<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
---------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 0-25000
ML PRINCIPAL PROTECTION L.P.
----------------------------
ML PRINCIPAL PROTECTION TRADING L.P.
------------------------------------
(Rule 140 Co-Registrant)
(Exact Name of Registrant as
specified in its charter)
Delaware 13-3750642 (Registrant)
- --------------------------------- 13-3775509 (Co-Registrant)
(State or other jurisdiction of -----------------------------
incorporation or organization) (IRS Employer Identification No.)
c/o Merrill Lynch Investment Partners Inc.
Merrill Lynch World Headquarters - South Tower, 6th Fl.
World Financial Center New York, New York 10080-6106
-----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
212-236-5662
--------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ML PRINCIPAL PROTECTION L.P.
----------------------------
(a Delaware limited partnership)
--------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
ASSETS
<S> <C> <C>
Cash $ 1,242 $ 1,423
Accrued interest 903,822 38,562
U.S. Government obligations 77,010,800 94,651,930
Equity in commodity futures trading accounts:
Cash and options premiums 25,285,239 6,127,948
Net unrealized profit on open contracts 52,514 2,958,084
----------------- -----------------
TOTAL $ 103,253,617 $ 103,777,947
================= =================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Redemptions payable $ 2,906,480 $ 636,155
Profit Shares payable 393,271 591,195
Brokerage commissions payable 553,514 494,349
Administrative fees payable 15,815 14,330
----------------- -----------------
Total liabilities 3,869,080 1,736,029
----------------- -----------------
Minority Interest 777,028 815,233
----------------- -----------------
PARTNERS' CAPITAL:
General Partners (6654.61 and 23141.61 Units) 699,455 2,564,153
Limited Partners (951812.25 and 989140.56 Units) 97,908,054 105,628,837
Subscriptions receivable (0 and 69,663.05 Units) - (6,966,305)
----------------- -----------------
Total partners' capital 98,607,509 101,226,685
----------------- -----------------
TOTAL $ 103,253,617 $ 103,777,947
================= =================
</TABLE>
NET ASSET VALUE PER UNIT (NOTE 2)
See notes to consolidated financial statements.
2
<PAGE>
ML PRINCIPAL PROTECTION L.P.
----------------------------
(a Delaware limited partnership)
--------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
<TABLE>
<CAPTION>
For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUES:
Trading profit (loss):
Realized $ 347,507 $ (869,301) $ 1,596,744 $ 3,722,347
Change in unrealized (1,794,976) (205,905) (2,938,626) (1,403,567)
------------------ ----------------- ----------------- -----------------
Total trading results (1,447,469) (1,075,206) (1,341,882) 2,318,780
------------------ ----------------- ----------------- -----------------
Interest income 1,483,007 1,069,022 2,970,056 2,182,912
------------------ ----------------- ----------------- -----------------
Total revenues 35,538 (6,184) 1,628,174 4,501,692
------------------ ----------------- ----------------- -----------------
EXPENSES:
Profit Shares 286,419 (85,054) 704,269 498,398
Brokerage commissions 1,693,272 1,067,741 3,254,852 2,141,245
Administrative fees 48,379 30,507 92,996 61,179
------------------ ----------------- ----------------- -----------------
Total expenses 2,028,070 1,013,194 4,052,117 2,700,822
------------------ ----------------- ----------------- -----------------
(LOSS) INCOME BEFORE
MINORITY INTEREST (1,992,532) (1,019,378) (2,423,943) 1,800,870
------------------ ----------------- ----------------- -----------------
Minority interest 27,002 28,337 38,205 (12,289)
------------------ ----------------- ----------------- -----------------
NET (LOSS) INCOME $ (1,965,530) $ (991,041) $ (2,385,738) $ 1,788,581
================== ================= ================= =================
NET (LOSS) INCOME PER UNIT:
Weighted average number of units
outstanding 1,029,734 741,218 1,013,441 723,788
================== ================= ================= =================
Weighted average net (loss) income
per Limited Partner
and General Partner Unit $ (1.91) $ (1.34) $ (2.35) $ 2.47
================== ================= ================= =================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
ML PRINCIPAL PROTECTION L.P.
