.78% (5.33)% 11.05% (5.79)% N/A
Futures Ltd. (3 mos) (6 mos.)

- ----------------------------------------------------------------------------------------------------------------------------------
Daiwa Hudson River Fund 0.65% 0.26% 19.82% (16.22)% N/A N/A N/A
(2 mos.) (11 mos.)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* The composite return of the fund, not the performance of any individual
series of shares/units.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

PURCHASERS OF UNITS WILL ACQUIRE NO INTEREST IN THESE FUNDS.
THESE FUNDS (OTHER THAN ML GLOBAL HORIZONS LTD.) ARE
EACH TRADED PURSUANT TO MATERIALLY DIFFERENT PROGRAMS AND WITH MATERIALLY
DIFFERENT OBJECTIVES THAN THE FUND

The Notes on Page 18 are an integral part of the above performance information.

-16-

<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MLIP SELECTED-ADVISOR AND MULTI-ADVISOR FUNDS
WITH "PRINCIPAL PROTECTION" FEATURES
SEPTEMBER 1, 1996
- ------------------------------------------------------------------------------------------------------------------------------------

Worst
Worst Monthly Peak-to-Valley
Type of Inception Aggregate Current Drawdown(1) Drawdown(3)
NAME OF FUND Offering of Trading Subcriptions Capitalization % Date % Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The S.E.C.T.O.R Fund L.P. Public July 1990 $125,853,000 $30,151,254 (6.09)% (2/96) (13.78)% (1/92-5/92)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund II L.P.
(SECTOR II Units) Public Dec. 1990 $136,410,000 $14,681,835 (4.73)% (2/96) (15.93)% (8/93-1/95)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund II L.P.
(SECTOR III UNITS) Public July 1991 $194,005,000 $26,906,145 (8.64)% (2/96) (14.25)% (1/92-5/92)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund
International II Ltd.
(SECTOR III Shares) Private July 1991 $85,701,800 $8,230,204 (7.10)% (1/92) (14.25)% (1/92-5/92)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund IV L.P.
(Series A Units) Public July 1992 $75,646,400 $4,154,937 (6.41)% (2/96) (8.98)% (6/95-10/95)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund
International IV Ltd. (Series A Shares) Private July 1992 $55,189,400 $3,825,437 (6.22)% (2/96) (8.30)% (1/94-1/95)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund V L.P. Public Jan. 1993 $137,500,000 $13,772,259 (7.51)% (2/96) (10.14)% (2/96-6/96)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund
International V Ltd. Private Jan. 1993 $81,252,600 $5,924,535 (3.41)% (7/95) (8.00)% (6/95-10/95)
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR International Limited Private Sept. 1993 $163,806,100 $14,203,992 (4.60)% (2/94) (10.43)% (9/93-2/94)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund VI L.P. Public Sept. 1993 $108,693,900 $31,916,415 (5.89)% (7/96) (8.97)% (5/96-7/96)
- ------------------------------------------------------------------------------------------------------------------------------------
ML Principal Protection L.P.
(formerly, ML Principal Protection
Plus L.P.) Public Oct. 1994 $102,373,215 $82,100,574 (3.70)% (2/96) (3.70)% (2/96)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>

- -----------------------------------------------------------------------------------------------------------------------------------
Cumulative
Rate of
Return 1996
Jan. 1, 1991- Compound 1995 1994 1993 1992 1991
Aug. 31, 1996 Rate of Compound Compound Compound Compound Compound
(or dissolu- Return Rate of Rate of Rate of Rate of Rate of
NAME OF FUND (tion) (8 months) Return Return Return Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
The S.E.C.T.O.R Fund L.P. 55.89% 1.50% 19.25% (9.29)% 19.36% (3.43)% 23.18%
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund II L.P.
(SECTOR II Units) 25.15% (0.96)% 13.50% (9.93)% 5.49% (2.76)% 20.50%
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund II L.P. 13.99%
(SECTOR III UNITS) 22.88% (4.19)% 9.30% (3.22)% 15.99% (8.30)% (6 mos.)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund 13.99%
International II Ltd. 28.23% 2.06% 2.84% 0.77% 15.99% (8.30)% (6 mos.)
(SECTOR III Shares)
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund IV L.P. 0.51%
(Series A Units) 9.36% (7.29)% 9.78% (5.73)% 13.40% (6 mos.) N/A
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund 0.51%
International IV Ltd. (Series A Shares) 12.59% (4.81)% 11.84% (7.21)% 13.40% (6 mos.) N/A
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund V L.P. 5.68% (8.51)% 14.22% (3.68)% 4.99% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund
International V Ltd. 9.16% (2.59)% 11.11% (3.94)% 4.99% N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
(3.25)%
SECTOR International Limited (0.66)% (0.66)% 7.65% (3.99)% (2 2/3 mos.) N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
(1.72%)
The SECTOR Strategy Fund VI L.P. 8.25% 4.04% 6.72% (0.80)% (4 mos.) N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
ML Principal Protection L.P.
(formerly, ML Principal Protection 13.52%
Plus L.P.) (composite) 0.91% 10.55% (2 2/3 mos) N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*The composite return of the fund, not the performance of any individual series
of shares/units.

-17-
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
MLIP SELECTED-ADVISOR AND MULTI-ADVISOR FUNDS
WITH "PRINCIPAL PROTECTION" FEATURES
SEPTEMBER 1, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
WORST MONTHLY
TYPE OF INCEPTION AGGREGATE CURRENT DRAWDOWN/(1)/
NAME OF FUND OFFERING OF TRADING SUBSCRIPTIONS CAPITALIZATION % DATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ML Principal Protection Plus Ltd. Private Oct. 1994 $437,301,323 $351,018,773 (3.72)% (2/96)
- ----------------------------------------------------------------------------------------------------------------------------------
Yen Linked ML PPP Ltd. Private Oct. 1995 (Yen)8,723,000,000 (Yen)8,674,648,656 (1.67)% (2/96)
- ----------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund(SM) dissolved as of
International II Ltd. Private Dec. 1990 $55,181,600 12/31/95 (4.56)% (8/94)
- ----------------------------------------------------------------------------------------------------------------------------------
dissolved as of
ML Japan Investment Partners Ltd. Private Aug. 1993 (Yen)1,050,000,000 6/30/96 (3.52)% (7/94)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

- ------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
RATE OF
RETURN 1996
WORST JAN. 1, 1991- COMPOUND 1995 1994
PEAK-TO-VALLEY AUG. 31, 1996 RATE OF COMPOUND COMPOUND
DRAWDOWN/(3)/ (OR DISSOLU- RETURN RATE OF RATE OF
NAME OF FUND % PERIOD TION) (8 MONTHS) RETURN RETURN
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
14.27%* 1.48%
ML Principal Protection Plus Ltd. (3.72)% (2/96) (composite) 1.35% 11.10% (2% mos.)
- ------------------------------------------------------------------------------------------------------------------------------
(0.30)%* 0.16%
Yen Linked ML PPP Ltd. (1.67)% (2/96) (composite) (0.46)% (3 mos.) N/A
- ------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund(SM)
International II Ltd. (16.49)% (8/93-1/95) 35.45% N/A 21.27% (9.64)%
- ------------------------------------------------------------------------------------------------------------------------------
(1.69)%
ML Japan Investment Partners Ltd. (7.32)% (1/94-2/95) (2.80)% (6 mos.) 3.95% (5.95)%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
COMPOUND COMPOUND COMPOUND
RATE OF RATE OF RATE OF
NAME OF FUND RETURN RETURN RETURN
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>

ML Principal Protection Plus Ltd. N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------

Yen Linked ML PPP Ltd. N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
The SECTOR Strategy Fund(SM)
International II Ltd. 5.49% (2.76)% 20.50%
- ------------------------------------------------------------------------------------------------------------------------------
1.13%
ML Japan Investment Partners Ltd. (5 mos.) N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* The composite return of the fund, not the performance of any individual
series of shares/units.

NOTES:

(1) WORST MONTHLY DRAWDOWN REPRESENTS THE LARGEST NEGATIVE MONTHLY RATE OF
RETURN EXPERIENCED BY THE FUND; A DRAWDOWN IS MEASURED ON THE BASIS OF MONTH-END
NET ASSET VALUE ONLY, AND DOES NOT REFLECT INTRA-MONTH FIGURES.

(2) MONTHLY RATE OF RETURN, ON THE BASIS OF WHICH WORST MONTHLY DRAWDOWN,
WORST PEAK-TO-VALLEY DRAWDOWN, CUMULATIVE RATE OF RETURN AND COMPOUND RATE OF
RETURN ARE CALCULATED, IS THE NET PERFORMANCE DURING THE MONTH OF DETERMINATION
(INCLUDING INTEREST INCOME AND AFTER ALL EXPENSES ACCRUED OR PAID) DIVIDED BY
THE TOTAL EQUITY AS OF THE BEGINNING OF SUCH MONTH.

(3) WORST PEAK-TO-VALLEY DRAWDOWN REPRESENTS THE GREATEST PERCENTAGE
DECLINE FROM A MONTH-END CUMULATIVE MONTHLY RATE OF RETURN WITHOUT SUCH
CUMULATIVE MONTHLY RATE OF RETURN BEING EQUALLED OR EXCEEDED AS OF A SUBSEQUENT
MONTH-END. FOR EXAMPLE, IF THE MONTHLY RATE OF RETURN WAS (1)% IN EACH OF
JANUARY AND FEBRUARY, 1% IN MARCH AND (2)% IN APRIL, THE PEAK-TO-VALLEY DRAWDOWN
WOULD STILL BE CONTINUING AT THE END OF APRIL IN THE AMOUNT OF APPROXIMATELY
(3)%, WHEREAS IF THE MONTHLY RATE OF RETURN HAD BEEN APPROXIMATELY 3% IN MARCH,
THE PEAK-TO-VALLEY DRAWDOWN WOULD HAVE ENDED AS OF THE END OF FEBRUARY AT
APPROXIMATELY THE (2)% LEVEL.

(4) INCLUDING MINORITY INTEREST.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

PURCHASERS OF UNITS WILL ACQUIRE NO INTEREST IN THESE FUNDS. THESE FUNDS (OTHER
THAN ML GLOBAL HORIZONS LTD.) ARE EACH TRADED PURSUANT TO MATERIALLY DIFFERENT
PROGRAMS AND WITH MATERIALLY DIFFERENT OBJECTIVES THAN THE FUND

The Notes on this Page 18 are an integral part of the above performance
information.

-18-
<PAGE>

SELECTED FINANCIAL DATA

The following Selected Financial Data is derived: (i) from the
financial statements of the Fund for the year ended December 31, 1995 and the
period from January 4, 1994 (commencement of operations) to December 31, 1994,
which have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report included in this Prospectus (see "Index to Financial
Statements" at page 58), and which are included herein in reliance upon the
authority of Deloitte & Touche LLP as experts in auditing and accounting; and
(ii) from the interim financial statements of the Fund for the periods from
January 1, 1996 to September 30, 1996 (unaudited) and January 1, 1995 to
September 30, 1995 (unaudited).

----------

<TABLE>
<CAPTION>
JANUARY 1, 1996 JANUARY 1, 1995
TO TO JANUARY 1, 1995 JANUARY 4, 1994
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995 TO TO
INCOME STATEMENT DATA (UNAUDITED) (UNAUDITED) DECEMBER 31, 1995 DECEMBER 31, 1994
- --------------------- ------------------ ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Trading Profits (Loss)
Realized Gain $ 4,610,717 $14,314,748 $17,455,764 $ 453,726
Change in Unrealized Gain
(Loss) 768,003 (4,758,175) 299,233 5,331,556
----------- ----------- ----------- ----------
Total Trading Results 5,378,720 9,556,573 17,754,997 5,785,282
Interest Income 2,996,535 2,819,800 3,786,925 1,972,722
----------- ----------- ----------- ----------
Total Revenues 8,375,255 12,376,373 21,541,922 7,758,004
----------- ----------- ----------- ----------
Expenses:
Brokerage Commissions 4,990,367 4,128,889 5,723,755 3,859,267
Profit Shares 373,820 1,492,857 1,492,857 1,103,649
Incentive Override 5,117 147,489 965,454 41,867
----------- ----------- ----------- ----------
Total Expenses 5,369,304 5,769,235 8,182,066 5,004,783
----------- ----------- ----------- ----------
Net Income $ 3,005,951 $ 6,607,138 $13,359,856 $2,753,221
=========== =========== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
BALANCE SHEET DATA* (UNAUDITED) (UNAUDITED) DECEMBER 31, 1995 DECEMBER 31, 1994
- ------------------ ------------------ ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Aggregate Net Asset Value $81,077,111 $83,631,110 $92,761,068 $67,078,533
Net Asset Value per Unit $ 128.97 $ 115.14 $ 124.35 $ 104.08
</TABLE>

* Balance sheet data is based on redemption values, which differ
immaterially from Net Asset Values as determined under Generally Accepted
Accounting Principles ("GAAP") due to the treatment of organization and
initial offering cost reimbursements.

<TABLE>
<CAPTION>
MONTH-END NET ASSET VALUE PER UNIT
- ------------------------------------------------------------------------------------------------------------------
JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC.
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $ 98.60 $ 97.36 $ 98.60 $ 98.99 $102.25 $104.98 $102.64 $100.63 $102.16 $104.27 $103.89 $104.08
- ------------------------------------------------------------------------------------------------------------------
1995 $101.22 $106.76 $116.51 $118.56 $121.04 $120.69 $116.88 $116.54 $115.14 $115.01 $117.18 $124.35
- ------------------------------------------------------------------------------------------------------------------
1996 $125.91 $117.82 $119.43 $128.54 $123.56 $127.71 $123.72 $124.28 $128.97 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

ALTHOUGH THE NET ASSET VALUE PER UNIT IS THE SAME FOR ALL UNITS,
UNITS PURCHASED AT DIFFERENT TIMES WILL HAVE DIFFERENT INVESTMENT EXPERIENCES
IN THE FUND. AT ANY GIVEN TIME, CERTAIN UNITS MAY HAVE INCREASED IN NET
ASSET VALUE FROM THE DATE OF PURCHASE WHILE OTHERS HAVE DECREASED.

-19-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OPERATIONAL OVERVIEW; ADVISOR SELECTIONS

The Fund's results of operations depend on MLIP's ability to select
Advisors and the Advisors' ability to trade profitably. MLIP's selection
procedures, as well as the Advisors' trading methods, are confidential, so that
substantially the only available information relevant to the Fund's results of
operations is its actual performance record to date. Because of the speculative
nature of its trading, the Fund's past performance is not necessarily indicative
of its future results.

In the Fund's 2 3/4 years of trading through September 1996, MLIP has
made few changes in either the Fund's Advisors or in the allocation of its
assets among them. Only two Advisor changes have been made since the Fund began
trading in January 1994: (i) replacing a former core Advisor (which discontinued
operations) with ARA Portfolio Management Company, L.L.C. as of January 1, 1995,
and (ii) allocating assets to non-core Advisors beginning July 1, 1996.

As of October 1, 1996, the Fund's assets were allocated among the core
Advisors approximately as follows:

<TABLE>
<CAPTION>
<S> <C>
ARA Portfolio Management
Company, L.L.C. 15%

Chesapeake Capital Corporation 38%

John W. Henry & Company, Inc. 38%
--

Total 91%
==
</TABLE>

MLIP's decision to terminate or reallocate assets among Trading
Advisors is based on a combination of numerous factors, as described under "The
Advisor Selection Process" at page 23. Advisors are, in general, terminated
primarily for unsatisfactory performance, but other factors -- for example, a
change in MLIP's or an Advisor's market outlook, apparent deviation from
announced risk control policies, excessive turnover of positions, changes in
principals, commitment of resources to other business activities, etc. -- may
also have a role in the termination or reallocation decision. The market
judgment and experience of MLIP's principals is an important factor in its
allocation decisions.

MLIP has no timetable or schedule for making Advisor changes or
reallocations, and generally makes a medium- to long-term commitment to all
Advisors selected. In particular, MLIP has to date made significantly fewer
reallocations of trading assets and adjustments in Advisor combinations than in
the case of many of MLIP's multi-advisor funds. However, there can be no
assurance as to the frequency or number of Advisor changes that 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 (i.e., three to five years) investments, but it is
difficult to identify trends in the Fund's operations and virtually impossible
to make any predictions regarding future results based on the results to
date.

Markets with sustained price trends 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 price trends will occur
and (iii) different Advisors are affected differently by trending markets as
well as by particular types of trends.

MLIP attempts to control credit risk in the Fund's futures, forward
and options trading (the Fund does not trade derivatives other than futures and
forward contracts and options thereon) by trading only through MLF. MLF acts
solely as a broker or counterparty to the Fund's trades; it does not advise with
respect to, or direct, any such trading.

MLIP attempts to control the market risk inherent in the Fund's
trading in the manner described under "The Advisor Selection Process -- MLIP and
Its Advisor Selection and Monitoring Process" at page 23. The market risk to the
Fund is, in any event, limited by its multi-advisor strategy. MLIP reviews the
positions acquired by the Advisors on a daily basis in an

-20-
<PAGE>

effort to determine whether the overall positions of the Fund may have become
what MLIP analyzes as being excessively concentrated in a limited number of
markets -- in which case MLIP may, as of the next month-end or quarter-end,
adjust the Fund's Advisor combination and/or allocations so as to attempt to
reduce the risk of such over-concentration occurring in the future.

MLIP may consider making distributions to investors under certain
circumstances (for example, if substantial profits are recognized); however,
MLIP has not done so to date and does not presently intend to do so.

Performance Summary
- -------------------

1994

STATISTICS. During 1994, the Fund's average month-end Net Assets
equalled $53,119,205. The Fund recognized gross trading gains of $5,785,282, and
incurred Brokerage Commissions of $3,859,267, Profit Shares of $1,103,649 and
Incentive Overrides of $41,867 (or 10.89%, 7.27%, 2.08% and 0.08%, respectively,
of average month-end Net Assets). Interest income of $1,972,722 or 3.71% of
average month-end Net Assets resulted in net income of $2,753,221, and a 4.08%
increase in the Net Asset Value per Unit.

OVERVIEW. 1994 was characterized by relatively quiet markets without
many major price trends. United States interest rates generally declined during
the period, and as they did, so did the U.S. dollar as compared to the
Deutschemark and certain other major currencies.

1995

STATISTICS. During 1995, the Fund's average month-end Net Assets
equalled $74,120,244. The Fund recognized gross trading gains of $17,754,997,
and incurred Brokerage Commissions of $5,723,755, Profit Shares of $1,492,857
and Incentive Overrides of $965,454 (or 23.95%, 7.72%, 2.01% and 1.30%,
respectively, of average month-end Net Assets). Interest income of $3,786,925 or
5.11% of average month-end Net Assets resulted in net income (without reduction
for organization and initial offering cost reimbursement payments) of
$13,359,856, and a 19.48% increase in the Net Asset Value per Unit.

OVERVIEW. In 1995, prevailing price trends in several key markets
enabled the Advisors to trade profitably for the Fund. Although trading in many
of the traditional commodity markets may have been lackluster, the currency and
financial markets offered exceptional trading conditions. After months
characterized by very difficult trading environments, solid price trends across
many markets (including bond markets, U.S. Treasury and non-dollar markets)
began to emerge during the first quarter of 1995. In the second quarter, market
volatility once again began to affect trading, as many previously strong price
trends began to weaken and, in some cases, reverse. The U.S. dollar hit new lows
versus the Japanese yen and Deutschemark before rebounding sharply. In addition,
there were strong indications that the U.S. economy was slowing which, when
coupled with a failure of the German Central Bank to lower interest rates,
stalled a rally in the German bond market. During the third quarter, there was a
correction in U.S. bond prices after several months of a strong uptrend. Despite
exposure to the global interest-rate markets, the Fund's long positions in
Treasury bonds had a negative impact on the Fund. Throughout August and into
September, the U.S. dollar rallied sharply against the Japanese yen and the
Deutschemark as a result of the coordinated intervention by major central banks
and widespread recognition of the growing banking crisis in Japan. Despite
continued price volatility during the final quarter of 1995, the Trading
Advisors were able to identify several trends in key markets. U.S. Treasury bond
prices continued their strong move upward throughout November, due both to weak
economic data and optimism on Federal budget talks. The 30-year Treasury bond
rate was pushed to its lowest level in more than two years.

1996 (9 months)

STATISTICS. From January 1, 1996 through September 30, 1996, the
Fund's average month-end Net Assets equalled $88,631,646. The Fund recognized
gross trading gains of $5,378,720, and incurred Brokerage Commissions of
$4,990,367, Profit Shares of $373,820 and Incentive Overrides of $5,117 (or
6.07%, 5.63%, 0.42% and 0.01%, respectively, of average month-end Net Assets).
Interest income of $2,996,535 or 3.38% of average month-end Net Assets resulted
in a net gain of $3,005,951 and a 3.72% increase in the Net Asset Value per
Unit.

OVERVIEW. The first nine months of 1996 included the two worst single
monthly drawdowns as well as the second most profitable month in the Fund's
history. The year began with the East Coast blizzard, continuing difficulties in
U.S. federal budget talks and an economic slowdown having a negative impact on
many markets. The Fund was profitable in January due to strong profits in
currency trading as the U.S. dollar reached a 23-month high against the Japanese
yen. In February,

-21-
<PAGE>

however, the Fund incurred its largest monthly loss due to the sudden reversals
in several strong price trends and considerable volatility in the currency and
financial markets. During March, large profits were taken in the crude oil and
gasoline markets as strong demand continued and talks between the United Nations
and Iraq were suspended. This trend continued into the second quarter, during
which strong gains were also recognized in the agricultural markets as a
combination of drought and excessive rain drove wheat and grain prices to
historic highs. In the late summer and early fall months, however, the Fund gave
back much of these gains as difficult trading conditions in many markets
prevailed and a lack of clear price trends in key markets negatively impacted
the Fund's performance.

RESULTS OF OPERATIONS IN GENERAL

The principal variables which determine the net performance of the
Fund are gross profitability and interest income. During all periods set forth
under "Selected Financial Data," the interest rates in many countries were at
unusually low levels. This negatively impacted revenues because interest income
is typically a major component of commodity pool profitability. In addition, low
interest rates are frequently associated with reduced fixed-income market
volatility, and in static markets the Fund's profit potential generally tends to
be diminished. On the other hand, during periods of higher interest rates, the
relative attractiveness of a high risk investment such as the Fund may be
reduced as compared to high yielding and much lower risk fixed-income
investments.

The Fund's Brokerage Commissions (and, as of October 1, 1996, the
Fund's Administrative Fees) are a constant percentage of assets charge. The only
Fund costs (other than the insignificant F/X Desk service fees and EFP
differentials) which are not based on a percentage of the Fund's assets are the
Profit Shares payable to the Trading Advisors on an Advisor-by-Advisor basis and
the Incentive Override payable to MLIP on the basis of overall Fund performance.
During periods when Profit Shares are a high percentage of net trading gains, it
is likely that there has been substantial performance non-correlation among the
Advisors (so that the total Profit Shares paid to those Advisors which have
traded profitably are a high percentage, or perhaps even in excess, of the total
profits recognized, as other Advisors have incurred offsetting losses, reducing
overall trading gains but not the Profit Shares paid to the successful
Advisors) -- suggesting the likelihood of generally trendless, non-consensus
markets.

The events that primarily determine the Fund's profitability are those
that produce sustained and major price movements. The Advisors are generally
more likely to be able to profit from sustained trends, irrespective of their
direction, than from static markets. During the course of the Fund's performance
to date, such events have ranged from Federal Reserve Board reductions in
interest rates, the apparent refusal of Iraq to arrive at a settlement which
would permit it to sell oil internationally, the inability of the U.S.
government to agree upon a federal budget and a combination of drought and
excessive rain negatively impacting U.S. agricultural harvesting as well as
planting. While these events are representative of the type of circumstances
which materially affect the Fund, the specific events which will do so in the
future cannot be predicted or identified.

Unlike many investment fields, there is no meaningful distinction in
the operation of the Fund between realized and unrealized profits. Most of the
contracts traded by the Fund are highly liquid and can be closed out at any
time. Furthermore, the profits on many open positions are effectively realized
on a daily basis through the payment of variation margin.

Except in unusual circumstances, factors -- regulatory approvals, cost
of goods sold, employee relations and the like -- which often materially affect
an operating business have virtually no impact on the Fund.

LIQUIDITY AND CAPITAL RESOURCES

The amount of capital raised for the Fund should not, except at
extremely high levels of capitalization, have a significant impact on its
operations. The Fund's costs are generally proportional to its asset base, and,
within broad ranges of capitalization, the Advisors' trading positions (and the
resulting gains and losses) should increase or decrease in approximate
proportion to the size of the Fund account managed by each of them,
respectively.

The Fund raises additional capital only through the continuous
offering of its Units. The Fund does not borrow, and sells no securities other
than the Units.

Inflation per se is not a significant factor in the Fund's
profitability, although inflationary cycles can give rise to the type of major
price movements that can have a materially favorable or adverse impact on the
Fund's performance.

In its trading to date, the Fund has from time to time had substantial
unrealized gains and losses on its open positions. These gains or losses are
paid on a periodic basis as part of the routine clearing cycle on exchanges or
in the over-the-counter markets (the only over-the-counter market in which the
Fund trades is the inter-bank forward market in currencies). In highly unusual
circumstances, market illiquidity could make it difficult for certain Advisors
to close out open positions, and any such illiquidity could expose the Fund to
significant losses, or cause it to be unable to recognize unrealized gains.
However, in general, there is no meaningful difference between the Fund's
realized and unrealized gains.

-22-
<PAGE>

In terms of cash flow, it makes little difference whether a market
position remains open (so that the profit or loss on such positions remains
unrealized), as cash settlement of unrealized gains and losses occurs
periodically whether or not positions are closed out. The only meaningful
difference between realized and unrealized gains or losses in the case of the
Fund is that unrealized items reflect gains or losses on positions which the
Advisors have determined not to close out (presumably, in the hope of future
profits), whereas realized gains or losses reflect amounts received or paid in
respect of positions no longer being maintained.

THE ADVISOR SELECTION PROCESS

MLIP AND ITS ADVISOR SELECTION AND MONITORING PROCESS

MLIP, a wholly-owned indirect subsidiary of ML & Co., is an integrated
business whose capabilities include research, trading, finance, administration,
systems, operations, sales and marketing. Since its inception, MLIP has
concentrated primarily on the structuring of multi-advisor products, and has
devoted substantial resources to the development of the capacity to formulate
advantageous trading advisor combinations, as well as to assess trading advisors
on an individual basis. Advisor analysis includes the quantitative appraisal of
an Advisor's strategy and performance combined with quantitative statistical
evaluation of the performance of individual advisors and of different possible
Advisor combinations.

MLIP's trading advisor analysis professionals monitor the performance
of several hundred advisors. Both quantitative and qualitative criteria have
been factored into MLIP's selection process, including the following: type of
trading program; risk control; duration and speed of recovery from drawdowns;
experience; organizational infrastructure; and low correlation in the past with
traditional investments such as stocks and bonds. Advisors' past records are
evaluated comparatively with a view to combining Advisors whose respective
trading results have historically demonstrated not only a low degree of
correlation with stocks and bonds but also with the other Advisors selected. In
addition to significant qualitative factors concerning the Advisors, certain
mathematical optimization procedures are used to develop an Advisor combination
which, based on a trading scenario in which the past performance of the
respective Advisors is combined for purposes of MLIP's selection analysis,
exhibits a reward/risk profile consistent with MLIP's objectives. By identifying
Advisor combinations on this basis, MLIP hopes to maintain profit potential
while also materially reducing the risk of major equity declines.

In selecting Advisors for the Fund, MLIP emphasizes retaining multiple
Advisors, trading in multiple markets and implementing multiple strategies. MLIP
also evaluates the overall market diversification and emphasis that different
possible Advisor combinations would give the Fund. Discretionary as well as
systematic, fundamental as well as technical, Advisors may be retained. MLIP may
allocate Fund assets to Advisors specializing in particular market sectors and
to Advisors with broadly diversified portfolios. See "The Core Advisors --
Futures Trading Methods in General" at pages 77-78. By diversifying strategies
as well as markets, MLIP can, if successful, create Advisor combinations for the
Fund that should have good profit potential across a wide range of different
market cycles. Since inception, the Fund's Advisor portfolio has emphasized
technical and trend-following methods.

MLIP's primary emphasis is on a qualitative assessment of each
Advisor, including, among other considerations, an evaluation of each Advisor's
basic investment management approach, markets traded, prior experience, past
performance, fee requirements and assets under management. Although different
factors may be considered in the case of different Advisors (and no
representation is made that any given factor will be considered in selecting any
given Advisor), subjective evaluation of each prospective Advisor by principals
of MLIP is an important factor in all of MLIP's Advisor selections. Quantitative
non-correlation analysis and volatility studies are employed in developing the
overall Advisor mix, but the principal objective is to identify Advisors which
MLIP believes to have excellent potential to trade successfully.

No Advisor selected by MLIP has any affiliation with Merrill Lynch,
other than managing the trading of the Fund and other futures funds or accounts
sponsored or managed by MLIP. Furthermore, none of the Advisors is affiliated
with any other Advisor.

MLIP monitors the performance of the Fund and its Advisors on a
day-to-day basis, and, from time to time, reallocates assets among, terminates
and/or appoints new Advisors. At least quarterly, MLIP formally reviews the
performance of the Fund and each Advisor in order to assess whether to change
Advisor selections or allocations. MLIP anticipates that a number of additional
adjustments may be made over time, as they have been to date; but there can be
no assurance that the Fund's Advisor portfolio will not remain static for
significant periods of time. On the other hand, MLIP may, on short notice,
terminate or allocate assets away from an Advisor if MLIP has reason to believe
that the Advisor is deviating from historical trading patterns, violating the
Advisor's risk management policies or has otherwise given MLIP what it considers
to be cause for termination.

-23-
<PAGE>

ACCESS TO GLOBAL MARKETS

The Fund has access to global markets including, but not limited to,
the following:

CURRENCIES

Australian Dollar Irish Punt
Belgian Franc Italian Lira
British Pound Japanese Yen
Canadian Dollar New Zealand Dollar
Danish Krone Norwegian Krone
Deutschemark Singapore Dollar
Dutch Guilder Spanish Peseta
European Currency Unit Swedish Krona
Finnish Markka Swiss Franc
French Franc United States Dollar
INTEREST RATES

Australian Bonds German Bonds
Australian Treasury Bills Italian Bonds
Canadian Bonds Japanese Bonds
Eurodollars PIBOR
Eurolira Spanish Bonds
Euromarks U.K. Gilts
Euroswiss U.K. Short Sterling
Euroyen U.S. Treasury Bills
French Bonds U.S. Treasury Bonds
U.S. Treasury Notes

STOCK INDICES

CAC 40 Stock Index (France) S&P 500 Stock Index (U.S.)
Financial Times 100 Stock Index (U.K.) Tokyo Stock Price Index
Major Market Stock Index (U.S.) U.S. Dollar Index
MEFF&S Stock Index (Spain) Value Line Stock Index (U.S.)
Nikkei Stock Average (Japan)

METALS

Aluminum Platinum
Gold Silver
Lead Tin
Nickel Zinc

ENERGY PRODUCTS

Crude Oil No. 2 Heating Oil
Gas Oil Propane
Heavy Fuel Oil Residual Fuel Oil
Natural Gas Unleaded Gasoline

AGRICULTURAL PRODUCTS

Cocoa Orange Juice
Coffee Pork Bellies
Corn Soybeans
Cotton Soymeal
Feeder Cattle Soy Oil
Live Hogs Sugar
Oats Wheat

The Fund has not traded, and may never trade, in all of the foregoing
markets. There can be no assurance as to which markets the Fund will trade
either over time or from time to time.

-24-
<PAGE>

THE ADVISORS

CORE ADVISOR SUMMARIES

The three core Advisors, which were, in the aggregate, trading 91% of
the Fund's assets as of October 1, 1996, were managing approximately $2.4
billion of customer assets in the futures, cash and forward markets, of which
approximately $1.72 billion was being traded in the programs used for the Fund.

THE CORE ADVISORS

APPROXIMATE
OCTOBER 1, 1996 ASSETS UNDER MANAGEMENT
ADVISOR ASSET ALLOCATION AUGUST 31, 1996
------- ---------------- -----------------------
<S> <C> <C>

ARA Portfolio 15% $138 million (total)
Management $ 99 million (Gamma Program)
Company, L.L.C.

Chesapeake Capital 38% $757 million (total)
Corporation $711 million (Diversified Program)

John W. Henry 38% $1.5 billion (total)
& Company, Inc. $912 million (Financial and Metals Portfolio)
---
91%
</TABLE>

Each of the current core Advisors is a systematic, technical, trend-
following trader.

ARA PORTFOLIO MANAGEMENT COMPANY, L.L.C. (15% ALLOCATION AS OF OCTOBER
1, 1996) -- ARA was organized (through a predecessor corporation) in 1992 to
design diversified portfolios of commodity futures contracts, each having what
ARA evaluates as a predictable level of anticipated risk, with risk tolerance
levels set in advance by the client. The ARA system is composed of two distinct
components: a Buy/Sell generator which has been used in actual trading since
1979; and a technique of risk management based upon daily monitoring and
attempting to control each account's volatility. The ARA system can, if
successful, produce a commodity portfolio having virtually any level of
anticipated risk that is sought by the client. Each ARA portfolio is comprised
of the same eighteen commodity futures contracts -- including currencies,
financial instruments, metals, energy and agriculturals -- which offer what ARA
believes to be a combination of diversity and liquidity. For the Fund, ARA
trades pursuant to its Gamma Program, which has been designed with the objective
of having an average volatility of approximately two times that of an
unleveraged S&P 500 stock portfolio. MLIP may reallocate some or all of the
Fund's assets managed by ARA to the Alpha Program, which is virtually identical
to the Gamma Program, except that the Alpha Program utilizes lower leverage. As
of August 31, 1996, ARA was managing approximately $99 million of customer funds
in the Gamma Program and approximately $138 million of customer funds in all of
its programs.

ARA has traded the Gamma Program since June 1992. Since inception,
this Program has been traded at generally the same degree of leverage, although
under certain market conditions ARA may reduce position size or even withdraw
from the market altogether. The compound annual rates of return achieved by the
Gamma Program since June 1992 have been 27.3% (7 months), 29.5%, 38.0%, 5.2% and
(3.8)% (8 months), respectively. During such period, the worst monthly drawdown
was (14.46)% (2/96) and the worst peak-to-valley drawdown (30.32)% (4/95-2/96).

See pages 80 through 82 for performance information relating to ARA.

CHESAPEAKE CAPITAL CORPORATION (38% ALLOCATION AS OF OCTOBER 1,
1996) -- Chesapeake has offered investment advisory and portfolio management
services to clients since 1988. Chesapeake currently trades three programs,
relying primarily on technical analysis and charting in its evaluation of
historical commodity price movements. In the Diversified Program which
Chesapeake trades for the Fund, Chesapeake applies its trend-following system to
a global portfolio of futures and forward markets, including agricultural
products, precious and industrial metals, currencies, financial instruments and
stock, financial and economic indices. Chesapeake may trade these markets on any
U.S. or foreign exchange. As of August 31, 1996, Chesapeake was managing
approximately $711 million of customer funds in the Diversified Program and
approximately $757 million of customer funds in all of its programs.

-25-
<PAGE>

Chesapeake has traded the Diversified Program since February 1988. The
compound annual rates of return achieved by the Diversified Program since
January 1, 1991 have been 12.51%, 1.81%, 61.82%, 15.87%, 14.09% and 0.83% (8
months), respectively. During such period, the worst monthly drawdown was
(10.98)% (1/92) and the worst peak-to-valley drawdown (16.62)% (1/92-5/92).

See pages 85 through 88 for performance information relating to
Chesapeake.

JOHN W. HENRY & COMPANY, INC. (38% ALLOCATION AS OF OCTOBER 1, 1996)
-- JWH operates twelve trading programs for U.S. and non-U.S. investors. These
programs emphasize intermediate and long-term quantitative trend analysis
models. The Financial and Metals Portfolio, which is traded for the Fund,
implements a technical, trend-following system which participates in four major
market sectors -- global interest rates, foreign exchange, global stock indices
and precious metals -- and seeks to capitalize on sustained moves in global
financial markets. As of August 31, 1996, JWH was trading approximately $912
million of customer funds in the Financial and Metals Portfolio and
approximately $1.5 billion of customer funds in all of its programs.

JWH has traded the Financial and Metals Portfolio since October 1984.
Since inception, the Financial and Metals Portfolio has been traded at generally
the same degree of leverage although under certain market conditions, JWH may
reduce position size or even withdraw from the market altogether. The compound
annual rates of return achieved by the Financial and Metals Portfolio since
January 1, 1991 have been 61.88%, (10.89)%, 46.82%, (5.32)%, 38.53% and 1.61% (8
months), respectively. During such period, the worst monthly drawdown on a
composite basis was (18.0)% (1/92), the worst monthly drawdown on an individual
account basis (27.7)% (1/92) and the worst peak-to-valley drawdown on a
composite basis (39.5)% (12/91-5/92).

See pages 96 through 104 for performance information relating to JWH.

MORE COMPLETE DESCRIPTIONS AND THE PERFORMANCE SUMMARIES FOR THE CORE ADVISORS
ARE INCLUDED UNDER "THE CORE ADVISORS." SEE "RISK FACTORS --
(2) PAST PERFORMANCE NOT
NECESSARILY INDICATIVE OF FUTURE RESULTS" AT PAGE 9.

THE ADVISORY AGREEMENTS

The Advisory Agreements among the Fund, MLIP and each Advisor
terminate at various times. MLIP generally attempts to negotiate advisory
agreements with comparable terms (although advisory fees differ) for all of the
public funds which MLIP sponsors. MLIP, but generally not the Advisors, has the
right to terminate any Advisory Agreement at will and upon short notice.

Each Advisory Agreement provides that the Fund will indemnify the
Advisor and its affiliates, as well as their respective officers, shareholders,
directors, employees, partners and controlling persons for conduct taken as an
Advisor or in connection with the Advisory Agreement, provided that such conduct
does not constitute negligence, misconduct or breach of the Advisory Agreement
or of any fiduciary obligation to the Fund, and was done in good faith and in a
manner reasonably believed to be in, or not opposed to, the best interests of
the Fund. Each Advisory Agreement further provides that this indemnity provision
will not increase the liability of any Limited Partner to the Fund beyond the
amount of such Limited Partner's capital and profits, if any, in the Fund.

Under the exculpatory provisions of the Advisory Agreements, none of
the Advisors or any related parties will be liable to the Fund or to any of the
Partners except by reason of conduct in violation of the foregoing standards for
indemnification by the Fund.

All Advisors which are not prohibited from doing so by applicable non-
United States laws invest $10,000 in the Fund during their tenure of providing
advisory services to it. MLIP has, for some years, required such investments
from all the advisors selected for its domestic funds as a token of the
advisors' commitment to managing such accounts.

-26-
<PAGE>

MLIP AND MLF

BACKGROUND

MLIP is the sole promoter of the Fund. None of MLF, Merrill Lynch
International Bank ("MLIB") or MLPF&S acts as a promoter with respect to
the organization of the Fund or the offering of the Units.

Merrill Lynch Investment Partners Inc., a Delaware corporation, was
organized in 1986 principally in order to serve as the general partner and
commodity pool operator of commodity pools for which MLF -- the futures
commission merchant for the Fund -- acts as commodity broker and MLPF&S as
selling agent. MLIP became registered with the CFTC as a commodity pool
operator and commodity trading advisor in October 1986 and April 1990,
respectively, and is a member of the National Futures Association ("NFA")
in such capacities. MLIP has sponsored in excess of 35 managed funds
futures, and, as of October 1, 1996, there was approximately $1.6 billion
in funds for which MLIP serves as trading sponsor or manager. The
principal offices of MLIP are located at Merrill Lynch World Headquarters,
Sixth Floor, South Tower, World Financial Center, New York, New York 10080-
6106; telephone: (212) 236-4167. MLIP is a wholly-owned subsidiary of
Merrill Lynch Group, Inc., which, in turn, is wholly-owned by Merrill Lynch
& Co., Inc.

The registration of MLIP with the CFTC, and MLIP's membership in the
NFA, must not be taken as an indication that any such agency or self-
regulatory body has recommended or approved either MLIP or an investment in
the Fund.

Since its inception in 1986, MLIP has operated with one primary
objective -- to provide investors with an opportunity for long-term capital
appreciation and diversification through quality investments in the
futures, commodity options and forward markets. MLIP, as general partner
or sponsor, structures and promotes managed futures investments in an
effort to meet the objectives of a wide variety of clients. MLIP attempts
to combine a detailed advisor selection process with active monitoring of
its existing funds and their advisors. MLIP does not manage client assets
directly, but rather specializes in selecting groups of independent trading
advisors to do so.

MLIP acts as general partner to thirteen public futures funds whose
units of limited partnership interest are registered under the Securities
Exchange Act of 1934: The Futures Expansion Fund Limited Partnership, The Growth
and Guarantee Fund L.P., ML Futures Investments II L.P. (formerly, The Futures
Dimension Fund II L.P.), ML Futures Investments L.P. (formerly, The Tudor Prime
Advisors Fund L.P.), John W. Henry & Co./Millburn L.P., The S.E.C.T.O.R.
Strategy Fund/SM/ L.P., The SECTOR Strategy Fund/SM/ II L.P., The SECTOR
Strategy Fund/SM/ IV L.P., The SECTOR Strategy Fund/SM/ V L.P., The SECTOR
Strategy Fund/SM/ VI L.P., ML Principal Protection L.P. (formerly, ML Principal
Protection Plus L.P.), ML JWH Strategic Allocation Fund L.P. and the Fund.
Because MLIP serves as the sole general partner of each of these funds, the
officers and directors of MLIP effectively manage them as officers and directors
of such funds.

PRINCIPALS

The principal officers of MLIP and their business backgrounds are as
follows.

John R. Frawley, Jr. Chief Executive Officer, President and Director

James M. Bernard Chief Financial Officer, Senior Vice President
and Treasurer

Jeffrey F. Chandor Senior Vice President and Director of
Sales, Marketing and Research

Allen N. Jones Chairman and Director

John R. Frawley, Jr. was born in 1943. Mr. Frawley is Chief
Executive Officer, President and a Director of MLIP as well as Co-Chairman
of MLF. He joined MLPF&S in 1966 and has served in various positions,
including Retail and Institutional Sales, Manager of New York
Institutional Sales, Director of Institutional Marketing, Senior Vice
President of Merrill Lynch Capital Markets, and Director of International
Institutional Sales. Mr. Frawley holds a Bachelor of Science degree from
Canisius College. Mr. Frawley served on the CFTC's Regulatory
Coordination Advisory Committee from its inception in 1990 through its
dissolution in 1994. Mr. Frawley is currently a member of the CFTC's
Financial Products Advisory Committee. In January 1996, he was re-elected
to a one-year term as Chairman of the Managed Futures Association, the
national trade

-27-
<PAGE>

association of the United States managed futures industry. Mr. Frawley is
also a Director of that organization, and a Director of the Futures
Industry Institute. Mr. Frawley also currently serves on a panel created
by the Chicago Mercantile Exchange and the Chicago Board of Trade to study
cooperative efforts related to electronic trading, common clearing and the
issues regarding a potential merger.

James M. Bernard was born in 1950. Mr. Bernard is Chief
Financial Officer, Senior Vice President and Treasurer of MLIP. He joined
MLF in 1983. Before that he was the Commodity Controller for Nabisco
Brands Inc. from November 1976 to 1982 and a Supervisor at Ernst & Whinney
from 1972 to November 1976. Mr. Bernard is a member of the American
Institute of Certified Public Accountants and holds a Bachelor of Science
degree from St. John's University and a Master of Business Administration
degree from Fordham University.

Jeffrey F. Chandor was born in 1942. Mr. Chandor is Senior Vice
President and the Director of Sales, Marketing and Research of MLIP. He
joined MLPF&S in 1971 and has served as the Product Manager of Equity,
Derivative Products and Mortgage-Backed Securities as well as Managing
Director of International Sales in the United States, and Managing
Director of Sales in Europe. Mr. Chandor holds a Bachelor of Arts degree
from Trinity College, Hartford, Connecticut.

Allen N. Jones was born in 1942. Mr. Jones is Chairman and a
Director of MLIP. Mr. Jones graduated from the University of Arkansas
with a Bachelor of Science, Business Administration degree in 1964. Since
June 1992, Mr. Jones has held the position of Senior Vice President of
MLPF&S. From June 1992 through February 1994, Mr. Jones was the President
and Chief Executive Officer of Merrill Lynch Insurance Group, Inc.
("MLIG") and remains on the Board of Directors of MLIG and its subsidiary
companies. In February 1994, Mr. Jones became the Director of Individual
Financial Services of the Merrill Lynch Private Client Group. From
January 1992 to June 1992, he held the position of First Vice President of
MLPF&S. From January 1990 to June 1992, he held the position of District
Director of MLPF&S. Before January 1990, he held the position of Senior
Regional Vice President of MLPF&S.

As of October 1, 1996, the principals of MLIP owned Units with
an aggregate Net Asset Value of approximately $90,000, and MLIP's general
partner interest in the Fund was valued at approximately $1.15 million.
Under currently effective tax regulations, MLIP is required to maintain at
least a 1% interest in the Fund at all times in order to ensure that the
Fund is treated as a partnership for federal income tax purposes.

MLF

MLF, the exclusive clearing futures commission merchant
(commodity broker) for the Fund, is a clearing member of The Board of
Trade of the City of Chicago, the Chicago Mercantile Exchange, the New
York Mercantile Exchange and all other principal United States commodity
exchanges. The principal office of MLF is located at World Financial
Center, 250 Vesey Street, 23rd Floor, New York, New York 10281-1323.

The Customer Agreement between MLF and the Fund provides that
MLF shall not be liable for actions taken pursuant to the Customer
Agreement except for actions constituting negligence or misconduct, and
that MLF shall not be responsible for actions taken by it under the
Customer Agreement in compliance with instructions given by any Trading
Advisor or the Fund.

FIDUCIARY OBLIGATIONS OF MLIP

NATURE OF FIDUCIARY OBLIGATIONS; CONFLICTS OF INTEREST

As general partner of the Fund, MLIP is a fiduciary to the
Limited Partners under both statutory and common law and has a
responsibility to exercise good faith, fairness and loyalty in all
dealings affecting the Fund. The scope of MLIP's fiduciary obligations is
defined and established, in large part, by the consent of each subscribing
Limited Partner to the business terms of the Fund as embodied in the
Limited Partnership Agreement and as described in this Prospectus. There
are substantial and inherent conflicts of interest in the structure of the
Fund. One of the purposes underlying the disclosures set forth in this
Prospectus is to disclose these conflicts of interest to all prospective
Limited Partners so that MLIP may have the opportunity to obtain their
informed consent to these conflicts prior to, and as a condition of, their
becoming Limited Partners. Prospective investors who are not willing to
consent to the various conflicts of interest described herein are
ineligible to invest in the Fund. See "Conflicts of Interest" at page 46.

-28-
<PAGE>

Having once established the business terms of the Fund, MLIP may be
effectively precluded from changing these terms in a manner that
disproportionately benefits MLIP, as any such change could constitute self-
dealing unless consented to by all investors in the Fund.

The Trading Advisors selected by MLIP are required to clear (although
not to execute) the Fund's futures trades through MLF, as well as to execute and
maintain the Fund's forward currency trades through the F/X Desk, established by
MLIP. See "Charges" at page 33. MLIP has no control or input into the trades
ordered for the Fund by the Trading Advisors, and the Brokerage Commissions paid
by the Fund are assessed on a flat-rate, not a per-trade, basis. Nevertheless,
prospective investors must recognize that by subscribing to the Fund they have
consented to its basic structure, in which affiliates of MLIP, and MLIP itself,
receive substantial revenues from the Fund and there is no party which
negotiates on behalf of the Fund to obtain lower rates from the Merrill Lynch
entities which provide services to it.

The Fund, as a publicly-offered commodity pool, is subject to the
Statement of Policy of the North American Securities Administrators Association,
Inc. relating to the registration, for public offering, of commodity pool
interests (the "NASAA Guidelines"). These NASAA Guidelines explicitly prohibit a
general partner of a commodity pool from "contracting away the fiduciary
obligation owed to [investors] under the common law."

The Limited Partnership Agreement provides that MLIP and its
affiliates shall have no liability to the Fund or to any Limited Partner for any
loss suffered by the Fund that arises out of any action or inaction of MLIP or
its affiliates if MLIP or its affiliates, in good faith, determined that such
course of conduct was in the best interests of the Fund, and such course of
conduct did not constitute negligence or misconduct by MLIP or its affiliates.
The Fund has agreed to indemnify MLIP and certain of its affiliates against
claims, losses or liabilities based on their conduct relating to the Fund,
provided that the conduct resulting in the claims, losses or liabilities for
which indemnity is sought did not constitute negligence or misconduct and was
done in good faith and in a manner reasonably believed to be in the best
interests of the Fund. The NASAA Guidelines prescribe the maximum permissible
extent to which the Fund can indemnify MLIP and its affiliates, and prohibit the
Fund from purchasing insurance to cover indemnification of MLIP which the Fund
itself could not undertake directly.

The Limited Partnership Agreement provides that MLIP and its
affiliates (as well as any persons acting as selling agent for the Units) shall
not be indemnified for any losses, liabilities or expenses arising from or out
of an alleged violation of federal or state securities laws unless (1) there has
been a successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee and the court approves
indemnification of the litigation costs, (2) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee and the court approves indemnification of the litigation
costs, or (3) a court of competent jurisdiction approves a settlement of the
claims against a particular indemnitee and finds that indemnification of the
settlement and related costs should be made.

The Limited Partnership Agreement provides that in the event of any
claim for indemnification for federal or state securities law violations, the
party seeking indemnification shall place before the court the position of the
SEC with respect to the issue of indemnification for securities law violations.
In the view of the SEC, any such indemnification is contrary to the federal
securities laws and therefore unenforceable.

REMEDIES AVAILABLE TO LIMITED PARTNERS

Under Delaware law, a limited partner may, in certain circumstances,
institute legal action on behalf of himself or herself and all other similarly
situated limited partners (a "class action") to recover damages from a general
partner for violations of fiduciary duties, or on behalf of a partnership (a
partnership "derivative action") to recover damages from a third party where a
general partner has failed or refused to institute proceedings to recover such
damages. In addition, limited partners may have the right, subject to applicable
procedural, jurisdictional and substantive requirements, to bring actions in
federal court to enforce their rights under the federal securities laws and the
rules and regulations promulgated thereunder by the SEC. For example, limited
partners who have suffered losses in connection with the purchase or sale of
their interests in a limited partnership may be able to recover such losses from
a general partner in cases in which such losses result from the general
partner's violation of the anti-fraud provisions of the federal securities laws.

In certain circumstances, Limited Partners also have the right to
institute a reparations proceeding before the CFTC against MLIP (a registered
commodity pool operator), MLF (a registered futures commission merchant) and the
Trading Advisors (registered commodity trading advisors), as well as those of
their respective employees who are required to be registered under the Commodity
Exchange Act and the rules and regulations promulgated thereunder. There is a
private right of action under the Commodity Exchange Act available to investors
in commodity pools such as the Fund.

-29-
<PAGE>

In the case of most public companies, management is required to make
numerous decisions in the course of the day-to-day operations of the company and
is protected in doing so by the so-called business judgment rule. This rule
protects management from liability for decisions made in the course of operating
a business if the decisions are made on an informed basis and in the honest
belief that the decision is in the best interests of the corporation. MLIP
believes that similar principles apply to MLIP in its management of the
Fund.

Limited Partners should consult their own counsel regarding their
possible rights of action in respect of the Fund.

USE OF PROCEEDS AND INTEREST INCOME

SUBSCRIPTION PROCEEDS

MLIP pays from its own funds the selling commissions relating to the sale
of the Units. Accordingly, 100% of the proceeds of Unit sales are received in
cash by the Fund and available for use in its speculative trading. In such
trading, however, the Fund's capital is not used to purchase or acquire any
asset but rather only as security for and to pay the Fund's trading losses.
Consequently, substantially all of such capital is available to earn interest at
the same time that such capital is being used to support the Fund's trading.
The primary use of the proceeds of subscriptions is to permit the Advisors to
trade, on a speculative basis, in a wide range of different futures, forward and
options on futures markets on behalf of the Fund. However, until such time, if
any, as are paid out to cover trading losses, Fund expenses or redemptions, such
proceeds, whether or not required for margin purposes, are available to be and
are invested in non-speculative (although by no means riskless) interest
programs.

MARKET SECTORS

The Fund trades in a diversified group of markets under the direction of
multiple independent Advisors. These Advisors can, and do, from time to time
materially alter the allocation of their overall trading commitments among
different market sectors. Except in the case of certain trading programs which
are purposefully limited in the markets which they trade, there is essentially
no restriction on the commodity interests which may be traded by any Advisor or
the rapidity with which an Advisor may alter its market sector allocations.

In its Gamma and Alpha Programs, ARA Portfolio Management Company, L.L.C.
implements a strictly technical trend-following system which uses a portfolio of
eighteen U.S. exchange-traded commodities, including currencies, financial
instruments, metals, energy and agriculturals. ARA maintains a position in each
commodity in its diversified portfolio at all times, although such positions
vary in magnitude.

In its Diversified Program, Chesapeake Capital Corporation applies its
trend-following system to a global portfolio of futures and forward markets,
including agricultural products, precious and industrial metals, currencies,
financial instruments, and stock, financial and economic indices.

The Financial and Metals Portfolio of John W. Henry & Company, Inc.
utilizes intermediate- and long-term quantitative trend analysis models which
participate in four major market sectors -- global interest rates, foreign
exchange, global stock indices and precious metals -- and seeks to capitalize on
sustained moves in global financial markets.

The Fund's financial statements contain information relating to the market
sectors traded by the Fund. There can, however, be no assurance as to which
markets may be included in the Fund's portfolio or as to which market sectors
the Fund's trading may be concentrated at any one time or over time. See "Index
to Financial Statements" at page 58.

