**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.20549**

**FORM 10-Q**

**(Mark One)**

**x****QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934**

**For the quarterly period endedSeptember 30, 2006**

**OR**

**o****TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934**

**For the transition period from                to                **

**Commission File Number 0-51086**

# **ML CORNERSTONE FUTURESACCESS LLC**

(Exact Name of Registrant asspecified in its charter)

| **Delaware**                     | ** ** | **20-1227929**                     |
|----------------------------------|------------|------------------------------------|
| (State or other  jurisdiction of |       | (IRS Employer  Identification No.) |
| incorporation or  organization)  |       |                               |

 

**c/o Merrill Lynch AlternativeInvestments LLC**

**Princeton Corporate Campus**

**800 Scudders Mill Road - Section2H**

**Plainsboro,New Jersey 08536**

(Address ofprincipal executive offices)

(Zip Code)

**609-282-6091**

(Registrant’s telephone number, including area code)

Indicate by check mark whether 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)has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act.
| Yes o |   | No x |
|------------|--------|-----------|

 

Indicate by check mark if the registrant is not required to filereports pursuant to Section 13 or 15(d) of the Act.
| Yes o |   | No x |
|------------|--------|-----------|

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorterperiod that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.
| Yes x |   | No o |
|------------|--------|-----------|

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part II of this Form 10-Q or any amendment to this Form 10-Q. x

Indicate by check mark whether the registrant is alarge accelerated filer, 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 check mark if the registrant is a shell company (as definedby Rule 12b-2 of the Act).
| Yes o |   | No x |
|------------|--------|-----------|

 

 

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**ML CORNERSTONE FUTURESACCESS LLC**

QUARTERLY REPORT FOR SEPTEMBER 30, 2006 ON FORM 10-Q

Table of Contents
|          | ** ** | ** **                                                                                  | ** ** | **PAGE** |
|----------|------------|---------------------------------------------------------------------------------------------|------------|----------|
| PART I   |       |                                                                                        |
|     |       |                                                                                        |       |     |
| Item 1.  |       | Financial Statements                                                                        |       | 2        |
|     |       |                                                                                        |       |     |
| Item 2.  |       | Management’s Discussion and Analysis of Financial Condition  and Results of Operations |       | 9        |
|     |       |                                                                                        |       |     |
| Item 3.  |       | Quantitative and Qualitative Disclosures About  Market Risk                                 |       | 13       |
|     |       |                                                                                        |       |     |
| Item 4.  |       | Controls and Procedures                                                                     |       | 13       |
|     |       |                                                                                        |       |     |
| PART II  |       |                                                                                        |
|     |       |                                                                                        |       |     |
| Item 1.  |       | Legal Proceedings                                                                           |       | 14       |
|     |       |                                                                                        |       |     |
| Item 2.  |       | Changes in Securities and Use of Proceeds                                                   |       | 14       |
|     |       |                                                                                        |       |     |
| Item 3.  |       | Defaults Upon Senior Securities                                                             |       | 14       |
|     |       |                                                                                        |       |     |
| Item 4.  |       | Submission of Matters to a Vote of Security Holders                                         |       | 14       |
|     |       |                                                                                        |       |     |
| Item 5.  |       | Other Information                                                                           |       | 14       |
|     |       |                                                                                        |       |     |
| Item 5a. |       | Recent Sales of Unregistered Securities: Uses of  Proceeds From Registered Securities       |       | 15       |
|     |       |                                                                                        |       |     |
| Item 6.  |       | Exhibits                                                                                    |       | 16       |

----

PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements

ML CORNERSTONEFUTURESACCESS LLC

(a Delaware Limited Liability Company)

STATEMENTS OF FINANCIAL CONDITION
| ** **                                                                       | ** ** | **September 30,** | ** **  | **December 31,** | ** ** |
|----------------------------------------------------------------------------------|------------|------------------------|-------------|-----------------------|------------|
| ** **                                                                       | ** ** | **2006**               | ** **  | **2005**              | ** ** |
| ** **                                                                       | ** ** | **(unaudited)**        | ** **  | ** **            | ** ** |
| **ASSETS:**                                                                      |       |                   |        |                  |       |
| Equity in commodity  futures trading accounts:                                   |       |                   |        |                  |       |
| Cash                                                                             |       | $                      | 123,605,256 |                  | $          | 58,685,484 |   |
| Net unrealized  (loss)profit on open contracts                                   |       | (3,011,072             | )           | 1,466,683             |       |
| Cash                                                                             |       | 104,277                |        | —                |       |
| Accrued interest                                                                 |       | 520,278                |        | 196,419               |       |
|                                                                             |       |                   |        |                  |       |
| **TOTAL**                                                                        |       | $                      | 121,218,739 |                  | $          | 60,348,586 |   |
|                                                                             |       |                   |        |                  |       |
| **LIABILITIES AND MEMBERS’  CAPITAL:**                                      |       |                   |        |                  |       |
| LIABILITIES:                                                                     |       |                   |        |                  |       |
| Brokerage  commissions payable                                                   |       | $                      | 93,892      |                  | $          | 30,999 |   |
| Management fee  payable                                                          |       | 201,173                |        | 99,205                |       |
| Sponsor’s fee  payable                                                      |       | 212,744                |        | 104,683               |       |
| Incentive fee  payable                                                           |       | —                 |        | 521,565               |       |
| Redemptions  payable                                                             |       | 284,761                |        | 172,097               |       |
| Initial offering  costs payable                                                  |       | 87,026                 |        | 110,118               |       |
| Other payables                                                                   |       | 67,429                 |        | 114,819               |       |
|                                                                             |       |                   |        |                  |       |
| Total  liabilities                                                               |       | 947,025                |        | 1,153,486             |       |
|                                                                             |       |                   |        |                  |       |
| MEMBERS’ CAPITAL:                                                           |       |                   |        |                  |       |
| Sponsor’s Capital  (21,248 and 21,248 Units issued and outstanding)         |       | 20,911                 |        | 20,373                |       |
| Members’ Capital  (122,274,982 and 61,779,296 Units issued and outstanding) |       | 120,250,803            |        | 59,174,727            |       |
|                                                                             |       |                   |        |                  |       |
| Total members’  capital                                                     |       | 120,271,714            |        | 59,195,100            |       |
|                                                                             |       |                   |        |                  |       |
| **TOTAL  LIABILITIES AND MEMBERS’ CAPITAL**                                 |       | $                      | 121,218,739 |                  | $          | 60,348,586 |   |
|                                                                             |       |                   |        |                  |       |
| **NET ASSET VALUE PER UNIT (Note 2)**                                            |       |                   |        |                  |       |

 

See notes to financialstatements.

