As filed with the Securities and Exchange Commission on June 28, 2005
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MAN-AHL 130, LLC
(Exact name of registrant as specified in its charter)
DELAWARE 6221 84-1676365
(State of Organization) (Primary Standard Industrial (IRS Employer
Classification Code Number) Identification Number)
C/O MAN INVESTMENTS (USA) CORP.
123 NORTH WACKER DRIVE, 28TH FLOOR
CHICAGO, ILLINOIS 60606
(312) 881-6800
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
JOHN M. KELLY
C/O MAN INVESTMENTS (USA) CORP.
123 NORTH WACKER DRIVE, 28TH FLOOR
CHICAGO, ILLINOIS 60606
(312) 881-6800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
David R. Sawyier
James B. Biery
Sidley Austin Brown & Wood LLP
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
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If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act") check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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Units of Limited Liability Company Interest ....
Class A1 ....................................... 25,000 $100 2,500,000 $ 294.25
Class A2 ....................................... 25,000 $100 2,500,000 $ 294.25
Class B1 ....................................... 25,000 $100 2,500,000 $ 294.25
Class B2 ....................................... 25,000 $100 2,500,000 $ 294.25
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TOTAL 100,000 UNITS $10,000,000 $1,177.00
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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MAN-AHL 130, LLC
100,000
UNITS OF LIMITED LIABILITY COMPANY INTEREST
CLASS A1, A2, B1 AND B2 UNITS
THE FUND
The Fund seeks medium- to long-term capital appreciation combined with
controlled performance volatility through a program of speculative futures
trading.
The Fund will trade in the global futures and forward markets pursuant to the
AHL Diversified Program, a speculative, trend-following managed futures
strategy.
As a futures fund, the Fund's assets consist almost entirely of cash and
cash-equivalents used to cover any trading losses and to margin open positions.
The Fund will seek to improve the yield earned on a limited portion of its cash
by investing in Man-Glenwood Lexington, LLC and Man-Glenwood Lexington TEI, LLC
(collectively, "Man-Glenwood"), registered investment companies which, in turn,
invest in a portfolio of private investment funds.
If successful, the Fund has the potential to provide a valuable element of
diversification to a traditional portfolio.
THE MANAGING MEMBER
Man Investments (USA) Corp. Affiliates of the Managing Member manage the AHL
Diversified Program as well as Man-Glenwood.
THE UNITS
Four Classes of Units are being offered (Class A1 and A2 Units are offered to
taxable investors and Class B1 and B2 Units are offered to tax-exempt
investors). These Classes are substantially identical except that Class A2 and
B2 Units are offered exclusively to participants in selling agent fixed fee or
asset-based fee investment programs and Class B1 and B2 Units have been
structured, so as not to cause tax-exempt investors to recognize `unrelated
business taxable income' on their investment in the Fund.
THE OFFERING
This is a best efforts, not a "firm commitment" offering. Subscription proceeds
received before the Fund begins operations will be held in escrow at [Bank].
Units of each Class are offered separately. If subscriptions for at least 5,000
Class A (A1 and A2) or 25,000 Class B1 or Class B2 Units are not accepted during
the Initial Offering Period ending [-], 2005 (subject to extension until no
later than [-], 2005), the offering of such Class(es) will be terminated and
subscription proceeds received in respect of such Class(es) will be promptly
returned to subscribers together with any interest earned thereon.
After a Class of Units has initially been issued, Units of such Class will be
continuously offered as of the first day of each calendar month without any
scheduled termination of the offering,
The Offering (continued) and no minimum number of Units will need to be sold as
of the beginning of any month for additional Units of that Class then to be
issued.
The Units are initially offered at $100 per Unit and thereafter at Net Asset
Value. The minimum investment in Class A1 and A2 Units is $25,000, and in Class
B1 and B2 Units it is $10,000; additional investments in any Class are permitted
in $1,000 increments.
If the minimum amount of Units offered pursuant to this offering is sold, the
proceeds to the Fund will be $500,000; if the total amount of Units offered
pursuant to this offering is sold, the proceeds to the Fund will be $10,000,000.
"ACCREDITED INVESTORS" ONLY
The Managing Member has determined to limit the persons eligible to invest in
the Units to "Accredited Investors." Individual "Accredited Investors" must have
an annual income of at least $200,000 (or joint annual income with spouse of
$300,000) in each of the two most recent years and a reasonable expectation of
such income in the current year or a net worth (including assets held jointly
with spouse) of $1,000,000; entity "Accredited Investors" must generally have a
net worth of $5,000,000.
THE RISKS
THE FUND IS A SPECULATIVE MANAGED FUTURES FUND, AND INVOLVES A HIGH DEGREE
OF RISK. BEFORE YOU DECIDE WHETHER TO INVEST, READ THIS ENTIRE PROSPECTUS
CAREFULLY AND CONSIDER "RISK FACTORS" BEGINNING ON PAGE 8.
- - The Fund is a speculative and leveraged managed futures fund. Leverage
magnifies losses as well as profits.
- - You may lose all or substantially all of your investment in the Fund.
- - The AHL Diversified Program is dependent for its profitability on there
being sustained price trends of the type which the Program is designed to
identify.
- - The Fund's substantial expenses must be offset by trading profits and
interest income for the Fund to be profitable.
- - The Fund trades to a substantial degree on non-U.S. markets which are not
subject to the same regulations as are their U.S. counterparts.
- - There is no market for the Units, and they may only be redeemed as of the
end of a calendar quarter on 45 days' prior notice, subject to the
limitation that no more than 15% of the Fund's outstanding Units may be
redeemed as of any calendar quarter-end.
- - Investors are required to make certain representations and warranties in
connection with their investment.
- - Each investor is encouraged to discuss any proposed investment in the Fund
with his/her individual financial, legal and tax advisers.
- - The Fund is newly formed and has no performance history.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE
ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
MAN INVESTMENTS INC.
SELLING AGENT
[-], 2005
[OUTSIDE BACK COVER]
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE FUND, THE MANAGING MEMBER, THE SELLING
AGENT OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY TO ANY PERSON
OR BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT
LAWFULLY BE MADE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF ITS ISSUE.
UNTIL ___________, 2005, ALL DEALERS EFFECTING TRANSACTIONS IN THE UNITS,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
ALL SELLING AGENTS MUST DELIVER TO PROSPECTIVE INVESTORS ANY SUPPLEMENTED
OR AMENDED PROSPECTUS ISSUED BY THE FUND DURING BOTH THE INITIAL AND THE ONGOING
OFFERING PERIODS.
i
COMMODITY FUTURES TRADING COMMISSION
RISK DISCLOSURE STATEMENT
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU
TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS.
SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND
CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS
ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE
POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS
THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID
DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A
COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGES 21 TO 24
AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO
RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 6.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE,
BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY
STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK
FACTORS OF THIS INVESTMENT, AT PAGES 8 TO 10.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN
FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE
POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE
UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY
BE EFFECTED.
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PLEASE SEE THE IMPORTANT PRIVACY POLICY ON PAGE 36.
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THE FUND IS A "COMMODITY POOL," REGULATED BY THE COMMODITY FUTURES TRADING
COMMISSION (THE "CFTC"), AND NOT A MUTUAL FUND OR ANY OTHER TYPE OF INVESTMENT
COMPANY WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940. PROSPECTIVE
INVESTORS MUST BE AWARE THAT IN INVESTING IN THE FUND THEY WILL NOT HAVE THE
BENEFIT OF ANY OF THE NUMEROUS INVESTOR PROTECTION PROVISIONS OF THE INVESTMENT
COMPANY ACT.
DUE TO THE FUND'S STATUS AS A "COMMODITY POOL," APPLICABLE CFTC RULES
REQUIRE THAT THIS PROSPECTUS BE ACCOMPANIED (ONCE THE FUND HAS BEGUN TRADING) BY
THE FUND'S MOST CURRENT MONTHLY ACCOUNT STATEMENT OR BY SUMMARY PERFORMANCE
INFORMATION RELATING TO THE FUND, CURRENT WITHIN 60 CALENDAR DAYS OF THE DATE OF
THE DELIVERY OF THIS PROSPECTUS.
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THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE
FUND'S REGISTRATION STATEMENT. YOU CAN READ AND COPY THE ENTIRE REGISTRATION
STATEMENT AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") IN WASHINGTON, D.C.
THE FUND WILL FILE QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ
AND COPY THESE REPORTS AT THE SEC PUBLIC REFERENCE FACILITIES IN WASHINGTON,
D.C. AT 450 FIFTH STREET, NW, WASHINGTON D.C 20549. PLEASE CALL THE SEC AT
1-800-SEC-0330 FOR FURTHER INFORMATION.
THE FUND'S REGISTRATION STATEMENT AND REPORTS FILINGS WILL ALSO BE POSTED
AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV.
MAN-GLENWOOD ARE PUBLICLY-OFFERED "INVESTMENT COMPANIES," REGISTERED UNDER
THE INVESTMENT COMPANY ACT OF 1940. INFORMATION REGARDING MAN-GLENWOOD IS ALSO
AVAILABLE AT THE SEC'S WEBSITE AS DESCRIBED IN THE PRECEDING PARAGRAPH.
ii
ORGANIZATIONAL CHART
MAN-AHL 130, LLC
All entities included in the Organizational Chart, other than the
Administrator, are affiliates of Man Group plc.
[FLOW CHART]
SEE "CONFLICTS OF INTEREST; TRANSACTIONS BETWEEN MAN
GROUP AND THE FUND" AT PAGE 26.
FOR CONVENIENCE, MAN GROUP PLC AND ENTITIES AFFILIATED WITH IT ARE
SOMETIMES COLLECTIVELY REFERRED TO AS "MAN GROUP."
iii
CONTENTS
PART ONE
DISCLOSURE DOCUMENT
SECTION PAGE
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Summary................................................................................................. 1
Risk Factors............................................................................................ 8
You May Lose Your Entire Investment.................................................................. 8
The Fund Uses Leverage, Which Increases Risk......................................................... 8
The Fund is the First Public Futures Fund Sponsored by the Managing Member........................... 8
The Fund Has No Operating History.................................................................... 8
The Fund's Performance is Expected to be Volatile.................................................... 8
The Fund's Substantial Fees and Expenses Will Cause Losses Unless Offset by Profits
and Interest Income ............................................................................... 8
An Investment in the Fund Is not A Liquid Investment................................................. 8
Substantial Redemptions May Cause the Fund to Incur Losses........................................... 8
The Fund is Subject to Conflicts of Interest......................................................... 8
The Managing Member has not Established Formal Procedures to Resolve Conflicts of Interest........... 9
The Fund's Investment in Man-Glenwood May incur losses............................................... 9
Changes in Regulatory Requirements May be Adverse to the Fund........................................ 9
The AHL Incentive Fee Calculation May not Reflect Your Investment Experience ........................ 9
You will be Taxed Each Year on Your Share of Fund Profits; You Will be Required to Extend
the Filing Date of Your Tax Returns ............................................................... 9
The Fund Could Lose Assets and Have its Trading Disrupted due to the Bankruptcy of the
Commodity Broker or Others ........................................................................ 9
Lack of Price Trends Will Cause Losses; There Have Been Sustained Periods of Time With
Insufficient Price Trends for the AHL Diversified Program to Trade Profitably. The
Managing Member Expects That There Will be Similar Periods in the Future .......................... 9
AHL's Trading Decisions are Based on Technical Systems not on an Analysis of Economic Factors........ 10
Increased Competition Among Trend-Following Traders Could Reduce AHL's Profitability................. 10
Market Conditions Will Dominate AHL's Results........................................................ 10
The Fund is Intended to be a Medium-To Long-Term Investment.......................................... 10
Use of Proceeds......................................................................................... 10
Management's Discussion and Analysis of the Fund's Prospective Operations............................... 13
Management of the Fund.................................................................................. 15
Performance Information................................................................................. 18
Net Asset Value......................................................................................... 20
Fees and Expenses Paid by the Fund...................................................................... 21
Clearing Broker......................................................................................... 24
Redemptions and Transfers of Units...................................................................... 25
Conflicts of Interests; Transactions Between Man Group and the Fund..................................... 26
Summary of the Limited Liability Company Agreement...................................................... 28
Tax Consequences........................................................................................ 29
Benefit Plan Investors.................................................................................. 32
Plan of Distribution.................................................................................... 34
Reports................................................................................................. 35
Lawyers; Accounts....................................................................................... 35
Privacy Policy.......................................................................................... 36
PART TWO
STATEMENT OF ADDITIONAL
INFORMATION
Section Page
----
Futures Markets and Trading Methods..................................................................... 38
Alternative Investment Strategies in General............................................................ 40
Supplemental Performance Information.................................................................... 41
Financial Statements.................................................................................... 51
Exhibit A -- Limited Liability Company Agreement........................................................ A-1
Exhibit B -- Subscription Requirements.................................................................. SR-1
Exhibit C -- Subscription Instructions.................................................................. SA-i
THIS PROSPECTUS IS INTENDED FIRST TO BE USED AS OF THE DATE SET FORTH ON THE
COVER OF THIS PROSPECTUS. APPLICABLE RULES OF THE CFTC REQUIRE THAT THIS
PROSPECTUS BE UPDATED AT LEAST EVERY NINE MONTHS FROM THE DATE OF FIRST USE, AND
THAT IT BE ACCOMPANIED BY CFTC-REQUIRED SUMMARY FINANCIAL INFORMATION CURRENT
WITHIN 60 DAYS OF DELIVERY.
- --------------------------------------------------------------------------------
1
SUMMARY
THE FUND
Man-AHL 130, LLC (the "Fund") is a limited liability company organized in
2005 under the laws of Delaware. The fiscal year of the Fund ends March 31, and
its taxable year ends on December 31.
The Fund is a speculative, managed futures fund which will trade pursuant
to the AHL Diversified Program (the "AHL Diversified Program").
The AHL Diversified Program is a managed futures program directed by Man
AHL (USA) Limited ("AHL").
The AHL Diversified Program is quantitative and primarily directional -
seeking to identify and take advantage of upward and downward price trends in
the commodities markets. Trading takes place 24 hours a day using real time
price information to respond to price moves across a range of global markets
encompassing stock indices, bonds, currencies and short-term interest rates.
The trading process is the product of sophisticated research - the AHL
Diversified Program applies a technical approach that was developed in and has
been operated since 1983. Although the underlying investment methodology is
proprietary and the precise details confidential, the guiding principles have
remained unchanged through the years: diversification, discipline, efficiency,
rigorous risk management and ongoing research.
* * * * *
Managed futures funds typically hold all of their capital in reserve to
cover trading losses and margin their open futures and forward positions. The
Fund will maintain the bulk of its capital in cash and cash equivalents. In an
effort to enhance the yield on such reserve assets, the Fund will invest
approximately 30% of its capital in Man-Glenwood, registered investment
companies which allocate their capital to a portfolio of private investment
funds ("Sub-Funds"). The Fund's Man-Glenwood investment also has the potential
to provide a certain degree of portfolio diversification from the Fund's core
futures trading strategy. The Managing Member will attempt to rebalance the
Fund's portfolio on a quarterly basis so as to maintain the Fund's investment in
Man-Glenwood at approximately 30% of Fund capital.
The Fund's Man-Glenwood investment is ancillary to the Fund's commodities
trading. If the Managing Member deems it to be necessary or advisable, the
Managing Member will reduce or eliminate this investment. No prospective
investor should invest in the Fund in reliance on the Fund's investing any of
its capital in Man-Glenwood.
MANAGING MEMBER
Man Investments (USA) Corp. is the Managing Member of the Fund and is
responsible for its overall management and administration.
The Managing Member is a subsidiary of Man Group plc, which is listed on
the London Stock Exchange and a constituent of the FTSE 100 index of leading UK
stocks. Man Group plc is a diversified global financial services firm that
engages in a broad spectrum of activities including financial advisory services,
asset management activities, sponsoring and managing private investment funds,
engaging in broker-dealer transactions (through its Man Financial division) and
other activities. Man Investments has launched approximately 450 alternative
investments products, including numerous commodity pools, and, as of March 31,
2005 had an estimated $43 billion under management.
AHL and Glenwood Capital Investments, L.L.C. ("Glenwood"), which manage
the AHL Diversified Program for the Fund and Man-Glenwood, respectively, are
members of the Man Group.
Man Financial Inc., the commodity broker used for the Fund's AHL
Diversified Program account, is also an affiliate of the Managing Member.
2
Man Investments Inc., the Selling Agent, is a registered broker-dealer and
is an affiliate of the Managing Member. The Selling Agent may engage additional,
unaffiliated, selling agents ("Additional Selling Agents") to assist it with the
placement of the Fund's Units.
PRINCIPAL OFFICES
The Fund's and the Managing Member's principal offices and the place where
their principal books and records are kept, are located at 123 N. Wacker Drive,
28th Floor, Chicago, Illinois 60606; telephone number: (312) 881-6800. Certain
records of the Fund will be located at the offices of the Fund's administrator.
THE OFFERING
INITIAL OFFERING PERIOD
The Fund is offering Units during an Initial Offering Period expected to
end [-] 2005, subject to extension until no later than [-] 2005.
The Units will initially be offered at $100 per Unit. This initial
offering price has been arbitrarily determined; investors' participation in the
Fund is determined on the basis of the dollar amount which they invest (whether
divided into $1, $100 or $1,000 Units). After the initial issuance of the Units
of each Class, such Units will be issued at their Net Asset Value as of the
beginning of each calendar month.
Units will be issued in fractions calculated to two decimal points.
CLASSES OF UNITS
The Fund offers four Classes of Units. These Classes have identical
trading and investment portfolios. Class A1 and Class A2 Units are offered only
to taxable investors, while the Class B1 and Class B2 Units are offered only to
tax-exempt investors. The Class B1 and B2 Units have been structured so as not
to cause tax-exempt investors to recognize taxable `unrelated business taxable
income.'
Class A1 and Class B1 Units are subject to a 1% annual Client Servicing
Fee.
Class A2 and Class B2 Units are available exclusively to investors
participating in selling agent asset-based or fixed fee investment programs, or
in investment advisors' fee-based advisory programs. Class A2 and Class B2 Units
are not charged the Client Servicing Fee.
MINIMUM INVESTMENT
Minimum initial investment: Class A1 and Class A2 Units, $25,000; Class B1
and Class B2 Units, $10,000; additional investments (whether at the time of the
initial investment or thereafter): $1,000 for any Class of Units.
MINIMUM CAPITALIZATION
A minimum of (i) 5,000 Class A1 and Class A2 Units, in aggregate
($500,000), or (ii) 25,000 Class B1 Units or Class B2 Units, separately
($2,500,000), must be sold for the Units of such Classes to be issued. The Fund
will only issue Class B1 or Class B2 Units if there are at least 100 subscribers
for the Class B1 Units or Class B2 Units.
MAJOR RISKS OF THE FUND
The Fund is speculative. You may lose all or substantially all of your
investment in the Fund.
The Fund is newly formed and thus has no performance history. The past
performance of the AHL Diversified Program is not necessarily indicative of the
future results of the Fund.
The Fund is leveraged. The Fund acquires futures and forward positions
with a face amount of as much as five to seven times or more of its total
equity. Leverage magnifies the impact of both profit and loss.
The Fund's performance is expected to be volatile. The Fund may suffer
sudden and substantial losses from time to time and the day-to-day value of the
Units will be variable.
3
The Fund is subject to substantial fees and expenses. To be profitable,
the Fund's fees and expenses must be offset by trading profits and interest
income.
The Units are not liquid. No secondary market exists for the Units, and
the Units may be redeemed only as of a quarter-end upon 45 days' notice. No more
than 15% of the Fund's outstanding Units may be redeemed as of any calendar
quarter.
The Fund's investment in Man-Glenwood could incur losses that would not
have been incurred on cash and equivalents.
ACCREDITED INVESTORS ONLY
Despite the Units being publicly offered, the Managing Member has
determined that only "Accredited Investors" may invest. An "Accredited Investor"
generally is: (i) an individual who has had an annual income of at least
$200,000 ($300,000 together with spouse) during the past two years and
reasonably expects to earn at least such amount of income in the current year or
has a net worth of $1,000,000; or (ii) an entity with a net worth of $5,000,000.
"Accredited Investor" status is not any assurance that an investment in the Fund
is suitable for any prospective investor.
To subscribe, you must complete and sign the Subscription Agreement and
Power of Attorney Signature Page which accompanies this Prospectus and deliver
it to your Selling Agent. See Exhibit B - Subscription Requirements and Exhibit
C - Subscription Agreement and Power of Attorney. You should review this entire
Prospectus carefully before deciding whether to invest in the Units.
Pending investment in the Units, subscription funds will be held in escrow
at [bank], which will serve as the Escrow Agent. All interest earned on
subscription funds while held in escrow will be invested in the Fund at the time
that the related Units are issued and will become a general asset of the Fund.
INVESTMENT OBJECTIVES, STRATEGY AND POLICIES
The Fund offers the following potential advantages. There can be no
assurance that such advantages will, in fact, be achieved.
- - Access to the AHL Diversified Program. Historically, the AHL Diversified
Program has recognized substantial profits. Past performance is not
necessarily indicative of future results.
- - Diversification into managed futures through investing in the AHL
Diversified Program which has historically had low correlation to the
returns of traditional stock and bond portfolios. There can be no
assurance that the performance of the AHL Diversified Program will be
non-correlated to the general equity and debt markets.
- - Limited liability.
- - Administrative convenience.
REDEMPTIONS
You may redeem your Units as of the end of any calendar quarter, upon 45
days' prior written notice to the Managing Member. Redemption proceeds are
usually paid out within 45 business days of the effective date of redemption.
If quarter-end redemptions are requested for more than 15% of the Fund's
then outstanding Units, each redemption request will be reduced pro rata so that
only 15% of the Fund's then outstanding Units are redeemed. Units not redeemed
due to the reduction of a redemption request will remain subject to increase or
decrease in value as a result of the Fund's trading activities.
Redeeming Unitholders will be notified if redemption requests for any
given quarter-end are likely to be pro rated in order to comply with such 15%
limitation, and will be given an opportunity to withdraw their redemption
requests.
4
CHARGES
The Fund's substantial expenses must be offset by trading gains and
interest income to avoid depletion of the Fund's assets.
NO SALES LOAD
No Units will be subject to any initial selling commission or sales load.
CLIENT SERVICING FEE, SELLING COMPENSATION
The Managing Member will receive a Client Servicing Fee equal to 1/12 of
1.0% of the Net Asset Value of the Class A1 and Class B1 Units at each month-end
(a 1% annual rate), calculated monthly and paid quarterly in arrears. The Client
Servicing Fee will not apply to Class A2 and Class B2 Units, which are offered
exclusively to participants in selling agent or registered investment advisor
asset-based fee programs. Subject to the regulatory limitation that the Selling
Agent receive aggregate selling commissions not in excess of 10% of the sale
price of each unit, the Managing Member will pass such Client Servicing Fee and
a portion of the Managing Member's management fee on to the Selling Agent with
respect to all Units subject to Client Servicing Fees which remain outstanding.
Once the Selling Agent has received aggregate selling commissions totaling 10%
of the sale price of such Unit, however, the Unit will be redesignated as a
fractional Class A2 or Class B2 Unit, reflecting the then current net asset
value of Class A2 or Class B2 Units, to which the Client Servicing Fee does not
apply, and the Selling Agent will receive no further compensation in respect of
such Unit.
ORGANIZATIONAL AND OFFERING AND ADMINISTRATION EXPENSES
The Managing Member, or an affiliate, will bear, without reimbursement
from the Fund, the costs of organizing the Fund and offering the Units pursuant
to this Prospectus.
The Fund will enter into an administration agreement with an independent
third party (the "Administrator") to provide various services (such as
administration, accounting, valuation, tax reporting and investor services) at
competitive rates, estimated at 0.50% per annum of the Fund's average month-end
Net Asset Value during a fiscal year, assuming average assets of $50,000,000.
Administrative expenses in excess of 0.50% of the Fund's average month-end Net
Asset Value during any fiscal year will be paid by, or reimbursed to the Fund
by, the Managing Member or an affiliate.
MANAGEMENT AND INCENTIVE FEES
The Fund. The Fund will pay the Managing Member a management fee of 1/12
of 0.75% of the Net Asset Value of all outstanding Units at each month-end (a
0.75% annual rate), calculated monthly and paid quarterly in arrears.
The AHL Diversified Program. The AHL Diversified Program charges: (i) a
management fee of 1/6 of 1% of the Fund's month-end Net Asset Value (a 2% annual
rate), calculated and paid monthly; and (ii) a monthly incentive fee of 20% of
any "new net profits" attributable to the Fund's AHL account (the capital
attributable to all Classes will be traded in the same AHL account). The AHL
Diversified Program's incentive fees are calculated on a "high water mark"
basis. If losses are incurred since the last payment of an incentive fee with
respect to the Fund's AHL account, AHL must earn back such losses before
generating additional incentive fees. Net profits are not reduced for such
purposes by incentive fees previously paid.
The Fund's Man-Glenwood investment is subject to annual management,
investor servicing and administrative fees and expenses equal to 3% per annum of
the aggregate value of the Fund's investment in Man-Glenwood, calculated monthly
and paid quarterly.
The Man-Glenwood Sub-Funds charge asset-based fees, generally ranging from
0% to 2% annually of each Man-Glenwood Sub-Fund's assets (including the Fund's
investment), with performance or incentive allocations to the investment
managers generally expected to range from 10% to 25% of any net profits earned
annually or quarterly (net profits for such purposes will
5
generally be calculated in the same manner as in the case of AHL).
TRANSACTION COSTS
The AHL Diversified Program executes its futures and forward trades
exclusively through Man Financial Inc. and its affiliates ("Man Financial"), a
member of the Man Group. Consequently, the futures commission rates charged to
the AHL Diversified Program have not been negotiated at arm's-length and certain
Man Financial clients may be charged lower rates. The Managing Member estimates
the Fund's AHL Diversified Program transaction costs at approximately 1.5% per
year of the Fund's average month-end Net Assets during such year. The total
commissions paid by the Fund in any period of 12 consecutive months are limited
to 3% of the Fund's average month-end Net Assets during such 12-month period.
The Managing Member estimates the Man-Glenwood Sub-Funds' annual
transaction costs at less than 1% per year of the Fund's average month-end
investment in Man-Glenwood during such year.
The following Breakeven table indicates the approximate amount of trading
profit the Fund must earn, during the first 12 months after a Class A1 or Class
B1 Unit is sold, to offset the costs applicable to a minimum investment in Class
A1 or Class B1 Units.
BREAKEVEN TABLE
CLASS A1 CLASS B1
DOLLAR RETURN DOLLAR RETURN
PERCENTAGE REQUIRED REQUIRED
RETURN ($25,000 ($10,000
REQUIRED INITIAL INITIAL
FIRST INVESTMENT) INVESTMENT)
TWELVE FIRST TWELVE FIRST TWELVE
MONTHS OF MONTHS OF MONTHS OF
EXPENSES INVESTMENT INVESTMENT INVESTMENT
-------- ---------- ------------ -----------
Management Fee 0.75% $ 187.50 $ 75.00
Aggregate 0.50% $ 125.00* $ 50.00
Administrative
Expenses*
Client Servicing 1.00%** $ 250.00** $100.00**
Fee**
AHL Management Fee* 2.00%* $ 500.00* $200.00*
AHL Performance --+ --+ --+
Fee+
AHL Transaction 1.50%*** $ 375.00*** $150.00***
Costs***
Man-Glenwood 0.90%**** $ 225.00**** $ 90.00****
Management Fee****
Man-Glenwood 0.30%**** $ 75.00**** $ 30.00****
Sub-Fund
Management Fees
Man-Glenwood 0.60%**** $ 150.00**** $ 60.00****
Sub-Fund
Performance Fees
Man-Glenwood 0.30% **** $ 75.00**** $ 30.00****
Sub-Fund
Transaction Costs*
TWELVE-MONTH 7.85% $1,962.50 $785.00
"BREAKEVEN"
- --------------------
*Estimated
**Not applicable to Units acquired through and participating in a selling agent
or investment advisor asset-based fee program. + Assumes breakeven AHL
performance.
***Estimated; maximum AHL transaction costs are capped at 3%. ****Estimated;
Man-Glenwood investment estimated at 30% of Fund assets
The percentage return needed for an investment in Class A2 or Class B2 Units,
which are not subject to the Client Servicing Fee, to offset estimated costs
during the first 12 months after a Class A2 or Class B2 Unit is sold is 6.85%,
which represents a dollar return for a $25,000 Class A2 initial investment and a
$10,000 Class B2 initial investment of $1,712.50 and $685.00, respectively.
6
FEDERAL INCOME TAX ASPECTS
The Fund will be treated as a partnership and not as an association or
"publicly-traded partnership" for federal income tax purposes. Thus, you will be
taxed each year on the Fund's income whether or not you redeem Units from the
Fund or receive distributions from the Fund.
40% of any trading profits on certain U.S. exchange-traded futures
contracts and certain foreign currency forward contracts are taxed as short-term
capital gains at ordinary income rates, while 60% of any such trading profits
are taxed as long-term capital gains at a lower maximum rate for individuals
(15% for most gains recognized in taxable years beginning on or before December
31, 2008). The Fund's trading gains from other contracts will be primarily
short-term capital gains and ordinary income. This tax treatment applies
regardless of how long an investor holds Units. Interest income is taxed at
ordinary income rates.
Capital losses on the Units may be deducted against capital gains.
However, capital losses in excess of capital gains may only be deducted against
ordinary income to the extent of $3,000 per year. Consequently, you could pay
tax on the Fund's interest income, if any, even though you have lost money on
your Units.
The Fund will provide estimated tax information in advance of April 15 so
Unitholders may pay taxes on a timely basis. However, definitive tax information
will not be available until after April 15th. Accordingly, Unitholders will be
required to apply for extensions to file their income tax returns.
THE FUTURES AND FORWARD MARKETS
Futures contracts are generally traded on exchanges and call for the
future delivery of various commodities or are settled in cash.
Forward currency contracts are traded off-exchange through banks or
dealers.
Futures and forward trading is a "zero-sum," risk transfer economic
activity. For every gain realized by a futures or forward trader, there is an
equal and offsetting loss suffered by another.
IS THE FUND A SUITABLE INVESTMENT FOR YOU?
The Fund is offered only as a limited diversification opportunity from a
traditional investment portfolio, not as a complete investment program.
Managed futures programs are highly speculative and there can be no
assurance that investors will not lose all or substantially all of their
investment.
You should not invest more than 10% of your readily marketable assets
(exclusive of home, furnishings and automobiles) in the Fund.
THESE ARE SPECULATIVE SECURITIES. YOU MAY LOSE ALL OR SUBSTANTIALLY ALL OF
YOUR INVESTMENT IN THE FUND.
THIS POOL HAS NOT COMMENCED TRADING AND DOES NOT HAVE ANY PERFORMANCE
HISTORY.
7
RISK FACTORS
THE FOLLOWING ARE THE PRINCIPAL RISKS YOU SHOULD CONSIDER IN MAKING A
DECISION TO INVEST IN THE FUND. THERE IS NO ASSURANCE THAT THE FUND WILL
ACHIEVE ITS INVESTMENT OBJECTIVES. SPECULATIVE FUTURES TRADING IS A
HIGH-RISK INVESTMENT.
GENERAL RISKS OF AN INVESTMENT IN THE FUND
- - YOU MAY LOSE YOUR ENTIRE INVESTMENT. The Fund is speculative and involves
a high degree of risk. Investors must be prepared to lose all or
substantially all of their investment in the Fund.
- - THE FUND USES LEVERAGE, WHICH INCREASES RISK. The AHL Diversified Program
trades at a substantial degree of leverage acquiring futures and forward
contracts with a face amount of as much as five to seven times or more of
the Fund's total equity. Leverage increases the risk of loss as well as
performance volatility and transaction costs.
- - THE FUND IS THE FIRST PUBLIC FUTURES FUND SPONSORED BY THE MANAGING
MEMBER. The Managing Member has never previously sponsored a public
futures fund in the United States. The past performance of the Man Group's
other investment funds and products is not necessarily indicative of the
future success of the Fund.
- - THE FUND HAS NO OPERATING HISTORY. The Fund is newly-formed and has no
operating history. The past performance of the AHL Diversified Program is
not necessarily indicative of how it will perform in the future.
- - THE FUND'S PERFORMANCE IS EXPECTED TO BE VOLATILE. The Fund may suffer
sudden and substantial losses from time to and the day-to-day value of the
Units will be variable and uncertain. The Net Asset Value of the Units may
change materially between the date you subscribe and the date Units are
issued to you or the date on which you request a redemption and the
quarter-end redemption date.
- - THE FUND'S SUBSTANTIAL FEES AND EXPENSES WILL CAUSE LOSSES UNLESS OFFSET
BY PROFITS AND INTEREST INCOME. The Fund is subject to substantial fees
and expenses. These fees and expenses are "layered": the Fund, the AHL
Diversified Program, Man-Glenwood and the Man-Glenwood Sub-Funds are each
subject to their own level of fees. These fees and expenses must be offset
by trading profits and interest income to avoid losses.
- - AN INVESTMENT IN THE FUND IS NOT A LIQUID INVESTMENT. No public or other
market will develop for the Units. You must bear the economic risk of your
investment until you redeem your Units.
