**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

 

**Washington, D.C. 20549**

 

**FORM 10-K**

 

**x**** Annual Report Pursuant to Section 13 or 15(d)**

**of the Securities Exchange Act of 1934**

 

**For the fiscal year ended: December 31, 2007**

 

**or**

 

**o****Transition Report Pursuant to Section 13**

**or 15(d) of the Securities Exchange Act of1934**

 

**Commission file number: 0-50269**

 

**ML SELECT FUTURES I L.P.**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                    | ** ** | **13-3879393**      |
|---------------------------------|------------|---------------------|
| (State or other jurisdiction of |       | (I.R.S. Employer    |
| incorporation or organization)  |       | Identification No.) |

 

**c/o Merrill Lynch AlternativeInvestments LLC**

**Hopewell Corporate Campus,Building No. 2**

**1200 Merrill Lynch Drive – FirstFloor**

**Pennington, New Jersey 08534**

(Address of principalexecutive offices)

 

Registrant’s telephonenumber, including area code: **(609) 274-5838**

 

Securities registered pursuant to Section 12(b) ofthe Act:**None**

 

Securities registeredpursuant to Section 12(g) of the Act: **LimitedPartnership Units**

 

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act.

Yes o Nox

 

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13or 15(d) of the Act.

Yes o Nox

 

Indicate by check mark if the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.

Yes x Noo

 

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K. x

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer o | Accelerated filer o | Non-accelerated filer x |
|---------------------------|---------------------|-------------------------|

 

Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b-2of the Act).

Yes o Nox

 

The limitedpartnership units of the registrant are not publicly traded.  Accordingly, there is no aggregate marketvalue for the registrant’s outstanding equity that is readily determinable.

 

As of January 31, 2008, limited partnership units with a Net AssetValue of $236,000,771 were held by non-affiliates.

 

**Documents Incorporated byReference**

 

The registrant’s 2007 Annual Report and Report ofIndependent Registered Public Accounting Firm, the annual report to securityholders for the fiscal year ended December 31, 2007, is incorporated byreference into Part II, Item 8, and Part IV hereof and filed as an Exhibit herewith.Copies of the annual report are available free of charge by contactingAlternative Investments Client Services at 1-866-MER-ALTS.

 

 

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**ML SELECT FUTURES I L. P.**

 

ANNUAL REPORT FOR 2007 ONFORM 10-K

 

Table of Contents

 
|        | ** **                                                                                                          | **PAGE**   |
|-------------|---------------------------------------------------------------------------------------------------------------------|------------|
|        | PART I                                                                                                         | ** ** |
|        |                                                                                                                |       |
| Item 1.     | Business                                                                                                            | 1          |
|        |                                                                                                                |       |
| Item 1A.    | Risk Factors                                                                                                        | 7          |
|        |                                                                                                                |       |
| Item 1B.    | Unresolved Staff  Comments                                                                                          | 9          |
|        |                                                                                                                |       |
| Item 2.     | Properties                                                                                                          | 9          |
|        |                                                                                                                |       |
| Item 3.     | Legal Proceedings                                                                                                   | 9          |
|        |                                                                                                                |       |
| Item 4.     | Submission of  Matters to a Vote of Security Holders                                                                | 9          |
|        |                                                                                                                |       |
|        | PART II                                                                                                        |       |
|        |                                                                                                                |       |
| Item 5.     | Market for  Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases  ofEquity  Securities | 9          |
|        |                                                                                                                |       |
| Item 6.     | Selected Financial  Data                                                                                            | 11         |
|        |                                                                                                                |       |
| Item 7.     | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                         | 14         |
|        |                                                                                                                |       |
| Item 7A.    | Quantitative  and Qualitative Disclosures about Market Risks                                                        | 21         |
|        |                                                                                                                |       |
| Item 8.     | Financial  Statements and Supplementary Data                                                                        | 25         |
|        |                                                                                                                |       |
| Item 9.     | Changes in and  Disagreements with Accountants on Accounting and Financial Disclosure                               | 25         |
|        |                                                                                                                |       |
| Item 9A(T). | Controls and  Procedures                                                                                            | 25         |
|        |                                                                                                                |       |
| Item 9B.    | Other Information                                                                                                   | 26         |
|        |                                                                                                                |       |
|        | PART III                                                                                                       |       |
|        |                                                                                                                |       |
| Item 10.    | Directors,  Executive Officers and Corporate Governance                                                             | 27         |
|        |                                                                                                                |       |
| Item 11.    | Executive Compensation                                                                                              | 29         |
|        |                                                                                                                |       |
| Item 12.    | Security Ownership  of Certain Beneficial Owners and Management and Related                                         |       |
|        | Stockholder  Matters                                                                                                | 29         |
|        |                                                                                                                |       |
| Item 13.    | Certain Relationships  and Related Transactions                                                                     | 29         |
|        |                                                                                                                |       |
| Item 14.    | Principal  Accountant Fees and Services                                                                             | 30         |
|        |                                                                                                                |       |
|        | PART IV                                                                                                        |       |
|        |                                                                                                                |       |
| Item 15.    | Exhibits and  Financial Statement Schedules                                                                         | 31         |

 

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**PART I**

 

**Item 1:****         Business**

 

(a)                                 GeneralDevelopment of Business:

 

ML Select Futures I L.P. (the “Partnership”) wasorganized under the Delaware Revised Uniform Limited Partnership Act on August 4,1995 under the name ML Chesapeake L.P. The Partnership began trading on April 16,1996 and trades in the international futures and forward markets applyingproprietary trading strategies under the direction of Sunrise Capital Partners,LLC (“Sunrise”). The Partnership’s objective is to achieve, through speculativetrading, substantial capital appreciation over time.

 

Merrill Lynch Alternative Investments LLC (“MLAI”),the Sponsor (“Sponsor”) and general partner of the Partnership, is an indirectwholly-owned subsidiary of Merrill Lynch & Co., Inc. (“MerrillLynch”). Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”),a wholly-owned subsidiary of Merrill Lynch, is the Partnership’s commoditybroker. As used herein, the capitalized term “MLAI” also refers to the generalpartner at times when its name was MLIM Alternative Strategies LLC, asapplicable.

 

The proceeds of the Partnership’s units of limitedpartnership interest (the “Units”) were initially allocated to the Partnership’sinitial trading adviser, Chesapeake Capital Corporation (“Chesapeake”). On July 1,1998, Sunrise replaced Chesapeake as the Partnership’s sole trading advisor (“Advisor”).

 

As of December 31, 2007, the capitalization ofthe Partnership was $225,754,363 and the Net Asset Value per Unit, originally$100 as of April 1, 1996, had risen to $250.55.

 

The highest month-end Net Asset Value per Unit sinceSunrise began trading the Partnership was $261.40 (June 30, 2007) and thelowest was $127.01 (July 31, 1998).

 

(b)                                FinancialInformation about Segments:

 

The Partnership’s business constitutes only onesegment for financial reporting purposes, i.e*.,*a speculative “commodity pool”. The Partnership does not engage in sales ofgoods or services.

 

(c)                                 NarrativeDescription of Business:

 

***General***

 

The Partnership trades in the international futuresand forward markets with the objective of achieving substantial capitalappreciation.

 

The Partnership has entered into an advisory agreementwith Sunrise whereby Sunrise trades the Partnership’s assets through a managedaccount using its Expanded Diversified Program. In the Expanded Diversified Program, Sunrise applies its trend-followingsystems to a broadly-diversified portfolio of futures and forward markets,including, but not limited to, precious and industrial metals, grains,petroleum products, soft commodities, domestic and foreign interest ratefutures, domestic and foreign stock indices (including S&P 500, DAX, andNikkei 225), currencies and their cross rates, and minor currency markets.

 

One of the aims of the Partnership is to providediversification to a limited portion of the risk segment of the LimitedPartners’ portfolios into an investment field that has historically oftendemonstrated a low degree of performance correlation with traditional stock andbond holdings.

 

*Employees*

 

The Partnership has no employees.

 

1

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***Sunrise and its Expanded Diversified Program***

 

Sunrise currently offers five trading programs, one ofwhich, the Expanded Diversified Trading Program is used in managing thePartnership’s assets.  In the ExpandedDiversified Trading Program, Sunrise applies its trend-following systems to abroadly-diversified portfolio of futures and forward markets, including, butnot limited to, precious and industrial metals, grains, petroleum products,soft commodities, domestic and foreign interest rate futures, domestic andforeign stock indices (including S&P 500, DAX and Nikkei 225), currenciesand their cross rates, and minor currency markets (collectively, “CommodityInterests”).  Sunrise may trade thesemarkets on any U.S. or non-U.S. exchange. Sunrise may also trade options for the Partnership in the future; in theevent that it does, these options will be considered Commodity Interests.  As of December 31, 2007, Sunrise wasmanaging approximately $1.589 billion (excluding “notional” funds) in thefutures and forward markets.

 

Sunrise’s Programs Are Technical and Trend-FollowingSystems

 

The mathematical models used by Sunrise’s programs aretechnical systems, generating trading signals on the basis of statisticalresearch into past market prices. Sunrise does not attempt to predict or forecast changes in price throughfundamental economic analysis.  Thetrading methodologies employed by Sunrise are based on programs analyzing alarge number of interrelated mathematical and statistical formulas andtechniques, which are quantitative and proprietary in nature.

 

As a trend-following advisor, Sunrise’s objective isto participate in major price trends—sustained price movements either up ordown.  Such price trends may berelatively infrequent.  Sometrend-following advisors have anticipated that over half of their positions willbe unprofitable.  Their strategy is basedon making sufficiently large profits from the trends which they identify andfollow to generate overall profits despite the more numerous but, hopefully,smaller losses incurred on the majority of their positions.

 

The Markets Traded by Sunrise for the Partnership

 

The Partnership trades on a variety of United Statesand foreign futures exchanges. Applicable exchange rules differ significantly among differentcountries and exchanges.  The Partnership’sentire off-exchange trading takes place substantially in the highly liquid,institutionally based currency forward markets. The forward markets are generally unregulated, and in its forwardtrading the Partnership does not deposit margin with respect to itspositions.  Spot and forward currencycontracts currently are the only non-exchange traded instruments held by thePartnership.

 

To date, approximately 20% to 30% of the Partnership’strades by volume have been in forward currency contracts, but from time to timethe percentage of the Partnership’s trading represented by forward currencytrades may fall substantially outside this range.  Because the Partnership need not deposit anymargin with Merrill Lynch in respect of the Partnership’s forward trading, thePartnership’s additional risk in trading in such unregulated markets should belimited to a possible loss of unrealized profits on open forward positionswhich a counterparty accessed through Merrill Lynch would not, in the event ofits bankruptcy, be able to pay to Merrill Lynch for the account of thePartnership.

 

As in the case of its market sector allocations, thePartnership’s commitments to different types of markets — U.S. and non-U.S.,regulated and unregulated — differ substantially from time to time as well asover time.  The Partnership has no policyrestricting its relative commitment to any of these different types of markets,although generally the bulk of the Partnership’s trading takes place onregulated exchanges.

 

The Partnership’s financial statements containinformation relating to the types of markets traded by the Partnership.  There can, however, be no assurance as towhich markets the Partnership may trade or in which markets the Partnership’strading may be concentrated at any one time or over time.

 

2

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***Use of Proceeds and Cash Management Income***

 

Subscription Proceeds

 

The Partnership’s cash isused as security for and to pay the Partnership’s trading losses as well as itsexpenses and redemptions. The primary use of the proceeds of the sale of theUnits is to permit Sunrise to trade on a speculative basis in a wide range ofdifferent futures and forwards markets on behalf of the Partnership.  While being used for this purpose, thePartnership’s assets are also generally available for cash management, as morefully described below under “Available Assets”.

 

Market Sectors

 

In the Expanded Diversified Program, Sunrise appliesits trend-following systems to a broadly diversified portfolio of futures andforward markets.  Commodity interestscurrently included in the Expanded Diversified Program are: currencies (majors,minors, & crossrates), metals (gold, silver, copper, aluminum, nickel,and zinc), indices (S&P 500, DAX, and Nikkei 225), interest rates (T-bonds,T-Notes, Eurodollars, Euro-Bund, three-month Euro Futures, Euro BOBL, JapaneseGovernment Bond, Euroyen, 90-day Australian Bank Accepted Bill (“Aussie Bill”)and three-month Canadian Bankers’ Acceptance Note), energy (crude oil andnatural gas) and agriculturals (soybeans, soymeal, corn, wheat, coffee andsugar and cotton).

 

Market Types

 

The Partnership trades on a variety of United Statesand foreign futures exchanges. Substantially all of the Partnership’s off-exchange trading takes placein the highly liquid, institutionally based currency forward markets.

 

Many of the Partnership’s currency trades are executedin the spot and forward foreign exchange markets (the “FX Markets”) where thereare no direct execution costs.  Instead,the participants, banks and dealers in the FX Markets take a “spread” betweenthe prices at which they are prepared to buy and sell a particular currency andsuch spreads are built into the pricing of the spot or forward contracts withthe Partnership.

 

As in the case of its market sector allocations, thePartnership’s commitments to different types of markets – U.S. and non-U.S.regulated and non-regulated differ substantially from time to time, as well asover time.  The Partnership has no policyrestricting its relative commitment to any of these different types of markets.