2

----

ML CORNERSTONEFUTURESACCESS LLC 

(a Delaware Limited Liability Company)

STATEMENTS OFOPERATIONS

(unaudited)
| ** **                                    | ** ** | **For the three** | ** ** | **For the three** | ** ** | **For the nine** | ** ** | **For the eight** | ** ** |
|-----------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|----------------------------|------------|-----------------------------|------------|
| ** **                                    | ** ** | **months ended**       | ** ** | **months ended**       | ** ** | **months ended**      | ** ** | **months ended**       | ** ** |
| ** **                                    | ** ** | **September 30,**      | ** ** | **September 30,**      | ** ** | **September 30,**     | ** ** | **September 30,**      | ** ** |
| ** **                                    | ** ** | **2006**                    | ** ** | **2005**                    | ** ** | **2006**                   | ** ** | **2005 (1)**           | ** ** |
| **TRADING PROFITS (LOSSES):**                 |       |                        |       |                        |       |                       |       |                        |       |
|                                          |       |                        |       |                        |       |                       |       |                        |       |
| Realized                                      |       | $                           | (5,029,841 | )                           | $          | (470,234                   | )          | $                           | 3,936,716  |   | $ | (1,672,375 | ) |
| Change in  unrealized                         |       | (4,853,613                  | )          | 1,946,404                   |       | (4,477,941                 | )          | 1,718,951                   |       |
| Brokerage  commissions                        |       | (172,005                    | )          | (40,202                     | )          | (376,019                   | )          | (87,894                     | )          |
| Total trading  profits (losses)               |       |                        |       |                        |       |                       |       |                        |       |
|                                          |       | (10,055,459                 | )          | 1,435,968                   |       | (917,244                   | )          | (41,318                     | )          |
| **INVESTMENT INCOME:**                        |       |                        |       |                        |       |                       |       |                        |       |
| Interest                                      |       |                        |       |                        |       |                       |       |                        |       |
|                                          |       | 1,526,612                   |       | 294,425                     |       | 3,333,089                  |       | 460,559                     |       |
| **EXPENSES:**                                 |       |                        |       |                        |       |                       |       |                        |       |
| Management fee                                |       | 582,923                     |       | 192,779                     |       | 1,416,026                  |       | 327,715                     |       |
| Sponsor’s fee                            |       | 617,320                     |       | 204,034                     |       | 1,502,259                  |       | 355,121                     |       |
| Incentive fee                                 |       | (1,961,042                  | )          | —                      |       | —                     |       | —                      |       |
| Other                                         |       | 286,486                     |       | 33,724                      |       | 578,171                    |       | 85,489                      |       |
| Total expenses  before reimbursement          |       | (474,313                    | )          | 430,537                     |       | 3,496,456                  |       | 768,323                     |       |
| Sponsor’s fee  reimbursement             |       | —                      |       | —                      |       | —                     |       | (6,032                      | )          |
|                                          |       |                        |       |                        |       |                       |       |                        |       |
| Total expenses                                |       | (474,313                    | )          | 430,537                     |       | 3,496,456                  |       | 762,293                     |       |
|                                          |       |                        |       |                        |       |                       |       |                        |       |
| **NET INVESTMENT INCOME (LOSS)**              |       |                        |       |                        |       |                       |       |                        |       |
|                                          |       | 2,000,925                   |       | (136,112                    | )          | (163,367                   | )          | (301,734                    | )          |
| **NET INCOME (LOSS)**                         |       |                        |       |                        |       |                       |       |                        |       |
|                                          |       | $                           | (8,054,534 | )                           | $          | 1,299,856                  |       | $                           | (1,080,611 | ) | $ | (343,052 | ) |
| **NET INCOME (LOSS) PER UNIT:**               |       |                        |       |                        |       |                       |       |                        |       |
|                                          |       |                        |       |                        |       |                       |       |                        |       |
| Weighted average  number of Units outstanding |       |                        |       |                        |       |                       |       |                        |       |
| Class A                                       |       | 16,387,477                  |       | 6,212,007                   |       | 13,554,924                 |       | 3,241,232                   |       |
| Class C                                       |       | 83,151,532                  |       | 29,111,526                  |       | 66,057,991                 |       | 17,354,747                  |       |
| Class D                                       |       | 4,175,416                   |       | 716,943                     |       | 2,569,137                  |       | 354,386                     |       |
| Class I                                       |       | 12,227,038                  |       | 5,457,651                   |       | 9,749,297                  |       | 2,538,131                   |       |
|                                          |       |                        |       |                        |       |                       |       |                        |       |
| Net income  (loss) per weighted average Units |       |                        |       |                        |       |                       |       |                        |       |
| Class A                                       |       | $                           | (0.0683    | )                           | $          | 0.0320                     |       | $                           | 0.0024     |   | $ | 0.0012 |   |
| Class C                                       |       | $                           | (0.0697    | )                           | $          | 0.0293                     |       | $                           | (0.0139    | ) | $ | (0.0259 | ) |
| Class D                                       |       | $                           | (0.0718    | )                           | $          | 0.0605                     |       | $                           | (0.0670    | ) | $ | 0.0917 |   |
| Class I                                       |       | $                           | (0.0684    | )                           | $          | 0.0375                     |       | $                           | (0.0026    | ) | $ | 0.0274 |   |

 

----

(1)commencement of operations February 1, 2005

Seenotes to financial statements.

3

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ML CORNERSTONEFUTURESACCESS LLC

(a Delaware Limited Liability Company)

STATEMENTS OFCHANGES IN MEMBERS’ CAPITAL

For the ninemonths ended September 30, 2006 and the eight months ended September 30, 2005 (1)