Units may only be redeemed as of any calendar quarter-end upon 45 days'
notice (subject to the limitation that redemptions of the Fund's
outstanding Units as of any given calendar quarter-end may not exceed 15%
of the Fund's then outstanding Units).
The Net Asset Value per Unit as of the redemption date may differ
materially from such Net Asset Value as of the date that irrevocable
notice of redemption must be given.
- - SUBSTANTIAL REDEMPTIONS MAY CAUSE THE FUND TO INCUR LOSSES. Substantial
redemptions of Units within a limited period of time, even if limited to
15% of the Fund's outstanding Units as of any calendar quarter-end, could
disrupt the Fund's portfolio resulting in losses.
- - THE FUND IS SUBJECT TO CONFLICTS OF INTEREST. The investment and
management activities of the Managing Member and its affiliates give rise
to conflicts of interest that may disadvantage the Fund.
Most of the direct and indirect service providers to the Fund (excluding
the
8
managers of the Man-Glenwood Sub-Funds and the Administrator); are members
of the Man Group and will remain so, even if using other, non-affiliated,
service providers might be better for the Fund. See "Conflicts of
Interest; Transactions Between Man Group and the Fund."
- - THE MANAGING MEMBER HAS NOT ESTABLISHED FORMAL PROCEDURES TO RESOLVE
CONFLICTS OF INTEREST. Because the Managing Member has not established any
formal procedures for resolving conflicts of interest, you will be
dependent on the good faith of the parties with conflicts to resolve the
conflicts equitably. There can be no assurance that conflicts of interest
will not result in losses for the Fund.
- - THE FUND'S INVESTMENT IN MAN-GLENWOOD MAY INCUR LOSSES. The Fund's
investment in Man-Glenwood is intended to enhance the yield which would
otherwise be earned on the Fund's assets held in reserve to support its
managed futures trading. However, this investment may incur losses.
- - CHANGES IN REGULATORY REQUIREMENTS MAY BE ADVERSE TO THE FUND. The
regulation of U.S. and non-U.S. futures funds such as the Fund has
undergone substantial change in recent years, and such change may continue
for the foreseeable future. The effect of regulatory change on the Fund,
while impossible to predict, could be substantial and adverse.
- - THE AHL INCENTIVE FEE CALCULATION MAY NOT REFLECT YOUR INVESTMENT
EXPERIENCE. The incentive fees payable to AHL will be calculated based on
the Fund's overall investment in AHL, irrespective of when individual
investors invest in the Fund. Consequently, the AHL incentive fees
calculated in respect of the Fund's AHL account may not be reflective of
the investment experience of certain Members.
- - YOU WILL BE TAXED EACH YEAR ON YOUR SHARE OF FUND PROFITS; YOU WILL BE
REQUIRED TO EXTEND THE FILING DATE OF YOUR TAX Returns. The Fund is taxed
as a partnership. Consequently, each Member will be required annually to
report and pay tax on such Member's distributive share of the Fund's net
long-term capital gain or loss, net short-term capital gain or loss and
all items of ordinary income or loss on such Member's income tax return
even though the Managing Member intends that the Fund will make no
distributions.
Definitive tax information relating to the Fund will not be available
until after April 15th, and Unitholders will be required to apply for
extensions to file their income tax returns. See "Tax Consequences."
- - THE FUND COULD LOSE ASSETS AND HAVE ITS TRADING DISRUPTED DUE TO THE
BANKRUPTCY OF THE COMMODITY BROKER OR OTHERS. The Fund is subject to the
risk of Man Financial, exchange, clearinghouse, or trading counterparty
insolvency. Fund assets could be lost or impounded during lengthy
bankruptcy proceedings. Were a substantial portion of the Fund's capital
to be tied up in a bankruptcy, the Managing Member might suspend or limit
the trading activities of the Fund, perhaps resulting in missed profit
opportunities.
RISKS SPECIFIC TO THE AHL DIVERSIFIED PROGRAM
- - LACK OF PRICE TRENDS WILL CAUSE LOSSES; THERE HAVE BEEN SUSTAINED PERIODS
OF TIME WITH INSUFFICIENT PRICE TRENDS FOR THE AHL DIVERSIFIED PROGRAM TO
TRADE PROFITABLY. THE MANAGING MEMBER EXPECTS THAT THERE WILL BE SIMILAR
PERIODS IN THE FUTURE. Trend-following futures trading systems such as the
AHL Diversified Program generally anticipate that most of their positions
will be unprofitable; they are dependent on major gains in a limited
number of positions for overall success. Accordingly, the Fund cannot
trade
9
profitably unless there are major price trends in at least some of the
markets it trades. Moreover, the price trends must be of a type that the
AHL models can identify. In the past there have been sustained periods of
time without significant market trends. During such periods, the Fund can
be expected to incur substantial losses.
Market conditions may result in which prices move rapidly in one
direction, then reverse and then reverse again. In such "whipsaw" markets,
AHL may establish positions for the Fund on the basis of incorrectly
identifying the rapid movement or reversal as a trend, resulting in
substantial losses.
In trendless markets, there is little chance that the AHL Diversified
Program will be profitable.
- - AHL'S TRADING DECISIONS ARE BASED ON TECHNICAL SYSTEMS NOT ON AN ANALYSIS
OF ECONOMIC FACTORS. AHL's trading decisions generally are not determined
by analysis of fundamental supply and demand factors, general economic
factors or anticipated world events, but rather by technical trading
systems based on historical price data. In markets in which fundamental
factors dominate, for example, a pending political or economic event, AHL
will maintain positions indicated by its technical systems which may incur
substantial losses if the event proved to be adverse.
- - INCREASED COMPETITION AMONG TREND-FOLLOWING TRADERS COULD REDUCE AHL'S
PROFITABILITY. The Managing Member believes that there has been, over
time, a substantial increase in interest in technical trading systems,
particularly trend-following systems. As the capital under the management
of trading systems based on the same general principles increases, an
increasing number of traders may attempt to initiate or liquidate
substantial positions at or about the same time as AHL, or otherwise alter
historical trading patterns or affect the execution of trades, to the
significant detriment of the Fund.
- - MARKET CONDITIONS WILL DOMINATE AHL'S RESULTS. Although the AHL
Diversified Program is as likely to be profitable as unprofitable in up or
down markets, there is some tendency for managed investment products such
as the Fund - particularly those managed by systematic, trend-following
advisors - to perform similarly during the same or approximately the same
periods. Prospective investors must recognize that, irrespective of the
skill and expertise of AHL, the success of the Fund may be substantially
dependent on general market conditions over which AHL has no control.
- - THE FUND IS INTENDED TO BE A MEDIUM- TO LONG-TERM INVESTMENT. The Managing
Member believes that investors should consider the Units as a medium- to
long-term investment (5 years or more) to permit the AHL Diversified
Program to function over a significant period.
LIMITS OF RISK DISCLOSURES
The foregoing summary risk factors does not purport to be a complete
explanation of the risks involved in an investment in the Fund. The AHL
Diversified Program is a proprietary, quantitative "black box" trading strategy
concerning which little information is available.
An investment in the Fund should only be made by investors who understand
the nature of the investment and can bear the risks of illiquidity and possible
total loss.
USE OF PROCEEDS
General
The entire proceeds of this offering will be used by the Fund to invest in
the AHL Diversified Program, as reserves to support the Fund's trading
activities and to pay expenses as described elsewhere in this Prospectus.
10
The Fund's capital will be maintained on deposit with Man Financial Inc.,
the Fund's commodity broker, or, in the case of the capital not needed to margin
AHL Diversified Program positions, with a bank. A limited portion of the Fund's
capital will be invested in Man-Glenwood. Fund capital held at Man Financial
will be maintained in segregated accounts, as required by CFTC Regulations. Fund
capital supporting the Fund's trading in foreign currency forward contracts and
other over-the-counter ("OTC") contracts will be maintained with the Fund's
foreign currency and OTC counterparties, including affiliates of Man Financial,
generally in cash upon which the Fund will receive an interest credit.
The Managing Member does not anticipate making any distributions of Fund
profits.
The AHL Diversified Program
The AHL Diversified Program is a managed futures program directed for the
Fund by Man-AHL (USA) Limited, a member of the Man Group, which is registered
with the CFTC as a commodity trading advisor, is a member of the NFA and is
registered in the United Kingdom with the Financial Services Authority.
The AHL Diversified Program is quantitative and primarily directional -
seeking to identify and take advantage of upward and downward price trends.
Trading takes place 24 hours per day and real-time price information is used to
respond to price moves across a diverse range of global markets. The AHL
Diversified Program invests in a diversified portfolio of futures, options and
forward contracts, swaps and other financial derivative instruments both on and
off exchange. These markets may be accessed directly or indirectly and include,
without limitation, stock indices, bonds, currencies, short-term interest rates
and selected commodities, including energy and precious and base industrial
metal contracts. Investment rules are executed within a systematic framework. In
addition to sector and market diversification, the AHL Diversified Program seeks
to achieve diversification by combining various systems driven by computerized
processes or trading algorithms, which sample prices in real time and measure
price momentum and breakouts spread over approximately 130 markets traded. The
trading algorithms seek to capture price trends and close out positions when a
high probability exists of a different trend developing, although the AHL
Diversified Program may include algorithmic systems based on certain forms of
quantitative fundamental data such as interest-rate data. For diversification,
the AHL Diversified Program deploys investment capital across the full range of
sectors and markets. Factors determining asset allocation weightings to
different sectors and markets are market and sector correlations, expected
returns, market access costs and market liquidity. Market exposure is
dynamically adjusted in real time to reflect changes in the volatility of
individual markets. The AHL Diversified Program systems, as applied, are
intended to target defined volatility levels rather than returns, assisted by
computer-supported analytical instruments and real time risk control and
management information systems.
The AHL Diversified Program uses margin and considerable leverage to reach
model allocations. In addition to the Fund's margining at Man Financial, the
Fund may also use lines of credit provided by Man Financial.
The investment process is the product of sophisticated research - the AHL
Diversified Program applies a technical approach that was developed and has been
operated since 1983. Although the underlying investment methodology is
proprietary and the precise details confidential, the guiding principles have
remained unchanged through the years: diversification, discipline, efficiency,
rigorous risk management and ongoing research.
The central investment philosophy is that markets are characterized by
real and often fairly persistent anomalies that are neither the result of random
behavior nor the outcome of perfectly informed or rational decisions by market
participants. Powerful computerized processes or trading algorithms are used to
sample prices in real time, seeking to identify and exploit the existence of
serial correlation or "crowd behavior" in markets
11
- - manifested by price trends. The core trend-following strategies include
momentum and breakout trading approaches which are intended to close out
positions once a trend is completed and there is a high probability of a
different trend developing.
These strategies combine multiple signal generators based on various time
frames, ranging from two to three days to several months. The number of systems
applied to a particular market varies according to the depth of liquidity in
that market. Markets with higher liquidity and lower access costs can support
higher trading frequencies and may receive greater allocation weightings in the
portfolio. The core trend-following component is complemented by proprietary
quantitative spread trading and arbitrage strategies that seek to capture
profits as markets experiencing relative pricing anomalies return to a state of
equilibrium.
All the strategies and systems of the AHL Diversified Program are designed
to target defined volatility levels rather than returns, and the investment
process is underpinned by computer-supported analytical instruments and
disciplined real time risk and management information systems. A proprietary
risk measurement method similar to the industry standard "value-at-risk" helps
ensure that the rule-based decisions that drive the investment process remain
within predefined risk parameters. Margin-to-equity ratios are monitored daily,
and the level of exposure in each market is quantifiable at any time and is
adjusted in accordance with market volatility. Market correlation is closely
monitored to prevent over-concentration of risk and ensure optimal portfolio
weightings. Market liquidity is examined with the objective of ensuring that
opening and closing positions are executed with minimal slippage, while
brokerage selection and trade execution are continually monitored with the
objective of ensuring quality market access.
Refinements to the Program since its development include the introduction
of market volatility controls, an increase in the number and diversity of
markets, the introduction of 24-hour trading and systems differentiation to
include the spread trading and arbitrage strategies that complement the main
trend-following trading algorithms.
Similarly, AHL may increase the number and diversity of markets and
instruments traded directly or indirectly by the AHL Diversified Program.
As of [-], 2005, the composition of the AHL Diversified Program's
portfolio was as follows:
[PIE CHART]
1 Currencies XX.X%
2 Energies XX.X%
3 Bonds XX.X%
4 Stocks XX.X%
5 Interest Rates XX.X%
6 Metals XX.X%
7 Agriculturals XX.X%
The Fund, directly or indirectly, will receive interest income on margin
and non-margin deposits with Man Financial Inc. United States dollar deposits
will receive interest income based on the 30-day U.S. Treasury bill rate and
other currencies at LIBOR, in each case, plus or minus 100 basis points.
Interest income, once accrued, is subject to risk of trading losses. The Fund
may be subject to interest charges on negative balances should the
12
interest income earned on the composition of foreign currency balances not
outweigh the interest charge on the shortfall of US dollar balances.
AHL may enter into foreign currency forward contracts in connection with
the Fund's futures trading denominated in currencies other than U.S. dollars to
hedge the exchange rate risk exposure of the non-U.S. dollar margin deposits
supporting such trading. There can be no assurance that such hedging will be
successful.
"Yield Enhancement" Investment in Man-Glenwood
The Managing Member will invest approximately 30% of the Fund's capital in
Man-Glenwood. This investment has the potential to generate higher yields than
the cash or cash equivalent instruments in which the Fund will hold the bulk of
its assets (used to support the Fund's AHL Diversified Program trading) and also
to perform in a manner substantially non-correlated to the AHL Diversified
Program. Historically, Man-Glenwood has had low correlation to the AHL
Diversified Program (as well as to stocks and bonds). The Managing Member will
attempt to rebalance the Fund's portfolio on a quarterly basis to maintain the
Fund's investment in Man-Glenwood at approximately 30% of Fund capital.
Among the investment strategies that may be pursued by the Man-Glenwood
Sub-Funds are the following:
- - Equity Hedge
- - Multi-Strategy
- - Event Driven
- - Relative Value
- - Variable Equity
- - Commodity and Trading
No prospective investor should invest in the Fund in reliance of the
Fund's investment in Man-Glenwood. The Managing Member may at any time reduce or
eliminate the Fund's Man-Glenwood investment if the Managing Member deems doing
so to be necessary or advisable to maintain the Fund's AHL Diversified Program
trading as well as for regulatory or tax purposes.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FUND'S PROSPECTIVE OPERATIONS
RESULTS OF OPERATIONS
The Fund is a speculative commodity pool which will trade pursuant to the
AHL Diversified Program.
The AHL Diversified Program is a futures and forward price
trend-following, trading system. The Program is entirely quantitative in nature
and implements trading positions on the basis of statistical analyses of past
price histories.
The AHL Diversified Program, like most trend-following systems, is
designed in the anticipation that most of its trades will be unprofitable; the
objective of overall profitability depending on the system identifying certain
major trends which occur and recognizing significant profits from participating
in such trends.
The past performance of the AHL Diversified Program is not necessarily
indicative of its future results. This is the case with all speculative trading
strategies. Moreover, the markets in which the AHL Diversified Program is active
have seen major changes in recent years, including the influx of entirely
different classes of market participants. These changed circumstances may mean
that the markets in which AHL has previously traded are not necessarily
representative of those in which it will trade on behalf of the Fund.
Futures trading programs are proprietary and confidential. Investors, in
investing in the Fund, must recognize that they are essentially committing
capital to a "black box" trading strategy. There is no way to predict how this
strategy will perform in the future, and if it does not perform successfully,
investors may lose all or substantially all of their investment.
As a speculative futures fund, the Fund effectively maintains all of its
capital in reserve. The Fund does not "buy" or "sell" futures or forward
contracts in the traditional sense; rather,
13
through taking positions in these markets, the Fund acquires loss/profit
exposure and uses its capital to cover losses and provide margin (which
constitutes a good faith deposit towards the Fund's obligation to pay such
losses) to support its open positions. The Fund will maintain most of its
capital in cash and cash equivalents.
CAPITAL RESOURCES
Due to the low margins required to support futures and forward trading,
only approximately 10% - 20% of the capital of a managed futures fund such as
the Fund is needed to margin its positions. The Fund will hold most of its
capital in cash and cash equivalents while investing approximately 30% of such
capital in Man-Glenwood, both for yield enhancement and diversification
purposes. The Fund's investment in Man-Glenwood cannot be used to margin its
futures trading and would be liquidated to the extent that the Manager deemed it
advisable to do so to support the Fund's futures trading. There can be no
assurance that the Fund will maintain any investment in Man-Glenwood. The
Managing Member is under no obligation to maintain the Fund's investment in
Man-Glenwood, and may reduce or eliminate such investment at any time.
The Fund, not being an operating company, does not incur capital
expenditures, it functions solely as a passive trading vehicle, and its capital
resources are used only as assets available to provide margin and pay trading
losses incurred on the Fund's AHL Diversified Program account.
LIQUIDITY
The AHL Diversified Program maintains highly liquid positions, and the
assets held by the Fund to support AHL's trading are cash or highly liquid
Treasury bills, deposit accounts or other equivalents.
The Fund will invest a limited portion of its capital in Man-Glenwood,
which is a closed-end registered investment company that provides quarterly
liquidity through discretionary tender offers for its shares. Under certain
circumstances, such tender offers may not occur as scheduled or may not be
sufficient to satisfy the full amount requested to be redeemed by the Fund.
However, the Man-Glenwood component of the Fund's portfolio is minor, and the
Managing Member believes that any delays in receiving redemption payments from
Man-Glenwood are unlikely to adversely affect the Fund's operations.
ACCOUNTING PRINCIPLES
The Fund will record its transactions in futures and forward contracts,
including related income and expenses, on a trade date basis. Open futures
contracts traded on an exchange will be valued at market, which is based on the
closing settlement price on the exchange where the futures contract is traded by
the Fund on the day with respect to which the Fund's Net Assets are being
determined. Open forward contracts traded on the interbank market will be valued
at their settlement price on the day with respect to which the Fund's net assets
are being determined.
The Fund will value its Man-Glenwood investment at its net asset value as
provided by Man-Glenwood.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions, such as accrual of expenses, that
affect the amounts and disclosures reported in the financial statements. Based
on the nature of the business and operations to be engaged in by the Fund, the
Managing Member believes that the estimates it will use in preparing the Fund's
financial statements will be appropriate and reasonable, however, actual results
could differ from the estimates. The estimates to be used will not provide a
range of possible results that would require the exercise of subjective
judgment. The Managing Member further believes that, based on the nature of the
business and operations to be engaged in by the Fund, no other reasonable
assumptions relating to the application of the Fund's critical accounting
estimates other than those to be used would likely result in materially
different amounts from those that will be reported.
14
OFF-BALANCE SHEET ARRANGEMENTS
The Fund will not engage in off-balance sheet arrangements with other
entities.
CONTRACTUAL OBLIGATIONS
The Fund will not enter into contractual obligations or commercial
commitments to make future payments of a type that would be typical for an
operating company. The Fund's sole business will be trading futures contracts,
forward currency and other OTC contracts, both long (contracts to buy) and short
(contracts to sell), and investing in cash, cash equivalents and Man-Glenwood.
All of the Fund's futures, forward and OTC contracts will be settled by offset,
not delivery. Substantially all such contracts will be for settlement within
four to six months of the trade date and substantially all such contracts will
be held by the Fund for less than four to six months before being offset or
rolled over into new contracts with similar maturities. Once the Fund begins
operations, the Fund's annual audited financial statements will present a
condensed schedule of investments setting forth net unrealized appreciation
(depreciation) of the Fund's open positions, both long and short, at fiscal
year-end.
SUMMARY
As is the case with any speculative futures fund, it is impossible to
predict how the Fund will perform. It is not possible, as it is in the case of
an operating business, to predict performance trends, analyze future market
conditions or evaluate the likely success or failure of the Fund.
There are certain general market conditions in which the Fund is more
likely to be profitable than in others. For example, in trendless or stagnant
markets, the AHL Diversified Program is unlikely to be profitable. On the other
hand, trending markets with substantial price change momentum can be favorable
to the AHL Diversified Program. However, because of the continually changing
population of market participants as well as supply and demand characteristics,
it cannot be predicted how the Fund will perform in any given market conditions.
MANAGEMENT OF THE FUND
THE MANAGING MEMBER
GENERAL
Man Investments (USA) Corp., a Delaware corporation, serves as Managing
Member with broad oversight over the operations and affairs of the Fund. The
Managing Member is registered with the CFTC as a commodity pool operator and
commodity trading advisor and is a member of the NFA. Under the LLC Agreement,
the Managing Member has the power to enter into, make and perform any contracts,
agreements or other undertakings it may deem advisable, including the delegation
of any of its responsibilities to other agents, in conducting the business of
the Fund, including but not limited to contracts, agreements or other
undertakings with persons, firms or corporations with which the Managing Member
or any other Member is affiliated. In this regard, it is expected that the
Managing Member will consult with and/or utilize research and/or other
information provided by other members of the Man Group. The principal business
address of the Managing Member is 123 N. Wacker Drive, 28th Floor, Chicago,
Illinois 60606.
The Managing Member is a subsidiary of Man Group plc, which is listed on
the London Stock Exchange and a constituent of the FTSE 100 index of leading UK
stocks. Man Group plc is a diversified global financial services firm that
engages in a broad spectrum of activities including financial advisory services,
asset management activities, sponsoring and managing private investment funds,
engaging in broker-dealer transactions (through its Man Financial division) and
other activities. Man Investments has launched approximately 450 alternative
investment products, including commodity pools, and, as of March 31, 2005, has
an estimated $43 billion under management.
The Managing Member will maintain an investment in the Fund equal to 1% of
the Fund's Net Asset Value (including the Managing
15
Member's investment) or $500,000, whichever is less.
Principals
The Managing Member's principals are John Kelly, Michael Lozowski, James
Rosenberger and Steven Zoric. The biographies of the officers and principals of
the Managing Member follow.
John Kelly, born 10/11/46. Mr. Kelly is the President and a Director of
the Managing Member and President, Chief Executive Officer and a Director of the
Selling Agent, which positions he has held since February 2002. As President,
Mr. Kelly is responsible for the day-to-day operations of the Managing Member
and the Selling Agent. Mr. Kelly is also a member of the Board of Managers of
three registered investment companies (including Man-Glenwood) advised by
Glenwood, which is an affiliate of the Managing Member. Mr. Kelly has over 15
years' experience in investment management. He graduated from Southampton
College of Technology and then went on to work for various industrial companies,
attaining general manager and directorship positions. In 1978, Mr. Kelly joined
a business consultancy service as a general manager, specializing in investment,
finance and aviation in the Gulf Region. In 1987, he joined the Man Group as a
Regional Manager in Bahrain where he was responsible for negotiations, corporate
finance and marketing support for specialist financial products promoted jointly
with major institutions in the region. In 1991, he became the Sales and
Marketing Director of Man Investments and was responsible for managing sales and
marketing globally for the Man Group until he moved to the United States in
September 2001.
Michael Lozowski, born 9/4/53. Mr. Lozowski is a Director of the Managing
Member, a Director and officer of Man-AHL (USA) Limited, co-head of Man Global
Strategies, a division of Man Investments Limited, in London, and a Director of
Man Investments Limited. Prior to his current role, he served as Man
Investments' Corporate Finance Director between 1990 and 1995. Mr. Lozowski
joined the Man Group in 1987 as assistant treasurer, having worked at The Chase
Manhattan Bank from 1980 to 1987 and at the National Westminster Bank between
1977 and 1980. He holds a Master's degree in Physics from University College,
Oxford and a Master of Science degree in Operational Research from the
University of Sussex.
James Rosenberger, born 1/27/63. Mr. Rosenberger joined Man Investments in
June 2003 as Head of Finance and Administration. Mr. Rosenberger's
responsibilities include Finance, Administration, Logistics and Human Resources
within the Managing Member. Mr. Rosenberger is the Chief Financial Officer for
the Managing Member and is the Chief Financial Officer and Financial and
Operations Principal for the Selling Agent. Prior to Man Investments, Mr.
Rosenberger was vice-President - Finance, Controller for The Envestnet Group,
Inc., beginning in 2000. Mr. Rosenberger's responsibilities during his tenure at
The Envestnet Group included all of the firm's accounting, finance, risk
management and investor relations functions. From early 1998, Mr. Rosenberger
was CFO for Duff & Phelps Investment Management Company. From late 1994 to early
1998, Mr. Rosenberger was Associate Director - IT Business Management and
Associate Director - Finance & Control for Swiss Bank Corporation (now UBS).
From early 1994 to late 1994, Mr. Rosenberger was the General Accounting Manager
at Rand McNally. From late 1987 to early 1994, Mr. Rosenberger was Manager -
Financial Planning & Analysis as well as Plant Accounting Manager for a division
of Rockwell International. From early 1986 to late 1987, Mr. Rosenberger was
Senior Auditor with Deloitte Haskins & Sells. Mr. Rosenberger graduated from the
University of Illinois with a BS in Accountancy in 1985. Mr. Rosenberger is a
Certified Public Accountant and a member of the American Institute of Certified
Public Accountants.
Steven Zoric, born 5/6/71. Mr. Zoric is a Director, Vice President and
Secretary of the Managing Member and the Selling Agent, which positions he has
held since February 2002. Mr. Zoric is Head of U.S. Legal and Compliance for the
Man Investments Division of Man Group plc, which includes the Managing Member,
the Selling Agent and Glenwood. Mr. Zoric is also Vice President and
16
Secretary of Glenwood and Secretary of the three investment companies advised by
Glenwood (including Man-Glenwood). In addition, Mr. Zoric is a Director and the
Secretary of several other U.S. Man Group companies, all of which are affiliates
of the Managing Member. Mr. Zoric joined the Man Group in July 2001. Prior to
joining the Man Group, from April 1997 to October 1999 and from August 2000 to
July 2001, Mr. Zoric was an associate in the Financial Services Group of Katten
Muchin Rosenman, a law firm based in Chicago. From November 1999 to July 2000,
Mr. Zoric was the Futures and Commodities Compliance Manager at Morgan Stanley &
Co., Inc. in New York. From April 1996 to April 1997, Mr. Zoric was an attorney
in the Financial Services Group at Sidley Austin Brown & Wood LLP in Chicago.
Mr. Zoric received a B.A. in Political Science from Northwestern University in
June 1992 and his J.D. with Honors from DePaul University College of Law in
1995.
AHL
The AHL Diversified Program is a managed futures program managed by
Man-AHL (USA) Limited, a member of the Man Group, which is registered with the
CFTC as a commodity trading advisor, is a member of the NFA and is registered in
the United Kingdom with the Financial Services Authority. Mr. Michael Lozowski,
a principal of the Managing Member, is also a principal of AHL and his biography
is set forth above. The biographies of the other principals of AHL follow.
Tim Wong. Mr. Wong is head of the AHL investment division with Man
Investments Ltd. and an associate director of Man Investments. In addition to
his key role in the AHL investment management process, he is a member of the Man
Global Strategies Committee. Mr. Wong joined the AHL division in 1991 as a
research analyst, later assuming responsibility for the day-to-day running of
the research and investment management operations. He graduated from Oxford
University in 1991 with a First in Engineering Science and subsequently gained
an MSC in Statistics and Operational Research from London University. He is an
Associate of the UK Society of Investment Professionals.
Victoria Owen. Ms. Owen is co-head of Man Global Strategies and a director
of Man Investments Limited. She studied Mathematics with Computer Sciences at
Bristol University and in 1981 began a career in the futures industry working
for Gill & Duffus on the energy brokerage desk. Ms. Owen subsequently extended
her specialist experience in the energy markets to trading and trading systems
development in a broad range of markets. She joined Man Investments in 1992 and
has been extensively involved in financial engineering, product development, and
all other key investment management activities. She now focuses on Man Global
Strategies' portfolio construction and management process and oversees the risk
monitoring process.
MAN-GLENWOOD
Glenwood Capital Investments, L.L.C. ("Glenwood") is an Illinois limited
liability company registered with the CFTC as a commodity pool operator and
commodity trading advisor and is a member of the NFA. Glenwood is also
registered with the SEC as an investment adviser.
Since its inception in 1987 (through a predecessor firm), Glenwood has
focused primarily on building multi-strategy, multi-manager funds of hedge fund
portfolios.
Glenwood is responsible for the day-to-day management of Man-Glenwood and
for the allocation of Man-Glenwood's assets to various Man-Glenwood Sub-Funds,
subject to policies adopted by the Board of Managers of Man-Glenwood. The
principals of Glenwood will devote such time to the ongoing operations of
Man-Glenwood as they deem advisable in order to implement and monitor
Man-Glenwood's investment program.
The personnel of Glenwood have primary responsibility for the investment
management of Man-Glenwood, including the selection of Man-Glenwood Sub-Fund
Managers and the allocation of
17
Man-Glenwood's assets among the Man-Glenwood Sub-Fund Managers.
PERFORMANCE INFORMATION
THIS POOL HAS NOT COMMENCED TRADING AND DOES NOT HAVE ANY PERFORMANCE
HISTORY.
NOTES TO PERFORMANCE SUMMARIES
MONTHLY RATES OF RETURN are calculated by dividing each month's net
performance by net asset value as of the beginning of such month.
WORST PEAK-TO-VALLEY DRAW-DOWN is the largest decline in month-end net
asset value (without adjustment for subscriptions and withdrawals) without such
net asset value being subsequently equaled or exceeded. For example, if the net
asset value dropped (1)% in each of January and February, rose 1% in March and
dropped (2)% in April, the Peak-to-Valley Drawdown would still be continuing at
the end of April in the amount of approximately (3)%, whereas if the net asset
value had risen approximately 2% or more in March, the Peak-to-Valley Drawdown
would have ended as of the end of February at approximately the (2)% level. The
period indicated for the Worst Peak-to-Valley Drawdown is the period beginning
with the month when the drawdown began and ending with the month as of the end
of which the lowest net asset value during the drawdown was reached.
THE MANAGING MEMBER AND ITS AFFILIATES HAVE OPERATED COMMODITY POOLS BEFORE
WHICH ARE EXEMPTED FROM SPECIFIC CFTC DISCLOSURE STANDARDS. PURSUANT TO
APPLICABLE CFTC REGULATIONS, THE PERFORMANCE OF THESE "EXEMPT POOLS" IS NOT
REQUIRED TO BE, AND IS NOT, PRESENTED IN THIS PROSPECTUS BECAUSE SUCH "EXEMPT
POOLS" ARE SUFFICIENTLY DIFFERENT FROM THE FUND THAT THE PRESENTATION OF THEIR
PERFORMANCE IS NOT MATERIAL TO A DECISION WHETHER TO INVEST IN THE FUND.
18
AHL DIVERSIFIED PROGRAM
JANUARY 2000 - [-] 2005
PERFORMANCE SUMMARY
The following summary performance information reflects the composite performance
results for the required period from January 2000 through [-] 2005 of the AHL
Diversified Program to be traded on behalf of the Fund. Man AHL (USA) Limited,
the commodity trading advisor to the Fund, is one of a number of wholly-owned
commodity trading advisor subsidiaries of Man Group Plc, all of which implement
the AHL Diversified Program on behalf of their clients pursuant to the same
trading systems in the same markets. At [-] 2005, _____ of the open accounts
were profitable and ____ were unprofitable.
NAME OF CTA: Man AHL (USA) Limited
NAME OF PROGRAM: AHL Diversified Program
INCEPTION OF TRADING BY CTA: 1/1/05
INCEPTION OF TRADING IN PROGRAM: January 1990
NUMBER OF OPEN ACCOUNTS: ___
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) OVERALL: U.S. $______
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) OVERALL: U.S. $______
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) IN PROGRAM: U.S. $______
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) IN PROGRAM: U.S. $______
LARGEST MONTHLY DRAWDOWN: (___)% (___)
LARGEST PEAK-TO-VALLEY DRAWDOWN: (___)% (___)
NUMBER OF PROFITABLE ACCOUNTS OPENED AND CLOSED DURING THE PERIOD: ___%
RANGE OF RETURNS EXPERIENCED BY PROFITABLE ACCOUNTS OPENED
AND CLOSED DURING THE PERIOD: ___%
NUMBER OF UNPROFITABLE ACCOUNTS THAT HAVE OPENED
AND CLOSED DURING THE PERIOD: ___
RANGE OF RETURNS EXPERIENCED BY UNPROFITABLE ACCOUNTS OPENED
AND CLOSED DURING THE PERIOD: (___)% - (___)%
MONTH 2000 2001 2002 2003 2004 2005
----- ------ ------ ------ ------ ------ -----------
January (0.7)% 1.5% (4.1)% 7.6% 1.0% (5.8)%
February 0.8% 2.6% (5.7)% 7.8% 4.8% 3.3%
March (3.1)% 11.8% (1.0)% (8.5)% (2.3)% (0.9)%
April (2.2)% (9.0)% (2.8)% 0.7% (8.0)%
May 2.4% (2.5)% 1.8% 10.9% (2.2)%
June (3.2)% (1.0)% 13.0% (4.1)% (5.8)%
July (3.0)% 4.3% 6.3% (0.5)% (0.4)%
August 4.6% 6.5% 0.9% (1.2)% 1.4%
September (2.6)% 10.4% 8.6% 2.5% 2.6%
October 4.5% 4.6% (9.1)% 1.4% 4.2%
November 10.3% (8.7)% (5.3)% (1.9)% 7.5%
December 10.8% (0.7)% 10.7% 6.6% (0.4)%
---- ---- ---- ---- ---- -----------
Compound Annual Rate of 18.8% 18.8% 11.1% 21.4% 1.3% (3.5)%
Rate of Return
---- ---- ---- ---- ---- -----------
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
---------------------------------------------------
PURSUANT TO APPLICABLE RULES OF THE CFTC, THE AHL DIVERSIFIED PROGRAM
PERFORMANCE RECORD IS PRESENTED FOR THE PAST FIVE FULL YEARS AND YEAR TO
DATE RATHER THAN SINCE INCEPTION.
