<PAGE>
ML PRINCIPAL PROTECTION L.P.
(formerly, ML PRINCIPAL PROTECTION PLUS L.P.)
SERIES I UNITS
PROSPECTUS SUPPLEMENT DATED JULY , 1996
TO
PROSPECTUS DATED JULY , 1996
The Series I Units will be sold on or about October __, 1996 to the extent
that acceptable subscriptions are received on or before September 25, 1996. The
"Principal Assurance Date" for the Series I Units will be September 30, 2001.
Distributions on the Series I Units, if any, will be in the discretion of MLIP,
although none are anticipated.
Series I Units are offered at $100 per Share ($97 in the case of Merrill
Lynch officers and employees). MLIP will initially commit 75% of the Series I
Units' assets to trading.
In addition to this Prospectus Supplement, the Prospectus must be
accompanied by recent monthly reports relating to ML Principal Protection L.P.
The Series I Units will have their own Net Asset Value, independent of that of
the other outstanding series of Units. Past performance is not necessarily
indicative of future results.
Information Regarding Certain of the Fund's Advisors
John W. Henry & Company, Inc. ("JWH"), a "core" Advisor, has had the
following change in personnel: Peter F. Karpen announced his resignation from
JWH on March 18, 1996 but will continue in his present capacity for 6 months
from that date.
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The other side of this Prospectus Supplement provides certain outline
information regarding the Fund's current Advisors.
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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 DISCLOSURE DOCUMENT AS SUPPLEMENTED.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS AS SUPPLEMENTED. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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Merrill Lynch, Pierce, Fenner & Smith Incorporated
Selling Agent
Merrill Lynch Investment Partners Inc.
General Partner
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ML PRINCIPAL PROTECTION L.P.
The Prospectus sets forth more detailed information concerning the
"core" Advisors. The non-"core" Advisors are identified below. As of July 1,
1996, the allocation of the Fund's trading assets among the Advisors is set
forth below in the parentheses following the Advisors' names. See "The Advisors"
in the Prospectus.
<TABLE>
<CAPTION>
AS OF MAY 31, 1995
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ANNUALIZED
WORST/BEST STANDARD GENERAL
MONTHLY DEVIATION ASSETS UNDER TRADING
RATE OF RETURN/1/ OF RETURN/2/ MANAGEMENT/3/ STRATEGY
----------------- ------------ -------------- ------------------
<S> <C> <C> <C> <C>
"CORE" ADVISORS
Chesapeake Capital Corporation (10.98)%/15.99% 17.41% $789 million Technical;
Diversified Trading Program (25%) trend-following
John W. Henry & Co., Inc. (18.0)%/39.4% 32.7% $893 million Technical;
Financial and Metals Portfolio (25%) trend-following
NON-"CORE" ADVISORS
AIS Futures Management, Inc. (9.62)%/8.38% 15.9% $75.4 million Systematic;
MAAP-2x-4x Program (9.5%) trend-following
ARA Portfolio Management Company, L.L.C. (8.34)%/14.48% 19.58% $140.6 million Technical;
Gamma Program (9.5%) trend-following
AIB Investment Managers Limited (1.29)%/2.98% 2.62% $55 million Discretionary;
Currency Program (7.5%) fundamental
Millburn Ridgefield Corporation (9.04)%/19.38% 17.6% $227 million Technical;
Global Portfolio - Normal Leverage (8.5%) trend-following
Trendstat Capital Management, Inc. (5.83)%/10.71% 10.63% $110.5 million Technical;
World Currency Program (5.5%) trend and counter
trend-following
West Course Capital Inc. (7.86)%/14.2% 16.4% $128.8 million Discretionary;
(9.5%) fundamental
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Past performance is not necessarily indicative of future results.
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 "Leverage Considerations" and
"Risk Factors" in the Prospectus. MLIP expects that, in general, the non-"core"
Advisors trading at "standard" leverage will hold positions in the range of 200%
to 400% of the net equity in their accounts and commit as margin 15% to 30% of
the Fund's assets allocated to them. Trading at this degree of leverage implies
that any non-"core" Advisor whose open positions incur a 10% loss will cause a
20% to 40% loss to its Fund account.
In considering the leverage and volatility at which the different non-
"core" Advisors trade, prospective investors should recognize that due to the
limited percentage of the Fund's assets allocated to each of them, none of these
Advisors, individually, is likely to make a material contribution over the
short-term to either the return achieved by, or the performance volatility of,
the Fund. It would require (i) monthly returns outside of historical highs and
lows for the non-"core" Advisors with the largest percentage asset allocation to
affect the Fund's overall monthly rate of return by as much as 2% (e.g., from a
10% to an 8% or 12% rate of return), and (ii) historical volatility increased by
a factor of approximately 4 for such non-"core" Advisor's performance to
increase the range of the Fund's overall standard deviation by as much as 30%.
The smaller the allocations to a non-"core" Advisor, the less the contribution
of such Advisor's performance and volatility to the overall performance and
volatility the Fund. The non-"core" Advisors as a whole can have a significant
effect on performance. However, the likely non-correlation among at least
certain of these six Advisors reduces the likelihood of any major short-term
effect.
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/1/ The lowest and the highest monthly rate of return through May 31, 1996 for
the program traded for the Fund since January 1, 1991 (or the inception of
trading if later).
/2/ An annualized standard deviation of 2% and a mean return of 1% would mean
that most (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 the returns. The more
variable an Advisor's historical returns, the greater the risk that substantial
losses have been included within the historical range of returns. Annualized
Standard Deviation of Return is with respect to the program used for the Fund
and covers the period beginning with January 1, 1991 (or the inception of
trading if later) through May 31, 1996.
/3/ Assets under management in the program used for the Fund ("notional" funds
excluded).
-2-