 

Custody of Assets

 

All of the Partnership’s trading assets are currentlyheld in Commodity Futures Trading Commission (“CFTC”) regulated customeraccounts at MLPF&S.

 

Available Assets

 

The Partnership earns income, as described below, onits “Available Assets”, which can be generally described as the cash actuallyheld by the Partnership.   AvailableAssets are held primarily in U.S. dollars and are comprised of the Partnership’scash balances held in the offset accounts (as described below) – which include “opentrade equity” (unrealized gain and loss on open positions) on United Statesfutures contracts, which is paid into or out of the Partnership’s account on adaily basis; the Partnership’s cash balance in foreign currencies derived fromits trading in non-U.S. dollar denominated futures and options contracts, whichincludes open trade equity on those exchanges which settle gains and losses onopen positions in such contracts prior to closing out such positions.  Available Assets do not include and thePartnership does not earn interest income on the Partnership’s  unrealized gains or losses on its openforward, commodity option and certain foreign futures positions since suchgains and losses are not collected or paid until such positions are closed out.

 

3

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The Partnership’s Available Assets may be greaterthan, less than or equal to the Partnership’s Net Asset Value (on which theredemption value of the Units is based) primarily because Net Asset Valuereflects all gains and losses on open positions as well as accrued but unpaidexpenses.

 

Interest Earned on the Partnership’s U.S. DollarAvailable Assets

 

The Partnership’s U.S. dollar Available Assets areheld in cash in offset accounts.

 

Offset accounts are non-interest bearing demanddeposit accounts maintained with banks unaffiliated with Merrill Lynch.  An integral feature of the offsetarrangements is that the participating banks specifically acknowledge that theoffset accounts are MLPF&S customer accounts, not subject to any MerrillLynch liability.

 

MLPF&S credits the Partnership, as of the end ofeach month, with interest at the effective daily 91-day Treasury bill rate onthe average daily U.S. dollar Available Assets held in the offset accountsduring such month.

 

The use of the offset account arrangements for thePartnership’s U.S. dollar Available Assets may be discontinued by Merrill Lynchat any time.  If Merrill Lynch were toterminate the offset arrangements, it would attempt to invest all of the Partnership’sU.S. dollar Available Assets to the maximum practicable extent in short-termTreasury bills.  All interest earned onthe U.S. dollar Available Assets so invested would be paid to the Partnershipbut MLAI would expect the amount of such interest to be less than thatavailable to the Partnership under the offset account arrangements.  The remaining U.S. dollar Available Assets ofthe Partnership would be kept in cash to meet variation margin payments and payexpenses, but would not earn interest for the Partnership.

 

The banks at which the offset accounts are maintainedmake available to Merrill Lynch interest-free overnight credits, loans oroverdrafts in the amount of the Partnership’s U.S. dollar Available Assets heldin the offset accounts, charging Merrill Lynch a small fee for thisservice.  The economic benefits derivedby Merrill Lynch – net of the interest credits paid to the Partnership and thefee paid to the offset banks – from the offset accounts have not exceeded 0.75%per annum of the Partnership’s average daily U.S. dollar Available Assets heldin the offset accounts.  These revenuesto Merrill Lynch are in addition to the Brokerage Commissions andAdministrative Fees paid by the Partnership to MLPF&S and MLAI,respectively.

 

Interest Paid by Merrill Lynch on the Partnership’sNon-U.S. Dollar Available Assets

 

Under the single currencymargining system implemented for the Partnership, the Partnership does notdeposit foreign currencies to margin trading in non-U.S. dollar denominated futurescontracts and options, if any. MLPF&S provides the necessary margin, permitting the Partnership toretain the monies which would otherwise be required for such margin as part ofthe Partnership’s U.S. dollar Available Assets. The Partnership does not earn interest on foreign margin depositsprovided by MLPF&S. The Partnership does, however, earn interest on itsnon-U.S. dollar Available Assets. Specifically, the Partnership is credited by Merrill Lynch with interestat prevailing short-term local rates on assets and net gains on non-U.S. dollardenominated positions for such gains actually held in cash by thePartnership.  Merrill Lynch charges thePartnership Merrill Lynch’s cost of financing realized and unrealized losses onsuch positions.

 

The Partnership holdsforeign currency gains and finances foreign currency losses on an interim basisuntil converted into U.S. dollars and either paid into or out of thePartnership’s U.S. dollar Available Assets. Foreign currency gains or losses on open positions are not convertedinto U.S. dollars until the positions are closed.  Assets of the Partnership while held inforeign currencies are subject to exchange rate risk.

 

4

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***Charges***

 

The following table summarizesthe charges incurred by the Partnership during 2007, 2006, and 2005.

 
| ** **                      | ** ** | **2007**           | ** ** | **2006**                                               | ** ** | **2005**           | ** ** |
|---------------------------------|------------|--------------------|------------|--------------------------------------------------------|------------|--------------------|------------|
| **Charges**                     | ** ** | **Dollar  Amount** | ** ** | **% of Average  Month-End  Net Assets** | ** ** | **Dollar  Amount** | ** ** | **% of Average  Month-End  Net Assets** | ** ** | **Dollar  Amount** | ** ** | **% of Average  Month-End  Net Assets** | ** ** |
|                            |       |               |       |                                                   |       |               |       |   |   |   |   |   |   |
| Brokerage  Commissions          |       | $16,351,736        |       | 5.66                                                   | %          | $19,872,678        |       | 5.61 | % | $27,053,850 |   | 5.58 | % |
| Administrative  and Filing Fees |       | 993,261            |       | 0.35                                                   | %          | 1,153,304          |       | 0.33 | % | 1,479,720 |   | 0.31 | % |
| Profit Shares                   |       | 671,266            |       | 0.23                                                   | %          | 49,055             |       | 0.01 | % | — |   | — |   |
| Total Expenses                  |       | $18,016,263        |       | 6.24                                                   | %          | $21,075,037        |       | 5.95 | % | $28,533,570 |   | 5.89 | % |

 

The foregoing table does not reflect the bid-askspreads paid by the Partnership on its forward trading, or the benefits whichmay be derived by Merrill Lynch from the deposit of certain of the Partnership’sU.S. dollar assets maintained at MLPF&S.

 

Each Unit is subject tothe same charges.  The Partnership’saverage month-end Net Assets during 2007, 2006 and 2005 equaled $288,689,351,$354,244,209 and $484,905,224, respectively.

 

During 2007, 2006 and 2005, the Partnership earned$13,248,150, $17,187,972 and $15,719,664, in interest income, or approximately4.59%, 4.85% and 3.24%,  of thePartnership’s average month-end Net Assets.

 

**Descriptionof Current Charges**

 
| **Recipient** | ** ** | **Nature  of Payment** | ** ** | **Amount  of Payment**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------------|------------|------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| MLPF&S    |       | Brokerage  Commissions |       | A flat-rate  monthly brokerage commission of 0.458 of 1% (a 5.5% annual rate) of the  Partnership’s month-end assets (including the monthly interest credit and  before reduction for accrued month-end redemptions, distributions, brokerage  commissions, administrative fees or Profit Shares, in each case as of the end  of the month of determination). Such commissions cover Sunrise’s monthly  consulting fee as well as all floor brokerage and exchange, clearing and  National Futures Association (“NFA”) fees incurred in the Partnership’s  trading. |
|          |       |                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|          |       |                   |       | During 2007, 2006, and 2005, the round-turn (each  purchase and sale or sale and purchase of a single futures contract)  equivalent rate of the Partnership’s flat-rate Brokerage Commissions was  approximately $251, $591 and $370, respectively.                                                                                                                                                                                                                                                                                                                                     |

 

5

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| MLPF&S                                                                                   |   | Use of  Partnership assets                                                                          |   | Merrill Lynch  may derive an economic benefit from the deposit of certain of the  Partnership’s U.S. dollar assets in accounts maintained at MLPF&S.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                         |   |                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| MLAI                                                                                         |   | Administrative  Fees                                                                                |   | A flat-rate  monthly charge of 0.021 of 1% (0.25% annual rate) of the Partnership’s  month-end assets (including the monthly interest credit and before reduction  for accrued month-end redemptions, distributions, brokerage commissions,  administrative fees or Profit Shares, in each case as of the end of the month  of determination). Additionally, the Partnership reimburses MLAI the actual  cost of the State of New Jersey annual filing fee assessed on a per partner  basis with a maximum of $250,000 per year. The administrative fees cover the  Partnership’s routine administrative expenses and MLAI will absorb any  administrative costs incurred during any calendar year in excess of the  foregoing amount. |
|                                                                                         |   |                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Merrill Lynch  International Bank (“MLIB”) (or an affiliate); Other counterparties |   | Bid–ask spreads                                                                                |   | Bid–ask spreads  on forward and related trades.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                         |   |                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| MLIB (or an  affiliate); Other counterparties                                                |   | EFP  differentials                                                                                  |   | Certain of the  Partnership’s currency trades may be executed in the form of “exchange of  futures for physical” transactions, in which a counterparty (which may be  MLIB or an affiliate) receives an additional “differential” spread for exchanging  the Partnership’s cash currency positions for equivalent futures positions.                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                         |   |                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Sunrise                                                                                      |   | Annual profit  shares                                                                               |   | 23% of any New  Trading Profits generated by the Partnership as a whole, excluding interest  income and after reduction for a portion of the Brokerage Commissions, as of  the end of each calendar year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                         |   |                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Sunrise                                                                                      |   | Consulting Fees                                                                                     |   | MLPF&S pays  Sunrise monthly Consulting Fees of 0.083 of 1% of the Partnership’s month-end  assets (a 1% annual rate), after reduction for a portion of the Brokerage  Commissions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                         |   |                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| MLPF&S;  Others                                                                          |   | Reimbursement of  delivery, insurance, storage and any other extraordinary charges; taxes (if  any) |   | Actual payments  to third parties, which are expected to be negligible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                         |   |                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| MLPF&S;  Others                                                                          |   | Extraordinary  expenses                                                                             |   | Actual costs  incurred; none paid to date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

 

6

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***Regulation***

 

MLAI, thePartnership and MLPF&S are each subject to regulation by the CFTC and theNFA.  Other than in respect of theregistration requirements pertaining to the Partnership’s securities under Section 12(g) ofthe Securities Exchange Act of 1934, the Partnership is generally not subjectto regulation by the Securities and Exchange Commission (the “SEC”).  However, MLAI itself is registered as an “investmentadviser” under the Investment Advisers Act of 1940.  MLPF&S is also regulated by the SEC andthe Financial Industry Regulatory Authority (the “FINRA”).

 

(d)                                FinancialInformation about Geographic Areas

 

The Partnershipdoes not engage in material operations in foreign countries, nor is a materialportion of the Partnership’s revenue derived from customers in foreigncountries. The Partnership trades on a number of foreign commodityexchanges.  The Partnership does notengage in the sales of goods or services.

 

**Item 1A: RiskFactors**

 

***The Large Size of the Partnership’sTrading Positions Increases the Risk of Sudden, Major Losses***

*** ***

The Partnership takes positions with values up toapproximately 15 times its total equity. Consequently, even small price movements can cause major losses.

 

***Investors Must Not Rely on the PastPerformance of Either Sunrise or the Partnership in Deciding Whether to BuyUnits***

*** ***

The performance of the Partnership is entirelyunpredictable, and the past performance of the Partnership as well as ofSunrise is not necessarily indicative of their future results.

 

The price data which Sunrise has researched indeveloping its programs may not reflect the changing dynamics of futuremarkets.  If not, the ExpandedDiversified Program would have little chance of being profitable.  An influx of new market participants, changesin market regulation, international political developments, demographic changesand numerous other factors can contribute to once-successful strategiesbecoming outdated.  Not all of thesefactors can be identified, much less quantified.  There can be no assurance that Sunrise willtrade profitably for the Partnership.

 

***Sunrise Analyzes Only TechnicalMarket Data.  No Economic FactorsExternal to Market Prices Are Analyzed***

*** ***

The Sunrise programs focus exclusively on statisticalanalysis of market prices.  Consequently,any factor external to the market itself which dominates prices is likely tocause major losses.  For example, apending political or economic event may be very likely to cause a major pricemovement, but Sunrise would continue to maintain positions that would incurmajor losses as a result of such movement, if its programs indicated that itshould do so.

 

The likelihood of the Units being profitable could bematerially diminished during periods when events external to the marketsthemselves have an important impact on prices. During such periods, Sunrise’s historical price analysis could establishpositions on the wrong side of the price movements caused by such events.

 

***Effectsof Speculative Position Limits***

*** ***

The CFTC and commodity exchanges have establishedspeculative position limits (referred to as “position limits”) on the maximumfutures positions which any person or group of persons acting in concert, mayhold or control in particular commodities. All commodity accounts controlled bySunrise and its principals and their affiliates are combined for speculativeposition limit purposes.  If such limitswere to be reached, Sunrise would be required to reduce the size of thepositions which would otherwise be taken for the Partnership in order to avoidexceeding such limits.  Any suchreduction could adversely affect the operations and profitability of thePartnership.

