ML PRINCIPAL PROTECTION L.P.
(formerly, ML Principal Protection Plus L.P.)
SERIES M UNITS
PROSPECTUS SUPPLEMENT DATED JULY 21, 1997
TO
PROSPECTUS DATED April 4, 1997
____________________
The Series M Units will be sold on or about October 1, 1997 pursuant to
acceptable subscriptions received on or before September 30, 1997. The
Principal Assurance Date for the Series M Units will be September 30, 2002.
Series M Units are offered at $100 per Unit ($97 in the case of officers
and employees of Merrill Lynch & Co., Inc. and its affiliates). The minimum
initial investment is 50 Units ($5,000); the minimum investment for existing
Limited Partners is 10 Units ($1,000). Any greater number of whole Units may be
purchased.
75% of the capital attributable to Series M Units will initially be
committed to trading.
No distributions are presently intended to be made on the Series M Units.
The Series M Units may be redeemed as of the end of any calendar month at
Net Asset Value, subject to a 3% redemption charge payable to Merrill Lynch
Investment Partners Inc. ("MLIP") on redemptions made on or prior to
September 30, 1998.
_________________________
On June 24, 1997, the Commodity Futures Trading Commission ("CFTC")
accepted an Offer of Settlement from Merrill Lynch Futures Inc. ("MLF") and
others, in a matter captioned "In the Matter of Mitsubishi Corporation and
Merrill Lynch Futures Inc., et al.", CFTC Docket No. 97-10, pursuant to which
MLF, without admitting or denying the allegations against it, consented to a
finding by the Commission that MLF had violated Section 4c(a)(A) of the
Commodity Exchange Act, relating to wash sales, and CFTC Regulation 1.37(a),
relating to recordkeeping requirements. MLF agreed to cease and desist from
violating Section 4c(a)(A) of the Act and Regulation 1.37(a), and to pay a civil
monetary penalty of $175,000.
James M. Bernard, formerly a Senior Vice President of MLIP, is no longer
with the firm.
_________________________
MLIP believes that it would be advantageous for its multiple advisor pools,
including the Fund, to increase the flexibility of the Fund's leverage policy.
Consequently, while the Fund's risk/reward objectives remain unchanged,
beginning in June 1997 MLIP may from time to time direct certain individual
Advisors to manage their Fund accounts as if they were managing up to 50% more
equity than the actual capital allocated to them. This additional leverage is
subject to the condition that the Fund as a whole will not trade as if it had in
excess of 20% more equity than actual capital.
It is not possible to predict the effect upleveraging may have,
particularly given the Advisors' ongoing leverage adjustments to their own
trading and the anticipated non-correlation of their strategies. Increasing
leverage can generally be expected to increase profit potential, risk of loss
and volatility of returns. The flat-rate fees charged to the Fund will not be
affected by this leverage policy change. These fees will continue to be based
on only the actual capital allocated to trading.
Any change in leverage by MLIP of the Fund's trading will be noted in the
asset allocation tables included in the Fund's monthly reports.
_________________________
The reverse side of this Prospectus Supplement provides certain outline
information regarding the current Advisors used by ML Principal Protection L.P.
(the "Fund").
_________________________
IN ADDITION TO THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS MUST BE ACCOMPANIED
BY SUMMARY FINANCIAL INFORMATION FOR THE FUND CURRENT WITHIN 60 CALENDAR DAYS
_________________________
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
ML PRINCIPAL PROTECTION L.P.
(formerly, ML Principal Protection Plus L.P.)
______________
As of July 1, 1997, the Net Asset Value of a Series A Unit initially
issued for $100 as of October 12, 1994 had risen to $125.05 (adding back to Net
Asset Value aggregate distributions of $12.00 per Series A Unit).