(unaudited)
| ** **                  | ** ** | ** **                | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **      | ** ** | ** **        | ** ** | **Members’  Capital**   | ** ** | **Members’  Capital**  | ** ** | ** **        | ** ** | ** **      | ** ** | ** **          | ** ** | **Members’  Capital**   | ** ** |
|-----------------------------|------------|---------------------------|------------|----------------------------------|------------|-------------------|------------|-----------------|------------|-------------------|------------|------------------------------|------------|-----------------------------|------------|-------------------|------------|-----------------|------------|---------------------|------------|------------------------------|------------|
| ** **                  | ** ** | **Initial Offering** | ** ** | **Initial  Offering Costs** | ** ** | **Subscriptions** | ** ** | **Redemptions** | ** ** | **Net Loss** | ** ** | **September 30,  2005** | ** ** | **December 31,  2005** | ** ** | **Subscriptions** | ** ** | **Redemptions** | ** ** | **Net Income** | ** ** | **September 30,  2006** | ** ** |
|                        |       |                      |       |                             |       |              |       |            |       |              |       |                         |       |                        |       |              |       |            |       |                |       |                         |       |
| Class A                     |       | 729,300                   |       | —                           |       | 7,488,358         |       | (97,500         | )          | —            |       | 8,120,158                    |       | 10,021,657                  |       | 8,053,588         |       | (1,000,523      | )          | —              |       | 17,074,722                   |       |
| Class C                     |       | 4,211,000                 |       | —                           |       | 30,834,906        |       | (1,728,206      | )          | —            |       | 33,317,700                   |       | 43,063,748                  |       | 48,535,257        |       | (3,498,170      | )          | —              |       | 88,100,835                   |       |
| Class D                     |       | —                    |       | —                           |       | 1,398,885         |       | —          |       | —            |       | 1,398,885                    |       | 1,398,885                   |       | 3,081,310         |       | —          |       | —              |       | 4,480,195                    |       |
| Class I                     |       | 287,000                   |       | —                           |       | 7,017,889         |       | (161,524        | )          | —            |       | 7,143,365                    |       | 7,295,006                   |       | 5,497,202         |       | (172,978        | )          | —              |       | 12,619,230                   |       |
|                        |       |                      |       |                             |       |              |       |            |       |              |       |                         |       |                        |       |              |       |            |       |                |       |                         |       |
| Total  Members’ Units  |       | 5,227,300                 |       | —                           |       | 46,740,038        |       | (1,987,230      | )          | —            |       | 49,980,108                   |       | 61,779,296                  |       | 65,167,357        |       | (4,671,671      | )          | —              |       | 122,274,982                  |       |
|                        |       |                      |       |                             |       |              |       |            |       |              |       |                         |       |                        |       |              |       |            |       |                |       |                         |       |
| Class A                     |       | —                    |       | —                           |       | 10,611            |       | —          |       | —            |       | 10,611                       |       | 10,611                      |       | —            |       | —          |       | —              |       | 10,611                       |       |
| Class C                     |       | —                    |       | —                           |       | 10,637            |       | —          |       | —            |       | 10,637                       |       | 10,637                      |       | —            |       | —          |       | —              |       | 10,637                       |       |
| Class D                     |       | —                    |       | —                           |       | —            |       | —          |       | —            |       | —                       |       | —                      |       | —            |       | —          |       | —              |       | —                       |       |
| Class I                     |       | —                    |       | —                           |       | —            |       | —          |       | —            |       | —                       |       | —                      |       | —            |       | —          |       | —              |       | —                       |       |
|                        |       |                      |       |                             |       |              |       |            |       |              |       |                         |       |                        |       |              |       |            |       |                |       |                         |       |
| Total  Sponsor’s Units |       | —                    |       | —                           |       | 21,248            |       | —          |       | —            |       | 21,248                       |       | 21,248                      |       | —            |       | —          |       | —              |       | 21,248                       |       |

 

----

(1)Commencement of operations February 1, 2005

Seenotes to financial statements.

 

4

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ML CORNERSTONEFUTURESACCESS LLC

(a Delaware Limited Liability Company)

STATEMENTS OFCHANGES IN MEMBERS’ CAPITAL

For the nine monthsended September 30, 2006 and the eight months ended September 30, 2005 (continued)(1)

(unaudited)

 
| ** **                     | ** ** | ** **                | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **      | ** ** | ** **                  | ** ** | **Members’  Capital**   | ** ** | **Members’  Capital**  | ** ** | ** **        | ** ** | ** **      | ** ** | ** **                  | ** ** | **Members’  Capital**   | ** ** |
|--------------------------------|------------|---------------------------|------------|----------------------------------|------------|-------------------|------------|-----------------|------------|-----------------------------|------------|------------------------------|------------|-----------------------------|------------|-------------------|------------|-----------------|------------|-----------------------------|------------|------------------------------|------------|
| ** **                     | ** ** | **Initial Offering** | ** ** | **Initial  Offering Costs** | ** ** | **Subscriptions** | ** ** | **Redemptions** | ** ** | **Net Income  (Loss)** | ** ** | **September 30,  2005** | ** ** | **December 31,  2005** | ** ** | **Subscriptions** | ** ** | **Redemptions** | ** ** | **Net Income  (Loss)** | ** ** | **September 30,  2006** | ** ** |
|                           |       |                      |       |                             |       |              |       |            |       |                        |       |                         |       |                        |       |              |       |            |       |                        |       |                         |       |
| Class A                        |       | $                         | 729,300    |                             | $          | (22,714           | )          | $               | 6,895,530  |                        | $          | (90,735                      | )          | $                           | 3,962      |              | $          | 7,515,343       |       | $                           | 9,635,030  |                         | $          | 8,301,893 |   | $ | (1,024,333 | ) | $ | 31,963 |   | $ | 16,944,553 |   |
| Class C                        |       | 4,211,000                 |       | (101,777                         | )          | 28,549,629        |       | (1,581,621      | )          | (448,805                    | )          | 30,628,426                   |       | 41,024,353                  |       | 49,259,570        |       | (3,518,775      | )          | (916,179                    | )          | 85,848,969                   |       |
| Class D                        |       | —                    |       | (3,189                           | )          | 1,376,110         |       | —          |       | 32,501                      |       | 1,405,422                    |       | 1,466,886                   |       | 3,557,100         |       | —          |       | (172,053                    | )          | 4,851,933                    |       |
| Class I                        |       | 287,000                   |       | (16,335                          | )          | 6,437,366         |       | (146,006        | )          | 69,640                      |       | 6,631,665                    |       | 7,048,458                   |       | 5,760,841         |       | (179,071        | )          | (24,880                     | )          | 12,605,348                   |       |
|                           |       |                      |       |                             |       |              |       |            |       |                        |       |                         |       |                        |       |              |       |            |       |                        |       |                         |       |
| Total  Members’ Interests |       | $                         | 5,227,300  |                             | $          | (144,015          | )          | $               | 43,258,635 |                        | $          | (1,818,362                   | )          | $                           | (342,702   | )                 | $          | 46,180,856      |       | $                           | 59,174,727 |                         | $          | 66,879,404 |   | $ | (4,722,179 | ) | $ | (1,081,149 | ) | $ | 120,250,803 |   |
|                           |       |                      |       |                             |       |              |       |            |       |                        |       |                         |       |                        |       |              |       |            |       |                        |       |                         |       |
| Class A                        |       | $                         | —     |                             | $          | —            |       | $               | 10,000     |                        | $          | —                       |       | $                           | (155       | )                 | $          | 9,845           |       | $                           | 10,221     |                         | $          | — |   | $ | — |   | $ | 318 |   | $ | 10,539 |   |
| Class C                        |       | —                    |       | —                           |       | 10,000            |       | —          |       | (195                        | )          | 9,805                        |       | 10,152                      |       | —            |       | —          |       | 220                         |       | 10,372                       |       |
| Class D                        |       | —                    |       | —                           |       | —            |       | —          |       | —                      |       | —                       |       | —                      |       | —            |       | —          |       | —                      |       | —                       |       |
| Class I                        |       | —                    |       | —                           |       | —            |       | —          |       | —                      |       | —                       |       | —                      |       | —            |       | —          |       | —                      |       | —                       |       |
|                           |       |                      |       |                             |       |              |       |            |       |                        |       |                         |       |                        |       |              |       |            |       |                        |       |                         |       |
| Total  Sponsor’s Interest |       | $                         | —     |                             | $          | —            |       | $               | 20,000     |                        | $          | —                       |       | $                           | (350       | )                 | $          | 19,650          |       | $                           | 20,373     |                         | $          | — |   | $ | — |   | $ | 538 |   | $ | 20,911 |   |
|                           |       |                      |       |                             |       |              |       |            |       |                        |       |                         |       |                        |       |              |       |            |       |                        |       |                         |       |
| Total Members’ Capital    |       | $                         | 5,227,300  |                             | $          | (144,015          | )          | $               | 43,278,635 |                        | $          | (1,818,362                   | )          | $                           | (343,052   | )                 | $          | 46,200,506      |       | $                           | 59,195,100 |                         | $          | 66,879,404 |   | $ | (4,722,179 | ) | $ | (1,080,611 | ) | $ | 120,271,714 |   |

 

----

(1)Commencement of operations February 1, 2005

Seenotes to financial statements.