----------------------------
(a Delaware limited partnership)
--------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
-------------------------------------------------------
For the six months ended June 30, 1998 and 1997
-----------------------------------------------
<TABLE>
<CAPTION>
Limited General Subscriptions
Units Partners Partner Receivable Total
----------- --------------------- --------------- ---------------------- -----------------
<S> <C> <C> <C> <C> <C>
PARTNERS' CAPITAL,
December 31, 1996 723,659.97 $ 76,542,105 $ 2,301,180 $ - $ 78,843,285
Subscriptions 116,453.00 11,645,300 - - 11,645,300
Distributions - (1,481,675) (33,522) - (1,515,197)
Net Income - 1,739,075 49,506 - 1,788,581
Redemptions (95,650) (10,424,401) - - (10,424,401)
----------- --------------------- --------------- ---------------------- -----------------
PARTNERS' CAPITAL,
June 30, 1997 744,462.59 $ 78,020,404 $ 2,317,164 $ - $ 80,337,568
=========== ===================== =============== ====================== =================
PARTNERS' CAPITAL,
December 31, 1997 942,619.12 $ 105,628,837 $ 2,564,153 $ (6,966,305) $ 101,226,685
Subscriptions 130,030.49 13,003,049 - - 13,003,049
Subscriptions receivable 69,663.26 - - 6,966,305 6,966,305
Distributions - (661,354) (22,156) - (683,510)
Net Income - (2,351,043) (34,695) - (2,385,738)
Redemptions (183,846.01) (17,711,435) (1,807,847) - (19,519,282)
--------- --------------------- --------------- --------------------- -----------------
PARTNERS' CAPITAL,
June 30, 1998 958,466.86 $ 97,908,054 $ 699,455 $ - $ 98,607,509
=========== ===================== =============== ==================== =================
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
ML PRINCIPAL PROTECTION L.P.
----------------------------
(formerly ML Principal Protection Plus L.P.)
(a Delaware limited partnership)
--------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting
of only normal recurring adjustments) necessary to present fairly the
consolidated financial position of ML Principal Protection L.P. (the
"Partnership" or the "Fund") as of June 30, 1998 and the results of its
operations for the six months ended June 30, 1998 and 1997. However, the
operating results for the interim periods may not be indicative of the
results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Partnership's Annual Report on Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
1997 (the "Annual Report").
5
<PAGE>
2. NET ASSET VALUE PER UNIT
For financial reporting purposes, the Partnership deducted the total
organizational and initial offering costs payable to the General Partner at
inception for purposes of determining Net Asset Value. Such deduction was
allocated pro-rata among the outstanding Units of each series based upon the
aggregate Net Asset Value of each series, and then equally among all Units of
the same series. For all other purposes (including computing Net Asset Value
for redemptions) the Partnership deducts the organizational and initial
offering cost reimbursements only as actually paid. The organizational and
initial offering cost reimbursement was completed in October 1997. At June
30, 1998 the Net Asset Values of the different series of Units for financial
reporting purposes and for all other purposes were:
<TABLE>
<CAPTION>
June 30, 1998
Net Asset Number Net Asset Value
Value of Units per Unit
------------------ ------------------- ---------------------
<S> <C> <C> <C>
Series A Units $ 14,277,388 127,836.00 $111.69
Series B Units 1,761,344 16,410.00 107.33
Series C Units 2,853,074 27,693.00 103.03
Series D Units 7,325,850 67,842.00 107.98
Series E Units 6,538,511 60,849.04 107.45
Series F Units 4,454,022 43,427.04 102.56
Series G Units 4,245,950 41,921.95 101.28
Series H Units 2,754,573 26,290.73 104.77
Series K Units 7,562,572 74,145.00 102.00
Series L Units 13,541,682 136,301.00 99.35
Series M Units 13,789,850 136,757.56 100.83
Series N Units 6,774,942 69,663.05 97.25
Series O Units 8,109,443 83,046.49 97.65
Series P Units 4,618,308 46,284.00 99.78
------------------ -------------------
Totals $ 98,607,509 958,466.86
================== ===================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
December 31, 1997
Number Net Asset
Net Asset Value of Units Value per Unit
----------------------- -------------------- -------------------
<S> <C> <C> <C>
Series A Units $ 17,716,313 155,778.00 $113.73
Series B Units 2,865,130 25,100.00 114.15
Series C Units 4,061,256 37,551.00 108.15
Series D Units 10,499,613 95,504.00 109.94
Series E Units 7,685,677 70,255.86 109.40
Series F Units 6,136,370 56,275.48 109.04
Series G Units 5,470,415 51,354.50 106.52
Series H Units 5,610,794 52,626.22 106.62
Series K Units 12,127,411 115,752.00 104.77
Series L Units 14,732,144 144,314.00 102.08
Series M Units 14,321,562 138,108.06 103.70
--------------------- --------------------
Totals $ 101,226,685 942,619.12
===================== ====================
</TABLE>
7
<PAGE>
3. ANNUAL DISTRIBUTIONS
The Partnership makes annual fixed-rate distributions, payable irrespective
of profitability, of between $2 and $5 per Unit on Units issued prior to July
16, 1996. The Partnership may also pay discretionary distributions on such
Series of Units of up to 50% of any Distributable New Appreciation, as defined
on such Units. No distributions are payable on Units issued after July 16, 1996.
