As filed with the Securities and Exchange Commission on October 21, 2005
REGISTRATION NO. 333-126172
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
AMENDMENT NO. 2
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
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)
----------
COPIES TO:
David R. Sawyier
James B. Biery
Sidley Austin Brown & Wood LLP
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
----------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
----------
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. [ ]
----------
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM AMOUNT OF
SECURITIES BEING AMOUNT BEING OFFERING PRICE AGGREGATE ADDITIONAL
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE(1)
--------------------- ------------- -------------- -------------- -------------------
Units of Limited Liability
Company Interest
Class A ............... 50,000 $100 5,000,000 $ 0
Class B ............... 50,000 $100 5,000,000 $ 0
------- ----------- -----------
TOTAL 100,000 UNITS $10,000,000 $ 0
======= =========== ===========
----------
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.
(1) In connection with the registrant's Registration Statement filed on June 28,
2005 (Reg. #333-126172), the registrant paid the total amount of $1,177 in
registration fees.
================================================================================
MAN-AHL 130, LLC
UNITS OF LIMITED LIABILITY COMPANY INTEREST
CLASS A AND B UNITS
(MINIMUM OF EACH CLASS: 5,000 UNITS; MAXIMUM OF EACH CLASS: 50,000 UNITS)
THE FUND
The Fund will trade in the global futures and forward markets pursuant to the
AHL Diversified Program, a speculative, trend-following managed futures
strategy.
The Fund will invest approximately 30% of its capital 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.
THE MANAGING MEMBER
Man Investments (USA) Corp. Affiliates of the Managing Member manage the AHL
Diversified Program as well as Man-Glenwood.
THE UNITS
Two Classes of Units are being offered (Class A Units are offered to taxable
investors and Class B Units are offered to tax-exempt investors). These Classes
are substantially identical except that Class B 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
Units of Class A or 25,000 Units of Class B are not accepted during the Initial
Offering Period ending [___] (subject to extension until no later than [___] for
Class A Units and [___] for Class B Units), the offering of such Class(es) will
be terminated and subscription proceeds received in respect of such Class(es)
will be returned within 5 business days 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, 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 A Units is $25,000, and in Class B 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.
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 9.
- - The Fund is a speculative and leveraged managed futures fund. The AHL
Diversified Program will typically hold futures positions with a face
amount equal to 300% to 800% of the Fund's Net Asset Value. Man-Glenwood
currently leverages its investment in the portfolio funds in which it
invests to approximately 120% of Man-Glenwood's net asset value. 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 Managing Member
estimates the expenses of the Fund, irrespective of profitability, at
approximately 6.25% for Class A and B Series 1 Units and 5.00% for Class A
and B Series 2 Units, of the Fund's average Net Asset Value, on a
break-even basis.
- - The Fund is subject to material conflicts of interest; members of the Man
Group act as the manager, commodity broker and foreign exchange trader of
the AHL Diversified Program and as the manager of Man-Glenwood.
- - Investors must pay tax every year on any income allocated to their
investment in the Fund, irrespective of receiving no distributions from the
Fund.
- - 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.
- - The Fund is newly-formed and has no operating history.
- - 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 total outstanding Units may
be redeemed as of any calendar quarter-end.
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 TO THIS POOL ON PAGES 30 TO
33 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO
RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, ON PAGE 7.
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, ON PAGES 9 TO 15.
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.
----------
PLEASE SEE THE IMPORTANT PRIVACY POLICY ON PAGE 47.
----------
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.
----------
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
(FLOW CHART)
SEE "CONFLICTS OF INTEREST; TRANSACTIONS BETWEEN MAN GROUP AND THE FUND" AT
PAGE 35.
ALL ENTITIES INDICATED ABOVE, EXCEPT THE FUND (ONCE TRADING BEGINS),
MAN-GLENWOOD, THE PORTFOLIO COMPANY, THE SUB-FUNDS AND THE THIRD-PARTY
ADMINISTRATOR, ARE 100% OWNED, DIRECTLY OR INDIRECTLY, BY MAN GROUP PLC.
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
- ------- ----
Summary.................................................................. 2
Risk Factors............................................................. 9
You May Lose Your Entire Investment................................... 9
The Fund Uses Leverage, Which Increases Risk.......................... 9
The Fund is the First Public Futures Fund Sponsored by the Managing
Member............................................................. 9
The Fund Has No Operating History..................................... 9
"Risk of Ruin"........................................................ 9
The Fund's Performance is Expected to be Volatile..................... 9
The Fund's Substantial Fees and Expenses Will Cause Losses Unless
Offset by Profits and Interest Income.............................. 10
An Investment in the Fund is not a Liquid Investment.................. 10
Substantial Redemptions may Cause the Fund to Incur Losses............ 10
The Fund is Subject to Conflicts of Interest.......................... 10
The Managing Member has not Established Formal Procedures to Resolve
Conflicts of Interest.............................................. 11
The Fund's Investment in Man-Glenwood may Incur Losses................ 11
Changes in Regulatory Requirements may be Adverse to the Fund......... 11
The AHL Incentive Fee Calculation may not Reflect Your Investment
Experience......................................................... 11
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.......... 12
The Fund Could Lose Assets and Have its Trading Disrupted due to the
Bankruptcy of its Commodity Broker, Counterparties or Others....... 12
Trading on Foreign Exchanges Presents Greater Risk Than Trading on
U.S. Exchanges..................................................... 12
The Fund Trades in Unregulated Markets................................ 12
Exchange Rate Risk.................................................... 13
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........... 13
AHL's Trading Decisions are Based on Technical Systems not on an
Analysis of Economic Factors....................................... 13
Increased Competition Among Trend-Following Traders Could Reduce AHL's
Profitability...................................................... 14
Market Conditions Will Dominate AHL's Results......................... 14
Reliance on a Single Futures Trading Strategy......................... 14
Possible Effects of Speculative Position Limits....................... 14
Possible Effects of Daily Price Fluctuation Limits.................... 14
The Fund is Unlikely to Realize its Potential Except in the Medium
to Long Term....................................................... 14
Use of Proceeds.......................................................... 14
Management's Discussion and Analysis of the Fund's Prospective
Operations............................................................ 19
Management of the Fund................................................... 21
Performance Information.................................................. 23
Net Asset Value.......................................................... 29
Fees and Expenses Paid by the Fund....................................... 30
Clearing Broker.......................................................... 34
Redemptions and Transfers of Units....................................... 34
Conflicts of Interests; Transactions Between Man Group and the Fund...... 35
Summary of the Limited Liability Company Agreement....................... 38
Tax Consequences......................................................... 39
Benefit Plan Investors................................................... 42
Plan of Distribution..................................................... 44
Reports.................................................................. 46
Lawyers; Accounts........................................................ 46
Privacy Policy........................................................... 47
Index to Financial Statements............................................ 49
PART TWO
STATEMENT OF ADDITIONAL
INFORMATION
SECTION PAGE
- ------- -----
Futures Markets and Trading Methods..................................... 61
Alternative Investment Strategies in General............................ 64
Supplemental Performance Information.................................... 65
Appendix -- Excerpts of Prospectus of Man-Glenwood Lexington, LLC....... APP-1
Exhibit A -- Limited Liability Company Agreement........................ A-1
Exhibit B -- Subscription Requirements.................................. SR-1
Exhibit C -- Subscription Instructions.................................. SA-1
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 THE MOST RECENT CFTC-REQUIRED MONTHLY REPORT OR
SUMMARY PERFORMANCE 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 on behalf
of the Fund by Man-AHL (USA) Limited ("AHL").
The AHL Diversified Program is quantitative and primarily directional
(i.e., it employs statistical models of market behavior in 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.
AHL's trading process is the product of sophisticated research and applies
a technical approach that was developed in and has been operated, with
modifications, in a company form since 1987. 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 AHL
Diversified Program to be traded on behalf of the Fund has been operating since
December 1990.
* * * * *
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 approximately 70% of its capital in cash and cash
equivalents. The Fund will invest the remainder of its capital -- approximately
30% -- in Man-Glenwood. The 30% investment in Man-Glenwood will be made by
investing approximately 30% of Class A capital in Man-Glenwood Lexington, LLC
and 30% of Class B capital in Man-Glenwood Lexington TEI, LLC, each a registered
investment company, such that the investment in Man-Glenwood represents
approximately 30% of the Fund's capital. Man-Glenwood, in turn, allocate their
capital, through an investment in Man-Glenwood Lexington Associates Portfolio,
LLC, a master investment vehicle (the "Portfolio Company"), to a portfolio of
private investment funds (the "Sub-Funds"). The Fund's Man-Glenwood investment
also has the potential to perform differently from the AHL Diversified Program.
Such non-correlation of results can reduce the risk of the Fund's overall
portfolio, with Man-Glenwood gains potentially offsetting the AHL Diversified
Program losses and vice versa. 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. If the Managing Member deems
it to be necessary or advisable, however, the Managing Member will reduce or
eliminate its investment 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. The Man Investments division of Man Group plc has launched
approximately 450 alternative investment products, including numerous commodity
pools, and, as of September
2
30, 2005 had an estimated $44 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, and Man Financial Limited, the entity through which
the Fund will conduct its foreign exchange trading, are both affiliates of the
Managing Member.
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
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 [___], subject to extension until no later than [___] for Class A Units and
[___] for Class B Units.
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. After the
initial issuance of the Units of each Class, additional Units will be issued at
the beginning of each month based on their Net Asset Value as of the end of the
previous calendar month.
Units will be issued in fractions calculated to two decimal points.
CLASSES AND SERIES OF UNITS
The Fund offers two Classes of Units. These Classes have identical trading
and investment portfolios. Class A Units are offered only to taxable investors,
while the Class B Units are offered only to tax-exempt investors. The Class B
Units have been structured so as not to cause tax-exempt investors to recognize
taxable "unrelated business taxable income."
Within each Class, Units will be issued in two separate Series. Class A
Series 1 and Class B Series 1 Units are subject to a 1.25% annual Client
Servicing Fee.
Class A Series 2 and Class B Series 2 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 and are not
charged the Client Servicing Fee.
MINIMUM INVESTMENT
Minimum initial investment: Class A Units, $25,000; Class B Units, $10,000;
additional investments (whether at the time of the initial investment or
thereafter): $1,000 for either Class of Units.
MINIMUM CAPITALIZATION
A minimum of (i) 5,000 Class A Units ($500,000), or (ii) 25,000 Class B
Units ($2,500,000), must be sold for the Units of such Classes to be issued. The
Fund will only issue Class B Units at such time as there are at least 100
subscribers for the Class B Units.
MAJOR RISKS OF THE FUND
The Fund is speculative. You may lose all or substantially all of your
investment in the Fund.
3
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 AHL Diversified Program will typically hold
futures positions with a face amount equal to 300% to 800% of the Fund's Net
Asset Value. Man-Glenwood currently leverages its indirect investment in the
Sub-Funds in which it invests up to approximately 120% of Man-Glenwood's net
asset value. Leverage magnifies losses as well as profits.
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.
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 Managing Member estimates the expenses of the Fund, irrespective of
profitability, at approximately 6.25% of the Series A1 and B1 Units and 5.00% of
the Series A2 and B2 Units, of the Fund's average Net Asset Value on a
break-even basis.
The Fund is subject to material conflicts of interest; members of the Man
Group act as the manager, commodity broker and foreign exchange trader of the
AHL Diversified Program and as the manager of Man-Glenwood. The Selling Agent is
also an affiliate.
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. The Net
Asset Value of a Unit may change materially between the date that a notice of
redemption must be submitted and the redemption date for such Unit.
No more than 15% of the Fund's total outstanding Units may be redeemed as
of any calendar quarter. In the event that the Fund receives redemption requests
in excess of such 15% limitation for eight consecutive quarters, the Fund will
cease its trading and investment activities and will terminate as promptly as
possible.
Investors must pay tax every year on any income allocated to their
investment in the Fund, irrespective of receiving no distributions from the
Fund.
The Fund is newly formed and has no operating history.
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.
Subscription funds not invested in the Fund will be returned to investors
together with any interest actually earned thereon.
LIMITED LIABILITY
Investors invest with limited liability and cannot lose more than their
investments and unredeemed profits.
4
POTENTIAL INVESTMENT ADVANTAGES
The Fund offers the following potential advantages.
- - Access to the AHL Diversified Program. Past performance is not necessarily
indicative of future results.
- - Diversification into managed futures; the AHL Diversified Program, which
has historically performed profitably during certain periods when
traditional stock and bond investments were performing poorly. There can be
no assurance that the performance of the AHL Diversified Program will be
non-correlated to the general equity and debt markets.
- - An investment of 30% of the Fund's capital in Man-Glenwood, potentially
increasing overall returns and potentially performing profitably during
certain periods when the AHL Diversified Program is unprofitable.
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 no more than 45 business days of the effective date of
redemption (this delay being required in order for the Fund to tender for
repurchase a portion of its investment in Man-Glenwood).
If quarter-end redemptions are requested for more than 15% of the Fund's
total then outstanding Units, each redemption request will be reduced pro rata
so that only 15% of the Fund's total 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.