5

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ML CORNERSTONEFUTURESACCESS LLC 

(a Delaware Limited Liability Company)

NOTES TO FINANCIALSTATEMENTS

(unaudited)

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In the opinion ofmanagement, the financial statements contain all adjustments necessary topresent fairly the financial position of ML Cornerstone FuturesAccess LLC (the “Fund”)as of September 30, 2006, and the results of its operations for the three andnine months ended September 30, 2006 and for the three and eight months endedSeptember 30, 2005.  However, theoperating results for the interim periods may not be indicative of the resultsfor the full year. The Fund commenced trading activities on February 1, 2005.  Therefore, the Statements of Operations andStatements of Changes in Members’ Capital contain information only for theeight month period ended September 30, 2005.

Certain information andfootnote disclosures normally included in annual financial statements preparedin accordance with accounting principles generally accepted in the UnitedStates of America (“US GAAP”) have been omitted.  It is suggested that these financialstatements be read in conjunction with the financial statements and notesthereto included in the Fund’s Annual Report on Form 10-K filed with theSecurities and Exchange Commission for the period ended December 31, 2005.

The preparation offinancial statements in conformity with US GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ from those estimates.

2.      NET ASSET VALUE PER UNIT

For financial reporting purposes, in conformity withUS GAAP, the Fund deducted the total initial offering costs at inception fromMembers’ Capital for purposes of determining Net Asset Value.  For all other purposes, including computingNet Asset Value for purposes of member subscription and redemption activity,such costs are amortized over 60 months. Consequently, the Net Asset Value andNet Asset Value per Unit of the different Classes for financial reportingpurposes and for all other purposes are as follows:

At September 30, 2006 the Net Asset Values of thedifferent series of Units are as follows:
|            | ** ** | **Net Asset Value** | ** **  | ** **    | ** ** | **Net Asset Value per Unit** | ** ** |
|------------|------------|-------------------------------|-------------|---------------|------------|--------------------------------------------------|------------|
| ** ** | ** ** | **All Other**            | ** **  | **Financial** | ** ** | **Number of**                               | ** ** | **All Other** | ** ** | **Financial** | ** ** |
| ** ** | ** ** | **Purposes**                  | ** **  | **Reporting** | ** ** | **Shares**                                       | ** ** | **Purposes** | ** ** | **Reporting** | ** ** |
| Class A    |       | $                             | 16,969,580  |          | $          | 16,955,092                                       |       | 17,085,333 |   | $ | 0.9932 |   | $ | 0.9924 |   |
| Class C    |       | 85,919,195                    |        | 85,859,341    |       | 88,111,472                                       |       | $ | 0.9751 |   | $ | 0.9744 |   |
| Class D    |       | 4,853,981                     |        | 4,851,933     |       | 4,480,195                                        |       | $ | 1.0834 |   | $ | 1.0830 |   |
| Class I    |       | 12,615,984                    |        | 12,605,348    |       | 12,619,230                                       |       | $ | 0.9997 |   | $ | 0.9989 |   |
|       |       | $                             | 120,358,740 |          | $          | 120,271,714                                      |       | 122,296,230 |   |   |   |   |   |

6

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AtDecember 31, 2005 the Net Asset Values of the different series of Units are asfollows:
|            | ** ** | **Net Asset Value** | ** ** | ** **    | ** ** | **Net Asset Value per Unit** | ** ** |
|------------|------------|-------------------------------|------------|---------------|------------|--------------------------------------------------|------------|
| ** ** | ** ** | **All Other**            | ** ** | **Financial** | ** ** | **Number of**                               | ** ** | **All Other** | ** ** | **Financial** | ** ** |
| ** ** | ** ** | **Purposes**                  | ** ** | **Reporting** | ** ** | **Shares**                                       | ** ** | **Purposes** | ** ** | **Reporting** | ** ** |
| Class A    |       | $                             | 9,663,194  |          | $          | 9,645,251                                        |       | 10,032,268 |   | $ | 0.9632 |   | $ | 0.9614 |   |
| Class C    |       | 41,110,839                    |       | 41,034,505    |       | 43,074,385                                       |       | $ | 0.9544 |   | $ | 0.9526 |   |
| Class D    |       | 1,469,615                     |       | 1,466,886     |       | 1,398,885                                        |       | $ | 1.0506 |   | $ | 1.0486 |   |
| Class I    |       | 7,061,570                     |       | 7,048,458     |       | 7,295,006                                        |       | $ | 0.9680 |   | $ | 0.9662 |   |
|       |       | $                             | 59,305,218 |          | $          | 59,195,100                                       |       | 61,800,544 |   |   |   |   |   |

 

3.      FAIR VALUE AND OFF-BALANCE SHEET RISK

The nature of this Fundhas certain risks, which cannot all be presented on the financialstatements.  The following summarizessome of those risks.

Market Risk

Derivative instrumentsinvolve varying degrees of off-balance sheet market risk.  Changes in the level or volatility ofinterest rates, foreign currency exchange rates or the market values of thefinancial instruments or commodities underlying such derivative instrumentsfrequently result in changes in the Fund’s net unrealized profit (loss) on suchderivative instruments as reflected in the Statement of FinancialCondition.  The Fund’s exposure to marketrisk is influenced by a number of factors, including the relationships amongthe derivative instruments held by the Fund as well as the volatility andliquidity of the markets in which the derivative instruments are traded.

The Sponsor of the Fund, Merrill Lynch AlternativeInvestments LLC (“MLAI”), has procedures in place intended to control marketrisk exposure, although there can be no assurance that they will, in fact,succeed in doing so.  These proceduresfocus primarily on monitoring the trading of Cornerstone Trading Company, Inc.(“Cornerstone”), the trading advisor, calculating the Net Asset Value of theFund as of the close of business on each day and reviewing outstandingpositions for over-concentrations.  WhileMLAI does not itself intervene in the markets to hedge or diversify the Fund’smarket exposure, MLAI may urge Cornerstone to reallocate positions in anattempt to avoid over-concentrations. However, such interventions are expected to be unusual.  It is expected that MLAI’s basic risk controlprocedures will consist of the ongoing process of advisor monitoring, with themarket risk controls being applied by Cornerstone itself.

Credit Risk

The risks associated with exchange-traded contractsare typically perceived to be less than those associated with over-the-counter(non-exchange-traded) transactions, because exchanges typically provideclearinghouse arrangements in which the collective credit (in some caseslimited in amount, in some cases not) of the members of the exchange is pledgedto support the financial integrity of the exchange.  In over-the-counter transactions, on theother hand, traders must rely solely on the credit of their respectiveindividual counterparties.  Margins,which may be subject to loss in the event of a default, are generally requiredin exchange trading, and counterparties may also require margin in theover-the-counter markets.