MARKET TYPES

The Fund trades on a variety of United States and foreign futures
exchanges. Applicable exchange rules differ significantly among different
countries and exchanges. Substantially all of the Fund's off-exchange trading
takes places in the highly liquid, institutionally based currency forward
markets. The Fund's forward currency trading is executed exclusively through
the F/X Desk, with MLF as the back-to-back intermediary to the ultimate
counterparties with which the Advisors trade on behalf of the Fund.

As in the case of its market sector allocations, the Fund's commitments to
different types of markets -- U.S. and non-U.S., regulated and unregulated --
differ substantially from time to time as well as over time. The Fund has no
policy

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<PAGE>

restricting its relative commitment to any of these different types of
markets, although the bulk of the Fund's trading takes place on regulated
exchanges.

The Fund's financial statements contain information relating to the types
of markets traded by the Fund. There can, however, be no assurance as to in
which markets the Fund's trading may be concentrated at any one time or over
time.

CUSTODY OF ASSETS

All of the Fund's capital is currently held in CFTC-regulated customer
accounts at MLF. The assets held to margin positions on non-U.S. exchanges are
held in CFTC-designated "foreign secured amount" accounts; the remainder of the
Fund's assets are held in CFTC-designated "customer segregated funds" accounts.
Both these types of accounts would be accorded certain protections from MLF's
general (i.e., non-customer) creditors in the event of an MLF bankruptcy. In
the future, MLF may elect to hold substantial portions of the Fund's assets in
unregulated accounts at MLPF&S or other Merrill Lynch affiliates. Such accounts
are not accorded the same bankruptcy protection as are CFTC-regulated customer
accounts, although they do constitute a general obligation of MLPF&S or its
affiliates, as the case may be. Maintaining Fund assets in unregulated accounts
would reduce the regulatory net capital requirements (and associated costs)
imposed on Merrill Lynch in respect of the assets held in regulated
accounts.

INCOME EARNED AND PAID BY MERRILL LYNCH ON THE FUND'S ASSETS

MLF's Portfolio of Customer Funds

The Fund's assets are maintained by MLF, together with the assets of other
MLF customers, as a single aggregate portfolio, without tracing any specific
investments made with such assets to the Fund or any other MLIP customer. MLF
earns a return on the overall pool of customer assets held by it through: (i)
itself investing such customer funds in interest-bearing instruments authorized
by the CFTC for such purposes; (ii) retaining -- at the expense of MLF --
Merrill Lynch Asset Management, L.P. ("MLAM"), the principal investment advisory
subsidiary of the Merrill Lynch group, to invest a portion of such customer
funds, also in CFTC-authorized investments; and (iii) holding the remainder of
such funds in cash in the non-interest bearing offset accounts as described
below. The combination of these three sources of revenues comprises MLF's
overall return on the customer funds held by it.

CFTC-Authorized Investments; MLAM Services

CFTC-authorized investments are essentially limited to U.S. government
securities and repurchase agreements on such securities. The CFTC does not,
however, impose any formal limitations as to the duration, or resulting market
risk, of such securities. MLF itself invests a substantial portion of its
customer funds in such instruments, but in so doing limits itself to short-term
instruments. In an attempt to increase the yield earned on its investment of
customer funds in CFTC-authorized investments, MLF retains MLAM to direct
certain of such investments -- generally in somewhat longer-term, and presumably
higher yielding, instruments than MLF itself acquires with customer funds.

Offset Accounts

Offset accounts are non-interest bearing demand deposit accounts maintained
with banks unaffiliated with Merrill Lynch. These accounts are similar to
"compensating balances," except that the participating banks specifically
acknowledge that the funds held in MLF offset accounts are customer assets, not
subject to any Merrill Lynch liability. The banks involved make available to
ML&Co. and certain of its affiliates interest-free overnight credits or
overdrafts in the amount of the daily customer cash balances in the MLF offset
accounts, charging a small fee for this service.

Trading on Foreign Exchanges

Under the recently instituted MLF "single currency margining system," the
Fund itself does not generally deposit foreign currency margin in respect of its
trading on non-U.S. exchanges. Rather, the Fund maintains substantially all of
its assets in U.S. dollar-denominated securities or U.S. dollars (i.e., either
invested in CFTC-authorized investments by MLF or MLAM or held in cash in offset
accounts). MLF charges the Fund a fee based on the Fund's "foreign currency
requirements," as calculated by MLF, in respect of the Fund's trading on foreign
exchanges. Such fee equals approximately 3/4 of 1% per annum in excess of the
prevailing overnight rate on the relevant currency, calculated on the amount of
initial margin which MLF would have required the Fund to post on the exchange in
question as a stand-alone customer. Gains and losses on open positions
denominated in foreign currencies decrease and increase, respectively, the
amount of the Fund's "foreign currency requirements" on which the MLF fee is
assessed. MLF pays the Fund interest on any trading gains in excess of its
"foreign currency

-31-
<PAGE>

requirements" temporarily held in non-dollar currencies at the prevailing
overnight rate on the relevant currency, but minus a fee of approximately 3/4 of
1% per annum. This 3/4 of 1% per annum increment or deduction in yield from the
overnight rate -- like the 1/2 of 1% per annum deducted by MLF from the 91-day
Treasury bill rate in crediting the Fund with interest on its U.S. dollar
deposits, as described under "-- Interest Paid by MLF to the Fund," below --
represents in part compensation for MLF's costs and services in providing single
currency margining and in part a source of profit for Merrill Lynch.

To the limited extent that the Fund may from time to time hold assets in
foreign currencies (generally, the Fund holds foreign currencies only
temporarily as a result of profits recognized on positions held on foreign
exchanges which, as a matter of administrative convenience for Merrill Lynch,
are converted into dollars weekly rather than daily), Merrill Lynch receives
bid-ask spreads upon the periodic exchange of such currencies into dollars.

Interest Paid by MLF to the Fund

Merrill Lynch retains for its own benefit the difference between (a) the
aggregate return it is able to achieve from a combination of investing (or
hiring MLAM to invest) customer funds in CFTC-authorized securities and
depositing such funds in offset accounts, and (b) the interest which MLF agrees
to pay to each of its customers. MLF's interest income arrangements with
different customers vary. In the case of the Fund, MLF has agreed to credit the
Fund with interest as if the Fund's Available Assets on deposit in U.S. dollars
with MLF were invested at 1/2 of 1% per annum below the prevailing 91-day
Treasury bill rate, while charging or crediting the Fund with certain amounts
in respect of its trading on foreign exchanges as described under "--Trading on
Foreign Exchanges," above. Available Assets are the same as Net Assets but do
not include monies due to the Fund in respect of open forward contracts,
commodity options and certain other interests, such as various foreign futures
contracts, but which have not actually been received by the Fund. Conversely,
Available Assets are not reduced, as are Net Assets, by monies due from, but not
yet paid by, the Fund in respect of such open positions or in respect of accrued
but unpaid expenses or charges. Available Assets may, at any given time, be
either higher or lower than Net Assets for purposes of determining the Net Asset
Value per Unit.

Aggregate Return Earned by Merrill Lynch

The aggregate interest income and other economic benefits to the Merrill
Lynch organization -- net of the interest credits paid to the Fund, the expenses
of maintaining and managing the MLF customer portfolio and of margining MLF
customers' trading positions -- derived from the various sources of revenue
available to Merrill Lynch from possession of the Fund's assets have generally
ranged between 1/4 of 1% and 3/4 of 1% per annum of the Fund's average daily
Available Assets in MLF's customer accounts. Merrill Lynch's net revenues from
possession of MLF customer funds are expected to continue to fall within this
range under single currency margining (which reduces Merrill Lynch's
administrative expense as well as, to a limited extent, the Fund's potential
exchange-rate exposure on its margin deposits). These net revenues to Merrill
Lynch are in addition to the Brokerage Commissions and Administrative Fees paid
by the Fund to MLF and MLIP, respectively.

FORWARD TRANSACTIONS

Spot and forward currency contracts are the only non-exchange traded
instruments held by the Fund.

To date, approximately 20% to 30% of the Fund's trades by volume have been
in forward currency contracts, but from time to time the percentage of the
Fund's trading represented by forward currency trades may fall substantially
outside this range. In using the F/X Desk, the Fund trades through MLF.
Because the Fund need not deposit any margin with MLF in respect of the Fund's
forward trading, the Fund's additional risk in trading in such unregulated
markets should be limited to a possible loss of unrealized profits on open
forward positions which a counterparty accessed through MLF would not, in the
event of its bankruptcy, be able to pay to MLF for the account of the Fund.

Having the Fund (and the other MLF clients using the F/X Desk) trade
through the F/X Desk on the basis of MLF's credit lines permits the F/X Desk to
access a wide range of counterparties without need of such counterparties
evaluating the individual credit of the Fund (or any other MLF client).

-32-

<PAGE>

CHARGES

The following table summarizes the charges incurred by the Fund during
1994, 1995 and 1996 (9 months).
<TABLE>
<CAPTION>
1/1/96 - 9/30/96 1/1/95 - 12/31/95 1/4/94 - 12/31/94
-------------------------- ------------------------- ------------------------
% of Average % of Average % of Average
Dollar Month-End Dollar Month-End Dollar Month-End
Cost Amount Net Assets* Amount Net Assets Amount Net Assets
---- ---------- ------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Brokerage $4,990,367 7.51% $5,723,755 7.72% $3,859,267 7.27%
Commissions

Profit Shares 373,820 0.56 1,492,857 2.01 1,103,649 2.08

Incentive Override 5,117 0.01 965,454 1.30 41,867 0.08
---------- ------------- ---------- ------------ ---------- ------------
Total $5,369,304 8.08% $8,182,066 11.03% $5,004,783 9.43%
========== ============= ========== ============ ========== ============
</TABLE>
____________________________

* Annualized

____________________________

The Fund's average month-end Net Assets during 1994, 1995 and 1996 (9
months) equalled $53,119,205, $74,120,244 and $88,631,646, respectively.

The foregoing table does not reflect the bid-ask spreads paid by the
Fund on its forward trading, or the benefits which MLF derives from the
possession of the Fund's assets. See "Use of Proceeds and Interest Income --
Interest Earned and Paid by Merrill Lynch on the Fund's Assets" at page 31.

During 1994, 1995 and 1996 (9 months), the Fund earned $1,972,722,
$3,786,925 and $2,996,535 in interest income, or approximately 3.71%, 5.11% and
3.38% (9 months) of the Fund's average month-end Net Assets.

See the Breakeven Table included in the "Summary" at page 7.
______________________________

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<PAGE>

CHARGES PAID BY THE FUND
<TABLE>
<CAPTION>

RECIPIENT NATURE OF PAYMENT AMOUNT OF PAYMENT
- ------------------ -------------------------- -------------------------------------------------------
<S> <C> <C>

MLF Brokerage Commissions A flat-rate monthly commission of 0.604 of 1% of
the Fund's month-end assets (a 7.25% annual rate).

MLF Use of Fund assets MLF receives an aggregate annual benefit from the
use of the Fund's assets (after payment of interest to
the Fund) of between 1/4 of 1% and 3/4 of 1% of the
Fund's average daily Available Assets.

MLIP Administrative Fees As of October 1, 1996, the Brokerage Commissions
payable by the Fund were reduced to 7.25%
annually, and the Fund now pays MLIP a monthly
Administrative Fee equal to 0.020833 of 1% of the
Fund's month-end assets (0.25% annually). MLIP
pays all of the Fund's routine administrative costs.

MLIB Bid-ask spreads Under MLIP's F/X Desk arrangements, MLIB
receives bid-ask spreads on all forward trades
executed on behalf of the Fund with MLIB.

Other Bid-ask spreads The counterparties other than MLIB with which the
Counterparties F/X Desk deals each receive bid-ask spreads on the
forward trades executed with the Fund.

MLIP F/X Desk service fees Under the F/X Desk arrangements, MLIP or
another Merrill Lynch entity receives a service fee
equal, at current exchange rates, to approximately
$5.00 to $12.50 on each purchase or sale of each
futures contract-equivalent forward contract exe-
cuted with counterparties other than MLIB.

MLIB EFP differentials MLIB or an affiliate receives a differential spread
for exchanging the Fund's spot currency positions
for equivalent futures positions.

MLIP Annual Incentive Overrides Paid by the Fund as a whole on an annual basis and
by reduction of the Net Asset Value of Units when
redeemed. The Incentive Override equals 10% of
any Net New Gain (as defined). Units may
generate Net New Gain and be subject to paying
an Incentive Override even though the Net Asset
Value per Unit has declined from the purchase
price of such Units.

Trading Advisors Profit Shares From 15% to 23% (depending on the Trading
Advisor) of any New Trading Profit as of the end of
each calendar quarter and upon redemption of
Units. New Trading Profit is calculated separately
in respect of each Advisor, irrespective of the
overall performance of the Fund. Units may
generate Net New Gain and be subject to paying
Profit Shares even though the Net Asset Value per
Unit has declined from the purchase price of such
Units.

</TABLE>

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<PAGE>

CHARGES PAID BY THE FUND (Cont'd)

RECIPIENT NATURE OF PAYMENT AMOUNT OF PAYMENT

MLF; Extraordinary expenses Actual costs incurred; none paid to date, and
Others expected to be negligible.

</TABLE>

-----------------------------

BROKERAGE COMMISSIONS

Commodity brokerage commissions are typically paid on the
completion or liquidation of a trade and are referred to as round-turn
commissions, which cover both the initial purchase (or sale) and the
subsequent offsetting sale (or purchase) of a commodity futures contract.
The Fund does not pay its commodity brokerage commissions on a per-trade
basis, but rather at a monthly flat rate of 0.604 of 1% of the Fund's
month-end assets (a 7.25% annual rate). MLF receives these flat-rate
payments irrespective of the number of trades executed on the Fund's
behalf. These Brokerage Commissions include the Advisors' Consulting Fees
and all execution and clearing costs. Month-end assets are not reduced
for purposes of calculating Brokerage Commissions by any accrued but
unpaid Profit Shares, Incentive Overrides, Administrative Fees or the
accrued Brokerage Commissions being calculated. The Fund could obtain
lower rates for similar brokerage services from firms other than MLF.

During 1994, 1995 and 1996 (9 months), the Fund paid Brokerage
Commissions of $3,859,267, $5,723,755 and $4,990,367 respectively; these
flat-rate Brokerage Commissions were the approximate equivalent of per-
trade commissions of $13, $88 and $71, respectively. These round-turn
equivalent rates were somewhat higher than those of most MLIP funds. Other
firms charge less for brokerage services similar to those provided by MLF
to the Fund. The per-trade equivalent of the Fund's flat-rate Brokerage
Commissions varies over time depending upon the frequency with which the
Advisors trade.

The audited financial statements distributed by MLIP to Limited
Partners include the approximate round-turn equivalent commission rate
paid by the Fund during the previous year.

State securities administrators require MLIP to state that
Brokerage Commissions paid by the Fund shall not be increased while
redemption charges are in effect. Moreover, MLIP has undertaken to
various state securities commissions that in no event will MLIP increase
the 7.50% annual "wrap fee" (which as of October 1, 1996 includes the
7.25% annual Brokerage Commissions and the 0.25% annual Administrative
Fee) without the unanimous consent of all Limited Partners. In fact, MLIP
has never raised the brokerage commissions paid by any of its funds and
has on a number of occasions reduced such charges. In addition, MLIP has
been required by various state regulators to make the following
disclosure:

The Fund's "Brokerage Commissions" and Administrative Fees
constitute a "wrap fee." This "wrap fee" is ML&Co.'s only source of
revenues from the Fund (other than the benefits derived from
possession of the Fund's assets as described under "Use of Proceeds
and Interest Income" and the Incentive Override, if earned), from
which ML&Co. must pay a variety of different costs and expenses. The
level of the "wrap fee" is set with these costs and expenses in mind.
Different ML&Co. entities pay the following costs and expenses with
respect to the operation of the Fund: (a) administrative and
offering expenses; (b) selling commissions; (c) ongoing compensation
to Financial Consultants; (d) costs of executing the Fund's futures
trades; (e) the Advisors' Consulting Fees; and (f) ML&Co. employee
discounts. All of these costs and expenses, not only execution
costs, are reflected in the 7.50% annual "wrap fee" (including both
the Brokerage Commissions and the Administrative Fees) charged to the
Fund.

PROSPECTIVE INVESTORS MUST BE AWARE THAT THE "BROKERAGE
COMMISSIONS" AND "ADMINISTRATIVE FEES" CHARGED TO THE FUND IN FACT
INCLUDE A SIGNIFICANT NUMBER OF COSTS OTHER THAN THOSE OF ACTUALLY
EXECUTING THE FUND'S TRADES OR PROVIDING ADMINISTRATIVE SERVICES TO
IT. SUCH FLAT-RATE "BROKERAGE COMMISSIONS" AND "ADMINISTRATIVE FEES"
MAY NOT BE INCREASED, IN THE AGGREGATE, ABOVE THE CURRENT ANNUAL
LEVEL OF 7.50% OF THE FUND'S AVERAGE MONTH-END ASSETS WITHOUT THE
UNANIMOUS CONSENT OF ALL LIMITED PARTNERS.

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<PAGE>

MLF pays, from the Brokerage Commissions received by it, all
costs of executing the Fund's futures trades, including the NFA
transaction fees assessed on the Fund's futures trading on United States
exchanges. Such fees currently equal $0.14 per round-turn trade of a
futures contract and $0.07 for each trade of a commodity option contract.

A number of the Advisors execute trades through brokers other
than MLF, in which case the trades are given up to be cleared by MLF. The
additional costs involved in such third-party trade executions are paid by
MLF.

USE OF FUND ASSETS

As described under "Use of Proceeds and Interest Income," at
pages 30-32, Merrill Lynch receives a net benefit, after payment of all
related costs and the interest due from MLF to the Fund, of between 1/4
of 1% and 3/4 of 1% of the Fund's average daily Available Assets from
possession of the Fund's assets.

ADMINISTRATIVE FEES

As of October 1, 1996, MLIP began charging flat-rate monthly
Administrative Fees of 0.020833 of 1% of the Fund's month-end assets (a
0.25 of 1% annual rate). Month-end assets for such purposes are not
reduced by accrued but unpaid Profit Shares, Incentive Overrides,
Brokerage Commissions or the Administrative Fees being calculated. At the
same time, the Fund's flat-rate Brokerage Commissions were reduced in an
amount corresponding to the Administrative Fees, so that there was no
increased expense to the Fund. MLIP pays the ongoing administrative
costs of the Fund, including the expense of updating this Prospectus.
During 1994, 1995 and 1996 (9 months), MLIP paid $128,654; $190,792 and
$166,346 (9 months), respectively, in administrative expenses relating to
the Fund.

BID-ASK SPREADS

Many of the Fund's currency trades are executed in the forward
markets, in which participants include in their pricing a spread between
the prices at which they are prepared to buy and sell a particular
currency. The fact that the Fund pays such spreads does not reduce the
flat-rate Brokerage Commissions paid by the Fund.

F/X DESK SERVICE FEES; EFP DIFFERENTIALS

The Fund trades forward contracts through the F/X Desk. The F/X
Desk gives the Fund access to counterparties in addition to (but also
including) MLIB. MLIP (or another Merrill Lynch entity) charges a service
fee equal to, at current exchange rates, approximately $5.00 to $12.50 on
each purchase or sale of a futures contract-equivalent face amount of a
given currency traded in the forward markets. No service fees are charged
on trades awarded to MLIB (which receives bid-ask spreads on such trades).

In its exchange of futures for physical ("EFP") trading with
Merrill Lynch, the Fund acquires spot or forward (collectively, "cash")
currency positions through the F/X Desk in the same manner and on the same
terms as in the case of the Fund's other F/X Desk trading. When the Fund
exchanges these positions for futures, there is a differential between the
prices of the two positions. This differential reflects, in part, the
different settlement dates of the cash and the futures contracts and
prevailing interest rates, but also includes a pricing spread in favor of
MLIB or another Merrill Lynch entity. EFPs are a trading technique which
effectively permits an Advisor to establish a futures position out of
normal exchange hours as well as to obtain a single price for an entire
large order, whereas when large orders are executed on the futures
exchange floor, they tend to be broken up into a number of different
futures trades, each of which may be bought or sold at a different price.
The current Advisor group makes very little use of EFPs.

The combined F/X Desk service fees and EFP differentials paid by
the Fund have not to date exceeded 1/4 of 1% of the Fund's average month-
end assets on an annual basis.

ANNUAL INCENTIVE OVERRIDES

Certain Definitions

In the following description of the calculation of Net New Gain
and the Incentive Override, it is important to distinguish: (a) the Net
Asset Value per Unit prior to adjustment to reflect the Incentive Override
accrual or reversal being

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<PAGE>

calculated; and (b) the Net Asset Value per Unit following such
adjustment. The former is referred to as the Unadjusted NAV. The Net
Asset Value per Unit as of the end of the month for which the Incentive
Override is being calculated, after adjustment for such Incentive
Override, is referred to as the Adjusted NAV. The Adjusted NAV represents
the purchase as well as the redemption value (prior to applicable
redemption charges) of the Units. Incentive Overrides are, other than as
described below in the case of Units purchased during the current calendar
year, calculated by comparing the current Unadjusted NAV to the highest
Adjusted NAV as of any previous calendar year-end. Such highest previous
Adjusted NAV to which the current Unadjusted NAV is compared is referred
to below as the High Water Mark NAV.

Calculation of Net New Gain

For purposes of the computation of Net New Gain and Incentive
Overrides (including calculating the High Water Mark NAV), interest income
is excluded, and Net New Gain is calculated after all fees (other than the
Incentive Override itself).

MLIP receives, as of December 31 of each year, an Incentive
Override equal to 10% of the aggregate Net New Gain (as defined) generated
during the year.

Except as described in the following paragraph, cumulative Net
New Gain is calculated for each month in a calendar year by determining
the change (positive or negative) between (i) the Adjusted NAVs at which
Units were purchased or the High Water Mark NAV -- which High Water Mark
NAV may be substantially below the Net Asset Value per Unit at which an
investor subscribed -- and (ii) the Unadjusted NAV as of the end of such
month.

For the calendar year in which a Unit is purchased: (A) Net New
Gain is generated by such Unit only to the extent that the year-end
Unadjusted NAV exceeds the Adjusted NAV at which such Unit was purchased;
(B) negative Net New Gain is generated by such Unit to the extent that the
Unadjusted NAV falls below such purchase price; provided that no negative
Net New Gain is recorded to the extent that the Unadjusted NAV falls below
the High Water Mark NAV; and (C) Net New Gain is only recorded to the
extent that Unadjusted NAV exceeds the High Water Mark NAV, irrespective
of the Adjusted NAV at which a Unit was purchased. Similar procedures are
applied in determining Units' contribution to Net New Gain for each month
that such Units are outstanding in the calendar year of purchase. Because
Units are purchased at beginning of the month Net Asset Values, the
contributions to Net New Gain generated by each tranche of Units purchased
as of the beginning of different months during a particular year is likely
to be different.

In years subsequent to the year in which a Unit is purchased,
the Adjusted NAV at which such Unit was purchased becomes irrelevant to
the calculation of the Net New Gain (if any) generated by such Unit,
because such Net New Gain is calculated in respect of all Units purchased
in prior years based on increases in the Unadjusted NAV over the
applicable High Water Mark NAV, irrespective of the purchase price of such
Unit.

Redemptions; No Earn Back of Incentive Overrides

When a Unit is redeemed, the redemption value of such Unit is
its Adjusted NAV, which reflects any accrued Incentive Override.
Incentive Overrides will be accrued against all Units equally, although
Units sold at different times will generate different amounts (positive or
negative) of Net New Gain. The amount by which the Adjusted NAV is
reduced to reflect any such Incentive Override accrual is, upon redemption
of a Unit, paid to MLIP. Such accruals once paid to MLIP are not subject
to refund, irrespective of subsequent losses.

Redemption charges do not reduce Net New Gain.

Because the High Water Mark NAV is reduced by the Incentive
Override due at the year-end when such High Water Mark NAV was realized,
MLIP does not have to earn back Incentive Overrides previously paid in
order for the Fund to generate additional Net New Gain on which an
incremental Incentive Override will accrue.

Allocation of Incentive Overrides among Investors

Units may, during years subsequent to the year of purchase,
generate Net New Gain from profits which serve only to earn back declines
in the Adjusted NAVs at which such Units were purchased. On the other
hand, if Units are purchased at Adjusted NAVs below the High Water Mark
NAV, such Units will also generate Net New Gain only to the extent that
such

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<PAGE>

High Water Mark NAV is exceeded. Consequently, certain Units may realize
substantial profits none of which generate Net New Gain, while others may
generate substantial Net New Gain after the year of purchase even though
their Adjusted NAV has declined significantly from their purchase price.

Net New Gain is calculated on an aggregate basis, not in respect
of the investment experience of any particular Unit. For example, assume
Units are sold during the first calendar year of operations at Adjusted
NAVs of $100, $110 and $105. If a Unit is subsequently redeemed when the
Unadjusted NAV per Unit is $107, the same accrued Incentive Override will
be reflected as a reduction of its redemption price, irrespective of what
the purchase price of the Unit being redeemed had been. The purchase
price of a Unit is, in the year of purchase, the Adjusted NAV from which
the Net New Gain (positive or negative) generated by such Unit is
measured. In the foregoing example, the Unit purchased at $110 would have
generated negative Net New Gain of ($3) as of the redemption date, while
the Units purchased at $100 and $105 would have generated positive Net New
Gain of $7 and $2, respectively. The aggregate Net New Gain generated by
all Units would be combined, multiplied by 10% and would reduce the Net
Asset Value of the Fund as an Incentive Override accrual, in which all
Units share equally.

The Fund's method of Incentive Override calculation attempts to
strike a compromise between avoiding misallocations of Incentive Overrides
among investors and maintaining a uniform Net Asset Value per Unit.
During the calendar year in which Units are purchased, certain
misallocations of the Incentive Override are prevented by MLIP agreeing
(i) to give investors which purchase Units below the High Water Mark NAV
for such year a free ride, i.e., no Net New Gain is generated on increases
in the Unadjusted NAV of their Units until such Unadjusted NAV exceeds the
High Water Mark NAV and (ii) that Units will contribute negative Net New
Gain to the extent that their Unadjusted NAV declines below their purchase
price (negative Net New Gain stops being generated if such Unadjusted NAV
declines below the High Water Mark NAV, as positive Net New Gain is only
generated to the extent that the Unadjusted NAV exceeds the High Water
Mark NAV). In years subsequent to the calendar year of purchase, the
Incentive Override is calculated in respect of all Units sold in prior
years based solely on the current High Water Mark NAV, irrespective of the
various purchase prices of these Units as of the beginning of numerous
different months during prior years.

There is no direct connection between the appreciation in the
Net Asset Value of a particular Unit and the Incentive Override applicable
to that Unit (equally, together with all other outstanding Units). For
example, if one Unit were sold as of January 1, 1997 (assumed for
simplicity's sake to be the commencement of trading) for $100, ten Units
as of July 1, 1997 at an Adjusted NAV of $110 and as of November 30, 1997
the initial Unit was redeemed at an Adjusted NAV of $105, despite the
profit made on the redeemed Unit, there would be no accrued Incentive
Override reflected in such Adjusted NAV because the $10 in Net New Gain
generated through June 30, 1997 would have been offset by the July 1, 1997
- -- November 30, 1997 losses incurred by a greater number of Units.

As of December 31, 1994 and 1995 and September 30, 1996, MLIP
received or had accrued to its benefit Incentive Overrides of $41,867,
$965,454 and $5,117, respectively, or approximately 0.08%, 1.30% and
0.01% of the Fund's average month-end Net Assets during these periods,
respectively.

The fact that MLIP receives an Incentive Override may lead it to
select Advisors which trade in a more risky or speculative manner than
would otherwise be the case. See "Conflicts of Interest" at page 46.

Net New Gain includes unrealized appreciation as well as
realized gain.

The method by which the Incentive Override is calculated results
in certain misallocations of the Incentive Override as well as of
reversals of accrued Incentive Overrides, and, consequently, possible
equity dilution among Limited Partners purchasing Units at different
times.

See Appendix I -- Incentive Override and Profit Share Calculations in
an Open-End Fund.

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<PAGE>

PROFIT SHARES

Calculation of New Trading Profit

Each current Advisor receives a Profit Share of either 15% or 20% of
any cumulative New Trading Profit generated by such Advisor, as of the end of
each calendar quarter. The percentage Profit Shares which are paid to the
current Advisors are as follows: ARA Portfolio Management Company, L.L.C. --
20%; Chesapeake Capital Corporation -- 20%; John W. Henry & Company, Inc. --
15%; Di Tomasso Group, Inc. -- 20%; and West Course Capital, Inc. -- 20%.

The Net Asset Value per Unit for purposes of calculating New Trading
Profit does not include interest income, and is not reduced by accrued Incentive
Overrides or redemption charges.

For example, assume that Chesapeake were the sole Advisor for the Fund
and that Units are sold as of January 1, 1997 (assumed for simplicity to be the
beginning of trading) at $100 per Unit, again at February 1, 1997 at $105 (after
reduction for accrued Profit Shares) and that as of March 31, 1997 the Net Asset
Value per Unit (prior to calculating the Profit Shares and without including
interest income) equals $102. New Trading Profit would be generated in respect
of the Units sold at $100 in the amount of $2.00 per Unit, whereas negative New
Trading Profit of $3.00 per Unit would be generated in respect of Units sold at
$105. Depending upon the number of Units sold as of January 1, 1997 and February
1, 1997, respectively, a Profit Share might or might not be due to Chesapeake as
of March 31, 1997. Subsequent to March 31, 1997, New Trading Profit would be
generated in respect of both the January 1, 1997 and the February 1, 1997
tranches of Units to the extent that the Chesapeake attributable Net Asset Value
per Unit (without including interest income) exceeded (i) $102 less (ii) the
per-Unit Profit Share, if any, paid to Chesapeake on March 31, 1997. If Units
were subsequently purchased at an attributable Net Asset Value less than the
attributable Net Asset Value per Unit (after payment of the per-Unit Profit
Share, if any) as of March 31, 1997, it would not be until the attributable Net
Asset Value per Unit (prior to accrual of the Profit Share) exceeded the March
31, 1997 high water mark attributable Net Asset Value that any New Trading
Profit would be generated by such Units. The above example of a Profit Share
calculation relates only to one Advisor. As the Fund pays Profit Shares to each
Advisor based on each such Advisor's individual performance rather than the
overall performance of the Fund, it is likely that there will be periods when
the aggregate Net Asset Value per Unit declines but Profit Shares are paid to
one or more Advisors. Historically, both the Fund and MLIP's other multi-advisor
funds have paid substantial Profit Shares even during losing periods.

New Trading Profit is calculated, in respect of each Advisor's Fund
account, on the same basis as Net New Gain, except that New Trading Profit is
generated each month to the extent that the current Net Asset Value per Unit
(excluding interest income and prior to reduction for any accrued Profit Share
or Incentive Override) attributable to such an account exceeds the highest such
attributable Net Asset Value per Unit (excluding interest income and after
reduction for the Profit Share and Incentive Override) as of any previous
calendar quarter-end (the attributable Net Asset Value per Unit as of the date
an Advisor begins managing an account for the Fund, or, in the calendar quarter
of sale, as of the date that particular Units are sold, if higher).

In the case of certain Advisors, New Trading Profit might not be
reduced by the full amount of the brokerage commissions paid by their Fund
account.

In the case of Units redeemed as of the end of any month that is not
the end of a calendar quarter, the Net Asset Value at which such Units are
redeemed will reflect a reduction for the per-Unit Profit Share accrued in
respect of each Advisor's account (equally reducing the attributable Net Asset
Value of all Units), as if the redemption date were at calendar quarter-end. The
amounts so deducted will be paid to the appropriate Advisor(s) and will not be
subject to being returned to the Fund or the redeeming Limited Partners,
irrespective of subsequent losses during the quarter. The Adjusted NAV at which
Units are redeemed reflects a reduction for both Profit Shares and the accrued
Incentive Override liability of the Fund. Although the accrued Profit Shares
will reduce the accrued Incentive Override (but not vice versa), both forms of
incentive compensation will reduce the Net Asset Value of any redeemed Unit.

In calculating the Profit Shares due in calendar quarters subsequent
to the quarter of purchase, the highest attributable Net Asset Value per Unit to
which the current attributable Net Asset Value per Unit is compared reflects a
reduction for the Profit Shares payable as of the calendar quarter-end when such
highest attributable Net Asset Value per Unit was attained. Accordingly (as is
the case with MLIP and the Incentive Override), the Advisors do not have to earn
back Profit Shares previously paid to them in order for the Fund account managed
by them to generate additional New Trading Profits on which an incremental
Profit Share will accrue.

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<PAGE>

Termination of an Advisory Agreement is treated as if the date
of termination were at calendar quarter-end for purposes of calculating
the Profit Share due to an Advisor. If a new or replacement Advisor is
retained, such Advisor calculates its Profit Shares without regard to any
losses previously incurred by the Fund.

In the event that MLIP reallocates assets away from an Advisor
(to fund redemptions or for other purposes), any shortfall between the
attributable Net Asset Value per Unit as of the date of such reallocation
and the high water mark attributable Net Asset Value per Unit shall be
reduced in proportion to the percentage of the Fund's assets managed by
such Advisor that are reallocated away. Conversely, any Profit Shares
accrued as of the date of any such reallocation shall be proportionately
paid to such Advisor.

During 1994, 1995 and the first three quarters of 1996, the Net
Asset Value per Unit increased approximately 4.08%, 19.48% and 3.72%, and
the Fund had net income of $2,753,221, $13,359,856 and $3,005,951,
respectively. Profit Shares equalled $1,103,649, $1,492,857 and $373,820,
or approximately 2.08%, 2.01% and 0.42% of the Fund's average month-end
Net Assets in each period, were paid. (The 1996 figure, when annualized,
equals the 0.56% Profit Share expense indicated in the table at the
beginning of this "Charges" section.)

General

Because the Profit Shares are generally calculated on a
quarterly basis, it is possible, irrespective of the fact that the Profit
Shares are paid separately to each Advisor based on its individual
performance, that the Fund will pay substantial Profit Shares during a
year even though the Net Asset Value per Unit declines substantially
during such year.

The method by which the Profit Shares are calculated results in
certain misallocations of Profit Shares as well as of reversals of accrued
Profit Shares, and, consequently, possible equity dilution among Limited
Partners purchasing Units at different times. These misallocations are
analogous to those which occur in the case of the Incentive Override.

EXTRAORDINARY EXPENSES

The Fund is required to pay any extraordinary charges (such as
taxes) incidental to its trading. No extraordinary charges have been paid
by the Fund to date, and in MLIP's experience such charges have been
negligible.

______________________

MLIP sends each Limited Partner a monthly statement that
includes a description of performance during the prior month and year-to-
date and sets forth, among other things, the Brokerage Commissions,
Administrative Fees, Incentive Overrides and Profit Shares paid or accrued
during such month and on a Year-to-date basis.

______________________

CHARGES PAID BY MERRILL LYNCH

The following costs are paid by the Merrill Lynch entities
indicated below. In each case, these entities receive substantial
revenues, directly or indirectly, from the Fund.

SELLING COMMISSIONS; ONGOING COMPENSATION

MLIP pays the selling commissions due on the Units, as well as
the ongoing compensation due on Units which remain outstanding for more
than twelve months. See "Plan of Distribution -- Selling Agent
Compensation" at page 55.

Through September 30, 1996, MLIP had paid a total of $5,595,249
in selling commissions (in the form of production credits, not cash out-
of-pocket).

The first monthly installments of ongoing compensation began to
accrue as of January 1, 1995 on the Units sold as of January 4, 1994.
Through September 30, 1996, MLIP paid a total of $1,323,788 in ongoing
compensation (in the form of production credits, not cash out-of-pocket).

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<PAGE>

CONSULTING FEES

The Trading Advisors each enter into a Consulting Agreement with MLF.
Pursuant to such Consulting Agreements, MLF pays monthly consulting fees to each
of the Advisors. Chesapeake and ARA each receive 0.167% (2% annually), and JWH
0.333% (4% annually), of the month-end assets of the Fund allocated to each of
them, respectively.

MLIP anticipates that the consulting fees paid to Advisors in the
future will generally fall within the range of 1% to 4% annual rate, but such
fees could fall outside of such range in certain cases.

For purposes of determining whether redemptions charges apply, Units
are considered to be issued as of the first day of the calendar month
immediately following the month during which the subscriptions for such Units
are accepted.

During 1994, 1995 and 1996 (9 months), MLF paid consulting fees of
$1,376,882, $2,156,311 and $2,477,438, respectively, or approximately 2.59%,
2.91% and 2.80% (9 months) of the Fund's average month-end Net Assets during
these periods.

_________________

REDEMPTION CHARGES

Units redeemed on or prior to the end of the twelfth full month after
issuance are subject to redemption charges of 3% of the Net Asset Value at which
they are redeemed. Such charges are paid to MLIP.

For purposes of determining whether redemption charges apply, Units
are considered to be issued as of the first day of the calendar month
immediately following the month during which the subscriptions for such Units
are accepted.

During 1994, 1995 and 1996 (9 months), MLIP received a total of
$53,976, $132,030 and $62,252, respectively, in redemption charges.

CERTAIN LITIGATION

JWH

In September 1996, JWH was named as a co-defendant in class action
lawsuits brought in the California Superior Court, Los Angeles County and in the
State Supreme Court, New York County. The actions, which seek unspecified
damages, purport to be brought on behalf of investors in certain 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.

MLIP

ML&Co. -- the sole stockholder of Merrill Lynch Group, Inc. (which is
the sole stockholder of MLIP and MLF) and of MLPF&S, and the 100% indirect owner
of all Merrill Lynch entities involved in the operation of the Fund -- as well
as certain of its subsidiaries have been named as defendants in numerous civil
actions and arbitration proceedings arising out of their respective business
activities.

The following actions have been filed against or on behalf of ML&Co.
in connection with ML&Co.'s business activities with the Treasurer-Tax Collector
of Orange County, California ("Orange County") or from the purchase of debt
instruments issued by Orange County that were underwritten by MLPF&S. On
December 6, 1994, bankruptcy petitions were filed on behalf of Orange County and
the Orange County Investment Pools (the "Pools") in the United States Bankruptcy
Court for the Central District of California (the "Bankruptcy Court"). The
Pools' bankruptcy petition subsequently was dismissed. The currently pending
actions involving ML&Co. and Orange County include, in the order summarized
below: an action in the names of Orange County and the current Orange County
Treasurer-Tax Collector; actions by investors and participants in the Pools;
actions by investors in ML&Co. or affiliated entities; and actions by holders of
bonds or other debt instruments issued

-41-
<PAGE>

by or on behalf of Orange County and other public entities which had funds
controlled by the Orange County Treasurer-Tax Collector.

On January 12, 1995, an action was commenced in the Bankruptcy Court
by Orange County and the Pools against ML&Co. and certain of its subsidiaries
(the "Orange County Action"). Orange County filed a first amended complaint on
June 6, 1995, which was dismissed on October 17, 1995. Orange County filed a
second amended complaint on October 25, 1995 adding John M.W. Moorlach, the
current Orange County Treasurer-Tax Collector, as a plaintiff, and alleging,
among other things, that ML&Co.'s liquidation of certain securities entitles the
plaintiffs to relief under Sections 362, 502, 510, 549 and 922 of Title 11 of
the United States Code (the "Bankruptcy Code"), that various securities
transactions between Orange County and/or the Pools and ML&Co. and its
subsidiaries violated California law and are null and void, that ML&Co. and its
subsidiaries violated Section 10(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") and Rule 10b-5 promulgated thereunder, Section 25401 of the
California Corporations Code (the "California Code"), Section 17200 of the
California Business and Professions Code, Sections 1709-10 of the California
Civil Code, breached fiduciary duties, aided and abetted breaches of fiduciary
duty and conspired to make unauthorized use of public funds. Damages in excess
of $2 billion, injunctive and declaratory relief are sought.

On March 1, 1995, the parties entered into an agreement pursuant to
which the proceeds from the sale of securities purchased by ML&Co. from Orange
County pursuant to certain master repurchase agreements are to be used to
purchase short-term Treasury bills or Treasury notes that will be identifiable
and held separate and subject to any rights that ML&Co. may have in the master
repurchase agreements. This agreement may be terminated by ML&Co. upon 30 days'
written notice.

On October 17, 1996, the United States District Court for the Central
District of California withdrew the reference to the Bankruptcy Court of the
Orange County Action. The case is now pending in the District Court.

On December 13, 1994, a purported class action was commenced in the
Superior Court of the State of California, Orange County, on behalf of
individuals whose funds were deposited with the Orange County Treasurer-Tax
Collector pursuant to proceedings in California Superior Court (the "DeLeon
Action"). On December 27, 1994, plaintiffs filed a first amended class action
complaint; on April 19, 1995, plaintiffs filed a second amended complaint which
was dismissed on November 13, 1995; and, on December 18, 1995, plaintiffs filed
a third amended complaint. As amended, the DeLeon Action is brought on behalf of
the same individuals on whose behalf the action was originally brought and on
behalf of individuals who invested funds in the Pools representing deferred
compensation and/or retirement funds. The defendants include ML&Co., a
subsidiary of ML&Co. and an employee of ML&Co. Plaintiffs allege, among other
things, that the defendants breached fiduciary duties, aided and abetted
breaches of fiduciary duties, conspired to breach a fiduciary duty and committed
professional negligence in connection with ML&Co.'s business activities with the
Orange County Treasurer-Tax Collector. Damages in an unspecified amount are
sought. On May 10, 1996, pursuant to agreement of the parties, the court entered
an order staying this action pending final resolution of the Orange County
Action described above.

On January 10, 1995, a purported class action was commenced in the
Superior Court of the State of California, Orange County, on behalf of persons
whose funds were deposited in the Pools pursuant to proceedings in California
Superior Court (the "Small Action"). ML&Co., a subsidiary of ML&Co., an employee
of ML&Co. and Robert L. Citron, formerly the Treasurer-Tax Collector of Orange
County, are named as defendants. Plaintiffs allege claims for breach of
fiduciary duty and fraud in connection with ML&Co.'s business activities with
the Orange County Treasurer-Tax Collector. Injunctive relief and damages in an
unspecified amount are sought. The complaint in this action was never served.

On September 15, 1995, an action was commenced in the Superior Court
of the State of California, San Francisco County, by twelve California public
entities (the "Atascadero State Court Action"). On April 10, 1996, a first
amended complaint was filed. Named as defendants are ML&Co., certain
subsidiaries of ML&Co. and three past or present employees of ML& Co. (two of
whom have been dismissed without prejudice by agreement of the parties). As
amended, the complaint alleges, among other things, that the defendants
committed fraud and deceit, negligence, negligent misrepresentation, conversion,
breached fiduciary duties, aided and abetted breaches of fiduciary duty and
violated California Penal Code Section 496 and the California Unfair Business
Practices Act, Sections 25400, 25401, 25500 and 25501 of the California Code and
the Racketeer Influenced and Corrupt Organizations Act ("RICO"), in connection
with ML&Co.'s business activities with the Orange County Treasurer-Tax
Collector. Injunctive relief, rescission, restitution and damages in excess of
$50 million are sought. The case has been transferred to Contra Costa County,
California.

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<PAGE>

On November 27, 1995, an action was commenced in the United States
District Court for the Central District of California by fourteen California
public entities (the "Atascadero Federal Court Action"). On March 22, 1996, an
amended complaint was filed. Named as defendants are ML&Co., certain
subsidiaries of ML&Co. and three past or present employees of ML&Co. (two of
whom have been dismissed without prejudice by agreement of the parties). John
Moorlach is named as a nominal defendant. As amended, the complaint alleges,
among other things, that defendants violated Sections 10(b) and 20(a) of the
Exchange Act and Rule 10b-5 promulgated thereunder, Sections 25400, 25401, 25500
and 25501 of the California Code, Section 496 of the California Penal Code, the
California Unfair Business Practices Act, and RICO, committed fraud and deceit,
negligence and negligent misrepresentation, conversion, breached fiduciary
duties, and aided and abetted breaches of fiduciary duty, in connection with
ML&Co.'s business activities with the Orange County Treasurer-Tax Collector.
Rescission, restitution and damages in excess of $50 million are sought.

Beginning on December 5, 1994, five derivative actions purportedly
brought on behalf of ML&Co. were filed in the Supreme Court of the State of New
York, New York County (the "Wilson Actions"). On February 21, 1995, the court
consolidated the actions and an amended consolidated complaint was filed on June
5, 1995 naming as defendants 22 present or past directors, officers or employees
of ML&Co. and/or certain of its subsidiaries. The amended complaint alleges,
among other things, breach of fiduciary duty and oversight failures, waste of
corporate assets and claims for indemnification in connection with ML&Co.'s
business activities with the Orange County Treasurer-Tax Collector. ML&Co. is
named as a nominal defendant in these actions. Damages in an unspecified amount
are sought on behalf of ML&Co. against the individuals named as defendants. The
Court dismissed this action on August 7, 1996. A notice of appeal was filed on
September 11, 1996.

On December 16, 1994, a purported class action was commenced in the
United States District Court for the Southern District of New York (the "Balan
Action"). An amended complaint was filed on May 15, 1995. As amended, the Balan
Action is brought on behalf of purchasers of ML&Co.'s common stock between March
31, 1994 and December 6, 1994, and names as defendants ML&Co. and two of its
directors and officers. The plaintiff alleges, among other things, violations of
Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated
thereunder in connection with ML&Co.'s disclosure with respect to its business
activities with the Orange County Treasurer-Tax Collector. Damages in an
unspecified amount are sought.

Beginning on December 8, 1994, ten purported class actions were
commenced in the United States District Court for the Central District of
California on behalf of individuals who purchased bonds or other debt
instruments issued by or on behalf of Orange County during various periods of
time (the "Smith Federal Court Action"). Plaintiffs filed an amended
consolidated complaint on January 27, 1995, and a first amended consolidated
complaint on February 27, 1995. As amended, the Smith Federal Court Action
purports to be brought on behalf of all persons who purchased bonds or other
debt instruments between July 1, 1992 and December 6, 1994 that were issued by
Orange County or other public entities with funds controlled by the Orange
County Treasurer-Tax Collector. The defendants in the first amended consolidated
complaint are ML&Co., an employee of ML&Co., PaineWebber, Inc., CS First Boston
Corp., Smith Barney, Inc., Lehman Brothers, Inc., Donaldson, Lufkin & Jenrette,
Inc., Kidder, Peabody & Co., Inc., Stone & Youngberg, Rauscher Pierce Refsnes,
Inc., Leifer Capital, Inc., Fieldman Rolapp & Associates, Inc., CGMS, Inc. and
O'Brien Partners, Inc. Following a stipulation and order filed on July 17, 1995
dismissing certain state law claims without prejudice, the plaintiffs allege,
among other things, that the defendants affiliated with ML&Co. violated Section
10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder with respect to
the sale of bonds and other debt instruments issued by Orange County and other
public entities. Damages in an unspecified amount are sought. On April 1, 1996,
the court granted a motion by plaintiffs to dismiss this action without
prejudice.

On September 28, 1995, a purported class action was commenced in the
Superior Court for the State of California, Orange County, asserting the state
law claims previously dismissed in the Smith Federal Court Action (the "Smith
State Court Action"). The Smith State Court Action is brought on behalf of the
same purported class as the Smith Federal Court Action. Named as defendants are
ML&Co., an employee of ML&Co. and the same defendants not affiliated with ML&Co.
as in the Smith Federal Court Action and, in addition, KPMG Peat Marwick.
Violations of Sections 25400, 25401, 25500, 25501 and 25504.1 of the California
Code and fraud and deceit are alleged in connection with disclosure made with
respect to the sale of bonds and other debt instruments issued by Orange County
or other public entities with funds controlled by the Orange County Treasurer-
Tax Collector. Damages in an unspecified amount are sought. Certain of the
defendants in the Smith State Court Action other than ML&Co. and the employee of
ML&Co. named as a defendant have entered into settlement agreements with the
plaintiffs in these cases.

On March 9, 1995, an action (the "Kemper Action") was commenced in the
Circuit Court of Cook County, Illinois, Chancery Division, by five money market
mutual funds managed by Kemper Financial Services, Inc. (namely, the Cash

-43-
<PAGE>

Account Trust, Cash Equivalent Fund, Kemper Investors Fund, Kemper Money Market
Fund and Kemper Portfolios). Named as defendants are a subsidiary of ML&Co. and
an employee of ML&Co. The complaint alleges, among other things, that the
defendants violated Sections 12A, 12F, 12G and 12I of the Illinois Securities
Act and committed common law fraud with respect to disclosure made in connection
with the issuance and sale of 1994-95 Taxable Notes that were issued by Orange
County on July 8, 1994. Rescission and damages in an unspecified amount are
sought. This action had been stayed until June 30, 1996. The court dismissed
this action without prejudice on September 4, 1996 pursuant to agreement of the
parties.

ML&Co. has also received formal and informal inquiries from various
governmental entities and agencies examining the events underlying the above
described litigation and is cooperating with these inquiries.

On December 16, 1994, a consolidated amended complaint was filed in In
Re NASDAQ Market-Makers Antitrust Litigation, MDL No. 1023, in the United States
District Court for the Southern District of New York. As subsequently amended,
the complaint alleges that 33 market-makers, including MLPF&S, engaged in a
conspiracy with respect to the spread between bid and ask prices for certain
securities traded on NASDAQ by refusing to quote bid and ask prices in so-called
"odd-eighths." The complaint purports to be brought on behalf of all persons who
purchased or sold these securities between May 1, 1989 and May 27, 1994. The
complaint alleges violations of antitrust laws and seeks compensatory damages in
an unspecified amount, treble damages, declaratory and injunctive relief, and
attorneys' fees and costs. Judgment against each of the defendants is sought on
a joint and several basis. MLPF&S has filed an answer denying the allegations in
the complaint. Discovery is proceeding.

In connection with their industry-wide investigations into the NASDAQ
market, ML&Co., along with other named defendants, has received inquiries from
the Antitrust Division of the Department of Justice and the SEC and is
cooperating with these inquiries.

On July 17, 1996, the Antitrust Division of the United States
Department of Justice filed a civil antitrust complaint against firms that make
markets in NASDAQ securities, including MLPF&S. The complaint alleged that the
firms violated Section 1 of the Sherman Act through a "common understanding" to
follow a "quoting convention" that the complaint asserts had inflated the
"inside spread" (the difference between the best quoted buying price and the
best quoted selling price on NASDAQ) in certain NASDAQ stocks. This allegedly
resulted in investors having to pay higher transaction costs for buying and
selling stocks than they would have paid otherwise. At the same time the
complaint was filed, a proposed settlement of the action was announced, pursuant
to which the market maker defendants in the action have agreed not to engage in
certain conduct. The proposed settlement, which is subject to court approval,
provides, among other things, for the monitoring and tape recording by each of
the market maker defendants of not less than 3.5 percent, or a maximum of 70
hours per week, of telephone conversations by its over-the-counter desk traders;
the provision to the Department of Justice of any taped conversation that may
violate the terms of the settlement; and for Department of Justice
representatives to appear unannounced, during regular business hours, for the
purpose of monitoring trader conversations as the conversations occur.

In each of the legal proceedings described below except for the
stockholder derivative actions, the claims against the Merrill Lynch defendants
(as defined below) have now either been dismissed pursuant to settlements or,
under the terms of a settlement for which court approval is being sought, will
be dismissed.

All the actions arise from certain securities trading transactions
that occurred at year-end 1984, 1985, 1986 and 1988 between MLPF&S and Merrill
Lynch Government Securities Inc. ("MLGSI") and a Florida insurance company,
Guarantee Security Life Insurance Company ("GSLIC"), which was taken into
liquidation. A principal focus of the allegations in the following civil
proceedings is an assertion that GSLIC's purpose in engaging in the year-end
transactions was to distort its apparent financial condition. It is claimed that
GSLIC's former officers and employees improperly took assets from the company
and its investment portfolio declined substantially in value before its true
financial condition became known to insurance regulators, GSLIC's policyholders,
and the creditors of GSLIC and its parent company, Transmark USA, Inc.
("Transmark").

On December 20, 1991, an action (the "Receiver Action") was commenced
by the Florida Department of Insurance as Receiver of GSLIC (the "Receiver") in
the Fourth Judicial Circuit Court in Duval County, Florida naming as defendants
former officers, directors and shareholders of GSLIC and Transmark, GSLIC's
former outside attorneys and accountants, MLPF&S, MLGSI and a former managing
director of MLPF&S (the Merrill Lynch parties in the Receiver Action being
referred to collectively as the "Merrill Lynch defendants"). The complaint
alleges state law claims against the above-mentioned Merrill Lynch defendants
for fraud, breach of fiduciary duty, conspiracy and aiding and abetting a breach
of duty

-44-
<PAGE>

arising from their involvement in the year-end trades with GSLIC, alleges that
GSLIC was damaged in excess of $300 million and seeks relief in an unspecified
amount from the Merrill Lynch defendants. On July 14, 1995, an agreement was
signed among the Receiver of GSLIC, the Merrill Lynch defendants, along with
certain other named defendants, to settle this action. The court has entered an
order severing for purposes of trial the claims against the settling defendants
and otherwise staying all further proceedings in respect of such defendants.
Pursuant to the terms of the final settlement agreement (executed on October 19,
1995) and subject to the finality of the court's Order of Final Approval of
Settlement dated March 8, 1996, the Merrill Lynch defendants will pay $45
million to the Receiver, and the Receiver's claims against them will be
dismissed in their entirety. On July 12, 1996, the plaintiffs in the Receiver
Action entered a stipulation of discontinuance with prejudice with respect to
all claims asserted against all defendants, including the Merrill Lynch
defendants.