In the event that the Fund receives redemption requests in excess of the
15% limitation for eight consecutive quarters, the Fund will cease its trading
and investment activities and will terminate as promptly as possible.
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 Selling Agent will receive a Client Servicing Fee equal to 1/12 of
1.25% of the Net Asset Value of the Class A Series 1 and Class B Series 1 Units
at each month-end (a 1.25% annual rate), calculated monthly and paid quarterly
in arrears. The Client Servicing Fee will not apply to Class A Series 2 and
Class B Series 2 Units, which are offered exclusively to participants in selling
agent or registered investment advisor fixed-fee or asset-based fee programs.
The Selling Agent is subject to the regulatory limitation that it receive
aggregate selling commissions not in excess of 10% of the sale price of each
Unit. Once the Selling Agent has received aggregate selling commissions totaling
10% of the sale price of a Class A Series 1 or Class B Series 1 Unit (or, if
earlier, such Unit has been charged Client Servicing Fees totaling 10% of the
sale price of such Unit), the Client Servicing Fee will end and the Class A
Series 1 and Class B Series 1 Units will be redesignated in terms of and become
indistinguishable from the Class A Series 2 and Class B Series 2 Units,
respectively, to which the Client Servicing Fee does not apply, and no further
Client Servicing Fee will be charged in respect of such Unit.
5
ORGANIZATIONAL AND OFFERING AND ADMINISTRATIVE 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 $100,000,000).
Administrative expenses in excess of 0.50% of the Fund's average month-end Net
Asset Value during the first two fiscal years will be paid by, or reimbursed to
the Fund by, the Managing Member or an affiliate (irrespective of the level of
the Fund's average assets during such year). Thereafter, expenses in excess of
0.50% of the Fund's average month-end Net Asset Value will be paid by the Fund,
but may be paid by the Managing Member in its discretion.
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 month-end notional value of the Fund's AHL
account - approximately equal to the Fund's 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 both Classes of Units will be traded in the same AHL account).
"New net profit" is the increase in the month end Net Asset Value of the account
(after deduction of monthly management fees, expenses and brokerage commissions
but before additions and withdrawals for the month) over the account's highest
Net Asset Value as of the end of any preceding month, or the commencement of
trading. 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 investment managers of the Sub-Funds (the "Sub-Fund Managers")
generally will charge the Portfolio Company a management fee (in addition to
their administrative costs), and some or all of the Sub-Fund Managers will
receive performance or incentive allocations. The management fees of the
Sub-Fund Managers are generally expected to range from 1% to 2% annually of the
net assets under their management (including the Fund's investment) and the
performance or incentive allocations to the Sub-Fund Managers are generally
expected to range from 15% 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), although on occasion this could be higher.
TRANSACTION COSTS
The AHL Diversified Program executes its futures and forward trades
exclusively through Man Financial Inc. and its affiliates (the "Clearing
Broker"), 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 of the Clearing Broker's clients may be charged lower rates.
However, the Fund will be charged futures brokerage commissions at rates
generally available to the Clearing Broker's unaffiliated institutional
customers. The Managing Member estimates the Fund's AHL Diversified Program
transaction costs
6
at approximately 1% 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 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 A Series 1
or Class B Series 1 Unit is sold, to offset the costs applicable to a minimum
investment in Class A Series 1 or Class B Series 1 Units.
BREAKEVEN TABLE
CLASS A CLASS B
SERIES 1 SERIES 1
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 1.25%** $ 312.50** $ 125.00**
Fee**
AHL Management Fee 2.00% $ 500.00 $ 200.00
AHL Incentive Fee .40%***** $ 100.00***** $ 40.00*****
AHL Transaction 1.00%*** $ 250.00*** $ 100.00***
Costs***
Man-Glenwood 0.90%**** $ 225.00**** $ 90.00****
Management Fee****
Sub-Fund 0.45%**** $ 112.50**** $ 45.00****
Management Fees
Sub-Fund 0.60%**** $ 150.00**** $ 60.00****
Performance Fees
Sub-Fund 0.30%**** $ 75.00**** $ 30.00****
Transaction
Costs****
Less Interest (1.90)% $ (475.00) $(190.00)
Income+
TWELVE-MONTH 6.25% $1,562.50 $ 625.00
"BREAKEVEN"
- ----------
* The Managing Member or an affiliate will assume administrative expenses in
excess of 0.50% per annum of the Fund's average month-end net asset value
for the first two fiscal years.
** Not applicable to Units acquired through and participating in a selling
agent or investment advisor asset-based fee program.
*** Estimated; maximum AHL transaction costs are capped at 3%.
**** Estimated; Man-Glenwood investment estimated at 30% of Fund assets.
***** The AHL Diversified Program charges a monthly incentive fee equal to 20%
of any "new net profits" attributable to the Fund's AHL account. AHL's
trading profits are not reduced by non-AHL fund expenses. Consequently, an
incentive fee may be charged by AHL in a breakeven or losing year for the
Fund. Therefore, the AHL Diversified Program's Incentive Fee is estimated
at 0.40%.
+ Interest Income estimated on the basis of 70% of Fund assets at current
overnight rates.
The percentage return needed for an investment in Class A Series 2 or Class B
Series 2 Units, which are not subject to the Client Servicing Fee, to offset
estimated costs during the first 12 months after a Class A Series 2 or Class B
Series 2 Unit is sold is 5%, which represents a dollar return for a $25,000
Class A Series 2 initial investment and a $10,000 Class B Series 2 initial
investment of $1,200.00 and $500.00, respectively.
7
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, and any ordinary income, 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.
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.
8
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. None of the Fund's strategies is assured of being
profitable (unlike many traditional investment approaches which seek to
participate in the growth of the economy over time, the Fund's strategies
are trading strategies which, if incorrect in the positions they acquire,
can lose money under any circumstances). The AHL Diversified Program
attempts to predict futures price trends, taking substantial positions
which will incur major losses if the price trends are incorrectly
identified or unexpectedly reverse. Similarly, the Sub-Funds in which
Man-Glenwood invests, through the Portfolio Company, each implement
strategies subject to different orders of market risk-- price movements,
changes in volatility, interest-rate fluctuations. 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 three to eight times or more of
the Fund's total equity. Man-Glenwood currently leverages its investment in
the Sub-Funds up to approximately 120% of Man-Glenwood net assets. 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 and
Man-Glenwood is not necessarily indicative of how they will perform in the
future.
- - "RISK OF RUIN." While volatility is a widely accepted measure of the risk
of a traditional debt or equity investment, it is also widely accepted that
volatility does not fully reflect the risk of trading-based (as opposed to
"buy and hold" traditional) strategies in that these strategies are subject
-- due to market disruption, illiquidity, "credit squeezes" and a variety
of other factors-- to incurring sudden and unprecedented losses. One of the
best-known alternative investment strategy funds had virtually no downside
volatility until it lost all of its equity ($4 billion) in the course of
two months. The Fund, in addition to being likely to have volatile
performance, will also be subject to this "risk of ruin."
- - THE FUND'S PERFORMANCE IS EXPECTED TO BE VOLATILE. Futures and forward
markets are volatile and the Fund may suffer sudden and substantial losses
from time to time. Futures and forward prices are affected by complex and
often unpredictable factors such as severe weather, governmental actions
and other economic or political events. In fact, certain events-- for
example, international terrorist acts and political turmoil-- may cause a
large number of the highly leveraged positions held by AHL to move in the
same direction at or about the same time. The low margin deposits normally
required in futures trading permit a high degree of leverage so
9
that even small price moves in the Fund's futures positions can result in
significant changes in the value of those positions. Accordingly, 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-- estimated, irrespective of profitability, at approximately 6.25%
for the Class A and B Series 1 Units and 5.00% for the Class A and B Series
2 Units, of the Fund's average Net Asset Value on a break-even basis. These
fees and expenses are "layered": the Fund, the AHL Diversified Program,
Man-Glenwood and the Sub-Funds are each subject to their own level of fees.
These fees and expenses are materially increased in comparison to the
equity in the Fund due to the leverage at which it trades. The AHL
Diversified Program taking positions at 600% of the Fund's net equity, for
example, results in increased transaction costs over those which would be
incurred were the Fund to acquire futures positions equal to its net
equity. The AHL Diversified Program's and Man-Glenwood's fees and expenses
must be offset by trading profits and interest income to avoid losses.
Furthermore, any profits earned by the AHL Diversified Program or the
Sub-Funds will be subject to performance compensation due to AHL or to the
Sub-Fund Managers.
- - 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 total then outstanding Units). A Unit's redemption price will
be its Net Asset Value on the redemption date, not the date notice of
redemption is given to the Fund.
Because the Units cannot be readily liquidated, it may be impossible for
investors to limit losses or realize accrued gains.
- - SUBSTANTIAL REDEMPTIONS MAY CAUSE THE FUND TO INCUR LOSSES. Substantial
redemptions of Units within a limited period of time, even though limited
to 15% of the Fund's total outstanding Units as of any calendar
quarter-end, could disrupt the Fund's portfolio resulting in losses. Being
required to liquidate positions-- especially in unfavorable market
conditions-- could require the Fund to liquidate positions at
disadvantageous prices which AHL would otherwise have maintained, impairing
the future profit potential of the Fund as well as perhaps resulting in
immediate losses. In the event that the Fund receives redemption requests
in excess of such 15% limitation for eight consecutive quarters, the Fund
will cease its trading and investment activities and will terminate as
promptly as possible.
- - THE FUND IS SUBJECT TO CONFLICTS OF INTEREST. The investment, management,
brokerage and sales activities of the Managing Member and its affiliates
give rise to conflicts of interest that may disadvantage the Fund.
Many of the direct and indirect service providers to the Fund (excluding
the managers of the 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. As a result of the conflicts of
interest in members of the Man
10
Group serving in multiple capacities with respect to the Fund, AHL and
Man-Glenwood, many of the service provider arrangements have not been
negotiated at arm's length, may not be at the lowest rates or terms
otherwise available and will not be terminated even should more
advantageous arrangements become available.
- - 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. AHL will, for example, have an
incentive to trade more frequently than it otherwise might due to an
affiliate of AHL acting as commodity broker for the Fund. Furthermore, the
Managing Member will not replace AHL as the futures manager for the Funds
nor Man-Glenwood as the Fund's non-cash equivalents reserve asset
investment, even if other such managers or investments might be more
advantageous for the Fund.
- - THE FUND'S INVESTMENT IN MAN-GLENWOOD MAY INCUR LOSSES. The Sub-Funds may
employ speculative trading strategies, including selling securities short
and trading in derivatives, including swaps, over the counter options and
asset-backed securities, or investing in non-marketable securities. Short
selling exposes the seller to unlimited risk due to the lack of an upper
limit on the price to which a security may rise. Derivatives prices may be
volatile and there are uncertainties as to how derivatives markets will
perform during periods of market instability or credit distress.
Non-marketable securities may be difficult to value and may not be easily
disposed of when declining in value. Although Man-Glenwood is designed as a
multi-manager, multi-strategy fund of funds investment, under certain
market conditions many of the Sub-Funds, in which it invests through the
Portfolio Company, could incur losses at or about the same time.
Man-Glenwood might also refuse to process repurchase tenders.
- - 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. In the past there have, for example, been
initiatives by certain governmental and/or political bodies to attempt to
restrict the amount of speculative trading permitted in certain currencies
and staples such as power and oil. The effect of regulatory change on the
Fund, while impossible to predict, could be substantial and adverse. For
example, certain regulatory changes have made the over-the-counter
derivatives markets significantly more available to small investors. This
could disrupt historical price patterns to the detriment of AHL's trading
systems (based on historical market data). In addition, the SEC recently
substantially expanded the applicability of the registration requirements
of the Investment Advisers Act. Many Sub-Fund Managers which might
otherwise have been available to Man-Glenwood may impose long-term lock-ups
or may refuse to permit Man-Glenwood to invest or reinvest.
- - 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 the AHL Diversified Program, 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. In addition,
the AHL incentive fees will not be affected by losses on the Fund's
Man-Glenwood investment. Because the AHL incentive fees are calculated on a
monthly basis, AHL could
11
receive substantial incentive fees from the Fund during a year, even though
the Fund's investment with AHL for such year was unprofitable.
- - 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. Consequently, Members must either redeem Units to pay their
taxes with respect to their investment in the Fund or have other funds
available to do so.
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 ITS COMMODITY BROKER, COUNTERPARTIES OR OTHERS. The Fund is
subject to the risk of Clearing Broker, exchange, clearinghouse, or trading
counterparty insolvency. Especially in AHL's over-the-counter derivatives
trading, the Fund will be dealing with substantially unregulated entities
and without the protection of a clearinghouse supporting the obligations of
such counterparties under their respective trades. 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.
- - TRADING ON FOREIGN EXCHANGES PRESENTS GREATER RISK THAN TRADING ON U.S.
EXCHANGES. The Fund will trade on commodity exchanges outside the United
States. Trading on foreign exchanges is not regulated by any United States
governmental agency and may involve certain risks that do not arise when
trading on United States exchanges. For example, an adverse change in the
exchange rate between the United States dollar and the currency in which a
non-U.S. futures contract is denominated would reduce the profit or
increase the loss on a trade in that contract.