7

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The credit risk associated with these instruments fromcounterparty nonperformance is the net unrealized profit, if any, included inthe Statement of Financial Condition. The Fund attempts to mitigate this riskby dealing exclusively with Merrill Lynch & Co., Inc. (“Merrill Lynch”)entities as clearing brokers.

The Fund, in its normal course of business, entersinto various contracts, with Merrill Lynch Pierce Fenner & Smith Inc. (“MLPF&S”)acting as its commodity broker.  Pursuantto the brokerage arrangement with MLPF&S (which includes a nettingarrangement), to the extent that such trading results in receivables from andpayables to MLPF&S, these receivables and payables are offset and reportedas a net receivable or payable and included in equity from commodity futurestrading accounts in the Statement of Financial Condition.

4.      RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the FinancialAccounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”)entitled “Accounting for Uncertainty in Income Taxes — an interpretation ofFASB Statement No. 109”. FIN 48 prescribes the minimum recognition threshold atax position must meet in connection with accounting for uncertainties inincome tax positions taken or expected to be taken by an entity before beingmeasured and recognized in the financial statements. Adoption of FIN 48 isrequired for fiscal years beginning after December 15, 2006. The impact on theFund financial statements, if any, is currently being assessed.

In September 2006, theSecurities Exchange Commission (“SEC”) staff also issued Staff Accounting BulletinNo. 108,*“Considering the Effects of PriorYear Misstatements when Quantifying Misstatements in Current Year FinancialStatements”* (“SAB 108”). While not an official rule orinterpretation of the SEC, SAB 108 was issued to address the diversity in practicein quantifying misstatements from prior years and assessing their effect oncurrent year financial statements. SAB 108 is effective for the first annualperiod ending after November 15, 2006, with early application encouraged. TheFund has assessed the impact of SAB 108 on its financial statements and doesnot expect the impact of adoption to be material to its financial statements.

In September 2006, the FASBissued Statement of Financial Accounting Standards No. 157, Fair ValueMeasurements (“FAS 157”).  FAS 157 establishes a common definitionfor fair value under accounting principles generally accepted in the UnitedStates of America, establishes a framework for measuring fair value and expandsdisclosure requirements about such fair value measurements.  FAS 157 iseffective for fiscal years beginning after November 15, 2007.  The Fund iscurrently evaluating the impact of adopting FAS 157 on its financialstatements.

8

----

Item 2:    Management’s Discussion andAnalysis of Financial Condition and Results of Operations

MONTH-END NETASSET VALUE PER UNIT

(NON US GAAP)

MLAI believes that the Net Asset Value used to calculate subscriptionand redemption value and to report performance to investors throughout the yearis the most valuable to the Members of the Fund.  Therefore, the charts below referencing NetAsset Value and performance measurements are based on the Net Asset Value forall other purposes, as discussed in Note 2 to the financial statements.

Class A
| ** ** | ** ** | **Jan.** | ** ** | **Feb.** | ** ** | **Mar.** | ** ** | **Apr.** | ** ** | **May** | ** ** | **Jun.** | ** ** | **Jul.** | ** ** | **Aug.** | ** ** | **Sep.** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|---------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| 2005       |       | n/a      |       | $        | 0.9847     |     | $          | 0.9286   |       | $       | 0.9424     |     | $          | 0.9291   |       | $        | 0.8983     |     | $          | 0.9171 |   | $ | 0.9021 |   | $ | 0.9279 |   |
| 2006       |       | $        | 0.9693     |     | $          | 0.9888   |       | $        | 1.0245     |    | $          | 1.0621   |       | $        | 1.0737     |     | $          | 1.0616   |       | $ | 1.0338 |   | $ | 1.0110 |   | $ | 0.9932 |   |
|            |            |          |            |          |            |          |            |          |            |         |            |          |            |          |            |          |            |          |            |  |  |  |  |  |  |  |  |  |

 

Class C
| ** ** | ** ** | **Jan.** | ** ** | **Feb.** | ** ** | **Mar.** | ** ** | **Apr.** | ** ** | **May** | ** ** | **Jun.** | ** ** | **Jul.** | ** ** | **Aug.** | ** ** | **Sep.** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|---------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| 2005       |       | n/a      |       | $        | 0.9839     |     | $          | 0.9271   |       | $       | 0.9401     |     | $          | 0.9260   |       | $        | 0.8946     |     | $          | 0.9125 |   | $ | 0.8969 |   | $ | 0.9217 |   |
| 2006       |       | $        | 0.9597     |     | $          | 0.9781   |       | $        | 1.0125     |    | $          | 1.0484   |       | $        | 1.0574     |     | $          | 1.0452   |       | $ | 1.0168 |   | $ | 0.9935 |   | $ | 0.9751 |   |
|            |            |          |            |          |            |          |            |          |            |         |            |          |            |          |            |          |            |          |            |  |  |  |  |  |  |  |  |  |

 

Class D
| ** ** | ** ** | **Jan.** | ** ** | **Feb.** | ** ** | **Mar.** | ** ** | **Apr.** | ** ** | **May** | ** ** | **Jun.** | ** ** | **Jul.** | ** ** | **Aug.** | ** ** | **Sep.** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|---------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| 2005       |       | n/a      |       | n/a      |       | n/a      |       | $        | 1.0161     |    | $          | 1.0031   |       | $        | 0.9710     |     | $          | 0.9925   |       | $ | 0.9776 |   | $ | 1.0068 |   |
| 2006       |       | $        | 1.0585     |     | $          | 1.0812   |       | $        | 1.1222     |    | $          | 1.1632   |       | $        | 1.1780     |     | $          | 1.1566   |       | $ | 1.1265 |   | $ | 1.1014 |   | $ | 1.0834 |   |
|            |            |          |            |          |            |          |            |          |            |         |            |          |            |          |            |          |            |          |            |  |  |  |  |  |  |  |  |  |

 

Class I
| ** ** | ** ** | **Jan.** | ** ** | **Feb.** | ** ** | **Mar.** | ** ** | **Apr.** | ** ** | **May** | ** ** | **Jun.** | ** ** | **Jul.** | ** ** | **Aug.** | ** ** | **Sep.** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|---------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| 2005       |       | n/a      |       | $        | 0.9850     |     | $          | 0.9292   |       | $       | 0.9433     |     | $          | 0.9303   |       | $        | 0.8998     |     | $          | 0.9189 |   | $ | 0.9042 |   | $ | 0.9303 |   |
| 2006       |       | $        | 0.9745     |     | $          | 0.9944   |       | $        | 1.0310     |    | $          | 1.0683   |       | $        | 1.0798     |     | $          | 1.0686   |       | $ | 1.0399 |   | $ | 1.0173 |   | $ | 0.9997 |   |
|            |            |          |            |          |            |          |            |          |            |         |            |          |            |          |            |          |            |          |            |  |  |  |  |  |  |  |  |  |

 

Performance Summary

January 1, 2006 to September 30, 2006

January 1, 2006 to March 31, 2006

The Fund posted anoverall gain for the quarter with interest rates, energy, and metal sectorsposting gains while agricultural and currencies sectors posted losses.

