10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2006
	OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to
Commission File Number 0-25000

ML PRINCIPAL PROTECTION L.P.

(Exact Name of Registrant as
specified in its charter)

Delaware	13-3750642 (Registrant)
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)

c/o Merrill Lynch Alternative Investments LLC

Princeton Corporate Campus

800 Scudders Mill Road -  Section 2G

Plainsboro, New Jersey 08536

(Address of principal executive offices)

(Zip Code)

609-282-6996

(Registrant’s telephone number, including area code)

Indicate by check mark if the registrant is a well-known seasoned issuer as defined by Rule 405 of the Securities Act

Yes o  No ý

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

Yes o  No ý

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

Yes ý  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-Q or any amendment to this Form 10-Q. ý

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

Large accelerated filer o        Accelerated filer o           Non-accelerated filer ý

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

Yes o  No ý

ML PRINCIPAL PROTECTION L.P.

QUARTERLY REPORT FOR MARCH 31, 2006 ON FORM 10-Q

Table of Contents

	PART I	2
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9
	PART II	10
Item 1.	Legal Proceedings	10
Item 2.	Changes in Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	10
Item 4.	Submission of Matters to a Vote of Security Holders	10
Item 5.	Other Information	10
Item 5a.	Recent Sales of Unregistered Securities: Uses of Proceeds From Registered Securities	10
Item 6	Exhibits and Reports on Form 8-K	11

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PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

ML PRINCIPAL PROTECTION L.P.

(a Delaware Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION

	March 31,		December 31,
	2006		2005
	(unaudited)
ASSETS:
Investment in Global Horizons	$	10,232,889	$	10,232,424
Receivable from Global Horizons	110,827		192,138
TOTAL ASSETS	$	10,343,716	$	10,424,562
LIABILITY AND PARTNERS’ CAPITAL
LIABILITY:
Redemptions payable	$	110,827	$	192,138
PARTNERS’ CAPITAL:
General Partner (107,422 and 160,738 Units)	106,643		154,642
Limited Partners (10,200,260 and 10,475,025 Units)	10,126,246		10,077,782
Total partners’ capital	10,232,889		10,232,424
TOTAL LIABILITY AND PARTNERS’ CAPITAL	$	10,343,716	$	10,424,562
NET ASSET VALUE PER UNIT
(Based on 10,307,682 and 10,635,763 Units outstanding)	$	0.9927	$	0.9621

See notes to financial statements.

2

ML PRINCIPAL PROTECTION L.P.

(a Delaware Limited Partnership)

STATEMENTS OF OPERATIONS

(unaudited)

	For the three			For the three
	months ended			months ended
	March 31,			March 31,
	2006			2005
TRADING PROFITS (LOSSES):
Realized and other	$	343,093		$	(77,128	)
Change in unrealized	72,327			(21,680		)
Total trading profits (losses)	415,420			(98,808		)
INVESTMENT INCOME:
Interest	109,623			72,324
EXPENSES:
Profit Shares	15,774			33,958
Brokerage commissions	179,948			211,003
Administrative fees	6,205			7,276
Total expenses	201,927			252,237
NET INVESTMENT LOSS	(92,304		)	(179,913		)
NET INCOME (LOSS)	$	323,116		$	(278,721	)
NET INCOME (LOSS) PER UNIT:
Weighted average number of General Partner and Limited Partner Units outstanding	10,421,661			12,629,531
Net income (loss) per weighted average General Partner and Limited Partner Unit	$	0.0310		$	(0.0221	)

Substantially all items of income and expense are derived from the investment in Global Horizons for the three months ended March 31, 2006 and 2005.

See notes to financial statements.

3

ML PRINCIPAL PROTECTION L.P.

(a Delaware Limited Partnership)

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

For the three months ended March 31, 2006 and 2005

(unaudited)

			General			Limited
	Units		Partner			Partners			Total
PARTNERS’ CAPITAL, DECEMBER 31, 2004	11,905,083		$	160,719		$	12,892,828		$	13,053,547
Conversion of Units	1,149,203		19			714			733
Net loss	—		(3,404		)	(275,317		)	(278,721		)
Redemptions	(709,861	)	—			(692,547		)	(692,547		)
PARTNERS’ CAPITAL, MARCH 31, 2005	12,344,425		$	157,334		$	11,925,678		$	12,083,012
PARTNERS’ CAPITAL, DECEMBER 31, 2005	10,635,763		$	154,642		$	10,077,782		$	10,232,424
Net income	—		4,405			318,711			323,116
Redemptions	(328,081	)	(52,404		)	(270,247		)	(322,651		)
PARTNERS’ CAPITAL, MARCH 31, 2006	10,307,682		$	106,643		$	10,126,246		$	10,232,889

See notes to financial statements.