Trading on foreign exchanges also presents risks of loss due to (1) the
possible imposition of exchange controls, which could make it difficult or
impossible for the Fund to repatriate some or all of its assets held by
non-U.S. counterparties; (2) possible government confiscation of assets;
(3) taxation; (4) possible government disruptions, which could result in
market closures and thus an inability to exit positions and repatriate Fund
assets for sustained periods of time, or even permanently; and (5) limited
rights in the event of the bankruptcy or insolvency of a foreign broker or
exchange resulting in a different and possibly less favorable distribution
of the bankrupt's assets than would occur in the United States.
Many foreign regulatory systems do not assure all market participants equal
access to transactions to the same extent as the U.S. regulations, and the
Fund -- as a non-local speculative trading vehicle -- may be denied
opportunities to which, in the United States, it would have access as a
matter of right.
- - THE FUND TRADES IN UNREGULATED MARKETS. Many of AHL's, as well as the
Sub-Funds', transactions will be executed in the over-the-counter,
unregulated markets. There is no way to determine fair pricing or prevent
12
business abuses in unregulated markets. Furthermore, unlike on exchanges,
participants in the over-the-counter markets have no obligation to make a
market in any of the instruments traded. The absence of regulation in such
markets could expose the Fund to significant losses.
Various national governments have expressed concern regarding the need to
regulate the "derivatives" markets in general. Future regulatory changes
may limit the Fund's ability to trade in certain markets.
- - EXCHANGE-RATE RISK AHL will both trade currencies and trade in other assets
denominated in currencies other than the U.S. dollar. The Fund will be
subject to the general risk of adverse fluctuations in exchange rates
between the currencies being traded by the Fund as well as to the risk that
in trading in assets denominated in currencies other than the U.S. dollar
the value of the Fund's positions will be adversely affected by changes in
the exchange rate between the functional currency of such position and the
Fund.
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 and forward 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 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. Technical trading systems are
premised on the concept that market prices reflect the results of numerous
market participants' assessment of the value of the instruments being
traded. This approach does not incorporate the possibility that basic
economic factors may cause market prices not to reflect true value and
moreover must assume that historical price trends are relevant information
to predicting prices in current markets (whereas, in fact, the markets and
market participants are continuously changing). 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.
13
- - 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.
For example, in the early 1990s a number of currency traders left major
banks and began implementing their individual currency trading strategies.
This resulted in several long-established technical currency traders
discontinuing operations as the price patterns which their systems had been
designed to identify were disrupted by the substantial new order flow into
the markets.
- - 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-- not necessarily the same market conditions
which would already affect the stock and bond markets but, for example,
trendless periods in the futures markets-- over which AHL has no control.
- - RELIANCE ON A SINGLE FUTURES TRADING STRATEGY. The Fund's managed futures
component represents a commitment solely to the AHL Diversified Program --
a single manager, single strategy allocation. Any single strategy involves
risk, and that risk may be heightened in the context of managed futures
strategies due to their need to continually develop and adapt their
strategies to changing market conditions and historical price information.
Reliance on a single manager and strategy incurs the risk of the single
manager's strategy becoming outdated, as well as the risk of other adverse
events affecting such single manager or strategy.
- - POSSIBLE EFFECTS OF SPECULATIVE POSITION LIMITS. Certain futures contracts
traded by AHL -- principally agricultural futures traded on U.S. exchanges
-- are subject to speculative position limits restricting the maximum
position which non-hedging traders (such as the Fund) may acquire.
Furthermore, these limits will be applied aggregating all AHL accounts, not
solely the Fund's. In certain circumstances, these speculative positions
may prohibit AHL from acquiring positions which it would otherwise have
believed to be in the best interest of the Fund.
- - POSSIBLE EFFECTS OF DAILY PRICE FLUCTUATION LIMITS. Certain futures
contracts traded by AHL -- again, principally agricultural futures
contracts traded on U.S. exchanges -- are subject to Daily Price
Fluctuation Limits restricting the maximum amount by which the price of a
contract can vary during a given trading day. Once the price has moved the
"daily limit," it may be economically infeasible to close out positions
against which the market is moving, resulting in AHL being required to
limit losses incurred on certain positions held by the Fund
14
- - THE FUND IS UNLIKELY TO REALIZE ITS POTENTIAL EXCEPT IN THE MEDIUM TO LONG
TERM. The nature of AHL's trend-following trading strategies, as well as
the diverse alternative investment strategies used in managing the
Sub-Funds, indicate that an investor must be prepared to be invested in the
Fund for a significant period of time in order to give the investment a
realistic opportunity to achieve its objective. Consequently, in the event
of unexpected change in an investor's financial circumstances or if
unexpected financial needs arise, an investor may be compelled to redeem
from the Fund at substantial losses which would have been more than offset
by subsequent gains had the investor been able to remain invested.
USE OF PROCEEDS
General
The Fund will invest approximately 30% of the proceeds of this offering in
Man-Glenwood and the remainder will be used by the Fund for the AHL Diversified
Program, as reserves to support the Fund's trading activities, and to pay
expenses as described elsewhere in this Prospectus. Due to the leverage
available in futures trading, the Fund's investment of 30% of its capital in
Man-Glenwood should have no effect on the Fund's ability to maintain an AHL
Diversified Program account on the same basis as if all of the Fund's assets
were invested in cash and cash-equivalents and deposited with the Clearing
Broker in order to support AHL's futures trading. Accordingly, giving
consideration to the leverage employed by Man-Glenwood (approximately 18% to
20%) and to the fact that the AHL Diversified Program will take positions on
behalf of the Fund with a face amount of between approximately 300% and 800% of
the Fund's total Net Asset Value, the Fund's Man-Glenwood investment will
represent approximately 4% to 11% of the Fund's total market exposure and the
AHL Diversified Program approximately 89% to 96% of the Fund's total market
exposure.
The Fund's capital will be maintained on deposit with the Clearing Broker,
or, in the case of the capital not needed to margin AHL Diversified Program
positions, with a bank. Fund capital held at the Clearing Broker 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 the Clearing Broker,
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
performance of the AHL Diversified Program as operated by the Managing Member
and affiliated CTAs is set forth on pages 25 and 28, respectively.
The AHL Diversified Program is a trading program that is systematic (i.e.,
the AHL traders' market judgment has little to do with AHL's trading), primarily
technical (i.e., focusing on market prices rather than attempting to analyze
fundamental economic data as a means of predicting prices) and primarily
trend-following (i.e., attempting to identify price trends and taking positions
in direct response to such trends). 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 they make is whether to execute trades as a
single order or as a series of different trades.
The AHL Diversified Program is quantitative and primarily directional
(i.e., it employs statistical models of market behavior in seeking to identify
and take advantage of upward and downward price trends in the commodities
markets). 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. The following is an illustrative, not necessarily inclusive,
list of markets, by
15
market sector, traded by AHL as of the date of this Prospectus:
AGRICULTURAL
Corn Soybeans
Cotton Soymeal
Non-GM Soybeans Soyoil
Red Azuki Beans Wheat
DEBT
Australian 10yr Bond Euro Schatz
Australian 3yr Bond Japanese Bonds
Canadian Bond UK Gilts
Euro BOBL US Treasury Bonds
Euro Bund US Treasury Notes
CURRENCIES
Australian Dollar New Zealand
Brazilian Real Norwegian Krone
Canadian Dollar Polish Zloty
Chilean Peso Singapore Dollar
Czech Koruna Slovak Koruna
Euro South African Rand
Hungarian Forint Swedish Krone
Indian Rupee Swiss Franc
Israeli Shekel Taiwanese Dollar
Japanese Yen UK Sterling
Mexican Peso US Dollar
ENERGIES
Crude Oil Kerosene
Gas Oil Natural Gas
Gasoline Unleaded Gas
Heating Oil
INTEREST RATES
Australian Treasury Bills Euroyen
Canadian Bankers Acceptance Federal Funds
Euribor New Zealand Bills
Eurodollar Short Sterling
Euroswiss Franc
LIVESTOCK
Feeder Cattle Live Cattle
Lean Hogs
METALS
Aluminum Platinum
Copper Silver
Gold Tin
Lead Zinc
Nickel
SOFT
Cocoa Rapeseed
Coffee Rubber
Orange Juice Sugar
EQUITY INDICES
AEX Index Nikkei 225 Index
Dax 30 Index Russell 2000 Index
EOA Index S&P 500 Index
Euro-STOXX Index S&P Canada 60 Index
FTSE 100 Index Singapore MSCI Index
FTSE/JSE Top 40 Companies Index Swedish OMX Index
Ibex 35 Index Taiwan MSCI Index
MIBTEL 30 Index TOPIX/S&P 150 Index
Nasdaq 100 Index
These markets may be accessed directly or indirectly. 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 the approximately 100 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 volatility is one widely accepted indication of risk. The AHL
systems are designed to reduce the exposure of the Fund to a market as its
volatility -- and, accordingly, risk --increases. 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. The AHL Diversified Program will typically hold futures
positions with a face amount equal to 300% to 800% of the Fund's Net Asset Value
and typically employs 12% to 18% of an accounts notional value to margin such
positions.
16
AHL's investment process is the product of sophisticated research and
applies a technical approach that was developed and has been operated, with
modifications, in a company form since 1987. 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 AHL
Diversified Program to be traded on behalf of the Fund has been operating since
December 1990.
The central investment philosophy is that markets are characterized by real
and often fairly persistent pricing irregularities 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 price trends. The core trend-following strategies include 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. AHL operates a number
of different trend-following models. These vary in terms of the data they
include in attempting to identify price trends (e.g., six-week moving average
prices, daily clearing prices for the last six months, intra-day highs and lows)
as well as in the criteria which they apply in identifying whether a price trend
has been determined.
In most of the instruments in which the Fund trades, AHL will apply more
than one of its price trend-following identification models. The number of
different models applied to a particular market may depend upon how liquid the
market is. In instruments such as Treasury bonds, AHL can apply multiple models
and allocate evenly between high turnover, short term trend models and longer
term trend models. In certain capital markets, on the other hand, the liquidity
(and hence the availability of positions) are significantly more limited so that
AHL is more likely to follow longer term trend models. 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 strategies that seek to capture profits
from the relative pricing of related positions rather than absolute price
movements.
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 the
Fund will be able to initiate and close out trades as indicated by AHL's systems
at market prices, 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 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.
17
As of June 30, 2005, the composition of the AHL Diversified Program's
portfolio was as follows:
(PIE CHART)
The multi-sector allocations of the AHL Diversified Program are subject to
material change at any time as well as from time to time.
All markets are futures and derivatives, not actual bonds, stocks, currencies,
or physical commodities.
1 Currencies 25.2%
2 Energies 17.4%
3 Debt 16.6%
4 Stocks 14.5%
5 Interest Rates 12.2%
6 Metals 9.0%
7 Agriculturals 5.1%
The Fund, directly or indirectly, will receive interest income on margin
and non-margin deposits with the Clearing Broker. United States dollar deposits
will receive interest income based on the current overnight rates, 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 interest income
earned on the composition of foreign currency balances not outweigh the interest
charge on the shortfall of US dollar balances.
Historically, the AHL Diversified Program has required only approximately
10% to 20% of an account's capital to margin the full positions which the AHL
Program acquires for an account with 100% of such equity. These low margin
requirements (typical of many managed futures programs) make possible the Fund's
investment of 30% of its capital in Man-Glenwood. The capital represented by
such investment would otherwise be held in reserve cash and cash-equivalents in
order to cover losses in the AHL Diversified Program. However, the Managing
Member believes that, if need be, the Fund's Man-Glenwood investment can be
liquidated through the Man-Glenwood quarterly tender process to support the
Fund's AHL Diversified Program trading.
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.
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.
The Managing Member may at any time, through the Man-Glenwood quarterly
tender process, 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.
18
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, 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 profit potential 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 Managing Member was able to do so
and 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 through
Man-Glenwood's quarterly tender process.
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 Units. Under certain
circumstances,
19
such tender offers may not occur as scheduled or may not be sufficient to
satisfy the full amount requested to be repurchased by the Fund. However, the
Man-Glenwood component of the Fund's portfolio represents an allocation of only
30% of the Fund's capital, and the Managing Member believes that any delays in
receiving repurchase 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.
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.
20
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. The Man Investments division of Man Group plc has launched
approximately 450 alternative investment products, including commodity pools,
and, as of September 30, 2005, has an estimated $44 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 Member's investment). The
Managing Member or any of its principals may trade for their own accounts and
such records will not be available for review by investors in the Fund.
Performance information for the Managing Member is set forth on page 27
this Prospectus.
Principals
The Managing Member's principals are John Kelly, Michael Lozowski, Steven
Zoric, Alicia Derrah and Man Investments Holdings, Inc. Mr. Lozowski will be
responsible for maintaining the allocation percentages as established in this
Prospectus, but will not be responsible for making trading decisions for the
Fund. The biographies of the officers and principals of the Managing Member
follow. The principals of the Managing Member do not hold any investments in the
Fund.