_______________
The allocation of the Fund's trading assets (75% of the capital
initially attributable to each series of Units sold pursuant to this Prospectus
Supplement and thereafter) among its core Advisors as of July 21, 1997 is set
forth below in the parentheses following each core Advisor's name. The
accompanying Prospectus includes more detailed information concerning the core
Advisors. See "The Advisors" and "The Core Advisors" in the Prospectus. Core
Advisors are Advisors allocated 10% or more of the Fund's trading assets for
management. Non-core Advisors are each allocated less than 10% of the Fund's
assets for management. The particular percentage allocations to the non-core
Advisors are not identified because, among other things, these allocations are
subject to frequent changes both due to the effects of differential performance
and to Merrill Lynch Investment Partners Inc. reallocating the Fund's traded
assets among such Advisors.
Annualized Assets Under
Worst/Best Standard Management General
Monthly Deviation In Strategy
Rate of Return/1/ of Return/2/ Fund Program/3/ Classification/4/
------------------- -------------- --------------- -----------------
Core Advisors
Chesapeake Capital Corporation (10.98)%/15.99% 17.7% $894 million Technical;
Diversified Trading Program (17%) trend-following
John W. Henry & Company, Inc. (27.7)%/5//25.5% 25.6% $1.9 billion Technical;
Financial and Metals Portfolio (15%) trend-following
Non-Core Advisors
AIS Futures Management, Inc. (10.64)%/13.39% 17.9% $130 million Systematic;
MAAP-2x-4x Program trend-following
ARA Portfolio Management Company, L.L.C. (6.48)%/5//7.89% 10.8% $110 million Technical;
Alpha Program trend-following
Graham Capital Management, L.P./6/ (6.31)%/12.33% 13.8% $229 million Technical;
Diversified Program trend-following
Trendstat Capital Management, Inc. (5.83)%/10.28% 11.8% $126 million Technical;
World Currency Program trend-related
Hill Financial Group, Ltd. (6.2)%/9.9% 11.3% $ 69 million Technical;
Multiple Strategy Program systematic
Millburn Ridgefield Corporation (10.54)%/19.38% 17.6% $231 million Technical;
Global Portfolio - Normal Leverage trend-following
Quantitative Financial Strategies, Inc. (11.97)%/13.29% 15.5% $207 million/7/ Systematic;
The Currency Program fundamental
Range Wise, Inc. (6.92)%/12.91% 12.5% $ 68 million Discretionary;
Range Wise Trading Program fundamental
Allied Irish Capital Management Ltd. (2.11)%/2.80% 3.5% $227 million Discretionary;
Worldwide Financial Futures Program fundamental
Fundamental Futures, Inc. (10.66)%/11.23% 14.5% $ 65 million Discretionary;
Fundamental Futures Trading Program fundamental
Northfield Trading L.P./8/ (11.6)%/11.4% 16.9% $230 million Systematic;
Diversified Program trend-following
Telesis Management Inc./8/ (9.6%)/30.3% 28.0% $150 million Discretionary;
Telesis Management Leveraged Program trend-following
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Performance and assets under management information is current as of May 31,
1997. Performance figures are not audited.
Futures trading is highly leveraged, as is each Advisor's trading
program. See "Leverage Considerations" and "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 trading assets allocated to each of
them, none 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 non-core Advisors as a group can have a
significant effect on performance. However, the likely performance non-
correlation among at least certain of these Advisors reduces the likelihood of
any major short-term effect.
The current non-core Advisors each receive Consulting Fees of up to 2%
per annum of the Fund's assets managed by each of them, respectively, plus
quarterly or annual Profit Shares of between 15% and 20% 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. Performance information is presented for the period from
January 1, 1992 (or inception, if later) through May 31, 1997.
/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 traded for the Fund ("notional"
funds excluded, except as described in Note (6) below).
/4/ See "The Core Advisors" in the Prospectus for a description of these
strategy classifications.
/5/ The worst Monthly Rate of Return of any individual account, not of the
program on a composite basis.
/6/ Graham Capital Management, L.P. ("Graham") is currently managing the Fund's
assets allocated to it as if Graham were managing 50% more equity than the
actual capital allocated to it.
/7/ "Notional" funds are included in assets under management for Quantitative
Financial Strategies, Inc.
/8/ Northfield Trading L.P. and Telesis Management Inc. will begin trading
for the Fund on or about July 21, 1997.