Substantially the same defendants are named in two consolidated
lawsuits brought in federal court in Jacksonville, Florida on October 15, 1991
and on February 28, 1992 on behalf of an uncertified alleged class of purchasers
of GSLIC insurance policies and annuities between 1984 and 1991 (the
"Haag/Levine Action"). The complaint alleges substantially the same claims as
the Receiver Action as well as claims under RICO and Section 10(b) of the
Exchange Act and seeks unspecified money damages. The court has stayed the
Haag/Levine Action pending the resolution of the Receiver Action. A condition of
the settlement in the Receiver Action is dismissal of the claims in the
Haag/Levine Action against the Merrill Lynch defendants, at no further cost to
the Merrill Lynch defendants. Unopposed motions seeking this dismissal have been
submitted to the court.

The Resolution Trust Corporation ("RTC"), as receiver for four failed
savings institutions (CenTrust Association Savings Bank, Imperial Savings
Association, FarWest Savings and Loan Association and Columbia Savings and Loan
Association) in January 1993 and April 1993 filed civil actions in federal court
in Jacksonville, Florida against ML&Co., MLPF&S, MLGSI, a former MLPF&S managing
director, and former officers, directors and employees of Transmark and GSLIC
(the "RTC Action"). The action seeks to recover damages as a result of purchases
by the four above-named institutions of securities issued by Transmark, GSLIC's
parent corporation. The claims alleged are substantially similar to those in the
Haag/Levine Action mentioned above. In April 1993, Trans-Resources Inc., a
company that alleges it also purchased Transmark securities, filed a complaint
in the federal court in Jacksonville, Florida substantially following the
allegations of the RTC Action and naming substantially the same defendants (the
"Trans-Resources Action"). The RTC Action and Trans-Resources Action each seek
compensatory and punitive damages in unspecified amounts, trebling of damages
under the RICO claim, rescissory relief and reimbursement of the costs of suit.
On August 10, 1995, an agreement was signed among the RTC and these Merrill
Lynch defendants to settle the RTC Action, as well as all other pending
litigation brought by the RTC against ML&Co. or its affiliates. Pursuant to the
agreement, $4.5 million has been paid to the RTC in respect of the RTC Action,
and the RTC's claims against these Merrill Lynch defendants have been dismissed
in their entirety. On December 22, 1995, an agreement was signed among Trans-
Resources and these Merrill Lynch defendants to settle the Trans-Resources
Action. Pursuant to the agreement, $150,000 has been paid to Trans-Resources,
and claims against the Merrill Lynch defendants in this action have been
dismissed in their entirety.

In October 1991, two derivative actions purportedly brought on behalf
of ML&Co. were filed in the Supreme Court of the State of New York, New York
County, naming as defendants directors of ML&Co. who were directors at the time
of the year-end securities transactions in question, among others. These cases,
now consolidated, assert claims of breach of fiduciary duties in connection with
the year-end securities transactions with GSLIC and other claims against
Transmark and one of Transmark's principals. The damages sought in this action
are unspecified. The court has stayed the action for all purposes pending a
resolution of the above-mentioned related litigation in Florida.

ML&Co. believes it has strong defenses to, and will vigorously
contest, the actions described above which are still pending. Although the
ultimate outcome of the actions described above and other civil actions,
arbitration proceedings and claims pending against ML&Co. or its subsidiaries as
of the date of this Prospectus cannot be ascertained at this time and the
results of legal proceedings cannot be predicted with certainty, it is the
opinion of the management of ML&Co. that the resolution of these actions will
not have a material adverse effect on the financial condition or the results of
operations of ML&Co.

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<PAGE>

CONFLICTS OF INTEREST

MERRILL LYNCH AFFILIATED ENTITIES

Other than the Trading Advisors, all parties involved in the
operations of the Fund are affiliated with Merrill Lynch. Consequently, many of
the business terms of the Fund have not been negotiated at arm's-length. Were
investors to seek redress from Merrill Lynch for damages relating to the
offering of the Units or the operations of the Fund, they (i) would be unlikely
to have recourse against any Merrill Lynch entity which is not a direct party to
an agreement with the Fund, and (ii) would be likely to have such recourse even
in the case of such entities only on a derivative basis, suing not individually
but in the right of the Fund.

<TABLE>
<CAPTION>
ML GLOBAL HORIZONS L.P.
ASSOCIATED MERRILL LYNCH ENTITIES
<S> <C> <C>
__________________________ __________________________ __________________________
| Merrill Lynch, Pierce, | | | | |
| Fenner & Smith | wholly-owned | Merrill Lynch | wholly-owned | Merrill Lynch |
| Incorporated |________________| & Co., Inc. |________________| International Inc. |
| Selling Agent | | | | |
|________________________| |________________________| |________________________|
| | |
| | wholly-owned wholly-owned |
| | |
| _____________|____________ __________________________
| | | | |
| | Merrill Lynch | | Merrill Lynch |
| | Group Inc. | | International Bank |
| | | | F/X Counterparty |
| |________________________| |________________________|
| | \ |
| | \ |
Selling | \ |
Agreement wholly-owned \ wholly-owned |
| | \ |
| | \ |
| | \ |
| _____________|____________ _______\__________________ |
| | Merrill Lynch | | | |
| | Investment Partners | | Merrill Lynch | F/X Desk
| | Inc. | | Futures Inc. | Agreement
| | General Partner | | Commodity Broker | |
| |________________________| |________________________| |
| | / |
| | general partnership / |
| | interest / |
| | Customer |
| _____________|____________ Agreement |
| | | / |
| | ML Global | / |
|____________________________| Horizons L.P. |/___________________________________|
| Fund |
|________________________|
</TABLE>

GENERAL

No Merrill Lynch entity or Trading Advisor has established any formal
procedures to resolve the conflicts of interest described below. Limited
Partners are dependent on the good faith of the respective parties subject to
such conflicts to resolve such conflicts equitably.

MLIP and its affiliates will, should the occasion arise, assert that
Limited Partners have consented to the following conflicts of interest by
subscribing to the Fund.

<PAGE>

MLIP

Relationship among the Merrill Lynch Affiliates

MLIP and its affiliates are the Fund's primary service providers,
other than the Trading Advisors, and will remain so even if using other firms
would be more advantageous for the Fund.

Other Funds Sponsored by MLIP

MLIP might be able to add more value to the Fund were certain MLIP
personnel to focus exclusively on managing the Fund, but none do so. MLIP
benefits from operating accounts other than the Fund because such accounts
generate significant revenues for it, and also diversify MLIP's exposure to one
or more of such accounts performing poorly.

There is, in general, a shortage of qualified futures trading advisors
available to manage customer assets. MLIP has a conflict of interest in
selecting Trading Advisors for the Fund and for other accounts sponsored by
MLIP.

MLIP has a conflict of interest in allocating assets among the Trading
Advisors in that MLF receives more net benefit from the Brokerage Commissions
paid by the Fund the more infrequently an Advisor trades. MLF receives a flat-
rate fee for executing the Fund's futures trades. However, MLF incurs out-of-
pocket costs in executing each such trade. The less frequently an Advisor
trades, the lower these out-of-pocket costs to MLF and the greater its net
revenues from the Fund.

MLIP may from time to time have a conflict of interest between
facilitating the ongoing offering of the Units and making Advisor or other
changes which MLIP would otherwise believe to be in the best interest of the
Fund.

MLIP sponsors numerous funds and has financial incentives to favor
certain of such funds over the Fund.

MLF AND MLIB

MLF has numerous clients and executes trades for a wide range of such
clients in the same markets at or about the same time. Executing orders for
different, and possibly competing, customers at the same time involves an
inherent conflict of interest. Furthermore, as a result of executing orders for
many other clients, MLF also has fewer resources to allocate to the Fund's
account.

Certain clients of MLF pay materially lower brokerage rates than does
the Fund. In the case of a number of such clients, particularly clients with an
account as large as that of the Fund, the lower fees charged by MLF are in large
part attributable to the significant costs incurred by MLIP and the ML&Co. group
in sponsoring the Fund and distributing the Units being embedded in the Fund's
Brokerage Commission costs. In the case of institutional accounts, no
sponsorship or distribution costs are incurred by the Merrill Lynch
organization, so MLF can lower Brokerage Commissions without reducing the net
revenue received by Merrill Lynch. See "Charges -- Charges Paid by Merrill
Lynch" at page 40 above. Nevertheless, even factoring in sponsorship and
distribution costs, certain institutional clients of MLF receive, as a result of
arm's-length negotiations, better commission rates than the Fund.

MLF and MLIB each have numerous clients and financial incentives to
favor certain such clients over the Fund.

THE TRADING ADVISORS

Other Clients and Business Activities of the Trading Advisors

The Fund might benefit significantly from an exclusive focus by
certain of the Trading Advisors on the Fund rather than on their other accounts,
including accounts owned by their principals. The Fund could be adversely
affected by the fact that the Trading Advisors trade other accounts at the same
time that they are managing the Fund's account.

The Trading Advisors and their principals devote a substantial portion
of their business time to ventures and accounts other than managing their Fund
account, including, in some cases, ventures which are unrelated to futures
trading.

Certain of the Trading Advisors act, or may in the future act, as
sponsors of their own single- or multi-advisor futures funds. Such funds may,
from time to time, be in direct competition with the Fund for positions in the
market.

-47-

<PAGE>

Other client accounts managed by a Trading Advisor may significantly
outperform its Fund account.

Each Trading Advisor has numerous clients and financial incentives to
favor certain accounts over the Fund.

Brokers and Dealers Selected by Trading Advisors

Certain of the Trading Advisors have required, as a condition of their
management of a Fund account, that such account trade through certain non-
Merrill Lynch brokers (even though MLF remains the clearing broker for the Fund)
with which such Trading Advisors have ongoing business dealings. Such Trading
Advisors may have a conflict of interest between insisting on the use of such
brokers and using the brokers most advantageous for the Fund.

Certain of the Trading Advisors execute a number of the trades for
their Fund accounts through affiliated floor brokers.

FINANCIAL CONSULTANTS

Financial Consultants (the individual MLPF&S brokers) receive initial
selling commissions and ongoing compensation in respect of the Units sold by
them. Consequently, Financial Consultants have a financial incentive to
encourage investors to purchase, and to discourage them from redeeming, their
Units.

PROPRIETARY TRADING

MLIP, the Advisors, their respective affiliates and related persons
may trade in the commodity markets for their own accounts as well as for the
accounts of their clients. In doing so, such persons may take positions which
are the same as or opposite to those held by the Fund. Prospective investors
should be aware that -- as a result of a neutral allocation system, testing a
new trading system, trading their proprietary accounts more aggressively or
other actions not in violation of their fiduciary or other duties -- such
persons may from time to time take positions in their proprietary accounts ahead
of the positions taken for the Fund and on occasion orders may be filled more
advantageously for the account of one or more such persons than for the Fund's
account. Records of this trading will not be available for inspection by Limited
Partners.
___________________

While it is generally true that it is in the best interests of MLIP,
the Trading Advisors and their respective affiliates and principals for the Fund
to trade successfully, in particular circumstances any of the foregoing parties
may receive significantly more benefit from acting in a manner adverse to the
Fund than from acting in, or not opposed to, the Fund's best interests. It is
very difficult, if not impossible, for Limited Partners to know or confirm that
any of the foregoing persons is equitably resolving the conflicts of interest
described above.

THE LIMITED PARTNERSHIP AGREEMENT

A copy of the Limited Partnership Agreement is included as Exhibit A
to this Prospectus and is incorporated herein by reference. Section and page
references below are to the Limited Partnership Agreement.

LIMITED LIABILITY OF SUBSCRIBERS

The Limited Partnership Agreement provides that (except as otherwise
provided by law -- for example, if the Fund is bankrupt or insolvent at the time
that a distribution is made to a Limited Partner) no Limited Partner shall be
personally liable for the debts of the Fund beyond the amount invested by such
Limited Partner in the Fund, plus his or her share of any undistributed profits.
(Section 7(e) at LPA-6).

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<PAGE>

ASSIGNMENTS; REDEMPTIONS

Units may only be transferred with the consent of the General Partner,
although the assignment of the economic interest represented by the Units (but
not any of the other rights, such as the right to vote and receive monthly
reports) does not require such consent. The General Partner will generally
consent to assignees becoming substitute Limited Partners unless doing so would
have adverse federal income tax consequences for the Fund.

A Limited Partner may redeem any or all of his or her Units at Net
Asset Value as of the last business day of any month upon ten calendar days'
irrevocable notice to his Merrill Lynch Financial Consultant. Payment of the
redemption price of Units is generally made within ten business days of the
effective date of redemption.

If Units are redeemed on or prior to the end of the twelfth full
calendar month after their sale, 3% of such Units' redemption proceeds are paid
to MLIP as an early redemption charge.

In general, redemption requests need not be made in writing. Limited
Partners may simply contact their Merrill Lynch Financial Consultant. A Limited
Partner who no longer has a Merrill Lynch account must request redemption in
writing (signature guaranteed), by corresponding with MLIP at: Merrill Lynch
World Headquarters, Sixth Floor, South Tower, World Financial Center, New York,
New York 10080-6106. (Section 11 at LPA-9).

MANAGEMENT OF PARTNERSHIP AFFAIRS; VOTING RIGHTS

Limited Partners take no part in the management and have no voice in
the operation of the Fund. (Section 8 at LPA-5). Limited Partners may remove and
replace MLIP as general partner of the Fund, and may, with the consent of MLIP,
amend the Limited Partnership Agreement, except in certain limited respects, by
the affirmative vote of holders of Units representing more than fifty percent
(50%) of the outstanding Units owned by Limited Partners. (Section 17(b) at LPA-
13). A majority of the Units held by Limited Partners may also compel
dissolution of the Fund. (Section 17(b) at LPA-13). Ten percent (10%) of the
Units held by Limited Partners have the right to bring a matter before a vote of
the Limited Partners. (Section 17(c) at LPA-13).

MLIP has no power under the Limited Partnership Agreement to restrict
any of the Limited Partners' voting rights. (Section 17(c) at LPA-13). Any Units
purchased by MLIP or its affiliates are non-voting. (Section 6 at LPA-2).

MLIP has the right unilaterally to amend the Limited Partnership
Agreement to the extent that such amendment is not adverse to the Limited
Partners and also in certain unusual circumstances -- for example, if doing so
is necessary to effect the intent of the Fund's tax allocations or to comply
with certain regulatory requirements. (Section 17(a) at LPA-13).

In the event that MLIP or the Limited Partners vote to amend the
Limited Partnership Agreement in any material respect, the amendment will not
become effective prior to all Limited Partners having an opportunity to redeem
their Units. (Section 17(c) at LPA-13).

REPORTS TO LIMITED PARTNERS AND ACCESS TO RECORDS

The books and records of the Fund (including a list of Limited
Partners and their addresses) are maintained at MLIP's principal office. Limited
Partners and their duly authorized representatives have the right during normal
business hours upon reasonable notice to MLIP to inspect such books and records
for any purpose reasonably related to their interest as Limited Partners. MLIP
will also mail copies of such books and records to Limited Partners upon request
and receipt of reasonable reproduction and mailing costs. (Section 9 at LPA-8).

Each month MLIP distributes summary statements of accounts to all
Limited Partners. All tax information relating to the Fund necessary for the
preparation of Limited Partners' federal income tax is distributed no later than
March 15 of each year. Audited financial statements are distributed by March 31
of each year. (Section 9 at LPA-8).

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<PAGE>

GENERAL

In compliance with the Statement of Policy of the North American
Securities Administrators Association, Inc. relating to the registration of
commodity pool programs under state securities or "Blue Sky" laws (the
"Guidelines"), the Limited Partnership Agreement provides that: (i) the Fund
will make no loans (Section 8 at LPA-6); (ii) no rebates or give-ups, among
other things, may be received from the Fund by any Trading Advisor, MLIP, MLF,
MLIB or any affiliate of the foregoing, and such restriction may not be
circumvented by reciprocal business arrangements among any Trading Advisor,
MLIP, MLF, MLIB or any of their respective affiliates and the Fund (Section 8 at
LPA-6); (iii) any agreements between the Fund and MLIP, MLF, MLIB or any
affiliate of MLIP, MLF or MLIB must be terminable by the Fund upon no more than
60 days' written notice (Section 8 at LPA-6); and (iv) the assets of the Fund
will not be commingled with the assets of any other person (deposit of assets
with a commodity broker, clearinghouse or forward dealer does not constitute
commingling for these purposes). (Section 8 at LPA-6).

All Advisors must meet the experience requirements of the Guidelines.
(Section 8 at LPA-6).

MLIP has agreed in the Limited Partnership Agreement to reimburse the
Fund, with interest, for any advisory or other fees paid by the Fund during any
fiscal year to any Advisor which exceed the 6% annual management fees and 15%
quarterly incentive fees permitted by the Guidelines. (Section 8 at LPA-7).

FEDERAL INCOME TAX CONSEQUENCES

MLIP has been advised by its counsel, Sidley & Austin, that, in its
opinion, the following summary correctly describes the material federal income
tax consequences, as of the date hereof, to a United States individual taxpayer
of acquiring, owning and disposing of Units.

PARTNERSHIP TAX STATUS OF THE FUND

MLIP has been advised by its counsel, Sidley & Austin, that, in its
opinion, the Fund is properly classified as a partnership for federal income tax
purposes.

MLIP believes that all of the income generated by the Fund to date has
constituted, and all income expected to be generated will constitute, qualifying
income. Accordingly, Sidley & Austin has advised MLIP that, in its opinion, the
Fund will not be subject to federal income tax as a corporation under the
provisions applicable to publicly-traded partnerships.

TAXATION OF PARTNERS ON PROFITS OR LOSSES OF THE FUND

Each Partner is required for federal income tax purposes to take into
account his allocable share of all items of Fund income, gain, loss or
deduction. A Partner's share of such items for tax purposes generally is
determined by the allocations in the Limited Partnership Agreement unless such
allocations do not have substantial economic effect or are not in accordance
with the Partners' interests in the Fund. Under the Limited Partnership
Agreement, allocations are generally made in proportion to the capital accounts
of each Unit, and therefore such allocations should have substantial economic
effect. However, in cases in which a Partner redeems part or all of his Units in
the Fund the allocations of capital gain or loss specified in the Limited
Partnership Agreement will not be in proportion to capital accounts. Because
such allocations are consistent with the economic effect of the Limited
Partnership Agreement, MLIP files the Fund's tax return based upon such
allocations. In the opinion of Sidley & Austin, the foregoing allocations should
be upheld if audited by the IRS. Nevertheless, a legal opinion is not binding on
the IRS, and it is not certain that such allocations would, in fact, be
respected upon audit. If such allocations were challenged and not sustained,
some or all of a redeeming Partner's capital gain or loss could be converted
from short-term to long-term, and each remaining Partner's share of the capital
gain or loss that is the subject of such allocations could be increased (solely
for tax purposes).

LIMITATIONS ON DEDUCTIBILITY OF FUND LOSSES

The amount of any Fund loss that a Partner is entitled to include in
his personal income tax return is limited to his tax basis for his Units as of
the end of the year in which such loss occurred. Generally, a Partner's tax
basis for his Units is the amount paid for such Units reduced (but not below
zero) by his share of any Fund distributions, realized losses and

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<PAGE>

expenses and increased by his share of the Fund's realized income and gains. In
addition, losses of the Fund may be limited under the "at risk" rules.

Because of the limitations imposed upon the deductibility of capital
losses (see "-- Tax on Capital Gains and Losses," at page 51), a Partner's
distributive share of any capital losses of the Fund does not materially reduce
the federal income tax payable on his ordinary income (including his allocable
share of the Fund's ordinary income).

TREATMENT OF INCOME AND LOSS UNDER THE "PASSIVE ACTIVITY LOSS RULES"

The Internal Revenue Code of 1986 (the "Code") contains rules (the
"Passive Activity Loss Rules") designed to prevent the deduction of losses from
passive activities against income not derived from such activities, including
salary income from investment activities not constituting a trade or business,
such as interest and dividends ("Portfolio Income"). The trading activities of
the Fund do not constitute passive activities, and income derived from the Fund
constitutes Portfolio Income or other income not from a passive activity.

REDEMPTIONS OF UNITS

Cash received from the Fund by a Partner generally is not reportable
as taxable income by a Partner, except as described below. Rather, such receipt
reduces (but not below zero) the total tax basis of the Units held by such
Partner.

Redemption for cash of all of a Partner's Units will result in the
recognition of gain or loss for federal income tax purposes. Such gain or loss
will be equal to the difference, if any, between the amount received and the
Partner's adjusted tax basis for his Units. Assuming that the Partner has held
his Units for more than one year, such gain or loss will be long-term capital
gain or loss.

GAIN OR LOSS ON SECTION 1256 CONTRACTS

Under the mark-to-market system of taxing futures and commodity
options contracts traded on United States exchanges and certain foreign currency
forward contracts ("Section 1256 Contracts"), any unrealized profit or loss on
positions in such Section 1256 Contracts open as of the end of a fiscal year is
treated as if such profit or loss had been realized for tax purposes as of such
time. In general, 60% of the net gain or loss which is generated as a result of
the mark-to-market system is treated as long-term capital gain or loss, and the
remaining 40% of such net gain or loss is treated as short-term capital gain or
loss.

GAIN OR LOSS ON NON-SECTION 1256 CONTRACTS

Except as described in the following paragraph with respect to Section
988 transactions, gain or loss with respect to contracts that are non-Section
1256 Contracts is taken into account for tax purposes only when realized.

Section 988 transactions include entering into or acquiring any
forward contract, futures contract or similar instrument if the amount paid or
received is denominated in terms of (or determined by reference to the value of)
a foreign currency other than the taxpayer's functional currency or if the
underlying property to which the contract or instrument ultimately relates is a
foreign currency other than the taxpayer's functional currency. In general,
foreign currency gain or loss on Section 988 transactions is treated as ordinary
income or loss. However, under the qualified fund election made by the Fund,
gain or loss with respect to certain Section 988 transactions will be capital
gain or loss. In addition, all such transactions are subject to the mark-to-
market rules, whether or not they involve Section 1256 Contracts (see "-- Gain
or Loss on Section 1256 Contracts," above).

TAX ON CAPITAL GAINS AND LOSSES

Net capital gains (i.e., the excess of net long-term capital gain over
net short-term capital loss) will be taxed for individual taxpayers at a maximum
rate of 28%. See "-- Limitation on Deductibility of Interest on Investment
Indebtedness," below, for a discussion of the reduction in the amount of an
individual taxpayer's net capital gain for a taxable year to the extent such
gain is taken into account as investment income. The Fund's trading generates
almost exclusively capital gain or loss. Capital losses are deductible by
individual taxpayers only to the extent of capital gains for the taxable year
plus $3,000. Accordingly, the Fund could incur significant capital losses but an
investor, nevertheless, be required to pay substantial taxes in respect of such
investor's allocable share of the Fund's interest and other ordinary income. See
"Risk Factors -- (20) Taxation of Interest Income" at page 11.

-51-
<PAGE>

If an individual taxpayer incurs a net capital loss for a year,
the portion thereof, if any, which consists of a net loss on Section 1256
Contracts may, at the election of the taxpayer, be carried back three
years. Losses so carried back may be deducted only against net capital
gain for such year to the extent that such gain includes gains on Section
1256 Contracts. Losses so carried back will be deemed to consist of 60%
long-term capital loss and 40% short-term capital loss (see "--Gain or
Loss on Section 1256 Contracts," above). To the extent that such losses
are not used to offset gains on Section 1256 Contracts in a carryback
year, they will carry forward indefinitely as losses on Section 1256
Contracts in future years.

LIMITED DEDUCTION FOR CERTAIN EXPENSES

The Code provides that, for individual taxpayers who itemize
deductions when computing taxable income, expenses of producing income,
including investment advisory fees, are aggregated with unreimbursed
employee business expenses, other expenses of producing income and certain
other deductions (collectively, "Aggregate Investment Expenses"), and that
the aggregate amount of such expenses is deductible only to the extent
that such amount exceeds 2% of an individual taxpayer's adjusted gross
income (the "2% Floor"). In addition, Aggregate Investment Expenses in
excess of the 2% Floor, when combined with a taxpayer's deductions for
certain other items, are subject to a reduction equal to, generally, 3% of
the taxpayer's adjusted gross income in excess of a certain threshold
amount (the "3% Phase-Out"). Moreover, such Aggregate Investment
Expenses are miscellaneous itemized deductions which are not deductible by
individual taxpayers in calculating their alternative minimum tax.

Based on the trading activities of the Fund to date, in the
opinion of Sidley & Austin, the Fund should be treated as engaged in the
conduct of a trade or business for federal income tax purposes. As a
result, the ordinary and necessary business expenses incurred by the Fund
in conducting its commodity futures trading business should not be subject
to the 2% Floor or the 3% Phase-Out. This is the position which MLIP has
taken to date. Investors should be aware, however, that an opinion of
counsel is not binding on the IRS or on any court, and that it is possible
that the IRS could contend, or that a court could decide, that the trading
activities of the Fund do not constitute a trade or business for federal
income tax purposes. To the extent the characterization of the Fund's
expenses as investment advisory expenses were to be sustained, each non-
corporate Partner's pro rata share of the amounts so characterized would
be deductible only to the extent that such non-corporate Partner's
Aggregate Investment Expenses exceeded the 2% Floor and, when combined
with certain other itemized deductions, exceeded the 3% Phase-Out. In
addition, each non-corporate Partner's distributive share of the income
would be increased (solely for tax purposes) by such Partner's pro rata
share of the amounts so recharacterized.

SYNDICATION FEES

The IRS could take the position that a portion of the Brokerage
Commissions paid to MLF constitutes non-deductible syndication expenses.

LIMITATION ON DEDUCTIBILITY OF INTEREST ON INVESTMENT INDEBTEDNESS

Interest paid or accrued on indebtedness properly allocable to
property held for investment constitutes investment interest. Interest
expense incurred by a Limited Partner to acquire or carry his Units (as
well as other investments) will constitute investment interest. Such
interest is generally deductible by individual taxpayers only to the
extent that it does not exceed net investment income (that is, generally,
the excess of (A) (i) gross income from interest, dividends, rents and
royalties, which would include a Partner's share of the Fund's interest
income, and (ii) certain gains from the disposition of investment
property, over (B) the expenses directly connected with the production of
such investment income). Any investment interest expense disallowed as a
deduction in a taxable year solely by reason of the above limitation is
treated as investment interest paid or accrued in the succeeding taxable
year. An individual taxpayer's net capital gain from the disposition of
investment property is included in clause (ii) of the second preceding
sentence only to the extent that such taxpayer elects to make a
corresponding reduction in the amount of net capital gain that is subject
to tax at the maximum 28% rate described above. (See "--Tax on Capital
Gains and Losses," above at page 51.)

MLIP'S CONTRIBUTION TO THE PURCHASE PRICE OF CERTAIN UNITS

MLIP contributes 3% of the purchase date Net Asset Value to the
Fund for each Unit purchased by officers and employees of ML&Co. or its
affiliates. The MLIP contribution is taxed as ordinary income in the year
of purchase, and affected subscribers acquire a tax basis of 100% of Net
Asset Value in their Units.

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<PAGE>

UNRELATED BUSINESS TAXABLE INCOME

In the opinion of Sidley & Austin, income earned by the Fund
does not constitute unrelated business taxable income under Section 511 of
the Code to employee benefit plans and other tax-exempt entities which
purchase Units; provided that Units purchased by such plans and entities
are not debt-financed (a contingency which is entirely within the control
of the purchasing plans and entities).

IRS AUDITS OF THE FUND AND ITS PARTNERS

The tax treatment of Fund-related items is determined at the
Fund rather than the Partner level. MLIP is the Fund's "tax matters
partner" with general authority to determine the Fund's responses to an
audit. The limitations period for assessment of deficiencies and claims
for refunds with respect to items related to the Fund is three years after
the Fund's return for the taxable year in question is filed, and MLIP has
the authority to extend such period with respect to all Limited Partners.

If an audit results in an adjustment, all Partners may be
required to pay additional taxes plus interest as well as penalties.
Partners may themselves also be subject to audits as the result of an
audit of the Fund.

STATE AND OTHER TAXES

In addition to the federal income tax consequences described
above, the Fund and the Partners may be subject to various state and other
taxes. Certain of such taxes could, if applicable, have a significant
effect on the amount of tax payable in respect of an investment in the
Fund.

____________________

THE FOREGOING SUMMARY IS NOT INTENDED AS TAX ADVICE,
PARTICULARLY AS CERTAIN OF THE INCOME TAX CONSEQUENCES OF AN INVESTMENT IN
THE FUND MAY NOT BE THE SAME FOR ALL TAXPAYERS. ACCORDINGLY, PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS WITH SPECIFIC REFERENCE
TO THEIR SITUATION UNDER FEDERAL, STATE AND OTHER LAWS BEFORE DETERMINING
WHETHER TO SUBSCRIBE FOR UNITS.

PLAN OF DISTRIBUTION

GENERAL

The Units are offered to the public on a continuous basis. The
minimum initial investment is 50 Units (or $5,000, if less); the minimum
additional investment for existing Limited Partners is 20 Units (or
$2,000, if less). Subscriptions are used to purchase the largest number
of whole Units possible at the purchase date Net Asset Value per Unit and
any overage is retained by the investors. The Fund does not issue
fractional Units.

Subscriptions may be submitted at any time during a month. If
accepted, such subscriptions will be applied to the purchase of Units as
of the first day of the immediately following calendar month. Settlement
of Unit purchases generally occurs within five (5) business days of the
beginning of the month when they are sold.

There is no minimum number of Units which must be sold as of the
beginning of any calendar month for any Units then to be sold. Given the
best efforts nature of the offering, there can be no assurance as to how
many Units will be sold, cumulatively or as of a month-end.

MLPF&S acts as the exclusive Selling Agent for the Units; see
"--Selling Agent Compensation," below at page 55. There is no market for
the Units, and MLPF&S does not engage in any form of market-making
activities with respect to the Units.

SUBSCRIPTION PROCEDURE

In order to purchase Units, an investor must complete, execute
and deliver to the Selling Agent a copy of the Signature Page to the
Subscription Agreement and Power of Attorney included in Exhibit C to this
Prospectus. Subscription

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<PAGE>

payments are made by authorizing the Selling Agent to debit an investor's
customer securities account in the amount of his subscription. (Prospective
subscribers must open an MLPF&S customer securities account in order to purchase
Units.) Accounts are debited, and subscriptions transmitted directly by the
Selling Agent to the Fund's account on settlement dates specified by the Selling
Agent. Such settlement dates generally take place not later than five (5)
business days following the beginning of the month as of which Units are
purchased. No sale of Units will be completed until at least five (5) business
days after the date a subscriber has executed, dated and submitted the Signature
Page to the Subscription Agreement and Power of Attorney.

Subscriptions must generally be received no less than five (5)
business days prior to the beginning of the month as of which the Units
subscribed for are to be purchased.

Existing Limited Partners subscribing for additional Units need not
(except in certain states) submit a new Signature Page to the Subscription
Agreement and Power of Attorney, but must be in possession of a current
Prospectus and Prospectus Supplement as well as recent summary financial
information relating to the Fund (current within 60 calendar days).

FINANCIAL CONSULTANTS (THE INDIVIDUAL MLPF&S BROKERS) ARE REQUIRED TO
RECONFIRM THE SUITABILITY OF EXISTING LIMITED PARTNERS WISHING TO MAKE AN
ADDITIONAL INVESTMENT IN THE FUND.

The Units are being sold when, as and if subscriptions are accepted by
MLIP, subject to the satisfaction of certain conditions set forth in the Selling
Agreement and to the approval by counsel of certain legal matters. The Units are
offered on a continuous basis. MLIP may terminate but not suspend the offering.

PURCHASES BY EMPLOYEE BENEFIT PLANS

APPLICATION. This section sets forth certain consequences under the
Employee Retirement Income Security Act of 1974 ("ERISA") and the Code, which a
fiduciary of an "employee benefit plan," as defined in and subject to ERISA, or
of a "plan," as defined in Section 4975, of the Code who has investment
discretion should consider before deciding to invest the plan's assets in the
Fund (such "employee benefit plans" and "plans" being referred to herein as
"Plans," and such fiduciaries being referred to herein as "Plan Fiduciaries").
In general, the terms, "employee benefit plan," as defined in ERISA and "plan,"
as defined in Section 4975 of the Code together refer to any plan or account of
various types which provide retirement or welfare benefits. Such plans and
accounts include, but are not limited to, corporate pension and profit sharing
plans, KEOGH plans for self-employed individuals (including partners),
"simplified employee pension plans," individual retirement accounts and medical
benefit plans.

SPECIAL INVESTMENT CONSIDERATIONS. Each Plan Fiduciary must give
appropriate consideration to the facts and circumstances that are relevant to an
investment in the Fund, including the role that an investment in the Fund plays
or would play in the Plan's overall investment portfolio. Each Plan Fiduciary,
before deciding to invest in the Fund, must be satisfied that investment in the
Fund is a prudent investment for the Plan, that the investments of the Plan,
including the investment in the Fund, are diversified so as to minimize the risk
of large losses and that an investment in the Fund complies with the Plan and
related trust documentation. As a matter of policy, MLIP limits each investor's
subscriptions to the Fund to no more than 10% of such investor's readily
marketable assets. In the case of IRA, BASIC and SEP accounts, this 10%
limitation applies to the beneficiary of such accounts, while such accounts
themselves may not invest more than 50% of their readily marketable assets in
the Fund.

THE FUND SHOULD NOT BE DEEMED TO HOLD PLAN ASSETS. A regulation issued
under ERISA (the "ERISA Regulation") contains rules for determining when an
investment by a Plan in an equity interest of a limited partnership will result
in the underlying assets of the partnership being considered to constitute
assets of the Plan for purposes of ERISA and Section 4975 of the Code (i.e.,
"plan assets"). Those rules provide in pertinent part that assets of a limited
partnership will not be considered assets of a Plan which purchases an equity
interest therein if such interest is a "publicly-offered security." The Units
should be considered to be "publicly-offered securities." Accordingly, the
underlying assets of the Fund should not be considered to constitute plan
assets.

INELIGIBLE PURCHASERS. Units may not be purchased with the assets of a
Plan if MLIP, any Advisor, the Selling Agent, any Financial Consultant, MLF,
MLIB or any of their respective affiliates either: (a) has investment discretion
with respect to the investment of such plan assets; (b) has authority or
responsibility to give or regularly gives investment advice with respect to such
plan assets, for a fee, and pursuant to an agreement or understanding that such
advice will serve as a primary

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<PAGE>

basis for investment decisions with respect to such plan assets and that such
advice will be based on the particular investment needs of the plan; or (c) is
an employer maintaining or contributing to such Plan.

ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF AN INDIVIDUAL RETIREMENT
ACCOUNT OR OTHER EMPLOYEE BENEFIT PLAN IS IN NO RESPECT A REPRESENTATION BY ANY
PARTY THAT AN INVESTMENT IN THE UNITS IS APPROPRIATE OR AUTHORIZED FOR SUCH
PLAN. EACH PLAN FIDUCIARY CONSIDERING ACQUIRING UNITS MUST CONSULT WITH ITS OWN
LEGAL AND TAX ADVISERS BEFORE DOING SO.

SELLING AGENT COMPENSATION

No selling commissions are paid from the proceeds of subscriptions.
MLIP credits the Selling Agent with production credits, a portion of which are
paid to the Selling Agent in cash by MLIP. Production credits do not represent
actual cash payments but rather internal bookkeeping entries relating to the
securities sold through different Financial Consultants (the individual MLPF&S
brokers). Pursuant to standard Selling Agent compensation procedures, a
percentage of the production credits awarded to a particular Financial
Consultant is paid out in cash by the Selling Agent to such Financial
Consultant. The Selling Agent is credited with production credits of 5% of the
purchase price Net Asset Value per Unit on all sales, provided that no initial
production credits accrue to the Selling Agent or Financial Consultants in
respect of sales of Units to officers and employees of ML&Co. and its affiliates
at 97% of Net Asset Value.

MLIP credits the Selling Agent with ongoing production credits, a
portion of which are paid in cash, with respect to Units which remain
outstanding more than twelve months. Such ongoing production credits accrue only
with respect to Units sold by Financial Consultants who are registered with the
CFTC, have passed either the Series 3 National Commodity Futures Examination or
the Series 31 Managed Futures Fund Examination and agree to provide certain
ongoing services to investors, upon request. Such production credits equal 2%
per annum of the average month-end Net Asset Value per Unit. Ongoing production
credits accrue monthly and are allocated quarterly. The Selling Agent will, in
turn, pay out a portion of the amounts so received to qualified Financial
Consultants.

In the Selling Agreement, each Trading Advisor and MLIP have agreed to
indemnify the Selling Agent against certain liabilities that the Selling Agent
may incur in connection with the offering and sale of the Units, including
liabilities under the Securities Act of 1933 and the Commodity Exchange Act. The
SEC is of the view that indemnification for liabilities arising under the
Securities Act of 1933 is against public policy as expressed in such Act and is,
therefore, unenforceable.

Certain of the ongoing offering costs paid by MLIP might be deemed to
constitute costs properly allocated to the account of the Selling Agent. Such
costs, which to date have included the expense of producing a revised sales
brochure and organizing certain seminars (but have not exceeded $65,000 in the
aggregate), are in addition to the selling commissions credited to the Selling
Agent. In no event will any of such costs properly allocated to the account of
the Selling Agent, when added to the selling commissions paid by MLIP, exceed an
aggregate of 10% of the aggregate subscription price of the Units.

LEGAL MATTERS

Sidley & Austin passes upon legal matters for MLIP, MLF and MLPF&S in
connection with the Units being offered hereby. Sidley & Austin advises MLIP and
its affiliates with respect to MLIP's responsibilities as general partner of the
Fund and related matters. Sidley & Austin has reviewed the statements under the
section, "Federal Income Tax Consequences," in this Prospectus, and rendered the
opinions described therein to MLIP.

EXPERTS

The balance sheet of MLIP as of December 29, 1995 and the financial
statements of the Fund as of December 31, 1994 and 1995 included in this
Prospectus have been audited by Deloitte & Touche llp, independent auditors, as
stated in their reports appearing herein, and have been so included in reliance
upon such reports given upon the authority of that firm as experts in auditing
and accounting.

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<PAGE>

ADDITIONAL INFORMATION

This Prospectus constitutes part of the Registration Statement filed
by the Fund with the SEC in Washington, D.C. This Prospectus does not contain
all of the information set forth in such Registration Statement, certain
portions of which have been omitted pursuant to the rules and regulations of the
SEC, including, without limitation, certain exhibits thereto (for example, the
forms of the Selling Agreement, the Advisory Agreements, the Customer Agreement
and the Foreign Exchange Desk Service Agreement). The descriptions contained
herein of agreements included as exhibits to the Registration Statement are
necessarily summaries; the exhibits themselves may be inspected without charge
at the public reference facilities maintained by the SEC in Washington, D.C.,
and copies of all or part thereof may be obtained from the SEC upon payment of
the prescribed fees. The SEC maintains a Web Site that contains reports, proxy
and information statements and other information regarding registrants, such as
the Fund, that file electronically with the SEC at http://www.sec.gov.

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<PAGE>

INDEX OF TERMS

A number of defined terms are used in this Prospectus. The respective
definitions or descriptions of such terms may be found on
the following pages.

TERM PAGE
- ---- ----
<S> <C>
Adjusted NAV.................... 37
Administrative Fee.............. 36
Advisors........................ Cover
Annualized standard deviation... Prospectus Supplement
Available Assets................ 31
Bid-ask spreads................. 36
Breakeven level................. 7
Brokerage Commissions........... 35
CFTC............................ i
Consulting Fees................. 40
Core Advisors................... 6
Customer segregated funds....... 31
Differential.................... 36
EFP............................. 36
Employee benefit plan........... 54
Foreign secured amount account.. 31
F/X Desk........................ 7
F/X Desk Service Fee............ 36
High Water Mark NAV............. 37
Incentive Override.............. 36
Investment advisory fees........ 11
Limited Partner................. LPA-1
MLAM............................ 31
MLF............................. Cover
MLIP............................ Cover
MLPF&S.......................... i
MLIB............................ 27
Net New Gain.................... 37
New Trading Profit.............. 39
NFA............................. 27
Non-core Advisors............... 6
Offset accounts................. 31
Ongoing production credits...... i
Peak-to-Valley Drawdown......... 5
Profit Shares................... 38
Redemption charges.............. 41
Round-turn commissions.......... 35
SEC............................. ii
Selling Agent................... i
Selling commissions............. i
Unadjusted NAV.................. 37
Variation margin................ 22
Worst Monthly Drawdown.......... 5
Worst Peak-to-Valley Drawdown... 5
</TABLE>

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<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ML GLOBAL HORIZONS L.P.

Independent Auditors' Report................ 59
Statements of Financial Condition........... 60
Statements of Income........................ 61
Statements of Changes in Partners' Capital.. 62
Notes to Financial Statements............... 63

MERRILL LYNCH INVESTMENT PARTNERS INC.

Independent Auditors' Report................ 71
Balance Sheets.............................. 72
Notes to Balance Sheets..................... 73

</TABLE>
______________________

Schedules are omitted for the reason that they are not required
or are not applicable or that equivalent information has been included
in the financial statements or notes thereto.

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<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE PARTNERS OF
ML GLOBAL HORIZONS L.P.

We have audited the accompanying statements of financial
condition of ML Global Horizons L.P. (a Delaware limited partnership; the
"Fund") as of December 31, 1995 and 1994, and the related statements of
income and of changes in partners' capital for the year ended December 31,
1995 and the period January 4, 1994 (commencement of operations) to
December 31, 1994. These financial statements are the responsibility of
the Fund's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, these financial statements present fairly, in
all material respects, the financial position of ML Global Horizons L.P.
as of December 31, 1995 and 1994, and the results of its operations for
the year ended December 31, 1995 and the period January 4, 1994
(commencement of operations) to December 31, 1994 in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP

January 26, 1996
New York, New York

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<PAGE>

ML GLOBAL HORIZONS L.P.
(A DELAWARE LIMITED PARTNERSHIP)
------------------------------

STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, 1996 (UNAUDITED), DECEMBER 31, 1995
AND DECEMBER 31, 1994
- ------------------------------------------------------------------------------

SEPTEMBER 30, 1996 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1995 1994
ASSETS ------------------ ------------ ------------
<S> <C> <C> <C>
Accrued interest receivable (Note 2) $ 307,250 $ 357,496 $ 280,548
Equity in commodity futures trading accounts:
Cash and option premiums 81,390,091 85,254,980 63,196,166
Net unrealized gain on open contracts 6,398,792 5,630,789 5,331,556
Other receivables -- -- 23,418
----------- ----------- -----------

TOTAL $88,096,133 $91,243,265 $68,831,688
=========== =========== ===========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
Redemptions payable $ 6,404,005 $ 674,724 $ 1,021,962
Brokerage Commissions payable (Note 2) 551,003 551,853 315,671
Profit Shares payable 58,897 -- 355,030
Incentive override payable (Note 2) 5,117 855,796 41,867
Organizational and initial offering costs payable (Note 1) -- 20,399 243,899
----------- ----------- -----------

Total liabilities 7,019,022 2,102,772 1,978,429
----------- ----------- -----------

PARTNERS' CAPITAL:
General Partner (8,985; 8,530; and 6,456 Units) $ 1,158,783 $ 1,052,896 $ 669,580
Limited Partners (619,673; 737,413; and 638,063 Units) 79,918,328 91,708,172 66,183,679
Subscriptions receivable (0; 29,116; and 0 Units) -- (3,620,575) --
----------- ----------- -----------

Total partners' capital 81,077,111 89,140,493 66,853,259
----------- ----------- -----------

TOTAL $88,096,133 $91,243,265 $68,831,688
=========== =========== ===========

NET ASSET VALUE PER UNIT (Note 4) $128.97 $124.35 $103.73
</TABLE>

See Notes to Financial Statements.

--------------------------

Past performance is not necessarily indicative of future results.

-60-
<PAGE>

ML GLOBAL HORIZONS L.P.
(A DELAWARE LIMITED PARTNERSHIP)
------------------------------

STATEMENTS OF INCOME
FOR THE PERIODS FROM JANUARY 1, 1996 TO
SEPTEMBER 30, 1996 (UNAUDITED) AND JANUARY 1, 1995 TO
SEPTEMBER 30, 1995 (UNAUDITED), THE YEAR ENDED DECEMBER 31, 1995
AND THE PERIOD FROM JANUARY 4, 1994
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

JANUARY 1, 1996 JANUARY 1, 1995
TO TO JANUARY 1, 1995 JANUARY 1, 1994
SEPTEMBER 30, SEPTEMBER 30, TO TO
1996 1995 DECEMBER 31, DECEMBER 31
(UNAUDITED) (UNAUDITED) 1995 1994
---------------- ---------------- --------------- ---------------

<S> <C> <C> <C> <C>
REVENUES

Trading profit (loss):
Realized $4,610,717 $14,314,748 $17,455,764 $ 453,726
Change in Unrealized 768,003 (4,758,175) 299,233 5,331,556
---------- ----------- ----------- ----------

Total trading results 5,378,720 9,556,573 17,754,997 5,785,282

Interest income (Note 2) 2,996,535 2,819,800 3,786,925 1,972,722
---------- ----------- ----------- ----------

Total revenues 8,375,255 12,376,373 21,541,922 7,758,004
---------- ----------- ----------- ----------

EXPENSES

Brokerage Commissions (Note 2) 4,990,367 4,128,889 5,723,755 3,859,267
Profit Shares 373,820 1,492,857 1,492,857 1,103,649
Incentive Override (Note 2) 5,117 147,489 965,454 41,867
---------- ----------- ----------- ----------

Total expenses 5,369,304 5,769,235 8,182,066 5,004,783
---------- ----------- ----------- ----------

NET INCOME $3,005,951 $ 6,607,138 $13,359,856 $2,753,221
========== =========== =========== ==========

NET INCOME PER UNIT:

Weighted average number of
Units outstanding (Note 5) 720,600 641,622 663,663 523,953
========== =========== =========== ==========

Net income per weighted
average General Partner and
Limited Partner Unit $ 4.17 $ 10.30 $ 20.13 $ 5.25
========== =========== =========== ==========
</TABLE>

See Notes to Financial Statements.

-----------------------------

Past performance is not necessarily indicative of future results.

-61-
<PAGE>

ML GLOBAL HORIZONS L.P.
(A DELAWARE LIMITED PARTNERSHIP)
------------------------------

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995
AND THE PERIOD FROM JANUARY 4, 1994
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

UNITS OF
PARTNERSHIP LIMITED GENERAL SUBSCRIPTIONS
INTEREST PARTNERS PARTNER RECEIVABLE TOTAL
------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Initial offering 358,350 $ 35,467,300 $ 367,700 $ -- $ 35,835,000

Organizational and initial
offering costs -- (442,366) (4,634) -- (447,000)

Subscriptions 317,083 31,598,577 275,531 -- 31,874,108

Redemptions (30,914) (3,162,070) -- -- (3,162,070)

Net income -- 2,722,238 30,983 -- 2,753,221
------------ ------------ ---------- ------------ ------------

PARTNERS' CAPITAL
DECEMBER 31, 1994 644,519 66,183,679 669,580 -- 66,853,259

Subscriptions 298,294 35,021,556 244,397 -- 35,265,953

Subscriptions receivable (29,116) -- -- (3,620,575) (3,620,575)

Redemptions (196,870) (22,718,000) -- -- (22,718,000)

Net income -- 13,220,937 138,919 -- 13,359,856
------------ ------------ ---------- ------------ ------------

PARTNERS' CAPITAL 716,827 91,708,172 1,052,896 (3,620,575) 89,140,493
DECEMBER 31, 1995

Subscriptions 135,271 13,149,858 56,900 3,620,575 16,827,333

Redemptions (223,440) (27,896,666) -- -- (27,896,666)

Net income -- 2,956,964 48,987 -- 3,005,951
------------ ------------ ---------- ------------ ------------

PARTNER'S CAPITAL
SEPTEMBER 30, 1996 628,658 $ 79,918,328 $1,158,783 $ -- $ 81,077,111
(Unaudited) ============ ============ ========== ============ ============

</TABLE>

See Notes to Financial Statements.

-------------------

Past performance is not necessarily indicative of future results.

-62-
<PAGE>

ML GLOBAL HORIZONS L.P.
(A Delaware Limited Partnership)
------------------------------

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
- -------------------------------------------------------------------------------

(1) Summary of Significant Accounting Policies

Organization
- ------------

ML Global Horizons L.P. (the "Fund") was organized as an open-end fund
under the Delaware Revised Uniform Limited Partnership Act on May 11, 1993 and
commenced trading activities on January 4, 1994. The Fund engages in the
speculative trading of futures, options and forward contracts on a wide range of
commodities. The Fund issues new units of limited partnership interest ("Units")
at the Net Asset Value as of the beginning of each month. Merrill Lynch
Investment Partners Inc. (formerly ML Futures Investment Partners Inc.) ("MLIP"
or the "General Partner"), a wholly-owned subsidiary of Merrill Lynch Group,
Inc. ("Merrill Lynch"), which in turn is a wholly-owned subsidiary of Merrill
Lynch & Co., Inc., is the general partner of the Fund, and Merrill Lynch Futures
Inc. ("MLF"), also an affiliate of Merrill Lynch, is its commodity broker. MLIP
has agreed to maintain a general partner interest of at least 1% of the total
capital in the Fund. MLIP and each Limited Partner share in the profits and
losses of the Fund in proportion to their respective interests in it.

MLIP selects independent advisors (the "Advisors" or the "Trading
Advisors") to manage the Fund's assets, and allocates and reallocates the Fund's
assets among existing, replacement and additional Advisors.

Estimates
- ---------

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities as of the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue Recognition
- -------------------

Commodity futures, options and forward contract transactions are
recorded on the trade date, and open contracts are reflected in the financial
statements at their fair value on the last business day of the reporting period.
The difference between the original contract price and fair value is reflected
in income as an unrealized gain or loss. Fair value is based on quoted market
prices.

Organizational and Initial Offering Costs, Operating Expenses and Selling
- -------------------------------------------------------------------------
Commissions
- -----------

MLIP advanced all organizational and initial offering costs relating
to the Fund. The Fund reimbursed MLIP for such costs over a two-year period in
24 equal monthly installments. For financial reporting purposes, the Fund
deducted the total organizational and initial offering costs of $447,000 from
Partners' capital at inception. For all other purposes, including determining
the Net Asset Value per Unit for redemption purposes, the Fund deducted
organizational and initial offering cost reimbursements only as actually paid.

MLIP pays all routine operating costs (including legal, accounting,
printing, postage and similar administrative expenses) of the Fund, including
the costs of the ongoing offering of the Units. MLIP receives a portion of the
Brokerage Commissions paid to MLF by the Fund (effective October 1, 1996, MLIP
began to receive the Administrative Fee directly from the Fund).

------------------------------

Past performance is not necessarily indicative of future results.

-63-
<PAGE>
ML GLOBAL HORIZONS L.P.
(A Delaware Limited Partnership)
------------------------------

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
(continued)
- -------------------------------------------------------------------------------

Effective October 1, 1996, a portion of the Brokerage Commissions
payable to MLF by the Fund (0.25 of 1% annually) has been recharacterized as an
Administrative Fee payable directly to MLIP. This recharacterization has not
increased the overall flat monthly rate paid by the Fund.

No selling commissions have been or are paid by Limited Partners.

Income Taxes
- ------------

No provision for income taxes has been made in the accompanying
financial statements as each partner is individually responsible for reporting
income or loss based on his or her respective share of the Fund's income and
expenses as reported for income tax purposes.

Distributions
- -------------

The Unitholders are entitled to receive, equally per Unit, any
distributions which may be made by the Fund. No such distributions have been
made as of September 30, 1996.

Redemptions
- -----------

A Limited Partner may require the Fund to redeem some or all of his
Units at Net Asset Value as of the close of business on the last business day of
any month upon ten calendar days' notice. Units redeemed on or prior to the end
of the twelfth full month after issuance are assessed an early redemption charge
of 3% of their Net Asset Value as of the date of redemption. If an investor
acquires Units at more than one time, such Units are treated on a "first-in,
first-out" basis for purposes of determining whether redemption charges are
applicable.

Dissolution of the Fund
- -----------------------

The Fund will terminate on December 31, 2023 or at an earlier date if
certain conditions occur, as well as under certain other circumstances, as set
forth in the Limited Partnership Agreement.

(2) Related Party Transactions

All of the Fund's assets are deposited with MLF. As a means of
approximating the interest rate which would be earned by the Fund had 100% of
its Net Assets on deposit with MLF been invested in 91-day Treasury bills, MLF
pays the Fund interest on its account equity on deposit in U.S. dollars with MLF
at a rate of 0.5 of 1% per annum below the prevailing 91-day Treasury bill
rates. In the case of its trading in certain foreign futures contracts, the Fund
either retains the related equity in dollars or deposits margin in foreign
currency denominated instruments and is charged or credited with interest
generally at approximately 0.5 of 1% per annum above or below the applicable
sovereign overnight rate. The additional economic benefit derived from
possession of the Fund's assets accrues to MLF or its affiliates.

The Fund pays Brokerage Commissions to MLF at a flat monthly rate of
0.625 of 1% (a 7.5% annual rate) of the Fund's month-end assets. (Effective
October 1, 1996, an annual fee of 0.25% of 1% of the Fund's month-end assets was
subtracted from the Brokerage Commissions and recharacterized as an
Administrative Fee payable to MLIP.) Month-end assets are not reduced for
purposes of calculating Brokerage Commissions or Administrative Fees by any
accrued but

------------------------------

Past performance is not necessarily indicative of future results.

-64-
<PAGE>
ML GLOBAL HORIZONS L.P.
(A Delaware Limited Partnership)
------------------------------

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
(continued)
- -------------------------------------------------------------------------------

unpaid Brokerage Commissions, Administrative Fees, Profit Shares, Incentive
Overrides or other accrued fees or charges. MLIP estimates that the round-turn
equivalent commission rate charged to the Fund during the nine months ended
September 30, 1996 and the years ended December 31, 1995 and 1994 was
approximately $71, $88 and $13, respectively (not including, in calculating
round-turn equivalents, forward contracts on a futures-equivalent basis).

MLF pays the Advisors annual Consulting Fees generally ranging from 1%
to 4% of the average month-end assets of the Fund, after reduction for a portion
of the Brokerage Commissions, managed by each of them, respectively.