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ML PRINCIPAL PROTECTION L.P.

(a Delaware Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

(unaudited)

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In the opinion of management, the financial statements contain all adjustments  necessary to present fairly the financial position of ML Principal Protection L.P. (the “Partnership”) as of March 31, 2006, and the results of its operations for the three months ended March 31, 2006 and 2005. The operating results for the interim periods may not be indicative of the results for the full year.

Certain information and footnote disclosures normally included in quarterly financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2.INVESTMENTS

As of March 31, 2006 and December 31, 2005, the Partnership had an investment in Global Horizons I L.P. (“Global Horizons”) of $10,232,889 and $10,232,424, respectively. As of March 31, 2006 and December 31, 2005, the Partnership’s percentage ownership share of Global Horizons was 3.95% and 3.81%, respectively.

Condensed statement of financial condition and statements of operations for Global Horizons are set forth as follows:

	March 31,		December 31,
	2006		2005
	(unaudited)
Assets	$	272,278,079	$	280,475,255
Liabilities	$	13,035,567	$	11,889,388
Partners’ Capital	259,242,512		268,585,867
Total	$	272,278,079	$	280,475,255

	For the three months ended March 31, 2006		For the three months ended March 31, 2005
	(unaudited)		(unaudited)
Trading profits and interest income	$	13,554,927	$	163,766
Expenses	5,407,206		4,834,520
Net income (loss)	$	8,147,721	$	(4,670,754	)

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3.FAIR VALUE AND OFF-BALANCE SHEET RISK

The Partnership invests indirectly in derivative instruments as a result of its investment in Global Horizons, but does not itself hold any derivative instrument positions. The nature of this Partnership has certain risks which cannot be presented on the financial statements. The following summarizes some of those risks resulting from its investment in Global Horizons.

Market Risk

Derivative instruments involve varying degrees of off-balance sheet market risk. Changes in the level or volatility of interest rates, foreign currency exchange rates or the market values of the financial instruments or commodities underlying such derivative instruments frequently result in changes in the Partnership’s allocation of net unrealized profit on such derivative instruments as reflected in the Statements of Financial Condition of Global Horizons. The Partnership’s exposure to market risk is influenced by a number of factors, including the relationships among the derivative instruments held by Global Horizons as well as the volatility and liquidity of the markets in which such derivative instruments are traded.

The General Partner, Merrill Lynch Alternative Investments LLC (“MLAI”), has procedures in place intended to control market risk exposure, although there can be no assurance that they will, in fact, succeed in doing so. These procedures focus primarily on monitoring the trading of the trading advisors (“Advisors”) selected from time to time by MLAI, as the General Partner of Global Horizons, calculating the Net Asset Value of their respective Partnership’s accounts and Global Horizons’ accounts as of the close of business on each day and reviewing outstanding positions for over-concentrations both on an Advisor-by-Advisor and on an overall Partnership basis. While MLAI does not itself intervene in the markets to hedge or diversify the Partnership’s market exposure, MLAI may urge Advisors to reallocate positions, or itself reallocate Partnership assets through Global Horizons among Advisors (although typically only as of the end of a month) in an attempt to avoid over-concentrations. However, such interventions are unusual. Except in cases in which it appears that an Advisor has begun to deviate from past practice or trading policies or to be trading erratically, MLAI’s basic risk control procedures consist simply of the ongoing process of advisor monitoring and selection with the market risk controls being applied by the Advisors themselves.

Credit Risk

The risks associated with exchange-traded contracts are typically perceived to be less than those associated with over-the-counter (non-exchange-traded) transactions, because exchanges typically (but not universally) provide clearinghouse arrangements in which the collective credit (in some cases limited in amount, in some cases not) of the members of the exchange is pledged to support the financial integrity of the exchange. In over-the-counter transactions, on the other hand, traders must rely solely on the credit of their respective individual counterparties. Margins, which may be subject to loss in the event of a default, are generally required in exchange trading, and counterparties may require margin in the over-the-counter markets.

The Partnership, through Global Horizons, has credit risk with respect to non-performance of its counterparties and brokers, but attempts to mitigate this risk by dealing almost exclusively with Merrill Lynch & Co., Inc. (“Merrill Lynch”) entities as clearing brokers.

The Partnership, through Global Horizons, in its normal course of business, enters into various contracts, with Merrill Lynch Pierce Fenner & Smith (“MLPF&S”) acting as its commodity broker. Pursuant to the brokerage agreement with MLPF&S (which includes a netting arrangement), to the

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extent that such trading results in receivables from and payables to MLPF&S, these receivables and payables are offset and reported as a net receivable or payable in the financial statements of Global Horizons in the Equity in commodity futures trading accounts in the Statements of Financial Condition.