The interest ratesector was the most profitable for the Fund. Although the Fund was generally net short, the best performer in ShortRate Asset Allocation was a long position in the Canadian market. In addition,the Fund was modestly profitable in a short position in Eurodollar futures.These positions continued to be profitable through mid-quarter as the marketpriced in roughly one more U.S. Federal Reserve tightening than had beenanticipated in January. Our other major short term interest rate position,short Euribor futures, was modestly profitable as well as the consensus shiftedto expect still stronger economic growth in Europe. Interest rates went up atthe end of the quarter and the strategy was

9

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short fixedincome. In particular, the Fund was short and did well in German bunds, Euriborand Eurodollars.

The energy sectorposted the second highest profit for the Fund. The best performer for the Fund was a short position in natural gas. Acontinued mild winter in the U.S. has contributed to lower prices. Excellentperformance mid-quarter was mainly due to the energy markets, most of whichwere short. In particular, natural gas futures dropped around 30%. However, bythe end of the quarter, the energy sector short positions adversely affectedthe Fund.

The metals sectorposted profits for the Fund. Profits were generated in the metals sector eventhrough a volatile climate. The quarter ended with the bullish speculativeenvironment fueling long term trends.

The agriculturalsector posted losses for the Fund. The agricultural market was soft whichattributed to the difficult trading environment resulting in the Fund postinglosses for this sector.

The currencysector was the least profitable for the Fund. Currency Asset Allocationcontinued to struggle the beginning of the quarter losing money in shortpositions in the Australian dollar. The Fund has closed out all currencypositions and will probably not re-enter until the U.S. dollar shifts tonegative momentum.

April 1, 2006 to June 30, 2006

The Fund posted anoverall gain for the quarter with interest rate, metals, currency and energysectors posting gains while the agricultural sector posted a loss.

The interest ratesector was the most profitable for the Fund. The Bond Asset Allocation posted profits for the Fund due to shortpositions in German bunds. German bunds decreased in price as the EuropeanCentral Bank continued to ruminate about the possibility of inflation ratesabove levels the bank is comfortable with. However, long-term bonds were theworst performer mid-quarter with most of the losses coming from a shortposition in the German bund. The likelihood of an extended interest rateadvantage for the U.S. dollar was one factor behind its rally at the end of thequarter. The quarter ended with modest contributions with returns short in theU.S. and Euro-zone interest rates.

The metals sectorposted the second highest profit for the Fund. Base metals produced around 0.8%return on NAV at the beginning of the quarter despite having only roughly a 2%risk allocation.  The best performingposition for the Fund was to have a long position in both aluminum and copperwith copper posting the highest gains for the Fund. As the metal pricesincreased, the mid-quarter strategy to cut positions to keep a constant U.S.dollar exposure worked out well due to the fact this was done when prices werenear their peaks. Base metal markets contributed a great deal of volatility aslong-standing in the copper market was down 15% at the end of the quarter. However,by the end of the quarter the effect on the returns was small.

The currencysector posted profits for the Fund. The Currency Asset Allocation portfolio, inU.S. dollar terms, was long British pounds and Japanese yen and shortAustralian dollars, with a net U.S. dollar short. This position was profitableas the U.S. dollar declined against the major currencies. The strategy withlong positions in the British pound produced most of the gain mid-quarteroffsetting losses in the Australian dollar. International value had difficultyin the currency markets quarters-end in the long Japanese yen/short U.S. dollarposition that reversed May’s gains. The quarter ended with the currency marketsexpecting the end of the U.S. Federal Reserve’s current tightening cycle to befurther away than previously thought.

10

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The energy sectorposted profits for the Fund. The energy sector posted profits for the Fundduring a very volatile period on the Iran/U.S./Europe nuclear standoff.  The end of the quarter, once again, forcedthe sector into a period of increased volatility, as both military andterrorist activities in the key energy production areas led to rising energyprices.

The agriculturalsector posted losses for the Fund. The agricultural market was soft which attributedto the difficult trading environment resulting in the Fund posting losses forthis sector.

July 1, 2006 to September30, 2006

The Fund posted anoverall loss for the quarter with energy and metals posting gains whileagriculture, currencies and interest rates posted losses.

The energy sectorwas the most profitable for the Fund. The quarter began with profits due tolong positions in natural gas and the heat wave in the U.S. drove energy demandfor cooling usage. Gains were made mid-quarter from short positions in theenergy markets which continued through quarter’s end. The quarter ended withnear term supplies being ample for all the energies and thus putting downwardpressure on the markets. In addition, the natural gas market was priced for amajor weather event.

The metals sectorposted profits for the Fund. Zinc was added to the metal portfolio mid-quarterwhile holding constant the U.S. dollar exposure in the base metal sector withlong positions in all the metals (copper, aluminum, and zinc). Profitscontinued to be posted through the end of the quarter.

The agriculturalsector posted losses for the Fund. The agricultural market was soft whichattributed to the difficult trading environment resulting in the Fund postinglosses for this sector.

The currencysector posted losses for the Fund. Long positions in the Japanese yen causedlosses due to the strong U.S. dollar beginning of the quarter. Losses wereposted at quarter’s end due to the short U.S. dollar positions on expectationsthat the U.S. dollar would depreciate versus the Japanese yen and the Britishpound. The shift in momentum in the currency market caused the Fund to closeout positions at quarter’s end.

The interest ratesector was the least profitable for the Fund. Interest rate related positionsposted losses at the beginning of the quarter due to the Fund’s positioning forworld rates to increase however, they decreased. Interest rates decreasedmid-quarter in both the U.S. and Japan, on a perceived decrease in rate hikeprospects. The quarter ended with short term interest rate positions remainingsubstantially unchanged.

February 1, 2005 to September 30, 2005

February 1, 2005 to March 31, 2005

The Fund posted aloss for the first quarter of 2005.  Thecurrency and interest rate sectors were unprofitable while the energy sectorposted a small profit for the quarter.

The largest losseswere in the Currency Asset Allocation sector and the Short Rate AssetAllocation sector.  The Fund was longEurodollars, which dropped in price, and short in the European markets, whichrose in price.  This occurred because themodels identified the term structure as over discounting future rateincreases.  Despite that, U.S. rates wentup and European rates went down.  [TheFund is long on U.S. exposures and short on European exposures, with a shortbias.]

11

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In the currencymarket, solid gains were posted, at the beginning of the period, due to thelong Sterling/short U.S. dollar position. The currency positions were left unchanged in February.  A current important driver of this positionis the United States’ poor balance of payments position.  In March, the U.S. dollar rallied strongly asthe U.S. economy remained strong and the U.S. Federal Reserve spoke openlyabout inflation concerns.  Inflation is generallybad for a country’s currency but in this case the market interpreted thesestatements as a signal that short-term rates would rise more thanexpected.  Rising interest rates tend tobe supportive of a country’s currency. Losses were incurred in the British pound and the Japanese yen.  Toward the end of the period, the Fundreduced its exposure to the U.S. dollar as the momentum shifted by cutting theBritish pound and Japanese yen positions and going more short with theEuro.  The Fund currently has a smallshort U.S. dollar exposure.