As of June 30, 1998, the Partnership has made the following distributions:
<TABLE>
<CAPTION>
Series Distribution Fixed-Rate Discretionary
Date Distribution Distribution
---------- -------------------------------------------------------------------
1998
- ---------
<S> <C> <C> <C>
Series B 1/1/98 $ 3.50 $ 1.50
Series C 4/1/98 3.50 -
Series F 1/1/98 3.50 1.25
Series G 4/1/98 3.50 -
1997
- ---------
Series A 10/1/97 $ 3.50 $ -
Series B 1/1/97 3.50 3.00
Series C 4/1/97 3.50 4.00
Series D 7/1/97 3.50 1.00
Series E 10/1/97 3.50 2.00
Series F 1/1/97 3.50 2.50
Series G 4/1/97 3.50 3.50
Series H 7/1/97 3.50 2.50
1996
- ---------
Series A 10/1/96 $ 3.50 $ 2.50
Series B 1/1/96 3.50 2.50
Series C 4/1/96 3.50 -
Series D 7/1/96 3.50 -
Series E 10/1/96 3.50 -
1995
- ---------
Series A 10/1/95 $ 3.50 $ 2.50
</TABLE>
8
<PAGE>
4. FAIR VALUE AND OFF-BALANCE SHEET RISK
The Partnership's revenues by reporting category for the respective periods were
as follows:
<TABLE>
<CAPTION>
For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------------ ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Interest rates $ (1,060,376) $ (547,293) $ (540,665) $ (1,052,121)
Stock indices 65,036 178,643 277,773 536,590
Commodities 145,100 225,815 353,250 1,750,969
Currencies 358,665 (677,333) 780,770 1,402,897
Energy (121,978) (452,246) (1,285,040) (932,627)
Metals (833,916) 197,208 (927,970) 613,072
------------------ ----------------- ----------------- ----------------
$ (1,447,469) $ (1,075,206) $ (1,341,882) $ 2,318,780
================== ================= ================= ================
</TABLE>
The contract/notional values of the Trading Partnership's open derivative
instrument positions as of June 30, 1998 and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C>
Commitment to Commitment to Commitment to Commitment to
Purchase (Futures, Sell (Futures, Purchase (Futures, Sell ( Futures,
Options & Forwards) Options & Fowards) Options & Forwards) Options & Forwards)
--------------------- --------------------- --------------------- ---------------------
Interest rates $ 249,550,041 $ 135,894,320 $ 121,435,283 $ 85,620,621
Stock indices 5,325,146 4,915,629 1,665,588 8,854,122
Commodities 10,598,741 11,363,887 11,663,786 21,791,599
Currencies 113,906,739 165,639,599 70,272,888 147,312,282
Energy 1,282,952 3,362,859 1,085,885 9,041,759
Metals 5,397,438 11,361,430 4,412,002 19,039,071
--------------------- --------------------- --------------------- ---------------------
$ 386,061,057 $ 332,537,724 $ 210,535,432 $ 291,659,454
===================== ===================== ===================== =====================
</TABLE>
9
<PAGE>
The contract/notional values of the Trading Partnership's exchange-traded and
non-exchange-traded open derivative instrument positions as of June 30, 1998
and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------------------------- -----------------------------------------
Commitment to Commitment to Commitment to Commitment to
Purchase (Futures, Sell (Futures, Purchase (Futures, Sell (Futures,
Options & Forwards) Options & Forwards) Options & Forwards) Options & Forwards)
------------------ --------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Exchange
traded $ 287,585,593 $ 195,946,736 $ 142,565,779 $ 183,223,917
Non-Exchange
traded 98,475,464 136,590,988 67,969,653 108,435,537
----------------- ---------------------- ------------------ -----------------
$ 386,061,057 $ 332,537,724 $ 210,535,432 $ 291,659,454
================= ====================== ================== =================
</TABLE>
The average fair value, based on contract/notional value, of the Trading