The Fund paid to MLIP an Incentive Override equal to 10% of any Net
New Gain, as defined, as of December 31, 1995 and 1994, and will do so as of
each subsequent December 31 in respect of any Net New Gain then outstanding.
Such payments are also made to MLIP from the redemption value of Units redeemed
as of the end of interim months during a year, to the extent of any Net New Gain
attributable to such Units when redeemed. Prior to December 31, 1994, the Fund
retained any accrued Incentive Overrides reflected as a reduction in the Net
Asset Value of Units when redeemed.

The Fund trades forward contracts through a Foreign Exchange Service
Desk (the "F/X Desk") established by MLIP that contacts at least two
counterparties along with Merrill Lynch International Bank ("MLIB") for all of
the Fund's currency trades. All counterparties other than MLIB are unaffiliated
with any Merrill Lynch entity. The F/X Desk charges a service fee equal (at
current exchange rates) to approximately $5.00 to $12.50 on each purchase or
sale of a futures contract equivalent face amount of a foreign currency. No
service fees are charged on trades awarded to MLIB (which receives a "bid-ask"
spread on such trades). MLIB is awarded trades only if its price (without the
service fee) is equal to or better than the best price (including the service
fee) offered by any of the other counterparties contacted.

The F/X Desk trades using credit lines provided by MLF. The Fund is
not required to margin or otherwise guarantee its F/X Desk trading.

Certain of the Fund's currency trades are executed in the form of
"exchange of futures for physical" ("EFP") transactions involving MLIB and 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 International Monetary Market of the Chicago Mercantile Exchange. In its
EFP trading, the Fund acquires cash currency positions through the F/X Desk in
the same manner and on the same terms as in the case of the Fund's other F/X
Desk trading. When the Fund exchanges these positions for futures, there is 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.

The Fund's F/X Desk service fee and EFP differential costs combined
have, to date, totaled no more than 0.25 of 1% per annum of the Fund's average
month-end Net Assets.

(3) Agreements

The Fund and the Advisors have each entered into Advisory Agreements.
These Advisory Agreements generally terminate one year after they are entered
into, subject to certain renewal rights exercisable by the Fund. The Advisors
determine the commodity futures and forward contract trades to be made on behalf
of their respective Fund accounts, subject to certain Fund trading policies and
to certain rights reserved by MLIP.

------------------------------

Past performance is not necessarily indicative of future results.

-65-
<PAGE>

ML GLOBAL HORIZONS L.P.
(A Delaware Limited Partnership)
--------------------------------

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
(continued)
- -------------------------------------------------------------------------------

Profit Shares, generally ranging from 15% to 25% of any New
Trading Profit, as defined, recognized by each Advisor considered
individually irrespective of the overall performance of the Fund, as of
the end of each calendar quarter are paid by the Fund to the appropriate
Trading Advisors. Profit Shares are also paid out in respect of Units
redeemed as of the end of interim months during a calendar quarter to the
extent of the applicable percentage of any New Trading Profit attributable
to such Units with respect to each Advisor.

The methods by which Profit Shares and the Incentive Override
are calculated may result in certain disproportionate allocations of such
fees and possible equity dilution among Partners purchasing Units at
different times.

(4) NET ASSET VALUE PER UNIT

For financial reporting purposes, the Fund deducted the total
organization and initial offering costs payable to MLIP at inception, in
determining Net Asset Value. For all other purposes (including computing
Net Asset Value for redemptions), the Fund deducted organization and
initial offering cost reimbursements only as actually paid. From and
after December 31, 1995, all such reimbursement payments had been made so
that there was no longer any accrued liability to reduce the Net Asset
Value per Unit for financial reporting purposes. However, as of December
31, 1994, the Net Asset Value per Unit was $103.73 for financial reporting
purposes and $104.08 for all other purposes.

(5) WEIGHTED AVERAGE NUMBER OF UNITS

The weighted average number of Units outstanding was computed
for purposes of disclosing net income per weighted average Unit. The
weighted average number of Units outstanding at September 30, 1996,
December 31, 1995 and December 31, 1994 equals the Units outstanding as of
such date, adjusted proportionately for Units sold and redeemed based on
the respective lengths of time each was outstanding during the preceding
period.

(6) FAIR VALUE AND OFF-BALANCE SHEET RISK

The Fund trades futures, options and forward contracts in
interest rates, stock indices, commodities, currencies, energy and metals.
The Fund's revenues by reporting category were as follows:
<TABLE>
<CAPTION>

January 1, 1996 to January 1, 1995 to
September 30, 1996 December 31, 1995
Total Trading Results Total Trading Results
---------------------- ----------------------
<S> <C> <C>
Interest Rates $ 3,130,911 $11,850,333

Stock Indices (2,543,650) 1,309,308

Commodities (269,789) (2,344,653)

Currencies 1,181,300 9,620,327

Energy 3,850,373 1,362,895

Metals 29,575 (4,043,213)
----------- -----------

Total $ 5,378,720 $17,754,997
=========== ===========

</TABLE>
------------------------------

Past performance is not necessarily indicative of future results.

-66-
<PAGE>

ML GLOBAL HORIZONS L.P.
(A DELAWARE LIMITED PARTNERSHIP)
--------------------------------

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
(CONTINUED)
- --------------------------------------------------------------------------------

MARKET RISK
- -----------

Derivative instruments involve varying degrees of off-balance
sheet market risk, and changes in the level or volatility of interest
rates, foreign currency exchange rates or the market values of the
financial instruments or commodities underlying such derivative
instruments frequently result in changes in the Fund's unrealized gain or
loss on such derivative instruments as reflected in the Statements of
Financial Condition as of the end of the period. The Fund's exposure to
market risk is influenced by a number of factors, including the
relationships among the derivative instruments held by the Fund as well as
the volatility and liquidity of the markets in which these derivative
instruments are traded.

The General Partner has procedures in place intended to control
market risk, although there can be no assurance that they will, in fact,
succeed in doing so. These procedures focus primarily on monitoring the
trading of the Advisors selected from time to time for the Fund,
calculating the Net Asset Value of the Advisors' respective Fund accounts
as of the close of business on each day and reviewing outstanding
positions for over-concentrations -- both on an Advisor-by-Advisor and on
an overall Fund basis. While the General Partner does not itself
intervene in the markets to hedge or diversify the Fund's market exposure,
the General Partner may urge Advisors to reallocate positions, or itself
reallocate Fund assets among Advisors (although typically only as of the
end of a month) in an attempt to avoid over-concentrations. However, such
interventions are unusual. Except in cases in which it appears that an
Advisor has begun to deviate from past practice or trading policies or to
be trading erratically, the General Partner's basic risk control
procedures consist simply of the ongoing process of Advisor monitoring
and selection, with the market risk controls being applied by the Advisors
themselves.

--------------------

Past performance is not necessarily indicative of future results.

-67-
<PAGE>

ML GLOBAL HORIZONS L.P.
(A DELAWARE LIMITED PARTNERSHIP)
--------------------------------

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
(CONTINUED)
- --------------------------------------------------------------------------------

FAIR VALUE
- ----------

The derivative instruments used in the Fund's trading activities
are marked to market daily with the resulting unrealized gains or losses
recorded in the Statements of Financial Condition and the related profit
or loss reflected in trading revenues in the Statements of Income. The
contract/notional values of open contracts as of September 30, 1996,
December 31, 1995 and December 31, 1994 were as follows:

<TABLE>
<CAPTION>
September 30, 1996
-----------------------------------------
Commitment to Commitment to
Purchase (Futures, Sell (Futures,
Options & Forwards) Options & Forwards)
------------------- -------------------
<S> <C> <C>
Interest rates $550,406,366 $ 29,579,996
Stock indices 13,927,945 387,071
Commodities 29,586,590 15,740,206
Currencies 101,576,608 140,790,591
Energy 12,457,490 --
Metals 8,390,854 72,267,418
------------ ------------
Total $716,345,853 $258,765,282
============ ============
</TABLE>

<TABLE>
<CAPTION>
December 31, 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 rates $366,794,659 $115,962,614 $136,897,304 $231,086,673
Stock indices 5,256,825 -- -- --
Commodities 43,376,228 13,773,026 18,682,900 4,490,146
Currencies 31,823,922 113,887,626 47,829,797 80,514,237
Energy 28,209,814 -- -- 1,650,990
Metals 7,101,823 23,355,741 17,480,867 52,431,693
------------ ------------ ------------ ------------
Total $482,563,271 $266,979,007 $220,890,868 $370,173,739
============ ============ ============ ============
</TABLE>

Substantially all of the Fund's derivative instruments outstanding as
of September 30, 1996 and December 31, 1995 expire within one year.

The contract/notional value of the Fund's open exchange-traded and
non-exchange-traded derivative instrument positions as of September 30, 1996 and
December 31, 1995 were as follows:

--------------------

Past performance is not necessarily indicative of future results.

-68-
<PAGE>

ML GLOBAL HORIZONS L.P.
(A Delaware Limited Partnership)
--------------------------------

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
(continued)
- --------------------------------------------------------------------------------

Fair Value (Cont'd)
- ----------

<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
----------------------------------------- ------------------------------------------
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 $652,652,970 $188,031,906 $451,632,138 $210,729,655
Non-Exchange-
Traded 63,692,883 70,733,376 30,931,133 56,249,352
------------ ------------ ------------ ------------

Total $716,345,853 $258,765,282 $482,563,271 $266,979,007
============ ============ ============ ============
</TABLE>

The average fair value of the Fund's derivative instrument positions which were
open as of the end of each calendar month during the nine months ended September
30, 1996 and the twelve months ended December 31, 1995 was as follows:

Nine Months Ended September 30, 1996 Twelve Months Ended December 31, 1995
------------------------------------------ ------------------------------------------
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 $349,253,611 $285,157,440 $392,684,358 $ 52,525,025
Stock indices 21,165,289 8,117,059 11,263,970 4,597,664
Commodities 37,644,825 13,686,858 23,210,531 11,584,575
Currencies 123,833,510 169,748,398 96,987,577 95,012,878
Energy 11,549,200 992,948 8,271,275 6,430,540
Metals 19,618,749 37,435,249 12,245,216 31,011,275
------------ ------------ ------------ ------------
Total $563,065,184 $515,137,952 $544,662,927 $201,161,957
============ ============ ============ ============
</TABLE>

A portion of the amounts indicated as off-balance sheet risk reflects offsetting
commitments to purchase and sell the same derivative instrument 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.

CREDIT RISK
- -----------

The risks associated with exchange-traded contracts are typically
perceived to be less than those associated with over-the-counter (non-exchange-
traded) 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 integrity of the exchange. 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 also require margin in the over-the-counter markets.

----------------

Past performance is not necessarily indicative of future results.

-69-
<PAGE>
ML GLOBAL HORIZONS L.P.
(A Delaware Limited Partnership)

NOTES FOR FINANCIAL STATEMENTS
FOR THE PERIODS FROM JANUARY 1, 1996 TO SEPTEMBER 30, 1996 (UNAUDITED) AND
JANUARY 1, 1995 TO SEPTEMBER 30, 1995 (UNAUDITED),
THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
(continued)
- -------------------------------------------------------------------------------

Credit Risk (Cont'd)
- -----------

The fair value amounts in the above tables represent the extent of the
Fund's market exposure in the particular class of derivative instrument listed,
but not the credit risk associated with counterparty nonperformance. The credit
risk associated with these instruments from counterparty nonperformance is the
net unrealized gain, if any, included in the Statements of Financial Condition.
The Fund also has credit risk because the sole counterparty or broker with
respect to most of the Fund's assets is MLF.

As of September 30, 1996, December 31, 1995 and 1994, $63,250,719,
$71,297,472 and $54,413,969 of the Fund's assets, respectively, were held in
segregated accounts in MLF in accordance with Commodity Futures Trading
Commission regulations.

The gross unrealized gain and the net unrealized gain (loss) on the
Fund's open derivative instrument positions as of September 30, 1996 and
December 31, 1995 were as follows:
<TABLE>
<CAPTION>

September 30, 1996 December 31, 1995
----------------------- -----------------------
Gross Net Gross Net
Unrealized Unrealized Unrealized Unrealized
Gain Gain (Loss) Gain Gain (Loss)
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Exchange-Traded $8,032,178 $6,064,776 $7,029,085 $5,952,033
Non-Exchange- 991,995 334,016 338,067 (321,244)
Traded ---------- ----------- ---------- -----------
$9,024,173 $6,398,792 $7,367,152 $5,630,789
========== =========== ========== ===========
</TABLE>

The Fund controls credit risk by dealing almost exclusively with
Merrill Lynch entities as brokers and counterparties.

The Fund through its normal course of business enters into various
contracts with MLF acting as its commodity broker. Pursuant to the brokerage
arrangement with MLF, to the extent that such trading results in receivables
from and payables to MLF, these receivables and payables are offset and reported
as a net receivable or payable.

------------------------------

Past performance is not necessarily indicative of future results.

-70-
<PAGE>

INDEPENDENT AUDITORS' REPORT

Merrill Lynch Investment Partners Inc.

We have audited the accompanying balance sheet of Merrill Lynch Investment
Partners Inc. (the "Company") (formerly, ML Futures Investment Partners Inc.) as
of December 29, 1995. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, such balance sheet presents fairly, in all material respects,
the financial position of the Company as of December 29, 1995 in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP

January 26, 1996
New York, New York

-71-
<PAGE>

MERRILL LYNCH INVESTMENT PARTNERS INC.
(FORMERLY, ML FUTURES INVESTMENT PARTNERS INC.)

BALANCE SHEETS

SEPTEMBER 27, 1996 (UNAUDITED) AND DECEMBER 29, 1995
<TABLE>
<CAPTION>

SEPTEMBER 27, 1996
(UNAUDITED) DECEMBER 29, 1995
------------------- -----------------
<S> <C> <C>
ASSETS

Cash $ 62,262 $ 17,738
Investments in affiliated partnerships 10,102,462 8,397,789
Other investments 538,066 579,127
Due from parent and affiliate 81,289,579 69,476,980
Receivables from affiliated partnerships 4,112,791 3,525,337
Deferred charges 16,039,548 11,759,885
Advances and other receivables 10,977,972 7,742,943
Fixed assets-net of accumulated depreciation of $1,095,428 and
and $1,016,602 130,292 119,823
Other assets 110,000 130,000
------------ ------------

TOTAL ASSETS $123,362,972 $101,749,622
============ ============

LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
Accounts payable and accrued expenses $ 590,038 $ 1,759,019
Due to affiliate 2,849,361 1,568,396
Current and deferred income taxes 11,359,167 7,162,014
------------ ------------

Total liabilities 14,798,566 10,489,429
------------ ------------

STOCKHOLDER'S EQUITY:
Preferred stock, par value $10.00 per share; 1,000 shares authorized
none outstanding -- --
Common stock, par value $10.00 per share; 1,000 shares authorized
100 shares outstanding 1,000 1,000
Additional paid-in capital 16,915,000 16,915,000
Retained earnings 91,648,406 74,344,193
------------ ------------

Total stockholder's equity 108,564,406 91,260,193
------------ ------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $123,362,972 $101,749,622
============ ============

</TABLE>

See Notes to Balance Sheets.

-72-
<PAGE>

MERRILL LYNCH INVESTMENT PARTNERS INC.
(FORMERLY, ML FUTURES INVESTMENT PARTNERS INC.)

NOTES TO BALANCE SHEETS

SEPTEMBER 27, 1996 (UNAUDITED) AND DECEMBER 29, 1995
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION
- ------------

Merrill Lynch Investment Partners Inc. (formerly, ML Futures
Investment Partners Inc.) (the "Company") is a wholly-owned subsidiary of
Merrill Lynch Group Inc., a wholly-owned subsidiary of Merrill Lynch & Co., Inc.
("ML&Co."). The Company is registered as a commodity pool operator and a
commodity trading advisor. The Company serves as the sole general partner of The
Futures Expansion Fund Limited Partnership, The Growth and Guarantee Fund L.P.,
ML Futures Investments II L.P. (formerly, The Futures Dimension Fund II L.P.),
ML Futures Investments L.P. (formerly The Tudor Prime Advisors Fund L.P.), John
W. Henry & Co./Millburn L.P., The S.E.C.T.O.R. Strategy Fund/sm/ L.P.)Safety of
Equity Capital; Targeting Overall Return), The SECTOR Strategy Fund/sm/ II L.P.,
The JWH Global Asset Fund L.P., The SECTOR Strategy Fund/sm/ IV L.P., The SECTOR
Strategy Fund/sm/ V L.P., ML Global Horizons L.P., ML Chesapeake L.P., The
SECTOR Strategy Fund/sm/ VI L.P., RXR Defensive Equity Alternative Account L.P.
I (ceased trading in May 1996), ML Principal Protection L.P. (formerly ML
Principal Protection Plus L.P.) and ML JWH Strategic Allocation Fund L.P.
(collectively, the "Affiliated Partnerships"). Additionally, the Company has
sponsored or initiated the formation of various offshore entities engaged in the
speculative trading of futures and forward contracts.

ESTIMATES
- ---------

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

INVESTMENTS IN AFFILIATED PARTNERSHIPS
- --------------------------------------

The Company's investments in its Affiliated Partnerships are accounted
for under the equity method of accounting.

DEFERRED CHARGES
- ----------------

Deferred charges represent compensation to ML&Co. affiliates for the
sale of fund units to their customers. Such costs are amortized over 6, 12, 24,
36 or 48-month periods.

2. RELATED PARTIES

Certain of the Company's officers and directors are also officers of other
subsidiaries of ML&Co. An affiliate bears all of the Company's facilities and
employee costs, for which it is reimbursed by the Company. Another affiliate,
Merrill Lynch Futures Inc., executes and clears the Affiliated Partnerships'
trades, as well as those of various offshore funds sponsored or managed by the
Company, for which it receives a fee, generally based on the net assets of the
Affiliated Partnerships and offshore funds.

ML&Co. is holder of the Company's excess cash, which is available on demand to
meet current liabilities. ML&Co. credits the Company with interest, at a
floating rate approximating ML&Co.'s average borrowing rate, based on the
Company's

PURCHASERS OF UNITS WILL
ACQUIRE NO INTEREST IN THIS COMPANY

-73-
<PAGE>
MERRILL LYNCH INVESTMENT PARTNERS INC.
(formerly, ML Futures Investment Partners Inc.)

NOTES TO BALANCE SHEETS

September 27, 1996 (unaudited) and December 29, 1995
(continued)

- -------------------------------------------------------------------------------

average daily balances receivable. At September 27, 1996 and December 29,
1995, approximately $81,300,000 and $69,500,000, respectively, was subject
to this agreement.

At September 27, 1996 and December 29, 1995, the Company had receivables
from Affiliated Partnerships and offshore funds for certain
administrative, management and redemption fees, all of which are expected
to be collected within 90 days. Additionally, the Company had receivables
from certain Affiliated Partnerships and offshore funds for organization
and initial offering costs paid on behalf of such funds which are being
reimbursed to the Company over various time periods (not exceeding three
years).

During 1995 and the first nine months of 1996, the Company did not declare
or pay a dividend.

3. INVESTMENTS IN AFFILIATED PARTNERSHIPS

Under the terms of the limited partnership agreements of the Affiliated
Partnerships, the Company is required to maintain an investment in each
Affiliated Partnership of at least one percent of the total contributions
to such partnership.

At September 27, 1996 and December 29, 1995, the Company's investments in
its Affiliated Partnerships were as follows:
<TABLE>
<CAPTION>
September 27, December 29,
1996 1995
------------ -----------
<S> <C> <C>
ML Principal Protection L.P. (formerly ML Principal Protection Plus L.P.).......................... $ 2,909,601 $2,324,996
ML JWH Strategic Allocation Fund L.P............................................................... 1,617,236 1,000
ML Global Horizons L.P............................................................................. 1,144,158 1,068,112
The SECTOR Strategy Fund II L.P................................................................... 766,218 770,619
John W. Henry & Company/Millburn L.P............................................................... 687,073 728,350
The SECTOR Strategy Fund VI L.P.................................................................... 707,556 725,174
RXR Defensive Equity Alternative Account L.P. I.................................................... -- 546,428
The JWH Global Asset Fund L.P...................................................................... 516,694 492,278
The S.E.C.T.O.R. Strategy Fund L.P.................................................................. 422,756 441,992
ML Futures Investments L.P......................................................................... 339,813 356,788
The SECTOR Strategy Fund V L.P...................................................................... 323,602 339,622
ML Futures Investments II L.P...................................................................... 191,465 213,181
The Growth and Guarantee Fund L.P.................................................................. 180,874 155,787
The Futures Expansion Fund Limited Partnership..................................................... 119,250 121,808
The SECTOR Strategy Fund IV L.P..................................................................... 99,731 111,654
ML Chesapeake L.P.................................................................................. 76,435 --
----------- ----------

Total.............................................................................................. $10,102,462 $8,397,789
=========== ==========

</TABLE>

PURCHASERS OF UNITS WILL
ACQUIRE NO INTEREST IN THIS COMPANY.

-74-
<PAGE>

MERRILL LYNCH INVESTMENT PARTNERS INC.
(formerly, ML Futures Investment Partners Inc.)

NOTES TO BALANCE SHEETS

September 27, 1996 (unaudited) and December 29, 1995
(continued)

- -------------------------------------------------------------------------------

The following represents condensed combined financial information of the
Affiliated Partnerships as of September 27, 1996 and December 29, 1995 (in
thousands):
<TABLE>

September 27, December 29,
1996 1995
------------- ------------
<S> <C> <C>
Assets............................................................................................. $ 552,160 $ 528,180
=========== ==========

Liabilities........................................................................................ 21,145 15,836
Partners' capital.................................................................................. 531,015 512,344
----------- ----------

Total....................................................................................... $ 552,160 $ 528,180
=========== ==========
</TABLE>

The Company's Affiliated Partnerships trade various futures, options and
forward contracts. Risk to such partnerships arises from the possible
adverse changes in the market value of such contracts and the potential
inability of counterparties to perform under the terms of the contracts.
The risk to the Company is represented by the portion of its investments
in Affiliated Partnerships derived from the unrealized gains contained in
such partnerships' net asset values.

4. INCOME TAXES

The results of operations of the Company are included in the consolidated
Federal and combined state and local income tax return of ML&Co. It is
the policy of ML&Co. to allocate current and deferred taxes associated
with such operating results to its respective subsidiaries in a manner
which approximates the separate Company method. ML&Co. and its affiliates
use the asset and liability method in providing income tax on all
transactions that have been recognized in the financial statements.

The Company provides for deferred income taxes resulting from temporary
differences which arise from recording deferred charges in different years
for income tax reporting purposes than for financial reporting purposes.
At September 27, 1996 and December 29, 1995, the Company had no deferred
tax assets. Deferred tax liabilities consisted of the following:
<TABLE>
<CAPTION>

September 27, 1996 December 29, 1995
------------------ -----------------
<S> <C> <C>

State and local $1,604,096 $1,176,130
Federal 5,052,565 3,704,471
---------- ----------

$6,656,661 $4,880,601
========== ==========

</TABLE>

As part of the consolidated group, the Company transfers to ML&Co. its
current Federal, state and local tax liabilities. During 1995 and the
first nine months of 1996, the Company transferred $10,707,045 and
$7,388,919, respectively, in current taxes payable to ML&Co. At September
27, 1996 and December 29, 1995, the Company had a current tax payable with
ML&Co. of $4,702,506 and $2,281,413, respectively.

PURCHASERS OF UNITS WILL
ACQUIRE NO INTEREST IN THIS COMPANY.

-75-
<PAGE>

MERRILL LYNCH INVESTMENT PARTNERS INC.
(formerly, ML Futures Investment Partners Inc.)

NOTES TO BALANCE SHEETS

September 27, 1996 (unaudited) and December 29, 1995
(continued)

- -------------------------------------------------------------------------------

5. NET WORTH AGREEMENTS

Pursuant to the limited partnership agreements of the Affiliated
Partnerships, the Company is required to maintain a "substantial net
worth," as defined. The Company's net worth, as defined, approximated
$94,376,053 and $79,337,067 at September 27, 1996 and December 29, 1995,
respectively, which, in the opinion of the Company's counsel, met the
definition of "substantial net worth."

6. COMMITMENTS

The Company is obligated to pay to affiliates, from its own funds and
without reimbursement by its Affiliated Partnerships, ongoing fees in
respect of units in such partnerships outstanding as of the end of various
periods.

PURCHASERS OF UNITS WILL
ACQUIRE NO INTEREST IN THIS COMPANY

-76-
<PAGE>

THE CORE ADVISORS

____________

AS OF OCTOBER 1, 1996, APPROXIMATELY 91% OF THE FUND'S TRADING ASSETS
WERE ALLOCATED AMONG THE THREE CURRENT CORE TRADING ADVISORS. BRIEF DESCRIPTIONS
AND PERFORMANCE SUMMARIES FOR THESE ADVISORS ARE INCLUDED HEREIN. HOWEVER,
ADVISORS' TRADING METHODS ARE CONFIDENTIAL AND PROPRIETARY AND PAST PERFORMANCE
IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE SIGNIFICANCE OF THE
FOLLOWING DESCRIPTIONS AND PERFORMANCE RECORDS TO A DECISION WHETHER TO INVEST
IN THE FUND MUST BE CONSIDERED IN LIGHT OF THESE MATERIAL QUALIFICATIONS.

FUTURES TRADING METHODS IN GENERAL

Systematic and Discretionary Trading Approaches

Managed futures strategies are generally classified as either
systematic or discretionary (or both).

A systematic trader will generally rely to some degree on judgmental
decisions concerning, for example, what markets to follow and commodities to
trade, but his primary reliance is on trading programs or models which generate
trading signals. The systems utilized to generate trading signals are changed
from time to time (although generally infrequently), but the trading
instructions generated by the systems being used are followed without
significant additional analysis or interpretation. Discretionary traders, on the
other hand, while they may utilize market charts, computer programs and
compilations of quantifiable fundamental information to assist them in making
trading decisions, make such decisions on the basis of their own judgment and
trading instinct, not on the basis of trading signals generated by any program
or model.

Each approach involves certain inherent risks. For example, systematic
traders may incur substantial losses when fundamental or unexpected forces
dominate the markets, while discretionary traders may overlook price trends
which would have been clearly signaled by a trading system. Systematic traders
tend to rely more on computerized programs than do discretionary traders, and
some consider the discipline of a systematic trading process to be advantageous.
However, any trader, systematic or discretionary, may suffer substantial losses
by misjudging the market analysis.

Technical and Fundamental Analysis

Managed futures trading analysts are generally classified as either
technical or fundamental (or both).

Technical analysis is based on the theory that the commodities markets
themselves provide a means of anticipating future prices. Technical analysis
operates on the theory that market prices and momentum at any given point in
time reflect all known factors affecting the supply and demand for a particular
commodity. Consequently, technical analysis focuses not on evaluating those
factors directly but on an analysis of price histories, movements and patterns,
theorizing that a detailed analysis of market date is the most effective means
of attempting to predict the future course of prices.

Fundamental analysis, in contrast, focuses on the study of factors
external to the trading markets that affect the supply and demand of a
particular commodity. Such factors might include weather, the economy of a
particular country, government policies, domestic and foreign political and
economic events, and changing trade prospects. Fundamental analysis theorizes
that by monitoring relevant supply and demand factors for a particular
commodity, a state of current or potential disequilibrium of market conditions
may be identified that has yet to be reflected in the price level of that
commodity. Fundamental analysis assumes that markets are imperfect, that
information is not instantaneously assimilated or disseminated and that
econometric models can be constructed that generate equilibrium prices that
reflect true value and may indicate market mispricing.

-77-
<PAGE>

Trend-Following

Trend-following advisors gear their trading approaches towards
positioning themselves to take advantage of major price movements. Trend-
following traders are to be contrasted with traders who seek to achieve overall
profitability by making numerous small profits on short-term trades, or through
arbitrage techniques. Trend-following traders assume that most of their trades
will be unprofitable. Their objective is to make a few large profits, more than
offsetting their more numerous but (hopefully) smaller losses, from capitalizing
on major trends. During periods when no major price trends develop in a market,
a trend-following trading advisor is likely to incur substantial losses.

Risk Control Techniques

Trading advisors often adopt fairly rigid risk management or money
management principles. Such principles typically restrict the size of positions
which will be taken as well as establishing stop-loss points at which losing
positions must be liquidated. No risk control technique is fail safe, and none
can, in fact, assure that major drawdowns will be avoided. Not only do estimates
of market volatility themselves require judgmental input, but also market
illiquidity can make it impossible for an account to liquidate a position
against which the market is moving strongly, whatever risk management principles
are utilized. The Advisors' risk management principles should be seen more as a
discipline applied to their trading in highly speculative markets than as an
effective protection against loss.

THE CORE ADVISORS

The following descriptions of the current core Advisors, their
respective trading systems, methods and strategies and their respective
principals are general and are not intended to be exhaustive. Trading methods
are proprietary and confidential. No attempt has been or could be made to
provide a precise description of any Advisor's method. MLIP believes that the
following descriptions may be of interest to prospective investors. However,
investors must be aware of the inherent limitations of such descriptions.

__________________________

FUTURES TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK. THERE CAN BE NO ASSURANCE THAT ANY ADVISOR
WILL TRADE PROFITABLY OR AVOID SUBSTANTIAL LOSSES.

-78-
<PAGE>

ARA PORTFOLIO MANAGEMENT COMPANY, L.L.C.

OCTOBER 1, 1996 ASSET ALLOCATION: 15%

BACKGROUND

ARA Portfolio Management Company was incorporated in Delaware in 1992.
On October 16, 1995, ARA Portfolio Management Company was merged into ARA
Portfolio Management Company, L.L.C., a limited liability company organized in
Delaware on September 25, 1995. References herein to ARA refer to the Delaware
corporation prior to October 16, 1995 and the Delaware limited liability company
on and after October 16, 1995. ARA has been registered with the CFTC as a
commodity trading advisor ("CTA") and commodity pool operator ("CPO") since May
12, 1992 and is a member of the NFA in such capacities.

A.R. Arulpragasam, age 39, is the President and Chief Executive
Officer of ARA. From August 1987 to March 1992, when ARA was formed, Mr.
Arulpragasam, through his own financial systems consulting firm, ARA Consulting,
acted as an independent consultant in the areas of financial systems modeling,
options analysis and operations research. From 1979 to 1987, Mr. Arulpragasam
was employed by Fairfield Financial Corp. ("Fairfield"), a company formed to
capitalize on the emerging area of yield curve arbitrage. At Fairfield he was in
charge of product research and development and was an assistant trader. Mr.
Arulpragasam received his B.S. in Mathematics from the Massachusetts Institute
of Technology in 1977 and pursued graduate studies in Operations Research at
Stanford University.

William L. Brown, age 50, has been a principal of ARA since May 1992;
however, he is not involved in the management, decision-making or daily
operations of ARA. Mr. Brown developed the price-trend identification algorithm
(Phase I Model) which forms a key element in ARA's investment products. Mr.
Brown has been an officer and director since 1975 of Ross Hall Corp., a private
investment company. Mr. Brown was a principal of George Booth & Associates, Inc.
("Booth"), a CTA and CPO, from July 1979 to December 1991, where he was a
passive shareholder with no role in operations.

TRADING STRATEGY

ARA employs a fully-automated, strictly technical, trend-following
trading system (the "ARA Portfolio System") which maintains a diversified
portfolio of commodities at all times. ARA maintains a position (although not
necessarily of the same magnitude) in each commodity in its portfolio at all
times.

The ARA Portfolio System utilizes a trend identification algorithm to
identify price trends and their relative strengths for each commodity traded.
The algorithm is purely technical in nature, based exclusively on historical
price data. The important difference between this system and many other trend-
following programs is the mathematical determination of the size of the
component portfolio positions based on the volatility characteristics of the
individual commodities and the overall strength of the price trend.

The ARA Portfolio System currently uses a portfolio of eighteen
commodities which, because of the co-variance of their price movements, ARA
believes to be an advantageous combination of markets. ARA currently trades
exclusively in the following domestic exchange-traded markets: British pounds;
German marks; Japanese yen; Swiss francs; Eurodollars; U.S. Treasury bonds;
gold; copper; heating oil; crude oil; corn; soybeans; soybean oil; live cattle;
live hogs; coffee; sugar; and cotton.

ARA administers two different trading programs: the ARA Alpha Program
and the ARA Gamma Program, both of which employ the trading method described
above. The ARA Alpha Program, which may be utilized, in the discretion of the
General Partner, to trade some or all of the Fund's assets managed by ARA, is
designed to have an average volatility approximately equal to that of an
unleveraged S&P 500 stock index portfolio. The ARA Gamma Program, which is
currently traded for the Fund, is designed to have an average volatility
approximately equal to two times that of an unleveraged S&P 500 stock index
portfolio. There can be no assurance as to the actual performance volatility
which will be experienced by the ARA Gamma Program used for the Fund. The
greater the volatility of a program, the greater the risk of loss.

-79-
<PAGE>

PAST PERFORMANCE

The following information describes the composite performance of all
customer accounts managed by ARA. ARA currently trades its Gamma Program on
behalf of the Fund and may, in the discretion of the General Partner, trade some
or all of the Fund's assets allocated to it pursuant to the Alpha Program. As of
August 31, 1996, ARA was managing approximately $138 million (excluding notional
funds) of customer funds in the futures and forward markets and approximately
$99 million (excluding notional funds) in the Gamma Program. All performance
information is current as of August 31, 1996.

As both ARA Trading Programs have been trading for less than five
years, performance information is set forth from the inception of trading.

As a general matter, the fees paid by the Fund to ARA have not
differed materially from, and in some cases are lower than, those paid by ARA's
other clients.

The "Notes to the Performance Summaries" are set forth on pages 105
through 107.

The following performance information has not been audited. However,
ARA believes that such information is accurate and fairly presented.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FURTHERMORE, THE RATES OF RETURN EARNED WHEN AN ADVISOR IS MANAGING A LIMITED
AMOUNT OF EQUITY MAY HAVE LITTLE RELATIONSHIP TO THE RATES OF RETURN WHICH SUCH
ADVISOR MAY BE ABLE TO ACHIEVE MANAGING LARGER AMOUNTS OF EQUITY.

THE FOLLOWING PERFORMANCE SUMMARIES HAVE IN NO RESPECT BEEN ADJUSTED
TO REFLECT THE CHARGES TO THE FUND. CERTAIN OF THE ACCOUNTS INCLUDED IN THE
FOLLOWING PERFORMANCE SUMMARIES PAID FEES MATERIALLY DIFFERENT FROM THOSE
CHARGED TO THE FUND.

COMMODITY INTEREST TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK. THERE CAN BE NO ASSURANCE THAT ANY TRADING ADVISOR WILL TRADE
PROFITABLY OR AVOID INCURRING SUBSTANTIAL LOSSES.

INVESTORS SHOULD NOTE THAT INTEREST INCOME MAY CONSTITUTE A
SIGNIFICANT PORTION OF A TRADING ADVISOR'S TOTAL INCOME AND, IN CERTAIN
INSTANCES, MAY GENERATE PROFITS WHERE THERE HAVE BEEN REALIZED OR UNREALIZED
LOSSES FROM COMMODITIES TRADING.

PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS.

See "Risk Factors -- (2) Past Performance Not Necessarily Indicative of Future
Results."

-80-
<PAGE>

ARA PORTFOLIO MANAGEMENT COMPANY, L.L.C.
GAMMA PROGRAM
JUNE 1, 1992 - AUGUST 31, 1996

The following performance summary and chart reflect the composite
performance results from June 1992 through August 1996 of ARA's Gamma Program.
ARA trades this program on behalf of the Fund. The program has been utilized in
trading for 45 accounts since its inception. As of August 31, 1996, 20 accounts
had been closed and 25 accounts remained open. Of the closed accounts, 14 were
profitable and 6 were unprofitable at their closing. Of the 25 open accounts, 21
were profitable and 4 unprofitable as of August 31, 1996.

Name of CTA: ARA Portfolio Management Company, L.L.C.
Name of program: Gamma Program
Inception of client account trading by CTA: June 1992
Inception of client account trading in program: June 1992
Number of open accounts: 25
Aggregate assets (excluding notional equity) overall: $138 million
Aggregate assets (excluding notional equity) in program: $ 99 million
Aggregate assets (including notional equity) overall: $138 million
Aggregate assets (including notional equity) in program: $99 million
Worst monthly drawdown on an individual account basis: (14.46)% (2/96)
Worst peak-to-valley drawdown on an individual account basis: (30.32)%
(4/95-2/96)
<TABLE>
<CAPTION>

================================================================
Monthly Rates
of Return 1996 1995 1994 1993 1992
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
January (5.47)% 0.07% 1.24% 0.05% --
- ----------------------------------------------------------------
February (13.28) 6.08 (2.16) 9.05 --
- ----------------------------------------------------------------
March 5.47 5.09 3.41 0.51 --
- ----------------------------------------------------------------
April 14.44 (5.22) 2.83 8.56 --
- ----------------------------------------------------------------
May (9.56) (4.42) 13.54 (1.41) --
- ----------------------------------------------------------------
June 5.95 (0.30) 11.90 3.58 11.69%
- ----------------------------------------------------------------
July 0.87 (6.75) (1.92) 3.18 4.51
- ----------------------------------------------------------------
August 0.67 (0.37) (8.34) (5.63) 3.85
- ----------------------------------------------------------------
September -- (4.19) (3.05) (4.43) (1.84)
- ----------------------------------------------------------------
October -- 3.51 1.33 0.30 (2.05)
- ----------------------------------------------------------------
November -- 2.69 14.48 6.71 8.37
- ----------------------------------------------------------------
December -- 10.32 2.00 6.98 0.76
- ----------------------------------------------------------------
Compound Annual (3.7)% 5.2% 38.0% 29.5% 27.3%
Rate of Return (8 months) (7 months)
================================================================
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

__________________________

SEE THE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-81-
<PAGE>

ARA PORTFOLIO MANAGEMENT COMPANY, L.L.C.
ALPHA PROGRAM
FEBRUARY 16, 1993 - AUGUST 31, 1996

The following performance summary and chart reflect the composite
performance results from June 1992 through August 1996 of ARA's Gamma Program.
ARA may trade this program on behalf of the Fund in the future. The program has
been utilized in trading for 15 accounts since its inception. As of August 31,
1996, 9 accounts had been closed. Of the 9 closed accounts, all were profitable
at their closing. Of the 6 open accounts, all were profitable as of August 31,
1996.

Name of CTA: ARA Portfolio Management Company, L.L.C.
Name of program: Alpha Program
Inception of client account trading by CTA: June 1992
Inception of client account trading in program: February 1993
Number of open accounts: 6
Aggregate assets (excluding notional equity) overall: $138 million
Aggregate assets (excluding notional equity) in program: $39 million
Aggregate assets (including notional equity) overall: $138 million
Aggregate assets (including notional equity) in program: $39 million
Worst monthly drawdown on an individual account basis: (6.69)% (2/96)
Worst peak-to-valley drawdown on an individual account basis: (9.62)%
(4/95-2/96)

<TABLE>
<CAPTION>
==========================================================
Monthly Rates
of Return 1996 1995 1994 1993
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
January (1.86)% 0.57% 0.94%
- ----------------------------------------------------------
February (6.48) 3.74 (1.34) 2.63%
- ----------------------------------------------------------
March 3.41 3.18 2.45 (0.51)
- ----------------------------------------------------------
April 7.89 (1.99) 1.35 4.34
- ----------------------------------------------------------
May (4.27) (1.45) 7.62 (0.60)
- ----------------------------------------------------------
June 2.93 0.24 6.46 2.20
- ----------------------------------------------------------
July 1.01 (3.17) (0.35) 3.06
- ----------------------------------------------------------
August 0.75 (0.01) (3.05) (3.21)
- ----------------------------------------------------------
September -- (1.88) (0.88) (2.12)
- ----------------------------------------------------------
October -- 1.93 0.88 0.14
- ----------------------------------------------------------
November -- 1.99 6.71 3.46
- ----------------------------------------------------------
December -- 5.78 1.61 4.04
- ----------------------------------------------------------
Compound Annual 2.7% 8.9% 24.1% 13.9%
Rate of Return (8 months)
==========================================================
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

THE FUND'S ACCOUNT MAY BE TRADED PURSUANT TO THE ALPHA TRADING
PROGRAM IN THE FUTURE.

--------------

SEE THE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-82-
<PAGE>

CHESAPEAKE CAPITAL CORPORATION

OCTOBER 1, 1996 ASSET ALLOCATION: 38%

BACKGROUND

Chesapeake Capital Corporation was incorporated under the laws of the
Commonwealth of Virginia in February 1988 for the purpose of offering investment
advisory and portfolio management services to both retail and institutional
investors in trading in the futures and forward markets. On August 19, 1991,
Chesapeake was merged into Chesapeake Capital Corporation, an Illinois
corporation formed on August 13, 1991. References herein to Chesapeake refer to
the Virginia corporation prior to August 19, 1991 and to the Illinois
corporation on and after August 19, 1991. Chesapeake is registered as a CTA and
a CPO with the CFTC, and is also a member in good standing of the NFA.
Chesapeake has been registered with the CFTC as a CTA and a CPO since June 20,
1988 and May 8, 1991, respectively, and a member of the NFA since June 20, 1988.

Mr. R. Jerry Parker, Jr. is the Chairman, Chief Executive Officer,
Director, sole shareholder and a principal of Chesapeake. Mr. Parker received
his B.S. in Commerce, with an emphasis in Accounting, from the University of
Virginia in January 1980. Mr. Parker worked in the accounting field for four
years after graduating from college and became a licensed Certified Public
Accountant in Virginia in 1982. From January 1983 until November 1983, Mr.
Parker was a CPA at Wilkinson & Lester, a certified public accounting firm based
in Richmond, Virginia. From November 1983 until January 1987, Mr. Parker was
employed as an exempt CTA by Richard J. Dennis, a principal and shareholder of
Richard J. Dennis & Company (a Chicago-based CTA and CPO registered with the
CFTC), in his "Turtle" training program. From January 1987 until February 1988,
Mr. Parker traded for Mr. Thomas Dennis as an exempt CTA. During these periods,
Mr. Parker had complete discretionary trading authority over a futures account
of $1 million to $1.5 million. In February 1988, Mr. Parker ceased trading for
Mr. Thomas Dennis and formed Chesapeake, where he serves as the Chairman, Chief
Executive Officer and Chief Trader.

Mr. John M. Hoade is President, Secretary and a principal of
Chesapeake. Mr. Hoade received a B.S. degree in Business Administration from
Lynchburg College in 1978. From 1976 through 1990, Mr. Hoade was employed by
Thurston Metals, Inc., located in Lynchburg, Virginia, in sales, marketing and
general management. Mr. Hoade joined Chesapeake in December 1990 to direct its
operations and marketing efforts.

TRADING STRATEGY

The Diversified Program which Chesapeake trades for the Fund
emphasizes diversification with a global portfolio of futures, forward and cash
markets which include, but are not limited to, agricultural products, precious
and industrial metals, currencies, financial instruments, and stock, financial
and economic indices. Chesapeake trades on numerous U.S. and non-U.S. exchanges.

The investment portfolios currently offered by Chesapeake are the
Diversified Program, the Diversified 2XL Program and the Financials and Metals
Program (the "Trading Programs"). The Diversified Program is Chesapeake's
longest operating investment portfolio, with a performance record beginning in
February 1988. While all of the Trading Programs employ the same general trading
methodology, as described below, they differ in their emphasis on certain
markets or market sectors and the exclusion of others. The following overview is
not intended as a detailed or exhaustive description of the trading
methodologies or strategies employed by Chesapeake, as the exact nature of these
methods and strategies is proprietary and confidential.

Relying primarily on technical analysis, Chesapeake believes that
future price movements in all markets may be more accurately anticipated by
analyzing historical price movements within a quantitative framework than by
attempting to predict or forecast changes in price through fundamental economic
analysis. The trading methodologies employed by Chesapeake are based on programs
analyzing a large number of interrelated mathematical and statistical formulas
and techniques which are quantitative, proprietary in nature and which have been
either learned or developed by Mr. Parker.

-83-
<PAGE>

In addition to such mathematical evaluations, Chesapeake employs a
technique of technical analysis generally known as charting in order to attempt
to determine optimal support and resistance levels and entry and exit points in
the various markets. In an effort to determine the overall technical condition
of the market and as a timing mechanism for trades, Chesapeake also makes
extensive use of internally-generated market information, which includes but is
not limited to price volatility, open interest, daily price action, volume and
market psychology or sentiment.

The profitability of the Chesapeake Trading Programs, traded pursuant
to technical analysis emphasizing mathematical and charting approaches, will
depend upon the occurrence in the future, as in the past, of major trends in
some markets. If there are no trends, the Trading Programs are likely to be
unprofitable. There have been trendless periods in the past which can be
expected to recur, and any factor which lessens the prospect of trends in the
future, such as increased governmental control, regulation, or participation as
a purchaser or seller in the futures markets (including governmental control or
regulation of, or participation in, international currency markets), lessens the
prospect that programs utilizing technical analysis, including the Trading
Programs, will be profitable in the future. In addition, the future
profitability of the Trading Programs would also be adversely affected by
factors which increase the number of signals leading to unprofitable trades. For
example, a significant increase in technically-oriented trading (trend-following
or otherwise) in a particular commodity might cause a change in the pattern of
price movements in a manner which might be unfavorable.

Trend-following trading systems, such as those employed by Chesapeake,
will seldom effect market entry or exit at the most favorable price in the
particular market trend. Rather, this type of trading system seeks to close out
losing positions quickly and to hold portions of profitable positions for as
long as the trading system determines that the particular market trend continues
to exist. There can be no assurance, however, that profitable positions can be
liquidated at the most favorable price in a particular trend. As a result, the
number of losing transactions may exceed substantially the number of profitable
transactions. However, if Chesapeake's approach is successful, these losses
should generally be relatively small and more than offset by gains on profitable
transactions.

The Trading Programs are oriented toward the preservation of original
equity. The commencement of trading or a drawdown from starting equity are
considered the situations of highest risk, and risk management techniques at
this point are emphasized over those which invite greater risk in the interest
of enhancing performance. These risk management techniques include
diversification. Also, the Trading Programs adhere to the requirements of a
money management system which determines and limits the equity committed to each
trade, each market, each commodity complex (in Trading Programs which trade in
more than one commodity complex) and each account.

Chesapeake believes that a long-term commitment to its Trading
Programs is necessary for profitable trading. Chesapeake attempts to take a
limited number of positions over the long term in an attempt to capture major
price movements while limiting downside risk on open positions.

Decisions concerning the liquidation of positions, the commodities to
be traded and the size of positions to be taken or maintained will require to
some degree the exercise of judgment by Chesapeake. The decision not to trade
futures interest contracts for a certain period, or not to trade certain futures
interest contracts due to lack of discernible price movements (trends) or lack
of liquidity, may result at times in clients (such as the Fund) missing
significant profit opportunities which might otherwise have been captured by
Chesapeake.

Futures contracts which are traded by Chesapeake may include, but are
not limited to, agricultural products, precious and industrial metals,
currencies, financial instruments, and stock, financial and economic indices.
Exchanges on which these transactions take place include, but are not limited
to, all exchanges in the United States, as well as non-U.S. exchanges (e.g., the
Belgian Futures and Options Exchange (BELFOX), the London International
Financial Futures and Options Exchange Ltd. (LIFFE), the International Petroleum
Exchange of London Ltd. (IPE), the London Metal Exchange (LME), the London
Commodity Exchange (LCE), the Italian Derivatives Market (IDEM), the Marche a
Terme International de France (MATIF), the Deutsche Terminborse, the Hong Kong
Futures Exchange Ltd., the Montreal Exchange (ME), the Tokyo Commodity Exchange,
the Tokyo International Financial Futures Exchange (TIFFE), the Tokyo Stock
Exchange (TSE), the Singapore International Monetary Exchange (SIMEX), the
Sydney Futures Exchange Ltd., and the Winnipeg Commodity Exchange). In addition,
Chesapeake continually monitors numerous markets, both U.S. and non-U.S., and
will generally initiate trades at such point that Chesapeake determines that a
market is sufficiently liquid and tradeable using the methods employed by
Chesapeake.

Chesapeake engages in transactions in physical commodities, including
EFPs.

-84-
<PAGE>

Chesapeake generally uses between 15% and 30% of an account's assets
as original margin for trading in the Diversified Program, but at times this
percentage can be higher.

The trading strategy utilized by Chesapeake's Trading Programs,
including the Diversified Program, may be revised from time to time by
Chesapeake as a result of ongoing research and development which seeks to devise
new trading systems, as well as test methods currently employed. The trading
methods used by Chesapeake in the future may differ significantly from those
presently used, due to the changes which may result from this research.

Since the Trading Programs utilized by Chesapeake are proprietary and
confidential, the above discussion is general in nature and is not intended to
be exhaustive.

PAST PERFORMANCE

The following information describes the composite actual performance
of all customer accounts managed by Chesapeake. As of August 31, 1996,
Chesapeake was managing approximately $757 million (excluding notional funds) of
customer funds in the futures and forwards markets, and approximately $711
million (excluding notional funds) in the Diversified Program.

Performance information is set forth for the most recent five full
years for each Chesapeake Trading Program or, in the event that a Trading
Program has been trading for less than five years, performance information is
set forth from the inception of trading. Performance information prior to
January 1, 1991 has been excluded in accordance with CFTC regulations.

Chesapeake has adopted a method of computing rate of return and
performance disclosure, referred to as the "Fully-Funded Subset" method,
pursuant to an Advisory (the "Fully-Funded Subset Advisory") published in
February 1993 by the CFTC. To qualify for the use of the Fully-Funded Subset
method, the Fully-Funded Subset Advisory requires that certain computations be
made in order to arrive at the Fully-Funded Subset and that the accounts for
which performance is so reported meet two tests which are designed to provide
assurance that the Fully-Funded Subset and the resultant rates of return are
representative of the trading program. Chesapeake has performed these
computations for periods subsequent to January 1, 1992. However, for periods
prior to January 1, 1992, due to cost considerations, the Fully-Funded Subset
method has not been used. Instead, the rates of return reported are based on a
computation which uses the nominal account sizes of all of the accounts
included, calculated in accordance with the "Only Accounts Traded" ("OAT")
method, also permitted in certain circumstances by the CFTC. Chesapeake believes
that this method yields substantially the same rates of return as would the
Fully-Funded Subset method and that the rates of return in the performance
summaries are representative of the Trading Programs for the periods presented.
For the periods from January 1, 1992 through December 31, 1993, Chesapeake
compared the OAT method and the Fully-Funded Subset method and found that the
two methods yielded substantially the same rates of return. Consequently,
Chesapeake continued to use the OAT method until the end of 1993 (the Fully-
Funded Subset Advisory was released in February 1993). From January 1, 1994 on,
Chesapeake has been using the Fully-Funded Subset method.

In reviewing the following information, prospective investors should
understand that performance is net of all actual fees and charges and includes
interest income applicable to the accounts comprising each composite performance
summary. Such composite performance is not necessarily indicative of the
performance of any individual account. The fees and charges applicable to
individual accounts are not specifically described herein. However, set forth
below is a general description of the charges applicable to such accounts.

Brokerage commissions are accounted for monthly and include the total
amount of all brokerage commissions and other trading fees paid during the month
plus or minus the change in brokerage commissions and other trading fees accrued
on open positions from the preceding month. Brokerage commissions are calculated
on a round-turn or flat-rate basis. Round-turn commissions have ranged from
approximately $7 per round-turn trade to approximately $50 per round-turn trade.
Flat-rate commissions have ranged from approximately 2% of equity to
approximately 9% of equity. Interest income is earned on U.S. government
obligations and cash on deposit with futures commission merchants and is
recorded on the accrual basis. Management fees are accrued monthly and are
charged at rates ranging from 0% to 8% of equity. Incentive fees are accrued
monthly and are charged at rates ranging from 12.5% to 30% of new trading
profits. On certain accounts, incentive fees are reduced by the management fees
paid over an agreed upon period.

-85-
<PAGE>

The "Notes to the Performance Summaries" are set forth on pages 105
through 107.

The following performance information has not been audited. However,
Chesapeake believes that such information is accurate and fairly presented.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FURTHERMORE, THE RATES OF RETURN ACHIEVED WHEN AN ADVISOR IS MANAGING A LIMITED
AMOUNT OF EQUITY MAY HAVE LITTLE RELATIONSHIP TO THE RATES OF RETURN WHICH SUCH
ADVISOR MAY BE ABLE TO ACHIEVE MANAGING LARGER AMOUNTS OF EQUITY.

COMMODITY INTEREST TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK. THERE CAN BE NO ASSURANCE THAT ANY TRADING ADVISOR WILL TRADE
PROFITABLY OR AVOID INCURRING SUBSTANTIAL LOSSES.

PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS.

See "Risk Factors -- (2) Past Performance Not Necessarily Indicative of Future
Results."

-86-
<PAGE>

CHESAPEAKE CAPITAL CORPORATION
DIVERSIFIED PROGRAM
JANUARY 1, 1991 - AUGUST 31, 1996

The following performance summary and chart reflect the composite
performance results from January 1991 through August 1996 of the Diversified
Program. Chesapeake trades this program on behalf of the Fund. The performance
of the program from February 1988 (inception) through December 1990, while
profitable, includes the program's two worst drawdowns, the larger of which
occurred during the period August 1989 through October 1989 and was (20.58)%.
The program has been utilized in trading for 177 accounts since January 1991. As
of August 31, 1996, 114 accounts had been closed and 63 accounts remained open.
Of the closed accounts, 98 were profitable and 16 were unprofitable at their
closing. Of the 63 open accounts, 60 were profitable and 3 were unprofitable as
of August 31, 1996.