19
NET ASSET VALUE
The Net Asset Value of the Fund will be computed as of the close of
business on the last day of each month.
The Net Asset Value of the Fund equals its assets less its liabilities, as
determined generally in accordance with Generally Accepted Accounting Principles
as applied in the United States of America. More specifically, the Net Asset
Value of the Fund equals the sum of all cash, the liquidating value (or cost of
liquidation, as the case may be) of all futures, forward and options on futures
positions and the fair market value of all other assets of the Fund held
pursuant to the AHL Diversified Program, less all liabilities of the Fund
(including accrued liabilities, regardless of whether such liabilities are ever
paid), in each case as determined by the Managing Member generally in accordance
with Generally Accepted Accounting Principles as applied in the United States of
America.
The Net Asset Value of the portion of the Fund's assets invested in
Man-Glenwood will be determined based on the Net Asset Values provided by the
managers of the Man-Glenwood Sub-Funds. The Managing Member has no means of
determining the accuracy of such valuations. Moreover, these valuations are
typically based on estimates. The difference between estimated and final values
will be reflected in the accounting period in which such final values become
available, not by retroactively adjusting previously determined Net Asset
Values.
20
FEES AND EXPENSES PAID BY THE FUND
The Managing Member believes that you should consider the charges to which
the Fund is subject when making your investment decision. Also, please see the
"Breakeven Table" on page 6.
CHARGES PAID BY THE FUND
RECIPIENT NATURE OF PAYMENT AMOUNT OF PAYMENT
- --------------------------- ---------------------------- ------------------------------------------------------------
The Managing Member ....... Management Fee 0.75% per annum of the Fund's Net Asset Value, calculated
monthly and paid quarterly in arrears.
Client Servicing Fee 1% per annum of the Net Asset Value of each Class A1 and
Class B1 Unit, calculated monthly and paid quarterly in
arrears. The Managing Member will reallocate the Client
Servicing Fee to the Selling Agent, provided that once the
Selling Agent has received aggregate compensation totaling
10% of a Unit's initial sale price (or, if earlier, such
Unit has been charged Client Servicing Fees totaling 10% of
such Units initial sale price), such Unit will be
redesignated as a fractional Class A2 or Class B2 Unit,
reflecting the current net asset value of Class A2 or Class
B2 Units, to which the Client Servicing Fee does not apply.
Man Financial Inc ......... Brokerage Commissions $9 to $11 per round turn trade, inclusive of exchange and
regulatory fees. Limited to 3% of the Fund's 12-month
average month-end Net Asset Value during each period of 12
consecutive months.
Forward
Counterparties ............ "Bid-ask" spreads These spreads are not actually fees paid by the Fund but are
dealer profit margins incorporated into forward contract
pricing. They are, therefore, unquantifiable. In addition,
the Fund will pay Man Financial Limited, an affiliate of the
Fund's commodity broker, a clearing fee of $1.14 on each
Fund forward transaction. This clearing fee is included
within the 3% cap on Fund brokerage commissions.
Man AHL (USA) Limited ..... Management Fee 2% per annum of the Fund's Net Asset Value, calculated and
paid monthly.
Monthly Incentive Fee 20% of any cumulative net profits in excess of the "high water
mark" for such net profits, calculated and paid monthly.
Man-Glenwood .............. Management, investor In total, 3% per annum of the Fund's aggregate investment in
servicing and administrative Man-Glenwood, calculated monthly and paid quarterly.
fees and expenses
Others .................... Administrator fees, custody As incurred; not expected to exceed 0.50 of 1% of average
and escrow fees, legal, month-end Net Assets annually, assuming average assets of
accounting, printing, postage $50,000,000. Administrative expenses in excess of 0.50 of
and other administrative costs 1% of the Fund's annual average month-end Net Assets will be
paid by, or reimbursed to the Fund by, the Managing Member
or an affiliate.
Others .................... Extraordinary charges Actual payments to third parties; expected to be negligible.
21
NO SALES LOAD
No Units will be subject to any initial selling commission or sales
load.
CLIENT SERVICING FEE, SELLING COMPENSATION
The Managing Member will receive an annual Client Servicing Fee, in
respect of Class A1 and Class B1 Units, equal to 1/12 of 1% of the Net Asset
Value of such Units at each month-end (a 1% annual rate), calculated monthly and
paid quarterly.
Subject to the regulatory limitation that the Selling Agent receive
aggregate selling commissions not in excess of 10% of the sale price of each
Unit, the Managing Member will pass such Client Servicing Fee, plus one-third of
the Managing Member's management fee, on to the Selling Agent until the Selling
Agent has received the maximum selling commission of 10% of the Net Asset Value
per Class A1 and Class B1 Unit at the time of issuance.
Once the Selling Agent has received aggregate selling compensation
totaling 10% of the sale price of a Unit (or, if earlier, such Unit has been
charged Client Servicing Fees totaling 10% of the sale price of such Unit), such
Unit will be redesignated as a fractional Class A2 or Class B2 Unit, reflecting
the then current Net Asset Value of the Class A2 or Class B2 Units, to which the
Client Servicing Fee does not apply, and the Selling Agent will receive no
further compensation in respect of such Unit.
Class A2 and Class B2 Units, which are offered exclusively to
participants in selling agent asset-based or fixed fee investment programs and
to clients of registered investment advisors who participate in such advisors'
fee-based advisory programs, will not be subject to Client Servicing Fees, and
the Selling Agent will not receive any selling compensation in respect of such
Units.
ORGANIZATIONAL AND OFFERING COSTS
The Managing Member, or an affiliate, will bear, without
reimbursement from the Fund, the costs of organizing the Fund and offering the
Units pursuant to this prospectus.
MANAGEMENT FEE
The Fund will pay the Managing Member a management fee of 1/12 of
0.75% of the Net Asset Value of all outstanding Units at each month-end (a 0.75%
annual rate), calculated monthly and paid quarterly in arrears.
The Managing Member shares the Management Fee with its affiliates.
AHL MANAGEMENT AND INCENTIVE FEES
The AHL Diversified Program charges a management fee of 1/6 of 1% of
the Fund's average month-end Net Asset Value (a 2% annual rate), calculated and
paid as of the end of each calendar month.
For purposes of calculating the AHL Diversified Program management
fee, Net Asset Value is not reduced by accrued management or incentive fees or
fees payable to the Managing Member.
The AHL Diversified Program charges a monthly incentive fee equal to
20% of any cumulative net profits attributable to the Fund's aggregate
investment in the Program in excess of the "high water mark," or all time high
point, in such net profits.
Incentive fees paid do not reduce cumulative net profits for
purposes of calculating the incentive fees due to AHL.
As an example of the calculation of the AHL Diversified Program
incentive fee, assume that the Net Asset Value of the Fund's AHL Diversified
Program investment is $25,000,000 and that as of the end of the first month,
such exposure has generated $100,000 of profits. An incentive fee
22
equal to $20,000 would be due and the Net Asset of such investment would be
$25,080,000. If, in the following month, the Fund's exposure had earned an
additional $20,000, an additional incentive fee of $4,000 would be due even
though such profit only earns back the incentive fee paid in the first month.
When a redemption is made, any accrued incentive fee attributable to
the redeemed Units is paid to AHL and any shortfall between the current level of
net profits and the high water mark attributable to the Fund's AHL Diversified
Program investment is reduced by being multiplied by the fraction the numerator
of which is Net Asset Value of the redeemed Units and the denominator of which
is the Net Asset Value of the Fund's AHL Diversified Program investment
immediately prior to the redemption.
Because the incentive fees are calculated on the basis of the
aggregate performance of the Fund, the incentive fee paid by any given
investor's Units may not directly correlate to such investor's investment
experience in the Fund. For example, an investor may invest in the Fund when the
Fund's investment in AHL is below its high water mark. In such circumstances,
such investor would benefit from the loss carryforward existing with respect to
the Fund with the result that no incentive fee would be paid to AHL with respect
to profits earned on such investor's Units until such loss carryforward had been
eliminated by such profits. At the same time, the economic return to the
existing investors in the Fund is diluted as the loss carryforward that would
have sheltered subsequent AHL profits on their Units from incentive fees is
diluted by the issuance of additional Units.
MAN-GLENWOOD FEES
The Fund's "yield enhancement" investment in Man-Glenwood will
approximate 30% of the Fund's Net Asset Value and may be reduced to
significantly below this level or eliminated entirely.
The Fund will pay management, investor servicing and administrative
fees and expenses which are capped at a rate of 3.0% per annum of the aggregate
value of the Fund's investment in Man-Glenwood, as described below.
Each of Man-Glenwood Lexington, LLC and Man-Glenwood Lexington TEI,
LLC pay direct investor servicing fees and operating and administrative expenses
at rates which in aggregate are capped at 1% per annum of the aggregate value of
the outstanding Man-Glenwood Units, calculated monthly and paid quarterly. In
addition, Man-Glenwood Lexington Associates Portfolio, LLC., a registered
investment company in which Man-Glenwood invests substantially all of its assets
and which has the same investments objectives as Man-Glenwood (the "Portfolio
Company"), pays Glenwood a management fee at a rate of 1.75% per annum of the
aggregate value of the Portfolio Company's outstanding units, calculated monthly
and paid quarterly. The Portfolio Company also pays administrative fees and
expenses which are capped at a rate of 0.25 of 1% per annum of the aggregate
value of the Portfolio Company's outstanding units, calculated monthly and paid
quarterly.
The Man-Glenwood Sub-Funds charge asset-based fees, generally
ranging from 0% to 2% annually of each Man-Glenwood Sub-Fund's assets, with
performance or incentive allocations to the investment managers generally
expected to range from 10% to 25% of net profits annually or quarterly (net
profits for such purposes will generally be calculated in the same manner as in
the case of AHL).
TRANSACTION COSTS
The AHL Diversified Program executes its futures and forward trades
exclusively through Man Financial (including its affiliates), a member of the
Man Group. The futures commission rates charged to the AHL Diversified Program,
approximately $9 to $11 per round-turn trade (inclusive of exchange and
regulatory fees), have not been negotiated at arm's-length, and other clients of
Man Financial may pay lower rates. Due to the conflict of interest
23
involved in AHL executing futures trades through one of its affiliates, the
maximum brokerage commissions that may be paid by the Fund in any period of 12
consecutive calendar months are limited to 3% of the Fund's average month-end
Net Asset Value for such 12-month period. Man Financial may share brokerage
commissions with its affiliates.
The Fund will enter into forward transactions with Man Financial
Limited, an affiliate of the Fund's commodity broker and a member of the Man
Group. Man Financial Limited will, in turn, enter, directly or indirectly, into
forward transactions with currency dealers that trade with a spread between the
price at which they are prepared to buy or sell a particular currency. These
"bid-ask" spreads represent a profit margin to the dealer for making a market in
the currency. Neither AHL, Man Financial Limited nor the Managing Member can
quantify the amount of dealer profit that is embedded in a price quoted by a
dealer, but the Managing Member believes that AHL and Man Financial Limited will
effect currency transactions on behalf of the Fund at prevailing market prices.
Dealer profit from the Fund's currency trading may, over time, be substantial.
In addition, the Fund will pay Man Financial Limited a clearing fee of $1.14 on
each Fund forward transaction. This clearing fee is included within the 3% cap
on Fund brokerage commissions.
ADMINISTRATIVE SERVICES; ESCROW AGENT
The Fund will pay all its routine, legal, accounting,
administrative, printing and similar costs associated with its operations. The
Managing Member anticipates that the Fund will enter into an administration
agreement with a third-party administrator to provide various services (such as
administration, accounting, valuation, tax reporting and investor services) at
competitive rates.
The Fund will retain [-] as Escrow Agent at competitive rates.
The Managing Member anticipates that these costs will not exceed
0.50 of 1% of the Fund's average month-end Net Asset Value during any Fiscal
Year, assuming average assets of $50,000,000. Administrative expenses in excess
of 0.50 of 1% of the Fund's average month-end Net Asset Value during any Fiscal
Year will be paid by, or reimbursed to the Fund by, the Managing Member or an
affiliate.
CLEARING BROKER
Man Financial Inc ("Man Financial" or the "Clearing Broker") is the
clearing broker for the Fund. The Clearing Broker is registered under the
Commodity Exchange Act, as amended, as a futures commission merchant and a
commodity pool operator, and is a member of the National Futures Association.
The Clearing Broker, which is part of the Man Group is a member of all major
U.S. futures exchanges. The Clearing Broker's main office is located at 717
Fifth Avenue, 9th Floor, New York, New York 10022-8101. The Clearing Broker's
telephone number at such location is (212) 589-6200.
At any given time, the Clearing Broker is involved in numerous legal
actions and administrative proceedings, which in the aggregate, are not, as of
the date of this Prospectus, expected to have a material effect upon its
condition, financial or otherwise, or to the services it will render to the
Fund. There have been no material, administrative, civil or criminal proceedings
pending, on appeal or concluded against the Clearing Broker or its principals
within the five years preceding the date of this Prospectus.
The Clearing Broker acts only as clearing broker for the Fund and as
such is paid commissions for executing and clearing trades on behalf of the
Fund. The Clearing Broker has not passed upon the adequacy or accuracy of this
Prospectus. The Clearing Broker neither will act in any supervisory capacity
with respect to the Managing Member nor participate in the management of the
Managing Member or the Fund.
24
Therefore, prospective investors should not rely on the Clearing Broker in
deciding whether or not to participate in the Fund.
REDEMPTIONS AND TRANSFERS OF UNITS
REDEMPTION PROCEDURES
Subject to the limitation described in the following paragraph, a Member
may redeem all or any portion of such Member's Units as of the end of any
calendar quarter by giving written notice to the Managing Member, or such party
as may be designated by the Managing Member, at least 45 calendar days prior to
such calendar quarter-end. All redemption notices are irrevocable.
No more than 15% of the Fund's outstanding Units, in aggregate, not on a
Class by Class basis, may be redeemed as of any given calendar quarter-end. If
quarter-end redemptions are requested for more than 15% of the Fund's then
outstanding Units, each redemption request will be pro rated so that no more
than 15% of the Fund's then outstanding Units are redeemed. Unitholders whose
redemption requests have been reduced will be required to submit redemption
requests for subsequent redemption dates if they want to redeem additional
Units. Units not redeemed due to the reduction of a redemption request will
remain subject to increase or decrease in value as a result of the Fund's
trading activities.
Unitholders will be notified of any redemption request reduction in
advance of the applicable quarter-end redemption date and will be given an
opportunity to withdraw their redemption requests.
Units will be valued for redemption purposes as of the calendar
quarter-end when redeemed. Quarter-end valuations will include estimated values
for Man-Glenwood computed by Glenwood. All such estimates will be conclusive for
determining the Fund's quarter-end redemption values, and any adjustments of
such estimates for Man-Glenwood will be reflected in the Fund's Net Asset Value
on a prospective basis only.
The redemption price of a Unit may differ substantially from the Net Asset
Value per Unit as of the date that an irrevocable notice of redemption must be
received.
There will be no redemption charge assessed in connection with
redemptions. The Fund generally will pay the redemption amount within 45 days of
the calendar quarter-end of redemption.
The Fund's AHL Diversified Program managed account will be highly liquid.
The Fund's ability to redeem its investment in Man-Glenwood is dependent on the
liquidity of the Man-Glenwood Sub-Funds. Certain of such Sub-Funds may from time
to time suspend or delay redemptions, which could, in time, cause Man-Glenwood
to do so as well. Similarly, the directors of Man-Glenwood may fail to make a
quarterly tender offer for Man-Glenwood Units, or a tender offer may not be
sufficient in amount to satisfy the Fund's repurchase request. However, the
Managing Member believes that any adverse effect to the Fund from any such
suspension or delay or foregone or insufficient tender offer is highly unlikely
due to the liquidity of the AHL Diversified Program account and the Fund's
limited investment in Man-Glenwood.
Man-Glenwood withholds 5% of the proceeds of a repurchase from
Man-Glenwood until the completion of Man-Glenwood's annual audit. The amount
withheld from a Fund repurchase from Man-Glenwood in connection with a Member's
redemption from the Fund will be approximately 1.5% of the Member's total
redemption amount. Rather than withhold redemption proceeds from Members
redeeming Units, however, the Managing Member intends to pay the full redemption
amount due to redeeming Members, subject to the Fund's 15% limit on quarterly
redemptions, and the amount subsequently paid to the Fund by Man-Glenwood from
the amount withheld will be a general asset of the Fund. Man-Glenwood may adjust
its estimated
25
net asset values following its annual audit, including a downward adjustment,
and may retain all or a portion of the amount withheld in connection with a
redemption in light of any such adjustment. The Fund will make any adjustments
to the Fund's Net Asset Value resulting from adjustments to Man-Glenwood's
estimated net asset values, on a prospective basis only.
TRANSFERS OF UNITS
Units may be assigned on the same timeframe as they may be redeemed --
i.e., as of the last day of any calendar quarter upon 45 days' notice to the
Managing Member. The 15% quarterly limitation on redemptions does not apply to
assignments.
Assignees of Units will not become substituted Members without the consent
of the Managing Member. However, the Managing Member intends to give such
consent in the case of all suitable assignees who execute a form of the Fund's
Subscription Agreement.
UNITS MAY ONLY BE ASSIGNED (EXCEPT BY WAY OF GIFT) TO ACCREDITED
INVESTORS.
CONFLICTS OF INTEREST; TRANSACTIONS BETWEEN MAN GROUP AND THE FUND
GENERAL
Neither the Managing Member nor the Fund has established any formal
procedures to resolve the following conflicts of interest. Consequently, there
is no independent control on how the Managing Member or the Fund resolves these
conflicts which can be relied upon by investors as ensuring that the Fund is
treated equitably with other clients of the Managing Member.
Because no formal procedures are in place for resolving conflicts, they
may be resolved by the Managing Member in a manner which causes the Fund losses.
The value of a Member's investment may be diminished by actions or omissions
which independent third parties could have prevented or corrected.
NO NEGOTIATIONS OVER BUSINESS TERMS
The business terms of the Fund were not negotiated. The Managing Member
unilaterally established these terms, balancing marketing and performance
considerations and its interest in maximizing the revenues generated to the Man
Group.
These business terms are described in detail in this Prospectus in order
to give prospective investors ample opportunity to accept or reject such terms.
THE MAN GROUP
The Managing Member organized and controls the Fund. The Managing Member
and its affiliates are the primary service providers to the Fund and will remain
so even if using other firms might be better for the Fund. Futures and
alternative strategy trading is highly competitive. None of the fees paid by the
Fund to any affiliate of the Managing Member were negotiated, and they may be
higher than would have been obtained in arm's-length bargaining. To the extent
that Man Group entities continue to be retained by the Fund despite providing
non-competitive services, the Fund's performance is likely to be negatively
impacted.
The Managing Member allocates its resources among a number of different
funds. The Managing Member has financial incentives to favor certain funds over
others.
The Managing Member's interest in maximizing its revenues could cause it
to take actions which are detrimental to the Fund in order to increase the
Managing Member's income from the Fund or decrease its costs in sponsoring the
Fund. Also, because the Managing Member does not have to compete with third
parties to provide
26
services to the Fund, there is no independent check on the quality of such
services.
THE FUND'S INVESTMENT IN THE AHL DIVERSIFIED PROGRAM
The AHL Diversified Program is operated by members of the Man Group, which
receives substantial compensation for doing so. The Fund does not expect to
allocate its capital to any other managed futures program, even if doing so
would be in the best interests of the Fund. Prospective investors, by investing
in the Fund, consent to the Fund investing solely in the AHL Diversified
Program.
THE CLEARING BROKER
The Fund pays substantial brokerage commissions and administrative fees to
Man Financial, as well as clearing fees on forward currency trades to Man
Financial Limited, an affiliate of Man Financial.
Many Man Financial clients pay lower brokerage rates than the Fund.
Brokerage commissions are a major cost to the Fund, and the cumulative effect of
the higher rates paid by the Fund is material.
Due to the affiliation of the Managing Member and Man Financial Inc., Man
Financial Inc. has agreed to limit the annual commodity brokerage commission
paid by the Fund to no more than 3% of the Fund's 12-month average month-end Net
Assets during each period of 12 consecutive months. However, this limitation
does not assure that the brokerage rates charged to the Fund are competitive.
Man Financial executes trades for different clients in the same markets at
the same time. Consequently, other clients may receive better prices on the same
trades than the Fund, causing the Fund to pay higher prices for its positions.
Man Financial must allocate its resources among many different clients.
Man Financial has financial incentives to favor certain accounts over the Fund.
Because of the competitive nature of the markets in which the Fund trades, to
the extent that Man Financial prefers other clients over the Fund, the Fund is
likely to incur losses.
Man Financial does not have to compete to provide services to the Fund;
consequently, there is no independent check on the quality of its services.
Man Financial may share brokerage commissions on transactions executed for
the Fund with affiliates of the Managing Member, including the Selling Agent.
THE FUND'S INVESTMENT IN MAN-GLENWOOD
Man-Glenwood is operated by members of the Man Group, which receives
substantial compensation for doing so. The Fund does not expect to allocate any
portion of its capital to any other fund of funds, even if doing so would be in
the best interests of the Fund. Prospective investors, by investing in the Fund,
consent to the Fund investing solely in Man-Glenwood for yield enhancement.
MAN-GLENWOOD'S BROKERS AND DEALERS
The brokers and dealers used by the Man-Glenwood Sub-Fund's investment
managers are generally selected by each investment manager individually. These
investment managers, in selecting executing brokers or dealers or in negotiating
commissions, may, and typically will, consider factors other than merely "best
price"; for example: financial responsibility and reputation; range and quality
of the services made available to the Man-Glenwood Sub-Funds investment
managers' clients; and professional services, including execution, clearance
procedures and ability to provide supplemental performance, statistical and
other research information for consideration, analysis and evaluation by the
respective Man-Glenwood Sub-Funds investment managers.
27
SELLING AGENTS
The Selling Agent and Additional Selling Agents will receive substantial
sales compensation for selling the Units. Consequently, the Selling Agent and
Additional Selling Agents have a conflict of interest in advising their clients
whether to invest in the Fund or redeem their Units.
INCENTIVE COMPENSATION
Because AHL receives incentive compensation in respect of the AHL
Diversified Program, AHL may have an incentive to trade the AHL Diversified
Program in a more speculative manner than it otherwise would.
Because the managers of the Man-Glenwood Sub-Funds are eligible to receive
incentive compensation from the Man-Glenwood Sub-Funds, such managers may have
an incentive to trade these Man-Glenwood Sub-Funds in a more speculative manner
than they otherwise would.
SUMMARY OF THE LIMITED LIABILITY COMPANY AGREEMENT
The Fund's LLC Agreement effectively gives the Managing Member full
control over the management of the Fund. Members have no voice in its
operations.
Although as Members, investors have no right to participate in the control
or management of the Fund, they are entitled to: (i) vote on a variety of
different matters; (ii) receive annual audited financial statements, unaudited
monthly reports and timely tax information sufficient to permit investors to pay
estimated taxes; (iii) inspect the Fund's books and records; (iv) redeem Units;
and (v) not to have the business terms of the Fund changed in a manner which
increases the compensation received by the Managing Member or its affiliates
without their unanimous consent.
Members' voting rights extend to any proposed change in the LLC Agreement
which would adversely affect them, as well as to their right to terminate the
Fund's contracts with affiliates of the Managing Member. Members also have the
right to call meetings of the Fund in order to permit Members to vote on any
matter on which they are entitled to vote, including the removal of the Managing
Member as managing member of the Fund.
Members or their duly authorized representatives may inspect the Fund's
books and records, for any purpose reasonably related to their status as Members
of the Fund, during normal business hours upon reasonable written notice to the
Managing Member. They may also obtain copies of such records upon payment of
reasonable reproduction costs; provided, however, that such Members represent
that the inspection and/or copies of such records will not be for commercial
purposes unrelated to such Members' interest in the Fund.
FINANCIAL AND TAX ALLOCATIONS
The LLC Agreement provides for the economic and tax allocations of the
Fund's profit and loss. Economic allocations are based on investors' capital
accounts, and the tax allocations generally attempt to equalize tax and capital
accounts by, for example, making a priority allocation of taxable income to
Members who redeem at a profit.
The Managing Member may amend the LLC Agreement in any manner not adverse
to the Members without need of obtaining their consent. These amendments can be
for clarification of inaccuracies or ambiguities, modifications in response to
changes in tax code or regulations or any other changes the Managing Member
deems advisable so long as they do not change the basic investment policy or
structure.
NET ASSET VALUE
Net Asset Values are determined in accordance with Generally Accepted
Accounting Principles of the United States of America and
28
include unrealized profits as well as unrealized losses on the Fund's
investments on open commodity positions. Net Assets include the sum of all cash,
Treasury bills or other fixed-income instruments, generally valued at cost plus
accrued interest, the liquidating value, or cost of liquidation, of all futures,
forward and options positions and the fair market value of all other assets,
less all liabilities, of the Fund, including accrued liabilities, irrespective
of whether such liabilities, such as incentive fees, may, in fact, never be
paid. If a futures contract cannot be liquidated on a day with respect to which
Net Assets are being determined, the settlement price on the next day on which
the contract can be liquidated shall be the basis for determining the
liquidating value of such contract, or such day, or such other value as the
Managing Member may deem fair and reasonable.
Man-Glenwood will compute its net asset value as of the last business day
of each of Man-Glenwood's "fiscal periods."
STANDARD OF LIABILITY; INDEMNIFICATION
The Managing Member in its operation of the Fund is specifically
authorized to engage in the transactions described herein (including those
involving affiliates of the Managing Member), and is exculpated and indemnified
by the Fund against claims sustained in connection with the Fund, provided that
such claims were not the result of gross negligence, willful misfeasance or
reckless misconduct and that the Managing Member determined that such conduct
was in the best interests of the Fund. Indemnification by the Fund for alleged
violation of securities laws is only available if the following conditions are
satisfied:
1) a successful adjudication on the merits of each count alleged has
been obtained; or
2) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction; or
3) a court of competent jurisdiction approves a settlement of the
claims and finds indemnification of the settlement and related costs
should be made; and
4) in the case of 3), the court has been advised of the position of the
SEC and the states in which the Units were offered and sold as to
indemnification for the violations.
TAX CONSEQUENCES
In the opinion of Sidley Austin Brown & Wood LLP the following summary of
the tax consequences to an individual United States taxpayer who invests in the
Fund is materially correct. Sidley Austin Brown & Wood LLP's opinion is filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
The Fund's Partnership Tax Status
In the opinion of Sidley Austin Brown & Wood LLP, the Fund will be treated
as a partnership for federal income tax purposes and not as an association
taxable as a corporation or as a "publicly-traded partnership." Accordingly, the
Fund will not pay any Federal income tax.
This opinion is not binding on the Internal Revenue Service ("IRS") or on
any court, and there can be no assurance that the IRS will not assert that the
Fund should be treated as an association taxable as a corporation or as a
"publicly-traded partnership" taxable as a corporation. The following discussion
assumes that the Fund will be treated as a partnership for federal income tax
purposes.
Taxation of Members
Each Member will be required to report on its federal income tax return
such Member's allocable share of the Fund's income, gains, losses, deductions,
credits and other items for the Fund's
29
taxable year ending with or within the Member's taxable year, whether or not any
distribution of cash or other property is made to the Member in that year.
At the end of each taxable year, items of Fund income, expense, gain, loss
and deduction, as determined for federal income tax purposes, will be allocated
among the Members which held Units during such taxable year. A Member's
distributive share of such items for federal income tax purposes generally is
determined by the allocations made pursuant to the Limited Liability Company
Agreement, unless the items so allocated do not have "substantial economic
effect" and are not in accordance with the Members' Units. Under the Limited
Liability Company Agreement, tax allocations are generally made in a manner
consistent with the financial allocations made to the Members' Capital Accounts
and therefore either should have substantial economic effect or should be in
accordance with the Members' Units.
Limitations on Deductibility of Fund Losses by Members
The amount of any Fund loss that a Member is entitled to include on its
income tax return is limited to such Member's adjusted tax basis for its Units
as of the end of the Fund's taxable year in which such loss occurred. Generally,
a Member's adjusted tax basis for its Units is the amount paid for such Units
reduced (but not below zero) by such Member's share of losses and expenses, and
any distributions made to such Member, and increased by such Member's share of
the Fund's income, including gains.
Cash Distributions
Cash received from the Fund by a Member as a distribution generally is not
reportable as taxable income by such Member, except to the extent such
distribution exceeds a Member's adjusted tax basis for its Units. Any such
excess is taxable to such Member as gain from the sale or exchange of such
Units. Allocations of Fund income increase the tax basis for a Member's Units at
the end of the taxable year. Cash distributions during the taxable year could
result in taxable gain to a Member even though no gain would result if the same
cash distributions were made following the Fund's allocation of income at the
end of the taxable year.
A cash distribution of all of a Member's Units will result in the
recognition of gain or loss for federal income tax purposes. Such gain or loss
will be equal to the difference between the amount of such distribution and the
Member's adjusted tax basis for such Units (including such Member's distributive
share of the Fund's income or loss for the year of such distribution).
Gain or Loss on Section 1256 Contracts
The Fund's investment assets may include certain futures and forward
contracts as well as certain dealer equity options traded on United States
exchanges ("Section 1256 Contracts"). Under the mark-to-market system of taxing
Section 1256 Contracts, any unrealized profit or loss on positions in such
Section 1256 Contracts which are open as of the end of a taxpayer's fiscal year
is treated as if such profit or loss had been realized for tax purposes as of
such time. In general, 60% of the net gain or loss which is generated by
transactions in Section 1256 Contracts is treated as long-term capital gain or
loss and the remaining 40% of such net gain or loss is treated as short-term
capital gain or loss. However, gain or loss on dealer equity options will be
treated as 100% short-term capital gain or loss.
Limited Deduction for Certain Expenses
The Code provides that expenses of producing income, including investment
advisory fees, are to be aggregated with certain other expenses (collectively,
"Aggregate Investment Expenses"), and the aggregate amount of such expenses is
deductible only to the extent such amount exceeds 2% of a non-corporate
taxpayer's adjusted gross income. In addition, Aggregate
30
Investment Expenses, when combined with an individual taxpayer's deductions for
certain other items, are subject to a reduction equal to generally 3% of the
taxpayer's adjusted gross income over a certain threshold amount. Moreover, such
expenses are not deductible in computing a non-corporate taxpayer's alternative
minimum tax liability. The Managing Member may treat the expenses of the Fund
(excluding amounts treated as Syndication Fees) as ordinary business deductions
not subject to the foregoing limitations. However, the IRS could contend that
all or a portion of such expenses should be treated as "investment advisory
fees." To the extent that the characterization of these expenses as investment
advisory fees were to be sustained, each non-corporate Member's share of the
amounts so characterized would be subject to the foregoing limitations on
deductibility.
Syndication Fees
Neither the Fund nor the Members are entitled to any deduction for any
placement and/or referral fees paid to persons who introduce prospective
investors which may include amounts paid to the Selling Agent. Such expenses may
be taken into account by a Member for purposes of determining capital gain or
loss upon redemption of its interest in the Fund.
Limitation on Deductibility of Interest on Investment Indebtedness
Non-corporate Members may be subject to certain limitations on the
deductibility of interest paid or accrued on indebtedness incurred or continued
to purchase or carry property held for investment.
Qualified Dividend Income
Qualified dividend income received in taxable years on or before December
31, 2008, is subject to tax at a 15% rate. Generally, qualified dividend income
is dividends received from U.S. corporations and from certain foreign
corporations, including foreign corporations whose shares are listed on an
established securities market in the United States. Qualified dividend income
does not include payments "in lieu of" dividends received from stock lending
transactions nor dividends received on stock to the extent the taxpayer is
obligated to make related payments with respect to substantially similar or
related property (e.g., a short sale of such stock).
Passive Activity Rules
The investment activities of the Fund do not constitute a "passive
activity," with the result that losses resulting from a Member's "passive
activities" cannot be offset against the Fund's income.
Class B Investments in Man-Glenwood Lexington TEI, LLC
Tax-exempt investors that invest in a partnership or limited liability
company which participates, either directly or through investing in other
partnerships or limited liability companies which engage in leveraged securities
trading are subject to federal income tax on the portion of the income from such
investment that is treated as "unrelated business taxable income" ("UBTI").
Man-Glenwood Lexington TEI, LLC has been structured so that tax-exempt investors
will not be subject to tax on UBTI arising from such investment, due to the
investment in the Portfolio Company that invests in the Man-Glenwood Sub-Funds
being made through an entity which is treated as a corporation, not as a
partnership, for U.S. tax purposes. Such entity itself may, however, be subject
to withholding tax on any portion of its income deemed to be effectively
connected to a U.S. trade or business engaged in by one or more Man-Glenwood
Sub-Funds.