 

7

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*** ***

***Lack ofthe Types of Price Trends Which the Expanded Diversified Program Can IdentifyWill Cause Major Losses***

*** ***

The Partnership cannot trade profitably unless major price trends occurin at least certain markets that it trades. Many markets are trendless most of the time, and in static marketsSunrise’s programs are likely to incur losses. In fact, Sunrise expects more than half of its trades to beunprofitable; it depends on significant gains from a few major trends to offsetthese losses.  It is not just any pricetrend, but price trends of the type which Sunrise’s systems have been designedto identify, which are necessary for the Partnership to be profitable.

 

***TheDanger to the Partnership of “Whipsaw” Markets***

*** ***

Often, the most unprofitable market conditions for the Partnership arethose in which prices “whipsaw,” moving quickly upward, then reversing, thenmoving upward again, then reversing again. In such conditions, the programs may establish a series of losingpositions based on incorrectly identifying both the brief upward or downwardprice movements as trends.

 

***ThePartnership’s Substantial Expenses Will Cause Losses Unless Offset by Profits***

*** ***

The Partnership’s expenses could, over time, result in significantlosses.  Except for the Profit Share theseexpenses are payable whether or not the Partnership is profitable.  It is also possible for Sunrise to earn aprofit share even if the Partnership has a loss. That is because thecalculation of our profit share does not include 100% of the costs associatedwith running the Partnership.

 

***Sunrise’sHigh Level of Equity Under Management Could Lead to Diminished Returns***

*** ***

Sunrise’s equity under management is approximately $1.589 billion.  The more money Sunrise manages, the moredifficult it may be for Sunrise to trade profitably because of the difficultyof trading larger positions without adversely affecting prices andperformance.  Large trades may result inmore price slippage than smaller orders.

 

***IlliquidMarkets Could Make It Impossible for Sunrise to Realize Profits or Limit Losses***

*** ***

In illiquid markets, Sunrise could be unable to capitalize on tradingopportunities or close out losing positions. There are numerous factors which can contribute to market illiquidity,far too many for Sunrise to be able to predict. There can be no assurance that a market which has been highly liquid inthe past will not experience periods of unexpected illiquidity.

 

Unexpected market illiquidity has caused major losses in recent yearsin certain sectors.  There can be no assurancethat the same will not happen to the Partnership from time to time.  The large size of the positions which Sunrisemay acquire for the Partnership increases the risk of illiquidity by bothmaking its positions more difficult to liquidate and increasing the lossesincurred while trying to do so.

 

***ThePartnership Trades Extensively in Foreign Markets; These Markets Are LessRegulated Than U.S. Markets and Are Subject to Exchange Rate, Market Practiceand Political Risks***

*** ***

The Expanded Diversified Program trades a great deal outside theU.S.  From time to time, as much asapproximately 40% of the Partnership’s overall market exposure could involvepositions taken on foreign markets (excluding foreign exchange transactions inU.S. markets).  Foreign trading involvesrisks — including exchange-rate exposure, possible governmental interventionand lack of regulation — which U.S. trading does not.  In addition, the Partnership may not have thesame access to certain positions on foreign exchanges as do local traders, andthe historical market data on which Sunrise bases its strategies may not be asreliable or accessible as it is in the United States.  Certain foreign exchanges may also be in amore or less developmental stage so that prior price histories may not beindicative of current price dynamics. The rights of clients in the event of the insolvency or bankruptcy of anon-U.S. market or broker are also likely to be more limited than in the caseof U.S. markets or brokers.

 

8

----

 

**The Partnership Could lose Assets and Have ItsTrading Disrupted Due to the Bankruptcy of One of the Parties**

 

The Partnership is subject to the risk of insolvencyof a counterparty, an exchange, a clearinghouse or MLPF&S.  The Partnership’sassets could be lost or impounded during lengthy bankruptcy proceedings. Were a substantial portion of the Partnership’s capital tied up in abankruptcy, MLAI might suspend or limit trading, perhaps causing thePartnership to miss significant profit opportunities.  There areincreased risks in dealing with unregulated tradingcounterparties including the risk that assets may not benefitfrom the protection afforded to “customer funds” deposited with regulateddealers and brokers.

 

**Item 1B: Unresolved StaffComments**

 

Not applicable.

 

**Item 2:****       ****Properties**

 

The Partnershipdoes not use any physical properties in the conduct of its business.

 

The Partnership’sadministrative offices are the administrative offices of MLAI (Merrill LynchAlternative Investments LLC, Hopewell Corporate Campus, Building No. 2,1200 Merrill Lynch Drive – First Floor, Pennington, New Jersey 08534).  MLAI performs administrative services for theFund from MLAI’s offices.

 

**Item 3:****       ****Legal Proceedings**

 

None.

 

**Item 4:****       ****Submission of Matters to aVote of Security Holders**

 

None.

 

**PART II**

 

**Item 5:****       ****Market for Registrant’sCommon Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities**

 

Item 5(a)

 

(a)                                 Market Information:

 

There is noestablished public trading market for the Units, and none is likely todevelop.  Limited Partners may redeemUnits on ten days written notice to MLAI as of the last day of each month attheir Net Asset Value, subject to certain early redemption charges.

 

(b)                                Holders:

 

As of December 31,2007, there were 2,788 holders of Units, including MLAI.

 

(c)                                 Dividends:

 

MLAI has not madeand does not contemplate making any distributions on the Units.

 

(d)                                Securities Authorized for Issuance UnderEquity Compensation Plans:

 

Not applicable.

 

9

----

 

(e)                                  RecentSales of Unregistered Securities:

 

Issuance to accredited investors pursuant toRegulation D and Section 4(6) under the Securities Act. The sellingagent of the following Class of Units was MLPF&S.

 

During 2007, the Fund issuedUnits as set forth in the following chart.

 

| ** ** | ** ** | **Subscription** | ** ** | ** ** | ** ** | ** ** | ** ** |
|------------|------------|------------------|------------|------------|------------|------------|------------|
| ** ** | ** ** | **Amount**       | ** ** | **Units**  | ** ** | **NAV**    | ** ** |
| Jan-07     |       | $                | 39,772     |       | 164        |       | $          | 242.51 |   |
| Feb-07     |       | 384,415          |       | 1,536      |       | 250.27     |       |
| Mar-07     |       | 708,558          |       | 2,913      |       | 243.24     |       |
| Apr-07     |       | 407,943          |       | 1,750      |       | 233.11     |       |
| May-07     |       | 290,759          |       | 1,171      |       | 248.30     |       |
| Jun-07     |       | 287,417          |       | 1,101      |       | 257.08     |       |
| Jul-07     |       | 19,866           |       | 76         |       | 261.40     |       |
| Aug-07     |       | —           |       | —     |       | 246.27     |       |
| Sep-07     |       | 74,788           |       | 357        |       | 209.49     |       |
| Oct-07     |       | —           |       | —     |       | 223.02     |       |
| Nov-07     |       | 9,985            |       | 41         |       | 243.54     |       |
| Dec-07     |       | —           |       | —     |       | 245.39     |       |
| Jan-08     |       | 2,355,170        |       | 9,400      |       | 250.55     |       |
| Feb-08     |       | —           |       | —     |       | 263.68     |       |
|            |            |                  |            |            |            |            |            |  |  |

 

Item 5(b)

 

Not applicable.

 

Item 5(c)

 

Not applicable.

 

10

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**Item 6:   Selected Financial Data**

 

The followingselected financial data has been derived from the audited financial statementsof the Partnership.

 
| **Statement of Income**         | ** ** | **For the Year  Ended  December 31,  2007** | ** ** | **For the Year  Ended  December 31,  2006** | ** ** | **For the Year  Ended  December 31,  2005** | ** ** | **For the Year  Ended  December 31,  2004** | ** **  | **For the Year  Ended  December 31,  2003** | ** ** |
|---------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|------------|---------------------------------------------|-------------|---------------------------------------------|------------|
|                            |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| TRADING PROFIT (LOSS):          |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| Realized                        |       | $                                           | 13,343,726 |                                        | $          | 37,752,945                                  |       | $                                           | (24,222,659 | )                                           | $          | 52,256,615 |   | $ | 27,402,575 |   |
| Change in  unrealized           |       | (1,451,441                                  | )          | (5,477,059                                  | )          | 3,041,057                                   |       | (14,070,731                                 | )           | 16,373,295                                  |       |
| Total trading  profit (loss)    |       | 11,892,285                                  |       | 32,275,886                                  |       | (21,181,602                                 | )          | 38,185,884                                  |        | 43,775,870                                  |       |
|                            |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| INVESTMENT INCOME:              |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| Interest                        |       | 13,248,150                                  |       | 17,187,972                                  |       | 15,719,664                                  |       | 6,875,902                                   |        | 1,831,533                                   |       |
|                            |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| EXPENSES:                       |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| Brokerage  commissions          |       | 16,351,736                                  |       | 19,872,678                                  |       | 27,053,850                                  |       | 26,151,018                                  |        | 10,533,803                                  |       |
| Profit Shares                   |       | 671,266                                     |       | 49,055                                      |       | -                                           |       | 4,731,366                                   |        | 8,416,558                                   |       |
| Administrative  and filing fees |       | 993,261                                     |       | 1,153,304                                   |       | 1,479,720                                   |       | 1,641,858                                   |        | 622,464                                     |       |
| Total expenses                  |       | 18,016,263                                  |       | 21,075,037                                  |       | 28,533,570                                  |       | 32,524,242                                  |        | 19,572,825                                  |       |
|                            |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| NET INVESTMENT LOSS             |       | (4,768,113                                  | )          | (3,887,065                                  | )          | (12,813,906                                 | )          | (25,648,340                                 | )           | (17,741,292                                 | )          |
|                            |       |                                        |       |                                        |       |                                        |       |                                        |        |                                        |       |
| **NET INCOME (LOSS)**           |       | $                                           | 7,124,172  |                                        | $          | 28,388,821                                  |       | $                                           | (33,995,508 | )                                           | $          | 12,537,544 |   | $ | 26,034,578 |   |

 
| **Balance Sheet Data**   | ** ** | **December 31,  2007** | ** **  | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** | **December 31, 2004** | ** **  | **December 31, 2003** | ** ** |
|--------------------------|------------|------------------------|-------------|-----------------------|------------|-----------------------|------------|-----------------------|-------------|-----------------------|------------|
|                     |       |                   |        |                  |       |                  |       |                  |        |                  |       |
| Partners' Capital        |       | $                      | 225,754,363 |                  | $          | 326,172,570           |       | $                     | 396,829,138 |                  | $          | 586,978,366 |   | $ | 270,488,591 |   |
| Net Asset Value per Unit |       | $                      | 250.55      |                  | $          | 242.51                |       | $                     | 224.17      |                  | $          | 234.41 |   | $ | 224.63 |   |

 

11

----

 

The followingmonth-end net asset value per unit information has been derived from financialand accounting data of the Partnership.

 

MONTH-ENDNET ASSET VALUE PER INITIAL UNIT

 
| ** ** | ** ** | **Jan.** | ** ** | **Feb.** | ** ** | **Mar.** | ** ** | **Apr.** | ** ** | **May** | ** ** | **June** | ** ** | **July** | ** ** | **Aug.** | ** ** | **Sept.** | ** ** | **Oct.** | ** ** | **Nov.** | ** ** | **Dec.** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|---------|------------|----------|------------|----------|------------|----------|------------|-----------|------------|----------|------------|----------|------------|----------|------------|
| 2003       |       | $        | 212.87     |     | $          | 221.65   |       | $        | 207.96     |    | $          | 208.62   |       | $        | 217.96     |     | $          | 209.68    |       | $        | 206.45     |     | $          | 206.34   |       | $ | 199.40 |   | $ | 210.45 |   | $ | 207.90 |   | $ | 224.63 |   |
| 2004       |       | $        | 226.76     |     | $          | 243.15   |       | $        | 248.26     |    | $          | 237.31   |       | $        | 234.35     |     | $          | 227.99    |       | $        | 223.83     |     | $          | 214.07   |       | $ | 215.06 |   | $ | 222.39 |   | $ | 232.33 |   | $ | 234.41 |   |
| 2005       |       | $        | 219.59     |     | $          | 218.75   |       | $        | 217.11     |    | $          | 213.97   |       | $        | 212.55     |     | $          | 211.75    |       | $        | 206.46     |     | $          | 206.27   |       | $ | 208.46 |   | $ | 210.63 |   | $ | 221.59 |   | $ | 224.17 |   |
| 2006       |       | $        | 225.13     |     | $          | 224.83   |       | $        | 232.20     |    | $          | 240.27   |       | $        | 241.84     |     | $          | 241.05    |       | $        | 230.50     |     | $          | 228.68   |       | $ | 227.51 |   | $ | 233.62 |   | $ | 238.87 |   | $ | 242.51 |   |
| 2007       |       | $        | 250.27     |     | $          | 243.24   |       | $        | 233.11     |    | $          | 248.30   |       | $        | 257.08     |     | $          | 261.40    |       | $        | 246.27     |     | $          | 209.49   |       | $ | 223.02 |   | $ | 243.54 |   | $ | 245.39 |   | $ | 250.55 |   |

 

Pursuant to CFTCpolicy, monthly performance is presented from January 1, 2003, even thoughthe Units were outstanding prior to such date.