Name of CTA: Chesapeake Capital Corporation
Name of program: Diversified Program
Inception of client account trading by CTA: February 1988
Inception of client account trading in program: February 1988
Number of open accounts: 63
Aggregate assets (excluding notional equity) overall: $757 million
Aggregate assets (excluding notional equity) in program: $711 million
Aggregate assets (including notional equity) overall: $912 million
Aggregate assets (including notional equity) in program: $861 million
Worst monthly drawdown: (10.98)% (1/92)
Worst peak-to-valley drawdown: (16.62)% (1/92-5/92)
<TABLE>
<CAPTION>
Monthly Rates
of Return 1996 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
January 1.69% (3.23)% (3.33)% 0.42% (10.98)% (1.29)%
- -------------------------------------------------------------------------
February (4.26) (4.39) (4.88) 15.99 (2.86) 4.84
- -------------------------------------------------------------------------
March 0.28 8.60 0.09 5.86 0.53 2.32
- -------------------------------------------------------------------------
April 10.16 1.45 (0.60) 7.38 (0.44) (2.80)
- -------------------------------------------------------------------------
May (3.04) 6.84 9.06 0.40 (3.66) 0.27
- -------------------------------------------------------------------------
June 3.27 0.88 7.02 0.98 6.52 (1.25)
- -------------------------------------------------------------------------
July (7.09) (3.09) (1.70) 9.49 12.96 (1.75)
- -------------------------------------------------------------------------
August 0.78 (2.66) (2.98) 5.88 3.16 (3.32)
- -------------------------------------------------------------------------
September -- 0.20 3.49 (2.63) (6.78) 4.39
- -------------------------------------------------------------------------
October -- (1.11) 1.97 (0.06) 5.21 4.21
- -------------------------------------------------------------------------
November -- 1.76 4.83 1.03 2.27 (4.68)
- -------------------------------------------------------------------------
December -- 9.18 2.86 5.77 (1.93) 12.08
- -------------------------------------------------------------------------
Compound Annual 0.83% 14.09% 15.87% 61.82% 1.81% 12.51%
Rate of Return (8 months)
- -------------------------------------------------------------------------
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
____________________

SEE THE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-87-
<PAGE>

<TABLE>
<CAPTION>
OTHER CHESAPEAKE CAPITAL CORPORATION PROGRAMS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NAME OF CTA: Chesapeake Capital Chesapeake Capital Chesapeake Capital Chesapeake Capital
Corporation Corporation Corporation Corporation
-----------------------------------------------------------------------------------------
NAME OF PROGRAM: Financials and Metals Diversified 2XL Program Pacific Rim Program Foreign Financials
Program Program
-----------------------------------------------------------------------------------------
INCEPTION OF CLIENT ACCOUNT
TRADING BY CTA: February 1988 February 1988 February 1988 February 1988
-----------------------------------------------------------------------------------------
INCEPTION OF CLIENT ACCOUNT
TRADING IN PROGRAM: March 1992 April 1994 June 1994 June 1992
ceased trading 8/95 ceased trading 6/94
-----------------------------------------------------------------------------------------
NUMBER OF OPEN ACCOUNTS: 7 4 0 0
-----------------------------------------------------------------------------------------
AGGREGATE ASSETS (EXCLUDING
NOTIONAL EQUITY) OVERALL: $757 million $757 million $757 million $757 million
-----------------------------------------------------------------------------------------
AGGREGATE ASSETS (EXCLUDING
NOTIONAL EQUITY) IN PROGRAM: $29 million $18 million N/A N/A
-----------------------------------------------------------------------------------------
AGGREGATE ASSETS (INCLUDING
NOTIONAL EQUITY) OVERALL: $912 million $912 million $912 million $912 million
-----------------------------------------------------------------------------------------
AGGREGATE ASSETS (INCLUDING
NOTIONAL EQUITY) IN PROGRAM: $33 million $17 million N/A N/A
-----------------------------------------------------------------------------------------
WORST MONTHLY DRAWDOWN: (7.86)% (7/96) (16.40)% (7/96) (3.30)% (7/95) (5.77)% (9/92)
-----------------------------------------------------------------------------------------
WORST PEAK-TO-VALLEY DRAWDOWN: (10.36)% (1/94-2/94) (17.59)% (5/96-7/96) (3.30)% (7/95) (5.77)% (9/92)
-----------------------------------------------------------------------------------------
1996 COMPOUND RATE OF RETURN: (3.61)% (8 months) (7.25)% (8 months) N/A N/A
-----------------------------------------------------------------------------------------
1995 COMPOUND RATE OF RETURN: 12.61% 18.77% 37.04% (8 months) N/A
-----------------------------------------------------------------------------------------
1994 COMPOUND RATE OF RETURN: 3.22% 26.88% (9 months) (2.76)% (7 months) (1.77)% (6 months)
-----------------------------------------------------------------------------------------
1993 COMPOUND RATE OF RETURN: 68.53% N/A N/A 21.90%
-----------------------------------------------------------------------------------------
1992 COMPOUND RATE OF RETURN: 24.19% (10 months) N/A N/A 21.42% (7 months)
-----------------------------------------------------------------------------------------
1991 COMPOUND RATE OF RETURN: N/A N/A N/A N/A
-----------------------------------------------------------------------------------------
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

THE FUND'S ACCOUNT IS NOT TRADED PURSUANT TO ANY OF THE FOREGOING PROGRAMS.

------------------

SEE THE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-88-
<PAGE>

JOHN W. HENRY & COMPANY, INC.
CTOBER 1, 1996 ASSET ALLOCATION: 38%

BACKGROUND

John W. Henry & Company began managing assets in 1981 as a sole
proprietorship and was later incorporated in the state of California as John W.
Henry & Company, Inc., to conduct business as a commodity trading advisor. JWH
trades numerous contracts on a 24-hour basis in the United States, Europe and
Asia, and has grown to be one of the largest advisors in the managed futures
industry, managing approximately $1.5 billion (excluding notional funds) in
customer capital. The sole shareholder of JWH is the John W. Henry Trust dated
July 27, 1990. The trustee and sole beneficiary of the Trust is John W. Henry.
JWH's registration as a CTA became effective in February 1982 and its
registration as a CPO became effective in July 1989. JWH is a member of the NFA
in these capacities.

Mr. John W. Henry is Chairman of the JWH Board of Directors and is
trustee and sole beneficiary of The John W. Henry Trust dated July 27, 1990. Mr.
Henry is also a member of the Investment Policy Committee of JWH. He currently
concentrates his activities at JWH on portfolio management, business issues and
frequent dialogue with trading supervisors. Mr. Henry is the exclusive owner of
certain trading systems licensed to Elysian Licensing Corporation, a corporation
wholly-owned by Mr. Henry, and sublicensed by Elysian Licensing Corporation to
JWH and utilized by JWH in managing client accounts. Over the last fifteen
years, Mr. Henry has developed many innovative investment programs.

Mr. Henry has served on the Board of Directors of the National
Association of Futures Trading Advisors ("NAFTA"), the Managed Futures Trade
Association ("MFTA") and has served on the nominating committee of the NFA. Mr.
Henry currently serves on the Board of Directors of the Futures Industry
Association ("FIA") and is chairman of the FIA Task Force on Derivatives for
Investment. He also currently serves on a panel created by the Chicago
Mercantile Exchange and the Chicago Board of Trade to study cooperative efforts
related to electronic trading, common clearing and the issues regarding a
potential merger. In 1989, Mr. Henry established residency in Florida and since
that time has performed services from that location as well as at the principal
offices of JWH. Mr. Henry is a principal of Westport Capital Management
Corporation, Global Capital Management Limited, JWH Investments, Inc., JWH Risk
Management Inc. and JWH Asset Management, Inc., all of which are affiliates of
JWH. Since the beginning of 1987, Mr. Henry has and will continue to devote
considerable time to business activities unrelated to JWH and its affiliates.

Mr. Mark H. Mitchell is Vice Chairman and a member of the JWH Board of
Directors. He is also Vice Chairman and a director of JWH Risk Management, Inc.
and a director of JWH Asset Management, Inc. Prior to his employment at JWH
commencing in January 1994, Mr. Mitchell was a partner of Chapman and Cutler, a
Chicago law firm, where he had headed its futures law practice since August
1983. From August 1980 to March 1991, he served as General Counsel of NAFTA and,
from March 1991 to December 1993, he served as General Counsel of the Managed
Futures Association ("MFA"). Mr. Mitchell is currently a member of the CPO/CTA
Advisory Committee and the Special Committee for the Review of the Multi-Tiered
Regulatory Approach to NFA Rules, both of the NFA. In addition, he has served as
a member of the Government Relations Committee of MFA and the Executive
Committee of the Law and Compliance Division of FIA. In 1985, he received the
Richard P. Donchian Award for Outstanding Contributions to the Field of
Commodity Money Management. He has been an editor of Futures International Law
Letter and its predecessor publication, Commodities Law Letter. He received an
A.B. with honors from Dartmouth College and a J.D. from the University of
California at Los Angeles, where he was named to the Order of the Coif, the
national legal honorary society.

Mr. David R. Bailin is an Executive Vice President and a member of the
Operating Committee of JWH. He is also President of JWH Investments, Inc.; JWH
Risk Management, Inc.; President and director of Westport Capital Management
Corporation and President and Chairman of the Board of Directors of Global
Capital Management Limited. He is responsible for the development,
implementation and management of JWH's sales and marketing infrastructure. Prior
to joining JWH in December 1995, Mr. Bailin was Managing Director-Development
since April 1994 for Global Asset Management ("GAM"), a Bermuda-based investment
management firm with over $7 billion in managed assets. He was responsible for
overseeing the international distribution of GAM's funds as well as for
establishing new distribution relationships and channels. Prior to his
employment with GAM, Mr. Bailin headed the real estate asset management division
of Geometry Asset Management beginning in July 1992. Prior to that time,
beginning in 1988, he was President of Warner Financial, an investment advisory
business in Boston, Massachusetts. Mr. Bailin received a B.A. from Amherst
College and an M.B.A. from Harvard Business School.

-89-

<PAGE>

Mr. James E. Johnson, Jr., is chief financial officer and chief
administrative officer for JWH. He also serves as a member of JWH's Operating
Committee. Mr. Johnson is also a principal of Westport Capital Management
Corporation, JWH Investments, Inc., JWH Risk Management, Inc. and JWH Asset
Management, Inc. Mr. Johnson joined JWH in May of 1995 from Bankers Trust
Company where he had been managing director and chief financial officer for
their institutional asset management division since January 1983. His areas of
responsibility included finance, operations, and technology. Prior to joining
Bankers Trust, Mr. Johnson was a product manager at American Express Company
responsible for research and market strategies for the Gold Card. He received a
B.A. with honors from Columbia University and an M.B.A. in Finance and Marketing
from New York University.

Ms. Elizabeth A.M. Kenton is a Senior Vice President, the Director of
Compliance and a member of the Operating Committee of JWH. Since joining JWH in
March 1989, Ms. Kenton has held positions of increasing responsibility in
Research and Development, Administration and Regulatory Compliance. Ms. Kenton
is also a Senior Vice President of JWH Risk Management, Inc., the Vice President
of JWH Asset Management, Inc., a director of Westport Capital Management
Corporation, the Executive Vice President of JWH Investments, Inc., and a
director of Global Capital Management Limited. Prior to her employment at JWH,
Ms. Kenton was Associate Manager of Finance and Trading Operations at Krieger
Investments, a currency and commodity trading firm. From July 1987 to September
1988, Ms. Kenton worked for Bankers Trust Company as a Product Specialist for
foreign exchange and Treasury options trading. Ms. Kenton is a member of the
MFA's Trading and Markets Committee. She received a B.S. in Finance from Ithaca
College.

Ms. Mary Elizabeth Hardy is Senior Vice President and Director of
Trading Administration and a member of the Operating and Investment Policy
Committees of JWH. Since joining JWH in September 1990, Ms. Hardy has held
positions of increasing responsibility in Research and Development and Trading.
Prior to her employment at JWH, beginning in 1989 Ms. Hardy held the position of
Associate Editor at Waters Information Services, a publishing company, where she
wrote weekly articles covering technological advances in the securities and
futures markets. Prior to joining Waters in 1989, Ms. Hardy was at Shearson
Lehman Brothers, Inc. ("Shearson") where she held the position of assistant
director of the Managed Futures Trading Department. Prior to that, Ms. Hardy was
an institutional salesperson at Shearson in a group specializing in financial
futures and options. Previously, Ms. Hardy was an institutional salesperson for
Donaldson, Lufkin and Jenrette with a group which also specialized in financial
futures and options. Ms. Hardy serves on the Board of Directors of the Managed
Futures Association and chairs its Trading and Markets Committee. She received a
B.B.A. in Finance from Pace University.

Mr. David M. Kozak is Counsel to the firm, Vice President and
Secretary of JWH. He is also secretary of JWH Risk Management, Inc., JWH Asset
Management, Inc. and Assistant Secretary of Westport Capital Management
Corporation. Prior to joining JWH in September 1995, Mr. Kozak was employed at
the law firm of Chapman and Cutler, where he was an associate from September
1983 and a partner from 1989. Mr. Kozak has concentrated in commodity futures
law since 1981, with emphasis in the area of commodity money management. During
the time he was employed at Chapman and Cutler, he served as outside counsel to
NAFTA and the MFA. Mr. Kozak is currently a member of the Government Relations
Committee of the MFA, the NFA Special Committee on CPO/CTA Disclosure Issues and
the Visiting Committee of The University of Chicago Library. He received a B.A.
from Lake Forest College, an M.A. from The University of Chicago, and a J.D.
from Loyola University of Chicago.

Mr. Kevin S. Koshi is a Senior Vice President, Chief Trader and a
member of the Investment Policy Committee of JWH. Mr. Koshi is responsible for
the supervision and administration of all aspects of order execution strategies
and the implementation of trading policies and procedures. Mr. Koshi joined JWH
in August 1988 as a professional in the Finance Department, and since 1990 has
held positions of increasing responsibility in the Trading Department. He
received a B.S. in Finance from California State University at Long Beach.

Mr. Barry S. Fox is the Director of Research and is a member of the
Investment Policy Committee of JWH. Mr. Fox is responsible for the design and
testing of new programs. He also supports and maintains proprietary
systems/models used to generate JWH trades. Mr. Fox joined JWH in March 1991,
and since that time he has held positions of increasing responsibility in the
Research and Product Development Departments. Prior to his employment at JWH,
Mr. Fox provided sales and financial analysis support since October 1990 for
Spreadsheet Solutions, a financial software development company. Prior to
joining Spreadsheet Solutions, Mr. Fox operated a trading company where he
traded his own proprietary capital. Before that, he was employed with Bankers
Trust as a product specialist for foreign exchange and treasury options trading.
He received a B.S. in Business Administration from the University of Buffalo.

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Ms. Glenda G. Twist is a Director of JWH and has held that position
since August 1993. Ms. Twist joined JWH in September 1991 with responsibilities
for corporate liaison, and she continues her duties in that area. Her
responsibilities include assistance in the day-to-day administration of the
Florida office, and review and compilation of financial information for JWH. Ms.
Twist was President of J.W. Henry Enterprises Corp., for which she performed
financial, consulting and administrative services from January 1991 to August
1991. From 1988 to December 1990, Ms. Twist was Executive Director of Cities in
Schools, a program in Arkansas designed to prevent students from leaving school
before completing their high school education. She received her B.S. in
Education from Arkansas State University.

Mr. John A. F. Ford is the director of marketing at JWH and is
responsible for the development and implementation of strategic marketing and
communications programs. He joined JWH in May 1996 from J.P. Morgan where he had
been vice president and head of corporate communications for the firm's European
operations from February 1994 to October 1995. He was previously in a similar
position with J.P. Morgan at the Euroclear Operations Centre in Brussels from
January 1992 to February 1994. From October 1995 to May 1996 he undertook a
number of consultancy projects while relocating to the United States. Prior to
joining J.P. Morgan, Mr. Ford was managing director of the European headquarters
of Gavin Anderson & Co. (UK), an international corporate and investor relations
consultancy, from February 1987 to December 1991. Mr. Ford has also been
involved in advising the Chicago Mercantile Exchange on marketing its services
to European institutions and advising the International Petroleum Exchange in
London on similar issues. He also helped market Mercury Asset Management to
major institutions and pension funds.

Mr. Michael D. Gould is Director of Investor Services at JWH. He is
responsible for general business development and oversees the investor services
function. He joined JWH in April 1994 from Smith Barney Inc. where he served as
senior sales manager and vice president-futures for the Managed Futures
Department. He held the identical position with the predecessor firms of
Shearson Lehman Bros. and Lehman Bros. from October 1991. Prior to that time, he
was engaged in a proprietary trader development program at Tricon USA from
September 1990 to October 1991. He was a registered financial consultant with
Merrill Lynch from 1985 through August 1990. His professional career began in
1982 as an owner-operator of a nonferrous metals trading and export business
which he ran until September 1985.

Mr. Jack M. Ryng, C.P.A., joined JWH as the Controller in November
1991. Mr. Ryng is also Chief Financial Officer and Secretary of JWH Investments,
Inc. Prior to that time, he was a Senior Manager with Deloitte & Touche where he
held positions of increasing responsibility since September 1985 for commodities
and securities industry clients. Prior to his employment by the Financial
Services Center of Touche Ross & Co. (the predecessor firm of Deloitte &
Touche), he was a senior accountant for Leonard Rosen & Co. Mr. Ryng is a member
of AICPA and the New York C.P.A. Society, and is a member of the board of the
New York Operations Division of the FIA. He received a B.S. in Business
Administration from Duquesne University.

Mr. Michael J. Scoyni is a Managing Director of JWH and is a principal
of Westport Capital Management Corporation. Mr. Scoyni has been associated with
Mr. Henry since 1974 and with JWH since 1982. He was engaged in research and
development for John W. Henry & Company (JWH's predecessor) from November 1981
to December 1982 and subsequently has been employed in positions of increasing
responsibility. He received a B.A. in Anthropology from California State
University.

Mr. Christopher E. Deakins is a Vice President of JWH. He is
responsible for general business development and investor services support.
Prior to joining JWH in August 1995, he was a vice president, national sales,
and a member of the Management Team for RXR Capital Management, Inc. His
responsibilities consisted of business development, institutional sales, and
broker-dealer support. Prior to joining RXR in August 1986, he was engaged as an
account executive for Prudential-Bache Securities starting in February 1985.
Prior to that, Mr. Deakins was an account executive for Merrill Lynch. He
received a B.A. in Economics from Hartwick College.

Mr. Chris J. Lautenslager is a vice president of JWH. He is
responsible for general business development and investor services support.
Prior to joining JWH in April 1996, he was the vice president of institutional
sales for I/B/E/S International, Inc., a distributor of corporate earnings
estimate information. His responsibilities consisted of business development and
support of global money managers and investment bankers. Prior to his employment
with I/B/E/S, Mr. Lautenslager devoted time to personal activities from April
1994 to March 1995, following the closing of the Stamford, Connecticut office of
Gruntal & Co., where he had worked as a proprietary equity trader since November
1993. Before that, he held the same position at S.A.C. Capital Management
starting in February 1993. From October 1987 to December 1992, Mr. Lautenslager
was a partner and managing director of Limitless Option Partners, a registered
Chicago Mercantile

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Exchange trading and brokerage organization, where he traded currency futures
and options. He received a B.S. in Accounting from the University of Colorado
and a Masters in Management from Northwestern University.

Mr. Edwin B. Twist is a Director of JWH and has held that position
since August 1993. Mr. Twist is also a director of JWH Risk Management, Inc. and
JWH Asset Management, Inc. Mr. Twist joined JWH as Internal Projects Manager in
September 1991. Mr. Twist's responsibilities include assistance in the day-to-
day administration of JWH's Florida office and internal projects. Mr. Twist was
Secretary and Treasurer at J.W. Henry Enterprises Corp., a Florida corporation
engaged in administrative and financial consulting services, for which he
performed financial, consulting and administrative services from January 1991 to
August 1991. Prior to his employment at JWH, Mr. Twist was an owner and manager
for 16 years of a 2,500-acre commercial farm in eastern Arkansas.

Ms. Nancy O. Fox, C.P.A., is a Vice President and the director of
investment support of JWH. She is responsible for the day-to-day activities of
the Investment Support Department, including all aspects of operations and
performance reporting. Prior to joining JWH in January 1992, Ms. Fox was a
senior accountant at Deloitte & Touche, where she served commodities and
securities industry clients and held positions of increasing responsibility
since July 1987. Ms. Fox is a member of the AICPA and the New Jersey Society of
C.P.A.s. She received a B.S. in Accounting and Finance from Fairfield University
and an M.B.A. from the University of Connecticut.

Mr. Julius A. Staniewicz is the senior strategist in JWH's Product
Development Department. He is also President of JWH Asset Management, Inc. Prior
to joining JWH in March of 1992, Mr. Staniewicz was employed with Shearson
Lehman Brothers as a financial consultant starting in April 1991. Prior to that,
beginning in 1990, Mr. Staniewicz was a vice president of Phoenix Asset
Management, a commodity pool operator and introducing broker. From 1986 to 1989,
Mr. Staniewicz worked in the managed futures department at Prudential-Bache
Securities, Inc., lastly as an assistant vice president and co-director of
managed futures. Mr. Staniewicz received a B.A. in Economics from Cornell
University.

Ms. Wendy B. Goodyear is director of the office of the chairman. She
is responsible for managing and coordinating projects involving Mr. Henry. Ms.
Goodyear joined JWH in October 1995 as director of marketing, responsible for
the development and implementation of strategic marketing and communications
programs. Prior to her employment at JWH, Ms. Goodyear was a vice president at
Citibank where she held several positions, including product development manager
for the depository receipt business and marketing manager for the pension
business. Prior to joining Citibank in May 1993, Ms. Goodyear was employed at
Bankers Trust Company from 1985 where she held positions of increasing
responsibility in both the private bank and pension businesses. Ms. Goodyear
received a B.A. in History from the University of Virginia and an M.B.A. from
the Stern School of Business at New York University.

THE INVESTMENT POLICY COMMITTEE

The Investment Policy Committee is one vehicle for decision-making at
JWH about the content and application of JWH trading programs. Composition of
the Investment Policy Committee, and participation in its discussions and
decisions by non-members, may vary over time.

TRADING STRATEGY

JWH specializes in managing institutional and individual capital in
the global futures, interest rate and foreign exchange markets. Since 1981, JWH
has developed and implemented proprietary trend-following trading techniques
that focus on long-term rather than short-term, day-to-day trends. JWH currently
operates twelve trading programs.

JWH's systematic investment process is designed to generate, over
market cycles, excellent risk-adjusted rates of return under favorable and
adverse market conditions. The JWH process capitalizes on emerging, long-term,
rising and falling price trends and ignores day-to-day price fluctuations. To
ensure disciplined implementation of its investment philosophy, JWH uses
mathematical models to execute investment decisions in more than 50 global
markets encompassing currencies, commodities and financial securities. All JWH
investment programs follow the strict money management framework outlined below.

The first step in the JWH investment process is the identification of
a price trend. While there are many ways to identify trends, JWH uses a
methodology which identifies opportunities in order to attempt to capture a
majority of the significant price movements in a given market. The process
presumes that such price movements will often exceed the

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expectation of the general marketplace. As such, the JWH discipline is to
pare losing positions relatively quickly while allowing profitable
positions to mature. Positions held for two to four months are not
unusual, and certain positions have been held for more than one year.
Historically, only thirty to forty percent of all trades made pursuant to
the trading methods have been profitable. Large profits on a few trades
in positions that typically exist for several months have produced
favorable overall results. Generally, the majority of losing positions
have been liquidated within weeks. The maximum equity retracement JWH has
experienced in any single program was nearly sixty percent (60)%. Similar
or greater drawdowns are possible in the future. There can be no
assurance that JWH will trade profitably for the Fund or avoid losses of
such magnitude.

JWH at its sole discretion may override computer-generated signals,
and may at times use discretion in the application of its quantitative models
which may affect performance positively or negatively. Subjective aspects of
JWH's quantitative models also include the determination of program leverage,
commencement of trading in an account, markets traded, contracts traded,
contract month selection, margin utilization and effective trade execution.

A Disciplined Investment Philosophy

JWH's strategy is based on the following guiding principles:

LONG-TERM PERSPECTIVE. JWH's investment strategies rest on a long-term
perspective in the world's financial and commodities markets. JWH believes that
historical performance demonstrates that, because trends often last longer than
most market participants expect, strong returns can be generated from positions
held over the long term.

DISCIPLINED INVESTMENT PROCESS. The disciplined investment process
utilized by JWH is designed to generate superior, risk-adjusted rates of return
throughout a market cycle. By consistently applying investment techniques in
financial and commodities markets worldwide, JWH is able to participate in
rising and falling markets without bias.

JWH's ongoing research has led to the development of analytical models
which suggest the appropriate content, weighting, exits and entries for each
investment position. Once established, these positions are monitored around the
clock. While many of these positions are closed out within a few days or weeks
at a profit or loss, others are retained where JWH's investment guidelines
indicate potential opportunity for exceptional returns.

TREND IDENTIFICATION. JWH's strategies are nonpredictive. Instead,
based on research into historic pricing data, JWH seeks to recognize the
movement of capital from one market to another after trends have begun.

GLOBAL DIVERSIFICATION. For more than a decade, JWH has recognized the
importance of global trading. Financial markets around the world are
increasingly interrelated, with actions in one country's markets often
influencing markets in other parts of the world. JWH investments are positioned
to provide access to the performance potential offered by the global
marketplace.

COMPREHENSIVE RISK MANAGEMENT. JWH's risk management strategies are
designed with the objective of decreasing volatility and improve the risk/reward
characteristics of investments in futures and forwards by relying upon carefully
formulated risk management algorithms that define controlled loss parameters
prior to execution.

PROGRAM MODIFICATIONS

In an effort to maintain and improve performance, JWH has engaged, and
continues to engage, in extensive research. While the basic philosophy
underlying the firm's investment methodology has remained intact throughout its
history, the potential benefits of employing more than one investment
methodology, alternatively, or in varying combinations, is a subject of
continual testing, review and evaluation. Extensive research and analysis may
suggest substitution of alternative investment methodologies with respect to
particular contracts in light of relative differences in historical performance
achieved through testing different methodologies. In addition, risk management
research and analysis may suggest modifications regarding the relative weighting
among various contracts, the addition or deletion of particular contracts for a
program or a change in the degree of leverage employed.

As capital in each JWH trading program increases, additional emphasis
and weighting may be placed on certain markets which have historically
demonstrated the greatest liquidity and profitability. Furthermore, the
weighting of

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capital committed to various markets in the trading programs is dynamic, and JWH
may vary the weighting at its discretion as market conditions, liquidity,
position limit considerations and other factors warrant. MLIP will generally not
be informed of any such changes.

LEVERAGE

Leverage adjustments have been and continue to be an integral part of
JWH's investment strategy. At its discretion, JWH may adjust leverage in certain
markets or entire programs. Factors which may affect the decision to adjust
leverage include: ongoing research; program volatility; current market
volatility; risk exposure; and subjective judgment and evaluation of these and
other general market conditions. Such decisions to change leverage may
positively or negatively affect performance, and will alter risk exposure for an
account. Leverage adjustments may lead to greater profits or losses, more
frequent and larger margin calls and greater brokerage expense. No assurance is
given that such leverage adjustments will be to the financial advantage of
investors in the Fund.

ADDITION, REDEMPTION AND REALLOCATION OF CAPITAL FOR COMMODITY POOL ACCOUNTS

JWH has developed procedures for trading pool accounts, such as the
Fund, that provide for the addition, redemption and/or reallocation of capital.
Investors who purchase or redeem units in a fund are most frequently permitted
to do so at a price equal to the net asset value per unit on the close of
business on the last business day of the month or quarter. In addition, funds
often may reallocate capital among advisors at the close of business on the last
business day of the month. In order to provide market exposure commensurate with
the equity in the account on the date of these transactions, JWH's practice is
to adjust positions as nearly as possible to the close of business on the last
trading date of the month. The intention is to provide for additions,
redemptions and reallocations at a net asset value per unit that will be the
same for each of these transactions and to eliminate possible variations in the
net asset value per unit that could occur as a result of inter-day price changes
when additions are calculated on the first day of the subsequent month.
Therefore JWH may, in its sole discretion, adjust its investment of the assets
associated with the addition, redemption and reallocation of capital as nearly
as possible to the close of business on the last trading day of the month to
reflect the amount then available for trading. Based on JWH's determination of
liquidity or other market conditions, JWH may decide to commence trading earlier
in the day on, or even before the last business day of the month. In the case of
an addition to a fund account, JWH may also, in its sole discretion, delay the
actual start of trading for those new assets. No assurance is given that JWH
will be able to achieve the objectives described above in connection with
funding level changes. The use of discretion by JWH in the application of this
procedure may affect performance positively or negatively.

PHYSICAL AND CASH COMMODITIES

JWH may from time to time trade in physical or cash commodities for
immediate or deferred delivery, including specifically gold bullion, as well as
futures, options and forward contracts when JWH believes that cash markets offer
comparable or superior market liquidity or ability to execute transactions at a
single price. Cash transactions, as opposed to futures transactions, relate to
the purchase and sale of specific physical commodities. Whereas futures
contracts are generally uniform except for price and delivery time, cash
contracts may differ from each other with respect to such terms as quantity,
grade, mode of shipment, terms of payment, penalties, risk of loss and the like.
There is no limitation on the daily price movements of cash or forward contracts
transacted through banks, brokerage firms or government dealers, and those
entities are not required to continue to make markets in any commodity. In
addition, the CFTC does not comprehensively regulate cash transactions, which
are subject to the risk of these entities' failure, inability or refusal to
perform with respect to such contracts.

LEGAL AND ETHICAL CONCERNS

JWH and Mr. Henry may engage in discretionary trading for their own
accounts, and may trade for the purpose of testing new investment programs and
concepts, as long as such trading does not amount to a breach of fiduciary duty.
In the course of such trading, JWH and Mr. Henry may take positions in their own
accounts which are the same or opposite from client positions, and on occasion
orders may be filled better for their accounts than for client accounts due to
testing a new quantitative model or program, a neutral allocation system, and/or
trading pursuant to individual discretionary methods. Records for these accounts
will not be made available to clients. Employees and principals of JWH (other
than Mr. Henry) are not permitted to trade on a discretionary basis in futures,
options on futures or forward contracts. However, such principals and employees
may invest in investment vehicles that trade futures, options on futures or
forward contracts,

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when an independent trader manages trading in that vehicle, and in the JWH
Employee Fund, L.P., which is managed by JWH. The records of these accounts also
will not be made available to clients. See "Certain Litigation" at page 41.

THE FINANCIAL AND METALS PORTFOLIO

Researched through 1983, a systematic method was first traded in a
format using solely financial and metals futures in August 1984. That program,
the Financial and Metals Portfolio, used by JWH in managing Fund assets, uses
quantitative, trend analysis models, participates in four major market sectors
- -- interest rates, foreign exchange, stock indices and precious metals -- and
seeks to capitalize on sustained moves in global financial markets.

The Financial and Metals Portfolio may take long, short or neutral
positions within the four market sectors traded. Because assets are concentrated
in interest rates, currencies, stock indices and metals only, volatility can be
higher than in a more diversified portfolio.

OTHER JWH PROGRAMS

In addition to the Financial and Metals Portfolio, JWH currently
operates eleven other trading programs for U.S. and non-U.S. investors, none of
which are utilized by JWH for the Fund. Each program is operated separately and
independently. These programs emphasize intermediate and long-term,
quantitative, trend-analysis models designed with the objective of achieving
speculative rates of return.

The Original Investment Program, which began in 1981, uses long-term,
quantitative models. This program trades in seven different market sectors
trading 20 to 25 commodities on both U.S. and non-U.S. exchanges. The KT
Diversified Program began in 1983 and ceased trading in February 1994. This
program utilized a neutral phase, and thus did not maintain constant positions
in the markets. This program participated in eight market sectors and traded 19
to 24 commodities only on U.S. exchanges. The Global Diversified Portfolio
invests in futures and forward contracts in a number of different markets,
sectors, and countries and is JWH's most diversified trading program. This
program has been trading for investors since June 1988. The International
Foreign Exchange Program, begun in 1986, concentrates exclusively on trading
between 10 to 15 foreign currencies in outright and cross-rate positions,
primarily through forward contracts. Portfolios are dynamic and include from
time to time various matrices of futures positions.

The World Financial Perspective, which began in 1986, trades the
financial and energy sector markets from the perspective of the Japanese yen,
German mark, Swiss franc, British pound, Australian dollar, French franc,
Canadian dollar and the U.S. dollar. The pricing of key global markets in terms
of foreign currencies provides a level of diversification not generally found in
futures portfolios. In February 1991, JWH began trading a portfolio in which the
same techniques utilized in the International Foreign Exchange Program are
primarily applied to the currencies of the major industrial nations, known as
"the Group of Seven" and Switzerland. These currencies are the Japanese yen,
British pound, Canadian dollar, German mark, French franc, Italian lira, the
U.S. dollar and Swiss franc and are among the most liquid, actively traded
currencies in the world. The G-7 Currency Portfolio makes use of both outright
positions and cross-rate positions. Positions are primarily taken in the
interbank market and from time to time on U.S. futures exchanges. The Yen
Financial Portfolio began in August 1991 and uses the same quantitative models
as the Financial and Metals Portfolio. The Yen Financial Portfolio trades
futures on the Japanese yen, the 10-year Japanese Government Bond, the Euroyen
and the Nikkei 225 stock index. The International Currency and Bond Portfolio,
begun in January 1993, combines the techniques employed in the G-7 Currency
Portfolio and the global bond sector of the Financial and Metals Portfolio to
trade a combined portfolio of currencies and international long-term bonds. In
June 1994, JWH began trading the Global Financial Portfolio, which utilizes the
same reversal approach as the Original Investment Program. The program trades in
four market sectors: interest rates, stock indices, currencies and energy. The
Dollar Program began trading client capital in June 1996. This program is
designed to capitalize on price movements in the U.S. dollar utilizing
intermediate-term and long-term quantitative trend analysis models, and takes
outright positions in the Japanese yen, German mark, Swiss franc, and British
pound versus the U.S. dollar.

The Worldwide Bond Program (WWB) began trading client capital in 1994.
WWB invests in the long-term portion of global interest rate markets, including
the U.S. 30-year bond, U.S. 10-year note, British long gilt, the French, German
and Italian bond, and Australian 10-year bond. Unlike most fixed income
investments, WWB is not limited to investments that have the potential to profit
in a stable or declining interest rate environment. Rather, WWB is designed to
capitalize on dominant trends, whether rising or falling, in worldwide bond
markets.

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The Delevered Yen Denominated Financial and Metals Profile which began
trading in October 1995 seeks to capitalize on sustained moves in global
financial markets utilizing intermediate-term and long-term quantitative trend
analysis models, some of which attempt to employ neutral stances during periods
of nontrending markets. This portfolio is traded at approximately one half of
the leverage of the traditional Financial and Metals portfolio and is traded
from the perspective of the Japanese yen.

InterRate/TM/, which commenced trading in November 1987 and closed in
July 1996, used a portfolio of foreign currency contracts that sought to capture
interest-rate differentials between countries. This program utilized leverage
that is significantly lower than other JWH programs, reducing risk as it sought
to generate returns significantly enhanced over the prevailing 91-day U.S.
Treasury bill rate.

The KT Diversified Program began in January 1984 and closed in
February 1994. This program participated in eight market sectors on U.S.
exchanges only.

PAST PERFORMANCE

The following information describes the composite actual performance
of all customer and proprietary accounts managed by JWH and JWH Investments Inc.
JWH trades its Financial and Metals Portfolio on behalf of the Fund. As of
August 31, 1996, JWH was managing approximately $1.5 billion (excluding notional
funds) of customer funds in the futures and forwards markets. All performance
information is current as of August 31, 1996.

Performance information is set forth for the most recent five full
years for each JWH and JWH Investments, Inc. program or, in the event that a
program has been trading for less than five years, performance information is
set forth from the inception of client account trading in such program.
Performance information prior to January 1, 1991 has been excluded in accordance
with CFTC regulations.

An investor should note that in a presentation of past performance
data, different accounts, even though traded according to the same investment
program, can have varying performance results. The reasons for this include
numerous material differences among accounts including, but not limited to: (a)
procedures governing timing for the commencement of trading and means of moving
toward full portfolio commitment of new accounts; (b) the periods during which
accounts are active; (c) the investment program used (although all accounts may
be traded in accordance with the same approach, such approach may be modified
periodically as a result of ongoing research and development by JWH); (d)
leverage employed; (e) the size of the account, which can influence the size of
positions taken and restrict the account from participating in all markets
available to an investment program; (f) the amount of interest income earned by
an account, which will depend on the rates paid by a futures commission merchant
on equity deposits and/or on the portion of an account invested in interest-
bearing obligations such as U.S. Treasury bills; (g) the amount of management
and incentive fees paid to JWH and the amount of brokerage commissions paid; (h)
the timing of orders to open or close positions; (i) the market conditions which
in part determine the quality of trade executions; (j) trading
instructions/restrictions of the client; (k) variations in fill prices; and (l)
the timing of additions and withdrawals.

During the periods covered by the performance summaries, and
particularly since 1989, JWH increased and decreased leverage in certain markets
and entire trading programs, and also altered the composition of the markets and
contracts that it traded for certain programs. In general, before 1993 JWH
traded its programs with greater leverage than it does currently. In addition,
the subjective aspects of JWH's trading methods may have been utilized more
often in recent years and, therefore, have had a more pronounced effect on
performance results during recent periods. In reviewing the JWH performance
summaries, prospective investors should bear in mind the possible effects of
these, and other, variations on rates of return and in the application of JWH's
investment methods.

The composite rates of return indicated should not be taken as
representative of any rate of return actually achieved by any of the accounts
represented in the performance summaries. Investors are further cautioned that
the data set forth in the performance summaries is not indicative of any trading
results which may be attained by JWH in the future, since past performance is
not necessarily indicative of future results. On several occasions, JWH has
decreased leverage over the last five years, in certain markets as well as in
entire trading programs. These actions have reduced the volatility of certain
trading programs when compared to the volatility prior to the decreases in
leverage. While historical returns represent actual performance achieved,
investors should be aware that the degree of leverage currently utilized may be
significantly different from that used during previous time periods.

Due to the commencement of trading in July 1996 by a new multi-program
fund managed by JWH, JWH developed a new method for treating the accrual of
incentive fees for the multi-advisor funds and multi-program accounts it
manages. For these accounts, JWH agreed that it would earn incentive fees only
when overall fund performance for multi-advisor funds, or overall JWH
performance for multi-program accounts, as the case may be, is profitable. As
applied, this new method presents incentive fees due for each program on a
stand-alone basis--in essence, to reflect the performance results that would
have been experienced by an investor in that program, regardless of any external
business arrangements (such as a multi-advisor structure or the use of multiple
JWH programs) that might have affected actual incentive fees paid. The new
method was applied initially in August 1996 performance. In that month, a one-
time adjustment to performance rate of return was made to each affected program

to show the impact of this adjustment from program inception through August
1996. In the case of certain programs, the adjustment had a material, i.e.,
greater than 10%, impact on the rate of return that otherwise would have been
shown. In the case of accounts that closed before JWH received an incentive fee
due to the operation of such netting arrangements, a balancing entry was made to
offset the effect of incentive fee accrual on ending equity.

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Prior to December 1991 for JWH, and July 1992 for JWH Investments,
Inc., performance summaries are presented on a cash basis except as otherwise
stated herein. The recording of items on a cash basis should not, for most
months, be materially different from presenting such rates of return on an
accrual basis. Any differences in the monthly rates of return between the two
methods would be immaterial to the overall performance presented.

Beginning with the change to the accrual basis of accounting for
incentive fees (in December 1991 for JWH and July 1992 for JWH Investments,
Inc.), the net effect on monthly net performance and the monthly rates of return
in the performance summaries of continuing to record interest income, management
fees, commissions and other expenses on a cash basis differs immaterially from
the results which would be obtained using accrual basis accounting.

Advisory fees vary from account to account managed pursuant to all
programs. Management fees vary from 0% to 6% of assets under management;
incentive fees vary from 0% to 25% of profits. Such variations in advisory fees
may have a material impact on the performance of an account from time to time.

The Notes to the Performance Summaries are an integral part of such
performance summaries, which are presented on a cash basis except as otherwise
described herein.

The "Notes to the Performance Summaries" are set forth on pages 105
through 107.

ADDITIONAL NOTE TO THE FINANCIAL AND METALS PORTFOLIO COMPOSITE PERFORMANCE
SUMMARY

In May 1992, 35% of the assets in the Financial and Metals Portfolio
was deleveraged 50% at the request of a client. The deleveraging materially
affected the rates of return achieved. The 1992 annual rate of return for these
deleveraged accounts was (24.3)%. The 1992 annual rate of return for the
Financial and Metals Portfolio performance summary was (10.9)%. If these
accounts had been excluded from the Financial and Metals Portfolio performance
summary, the 1992 annual rate of return would have been (3.9)%. The effect of
this deleveraging was eliminated in September 1992.

Additionally, the Financial and Metals Portfolio composite performance
summary includes the performance of several accounts that do not participate in
global markets due to their smaller account equities which do not meet the
minimums established for this program. Accounts not meeting such minimums can
experience performance materially different than the performance of an account
which meets the minimum account size. The performance of such accounts has no
material effect on the overall Financial and Metals Portfolio performance
summary.

ADDITIONAL NOTE TO THE YEN FINANCIAL PORTFOLIO COMPOSITE PERFORMANCE SUMMARIES

The Yen Financial Portfolio is traded from the Japanese yen
perspective. Accounts may be opened with either U.S. dollar or Japanese yen
deposits. Accounts originally opened with U.S. dollars establish additional
interbank positions in Japanese yen in an effort to enable such accounts to
generate returns similar to returns generated by accounts with yen-denominated
balances. Over time, as profits and losses are recognized in yen-denominated
Japanese markets, accounts may hold varying levels of U.S. dollars and Japanese
yen. Additionally, the interbank positions are adjusted periodically to reflect
the actual portions of the account balances remaining in U.S. dollars.

Accordingly, as the equity mix between U.S. dollars and Japanese yen
varies, performance from each perspective will also vary. Investors should be
aware that their individual account performance may differ from the composite
performance summaries presented in relation to the perspective of their base
currency. Such differences arise from exchange rate movements, percentage of
account balances held in yen, and fee arrangements.

This program began trading client capital in January 1992. In July
1996, one proprietary account commenced trading pursuant to an investment in a
fund. This proprietary account is traded in exactly the same manner that client
funds would be traded, and is subject to all of the same fees and expenses that
would be charged to a client investment in the fund; therefore, there is no
material impact on the rates of return presented for such account.

The performance of the Yen Financial Portfolio is presented on an
individual account basis due to material differences among accounts' historical
performance. Account performance has varied historically due to a number of
factors unique to this portfolio, including whether the portfolio is denominated
in dollars or yen, the extent of hedging currency conversions, the amounts and
frequency of currency conversions, and account size. Several of these factors
that have materially influenced performance depend on clients' specific choices
that effectively result in customized client portfolios.

-97-
<PAGE>

ADDITIONAL NOTE TO THE GLOBAL FINANCIAL PORTFOLIO COMPOSITE PERFORMANCE
SUMMARY

Since the inception of the Global Financial Portfolio, the
timing of individual account openings has had a material impact on
compound rates of return. Based on the account startup methodology used by
JWH, the performance of individual accounts composing the Global Financial
Portfolio composite performance summary has varied. In 1994, the two
accounts that were open generated separate rates of return of (44)% and
(17)%, respectively. For the period January 1995 through June 1995, the
three open accounts achieved separate rates of return of 101%, 75% and
67%, respectively. As of June 1995, these accounts now maintain mature
positions and are performing consistently with each other. Due to the six
month period in 1995 of varied performance, the three accounts therefore
achieved annual rates of return for 1995 of 122%, 92% and 78%,
respectively.

This program began trading client capital in June 1994. In July
1995, one proprietary account commenced trading pursuant to an investment
in a fund. This proprietary account is traded in exactly the same manner
that client funds would be traded, and is subject to all of the same fees
and expenses that would be charged a client investment in the fund;
therefore, there is no material impact on the rates of return presented.

ADDITIONAL NOTE TO THE ORIGINAL INVESTMENT PROGRAM COMPOSITE PERFORMANCE
SUMMARY

The Original Investment Program began trading client capital in
October 1982. In November 1994, one proprietary account commenced trading
pursuant to an investment in a fund. This proprietary account is traded in
exactly the same manner that client funds would be traded, and is subject
to all of the same fees and expenses that would be charged a client
investment in the fund; therefore, there is no material impact on the
rates of return presented.

ADDITIONAL NOTE TO THE G-7 CURRENCY PORTFOLIO COMPOSITE PERFORMANCE
SUMMARY

The G-7 Currency Portfolio began trading client capital in
February 1991. From July 1995 through December 1995 one proprietary
account was trading pursuant to an investment in a fund, and in August
1996 an additional proprietary account began trading pursuant to the same
fund. These proprietary accounts have been traded in exactly the same
manner that client funds would be traded, and have been subject to all of
the same fees and expenses that would be charged a client investment in
the fund; therefore, there is no material impact on the rates of return
presented.

ADDITIONAL NOTE TO THE SUMMARIES PRESENTED WHICH UTILIZE THE FULLY-
FUNDED SUBSET METHOD -- I.E., THE GLOBAL DIVERSIFIED PORTFOLIO AND JWH
INVESTMENTS, INC. INTERRATE/TM/ (THE "FULLY-FUNDED SUBSET SUMMARIES")

Actual funds are the amount of margin-qualifying assets on
deposit. Nominal account size is a dollar amount which clients have agreed
to in writing and which determines the level of trading in the account
regardless of the amount of actual funds. Notional funds are the amount by
which the nominal account size exceeds the amount of actual funds. The
amount of notional equity in the accounts that compose the Fully-Funded
Subset Summaries requires additional disclosure under current CFTC policy.
The Fully-Funded Subset Summaries include notional equity in excess of the
10% disclosure threshold established by the CFTC and reflect the adoption
of a method of presenting rate-of-return and performance disclosure
authorized by the CFTC, referred to as the Fully-Funded Subset method. See
"-- Chesapeake Capital Corporation -- Past Performance," at page 85. This
method permits notional and fully-funded accounts to be included in a
single performance summary.

To qualify for the use of the Fully-Funded Subset method, the
Fully-Funded Subset Advisory requires that certain computations be made in
order to arrive at the Fully-Funded Subset and that the accounts for which
performance is so reported meet two tests which are designed to provide
assurance that the Fully-Funded Subset and the resultant rates of return
are representative of the programs.

These computations have been performed for the Global
Diversified Portfolio from January 1, 1992 to its close and JWH
Investments, Inc.'s InterRate/TM/ from inception to its close. They were
designed to provide assurance that the performance presented in the Fully-
Funded Subset Summaries and calculated on a Fully-Funded Subset basis
would be representative of such performance calculated on a basis which
includes notional funds in beginning equity. The rates of return in the
Fully-Funded Subset Summaries are calculated by dividing net performance
by the sum of beginning equity plus additions minus withdrawals. JWH and
JWH Investments, Inc. believe that this method yields substantially the
same adjusted rates of return as would the Fully-Funded Subset method were
there any fully-funded accounts, and that the rates of return for the
Fully-Funded Subset Summaries are representative of the performance of the
programs for the periods presented.

-98-
<PAGE>

The following performance information has not been audited.
However, JWH and JWH Investments, Inc. believe that such information is
accurate and fairly presented.

INTERRATE/TM/ IS QUALITATIVELY DIFFERENT FROM THE METHODS WHICH
GENERATED THE PERFORMANCE PRESENTED IN THE CASE OF THE OTHER JWH PROGRAMS.
THE OTHER JWH PROGRAMS DIFFER FROM INTERRATE/TM/ WITH RESPECT TO: (A) FEES
CHARGED; (B) LENGTH OF TIME FOR WHICH POSITIONS ARE HELD; (C) POSITIONS
TAKEN; (D) LEVERAGE USED; AND (E) RATE OF RETURN OBJECTIVES.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
RESULTS. FURTHERMORE, THE RATES OF RETURN EARNED WHEN AN ADVISOR IS
MANAGING A LIMITED AMOUNT OF EQUITY MAY HAVE LITTLE RELATIONSHIP TO THE
RATES OF RETURN WHICH SUCH ADVISOR MAY BE ABLE TO ACHIEVE MANAGING LARGER
AMOUNTS OF EQUITY.

A NUMBER OF THE ACCOUNTS INCLUDED IN THE FOLLOWING PERFORMANCE
SUMMARIES WERE TRADED IN A MANNER MATERIALLY DIFFERENT FROM THAT IN WHICH
JWH TRADES ON BEHALF OF THE FUND.

THE FOLLOWING PERFORMANCE SUMMARIES HAVE IN NO RESPECT BEEN
ADJUSTED TO REFLECT THE CHARGES TO THE FUND. CERTAIN OF THE ACCOUNTS
INCLUDED IN THE FOLLOWING PERFORMANCE SUMMARIES PAID FEES MATERIALLY
DIFFERENT FROM, AND IN SOME CASES MATERIALLY LOWER THAN, THOSE CHARGED THE
FUND.

COMMODITY INTEREST TRADING IS SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. THERE CAN BE NO ASSURANCE THAT ANY TRADING ADVISOR WILL
TRADE PROFITABLY OR AVOID INCURRING SUBSTANTIAL LOSSES.

PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS.

See "Risk Factors -- (2) Past Performance Not Necessarily Indicative of Future
Results."

-99-
<PAGE>

JOHN W. HENRY & COMPANY, INC.
Financial and Metals Portfolio
January 1991 -- August 1996

The following performance summary and chart reflect the composite
performance results from January 1991 through August 1996 of the Financial and
Metals Portfolio. JWH trades this program on behalf of the Fund. The program has
been utilized in trading for 359 accounts since its inception. As of August 31,
1996, 288 accounts had been closed and 71 accounts remained open. Of the closed
accounts, 251 were profitable and 37 were unprofitable at their closing. Of the
71 open accounts, 66 were profitable and 5 were unprofitable as of August 31,
1996.

Name of CTA: John W. Henry & Company, Inc.
Name of program: Financial and Metals Portfolio
Inception of client account trading by CTA: October 1982
Inception of client account trading in program: October 1984
Number of open accounts: 71
Aggregate assets (excluding notional equity) overall: $1.5 billion
Aggregate assets (excluding notional equity) in program: $912 million
Aggregate assets (including notional equity) overall: $1.5 billion
Aggregate assets (including notional equity) in program: $912 million
Worst monthly drawdown on a composite basis: (18.0)% (1/92)
Worst monthly drawdown on an individual account basis: (27.7)% (1/92)
Worst peak-to-valley drawdown: (39.5)% (12/91-5/92)
<TABLE>
<CAPTION>
=======================================================================
Monthly Rates
of Return 1996 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
January 6.0% (3.8)% (2.9)% 3.3% (18.0)% (2.3)%
- -----------------------------------------------------------------------
February (5.5) 15.7 (0.6) 13.9 (13.5) 3.8
- -----------------------------------------------------------------------
March 0.7 15.3 7.2 (0.3) 3.0 4.5
- -----------------------------------------------------------------------
April 2.3 6.1 0.9 9.3 (12.2) (0.8)
- -----------------------------------------------------------------------
May (1.7) 1.2 1.3 3.3 (5.7) (0.3)
- -----------------------------------------------------------------------
June 2.2 (1.7) 4.5 0.1 21.9 (1.3)
- -----------------------------------------------------------------------
July (1.1) (2.3) (6.1) 9.7 25.5 (13.4)
- -----------------------------------------------------------------------
August (0.8) 2.1 (4.1) (0.8) 10.2 4.8
- -----------------------------------------------------------------------
September -- (2.1) 1.5 0.2 (5.2) 25.8
- -----------------------------------------------------------------------
October -- 0.3 1.7 (1.1) (4.5) (7.7)
- -----------------------------------------------------------------------
November -- 2.6 (4.4) (0.3) (0.8) 6.6
- -----------------------------------------------------------------------
December -- 1.7 (3.5) 2.9 (2.6) 39.4
- -----------------------------------------------------------------------
Compound Annual 1.61% 38.53% (5.32)% 46.82% (10.89)% 61.88%
Rate of Return (8 months)
=======================================================================
</TABLE>

In May 1991, one proprietary account commenced trading and in
March 1992 a second proprietary account commenced trading. Both
accounts appear in the summary performance and chart from their
inception until August 1995. The maximum percentage of proprietary
funds during this time period was less than 1/2 of 1%. These
proprietary funds had no material effect on the rate of return.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
SEE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-100-
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER JOHN W. HENRY & COMPANY, INC. PROGRAMS
- ------------------------------------------------------------------------------------------------------------------------------------
John W. Henry John W. Henry John W. Henry John W. Henry
Name of CTA: & Company, Inc. & Company, Inc. & Company, Inc. & Company, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Name of Program: International The World
Original Investment Global Diversified Currency and Financial
Program Portfolio Bond Portfolio Perspective
- ------------------------------------------------------------------------------------------------------------------------------------
Inception of Client Account Trading by CTA: October 1982 October 1982 October 1982 October 1982
- ------------------------------------------------------------------------------------------------------------------------------------
Inception of Client Account Trading in
Program: October 1982 June 1988 January 1993 April 1987
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Open Accounts: 27 17 1 5
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate Assets (excluding notional equity)
Overall: $1.5 billion $1.5 billion $1.5 billion $1.5 billion
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate Assets (excluding notional equity)
in Program: $157 million $133 million $2 million $18 million
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate Assets (excluding notional equity)
Overall: $1.5 billion $1.5 billion $1.5 billion $1.5 billion
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate Assets (excluding notional equity)
in Program: $157 million $133 million $2 million $18 million
- ------------------------------------------------------------------------------------------------------------------------------------
Worst Monthly Drawdown on a
Composite Basis: (14.1)% (10/94) (16.8)% (7/91) (6.7)% (7/94) (21.6)% (1/92)
- ------------------------------------------------------------------------------------------------------------------------------------
Worst Monthly Drawdown on an
Individual Account Basis: (18.1)% (2/92) (20.3)% (7/91) (7.8)% (7/94) (25.5)% (1/92)
- ------------------------------------------------------------------------------------------------------------------------------------
Worst Peak-to-Valley Drawdown: (26.2)% (6/94-10/94) (29.1)% (12/91-5/92) (20.1)% (6/94-1/95) (32.0)% (12/91-10/92)
- ------------------------------------------------------------------------------------------------------------------------------------
1996 Compound Rate of Return: (4)% (8 months) (5)% (8 months) (4)% (8 months) 10% (8 months)
- ------------------------------------------------------------------------------------------------------------------------------------
1995 Compound Rate of Return: 53% 20% 37% 32%
- ------------------------------------------------------------------------------------------------------------------------------------
1994 Compound Rate of Return: (6)% 10% (2)% (15)%
- ------------------------------------------------------------------------------------------------------------------------------------
1993 Compound Rate of Return: 41% 60% 15% 14%
- ------------------------------------------------------------------------------------------------------------------------------------
1992 Compound Rate of Return: 11% (13)% N/A (23)%
- ------------------------------------------------------------------------------------------------------------------------------------
1991 Compound Rate of Return: 5% 40% N/A 15%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
OTHER JOHN W. HENRY & COMPANY, INC. PROGRAMS
- --------------------------------------------------------------------------------------------------------------
John W. Henry John W. Henry John W. Henry
Name of CTA: & Company, Inc. & Company, Inc. & Company, Inc.
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name of Program: Delivered Yen International
Global Financial Denominated Financial Foreign Exchange
Portfolio and Metals Profile Program
- --------------------------------------------------------------------------------------------------------------
Inception of Client Account Trading by CTA: October 1982 October 1982 October 1982
- --------------------------------------------------------------------------------------------------------------
Inception of Client Account Trading in
Program: June 1994 October 1995 August 1986
- --------------------------------------------------------------------------------------------------------------
Number of Open Accounts: 5 1 7
- --------------------------------------------------------------------------------------------------------------
Aggregate Assets (excluding notional equity)
Overall: $1.5 billion $1.5 billion $1.5 billion
- --------------------------------------------------------------------------------------------------------------
Aggregate Assets (excluding notional equity)
in Program: $58 million (Y)923 million $67 million
- --------------------------------------------------------------------------------------------------------------
Aggregate Assets (including notional equity)
Overall: $1.5 billion $1.5 billion $1.5 billion
- --------------------------------------------------------------------------------------------------------------
Aggregate Assets (including notional equity)
in Program: $58 million (Y)923 million $67 million
- --------------------------------------------------------------------------------------------------------------
Worst Monthly Drawdown on a
Composite Basis: (17.4)% (11/94) (3.2)% (2/96) (12.0)% (1/92)
- --------------------------------------------------------------------------------------------------------------
Worst Monthly Drawdown on an
Individual Account Basis: (19.5)% (11/94) (3.2)% (2/96) (13.6)% (1/92)
- --------------------------------------------------------------------------------------------------------------
Worst Peak-to-Valley Drawdown: (46.0)% (6/94-1/95) (5.1)% (1/96-8/96) (24.1)% (12/91-4/92)
- --------------------------------------------------------------------------------------------------------------
1996 Compound Rate of Return: (5)% (8 months) (3)% (8 months) (7)% (8 months)
- --------------------------------------------------------------------------------------------------------------
1995 Compound Rate of Return: 86% 0.2% (3 months) 17%
- --------------------------------------------------------------------------------------------------------------
1994 Compound Rate of Return: (38)% (7 months) N/A (6)%
- --------------------------------------------------------------------------------------------------------------
1993 Compound Rate of Return: N/A N/A (5)%
- --------------------------------------------------------------------------------------------------------------
1992 Compound Rate of Return: N/A N/A 5%
- --------------------------------------------------------------------------------------------------------------
1991 Compound Rate of Return: N/A N/A 39%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FUTURES TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.