Partnership's derivative instrument positions which were open as of the end
of each calendar month during the six months ended June 30, 1998 and the year
ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------------------------- ---------------------------------------------
Commitment to Commitment to Commitment to Commitment to
Purchase (Futures, Sell (Futures, Purchase (Futures, Sell (Futures,
Options & Forwards) Options & Forwards) Options & Forwards) Options & Forwards)
-------------------- ----------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Interest rates $ 291,479,051 $ 124,704,213 $ 177,189,103 $ 68,697,138
Stock indices 10,507,803 4,125,361 7,544,449 4,040,832
Commodities 11,577,867 18,872,855 13,113,725 11,481,639
Currencies 112,869,157 157,912,629 70,061,899 113,287,725
Energy 2,556,977 5,827,561 3,621,533 3,415,726
Metals 9,957,794 14,795,340 7,369,251 14,913,348
------------------- ----------------------- -------------------- -------------------
$ 438,948,649 $ 326,237,959 $ 278,899,960 $ 215,836,408
=================== ======================= ==================== ===================
</TABLE>
The gross unrealized profit and the net unrealized profit (loss) on the
Trading Partnership's open derivative instrument positions as of June 30,
1998 and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------- ---------------------------------
Gross Net Gross Net
Unrealized Unrealized Unrealized Unrealized
Profit Profit (Loss) Profit Profit (Loss)
-------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Exchange
traded $ 1,773,958 $ 123,092 $ 3,263,519 $ 2,416,539
Non-Exchange
traded 2,066,767 (70,578) 2,119,281 541,545
-------------- ---------------- --------------- ---------------
$ 3,840,725 $ 52,514 $ 5,382,800 $ 2,958,084
============== ================ =============== ===============
</TABLE>
4. SUBSEQUENT EVENTS
On July 1, 1998 distributions were announced with respect to Series D
Units and Series H Units. Series D Units received an annual fixed rate
distribution equal to $3.50 per Unit. Series H Units received an annual
fixed rate distribution equal to $3.50 per Unit.
10
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
- -------------
Performance Summary
January 1, 1997 to June 30, 1997
January 1, 1997 to March 31, 1997
In currency markets, the U.S. dollar rallied and started 1997 on a strong
note, rising to a four-year high versus the Japanese yen and two-and-a-half year
highs versus the Deutsche mark and the Swiss franc. Profitable results were
seen throughout the quarter in currency trading.
Global interest rate markets began the year on a volatile note, as
investors evaluated economic data for signs of inflation. January and March
were profitable months for interest rate trading.
In energy markets, a slump in crude oil prices was characteristic of its
lackluster performance from the beginning of the year. Early in 1997,
volatility returned in the energy markets, reflecting the impact of a winter
significantly warmer than normal. January and March saw losses in energy
trading; February, however, was profitable.
Agricultural commodity trading proved profitable in February and March.
Soybean prices reached their highest level in over eight years, on continued
demand and fears that inventories could fall to critically low levels before the
next harvest.
April 1, 1997 to June 30, 1997
In the currency markets, the dollar underwent a significant correction in
the Spring against the Japanese yen due to the G7 finance ministers'
determination that a further dollar advance would be counter-productive to their
current goals. Currency trading was unprofitable for the quarter.