John Kelly, born 10/11/46. Mr. Kelly is the President, Chief Executive
Officer and a Director of the Managing Member and of the Selling Agent, which
positions he has held since February 2002. Mr. Kelly is currently listed with
NFA as a principal of the Managing Member and of the Selling Agent (as of
February 2002). In addition, he is registered as an associated person of the
Managing Member since February 2002 and of the Selling Agent since March 2002.
As Chief Executive Officer, 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 Man-Glenwood and the Portfolio Company. 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
21
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 Vice President and a
Director of the Managing Member, which position he has held since February 2002,
and will be responsible for making the allocation decisions of the Fund. In
addition, since February 2002, Mr. Lozowski also is the Managing Director of
Man-AHL (USA) Limited, with whom he is listed as a Principal and is registered
as an associated person as of May 2003. Mr. Lozowski is also a Director of Man
Investments Limited ("MIL"), an affiliated United Kingdom limited liability
company that acts as an investment manager and commodity trading advisor to
non-U.S. persons. With MIL, Mr. Lozowski has particular responsibility for
investment management. Prior to this, Mr. Lozowski was the Corporate Finance
Director of Man Management AG and affiliated companies in Switzerland from 1990
until December 1995. He joined the Man Group in November 1987 as Assistant
Treasurer. Before joining the Man Group, he worked at the Chase Manhattan Bank
from March 1980 until November 1987 and at the National Westminster Bank from
1977 through March 1980. After receiving a Master's degree in Physics at
University College, Oxford, he progressed to a Master of Science degree in
Operational Research at the University of Sussex in England.
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 Secretary
of Glenwood and Secretary of Man-Glenwood and the Portfolio Company. 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.
Alicia Derrah, born 3/17/58. Ms. Derrah is the Chief Financial Officer of
the Managing Member and of Glenwood Capital Investments, L.L.C., the investment
manager of Man-Glenwood. Ms. Derrah joined the Managing Member in October 2005
and joined Glenwood Capital Investments, LLC in September 1992 and is
responsible for their respective accounting and financial reporting functions.
From December 1987 to August 1992, Ms. Derrah was employed by Arthur Andersen
LLP as a senior auditor in the Financial Services division of the firm. Ms.
Derrah's clients included Glenwood Capital Investments, L.L.C., bank holding
companies and capital markets institutions.
Prior to joining Arthur Andersen, Ms. Derrah was employed by The Sanwa Bank,
Ltd., in their Chicago branch office, as an analyst in the corporate finance
area. In that capacity, Ms. Derrah worked primarily with local Fortune 500
companies and was responsible for both corporate credit analysis and continued
business development. Ms. Derrah is a C.P.A. and received a B.A. from Mundelein
College.
Man Investments Holdings, Inc., a Delaware corporation, is also a principal
of the Managing Member, but does not participate in making trading or
operational decisions for the Fund. Man Investments Holdings, Inc. is an
indirect, wholly-owned subsidiary of Man Group plc.
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. The principals of AHL are
Michael Lozowski, Timothy Wong and Christopher Shea. Mr. Lozowski is also a
principal of the Managing Member and his biography is set forth above. Mr.
Lozowski and Mr. Wong are responsible for the trading decisions of AHL. The
biographies of the other principals of AHL follow. AHL or any of its principals
may trade for their own accounts and such records will not be available for
review by pool participants. Neither AHL nor any of its principals hold any
investments in the Fund.
Timothy Wong, born 11/16/1967. Mr. Wong is a Director of AHL and is
responsible for AHL's research and investment management operations and, in
addition to Mr. Lozowski, is responsible for making the trading decisions on
behalf of the AHL Diversified Program. Mr. Wong is listed as a Principal of AHL
and is registered as an associated person of AHL as of March 2003 and June 2003,
respectively. Mr. Wong is also an Associate Director of MIL which he joined in
1991 as a research analyst and later assumed overall
22
responsibility for the day-to-day running of the research and investment
management operations. In addition, Mr. Wong is the head of AHL (which is part
of Man Investments Ltd.) and a member of the Man Global Strategies investment
committee. Mr. Wong 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.
Christopher Shea, born 6/25/1954. Mr. Shea is responsible for a range of
support functions including information systems, information technology and
logistics, across the whole of the Man Investments Division, which includes AHL.
Mr. Shea has previously worked in the Swiss office of Man Investments for
two-year periods in 1993 and 2002, where he was responsible for financial
control and reporting of all global entities. He is a member of the Management
Committee of Man Investments. Prior to joining the Man Group in 1990 as
financial controller for ED & F Man (Cocoa Division), he worked for Gill &
Duffus, where he was made financial director in 1987. From 1981 to 1983 Mr. Shea
worked as a management accountant for BP Oil International, having started his
career in the audit department of Thomson McLintock & Co., London. Mr. Shea
received his Master's (M.A. Cantab.) in natural sciences from Christ's College,
Cambridge, and subsequently became an associate member of the Institute of
Chartered Accountants in England and Wales (ICAEW).
Performance information for AHL is set forth on pages 25, 26 and 28 of this
Prospectus.
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, through the Portfolio Company, to
various 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.
Neither Glenwood nor any of its principals hold any investment in the Fund.
Glenwood and its principals may trade for their own accounts and such records
will not be available for review by investors in the Fund.
The personnel of Glenwood have primary responsibility for the investment
management of Man-Glenwood, including the selection of Sub-Fund Managers and the
allocation of Man-Glenwood's assets among the Sub-Fund Managers.
Descriptions of the business experience of Glenwood and its principals are
set forth in the Appendix to this Prospectus. Performance and strategy
allocation information for Man-Glenwood Lexington, LLC and Man-Glenwood
Lexington TEI, LLC is set forth on pages 74 through 76 in Part II of this
Prospectus.
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
23
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.
RATES OF RETURN are calculated by dividing net performance of the pool by
the beginning equity of the pool. Net performance equals the sum of gross
realized gains (losses) minus brokerage commissions plus interest income plus
change in unrealized gains (losses) minus management fees and incentive fees.
COMPOUND PERIOD percentage rate of return represents monthly "Rate of
Return" compounded over the number of months in a given period, i.e., each
month's rate of return in hundredths is added to one (1) and the result is
multiplied by the previous month's compounded rate of return similarly
expressed. One (1) is then subtracted from the product and the result is
multiplied by one hundred (100).
PURSUANT TO APPLICABLE RULES OF THE CFTC, THE MAN INVESTMENTS (USA) CORP
PERFORMANCE RECORD IS PRESENTED FOR THE PAST FIVE FULL YEARS AND YEAR TO DATE
RATHER THAN SINCE INCEPTION.
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.
24
AHL DIVERSIFIED PROGRAM
MAN-AHL (USA) LIMITED
JANUARY 2005 - JULY 2005
PERFORMANCE SUMMARY
The following summary performance information reflects the composite performance
results for the required period from January 2005 through July 2005 of the AHL
Diversified Program to be traded on behalf of the Fund as implemented by Man-AHL
(USA) Limited. 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, that 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: 1/1/05
NUMBER OF OPEN ACCOUNTS: 3
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) OVERALL: U.S. $190,962,139
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) OVERALL: U.S. $214,278,981
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) IN PROGRAM: U.S. $129,794,270
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) IN PROGRAM: U.S. $153,111,112
LARGEST MONTHLY DRAWDOWN: (2.52)% (April 2005)
WORST PEAK-TO-VALLEY DRAWDOWN: (2.52)% (4/1/05 - 4/30/05)
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 2005
----- ---------
January (1.22)%
February 3.03%
March 0.08%
April (2.52)%
May 3.73%
June 3.36%
July 0.64%
August
September
October
November
December
Compound Annual Rate of
Return 7.14%
(7 MONTHS)
See Notes Pages 23-24
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
25
ADDITIONAL
MAN-AHL (USA) LIMITED
TRADING PROGRAMS
January 1, 2000 - May 31, 2005
------------------------------
Name of CTA: Man-AHL (USA) Limited
April 2005 - June 2005
Name of Program: Man-AHL Alpha
Inception of Client Account Trading by CTA: April 2005
Inception of Client Account Trading in Program: October 1995
Number of Open Accounts: 3
Actual Assets Overall: $190,962,139
Actual Assets in Program: $ 61,167,869
Worst Monthly Drawdown in an Account: (1.52)%
(Apr. 2005)
Worst Peak-to-Valley Drawdown in an Account: (1.52)%
(Apr. 1, 2005 - Apr. 31, 2005)
2005 YTD Compound Rate of Return: 1.62% (2 months)
2004 Compound Rate of Return: N/A
2003 Compound Rate of Return: N/A
2002 Compound Rate of Return: N/A
2001 Compound Rate of Return: N/A
2000 Compound Rate of Return: N/A
See Notes Pages 23-24
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
26
ADDITIONAL MAN INVESTMENTS (USA)
CORP. FUNDS
CTA: Man-AHL (USA) Corp.
Inception - April 1, 2005
CTA: Man-AHL (USA) Limited.
April 1, 2005 - June 30, 2005
------------------------------------
Name of Fund: Man-AHL Diversified I, LP
Type of Offering Private
Inception of Trading April 1998
Aggregate Subscriptions: $10,327,592
Current Capitalization: $6,043,522
Worst Monthly Drawdown in an Account: (9.57)%
(Oct 2002)
Worst Peak-to-Valley Drawdown in an
Account: (18.64)%
(10/01 - 05/02)
2005 YTD Compound Period Rate of Return: (0.90)% (6 months)
2004 Compound Period Rate of Return: 0.89%
2003 Compound Period Rate of Return: 21.13%
2002 Compound Period Rate of Return: 9.57%
2001 Compound Period Rate of Return: 12.78%
2000 Compound Period Rate of Return: 16.15%
See Notes Pages 23-24
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
27
AHL DIVERSIFIED PROGRAM
JANUARY 2000 - JUNE 2005
PERFORMANCE SUMMARY
The following summary performance information reflects the composite results of
all accounts traded pursuant to the AHL Diversified Program from January 2000
through June 2005, as implemented by the wholly owned commodity trading advisor
subsidiaries of Man Group plc that implement the AHL Diversified Program on
behalf of their clients. At June 2005, 103 of the open accounts were profitable
and 0 were unprofitable.
NAME OF PROGRAM: AHL Diversified Program
INCEPTION OF TRADING: January 1983
NUMBER OF OPEN ACCOUNTS: 103
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) OVERALL: U.S. $8,738,901,917
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) OVERALL: U.S. $8,738,901,917
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) IN PROGRAM: U.S. $8,738,901,917
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) IN PROGRAM: U.S. $8,738,901,917
LARGEST MONTHLY DRAWDOWN: (8.9)% (October 2002)
WORST PEAK-TO-VALLEY DRAWDOWN: [ ]
NUMBER OF PROFITABLE ACCOUNTS OPENED AND CLOSED DURING THE PERIOD: 3
RANGE OF RETURNS EXPERIENCED BY PROFITABLE ACCOUNTS OPENED AND CLOSED DURING
THE PERIOD: 46.13% to 0.28%
NUMBER OF UNPROFITABLE ACCOUNTS THAT HAVE OPENED AND CLOSED DURING THE PERIOD: 0
RANGE OF RETURNS EXPERIENCED BY UNPROFITABLE ACCOUNTS OPENED AND CLOSED DURING
THE PERIOD: N/A
MONTH 2000 2001 2002 2003 2004 2005
----- ---- ---- ---- ---- ---- ----
January (0.8)% 1.2% (3.8)% 7.3% 1.8% (6.3)%
February 0.8% 2.5% (5.3)% 8.0% 4.2% 3.7%
March (2.9)% 11.1% (1.0)% (8.4)% (1.8)% (1.1)%
April (2.5)% (8.7)% (2.3)% 0.5% (8.4)% (2.3)%
May 2.4% (2.5)% 1.3% 12.2% (2.6)% 4.6%
June (3.3)% (0.8)% 12.5% (4.4)% (5.8)% 5.4%
July (2.9)% 2.4% 6.3% (1.8)% (0.8)%
August 4.0% 5.5% 1.7% (1.1)% 2.2%
September (2.5)% 10.1% 8.8% 2.7% 3.4%
October 3.8% 4.2% (8.9)% 1.1% 5.5%
November 9.1% (8.3)% (4.7)% (2.2)% 8.0%
December 11.1% (1.1)% 10.7% 7.5% 0.2%
Compound Annual Rate of Return 16.4% 14.4% 13.4% 21.1% 4.8% 3.5%
See Notes Pages 23-24
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Combining the performance of accounts, even those traded pursuant to the same
trading program, has certain inherent and material limitations. For example, the
performance of particular accounts may be significantly impacted by the timing
of when they begin trading as well as the timing of cash flows, factors which
are mitigated by a composite presentation of a number of accounts. In addition,
certain accounts exclude futures and other derivative contracts that are
included in other accounts.
----------
28
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 accounting principles generally accepted
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 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. Units will be
valued for repurchase purposes as of the calendar quarter-end when repurchased.
Quarter-end valuations will include estimated values for Man-Glenwood computed
by the administrator for Man-Glenwood. All such estimates will be conclusive for
determining the Fund's quarter-end repurchase 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. If an investor redeems prior to a downward
adjustment of Net Asset Value, the Fund will bear the cost of the adjustment
with respect to such Investor. An Investor which has redeemed prior to an upward
adjustment of Net Asset Value will not benefit from such adjustment.