THE FUND'S ACCOUNT IS NOT TRADED PURSUANT TO ANY OF THE FOREGOING PROGRAMS.

SEE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-101-
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------

OTHER JOHN W. HENRY & COMPANY, INC. PROGRAMS
-------------------------------------------------------------------------------------------------

NAME OF CTA: John W. Henry John W. Henry John W. Henry John W. Henry
& Company, & Company, & Company, Inc. & Company,
Inc. Inc. Inc.
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worldwide Bond
NAME OF PROGRAM: G-7 Currency Portfolio Program Dollar Program InterRate(TM)
-------------------------------------------------------------------------------------------------
INCEPTION OF CLIENT
ACCOUNT TRADING BY CTA: October 1982 October 1982 October 1982 October 1982
-------------------------------------------------------------------------------------------------
INCEPTION OF CLIENT December 1988,
ACCOUNT TRADING IN PROGRAM: February 1991 July 1996 July 1996 ceased trading 7/96
-------------------------------------------------------------------------------------------------
NUMBER OF OPEN ACCOUNTS: 9 2 2 0
-------------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(EXCLUDING NOTIONAL EQUITY)
OVERALL: $1.5 billion $1.5 billion $1.5 billion $1.5 billion
-------------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(EXCLUDING NOTIONAL EQUITY)
IN PROGRAM: $103 million $ 9 million $9 million N/A
-------------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(INCLUDING NOTIONAL
EQUITY) OVERALL: $1.5 billion $1.5 billion $1.5 billion $1.5 billion
-------------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(INCLUDING NOTIONAL EQUITY)
IN PROGRAM: $103 million $9 million $9 million N/A
-------------------------------------------------------------------------------------------------
WORST MONTHLY DRAWDOWN
ON A COMPOSITE BASIS: (10.7)% (1/92) None (2.3)% (8/96) (9.71)% (9/92)
-------------------------------------------------------------------------------------------------
WORST MONTHLY DRAWDOWN ON AN
INDIVIDUAL ACCOUNT BASIS: (12.3)% (1/92) None (2.3)% (8/96) (10.2)% (9/92)
-------------------------------------------------------------------------------------------------
WORST PEAK-TO-VALLEY
DRAWDOWN: (19.5)% (7/93-1/95) None (3.5)% (7/96-8/96) (17.8)% (8/92-2/94)
-------------------------------------------------------------------------------------------------
1996 COMPOUND RATE OF RETURN: (4)% (8 months) (3)% (2 mos) (4)% (2 mos) 6% (7 months)
-------------------------------------------------------------------------------------------------
1995 COMPOUND RATE OF RETURN: 32% N/A N/A 5%
-------------------------------------------------------------------------------------------------
1994 COMPOUND RATE OF RETURN: (5)% N/A N/A 3%
-------------------------------------------------------------------------------------------------
1993 COMPOUND RATE OF RETURN: (6)% N/A N/A (5)%
-------------------------------------------------------------------------------------------------
1992 COMPOUND RATE OF RETURN: 15% N/A N/A (1)%
-------------------------------------------------------------------------------------------------
1991 COMPOUND RATE OF RETURN: 49% (11 months) N/A N/A 9%
-------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------
NAME OF CTA: John W. Henry
& Company, Inc. JWH Investments, Inc. JWH Investments, Inc.
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Financial and Metals
NAME OF PROGRAM: KT Diversified Program Portfolio InterRate(SM)
-----------------------------------------------------------------------------------------------
INCEPTION OF CLIENT
ACCOUNT TRADING BY CTA: October 1982 September 1991 September 1991
-----------------------------------------------------------------------------------------------
INCEPTION OF CLIENT
ACCOUNT TRADING January 1984, September 1991, February 1992,
PROGRAM: ceased trading 2/94 ceased trading 7/95 ceased trading 11/93
-----------------------------------------------------------------------------------------------
NUMBER OF OPEN ACCOUNTS: 0 0 0
-----------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(EXCLUDING NOTIONAL EQUITY)
OVERALL: $1.5 billion 0 0
-----------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(EXCLUDING NOTIONAL EQUITY)
IN PROGRAM: N/A N/A N/A
-----------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(INCLUDING NOTIONAL EQUITY)
OVERALL: $1.5 billion 0 0
-----------------------------------------------------------------------------------------------
AGGREGATE ASSETS
(INCLUDING NOTIONAL EQUITY) IN
PROGRAM: N/A N/A N/A
----------------------------------------------------------------------------------------------
WORST MONTHLY DRAWDOWN
ON A COMPOSITE BASIS: (19.2)% (7/91) (16.6)% (1/92) (9.3)% (9/92)
----------------------------------------------------------------------------------------------
WORST MONTHLY DRAWDOWN ON AN
INDIVIDUAL ACCOUNT BASIS: (28.6)% (1/92) (16.6)% (1/92) (9.3)% (9/92)
----------------------------------------------------------------------------------------------
WORST PEAK-TO-VALLEY DRAWDOWN: (40.6)% (1/91-3/92) (34.4)% (12/91-5/92) (20.6)% (8/92-11/93)
----------------------------------------------------------------------------------------------
1996 COMPOUND RATE OF RETURN: N/A N/A N/A
----------------------------------------------------------------------------------------------
1995 COMPOUND RATE OF RETURN: N/A 30% (7 months) N/A
----------------------------------------------------------------------------------------------
1994 COMPOUND RATE OF RETURN: (14)% (2 months) (1)% N/A
----------------------------------------------------------------------------------------------
1993 COMPOUND RATE OF RETURN: 21% 46% (10)% (11 months)
----------------------------------------------------------------------------------------------
1992 COMPOUND RATE OF RETURN: (12)% (4)% 3% (11 months)
----------------------------------------------------------------------------------------------
1991 COMPOUND RATE OF RETURN: (2)% 59% (4 months) N/A
---------------------------------------------------------------------------------------------
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FUTURES TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.

THE FUND'S ACCOUNT IS NOT TRADED PURSUANT TO ANY OF THE FOREGOING PROGRAMS.

SEE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-102-

<PAGE>
JOHN W. HENRY & COMPANY, INC. TRADING PROGRAMS
PERFORMANCE SUMMARIES

YEN FINANCIAL PORTFOLIO

Name of CTA: John W. Henry & Company, Inc.
Inception of client account trading: October 1982
Number of open accounts: 7
Aggregate assets (excluding notional equity) overall: $1.5 billion
Aggregate assets (excluding notional equity) in program: $38 million
Aggregate assets (including notional equity) overall: $1.5 billion
Aggregate assets (including notional equity) in program: $38 million

See Additional Note on p. 97.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AGGREGATE WORST WORST
ACCOUNT NO. INCEPTION OF ASSETS COMPOUND RATE MONTHLY PEAK-TO-VALLEY
TRADING AUGUST 31, 1996 OF RETURN (%) DRAWDOWN % DRAWDOWN %
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 1/92 $5.9 million 1996: (15) (8 months) (14.4) - 2/92 (30.5) - 4/95-7/96
1995: 21
1994: (13)
1993: 76
1992: 20
- --------------------------------------------------------------------------------------------------------------------------
2 1/93 $1.0 million 1996: (14) (8 months) (6.9) - 7/95 (29.0) - 4/95-7/96
1995: 21
1994: (9)
1993: 71
- --------------------------------------------------------------------------------------------------------------------------
3 1/94 $0.9 million 1996: (14) (8 months) (6.0) - 7/95 (26.6) - 4/95-7/96
1995: 22
1994: (8)
- --------------------------------------------------------------------------------------------------------------------------
4 6/94 $22.4 million 1996: (8) (8 months) (6.5) - 7/95 (22.3) - 4/95-7/96
1995: 24
1994: (2) (6 months)
- --------------------------------------------------------------------------------------------------------------------------
5 8/94 $4.4 million 1996: (12) (8 months) (7.1) - 7/95 (30.4) - 4/95-7/96
1995: 21
1994: (4) (5 months)
- --------------------------------------------------------------------------------------------------------------------------
6 1/95 $2.2 million 1996: (17) (8 months) (7.5) - 7/95 (35.5) - 5/96-7/96
1995: 13
- --------------------------------------------------------------------------------------------------------------------------
7 3/94 (Yen)179 million 1996: (6) (8 months) (6.7) - 7/96 (15.9) - 2/96-7/96
1995: 28
1994: (11) (10 months)
- --------------------------------------------------------------------------------------------------------------------------
8 4/92 closed - 9/93 1993: 63 (9 months) (11.7) - 5/92 (11.7) - 4/92-5/92
1992: 27
- --------------------------------------------------------------------------------------------------------------------------
9 2/92 closed - 12/92 1992: 33 (11 months) (11.5) - 2/92 (11.5) - 2/92
- --------------------------------------------------------------------------------------------------------------------------
10 3/94 closed - 12/94 1994: (7) (10 months) (5.4) - 5/94 (10.5) - 4/94-12/94
- --------------------------------------------------------------------------------------------------------------------------
11 11/93 closed - 8/95 1995: 20 (8 months) (9.0) - 8/95 (18.8) - 4/95-8/95
1994: (13)
1993: 5 (2 months)
- --------------------------------------------------------------------------------------------------------------------------
12 11/93 closed - 1/95 1995: (1) (1 month) (6.3) - 5/94 (16.5) - 4/94-1/95
1994: (15)
1993: 5 (2 months)
- --------------------------------------------------------------------------------------------------------------------------
13 12/92 closed - 3/96 1996: (4) (3 months) (4.9) - 7/95 (15.8) - 12/93-1/95
1995: 31
1994: (14)
1993: 69
1992: 0.1 (1 month)
- --------------------------------------------------------------------------------------------------------------------------
14 1/93 closed - 12/95 1995: (11) (6.2) - 6/95 (15.8) - 4/95-12/95
1994: (4)
1993: 43
- --------------------------------------------------------------------------------------------------------------------------
15 4/93 closed - 9/94 1994: (19) (9 months) (5.8) - 5/94 (19.9) - 11/93-9/94
1993: 25 (9 months)
- --------------------------------------------------------------------------------------------------------------------------
16 1/94 closed - 8/94 1994: (7) (8 months) (5.5) - 5/94 (11.0) - 4/94-8/94
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FUTURES TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.

THE FUND'S ACCOUNT IS NOT TRADED PURSUANT TO THE FOREGOING PROGRAM.

SEE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-103-
<PAGE>
JOHN W. HENRY & COMPANY, INC. TRADING PROGRAMS
PERFORMANCE SUMMARIES

YEN FINANCIAL PORTFOLIO

Name of CTA: John W. Henry & Company, Inc.
Inception of client account trading: October 1982
Inception of client account trading in program: January 1992
Number of open accounts 7
Aggregate assets (excluding notional equity) overall: $1.5 billion
Aggregate assets (excluding notional equity) in program: $38 million
Aggregate assets(including notional equity) overall: $1.5 billion
Aggregate assets(including notional equity) in program: $38 million

See Addditional Note on p. 97.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Account No. Inception of Aggregate Worst Worst
Trading Assets Compound Rate Monthly Peak-to-Valley
August 31, 1996 of Return (%) Drawdown % Drawdown %
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
17 12/92 closed - 1/96 1996: 0.3 (1 month) (6.0) - 7/95 (12.4) - 4/95 - 10/95
1995: 27
1994: (5)
1993: 74
1992: (1) (1 month)
- --------------------------------------------------------------------------------------------------------------------------------
18 3/94 closed - 4/96 1996: (6) (4 months) (6.2) - 7/95 (18.5) - 4/95 - 4/96
1995: 19
1994: (10) (10 months)
- --------------------------------------------------------------------------------------------------------------------------------
19 12/94 closed 1996: (8) (4 months) (6.6) - 7/95 (21.1) - 4/95 - 4/96
1995: 18
1994: 0.2 (1 month)
- --------------------------------------------------------------------------------------------------------------------------------
20 6/94 closed - 12/94 1994: (8) (7 months) (5.1) - 7/94 (10.4) - 6/94 - 11/94
- --------------------------------------------------------------------------------------------------------------------------------
21 6/94 closed - 3/95 1995: 48 (3 months) (3.6) - 7/94 (9.9) - 6/94 - 1/95
1994: (7) (7 months)
- --------------------------------------------------------------------------------------------------------------------------------
22 4/94 closed - 9/94 1994: (5) (6 months) (4.7) - 5/94 (7.0) - 4/94 - 9/94
- --------------------------------------------------------------------------------------------------------------------------------
23 3/94 closed - 9/94 1994: (10) (7 months) (6.3) - 5/94 (11.0) - 4/94 - 9/94
- --------------------------------------------------------------------------------------------------------------------------------
24 4/94 closed - 9/94 1994: (10) (6 months) (9.1) - 5/94 (12.9) - 4/94 - 9/94
- --------------------------------------------------------------------------------------------------------------------------------
25 4/93 closed - 12/94 1994: (17) (6.1) - 5/94 (17.9) - 11/93 - 12/94
1993: 27 (9 months)
- --------------------------------------------------------------------------------------------------------------------------------
26 9/93 closed - 12/94 1994: (12) (6.0) - 5/94 (14.1) - 4/94 - 12/94
1993: 3 (4 months)
- --------------------------------------------------------------------------------------------------------------------------------

</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FUTURES TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.

THE FUND'S ACCOUNT IS NOT TRADED PURSUANT TO THE FOREGOING PROGRAM.

SEE "NOTES TO THE PERFORMANCE SUMMARIES" ON PAGES 105 THROUGH 107.

-104-
<PAGE>

NOTES TO THE PERFORMANCE SUMMARIES

1. Name of CTA is the name of the core Advisor which directed the accounts
included in the performance summary.

2. Name of Program is the name of the trading program used by the core
Advisor in directing the accounts included in the performance summary.

3. Inception of Client Account Trading by CTA is the date on which the
relevant core Advisor began directing client accounts.

4. Inception of Client Account Trading in Program is the date on which the
relevant core Advisor began directing client accounts pursuant to the
program shown in the performance summary.

5. Number of Open Accounts is the number of accounts directed by the relevant
core Advisor pursuant to the program shown in the performance summary, as
of the end of the period covered by the performance summary.

6. Aggregate Assets (excluding notional equity) Overall is the aggregate
amount of actual assets under the management of the relevant core Advisor
in all programs operated by such core Advisor, as of the end of the period
covered by the performance summary. With respect to ARA and Chesapeake,
these numbers include client funds only. With respect to JWH, these
numbers also include proprietary funds; however, all proprietary funds are
traded in the same manner and charged the same fees as client funds, and
the proprietary funds are, in any event, not material in terms of the
overall assets managed by JWH.

7. Aggregate Assets (excluding notional equity) in Program is the aggregate
amount of actual assets under the management of the relevant core Advisor
in the program shown in the performance summary, as of the end of the
period covered by the performance summary. With respect to ARA and
Chesapeake, these numbers include client funds only. With respect to JWH,
these numbers may also include proprietary funds; however, all proprietary
funds are traded in the same manner and charged the same fees as client
funds, and the proprietary funds are, in any event, not material in terms
of the overall assets managed by JWH.

8. Aggregate Assets (including notional equity) Overall is the aggregate
amount of total equity, including notional equity, under the management of
the relevant core Advisor in all programs operated by such core Advisor,
as of the end of the period covered by the performance summary. Notional
equity represents the additional amount of equity which exceeds the amount
of equity actually committed to the core Advisor for management. With
respect to ARA and Chesapeake, these numbers include client funds only.
With respect to JWH, these numbers also include proprietary funds;
however, all proprietary funds are traded in the same manner and charged
the same fees as client funds, and the proprietary funds are, in any
event, not material in terms of the overall assets managed by JWH.

9. Aggregate Assets (including notional equity) in Program is the aggregate
amount of total equity, including notional equity, under the management of
the relevant core Advisor in the program shown in the performance summary,
as of the end of the period covered by the performance summary. Notional
equity represents the additional amount of equity which exceeds the amount
of equity actually committed to the core Advisor for management. With
respect to ARA and Chesapeake, these numbers include client funds only.
With respect to JWH, these numbers may also include proprietary funds;
however, all proprietary funds are traded in the same manner and charged
the same fees as client funds, and the proprietary funds are, in any
event, not material in terms of the overall assets managed by JWH.

10. Worst Monthly Drawdown is the worst monthly loss experienced by the
relevant program on either a composite or individual account basis, unless
noted otherwise, in any calendar month covered by the performance summary
and includes the month and year of such drawdown.

With respect to Chesapeake's programs, worst monthly drawdown is the worst
monthly loss experienced by the program on a composite basis in any
calendar month expressed as a percentage of the total equity (including
notional equity) in the program. A small number of accounts managed by
Chesapeake have experienced monthly drawdowns which are materially larger
than the worst composite monthly drawdown. These variances result from
such factors as small account size, intra-month account opening or
closing, significant intra-month additions or withdrawals and investment
restrictions imposed by the client. Small account sizes refers to accounts
of $1,000,000 trading level or less, which is substantially below the
minimum account size currently required by Chesapeake for new accounts.

With respect to JWH's programs, the worst monthly drawdown for an
individual account within a program was determined after identification of
the three worst monthly drawdowns on a composite basis for each investment

-105-
<PAGE>

NOTES TO THE PERFORMANCE SUMMARIES
(Cont'd)

program. Within the three months in which the worst composite monthly
drawdowns occurred, individual accounts were reviewed for each program.
The individual account which experienced the largest loss in those months
is the account shown as having the worst individual monthly drawdown for
the investment program. Some individual accounts were excluded from review
if they were being phased in or out, opened or closed during the month or
if material intra-month additions or redemptions were made.

Differences between the worst monthly drawdown for an individual account
and the worst monthly drawdown on a composite basis for a program are due
to, among other factors, the reasons noted under "John W. Henry &
Company--Past Performance" at page 96.

11. Worst Peak-to-Valley Drawdown is the largest percentage decline (after
eliminating the effect of additions and withdrawals) during the period
covered by the performance summary from any month-end net asset value,
without such month-end net asset value being equalled or exceeded as of a
subsequent month-end. Worst peak-to-valley drawdown is calculated on the
basis of the loss experienced in the program either on an individual
account or a composite basis, unless noted otherwise, expressed as a
percentage of the total equity (including notional equity) in the program.
Individual accounts managed by a core Advisor may have experienced larger
peak-to-valley drawdowns. JWH calculates the period over which the worst
peak-to-valley drawdown of a program has occurred as beginning with the
last profitable month immediately preceding the drawdown. ARA and
Chesapeake calculate such period as beginning with the first unprofitable
month of the drawdown.

With respect to Chesapeake's programs, a small number of accounts managed
by Chesapeake have experienced peak-to-valley drawdowns which are
materially larger than the worst composite peak-to-valley drawdown. These
variances result from such factors as small account size, intra-month
account opening or closing, significant intra-month additions or
withdrawals and investment restrictions imposed by the client.

12. Monthly Rates of Return, in accordance with CFTC rules, are shown only for
the specific programs currently being traded by the core Advisors for the
Fund.

With respect to ARA's Gamma Program, the Monthly Rate of Return for each
month is calculated by dividing net performance by beginning equity,
except when there are significant additions or withdrawals during a month.
In such instances, beginning equity is adjusted to reflect the pro rata
participation of the capital available for trading.

With respect to Chesapeake's Diversified Program, the Monthly Rate of
Return for each month beginning January 1994 is calculated by dividing the
net performance of the Fully-Funded Subset by the beginning equity of the
Fully-Funded Subset, except in periods of significant additions or
withdrawals to the accounts in the Fully-Funded Subset. In such instances,
the Fully-Funded Subset is adjusted to exclude accounts with significant
additions or withdrawals, whose inclusion would materially distort the
rate of return calculated pursuant to the Fully-Funded Subset method.

The Monthly Rate of Return for each month prior to January 1992 is
calculated using the Only Accounts Traded (OAT) method (see "Chesapeake
Capital Corporation -- Past Performance" at page 85), which uses net
performance divided by beginning equity, subject to certain adjustments.
In this calculation, accounts are excluded from both net performance and
beginning equity if their inclusion would materially distort the Monthly
Rate of Return. The excluded accounts include (1) accounts for which there
has been a material addition or withdrawal during the month, (2) accounts
which were open for only part of the month or (3) accounts which had no
open positions during the month due to the intention to permanently close
the account. Such accounts were not charged with material nonrecurring
costs during the month.

The Monthly Rate of Return for the months from January 1992 through April
1994 was calculated using both the Fully-Funded Subset and OAT methods of
computation, as described herein. No material differences were noted
between the Monthly Rates of Return computed using each method.

With respect to JWH's Financial and Metals Portfolio, the Monthly Rate of
Return for each month is calculated by dividing net performance by the sum
of beginning equity plus additions and minus withdrawals. For such
purposes, all additions and withdrawals are effectively treated as if they
had been made on the first day of the month even if, in fact, they
occurred later, unless, beginning in December 1991, they are material to
the performance of the Financial and Metals Portfolio, in which case they
are time-weighted.

-106-
<PAGE>

NOTES TO THE PERFORMANCE SUMMARIES
(Cont'd)

The Monthly Rates of Return for the current core Advisors are, in certain
cases, calculated on the basis of assets under management including
proprietary capital. However, each of the current core Advisors believes
that the inclusion of such capital has had no material effect on their
respective Monthly Rates of Return.

13. Compound Rate of Return is calculated by multiplying on a compound
basis each of the Monthly Rates of Return and not by adding or averaging
such Monthly Rates of Return. For periods of less than one year, the
results are year-to-date.

-107-

<PAGE>

PERFORMANCE OF THE SINGLE-ADVISOR
FUTURES FUNDS OPERATED BY MLIP

GENERAL

The following is summary performance information for the six single-
advisor funds which MLIP has dis tributed other than as part of its Managed
Account Program (which consists of private placements and feeder funds which
invest all of their assets directly into different managers' private funds).

All summary performance information is current as of September 1,
1996. Performance information is set forth for the most recent five full years
of each fund. Performance information prior to January 1, 1991 has not been
included, in accordance with CFTC regulations.

Four of the funds presented (The Futures Expansion Fund Limited
Partnership, World Currencies Limited, ML JWH Strategic Allocation Fund L.P. and
ML JWH Strategic Allocation Fund Ltd.) have or, in the case of World Currencies
Limited which dissolved, had fee structures and interest arrangements generally
comparable to that of the Fund (although these funds, being single-advisor
pools, pay profit shares only in respect of overall fund performance, not on an
advisor-by-advisor basis). The other funds, The Growth and Guarantee Fund L.P.
and InterRate Limited, were designed as index and yield enhancement funds,
respectively, and pay (paid, in the case of The Growth and Guarantee Fund L.P.
- --Series B and InterRate Limited, each of which has dissolved) reduced fees.

THE FUNDS WHOSE PERFORMANCE IS SUMMARIZED IN THIS SECTION ARE
MATERIALLY DIFFERENT FROM THE FUND, AND THE PERFORMANCE SUMMARIES OF SUCH FUNDS
ARE NOT REPRESENTATIVE OF HOW THE FUND HAS PERFORMED TO DATE NOR INDICATIVE OF
HOW THE FUND WILL PERFORM IN THE FUTURE.

MANAGED ACCOUNT PROGRAM SINGLE-ADVISOR FUNDS NOT PRESENTED

MLIP currently has sponsored, and continues to operate, five single-
advisor funds, as well as several single-advisor feeder funds, as part of MLIP's
Managed Account Program. These funds are in addition to the six single-advisor
funds whose performance records are summarized herein. MLIP selects the
professional advisors for the funds in the Managed Account Program. However,
each client determines with which, if any, of such advisors the client will
invest. The Managed Account Program emphasizes single-advisor funds.

In its single-advisor funds, MLIP does not implement asset allocation
strategies as MLIP does for the Fund. Nor is MLIP's trading leverage analysis of
any relevance in the context of single-advisor funds. All the assets of such
funds are simply allocated to their respective advisors.

Managed Account Program funds are privately distributed with a minimum
investment of $100,000 (although MLIP has from time to time permitted
investments of $50,000).

Although MLIP's ability to select advisors for the Managed Account
Program might be regarded as a reflection on MLIP's ability to select advisors
for its multi-advisor funds, MLIP regards the Managed Account Program and MLIP's
multi-advisor funds as qualitatively different investments. Consequently, while
MLIP will furnish, without charge, full performance records of all MLIP single-
advisor funds upon the request of any existing or prospective investor in the
Fund, such records are not set forth herein.

The three worst performing of the single-advisor Managed Account
Program funds sponsored by MLIP had, as of September 1, 1996, cumulative rates
of return, since inception, of (53.27)% (18 months), (17.67)% (43 months) and
(6.20)% (27 months).

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

MATERIAL DIFFERENCES EXIST BETWEEN THE FUNDS SET FORTH HEREIN AND THE
FUND. TO DATE, THE FUND HAS NOT PERFORMED IN A MANNER COMPARABLE TO MANY OF
THESE SINGLE-ADVISOR MLIP-SPONSORED FUNDS, AND THERE IS NO REASON TO EXPECT THAT
THE FUND WILL PERFORM IN A MANNER COMPARABLE TO ANY OF SUCH FUNDS IN THE FUTURE.

----------------

-108-

<PAGE>

- ------------------------------------------------------------------------------------------------------------------------------------
MLIP SINGLE-ADVISOR FUNDS
SEPTEMBER 1, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Worst
Worst Monthly Peak-to-valley
Type of Inception of Aggregate Current Drawdown Drawdown
NAME OF FUND Offering Trading Subscription Capitalization Period Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Futures Expansion Fund Public Jan. 1987 $56,741,035 $8,766,575 (10.92)% (2/96) (17.32)% (1/91-11/91)
Limited Partnership
- ------------------------------------------------------------------------------------------------------------------------------------
The Growth & Guarantee Fund Public Aug. 1987 $148,349,450 $8,612,566 (4.28)% (6/91) (6.93)% (2/94-6/94)
L.P. - Series A Units
- ------------------------------------------------------------------------------------------------------------------------------------
ML JWH Strategic Allocation Public July 1996 $110,773,125 $108,525,219 (1.02)% (7/96) (1.11)% (7/96-8/96)
Fund L.P.
- -----------------------------------------------------------------------------------------------------------------------------------
ML JWH Strategic Allocation Private July 1996 $87,272,808 $ 85,729,688 (1.05)% (7/96) (1.35)% (7/96-8/96)
Fund Ltd.
- -----------------------------------------------------------------------------------------------------------------------------------
World Currencies Limited Private Aug. 1987 $47,814,293 dissolved as (13.41)% (4/92) (35.81)% (9/92-1/95)
of 4/11/96
- -----------------------------------------------------------------------------------------------------------------------------------
The Growth & Guarantee Fund Public Sept. 1987 $84,282,707 dissolved as (3.65)% (6/91) (4.29)% (9/91-11/91)
L.P. - Series B Units of 12/31/91
- -----------------------------------------------------------------------------------------------------------------------------------
InterRate/tm/ Limited Private Dec. 1988 $7,429,200 dissolved as (10.08)% (9/92) (13.49)% (9/92-1/93)
of 1/31/94
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

WORST MONTHLY DRAWDOWN AS USED HEREIN MEANS THE LARGEST NEGATIVE MONTHLY RATE
OF RETURN EXPERIENCED BY THE RELEVANT FUND DURING THE PERIOD COVERED BY THE
PERFORMANCE SUMMARY. A DRAWDOWN IS MEASURED ON THE BASIS OF MONTH-END FIGURES
ONLY, AND DOES NOT REFLECT INTRA-MONTH PERFORMANCE.

WORST PEAK-TO-VALLEY DRAWDOWN AS USED HEREIN MEANS THE GREATEST PERCENTAGE
DECLINE, DURING THE PERIOD COVERED BY THE PERFORMANCE SUMMARY, FROM A MONTH-END
CUMULATIVE MONTHLY RATE OF RETURN WITHOUT SUCH CUMULATIVE MONTHLY RATE OF RETURN
BEING EQUALLED OR EXCEEDED AS OF A SUBSEQUENT MONTH-END. FOR EXAMPLE, IF THE
MONTHLY RATE OF RETURN OF A PARTICULAR FUND WAS (1)% IN EACH OF JANUARY AND
FEBRUARY, 1% IN MARCH AND (2)% IN APRIL, A PEAK-TO-VALLEY DRAWDOWN ANALYSIS
CONDUCTED AS OF THE END OF APRIL WOULD CONSIDER THAT DRAWDOWN TO BE STILL
CONTINUING AND TO BE APPROXIMATELY (3)% IN AMOUNT, WHEREAS IF THE MONTHLY RATE
OF RETURN HAD BEEN APPROXIMATELY 3% IN MARCH, THE JANUARY-FEBRUARY DRAWDOWN
WOULD HAVE ENDED AS OF THE END OF FEBRUARY AT APPROXIMATELY THE (2)% LEVEL.

MONTHLY RATE OF RETURN, ON THE BASIS OF WHICH WORST MONTHLY DRAWDOWN, WORST
PEAK-TO-VALLEY DRAWDOWN, CUMULATIVE RATE OF RETURN AND COMPOUND RATE OF RETURN
ARE CALCULATED, IS THE NET PERFORMANCE OF THE FUND DURING THE MONTH OF
DETERMINATION (INCLUDING INTEREST INCOME AND AFTER ALL EXPENSES ACCRUED OR PAID)
DIVIDED BY THE TOTAL EQUITY OF THE FUND AS OF THE BEGINNING OF SUCH MONTH.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

PURCHASERS OF UNITS WILL ACQUIRE NO INTEREST IN THESE FUNDS. THESE FUNDS ARE
EACH TRADED PURSUANT TO MATERIALLY DIFFERENT PROGRAMS AND WITH MATERIALLY
DIFFERENT OBJECTIVES THAN THE FUND.

-109-
<PAGE>

THE ROLE OF MANAGED FUTURES IN AN INVESTMENT PORTFOLIO

MANAGED FUTURES AS AN ELEMENT IN MODERN PORTFOLIOS

This section presents a general description of the possible role of a
managed futures investment in an overall portfolio. Prospective investors are
cautioned that what may be true of managed futures investments considered in
general may not be true of the Fund. The Fund does not purport to offer the full
diversification and access to global trading which is reflected in the
investment opportunities available in the managed futures industry considered as
a whole. The following statements are qualified in their entirety by the
specific descriptions of the Fund, the Trading Advisors, their strategies and
the markets traded by the Fund set forth herein and elsewhere in this Prospectus
and in the accompanying Prospectus Supplement.

A global investment perspective may be appropriate in seeking
investment opportunity and increased portfolio diversification. The
globalization of the world's economy offers significant new opportunities.
However, world political and economic events have an influence -- often a
dramatic influence -- on its markets, creating increased risk and volatility.
The market volatility of recent years suggests that stable growth may be
becoming increasingly difficult to achieve.

Over the long term, portfolios are benefitted by having the ability to
adapt to changing social, political and economic trends. A well-diversified
asset allocation strategy enhances this ability and offers a flexible approach
to the objective of building and protecting wealth in today's economic
environment. Incorporating a managed futures investment into portfolios as part
of a well-diversified asset allocation strategy has the potential, if the
managed futures investment is successful, to increase profits while reducing
overall portfolio risk. The Fund's performance to date has been volatile
(volatility being one commonly accepted measure of risk). There can be no
assurance that the Fund will trade successfully, and if it does not do so an
investment in the Fund cannot provide beneficial diversification to a portfolio.
Furthermore, even if profitable, the Fund may not be a successful
diversification of an investor's stock and bond portfolio because the Fund's
performance may be correlated (i.e., experiencing generally similar returns at
or about the same time) with these markets. The past performance of the Fund is
not necessarily indicative of its future results or of performance relative to
the debt or equity markets.

An asset allocation strategy diversifies a portfolio into a variety of
different components such as stocks, bonds and cash equivalents. Such a strategy
may also include, to a limited extent, non-traditional investments such as
managed futures (among a variety of alternatives). The goal is to achieve the
twin investment objectives of long-term total return combined with reduced
portfolio volatility and limited risk of major losses. An investment's
anticipated return, relative risk level, historical correlation with other
components in the portfolio and the percentage of an investor's holdings which
can suitably be committed to speculative alternative investments should be
principal factors taken into account in allocating a portfolio's assets.
Different investment components are expected to respond differently to changing
economic conditions. Consequently, combining a number of such components may add
a potentially valuable element of diversification to an overall portfolio. There
can be no assurance that the Fund will not respond to prevailing economic
conditions in the same manner, as well as incur losses at or about the same
time, as the general debt and equity markets.

PROFESSIONAL MANAGEMENT

Depending upon the fund and advisors selected, an investment in
managed futures has the potential to offer access to professionally managed
trading in a variety of commodity markets, including currencies, interest rates,
stock indices, energy, metals and agriculture. These markets may be traded
through futures, options on futures and forward contracts, and offer the ability
to trade either side of a market and at a wide range of different leverage
factors. The Fund does not trade in all, or even most, of the available markets,
and its positions may frequently be concentrated in particular markets and
sectors. There is substantial overlap among the markets traded by the Advisors.
The concentrated multi-advisor program implemented by the Fund should, over
time, result in the Fund's trading being less diversified than in the case of
many multi-advisor funds.

-110-
<PAGE>

[Pie Graphs: Futures Volume by Market Sector]

The futures volume figures and market sector distributions presented
above include both speculative and hedging transactions, as well as
options on futures. Source: Futures Industry Association. A
significant portion of currency trading is done in the forward rather
than in the futures markets, and, accordingly, is not reflected in the
foregoing chart.

INTERNATIONAL MARKETS

The futures markets have expanded in recent years to include a wide
range of instruments representing major sectors of the world's economy.
Coinciding with the development of an increasingly broad range of markets has
been greatly increased liquidity. The expansion of futures trading on major
exchanges in Chicago, Frankfurt, London, New York, Paris, Singapore, Sydney and
Tokyo offers the possibility of access to international market sectors as well
as the potential for a global diversification of portfolios traditionally
concentrated in a single nation's economy and currency. Managed futures advisors
are often able quickly to deploy and redeploy capital across a wide range of
international markets. No representation is or could be made that the
diversification or internationalization of futures trading in general has been
or will be reflected in the trading of the Fund.

At the same time that the rapid geographical expansion of the
available markets and the introduction of an array of innovative products have,
in the case of certain managers, created new opportunities for both profit and
diversification, these developments have made trading very much more complex and
difficult for the individual investor. Managed futures investments offer the
investor the opportunity to participate in a range of different economic sectors
utilizing professional money managers. Managed futures investments have profit
potential, but also involve a high degree of risk. A managed futures investment
is suitable only for a limited portion of the risk segment of a portfolio, which
may limit the diversification potential of the investment.

SUBSTANTIAL INVESTOR PARTICIPATION

A large number of investors, both individuals and institutions
(although only a small percentage of the investing public), have committed a
limited portion of their assets to managed futures during the last 10 to 15
years. In 1980, client assets in the managed futures industry were estimated by
Managed Account Reports ("MAR"), a leading industry publication in the United
States, at approximately $0.3 billion. As of the end of 1995, the same
publication estimated such

-111-

<PAGE>

assets, which peaked at around an estimated $25 billion as of the end of 1993,
at approximately $ 22.8 billion. Of this amount, approximately $2.5 billion to
$3.5 billion is estimated to be invested in pools, such as the Fund, publicly
distributed in the United States. The assets invested in managed futures are
invested in a wide range of different products, including single-advisor and
multi-advisor funds, funds of funds, "principal protection" pools in which only
a fraction of the assets invested are committed to trading and individual
managed accounts. Many of these investments are materially different from the
Fund in design and fee structure as well as in investor base, performance and
risk control objectives.

NON-CORRELATION -- A POTENTIALLY IMPORTANT COMPONENT OF RISK REDUCTION

Historically, the returns of many managed futures investments have
exhibited a substantial degree of non-correlation with the performance of the
general equity and debt markets, suggesting that a managed futures component, if
successful, may provide a valuable complement to a traditional portfolio. Modern
portfolio theory suggests that investments with positive returns and low
correlation with other holdings can improve the reward/risk characteristics of
an investor's overall portfolio. Consequently, allocating a limited portion of
the risk segment of a portfolio to managed futures, such as the Fund, if the
managed futures performance is, in fact, profitable as well as non-correlated
with stocks and bonds, can potentially add a valuable aspect of diversification
to a traditionally structured portfolio. On an interim basis, a non-correlated
asset may benefit a portfolio even if that asset is not itself profitable, by
helping to preserve equity during periods when core investments are incurring
significant losses. However, over time an investment can only be beneficial if
it is itself profitable. There can be no assurance that any managed futures
investment will be successful, avoid substantial losses or generate performance
non-correlated with the equity or debt markets. Even if the performance of the
Fund is, in fact, non-correlated with these markets (of which there can be no
assurance), this does not mean that the Fund's results will not parallel general
stock and bond price levels during significant periods of time. Non-correlation
is not negative correlation. The Fund may well incur losses at or about the same
time as an investor's traditional holdings, increasing, rather than mitigating,
overall portfolio losses. Furthermore, even if a managed futures investment is
non-correlated to general equity and debt prices, it must also be profitable in
order to add value as an element of overall diversification in a portfolio.

Allocating assets to non-traditional, alternative investments is based
on the premise that while securities (e.g., stocks and bonds) prices are often
affected by overall market price trends, alternative investments may not be, at
least to the same degree. In addition, the results of many types of alternative
investments have historically been largely non-correlated with each other. This
creates the possibility of assembling a portfolio whose various investments have
been developed with the objective of participating successfully in different
economic cycles and national financial markets, potentially multiplying profit
opportunities while decreasing the effect of price movements in any given market
on the overall volatility of the portfolio. The speculative nature of the return
recognized from a managed futures investment such as the Fund indicates that
prospective investors must not rely on such investment either to generate
profits or to help diversify a portfolio, because the actual results of such an
investment are entirely unpredictable.

There are a number of different, non-traditional alternative
investments to which one could commit assets with the objective of diversifying
and improving the overall reward/risk ratio of a traditional portfolio --
venture capital, natural resources, real estate, private lending and managed
futures are only certain of the options available. Many alternative investments
are likely to generate results largely non-correlated with those of the debt and
equity markets. A managed futures investment is typically more liquid and more
readily-valued than many other alternative investments, but unlike many such
investments, does not involve the acquisition of any assets with an intrinsic
value. Although the commodities and instruments which underlie the Fund's
futures and forward contracts have value, the success of its managed futures
program depends on the results of speculative trading. No object of value is
acquired by the Fund. Rather, the Fund obtains market exposures, hoping to
profit from price movements in commodities and financial instruments which the
Fund, in fact, never owns. A fundamental characteristic of a managed futures
investment is that it is a commitment to trading rather than to investing; to
speculating on price differences, not to acquiring assets reasonably expected to
grow in value over time.

All performance information in this Prospectus and the accompanying
Prospectus Supplement is presented exclusively on a pre-tax basis. The tax costs
of maintaining an investment in the Fund are materially higher than those that
would be applicable to an investment in the constituent securities of a stock or
bond index.

-112-

<PAGE>

Investors could obtain the 91-day Treasury bill, or a stock or bond
index return with minimal expense, whereas the total charges to the Fund are
anticipated to be approximately 10% of its average Net Assets per year.

The futures markets are fundamentally different from the securities
markets in a number of respects, and any comparison between them (whether
relating to correlation, volatility or absolute performance) is subject to
certain inherent and material limitations.

SUMMARY

Participation in a professionally managed futures program, obtaining
access to the experience and expertise of a professional trading managers and
trading advisors, involves significant risks but offers the opportunity to
potentially:

. Diversify into new markets;

. Profit (or incur losses) in rising as well as falling markets;

. Increase portfolio returns as well as reduce total portfolio risk
(through adding an investment component with the potential for
performance non-correlated with other portfolio components); and

. Participate in the highly leveraged futures, options on futures and
forward markets with liability limited to the amount invested, plus
any undistributed profits.

Prudence demands that an investor carefully examine all aspects of a
managed futures investment and weigh the associated benefits of profit potential
and possible portfolio diversification against the risks of such investment. A
managed futures investment is not suitable for all investors, and is not a
suitable investment for more than a limited portion of the risk segment of any
investor's portfolio. Furthermore, different managed futures investments have
materially different objectives and reward/risk profiles. The potential benefits
of a successful managed futures investment must be considered in light of the
limited portion of an overall portfolio such an investment can suitably
constitute. However, for the investor who can tolerate the risks, a managed
futures investment, if successful, has the potential to yield portfolio
diversification benefits. See "Risk Factors."

-113-

<PAGE>

APPENDIX I

INCENTIVE OVERRIDE AND PROFIT SHARE CALCULATIONS IN AN OPEN-END FUND

SEE "CHARGES."

Because (i) the Fund is open-ended, both selling Units as of the
beginning, and permitting redemptions of Units as of the end, of each month, and
(ii) maintains a uniform Net Asset Value per Unit, the calculation of Incentive
Overrides and Profit Shares is significantly more complicated than in the case
of a closed-end fund. In order to maintain a uniform Net Asset Value per Unit
while selling Units at different times and, consequently, at different Net Asset
Values -- with the result that different Units will realize different amounts of
profit and loss, as well as generate different amounts of Net New Gain and New
Trading Profit -- it is necessary to adopt certain conventions regarding how
incentive compensation will be allocated equally (so as to maintain a uniform
Net Asset Value per Unit) among all outstanding and newly offered Units.
Selecting which of these conventions to employ is a matter of balancing
administrative feasibility and convenience with the economic treatment accorded
to MLIP, the Advisors and the investors. The following describes in detail the
manner in which the Fund calculates the Incentive Override and Profit Shares.
There are a number of other methods which the Fund might have elected to use
instead of the following, some of which would be more, and some less, favorable
to MLIP and the Advisors.

INCENTIVE OVERRIDES

FOR THE COMPONENTS INCLUDED IN NET NEW GAIN AND THE MEANING OF
UNADJUSTED NAV, ADJUSTED NAV AND HIGH WATER MARK NAV, SEE "CHARGES -- ANNUAL
INCENTIVE OVERRIDES" AT PAGES 36-38.

As an example, assume ten Units are sold January 1, 1997, which for
purposes of this example will be assumed to be commencement of trading, at an
Adjusted NAV of $100, and as of January 31, 1997 the Unadjusted NAV equals $110.
Net New Gain would equal $100 ($10 per Unit). Consequently, an Incentive
Override of $10 would be accrued, and the Adjusted NAV would be $109. If five
Units were purchased as of February 1, 1997 (at $109 per Unit, the Unadjusted
NAV of $110 less the accrued Incentive Override of $1 per Unit), and the
Unadjusted NAV as of February 28, 1997 equalled $105, there would have been a
loss in February 1997 of $60 (i.e., a $4 loss on each of 15 Units), which would
be charged equally to the 15 Units outstanding at the end of February. This $60
negative Net New Gain would reduce the $100 of Net New Gain accrued in respect
of January, leaving cumulative Net New Gain of $40 ($2.67 per Unit) and an
accrued Incentive Override of $4 ($0.267 per Unit). The $6 of previously accrued
Incentive Override reversed as of the end of February would be included in the
February 28, 1997 Adjusted NAV, which would equal $105.40. The same calculation
is made for each month of the calendar year. As of the end of each month,
Unadjusted NAV is determined, and the aggregate difference, in respect of all
outstanding Units, between such Unadjusted NAV and the Adjusted NAV as of the
beginning of the month constitutes the incremental Net New Gain (positive or
negative) for such month, subject to possible adjustments to reflect the High
Water Mark NAV and the Adjusted NAV at which Units were purchased during the
year of determination.

Unadjusted NAVs, Adjusted NAVs and High Water Mark NAVs are, in all
cases, exclusive of interest income, which is not included in Net New Gain.

INCENTIVE OVERRIDE ACCRUALS

Assume that one Unit is purchased, at the commencement of trading, for
$100 as of January 1, 1997, a second Unit as of July 1, 1997 and that only these
two Units are outstanding through December 31, 1997. If at July 1, 1997 the
Fund's single outstanding Unit had earned cumulative trading profits of $10, and
the Fund subsequently generates no net profits or losses through December 31,
1997, the Fund as a whole will pay the $1 Incentive Override due as of December
31, 1997. However, the investor who acquired his Unit as of July 1, 1997 would
do so at an Adjusted NAV that reflects a reduction for the $1 Incentive Override
accrued as of June 30, 1997. Consequently, although as of June 30, 1997
there

APPI-1

<PAGE>

would be $110 per Unit (the single outstanding Unit) in cash held in the Fund's
account, the investor as of July 1, 1997 would subscribe at $109 per Unit --
i.e., the cash value per Unit less the accrued Incentive Override (the Adjusted
NAV). The cash value of the Fund as of December 31, 1997 would, accordingly,
equal (A) $110 (the $100 subscription price plus the $10 of trading profit
earned through June 30, 1997) plus (B) $109 (the $109 subscription price of the
Unit sold July 1, 1997). By assumption, no incremental Net New Gain would be
recognized during the period July 1, 1997 -- December 31, 1997, as the Adjusted
NAV as of December 31, 1997 (which is calculated after reduction for the
Incentive Override accrued as of July 1, 1997) would equal $109 -- the same as
the Adjusted NAV as of July 1, 1997. From the aggregate cash value of the Fund,
$219, a $1 Incentive Override (10% of the $10 of Net New Gain accrued as of June
30, 1997 and retained through December 31, 1997) would be paid by the Fund to
MLIP, leaving a final Fund Net Asset Value of $218 which would be shared equally
among the two Units, resulting in an Adjusted NAV of $109. The July 1, 1997
investor who bought into the Fund at $109 would have experienced no gain or loss
through December 31, 1997, at which time his Unit would continue to have an
Adjusted NAV of $109 after payment of the Incentive override. Furthermore, the
January 1, 1997 investor who realized $10 in Net New Gain would also
appropriately have a $109 Adjusted NAV after payment of the Incentive Override.
In the foregoing situation, the combination of having the Fund as a whole pay
the Incentive Override and permitting the second investor to invest at the
Adjusted NAV which is reduced by the accrued Incentive Override effectively and
equitably allocates to the first investor the Incentive Override attributable to
the Net New Gain generated by such first investor's Unit.

INCENTIVE OVERRIDE REVERSALS

If an investor subscribes for Units at a price reduced by an accrued
Incentive Override, and such accrual is later reversed due to a decline in Net
New Gain, the reversal is allocated pro rata to such investor's Units although
such investor had already had the purchase price of his Units reduced by the
full amount of such accrual on a per-Unit basis. Using the example of the two
Units sold as of January 1, 1997 and July 1, 1997, if between July 1, 1997 and
December 31, 1997 the Fund incurred a loss of $19, the Unadjusted NAV as of
December 31, 1997 would equal (A) the $218 cash value of the Fund as of December
31, 1997 minus the $19 loss, divided by (B) the number of outstanding Units (2),
or $99.50. However, no Net New Gain would remain at year-end, so that the Fund's
Net Asset Value would increase by the reversal of the previously accrued $1
Incentive Override, and the Adjusted NAV would equal $100. This would mean that
in the period July 1, 1997 -- December 31, 1997, the cash value of the Unit sold
as of January 1, 1997 would have declined by $10, but the cash value of the Unit
sold as of July 1, 1997 by only $9. Both subscribers' capital accounts are
reduced from $109 to $99.50 by the trading losses and then both are increased to
$100 by the $0.50 per Unit Incentive Override reversal.

An entirely equitable allocation of Incentive Override reversals would
require MLIP, on an ongoing basis, either to issue fractional Units or to make
cash distributions to the appropriate Limited Partners in order to compensate
them for misallocations of these reversals. Either of these alternatives would,
MLIP believes, be infeasible in the context of operating a large, open-end
public investment fund such as the Fund. Alternatively, MLIP could have elected
to calculate and pay out Incentive Overrides on the same timing cycle as the
Fund permits investors to purchase Units, so that no investors would subscribe
at a time when the Adjusted NAV reflected a reduction for accrued but unpaid
Incentive Overrides which might subsequently be reversed. However, MLIP believes
that a one month Incentive Override calculation period would be inconsistent
with the Fund's medium to long-term trading approach.

NET NEW GAIN COMPARED TO PER-UNIT AND CUMULATIVE TRADING PROFITS

Because Net New Gain is calculated by aggregating the positive and
negative changes between the Adjusted NAV and Unadjusted NAV in respect of
different tranches of Units, Net New Gain may differ substantially from what one
might have calculated on the basis of comparing the High Water Mark NAV (or the
purchase price of a particular Unit during the year of purchase, if higher) to
the Unadjusted NAV as of year-end and multiplying the result by the number of
outstanding Units. Furthermore, Net New Gain may differ significantly from
cumulative trading profits. For example, assume that ten Units are sold as of
January 1, 1997 at $100, 100 Units as of April 1, 1997 at $90 and the Unadjusted
NAV as of December 31, 1997 equals $95. During 1997, the Fund as a whole would
have generated cumulative trading profits of ($50) plus $500, or $450. However,
no Net New Gain would be recognized. On the other hand, assume that ten Units
are sold as of January 1, 1997 at $100, 500 Units at $110 as of July 1, 1997,
the December 31, 1997 Adjusted NAV equals $102 and as of December 31, 1998 the
Unadjusted NAV is $105. Net New Gain for 1998 would equal 510 times $3 ($105 --
$102; the Unadjusted NAV at year-end minus the applicable High Water Mark NAV),
or $1,530, whereas there would be a cumulative trading loss of (500 times $5)
plus $50 or ($2,450).

APPI-2

<PAGE>

Cumulative trading profit or loss has no direct relationship with Net
New Gain, and neither has a direct relationship with a Partner's investment
experience in the Fund.

PROFIT SHARES

The Advisors' Profit Shares are calculated, on a quarterly basis, in
the same manner that MLIP's Incentive Override is calculated on an annual basis,
except that: (i) the Profit Shares are calculated prior to reduction of New
Trading Profit by the Incentive Override (which is itself calculated after all
Profit Shares, fees and charges other than the Incentive Override itself); (ii)
each Advisor's Profit Share is calculated as if such Advisor were managing a
separate fund, rather than being based on Net New Gains generated by aggregate
changes in the overall Unadjusted NAV of all outstanding Units; and (iii) Profit
Shares are calculated quarterly based on increases in the Net Asset Value per
Unit attributable to a given Advisor over the highest attributable Net Asset
Value per Unit as of any previous calendar quarter-end (or at the time such
Advisor began managing an account for the Fund, if higher), not annually on the
basis of increases over the highest Adjusted NAV as of any previous calendar
year-end.

Because the Advisors' Profit Shares are calculated on the basis of
increases in the Net Asset Value per Unit attributable to each individual
Advisor's Fund account, the Profit Shares have, irrespective of the method by
which the New Trading Profit generated by each Advisor is calculated, no direct
correlation to the overall Net Asset Value per Unit. Substantial Profit Shares
may be paid even during periods when the Fund is incurring significant
losses.