 

12

----

 

**ML SELECTFUTURES I L.P.**

**December 31,2007**

 

*Type ofPool:*  Single Advisor/Publicly-Offered/Non-”PrincipalProtected”(1)

*Inceptionof Trading:* April 1996

*AggregateSubscriptions:*     $587,490,383

*CurrentCapitalization:  * $225,754,363

*WorstMonthly Drawdown(2):   *(14.94)% (08/07)

*WorstPeak-to-Valley Drawdown(3):   *(19.86)% (07/07-08/07)

 

*Net Asset Value per Unit, December 31,2007:* $250.55

 

**MonthlyRates of Return****(4)**

 

| **Month**                      | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|--------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| January                        |       | 3.20     | %          | 0.43     | %          | (6.32    | )%         | 0.95     | %          | 8.48     | %          |
| February                       |       | (2.81    | )          | (0.14    | )          | (0.38    | )          | 7.23     |       | 4.12     |       |
| March                          |       | (4.16    | )          | 3.28     |       | (0.75    | )          | 2.10     |       | (6.18    | )          |
| April                          |       | 6.52     |       | 3.48     |       | (1.45    | )          | (4.41    | )          | 0.31     |       |
| May                            |       | 3.54     |       | 0.65     |       | (0.67    | )          | (1.25    | )          | 4.48     |       |
| June                           |       | 1.68     |       | (0.33    | )          | (0.37    | )          | (2.71    | )          | (3.80    | )          |
| July                           |       | (5.79    | )          | (4.38    | )          | (2.50    | )          | (1.82    | )          | (1.54    | )          |
| August                         |       | (14.94   | )          | (0.79    | )          | (0.09    | )          | (4.36    | )          | (0.05    | )          |
| September                      |       | 6.46     |       | (0.51    | )          | 1.06     |       | 0.46     |       | (3.36    | )          |
| October                        |       | 9.20     |       | 2.69     |       | 1.04     |       | 3.41     |       | 5.54     |       |
| November                       |       | 0.76     |       | 2.25     |       | 5.20     |       | 4.47     |       | (1.21    | )          |
| December                       |       | 2.10     |       | 1.52     |       | 1.16     |       | 0.89     |       | 8.05     |       |
| Compound Annual Rate of Return |       | 3.31     | %          | 8.18     | %          | (4.37    | )%         | 4.35     | %          | 14.47    | %          |

 

----

(1) Certainfunds, including funds sponsored by MLAI, are structured so as to guarantee toinvestors that their investment will be worth no less than a specified amount(typically, the initial purchase price) as of a date certain after the date ofinvestment.  The CFTC refers to suchfunds as “principal protected”.  ThePartnership has no such feature.

 

(2) WorstMonthly Drawdown represents the largest negative Monthly Rate of Returnexperienced since January 1, 2003 by the Partnership; a drawdown ismeasured on the basis of month-end Net Asset Value only, and does not reflectintra-month figures.

 

(3) WorstPeak-to-Valley Drawdown represents the greatest percentage decline since January 1,2003 from a month-end cumulative Monthly Rate of Return without such cumulativeMonthly Rate of Return being equaled or exceeded as of a subsequentmonth-end.  For example, if the MonthlyRate 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 endof April in the amount of approximately (3)%, whereas if the Monthly Rateof Return had been approximately 3% in March, the Peak-to-Valley Drawdown wouldhave ended as of the end of February at approximately the (2)% level.

 

(4) MonthlyRate of Return is the net performance of the Partnership during the month ofdetermination (including interest income and after all expenses have beenaccrued or paid) divided by the total equity of the Partnership as of thebeginning of such month*.*

 

13

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**Item 7:             Management’s Discussion andAnalysis of Financial Condition and Results of Operations**

 

***Resultsof Operations***

 

General

 

Sunrise has beenthe Partnership’s sole Advisor since July 1, 1998.  Sunrise is a trend-following trader, whoseprogram does not attempt to predict price movements.  Sunrise has generally not relied on using fundamentaleconomic supply or demand analyses nor macroeconomic assessments of therelative strengths of different national economies or economic sectors.  Instead, its program applies proprietarymodels to analyze past market data, and from this data attempts to determinewhether market prices are trending.  As atechnical trader, Sunrise bases its strategies on the theory that market pricesreflect the collective judgment of numerous market participants and are, accordingly,an efficient indication of market movements. However, there are frequent periods during which fundamental factorsexternal to the market dominate prices.

 

If Sunrise’smodels identify a trend, it signals positions, which follow the trend.  When these models identify the trend ashaving ended or reversed, these positions are either closed out orreversed.  Due to their trend-followingcharacter, Sunrise’s program does not predict either the commencement or theend of a price movement.  Rather, itsobjective is to identify a trend early enough to profit from it and detect itsend or reversal in time to close out the Partnership’s positions whileretaining most of the profits made from following the trend.

 

There are so manyinfluences on the markets that the same general type of economic event may leadto a price trend in some cases but not in others.  The analysis is further complicated by thefact that the programs are designed to recognize only certain types of trendsand to apply only certain criteria of when a trend has begun.  Consequently, even though significant pricetrends may occur, if these trends are not comprised of the type of intra-periodprice movements, which its program is designed to identify, Sunrise may missthe trend altogether.

 

***PerformanceSummary***

 

This performancesummary is an outline description of how the Partnership performed in the past,not necessarily any indication of how it will perform in the future.  In addition, the general causes to whichcertain price movements are attributed may or may not in fact have caused suchmovements, but simply occurred at or about the same time.

 

Sunrise isunlikely to be profitable in markets in which such trends do not occur.  Static or erratic prices are likely to resultin losses.  Similarly, unexpected events(for example, a political upheaval, natural disaster or governmentalintervention) can lead to major short-term losses, as well as gains.

 

While there can beno assurance that Sunrise will be profitable under any given market condition,markets in which substantial and sustained price movements occur typicallyoffer the best profit potential for the Partnership.

 

2007

 
| ** **               | ** ** | **Total Trading** | ** ** |
|--------------------------|------------|-------------------|------------|
| ** **               | ** ** | **Profit (Loss)** | ** ** |
| Energy                   |       | $                 | 12,315,951 |   |
| Currencies               |       | 7,513,761         |       |
| Agricultural Commodities |       | 3,750,546         |       |
| Interest Rates           |       | 2,846,258         |       |
| Stock Indices            |       | (7,861,021        | )          |
| Metals                   |       | (6,673,210        | )          |
|                     |       | $                 | 11,892,285 |   |

 

14

----

 

The Partnership posted overall gains for the year withthe energy, currency, agriculture, and interest rate sectors posted profitswhile the stock indices and metal sectors sustained losses.

 

The energy sector posted profits for the Partnership.The year began with profits posted to the Partnership due to the United Statescrude futures falling to a twenty month low. Declining energy prices reachedprofit target levels resulting in a partial liquidation of the Partnership’sshort energy positions. Rising inventories and warm weather were the primarydrivers of the downward move. Despite initial weakness, the oil complex movedupward beginning mid-quarter and remained volatile with crude oil reaching atwo-month high when the price rose above $60.00 a barrel. This move contributedheavily to the sector losses suffered by the Partnership’s short energypositions. Crude oil initially weakened and then rallied due to uncertaintyover the hostage situation between the United Kingdom and Iran. Due to thevolatility of the markets trading was difficult and relatively flat throughoutthe second quarter. The third quarter was profitable for the Partnership due tooil prices moving to record highs. The cut in interest rates, rising energydemands and forecasts for continued declines in U.S. inventories were among themajor factors behind the rally. The year ended as prices continued to movehigher. Crude oil approached $100.00 per barrel after the United States crudeinventories fell more than expected. News of the assassination of the formerPakistani Prime Minister also contributed to the rise.

 

The currency sector posted profits for thePartnership. There were gains at the beginning of the year due to longpositions in the British pound against the Swiss franc, the Euro and theJapanese yen. The British pound continued to strengthen against most majorcurrencies due to rising United Kingdom interest rates reaching a two year highagainst the Euro and an eight year high against the Japanese yen. Profitscontinued to be posted through the second quarter as the U. S. dollar droppedto an all time low against the Euro and hit multiyear lows against other major andminor currencies. Sentiment towards the U.S. dollar remained negative inreaction to the disappointing United States economic data. Therefore, longpositions in the Euro, British pound, Australian dollar, and New Zealand dollargenerated solid gains against the U.S. dollar. Volatility and uncertaintyreturned to the currency market at the beginning of the third quarter asdeclines in global equity markets prompted position liquidation in the currencysector. Sunrise Expanded Diversified Program (“SEDP”) short positions in theJapanese yen suffered losses when the currency moved higher against its majorcounterparts. Losses continued to be posted to the Partnership during the midthird quarter in reaction to developments in the global financial system as theJapanese yen rallied while the British pound, Euro, Australian dollar and theNew Zealand dollar weakened sharply as investors reduced their exposure to highyielding carry trades. As a result, SEDP liquidated a large portion of itsshort Japanese yen crosses and a large portion of its long positions in minorcurrencies. The U.S. dollar hit a series of new record lows against the Euroafter the Federal Reserve cut its short-term lending rate by half point on September 18,2007. The interest rate adjustment was a result of developments in thefinancial markets. It was negative for the U.S. dollar, with an outlook forless favorable interest rate differentials. Higher yielding currencies, likethe Euro, Australian dollar, and the New Zealand dollar, showed gains after theFederal Reserves announcement. The trend of the lower U.S dollar and strongercommodity prices enabled SEDP to post profits for the Partnership at the end ofthe third quarter. The year ended with the British pound trading very close to all-timelows versus the Euro, which made SEDP’s short positions in the British poundversus the Euro the most profitable for the currency sector.

 

The agriculture sector posted profits for thePartnership. Trading in sugar was profitable at the beginning of the year asprices continued to decline. Soybeans and soybean meal futures rallied due tonew contract highs on the possibility of planting and weather problems.However, the first quarter ended with losses posted to the Partnership due toweakened commodities prices causing the Partnership to exit most of SEDP’s longpositions. Soybeans, wheat and cotton soared at the beginning of the secondquarter due to the acreage and stock reports as well as weather forecasts.However, this could not offset the losses incurred mid through the end of thesecond quarter as price action in agricultural commodities remained verychoppy. Wheat generated profits for the Partnership third quarter as the marketclimbed to an all-time high due to global production problems, a pre-existingtight inventory, and technical strength. Grains continued to rally at the end of the third quarter mainly due todemand from the growing economies of Asia and Latin America posting profits forthe Partnership. Profits continued to be posted for the Partnership as the yearended in response to a growing global demand.

 

15

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The interest rate sector posted profits for thePartnership. Performance in the interest rate markets were mixed at the beginningof the year due to yields rising in most major markets, except Japan withmoderate profits being generated in European interest rates futures. Losseswere also incurred at the end of the first quarter as investors fled to saferalternatives and drove the market higher, against the Partnership’s shortpositions. Performance in the interest rate markets were mixed at the beginningof the second quarter due to domestic interest rate futures posting losses asthe United States Federal Reserve was still on hold since last summer regardinginterest rate adjustments. A number of equity markets reached new historichighs during the second quarter. In reaction to continued global expansion andstrong economic growth, the European Central Bank raised interest rates to curbinflationary pressures resulting in the price of European debt instruments tomove down, in favor of the SEDP’s short positions. The trends of rising stocksand interest rates switched sharply at the beginning of the third quarterforcing SEDP out of some profitable positions. The interest rate market ralliedas investors moved into the traditional safety of government bonds, whichgenerated losses for SEDP. Trading in interest rate futures also producedlosses mid-quarter as investors moved from stocks to less risky governmentsecurities and pushed prices higher against the against SEDP’s short positions.These short positions were quickly liquidated and long positions were initiatedfor some shorter-term systems. The third quarter ended with interest ratesector posting profits to the Partnership as prices moved higher in favor ofSEDP’s long positions. The interest rate sector faced a volatile marketproducing losses in December. Treasury prices moved lower during the first halfof December 2007 and finished the year higher, ultimately supported byeconomic data.

 

The metals sector posted losses for the Partnership.Due to the volatility of the markets trading was difficult at the beginning ofthe year. There were no positions in the metal markets due to a lack of trendsand/or unacceptable volatility which continued through the second quarter. Baseand precious metals posted losses as prices declined across the board. Weaknessin metals was a reflection of rising inventories which triggered heavy positionliquidation resulting in losses being posted to the Partnership.  Profits were posted to the Partnership at thebeginning of the third quarter in spite of the volatile markets and a difficulttrading environment. Global growth remained strong as demand for commoditiesthat are priced in dollars grew as gold prices moved higher posting solidprofits. Gold extended its upward trend and traded above $800.00 an ounce in atthe beginning of the fourth quarter. The upward trend in gold continued at theend of the year as strong demand helped drive prices higher. Industrial metalsmoved in favor of SEDP’s short positions which generated profits for thePartnership as the year ended.