State and Local Taxes
In certain cases, the Fund may be subject to entity-level state and local
taxes in states in which the profits of the Fund are deemed to be sourced. Each
Member may be required to report and pay state and local tax on such Member's
distributive
31
share of the profits of the Fund in the state and municipality in which the
Member resides and/or other jurisdictions in which income is earned by the Fund.
Fund Audits
The tax treatment of Fund items is determined at the Fund level rather
than at the Member level. The Managing Member is the "Tax Matters Partner" of
the Fund with the authority to determine the Fund's response to an audit. The
limitations period for assessment of deficiencies and claims for refunds with
respect to items related to the Fund is generally three years after the Fund's
return for the taxable year in question is filed, and the Managing Member has
the authority to, and may, extend such period with respect to all Members.
Certain tax positions which the Managing Member may elect to take on behalf of
the Fund may increase the chance that the Fund's return will be audited. If an
audit results in an adjustment, all Members may be required to pay additional
tax, interest and, possibly, penalties. There can be no assurance that the
Fund's tax return will not be audited by the IRS or that no adjustments to such
returns will be made as a result of such an audit.
BENEFIT PLAN INVESTORS
GENERAL
The following section sets forth certain consequences under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the Code,
which a fiduciary of an "employee benefit plan" as defined in and subject to
ERISA or of a "plan" as defined in and subject to Section 4975 of the Code who
has investment discretion should consider before deciding to invest any of such
plan's assets in the Fund (such "employee benefit plans" and "plans" being
referred to herein as "Plans," and such fiduciaries with investment discretion
being referred to herein as "Plan Fiduciaries"). The following summary is not
intended to be complete, but only to address certain questions under ERISA and
the Code which are likely to be raised by the Plan Fiduciary's own counsel.
In general, the terms "employee benefit plan" as defined in ERISA and
"plan" as defined in Section 4975 of the Code together refer to any plan or
account of various types which provides retirement benefits or welfare benefits
to an individual or to an employer's employees and their beneficiaries. Such
plans and accounts include, but are not limited to, corporate pension and profit
sharing plans, "simplified employee pension plans," KEOGH plans for
self-employed individuals (including partners), individual retirement accounts
described in Section 408 of the Code and medical benefit plans.
Each Plan Fiduciary must give appropriate consideration to the facts and
circumstances that are relevant to an investment in the Fund, including the role
that an investment in the Fund plays in the Plan's overall investment portfolio.
Each Plan Fiduciary, before deciding to invest in the Fund, must be satisfied
that investment in the Fund is a prudent investment for the Plan, that the
investments of the Plan, including the investment in the Fund, are diversified
so as to minimize the risk of large losses and that an investment in the Fund
complies with the terms of the Plan and the related trust. Each plan fiduciary
considering acquiring Units must consult its own legal and tax advisors before
doing so.
"PLAN ASSETS"
The purchase of Units by a Plan raises the issue of whether that purchase
will cause, for purposes of Title I of ERISA and Section 4975 of the Code, the
underlying assets of the Fund to constitute assets of such Plan. A regulation
issued under ERISA (the "ERISA Regulation") contains rules for determining when
an investment by a Plan in an entity will result in the underlying assets of
such entity being considered assets of such Plan for purposes of ERISA and
Section 4975 of the Code (i.e., "plan assets"). Those rules provide that assets
32
of an entity will not be considered assets of a Plan which purchases an equity
interest in the entity if certain exceptions apply, including an exception
applicable if the equity interest purchased is a "publicly-offered security"
(the "Publicly-Offered Security Exemption").
The Publicly-Offered Security Exception applies if the equity interest is
a security that is (1) "freely transferable," (2) part of a class of securities
that is "widely held" and (3) either (a) part of a class of securities
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
or (b) sold to the Plan as part of a public offering pursuant to an effective
registration statement under the Securities Act of 1933 and the class of which
such security is a part is registered under the Securities Exchange Act of 1934
within 120 days (or such later time as may be allowed by the SEC) after the end
of the fiscal year of the issuer in which the offering of such security
occurred. The ERISA Regulation states that the determination of whether a
security is "freely transferable" is to be made based on all relevant facts and
circumstances. The ERISA Regulation specifies that, in the case of a security
that is part of an offering in which the minimum investment is $10,000 or less,
the following requirements, alone or in combination, ordinarily will not affect
a finding that the security is freely transferable: (i) a requirement that no
transfer or assignment of the security or rights in respect thereof be made that
would violate any federal or state law; (ii) a requirement that no transfer or
assignment be made without advance written notice given to the entity that
issued the security; and (iii) any restriction on substitution of an assignee as
"a limited partner of a partnership, including a general partner consent
requirement, provided that the economic benefits of ownership of the assignor
may be transferred or assigned without regard to such restriction or consent"
(other than compliance with any of the foregoing restrictions). Under the ERISA
Regulation, a class of securities is "widely held" only if it is of a class of
securities owned by 100 or more investors independent of the issuer and of each
other. A class of securities will not fail to be widely held solely because
subsequent to the initial offering the number of independent investors falls
below 100 as a result of events beyond the issuer's control.
The Class B Units are expected to qualify as a "publicly-offered security"
pursuant to the foregoing rules.
INELIGIBLE PURCHASERS
In general, Units may not be purchased with the assets of a Plan if the
Managing Member, any wholesaler, any Selling Agent, or any of their respective
affiliates or any of their respective agents or employees: (1) has investment
discretion with respect to the investment of such plan assets; (2) has authority
or responsibility to give or regularly gives investment advice with respect to
such plan assets, for a fee, and pursuant to an agreement or understanding that
such advice will serve as a primary basis for investment decisions with respect
to such plan assets and that such advice will be based on the particular
investment needs of the Plan; or (3) is an employer maintaining or contributing
to such Plan, except as is otherwise permissible under ERISA and Section 4975 of
the Code. A party that is described in clause (1) or (2) of the preceding
sentence is a fiduciary under ERISA and the Code with respect to the Plan, and
any such purchase might result in a "prohibited transaction" under ERISA and the
Code.
Except as otherwise set forth, the foregoing statements regarding the
consequences under ERISA and the Code of an investment in the Fund are based on
the provisions of the Code and ERISA as currently in effect, and the existing
administrative and judicial interpretations thereunder. No assurance can be
given that administrative, judicial or legislative changes will not occur that
may make the foregoing statements incorrect or incomplete.
ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF PLANS IS IN NO RESPECT A
REPRESENTATION BY THE FUND, THE MANAGING MEMBER, ANY SELLING AGENT OR ANY OTHER
PARTY RELATED TO THE FUND THAT THIS
33
INVESTMENT MEETS SOME OR ALL OF THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO
INVESTMENTS BY ANY PARTICULAR PLAN OR THAT THIS INVESTMENT IS APPROPRIATE FOR
ANY PARTICULAR PLAN. THE PERSON WITH INVESTMENT DISCRETION SHOULD CONSULT WITH
HIS OR HER FINANCIAL AND LEGAL ADVISORS AS TO THE PROPRIETY OF AN INVESTMENT IN
THE FUND IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR PLAN AND CURRENT TAX
LAW.
PLAN OF DISTRIBUTION
SUBSCRIPTION PROCEDURE
The Units are offered as of the beginning of each month.
Each Class of Units will initially be issued at $100 per Unit and
thereafter at the Net Asset Value per Unit of the Class.
In order to purchase Units, you must complete, sign and deliver to the
Selling Agent or an Additional Selling Agent an original of the Subscription
Agreement and Power of Attorney Signature Page which accompanies this
Prospectus, together with a wire transfer in the amount of your subscription
pursuant to the wire instructions provided in the instructions to the
Subscription Agreement. Payment of the subscription amount may also be made with
a check. Checks should be made payable to "[-] as Escrow Agent for Man-AHL 130,
LLC Account No. [-]." Subscription proceeds will be deposited in escrow with the
Escrow Agent, pending investment in the Fund.
The Managing Member will determine, in its sole discretion, whether to
accept or reject a subscription in whole or in part. The Managing Member expects
to make its determination within five business days of the submission of a
subscription to the Managing Member.
ALL SUBSCRIBERS MUST BE ACCREDITED INVESTORS.
Although the public offering of the Units has been registered under the
Securities Act of 1933, the Managing Member has determined to limit the persons
eligible to invest in the Units to "Accredited Investors." Individual
"Accredited Investors" must have an annual income of at least $200,000 (or joint
annual income with spouse of at least $300,000) in each of the two most recent
years and must expect to have such income in the current year or a net worth
(including assets held jointly with spouse) of $1,000,000; entity "Accredited
Investors" must generally have a net worth of $5,000,000. "Accredited Investor"
status is not any assurance that an investment in the Fund is suitable for any
prospective investor.
The Managing Member or the selling agent selling the Units, will make
every reasonable effort to determine the suitability of prospective Members in
the Fund through information received on the Subscription Agreement. Generally,
the Managing Member or its designee must receive subscription documents together
with payment in the amount of the subscription at least five business days
before the end of a month for them to be accepted as of the first day of the
immediately following calendar month.
Subscriptions are final and binding on a subscriber as of the close of
business on the fifth business day following the Submission of the subscriber's
Subscription Agreement to the selling agent selling the subscriber the Units.
The Fund will receive any interest earned on accepted subscriptions held
in the Escrow Account pending investment in the Fund.
Subscriptions, if rejected, will be returned to investors, together with
any interest actually earned thereon, promptly following the end of the month as
of which the subscription was rejected or sooner if practicable.
There are no fees applicable to subscriptions held pending investment in
the Fund's trading account.
34
SELLING AGENTS
No upfront sales load will be paid on any Units. The Selling Agent will
receive from the Managing Member a Client Servicing Fee in an amount equal to 1%
per annum of the annual average month-end Net Asset Value of each Class A1 and
Class B1 Unit plus one-third of the Managing Member's management fee in respect
of each such Unit (in aggregate, a 1.25% annual rate), payable quarterly in
arrears for as long as such Unit remains outstanding. However, in no event may
selling compensation in excess of 10% of the issuance price of any Unit be paid
in respect of any Unit. The Selling Agent may allot all or a portion of the
Client Servicing Fee to the Additional Selling Agents.
Once the Selling Agent has received 10% of the sale price of a Class A1 or
Class B1 Unit (or, if earlier, such Unit has been charged Client Servicing Fees
totaling 10% of the sale price of such Unit), such Unit will be redesignated as
a fractional Class A2 or Class B2 Unit, reflecting the then current net asset
value of Class A2 or Class B2 Units, and no additional Client Servicing Fee will
be charged, in respect of such redesignated Unit and no further compensation
will be paid to the Selling Agent in respect of such Unit.
Class A2 and Class B2 Units, which are available for sale exclusively to
participants in selling agent asset-based or fixed-fee investment programs and
registered investment advisor fee-based advisory programs, are not charged the
Client Servicing Fee, and no Client Servicing Fee or other compensation will be
paid to the Selling Agent in respect of Class A2 or Class B2 Units.
The Selling Agent may engage one or more registered broker-dealers to
assist the Selling Agent with the offer and sale of the Units. The Selling Agent
(or its affiliates), not the Fund, will compensate such Additional Selling
Agents subject to the limitations of NASD Rule 2810(b)(4)(B)(i) pertaining to
maximum allowable selling commissions.
The Managing Member or the Selling Agent may also engage one or more
registered broker-dealers to solicit other broker-dealers to become additional
Selling Agents and to assist those Additional Selling Agents with the offering
and sale of the Units, that is, to act as wholesalers. As compensation for its
services, any such wholesaler will receive a portion of the Client Servicing Fee
that would otherwise be paid to the Additional Selling Agents.
REPORTS
The Managing Member will provide investors with monthly financial reports,
annual audited financial statements, and federal income tax information. The
most recent redemption Net Asset Value per Unit is available by calling
representatives of the Managing Member at [-].
LAWYERS; ACCOUNTANTS
Sidley Austin Brown & Wood LLP, New York, New York and Chicago, Illinois,
has advised the Managing Member on the offering of the Units and may advise the
Managing Member on an ongoing basis, including concerning its responsibilities
as Managing Member. Sidley Austin Brown & Wood LLP does not represent the Fund
or its Members as such.
The Man Investments (USA) Corp. Statement of Financial Condition as of
March 31, 2005 included in this prospectus has been included herein in reliance
on the report of PricewaterhouseCoopers LLP, an independent registered public
accounting firm, given on the authority of that firm as experts in auditing and
accounting.
The Financial Statements of Man-AHL 130, LLC as of May 20, 2005 included
in this prospectus have been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as
35
stated in their report appearing herein and are included in reliance upon the
report of such firm given upon their authority as experts in auditing and
accounting.
PRIVACY POLICY
Our Commitment to Your Privacy. The Managing Member and the Fund believe
that protecting the privacy of your nonpublic information is of utmost
importance and, therefore, we are committed to maintaining the privacy of the
nonpublic personal information we obtain from you and from other sources about
you. Accordingly, we are providing you with the following information relating
to the Managing Member's and the Fund's privacy policy and procedures.
The Information We Collect and Sources of Information. BECAUSE YOUR
PERSONAL AND FINANCIAL DATA IS PRIVATE INFORMATION, WE DO NOT SELL YOUR
INFORMATION TO ANYONE. Instead, your information is used by us to help identify
you, evaluate your subscription for Units and manage your investment. We collect
this information from a variety of sources including:
- - information we receive from you in the Subscription Agreement or other
forms, whether written or electronic. This information includes, but is
not limited to, your name, address, social security number and information
about your level of income, net worth and investment experience.
- - information about your transactions with us and our affiliates or others.
This information could include your use of various products and services
that we and our affiliates provide.
- - information we receive from our affiliates.
- - information we receive from other third parties such as demographic firms.
This information could include investment preferences.
- - information we receive from you online, such as cookies (small pieces of
data stored by your Internet browser on your computer) or other technology
that may be used to, among other things, remember passwords for you, help
us track your website usage, or provide you with customized content.
Information We Disclose. We do not disclose any information on current or
former investors to any nonaffiliated third party except as permitted or
required by law. For example, we may:
- - share information with regulatory authorities and law enforcement
officials who have jurisdiction over us or if we are required to do so by
U.S. or other applicable law;
- - provide information to protect against fraud;
- - share information with your prior consent; and
- - share information with service providers that perform administrative or
marketing services on our behalf; or
- - share information with our accountants, attorneys and auditors.
In addition, we may share information about you with our affiliates as
permitted by law, such as information about your transactions or experiences
with us, our affiliates or others. Our affiliates are financial service
providers and include broker-dealers, investment advisers, commodity pool
operators and commodity trading advisors.
How We Safeguard Your Information. We maintain physical, electronic and
procedural safeguards that comply with federal standards in order to guard your
nonpublic personal information. We restrict and limit access to nonpublic
personal information about you to: (a) those employees who need to know that
information to provide products or services to you; and (b) those nonaffiliated
third parties whose access to such information is permitted by law and who need
to know that information in order to assist us in providing you with the
products and services you receive from us.
We educate and train our employees on how to properly handle personal
information and safeguard customer information and prevent
36
unauthorized access, disclosure or use. In addition, affiliates and
nonaffiliated third parties that have access to personal information must agree
to follow appropriate standards of security and confidentiality.
We Will Keep You Informed of Our Privacy Policy. As required by federal
law, we will be informing you of our privacy policy annually. We may amend this
policy at any time, and we will inform you of changes as required by law.
If you have any questions regarding our privacy policy or if the
information we have about you has changed, please contact us at (800) 446-5345
37
THIS PROSPECTUS IS IN TWO PARTS: A DISCLOSURE DOCUMENT AND THIS STATEMENT
OF ADDITIONAL INFORMATION. THESE PARTS ARE BOUND TOGETHER, AND BOTH CONTAIN
IMPORTANT INFORMATION.
PART TWO
STATEMENT OF ADDITIONAL INFORMATION
FUTURES MARKETS AND TRADING METHODS
MANAGED FUTURES FUNDS
A futures fund is a professionally managed investment vehicle trading in
either a concentrated or diversified range of markets. There is no material
limitation on the assets which may be subject to futures and forward contracts.
These markets may include global currencies, financial instruments, commodity
and securities indices, interest rates, energy, metals and agricultural
products. Futures funds trade either or both the short or long side of the
market, often on a 24-hour basis, and are generally higher risk and have more
volatile performance than many other investments.
Futures funds trade in exchange-traded futures contracts and futures
contract options as well as in over-the-counter forward contracts and other
derivatives.
The nature of futures trading results in substantially all of a futures
fund capital being held in reserve. No capital is required to acquire a futures
contract; rather, a future fund's capital is held in reserve and available to
cover losses incurred on the futures positions to which the fund acquires
exposure. The margin required to open a particular futures position constitutes
a good faith deposit against the fund's potential obligation to pay such losses.
MANAGED FUTURES AND THE ASSET ALLOCATION PROCESS
Futures funds can take long and short positions in a wide range of assets,
the performance of which may be substantially non-correlated to the general debt
and equity markets. Consequently, traditional "all long" portfolios invested in
stocks, bonds and cash equivalents can be diversified by allocating a portion of
their assets to non-traditional investments such as managed futures. Because of
futures funds' potential non-correlation with the performance of stocks and
bonds, an investment in managed futures has the potential to diversify a
traditional portfolio, and contributes to improving long-term returns and
reduced portfolio volatility.
* * * *
The Fund is a speculative, highly leveraged investment and is not
appropriate for everyone. There can be no assurance that an investment in the
Fund will be profitable or non-correlated with an investor's traditional stock
and bond portfolio holdings. Investors must be prepared to lose all or
substantially all of their investment in the Fund.
THE FUTURES AND FORWARD MARKETS
Futures and Forward Contracts
Futures contracts are traded on exchanges and call for the future delivery
of various commodities. These contractual obligations may be satisfied either by
taking or making physical delivery or by making an offsetting sale or purchase
of a futures contract on the same exchange.
Forward currency contracts are traded off-exchange through banks or
dealers. In such instances, the bank or dealer generally acts as principal in
the transaction and charges "bid-ask" spreads.
38
Futures and forward trading is a "zero-sum," risk transfer economic
activity. For every gain there is an equal and offsetting loss.
Hedgers and Speculators
The two broad classifications of persons who trade futures are "hedgers"
and "speculators." Hedging is designed to minimize the losses that may occur
because of price changes, for example, between the time a merchandiser contracts
to sell a commodity and the time of delivery. The hedger's core business
involves an exposure to certain commodity prices, and the hedger is effectively
able to reduce or eliminate the risk of changes in such prices by taking futures
positions which will profit from price changes which would otherwise adversely
affect such core business. The futures and forward markets enable the hedger to
shift the risk of price changes to the speculator. The speculator risks capital
with the hope of making profits from such changes. Speculators, such as the
Fund, have no "core business" involvement with any commodity and rarely take
delivery of the physical commodity but rather close out their futures positions
through offsetting futures contracts.
Exchanges; Position and Daily Limits; Margins
Each of the commodity exchanges in the United States has an associated
"clearinghouse." Once trades made between members of an exchange have been
cleared, each clearing broker looks only to the clearinghouse for all payments
in respect of such broker's open positions. The clearinghouse "guarantee" of
performance on open positions does not run to customers. If a member firm goes
bankrupt, customers could lose money.
Foreign commodity exchanges differ in certain respects from their United
States counterparts and are not regulated by any United States agency.
The CFTC and the United States exchanges have established "speculative
position limits" on the maximum positions that futures traders may hold or
control in futures contracts on certain, generally agricultural, commodities.
Most United States exchanges limit the maximum change in futures prices
during any single trading day. Once the "daily limit" has been reached, it
becomes very difficult to execute trades. Because these limits apply on a
day-to-day basis, they do not limit ultimate losses, but may reduce or eliminate
liquidity.
When a position is established, "initial margin" is deposited. Margin
deposited by a futures trader remains the property of such trader. Such margin
merely serves as a good faith deposit by a trader to ensure that such trader
will be able to cover any losses incurred on such trader's open positions.
On most exchanges, at the close of each trading day "variation margin,"
representing the unrealized gain or loss on the open positions, is either
credited to or debited from a trader's account. If "variation margin" payments
cause a trader's "initial margin" to fall below "maintenance margin" levels, a
"margin call" is made, requiring the trader to deposit additional margin or have
his position closed out.
The balance sheet of a futures fund at any point in time typically
consists entirely of cash and cash equivalent instruments. As gains or losses
are recognized on the fund's open futures positions, such cash and cash
equivalent instruments either increase or decrease, but the futures contracts
held by the fund are not themselves assets or liabilities, but simply exposure
to risk and potential profits.
Many futures funds maintain all of their assets in cash and cash
equivalent instruments, but some -- such as the Fund -- attempt to achieve some
measure of yield enhancement and/or diversification by investing a portion of
such capital in other investments -- in the case of the Fund, Man-Glenwood.
39
TRADING METHODS
Managed futures strategies are generally classified as (i) systematic or
discretionary; and (ii) technical or fundamental.
Systematic and Discretionary Trading Approaches
A systematic trader relies on trading programs or models to generate
trading signals. Discretionary traders make trading decisions on the basis of
their own judgment.
Each approach involves inherent risks. For example, systematic traders may
incur substantial losses when fundamental or unexpected forces dominate the
markets, while discretionary traders may overlook price trends which would have
been signaled by a system.
Technical and Fundamental Analysis
Technical analysis -- on which AHL relies exclusively -- operates on the
theory that market prices, momentum and patterns at any given point in time
reflect all known factors affecting the supply and demand for a particular
commodity. Consequently, technical analysis focuses on market data as the most
effective means of attempting to predict future prices.
Fundamental analysis, in contrast, focuses on the study of factors
external to the markets, for example: weather, the economy of a particular
country, government policies, domestic and foreign political and economic
events, and changing trade prospects. Fundamental analysis assumes that markets
are imperfect and that market mispricings can be identified.
Trend-Following
Trend-following advisors -- such as AHL -- try to take advantage of major
price movements, in contrast with traders who focus on making many small profits
on short-term trades or through relative value positions. Trend-following
traders assume that most of their trades will be unprofitable. They look for a
few large profits from big trends. During periods with no major price movements,
a trend-following trading advisor is likely to have big losses.
Risk Control Techniques
Trading advisors often adopt risk management principles. Such principles
typically restrict the size of positions taken as well as establish stop-loss
points at which losing positions must be liquidated. However, no risk control
technique can assure that big losses will be avoided.
The AHL Diversified Program
The AHL Diversified Program is a systematic, technical, trend-following
trading system. While AHL's trading systems themselves are continuously being
developed and/or adapted, the AHL trading approach leaves little room for
discretionary decision-making by the AHL traders -- perhaps the most important
subjective judgment made by the AHL principals is whether to execute trades as a
single order or as series of different operations.
ALTERNATIVE INVESTMENT STRATEGIES IN GENERAL
The Fund's investment of a limited portion of its capital in Man-Glenwood
is intended for yield enhancement purposes. Man-Glenwood invests in a
diversified group of alternative investment strategies.
INVESTMENT STRATEGIES
Alternative investment strategies are strategies other than "all long"
debt and equity investing. Alternative strategies involve a wide range of
investment techniques. The following are general descriptions of certain
principal alternative investment strategies. The following descriptions are not
intended to be complete explanations of any of such strategies or a list of all
possible alternative investment strategies.
40
EQUITY HEDGE. Equity hedge is characterized by investment managers
investing in domestic and international equity markets with a strong commitment
to running portfolios on a highly-hedged basis. Portfolios may be run with a
purely balanced exposure or within tight bands of net exposure. Returns can be
driven by fundamental or quantitative security selection, both within sectors or
across sectors, but without a significant beta exposure in the portfolio.
MULTI-STRATEGY. Investment managers in this style take a
multi-disciplinary approach to trading in various markets, including equities,
bonds, derivatives and commodities. These investment managers often attempt to
exploit synergies among their individual research teams. Strategies may include,
but are not limited to, relative value, event-driven, equity hedge and commodity
and trading strategies.
EVENT-DRIVEN. Investment managers within the event-driven strategy focus
on corporate events such as bankruptcies, mergers, reorganizations, spin-offs,
restructurings and changes in senior management that have the potential to
significantly change the future prospects, and the future valuation, of a
company.
Major strategies within the event-driven area are distressed securities,
and mergers and reorganizations (risk arbitrage). Investing in distressed
securities typically involves buying or selling short securities of companies
that are in or facing bankruptcy, reorganization or other distressed situations.
The mergers and reorganizations strategy involves purchasing and selling short
shares of target and acquiring corporations, respectively, in anticipation of a
merger transaction.
RELATIVE VALUE. These investment managers attempt to exploit mispricings
within different securities of either the same issuer or of issuers with similar
fundamental characteristics. This strategy often involves exploiting the
optionality that may be present in select securities, particularly convertible
bonds. Typical strategies include convertible bond arbitrage, credit arbitrage
and derivatives arbitrage.
VARIABLE EQUITY. These investment managers invest in domestic and
international equity markets. Some investment managers may shift gross and net
exposures over time as market conditions change, while other investment managers
may position their portfolios consistently net-long or net-short. Returns are
driven by the individual stock selection skills, following either fundamental or
quantitative selection criteria, along with the ability to identify shifts in
market direction.
COMMODITY AND TRADING. Commodity and trading is a style that aims to
generate alpha by directional or arbitrage related trading in a broader range of
markets than equities and/or bonds. The underlying investment managers can be
purely model-driven or fundamentally-driven or a combination of the two, and
there is often a strong component of exploiting market momentum opportunities
within this category.
SUPPLEMENTAL PERFORMANCE INFORMATION
The Fund will trade in the futures, forward currency and over-the-counter
derivatives markets pursuant to the AHL Diversified Program. The trading process
is the product of sophisticated research - the AHL Diversified Program applies a
technical approach that was developed in and has been operated since 1983.
A number of commodity advisory subsidiaries of Man Group plc employ the
AHL Diversified Program on behalf of their clients. The performance information
set forth below represents the composite performance of all accounts traded
pursuant to the AHL Diversified Portfolio since December 20, 1990, adjusted to
reflect the management and incentive fees payable to Man-AHL (USA) Ltd. in
respect of the Fund's account.
41
The Fund also allocates approximately 30% of its capital to Man-Glenwood
Lexington, LLC and Man-Glenwood Lexington TEI, LLC in an attempt to enhance the
yield the Fund would otherwise earn on such capital in the Fund's account at the
commodity broker. The performance information set forth below for Man-Glenwood
represents the past performance of (i) a private fund that utilized a
multi-manager, multi-strategy investment approach from the private fund's
establishment in 1993 to 2002, (ii) Man-Glenwood Associates Portfolio, LLC (the
"Portfolio Company"), which is the private fund's successor, from January 1,
2003 until March 31, 2003, in the case of Man-Glenwood Lexington, LLC, and from
January 1, 2003 until April 30, 2004, in the case of Man-Glenwood Lexington TEI,
LLC and (iii) Man-Glenwood, LLC or Man-Glenwood Lexington TEI, LLC, as the case
may be, thereafter. Pursuant to a two-part reorganization transaction completed
on January 2, 2003, the private fund was reorganized into a newly formed
master-feeder structure in which the Portfolio Company assumed the private
fund's portfolio, with the private fund investing all of its investable assets
in the Portfolio Company, except those restricted for regulatory reasons,
liquidation purposes or forced redemptions, and in anticipation of Man-Glenwood,
LLC investing all of its investable assets in the Portfolio Company after March
31, 2003. Glenwood Capital Investments, L.L.C. is the investment adviser to the
Portfolio Company, and is the investment adviser to the private fund. The
private fund, the Portfolio Company, Man-Glenwood Lexington, LLC and
Man-Glenwood Lexington TEI, LLC have substantially similar investment
objectives, policies and strategies. Glenwood manages the Portfolio Company
substantially similarly to the private fund. Accordingly, by Man-Glenwood
Lexington, LLC and Man-Glenwood Lexington TEI, LLC investing all of their
investable assets in the Portfolio Company, Man-Glenwood receives substantially
similar investment management to that the Adviser renders to the Portfolio
Company and previously rendered to the private fund.
The private fund and Portfolio Company performance has been adjusted to
reflect the anticipated fees and expenses of Man-Glenwood, including the 3%
annualized expense limit, plus certain private fund expenses.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
THE PAST PERFORMANCE OF THE AHL DIVERSIFIED PORTFOLIO AND OF MAN-GLENWOOD
IS NOT NECESSARILY INDICATIVE OF THE FUTURE RESULTS OF THE FUND. THERE CAN BE NO
ASSURANCE THAT THE FUND WILL TRADE PROFITABLY OR NOT INCUR LOSSES.