The interest ratesector had the greatest loss for the Fund. The Fund began trading in February and had lackluster performance inshort-term interest rates.  Though theFund was net short on these instruments globally in February, it was long U.S.short-term interest rates which decreased in price more than the shorts.  Over the course of the month, the Fund addedmodestly to its net short position, and continued to adjust the short interestrate position more often than was typical for their trading program.

April 1, 2005 to June 30, 2005

The Fund posted aloss for the second quarter of 2005. Losses were posted in all sectors.

The interest ratesector posted a small loss for the Fund. The Short Rate Asset Allocation model benefited from the rally at thefront end of the U.S. yield curve during the beginning of the quarter, thoughthese gains were largely offset by losses sustained early on by being shortEuribor futures.  Growth expectations forEurope were again reduced leading to a rally in Euro denominated fixedincome.  The Euribor short was removedand the Fund was left with an average sized net long position in global terminterest rates.  Mid-quarter, the shortrate model proved to be moderately profitable as a basket of long positions inthe United States, the United Kingdom, and Canada did well.  In the U.S., the Fund had good timing as itincreased its position after the strong U.S. employment report.  The Eurodollars recovered completely and theFund took long positions in the short end of the yield curve, primarily in theU.S.  In the bond markets, there remaineda battle between fundamentals and momentum. The end of the quarter saw poor performance in many of the Fund’sstrategies.  The Bond Asset Allocationstrategy had a brief short position, expressed mainly in Japanese governmentbonds, which was unprofitable.  Modestshort positions were taken in the Japanese, German, and Australian governmentbond markets and money was lost on being short the short term interest rates inJune.  The expectation in the markets wasfor the Euro denominated short term interest rates to go down in price and upin rate.  In June, European growth againdisappointed and speculation began to build about a European Central Bank ratecut.

The Fund posted aloss in the energy sector.  The quarterbegan with a gain because the Fund added additional fundamental information tothe crude oil trading that it had long included in the trend analysis componentof international value.  The Fundcontinued to trade this market with a systematic, or model based, approach butthe importance of the technical component decreased.  The Fund then focused its research on realcommodities.  It continued to move thenon-financials it traded over to fundamental models, most recently naturalgas.  The research is continued with thegoal of moving more energy contracts to this mixed fundamental and technicalframework.

The currency sector was the poorest performing sectorfor the quarter.  The Currency AssetAllocation strategy led International Value higher in April thanks to U.S.dollar weakness against the Japanese yen and Sterling.  The Fund added to its position to create alarge U.S. dollar short.  However, thelosses were driven by the currency model and the losses in the currency modelwere driven by the Fund’s long Japanese yen position.  The U.S. dollar appreciated mid-quarter as aresult of economic strength in the U.S. The Euro, in particular, suffered because of continued economic weaknessand concerns about the

12

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fate of the European constitution.  Related to this, interest rate differentialscontinued to move in favor of the U.S. currency.  However, the Fund’s models identified thebalance of payments imbalances that the U.S. suffers relative to the rest ofthe world as a major negative factor for the U.S. dollar.  As a result, the Fund retains its longJapanese yen position against being short the U.S. dollar and the Euro.

July 1, 2005 to September 30, 2005

The Fund posted a gainfor the third quarter of 2005.  Theenergy and currency sectors were unprofitable while the interest rates sectorposted a profit for the quarter.

Solidprofits were generated in the interest rates sector in the third quarter. Inthe beginning of the quarter, most of the gains were contributed from the ShortRate model. Within the Short Rate model, all of the gains came from Euriborshorts. Many market participants had been expecting the European Central Bank (“ECB”)to cut rates in the near future. However, throughout July, ECB members, through their public comments,expressed no inclination to cut rates and economic data was firm. As such,expectations that rates would be cut reversed and the short end of the yieldcurve returned to a more normal upward sloping shape towards September. Thelosses generated in August, were largely offset by the gains sustained inSeptember. This sector saw impressive performance towards the end of thequarter. In September, Europe and Japan showed more growth and as a resultinterest rates went up worldwide. The International Value program was short infixed income across the board and thus benefited from this increase in rates.

The currenciessector posted a small loss for the quarter. This sector experienced a more volatile period, yet ended with a smallerloss than the second quarter.  As aresult of the U.S. dollar weakness towards the Japanese yen and the Britishpound, The Currency Asset Allocation strategy led the International Valueprogram higher in September.

The poorest performanceposted was in the energy sector. The quarter began with a small gain and sawthe poorest performance towards the end of the quarter.  This was caused because of the low positionlevels of energy segments.  DuringAugust, concerns about growth in Europe caused the market to rally, even beforeHurricane Katrina, causing oil prices to increase and cutting expectations forU.S. growth, two factors expected to again defer the day of vigorous,self-sustaining European growth. In addition, the disruptions of the oilrefineries did not help the rest of the energy markets.  The Fund reduced its position during Augustand reduced its position further in September.

Item 3.   Quantitative and Qualitative DisclosuresAbout Market Risk

          Not applicable

Item4. Controls and Procedures

MLAI, the Sponsorof ML Cornerstone FuturesAccess LLC, with the participation of the Sponsor’sChief Executive Officer and the Chief Financial Officer, has evaluated theeffectiveness of the design and operation of its disclosure controls andprocedures with respect to the Fund as of the end of the period of thisquarterly report, and, based on this evaluation, has concluded that thesedisclosure controls and procedures are effective.  Additionally, there were no significant changesin the Fund’s internal controls or in other factors that could significantlyaffect these controls subsequent to the date of this evaluation, including anycorrective actions with regard to significant deficiencies and materialweaknesses.

13

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PART II - OTHER INFORMATION

Item1.            LegalProceedings

Neither the Fund nor MLAI has ever been the subjectof any material litigation.  MerrillLynch is the 100% indirect owner of MLAI, MLPF&S and all other MerrillLynch entities involved in the operations of the Fund.  Merrill Lynch as well as certain of itssubsidiaries and affiliates have been named as defendants in civil actions,arbitration proceedings and claims arising out of their respective businessactivities. Although the ultimate outcome of these actions cannot be predictedat this time and the results of legal proceedings cannot be predicted withcertainty, it is the opinion of management that the result of these matterswill not be materially adverse to the business operations or the financialcondition of MLAI or the Fund.

Item2.            Changesin Securities and Use of Proceeds

(a)   None.

(b)   None.

(c)   None.

(d)   None.

Item3.            DefaultsUpon Senior Securities

None.

Item4.            Submissionof Matters to a Vote of Security Holders

None.

Item5.            OtherInformation

None.