 

Stock indices posted losses for the Partnership.Equity markets performed well at beginning of the year due to soft inflationand solid economic growth creating a positive environment for equities as longtrades in both domestic and foreign stock indices recorded profits. However,mid-quarter generated losses due to most major stock indices had been at theirlong-term high and the Partnership had to liquidate a small portion of its longposition on profit targets and continued to decline to the end of the firstquarter. The beginning of the second quarter trading was profitable in theglobal stock market indices as favorable reports on economic growth abroad andcorporate profits helped drive stock markets into record territory. The marketexperienced sharp up and down moves as the second quarter ended producinglosses for the Partnership that were offset by gains from foreign stock indexfutures. The steepest losses were recorded at the beginning of the thirdquarter in global stock indices as stock prices fell sharply just days aftersetting record highs. Various pieces of unfavorable economic news sent thestock market down: concerns about the state of the U.S. credit and housingmarkets, corporate borrowing and mixed corporate results. Losses continued tobe posted to the Partnership through the end of the third quarter due to dramaticprice reversals as well as major position adjustments in the financial sectoraround the world. Developments in the credit markets and worries about thefinancial system negatively impacted the stock market and the Partnershiprecorded losses as the market suffered a major price correction as the yearended.

 

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*2006*

 
| ** **               | ** ** | **Total Trading** | ** ** |
|--------------------------|------------|-------------------|------------|
| ** **               | ** ** | **Profit (Loss)** | ** ** |
| Stock Indices            |       | $                 | 8,321,295  |   |
| Metals                   |       | 13,145,842        |       |
| Interest Rates           |       | 6,848,350         |       |
| Energy                   |       | 470,071           |       |
| Agricultural Commodities |       | (1,879,496        | )          |
| Currencies               |       | 5,369,824         |       |
|                     |       | $                 | 32,275,886 |   |

 

The Partnership’s performance was an overall gain in2006 with metals, stock indices, interest rates, currencies and energy postinggains while agriculture posted losses.

 

The metals sector produced gains for the Partnership.The year began with both precious and base metals continuing to be supported bystrong supply-demand fundamentals. Concerns about the mining industry’s abilityto meet growing demand, coupled with inflation and geopolitical concernscontinued to drive prices higher. Gold, which is considered an indicator ofinflation, rose to a 25-year high. Silver, which followed other precious andindustrial metals, was trading at historically high levels, hitting a 22-yearhigh. Growing demand for industrial metals in Asian economies seemed to be themain source of price support for the entire metals sector.  During the second quarter, the metals complexrallied to historically high levels, supported by a strong demand and tightglobal supplies. The rally attracted more speculative commodity interest, whichfurther intensified the buying momentum. Trading was difficult throughout thethird quarter due to the volatility of the markets. The year ended with themetals sector maintaining the profits it gained throughout the year.

 

The stock indices sector produced gains for thePartnership. Stock indices were profitable through the whole first quarter.During the second quarter, prices fell in May 2006 reflecting fears thatinflation and rising interest rates might hurt corporate profits. Late in thequarter, prices moved higher after the U.S. Federal Reserve’s quarter-pointrate hike. The stock market reacted to the statement that accompanied the U.S.Federal Reserve’s decision as the Federal Reserve toned down its warning aboutfurther rate increases. During the third quarter, the DAX, Germany’s benchmarkstock index, was near a three-year high and the Nikkei 225 Stock Index reacheda new four-year high. The year ended with several European and Japanese, aswell as some domestic stock markets rising to new record highs.

 

The interest rates sector produced gains for thePartnership. The year started with year strong economic growth in the U.S. andabroad prompting central banks to raise interest rates.  The purpose of the economic tightening policyis to control the inflationary trend that tends to accompany economic growth.Mid-year global bond prices declined in anticipation of further interest rateincreases. Strong economic data and growing inflation worries pushed yields tomulti-year highs. Uncertainty about the U.S. Federal Reserve’s position oninterest rate increases contributed towards keeping the markets volatile andchoppy. A quarter-point interest rate hike at the end of June brought theshort-term interest rates to 5.25 %. During the third quarter, the U.S. FederalReserve decided not to increase interest rates for the first time in two years.The year ended with inflation fears decreasing and short term interest rates remainingunchanged for the third consecutive month with the market remained range bound.

 

The currency sector produced gains for thePartnership. The beginning of year was characterized by choppy, non-directionalpatterns making it difficult to identify trends. The U.S. dollar weakenedagainst other major currencies. Mid-year the U.S. dollar came under pressurefrom several fronts and moved lower against other major currencies. Commentsfrom the group of seven industrialized nations that addressed global imbalancesand called for more currency flexibility caused the U.S. dollar to fall.  The U.S. dollar weakened further when theU.S. Federal Reserve signaled it might pause in its interest tightening cycle.The British pound outperformed the other major

 

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currencies and became thelargest contributor to the Partnership’s positive performance.  The U.S. dollar advanced against most majorand minor currencies, due largely to speculation over interest rates.  Another factor in the U.S. dollar’s rise wasweakness in its counterparts, especially the Japanese yen, the New Zealanddollar and the African rand. At the beginning of the third quarter, there wereno gains due to concerns about lower growth and higher inflation. The U.S.currency reversed direction in reaction to soft economic data and declinedagainst most major currencies. The British pound was under pressure at the endof the quarter in reaction to unfavorable economic reports. At the beginning ofthe fourth quarter, the U.S. dollar moved in relatively narrow ranges; it roseagainst other major currencies in early October 2006 only to reversecourse and weaken in the second half of the month. Mid quarter, the Britishpound took center stage, rising to a 14-year high versus the U.S. dollar andgenerated significant profits for the Partnership’s long positions. The yearended with the U.S dollar higher against most major currencies.

 

The energy sectorproduced gains for the Partnership. At the beginning of the year, the energysector posted a small profit for the Partnership. Mid-year crude oil pricesmoved up and reached an exchange-record level of $75.35 per barrel as concernsabout tight summer gasoline supplies and tensions over Iran’s nuclear programremained high. During the third quarter, crude oil prices topped at $79 abarrel as a result of the current conflict in the Middle East and concern thatconflict might spread to other countries, including the threat to oil exportsfrom the Persian Gulf. Crude oil prices fell below $60 a barrel at the end ofthe quarter down 21% from its high at the beginning of the quarter. The factorsbehind the dramatic price decline included growing inventories and a slowdownin global economic growth. The year ended as energy prices weakened in reactionto unseasonably warm weather in the Northeastern U.S. and rising inventories ofgasoline and other products. Falling oil prices triggered several profit-takingsignals for the Partnership.

 

The agriculture sectorproduced losses for the Partnership. The beginning of the year saw sugar as themain single market contributor to positive returns reaching the highest pricelevel since 1995. Mid-year favorable weather forecasts for the Midwest putpressure on grain futures and caused the Partnership to liquidate long corn andwheat positions. The third quarter ended with the sector posting losses due toincreased volatility. The year ended with corn prices rising to new highs onexpectations of strong ethanol demand and wheat prices moving higher due toreports of tight supplies.

 

*2005*

 
| ** **                | ** ** | **Total Trading** | ** **  |
|---------------------------|------------|------------------------|-------------|
| ** **                | ** ** | **Profit (Loss)** | ** **  |
| Stock Indices             |       | $                      | 13,907,052  |   |
| Metals                    |       | 8,710,419              |        |
| Interest Rates            |       | 8,153,645              |        |
| Energy                    |       | (113,377               | )           |
| Agricultural  Commodities |       | (1,958,031             | )           |
| Currencies                |       | (49,881,310            | )           |
|                      |       | $                      | (21,181,602 | ) |

 

The Partnershipexperienced an overall loss for the year. Stock indices, metals sector andinterest rates were profitable for the Partnership while the energy sector,agricultural commodities, and currencies sustained losses.

 

Stock indicesposted the highest profit for the Partnership. There were little gains in thefirst half of the year due to such a volatile trading environment. Stockindices outperformed the other sectors in the Partnership in the third quarter.In particular, the DAX, German’s benchmark stock index was near a three-yearhigh and the Nikkei 225 Stock Index reached a new four-year high. ThePartnership took advantage of its trading profits by partially liquidating itslong positions at profit target levels. The year ended with foreign stockindices continuing to be profitable, moving to new highs. This caused an exitin the remaining long Nikkei 225 position to lock in profit targets.

 

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The metals sectorwas profitable for the Partnership. The year began with trend reversals andsevere volatility causing losses in precious and base metals only to regaintheir bullish momentum as the year progressed with aluminum and copper pricesstrengthening due to a tighter supply-demand situation. The gold futures appreciatedsignificantly in September 2005 due to the increased demand for gold whichis a direct correlation to rising inflation expectations. Strong demandcombined with historically low inventories and inflation concerns drove theprices to new highs in November 2005. Therefore, profitable metalspositions (copper, aluminum) were partially liquidated after reaching profittargets. The year ended with gold, which is usually sensitive to the U.S.dollar and tends to move in the opposite direction, reaching new contract highsas the U.S. dollar declined in value. Silver and aluminum also posted solidprofits.

 

The interest ratesector also posted gains for the Partnership. The year began with both domesticand foreign interest rate futures recording record profits as yields onlong-term debt instruments continued to fall. However, the trend reversed earlyin the year generating profits on short Eurodollar positions only to reverseagain at the end of the June 2005. France’s decision not to ratify a newEuropean constitution seemed to contribute to the rally in interest ratefutures. Favorable economic news and expectations that the Federal Reservemight stop raising interest rates in the summer may also explain the strengthin bond prices. On July 1, 2005, the U.S. Federal Reserve raised theFederal funds rate by another 0.25%, which represented the ninth increase ofthat size since the central bank began to tighten credit in June 2004 andcaused the price of underlying debt instruments to move down against long positions.Gains were generated in short-term interest rate futures with the Partnershiphaving a short position in the Eurodollar. The year ended with losses as prices moved against the Partnership’sshort positions. The Partnership experienced an inversion of the yield curve aslong-term yields dropped below the level of short-term yields. The strongdemand of  U.S. Treasury bonds and notesmay have been driving long-term yields lower.

 

The energy sectorposted losses for the Partnership. Trading in this sector was in the thirdquarter only. Crude oil rallied to levels above $70.00 per barrel but droppedsharply after the U.S. government decided to release some oil from energystockpiles, while the Partnership’s long crude oil positions recorded profits.Prices remained at levels not seen for 15 years as the market struggled fordirection after refinery and production shutdowns in the aftermath ofHurricanes Katrina and Rita.

 

The agriculturalsector posted losses for the Partnership due to the volatility of the tradingmarket. Profits from sugar reached an 11 year high and became one of the bestperforming commodities in 2005. However, profits from sugar could not offsetlosses sustained from other commodities.

 

The currencysector was the least profitable for the Partnership.  The year was characterized by a strong U.S.dollar even in light of higher energy prices and Hurricane Katrina’seffects.  At the beginning of the year,the U.S. dollar gained support by improved U.S. economic data and moved higheragainst most major and minor currencies. The rising U.S. dollar triggered exitsignals for short U.S. dollar positions which resulted in losses. The trend ofa stronger U.S. dollar continued through the middle part of the year as keyeconomic reports indicated the United States is growing faster than otherdeveloped countries coupled with higher interest rates in the U.S. In thebeginning of July 2005, there was an approximate 2% revaluation of theChinese yuan against the U.S. dollar which led to a short rally in severalAsian currencies including the Japanese yen. Positive momentum for the U.S.dollar came at the end of the year which resulted from favorable interest ratedifferentials. The U.S. interest rates had climbed by 300 basis points over thepast two years, while European and Japanese rates have remained stagnant.

 

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VariablesAffecting Performance

 

The principal variablesthat determine the net performance of the Partnership are gross profitabilityfrom the Partnership’s trading activities and interest income.

 

During all periods setforth above “Selected Financial Data”, the interest rates in many countrieswere at unusually low levels.  The lowinterest rates in the United States (although higher than in many othercountries) negatively impacted revenues because interest income is typically amajor component of the Partnership’s profitability.  In addition, low interest rates arefrequently associated with reduced fixed income market volatility, and in staticmarkets the Partnership’s profit potential generally tends to bediminished.  On the other hand, duringperiods of higher interest rates, the relative attractiveness of a high riskinvestment such as the Partnership may be reduced as compared to high yieldingand much lower risk fixed-income investments.

 

The Partnership’sBrokerage Commissions and Administrative Fees are a constant percentage of thePartnership costs (other than the insignificant currency trading costs whichare not based on a percentage of the Partnership’s assets allocated to tradingor total) are the Profit Shares payable to the Advisor based on the new TradingProfits generated by the Partnership excluding interest and after reduction fora portion of the Brokerage Commissions.

 

Unlike many investmentfields, there is no meaningful distinction in the operation of the Partnershipbetween realized and unrealized profits. Most of the contracts traded by the Partnership are highly liquid and canbe closed out at any time.

 

Except in unusualcircumstances, factors—regulatory approvals, cost of goods sold, employeerelations and the like—which often materially affect an operating business haveno material impact on the Partnership.

 

***Liquidity;Capital Resources***

 

The Partnershipborrows only to a limited extent and only on a strictly short-term basis inorder to finance losses on non-U.S. dollar denominated trading positionspending the conversion of the Partnership’s U.S. dollar deposits. Theseborrowings are at a prevailing short-term rate in the relevant currency.

 

Substantially allof the Partnership’s assets are held in cash. The Net Asset Value of thePartnership’s cash is not affected by inflation. However, changes in interestrates could cause periods of strong up or down price trends, during which thePartnership’s profit potential generally increases. Inflation in commodityprices could also generate price movements, which the strategies mightsuccessfully follow.