42
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 - [-] 2005
[LINE GRAPH]
AHL Diversified S&P 500 TR Index Citigroup High
Rebase Value Programme Grade Corp Bond TR
------------- ---------------- --------------------
1000 30-Nov-90 1000.00 1000.00 1000.00
30-Dec-90 982.81 1027.86 1016.74
30-Jan-91 968.76 1072.62 1032.03
27-Feb-91 971.73 1149.33 1044.55
30-Mar-91 983.04 1177.16 1055.83
29-Apr-91 964.54 1179.95 1070.41
30-May-91 967.41 1230.85 1074.55
29-Jun-91 977.38 1174.46 1072.64
30-Jul-91 940.46 1229.20 1090.55
30-Aug-91 982.16 1258.32 1120.52
29-Sep-91 1033.18 1237.26 1150.89
30-Oct-91 1043.75 1253.90 1155.85
29-Nov-91 1063.30 1203.38 1168.07
30-Dec-91 1197.62 1341.00 1218.99
30-Jan-92 1104.79 1316.01 1197.88
27-Feb-92 1084.10 1333.05 1209.34
30-Mar-92 1067.62 1307.13 1200.57
29-Apr-92 1053.75 1345.51 1202.45
30-May-92 1039.22 1352.10 1232.95
29-Jun-92 1051.85 1331.99 1252.24
30-Jul-92 1168.94 1386.40 1290.78
30-Aug-92 1214.93 1358.03 1302.34
29-Sep-92 1186.87 1373.99 1315.22
30-Oct-92 1176.05 1378.73 1294.65
29-Nov-92 1190.38 1425.68 1303.62
30-Dec-92 1217.56 1443.18 1333.30
30-Jan-93 1245.03 1455.24 1366.67
27-Feb-93 1346.84 1475.07 1401.63
30-Mar-93 1363.69 1506.20 1405.17
29-Apr-93 1375.06 1469.79 1412.47
30-May-93 1388.28 1509.11 1415.34
29-Jun-93 1420.29 1513.53 1456.85
30-Jul-93 1469.50 1507.44 1471.40
30-Aug-93 1548.19 1564.64 1513.69
29-Sep-93 1535.22 1552.64 1520.24
30-Oct-93 1578.33 1584.76 1527.97
29-Nov-93 1570.05 1569.65 1499.28
30-Dec-93 1678.14 1588.63 1509.37
30-Jan-94 1644.11 1642.64 1539.93
27-Feb-94 1588.31 1598.05 1495.93
30-Mar-94 1633.85 1528.38 1438.65
29-Apr-94 1569.10 1547.98 1424.74
30-May-94 1657.03 1573.39 1415.84
29-Jun-94 1692.65 1534.82 1404.40
30-Jul-94 1623.36 1585.22 1447.79
30-Aug-94 1558.00 1650.21 1443.33
29-Sep-94 1620.88 1609.86 1405.04
30-Oct-94 1595.41 1646.03 1398.06
29-Nov-94 1720.63 1586.07 1400.62
30-Dec-94 1722.44 1609.61 1422.68
30-Jan-95 1757.64 1651.35 1459.17
27-Feb-95 1806.97 1715.71 1501.34
30-Mar-95 1967.13 1766.33 1515.59
29-Apr-95 2036.16 1818.34 1542.14
30-May-95 2139.58 1891.02 1639.40
29-Jun-95 2132.92 1934.94 1652.31
30-Jul-95 2086.13 1999.11 1635.68
30-Aug-95 2141.17 2004.14 1670.62
29-Sep-95 2168.40 2088.71 1696.12
30-Oct-95 2144.15 2081.25 1727.55
29-Nov-95 2189.41 2172.61 1769.37
30-Dec-95 2305.06 2214.46 1809.66
30-Jan-96 2316.27 2289.83 1812.14
27-Feb-96 2195.82 2311.06 1744.52
30-Mar-96 2171.71 2333.31 1721.76
29-Apr-96 2356.76 2367.71 1694.29
30-May-96 2236.63 2428.77 1695.16
29-Jun-96 2350.93 2438.04 1724.34
30-Jul-96 2267.03 2330.32 1726.02
30-Aug-96 2291.10 2379.48 1713.92
29-Sep-96 2554.10 2513.41 1758.25
30-Oct-96 2789.07 2582.73 1821.81
29-Nov-96 3046.14 2777.95 1869.68
30-Dec-96 3017.20 2722.91 1834.88
30-Jan-97 3129.81 2893.02 1829.66
27-Feb-97 3285.60 2915.70 1834.82
30-Mar-97 3233.24 2795.94 1794.33
29-Apr-97 3093.29 2962.81 1827.27
30-May-97 3104.63 3143.19 1850.72
29-Jun-97 3239.45 3284.01 1885.30
30-Jul-97 3519.60 3545.31 1984.93
30-Aug-97 3343.61 3346.70 1937.30
29-Sep-97 3393.51 3529.99 1981.16
30-Oct-97 3363.75 3412.09 2018.92
29-Nov-97 3464.35 3570.05 2039.37
30-Dec-97 3705.23 3631.36 2072.69
30-Jan-98 3777.49 3671.52 2101.07
27-Feb-98 3855.42 3936.33 2099.59
30-Mar-98 4031.12 4137.91 2107.53
29-Apr-98 3855.42 4179.54 2118.66
30-May-98 4106.22 4107.70 2153.98
29-Jun-98 4177.06 4274.55 2178.66
30-Jul-98 4266.33 4229.03 2166.48
30-Aug-98 5051.30 3617.61 2185.69
29-Sep-98 5326.18 3849.36 2275.92
30-Oct-98 5232.30 4162.47 2232.77
29-Nov-98 5307.76 4414.75 2293.08
30-Dec-98 5490.54 4669.15 2295.47
30-Jan-99 5202.91 4864.40 2323.59
27-Feb-99 5290.76 4713.22 2230.48
30-Mar-99 5123.57 4901.79 2231.04
29-Apr-99 5508.97 5091.61 2225.65
30-May-99 5218.50 4971.37 2186.50
29-Jun-99 5259.59 5247.28 2151.52
30-Jul-99 5302.19 5083.43 2127.20
30-Aug-99 5353.20 5058.28 2121.60
29-Sep-99 5365.96 4919.62 2141.37
30-Oct-99 4977.72 5230.93 2151.51
29-Nov-99 5357.46 5337.27 2146.41
30-Dec-99 5601.17 5651.61 2124.55
30-Jan-00 5562.92 5367.66 2120.07
27-Feb-00 5609.67 5266.05 2139.60
30-Mar-00 5435.39 5781.20 2175.84
29-Apr-00 5313.53 5607.29 2150.89
30-May-00 5442.48 5492.25 2116.33
29-Jun-00 5268.19 5627.65 2185.31
30-Jul-00 5112.33 5539.67 2224.46
30-Aug-00 5347.54 5883.76 2254.52
29-Sep-00 5208.68 5573.13 2265.00
30-Oct-00 5445.31 5549.57 2275.18
29-Nov-00 6006.42 5112.05 2334.93
30-Dec-00 6652.54 5137.07 2397.91
30-Jan-01 6751.73 5319.33 2483.99
27-Feb-01 6927.43 4834.30 2515.62
30-Mar-01 7742.17 4528.05 2508.27
29-Apr-01 7043.83 4879.92 2476.09
30-May-01 6868.44 4912.62 2508.83
29-Jun-01 6802.98 4793.05 2522.72
30-Jul-01 7097.55 4745.87 2613.75
30-Aug-01 7556.76 4448.77 2654.66
29-Sep-01 8343.19 4089.52 2614.27
30-Oct-01 8722.81 4167.50 2728.59
29-Nov-01 7960.48 4487.18 2677.29
30-Dec-01 7906.35 4526.49 2653.24
30-Jan-02 7580.85 4460.43 2699.62
27-Feb-02 7145.84 4374.41 2734.83
30-Mar-02 7076.41 4538.93 2654.21
29-Apr-02 6878.03 4263.74 2721.37
30-May-02 6999.89 4232.33 2752.14
29-Jun-02 7912.42 3930.82 2772.21
30-Jul-02 8409.79 3624.43 2798.16
30-Aug-02 8489.14 3648.23 2924.63
29-Sep-02 9218.88 3251.74 3021.08
30-Oct-02 8380.03 3537.95 2948.66
29-Nov-02 7932.26 3746.19 2979.04
30-Dec-02 8784.19 3526.11 3086.61
30-Jan-03 9453.03 3433.74 3093.02
27-Feb-03 10191.30 3382.22 3174.55
30-Mar-03 9323.00 3415.06 3149.17
29-Apr-03 9388.19 3696.36 3221.44
30-May-03 10414.16 3891.11 3373.09
29-Jun-03 9984.78 3940.74 3324.83
30-Jul-03 9932.35 4010.22 3031.81
30-Aug-03 9811.90 4088.43 3098.14
29-Sep-03 10059.89 4045.02 3254.03
30-Oct-03 10204.43 4273.84 3188.11
29-Nov-03 10010.29 4311.45 3204.63
30-Dec-03 10667.82 4537.56 3249.17
30-Jan-04 10771.26 4620.84 3309.83
27-Feb-04 11289.92 4685.07 3368.88
30-Mar-04 11029.17 4614.39 3408.50
29-Apr-04 10147.75 4541.95 3226.40
30-May-04 9921.01 4604.28 3203.38
29-Jun-04 9349.93 4693.81 3233.32
30-Jul-04 9315.92 4538.46 3292.91
30-Aug-04 9442.04 4556.82 3422.97
29-Sep-04 9688.61 4606.17 3457.53
30-Oct-04 10095.31 4676.54 3514.16
29-Nov-04 10853.45 4865.76 3443.92
30-Dec-04 10810.94 5031.34 3532.54
30-Jan-05 10184.59 4908.70 3630.24
27-Feb-05 10520.44 5012.00 3589.73
30-Mar-05 10429.75 4923.24 3545.03
AHL
DIVERSIFIED US US
PROGRAM STOCKS BONDS
----------- ------ -----
Cumulative return xx.x% xx.x% xx.x%
Compound annual return xx.x% xx.x% xx.x%
Annualized x.x% x.x% x.x%
Worst drawdown x.x% x.x% x.x%
Sharpe ratio x.xx x.xx x.xx
The chart above represents the pre-tax growth of a theoretical $1,000
investment in the AHL Diversified Program, in the U.S. Stock market and in the
U.S. bond market.
Notes: 1 US stocks: S&P 500 Total Return Index (dividends reinvested); 2 US
bonds: Citigroup High Grade Corporate Bond Index (total return). Each
index is unmanaged and does not incur management fees, transaction costs
or other expenses. Annualized standard deviation is a measurement of a
fund's risk which shows the amount of dispersion or volatility of
historical returns. A higher standard deviation indicates a fund has
historically had more volatility. Sharpe ratio is calculated using the
risk-free rate in the appropriate currency over the period analyzed. Where
an investment has underperformed the risk-free rate, the Sharpe ratio will
be negative. Because the Sharpe ratio is an absolute measure of
risk-adjusted return, negative Sharpe ratios are shown as N/A, as they can
be misleading. Source: Man database and Bloomberg.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
43
AHL DIVERSIFIED PROGRAM
[BAR CHART]
AHL Diversified Program US stocks US bonds
Return for last 12 months -5.4% 6.7% 4.0%
Annualised return over the last 5 years 13.9% -3.2% 10.3%
Annualised Return / Compound Annual Rate of 17.8% 11.8% 9.2%
Return Since inception to March 31, 2005
The chart above represents the annualized performance of the AHL
Diversified Program over a one-year period, a five-year period and since
inception in [-] compared to the performance of U.S. stocks, represented by the
S&P 500 Total Return Index (dividends reinvested) and U.S. bonds, represented by
the Citigroup High Grade Corporate Bond Index (total return). Index returns are
shown for comparison purposes. Each index is unmanaged and does not incur
management fees, transaction costs or other expenses.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
44
AHL DIVERSIFIED PROGRAM
[PIE CHART]
Traditional Portfolio Enhanced Portfolio
Compound annual return X.X% Compound annual return X.X% Improvement of X.X %
Annualized standard deviation XX.X% Annualized standard deviation XX.X% Reduced by X.X %
Worst drawdown XX.X% Worst drawdown XX.X% Improvement of X.X %
Sharpe ratio XX.X Sharpe ratio XX.X% Improvement of X.XX
$25,000 invested at inception would have $25,000 invested at inception would have
grown to XX,XXX grown to XX,XXX
The chart above shows the results of adding 10% AHL Diversified Program to a
traditional portfolio of stocks, bonds and cash.
Notes: 1 US stocks: S&P 500 Total Return Index (dividends reinvested); 2 US
bonds: Citigroup High Grade Corporate Bond Index (total return); 3 Cash: 3
Month US LIBOR Index. Each index is unmanaged and does not incur
management fees, transaction costs or other expenses.Annualized standard
deviation is a measurement of a fund's risk which shows the amount of
dispersion or volatility of historical returns. A higher standard
deviation indicates a fund has historically had more volatility. Sharpe
ratio is calculated using the risk-free rate in the appropriate currency
over the period analyzed. Where an investment has underperformed the
risk-free rate, the Sharpe ratio will be negative. Because the Sharpe
ratio is an absolute measure of risk-adjusted return, negative Sharpe
ratios are shown as N/A, as they can be misleading. In order for a
portfolio consisting of stocks, bonds and cash and the AHL Diversified
Program to outperform a portfolio consisting of stocks, bonds and cash
only, the AHL Diversified Program must outperform stocks, bonds or cash
over the period measured. There can be no assurance that will, in fact,
occur. Source: Man database and Bloomberg.
THE RISK OF A FUND TRADING THE AHL DIVERSIFIED PORTFOLIO INCURRING SUDDEN, MAJOR
LOSSES IS NOT REFLECTED IN THE ABOVE CHARTS OR STATISTICS, WHICH ARE BASED ON
STATISTICAL AVERAGES OVER TIME.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
45
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 TO MONTH DATE, 2005
[BAR GRAPH]
AHL Diversified Program US stocks US bonds
Average (mean) return during S&P 500 TR Index
positive quarters 3.5% 6.7% 2.1%
Average (mean) return during S&P 500 TR Index
negative quarters 7.4% -6.2% 2.6%
Average (mean) return during all quarters 4.6% 3.1% 2.3%
Average (mean) return during Citigroup High
Grade Corp Bond TR positive quarters 6.1% 3.0% 3.7%
Average (mean) return during Citigroup High
Grade Corp Bond TR negative quarters -0.4% 3.2% -2.4%
Average (mean) return during all quarters 4.6% 3.1% 2.3%
The first chart above represents a comparison of the AHL Diversified Program and
US bonds to US stocks, showing the average quarterly returns, during up and down
quarters for US stocks. The second chart above represents a comparison of the
AHL Diversified Program and US stocks to US bonds, showing the average quarterly
returns, during up and down quarters for US bonds.
Notes: 1 The AHL Diversified Program composite performance; 2 US stocks: S&P 500
Total Return Index; 3 US bonds: Citigroup High Grade Corporate Bond Index
(total return). Source: Man database and Bloomberg
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
46
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 TO MONTH DATE, 2005
12 MONTH ROLLING RETURNS ANALYSIS
[BAR GRAPH]
12 month
AHL cumulative
rolling return
30-Nov-90
30-Dec-90
30-Jan-91
27-Feb-91
30-Mar-91
29-Apr-91
30-May-91
29-Jun-91
30-Jul-91
30-Aug-91
29-Sep-91
30-Oct-91
29-Nov-91 6.3%
30-Dec-91 21.9%
30-Jan-92 14.0%
27-Feb-92 11.6%
30-Mar-92 8.6%
29-Apr-92 9.2%
30-May-92 7.4%
29-Jun-92 7.6%
30-Jul-92 24.3%
30-Aug-92 23.7%
29-Sep-92 14.9%
30-Oct-92 12.7%
29-Nov-92 12.0%
30-Dec-92 1.7%
30-Jan-93 12.7%
27-Feb-93 24.2%
30-Mar-93 27.7%
29-Apr-93 30.5%
30-May-93 33.6%
29-Jun-93 35.0%
30-Jul-93 25.7%
30-Aug-93 27.4%
29-Sep-93 29.4%
30-Oct-93 34.2%
29-Nov-93 31.9%
30-Dec-93 37.8%
30-Jan-94 32.1%
27-Feb-94 17.9%
30-Mar-94 19.8%
29-Apr-94 14.1%
30-May-94 19.4%
29-Jun-94 19.2%
30-Jul-94 10.5%
30-Aug-94 0.6%
29-Sep-94 5.6%
30-Oct-94 1.1%
29-Nov-94 9.6%
30-Dec-94 2.6%
30-Jan-95 6.9%
27-Feb-95 13.8%
30-Mar-95 20.4%
29-Apr-95 29.8%
30-May-95 29.1%
29-Jun-95 26.0%
30-Jul-95 28.5%
30-Aug-95 37.4%
29-Sep-95 33.8%
30-Oct-95 34.4%
29-Nov-95 27.2%
30-Dec-95 33.8%
30-Jan-96 31.8%
27-Feb-96 21.5%
30-Mar-96 10.4%
29-Apr-96 15.7%
30-May-96 4.5%
29-Jun-96 10.2%
30-Jul-96 8.7%
30-Aug-96 7.0%
29-Sep-96 17.8%
30-Oct-96 30.1%
29-Nov-96 39.1%
30-Dec-96 30.9%
30-Jan-97 35.1%
27-Feb-97 49.6%
30-Mar-97 48.9%
29-Apr-97 31.3%
30-May-97 38.8%
29-Jun-97 37.8%
30-Jul-97 55.3%
30-Aug-97 45.9%
29-Sep-97 32.9%
30-Oct-97 20.6%
29-Nov-97 13.7%
30-Dec-97 22.8%
30-Jan-98 20.7%
27-Feb-98 17.3%
30-Mar-98 24.7%
29-Apr-98 24.6%
30-May-98 32.3%
29-Jun-98 28.9%
30-Jul-98 21.2%
30-Aug-98 51.1%
29-Sep-98 57.0%
30-Oct-98 55.5%
29-Nov-98 53.2%
30-Dec-98 48.2%
30-Jan-99 37.7%
27-Feb-99 37.2%
30-Mar-99 27.1%
29-Apr-99 42.9%
30-May-99 27.1%
29-Jun-99 25.9%
30-Jul-99 24.3%
30-Aug-99 6.0%
29-Sep-99 0.7%
30-Oct-99 -4.9%
29-Nov-99 0.9%
30-Dec-99 2.0%
30-Jan-00 6.9%
27-Feb-00 6.0%
30-Mar-00 6.1%
29-Apr-00 -3.5%
30-May-00 4.3%
29-Jun-00 0.2%
30-Jul-00 -3.6%
30-Aug-00 -0.1%
29-Sep-00 -2.9%
30-Oct-00 9.4%
29-Nov-00 12.1%
30-Dec-00 18.8%
30-Jan-01 21.4%
27-Feb-01 23.5%
30-Mar-01 42.4%
29-Apr-01 32.6%
30-May-01 26.2%
29-Jun-01 29.1%
30-Jul-01 38.8%
30-Aug-01 41.3%
29-Sep-01 60.2%
30-Oct-01 60.2%
29-Nov-01 32.5%
30-Dec-01 18.8%
30-Jan-02 12.3%
27-Feb-02 3.2%
30-Mar-02 -8.6%
29-Apr-02 -2.4%
30-May-02 1.9%
29-Jun-02 16.3%
30-Jul-02 18.5%
30-Aug-02 12.3%
29-Sep-02 10.5%
30-Oct-02 -3.9%
29-Nov-02 -0.4%
30-Dec-02 11.1%
30-Jan-03 24.7%
27-Feb-03 42.6%
30-Mar-03 31.7%
29-Apr-03 36.5%
30-May-03 48.8%
29-Jun-03 26.2%
30-Jul-03 18.1%
30-Aug-03 15.6%
29-Sep-03 9.1%
30-Oct-03 21.8%
29-Nov-03 26.2%
30-Dec-03 21.4%
30-Jan-04 13.9%
27-Feb-04 10.8%
30-Mar-04 18.3%
29-Apr-04 8.1%
30-May-04 -4.7%
29-Jun-04 -6.4%
30-Jul-04 -6.2%
30-Aug-04 -3.8%
29-Sep-04 -3.7%
30-Oct-04 -1.1%
29-Nov-04 8.4%
30-Dec-04 1.3%
30-Jan-05 -5.4%
27-Feb-05 -6.8%
30-Mar-05 -5.4%
3 YEAR ROLLING CUMULATIVE RETURNS ANALYSIS
[BAR GRAPH]
AHL 3 year cumulative
rolling return
30-Nov-90
30-Dec-90
30-Jan-91
27-Feb-91
30-Mar-91
29-Apr-91
30-May-91
29-Jun-91
30-Jul-91
30-Aug-91
29-Sep-91
30-Oct-91
29-Nov-91
30-Dec-91
30-Jan-92
27-Feb-92
30-Mar-92
29-Apr-92
30-May-92
29-Jun-92
30-Jul-92
30-Aug-92
29-Sep-92
30-Oct-92
29-Nov-92
30-Dec-92
30-Jan-93
27-Feb-93
30-Mar-93
29-Apr-93
30-May-93
29-Jun-93
30-Jul-93
30-Aug-93
29-Sep-93
30-Oct-93
29-Nov-93 57.0%
30-Dec-93 70.7%
30-Jan-94 69.7%
27-Feb-94 63.5%
30-Mar-94 66.2%
29-Apr-94 62.7%
30-May-94 71.3%
29-Jun-94 73.2%
30-Jul-94 72.6%
30-Aug-94 58.6%
29-Sep-94 56.9%
30-Oct-94 52.9%
29-Nov-94 61.8%
30-Dec-94 43.8%
30-Jan-95 59.1%
27-Feb-95 66.7%
30-Mar-95 84.3%
29-Apr-95 93.2%
30-May-95 105.9%
29-Jun-95 102.8%
30-Jul-95 78.5%
30-Aug-95 76.2%
29-Sep-95 82.7%
30-Oct-95 82.3%
29-Nov-95 83.9%
30-Dec-95 89.3%
30-Jan-96 86.0%
27-Feb-96 63.0%
30-Mar-96 59.3%
29-Apr-96 71.4%
30-May-96 61.1%
29-Jun-96 65.5%
30-Jul-96 54.3%
30-Aug-96 48.0%
29-Sep-96 66.4%
30-Oct-96 76.7%
29-Nov-96 94.0%
30-Dec-96 79.8%
30-Jan-97 90.4%
27-Feb-97 106.9%
30-Mar-97 97.9%
29-Apr-97 97.1%
30-May-97 87.4%
29-Jun-97 91.4%
30-Jul-97 116.8%
30-Aug-97 114.6%
29-Sep-97 109.4%
30-Oct-97 110.8%
29-Nov-97 101.3%
30-Dec-97 115.1%
30-Jan-98 114.9%
27-Feb-98 113.4%
30-Mar-98 104.9%
29-Apr-98 89.3%
30-May-98 91.9%
29-Jun-98 95.8%
30-Jul-98 104.5%
30-Aug-98 135.9%
29-Sep-98 145.6%
30-Oct-98 144.0%
29-Nov-98 142.4%
30-Dec-98 138.2%
30-Jan-99 124.6%
27-Feb-99 140.9%
30-Mar-99 135.9%
29-Apr-99 133.8%
30-May-99 133.3%
29-Jun-99 123.7%
30-Jul-99 133.9%
30-Aug-99 133.7%
29-Sep-99 110.1%
30-Oct-99 78.5%
29-Nov-99 75.9%
30-Dec-99 85.6%
30-Jan-00 77.7%
27-Feb-00 70.7%
30-Mar-00 68.1%
29-Apr-00 71.8%
30-May-00 75.3%
29-Jun-00 62.6%
30-Jul-00 45.3%
30-Aug-00 59.9%
29-Sep-00 53.5%
30-Oct-00 61.9%
29-Nov-00 73.4%
30-Dec-00 79.5%
30-Jan-01 78.7%
27-Feb-01 79.7%
30-Mar-01 92.1%
29-Apr-01 82.7%
30-May-01 67.3%
29-Jun-01 62.9%
30-Jul-01 66.4%
30-Aug-01 49.6%
29-Sep-01 56.6%
30-Oct-01 66.7%
29-Nov-01 50.0%
30-Dec-01 44.0%
30-Jan-02 45.7%
27-Feb-02 35.1%
30-Mar-02 38.1%
29-Apr-02 24.9%
30-May-02 34.1%
29-Jun-02 50.4%
30-Jul-02 58.6%
30-Aug-02 58.6%
29-Sep-02 71.8%
30-Oct-02 68.4%
29-Nov-02 48.1%
30-Dec-02 56.8%
30-Jan-03 69.9%
27-Feb-03 81.7%
30-Mar-03 71.5%
29-Apr-03 76.7%
30-May-03 91.3%
29-Jun-03 89.5%
30-Jul-03 94.3%
30-Aug-03 83.5%
29-Sep-03 93.1%
30-Oct-03 87.4%
29-Nov-03 66.7%
30-Dec-03 60.4%
30-Jan-04 59.5%
27-Feb-04 63.0%
30-Mar-04 42.5%
29-Apr-04 44.1%
30-May-04 44.4%
29-Jun-04 37.4%
30-Jul-04 31.3%
30-Aug-04 24.9%
29-Sep-04 16.1%
30-Oct-04 15.7%
29-Nov-04 36.3%
30-Dec-04 36.7%
30-Jan-05 34.3%
27-Feb-05 47.2%
30-Mar-05 47.4%
The first chart presents the returns of the AHL Diversified Program for all
period of 12 consecutive months from [-] to [-]. The second chart presents the
returns of the AHL Diversified Program for all periods of 36 consecutive months
from [-] to [-].
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
47
MAN-GLENWOOD LEXINGTON, LLC
[LINE GRAPH]
Man-
Glenwood S&P 500 Citigroup
Lexington, TR High Grade
Rebase Value LLC Index Corp Bond TR
---------- -------- ----------
1000 31-Dec-92 1000.00 1000.00 1000.00
30-Jan-93 1008.95 1008.36 1025.03
27-Feb-93 1018.52 1022.10 1051.25
30-Mar-93 1047.92 1043.67 1053.90
29-Apr-93 1084.83 1018.44 1059.38
30-May-93 1107.64 1045.69 1061.53
29-Jun-93 1145.17 1048.75 1092.67
30-Jul-93 1162.97 1044.53 1103.58
30-Aug-93 1194.28 1084.16 1135.30
29-Sep-93 1186.95 1075.85 1140.20
30-Oct-93 1206.24 1098.10 1146.01
29-Nov-93 1209.92 1087.64 1124.49
30-Dec-93 1268.80 1100.79 1132.05
30-Jan-94 1291.95 1138.21 1154.97
27-Feb-94 1261.72 1107.32 1121.98
30-Mar-94 1242.19 1059.04 1079.02
29-Apr-94 1231.32 1072.62 1068.58
30-May-94 1251.88 1090.22 1061.91
29-Jun-94 1257.74 1063.50 1053.32
30-Jul-94 1257.71 1098.42 1085.87
30-Aug-94 1261.83 1143.46 1082.52
29-Sep-94 1267.00 1115.50 1053.81
30-Oct-94 1253.44 1140.56 1048.57
29-Nov-94 1233.49 1099.01 1050.49
30-Dec-94 1230.81 1115.32 1067.03
30-Jan-95 1224.90 1144.25 1094.40
27-Feb-95 1224.11 1188.84 1126.03
30-Mar-95 1240.48 1223.92 1136.72
29-Apr-95 1258.98 1259.96 1156.63
30-May-95 1273.77 1310.32 1229.58
29-Jun-95 1273.99 1340.75 1239.26
30-Jul-95 1298.10 1385.22 1226.79
30-Aug-95 1339.59 1388.70 1252.99
29-Sep-95 1352.31 1447.30 1272.12
30-Oct-95 1355.40 1442.13 1295.69
29-Nov-95 1362.12 1505.44 1327.06
30-Dec-95 1384.60 1534.44 1357.28
30-Jan-96 1410.04 1586.66 1359.14
27-Feb-96 1420.47 1601.37 1308.42
30-Mar-96 1444.61 1616.79 1291.35
29-Apr-96 1464.52 1640.62 1270.75
30-May-96 1497.81 1682.93 1271.40
29-Jun-96 1500.51 1689.36 1293.29
30-Jul-96 1464.04 1614.72 1294.54
30-Aug-96 1496.21 1648.78 1285.47
29-Sep-96 1495.54 1741.58 1318.72
30-Oct-96 1513.38 1789.62 1366.39
29-Nov-96 1548.71 1924.89 1402.29
30-Dec-96 1562.71 1886.75 1376.19
30-Jan-97 1603.32 2004.62 1372.28
27-Feb-97 1631.15 2020.33 1376.15
30-Mar-97 1632.27 1937.35 1345.78
29-Apr-97 1612.44 2052.98 1370.49
30-May-97 1661.24 2177.97 1388.07
29-Jun-97 1707.07 2275.54 1414.01
30-Jul-97 1777.23 2456.60 1488.73
30-Aug-97 1794.68 2318.98 1453.01
29-Sep-97 1850.44 2445.98 1485.91
30-Oct-97 1841.19 2364.29 1514.22
29-Nov-97 1845.31 2473.74 1529.56
30-Dec-97 1863.07 2516.23 1554.55
30-Jan-98 1841.64 2544.06 1575.84
27-Feb-98 1875.99 2727.55 1574.73
30-Mar-98 1923.68 2867.22 1580.69
29-Apr-98 1947.21 2896.07 1589.04
30-May-98 1969.12 2846.29 1615.53
29-Jun-98 1963.71 2961.90 1634.03
30-Jul-98 1964.51 2930.37 1624.90
30-Aug-98 1949.83 2506.70 1639.31
29-Sep-98 1916.92 2667.28 1706.98
30-Oct-98 1904.71 2884.24 1674.62
29-Nov-98 1945.94 3059.05 1719.85
30-Dec-98 1978.62 3235.33 1721.64
30-Jan-99 1997.82 3370.62 1742.74
27-Feb-99 2015.30 3265.86 1672.90
30-Mar-99 2032.24 3396.53 1673.32
29-Apr-99 2093.32 3528.06 1669.28
30-May-99 2114.84 3444.74 1639.91
29-Jun-99 2180.16 3635.92 1613.68
30-Jul-99 2201.28 3522.39 1595.44
30-Aug-99 2200.97 3504.97 1591.24
29-Sep-99 2238.56 3408.88 1606.07
30-Oct-99 2260.51 3624.60 1613.67
29-Nov-99 2318.02 3698.28 1609.85
30-Dec-99 2399.09 3916.09 1593.45
30-Jan-00 2429.02 3719.34 1590.09
27-Feb-00 2458.89 3648.93 1604.74
30-Mar-00 2492.32 4005.89 1631.92
29-Apr-00 2503.21 3885.38 1613.21
30-May-00 2552.32 3805.67 1587.29
29-Jun-00 2570.98 3899.49 1639.02
30-Jul-00 2616.59 3838.52 1668.39
30-Aug-00 2659.63 4076.95 1690.93
29-Sep-00 2687.27 3861.71 1698.79
30-Oct-00 2715.54 3845.39 1706.43
29-Nov-00 2747.16 3542.22 1751.24
30-Dec-00 2795.46 3559.56 1798.48
30-Jan-01 2822.12 3685.85 1863.04
27-Feb-01 2858.90 3349.77 1886.76
30-Mar-01 2901.43 3137.56 1881.25
29-Apr-01 2897.91 3381.38 1857.11
30-May-01 2920.19 3404.03 1881.67
29-Jun-01 2923.48 3321.18 1892.09
30-Jul-01 2937.07 3288.49 1960.36
30-Aug-01 2964.33 3082.62 1991.04
29-Sep-01 2971.22 2833.69 1960.75
30-Oct-01 2977.31 2887.73 2046.49
29-Nov-01 2982.36 3109.24 2008.02
30-Dec-01 2995.98 3136.47 1989.98
30-Jan-02 3025.64 3090.70 2024.76
27-Feb-02 3038.37 3031.10 2051.17
30-Mar-02 3044.68 3145.10 1990.71
29-Apr-02 3069.56 2954.41 2041.07
30-May-02 3092.06 2932.65 2064.16
29-Jun-02 3077.98 2723.73 2079.21
30-Jul-02 3015.41 2511.43 2098.67
30-Aug-02 3029.28 2527.92 2193.53
29-Sep-02 3004.67 2253.18 2265.86
30-Oct-02 3009.93 2451.50 2211.55
29-Nov-02 3033.12 2595.79 2234.33
30-Dec-02 3055.95 2443.30 2315.02
30-Jan-03 3066.54 2379.29 2319.82
27-Feb-03 3063.68 2343.59 2380.97
30-Mar-03 3061.43 2366.35 2361.94
29-Apr-03 3083.81 2561.26 2416.14
30-May-03 3105.11 2696.21 2529.88
29-Jun-03 3116.15 2730.60 2493.68
30-Jul-03 3129.48 2778.75 2273.92
30-Aug-03 3135.84 2832.94 2323.66
29-Sep-03 3143.63 2802.86 2440.58
30-Oct-03 3173.50 2961.41 2391.14
29-Nov-03 3182.18 2987.47 2403.53
30-Dec-03 3188.85 3144.15 2436.94
30-Jan-04 3214.59 3201.86 2482.44
27-Feb-04 3224.69 3246.36 2526.72
30-Mar-04 3224.06 3197.39 2556.44
29-Apr-04 3216.59 3147.19 2419.86
30-May-04 3199.11 3190.38 2402.60
29-Jun-04 3190.17 3252.42 2425.05
30-Jul-04 3158.92 3144.77 2469.75
30-Aug-04 3153.30 3157.49 2567.29
29-Sep-04 3159.75 3191.69 2593.21
30-Oct-04 3174.38 3240.45 2635.69
29-Nov-04 3212.50 3371.56 2583.00
30-Dec-04 3247.30 3486.29 2649.47
30-Jan-05 3234.31 3401.32 2722.75
27-Feb-05 3255.71 3472.89 2692.36
30-Mar-05 3238.58 3411.39 2658.84
Man-Glenwood(1) US stocks(2) US bonds(3)
--------------- ------------ -----------
Total return xx.x% xx.x% xx.x%
Annualized return xx.x% xx.x% xx.x%
Annualized standard
deviation(4) x.x% x.x% x.x%
Largest peak-to-
trough loss x.x% x.x% x.x%
Sharpe ratio(5) x.x x.x x.x
[PIE CHART]
1 Equity Hedge xx.x %
2 Multi-Strategy xx.x %
3 Variable Equity xx.x %
4 Event Driven xx.x %
5 Commodity and xx.x %
Trading
6 Relative Value xx.x %
7 Cash and xx.x %
equivalents
The first chart above represents the pre-tax growth of a theoretical $1,000
investment in Man-Glenwood Lexington, LLC as well as in US stocks and US bonds
from January 1, 1993 through [-] 2005. The performance of Man-Glenwood Lexington
TEI, LLC is substantially similar, as demonstrated on the following page. The
pie chart illustrates the Man-Glenwood portfolio allocations among various
alternative investment strategies as of [-] 2005. The Fund'S Man-Glenwood
investment is ancillary to the Fund's commodities trading and represents some
what less than 25% of the Fund's total Market exposure. No prospective investor
should invest in the Fund in reliance on the Fund's investment in Man -
Glenwood.