APPI-3

<PAGE>

APPENDIX II

BLUE SKY GLOSSARY

SEE "INDEX OF DEFINED TERMS" FOR AN INDEX OF TERMS DIRECTLY RELEVANT TO THE FUND

The following definitions are included in this Appendix II in
compliance with the requirements of various state securities administrators who
review public futures fund offerings for compliance with the "Guidelines for the
Registration of Commodity Pool Programs" Statement of Policy promulgated by the
North American Securities Administrators Association, Inc. The following
definitions are reprinted verbatim from such Guidelines and may, accordingly,
not in all cases be relevant to an investment in the Fund.

DEFINITIONS -- As used in the Guidelines, the following terms have the
following meanings:

Administrator -- The official or agency administering the securities
laws of a state.

Advisor -- Any Person who for any consideration engages in the
business of advising others, either directly or indirectly, as to the value,
purchase, or sale of Commodity Contracts or commodity options.

Affiliate -- An Affiliate of a Person means: (a) any Person directly
or indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of such Person; (b) any Person 10% or more of
whose outstanding voting securities are directly or indirectly owned, controlled
or held with power to vote, by such Person; (c) any Person, directly or
indirectly, controlling, controlled by, or under common control of such Person;
(d) any officer, director or partner of such Person; or (e) if such Person is an
officer, director or partner, any Person for which such Person acts in any such
capacity.

Capital Contributions -- The total investment in a Program by a
Participant or by all Participants, as the case may be.

Commodity Broker -- Any Person who engages in the business of
effecting transactions in Commodity Contracts for the account of others or for
his own account.

Commodity Contract -- A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a traded
commodity at a specified price and delivery point.

Cross Reference Sheet -- A compilation of the Guideline sections,
referenced to the page of the prospectus, Program agreement, or other exhibits,
and justification of any deviation from the Guidelines.

Net Assets -- The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net Assets
shall include any unrealized profits or losses on open positions, and any fee or
expense including Net Asset fees accruing to the Program.

Net Asset Value Per Program Interest -- The Net Assets divided by the
number of Program Interests outstanding.

Net Worth -- The excess of total assets over total liabilities as
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles.

APPII-1

<PAGE>

New Trading Profits -- The excess, if any, of Net Assets at the end of
the period over Net Assets at the end of the highest previous period or Net
Assets at the date trading commences, whichever is higher, and as further
adjusted to eliminate the effect on Net Assets resulting from new Capital
Contributions, redemptions, or capital distributions, if any, made during the
period decreased by interest or other income, not directly related to trading
activity, earned on Program assets during the period, whether the assets are
held separately or in a margin account.

Organization and Offering Expenses -- All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriter's attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders, depositories,
experts, expenses of qualification of the sale of its Program Interest under
federal and state law, including taxes and fees, accountants' and attorneys'
fees.

Participant -- The holder of a Program Interest.

Person -- Any natural Person, partnership, corporation, association or
other legal entity.

Pit Brokerage Fee -- Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees.

Program -- A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts.

Program Broker -- A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program.

Program Interest -- A limited partnership interest or other security
representing ownership in a program.

Pyramiding -- A method of using all or a part of an unrealized profit
in a Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.

Sponsor -- Any Person directly or indirectly instrumental in
organizing a Program or any Person who will manage or participate in the
management of a Program, including a Commodity Broker who pays any portion of
the Organization Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform services
for the Program. Sponsor does not include wholly independent third parties such
as attorneys, accountants, and underwriters whose only compensation is for
professional services rendered in connection with the offering of the units. The
term Sponsor shall be deemed to include its Affiliates.

Valuation Date -- The date as of which the Net Assets of the Program
are determined.

Valuation Period -- A regular period of time between Valuation Dates.

APPII-2

<PAGE>

EXHIBIT A

ML GLOBAL HORIZONS L.P.

FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT

DATED AS OF
OCTOBER 1, 1996

MERRILL LYNCH INVESTMENT PARTNERS INC.

GENERAL PARTNER

<PAGE>

ML GLOBAL HORIZONS L.P.

FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Formation and Name................................................... LPA-1
2. Principal Office..................................................... LPA-1
3. Business............................................................. LPA-1
4. Term, Dissolution, Fiscal Year and Net Asset Value................... LPA-1
(a) Term............................................................ LPA-1
(b) Dissolution..................................................... LPA-2
(c) Fiscal Year..................................................... LPA-2
(d) Net Asset Value................................................. LPA-2
5. Net Worth of General Partner......................................... LPA-2
6. Capital Contributions; Units......................................... LPA-2
7. Allocation of Profits and Losses..................................... LPA-3
(a) Capital Accounts and Allocations................................ LPA-3
(b) Allocation of Profit and Loss for Federal Income Tax Purposes... LPA-3
(c) Incentive Overrides; Profit Shares.............................. LPA-4
(d) Adjustments..................................................... LPA-5
(e) Expenses........................................................ LPA-6
(f) Limited Liability of Limited Partners........................... LPA-6
(g) Return of Capital Contributions................................. LPA-6
8. Management of the Fund............................................... LPA-6
9. Audits and Reports to Limited Partners............................... LPA-8
10. Assignability of Units............................................... LPA-8
11. Redemptions.......................................................... LPA-9
12. Offering of Units....................................................LPA-10
13. Continuous Offering; Additional Offerings............................LPA-10
14. Special Power of Attorney............................................LPA-11
15. Withdrawal of a Partner..............................................LPA-11
16. Standard of Liability; Indemnification...............................LPA-11
(a) Standard of Liability for the General Partner...................LPA-11
(b) Indemnification of the General Partner by the Fund..............LPA-12
(c) Indemnification of the Fund by the Partners.....................LPA-13
17. Amendments; Meetings.................................................LPA-13
(a) Amendments with Consent of the General Partner..................LPA-13
(b) Amendments and Actions without Consent of the General Partner...LPA-13
(c) Meetings; Other Voting Matters..................................LPA-13
18. Governing Law........................................................LPA-14
19. Miscellaneous........................................................LPA-14
(a) Notices.........................................................LPA-14
(b) Binding Effect..................................................LPA-14
(c) Captions........................................................LPA-14
20. Certain Definitions..................................................LPA-14
</TABLE>

LPA-i

<PAGE>

ML GLOBAL HORIZONS L.P.

FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT

This Fourth Amended and Restated Limited Partnership Agreement (the
"Limited Partnership Agreement") is made as of October 1, 1996, by and among
MERRILL LYNCH INVESTMENT PARTNERS INC., a Delaware corporation, as general
partner (the "General Partner"), and each other party who has become or who
becomes a party to this Fourth Amended and Restated Limited Partnership
Agreement as a limited partner (individually, a "Limited Partner" and,
collectively, the "Limited Partners") (the General Partner and the Limited
Partners being collectively referred to herein as "Partners").

WITNESSETH:

1. Formation and Name.

The parties hereto do hereby form and continue a limited partnership
under the Delaware Revised Uniform Limited Partnership Act, as amended (the
"Act"). The name of the limited partnership is ML GLOBAL HORIZONS L.P. (the
"Fund").

2. Principal Office.

The address of the principal office of the Fund shall be c/o the
General Partner, Merrill Lynch World Headquarters, 6th Floor, South Tower, World
Financial Center, New York, New York 10080-6106; telephone: (212) 236-4167. The
address of the registered office of the Fund in the State of Delaware is c/o The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, and the name and address of the
registered agent for service of process on the Fund in the State of Delaware is
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.

3. Business.

The Fund's business and purpose is to trade, buy, sell or otherwise
acquire, hold or dispose of forward contracts, futures contracts for
commodities, financial instruments and currencies, any rights pertaining thereto
and any options thereon or on physical commodities, as well as securities and to
engage in all activities necessary, convenient or incidental thereto. The Fund
may also engage in hedge, arbitrage and cash trading of commodities, futures,
forwards and options. The objective of the Fund's business is appreciation of
its assets through speculative trading.

4. Term, Dissolution, Fiscal Year and Net Asset Value.

(a) Term. The term of the Fund commenced on the day on which the
Certificate of Limited Partnership was filed with the Secretary of State of the
State of Delaware pursuant to the provisions of the Act and shall end upon the
first to occur of the following: (1) December 31, 2023; (2) receipt by the
General Partner of an approval to dissolve the Fund at a specified time by
Limited Partners owning units of limited partnership interest ("Units")
representing more than fifty percent (50%) in Net Asset Value of the outstanding
Units then owned by Limited Partners, notice of which is sent by certified mail
return receipt requested to the General Partner not less than 90 days prior to
the effective date of such dissolution; (3) withdrawal, insolvency or
dissolution of the General Partner or any other event that causes the General
Partner to cease to be a general partner unless (i) at the time of such event
there is at least one remaining general partner of the Fund who carries on the
business of the Fund (and each remaining general partner of the Fund is hereby
authorized to carry on the business of the Fund in such an event), or (ii)
within ninety days after such event all Partners agree in writing

LPA-1
<PAGE>

to continue the business of the Fund and to the appointment, effective as of the
date of such event, of one or more general partners of the Fund; (4) a decline
in the aggregate Net Assets of the Fund to less than $250,000; (5) dissolution
of the Fund pursuant hereto; or (6) any other event which shall make it unlawful
for the existence of the Fund to be continued or require termination of the
Fund.

(b) Dissolution. Upon the occurrence of an event causing the
dissolution of the Fund, the Fund shall be dissolved and terminated.

(d) Net Asset Value. Net Assets of the Fund are its assets less its
liabilities determined in accordance with generally accepted accounting
principles. If a contract cannot be liquidated on the day with respect to which
Net Assets are being determined, the settlement price on the first subsequent
day on which the contract can be liquidated shall be the basis for determining
the liquidating value of such contract for such day, or such other value as the
General Partner may deem fair and reasonable. The liquidating value of a
commodity futures or option contract not traded on a United States commodity
exchange shall mean its liquidating value as determined by the General Partner
on a basis consistently applied for each different variety of contract. Accrued
Profit Shares and Incentive Overrides (as described in the Prospectus, as
defined in Section 8 hereof) shall reduce Net Asset Value, even though such
Profit Shares and Incentive Overrides may never, in fact, be paid. Accrued
Profit Shares and Incentive Overrides shall be calculated on a basis which
reflects the aggregate New Trading Profit (as defined) or Net New Gain (as
defined), as the case may be, accrued in respect of all outstanding Units.

5. Net Worth of General Partner.

The General Partner agrees that at all times so long as it remains
general partner of the Fund, it will maintain its Net Worth at an amount not
less than 5% of the total contributions by all partners to the Fund and all
other partnerships of which it is general partner. The General Partner will not
permit its net worth to decline below $10 million without the approving vote of
more than fifty percent (50%) in Net Asset Value of the outstanding Units then
owned by Limited Partners.

The requirements of the first sentence of the preceding paragraph may
be modified if the General Partner obtains an opinion of counsel for the Fund
that a proposed modification will not adversely affect the classification of the
Fund as a partnership for federal income tax purposes and if such modification
will reflect or exceed applicable state securities and Blue Sky laws and qualify
under any guidelines or statements of policy promulgated by any body or agency
constituted by the various state securities administrators having jurisdiction
in the premises.

6. Capital Contributions; Units.

The Partners' respective capital contributions to the Fund shall be as
shown on the books and records of the Fund.

The General Partner, so long as it is a general partner of the Fund,
or any substitute general partner, shall invest in the Fund, as a general
partner interest, sufficient capital so that the General Partner will have at
all times a capital account equal to 1% of the total capital accounts of the
Fund (including the General Partner's). The General Partner may withdraw any
interest it may have as a general partner in excess of such requirement, and may
redeem as of any month-end any interest which it may acquire on the same terms
as any Limited Partner, provided that it must maintain the minimum interest
described in the preceding sentence.

The General Partner may, without the consent of any Partners, admit to
the Fund purchasers of Units as limited partners of the Fund.

LPA-2
<PAGE>

Any Units acquired by the General Partner or any of its affiliates
will be non-voting, and will not be considered outstanding for purposes of
determining whether the majority approval of the outstanding Units has been
obtained.

7. Allocation of Profits and Losses.

(a) Capital Accounts and Allocations. A capital account shall be
established for each Unit, and for the General Partner on a Unit-equivalent
basis. The balance of each Unit's capital account shall be the amount
contributed to the Fund with respect to such Unit, which amount shall be equal
to the Net Asset Value per Unit on the date each Unit is purchased after all
accrued fees and expenses, including Incentive Override and Profit Share
accruals which may, in fact, never be paid. As of the close of business (as
determined by the General Partner) on the last day of each month, any increase
or decrease in the Fund's Net Assets as compared to the last such determination
of Net Assets shall be credited or charged equally to the capital accounts of
all Units then outstanding; provided that for purposes of maintaining such
capital accounts, amounts paid or payable to the General Partner for items such
as Administrative Fees, Incentive Overrides and service fees and exchange of
futures for physical charges, shall be treated as if paid or payable to a third
party and shall not be credited to the capital account of the interest held by
the General Partner.

For purposes of this Section 7, unless specified to the contrary,
Units redeemed as of the end of any month shall be considered outstanding as of
the end of such month.

(b) Allocation of Profit and Loss for Federal Income Tax Purposes. As
of the end of each fiscal year, the Fund's income and expense and capital gain
or loss shall be allocated among the Partners pursuant to the following
provisions of this Section 7(b) for federal income tax purposes. For purposes of
this Section 7(b), capital gain and capital loss shall be allocated separately
and not netted.

(1) First, items of ordinary income and expense (other than the
Incentive Override and Profit Shares which shall be allocated as set forth in
Section 7(b)(2)) shall be allocated pro rata among the Units outstanding as of
the end of each month in which the items of ordinary income and expense accrue.

(2) Second, any Incentive Override or Profit Share paid to the General
Partner or the Advisors shall be allocated among the Units outstanding at any
time during the fiscal year based upon the ratio that each such Unit's Net
Incentive Override or Net Profit Share (the excess, if any, of the aggregate of
all Incentive Overrides or Profit Shares, as the case may be, allocated to the
capital account relating to such Unit over the aggregate of all reversals of
Incentive Overrides or Profit Shares, as the case may be, allocated to such
Unit) bears to the Net Incentive Override or Net Profit Share, as the case may
be, of all Units; provided that the General Partner may allocate Incentive
Overrides and Profit Shares first to Units whose Net Asset Value was reduced by
accrued Incentive Overrides and Profit Shares upon redemption, in an amount up
to the amount of such reduction.

(3) Third, capital gain or loss shall be allocated as follows:

(A) There shall be established a tax account with respect to each
outstanding Unit. The balance of each tax account shall be the amount paid
to the Fund for each Unit. As of the end of each fiscal year:

(i) Each tax account shall be increased by the amount of income
allocated to each Unit pursuant to Sections 7(b)(1) and 7(b)(3)(C).

(ii) Each tax account shall be decreased by the amount of
expense or loss allocated to each Unit pursuant to Sections 7(b)(1),
7(b)(2) and 7(b)(3)(E) and by the amount of any distributions paid out
with respect to the Units other than upon redemption.

(iii) When a Unit is redeemed, the tax account attributable to
such Unit (determined after making all allocations described in this
Section 7(b)) shall be eliminated.

LPA-3
<PAGE>

(B) Each Partner who redeems a Unit during a fiscal year (including
Units redeemed as of the end of the last day of such fiscal year) shall be
allocated Capital Gain, if any, up to the amount of the excess, if any, of
the amount received in respect of the Units so redeemed (before taking
into account any early redemption charges) over the sum of the tax
accounts (determined after making the allocation described in Sections
7(b)(1) and 7(b)(2), but prior to making the allocations described in this
Section 7(b)(3)(B) or Section 7(b)(3)(D)) allocable to such Units (an
"Excess"). In the event the aggregate amount of Capital Gain available to
be allocated pursuant to this Section 7(b)(3)(B) is less than the
aggregate amount of Capital Gain required to be so allocated, the
aggregate amount of available Capital Gain shall be allocated among all
such Partners in the ratio which each such Partner's Excess bears to the
aggregate Excess of all such Partners.

(C) Capital Gain remaining after the allocation described in Section
7(b)(3)(B) shall be allocated among all Partners who hold Units
outstanding as of the end of the applicable fiscal year (other than Units
redeemed as of the end of the last day of such fiscal year) whose capital
accounts with respect to such Units are in excess of their tax accounts
(determined after making the allocations described in Sections 7(b)(1) and
7(b)(2)) allocable to such Units in the ratio that each such Partner's
excess bears to the aggregate excess of all such Partners. Capital Gain
remaining after the allocation described in the preceding sentence shall
be allocated among all Partners described in said sentence in proportion
to their holdings of such Units.

(D) Each Partner who redeems a Unit during a fiscal year (including
Units redeemed as of the end of the last day of such fiscal year) shall be
allocated Capital Loss, if any, up to the amount of the sum of the excess
of the tax accounts (determined after making the allocations described in
Sections 7(b)(1) and 7(b)(2), but prior to making the allocations
described in this Section 7(b)(3)(D) or Section 7(b)(3)(B)) allocable to
the Units so redeemed over the amount received in respect of such Units
(before taking into account any early redemption charges) (a "Negative
Excess"). In the event the aggregate amount of available Capital Loss
required to be allocated pursuant to this Section 7(b)(3)(D) is less than
the aggregate amount required to be so allocated, the aggregate amount of
available Capital Loss shall be allocated among all such Partners in the
ratio that each such Partner's Negative Excess bears to the aggregate
Negative Excess of all such Partners.

(E) Capital Loss remaining after the allocation described in Section
7(b)(3)(D) shall be allocated among all Partners who hold Units
outstanding as of the end of the applicable fiscal year (other than Units
redeemed as of the end of the last day of such fiscal year) whose tax
accounts with respect to such Units are in excess of their capital
accounts (determined after making the allocations described in Sections
7(b)(1) and 7(b)(2)) with respect to such Units in the ratio that each
such Partner's negative excess bears to the aggregate negative excess of
all such Partners. Capital Loss remaining after the allocation described
in the preceding sentence shall be allocated among all Partners described
in such sentence in proportion to their holdings of such Units.

(F) For purposes of this Section 7(b), "Capital Gain" or "Capital
Loss" shall mean gain or loss characterized as gain or loss from the sale
or exchange of a capital asset, by the Internal Revenue Code of 1986, as
amended, including, but not limited to, gain or loss required to be taken
into account pursuant to Section 1256 thereof.

(4) The allocation of profit and loss for federal income tax purposes
set forth herein is intended to allocate taxable profit and loss among Partners
generally in the ratio and to the extent that profit and loss are allocated to
such Partners so as to eliminate, to the extent possible, any disparity between
the Partner's capital account and his tax account, consistent with principles
set forth in Section 704 of the Internal Revenue Code of 1986, as amended,
including without limitation a "Qualified Income Offset."

(5) The allocations of profit and loss to the Partners in respect of
the Units shall not exceed the allocations permitted under Subchapter K of the
Internal Revenue Code of 1986, as amended, as determined by the General Partner,
whose determination shall be binding.

(c) Incentive Overrides; Profit Shares. Incentive Overrides shall be
payable to the General Partner as of the end of each calendar year and upon
redemption of Units.

LPA-4
<PAGE>

Incentive Overrides shall equal 10% of Net New Gain (if any)
calculated as of each fiscal year-end and upon redemption of Units. Net New Gain
shall be calculated (i) separately in respect of each tranche of Units sold as
of the beginning of different months during the fiscal year of determination and
(ii) in a uniform manner in respect of all Units sold prior to the fiscal year
of determination.

In respect of Units sold in fiscal years prior to the year of
determination, Net New Gain for any year will equal the amount (if any) by which
the Net Asset Value per Unit (excluding interest income) prior to reduction for
any accrued Incentive Override being calculated (the "Unadjusted NAV") for each
Unit outstanding as of the applicable December 31 exceeds the greater of (i)
$100 or (ii) the highest Net Asset Value per Unit (excluding interest income) as
of any previous calendar year-end, after reduction for the Incentive Override,
if any, then due (the "High Water Mark NAV"). Similar principles shall apply to
determine the Net New Gain for any month. No negative Net New Gain shall be
recorded in respect of losses incurred to the extent that such losses reduce the
Unadjusted NAV below the High Water Mark NAV, but no Net New Gain will be
recorded on any Units except to the extent that the Unadjusted NAV exceeds the
High Water Mark NAV.

In respect of a Unit sold during the fiscal year of determination, (i)
negative Net New Gain for such year shall be generated to the extent that the
Unadjusted NAV as of the date of determination is less than the purchase price
of such Unit but equal to or greater than the High Water Mark NAV, and (ii)
positive Net New Gain for such year shall be generated to the extent that the
Unadjusted NAV as of the date of determination exceeds the greater of the High
Water Mark NAV or the purchase price of such Unit. Similar principles shall
apply to determine the Net New Gain (positive or negative) for any month.

Incentive Overrides shall be paid by the Fund as a whole, irrespective
of whether the Unadjusted NAV has declined below the purchase price of a
particular Unit. Accrued Incentive Overrides shall reduce the redemption price
of Units and shall be paid to the General Partner upon redemption. The amount
(if any) of the accrued Incentive Override that shall be paid to the General
Partner upon the redemption of any Unit shall be determined by dividing the
total Incentive Override as of such redemption date by the number of Units then
outstanding (including Units redeemed as of such date); the remainder of the
accrued Incentive Override shall be paid to the General Partner on December 31
of each year.

For capital account purposes, accrued Incentive Overrides shall, in
all cases, be reflected equally as a reduction in the Net Asset Value per Unit
of all Units outstanding at the time the Incentive Override accrued, and
reversals of accrued Incentive Overrides shall equally increase the Net Asset
Value per Unit of all Units outstanding at the time of the accrual of such
reversal, irrespective of whether a particular Unit was outstanding when a
particular Incentive Override was accrued.

Interest income shall not be included in the Net Asset Value per Unit
for purposes of calculating Net New Gain, and such Net Asset Value shall be net
of all Profit Shares, fees and expenses other than the Incentive Override being
determined.

Early redemption charges shall in no respect reduce Net New Gain.

The Profit Shares paid to the Advisors pursuant to the Advisory
Agreements among the General Partner, the Fund and each such Advisor shall
result in deductions being allocated to the Partners. Such allocation shall
apply the same principles as the allocation of Incentive Override deductions
described above. Profit Shares with respect to any calendar quarter will be paid
to an Advisor as of the last day of such period, except that Profit Shares with
respect to Units redeemed as of the last day of any month that does not end a
calendar quarter shall be paid as of the day such Units are redeemed and Profit
Shares with respect to Units redeemed as of the end of any month that ends a
calendar quarter shall be paid to an Advisor in the same manner and at the same
time as if such Units had not been redeemed.

(d) Adjustments. The General Partner may adjust the allocations set
forth in this Section 7(c), in the General Partner's discretion, if the General
Partner believes that doing so will achieve more equitable allocations or
allocations more consistent with the Internal Revenue Code of 1986, as
amended.

LPA-5

<PAGE>

(e) Expenses. The General Partner shall pay, but without
reimbursement, the selling and trailing commissions relating to the offering of
the Units, and the cost of the ongoing offering of the Units. The Fund shall
bear all of any taxes applicable to it and any charges incidental to trading.
The General Partner shall pay all of the Fund's routine legal, accounting, and
administrative expenses but, beginning October 1, 1996, the Fund shall pay to
the General Partner Administrative Fees of 0.020833 1 of 1% of the Fund's month-
end assets (0.25% annually), as described in the Prospectus. Any administrative
expenses incurred by the General Partner in excess of the Administrative Fee
shall be borne by the General Partner, without reimbursement from the Fund. Any
goods and services provided to the Fund by the General Partner shall be provided
at rates and terms at least as favorable as those which may be obtained from
third parties in arm's-length negotiations. None of the General Partner's
overhead expenses incurred in connection with the administration of the Fund
(including, without limitation, salaries, rent and travel expenses) will be
charged to the Fund. All of the expenses which are for the Fund's account shall
be billed directly to the Fund. Appropriate reserves may be created, accrued,
and charged against Net Assets for contingent liabilities, if any, as of the
date any such contingent liability becomes know to the General Partner. Such
reserves shall reduce Net Asset Value for all purposes.

(f) Limited Liability of Limited Partners. Each Unit, when purchased
in accordance with this Limited Partnership Agreement, shall, except as
otherwise provided by law, be fully paid and nonassessable. Any provisions of
this Limited Partnership Agreement to the contrary notwithstanding, except as
otherwise provided by law, no Limited Partner shall be liable for Fund
obligations in excess of the capital contributed by such Limited Partner, plus
his share of undistributed profits and assets.

(g) Return of Capital Contributions. No Partner or subsequent assignee
shall have any right to demand the return of his capital contribution or any
profits added thereto, except through redeeming Units or upon dissolution of the
Fund, in each case as provided herein. In no event shall a Partner or subsequent
assignee be entitled to demand or receive property other than cash.

8. Management of the Fund.

The General Partner, to the exclusion of all Limited Partners, shall
control, conduct and manage the business of the Fund. The General Partner shall
have sole discretion in determining what distributions of profits and income, if
any, shall be made to the Partners (subject to the allocation provisions
hereof), shall execute various documents on behalf of the Fund and the Partners
pursuant to powers of attorney and supervise the liquidation of the Fund if an
event causing dissolution of the Fund occurs.

The General Partner may in furtherance of the business of the Fund
cause the Fund to buy, sell, hold, or otherwise acquire or dispose of
commodities, futures contracts and options traded on exchanges or otherwise,
arbitrage positions, repurchase agreements, interest-bearing securities, deposit
accounts and similar instruments and other assets, and cause the Fund's trading
to be limited to only certain of the foregoing instruments. The General Partner
is specifically authorized by each Limited Partner to enter into "offset
account" arrangements as described in the prospectus relating to the offering of
the Units in effect as of the time that such Limited Partner last purchased
Units while in receipt of a current prospectus (the "Prospectus"). The General
Partner may engage, and compensate on behalf of the Fund from funds of the Fund,
or agree to share profits and losses with, such persons, firms or corporations,
including (except as described in this Limited Partnership Agreement) the
General Partner and any affiliated person or entity, as the General Partner in
its sole judgment shall deem advisable for the conduct and operation of the
business of the Fund, provided, that no such arrangement shall allow Brokerage
Commissions and Administrative Fees paid by the Fund in excess of the amount
described in the Prospectus or as permitted under applicable North American
Securities Administrators Association, Inc. Guidelines for the Registration of
Commodity Pool Programs ("NASAA Guidelines") in effect as of the date of the
Prospectus (i.e., 80% of the published retail rate plus pit brokerage fees, or
14% annually -- including pit brokerage and service fees -- of the Fund's
average Net Assets, excluding the assets not directly related to trading
activity), whichever is higher. The General Partner shall reimburse the Fund, on
an annual basis, to the extent that the sum of the Fund's Brokerage Commissions,
Administrative Fees and annual Incentive Override, as described in the
Prospectus, have exceeded 14% of the Fund's average Net Assets during the
preceding year. The General Partner is hereby specifically authorized to enter
into, on behalf of the Fund, the Advisory Agreements and the Selling Agreement
as described in the Prospectus and to enter into the Customer Agreement and the
Foreign Exchange Desk Service Agreement and to engage in exchange of futures for
physical currency transactions on behalf of the Fund, also as referred to in the
Prospectus. The General Partner shall not enter into an Advisory Agreement with
any trading advisor that does not satisfy the relevant experience (i.e.,
ordinarily a minimum of three years) requirements under the NASAA Guidelines.
The Fund's Brokerage Commissions may not be increased (i) during any period when

LPA-6
<PAGE>

redemption charges are in effect or (ii) without prior written notice to Limited
Partners within sufficient time for the exercise of their redemption rights
prior to such increase becoming effective. Such notification shall contain a
description of Limited Partner's voting and redemption rights and a description
of any material effect of such increase.

In addition to any specific contract or agreements described herein,
the Fund may enter into any other contracts or agreements specifically described
in or contemplated by the Prospectus without any further act, approval or vote
of the Limited Partners, notwithstanding any other provisions of this Limited
Partnership Agreement, the Act or any applicable law, rule or regulations.

The General Partner shall be under a fiduciary duty to conduct the
affairs of the Fund in the best interests of the Fund. The Limited Partners will
under no circumstances be deemed to have contracted away the fiduciary
obligations owed them by the General Partner under the common law. The General
Partner's fiduciary duty includes, among other things, the safekeeping of all
Fund funds and assets and the use thereof for the benefit of the Fund. The
General Partner shall at all times act with integrity and good faith and
exercise due diligence in all activities relating to the conduct of the business
of the Fund and in resolving conflicts of interest. The Fund's brokerage
arrangements shall be non-exclusive, and the brokerage commissions paid by the
Fund shall be competitive. The Fund shall seek the best price and services
available for its commodity transactions.

The General Partner is hereby authorized to perform all other duties
imposed by Sections 6221 through 6232 of the Internal Revenue Code of 1986, as
amended, on the General Partner as the tax matters partner of the Fund.

The Fund shall make no loans to any party, and the funds of the Fund
will not be commingled with the funds of any other person or entity (deposit of
funds with a commodity broker, clearinghouse or forward dealer or entering into
joint ventures or partnerships shall not be deemed to constitute commingling for
these purposes). The General Partner shall make no loans to the Fund unless
approved by the Limited Partners in accordance with Section 17(a) of this
Limited Partnership Agreement (the fees charged in respect of the Fund's trading
of certain foreign futures transactions, as described under "Use of Proceeds" in
the Prospectus, not being deemed to constitute a loan for such purposes). If the
General Partner makes a loan to the Fund, the General Partner shall not receive
interest in excess of its interest costs, nor may the General Partner receive
interest in excess of the amounts which would be charged the Fund (without
reference to the General Partner's financial resources or guarantees) by
unrelated banks on comparable loans for the same purpose. The General Partner
shall not receive points or other financing charges or fees regardless of the
amount. The Fund shall not invest in any debt instruments other than Treasury
securities, short-term sovereign debt instruments and other investments
authorized by the Commodity Futures Trading Commission (the "CFTC") for the
investment of customer funds, and shall not invest in any equity security
without prior notice to Limited Partners. Except in respect of the Incentive
Override, no person or entity may receive, directly or indirectly, any advisory,
management or incentive fees, or any profit-sharing allocation from joint
ventures, partnerships or similar arrangements in which the Fund participates,
for investment advice or management who shares or participates in any commodity
brokerage commissions; no broker may pay, directly or indirectly, rebates or
give-ups to any trading advisor or manager or to the General Partner or any of
their respective affiliates; and such prohibitions may not be circumvented by
any reciprocal business arrangements. No trading advisor for the Fund shall be
affiliated with the Fund's commodity broker, the General Partner or their
affiliates (this prohibition shall not preclude the General Partner from
retaining a trading advisor for which the General Partner provides
administrative services). The maximum period covered by any contract entered
into by the Fund, except for the various provisions of the Selling Agreement
which survive each closing of the sales of the Units, shall not exceed one year.
Any material change in the Fund's basic investment policies or structure shall
require the approval of Limited Partners owning Units representing more than
fifty percent (50%) of all Units then owned by the Limited Partners. Any
agreements between the Fund and the General Partner or any affiliate of the
General Partner shall be terminable by the Fund upon no more than 60 days'
written notice. All sales of Units in the United States will be conducted by
registered brokers.

The Fund is prohibited from employing the trading technique commonly
known as pyramiding. A trading manager or advisor of the Fund taking into
account the Fund's open trade equity on existing positions in determining
generally whether to acquire additional commodity positions on behalf of the
Fund will not be considered to be engaging in pyramiding.

The General Partner may take such other actions on behalf of the Fund
as the General Partner deems necessary or desirable to manage the business of
the Fund.

LPA-7
<PAGE>

The General Partner shall reimburse the Fund for any advisory
fees paid by the Fund to any trading advisor over the course of any fiscal year,
to the extent that the fees paid during such year exceed the 6% annual
management fees and the 15% quarterly incentive fees (calculating New Trading
Profit, as defined in the Prospectus, after all expenses and without including
interest income) contemplated by the NASAA Guidelines. Any such reimbursement
shall be made on a present value basis, fully compensating the Fund for having
made payments at any time during the year which would not otherwise have been
due from it. The General Partner shall disclose any such reimbursement in the
Annual Report delivered to Limited Partners.

The General Partner is engaged, and may in the future engage, in
other business activities and shall not be required to refrain from any other
activity nor forego any profits from any such activity, whether or not in
competition with the Fund. Limited Partners may similarly engage in any such
other business activities. The General Partner shall devote to the Fund such
time as the General Partner may deem advisable to conduct the Fund's business
and affairs.

9. Audits and Reports to Limited Partners.

The Fund books shall be audited annually by an independent
certified public accountant. The Fund will use its best efforts to cause each
Limited Partner to receive (i) within 90, but in no event later than 120 days,
after the close of each fiscal year certified financial statements of the Fund
for the fiscal year then ended, (ii) within 90 days of the end of each fiscal
year (but in no event later than March 15 of each year) such tax information as
is necessary for a Limited Partner to complete his federal income tax return and
(iii) such other annual and monthly information as the CFTC may by regulation
require. The General Partner shall include in the Annual Reports sent to Limited
Partners an approximate estimate (calculated as accurately as may be reasonably
practicable) of the round-turn equivalent brokerage commission rate paid by the
Fund during the preceding year (not including forward contracts on a futures
equivalent basis in the denominator used to calculate such round-turn equivalent
rate). Limited Partners or their duly authorized representatives may inspect the
Fund books and records during normal business hours upon reasonable written
notice to the General Partner and obtain copies of such records upon payment of
reasonable reproduction costs; provided, however, upon request by the General
Partner, the Limited Partner shall represent that the inspection and/or copies
of such records will not be for commercial purposes unrelated to such Limited
Partner's interest as a limited partner in the Fund.

The General Partner shall calculate the approximate Net Asset
Value per Unit on a daily basis and furnish such information upon request
to any Limited Partner.

The General Partner will send written notice to each Limited
Partner within seven days of any decline in the Fund's Net Asset Value or in the
Net Asset Value per Unit to 50% or less of such value as of the previous month-
end. Any such notice shall contain a description of Limited Partners' voting
rights.

The General Partner shall maintain and preserve all Fund records
for a period of not less than six (6) years.

The General Partner will, with the assistance of the Fund's
commodity broker, make an annual review of the commodity brokerage arrangements
applicable to the Fund. In connection with such review, the General Partner will
ascertain, to the extent practicable, the commodity brokerage rates charged to
other major commodity pools whose trading and operations are, in the opinion of
the General Partner, comparable to those of the Fund in order to assess whether
the rates charged the Fund are competitive in light of the services it receives.
If, as a result of such review, the General Partner determines that such rates
are not competitive in light of the services provided to the Fund, the General
Partner will notify the Limited Partners, setting forth the rates charged to the
Fund and several funds which are, in the General Partner's opinion, comparable
to the Fund.

10. Assignability of Units.

Each Limited Partner expressly agrees that he will not assign,
transfer or dispose of, by gift or otherwise, any of his Units or any part or
all of his right, title and interest in the capital or profits of the Fund in
violation of any applicable federal or state securities laws or without giving
written notice to the General Partner. No assignment, transfer or disposition by
an assignee of Units or of any part of his right, title and interest in the
capital or profits of the Fund shall

LPA-8
<PAGE>

be effective against the Fund or the General Partner until the General
Partner receives the written notice of the assignment; the General Partner
shall not be required to give any assignee any rights hereunder prior to
receipt of such notice. The General Partner may, in its sole discretion,
waive any such notice. No such assignee, except with the consent of the
General Partner, may become a substituted Limited Partner, nor will the
estate or any beneficiary of a deceased Limited Partner or assignee have
any right to redeem Units from the Fund except by redemption as provided
in Section 11 hereof. The General Partner's consent is required for the
admission of a substituted Limited Partner, and the General Partner
intends to so consent, provided the General Partner and the Fund receive
an opinion of counsel to the General Partner that such admission will not
adversely affect the classification of the Fund as a partnership for
federal income tax purposes. Each Limited Partner agrees that with the
consent of the General Partner any assignee may become a substituted
Limited Partner without need of the further act or approval of any Limited
Partner. If the General Partner withholds consent, an assignee shall not
become a substituted Limited Partner, and shall not have any of the rights
of a Limited Partner, except that the assignee shall be entitled to
receive that share of capital and profits and shall have that right of
redemption to which his assignor would otherwise have been entitled. No
assignment, transfer or disposition of Units shall be effective against
the Fund or the General Partner until the first day of the month
succeeding the month in which the General Partner receives notice of such
assignment, transfer or disposition.

11. Redemptions.

A Limited Partner, the General Partner or any assignee of Units
of whom the General Partner has received written notice as described
above, may redeem all or any of his Units (such redemption being herein
referred to as a "redemption"), effective as of the close of business (as
determined by the General Partner) on the last day of any month, provided,
that (i) all liabilities, contingent or otherwise, of the Fund (including
the Fund's allocable share of the liabilities, contingent or otherwise, of
any entities in which the Fund invests), except any liability to Partners
on account of their capital contributions, have been paid or there remains
property of the Fund sufficient to pay them and (ii) the General Partner
shall have timely received a request for redemption. Units redeemed on or
before the end of the twelfth full calendar month after the date as of
which such Units begin to participate in the profits and losses of the
Fund are subject to early redemption charges of 3% of the Net Asset Value
at which they are redeemed. Such charges will be paid to the General
Partner. In the event that a Limited Partner acquires Units at more than
one month-end, such Units will be treated on a first-in, first-out basis
for purposes of determining whether early redemption charges apply.
Requests for redemption must be received by the General Partner at least
ten calendar days, or such lesser period as shall be acceptable to the
General Partner, in advance of the requested effective date of redemption.
Such requests need not be in writing so long as the Limited Partner has a
Merrill Lynch customer securities account. The General Partner may declare
additional redemption dates upon notice to the Limited Partners as well as
to those assignees of whom the General Partner has received notice as
described above.

If at the close of business (as determined by the General
Partner) on any day, the Net Asset Value per Unit has decreased to $50 or
less, after adding back all distributions, the Fund shall liquidate all
open positions as expeditiously as possible and suspend trading. Within
ten business days after the date of suspension of trading, the General
Partner (and any other general partners of the Fund) shall declare a
Special Redemption Date. Such Special Redemption Date shall be a business
day within 30 business days from the date of suspension of trading by the
Fund, and the General Partner shall mail notice of such date to each
Limited Partner and assignee of Units of whom it has received written
notice as described above, by first-class mail, postage prepaid, not later
than ten business days prior to such Special Redemption Date, together
with instructions as to the procedure such Limited Partner or assignee
must follow to have his interest (only entire, not partial, interests may
be so redeemed unless otherwise determined by the General Partner) in the
Fund redeemed on such date. Upon redemption pursuant to a Special
Redemption Date, a Partner or any other assignee of whom the General
Partner has received written notice as described above, shall receive from
the Fund an amount equal to the Net Asset Value of his interest in the
Fund, determined as of the close of business (as determined by the General
Partner) on such Special Redemption Date. No redemption charges shall be
assessed on any such Special Redemption Date. As in the case of a regular
redemption, an assignee shall not be entitled to redemption until the
General Partner has received written notice (as described above) of the
assignment, transfer or disposition under which the assignee claims an
interest in the Units to be redeemed. If, after such Special Redemption
Date, the Net Assets of the Fund are at least $250,000 and the Net Asset
Value of a Unit is in excess of $25, the Fund may, in the discretion of
the General Partner, resume trading. The General Partner may at any time
and in its discretion declare a Special Redemption Date, should the
General Partner determine that it is in the best interests of the Fund to
do so. If the General Partner declares a Special Redemption Date, the
General Partner need not again call a Special Redemption Date (whether or
not a Special Redemption Date would be required to be called as described
above); and the General Partner in its notice of a Special Redemption Date
may, in its discretion, establish the conditions, if any, under which
other Special Redemption Dates must be called, which conditions may be
determined in the sole discretion of the General Partner, irrespective of
the provisions of this paragraph. The General Partner may also, in its

LPA-9
<PAGE>

discretion, declare additional regular redemption dates for Units and permit
certain Limited Partners to redeem at other than month-end.

Redemption payments will be made within ten business days after the
month-end of redemption, except that under special circumstances, including, but
not limited to, inability to liquidate commodity positions as of a redemption
date or default or delay in payments due the Fund from commodity brokers, banks
or other persons or entities, the Fund may in turn delay payment to Partners or
assignees requesting redemption of their Units of the proportionate part of the
Net Asset Value of such Units equal to that proportionate part of the Fund's
aggregate Net Asset Value represented by the sums which are the subject of such
default or delay.

Only whole Units may be redeemed, unless the General Partner
specifically otherwise consents.

The General Partner may require a Limited Partner to redeem all or a
portion of such Partner's Units if the General Partner considers doing so to be
desirable for the protection of the Fund, and will use best efforts to do so to
the extent necessary to prevent the Fund from being deemed to hold "plan assets"
under the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the Internal Revenue Code of 1986, as amended (the
"Code"), with respect to any "employee benefit plan" subject to ERISA or with
respect to any plan or account subject to Section 4975 of the Code.

12. Offering of Units.

The General Partner on behalf of the Fund shall (i) cause to be filed
such Prospectus Supplements and amended Registration Statements as the General
Partner deems advisable with the Securities and Exchange Commission for the
ongoing registration of the continuous public offering of the Units, (ii) use
its best efforts to qualify and to keep qualified Units for sale under the
securities laws of such States of the United States or other jurisdictions as
the General Partner shall deem advisable and (iii) take such continuous
offering; action with respect to the matters described in (i) and (ii) as the
General Partner shall deem advisable or necessary.

The General Partner shall use its best efforts not to accept any
subscriptions for Units if doing so would cause the Fund to hold "plan assets"
under ERISA or the Code with respect to any "employee benefit plan" subject to
ERISA or with respect to any plan or account subject to Section 4975 of the
Code. If such a subscriber has its subscription reduced for such reason, such
subscriber shall be entitled to rescind its subscription in its entirety even
though subscriptions are otherwise irrevocable.

13. Continuous Offering; Additional Offerings.

The General Partner may, in its discretion, continue the ongoing
offering of Units contemplated by the Prospectus as well as make additional
public or private offerings of Units, provided that doing so does not dilute
existing Limited Partners' economic interest in the Fund or cause the ongoing
offering of the Units (unless otherwise discontinued) not to constitute a
continuous offering within the meaning of applicable Securities and Exchange
Commission rules). No Limited Partner shall have any preemptive, preferential or
other rights with respect to the issuance or sale of any additional Units, other
than as set forth in the preceding sentence.

The Fund may offer different series or classes of Units having
different economic terms than previously offered series or classes of Units;
provided that the issuance of such a new series or class of Units shall in no
respect adversely affect the holders of outstanding Units; and provided further
that the assets attributable to each such series or class shall, to the maximum
extent permitted by law, be treated as legally separate and distinct pools of
assets, and the assets attributable to one such series or class be prevented
from being used in any respect to satisfy or discharge any debt or obligation of
any other such series or class.

LPA-10
<PAGE>

14. Special Power of Attorney.

Each Limited Partner by his execution of this Limited Partnership
Agreement does hereby irrevocably constitute and appoint the General Partner and
each officer of the General Partner, with power of substitution, as his true and
lawful attorney-in-fact, in his name, place and stead, to execute, acknowledge,
swear to (and deliver as may be appropriate) on his behalf and file and record
in the appropriate public offices and publish (as may in the reasonable judgment
of the General Partner be required by law): (i) this Limited Partnership
Agreement, including any amendments and/or restatements hereto duly adopted as
provided herein; (ii) certificates of limited partnership in various
jurisdictions, and amendments and/or restatements thereto, and of assumed name
or of doing business under a fictitious name with respect to the Fund; (iii) all
conveyances and other instruments which the General Partner deems appropriate to
qualify or continue the Fund in the State of Delaware and the jurisdictions in
which the Fund may conduct business, or which may be required to be filed by the
Fund or the Partners under the laws of any jurisdiction or under any amendments
or successor statutes to the Act, to reflect the dissolution or termination of
the Fund or the Fund being governed by any amendments or successor statutes to
the Act or to reorganize or refile the Fund in a different jurisdiction; and
(iv) to file, prosecute, defend, settle or compromise litigation, claims or
arbitrations on behalf of the Fund. The Power of Attorney granted herein shall
be irrevocable and deemed to be a power coupled with an interest (including,
without limitation, the interest of the other Partners in the General Partner
being able to rely on the General Partner's authority to act as contemplated by
this Section 14) and shall survive and shall not be affected by the subsequent
incapacity, disability or death of a Limited Partner.

15. Withdrawal of a Partner.

The Fund shall be dissolved upon the withdrawal, dissolution, admitted
or court-decreed insolvency or the removal of the General Partner, or any other
event that causes the General Partner to cease to be a general partner under the
Act, unless the Fund is continued pursuant to the terms of Section 4. In
addition, the General Partner may withdraw from the Fund, without any breach of
this Limited Partnership Agreement, at any time upon 120 days' written notice by
first class mail, postage prepaid, to each Limited Partner and assignee of whom
the General Partner has notice. If the General Partner withdraws as general
partner and the Fund's business is continued, the withdrawing General Partner
shall pay all expenses incurred as a result of its withdrawal.

The General Partner may not assign its general partner interest or its
obligation to direct the trading of the Fund assets without the consent of each
Limited Partner. The General Partner will notify all Limited Partners of any
change in the principals of the General Partner. No provision of this Limited
Partnership Agreement shall be deemed, nor does any such provision purport, to
waive compliance with the Investment Advisers Act of 1940, as amended.

The death, incompetency, withdrawal, insolvency or dissolution of a
Limited Partner or any other event that causes a Limited Partner to cease to be
a limited partner of the Fund shall not terminate or dissolve the Fund, and a
Limited Partner, his estate, custodian or personal representative shall have no
right to redeem or value such Limited Partner's interest in the Fund except as
provided in Section 11 hereof. Each Limited Partner expressly agrees that in the
event of his death, he waives on behalf of himself and his estate, and directs
the legal representatives of his estate and any person interested therein to
waive, the furnishing of any inventory, accounting or appraisal of the assets of
the Fund and any right to an audit or examination of the books of the Fund.
Nothing in this Section 15 shall, however, waive any right given elsewhere in
this Limited Partnership Agreement for a Limited Partner to be informed of the
Net Asset Value of his Units, to receive periodic reports, audited financial
statements and other information from the General Partner or the Fund or to
redeem or transfer Units.

16. Standard of Liability; Indemnification.

(a) Standard of Liability for the General Partner. The General
Partner and its Affiliates, as defined below, shall have no liability to the
Fund or to any Partner for any loss suffered by the Fund which arises out of any
action or inaction of the General Partner or its Affiliates if the General
Partner, in good faith, determined that such course of conduct was in the best
interests of the Fund and such course of conduct did not constitute negligence
or misconduct of the General Partner or its Affiliates.

LPA-11
<PAGE>

(b) Indemnification of the General Partner by the Fund. To the fullest
extent permitted by law, subject to this Section 16, the General Partner and its
Affiliates shall be indemnified by the Fund against any losses, judgments,
liabilities, expenses and amounts paid in settlement of any claims sustained by
them in connection with the Fund; provided that such claims were not the result
of negligence or misconduct on the part of the General Partner or its
Affiliates, and the General Partner, in good faith, determined that such conduct
was in the best interests of the Fund; and provided further that Affiliates of
the General Partner shall be entitled to indemnification only for losses
incurred by such Affiliates in performing the duties of the General Partner and
acting wholly within the scope of the authority of the General Partner.

Notwithstanding anything to the contrary contained in the preceding
two paragraphs, the General Partner and its Affiliates and any persons acting as
selling agent for the Units shall not be indemnified for any losses, liabilities
or expenses arising from or out of an alleged violation of federal or state
securities laws unless (1) there has been a successful adjudication on the
merits of each count involving alleged securities law violations as to the
particular indemnitee and the court approves indemnification of the litigation
costs, or (2) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee and the court
approves indemnification of the litigation costs, or (3) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of the settlement and related costs should be
made.

In any claim for indemnification for federal or state securities law
violations, the party seeking indemnification shall place before the court the
position of the Securities and Exchange Commission, the California Department of
Corporations, the Massachusetts Securities Division, the Pennsylvania Securities
Commission, the Tennessee Securities Division, the Texas Securities Board and
any other state or applicable regulatory authority with respect to the issue of
indemnification for securities law violations.

The Fund shall not bear the cost of that portion of any insurance
which insures any party against any liability the indemnification of which is
herein prohibited.

For the purposes of this Section 16, the term Affiliates shall mean
any person acting on behalf of or performing services on behalf of the Fund who:
(1) directly or indirectly controls, is controlled by, or is under common
control with the General Partner; or (2) owns or controls 10% or more of the
outstanding voting securities of the General Partner; or (3) is an officer or
director of the General Partner; or (4) if the General Partner is an officer,
director, partner or trustee, is any entity for which the General Partner acts
in any such capacity.

Advances from Fund funds to the General Partner and its Affiliates for
legal expenses and other costs incurred as a result of any legal action
initiated against the General Partner by a Limited Partner are prohibited.

Advances from Fund funds to the General Partner and its Affiliates for
legal expenses and other costs incurred as a result of a legal action will be
made only if the following three conditions are satisfied: (1) the legal action
relates to the performance of duties or services by the General Partner or its
Affiliates on behalf of the Fund; (2) the legal action is initiated by a third
party who is not a Limited Partner; and (3) the General Partner or its
Affiliates undertake to repay the advanced funds, with interest from the date of
such advance, to the Fund in cases in which they would not be entitled to
indemnification under the standard of liability set forth in Section 16(a).

In no event shall any indemnity or exculpation provided for herein be
more favorable to the General Partner or any Affiliate than that contemplated by
the NASAA Guidelines as in effect on the date of this Limited Partnership
Agreement.

In no event shall any indemnification permitted by this subsection (b)
of Section 16 be made by the Fund unless all provisions of this Section for the
payment of indemnification have been complied with in all respects. Furthermore,
it shall be a precondition of any such indemnification that the Fund receive a
determination of qualified independent legal counsel in a written opinion that
the party which seeks to be indemnified hereunder has met the applicable
standard of conduct set forth herein. Receipt of any such opinion shall not,
however, in itself, entitle any such party to indemnification unless
indemnification is otherwise proper hereunder. Any indemnification payable by
the Fund hereunder shall be made only as provided in the specific case.

LPA-12
<PAGE>

In no event shall any indemnification obligations of the Fund under
this subsection (b) of this Section 16 subject a Limited Partner to any
liability in excess of that contemplated by subsection (e) of Section 7
hereof.

(c) Indemnification of the Fund by the Partners. In the event the Fund
is made a party to any claim, dispute or litigation or otherwise incurs any loss
or expense as a result of or in connection with any Partner's activities,
obligations or liabilities unrelated to the Fund's business, such Partner shall
indemnify and reimburse the Fund for all loss and expense incurred, including
reasonable attorneys' fees.

17. Amendments; Meetings.

(a) Amendments with Consent of the General Partner. If at any time
during the term of the Fund the General Partner shall deem it necessary or
desirable to amend this Limited Partnership Agreement, the General Partner may
proceed to do so, provided that such amendment shall be effective only if
embodied in an instrument approved by the General Partner and, subject to the
immediately following sentence, by the holders of Units representing a majority
of the outstanding Units. No meeting procedure or specified notice period is
required in the case of amendments made with the consent of the General Partner,
mere receipt of an adequate number of unrevoked written consents being
sufficient. The General Partner may amend this Limited Partnership Agreement
without the consent of the Limited Partners in order (i) to clarify any clerical
inaccuracy or ambiguity or reconcile any inconsistency (including any
inconsistency between this Limited Partnership Agreement and the Prospectus),
(ii) to effect the intent of the tax allocations proposed herein to the maximum
extent possible in the event of a change in the Code or the interpretations
thereof affecting such allocations, (iii) to attempt to ensure that the Fund is
not treated as an association taxable as a corporation for federal income tax
purposes, (iv) to qualify or maintain the qualification of the Fund as a limited
partnership in any jurisdiction, (v) to delete or add any provision of or to
this Limited Partnership Agreement required to be deleted or added by the Staff
of the Securities and Exchange Commission or any other federal agency or any
state "Blue Sky" official or similar official or in order to opt to be governed
by any amendment or successor statute to the Act, (vi) to make any amendment to
this Limited Partnership Agreement which the General Partner deems advisable,
including amendments that reflect the offering and issuance of additional Units,
whether or not issued through a series or class, provided that such amendment is
not adverse to the Limited Partners, or that is required by law, and (vii) to
make any amendment that is appropriate or necessary, in the opinion of the
General Partner, to prevent the Fund or the General Partner or its directors,
officers or controlling persons from in any manner being subjected to the
provisions of the Investment Company Act of 1940, as amended, or to prevent the
Fund from holding "plan assets" under ERISA or the Code with respect to any
"employee benefit plan" subject to ERISA or with respect to any plan or account
subject to Section 4975 of the Code.

(b) Amendments and Actions without Consent of the General Partner. In
any vote called by the General Partner or pursuant to section (c) of this
Section 17, upon the affirmative vote (which may be in person or by proxy) of
more than fifty percent (50%) of the Units then owned by Limited Partners, the
following actions may be taken, irrespective of whether the General Partner
concurs: (i) this Limited Partnership Agreement may be amended, provided,
however, that approval of all Limited Partners shall be required in the case of
amendments changing or altering this Section 17, extending the term of the Fund,
or materially changing the Fund's basic investment policies or structure; in
addition, reduction of the capital account of any Limited Partner or assignee or
modification of the percentage of profits, losses or distributions to which a
Limited Partner or an assignee is entitled hereunder shall not be effected by
any amendment or supplement to this Limited Partnership Agreement without such
Limited Partner's or assignee's written consent; (ii) the Fund may be dissolved;
(iii) the General Partner may be removed and replaced; (iv) a new general
partner or general partners may be elected if the General Partner withdraws from
the Fund; (v) the sale of all or substantially all of the assets of the Fund may
be approved; and (vi) any contract with the General Partner or any affiliate
thereof may be disapproved of and, as a result, terminated upon 60 days'
notice.