29
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 7.
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.
The Selling Agent............. Client Servicing Fee 1.25% per annum of the Net Asset Value of each
Class A Series 1 and Class B Series 1 Unit,
calculated monthly and paid quarterly in
arrears. 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), the
Client Servicing Fee will end and the Class A
Series 1 and Class B Series 1 Units will be
redesignated in terms of and become
indistinguishable from the Class A Series 2 and
Class B Series 2 Units, respectively.
Man Financial Inc............. Brokerage Commissions $6 to $8 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 notional value of the Fund's
AHL account, calculated and paid monthly.
Monthly Incentive Fee 20% of any new net profits calculated and paid
monthly on a "high water mark" basis.
Man-Glenwood.................. Management, investor servicing In total, 3% per annum of the Fund's aggregate
and administrative fees and investment in Man-Glenwood, calculated monthly
expenses and paid quarterly.
Others........................ Administrator fees, custody As incurred; not expected to exceed 0.50 of 1%
and escrow fees, legal, of average month-end Net Assets annually,
accounting, printing, postage assuming average assets of $100,000,000.
and other administrative costs Administrative expenses in excess of 0.50 of 1%
of the Fund's average month-end Net Asset Value
during the first two Fiscal Years of the Fund
will be paid by, or reimbursed to the Fund by,
the Managing Member or an affiliate. Thereafter,
expenses in excess of 0.50 of 1% of the Fund's
average month-end Net Asset Value will be paid
by the Fund, but may be paid by the Managing
Member in its discretion.
Others........................ Extraordinary charges Actual payments to third parties; expected to be
negligible.
30
NO SALES LOAD
No Units will be subject to any initial selling commission or sales load.
CLIENT SERVICING FEE, SELLING COMPENSATION
The Selling Agent will receive an annual Client Servicing Fee, in respect
of Class A Series 1 and Class B Series 1 Units, equal to 1/12 of 1.25% of the
Net Asset Value of such Units at each month-end (a 1.25% annual rate),
calculated monthly and paid quarterly.
The Selling Agent is subject to the regulatory limitation that it receive
aggregate selling commissions not in excess of 10% of the sale price of each
Unit. Once the Selling Agent has received aggregate selling commissions totaling
10% of the sale price of a Class A Series 1 or Class B Series 1 Unit (or, if
earlier, such Unit has been charged Client Servicing Fees totaling 10% of the
sale price of such Unit), the Client Servicing Fee will end and the Class A
Series 1 and Class B Series 1 Units will be redesignated in terms of and become
indistinguishable from the Class A Series 2 and Class B Series 2 Units,
respectively, to which the Client Servicing Fee does not apply, and no further
Client Servicing Fee will be charged in respect of such Unit.
Class A Series 2 and Class B Series 2 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 the initial offering of the Units
pursuant to this prospectus. Once the Fund commences its trading, the Fund will
bear the costs related to ongoing offerings.
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 may share 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
month-end notional value of the Fund's AHL account (a 2% annual rate),
calculated and paid as of the end of each calendar month. The notional value of
the Fund's AHL account will be approximately equal to the Fund's aggregate Net
Asset Value.
For purposes of calculating the AHL Diversified Program management fee, the
account size is not reduced by accrued management or incentive fees or fees
payable by the Fund to the Managing Member.
The AHL Diversified Program charges a monthly incentive fee equal to 20% of
any "new net profits" attributable to the Fund's AHL account (the capital
attributable to both Classes will be traded in the same AHL account). "New net
profit" is the increase in the month end Net Asset Value of the account (after
deduction of monthly management fees, expenses and brokerage commissions but
before additions and withdrawals for the month) over the account's highest Net
Asset Value as of the end of any preceding month, or the commencement of
trading. 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.
31
Incentive fees paid do not reduce new 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 equal to $20,000
would be due and the Net Asset Value 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 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 services fees
and 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 Sub-Fund Managers generally will charge the Portfolio Company an asset
based fee, and some or all of the Sub-Fund Managers will receive performance or
incentive allocations. The asset based fees of the Sub-Fund Managers are
generally expected to range from 1% to 2% annually of the net assets under their
management and the performance or incentive allocations to the Sub-Fund Managers
are generally expected to range from 15% to
32
25% of net profits annually, although on occasion this could be higher. The
receipt of a performance or incentive allocation by a Sub-Fund Manager may
create an incentive for a Sub-Fund Manager to make investments that are riskier
or more speculative than those that might have been made in the absence of such
an incentive. Also, incentive fees may be paid to Sub-Fund Managers who show net
profits, even though the Portfolio Company and Man-Glenwood, as a whole, may
incur a net loss. In addition, because a performance or incentive allocation
will generally be calculated on a basis that includes unrealized appreciation of
a Sub-Fund's assets, these allocations may be greater than if they were based
solely on realized gains. Generally, the Sub-Fund Managers' compensation is
determined separately for each year or shorter period; whenever possible,
agreements are obtained to carry forward losses to subsequent periods in
determining the fee for such periods.
TRANSACTION COSTS
The AHL Diversified Program clears its futures and forward trades
exclusively through the Clearing Broker (including its affiliates), a member of
the Man Group. The futures commission rates charged to the AHL Diversified
Program, approximately $6 to $8 per round-turn trade (inclusive of exchange and
regulatory fees), have not been negotiated at arm's-length, but are the rates
generally available to the Clearing Broker's unaffiliated institutional
customers, although other clients of the Clearing Broker may pay lower rates.
Due to the conflict of interest 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.
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 $100,000,000. Administrative expenses in excess of 0.50 of 1%
of the Fund's average month-end Net Asset Value during the first two Fiscal
Years of the Fund will be paid by, or reimbursed to the Fund by, the Managing
Member or an affiliate. Thereafter, expenses in excess of 0.50 of 1% of the
Fund's average month-end Net Asset Value will be paid by the Fund, but may be
paid by the Managing Member in its discretion.
33
CLEARING BROKER
Man Financial Inc., the Clearing Broker for the Fund, 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. Therefore, prospective investors should not rely on the Clearing
Broker in deciding whether or not to participate in the Fund.
Pursuant to the commodity brokerage agreement between the Clearing Broker
and the Fund, the Fund has agreed to indemnify and hold harmless the Clearing
Broker and its affiliates from and against any liability, damage, cost or
expense any of them may incur or be subjected to with respect to the Fund or any
transaction or position therein, or as a result of the Fund's violation of any
representations, agreements or obligations under the commodity brokerage
agreement. The Clearing Broker will only be liable to the Fund for actions or
inactions which amount to gross negligence or fraud.
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 total 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 total
then outstanding Units, each redemption request will be pro rated so that no
more than 15% of the Fund's total 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.
In the event that the Fund receives redemption requests in excess of the
15% limitation for eight consecutive quarters, the Fund will cease its trading
and investment
34
activities and will terminate as promptly as possible.
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 have its investment in Man-Glenwood repurchased is
dependent on the liquidity of the Sub-Funds and Man-Glenwood's board of
managers. 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 board 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 generally withholds 5% of the proceeds of a total repurchase
from Man-Glenwood until the completion of Man-Glenwood's annual audit. The
amount withheld from a total repurchase by the Fund from Man-Glenwood will be
approximately 1.5% of a Member's total investment. Rather than withhold
redemption proceeds from Members redeeming Units, however, the Managing Member
intends to pay the full redemption amount due to redeeming Members and the
amount subsequently paid to the Fund by Man-Glenwood from the amount withheld
will be a general asset of the Fund.
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
35
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.
For example, although the Managing Member and its affiliates attempt to
deal with all of the funds and accounts with which they are associated on a pari
passu basis, certain funds and accounts may pay higher fees and commissions to
the Managing Member and its affiliates than others. Accordingly, were the
Managing Member or one of its affiliates to be in the position, for example, of
allocating a particular trading opportunity among such funds and accounts, the
Managing Member or such affiliate would have incentives to allocate such trading
opportunity to the fund or account from which the Managing Member on such
affiliate received the highest fees and/or commissions. While the Managing
Member and its affiliates believe that they deal equitably with all of the funds
and accounts which they manage, prospective investors should be aware that
financial incentives not to do so are present.
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 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.
THE CLEARING BROKER
The Fund pays substantial brokerage commissions and administrative fees to
the Clearing Broker, as well as clearing fees on forward currency trades to Man
Financial Limited, an affiliate of the Clearing Broker.
Although certain of the Clearing Broker's clients may pay lower brokerage
rates than the Fund, the brokerage commission rates charged by the Clearing
Broker to the Fund are those generally available to the Clearing Broker's
unaffiliated institutional customers. The Fund's expected annual brokerage
commissions as a percentage of average Net Asset Value are approximately 1%.
36
Due to the affiliation of the Managing Member and the Clearing Broker, the
Clearing Broker 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.
The Clearing Broker 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.
The Clearing Broker must allocate its resources among many different
clients. Because the Clearing Broker's clients are charged different rates and
fees, the Clearing Broker may have 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 the Clearing Broker prefers other
clients over the Fund, the Fund may incur losses.
The Clearing Broker does not have to compete to provide services to the
Fund; consequently, there is no independent check on the quality of its
services.
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.
MAN-GLENWOOD'S BROKERS AND DEALERS
The brokers and dealers used by the 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 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 Sub-Funds'
investment managers.
Man-Glenwood may trade options for hedging purposes and will also select
brokers. In general, Man-Glenwood does not select brokers affiliated with the
Man Group for such purpose.
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.
As the Selling Agent is an affiliate of the Managing Member, the selling
commissions paid to the Selling Agent were not negotiated at arm's length. These
commissions, although not paid directly by investors, indirectly increase the
overall costs to which the Fund is subject, to the detriment of existing
investors.
In addition, in the Additional Selling Agent's ongoing dealings with its
clients regarding their investment in the Fund, the Additional Selling Agent
will have a conflict of interest in that if a client redeems, the Additional
Selling Agent will no longer receive ongoing trailing commissions in respect of
the capital invested by such client.
Because the Selling Agent's affiliates will receive advisory fees and
brokerage commissions in respect of the Fund's trading activities, the Selling
Agent may have
37
incentives to solicit investments for Units that a Selling Agent without any
affiliation to the management or trading of the Fund would not have.
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 Sub-Funds are eligible to receive incentive
compensation from the Sub-Funds, such managers may have an incentive to trade
these Sub-Funds in a more speculative manner than they otherwise would.
SUMMARY OF THE LIMITED LIABILITY COMPANY AGREEMENT
The Fund's Limited Liability Company Agreement ("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 (and eventually final 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 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
38
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.
Once the amount of subscriptions accepted has exceeded $500,000 for Class A
Units or $2,500,000 for Class B Units, the Units of such Class will be issued
and will thereafter be issued at the beginning of each month based on their Net
Asset Value per Unit of such Class as of the end of the previous calendar month;
provided, however, that the Class B Units will not be issued until such time as
there are 100 investors in the Class B Units.
Man-Glenwood will provide the Fund with a net asset value for the Fund's
investment in Man-Glenwood as of the last business day of each calendar month.
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 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.
The opinion of Sidley Austin Brown & Wood LLP 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.
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.
39
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 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 LLC Agreement, unless the
items so allocated do not have "substantial economic effect" and are not in
accordance with the Members' Units. Under the LLC 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 contracts traded
on United States exchanges as well as certain forward contracts ("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.
40
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 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 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
41
effectively connected to a U.S. trade or business engaged in by one or more
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 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.
42
"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
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.
43
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 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 is offered as part of a "best efforts" minimum/maximum
offering without any firm commitment from the Selling Agent to acquire or sell
any specified dollar amount of Units of any Class.
The Class A Units, on the one hand, and the Class B Units, on the other
hand, are substantially identical. The Class A Units access the Man-Glenwood
Portfolio Company by investing in Man-Glenwood Lexington, LLC while the Class B
Units - offered only to tax-exempt investors -- do so by investing in
Man-Glenwood Lexington TEI, LLC, thereby avoiding being subject to "unrelated
business taxable income" (which is taxable to otherwise tax-exempt investors) on
their investment in the Fund. The eligibility to invest in Class A Series 1 or
Class A Series 2 Units, on the one hand, or Class B Series 1 or Class B Series 2
Units, on the other, is based entirely on whether the investor is investing in
the Fund as part of such investor's participation in a selling agent or
registered investment advisor fixed fee or asset-based fee investment or
advisory program under which an investor pays a fee based on the investor's
assets in the program to its broker or advisor but not sales commissions.
Each Series of Units of each Class will be issued at $100 per Unit once the
minimum amount of subscriptions for Units of such Class to be issued has been
received by the Fund and, in the case of Class B Units, the minimum number of
investors in the Class B Units have invested. Thereafter, Units will be issued
at the Net Asset Value per Unit of the relevant Series as of each month-end.
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.
44
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 beginning of the
month for 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.