Notes: 1 Man-Glenwood: represented by the performance of (i) the private fund
described on page 42 from January 1, 1993 to December 31, 2002; (ii) the
Portfolio Company described on page 42 from January 1, 2003 to March 31,
2003; and (iii) Man-Glenwood Lexington, LLC thereafter; 2 US stocks: S&P
500 Total Return Index (dividends reinvested); 3 US bonds: Citigroup High
Grade Corporate Bond Index (total return); 4 Annualized standard deviation
is a measurement of a fund's risk which shows the amount of dispersion or
volatility of historical returns. A higher standard deviation indicates a
fund has historically had more volatility; 5 Sharpe ratio is calculated
using the risk-free rate in the appropriate currency over the period
analyzed. Where an investment has underperformed the risk-free rate, the
Sharpe ratio will be negative. Because the Sharpe ratio is an absolute
measure of risk-adjusted return, negative Sharpe ratios are shown as N/A,
as they can be misleading. Index returns are shown for comparison
purposes. Each index is unmanaged and does not incur management fees,
transaction costs or other expenses. Source: Man database and Bloomberg.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
48
MAN-GLENWOOD LEXINGTON, LLC
JANUARY 2000 - MARCH 2005
PERFORMANCE SUMMARY
MONTHLY RATES OF RETURN
- --------------------------------------------------------------------------------
MONTH 2000 2001 2002 2003 2004 2005
- ----------------------- ------ ------ -------- ------ ------ -------
January 1.2% 1.0% 1.0% 0.3% 0.8% (0.4)%
February 1.2% 1.3% 0.4% (0.1)% 0.3% 0.7%
March 1.4% 1.5% 0.2% (0.1)% 0.0% (0.5)%
April 0.4% (0.1)% 0.8% 0.7% (0.2)%
May 2.0% 0.8% 0.7% 0.7% (0.5)%
June 0.7% 0.1% (0.5)% 0.4% (0.3)%
July 1.8% 0.5% (2.0)% 0.4% (1.0)%
August 1.6% 0.9% 0.5% 0.2% (0.2)%
September 1.0% 0.2% (0.8)% 0.2% 0.2%
October 1.1% 0.2% 0.2% 1.0% 0.5%
November 1.2% 0.2% 0.8% 0.3% 1.2%
December 1.8% 0.5% 0.8% 0.2% 1.1%
--- --- ---- --- ---- -----
Compound Annual Rate of 16.5% 7.2% 2.0% 4.3% 1.8% (0.3)%*
Return
--- --- ---- --- ---- -----
- ----------
*3 Months
MAN-GLENWOOD LEXINGTON TEI, LLC
JANUARY 2000 - MARCH 2005
PERFORMANCE SUMMARY
MONTHLY RATES OF RETURN
- --------------------------------------------------------------------------------
MONTH 2000 2001 2002 2003 2004 2005
- ----------------------- ------ ------ -------- ------ ------ -------
January 1.2% 1.0% 1.0% 0.3% 0.8% (0.4)%
February 1.2% 1.3% 0.4% (0.1)% 0.3% 0.7%
March 1.4% 1.5% 0.2% (0.1)% 0.0% (0.6)%
April 0.4% (0.1)% 0.8% 0.7% (0.2)%
May 2.0% 0.8% 0.7% 0.7% (0.5)%
June 0.7% 0.1% (0.5)% 0.4% (0.3)%
July 1.8% 0.5% (2.0)% 0.4% (1.0)%
August 1.6% 0.9% 0.5% 0.2% (0.2)%
September 1.0% 0.2% (0.8)% 0.2% 0.2%
October 1.1% 0.2% 0.2% 1.0% 0.5%
November 1.2% 0.2% 0.8% 0.3% 1.2%
December 1.8% 0.5% 0.8% 0.2% 1.1%
--- --- ---- --- ---- -----
Compound Annual Rate of 16.5% 7.2% 2.0% 4.3% 1.8% (0.4)%*
Return
--- --- ---- --- ---- -----
- ----------
*3 Months
Monthly Rates of Return are calculated by dividing each month's net performance
by net asset value as of the beginning of such month. Man-Glenwood Lexington,
LLC performance is represented by the performance of (i) the private fund
described on page 42 from January 1, 2000 to December 31, 2002; (ii) the
Portfolio Company described beginning on page 42 from January 1, 2003 to March
31, 2003; and (iii) Man-Glenwood Lexington, LLC thereafter. Man-Glenwood
Lexington TEI, LLC performance is represented by the performance of (i) the
private fund described on page 42 from January 1, 2000 to December 31, 2002;
(ii) the Portfolio Company described on page 42 from January 1, 2003 to April
30, 2004; and (iii) Man-Glenwood Lexington TEI, LLC thereafter. The Fund's
Man-Glenwood investment is ancillary to the Fund's commodities trading and
represents some what less than 25% of the Fund's total Market exposure. No
prospective investor should invest in the Fund in reliance on the Fund's
investment in Man - Glenwood.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
49
CORRELATION MATRIX
[DATE] TO [DATE]
PRODUCT US bonds(4) US stocks(3) Man-Glenwood(2) AHL Diversified Program(1)
- --------------- ----------- ------------ --------------- --------------------------
AHL Diversified x.xx x.xx x.xx x.xx
Program(1)
Man-Glenwood(2) x.xx x.xx x.xx
US stocks(3) x.xx x.xx
US bonds(4) x.xx
Statistically, investments with a correlation of 1.00 make or lose money
at the same time. Investments with a correlation of -1.00 always move in
opposite directions. The returns of the AHL Diversified Program and of
Man-Glenwood have very low correlation with other asset classes as well as with
each other.
Notes: 1 AHL Diversified Program composite performance, adjusted to reflect the
management and incentive fees payable to Man-AHL (USA) Ltd. in respect of
the Fund's account, 2 Man-Glenwood: represented by the performance of (i)
the private fund described on page 42 from January 1, 1993 to December 31,
2002; (ii) the Portfolio Company described on page 42 from January 1, 2003
to March 31, 2003; and (iii) Man-Glenwood Lexington, LLC thereafter; 3 US
stocks: S&P 500 Total Return Index (dividends reinvested); 4 US bonds:
Citigroup High Grade Corporate Bond Index (total return). Index returns
are shown for comparison purposes. Each index is unmanaged and does not
incur management fees, transaction costs or other expenses. Source: Man
database and Bloomberg.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
50
Financial Statements
MAN-AHL 130, LLC
PAGE
----
Audited Financial Statements:
Report of Independent Registered Public Accounting Firm.................................... F-1
Statement of Assets and Liabilities as of May 20, 2005..................................... F-2
Notes to Statement of Financial Condition.................................................. F-3
MAN INVESTMENTS (USA) CORP.
Audited Financial Statements:
Report of Independent Auditors............................................................. F-5
Statement of Financial Condition as of March 31, 2005...................................... F-6
Notes to Statement of Financial Condition.................................................. F-7
Schedules are omitted for the reason that they are not required or are not
applicable or that equivalent information has been included in the financial
statements or notes thereto.
--------------------
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Managing Member of
Man-AHL 130, LLC:
We have audited the accompanying statement of assets and liabilities of Man-AHL
130, LLC (the "Company"), as of May 20, 2005. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statement presents fairly, in all material
respects, the financial position of the Company as of May 20, 2005, in
conformity with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
May 26, 2005
F-1
MAN-AHL 130, LLC
STATEMENT OF ASSETS AND LIABILITIES
MAY 20, 2005
ASSETS
Cash $ 10,000
---------------
Total Assets $ 10,000
===============
LIABILITIES $ 0
---------------
NET ASSETS $ 10,000
===============
NET ASSETS - Applicable to 1,000 Class A units of beneficial interest outstanding $ 10,000
===============
NET ASSET VALUE PER UNIT (net assets divided by 1,000 Class A units of LLC
interest) $ 100
===============
See notes to financial statement.
F-2
MAN-AHL 130, LLC
NOTES TO FINANCIAL STATEMENT
MAY 20, 2005
1. ORGANIZATION
Man-AHL 130, LLC (the "Company") is a newly formed Delaware limited liability
company registered under the Securities Act of 1933 (the "1933 Act"), designed
as a structured managed futures product which offers investors enhanced yield
and diversification benefits. The Company was formed on April 14, 2005.
The Company expects to invest the majority of its capital into a managed futures
program (the "AHL Diversified Program"). The Company's objective in investing in
the AHL Diversified Program is to recognize substantial profits while achieving
diversification, as this program has had historically low correlation to
traditional stock and bond portfolios. Additionally, the Company expects to
invest a portion of its capital in one or both of the following registered
investment companies: Man-Glenwood Lexington, LLC and Man-Glenwood Lexington
TEI, LLC (collectively, "Lexington Funds"). The Company will attempt to achieve
enhanced yield and diversification through investments in the Lexington Funds,
which have had historically low correlation to both traditional stock and bond
portfolios as well as low correlation to the AHL Diversified Program.
The Company's managing member is Man Investments (USA) Corp., ("MI USA"), a
Delaware corporation. MI USA is registered with the CFTC as a commodity pool
operator and a commodity trading advisor, and is a member of the NFA. MI USA is
a subsidiary of Man Group plc, a diversified global financial services firm
listed on the London Stock Exchange.
Man AHL (USA) Limited manages the AHL Diversified Program. Man AHL (USA) Limited
is an affiliate of MI USA and a member of Man Group plc. Man AHL (USA) Limited
is registered with the CFTC as a commodity trading advisor and is a member of
the NFA, in addition to registration with the Financial Services Authority in
the United Kingdom.
The AHL Diversified Program executes its futures and forward trades exclusively
through Man Financial Inc. ("Man Financial"), an affiliate of MI USA, Man AHL
(USA) Limited and a member of Man Group plc.
Glenwood Capital Investments, L.L.C. ("GCI") acts as an administrator to the
Lexington Funds. GCI is an Illinois limited liability company and is registered
with the CFTC as a commodity pool operator and commodity trading advisor and is
a member of the NFA. GCI is also registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"). GCI is an affiliate of MI USA, Man AHL (USA) Limited and Man Financial,
and is a subsidiary of Man Group plc.
The Lexington Funds achieve their investment objects through an investment in
Man-Glenwood Lexington Associates Portfolio, LLC (the "Portfolio Company"),
which allocates its capital among a series of "sub-funds." GCI acts as an
investment adviser to the Portfolio Company in addition to the services it
provides to the Lexington Funds.
Man Investments Inc. ("MII"), an affiliate of MI USA, Man AHL (USA) Limited, Man
Financial and GCI, and a subsidiary of Man Group plc, will act as the Company's
selling agent.
The Company will pay MI USA a management fee at the rate of 0.75% per annum on
the month-end net asset value of all outstanding units determined as of the end
of each month (before the redemption of any units) and payable quarterly in
arrears. The Company will pay Man AHL (USA) Limited a management fee of 2% per
annum on the month-end net asset value of capital allocated to the AHL
Diversified Program (the "AHL Account") calculated and paid monthly. In
addition, Man AHL (USA) Limited will be entitled to a monthly incentive fee of
20% of any "new net profits" attributable to the AHL Account, subject to a "high
water mark."
GCI receives a management fee of 1.75% of net assets per annum for investment
advisory services provided to the Portfolio Company, calculated monthly and paid
quarterly. Additionally, GCI receives an administrative fee of 0.25% of net
assets per annum for administrative services to each
F-3
Lexington Fund, calculated monthly and paid quarterly.
MII receives an investor servicing fee of 0.50% of net assets per annum for the
provision of investor services to the Lexington Funds, calculated monthly and
paid quarterly.
MI USA will receive a 1.0% per annum client servicing fee, calculated monthly
and paid quarterly in arrears, on the month-end net asset value of certain
units. MI USA will pass on such client service fee to MII, subject to a maximum
commission receipt to MII of 10% of the subscription price of each unit.
MI USA expects that the Company will enter into an administration agreement with
an independent third party to provide various services (such as administration,
accounting, valuation, tax reporting and investor servicing). The cost of these
services is currently estimated at 0.50% of net assets per annum.
The Company currently intends to accept initial subscriptions for units during
an initial offering period. After the Company begins operations, units will be
offered on the first day of each month. Redemptions will be accepted quarterly,
with a 45 day notice period.
2. SIGNIFICANT ACCOUNTING POLICIES
The Company's statement of assets and liabilities is prepared in conformity with
accounting principles generally accepted in the United States of America. The
preparation of financial statements requires the Company 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 period.
Actual results could differ from those estimates.
The Managing Member, or an affiliate, will assume organizational and offering
costs, estimated to be $17,500 and $352,500, respectively.
The Company will be treated as a United States Partnership for federal income
tax purposes. As such, members are individually liable for the taxes on their
share of the Company's income or loss.
3. CAPITAL STRUCTURE
The Company expects to offer four classes of units of limited liability company
interests. These classes have substantially identical trading portfolios except
that Class A Units are offered to taxable investors and invest in Man-Glenwood
Lexington, LLC and Class B Units are offered to tax-exempt investors and invest
in Man-Glenwood Lexington TEI, LLC. Additionally, separate classes will be
issued to taxable and tax-exempt investors who participate in selling agent or
registered investment advisor fee based investment or advisory programs. These
classes will not be subject to the investor servicing fee.
F-4
REPORT OF INDEPENDENT AUDITORS
To the Shareholder of
Man Investments (USA) Corp.
In our opinion, the accompanying statement of financial condition presents
fairly, in all material respects, the financial position of Man Investments
(USA) Corp. (the "Company") at March 31, 2005 in conformity with accounting
principles generally accepted in the United States of America. This financial
statement is the responsibility of the Company's management; our responsibility
is to express an opinion on this financial statement based on our audit. We
conducted our audit of this statement in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
statement of financial condition is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of financial condition, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall statement of financial condition presentation. We believe that our audit
of the statement of financial condition provides a reasonable basis for our
opinion.
PricewaterhouseCoopers LLP
Chicago, Illinois
June 24, 2005
F-5
MAN INVESTMENTS (USA) CORP.
STATEMENT OF FINANCIAL CONDITION
AS OF MARCH 31, 2005
ASSETS
Cash and cash equivalents
Cash $ 1,000
Deposit with an affiliate 1,253,173
Management fees receivable 56,894
-----------
Total assets $ 1,311,067
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Payable to affiliates $ 60,471
-----------
Total liabilities 60,471
Shareholder's equity
Common shares, $0.01 par value (200 shares issued
and outstanding, 1,000 shares authorized) 2
Additional paid-in capital 1,250,998
Retained deficit (404)
-----------
1,250,596
Total liabilities and shareholder's equity $ 1,311,067
===========
INVESTORS WILL NOT ACQUIRE ANY INTEREST IN THIS ENTITY.
The accompanying notes are an integral part of this
statement of financial condition.
F-6
MAN INVESTMENTS (USA) CORP.
NOTES TO STATEMENT OF FINANCIAL CONDITION
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION
Man Investments (USA) Corp. (the "Company"), a Delaware corporation, was
formed on February 8, 2002 and is a wholly owned subsidiary of Man
Investments Holdings Inc. The ultimate parent of Man Investments Holdings
Inc. is Man Group plc, a United Kingdom public limited company. The
Company is registered as a commodity pool operator and commodity trading
advisor with the Commodity Futures Trading Commission and is a member of
the National Futures Association.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statement has been prepared in conformity with
accounting principles generally accepted in the United States of America.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes interest-bearing deposits with an
affiliate in the amount of $1,253,173. The interest rate earned on
deposits changes daily and was in the range between 2.64% to 3.04%.
MANAGEMENT FEES
The Company earns management fees from sponsored investment funds.
Revenues are recorded on an accrual basis as services are provided and
when such fees are earned and measurable pursuant to the prevailing
management contracts.
LIABILITIES
Payable to affiliates represents payables to related parties of Man Group
plc and one of the sponsored funds, Man IP 200 Private LLC ("Fund"), for
reimbursement of the Company's share of expenses incurred during the year.
USE OF ESTIMATES
The preparation of the statement of financial condition in conformity with
accounting principles generally accepted in the United States of America
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 statement of financial
condition. Actual results could differ from those estimates.
CONTINGENCIES
In the normal course of business, the Company enters into contracts that
contain a variety of representations and warranties and which provide
general indemnifications. The Company's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be
made against the Company that have not yet occurred. However, based on
experience, management expects the risk of loss to be remote.
F-7
MAN INVESTMENTS (USA) CORP.
NOTES TO STATEMENT OF FINANCIAL CONDITION, Continued
- --------------------------------------------------------------------------------
RELATED PARTY TRANSACTIONS
Man-Glenwood Inc. ("MGI"), an affiliate, provides the Company with
technology support, legal and compliance as well as finance and
administration services. In addition, MGI leases the office space
occupied by the Company and the equipment used by the Company.
The Fund pays the Company, as managing member, an annual management fee
which is a percentage of the net asset value of the outstanding units
calculated as of the end of each calendar month and paid quarterly.
The Company is the managing member of a newly formed fund, Man-AHL 130
LLC. In connection with the anticipated offering of units of Man-AHL 130
LLC, all of the offering and organizational costs incurred and accrued
through March 31, 2005 have been assumed by an affiliate. In addition, an
affiliate will bear the administrative expenses of the new fund in excess
of 0.50% of the Fund's average month-end net asset value during any fiscal
year.
3. SUBSEQUENT EVENT
Effective on April 1, 2005, the Company became the general partner of
Man-AHL Diversified Trading Company LP, Man-AHL Diversified I LP
("Diversified I") , Man-AHL Diversified II LP ("Diversified II") and
Man-AHL Alpha LP ("AHL Alpha") and the commodity pool operator of AHL
Alpha (Cayman) LTD. Prior to April 1, 2005, an affiliated entity was the
general partner and commodity pool operator, respectively, for these
funds.
The Company maintains capital investments in Diversified I, Diversified II
and AHL Alpha (the "Funds"). Under the terms of the Funds' limited
partnership agreements, the Company is required to maintain a capital
account equal to the lesser of (a) 1.01% of the aggregate net capital
contributions made to the partnership by all partners from time to time
(including the general partner's capital contributions) or (b) $500,000.
In connection with this requirement, the prior general partner contributed
investments with a value of $4,594,743 to the Company on April 1, 2005.
F-8
MAN-AHL 130, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
LIMITED LIABILITY COMPANY AGREEMENT
DATED AS OF
________, 2005
MAN INVESTMENTS (USA) CORP
MANAGING MEMBER
MAN-AHL 130, LLC
LIMITED LIABILITY COMPANY AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
- ----------- ------
ARTICLE I
DEFINITIONS
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS
Section 2.1 Formation of Limited Liability Company............................................................... 4
Section 2.2 Name................................................................................................. 4
Section 2.3 Principal and Registered Office...................................................................... 4
Section 2.4 Duration............................................................................................. 5
Section 2.5 Business of the Fund................................................................................. 5
Section 2.6 Members.............................................................................................. 5
Section 2.7 Limited Liability.................................................................................... 6
ARTICLE III
NET WORTH OF MANAGING MEMBER
ARTICLE IV
CAPITAL CONTRIBUTIONS; UNITS
ARTICLE V
ALLOCATION OF PROFITS AND LOSSES
Section 5.1 Capital Accounts and Allocations..................................................................... 6
Section 5.2 Allocation of Profit and Loss for Federal Income Tax Purposes........................................ 7
Section 5.3 Organizational and Initial Offering Costs; Operating Costs; Management and Client Servicing
Fees; Costs and Fees of Underlying Investments....................................................... 9
Section 5.4 Taxes................................................................................................ 9
Section 5.5 Managing Member Services; Direct Expenses; Reserves.................................................. 9
Section 5.6 Limited Liability of Members......................................................................... 10
Section 5.7 Return of Capital Contributions...................................................................... 10
ARTICLE VI
MANAGEMENT OF THE FUND
Section 6.1 Management of the Fund............................................................................... 10
Section 6.2 Compliance with the NASAA Guidelines................................................................. 10
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ARTICLE VII
AUDITS AND REPORTS TO MEMBERS
Section 7.1 Audits and Reports to Members........................................................................ 12
ARTICLE VIII
ASSIGNABILITY OF UNITS
Section 8.1 Assignability of Units............................................................................... 12
ARTICLE IX
REDEMPTIONS
Section 9.1 Redemptions.......................................................................................... 13
ARTICLE X
OFFERING OF UNITS
Section 10.1 Continuous Offering of Units......................................................................... 14
ARTICLE XI
ADDITIONAL OFFERINGS; DIFFERENT BUSINESS TERMS
Section 11.1 Additional Offerings................................................................................. 14
Section 11.2 Different Business Terms............................................................................. 14
ARTICLE XII
SPECIAL POWER OF ATTORNEY
Section 12.1 Special Power of Attorney............................................................................ 15
ARTICLE XIII
WITHDRAWAL OF A MEMBER
Section 13.1 Withdrawal of a Member............................................................................... 15
ARTICLE XIV
STANDARD OF LIABILITY; INDEMNIFICATION
Section 14.1 Standard of Liability for the Managing Member........................................................ 16
Section 14.2 Indemnification of the Managing Member by the Fund................................................... 16
Section 14.3 Indemnification of the Fund by the Members........................................................... 17
ARTICLE XV
AMENDMENTS; MEETINGS
Section 15.1 Amendments with Consent of the Managing Member....................................................... 18
Section 15.2 Amendments and Actions without Consent of the Managing Member........................................ 18
Section 15.3 Meetings; Other Voting Matters....................................................................... 18
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Section 15.4 Opportunity to Redeem................................................................................ 19
ARTICLE XVI
GOVERNING LAW
Section 16.1 Governing Law........................................................................................ 19
ARTICLE XVII
MISCELLANEOUS
Section 17.1 Notices.............................................................................................. 19
Section 17.2 Binding Effect....................................................................................... 19
Section 17.3 Captions............................................................................................. 20
ARTICLE XVIII
CERTAIN DEFINITIONS
Section 18.1 Certain Definitions.................................................................................. 20
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MAN-AHL 130, LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT of Man-AHL 130, LLC (the "Fund"), dated
as of __________, 2005, by and among Man Investments (USA) Corp., as the
Managing Member, and those Persons hereafter admitted as Members.
WITNESSETH:
WHEREAS, the Fund has been formed as a limited liability company under the
Delaware Limited Liability Company Act pursuant to an initial Certificate of
Formation dated and filed with the Secretary of State of Delaware on ______,
2005;
WHEREAS, the Fund will operate subject to the regulations relating to "commodity
pools" as promulgated by the Commodity Futures Trading Commission and the
National Futures Association;
WHEREAS, the Fund will be traded pursuant to in the AHL Diversified Program, a
highly-leveraged speculative managed futures program; and
WHEREAS, the Fund will invest a limited portion of its capital in Man-Glenwood,
while holding the bulk of its capital in cash and cash equivalents as described
herein.
NOW, THEREFORE, for and in consideration of the foregoing and the mutual
covenants hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
"ADMINISTRATOR" -- With respect to the Fund, means [TBD] or such other entity as
the Managing Member may select from time to time to provide administrative
services to the Fund and to the Managing Member in its capacity as such.
"AFFILIATE" -- With respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person, and the term `Affiliated' shall have a
correlative meaning. The term `control' means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" -- This Limited Liability Company Agreement, as amended from time to
time.
"AHL" -- Man AHL (USA) Limited, an affiliate of the Managing Member.
"AHL DIVERSIFIED PROGRAM" -- A diversified leveraged managed futures program
implemented by AHL applying systematic trading strategies across a diversified
range of markets.
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"CAPITAL ACCOUNT" -- With respect to each Unit, the Capital Account established
and maintained on behalf of such Unit pursuant to Section 6.1. For tax purposes,
each Member shall be deemed to have a single Capital Account, but the financial
allocations of the Fund will be accounted for on a per-Unit basis.
"CERTIFICATE" -- The Certificate of Formation of the Fund and any amendments
thereto as filed with the office of the Secretary of State of the State of
Delaware.
"CLASS" -- Any Class of Units established by the Managing Member, having such
relative rights, preferences and obligations as are designated by the Managing
Member. The A1, A2, B1 and B2 Classes initially authorized invest in the same
AHL Diversified Program and cash and cash equivalents, however, the Class B1 and
Class B2 Units invest a limited portion of their capital in Man-Glenwood
Lexington TEI, LLC while the Class A1 and Class A2 Units invest in Man-Glenwood
Lexington, LLC.
"CLIENT SERVICING FEE" -- See Section 5.3.
"CLOSING DATE" -- Each date on or as of which Units are issued.
"CODE" -- The United States Internal Revenue Code of 1986, as amended from time
to time, or any successor law.
"COMMODITY EXCHANGE ACT" -- The Commodity Exchange Act, as amended.
"DELAWARE ACT" -- The Delaware Limited Liability Company Act, amended from time
to time, or any successor law.
"ERISA" -- The Employee Retirement Income Security Act of 1974 as amended from
time to time or any successive law.
"FISCAL PERIOD" -- The period commencing on the Closing Date, and thereafter
each period commencing on the day immediately following the last day of the
preceding Fiscal Period, and ending at the close of business on the first to
occur of (i) the last day of each calendar month, (ii) any day as of which any
amount is credited to or debited from the Capital Account of any Member other
than an amount to be credited to or debited from the Capital Accounts of all
Members in accordance with their respective ownership of Units, or (iii) any
other time established by the Managing Member from time to time.
"FISCAL YEAR" -- The period commencing on the initial Closing Date and ending on
the next succeeding March 31, and thereafter each period commencing on April 1
of each year and ending on March 31 of such year (or on the date of a final
distribution pursuant to Section 6.2), unless and until the Managing Member
shall elect another Fiscal Year for the Fund.
"FUND" -- The limited liability company governed hereby, as such limited
liability company may from time to time be constituted.
"FUTURES" -- Exchange-traded as well as over-the-counter investments providing
for the future delivery of any form of commodity, currency or other instruments.
"MAJORITY IN INTEREST" -- Members whose Units, when aggregated, exceed 50% of
the aggregate Unit NAV of all outstanding Units.
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"MAN-GLENWOOD" -- In the case of the Class A1 Units and Class A2 Units:
Man-Glenwood Lexington, LLC, a Delaware limited liability company registered as
an investment company under the Investment Company Act; and in the case of the
Class B1 Units and Class B2 Units, Man-Glenwood Lexington TEI, LLC, also a
Delaware limited liability company registered as an investment company under the
Investment Company Act. Man-Glenwood Lexington, LLC and Man-Glenwood Lexington
TEI, LLC each invest substantially all of their capital in Man-Glenwood
Lexington Associates Portfolio, LLC, the only differences between Man-Glenwood
Lexington, LLC and Man-Glenwood Lexington TEI, LLC being that the former is
taxed as a partnership and the latter as a corporation for federal income tax
purposes. As a result, Class B1 Units and Class B2 Units, which invest a limited
portion of their capital in Man-Glenwood Lexington TEI, LLC will not recognize
"unrelated business taxable income" on such investment.
"MANAGEMENT FEE" -- See Section 5.3.
"MANAGING MEMBER" -- Man Investments (USA) Corp. or such additional or successor
Managing Member(s), which shall be the Fund's manager(s) for purposes of the
Delaware Act, as shall be designated from time to time pursuant to the
provisions of Article VII.
"MEMBER" -- Any Person who shall have been admitted to the Fund as a member
(including any Managing Member in such Person's capacity as a member of the Fund
but excluding any Managing Member in such Person's capacity as a manager of the
Fund for purposes of the Delaware Act) until the Fund redeems all the Units of
such Person pursuant to Article X or a substituted member or members are
admitted with respect to any such Person's Units pursuant to Article X.
"NASAA GUIDELINES" -- The Guidelines for the Registration of Public Commodity
Pool Programs issued by the North American Securities Administrators
Association, Inc.
"NASD" -- The National Association of Securities Dealers, Inc.
"NET ASSET VALUE" -- The total value of all assets of the Fund, less all accrued
debts, liabilities and obligations of the Fund, calculated before giving effect
to any redemptions of Units as of the date of determination. The Net Asset Value
of the Fund will be computed as of the close of business on the last day of each
Fiscal Period.
"NET PROFIT" or "NET LOSS" -- The amount by which the Net Asset Value of the
Fund as of the close of business on the last day of a Fiscal Period exceeds (in
the case of Net Profit) or is less than (in the case of Net Loss) such Net Asset
Value as of the commencement of the same Fiscal Period.
"PERSON" -- Any individual, partnership, corporation, trust or other entity.
"PROSPECTUS" -- The Prospectus of the Fund dated ______, 2005.
"QUALIFIED INVESTOR" -- A Person who qualifies as an `accredited investor' as
defined in Regulation D under the Securities Act of 1933, as amended, and meets
all applicable NASAA Guidelines suitability requirements.
"REDEMPTION DATE" -- The date (the last day of a calendar quarter) as of which
the Fund values the Units for purposes of determining the price at which such
Units are to be redeemed by the Fund pursuant to Article X.
"SELLING AGENT" -- Man Investments Inc. or such additional or successor selling
agents for the Units as may be designated from time to time.
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"SUBSCRIPTION AGREEMENT" -- The agreement submitted by all Persons wishing to
acquire Units. All Subscription Agreements are subject to acceptance by the
Managing Member.
"TAXABLE YEAR" -- The period commencing on the initial Closing Date and ending
on the next succeeding December 31, and thereafter each period commencing on
January 1 and ending on the immediately following December 31, unless and until
the Managing Member shall elect another taxable year for the Fund.
"TRANSFER" -- The assignment, transfer, sale, encumbrance, pledge or other
disposition of a Unit, including any right to receive any allocations and
distributions attributable to such Unit.
"TREASURY REGULATIONS" -- Treasury Regulations promulgated under the Code.
"UNIT NAV" -- The Net Asset Value of the Units of each Class, divided by the
number of Units of such Class outstanding at the date of determination. The
initial Unit NAV of each Class shall be an arbitrarily determined $100.
"UNITS" -- The units of limited liability company interest, each representing an
ownership interest in the Fund, including the rights and obligations of a Member
under this Agreement and the Delaware Act.
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS
SECTION 2.1 FORMATION OF LIMITED LIABILITY COMPANY
The Fund has been formed as a limited liability company at the direction of the
Managing Member. The Managing Member shall cause the execution and filing in
accordance with the Delaware Act of any amendment to the Certificate and shall
cause the execution and filing with applicable governmental authorities of any
other instruments, documents and certificates that, in the opinion of the
Managing Member's legal counsel, may from time to time be required by or
advisable under the laws of the United States of America, the State of Delaware
or any other jurisdiction in which the Fund shall determine to do business, or
any political subdivision or agency thereof, or as such legal counsel may deem
necessary or appropriate to effectuate, implement and continue the valid
existence and business of the Fund.
SECTION 2.2 NAME
The Fund's name shall be "Man-AHL 130, LLC" or such other name as the Managing
Member may hereafter adopt upon (i) causing an appropriate amendment to the
Certificate to be filed in accordance with the Delaware Act and (ii) taking such
other actions as may be required by law.
SECTION 2.3 PRINCIPAL AND REGISTERED OFFICE
The Fund shall have its principal office at 123 N. Wacker Drive, 28th Floor,
Chicago, Illinois 60606, or at such other place as may be designated from time
to time by the Managing Member.
The Fund shall have its registered office in Delaware at 2711 Centerville Road,
Suite 400, Wilmington, Delaware 19808, and shall have Corporation Service
Company as its registered agent for service of process in
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Delaware, unless a different registered office or agent is designated from time
to time by the Managing Member.
SECTION 2.4 DURATION
The term of the Fund commenced on the filing of the Certificate with the
Secretary of State of Delaware and shall continue until the Fund is dissolved
pursuant to Section 3.1.
SECTION 2.5 BUSINESS OF THE FUND
The business of the Fund is to seek medium- to long-term capital appreciation.
The Fund trades in Futures by committing to the AHL Diversified Program while
holding its capital in cash and cash equivalents as well as investing a limited
portion of such capital in Man-Glenwood. The Fund may execute, deliver and
perform all contracts, agreements, subscription documents and other undertakings
and engage in all activities and transactions as may in the opinion of the
Managing Member be necessary or advisable to carry out the Fund's objectives and
business.
The Managing Member shall attempt to rebalance the Fund's portfolio quarterly to
maintain the Fund's investment in Man-Glenwood at approximately 30% of Fund
capital. The Managing Member shall use commercially reasonable efforts to ensure
that the Fund does not invest more than 30% of its capital (as determined as of
the beginning of each calendar quarter) in Man-Glenwood. The Managing Member may
cause the Fund to invest less than 30% of its capital in Man-Glenwood if it
deems it necessary to do so in order to obtain margin-eligible assets for the
Fund or for regulatory or tax requirements.
In furtherance of the Fund's business, the Managing Member shall have the
authority to take the following actions as the Managing Member in its sole and
absolute discretion may elect:
(a) To exercise all rights, powers and privileges of ownership or interest in
all Futures and other assets included in the Fund property, including
without limitation the right to vote thereon and otherwise act with
respect thereto; and to do all acts and things for the preservation,
protection, improvement and enhancement in value of all such securities
and assets;
(b) To do everything necessary, appropriate or desirable for the
accomplishment of any purpose or the attainment of any object or the
furtherance of any power referred to in this Agreement, either alone or in
association with others, and to do every other act or thing incidental to
arising out of or connected with the Fund's businesses, purposes, objects
or powers.
SECTION 2.6 MEMBERS
The Fund shall offer a single series of Units in each Class. Each such series
shall initially be issued at a Unit NAV of $100, and thereafter at the then
current Unit NAV. Units shall be available for investment as of the beginning of
each month; provided, that the Fund shall in no event be required to issue Units
of any Class at any given time. Each subscription for Units is subject to the
receipt by the Fund of cleared funds on or before the scheduled issuance date of
such Units in the full amount of such subscription. Subject to the foregoing, a
Person may be admitted to the Fund as a Member subject to the condition that
such Person shall execute and deliver a Subscription Agreement pursuant to which
such Member agrees to be bound by all the terms and provisions of this
Agreement. The Managing Member may in its sole and absolute discretion reject
any subscription for
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Units. The Managing Member may, in its sole and absolute discretion, suspend or
terminate the offering of the Units at any time.
SECTION 2.7 LIMITED LIABILITY
Except as provided under the Delaware Act, a Member shall not be liable for the
Fund's debts, obligations or liabilities in any amount in excess of the Capital
Account balance of such Member. Except as provided under the Delaware Act, a
Managing Member shall not be liable for the Fund's debts, obligations or
liabilities.
ARTICLE III
NET WORTH OF MANAGING MEMBER
The Managing Member agrees that at all times so long as it remains Managing
Member of the Fund, it will maintain its Net Worth (as determined in accordance
with the NASAA Guidelines) at an amount not less than $1,000,000.
ARTICLE IV
CAPITAL CONTRIBUTIONS; UNITS
The Members' respective capital contributions to the Fund shall be as shown on
the books and records of the Fund.
The Managing Member shall have at all times a Capital Account equal to 1% of the
total Capital Accounts of the Fund (including the Managing Member's) or
$500,000, whichever is less. The Managing Member may withdraw any interest it
may have as a Managing Member in excess of such requirement at such time or
times as the Managing Member may determine.
The Managing Member may, without the consent of any Members, admit new Members.
Any Units acquired by the Managing Member or any of its affiliates will be
non-voting, and will not be considered outstanding for purposes of determining a
Majority in Interest.
ARTICLE V
ALLOCATION OF PROFITS AND LOSSES
SECTION 5.1 CAPITAL ACCOUNTS AND ALLOCATIONS
A Capital Account shall be established for each Unit, and for the Managing
Member on a Unit-equivalent basis. The initial balance of each Unit's Capital
Account shall be the subscription price for such Unit. As of the close of
business (as determined by the Managing Member) on the last day of each Fiscal
Period, any Net Profit or Net Loss in the Fund's Net Assets as compared to the
last such determination of Net Assets shall be credited or charged to each Unit
pro rata in accordance with the Capital Account balances of such Units as of the
beginning of such Fiscal Period.