(c) Meetings; Other Voting Matters. Any Limited Partner upon request
addressed to the General Partner shall be entitled to obtain from the General
Partner, upon payment in advance of reasonable reproduction and mailing costs, a
list of the names and addresses of record of all Limited Partners and the number
of Units held by each (which shall be mailed by the General Partner to the
Limited Partner within ten days of the receipt of the request); provided, that
the General Partner may require any Limited Partner requesting such information
to submit written confirmation that such information will not be used for
commercial purposes. Upon receipt of a written proposal, signed by Limited
Partners owning Units representing at least 10% of the Units then owned by
Limited Partners, that a meeting of the Fund be called to vote upon any matter
upon which the Limited Partners may vote pursuant to this Limited Partnership
Agreement, the General Partner shall, by written notice to each Limited Partner
of record sent by certified mail within 15 days after such

LPA-13
<PAGE>

receipt, call a meeting of the Fund. Such meeting shall be held at least 30 but
not more than 60 days after the mailing of such notice, and such notice shall
specify the date of, a reasonable place and time for, and the purpose of such
meeting.

The General Partner may not restrict the voting rights of Limited
Partners as set forth herein.

In the event that the General Partner or the Limited Partners vote to
amend this Limited Partnership Agreement in any material respect, the amendment
will not become effective prior to all Limited Partners having an opportunity to
redeem their Units.

18. Governing Law.

The validity and construction of this Limited Partnership Agreement
shall be determined and governed by the laws of the State of Delaware without
regard to principles of conflicts of law; provided, that the foregoing choice of
law shall not restrict the application of any state's securities laws to the
sale of Units to its residents or within such state.

19. Miscellaneous.

(a) Notices. All notices under this Limited Partnership Agreement
shall be in writing and shall be effective upon personal delivery, or if sent by
first class mail, postage prepaid, addressed to the last known address of the
party to whom such notice is to be given, upon the deposit of such notice in the
United States mail.

(b) Binding Effect. This Limited Partnership Agreement shall inure to
and be binding upon all of the parties, all parties indemnified under Section 16
hereof, and their respective successors and assigns, custodians, estates, heirs
and personal representatives. For purposes of determining the rights of any
Partner or assignee hereunder, the Fund and the General Partner may rely upon
the Fund records as to who are Partners and assignees, and all Partners and
assignees agree that their rights shall be determined and they shall be bound
thereby.

(c) Captions. Captions in no way define, limit, extend or describe the
scope of this Limited Partnership Agreement nor the effect of any of its
provisions. Any reference to "persons" in this Limited Partnership Agreement
shall also be deemed to include entities, unless the context otherwise requires.

20. Certain Definitions.

This Limited Partnership Agreement contains certain provisions
required by the NASAA Guidelines. The terms used in such provisions are defined
as follows (the following definitions are included verbatim from the NASAA
Guidelines and, accordingly, may not in all cases be relevant to this Limited
Partnership Agreement):

Administrator. The official or agency administering the securities
laws of a state.

Advisor. Any Person who for any consideration engages in the business
of advising others, either directly or indirectly, as to the value,
purchase, or sale of Commodity Contracts or commodity options.

Affiliate. An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities of such Person; (b) any
Person 10% or more of whose outstanding voting securities are directly
or indirectly owned, controlled or held with power to vote, by such
Person; (c) any Person, directly or indirectly, controlling,
controlled by, or under common control with such Person; (d) any
officer, director or partner of such Person; or (e) if such Person is
an officer, director or partner, any Person for which such Person acts
in any such capacity.

LPA-14
<PAGE>

Capital Contributions. The total investment in a Program by a
Participant or by all Participants, as the case may be.

Commodity Broker. Any Person who engages in the business of effecting
transactions in Commodity Contracts for the account of others or for his
own account.

Commodity Contract. A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a
traded commodity at a specified price and delivery point.

Cross Reference Sheet. A compilation of the Guidelines sections,
referenced to the page of the prospectus, Program agreement, or other
exhibits, and justification of any deviation from the Guidelines.

Net Assets. The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net
Assets shall include any unrealized profits or losses on open positions,
and any fee or expense including Net Asset fees accruing to the Program.

Net Asset Value Per Program Interest. The Net Assets divided by the
number of Program Interests outstanding.

Net Worth. The excess of total assets over total liabilities as
determined by generally accepted accounting principles. Net Worth shall
be determined exclusive of home, home furnishings and automobiles.

New Trading Profits. The excess, if any, of Net Assets at the end of the
period over Net Assets at the end of the highest previous period or Net
Assets at the date trading commences, whichever is higher, and as further
adjusted to eliminate the effect on Net Assets resulting from new Capital
Contributions, redemptions, or capital distributions, if any, made during
the period decreased by interest or other income, not directly related to
trading activity, earned on Program assets during the period, whether the
assets are held separately or in the margin account.

Organization and Offering Expenses. All expenses incurred by the Program
in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but
not limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriters' attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositories, experts, expenses of qualification of the sale of its
Program Interests under federal and state law including taxes and fees,
accountants' and attorneys' fees.

Participant. The holder of a Program Interest.

Person. Any natural Person, partnership, corporation, association or
other legal entity.

Pit Brokerage Fee. Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees.

Program. A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts.

Program Broker. A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program.

LPA-15
<PAGE>

Program Interest. A limited partnership interest or other security
representing ownership in a Program.

Pyramiding. A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.

Sponsor. Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of
a Program, including a Commodity Broker who pays any por tion of the
Organizational Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform
services for the Program. Sponsor does not include wholly independent
third parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services rendered in connection with the
offering of the units. The term "Sponsor" shall be deemed to include its
Affiliates.

Valuation Date. The date as of which the Net Assets of the Program are
determined.

Valuation Period. A regular period of time between Valuation Dates.

IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amended and Restated Limited Partnership Agreement as of the day and year first
above written.

GENERAL PARTNER: LIMITED PARTNERS:

MERRILL LYNCH INVESTMENT All Limited Partners now and hereafter
PARTNERS INC. admitted as limited partners of the Fund
pursuant to Powers of Attorney now or
hereafter executed in favor of, and
delivered to, the General Partner.

By /s/ JOHN R. FRAWLEY, JR.
------------------------
John R. Frawley, Jr.
President and MERRILL LYNCH INVESTMENT
Chief Executive Officer PARTNERS INC.

By /s/ JOHN R. FRAWLEY, JR.
------------------------
John R. Frawley, Jr.
President and
Chief Executive Officer

LPA-16

<PAGE>

EXHIBIT B

ML GLOBAL HORIZONS L.P.

____________________

SUBSCRIPTION REQUIREMENTS

By executing a Subscription Agreement and Power of Attorney Signature
Page for Limited Partnership Units ("Units") of ML GLOBAL HORIZONS L.P. (the
"Fund"), each purchaser ("Purchaser") of Units irrevocably subscribes for Units
at the Net Asset Value per Unit as of the date of issuance (97% of such Net
Asset Value in the case of officers and employees of Merrill Lynch & Co., Inc.
and its affiliates), as described in the Fund's Prospectus dated November __,
1996 (the "Prospectus"). EXCEPT AS SET FORTH BELOW IN THE CASE OF MAINE AND
MICHIGAN RESIDENTS, INVESTORS WHO ARE CURRENTLY LIMITED PARTNERS IN THE FUND
NEED NOT EXECUTE AN ADDITIONAL SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SIGNATURE PAGE IN ORDER TO PURCHASE ADDITIONAL UNITS. HOWEVER, SUCH PERSONS MUST
RECEIVE A CURRENT PROSPECTUS FOR THE FUND AND CAREFULLY REVIEW THIS EXHIBIT B --
SUBSCRIPTION REQUIREMENTS AS WELL AS THE SUBSCRIPTION AGREEMENT AND POWER OF
ATTORNEY. SUCH PERSONS' FINANCIAL CONSULTANTS WILL BE REQUIRED TO RECONFIRM THAT
SUCH PERSONS CONTINUE TO MEET THE SUITABILITY REQUIREMENTS SET FORTH BOTH HEREIN
AND THEREIN IN ORDER FOR SUCH PERSONS TO BE ABLE TO PURCHASE ADDITIONAL
UNITS.

By executing a Subscription Agreement and Power of Attorney Signature
Page, Purchaser has thereby authorized Merrill Lynch, Pierce, Fenner & Smith
Incorporated or one of its affiliates (the "Selling Agent") to debit Purchaser's
customer securities account in the full amount of his subscription. If
Purchaser's Subscription Agreement and Power of Attorney Signature Page is
accepted, Purchaser agrees to contribute Purchaser's subscription to the Fund
and to be bound by the terms of the Fund's Limited Partnership Agreement, which
will be in substantially the form of the Fourth Amended and Restated Limited
Partnership Agreement included in the Prospectus as Exhibit A. Purchaser agrees
to reimburse the Fund and Merrill Lynch Investment Partners Inc. ("MLIP"), the
general partner of the Fund, for any expense or loss incurred by either as a
result of the cancellation of Purchaser's Units due to a failure of the
Purchaser to deliver good funds in the full amount of the subscription price of
the Units subscribed for by Purchaser.

Representations and Warranties

As an inducement to MLIP to accept this subscription, Purchaser, by
executing and delivering Purchaser's Subscription Agreement and Power of
Attorney Signature Page, represents and warrants to the Fund, MLIP, Merrill
Lynch Futures Inc., and the Selling Agent as follows:

(a) Purchaser is of legal age to execute the Subscription Agreement
and Power of Attorney Signature Page and is legally competent to do so.
Purchaser acknowledges that Purchaser has received (prior to any direct or
indirect solicitation of Purchaser's investment) a copy of the Prospectus--
together with a current Prospectus Supplement and summary financial
information relating to the Fund current within 60 calendar days -- dated
within nine months of the date as of which Purchaser subscribed to purchase
Units.

(b) All information that Purchaser has heretofore furnished to MLIP or
that is set forth in the Subscription Agreement and Power of Attorney
submitted by Purchaser is correct and complete as of the date of such
Subscription Agreement and Power of Attorney, and if there should be any
change in such information prior to acceptance of Purchaser's subscription,
Purchaser will immediately furnish such revised or corrected information to
MLIP.

SR-1
<PAGE>

(c) Unless (d) below is applicable, Purchaser's subscription is
made with Purchaser's funds for Purchaser's own account and not as
trustee, custodian or nominee for another.

(d) The subscription, if made as custodian for a minor, is a
gift Purchaser has made to such minor and is not made with such minor's
funds or, if not a gift, the representations as to net worth and annual
income set forth below apply only to such minor.

(e) If Purchaser is subscribing in a representative capacity,
Purchaser has full power and authority to purchase the Units and enter
into and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which he is purchasing the Units, and such entity
has full right and power to purchase such Units and enter into and be
bound by the Subscription Agreement and Power of Attorney and to become a
Limited Partner pursuant to the Limited Partnership Agreement.

(f) Purchaser either is not required to be registered with the
Commodity Futures Trading Commission ("CFTC") or to be a member of the
National Futures Association ("NFA"), or, if required to be so, is duly
registered with the CFTC and is a member in good standing of the NFA. It
is an NFA requirement that MLIP attempt to verify that any entity which
seeks to purchase Units be duly registered with the CFTC and a member of
the NFA, if required. Purchaser agrees to supply MLIP with such
information as MLIP may reasonably request in order to attempt such
verification. Most entities which acquire Units will, as a result,
themselves become commodity pools within the intent of applicable CFTC and
NFA rules, and their sponsors, accordingly, will be required to register
as commodity pool operators.

(g) If the undersigned is acting on behalf of an "employee
benefit plan," as defined in and subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any "plan," as defined in
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")
(each such employee benefit plan and plan, a "Plan"), the individual
signing this Subscription Agreement and Power of Attorney on behalf of the
undersigned, in addition to the representations and warranties set forth
above, hereby further represents and warrants as, or on behalf of the
fiduciary of the Plan responsible for purchasing the Units (the "Plan
Fiduciary") that: (a) the Plan Fiduciary has considered an investment in
the Fund for such Plan in light of the risks relating to the Fund; (b) the
Plan Fiduciary has determined that an investment in the Fund for such Plan
is consistent with the Plan Fiduciary's responsibilities under ERISA; (c)
the Plan's investment in the Fund does not violate and is not otherwise
inconsistent with the terms of any legal document constituting the Plan or
any trust agreement thereunder; (d) the Plan's investment in the Fund has
been duly authorized and approved by all necessary parties; (e) none of
MLIP, any Advisor to the Fund, the Selling Agent, Merrill Lynch Futures
Inc., Merrill Lynch International Bank ("MLIB"), any of their respective
affiliates or any of their respective agents or employees (i) has
investment discretion with respect to the investment of assets of the Plan
used to purchase Units, (ii) has authority or responsibility to or
regularly gives investment advice with respect to the assets of the Plan
used to purchase Units for a fee and pursuant to an agreement or
understanding that such advice will serve as a primary basis for
investment decisions with respect to the Plan and that such advice will be
based on the particular investment needs of the Plan, or (iii) is an
employer maintaining or contributing to the Plan; and (f) the Plan
Fiduciary (i) is authorized to make, and is responsible for, the decision
to invest in the Fund, including the determination that such investment is
consistent with the requirement imposed by Section 404 of ERISA that Plan
investments be diversified so as to minimize the risk of large losses,
(ii) is independent of MLIP, any Advisor to the Fund, the Selling Agent,
Merrill Lynch Futures Inc., MLIB and any of their respective affiliates,
and (iii) is qualified to make such investment decision. The undersigned
will, at the request of MLIP, furnish MLIP with such information as MLIP
may reasonably require to establish that the purchase of Units by the Plan
does not violate any provision of ERISA or the Code, including, without
limitation, those provisions relating to "prohibited transactions" by
"parties in interest" or "disqualified persons," as defined therein.

The representations and statements set forth herein may be
asserted in the defense of the Fund, MLIP, the Advisors to the Fund, the
Selling Agent, Merrill Lynch Futures Inc. or others in any subsequent
litigation or other proceeding.

____________________

SR-2
<PAGE>

Investor Suitability

PURCHASER UNDERSTANDS THAT THE PURCHASE OF UNITS MAY BE MADE ONLY BY
PERSONS WHO, AT A MINIMUM, HAVE (I) A NET WORTH OF AT LEAST $150,000 (EXCLUSIVE
OF HOME, FURNISHINGS AND AUTOMOBILES) OR (II) AN ANNUAL GROSS INCOME OF AT LEAST
$45,000 AND A NET WORTH OF AT LEAST $45,000 (EXCLUSIVE OF HOME, FURNISHINGS AND
AUTOMOBILES). RESIDENTS OF THE FOLLOWING STATES MUST MEET THE REQUIREMENTS SET
FORTH BELOW (NET WORTH FOR SUCH PURPOSES IS IN ALL CASES EXCLUSIVE OF HOME,
FURNISHINGS AND AUTOMOBILES). IN ADDITION, PURCHASER MAY NOT INVEST MORE THAN
10% OF HIS OR HER READILY MARKETABLE ASSETS IN THE FUND.

1. Arizona -- Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual income of at least $60,000.

2. California -- Net worth of at least $250,000 and an annual income
of at least $65,000 or, in the alternative, a net worth of at least $500,000.

3. Iowa -- Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual taxable income of at least $60,000.

4. Maine -- Minimum subscription per investment, both initial and
subsequent, of $5,000; net worth of at least $200,000 or a net worth of at least
$50,000 and an annual income of at least $50,000. ALL MAINE RESIDENTS, INCLUDING
EXISTING LIMITED PARTNERS IN THE FUND SUBSCRIBING FOR ADDITIONAL UNITS, MUST
EXECUTE A SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE. MAINE
RESIDENTS MUST SIGN A SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE
PAGE SPECIFICALLY PREPARED FOR MAINE RESIDENTS, A COPY OF WHICH SHALL ACCOMPANY
THIS PROSPECTUS AS DELIVERED TO ALL MAINE RESIDENTS.

5. Massachusetts -- Net worth of at least $225,000 or a net worth of
at least $60,000 and an annual income of at least $60,000.

6. Michigan -- Net worth of at least $225,000 or a net worth of at
least $60,000 and taxable income in 1996 of at least $60,000. ALL MICHIGAN
RESIDENTS, INCLUDING EXISTING LIMITED PARTNERS IN THE FUND SUBSCRIBING FOR
ADDITIONAL UNITS, MUST EXECUTE A SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SIGNATURE PAGE.

7. Minnesota -- Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual income of at least $60,000.

8. Mississippi -- Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual income of at least $60,000.

9. Missouri -- Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual income of at least $60,000.

10. New Hampshire -- Net worth of at least $250,000 or a net worth of
at least $125,000 and an annual income of at least $50,000.

11. North Carolina -- Net worth of at least $225,000 or a net worth of
at least $60,000 and an annual income of at least $60,000.

SR-3
<PAGE>

12. Oklahoma -- Net worth of at least $225,000 or a net worth of
$60,000 and an annual income of at least $60,000.

13. Oregon -- Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual taxable income of at least $60,000.

14. Pennsylvania -- Net worth of a least $175,000 or a net worth of at
least $100,000 and an annual taxable income of at least $50,000.

15. South Carolina -- Net worth of at least $100,000 or a net income
in 1996 some portion of which was subject to maximum federal and state income
tax.

16. South Dakota -- Net worth of at least $225,000 or a net worth of
at least $60,000 and an annual income of at least $60,000.

17. Tennessee -- Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual taxable income of at least $60,000.

18. Texas -- Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual taxable income of at least $60,000.

SR-4
<PAGE>

EXHIBIT C

ML GLOBAL HORIZONS L.P.

---------------

SUBSCRIPTION INSTRUCTIONS

ANY PERSON CONSIDERING PURCHASING UNITS SHOULD CAREFULLY READ AND REVIEW
THE PROSPECTUS OF THE FUND DATED NOVEMBER __, 1996, TOGETHER WITH THE
CURRENT PROSPECTUS SUPPLEMENT AND SUMMARY FINANCIAL INFORMATION
RELATING TO THE FUND CURRENT WITHIN 60 CALENDAR
DAYS WHICH ACCOMPANIED THE PROSPECTUS.

The Units are speculative and involve a high degree of risk. No person
may invest more than 10% of his or her readily marketable assets in the Fund.

EXISTING LIMITED PARTNERS WHO ARE SUBSCRIBING FOR ADDITIONAL UNITS
(EXCEPT MAINE AND MICHIGAN RESIDENTS) NEED NOT COMPLETE AN ADDITIONAL
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE BUT MUST RECEIVE A
CURRENT PROSPECTUS FOR THE FUND (TOGETHER WITH THE CURRENT PROSPECTUS SUPPLEMENT
AND SUMMARY FINANCIAL INFORMATION RELATING TO THE FUND CURRENT WITHIN 60
CALENDAR DAYS) AND CAREFULLY REVIEW THE SUBSCRIPTION AGREEMENT AND POWER OF
ATTORNEY AS WELL AS EXHIBIT B --SUBSCRIPTION REQUIREMENTS. SUCH LIMITED
PARTNERS' FINANCIAL CONSULTANTS MUST RECONFIRM THAT SUCH LIMITED PARTNERS
CONTINUE TO MEET THE STANDARDS AND REQUIREMENTS SET FORTH HEREIN AND IN EXHIBIT
B -- SUBSCRIPTION REQUIREMENTS IN ORDER FOR SUCH LIMITED PARTNERS TO BE ELIGIBLE
TO PURCHASE ADDITIONAL UNITS.

---------------

FILL IN ALL OF THE BOXES ON PAGES SA-5 and SA-6; TYPE OR PRINT

USING BLACK INK ONLY AND ONE LETTER OR NUMBER PER BOX, AS FOLLOWS:
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1 - Financial Consultants must complete the information required.

Item 2 - Enter the number of Units to be purchased or check the appropriate
dollar amount of subscription.

Item 3 - Enter customer's Merrill Lynch Account Number.

Item 4 - Enter the Social Security Number or Taxpayer ID Number. In case of
joint ownership, either Social Security Number may be used.
</TABLE>
The Signature Page is self-explanatory for most types of investors;
however, we have provided specific instructions for the following types of
investors:

Trust -- Enter the Trust name on line 7 and the trustee's name on line
8, followed by "Trustee." If applicable, use line 9 for the custodian's name,
followed by "Custodian." Be sure to furnish the Taxpayer ID Number of the Trust.

SA-(i)
<PAGE>

Custodian Under Uniform Gifts to Minors Act -- Complete line 5 with
the name of minor followed by "UGMA." On line 8 enter the custodian's name,
followed by "Custodian." Be sure to furnish the minor's Social Security Number.

Partnership or Corporation -- The Partnership or Corporation name is
required on line 7. Enter an officer's or partner's name on line 8. Be sure to
furnish the Taxpayer ID Number of the Partnership or Corporation.
<TABLE>
<CAPTION>

<S> <C> <C>
Items 5, 6, 7 - Enter the exact name in which the Units are to be held.

Item 8 - Enter a partner's or officer's name.

Item 9 - Complete information as required.

Item 10 - The investor(s) (EXCEPT CURRENT LIMITED PARTNERS IN THE
FUND OTHER THAN RESIDENTS OF MAINE OR MICHIGAN) must
execute the Subscription Agreement and Power of Attorney
Signature Page (Item 10, Page SA-6) and review the
representation relating to backup withholding tax
underneath the signature and telephone number lines in
Item 10.

Item 11 - Financial Consultants must complete the information
required.
</TABLE>

THE SPECIMEN COPY OF THE SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SIGNATURE PAGE (PAGES SA-3 AND SA-4) SHOULD NOT BE EXECUTED.

Instructions to Financial Consultants:

THE EXECUTED SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE MUST
BE RETAINED IN THE BRANCH OFFICE.

RECONFIRMATIONS (I.E., SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SIGNATURE PAGES EXECUTED BY FINANCIAL CONSULTANTS) OR ANOTHER FORM OF WRITTEN
RECONFIRMATION APPROVED BY THE BRANCH OFFICE REGARDING THE CONTINUING
SUITABILITY OF EXISTING LIMITED PARTNERS SUBSCRIBING FOR ADDITIONAL UNITS MUST
ALSO BE RETAINED IN THE BRANCH OFFICE.

SA-(ii)
<PAGE>

ML GLOBAL HORIZONS L.P.

LIMITED PARTNERSHIP UNITS

--------------------

BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SUBSCRIBERS ARE NOT WAIVING ANY RIGHTS UNDER THE SECURITIES ACT
OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934
--------------------

SUBSCRIPTION AGREEMENT AND
POWER OF ATTORNEY

ML GLOBAL HORIZONS L.P.
c/o Merrill Lynch Investment Partners Inc.
General Partner
Merrill Lynch World Headquarters
South Tower, 6th Floor
World Financial Center
New York, New York 10080-6106

Dear Sirs:

1. Subscription for Units. I hereby subscribe for the number of
limited partnership units ("Units") in ML GLOBAL HORIZONS L.P. (the "Fund") set
forth in the Subscription Agreement and Power of Attorney Signature Page
attached hereto; a minimum of 50 Units ($5,000, if less) must be purchased -- 20
Units ($2,000, if less) for both: (i) trustees or custodians of eligible
employee benefit plans and individual retirement accounts; and (ii) existing
Limited Partners (who are not, except in the case of Maine or Michigan
residents, required to submit a new Subscription Agreement and Power of Attorney
in order to acquire additional Units). Any greater number of whole Units may be
purchased in 1 Unit increments. The purchase price is the Net Asset Value per
Unit -- 97% of the Net Asset Value per Unit if I am an officer or employee of
Merrill Lynch & Co., Inc. or any of its affiliates. The terms of the offering of
the Units are described in the Prospectus of the Fund dated November __, 1996,
together with the accompanying Prospectus Supplement and summary financial
information relating to the Fund current within 60 calendar days (the
"Prospectus"). Units are continuously offered during each calendar month, but
generally are sold only as of the beginning of the immediately following
calendar month (until such time as the offering is discontinued). Concurrently
with or prior to the delivery of this Subscription Agreement and Power of
Attorney, I have authorized Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Selling Agent") to debit my customer securities account in the amount of
my subscription. I acknowledge that I must have my subscription payment in such
account on but not before the settlement date for my purchase of Units. Such
settlement date will be not more than five business days after the purchase date
of my Units, which will occur as of the first day of the calendar month
immediately following the month during which my subscription is accepted. My
Merrill Lynch Financial Consultant will inform me of such settlement date, on
which my account will be debited and the amount so debited transmitted directly
to the Fund, as described in the Prospectus. MERRILL LYNCH INVESTMENT PARTNERS
INC. ("MLIP"), the General Partner of the Fund, may, in its sole and absolute
discretion, accept or reject this subscription in whole or in part, except that,
if this subscription is to be accepted in part only, it shall not be reduced to
an amount less than 50 Units ($5,000, if less); 20 Units ($2,000, if less) in
the case of persons permitted to purchase such lesser minimum, as described
above. All subscriptions once submitted are irrevocable. All Units are offered
subject to prior sale.

2. Representations and Warranties of Subscriber. I have received the
Prospectus together with a current Prospectus Supplement and summary financial
information relating to the Fund current within 60 calendar days. I understand
that by submitting this Subscription Agreement and Power of Attorney I am making
the representations and warranties set forth in Exhibit B -- Subscription
Requirements in the Prospectus, including, without limitation, those

SA-1
<PAGE>

representations and warranties relating to my net worth (exclusive of home,
furnishings and automobiles), annual income and readily marketable assets.

3. Power of Attorney. In connection with my subscription for Units,
I do hereby irrevocably constitute and appoint MLIP, and its successors and
assigns, as my true and lawful Attorney-in-Fact, with full power of
substitution, in my name, place and stead, to (i) file, prosecute, defend,
settle or compromise litigation, claims or arbitrations on behalf of the Fund
and (ii) make, execute, sign, acknowledge, swear to, deliver, record and file
any documents or instruments which may be considered necessary or desirable by
MLIP to carry out fully the provisions of the Limited Partnership Agreement of
the Fund, including, without limitation, by executing said Limited Partnership
Agreement itself, and by effecting all amendments permitted by the terms
thereof. I acknowledge that the other investors in the Fund are relying on
MLIP's authority to act pursuant to the Power of Attorney granted hereby. The
Power of Attorney granted hereby shall be deemed to be coupled with an interest
and shall be irrevocable and shall survive, and shall not be affected by, my
subsequent death, incapacity, disability, insolvency or dissolution or any
delivery by me of an assignment of the whole or any portion of my Units.

4. Irrevocability; Governing Law. I hereby acknowledge and agree
that I am not entitled to cancel, terminate or revoke this subscription or any
of my agreements hereunder after the Subscription Agreement and Power of
Attorney Signature Page attached hereto has been submitted (and not rejected),
and that this subscription and such agreements shall survive my death or
disability. THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SHALL BE GOVERNED
BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

SA-2
<PAGE>

<TABLE>
<CAPTION>
SPECIMEN
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Financial Consultant [ ] [ ] [ ] [ ]
Name First M.I. Last Sub. Order Ref. #

Financial Consultant [ ]-[ ]-[ ] Financial Consultant Number [ ] Branch Wire Code [ ]
Phone Number
- -----------------------------------------------------------------------------------------------------
</TABLE>

ML GLOBAL HORIZONS L.P.

LIMITED PARTNERSHIP UNITS
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE
PLEASE PRINT OR TYPE. USE BLACK INK ONLY AND ONLY ONE CHARACTER PER BOX.

The Investor named below, by execution and delivery of this Signature Page, by
payment of the purchase price for Limited Partnership Units ("Units") in ML
Global Horizons L.P. (the "Fund") and by authorizing Merrill Lynch, Pierce,
Fenner & Smith Incorporated to debit investor's customer securities account in
the amount set forth below, hereby subscribes for the purchase of Units at a
purchase price of Net Asset Value as of the first day of the month immediately
following receipt and acceptance of this Signature Page (or 97% of Net Asset
Value for officers and employees of Merrill Lynch & Co., Inc. and its
affiliates).

The named investor further acknowledges receipt of the Prospectus of the Fund
dated November _, 1996 including the Fourth Amended and Restated Limited
Partnership Agreement, the Subscription Requirements and the Subscription
Agreement and Power of Attorney set forth therein, the terms of which govern the
investment in the Units being subscribed for hereby, together with the summary
financial information relating to the Fund current within 60 calendar days.

If the subscriber is a participant in a Merrill Lynch sponsored IRA, BASIC/TM/
or SEP account and is purchasing Units for such an account, the subscriber
hereby acknowledges that:

1. An amount at least equal to the purchase price for the Units is in an IRA,
BASIC/TM/ or SEP account at Merrill Lynch, Pierce, Fenner & Smith
Incorporated;
2. The minimum value of all securities and funds in such IRA, BASIC/TM/ or SEP
account is $20,000;
3. The minimum subscription is 20 Units (or $2,000 if less) and the amount of
this subscription is no more than 10% of the value of the IRA, BASIC/TM/ or
SEP account on the subscription date; and
4. Each separate IRA, BASIC/TM/ or SEP account of the subscriber seeking to
purchase Units meets the above eligibility requirements.

2 [ ] [ ] $5,000 [ ] $2,000 3 [ ]-[ ]
Enter number of Units or check appropriate box Merrill Lynch Account #
(minimum 50 Units, or $5,000 if less, for
Taxable Investors; 20 Units, or $2,000 if less,
for Non-Taxable Investors and existing
Limited Partners subscribing for additional
Units: incremental investments in one Unit multiples).

4 [ ]-[ ]-[ ] [ ]-[ ]
Social Security Number or Taxpayer ID Number

Limited Partner Name
5 [ ] [ ] [ ]
First Name M.I. Last Name

Joint Partner Name
6 [ ] [ ] [ ]
First Name M.I. Last Name

Partnership, Corporate or Trust Limited Partner Name
7 [ ]

Partner, Officer, Trustee, Beneficiary, Power of Attorney or Custodian under
UGMA/UTMA
8 [ ]

Additional Information
9 [ ]

Residence Address of Limited Partner (P.O. Box Numbers Are Not Acceptable For
Residence Address)

[ ] [ ] [ ]
Street Number Street Name Apt. Number

[ ] [ ] [ ] [ ]
Bldg. No. City State Zip Code

[ ]
Country (If Other Than U.S.A.)

Mailing Address of Limited Partner (If Other Than Residence Address)
[ ] [ ] [ ]
Street Number Street Name Apt. Number

[ ] [ ] [ ] [ ] [ ]
Bldg. No. P.O. Box No. City State Zip Code

[ ]
Country (If Other Than U.S.A.)

[ ] Check box if Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") is custodian.

Name of Custodian. If Other Than Merrill Lynch
[ ]

Mailing Address of Custodian. If Other Than Merrill Lynch
[ ] [ ] [ ]
Street Number Street Name Apt. Number

[ ] [ ] [ ] [ ] [ ]
Bldg. No P.O. Box No. City State Zip Code

[ ]
Country (If Other Than U.S.A.)

SA-3
<PAGE>

SPECIMEN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

ML GLOBAL HORIZONS L.P.
LIMITED PARTNERSHIP UNITS
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE (CONTINUED)

- -------------------------------------------------------------------------------
10 FOR USE BY INVESTOR

X _________________________________ X _____________________________________
Signature of Investor Date Signature of Joint Investor (if any) Date

( ) -
_________________________________
Telephone Number of Investor

EXECUTING AND DELIVERING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SIGNATURE PAGE SHALL IN NO RESPECT BE DEEMED TO CONSTITUTE A WAIVER OF ANY
RIGHTS UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934. I ACKNOWLEDGE THAT I HAVE RECEIVED, IN ADDITION TO THE PROSPECTUS DATED
NOVEMBER __, 1996, SUMMARY FINANCIAL INFORMATION RELATING TO THE FUND CURRENT
WITHIN 60 CALENDAR DAYS.

I have checked the following box if I am subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: [_]. Under the
penalties of perjury, by signature above I hereby certify that the Social
Security Number or Taxpayer ID Number shown on the front of this Subscription
Agreement and Power of Attorney Signature Page above my name is my true, correct
and complete Social Security Number or Taxpayer ID Number and that the
information given in the immediately preceding sentence is true, correct and
complete.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
11 FINANCIAL CONSULTANT MUST SIGN

I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments, financial
situation and needs and any other information known by me, that investment in
the Fund is suitable for such investor in light of his/her financial position,
net worth and other suitability characteristics. I have also informed the
investor of the unlikelihood of a public trading market developing for the
Units.

The Financial Consultant MUST sign below in order to substantiate compliance
with Appendix F to Article 3, Section 34 of the NASD's Rules of Fair Practice.

X _____________________________________________________________________________
Financial Consultant Signature Date

Office Manager approval of Merrill Lynch sponsored retirement account purchases.

X _____________________________________________________________________________
Office Manager Signature Date
- -------------------------------------------------------------------------------

===============================================================================

<TABLE>
<CAPTION>
DATE RECEIVED COUNTRY CODE ADDITIONAL ORDER CONTROL NUMBER
<S> <C> <C> <C> <C>

FOR OFFICE USE ONLY [______] [__] [__] [__] [_____}
</TABLE>

SA-4
<PAGE>

EXECUTION COPY
<TABLE>
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Financial Consultant [ ] [ ] [ ] [ ]
Name First M.I. Last Sub. Order Ref. #

LIMITED PARTNERSHIP UNITS
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE
PLEASE PRINT OR TYPE. USE BLACK INK ONLY AND ONLY ONE CHARACTER PER BOX.

If the subscriber is a participant in a Merrill Lynch sponsored IRA, BASIC/TM/
or SEP account and is purchasing Units for such an account, the subscriber
hereby acknowledges that:

4 [ ]-[ ]-[ ] [ ]-[ ]
Social Security Number or Taxpayer ID Number

Limited Partner Name
5 [ ] [ ] [ ]
First Name M.I. Last Name

Joint Partner Name
6 [ ] [ ] [ ]
First Name M.I. Last Name

Partnership, Corporate or Trust Limited Partner Name
7 [ ]

Partner, Officer, Trustee, Beneficiary, Power of Attorney or Custodian under
UGMA/UTMA
8 [ ]

Additional Information
9 [ ]

Residence Address of Limited Partner (P.O. Box Numbers Are Not Acceptable For
Residence Address)

[ ] [ ] [ ]
Street Number Street Name Apt. Number

[ ] [ ] [ ] [ ]
Bldg. No. City State Zip Code

[ ]
Country (If Other Than U.S.A.)

Mailing Address of Limited Partner (If Other Than Residence Address)
[ ] [ ] [ ]
Street Number Street Name Apt. Number

[ ] [ ] [ ] [ ] [ ]
Bldg. No. P.O. Box No. City State Zip Code

[ ]
Country (If Other Than U.S.A.)

[ ] Check box if Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") is custodian.

Name of Custodian. If Other Than Merrill Lynch
[ ]

Mailing Address of Custodian. If Other Than Merrill Lynch
[ ] [ ] [ ]
Street Number Street Name Apt. Number

[ ] [ ] [ ] [ ] [ ]
Bldg. No. P.O. Box No. City State Zip Code

[ ]
Country (If Other Than U.S.A.)

SA-5
<PAGE>

EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

ML GLOBAL HORIZONS L.P.
LIMITED PARTNERSHIP UNITS
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE (CONTINUED)
- --------------------------------------------------------------------------------
10 FOR USE BY INVESTOR

X _________________________________ X ____________________________________
Signature of Investor Date Signature of Joint Investor (if any)
______________
Date
( ) --
_________________________________
Telephone Number of Investor

I have checked the following box if I am subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: [_]. Under the
penalties of perjury, by signature above I hereby certify that the Social
Security Number or Taxpayer ID Number shown on the front of this Subscription
Agreement and Power of Attorney Signature Page above my name is my true, correct
and complete Social Security Number or Taxpayer ID Number and that the
information given in the immediately preceding sentence is true, correct and
complete.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
11 FINANCIAL CONSULTANT MUST SIGN

The Financial Consultant MUST sign below in order to substantiate compliance
with Appendix F to Article 3, Section 34 of the NASD's Rules of Fair Practice.

X ______________________________________________________________________________
Financial Consultant Signature Date

Office Manager approval of Merrill Lynch sponsored retirement account purchases.

X ______________________________________________________________________________
Office Manager Signature Date
- --------------------------------------------------------------------------------

================================================================================

<TABLE>
DATE RECEIVED COUNTRY CODE ADDITIONAL ORDER CONTROL NUMBER
<S> <C> <C> <C> <C>
FOR OFFICE USE ONLY [__][__][__][__][__][__] [__][__] [__] [__][__][__][__][__]
</TABLE>

SA-6
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Merrill Lynch Investment Partners Inc. will pay, without reimbursement
from the Registrant, all of the following costs incurred in connection with
preparing and filing this Registration Statement. This Registration Statement
also constitutes Post-Effective Amendment No. 4 to the Registrant's Registration
Statement on Form S-1, No. 33-80202 (effective June 17, 1994) and Post-Effective
Amendment No. 3 with respect to the Registrant's Registration Statement on Form
S-1, No. 33-88994 (effective March 1, 1995).

<TABLE>
<CAPTION>
Approximate
Amount
-----------
<S> <C>
Securities and Exchange Commission Registration Fee.......... $ 17,242
National Association of Securities Dealers, Inc. Filing Fee.. 5,500
Printing Expenses............................................ 75,000
Fees of Certified Public Accountants......................... 50,000
Blue Sky Expenses (Excluding Legal Fees)..................... 25,000
Fees of Counsel.............................................. 75,000
Miscellaneous Offering Costs................................. 63,779
--------
Total...................................................... $311,521
========
</TABLE>

--------------------

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 16 of the Third Amended and Restated Limited Partnership
Agreement (attached as Exhibit A to the prospectus which forms a part of this
Registration Statement) provides for the indemnification of the General Partner
and certain of its affiliates by the Registrant. "Affiliates" shall mean any
person performing services on behalf of the Fund who: (1) directly or indirectly
controls, is controlled by, or is under common control with the General Partner;
or (2) owns or controls 10% or more of the outstanding voting securities of the
General Partner; or (3) is an officer or director of the General Partner; or (4)
if the General Partner is an officer, director, partner or trustee, is any
entity for which the General Partner acts in any such capacity. Indemnification
is to be provided for any loss suffered by the Registrant which arises out of
any action or inaction, if the party, in good faith, determined that such course
of conduct was in the best interest of the Registrant and such conduct did not
constitute negligence or misconduct. The General Partner and its affiliates will
only be entitled to indemnification for losses incurred by such affiliates in
performing the duties of the General Partner and acting wholly within the scope
of the authority of the General Partner.

In the Selling Agreement, the Trading Advisors have agreed to
indemnify each person who controls the General Partner within the meaning of
Section 15 of the Securities Act of 1933 and each person who signed this
Registration Statement or is a director of the General Partner against losses,
claims, damages, liabilities or expenses arising out of or based upon any untrue
statement or omission or alleged untrue statement or omission relating or with
respect to the Trading Advisors or any principal of the Trading Advisors or
their operations, trading systems, methods or performance, which was made in any
preliminary prospectus, this Registration Statement as declared effective, the
Prospectus included in this Registration Statement when declared effective, or
in any amendment or supplement thereto and furnished by or approved

S-1
<PAGE>

by the Trading Advisors for inclusion therein. The Trading Advisors have also
agreed to contribute to the amounts paid by such controlling persons, signatees
or directors in respect of any such losses, claims, damages, liabilities or
expenses in the event that the foregoing indemnity is unavailable or
insufficient.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

None.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following documents (unless otherwise indicated) are filed
herewith and made a part of this Registration Statement:

(a) Exhibits.

Exhibit
Number Description of Document
- ------ -----------------------

The following exhibits are filed herewith.

EX-3.02c Fourth Amended and Restated Limited Partnership Agreement
of the Registrant (included as Exhibit A to the
Prospectus).

EX-5.01 Opinion of Sidley & Austin relating to the legality of the
Units.

EX-8.01 Opinion of Sidley & Austin with respect to federal income
tax consequences.

EX-10.09 Subscription Agreement and Power of Attorney (included as
Exhibit C to the Prospectus).

EX-23.01 Consent of Sidley & Austin.

EX-23.02 Consent of Deloitte & Touche LLP.

------------------------------------------

The following exhibits are incorporated by reference herein from
the exhibits of the same description and number filed with Amendment No. 1 to
the Registrant's Registration Statement on Form S-1 (Registration No. 33-62998),
filed with the Commission on September 10, 1993 (Amendment No. 2 to such
Registration Statement became effective October 4, 1993).

1.01 Selling Agreement among the Partnership, the General Partner,
(Amended) Merrill Lynch Futures, the Selling Agent and the Trading
Advisors.

10.01 Form of Advisory Agreement among the Partnership, the General
(Amended) Partner and each Trading Advisor.

S-2
<PAGE>

Exhibit
Number Description of Document
- ------- -----------------------

10.02 Form of Consulting Agreement between Merrill Lynch Futures and
(Amended) each Trading Advisor.

10.03 Form of Customer Agreement between the Partnership and Merrill
(Amended) Lynch Futures.

10.06 Foreign Exchange Desk Service Agreement.

The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed with the Registrant's
Registration Statement on Form S-1 (Registration No. 33-88994), which became
effective March 1, 1995.

1.01(b) Amendment No. 1 to the Selling Agreement among the Partnership, the
General Partner, Merrill Lynch Futures Inc., the Selling Agent and
ARA Portfolio Management Company, L.L.C. (formerly, ARA Portfolio
Management Company).

The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed with the Registrant's Post-
Effective Amendment No. 1 to the Registration Statement on Form S-1
(Registration No. 33-88994) which became effective on December 6, 1995 (Post-
Effective Amendment No. 2 to such Registration Statement became effective April
8, 1996).

1.02 Form of Assignment of Selling Agreement.

3.01 Amended and Restated Certificate of Limited Partnership of the
Registrant.

10.07 Form of Assignment of Advisory Agreement.

10.08 Form of Assignment of Consulting Agreement.

EX-1.01c Form of Amendment to the Selling Agreement among the Partnership,
the General Partner, Merrill Lynch Futures Inc., the Selling Agent
and the Trading Advisors.

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;

S-3
<PAGE>

(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
((S)230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;

(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.

(b) Insofar as indemnification for liabilities under the Securities
Act of 1933 may be permitted to officers, directors or controlling persons
of the registrant pursuant to the provisions described in Item 14 above,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by an officer, director, or controlling person of the registrant
in the successful defense of any such action, suit or proceeding) is
asserted by such officer, director or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.

S-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
General Partner of the Registrant has duly caused this Registration Statement
Amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York in the State of New York on the 26th day of
November, 1996.

ML GLOBAL HORIZONS L.P.

By: Merrill Lynch Investment Partners Inc.
General Partner

By: /s/ JOHN R. FRAWLEY, JR.
--------------------------------------
John R. Frawley, Jr.
President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Registration Statement Amendment has been signed below
by the following persons on behalf of the General Partner of the Registrant in
the capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title With Registrant Date
--------- --------------------- ----
<S> <C> <C>
/s/ JOHN R. FRAWLEY, JR. President, Chief Executive November 26, 1996
- ----------------------------- Officer and Director
John R. Frawley, Jr.

/s/ JAMES M. BERNARD Chief Financial Officer and November 26, 1996
- ----------------------------- Senior Vice-President
James M. Bernard (Principal Financial and
Accounting Officer)

/s/ ALLEN N. JONES Director November 26, 1996
- -----------------------------
Allen N. Jones
</TABLE>

(Being principal executive officer, the principal financial and
accounting officer and a majority of the directors of Merrill Lynch Investment
Partners Inc.)

Merrill Lynch Investment General Partner of Registrant
Partners Inc.

By: /s/ JOHN R. FRAWLEY, JR. November 26, 1996
-------------------------
John R. Frawley, Jr.
President and Chief
Executive Officer

S-5
<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 26, 1996

REGISTRATION NO. 333-10749
================================================================================

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

--------------------

EXHIBITS

AMENDMENT NO. 2

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

--------------------

ML GLOBAL HORIZONS L.P.

================================================================================

<PAGE>

EXHIBIT INDEX

Exhibit
Number Description of Document
- ------ -----------------------

The following exhibits are filed herewith.

EX-3.02c Fourth Amended and Restated Limited Partnership Agreement of the
Registrant (included as Exhibit A to the Prospectus).

EX-5.01 Opinion of Sidley & Austin relating to the legality of the Units.

EX-8.01 Opinion of Sidley & Austin with respect to federal income tax
consequences.

EX-10.09 Subscription Agreement and Power of Attorney (included as Exhibit C to
the Prospectus).

EX-23.01 Consent of Sidley & Austin.

EX-23.02 Consent of Deloitte & Touche LLP.

--------------------

The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed with Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-62998),
filed with the Commission on September 10, 1993 (Amendment No. 2 to such
Registration Statement became effective October 4, 1993).

1.01 Selling Agreement among the Partnership, the General Partner,
(Amended) Merrill Lynch Futures, the Selling Agent and the Trading Advisors.

10.01 Form of Advisory Agreement among the Partnership, the General
(Amended) Partner and each Trading Advisor.

10.02 Form of Consulting Agreement between Merrill Lynch Futures and
(Amended) each Trading Advisor.

10.03 Form of Customer Agreement between the Partnership and Merrill
(Amended) Lynch Futures.

10.06 Foreign Exchange Desk Service Agreement.

1.01(b) Amendment No. 1 to the Selling Agreement among the Partnership, the
General Partner, Merrill Lynch Futures Inc., the Selling Agent and ARA
Portfolio Management Company, L.L.C. (formerly, ARA Portfolio
Management Company).

The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed with the Registrant's Post-
Effective Amendment No. 1 to the Registration Statement on Form S-1,
(Registration No. 33-88994), which became effective on December 6, 1995 (Post-
Effective Amendment No. 2 to such Registration Statement became effective April
8, 1996).

1.02 Form of Assignment of Selling Agreement.

3.01 Amended and Restated Certificate of Limited Partnership of the
Registrant.

10.07 Form of Assignment of Advisory Agreement.

10.08 Form of Assignment of Consulting Agreement.

<PAGE>

The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed with the Registrant's
Registration Statement on Form S-1, (Registration No. 333-10749), which was
filed on August 23, 1996.

EX-1.01c Form of Amendment to the Selling Agreement among the Partnership, the
General Partner, Merrill Lynch Futures Inc., the Selling Agent and the
Trading Advisors.

<PAGE>

EX.-5.01
--------

[LETTERHEAD OF SIDLEY & AUSTIN]

November 26, 1996

Merrill Lynch Investment Partners Inc.,
as general partner of ML Global Horizons L.P.
Merrill Lynch World Headquarters
South Tower, 6th Floor
World Financial Center
New York, New York 10080-6106

RE: ML GLOBAL HORIZONS L.P.
$115,000,000 OF UNITS OF
LIMITED PARTNERSHIP INTEREST (THE "UNITS")
-----------------------------------------

Dear Sir or Madam:

We refer to the Amendment No. 2 to the Registration Statement on Form
S-1 (Registration No. 333-10749) (the "Registration Statement") filed by ML
Global Horizons L.P., a Delaware limited partnership (the "Partnership"), with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act") relating to the registration of $50,000,000 of
Units of the Partnership. Pursuant to Rule 429 under the Securities Act, the
form of prospectus set forth in the Registration Statement (the "Prospectus")
also relates to an additional $65,000,000 of Units registered under the
Securities Act pursuant to a Registration Statement on Form S-1 declared
effective on June 17, 1994 (Registration No. 33-80202) and a Registration
Statement on Form S-1 declared effective on March 1, 1995 (Registration No. 33-
88994). Capitalized terms not defined herein have the meanings specified in the
Registration Statement.

We are familiar with the proceedings to date with respect to the
proposed issuance and sale of the Units pursuant to the Prospectus and have
examined such records, documents and questions of law, and satisfied ourselves
as to such matters of fact, as we have considered relevant and necessary as a
basis for this opinion.

For purposes of rendering this opinion, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as certified or photostatic copies,
and the authenticity of the originals of such copies.

Based on the foregoing, we are of the opinion that:

1. The Partnership has been duly formed and is validly existing in
good standing as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act (the "Act").

2. The General Partner has taken all corporate action required to be
taken by it to authorize the issuance and sale of the Units to the Limited
Partners and to authorize the admission to the Partnership of the Limited
Partner as limited partners of the Partnership.

3. Assuming (i) the due authorization, execution and delivery to the
General Partner of a Subscription Agreement by each subscriber for Units (the
"Subscribers"), (ii) the due acceptance by the General Partner of each
Subscription Agreement and the due acceptance by the General Partner of the
admission of each of the Subscribers as a limited partner of the Partnership,
(iii) the payment by each Subscriber to the Partnership of the full
consideration due for

<PAGE>

Sidley & Austin Chicago

Merrill Lynch Investment Partners, Inc.
November 26, 1996
Page 2

the Units to which it subscribed, (iv) that the books and records of the
Partnership set forth all information required by the Limited Partnership
Agreement and the Act, including all information with respect to all persons and
entities to be admitted as Partners and their contributions to the Partnership,
(v) that the Subscribers, as limited partners of the Partnership, do not
participate in the control of the business of the Partnership within the meaning
of the Act, (vi) that the Units are offered and sold as described in the
Prospectus and the Limited Partnership Agreement and (vii) that the Subscribers
meet all of the applicable suitability standards set forth in the Prospectus and
that the representations and warranties of the Subscribers in their respective
Subscription Agreements are true and correct, the Units to be issued to the
Subscribers will represent valid and legally issued limited partner interests in
the Partnership and, subject to the qualifications set forth below, will be
fully paid and nonassessable limited partner interests in the Partnership, as to
which the Subscribers, as limited partners of the Partnership, will have no
liability in excess of their obligations to make contributions to the
Partnership, their obligations to make other payments provided for in the
Limited Partnership Agreement and their share of the Partnership's assets and
undistributed profits (subject to the obligation of a Limited Partner to repay
funds distributed to such Limited Partners by the Partnership in certain
circumstances).

4. There are no provisions in the Limited Partnership Agreement the
inclusion of which, subject to the terms and conditions set forth therein, would
cause the Limited Partners, as limited partners of the Partnership, to be deemed
to be participating in the control of the business of the Partnership within the
meaning of the Act.

This opinion is limited to the Act and the General Corporation Law of
the State of Delaware. We express no opinion as to the application of the
securities or blue sky laws of the various states (including the State of
Delaware) to the sale of the Units.

We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to our firm included in or made a
part of the Registration Statement.

Very truly yours,

SIDLEY & AUSTIN

<PAGE>

EX.-8.01
--------

[LETTERHEAD OF SIDLEY & AUSTIN]

November 26, 1996

Merrill Lynch Investment Partners Inc.
General Partner of
ML Global Horizons L.P.
Merrill Lynch World Headquarters
South Tower, Sixth Floor
World Financial Center
New York, New York 10080-6106

Re: Amendment No. 2 to the Registration Statement on Form S-1
---------------------------------------------------------

Dear Sir or Madam:

We have acted as your counsel in connection with the preparation and
filing with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended, of Amendment No. 2 to the Registration
Statement on Form S-1 (Registration No. 333-10749) to be filed with the SEC on
or about November 26, 1996, (the "Registration Statement"), relating to Units
of Limited Partnership Interest ("Units") of ML Global Horizons L.P. (the
"Fund"), a limited partnership organized under the Delaware Revised Uniform
Limited Partnership Act.

We have reviewed such data, documents, questions of law and fact and
other matters as we have deemed pertinent for the purpose of this opinion. Based
upon the foregoing, we hereby confirm our opinions expressed under the caption
"Federal Income Tax Consequences" in the Prospectus (the "Prospectus")
constituting a part of the Registration Statement that: (i) the Fund will be
taxed as a partnership for federal income tax purposes (assuming that Merrill
Lynch Investment Partners Inc. will, when the Fund's Units are sold to the
public, have a capitalization no less than that indicated in the audited
financial statements included in the Registration Statement and that Merrill
Lynch Investment Partners Inc. makes a capital contribution to the Fund in at
least the amount contemplated by the Prospectus); (ii) each Partner will be
required to report on his tax return his allocable share of the Fund's income,
gains, losses, and deductions; (iii) based upon the contemplated trading
activities of the Fund, the Fund should be treated as engaged in the conduct of
a trade or business for federal income tax purposes, and, as a result, the
ordinary and necessary business expenses incurred by the Fund in conducting its
commodity futures trading business should not be subject to limitation under
section 67 of the Internal Revenue Code of 1986, as amended (the "Code") or
under section 68 of the Code; and (iv) based on the contemplated trading
activities of the Fund, the income earned by the Fund will not constitute
"unrelated business taxable income" under section 511 of the Code to employee
benefit plans and other tax-exempt entities which purchase Units; provided that
such Units purchased by such plans and entities are not "debt-financed" within
the meaning of section 514 of the Code.

We also advise you that in our opinion the description set forth under
the caption "Federal Income Tax Consequences" in the Prospectus correctly
describes (subject to the uncertainties referred to therein) the material
aspects of the federal income tax treatment to United States individual
investors, as of the date hereof, of an investment in the Fund.

We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the inclusion in the Prospectus of our opinion set
forth under the caption "Federal Income Tax Consequences."

Very truly yours,

SIDLEY & AUSTIN

<PAGE>

EX.23.01
--------

[LETTERHEAD OF SIDLEY & AUSTIN]

November 26, 1996

CONSENT

SIDLEY & AUSTIN

Sidley & Austin hereby consents to all references made to it in the
Registration Statement on Form S-1 of ML Global Horizons L.P. as filed with the
Securities and Exchange Commission on or about November 26, 1996.

SIDLEY & AUSTIN

<PAGE>

EX.-23.02
---------

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 2 to the Registration Statement No.
333-10749 of ML Global Horizons L.P. (a Delaware limited partnership) on Form
S-1 of our report dated January 26, 1996 relating to the financial statements of
ML Global Horizons L.P. and of our report dated January 26, 1996 relating to the
balance sheet of Merrill Lynch Investment Partners Inc. (formerly, ML Futures
Investment Partners Inc.), appearing in the Prospectus, which is a part of such
Registration Statement, and to the reference to us under the headings "Selected
Financial Data" and "Experts" in such Prospectus.

DELOITTE & TOUCHE LLP

November 25, 1996
New York, New York