SELLING AGENTS
No upfront sales load will be paid on any Units. The Selling Agent will
receive a Client Servicing Fee in an amount equal to 1.25% per annum of the
annual average month-end Net Asset Value of each Class A Series 1 and Class B
Series 1 Unit, payable quarterly in arrears for as long as such Unit remains
outstanding. However, in compliance with the limitations of NASD Rule
2810(b)(4)(B)(i), Client Servicing Fees paid in respect of any Unit will not
exceed 10% of the issuance price of such 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 A
Series 1 or Class B Series 1 Unit (or, if earlier, such Unit has been charged
Client Servicing Fees totaling 10% of the sale price of such Unit), the Client
Servicing Fee will end and the Class A Series 1 and Class B Series 1 Units will
be redesignated in terms of and become indistinguishable from the Class A Series
2 and Class B Series 2 Units, respectively, and no further Client Servicing Fee
will be charged in respect of such Unit.
Class A Series 2 and Class B Series 2 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 A Series 2 or
Class B Series 2 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
45
NASD Rule 2810(b)(4)(B)(i) pertaining to maximum allowable selling commissions.
The Selling Agent may pay, from its own resources, brokers and dealers and
investor service providers, including for custodian services, for ongoing
investor servicing. Such payments may be made for the provision of sales
training, product education and access to sales staff, the support and conduct
of due diligence, balance maintenance, the provision of information, inclusion
on preferred provider lists and support services to clients, and the provision
of other services. Provided, however, that any such amounts paid to Additional
Selling Agents, when aggregated with the Client Servicing Fee paid in connection
with the sale of the Units, shall not exceed 10% of the gross proceeds of this
offering of the Units.
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 may receive a portion of the Client Servicing Fee
that would otherwise be paid to the Additional Selling Agents.
Pursuant to the General Distributor's Agreement between the Fund, the
Managing Member and the Selling Agent, the Managing Member has agreed to
indemnify, defend and hold the Selling Agent and its affiliates harmless from
and against any and all claims, demands, liabilities and expenses that the
Selling Agent and its affiliates may incur in the capacity of Selling Agent for
the Fund. The Selling Agent will only be liable to the Fund for losses resulting
from the willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties, from reckless disregard of its obligations and duties
under the General Distributor's Agreement, or from its failure to comply with
laws, rules and regulations applicable to it in connection with its distribution
of the Units.
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 (866) 436-2512.
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 Statement 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 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.
46
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 unauthorized access,
disclosure or use. In addition, affiliates and nonaffiliated third parties that
have access to personal information must
47
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 (866) 436-2512.
48
INDEX TO FINANCIAL STATEMENTS
PAGE
----
MAN-AHL 130, LLC
Audited Financial Statement:
Report of Independent Registered Public Accounting Firm............... 50
Statements of Financial Condition .................................... 51
Statements of Operations.............................................. 52
Statements of Changes in Net Assets................................... 53
Notes to Statements of Financial Condition............................ 54
MAN INVESTMENTS (USA) CORP.
Audited Financial Statement:
Report of Independent Auditors........................................ 56
Statement of Financial Condition September 30, 2005................... 57
Notes to Statement of Financial Condition............................. 58
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.
----------
49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Managing Member of
Man-AHL 130, LLC:
We have audited the accompanying statement of financial condition 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
50
MAN-AHL 130, LLC
STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, 2005 MAY 20, 2005
(UNAUDITED) (AUDITED)
ASSETS
Cash $ 10,000 $ 10,000
------------------ --------------
Total Assets $ 10,000 $ 10,000
================== ==============
LIABILITIES $ 0 $ 0
------------------ --------------
NET ASSETS $ 10,000 $ 10,000
================== ==============
NET ASSETS - Applicable to 1,000 Class A units of beneficial interest
outstanding $ 10,000 $ 10,000
================== ==============
NET ASSET VALUE PER UNIT (net assets divided by 1,000 Class A units of
LLC interest) $ 100 $ 100
================== ==============
See Notes to Statements of Financial Condition.
51
MAN-AHL 130, LLC
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE PERIOD FOR THE PERIOD
MAY 21, 2005 APRIL 14, 2005
THROUGH (INCEPTION)
SEPTEMBER 30, THROUGH
2005 MAY 20, 2005
INVESTMENT INCOME $ 0 $ 0
EXPENSES 0 0
-------------- --------------
NET INVESTMENT INCOME 0 0
REALIZED AND UNREALIZED GAIN ON INVESTMENTS 0 0
-------------- --------------
NET INCOME $ 0 $ 0
============== ==============
See Notes to Statements of Financial Condition.
52
MAN-AHL 130, LLC
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
FOR THE PERIOD FOR THE PERIOD
MAY 21, 2005 APRIL 14, 2005
THROUGH (INCEPTION)
SEPTEMBER 30, THROUGH
2005 MAY 20, 2005
CAPITAL TRANSACTIONS:
Proceeds from shares sold $ 0 $ 10,000
NET INCOME 0 0
NET ASSETS-Beginning of period 10,000 0
-------------- -------------
NET ASSETS-End of period $ 10,000 $ 10,000
============== ==============
See Notes to Statements of Financial Condition.
53
MAN-AHL 130, LLC
NOTES TO STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, 2005 and 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, "Man-Glenwood"). The Company will account for its
investment in Man-Glenwood on an equity basis, including only the Net Asset
Value of such investment in the Company's financial statements.
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
Man-Glenwood. 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.
Man-Glenwood achieve their investment objective 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 Man-Glenwood.
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 notional value of the Fund's allocation to the AHL Diversified
Program (the "AHL Account"), which approximates the Fund's net asset value,
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
net asset value of 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 Man-Glenwood fund,
calculated monthly and paid quarterly.
54
MII receives an investor servicing fee of 0.50% of net assets per annum for the
provision of investor services to Man-Glenwood, calculated monthly and paid
quarterly.
MII will receive a 1.25% per annum client servicing fee, calculated monthly and
paid quarterly in arrears, on the month-end net asset value of certain units,
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 will not begin to accrue these fees until trading operations
commence.
The Company currently intends to accept initial subscriptions for units during
an initial offering period which is expected to end at [___]. 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. No more
than 15% of the Company's total outstanding Units may be redeemed as of any
given calendar quarter-end. If quarter-end redemptions are requested for more
than 15% of the Company's total then outstanding Units, each redemption request
will be pro rated so that no more than 15% of the Company's total then
outstanding Units are redeemed. In the event that the Company receives
redemption requests in excess of such 15% limitation for eight consecutive
quarters, the Company will cease its trading and investment activities and will
terminate as promptly as possible.
2. SIGNIFICANT ACCOUNTING POLICIES
The Company's statement of financial condition 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 Company will value its Man-Glenwood investment at its net asset value, which
approximates fair value, as provided by each Man-Glenwood fund.
The Company 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 Company on the day with respect to which the Company'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 Company's Net
Assets are being determined.
MI USA, or an affiliate, will assume organizational and offering costs,
estimated to be $38,000 and $423,000, 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 two 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 series 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
series will not be subject to the investor servicing fee.
55
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
56
MAN INVESTMENTS (USA) CORP.
STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
AS OF SEPTEMBER 30, 2005
ASSETS
Cash and cash equivalents
Cash $ 1,000
Deposit with an affiliate 2,394,277
Management fees receivable 126,271
Investments 5,192,920
----------
Total assets $7,714,468
==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Payable to affiliates $ 53,701
Accrued expenses and other liabilities 1,056,101
Income taxes payable 148,709
----------
Total liabilities 1,258,511
Shareholder's equity
Common shares, $0.01 par value (600 shares issued
and outstanding, 1,000 shares authorized) 6
Additional paid-in capital 6,250,994
Retained earnings 204,957
----------
6,455,957
Total liabilities and shareholder's equity $7,714,468
==========
INVESTORS WILL NOT ACQUIRE ANY INTEREST IN THIS ENTITY.
The accompanying notes are an integral part of this
statement of financial condition.
57
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 $2,394,277. The interest rate earned on
deposits changes daily and was in the range between 2.88% to 4.08% from
April 1, 2005 through September 30, 2005.
INVESTMENTS
The Company serves as 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"). The Company maintains capital investments in Diversified I,
Diversified II and AHL Alpha (the "Limited Partnerships"). Under the
terms of each entity's limited partnership agreement, 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. The Company values its investments in
the Limited Partnerships at the Company's pro rata interest in the net
assets of these entities. As of September 30, 2005, the Company had
investments in Diversified I, Diversified II and AHL Alpha of
$2,403,720, $2,164,790 and $614,410, respectively.
The Company has a $10,000 interest in Man-AHL 130, LLC (the "Fund") and
acts as the Fund's managing member. The initial investment was recorded
at cost, and, as the Fund has not commenced trading, no change in
carrying value of this investment has been recorded. On an ongoing
basis, the Company will value its investment at the Company's pro rata
interest in the net assets of the Fund.
The net asset values of the Fund and Limited Partnerships is obtained
from the administrators of the Fund and Limited Partnerships,
respectively.
58
MAN INVESTMENTS (USA) CORP.
NOTES TO STATEMENT OF FINANCIAL CONDITION
- --------------------------------------------------------------------------------
The Limited Partnerships record transactions on a trade date basis.
Interest income is recorded on an accrual basis. In the normal course
of business, the Limited Partnerships enter into derivative contracts
("derivatives") for trading purposes. Derivatives include futures
contracts and forward contracts. The Limited Partnerships record its
derivative activities on a mark-to-market basis. Fair values are
determined by using quoted market values for futures contracts and by
using quoted values for forward contracts. Assets and liabilities
denominated in foreign currencies are translated at exchange rates on
the date of valuation.
In connection with the anticipated offering of units of Man-AHL 130,
LLC, all of the offering and organizational costs incurred and accrued
through September 30, 2005 were assumed by the Company or an affiliate.
In addition, an affiliate of the Company will bear the administrative
expenses of the Fund in excess of 0.50% of the Fund's month-end net
asset value during the first two fiscal years of Man-AHL 130, LLC.
Thereafter, expenses in excess of 0.50% of the Fund's month-end net
asset value will be paid by the Fund, but may be paid by the Company or
an affiliate at the Company's discretion.
MANAGEMENT FEES
The Company earns management fees from certain of the Limited
Partnerships where it acts in a capacity as manager. 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
Accrued expenses and other liabilities consist primarily of legal
expenses.
Payable to affiliates represents reimbursement due for the Company's
share of expenses incurred during the year.
TAX PROVISION
Income taxes are provided under the provisions of Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
The Company is included in the consolidated federal and state income
tax returns filed by Man Group USA Inc. Pursuant to an agreement
between the Company and Man Group USA Inc., the Company records
provisions for taxes associated with its operations as if it were a
taxable entity.
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.
59
MAN INVESTMENTS (USA) CORP.
NOTES TO STATEMENT OF FINANCIAL CONDITION
- --------------------------------------------------------------------------------
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.
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.
60
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 futures 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.
It is because substantially all of its capital would otherwise be held in
reserve that the Fund is able to allocate 30% of such capital to Man-Glenwood
without in any respect reducing the Fund's commitment to the AHL Diversified
Program.
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 (i.e., not
necessarily moving in the same direction at the same time) 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 (by being profitable when traditional investments are
generally declining, as well as vice versa), and to contribute 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.
61
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.
Futures and forward trading is a "zero-sum," risk transfer economic
activity. For every gain there is an equal and offsetting loss.
The Fund will trade extensively in both the futures and forward markets.
The latter are substantially unregulated as there is no clearinghouse or other
entity which guarantees the Fund's counterparties' performance under their open
positions
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.
62
Futures Funds' Assets
The balance sheet of a futures fund at any point in time typically consists
entirely of cash and cash equivalent instruments (and, in the case of the Fund,
its 30% investment in Man-Glenwood). 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 -- invest a portion of such capital in
other investments -- in the case of the Fund, Man-Glenwood -- in an effort to
achieve higher returns or reduce the overall volatility of the investment.
Although the Fund's assets consist entirely of cash and cash-equivalent
instruments as well as its investment in Man-Glenwood, the Fund's primary profit
potential as well as risk of loss derives from its participating in the AHL
Diversified Program. The Fund's market exposure through this Program will
typically equal between 300% and 800% of the Fund's Net Asset Value. The results
of such market exposure are reflected in increases or decreases in the Fund's
Net Asset Value as the fluctuation in the value of the Fund's futures positions
are settled by the payment or receipt of funds (generally on a daily basis).
While the Fund's assets at any given time will be almost exclusively its
Man-Glenwood investment, U.S. Treasury securities and cash, its primary business
is trading pursuant to the AHL trend-following futures and forward trading
program.
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.
63
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 incorporates a number of risk control systems
- -- for example, signaling a reduction in position size as market volatility
increases or an adjustment of positions in correlated markets to maintain the
desired level of diversification within the portfolio as a whole. Prospective
investors must recognize, however, that no risk control policy or technique can
provide any absolute assurance against losses being incurred in excess of what
is considered to be an acceptable level. In addition, risk control -- like
outright hedging -- involves substantial opportunity costs. AHL may elect not to
apply certain risk control policies if AHL believes that doing so would impair
profit potential (although thereby incurring greater risk of loss).
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 both for yield and diversification 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.