 

Becausesubstantially all of the Partnership’s assets are held in cash, the Partnershipshould be able to close out any or all of its open trading positions andliquidate any or all of its securities holdings quickly and at market prices,except in very unusual circumstances. This permits the Advisor to limit lossesas well as reduce market exposure on short notice should its strategiesindicate doing so. In addition, because there is a readily available marketvalue for the Partnership’s positions and assets, the Partnership’s monthly NetAsset Value calculations are precise, and investors need only wait ten businessdays to receive the full redemption proceeds of their Units.

 

(The Partnership has noapplicable off-balance sheet arrangements and tabular disclosure or contractualobligations of the type described in Items 3.03(a)(4) and 3.03(a)(5) ofRegulation S-K)

 

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**Item 7A:****Quantitative andQualitative Disclosures About Market Risk**

 

Introduction

 

The Partnership is aspeculative commodity pool. The market sensitive instruments held by it areacquired for speculative trading purposes and all or substantially all of thePartnership’s assets are subject to the risk of trading loss.  Unlike an operating company, the risk ofmarket sensitive instruments is integral, not incidental, to the Partnership’smain line of business.

 

Market movements resultin frequent changes in the fair market value of the Partnership’s openpositions and, consequently, in its earnings and cash flow. The Partnership’smarket risk is influenced by a wide variety of factors, including the level andvolatility of interest rates, exchange rates, equity price levels, the marketvalue of financial instruments and contracts, the diversification effects amongthe Partnership’s open positions and the liquidity of the markets in which ittrades.

 

The Partnership, underthe direction of Sunrise, rapidly acquires and liquidates both long and shortpositions in a wide range of different markets. Consequently, it is not possible to predict how a particular future marketscenario will affect performance, and the Partnership’s past performance is notnecessarily indicative of its future results.

 

Value at Risk is ameasure of the maximum amount which the Partnership could reasonably beexpected to lose in a given market sector. However, the inherent uncertainty ofthe Partnership’s speculative trading and the recurrence in the markets tradedby the Partnership of market movements far exceeding expectations could resultin actual trading or non-trading losses far beyond the indicated Value at Riskor the Partnership’s experience to date (i.e., “risk of ruin”). In light of theforegoing, as well as the risks and uncertainties intrinsic to all futureprojections, the quantifications included in this section should not be consideredto constitute any assurance or representation that the Partnership’s losses inany market sector will be limited to Value at Risk or by the Partnership’sattempts to manage its market risk.

 

Quantifying ThePartnership’s Trading Value At Risk

 

QuantitativeForward-Looking Statements

 

The followingquantitative disclosures regarding the Partnership’s market risk exposurescontain “forward-looking statement” within the meaning of the safe harbor formcivil liability provided for such statements by the Private SecuritiesLitigation Reform Act of 1995 (set forth in Section 27Aof the SecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934).  All quantitative disclosures in this sectionare deemed to be forward-looking statements for purposes of the safe harbor,except for statements of historical fact.

 

The Partnership’s riskexposure in the various market sectors traded by the Advisor is quantifiedbelow in terms of Value at Risk.  Due tothe Partnership’s mark-to-market accounting, any loss in the fair value of thePartnership’s open positions is directly reflected in the Partnership’searnings (realized or unrealized) and cash flow (at least in the case ofexchange-traded contracts in which profits and losses on open positions aresettled daily through variation margin).

 

Exchange maintenancemargin requirements have been used by the Partnership as the measure of itsValue at Risk.  Maintenance marginrequirements are set by exchanges to equal or exceed the maximum loss in thefair value of any given contract incurred in 95%-99% of the one-day timeperiods included in the historical sample (generally approximately one year)researched for purposes of establishing margin levels.  The maintenance margin levels are establishedby dealers and exchanges using historical price studies as well as anassessment of current market volatility (including the implied volatility ofthe options on a given futures contract) and economic fundamentals to provide aprobabilistic estimate of the maximum expected near-term one-day pricefluctuation.

 

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In the case ofmarket sensitive instruments which are not exchange-traded (almost exclusivelycurrencies in the case of the Partnership), the margin requirements for theequivalent futures positions have been used as Value at Risk.  In those rare cases in which afutures-equivalent margin is not available, dealers’ margins have been used.

 

100% positivecorrelation in the different positions held in each market risk category hasbeen assumed.  Consequently, the marginrequirements applicable to the open contracts have been aggregated to determineeach trading category’s aggregate Value at Risk.  The diversification effects resulting fromthe fact that the Partnership’s positions are rarely, if ever, 100% positivelycorrelated have not been reflected.

 

***The Partnership’s Trading Valueat Risk in Different Market Sectors***

 

The following table indicates the average, highest and lowest tradingValue at Risk associated with the Partnership’s open positions by marketcategory for the fiscal years. During the fiscal year 2007, the Partnership’saverage capitalization was $288,689,351. During the fiscal year 2006, thePartnership’s average capitalization was $354,244,209.

 
| ** **               | ** ** | **December 31, 2007** | ** ** |
|--------------------------|------------|-----------------------|------------|
| ** **               | ** ** | **Average**           | ** ** | **% of Average** | ** ** | **Highest Value** | ** ** | **Lowest Value** | ** ** |
| **Market Sector**        | ** ** | **Value at Risk**     | ** ** | **Capitalization** | ** ** | **At Risk** | ** ** | **At Risk** | ** ** |
|                     |       |                  |       |   |   |   |   |   |   |
| Currencies               |       | $                     | 6,528,563  |   | 2.26 | % | $ | 78,342,752 |   | $ | 1,273,153 |   |
| Metals                   |       | 965,803               |       | 0.33 | % | 11,589,631 |   | — |   |
| Stock Indices            |       | 3,084,338             |       | 1.07 | % | 37,012,055 |   | 520,573 |   |
| Interest Rates           |       | 22,335,459            |       | 7.74 | % | 268,025,512 |   | 3,455,553 |   |
| Energy                   |       | 1,452,389             |       | 0.50 | % | 17,428,673 |   | — |   |
| Agricultural Commodities |       | 720,811               |       | 0.25 | % | 8,649,733 |   | 27,165 |   |
|                     |       |                  |       |   |   |   |   |   |   |
| TOTAL                    |       | $                     | 35,087,363 |   | 12.15 | % | $ | 421,048,356 |   | $ | 5,276,444 |   |
|                          |            |                       |            |  |  |  |  |  |  |  |  |  |  |  |  |

 
|                     |       | **December  31, 2006** |       |
|--------------------------|------------|------------------------|------------|
| ** **               | ** ** | **Average**            | ** ** | **% of  Average** | ** ** | **Highest  Value** | ** ** | **Lowest  Value** | ** ** |
| **Market Sector**        | ** ** | **Value at  Risk**     | ** ** | **Capitalization** | ** ** | **At Risk** | ** ** | **At Risk** | ** ** |
|                     |       |                   |       |   |   |   |   |   |   |
| Currencies               |       | $                      | 1,887,758  |   | 0.53 | % | $ | 6,222,410 |   | $ | 197,905 |   |
| Metals                   |       | 183,195                |       | 0.05 | % | 458,773 |   | — |   |
| Stock Indices            |       | 1,534,109              |       | 0.43 | % | 5,526,258 |   | — |   |
| Interest Rates           |       | 26,922,172             |       | 7.60 | % | 33,894,080 |   | 13,349,857 |   |
| Energy                   |       | 589,740                |       | 0.17 | % | 2,618,734 |   | — |   |
| Agricultural Commodities |       | 218,024                |       | 0.06 | % | 1,475,549 |   | — |   |
|                     |       |                   |       |   |   |   |   |   |   |
| TOTAL                    |       | $                      | 31,334,998 |   | 8.85 | % | $ | 50,195,804 |   | $ | 13,547,762 |   |

 

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Material Limitations onValue at Risk as an Assessment of Market Risk

 

The face value ofthe market sector instruments held by the Partnership is typically many timesthe applicable maintenance margin requirement (maintenance margin requirementsgenerally ranging between approximately 1% and 10% of contract face value) aswell as many times the capitalization of the Partnership.  The magnitude of the Partnership’s openpositions creates a “risk of ruin” not typically found in most other investmentvehicles.  Because of the size of itspositions, certain market conditions — unusual, but historically recurring fromtime to time — could cause the Partnership to incur severe losses over a shortperiod of time.   The foregoing Value atRisk table — as well as the past performance of the Partnership — gives noindication of this “risk of ruin.”

 

**Non-Trading Risk**

 

Foreign Currency Balances; Cash on Deposit with MLPF&S

 

The Partnershiphas non-trading market risk on its foreign cash balances not needed for margin.However, these balances (as well as the market risk they represent) areimmaterial.

 

The Partnershipalso has non-trading market risk on the approximately 90%-95% of its assetswhich are held in cash at MLPF&S. The value of this cash is not interestrate sensitive, but there is cash flow risk in that if interest rates declineso will the cash flow generated on these monies. This cash flow risk isimmaterial.

 

**Qualitative Disclosures Regarding Primary TradingRisk Exposures**

 

The followingqualitative disclosures regarding the Partnership’s market risk exposures — exceptfor (i) those disclosures that are statements of historical fact and (ii) thedescriptions of how the Partnership manages its primary market risk exposures —constitute forward-looking statements within the meaning of Section 27A ofthe Securities Act and Section 21E of the Securities Exchange Act. ThePartnership’s primary market risk exposures as well as the strategies used andto be used by MLAI and Sunrise for managing such exposures are subject tonumerous uncertainties, contingencies and risks, any one of which could causethe actual results of the Partnership’s risk controls to differ materially fromthe objectives of such strategies. Government interventions, defaults andexpropriations, illiquid markets, the emergence of dominant fundamentalfactors, political upheavals, changes in historical price relationships, and aninflux of new market participants, increased regulation and many other factorscould result in material losses as well as in material changes to the riskexposures and the risk management strategies of the Partnership. There can beno assurance that the Partnership’s current market exposure and/or riskmanagement strategies will not change materially or that any such strategieswill be effective in either the short- or long-term. Investors must be preparedto lose all or substantially all of the time value of their investment in the Partnership.

 

The following werethe primary trading risk exposures of the Partnership as of December 31,2007, by market sector.

 

**Interest Rates**.

 

Interest rate riskis the principal market exposure of the Partnership.  Interest rate movements directly affect theprice of derivative sovereign bond positions held by the Partnership andindirectly the value of its stock index and currency positions. Interest ratemovements in one country as well as relative interest rate movements betweencountries materially impact the Partnership’s profitability. The Partnership’sprimary interest rate exposure is to interest rate fluctuations in the UnitedStates and the other G-7 countries. However, the Partnership also takes positions in the government debt ofsmaller nations e.g., Australia. The Partnership anticipates that G-7 interestrates will remain the primary market exposure of the Partnership for theforeseeable future.

 

**Currencies**.

 

The Partnershiptrades in a number of currencies. However, the Partnership’s major exposureshave typically been in the U.S. dollar/Japanese yen, U.S. dollar/Euro, U.Sdollar/Australian dollar and U.S. dollar/Swiss franc positions. The Partnershipdoes not anticipate that the risk profile of the Partnership’s currency sectorwill change significantly in the future. The currency trading Value at Riskfigure includes foreign margin amounts converted into U.S. dollars with anincremental adjustment to reflect the exchange rate risk of maintaining Valueat Risk in a functional currency other than U.S. dollars.

 

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**StockIndices**.

 

The Partnership’sprimary equity exposure is to S&P 500, Nikkei and German DAX equity indexprice movements. The Partnership is primarily exposed to the risk of adverseprice trends or static markets in the major U.S., European and Asian indices.

 

**Metals**.

 

The Partnership’smetals market exposure is to fluctuations in both the price of precious andnon-precious metals.

 

**AgriculturalCommodities**

 

The Partnership’sprimary agricultural commodities exposure is to agricultural price movementswhich are often directly affected by severe or unexpected weather conditions.Soybeans, grains, cotton and sugar accounted for the substantial bulk of thePartnership’s agricultural commodities exposure as of December 31, 2007.However, it is anticipated that Sunrise will maintain an emphasis on cotton,grains and sugar, in which the Partnership has historically taken its largestpositions.

 

**Energy**.

 

The Partnership’sprimary energy market exposure is to natural gas and crude oil price movements,often resulting from political developments in the Middle East. Oil prices canbe volatile and substantial profits and losses have been and are expected tocontinue to be experienced in this market.

 

**Qualitative Disclosures RegardingNon-Trading Risk Exposure**

 

The following werethe only non-trading risk exposures of the Partnership as of December 31,2007.

 

**ForeignCurrency Balances.**

 

The Partnership’sprimary foreign currency balances are in Japanese yen, AUD, CAD, CHF and Euros.

 

**U.S.Dollar Cash Balance**.

 

The Partnershipholds U.S. dollars only in cash at MLPF&S. The Partnership has immaterialcash flow interest rate risk on its cash on deposit with MLPF&S in thatdeclining interest rates would cause the income from such cash to decline.