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

MONTH-END NET ASSET VALUE PER UNIT

	Jan.		Feb.		Mar.
2005	$	0.9659	$	0.9763	$	0.9788
2006	$	0.9829	$	0.9752	$	0.9927

Performance Summary

January 1, 2006 to March 31, 2006

All of the Partnership’s trading assets are invested in Global Horizons. The Partnership recognizes trading profits or losses as an investor in Global Horizons. The following commentary describes the trading results of Global Horizons.

The Partnership posted a gain for the first quarter. Gains in interest rates, metals and stock indices sectors outweighed losses experienced in the agricultural, energy and currencies sectors.

The largest gains were posted in the interest rate sector. Short positions in Eurodollars, the front end of the U.S. curve, and in German Bunds, Japanese government bonds and U.S. Treasuries all drove performance. The short positions to the U.S. profited due to higher interest rates as a result of increased inflationary pressure. U.S Treasuries contributed as markets declined on stronger than expected consumer confidence and rising inflationary fears.

The metals sector posted a gain for the Partnership despite losses realized mid-quarter. Metals rallied due to base and precious metal holdings. Long gold positions profited as investors continued to use gold as a hedge against a weakening U.S. dollar. Aluminum and zinc both rallied early in the quarter due to global growth and supply issue. Precious and base metals contributed to performance through long positions to gold, silver and copper as demand increased.

Trading in stock indices also posted gains throughout the quarter. Strong domestic and international markets contributed to performance. The increased volatility in the European markets provided increased opportunities for short-term trend followers. The Partnership continued to maintain a long bias to global equities. Japan and European exposures led performance as markets rallied, while U.S. exposures slightly detracted from performance.

Trading in agricultural commodities contributed to losses during the quarter despite small gains in the latter part of the quarter. Short positions in coffee and long positions in corn detracted from performance mid-quarter. Some losses were mitigated through long positions in sugar as demand grew for ethanol, a sugar by product. Detracting from performance were long exposures to the soybean complex. Contributing slightly in March were gains resulting from short positions in coffee and the meat complex as prices continued to decrease.

Trading in the energy sector posted losses throughout the quarter. Crude oil rallied due to geopolitical issues but was not enough to offset losses from the decline in refined products, such as unleaded and heating oil. Crude oil suffered mid-quarter as prices declined amid increased supply.

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Geopolitical issues led to increased volatility within the sector. This caused gasoline prices to surge as supply decreased reversing the downward price trend experienced earlier in the quarter.

The currencies sector was the sector with the weakest performance for the Partnership, despite small gains early in the quarter. Foreign exchange contributed positively to the Partnership as the U.S. dollar weakened throughout the month due to the continuation of December’s carry trade reversal and the continued expectation for the slowdown of the U.S. Federal Reserve. Contributing to performance was long Canadian dollar and British pound positions, while detracting from performance was positions in the Euro and Swiss franc. Long positions in the Mexican peso and short Euro positions contributed to performance as well. Foreign exchange detracted due to strong reversals in March. Long exposures to the Mexican peso, Japanese yen, Canadian dollar and the British pound during the choppy market conditions all contributed to losses.

January 1, 2005 to March 31, 2005

All of the Partnership’s trading assets are invested in Global Horizons. The Partnership recognizes trading profits or losses as an investor in Global Horizons. The following commentary describes the trading results of Global Horizons.

The Partnership posted a loss for the first quarter. Losses in the currency and global equity sectors outweighed gains experienced in the agricultural sector.

The interest rate sector was the best performing sector for the Partnership. The Partnership benefited from long U.S. dollar positions versus the Euro and long Euro and Japanese fixed incomes. Systematic, long-term trend followers also posted gains in the interest rate sector.

The energy sector was the second highest performing sector for the Partnership. Gains were experienced in the energy sector as the Partnership benefited from long positions in crude oil and gas as these industries profited. Gains were also posted in long crude oil and heating oil positions.

The agricultural sector also performed well for the quarter. Gains were experienced from long positions in cattle and hog markets. Short grain positions and long soybean positions detracted from performance mid-quarter. However, the quarter ended with gains posted due to coffee, which experienced a lack of supply and a growing demand.

The metals sector posted a gain for the quarter. The Partnership benefited from long positions in base and precious metals, such as gold, copper and zinc.

The stock indices sector posted a loss for the quarter. Losses occurred in the beginning of the quarter due to a trend reversal from long global equities to short global equities. Profits were made through long positions on the FTSE index and Asian equities. Stock indices contributed negatively to performance as the equity markets declined at the end of the quarter.