EQUITY HEDGE. Equity hedge is characterized by investment managers
investing in domestic and international equity markets while hedging overall
equity market risk by, for example, taking short positions in the applicable
stock index. By attempting to neutralize the effects of general equity market
increases or declines on a fund's portfolio, these traders focus either on
individual stocks or on the relative value of stocks of different but related
issuers. Returns can be driven by fundamental or quantitative security
selection, both within sectors or across sectors. However, the portfolio is
constructed so as to substantially eliminate exposure to general equity market
price movements as opposed to the price movements of individual stocks. For
example, if the Dow Jones Industrial Average declines 10% while Ford Motor
Company stocks declined only 9%, an equity hedge manager would hope to be able
to recognize the 1% profit on the outperformance of Ford, while avoiding the 10%
losses incurred by the market as a whole.
MULTI-STRATEGY. Investment managers in this style take a multi-disciplinary
approach to trading in various markets, including equities, bonds, derivatives
and commodities. Strategies may include, but are not limited to, relative value,
event-driven, equity hedge and commodity and trading strategies.
64
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 (i) distressed
securities, and (ii) 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. In each case, the outcome of the financial
restructuring, merger, etc. is expected materially to affect the value of the
positions acquired. These strategies are typically subject to major losses if
the anticipated "event" is not consummated.
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 attempting to exploit
the value of the option component embedded in certain securities, particularly
convertible bonds. Typical strategies include convertible bond arbitrage, credit
arbitrage and derivatives arbitrage. By "arbitrage" what is meant is that these
strategies seek to profit from relative mispricings between, for example, a
convertible bond and the common stock into which it is convertible, the
subordinated and senior debt of the same or related issuer or the equity options
and underlying equity of the same or related issuers.
VARIABLE EQUITY. These investment managers invest in domestic and
international equity markets. These managers will generally take positions both
based on issuer-specific factors, and so as to reflect the manager's opinions as
to the likely movements of the market as a whole. 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 trading seeks to generate profits by
trading in markets other than equities and/or bonds. Commodity trading
strategies can be purely model-driven (based on systems which analyze historical
price patterns and information), fundamentally-driven (based on the manager's
analysis of underlying economic factors) or a combination of the two. Many
futures trading strategies attempt to identify price trends and movements rather
than to profit from identifying relative mispricings.
SUPPLEMENTAL PERFORMANCE INFORMATION
The Fund will trade in the futures, forward currency and over-the-counter
derivatives markets pursuant to the AHL Diversified Program. AHL's trading
process is the product of sophisticated research and applies a technical
approach that was developed in and has been operated, with modifications, in a
company form since 1987. The AHL Diversified Program to be traded on behalf of
the Fund has been operating since December 1990.
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.
The Fund 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
65
from the private fund's management under Glenwood Capital Investments, LLC from
1993 to 2002, (ii) Man-Glenwood Lexington 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 Lexington, 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
Lexington, 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.
66
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 - JUNE 30, 2005
(LINE GRAPH)
Composite
- AHL
Programme Citigroup High
Diversified S&P 500 Grade Corp
(for US only) TR Index Bond TR
------------- -------- --------------
30-Nov-90 1000.00 1000.00 1000.00
30-Dec-90 1002.80 1027.86 1016.74
30-Jan-91 994.88 1072.62 1032.03
27-Feb-91 976.47 1149.33 1044.55
30-Mar-91 976.47 1177.16 1055.83
29-Apr-91 954.99 1179.95 1070.41
30-May-91 947.25 1230.85 1074.55
29-Jun-91 960.99 1174.46 1072.64
30-Jul-91 912.65 1229.20 1090.55
30-Aug-91 928.35 1258.32 1120.52
29-Sep-91 969.57 1237.26 1150.89
30-Oct-91 975.10 1253.90 1155.85
29-Nov-91 976.56 1203.38 1168.07
30-Dec-91 1078.02 1341.00 1218.99
30-Jan-92 995.88 1316.01 1197.88
27-Feb-92 968.99 1333.05 1209.34
30-Mar-92 957.65 1307.13 1200.57
29-Apr-92 936.20 1345.51 1202.45
30-May-92 916.26 1352.10 1232.95
29-Jun-92 917.54 1331.99 1252.24
30-Jul-92 996.82 1386.40 1290.78
30-Aug-92 1029.51 1358.03 1302.34
29-Sep-92 978.04 1373.99 1315.22
30-Oct-92 964.93 1378.73 1294.65
29-Nov-92 976.99 1425.68 1303.62
30-Dec-92 980.51 1443.18 1333.30
30-Jan-93 1000.32 1455.24 1366.67
27-Feb-93 1068.64 1475.07 1401.63
30-Mar-93 1023.33 1506.20 1405.17
29-Apr-93 1017.49 1469.79 1412.47
30-May-93 1017.29 1509.11 1415.34
29-Jun-93 1049.95 1513.53 1456.85
30-Jul-93 1059.82 1507.44 1471.40
30-Aug-93 1125.63 1564.64 1513.69
29-Sep-93 1121.58 1552.64 1520.24
30-Oct-93 1133.92 1584.76 1527.97
29-Nov-93 1113.85 1569.65 1499.28
30-Dec-93 1173.10 1588.63 1509.37
30-Jan-94 1134.51 1642.64 1539.93
27-Feb-94 1123.27 1598.05 1495.93
30-Mar-94 1144.84 1528.38 1438.65
29-Apr-94 1101.45 1547.98 1424.74
30-May-94 1150.69 1573.39 1415.84
29-Jun-94 1163.46 1534.82 1404.40
30-Jul-94 1119.95 1585.22 1447.79
30-Aug-94 1060.48 1650.21 1443.33
29-Sep-94 1074.79 1609.86 1405.04
30-Oct-94 1055.88 1646.03 1398.06
29-Nov-94 1126.62 1586.07 1400.62
30-Dec-94 1133.38 1609.61 1422.68
30-Jan-95 1140.18 1651.35 1459.17
27-Feb-95 1148.62 1715.71 1501.34
30-Mar-95 1193.52 1766.33 1515.59
29-Apr-95 1217.98 1818.34 1542.14
30-May-95 1277.24 1891.02 1639.40
29-Jun-95 1240.72 1934.94 1652.31
30-Jul-95 1215.71 1999.11 1635.68
30-Aug-95 1250.82 2004.14 1670.62
29-Sep-95 1271.83 2088.71 1696.12
30-Oct-95 1253.28 2081.25 1727.55
29-Nov-95 1273.03 2172.61 1769.37
30-Dec-95 1338.17 2214.46 1809.66
30-Jan-96 1347.18 2289.83 1812.14
27-Feb-96 1294.90 2311.06 1744.52
30-Mar-96 1283.20 2333.31 1721.76
29-Apr-96 1368.55 2367.71 1694.29
30-May-96 1312.43 2428.77 1695.16
29-Jun-96 1348.72 2438.04 1724.34
30-Jul-96 1295.87 2330.32 1726.02
30-Aug-96 1309.71 2379.48 1713.92
29-Sep-96 1463.52 2513.41 1758.25
30-Oct-96 1594.79 2582.73 1821.81
29-Nov-96 1743.78 2777.95 1869.68
30-Dec-96 1723.42 2722.91 1834.88
30-Jan-97 1783.62 2893.02 1829.66
27-Feb-97 1873.65 2915.70 1834.82
30-Mar-97 1841.63 2795.94 1794.33
29-Apr-97 1765.72 2962.81 1827.27
30-May-97 1760.83 3143.19 1850.72
29-Jun-97 1833.55 3284.01 1885.30
30-Jul-97 1976.51 3545.31 1984.93
30-Aug-97 1824.62 3346.70 1937.30
29-Sep-97 1855.63 3529.99 1981.16
30-Oct-97 1830.69 3412.09 2018.92
29-Nov-97 1868.99 3570.05 2039.37
30-Dec-97 1974.26 3631.36 2072.69
30-Jan-98 1975.42 3671.52 2101.07
27-Feb-98 2025.99 3936.33 2099.59
30-Mar-98 2097.01 4137.91 2107.53
29-Apr-98 2013.45 4179.54 2118.66
30-May-98 2126.22 4107.70 2153.98
29-Jun-98 2156.56 4274.55 2178.66
30-Jul-98 2191.34 4229.03 2166.48
30-Aug-98 2542.31 3617.61 2185.69
29-Sep-98 2648.56 3849.36 2275.92
30-Oct-98 2595.86 4162.47 2232.77
29-Nov-98 2632.62 4414.75 2293.08
30-Dec-98 2712.85 4669.15 2295.47
30-Jan-99 2582.98 4864.40 2323.59
27-Feb-99 2609.78 4713.22 2230.48
30-Mar-99 2538.26 4901.79 2231.04
29-Apr-99 2702.77 5091.61 2225.65
30-May-99 2563.95 4971.37 2186.50
29-Jun-99 2589.08 5247.28 2151.52
30-Jul-99 2572.42 5083.43 2127.20
30-Aug-99 2591.80 5058.28 2121.60
29-Sep-99 2601.09 4919.62 2141.37
30-Oct-99 2432.67 5230.93 2151.51
29-Nov-99 2594.77 5337.27 2146.41
30-Dec-99 2687.30 5651.61 2124.55
30-Jan-00 2666.13 5367.66 2120.07
27-Feb-00 2687.93 5266.05 2139.60
30-Mar-00 2610.10 5781.20 2175.84
29-Apr-00 2544.86 5607.29 2150.89
30-May-00 2606.24 5492.25 2116.33
29-Jun-00 2521.50 5627.65 2185.31
30-Jul-00 2449.19 5539.67 2224.46
30-Aug-00 2547.17 5883.76 2254.52
29-Sep-00 2484.34 5573.13 2265.00
30-Oct-00 2579.93 5549.57 2275.18
29-Nov-00 2814.54 5112.05 2334.93
30-Dec-00 3127.52 5137.07 2397.91
30-Jan-01 3165.48 5319.33 2483.99
27-Feb-01 3244.48 4834.30 2515.62
30-Mar-01 3604.75 4528.05 2508.27
29-Apr-01 3292.56 4879.92 2476.09
30-May-01 3211.29 4912.62 2508.83
29-Jun-01 3185.32 4793.05 2522.72
30-Jul-01 3261.22 4745.87 2613.75
30-Aug-01 3439.94 4448.77 2654.66
29-Sep-01 3788.29 4089.52 2614.27
30-Oct-01 3945.64 4167.50 2728.59
29-Nov-01 3619.17 4487.18 2677.29
30-Dec-01 3577.74 4526.49 2653.24
30-Jan-02 3441.54 4460.43 2699.62
27-Feb-02 3257.96 4374.41 2734.83
30-Mar-02 3225.18 4538.93 2654.21
29-Apr-02 3150.90 4263.74 2721.37
30-May-02 3193.22 4232.33 2752.14
29-Jun-02 3592.25 3930.82 2772.21
30-Jul-02 3818.04 3624.43 2798.16
30-Aug-02 3881.76 3648.23 2924.63
29-Sep-02 4221.43 3251.74 3021.08
30-Oct-02 3846.16 3537.95 2948.66
29-Nov-02 3666.66 3746.19 2979.04
30-Dec-02 4057.35 3526.11 3086.61
30-Jan-03 4353.27 3433.74 3093.02
27-Feb-03 4702.43 3382.22 3174.55
30-Mar-03 4306.37 3415.06 3149.17
29-Apr-03 4326.31 3696.36 3221.44
30-May-03 4852.30 3891.11 3373.09
29-Jun-03 4640.26 3940.74 3324.83
30-Jul-03 4555.63 4010.22 3031.81
30-Aug-03 4504.08 4088.43 3098.14
29-Sep-03 4624.66 4045.02 3254.03
30-Oct-03 4674.11 4273.84 3188.11
29-Nov-03 4569.90 4311.45 3204.63
30-Dec-03 4912.14 4537.56 3249.17
30-Jan-04 4999.96 4620.84 3309.83
27-Feb-04 5208.20 4685.07 3368.88
30-Mar-04 5113.30 4614.39 3408.50
29-Apr-04 4685.83 4541.95 3226.40
30-May-04 4565.02 4604.28 3203.38
29-Jun-04 4300.50 4693.81 3233.32
30-Jul-04 4265.10 4538.46 3292.91
30-Aug-04 4357.47 4556.82 3422.97
29-Sep-04 4506.73 4606.17 3457.53
30-Oct-04 4754.80 4676.54 3514.16
29-Nov-04 5137.55 4865.76 3443.92
30-Dec-04 5146.66 5031.34 3532.54
30-Jan-05 4820.85 4908.70 3630.24
27-Feb-05 4997.99 5012.00 3589.73
30-Mar-05 4945.29 4923.24 3545.03
29-Apr-05 4831.13 4829.87 3660.83
30-May-05 5053.16 4983.55 3768.89
29-Jun-05 5326.66 4990.63 3822.05
AHL
DIVERSIFIED US US
PROGRAM STOCKS(1) BONDS(2)
----------- --------- --------
Cumulative return 432.7% 399.1% 282.2%
Compound annual return 12.2% 11.7% 9.6%
Annualized volatility 16.2% 14.2% 7.1%
Worst drawdown -20.1% -44.7% -10.1%
Sharpe ratio(3) 0.52 0.55 0.72
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. The AHL Diversified Program performance information set forth
above presents the composite results of all accounts traded pursuant to the AHL
Diversified Program from December 20, 1990 through June 30, 2005. Combining the
performance of accounts, even those traded pursuant to the same trading program,
has certain inherent and materials limitations. For example, the performance of
particular accounts may be significantly impacted by the timing of when they
begin trading as well as the timing of cash flows, level of leverage of the
account and the exclusion of certain futures and other derivative contracts that
are included in other accounts, factors which are mitigated by a composite
presentation of a number of accounts.