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For purposes of this Article V, unless specified to the contrary, Units redeemed
as of the end of any Fiscal Period shall be considered outstanding as of the end
of such Fiscal Period.
SECTION 5.2 ALLOCATION OF PROFIT AND LOSS FOR FEDERAL INCOME TAX PURPOSES
As of the end of each Fiscal Year, the Fund's income and expense and capital
gain or loss shall be allocated among the Members pursuant to the following
provisions of this Section 5.2 for federal income tax purposes.
(a) First, items of ordinary income and expense shall be allocated pro rata
among the Units outstanding as of the end of each month in which the items
of ordinary income and expense accrue.
(b) Second, capital gain or loss shall be allocated as follows:
(i) There shall be established a tax account with respect to each
outstanding Unit. The balance of each tax account shall be the
amount paid to the Fund for each Unit. As of the end of each Fiscal
Year:
(1) Each tax account shall be increased by the amount of income
allocated to each Unit pursuant to Sections 5.2(a), 5.2(b)(ii) and
5.2(b)(iii).
(2) Each tax account shall be decreased by the amount of expense or
loss allocated to each Unit pursuant to Sections 5.2(a), 5.2(b)(iv)
and 5.2(b)(v) and by the amount of any distributions paid out with
respect to the Units other than upon redemption.
(3) When a Unit is redeemed, the tax account attributable to such
Unit (determined after making all allocations described in this
Section 5.2) shall be eliminated.
(ii) Each Member who redeems a Unit during a Fiscal Year (including Units
redeemed as of the end of the last day of such Fiscal Year) shall be
allocated Capital Gain, if any, up to the amount of the excess, if
any, of the amount received in respect of the Units so redeemed over
the sum of the tax accounts (determined after making the allocation
described in Sections 5.2(a) but prior to making the allocations
described in this Section 5.2(b)(ii) and 5.2(b)(iii)) allocable to
such Units (an "Excess"). In the event the aggregate amount of
Capital Gain available to be allocated pursuant to this Section
5.2(c)(ii) is less than the aggregate amount of Capital Gain
required to be so allocated, the aggregate amount of available
Capital Gain shall be allocated among all such Members in the ratio
which each such Member's Excess bears to the aggregate Excess of all
such Members.
(iii) Capital Gain remaining after the allocation described in Section
5.2(b)(ii) shall be allocated among all Members who hold Units
outstanding as of the end of the applicable Fiscal Year (other than
Units redeemed as of the end of the last day of such Fiscal Year)
whose Capital Accounts with respect to such Units are in excess of
the tax accounts (determined after making the allocations described
in Sections 5.2(a) and 5.2(b)(ii)) allocable to such Units in the
ratio that each such Member's excess bears to the aggregate excess
of all such Members. Capital Gain remaining after the allocation
described in the preceding sentence shall be allocated among all
Members described in said sentence in proportion to their holdings
of such Units (taking into account the different Net Asset Values of
the different Units).
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(iv) Each Member who redeems a Unit during a Fiscal Year (including Units
redeemed as of the end of the last day of such Fiscal Year) shall be
allocated Capital Loss, if any, up to the amount of the sum of the
excess of the tax account (determined after making the allocations
described in Sections 5.2(a), but prior to making the allocations
described in this Section 5.2(b)(iv) or 5.2(b)(v)) allocable to such
Unit over the amount received in respect of such Unit (a "Negative
Excess"). In the event the aggregate amount of available Capital
Loss required to be allocated pursuant to this Section 5.2(c)(iv) is
less than the aggregate amount required to be so allocated, the
aggregate amount of available Capital Loss shall be allocated among
all such Members in the ratio that each such Member's Negative
Excess bears to the aggregate Negative Excess of all such Members.
(v) Capital Loss remaining after the allocation described in Section
5.2(b)(iv) shall be allocated among all Members who hold Units
outstanding as of the end of the applicable Fiscal Year (other than
Units redeemed as of the end of the last day of such Fiscal Year)
whose tax accounts with respect to such Units are in excess of their
Capital Accounts (determined after making the allocations described
in Sections 5.2(a) with respect to such Units in the ratio that each
such Member's negative excess bears to the aggregate negative excess
of all such Members. Capital Loss remaining after the allocation
described in the preceding sentence shall be allocated among all
Members described in such sentence in proportion to their holdings
of such Units (taking into account the different Net Asset Value of
different Units.
(vi) For purposes of this Section 5.2, "Capital Gain" or "Capital Loss"
shall mean gain or loss characterized as gain or loss from the sale
or exchange of a capital asset, by the Internal Revenue Code of
1986, as amended, including, but not limited to, gain or loss
required to be taken into account pursuant to Section 1256 thereof.
(vii) The Managing Member may elect, with respect to any given Fiscal
Year, to allocate Capital Gain and Capital Loss on a gross basis
rather than netting such Capital Gains and Capital Losses.
(c) The allocation of profit and loss for federal income tax purposes set
forth herein is intended to allocate taxable profit and loss among Members
generally in the ratio and to the extent that profit and loss are
allocated to the Members so as to eliminate, to the extent possible, any
disparity between each Member's Capital Account and such Member's tax
account, consistent with principles set forth in Section 704 of the
Internal Revenue Code of 1986, as amended (the "Code"), including without
limitation a "Qualified Income Offset."
(d) The allocations of profit and loss to the Members shall not exceed the
allocations permitted under Subchapter K of the Code, as determined by the
Managing Member, whose determination shall be binding.
(e) The Managing Member may adjust the allocations set forth in this Section
5.2, in the Managing Member's discretion, if the Managing Member believes
that doing so will achieve more equitable allocations or allocations more
consistent with the Code.
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SECTION 5.3 ORGANIZATIONAL AND INITIAL OFFERING COSTS; OPERATING COSTS;
MANAGEMENT AND CLIENT SERVICING FEES; COSTS AND FEES OF
UNDERLYING INVESTMENTS
(a) The organizational and initial offering costs of the Fund will be paid by
the Managing Member or an Affiliate and shall not be borne by the Fund.
(b) The Managing Member may amortize (or not) the ongoing offering costs of
the Units in such manner and over such period of time as the Managing
Member may determine, provided that the maximum amortization in any twelve
month period shall not exceed 2% of the average month-end Net Asset Value
of such Units during any period of twelve consecutive calendar months.
(c) The Managing Member shall be entitled to receive an annual Management Fee
equal to 0.75% of each Unit's average month-end Net Assets during each
year.
(d) The Managing Member shall be entitled to receive an annual Client
Servicing Fee equal to 1.0% of the average month-end Unit NAV of each
Class A1 and Class B1 Unit during each Fiscal Year until the Selling Agent
has been paid aggregate selling compensation totaling 10% of such Units
issue Price or such Unit has paid Client Servicing Fees totaling 10% of
such Unit's issue price, whichever is sooner, after which such Unit will
be redesignated as a fractional Class A2 or Class B2 Unit, as appropriate,
at the then current NAV for Class A2 or Class B2 Units, and no further
Client Servicing Fee shall be charged to such Unit.
(e) The AHL Diversified Program and Man-Glenwood shall be subject to the fees
and expenses described in the Prospectus.
(f) The Fund shall bear all expenses incurred in connection with its
investment in cash and cash equivalents.
(g) In the event that the Fund invests in any assets (including managed
investment programs) other than the AHL Diversified Program, Man-Glenwood
and cash or cash equivalents, the Fund shall bear the costs of such
investments -- in all cases, however, subject to any applicable limitation
imposed by the NASAA Guidelines.
SECTION 5.4 TAXES
The Fund shall bear all of any taxes applicable to it.
SECTION 5.5 MANAGING MEMBER SERVICES; DIRECT EXPENSES; RESERVES
Any goods and services provided to the Fund by the Managing Member shall be
provided at rates and terms at least as favorable as those which may be obtained
from third parties in arm's-length negotiations. None of the Managing Member's
overhead expenses incurred in connection with the administration of the Fund
(including, without limitation, salaries, rent and travel expenses) will be
charged to the Fund.
All of the expenses which are for the Fund's account shall be billed directly to
the Fund.
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Appropriate reserves may be created, accrued, and charged against Net Assets for
contingent liabilities, if any, as of the date any such contingent liability
becomes know to the Managing Member. Such reserves shall reduce Net Asset Value
for all purposes.
SECTION 5.6 LIMITED LIABILITY OF MEMBERS
Each Unit, when purchased in accordance with this Agreement, shall, except as
otherwise provided by law, be fully paid and nonassessable. Any provisions of
this Agreement to the contrary notwithstanding, except as otherwise provided by
law, no Member shall be liable for Fund obligations in excess of the capital
contributed by such Member, plus such Member's share of undistributed profits
and assets.
SECTION 5.7 RETURN OF CAPITAL CONTRIBUTIONS
No Member or subsequent assignee shall have any right to demand the return of
his capital contribution or any profits added thereto, except through redeeming
Units or upon dissolution of the Fund, in each case as provided herein. In no
event shall a Member or subsequent assignee be entitled to demand or receive
property other than cash.
ARTICLE VI
MANAGEMENT OF THE FUND
SECTION 6.1 MANAGEMENT OF THE FUND
The Managing Member, to the exclusion of all Members, shall control, conduct and
manage the business of the Fund. The Managing Member shall have sole discretion
in determining what distributions of profits and income, if any, shall be made
to the Members (subject to the allocation provisions hereof), shall execute
various documents on behalf of the Fund and the Members pursuant to powers of
attorney and supervise the liquidation of the Fund if an event causing
dissolution of the Fund occurs.
The Managing Member is hereby designated as the Tax Matters Member of the Fund
and is authorized to perform all duties imposed by Sections 6221 through 6232 of
the Code on the Tax Matters Member.
The Managing Member may take such other actions on behalf of the Fund as the
Managing Member deems necessary or desirable to manage the business of the Fund.
The Managing Member is engaged, and may in the future engage, in other business
activities and shall not be required to refrain from any other activity nor
forego any profits from any such activity, whether or not in competition with
the Fund. Members may similarly engage in any such other business activities.
The Managing Member shall devote to the Fund such time as the Managing Member
may deem advisable to conduct the Fund's business and affairs.
SECTION 6.2 COMPLIANCE WITH THE NASAA GUIDELINES
The Managing Member may engage, and compensate on behalf of the Fund from funds
of the Fund, or agree to share profits and losses with, such persons, firms or
corporations, including (except as described in this Agreement) the Managing
Member and any affiliated person or entity, as the Managing Member in its sole
judgment shall deem advisable for the conduct and operation of the business of
the Fund, provided, that no such
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arrangement shall allow brokerage commissions paid by the Fund in excess of the
amount described in the Prospectus or as permitted under applicable NASAA
Guidelines in effect as of the date of the Prospectus (i.e., 80% of the
published retail rate plus pit brokerage fees, or 14% annually -- including pit
brokerage and service fees -- of the Fund's average Net Assets, excluding the
assets not directly related to trading activity), whichever is higher.
The Managing Member shall be under a fiduciary duty to conduct the affairs of
the Fund in the best interests of the Fund. The Members will under no
circumstances be deemed to have contracted away the fiduciary obligations owed
them by the Managing Member under the common law. The Managing Member's
fiduciary duty includes, among other things, the safekeeping of all funds and
assets of the Fund and the use thereof for the benefit of the Fund. The Managing
Member shall at all times act with integrity and good faith and exercise due
diligence in all activities relating to the conduct of the business of the Fund
and in resolving conflicts of interest. The Fund's brokerage arrangements shall
be non-exclusive, and the brokerage commissions paid by the Fund shall be
competitive. The Fund shall seek the best price and services available for its
commodity transactions.
The Fund shall make no loans to any party, and the funds of the Fund will not be
commingled with the funds of any other person or entity (deposit of funds with a
commodity broker, clearinghouse or forward dealer or entering into joint
ventures or partnerships shall not be deemed to constitute commingling for these
purposes). The Managing Member shall make no loans to the Fund, unless approved
by the Members in accordance with Section 15.1 of this Agreement.
If the Managing Member makes a loan to the Fund, the Managing Member shall not
receive interest in excess of its interest costs, nor may the Managing Member
receive interest in excess of the amounts which would be charged the Fund
(without reference to the Managing Member's financial resources or guarantees)
by unrelated banks on comparable loans for the same purpose. The Managing Member
shall not receive "points" or other financing charges or fees regardless of the
amount. Except as disclosed in the Prospectus, no person or entity may receive,
directly or indirectly, any advisory, management or incentive fees, or any
profit-sharing allocation from joint ventures, partnerships or similar
arrangements in which the Fund participates, for investment advice or management
who shares or participates in any commodity brokerage commissions; no broker may
pay, directly or indirectly, rebates or give-ups to any trading advisor or
manager or to the Managing Member or any of their respective affiliates; and
such prohibitions may not be circumvented by any reciprocal business
arrangements. The maximum period covered by any contract entered into by the
Fund, except for the various provisions of the Selling Agreement which survive
each closing of the sales of the Units, shall not exceed one year. Any material
change in the Fund's basic investment policies or structure shall require the
approval of Members owning Units representing more than fifty percent (50%) of
all Units of all Classes then owned by the Members. Any agreements between the
Fund and the Managing Member or any affiliate of the Managing Member shall be
terminable by the Fund upon no more than 60 days' written notice.
The Fund is prohibited from employing the trading technique commonly known as
pyramiding. A trading manager or advisor of the Fund taking into account the
Fund's open trade equity on existing positions in determining generally whether
to acquire additional commodity positions on behalf of the Fund will not be
considered to be engaging in pyramiding.
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ARTICLE VII
AUDITS AND REPORTS TO MEMBERS
SECTION 7.1 AUDITS AND REPORTS TO MEMBERS
The Fund books shall be audited annually by an independent certified public
accountant. The Fund will use its best efforts to cause each Member to receive
(i) within 90 days after the close of each Fiscal Year certified financial
statements of the Fund for the Fiscal Year then ended, (ii) such tax information
relating to their investment in the Fund as is necessary for a Member to
determine such Member's estimated tax liability in advance of April 15 of each
year and (iii) such other annual and monthly information as the CFTC may by
regulation require. Definitive tax information will not be available until after
April 15 of each year and Members will be required to request extensions to file
their tax returns.
Members or their duly authorized representatives may inspect the Fund books and
records during normal business hours upon reasonable written notice to the
Managing Member and obtain copies of such records upon payment of reasonable
reproduction costs; provided, however, upon request by the Managing Member, the
Member shall represent that the inspection and/or copies of such records will
not be for commercial purposes unrelated to such Member's interest as a Member
in the Fund.
The Managing Member shall calculate the approximate Net Asset Value per Unit on
a daily basis and furnish such information upon request to any Member.
The Managing Member will send written notice to each Member within seven days of
any decline in the Fund's Net Asset Value or in the Net Asset Value per Unit to
50% or less of such value as of the previous month-end. Any such notice shall
contain a description of Members' voting rights.
The Managing Member shall maintain and preserve all Fund records for a period of
not less than six (6) years.
ARTICLE VIII
ASSIGNABILITY OF UNITS
SECTION 8.1 ASSIGNABILITY OF UNITS
Each Member expressly agrees that he will not assign, transfer or dispose of, by
gift or otherwise, any of his Units or any part or all of his right, title and
interest in the capital or profits of the Fund in violation of any applicable
federal or state securities laws or without giving written notice to the
Managing Member. No assignment, transfer or disposition by an assignee of Units
or of any part of his right, title and interest in the capital or profits of the
Fund shall be effective against the Fund or the Managing Member until the
Managing Member receives the written notice of the assignment; the Managing
Member shall not be required to give any assignee any rights hereunder prior to
receipt of such notice. The Managing Member may, in its sole discretion, waive
any such notice. No such assignee, except with the consent of the Managing
Member, may become a substituted Member, nor will the estate or any beneficiary
of a deceased Member or assignee have any right to redeem Units from the Fund
except by redemption as provided in Article IX. The Managing Member's consent is
required for the admission of a substituted Member, and the Managing Member
intends to so consent, provided the Managing Member and the Fund receive an
opinion of counsel to the Managing Member that such admission will not adversely
affect the classification of the Fund as a partnership for federal income tax
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purposes. Each Member agrees that with the consent of the Managing Member any
assignee may become a substituted Member without need of the further act or
approval of any Member. If the Managing Member withholds consent, an assignee
shall not become a substituted Member, and shall not have any of the rights of a
Member, except that the assignee shall be entitled to receive that share of
capital and profits and shall have that right of redemption to which his
assignor would otherwise have been entitled. No assignment, transfer or
disposition of Units shall be effective against the Fund or the Managing Member
until the first day of the month succeeding the month in which the Managing
Member receives notice of such assignment, transfer or disposition.
ARTICLE IX
REDEMPTIONS
SECTION 9.1 REDEMPTIONS
A Member, the Managing Member or any assignee of Units of whom the Managing
Member has received written notice as described above, may redeem all or any of
his Units (such redemption being herein referred to as a "redemption"),
effective as of the close of business (as determined by the Managing Member) on
the last day of any calendar quarter, provided, that (i) all liabilities,
contingent or otherwise, of the Fund (including the Fund's allocable share of
the liabilities, contingent or otherwise, of any entities in which the Fund
invests), except any liability to Members on account of their capital
contributions, have been paid or there remains property of the Fund sufficient
to pay them, (ii) the Managing Member shall have timely received a request for
redemption and (iii) if quarter-end redemption are requested for more than 15%
of the Fund's outstanding Units at any quarter-end (in aggregate, not on a Class
by Class basis), each redemption request will be pro rated so that no more than
15% of the Fund's outstanding Units are redeemed. Requests for redemption must
be in writing and must be received by the Managing Member at least 45 calendar
days, or such lesser period as shall be acceptable to the Managing Member, in
advance of the requested effective date of redemption.
If at the close of business (as determined by the Managing Member) on any day,
the Unit NAV of the Units of any Class has decreased to 50% or less of the
initial issuance price of such Units, after adding back all distributions, the
Fund shall liquidate all open positions as expeditiously as possible and suspend
trading. Within ten business days after the date of suspension of trading, the
Managing Member (and any other Managing Members of the Fund) shall declare a
Special Redemption Date. Such Special Redemption Date shall be a business day
within 30 business days from the date of suspension of trading by the Fund, and
the Managing Member shall mail notice of such date to each Member and assignee
of Units of whom it has received written notice as described above, by
first-class mail, postage prepaid, not later than ten business days prior to
such Special Redemption Date, together with instructions as to the procedure
such Member or assignee must follow to have his interest (only entire, not
partial, interests may be so redeemed unless otherwise determined by the
Managing Member) in the Fund redeemed on such date. Upon redemption pursuant to
a Special Redemption Date, a Member or any other assignee of whom the Managing
Member has received written notice as described above, shall receive from the
Fund an amount equal to the Net Asset Value of his interest in the Fund (subject
to the liquidity of the Fund's Man-Glenwood investment), determined as of the
close of business (as determined by the Managing Member) on such Special
Redemption Date. As in the case of a regular redemption, an assignee shall not
be entitled to redemption until the Managing Member has received written notice
(as described above) of the assignment, transfer or disposition under which the
assignee claims an interest in the Units to be redeemed. If, after such Special
Redemption Date, the Net Assets of the Fund are at least $250,000 and the Net
Asset Value per Unit of the Class with the lowest Unit NAV is in excess
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of $25, the Fund may, in the discretion of the Managing Member, resume trading.
If the Managing Member declares a Special Redemption Date, the Managing Member
need not again call a Special Redemption Date (whether or not a Special
Redemption Date would be required to be called as described above); and the
Managing Member in its notice of a Special Redemption Date may, in its
discretion, establish the conditions, if any, under which other Special
Redemption Dates must be called, which conditions may be determined in the sole
discretion of the Managing Member, irrespective of the provisions of this
paragraph.
Redemption payments generally will be made within 45 days after the quarter-end
of redemption, except that under special circumstances, including, but not
limited to, inability to liquidate commodity positions as of a redemption date
or default or delay in payments due the Fund from commodity brokers, banks or
other persons or entities, the Fund may in turn delay payment to Members or
assignees requesting redemption of their Units of the proportionate part of the
Net Asset Value of such Units equal to that proportionate part of the Fund's
aggregate Net Asset Value represented by the sums which are the subject of such
default or delay.
Only whole Units may be redeemed, unless the Managing Member specifically
otherwise consents.
The Managing Member may require a Member to redeem all or a portion of such
Member's Units if the Managing Member considers doing so to be desirable for the
protection of the Fund.
ARTICLE X
OFFERING OF UNITS
SECTION 10.1 CONTINUOUS OFFERING OF UNITS
The Units of each Class shall be continuously offered at their respective Unit
NAVs as of the first day of each month. The Managing Member on behalf of the
Fund shall take such action with respect to the offering of Units as the
Managing Member shall deem advisable or necessary.
ARTICLE XI
ADDITIONAL OFFERINGS; DIFFERENT BUSINESS TERMS
SECTION 11.1 ADDITIONAL OFFERINGS
The Managing Member may make additional public or private offerings of Units,
provided that doing so does not dilute existing Members' economic interest in
the Fund.
No Member shall have any preemptive, preferential or other rights with respect
to the issuance or sale of any additional Units, other than as set forth in the
preceding sentence.
SECTION 11.2 DIFFERENT BUSINESS TERMS
The Fund may offer different Classes of Units having different economic terms
than previously offered Classes of Units; provided that the issuance of such a
new Class of Units shall in no respect adversely affect the holders of
outstanding Units.
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ARTICLE XII
SPECIAL POWER OF ATTORNEY
SECTION 12.1 SPECIAL POWER OF ATTORNEY
Each Member by his execution of this Agreement does hereby irrevocably
constitute and appoint the Managing Member and each officer of the Managing
Member, with power of substitution, as his true and lawful attorney-in-fact, in
his name, place and stead, to execute, acknowledge, swear to (and deliver as may
be appropriate) on his behalf and file and record in the appropriate public
offices and publish (as may in the reasonable judgment of the Managing Member be
required by law): (i) this Agreement, including any amendments and/or
restatements hereto duly adopted as provided herein; (ii) certificates of
limited partnership in various jurisdictions, and amendments and/or restatements
thereto, and of assumed name or of doing business under a fictitious name with
respect to the Fund; (iii) all conveyances and other instruments which the
Managing Member deems appropriate to qualify or continue the Fund in the State
of Delaware and the jurisdictions in which the Fund may conduct business, or
which may be required to be filed by the Fund or the Members under the laws of
any jurisdiction or under any amendments or successor statutes to the Act, to
reflect the dissolution or termination of the Fund or the Fund being governed by
any amendments or successor statutes to the Act or to reorganize or refile the
Fund in a different jurisdiction; and (iv) to file, prosecute, defend, settle or
compromise litigation, claims or arbitrations on behalf of the Fund. The Power
of Attorney granted herein shall be irrevocable and deemed to be a power coupled
with an interest (including, without limitation, the interest of the other
Members in the Managing Member being able to rely on the Managing Member's
authority to act as contemplated by this Article XII) and shall survive and
shall not be affected by the subsequent incapacity, disability or death of a
Member.
ARTICLE XIII
WITHDRAWAL OF A MEMBER
SECTION 13.1 WITHDRAWAL OF A MEMBER
The Fund shall be dissolved upon the withdrawal, dissolution, admitted or
court-decreed insolvency or the removal of the Managing Member, or any other
event that causes the Managing Member to cease to be a Managing Member under the
Act. In addition, the Managing Member may withdraw from the Fund, without any
breach of this Agreement, at any time upon 120 days' written notice by first
class mail, postage prepaid, to each Member and assignee of whom the Managing
Member has notice. If the Managing Member withdraws as Managing Member and the
Fund's business is continued, the withdrawing Managing Member shall pay all
expenses incurred as a result of its withdrawal.
The Managing Member may not assign its Managing Member interest or its
obligations to the Fund without the consent of a Majority in Interest.
The Managing Member will notify all Members of any change in the principals of
the Managing Member.
The death, incompetency, withdrawal, insolvency or dissolution of a Member or
any other event that causes a Member to cease to be a Member of the Fund shall
not terminate or dissolve the Fund, and a Member, his estate, custodian or
personal representative shall have no right to redeem or value such Member's
interest in the Fund except as provided in Article VIII hereof. Each Member
expressly agrees that in the event of his death, he
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waives on behalf of himself and his estate, and directs the legal
representatives of his estate and any person interested therein to waive, the
furnishing of any inventory, accounting or appraisal of the assets of the Fund
and any right to an audit or examination of the books of the Fund. Nothing in
this Article XIII shall, however, waive any right given elsewhere in this
Agreement for a Member to be informed of the Net Asset Value of his Units, to
receive periodic reports, audited financial statements and other information
from the Managing Member or the Fund or to redeem or transfer Units.
ARTICLE XIV
STANDARD OF LIABILITY; INDEMNIFICATION
SECTION 14.1 STANDARD OF LIABILITY FOR THE MANAGING MEMBER
The Managing Member and its Affiliates, as defined below, shall have no
liability to the Fund or to any Member for any loss suffered by the Fund which
arises out of any action or inaction of the Managing Member or its Affiliates if
the Managing Member, in good faith, determined that such course of conduct was
in the best interests of the Fund and such course of conduct did not constitute
negligence or misconduct of the Managing Member or its Affiliates.
SECTION 14.2 INDEMNIFICATION OF THE MANAGING MEMBER BY THE FUND
To the fullest extent permitted by law, subject to this Section 14.2, the
Managing Member and its Affiliates shall be indemnified by the Fund against any
losses, judgments, liabilities, expenses and amounts paid in settlement of any
claims sustained by them in connection with the Fund; provided that such claims
were not the result of negligence or misconduct on the part of the Managing
Member or its Affiliates, and the Managing Member, in good faith, determined
that such conduct was in the best interests of the Fund; and provided further
that Affiliates of the Managing Member shall be entitled to indemnification only
for losses incurred by such Affiliates in performing the duties of the Managing
Member and acting wholly within the scope of the authority of the Managing
Member.
Notwithstanding anything to the contrary contained in the preceding two
paragraphs, the Managing Member and its Affiliates and any persons acting as
selling agent for the Units shall not be indemnified for any losses, liabilities
or expenses arising from or out of an alleged violation of federal or state
securities laws unless (1) there has been a successful adjudication on the
merits of each count involving alleged securities law violations as to the
particular indemnitee and the court approves indemnification of the litigation
costs, or (2) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee and the court
approves indemnification of the litigation costs, or (3) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of the settlement and related costs should be
made.
In any claim for indemnification for federal or state securities law violations,
the party seeking indemnification shall place before the court the position of
the Securities and Exchange Commission, the California Department of
Corporations, the Massachusetts Securities Division, the Pennsylvania Securities
Commission, the Tennessee Securities Division, the Texas Securities Board and
any other state or applicable regulatory authority with respect to the issue of
indemnification for securities law violations.
The Fund shall not bear the cost of that portion of any insurance which insures
any party against any liability the indemnification of which is herein
prohibited.
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For the purposes of this Section 14.2, the term Affiliates shall mean any person
acting on behalf of or performing services on behalf of the Fund who: (1)
directly or indirectly controls, is controlled by, or is under common control
with the Managing Member; or (2) owns or controls 10% or more of the outstanding
voting securities of the Managing Member; or (3) is an officer or director of
the Managing Member; or (4) if the Managing Member is an officer, director,
Member or trustee, is any entity for which the Managing Member acts in any such
capacity.
Advances from Fund funds to the Managing Member and its Affiliates for legal
expenses and other costs incurred as a result of any legal action initiated
against the Managing Member by a Member are prohibited.
Advances from Fund funds to the Managing Member and its Affiliates for legal
expenses and other costs incurred as a result of a legal action will be made
only if the following three conditions are satisfied: (1) the legal action
relates to the performance of duties or services by the Managing Member or its
Affiliates on behalf of the Fund; (2) the legal action is initiated by a third
party who is not a Member; and (3) the Managing Member or its Affiliates
undertake to repay the advanced funds, with interest from the date of such
advance, to the Fund in cases in which they would not be entitled to
indemnification under the standard of liability set forth in Section 14.1.
In no event shall any indemnity or exculpation provided for herein be more
favorable to the Managing Member or any Affiliate than that contemplated by the
NASAA Guidelines as in effect on the date of this Agreement.
In no event shall any indemnification permitted by this Section 14.2 be made by
the Fund unless all provisions of this Section for the payment of
indemnification have been complied with in all respects. Furthermore, it shall
be a precondition of any such indemnification that the Fund receive a
determination of qualified independent legal counsel in a written opinion that
the party which seeks to be indemnified hereunder has met the applicable
standard of conduct set forth herein. Receipt of any such opinion shall not,
however, in itself, entitle any such party to indemnification unless
indemnification is otherwise proper hereunder. Any indemnification payable by
the Fund hereunder shall be made only as provided in the specific case.
In no event shall any indemnification obligations of the Fund under this Article
XIV subject a Member to any liability in excess of that contemplated by Section
5.6.
In no event shall the provisions of this Article XIV constitute a waiver by the
Fund or of any Member of any rights of the Fund or the Members under federal and
state securities laws or purport to exculpate or indemnify the Managing Member
where such exculpation or indemnification is inconsistent with such laws.
SECTION 14.3 INDEMNIFICATION OF THE FUND BY THE MEMBERS
In the event the Fund is made a party to any claim, dispute or litigation or
otherwise incurs any loss or expense as a result of or in connection with any
Member's activities, obligations or liabilities unrelated to the Fund's
business, such Member shall indemnify and reimburse the Fund for all loss and
expense incurred, including reasonable attorneys' fees.
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ARTICLE XV
AMENDMENTS; MEETINGS
SECTION 15.1 AMENDMENTS WITH CONSENT OF THE MANAGING MEMBER
If at any time during the term of the Fund the Managing Member shall deem it
necessary or desirable to amend this Agreement, the Managing Member may proceed
to do so, provided that such amendment shall be effective only if embodied in an
instrument approved by the Managing Member and by a Majority in Interest.
The Managing Member may amend this Agreement without the consent of the Members
in order (i) to clarify any clerical inaccuracy or ambiguity or reconcile any
inconsistency (including any inconsistency between this Agreement and the
Prospectus), (ii) to effect the intent of the tax allocations proposed herein to
the maximum extent possible in the event of a change in the Code or the
interpretations thereof affecting such allocations, (iii) to attempt to ensure
that the Fund is not treated as an association taxable as a corporation for
federal income tax purposes, (iv) to attempt to ensure that the Fund is not
treated as an "investment company" for purposes of the Investment Company Act of
1940, as amended from time to time or any successor law, (v) to qualify or
maintain the qualification of the Fund as a partnership in any jurisdiction,
(vi) to delete or add any provision to this agreement required to be deleted or
added by the Staff of the Securities and Exchange Commission or any other
federal agency or any state "Blue Sky" official or similar official or in order
to opt to be governed by any amendment or successor statute to the Act, (vii) to
make any amendment to this Agreement which the Managing Member deems advisable
provided that such amendment is not adverse to the Members or is required by
law, and (viii) to make any amendment that is appropriate or necessary, in the
opinion of the Managing Member, to prevent the Fund or the Managing Member or
its directors, officers or controlling persons from in any manner holding "plan
assets" under ERISA or the Code with respect to any "employee benefit plan"
subject to ERISA or with respect to any plan or account subject to Section 4975
of the Code.
SECTION 15.2 AMENDMENTS AND ACTIONS WITHOUT CONSENT OF THE MANAGING MEMBER
In any vote called by the Managing Member or pursuant to Section 15.3, upon the
affirmative vote (which may be in person or by proxy) of a Majority-in-Interest,
the following actions may be taken, irrespective of whether the Managing Member
concurs: (i) this Agreement may be amended, provided, however, that approval of
all Members shall be required in the case of amendments changing or altering
this Section 15, extending the term of the Fund, or materially changing the
Fund's basic investment policies or structure; in addition, reduction of the
Capital Account of any Member or assignee or modification of the percentage of
profits, losses or distributions to which a Member or an assignee is entitled
hereunder shall not be effected by any amendment or supplement to this Agreement
without such Member's or assignee's written consent; (ii) the Fund may be
dissolved; (iii) the Managing Member may be removed and replaced; (iv) a new
Managing Member or Managing Members may be elected if the Managing Member
withdraws from the Fund; (v) the sale of all or substantially all of the assets
of the Fund may be approved; and (vi) any contract with the Managing Member or
any affiliate thereof may be disapproved of and, as a result, terminated upon 60
days' notice.
SECTION 15.3 MEETINGS; OTHER VOTING MATTERS
Any Member upon request addressed to the Managing Member shall be entitled to
obtain from the Managing Member, upon payment in advance of reasonable
reproduction and mailing costs, a list of the names and addresses of record of
all Members and the number of Units held by each (which shall be mailed by the
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Managing Member to the Member within ten days of the receipt of the request);
provided, that the Managing Member may require any Member requesting such
information to submit written confirmation that such information will not be
used for commercial purposes.
Upon receipt of a written proposal, signed by Members owning Units representing
at least 10% of the Units then owned by Members, that a meeting of the Fund be
called to vote upon any matter upon which the Members may vote pursuant to this
Agreement, the Managing Member shall, by written notice to each Member of record
sent by certified mail within 15 days after such receipt, call a meeting of the
Fund. Such meeting shall be held at least 30 but not more than 60 days after the
mailing of such notice, and such notice shall specify the date of, a reasonable
place and time for, and the purpose of such meeting.