Global interest rate trading provided unprofitable results for the quarter.
Profits were seen in May and June; losses however were apparent in April.
During April, U.S. bond prices moved in a directionless pattern, as investors
remained concerned over inflation and its impact on further increases in
interest rates by the U.S. Federal Reserve.
Energy trading was unprofitable throughout the quarter. In June crude oil
trended downward during the beginning of the month, before a sudden price
reversal occurred amid speculation that Iraq exports could be delayed until
August. Price movement of heating oil and unleaded gas proved to be trendless.
Agricultural commodity trading proved profitable for the quarter. May's
profits were due to coffee prices surging beyond three dollars a pound for the
first time in twenty years, on the possibility of frost in Brazil and reports of
poor crops in smaller countries.
January 1, 1998 to June 30, 1998
January 1, 1998 to March 31, 1998
The Fund's most profitable positions during the quarter were in the global
interest rate markets, particularly in European bonds where an extended bond
market rally continued despite an environment of robust growth in the United
States, Canada and the United Kingdom, as well as a strong pick-up in growth in
continental Europe. Specifically, strong gains were recorded in French and
German bonds.
Gold and crude oil trading resulted in losses. Gold prices drifted
sideways and lower as Asian demand continued to slow and demand in the Middle
East was affected by low oil prices. Initially buoyed on concerns about a U.S.-
led military strike against Iraq, crude oil fell to a nine year low, as the
globally warm winter, the return of Iraq as a producer and the Asian economic
crisis added to OPEC's supply glut problems.
Trading results in stock index markets were mixed, but marginally
profitable, despite a strong first-quarter performance by the U.S. equity market
as several consecutive weekly gains were recorded with most market averages
setting new highs. Results in currency trading were also mixed, but marginally
profitable. Strong gains were realized in positions on the Swiss franc, which
weakened versus the U.S. dollar, while trading losses resulted from positions in
the Deutsche mark and the Australian dollar.
11
<PAGE>
Agricultural commodity markets provided profits. Live cattle and hog
prices trended downward throughout the quarter resulting in strong gains.
Cotton prices moved mostly upward during the quarter, but dropped off sharply at
the end of March, causing losses.
April 1, 1998 to June 30, 1998
As swings in the U.S. dollar and developments in Japan affected bond
markets, the Fund's interest rate trading during the quarter resulted in losses,
particularly in Eurodollar deposits and U.S. Treasury bonds. Early in the
quarter, Treasury trading was range-bound, as concern that the economy might be
overheating was balanced by the potential impact of the Asian recession.
Additionally, Australian bonds and bills saw a dramatic drop in prices in early
June, as dollar-bloc currencies remained under pressure versus the U.S. dollar
due to the Japanese/Asian crisis.
Metals and energy trading also resulted in losses. The depressed gold
market weakened further following news of a European Central Bank consensus that
ten to fifteen percent of reserves should be made up of gold bullion which was
at the low end of expectations. Despite production cuts initiated by OPEC at
the end of March, world oil supplies remained excessive and oil prices stood at
relatively low levels throughout the quarter.
Results in currency trading were profitable. Strong gains were realized
in positions on the Japanese yen, which weakened during June to an eight-year
low versus the U.S. dollar. Trading results in stock index markets were also
profitable as the Asia-Pacific region's equity markets weakened across the
board. In particular, Hong Kong's Hang Seng index trended downward during most
of the quarter and traded at a three-year low.
Agricultural commodity trading produced profits. Although the U.S.
soybean crop got off to a good start which contributed to higher yield
expectations and a more burdensome supply outlook, soybean prices traded in a
volatile pattern for the second half of the quarter. Sugar futures maintained
mostly a downtrend, as no major buyers emerged to support the market.
Similarly, coffee prices trended downward, as good weather conditions in Central
America and Mexico increased the prospects of more output from these countries.
<TABLE>
<CAPTION>
MONTH-END NET ASSET VALUE PER SERIES A UNIT
Jan. Feb. Mar. Apr. May Jun.