 

**Qualitative DisclosuresRegarding Means of Managing Risk Exposure**

** **

#### **Trading Risk**

#### ** **

MLAI hasprocedures in place intended to control market risk, although there can be noassurance that they will, in fact, succeed in doing so. These procedures focusprimarily on monitoring the trading of the Advisor, calculating the Net AssetValue of the Partnership account managed by the Advisor as of the close ofbusiness on each day and reviewing outstanding positions for over-concentrations.While MLAI does not itself intervene in the markets to hedge or diversify thePartnership’s market exposure, MLAI may urge the Advisor to reallocatepositions in an attempt to avoid over-concentrations.  However, such interventions are unusual.Sunrise applies its own risk management policies to its trading.

 

Sunrise Risk Management

 

Sunrise attemptsto control risk through the utilization of proprietary risk managementtechniques, which are applied at all stages of the trading process. Thesetechniques are designed to control all aspects of portfolio, market, andexecution risk, with the stated goal of maintaining Sunrise’s historical ratesof returns without increased volatility.

 

The basis forSunrise’s risk management system is its scientific approach and historicalresearch. This process attempts to measure the correlation and performancecharacteristics associated with various weightings assigned to differentmarkets and sectors. Sunrise allocates equity risk to each market and market sectorin an effort to minimize the possibility that any one market or sector has adisproportionate influence on the portfolio. Overall, portfolio exposure,drawdown and recovery periods are carefully studied.

 

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Sunrise usesfilters that attempt to avoid taking trades with poor risk/rewardcharacteristics. In addition, once a trade is taken, an array of exitstrategies are employed that attempt to protect open profits while exitingpositions that fail to trend in the expected direction. Initial money stops arestrictly followed and factors that would make it difficult to execute trades,such as reduced liquidity or extreme market developments, are also incorporatedin the trading decision and risk management processes.

 

Other risk factorssuch as foreign currency risk when trading in non-U.S. markets, custodian risk,and counterparty risk when trading in the over-the counter markets are takeninto account and play an important part of Sunrise’s overall risk managementprocess. Sunrise uses only counterparties and brokers to execute trades that itand the market generally perceive as creditworthy. The majority of trades aredone with institutions with which Sunrise has long-term relationships.

 

## Non-Trading Risk

 

The Partnershipcontrols the non-trading exchange rate risk by regularly converting foreignbalances back into U.S. dollars at least once per week, and more frequently ifa particular foreign currency balance becomes unusually high.

 

The Partnershiphas cash flow interest rate risk on its cash on deposit with MLPF&S in thatdeclining interest rates would cause the income from such cash to decline.However, a certain amount of cash or cash equivalents must be held by thePartnership in order to facilitate margin payments and pay expenses andredemptions. MLAI does not take any steps to limit the cash flow risk on itscash held on deposit at MLPF&S.

 

**Item 8: FinancialStatements and Supplementary Data**

 

**SelectedQuarterly Financial Data**

**MLSelect Futures I  L.P.**

 

Net Income byQuarter

Eight Quartersthrough December 31, 2007  

 
| ** **                                   | ** ** | ** ** | ** ** | **Fourth**  | ** ** | **Third**   | ** ** | **Second**  | ** ** | **First**   | ** ** | **Fourth**  | ** ** | **Third**   | ** ** | **Second**  | ** ** | **First**   | ** ** |
|----------------------------------------------|------------|------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|
| ** **                                   | ** ** | ** ** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** |
| ** **                                   | ** ** | **Totals** | ** ** | **2007**    | ** ** | **2007**    | ** ** | **2007**    | ** ** | **2007**    | ** ** | **2006**    | ** ** | **2006**    | ** ** | **2006**    | ** ** | **2006**    | ** ** |
| Total Income (Loss)                          |       |       |       | $           | 34,530,537 |        | $          | (48,718,656 | )          | $           | 46,724,564 |        | $          | (7,396,010  | )          | $           | 26,136,696 |        | $          | (15,744,070 | ) | $ | 20,068,698 |   | $ | 19,002,534 |   |
| Total Expenses                               |       |       |       | 4,217,901   |       | (1,394,041  | )          | 10,435,600  |       | 4,756,803   |       | 4,910,876   |       | 4,436,689   |       | 6,048,528   |       | 5,678,944   |       |
| Net Income (Loss)                            |       |       |       | $           | 30,312,636 |        | $          | (47,324,615 | )          | $           | 36,288,964 |        | $          | (12,152,813 | )          | $           | 21,225,820 |        | $          | (20,180,759 | ) | $ | 14,020,170 |   | $ | 13,323,590 |   |
|                                         |       |       |       |        |       |        |       |        |       |        |       |        |       |        |       |        |       |        |       |
| Weighted average units                       |       |       |       | 1,045,515   |       | 1,211,846   |       | 1,274,203   |       | 1,327,037   |       | 1,408,746   |       | 1,480,389   |       | 1,552,158   |       | 1,710,600   |       |
|                                         |       |       |       |        |       |        |       |        |       |        |       |        |       |        |       |        |       |        |       |
| Net Income (Loss)  per weighted average Unit |       |       |       | $           | 28.99      |        | $          | (39.05      | )          | $           | 28.48      |        | $          | (9.16       | )          | $           | 15.07      |        | $          | (13.63 | ) | $ | 9.03 |   | $ | 7.79 |   |

 

The financialstatements required by this Item are included in Exhibit 13.01.

 

The supplementaryfinancial information (“information about oil and gas producing activities”)specified by Item 302(b) of Regulation S-K is not applicable.

 

**Item 9: Changesin and Disagreements with Accountants on Accounting and Financial Disclosure**

 

There were nochanges in or disagreements with the independent registered public accountingfirm on accounting and financial disclosure.

 

**Item9A(T): Controls and Procedures**

 

MLAI’s ChiefExecutive Officer and the Chief Financial Officer, on behalf of the Partnership,has evaluated the effectiveness of the design and operation of its disclosurecontrols and procedures with respect to the Partnership as of and for the yearwhich ended December 31, 2007, and, based on its evaluation, has concludedthat these

 

25

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disclosurecontrols and procedures are effective. Additionally, there were no significantchanges in the Partnership’s internal controls over financial reporting whichmaterially affect such internal control.

 

*Changesin Internal Control over Financial Reporting*

 

No change ininternal control over financial reporting (as defined in Rule 13a-15(f) underthe Exchange Act ) occurred during the year ended December 31, 2007 thathas materially affected, or is reasonable likely to materially affect, the Partnership’sinternal control, over financial reporting.

 

*Management’sReport on Internal Control over Financial Reporting:*

 

The Partnership’s management is responsible for establishing andmaintaining adequate internal control over financial reporting.  The Partnership’sinternal control over financial reporting is a process designed under thesupervision of MLAI’s Chief Executive Officer and the Chief Financial Officer,on behalf of the Partnership and is effected by management, other personnel andservice providers to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles andincluded those policy and procedures that:

 

·                              Pertain to the maintenance of recordsthat in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Partnership.

 

·                              Provide reasonable assurance that transactionsare recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts and expenditures of the Partnership are being made only in accordance withauthorizations of management and directors of the Partnership; and

 

·                              Provide reasonable assurance regardingprevention or timely detection of unauthorized acquisitions, use or dispositionof the Partnership’sassets that could have a material effect on the financial statements.

 

Becauseof its inherent limitations, internal control over financial reporting can onlyprovide only reasonable assurance with respect to financial statementpreparation and presentation.  Projections of any evaluation ofeffectiveness to future periods are subject to the risks that controls may becomeinadequate because of changes in condition, or that the degree of compliancewith the policies or procedures may deteriorate.

 

The Partnership’s management assessed the effectiveness ofthe Partnership’sinternal control over financial reporting as December 31, 2007.  Inmaking this assessment, management used the criteria set forth by the Committeeof Sponsoring Organizations of the Treadway Commission (COSO) in “InternalControl-Integrated Framework”.

 

Basedon its assessment the Partnership’s management concluded that at December 31, 2007,the Partnership’sinternal control over financial report was effective.

 

**Item9B:  Other Information**

 

Not Applicable.

 

26

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**PART III**

 

**Item 10: Directors, Executive Officers andCorporate Governance**

 

10(a) and 10(b)      Identificationof Directors and Executive Officers:

 

As a limited partnership,the Partnership has no officers or directors and is managed by MLAI. Tradingdecisions are made by Sunrise on behalf of the Partnership.

 

The managers andexecutive officers of MLAI and their respective business backgrounds are asfollows:

 
| **Paul Morton**      |   | Chief Executive  Officer, President and Manager |
|----------------------|--------|-------------------------------------------------|
|                 |   |                                            |
| **Barbra E. Kocsis** |   | Chief Financial Officer                         |
|                 |   |                                            |
| **Steven B. Olgin**  |   | Vice President and  Manager                     |
|                 |   |                                            |
| **Thomas W. Lee**    |   | Vice President and  Manager                     |
|                 |   |                                            |
| **Shawn T. Wells**   |   | Vice President                                  |

 

Paul Morton is the ChiefExecutive Officer, President and Manager of MLAI, and also serves as the COOfor the Global Investment and Insurance Solutions (GIIS) group for MerrillLynch.  As COO of GIIS, Mr. Mortonleads the market investments business within the group, which includessecondary equity, debt, listed options, futures and FX for Merrill Lynch’sGlobal Wealth Management division.  Priorto serving as COO of GIIS, Mr. Morton worked in the equity and debttrading management of Merrill Lynch. Prior to joining Merrill Lynch in 1996, Mr. Mortonworked in the equity derivatives at Paine Webber.  From 1988-1993, Mr. Morton served as anofficer in the US Army for five years.  Mr. Mortonholds a BS (Aerospace Engineering) from the United States Military Academy atWest Point (1988) and a MBA (Finance) from the Wharton School at the Universityof Pennsylvania (1995).

 

Barbra E. Kocsis is the Chief Financial Officer of MLAI. She is also aDirector within the Merrill Lynch Global Private Client Global InfrastructureSolutions group. Prior to that, she was the Fund Controller of MLAI. Beforecoming to MLAI, Ms. Kocsis held various accounting and tax positions atDerivatives Portfolio Management LLC from May 1992 until May 1999, atwhich time she held the position of accounting director. Prior to that, she wasan associate at Coopers & Lybrand in both the audit and tax practices.She graduated cum laude from Monmouth College in 1988 with a Bachelor ofScience in Business Administration – Accounting and is a Certified PublicAccountant.

 

Steven B. Olgin isa Vice President and a Manager of MLAI, is registered with NFA as a principalof MLAI and is a Managing Director of Merrill Lynch Global Private Client (“GPC”).  Before joining the Manager in 1994, Mr. Olginwas an associate of the law firm of Sidley & Austin, from 1986 until1994.  Mr. Olgin graduated from TheAmerican University with a Bachelor of Science in Business Administration and aBachelor of Arts in Economics, and received his Juris Doctor from The JohnMarshall Law School.  Mr. Olgin wasa member of the Managed Funds Association’s Government Relations Committee andhas served as an arbitrator for NFA.

 

ThomasW. Lee**is a Managing Director in Merrill Lynch’sMarket Investments and Origination Group, responsible for Global Private Client’sequity and debt new issue businesses, and is a Vice President and Manager ofMLAI, and his registration as a principal of MLAI is pending with NFA.  Prior to joining Merrill Lynch in 1998, Mr. Leewas a corporate securities attorney at the law firm of Brown &Wood.  Mr. Lee received his J.D.from Emory University School of Law and a B.S. from Cornell University.

 

*Shawn Wells**is a Vice President of MLAI and the General Counsel,a position he has held since October 2005. Prior to that time, Mr. Wells served as Senior Associate GeneralCounsel at Franklin Templeton Investments, serving as Chief Counsel of the firm’sInternational and Alternative Strategies divisions from October 1996 to December 1997and again from September 1998 to October 2005.  Mr. Wells is a Certified Public*

 

27

----

* *

*Accountant,and received a BBA in Finance and Accounting from the University of Texas atAustin, and his JD from Southern Methodist University, where he was an editorof the SMU Law Review.*

 

As of December 31,2007, the principals of MLAI had no investment in the Partnership, and MLAI’sgeneral partner interest in the Partnership was valued at $3,483,352.

 

MLAIacts as the sponsor, general partner or manager to ten public futures fundswhose units of limited partner or member interests are registered under theSecurities Exchange Act of 1934: ML Trend-Following Futures Fund L.P., MLSystematic Momentum Futures Access, LLC, ML Appleton FuturesAccess LLC, MLAspect FuturesAccess LLC, ML Winton FuturesAccess LLC, ML CornerstoneFuturesAccess LLC, ML APM Global Futures Access LLC; ML ChesapeakeFuturesAccess, ML Transtrend DTP Enhanced FuturesAccess LLC and thePartnership. Because MLAI serves as the sponsor, general partner or manager ofeach of these funds, the officers and managers of MLAI effectively manage themas officers and directors of such funds.

 

(c)                                 Identificationof Certain Significant Employees:

 

None.

 

(d)                                FamilyRelationships:

 

None.

 

(e)                                 BusinessExperience:

 

See Item 10(a) and (b) above.

 

(f)                                   Involvementin Certain Legal Proceedings:

 

None.

 

(g)                                Promotersand Control Persons:

 

Not applicable.

 

Section 16(a) BeneficialOwnership Reporting Compliance:

 

Not applicable.

 

Section 16(a) BeneficialOwnership Reporting Compliance:

 

Not applicable.