The Managing Member may not restrict the voting rights of Members as set forth
herein.
SECTION 15.4 OPPORTUNITY TO REDEEM
In the event that the Managing Member or the Members vote to amend this
Agreement in any material respect, the amendment will not become effective prior
to all Members having an opportunity to redeem their Units.
ARTICLE XVI
GOVERNING LAW
SECTION 16.1 GOVERNING LAW
The validity and construction of this Agreement shall be determined and governed
by the laws of the State of Delaware without regard to principles of conflicts
of law; provided, that the foregoing choice of law shall not restrict the
application of any state's securities laws to the sale of Units to its residents
or within such state.
ARTICLE XVII
MISCELLANEOUS
SECTION 17.1 NOTICES
All notices under this Agreement shall be in writing and shall be effective upon
personal delivery, or if sent by first class mail, postage prepaid, addressed to
the last known address of the party to whom such notice is to be given, upon the
deposit of such notice in the United States mail.
SECTION 17.2 BINDING EFFECT
This Agreement shall inure to and be binding upon all of the parties, all
parties indemnified under Article XIV hereof, and their respective successors
and assigns, custodians, estates, heirs and personal representatives. For
purposes of determining the rights of any Member or assignee hereunder, the Fund
and the Managing Member may rely upon the Fund records as to who are Members and
assignees, and all Members and assignees agree that their rights shall be
determined and they shall be bound thereby.
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SECTION 17.3 CAPTIONS
Captions in no way define, limit, extend or describe the scope of this Agreement
nor the effect of any of its provisions. Any reference to "persons" in this
Agreement shall also be deemed to include entities, unless the context otherwise
requires.
ARTICLE XVIII
CERTAIN DEFINITIONS
SECTION 18.1 CERTAIN DEFINITIONS
This Agreement contains certain provisions required by the NASAA Guidelines. The
terms used in such provisions are defined as follows (the following definitions
are included verbatim from the NASAA Guidelines and, accordingly, may not in all
cases be relevant to this Agreement):
Administrator. The official or agency administering the securities
laws of a state.
Advisor. Any Person who for any consideration engages in the
business of advising others, either directly or indirectly, as to
the value, purchase, or sale of Commodity Contracts or commodity
options.
Affiliate. An Affiliate of a Person means: (a) any Person directly
or indirectly owning, controlling or holding with power to vote 10%
or more of the outstanding voting securities of such Person; (b) any
Person 10% or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held with power to vote,
by such Person; (c) any Person, directly or indirectly, controlling,
controlled by, or under common control with such Person; (d) any
officer, director or Member of such Person; or (e) if such Person is
an officer, director or Member, any Person for which such Person
acts in any such capacity.
Capital Contributions. The total investment in a Program by a
Participant or by all Participants, as the case may be.
Commodity Broker. Any Person who engages in the business of
effecting transactions in Commodity Contracts for the account of
others or for his own account.
Commodity Contract. A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade
of a traded commodity at a specified price and delivery point.
Cross Reference Sheet. A compilation of the Guidelines sections,
referenced to the page of the prospectus, Program agreement, or
other exhibits, and justification of any deviation from the
Guidelines.
Net Assets. The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles.
Net Assets shall include any unrealized profits or losses on open
positions, and any fee or expense including Net Asset fees accruing
to the Program.
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Net Asset Value Per Program Interest. The Net Assets divided by the
number of Program Interests outstanding.
Net Worth. The excess of total assets over total liabilities as
determined by generally accepted accounting principles. Net Worth
shall be determined exclusive of home, home furnishings and
automobiles.
New Trading Profits. The excess, if any, of Net Assets at the end of
the period over Net Assets at the end of the highest previous period
or Net Assets at the date trading commences, whichever is higher,
and as further adjusted to eliminate the effect on Net Assets
resulting from new Capital Contributions, redemptions, or capital
distributions, if any, made during the period decreased by interest
or other income, not directly related to trading activity, earned on
Program assets during the period, whether the assets are held
separately or in the margin account.
Organization and Offering Expenses. All expenses incurred by the
Program in connection with and in preparing a Program for
registration and subsequently offering and distributing it to the
public, including, but not limited to, total underwriting and
brokerage discounts and commissions (including fees of the
underwriters' attorneys), expenses for printing, engraving, mailing,
salaries of employees while engaged in sales activity, charges of
transfer agents, registrars, trustees, escrow holders, depositories,
experts, expenses of qualification of the sale of its Program
Interests under federal and state law including taxes and fees,
accountants' and attorneys' fees.
Participant. The holder of a Program Interest.
Person. Any natural Person, partnership, corporation, association or
other legal entity.
Pit Brokerage Fee. Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees.
Program. A partnership, joint venture, corporation, trust or other
entity formed and operated for the purpose of investing in Commodity
Contracts.
Program Broker. A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program.
Program Interest. A partnership interest or other security
representing ownership in a Program.
Pyramiding. A method of using all or a part of an unrealized profit
in a Commodity Contract position to provide margin for any
additional Commodity Contracts of the same or related commodities.
Sponsor. Any Person directly or indirectly instrumental in
organizing a Program or any Person who will manage or participate in
the management of a Program, including a Commodity Broker who pays
any portion of the Organizational Expenses of the Program, and the
Managing Member(s) and any other Person who regularly performs or
selects the Persons who perform services for the Program. Sponsor
does not include wholly independent third parties such as attorneys,
accountants, and underwriters whose only compensation is for
professional services
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rendered in connection with the offering of the units. The term
"Sponsor" shall be deemed to include its Affiliates.
Valuation Date. The date as of which the Net Assets of the Program
are determined.
Valuation Period. A regular period of time between Valuation Dates.
--------------------
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MANAGING MEMBER: MEMBERS:
MAN INVESTMENTS (USA) CORP. All Members now and hereafter admitted as
Members of the Fund pursuant to Powers of
Attorney now or hereafter executed in favor
of, and delivered to, the Managing Member.
By: _____________________________
John M. Kelly
President and MAN INVESTMENTS (USA) CORP.
Director
By: _______________________________________
John M. Kelly
President and
Director
A-22
EXHIBIT B
MAN-AHL 130, LLC
--------------------------
SUBSCRIPTION REQUIREMENTS
General
By submitting a Subscription Agreement Signature Page, you (i) subscribe
to purchase Units, (ii) authorize the Selling Agent to debit your subscription
from your customer securities account or otherwise arrange to receive your
subscription fund and (iii) agree to the terms of the Limited Liability Company
Agreement.
Representations and Warranties
You represent and warrant to the Fund, the Managing Member and their
respective affiliates as follows:
(a) You are of legal age and legally competent to execute the Subscription
Agreement Signature Page.
(b) You are an "Accredited Investor" as defined in order Regulation D
under the Securities Act. Although the public offering of the Units
has been registered under the Securities Act of 1933, the Managing
Member has determined to limit the persons eligible to invest in the
Units to "Accredited Investors." Individual "Accredited Investors"
must have an annual income of at least $200,000 (or joint annual
income with spouse of $300,000) in each of the two most recent years
and must reasonably expect to achieve such income in the current year
or have a net worth (including assets held jointly with spouse) of
$1,000,000; entity "Accredited Investors" must generally have a net
worth of $5,000,000. "Accredited Investor" status is a regulatory
minimum only, not any assurance that an investment in the Fund is
suitable for any prospective investor.
(c) All information on your Subscription Agreement Signature Page is
correct and complete. You will immediately contact the Managing Member
if there is any change in such information.
(d) Your subscription is made with your own funds and for your own
account.
(e) Your subscription, if made as custodian for a minor, is a gift you
have made to such minor or, if not a gift, the above representations
as to net worth or annual income apply to such minor personally.
(f) If you are subscribing in a representative capacity, you have full
power and authority to purchase the Units on behalf of the entity for
which you are acting, and such entity has full power and authority to
purchase such Units.
(g) You either are, or are not required to be, registered with the CFTC or
a member of the NFA.
(h) Your subscription monies were not derived from activities that may
contravene United States (federal or state) or international
anti-money laundering laws and regulations. You are not (i) an
individual, entity or organization named on a United States Office of
Foreign Assets Control ("OFAC") "watch list" and do not have any
affiliation with any kind of such individual, (ii) a foreign shell
bank, (iii) a person or entity resident in or whose subscription funds
are transferred from or through a jurisdiction identified as
non-cooperative by the Financial Action Task Force, (iv) a senior
foreign political figure(1), an immediate family member(2) or close
associate(3) of a senior foreign
- ----------
(1) A "Senior foreign political figure" is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
non-U.S. government (whether elected or not), a senior official of a major
non-U.S. political party, or a senior executive of a non-U.S. government-owned
corporation. In addition, a "senior foreign political figure" includes any
corporation, business or other entity that has been
SR-1
political figure within the meaning of the USA PATRIOT Act of 2001(4).
You agree to promptly notify the Managing Member should you become
aware of any change in the information set forth in this
representation. You acknowledge that, by law, the Managing Member may
be obligated to "freeze" your account, either by prohibiting
additional subscriptions, declining any redemption requests and/or
segregating the assets in the account in compliance with governmental
regulations, and the Managing Member may also be required to report
such action and to disclose your identity to OFAC. You represent and
warrant that all of the information which you have provided to the
Fund in connection with the Subscription Agreement is true and
correct, and you agree to provide any information the Managing Member
or its agents deem necessary to comply with the Fund's anti-money
laundering program and related responsibilities from time to time. If
you have indicated in this Subscription Agreement that you are an
intermediary subscribing in the Fund as a record owner in your
capacity as agent, representative or nominee on behalf of one or more
underlying investors ("Underlying Investors"), you agree that the
representations, warranties and covenants are made by you on behalf of
yourself and the Underlying Investors.
Investor Suitability
ONLY "ACCREDITED INVESTORS" MAY INVEST IN THE FUND.
YOU SHOULD NOT INVEST MORE THAN 10% OF YOUR READILY MARKETABLE ASSETS IN
THE FUND.
NO SUBSCRIBER SHALL BE DEEMED TO HAVE WAIVED ANY RIGHTS OR CLAIMS THAT HE
OR SHE MAY HAVE UNDER ANY FEDERAL OR STATE SECURITIES LAWS BY REASON OF ANY
REPRESENTATIONS OR UNDERTAKINGS MADE BY SUCH SUBSCRIBER IN EITHER THE
SUBSCRIPTION AGREEMENT OR IN THE LIMITED LIABILITY COMPANY AGREEMENT.
YOU MAY REVOKE YOUR SUBSCRIPTION AT ANY TIME WITHIN 5 BUSINESS DAYS OF
SUBMISSION.
- ----------
formed by, or for the benefit of, a senior foreign political figure.
(2) "Immediate family" of a senior foreign political figure typically includes
the figure's parents, siblings, spouse, children and in-laws.
(3) A "close associate" of a senior foreign political figure is a person who is
widely and publicly known to maintain an unusually close relationship with the
senior foreign political figure, and includes a person who is in a position to
conduct substantial domestic and international financial transactions on behalf
of the senior foreign political figure.
(4) The United States "Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001",
Pub. L. No. 107-56 (2001).
SR-2
EXHIBIT C
MAN-AHL 130, LLC
--------------------------
SUBSCRIPTION INSTRUCTIONS
YOU SHOULD CAREFULLY READ AND REVIEW BOTH PARTS OF THE PROSPECTUS AND THE
ACCOMPANYING SUMMARY FUND FINANCIAL INFORMATION.
EXISTING INVESTORS SUBSCRIBING FOR ADDITIONAL UNITS (EXCEPT MAINE AND
MICHIGAN RESIDENTS) NEED NOT COMPLETE AN ADDITIONAL SUBSCRIPTION AGREEMENT
SIGNATURE PAGE. SUCH INVESTORS' REGISTERED REPRESENTATIVES WILL RECONFIRM THEIR
SUITABILITY.
SUBSCRIPTION FUNDS SHOULD BE SENT TO THE FUND'S ESCROW ACCOUNT PURSUANT TO
THE FOLLOWING INSTRUCTIONS:
[WIRE INSTRUCTIONS]
FILL IN ALL OF THE BOXES ON PAGES SA-4 AND SA-5. TYPE OR PRINT USING BLACK
INK ONLY AND ONE LETTER OR NUMBER PER BOX, AS FOLLOWS:
Item 1 -- Registered Representatives must complete the information required.
Item 2 -- Enter the dollar amount to be purchased. Units will be sold in
fractions calculated to two decimal points. Subscription funds which
cannot be invested in fractional Units will become general assets of
the Fund.
Item 3 -- Indicate Class A1, Class A2, Class B1 or Class B2 Units. Tax-exempt
investors must invest in Class B1 or Class B2 Units and taxable
investors must invest in Class A1 or Class A2 Units.
CLASS A2 AND CLASS B2 UNITS ARE AVAILABLE ONLY TO PARTICIPANTS IN SELLING
AGENT OR FINANCIAL ADVISOR ASSET-BASED FEE OR FIXED FEE INVESTMENT PROGRAMS WHO
PURCHASE THEIR UNITS THROUGH SUCH PROGRAMS. CLASS A2 AND CLASS B2 UNITS DO NOT
PAY CLIENT SERVICING FEES.
Item 4 -- Enter customer's Account Number.
Item 5 -- Enter the Social Security Number or Taxpayer ID Number. In case of
joint ownership, either Social Security Number may be used.
The Signature Page is generally self-explanatory; however, we have
provided specific instructions for the following:
Trust -- Enter the Trust name on line 7 and the trustee's name on line 8,
followed by "Trustee." If applicable, use line 9 for the custodian's name,
followed by "Custodian." Be sure to furnish the Taxpayer ID Number of the Trust.
Custodian Under Uniform Gifts to Minors Act -- Complete line 5 with the
name of minor followed by "UGMA." On line 8 enter the custodian's name, followed
by "Custodian." Be sure to furnish the minor's Social Security Number.
Partnership or Corporation -- The Partnership or Corporation name is
required on line 7. Enter an officer's or partner's name on line 8. Be sure to
furnish the Taxpayer ID Number of the Fund or Corporation.
Items -- 6,7,8 Enter the exact name in which the Units are to be held.
Item 9 -- Complete information as required.
Item 10 -- The investor(s) (EXCEPT CURRENT INVESTORS IN THE FUND OTHER THAN
RESIDENTS OF MAINE OR MICHIGAN) must execute the Subscription
Agreement Signature Page (Item 10, Page SA-5) and review the
representation relating to backup withholding tax underneath the
signature and telephone number lines in Item 10.
Item 11 -- Registered Representatives must complete the information
required.
THE SPECIMEN COPY OF THE SUBSCRIPTION AGREEMENT SIGNATURE PAGE (PAGES SA-2
AND SA-3) SHOULD NOT BE EXECUTED.
SA-i
--------------------------
Instructions to Registered Representatives:
The executed Subscription Agreement Signature Page must be retained in the
Branch Office.
SUITABILITY RECONFIRMATIONS (I.E., SUBSCRIPTION AGREEMENT SIGNATURE PAGES
EXECUTED BY REGISTERED REPRESENTATIVES OR ANOTHER FORM OF WRITTEN RECONFIRMATION
APPROVED BY THE BRANCH OFFICE) MUST ALSO BE RETAINED IN THE BRANCH OFFICE.
SA-ii
MAN-AHL 130, LLC
UNITS OF LIMITED LIABILITY COMPANY INTEREST
-----------------------------
BY EXECUTING THIS SUBSCRIPTION AGREEMENT SUBSCRIBERS ARE
NOT WAIVING ANY RIGHTS UNDER ANY FEDERAL OR
STATE SECURITIES LAWS
-----------------------------
SUBSCRIPTION AGREEMENT
MAN-AHL 130, LLC
c/o Man Investments (USA) Corp. (the "Managing Member")
123 North Wacker Drive, 28th Floor
Chicago, Illinois 60606
Dear Sirs:
I subscribe for the dollar amount indicated on the Subscription
Agreement Signature Page.
If I subscribe for Class A2 Units or Class B2 Units through a selling agent
or investment advisor asset-based or fixed fee investment program, no Client
Servicing Fee will be payable in respect of such Units.
The purchase price per Unit of each Class is the Unit NAV of such Class.
The purchase date for my Units is the first day of the calendar month
immediately following this subscription being accepted. I will have the
subscription funds in my customer securities account not less than 5 business
days before such purchase date.
I have received both Parts of the Prospectus together with the
accompanying summary Fund financial information. I understand that by submitting
this Subscription Agreement I am making the representations and warranties set
forth in Exhibit B -- Subscription Requirements in the Prospectus.
I irrevocably appoint the Managing Member and each officer thereof
as my true and lawful Attorney-in-Fact, with full power of substitution, to
execute, deliver and record any documents or instruments which the Managing
Member considers appropriate to carry out the provisions of the Limited
Liability Company Agreement.
THIS SUBSCRIPTION AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS.
NO ONE SHOULD INVEST MORE THAN 10% OF HIS OR HER
READILY MARKETABLE ASSETS IN THE FUND.
SA-1
1 REGISTERED
REPRESENTATIVE _________________ _____ ____________________ _________________
NAME FIRST M.I. LAST SUB. ORDER REF. #
REGISTERED REGISTERED
REPRESENTATIVE ___ ___ ____ REPRESENTATIVE ________ BRANCH WIRE CODE ________
PHOMR NUMBER NUMBER
MAN-AHL 130, LLC
UNITS OF LIMITED LIABILITY COMPANY INTEREST
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE
PLEASE PRINT OR TYPE. USE BLACK INK ONLY AND ONLY ONE CHARACTER PER BOX.
I subscribe for Units of Limited Liability Company Interest in Man-AHL
130, LLC (the "Fund") and authorize Man Group plc to debit my customer
securities account or otherwise arrange for the receipt of my subscription funds
in the amount set forth below. The Units of each Class are sold at the Unit NAV
of such Class.
2 __________ 3 _______ ____ _____ _____ 4 _____ _____
Dollar Amount. Class A1 Class A2 Class B1 Class B2 Account #
Minimum$25,000 (Taxable (Taxable (Tax- Exempt (Tax- Exempt
Class A1 and A2; Investors Investors Investors Investors
$10,000 Class B1 only) only) only) only)
and B2;
incremental
investments in
$1000 multiples.
5 _______ _____ _______ _____ ___________________
Social Security Number or Taxpayer ID Number
Member Name
5 ____________________________ _____ ______________________________________
First Name M.I. Last Name
Joint Member Name
6 ____________________________ _____ ______________________________________
First Name M.I. Last Name
Fund, Corporate or Trust Member Name
7 _____________________________________________________________
Partner, Officer, Trustee, Beneficiary, Power of Attorney or Custodian under
UGMA/UTMA
8 _____________________________________________________________
Additional Information
9 _____________________________________________________________
Residence Address of Member (P.O. Box Numbers Are Not Acceptable For Residence
Address)
_______________ ____________________________________ ________________
Street Number Street Name Apt. Number
_________ _________________________ ________________ _______________
Bldg. No. City State Zip Code
_________________________________________________
Country (If Other Than U.S.A.)
Mailing Address of Member (If Other Than Residence Address)
___________________ _____________________________ ___________________
Street Number Street Name Apt. Number
__________ ________________ ____________________ ______ ____________________
Bldg. No. P.O. Box No. City State Zip Code
_______________________________________
Country (If Other Than U.S.A.)
Name of Custodian
___________________________________________________
Mailing Address of Custodian
___________________ _____________________________________ __________________
Street Number Street Name Apt. Number
__________ ________________ ______________________________ _______ ___________
Bldg. No. P.O. Box No. City State Zip Code
__________________________________________
Country (If Other Than U.S.A.)
SA-2
MAN-AHL 130, LLC
UNITS OF LIMITED LIABILITY COMPANY INTEREST
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE (CONTINUED)
- --------------------------------------------------------------------------------
10 FOR USE BY INVESTOR
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification
number,
2. I am not subject to backup withholding because: (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends or (c) the
IRS has notified me that I am no longer subject to backup
withholding,
and
3. I am a U.S. Person.
Cross out item 2 above if you have been notified by the IRS that you are
currently subject to backup withholding because you have failed to report
all interest and dividends on your tax return.
THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
___________________________________________________________________________
X X
______________________________ _________________________________________
Signature of Investor Date Signature of Joint Investor (if any) Date
( ) -- Subscription for the Units to be sold as of
________________________________
Telephone Number of Investor [insert date]
_____________________
I acknowledge that I have received the Prospectus of the Fund dated ______, 2005
together with summary Fund financial information current within 60 days.
However, submitting this Subscription Agreement and Power of Attorney Signature
Page in no respects constitutes a waiver of any rights under any federal or
state securities laws.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
11 Registered Representative MUST SIGN
I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments, financial
situation and needs and any other information known by me, that investment in
the Fund is suitable for such investor in light of his/her financial position,
net worth and other suitability characteristics. I have also informed the
investor of the unlikelihood of a public trading market developing for the
Units.
The Registered Representative MUST sign below in order to substantiate
compliance with NASD Business Conduct Rule 2810.
X _____________________________________________________________________________
Registered Representative Signature Date
- --------------------------------------------------------------------------------
SA-3
1 REGISTERED
REPRESENTATIVE _________________ _____ ____________________ _________________
NAME FIRST M.I. LAST SUB. ORDER REF. #
REGISTERED REGISTERED
REPRESENTATIVE ___ ___ ____ REPRESENTATIVE ________ BRANCH WIRE CODE ________
PHOMR NUMBER NUMBER
MAN-AHL 130, LLC
UNITS OF LIMITED LIABILITY COMPANY INTEREST
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE
PLEASE PRINT OR TYPE. USE BLACK INK ONLY AND ONLY ONE CHARACTER PER BOX.
I subscribe for Units of Limited Liability Company Interest in Man-AHL
130, LLC (the "Fund") and authorize the Managing Member to debit my customer
securities account or otherwise arrange for the receipt of my subscription funds
in the amount set forth below. The Units of each Class are sold at the Unit NAV
of such Class.
2 __________ 3 _______ ____ _____ _____ 4 _____ _____
Dollar Amount. Class A1 Class A2 Class B1 Class B2 Account #
Minimum$25,000 (Taxable (Taxable (Tax- Exempt (Tax- Exempt
Class A1 and A2; Investors Investors Investors Investors
$10,000 Class B1 only) only) only) only)
and B2;
incremental
investments in
$1000 multiples.
5 _______ _____ _______ _____ ___________________
Social Security Number or Taxpayer ID Number
Member Name
5 ____________________________ _____ ______________________________________
First Name M.I. Last Name
Joint Member Name
6 ____________________________ _____ ______________________________________
First Name M.I. Last Name
Fund, Corporate or Trust Member Name
7 _____________________________________________________________
Partner, Officer, Trustee, Beneficiary, Power of Attorney or Custodian under
UGMA/UTMA
8 _____________________________________________________________
Additional Information
9 _____________________________________________________________
Residence Address of Member (P.O. Box Numbers Are Not Acceptable For Residence
Address)
_______________ ____________________________________ ________________
Street Number Street Name Apt. Number
_________ _________________________ ________________ _______________
Bldg. No. City State Zip Code
_________________________________________________
Country (If Other Than U.S.A.)
Mailing Address of Member (If Other Than Residence Address)
___________________ _____________________________ ___________________
Street Number Street Name Apt. Number
__________ ________________ ____________________ ______ ____________________
Bldg. No. P.O. Box No. City State Zip Code
_______________________________________
Country (If Other Than U.S.A.)
Name of Custodian
___________________________________________________
Mailing Address of Custodian
___________________ _____________________________________ __________________
Street Number Street Name Apt. Number
__________ ________________ ______________________________ _______ ___________
Bldg. No. P.O. Box No. City State Zip Code
__________________________________________
Country (If Other Than U.S.A.)
SA-4
MAN-AHL 130, LLC
UNITS OF LIMITED LIABILITY COMPANY INTEREST
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE (CONTINUED)
- --------------------------------------------------------------------------------
10 FOR USE BY INVESTOR
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification
number,
2. I am not subject to backup withholding because: (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends or (c) the
IRS has notified me that I am no longer subject to backup
withholding, and
3. I am a U.S. Person.
Cross out item 2 above if you have been notified by the IRS that you are
currently subject to backup withholding because you have failed to report
all interest and dividends on your tax return.
THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
___________________________________________________________________________
X X
______________________________ _________________________________________
Signature of Investor Date Signature of Joint Investor (if any) Date
( ) -- Subscription for the Units to be sold as of
________________________________
Telephone Number of Investor [insert date]
_____________________
I acknowledge that I have received the Prospectus of the Fund dated ______, 2005
together with summary Fund financial information current within 60 days.
However, submitting this Subscription Agreement and Power of Attorney Signature
Page in no respects constitutes a waiver of any rights under any federal or
state securities laws.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
11 Registered Representative MUST SIGN
I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments, financial
situation and needs and any other information known by me, that investment in
the Fund is suitable for such investor in light of his/her financial position,
net worth and other suitability characteristics. I have also informed the
investor of the unlikelihood of a public trading market developing for the
Units.
The Registered Representative MUST sign below in order to substantiate
compliance with NASD Business Conduct Rule 2810.
X _____________________________________________________________________________
Registered Representative Signature Date
- --------------------------------------------------------------------------------
SA-5
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Man Investments (USA) Corp. or an affiliate will pay, without
reimbursement by Registrant, all organizational and initial offering costs, as
described in the Prospectus.
The following is an estimate of the costs of preparing, filing and
distributing this Registration Statement and the Prospectus which it includes.
Approximate
Amount
-----------
Securities and Exchange Commission Registration Fee.............................. $ 1,177 *
National Association of Securities Dealers, Inc. Filing Fee...................... 1,500 *
Printing Expenses................................................................ 75,000
Fees of Certified Public Accountants............................................. 17,500
Blue Sky Expenses (Excluding Legal Fees)......................................... 30,000
Fees of Counsel.................................................................. 240,000
Advertising and Sales Literature................................................. 25,000
Miscellaneous Offering Costs..................................................... 10,000
---------
Total............................................................................ $ 400,000
- -----------------------
* Fees marked with an asterisk are exact rather than estimated and approximate.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XIV of the Limited Liability Company Agreement (attached as
Exhibit A to the prospectus which forms a part of this Registration Statement)
provides for the indemnification of the Managing Member and certain of its
affiliates by the Registrant. "Affiliates" shall mean any person performing
services on behalf of the Fund who: (1) directly or indirectly controls, is
controlled by, or is under common control with the Managing Member; or (2) owns
or controls 10% or more of the outstanding voting securities of the Managing
Member; or (3) is an officer or director of the Managing Member; or (4) if the
Managing Member is an officer, director, partner or trustee, is any entity for
which the Managing Member acts in any such capacity. Indemnification is to be
provided for any loss suffered by the registrant which arises out of any action
or inaction, if the party, in good faith, determined that such course of conduct
was in the best interest of the Registrant and such conduct did not constitute
negligence or misconduct. The Managing Member and its affiliates will only be
entitled to indemnification for losses incurred by such affiliates in performing
the duties of the Managing Member and acting wholly within the scope of the
authority of the Managing Member.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following documents (unless otherwise indicated) are filed
herewith and made a part of this Registration Statement:
II-1
Exhibit
Number Description of Document
- -------- -----------------------
1.01 Form of General Distributor's Agreement between the Registrant and
Man Investments Inc.
1.02 Form Selling Agreement between Man Investments Inc. and Additional
Selling Agents.*
3.01(i) Certificate of Formation of the Registrant.
3.02 Limited Liability Company Agreement of the Registrant (included as
Exhibit A to the Prospectus).
5.01 Form of Opinion of Sidley Austin Brown & Wood LLP relating to the
legality of the Units.
8.01 Form of Opinion of Sidley Austin Brown & Wood LLP with respect to
federal income tax consequences.
10.01 Form of Administration Agreement between the Fund and the
Administrator.*
10.02 Form of Customer Agreement between the Registrant and Man Financial
Inc.
10.03 Form of Trading Advisory Agreement between Registrant and Man-AHL
(USA) Ltd.
10.04 Form of Escrow Agreement among the Registrant, the Escrow Agent, the
Selling Agent and the Managing Member.*
10.05 Form of Subscription Agreement (included with the Prospectus).
23.01 Consent of Sidley Austin Brown & Wood LLP.
23.02 Consent of Deloitte & Touche LLP.
23.03 Consent of PricewaterhouseCoopers LLP.
99.01 Securities and Exchange Commission Release No. 33-6815 --
Interpretation and Request for Public Comment -- Statement of the
Commission Regarding Disclosure by Issuers of Interests in Publicly
Offered Commodity Pools (54 Fed. Reg. 5600; February 6, 1989).*
99.02 Commodity Futures Trading Commission -- Interpretative Statement and
Request for Comments -- Statement of the Commodity Futures Trading
Commission Regarding Disclosure by Commodity Pool Operators of Past
Performance Records and Pool Expenses and Requests for Comments (54
Fed. Reg. 5597; February 6, 1989).*
99.03 North American Securities Administrators Association, Inc.
Guidelines for the Registration of Commodity Pool Programs.*
99.04 Prospectus, included in Registration No. 333-118854, of Man-Glenwood
Lexington LLC.*
II-2
99.05 Prospectus, included in Registration No. 333-120945, of Man-Glenwood
Lexington TEI, LLC.*
- ------------------------
* To be filed by amendment.
ITEM 17.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
(Section 230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities under the Securities
Act of 1933 may be permitted to officers, directors or controlling persons of
the registrant pursuant to the provisions described in Item 14 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by an officer, director,
or controlling person of the registrant in the successful defense of any such
action, suit or proceeding) is asserted by such officer, director or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Managing Member of the Registrant has duly caused this Registration Statement or
Registration Statement Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of Chicago in the State of Illinois on
the 24th day of June, 2005.
MAN-AHL 130, LLC
By: MAN INVESTMENTS (USA) CORP.
MANAGING MEMBER
By: /s/ JOHN M. KELLY
-----------------
John M. Kelly
President and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Registration Statement Amendment has been signed below
by the following persons on behalf of the Managing Member of the Registrant, in
the capacities and on the date indicated.
Signature Title with Registrant Date
/s/ JOHN M. KELLY President and Director June 24, 2005
- ---------------------------- (Principal Executive
John M. Kelly Officer)
/s/ JAMES W. ROSENBERGER Principal Financial and June 24, 2005
- ---------------------------- Accounting Officer
James W. Rosenberger
/s/ MICHAEL LOZOWSKI Director June 24, 2005
- ----------------------------
Michael Lozowski
/s/ STEVEN ZORIC Vice President, June 24, 2005
- ---------------------------- Secretary and Director
Steven Zoric
Being the principal executive officer, the principal financial and
accounting officer and a majority of the directors of Man Investments (USA)
Corp.
MAN INVESTMENTS (USA) CORP.
Managing Member
By /s/ JOHN M. KELLY June 24, 2005
-------------------------------
John M. Kelly
President and Director
II-4
As filed with the Securities and Exchange Commission on June 28, 2005
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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EXHIBITS
To
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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MAN-AHL 130, LLC
(Exact name of registrant as specified in its charter)
================================================================================
EXHIBIT INDEX
Exhibit
Number Description of Document
- -------- -----------------------
1.01 Form of General Distributor's Agreement between the Registrant and
Man Investments Inc.
1.02 Form Selling Agreement between Man Investments Inc. and Additional
Selling Agents.*
3.01(i) Certificate of Formation of the Registrant.
3.02 Limited Liability Company Agreement of the Registrant (included as
Exhibit A to the Prospectus).
5.01 Form of Opinion of Sidley Austin Brown & Wood LLP relating to the
legality of the Units.
8.01 Form of Opinion of Sidley Austin Brown & Wood LLP with respect to
federal income tax consequences.
10.01 Form of Administration Agreement between the Fund and the
Administrator.*
10.02 Form of Customer Agreement between the Registrant and Man Financial
Inc.
10.03 Form of Trading Advisory Agreement between Registrant and Man-AHL
(USA) Ltd.
10.04 Form of Escrow Agreement among the Registrant, the Escrow Agent, the
Selling Agent and the Managing Member.*
10.05 Form of Subscription Agreement (included with the Prospectus).
23.01 Consent of Sidley Austin Brown & Wood LLP.
23.02 Consent of Deloitte & Touche LLP.
23.03 Consent of PricewaterhouseCoopers LLP.
99.01 Securities and Exchange Commission Release No. 33-6815 --
Interpretation and Request for Public Comment -- Statement of the
Commission Regarding Disclosure by Issuers of Interests in Publicly
Offered Commodity Pools (54 Fed. Reg. 5600; February 6, 1989).*
99.02 Commodity Futures Trading Commission -- Interpretative Statement and
Request for Comments -- Statement of the Commodity Futures Trading
Commission Regarding Disclosure by Commodity Pool Operators of Past
Performance Records and Pool Expenses and Requests for Comments (54
Fed. Reg. 5597; February 6, 1989).*
99.03 North American Securities Administrators Association, Inc.
Guidelines for the Registration of Commodity Pool Programs.*
99.04 Prospectus, included in Registration No. 333-118854, of Man-Glenwood
Lexington LLC.*
99.05 Prospectus, included in Registration No. 333-120945, of Man-Glenwood
Lexington TEI, LLC.*
- ------------------------
* To be filed by amendment.