14

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Item 5(a).       Recent Sales of Unregistered Securities:  Uses of Proceeds From Registered Securities:

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

CLASS A
| ** ** | ** ** | ** ** | ** ** | **Subscription** | ** ** | ** ** | ** ** | ** **       | ** ** |
|------------|------------|------------|------------|------------------|------------|------------|------------|------------------|------------|
| ** ** | ** ** | ** ** | ** ** | **Amount**       | ** ** | **Units**  | ** ** | **NAV (1)** | ** ** |
|       |       | Jan-06     |       | $                | 641,544    |       | 666,055    |             | $          | 0.9632 |   |
|       |       | Feb-06     |       | 306,145          |       | 315,841    |       | 0.9693           |       |
|       |       | Mar-06     |       | 1,054,763        |       | 1,066,710  |       | 0.9888           |       |
|       |       | Apr-06     |       | 934,029          |       | 911,693    |       | 1.0245           |       |
|       |       | May-06     |       | 645,425          |       | 607,688    |       | 1.0621           |       |
|       |       | Jun-06     |       | 1,721,920        |       | 1,603,725  |       | 1.0737           |       |
|       |       | Jul-06     |       | 1,263,049        |       | 1,189,760  |       | 1.0616           |       |
|       |       | Aug-06     |       | 1,101,285        |       | 1,065,279  |       | 1.0338           |       |
|       |       | Sep-06     |       | 633,733          |       | 626,837    |       | 1.0110           |       |
|       |       | Oct-06     |       | 945,735          |       | 952,210    |       | 0.9932           |       |
|            |            |            |            |                  |            |            |            |                  |            |  |  |

 

CLASS C
| ** ** | ** ** | ** ** | ** ** | **Subscription** | ** ** | ** ** | ** ** | ** **       | ** ** |
|------------|------------|------------|------------|------------------|------------|------------|------------|------------------|------------|
| ** ** | ** ** | ** ** | ** ** | **Amount**       | ** ** | **Units**  | ** ** | **NAV (1)** | ** ** |
|       |       | Jan-06     |       | $                | 3,822,939  |       | 4,005,594  |             | $          | 0.9544 |   |
|       |       | Feb-06     |       | 2,749,933        |       | 2,865,409  |       | 0.9597           |       |
|       |       | Mar-06     |       | 5,091,868        |       | 5,205,877  |       | 0.9781           |       |
|       |       | Apr-06     |       | 5,905,887        |       | 5,832,975  |       | 1.0125           |       |
|       |       | May-06     |       | 6,422,893        |       | 6,126,376  |       | 1.0484           |       |
|       |       | Jun-06     |       | 6,793,483        |       | 6,424,705  |       | 1.0574           |       |
|       |       | Jul-06     |       | 7,564,743        |       | 7,237,603  |       | 1.0452           |       |
|       |       | Aug-06     |       | 6,176,970        |       | 6,074,911  |       | 1.0168           |       |
|       |       | Sep-06     |       | 4,730,855        |       | 4,761,807  |       | 0.9935           |       |
|       |       | Oct-06     |       | 4,849,807        |       | 4,973,651  |       | 0.9751           |       |
|            |            |            |            |                  |            |            |            |                  |            |  |  |

 

CLASS D
| ** ** | ** ** | ** ** | ** ** | **Subscription** | ** ** | ** ** | ** ** | ** **       | ** ** |
|------------|------------|------------|------------|------------------|------------|------------|------------|------------------|------------|
| ** ** | ** ** | ** ** | ** ** | **Amount**       | ** ** | **Units**  | ** ** | **NAV (1)** | ** ** |
|       |       | Jan-06     |       | $                | —     |       | —     |             | $          | 1.0506 |   |
|       |       | Feb-06     |       | —           |       | —     |       | 1.0585           |       |
|       |       | Mar-06     |       | —           |       | —     |       | 1.0812           |       |
|       |       | Apr-06     |       | 300,000          |       | 267,332    |       | 1.1222           |       |
|       |       | May-06     |       | —           |       | —     |       | 1.1632           |       |
|       |       | Jun-06     |       | 1,649,999        |       | 1,400,679  |       | 1.1780           |       |
|       |       | Jul-06     |       | 577,101          |       | 498,963    |       | 1.1566           |       |
|       |       | Aug-06     |       | 1,030,000        |       | 914,336    |       | 1.1265           |       |
|       |       | Sep-06     |       | —           |       | —     |       | 1.1014           |       |
|       |       | Oct-06     |       | —           |       | —     |       | 1.0834           |       |
|            |            |            |            |                  |            |            |            |                  |            |  |  |

 

CLASS I
| ** ** | ** ** | ** ** | ** ** | **Subscription** | ** ** | ** ** | ** ** | ** **       | ** ** |
|------------|------------|------------|------------|------------------|------------|------------|------------|------------------|------------|
| ** ** | ** ** | ** ** | ** ** | **Amount**       | ** ** | **Units**  | ** ** | **NAV (1)** | ** ** |
|       |       | Jan-06     |       | $                | 97,927     |       | 101,164    |             | $          | 0.9680 |   |
|       |       | Feb-06     |       | 249,000          |       | 255,516    |       | 0.9745           |       |
|       |       | Mar-06     |       | 148,873          |       | 149,711    |       | 0.9944           |       |
|       |       | Apr-06     |       | 1,193,282        |       | 1,157,403  |       | 1.0310           |       |
|       |       | May-06     |       | 437,997          |       | 409,994    |       | 1.0683           |       |
|       |       | Jun-06     |       | 941,854          |       | 872,248    |       | 1.0798           |       |
|       |       | Jul-06     |       | 1,686,809        |       | 1,578,522  |       | 1.0686           |       |
|       |       | Aug-06     |       | 719,155          |       | 691,561    |       | 1.0399           |       |
|       |       | Sep-06     |       | 285,945          |       | 281,083    |       | 1.0173           |       |
|       |       | Oct-06     |       | 2,244,996        |       | 2,245,670  |       | 0.9997           |       |
|            |            |            |            |                  |            |            |            |                  |            |  |  |

 

----

(1) Net Asset Value for all other purposes

15

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Item6.            Exhibits

The following exhibits are incorporated by referenceor are filed herewith to this Quarterly Report on Form 10-Q:
| 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.                     |

 

16

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.
|                          |   | ML CORNERSTONE FUTURESACCESS  LLC            |              |
|--------------------------|--------|----------------------------------------------|-------------------|
|                     |   |                                         |              |
|                     |   |                                         |              |
|                     | By:    | MERRILL LYNCH  ALTERNATIVE                   |              |
|                     |   |                                         | INVESTMENTS LLC   |   |
|                     |   |                                         | (General Partner) |   |
|                     |   |                                         |              |
|                     |   |                                         |              |
| Date: November  14, 2006 | By     | /s/ BENJAMIN WESTON                          |              |   |
|                     |   | Benjamin Weston                              |              |
|                     |   | Chief Executive  Officer and President       |              |
|                     |   | (Principal Executive Officer)                |              |
|                     |   |                                         |              |
|                     |   |                                         |              |
| Date: November  14, 2006 |   |                                         |              |
|                     | By     | /s/ BARBRA E. KOCSIS                         |              |   |
|                     |   | Barbra E. Kocsis                             |              |
|                     |   | Chief Financial Officer                      |              |
|                     |   | (Principal Financial and Accounting Officer) |
|                          |        |                                              |                   |  |  |  |  |  |  |  |

 

17

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