 

Code of Ethics:

 

MLAI and Merrill Lynchhave adopted a code of ethics, as of the end of the period covered by thisreport, which applies to the Partnership’s (MLAI’s) principal executive officerand principal financial officer or persons performing similar functions onbehalf of the Partnership.  A copy of thecode of ethics is available to any person, without charge, upon request bycalling 1-866-MER-ALTS.

 

Nominating Committee:

 

Not applicable. (Neitherthe Partnership nor MLAI has nominating committee.)

 

Audit Committee: AuditCommittee Financial Expert:

 

Not applicable. (Neitherthe Partnership nor MLAI has an audit committee.  There are no listed 

shares of the Partnershipor MLAI.)

 

28

----

 

**Item 11: ExecutiveCompensation**

 

The managers andofficers of MLAI are remunerated by MLAI in their respective positions. ThePartnership does not have any officers, managers or employees.  The Partnership pays Brokerage Commissions toan affiliate of MLAI and Administrative Fees to MLAI.  MLAI or its affiliates may also receivecertain economic benefits from possession of the Partnership’s U.S. dollarassets.  The managers and officersreceive no “other compensation” from the Partnership, and the managers receiveno compensation for serving as managers of MLAI.  There are no compensation plans orarrangements relating to a change in control of either the Partnership or MLAI.

 

**Item 12: SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters**

 

(a)                                  SecurityOwnership of Certain Beneficial Owners:

 

None.

 

(b)                                 SecurityOwnership of Management:

 

As of December 31,2007, MLAI owned 13,916 Unit-equivalent general partnership interests, whichconstituted 1.54% of the total Units outstanding, the principals of MLAI didnot own any Units, and the Advisor did not own any Units.

 

(c)           Changes in Control:

 

None.

 

(d)                                 SecuritiesAuthorized for Issuance Under Equity Compensation Plans:

 

Not applicable.

 

**Item 13: CertainRelationships and Related Transactions**

 

(a)           Transactions between Merrill Lynchand the Partnership

 

All of the service providers to the Partnership, other than Sunrise,are affiliates of Merrill Lynch.  MerrillLynch negotiated with Sunrise over the level of its advisory fees and ProfitShares.  However, none of the fees paidby the Partnership to any Merrill Lynch party were negotiated, and they arehigher than would have been obtained in arms-length bargaining.

 

ThePartnership pays MLPF&S substantial Brokerage Commissions andAdministrative Fees as well as bid-ask spreads on forward currency trades.  The Partnership also pays MLPF&S intereston short-term loans extended by MLPF&S to cover losses on foreign currencypositions.

 

Withinthe Merrill Lynch organization, MLAI is the beneficiary of the revenuesreceived by different Merrill Lynch entities from the Partnership.  MLAI controls the management of thePartnership and serves as its promoter. Although MLAI has not sold any assets, directly or indirectly, to thePartnership, MLAI makes substantial profits from the Partnership due to theforegoing revenues.

 

Noloans have been, are or will be outstanding between MLAI or any of itsprincipals and the Partnership.

 

29

----

 

MLAIpays substantial selling commissions and trailing commissions to MLPF&S fordistributing the Units.  MLAI isultimately paid back for these expenditures from the revenues it receives fromthe Partnership.

 

(b)                                CertainBusiness Relationships:

 

MLPF&S, anaffiliate of MLAI, acts as the principal commodity broker for the Partnership.

 

In 2007, thePartnership expensed:  (i) BrokerageCommissions of $16,351,736 to MLPF&S, which included $3,528,037 inconsulting fees earned by Sunrise; and (ii) Administrative Fees of$743,261 to MLAI.  In addition, MLAI andits affiliates may have derived certain economic benefits from possession of aportion of the Partnership’s assets, as well as from foreign exchange and EFPtrading.

 

See Item 1(c), “NarrativeDescription of Business — Charges” and “— Description of Current Charges”for a discussion of other business dealings between MLAI affiliates and thePartnership.

 

(c)           Indebtedness of Management:

 

The Partnership isprohibited from making any loans, to management or otherwise.

 

**Item 14: PrincipalAccountant Fees and Services**

 

(a)                                  AuditFees

 

Aggregate fees billed for professional services rendered by Deloitte &Touche LLP in connection with the audit of the Partnership’s financialstatements as of and for the years ended December 31, 2007 and 2006 were$48,000 and $45,207.

 

(b)                                 Audit-RelatedFees

 

There were noother audit-related fees billed for the years ended December 31, 2007 or2006 related to the Partnership.

 

(c)                                  TaxFees

 

Aggregate feesbilled for professional services rendered by Deloitte Tax LLP in connectionwith the tax compliance, advice and preparation of the Partnership’s taxreturns for the years ended December 31, 2007 and 2006 were $72,000 forboth years.

 

(d)                                 AllOther Fees

 

No fees were paidto Deloitte & Touche LLP nor Deloitte Tax LLP during the years ended December 31,2007 or 2006 for any other professional services in relation to thePartnership.

 

Neither thePartnership nor MLAI has an audit committee to pre-approve principal accountantfees and services.  In lieu of an auditcommittee, the managers and the principal financial officer pre-approve allbillings prior to the commencement of services.

 

30

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#### ** **

#### **PART IV**

#### ** **

**Item 15: Exhibitsand Financial Statement Schedules**

 
| ** ** | ** ** | ** **                                                                           | **Page:**  |
|------------|------------|--------------------------------------------------------------------------------------|------------|
| ** ** | 1.         | **Financial  Statements (found in Exhibit 13.01):**                             | ** ** |
|       |       |                                                                                 |       |
|       |       | Report of  Independent Registered Public Accounting Firm                             | 1          |
|       |       |                                                                                 |       |
|       |       | Statements of Financial Condition as of  December 31, 2007 and 2006             | 2          |
|       |       |                                                                                 |       |
|       |       | For the years  ended December 31, 2007, 2006 and 2005:                          |       |
|       |       | Statements  of Operations                                                            | 3          |
|       |       | Statements of Changes in Partners’ Capital                                      | 4          |
|       |       |                                                                                 |       |
|       |       | Financial Data Highlights for the years ended  December 31, 2007, 2006 and 2005 | 5          |
|       |       |                                                                                 |       |
|       |       | Notes to Financial Statements                                                        | 6-12       |

 

2.            FinancialStatement Schedules:

 

Financial statementschedules not included in this Form 10-K have been omitted for the reasonthat they are not required or are not applicable or that equivalent informationhas been included in the financial statements or notes thereto.

 

3.            Exhibits:

 

The following exhibitsare incorporated by reference or are filed herewith to this Annual Report on Form 10-K:

 
| **Designation**     | ** **                                                                                                                                                                                                                                                                                          | **Description** |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|
|                |                                                                                                                                                                                                                                                                                                |
| 3.01                | Amended and  Restated Certificate of Limited Partnership of the Registrant.                                                                                                                                                                                                                         |
|                |                                                                                                                                                                                                                                                                                                |
| Exhibit 3.01:  | Is incorporated  herein by reference from Exhibit 3.01 contained in Amendment No. 1  to the Registration Statement (File No. 000-50269) filed on April 30,  2003, on Form 10 under the Securities Act of 1933 (the “Registrant’s  Registration Statement”). |
|                |                                                                                                                                                                                                                                                                                                |
| 3.02                | ML Select  Futures I L.P. Eleventh Amendment and Restated Limited Partnership Agreement.                                                                                                                                                                                                            |
|                |                                                                                                                                                                                                                                                                                                |
| Exhibit 3.02   | Is incorporated  by reference from Exhibit 3.02(a) contained in the Registration  Statement on Form 10 (File No. 000-50269) under the Securities  Exchange Act of 1934, filed on October 11, 2007.                                                                         |
|                |                                                                                                                                                                                                                                                                                                |
| 10.01               | Subscription  Agreement                                                                                                                                                                                                                                                                             |
|                |                                                                                                                                                                                                                                                                                                |
| Exhibit 10.01: | Is incorporated  by reference from Exhibit 10.01 contained in Amendment No. 2 to the  Registrant’s Registration Statement                                                                                                                                                            |
|                |                                                                                                                                                                                                                                                                                                |
| 10.03               | Customer Agreement  between ML Select Futures I L.P. and Merrill Lynch Futures Inc.                                                                                                                                                                                                                 |
|                |                                                                                                                                                                                                                                                                                                |
| Exhibit 10.03: | Is incorporated  hereby by reference from Exhibit 10.03 contained in the Registrant’s  Registration Statement.                                                                                                                                                                            |

 

31

----

 
| 10.04               | Consulting  Agreement between Merrill Lynch Futures Inc. and Sunrise Capital Partners,  LLC.                                                                                                                      |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |                                                                                                                                                                                                              |
| Exhibit 10.04: | Is incorporated  hereby by reference from Exhibit 10.04 contained in the Registrant’s  Registration Statement.                                                                                          |
|                |                                                                                                                                                                                                              |
| 10.05               | Selling  Agreement among ML Select Futures I L.P. Merrill Lynch Investment Partners  Inc., Merrill Lynch Futures Inc., Merrill Lynch, Pierce, Fenner &  Smith Incorporated and Sunrise Capital Partners. |
|                |                                                                                                                                                                                                              |
| Exhibit 10.05: | Is incorporated  hereby by reference from Exhibit 10.05 contained in the Registrant’s  Registration Statement.                                                                                          |
|                |                                                                                                                                                                                                              |
| 13.01               | 2007 Annual  Report and Report of Independent Registered Public Accounting Firm.                                                                                                                                  |
|                |                                                                                                                                                                                                              |
| Exhibit 13.01: | Is filed  herewith.                                                                                                                                                                                               |
|                |                                                                                                                                                                                                              |
| 31.01 and 31.02     | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                 |
|                |                                                                                                                                                                                                              |
| Exhibit 31.01  |                                                                                                                                                                                                              |
| and 31.02:          | Are filed  herewith.                                                                                                                                                                                              |
|                |                                                                                                                                                                                                              |
| 32.01 and 32.02     | Section 1350  Certifications                                                                                                                                                                                 |
|                |                                                                                                                                                                                                              |
| Exhibit 32.01  |                                                                                                                                                                                                              |
| and 32.02:          | Are filed  herewith.                                                                                                                                                                                              |

 

32

----

 

**SIGNATURES**

 

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

 

**ML SELECT FUTURES I L.P.**

 

By: **MERRILL LYNCH ALTERNATIVE INVESTMENTS GENERALPARTNER**

 
| By:                                            | /s/Paul Morton |   |
|------------------------------------------------|----------------|--------|
| Paul Morton                                    |           |
| Chief Executive Officer, President and Manager |           |
| (Principal Executive Officer)                  |           |

 

 

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, this report has been signed on March 31,2008 by the following persons on behalf of the Registrant and in the capacitiesindicated.

 
| **Signature**        | ** ** | **Title**                                       | ** **           | **Date** |
|----------------------|------------|-------------------------------------------------|----------------------|----------|
|                 |       |                                            |                 |
| /s/ Paul Morton      |       | Chief Executive  Officer, President and Manager | March 31,  2008 |
| Paul Morton          |       |                                            |                 |
|                 |       |                                            |                 |
| /s/ Barbra E. Kocsis |       | Chief Financial  Officer                        | March 31,  2008 |
| Barbra E. Kocsis     |       |                                            |                 |
|                 |       |                                            |                 |
| /s/ Steven B.  Olgin |       | Vice President  and Manager                     | March 31,  2008 |
| Steven B. Olgin      |       |                                            |                 |
|                 |       |                                            |                 |
| /s/ Thomas W.  Lee   |       | Vice President  and Manager                     | March 31,  2008 |
| Thomas W. Lee        |       |                                            |                 |
|                 |       |                                            |                 |
| /s/ Shawn T.  Wells  |       | Vice President                                  | March 31,  2008 |
| Shawn T. Wells       |       |                                            |                 |

 

(Being the principal executive officer, the principalfinancial and accounting officer and a majority of the managers of MerrillLynch Alternative Investments LLC)

 
| **MERRILL  LYNCH ALTERNATIVE INVESTMENTS LLC** |                 |
|------------------------------------------------|----------------------|
| Sponsor of  Registrant                         | March 31,  2008 |

 

 
| By:                                             | /s/ Paul Morton |   |
|-------------------------------------------------|-----------------|--------|
| Paul Morton                                     |            |
| Chief Executive  Officer, President and Manager |            |
| (Principal  Executive Officer)                  |            |

 

----

 

**ML SELECT FUTURES LIMITEDPARTNERSHIP**

 

2007 FORM 10-K

 

INDEX TO EXHIBITS

 
| ** **         | ** ** | Exhibit                                                                         |
|--------------------|------------|---------------------------------------------------------------------------------|
|               |       |                                                                            |
| Exhibit 13.01 |       | 2007 Annual  Report and Report of Independent Registered Public Accounting Firm |
|               |       |                                                                            |
| Exhibit 31.01 |       | Rule 13a-14(a)/15d-14(a) Certifications                               |
|               |       |                                                                            |
| Exhibit 31.02 |       | Rule 13a-14(a)/15d-14(a) Certifications                               |
|               |       |                                                                            |
| Exhibit 32.01 |       | Section 1350  Certifications                                               |
|               |       |                                                                            |
| Exhibit 32.02 |       | Section 1350  Certifications                                               |

 

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