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
1997 $113.00 (a) $114.63 (a) $114.69 (a) $113.89 (a) $112.28 (a) $113.05 (a)
- --------------------------------------------------------------------------------------------------------
1998 $113.84 (b) $113.25 (b) $113.37(b) $111.46 (b) $112.48 (b) $111.69(b)
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) After reduction for $6.00 per Series A Unit distribution declared on
October 1, 1995 and $6.00 per Series A Unit distribution declared on
October 1, 1996.
(b) After reduction for a $3.50 per Series A distribution declared on October
1, 1997 and the distributions described in (a), resulting in a total
distribution of $15.50 inception to date.
As of July 1, 1996, the Fund changed its name to ML Principal Protection
L.P. Such change was due to the General Partner restructuring the continuous
offerings to be sold without a guaranteed annual fixed-rate distribution or a
discretionary distribution as previously offered under ML Principal Protection
Plus L.P.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings to which the Partnership or the
General Partner is a party.
Item 2. Changes in Securities and Use of Proceeds
(a) None.
(b) None.
(c) None.
(d) The Fund has 2,250,000 Units of limited partnership interest
registered, with an aggregate price of $225,000,000. The Fund has
sold 1,598,940.26 Units of limited partnership interest, with an
aggregate price of $159,894,026.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Effective May 11, 1998, Jo Ann Di Dario became a Vice President, Treasurer
and Chief Financial Officer of Merrill Lynch Investment Partners Inc. (AMLIP@).
Ms. Di Dario was born in 1946. Before joining MLIP, she was self-employed for
one year. From February 1996 to May 1997, she worked as a consultant for Global
Asset Management, an international mutual fund organizer and operator
headquartered in London, where she offered advice on restructuring the back
office operations. From May 1992 to January 1996, Ms. Di Dario served as Vice
President of Meridian Bank Corporation, a regional bank holding company. She
was responsible for managing the treasury operations of the bank holding company
and its wholly-owned subsidiary, Meridian Investment Company Inc. Ms. Di Dario
managed the domestic treasury operation of First Fidelity Bank, a regional bank,
from September 1991 to May 1992. From 1985 until December 1990, Ms. Di Dario
was Vice President, Secretary and Controller of Caxton Corporation, a commodity
pool operator and commodity trading advisor. Her background includes seven
years of public accounting experience. She graduated with high honors from
Stockton State College with a Bachelor of Science Degree in Accounting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
There are no exhibits required to be filed with this report.
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed during the first six months of
fiscal 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ML PRINCIPAL PROTECTION L.P.
----------------------------
(formerly ML Principal Protection Plus L.P.)
By: MERRILL LYNCH INVESTMENT PARTNERS INC.
(General Partner)
Date: August 11, 1998 By /s/ JOHN R. FRAWLEY, JR.
-------------------------
John R. Frawley, Jr.
Chairman, Chief Executive Officer,
President and Director
Date: August 11, 1998 By /s/ JO ANN DI DARIO
-------------------
Jo Ann Di Dario
Vice President, Chief Financial Officer
and Treasurer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 1,242 1,423
<RECEIVABLES> 26,241,575 9,124,594
<SECURITIES-RESALE> 0 0
<SECURITIES-BORROWED> 0 0
<INSTRUMENTS-OWNED> 77,010,800 94,651,930
<PP&E> 0 0
<TOTAL-ASSETS> 103,253,617 103,777,947
<SHORT-TERM> 0 0
<PAYABLES> 4,646,108 2,551,262
<REPOS-SOLD> 0 0
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 0 0
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 98,607,509 101,226,685
<TOTAL-LIABILITY-AND-EQUITY> 103,253,617 103,777,947
<TRADING-REVENUE> (1,341,882) 2,318,780
<INTEREST-DIVIDENDS> 2,970,056 2,182,912
<COMMISSIONS> 4,013,912 2,713,111
<INVESTMENT-BANKING-REVENUES> 0 0
<FEE-REVENUE> 0 0
<INTEREST-EXPENSE> 0 0
<COMPENSATION> 0 0
<INCOME-PRETAX> (2,385,738) 1,788,581
<INCOME-PRE-EXTRAORDINARY> (2,385,738) 1,788,581
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,385,738) 1,788,581
<EPS-PRIMARY> (2.35) 2.47
<EPS-DILUTED> (2.35) 2.47
</TABLE>