The currency sector posted the greatest loss for the Partnership. Losses at the beginning of the quarter were due to a trend reversal from short U.S. dollar positions to long U.S. dollar positions. Long Japanese yen and Swiss franc positions also experienced losses. With the U.S. Federal Reserve expressing concern about inflation, investors predicted that interest rates and the U.S. dollar would rise. This caused losses as investors fled from emerging currencies. Long Australian dollar and Mexican peso positions also contributed to negative performance.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable

Item 4. Controls and Procedures

Merrill Lynch Alternative Investments LLC, the General Partner of ML Principal Protection L.P., with the participation of the General Partner’s Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures with respect to the Partnership within 90 days of the filing date of this quarterly report, and, based on this evaluation, has concluded that these disclosure controls and procedures are effective. Additionally, there were no significant changes in the Partnership’s internal controls or in other factors that could significantly affect these controls subsequent to the date of this evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

9

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Partnership, Merrill Lynch Investment Managers (“MLIM LLC”) nor MLAI have ever been the subject of any material litigation. Merrill Lynch is the 100% indirect owner of MLAI, MLIM LLC, MLPF&S and all other Merrill Lynch entities involved in the operation of the Partnership. Merrill Lynch as well as certain of its subsidiaries and affiliates have been named as defendants in civil actions, arbitration proceedings and claims arising out of their respective business activities. Although the ultimate outcome of these actions cannot be predicted at this time and the results of legal proceedings cannot be predicted with certainty, it is the opinion of management that the result of these matters will not be materially adverse to the business operations or financial condition of MLIM LLC, MLAI or the Partnership.

Item 2. Changes in Securities and Use of Proceeds

(a)None

(b)None

(c)None

(d)None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

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

Not applicable.

10

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

The following exhibits are incorporated by reference or are filed herewith to this Quarterly Report on Form 10-Q:

31.01 and

31.02Rule 13a-14(a)/15d-14(a) Certifications

Exhibit 31.01

and 31.02: Are filed herewith.

32.01 and

32.02Section 1350 Certifications

Exhibit 32.01

and 32.02: Are filed herewith.

(b) Reports on Form 8-K.

There were no reports on Form 8-K filed during the first three months of fiscal 2006.

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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 the undersigned thereunto duly authorized.

	ML PRINCIPAL PROTECTION L.P.
	By: MERRILL LYNCH ALTERNATIVE
	INVESTMENTS LLC
	(General Partner)
Date: May 15, 2006	By		/s/ ROBERT M. ALDERMAN
		Robert M. Alderman
		Chief Executive Officer, President and Manager
		(Principal Executive Officer)
Date:  May 15, 2006
	By			/s/ MICHAEL L. PUNGELLO
		Michael L. Pungello
		Vice President, Chief Financial Officer
		and Treasurer
		(Principal Financial and Accounting Officer)

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EX-31.01

EXHIBIT 31.01

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

I, Robert M. Alderman, certify that:

1. I have reviewed this report on Form 10-Q of ML Principal Protection L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2006
By	/s/ ROBERT M. ALDERMAN
Robert M. Alderman
Chief Executive Officer, President and Manager
(Principal Executive Officer)

1

EX-31.02

EXHIBIT 31.02

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

I, Michael L. Pungello, certify that:

1. I have reviewed this report on Form 10-Q of ML Principal Protection L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2006
By	/s/ MICHAEL L. PUNGELLO
Michael L. Pungello
Vice President, Chief Financial Officer
and Treasurer
(Principal Financial and Accounting Officer)

1

EX-32.01

EXHIBIT 32.01

SECTION 1350 CERTIFICATIONS

In connection with this quarterly report of ML Principal Protection L.P. (the “Company”) on Form 10-Q for the period ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (this “Report”), I, Robert M. Alderman, Chief Executive Officer, President and Manager of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant of the Sarbanes-Oxley Act of 2002, that:

1. This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2006
By	/s/ ROBERT M. ALDERMAN
Robert M. Alderman
Chief Executive Officer, President and Manager
(Principal Executive Officer)

1

EX-32.02

EXHIBIT 32.02

SECTION 1350 CERTIFICATIONS

In connection with this quarterly report of ML Principal Protection L.P. (the “Company”) on Form 10-Q for the period ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (this “Report”), I, Michael L. Pungello, Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant of the Sarbanes-Oxley Act of 2002, that:

1. This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2006
By	/s/ MICHAEL L. PUNGELLO
Michael L. Pungello
Vice President, Chief Financial Officer
and Treasurer
(Principal Financial and Accounting Officer)

1