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; (3) 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. Source: Man database and Bloomberg.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
67
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 - JUNE 30, 2005
(BAR CHART)
1 year to 5 years to Since inception to
June 30, 2005 June 30, 2005 June 30, 2005
------------- ------------- ------------------
AHL Diversified Program 15.3% 16.1% 12.2%
US stocks(1) 7.7% -2.4% 11.7%
US bonds(2) 17.7% 11.8% 9.6%
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 December 1990 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.
The performance set forth above was measured as of single points in time
and is not necessarily reflective of the results of any particular account
traded pursuant to the AHL Diversified Program or tracking the S&P or Citigroup
indices.
The AHL Diversified Program performance information set forth above
presents the composite results of all accounts traded pursuant to the AHL
Diversified Program from December 20, 1990 through June 30, 2005. Combining the
performance of accounts, even those traded pursuant to the same trading program,
has certain inherent and material limitations. For example, the performance of
particular accounts may be significantly impacted by the timing of when they
begin trading as well as the timing of cash flows, level of leverage of the
account and the exclusion of certain futures and other derivative contracts that
are included in other accounts, factors which are mitigated by a composite
presentation of a number of accounts.
Notes: (1) US stocks: S&P 500 Total Return Index (dividends reinvested); (2)
US bonds: Citigroup High Grade Corporate Bond Index (total return).
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
68
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 TO JUNE 30, 2005
Traditional portfolio(4) and return
(PIE CHART)
US stocks(1) 60%
US bonds(2) 30%
Cash(3) 10%
Enhanced portfolio(4) and return
(PIE CHART)
AHL Diversified Program 90%
Traditional Portfolio(4) 10%
NOTE: 10% IS ONLY AN EXAMPLE. YOU MUST DETERMINE THE APPROPRIATE ALLOCATION TO
ALTERNATIVES GENERALLY, AND IF SUITABLE, THE AHL DIVERSIFIED PROGRAM, AS A
PORTION OF A DIVERSIFIED PORTFOLIO.
Traditional Portfolio Enhanced Portfolio
- ------------------------------ ------------------------------
Compound annual return 10.6% Compound annual return 10.9% Improvement of 0.3%
Annualized volatility 9.0% Annualized volatility 8.2% Reduced by 0.8%
Worst drawdown -21.9% Worst drawdown -15.1% Improvement of 6.8%
Sharpe ratio(5) 0.65 Sharpe ratio(5) 0.79 Improvement of 0.10
$1,000 invested at inception $1,000 invested at inception
would have grown to $4,346.70 would have grown to 4,540.30
The AHL Diversified Program performance information set forth above
presents the composite results of all accounts traded pursuant to the AHL
Diversified Program from December 20, 1990 through June 30, 2005. Combining the
performance of accounts, even those traded pursuant to the same trading program,
has certain inherent and material limitations. For example, the performance of
particular accounts may be significantly impacted by the timing of when they
begin trading as well as the timing of cash flows, level of leverage of the
account and the exclusion of certain futures and other derivative contracts that
are included in other accounts, factors which are mitigated by a composite
presentation of a number of accounts.
Combining actively managed investments such as the Fund with passive
investment indices such as the S&P 500 Total Return Index and Citigroup High
Grade Corporate Bond Index has material inherent limitations. Each index is
unmanaged and does not incur management fees, transaction costs or other
expenses.
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; (4) Traditional portfolio: 60% US
stocks, 30% US bonds, 10% Cash. Enhanced portfolio: 90% traditional
portfolio, 10% AHL Diversified Program; (5) Sharpe ratio is calculated
using the risk-free rate in the appropriate currency over the period
analyzed. 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 (THE "RISK OF RUIN") 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.
IF THE AHL DIVERSIFIED PROGRAM IS SUCCESSFUL, IT COULD ADD BENEFICIAL
DIVERSIFICATION TO A PORTFOLIO.
69
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
THE FOREGOING DOES NOT REPRESENT ANY ACTUAL PORTFOLIO COMPOSITION
BUT ONLY THE POSSIBLE RESULTS WHICH MIGHT HAVE OCCURRED
HAD THE AHL DIVERSIFIED PROGRAM BEEN INCLUDED IN A TRADITIONAL PORTFOLIO
DURING THE PERIOD SHOWN.
70
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 TO JUNE 30, 2005
(BAR CHART)
Average return Average return
during US stocks during US stocks Average return
profitable quarters unprofitable quarters during all quarters
------------------- --------------------- -------------------
AHL Diversified Program 2.0% 6.5% 3.2%
US stocks(1) 6.6% -6.2% 3.1%
US bonds(2) 2.3% 2.6% 2.4%
(BAR CHART)
Average return Average return
during US bonds during US bonds Average return
profitable quarters unprofitable quarters during all quarters
------------------- --------------------- -------------------
AHL Diversified Program 4.5% -1.2% 3.2%
US stocks(1) 3.0% 3.2% 3.1%
US bonds(2) 3.7% -2.4% 2.4%
The first chart above represents a comparison of the AHL Diversified
Program performance record and US bonds to US stocks, showing the average
quarterly returns, during profitable and unprofitable quarters for US stocks as
well as for all quarters during the period shown. The second chart above
represents a comparison of the AHL Diversified Program performance record and US
stocks to US bonds, showing the average quarterly returns, during profitable and
unprofitable quarters for US bonds as well as for all quarters during the period
shown. The charts above suggest that the AHL Diversified Program has in many
cases not been dependent on the same events that trigger positive performance
for stocks or bonds, and that events that trigger negative performance for
stocks have in certain cases provided significant profit making opportunities
for the AHL Diversified Program.
Profitable or unprofitable quarters are determined by measuring the
quarterly performance of the programs represented in the AHL Diversified
Program, US stocks and US bonds respectively, beginning with the quarter ending
December 1990. Performance is calculated quarter-to-quarter, not cumulatively or
against an absolute base line. Percentages on the left side of the chart
indicate the level of quarterly returns.
71
Performance used in these graphs is for illustrative purposes only and does
not reflect the actual performance of the Fund. The AHL Diversified Program
performance information set forth above presents the composite results of all
accounts traded pursuant to the AHL Diversified Program from December 20, 1990
through June 30, 2005. Combining the performance of accounts, even those traded
pursuant to the same trading program, has certain inherent and material
limitations. For example, the performance of particular accounts may be
significantly impacted by the timing of when they begin trading as well as the
timing of cash flows, factors which are mitigated by a composite presentation of
a number of accounts.
Notes: (1) US stocks: S&P 500 Total Return Index; (2) US bonds: Citigroup
High Grade Corporate Bond Index (total return). Source: Man database
and Bloomberg
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
72
AHL DIVERSIFIED PROGRAM
DECEMBER 20, 1990 TO JUNE 30, 2005
(BAR GRAPH)
(BAR GRAPH)
12 month 3 year
rolling rolling
Annualized Annualized
return 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 -2.3%
30-Dec-91 7.5%
30-Jan-92 0.1%
27-Feb-92 -0.8%
30-Mar-92 -1.9%
29-Apr-92 -2.0%
30-May-92 -3.3%
29-Jun-92 -4.5%
30-Jul-92 9.2%
30-Aug-92 10.9%
29-Sep-92 0.9%
30-Oct-92 -1.0%
29-Nov-92 0.0%
30-Dec-92 -9.0%
30-Jan-93 0.4%
27-Feb-93 10.3%
30-Mar-93 6.9%
29-Apr-93 8.7%
30-May-93 11.0%
29-Jun-93 14.4%
30-Jul-93 6.3%
30-Aug-93 9.3%
29-Sep-93 14.7%
30-Oct-93 17.5%
29-Nov-93 14.0% 3.7%
30-Dec-93 19.6% 5.4%
30-Jan-94 13.4% 4.5%
27-Feb-94 5.1% 4.8%
30-Mar-94 11.9% 5.4%
29-Apr-94 8.3% 4.9%
30-May-94 13.1% 6.7%
29-Jun-94 10.8% 6.6%
30-Jul-94 5.7% 7.1%
30-Aug-94 -5.8% 4.5%
29-Sep-94 -4.2% 3.5%
30-Oct-94 -6.9% 2.7%
29-Nov-94 1.1% 4.9%
30-Dec-94 -3.4% 1.7%
30-Jan-95 0.5% 4.6%
27-Feb-95 2.3% 5.8%
30-Mar-95 4.3% 7.6%
29-Apr-95 10.6% 9.2%
30-May-95 11.0% 11.7%
29-Jun-95 6.6% 10.6%
30-Jul-95 8.6% 6.8%
30-Aug-95 17.9% 6.7%
29-Sep-95 18.3% 9.2%
30-Oct-95 18.7% 9.1%
29-Nov-95 13.0% 9.2%
30-Dec-95 18.1% 10.9%
30-Jan-96 18.2% 10.4%
27-Feb-96 12.7% 6.6%
30-Mar-96 7.5% 7.8%
29-Apr-96 12.4% 10.4%
30-May-96 2.8% 8.9%
29-Jun-96 8.7% 8.7%
30-Jul-96 6.6% 6.9%
30-Aug-96 4.7% 5.2%
29-Sep-96 15.1% 9.3%
30-Oct-96 27.2% 12.0%
29-Nov-96 37.0% 16.1%
30-Dec-96 28.8% 13.7%
30-Jan-97 32.4% 16.3%
27-Feb-97 44.7% 18.6%
30-Mar-97 43.5% 17.2%
29-Apr-97 29.0% 17.0%
30-May-97 34.2% 15.2%
29-Jun-97 35.9% 16.4%
30-Jul-97 52.5% 20.8%
30-Aug-97 39.3% 19.8%
29-Sep-97 26.8% 20.0%
30-Oct-97 14.8% 20.1%
29-Nov-97 7.2% 18.4%
30-Dec-97 14.6% 20.3%
30-Jan-98 10.8% 20.1%
27-Feb-98 8.1% 20.8%
30-Mar-98 13.9% 20.7%
29-Apr-98 14.0% 18.2%
30-May-98 20.8% 18.5%
29-Jun-98 17.6% 20.2%
30-Jul-98 10.9% 21.7%
30-Aug-98 39.3% 26.7%
29-Sep-98 42.7% 27.7%
30-Oct-98 41.8% 27.5%
29-Nov-98 40.9% 27.4%
30-Dec-98 37.4% 26.6%
30-Jan-99 30.8% 24.2%
27-Feb-99 28.8% 26.3%
30-Mar-99 21.0% 25.5%
29-Apr-99 34.2% 25.5%
30-May-99 20.6% 25.0%
29-Jun-99 20.1% 24.3%
30-Jul-99 17.4% 25.7%
30-Aug-99 1.9% 25.5%
29-Sep-99 -1.8% 21.1%
30-Oct-99 -6.3% 15.1%
29-Nov-99 -1.4% 14.2%
30-Dec-99 -0.9% 16.0%
30-Jan-00 3.2% 14.3%
27-Feb-00 3.0% 12.8%
30-Mar-00 2.8% 12.3%
29-Apr-00 -5.8% 13.0%
30-May-00 1.6% 14.0%
29-Jun-00 -2.6% 11.2%
30-Jul-00 -4.8% 7.4%
30-Aug-00 -1.7% 11.8%
29-Sep-00 -4.5% 10.2%
30-Oct-00 6.1% 12.1%
29-Nov-00 8.5% 14.6%
30-Dec-00 16.4% 16.6%
30-Jan-01 18.7% 17.0%
27-Feb-01 20.7% 17.0%
30-Mar-01 38.1% 19.8%
29-Apr-01 29.4% 17.8%
30-May-01 23.2% 14.7%
29-Jun-01 26.3% 13.9%
30-Jul-01 33.2% 14.2%
30-Aug-01 35.0% 10.6%
29-Sep-01 52.5% 12.7%
30-Oct-01 52.9% 15.0%
29-Nov-01 28.6% 11.2%
30-Dec-01 14.4% 9.7%
30-Jan-02 8.7% 10.0%
27-Feb-02 0.4% 7.7%
30-Mar-02 10.5% 8.3%
29-Apr-02 -4.3% 5.2%
30-May-02 -0.6% 7.6%
29-Jun-02 12.8% 11.5%
30-Jul-02 17.1% 14.1%
30-Aug-02 12.8% 14.4%
29-Sep-02 11.4% 17.5%
30-Oct-02 -2.5% 16.5%
29-Nov-02 1.3% 12.2%
30-Dec-02 13.4% 14.7%
30-Jan-03 26.5% 17.8%
27-Feb-03 44.3% 20.5%
30-Mar-03 33.5% 18.2%
29-Apr-03 37.3% 19.3%
30-May-03 52.0% 23.0%
29-Jun-03 29.2% 22.5%
30-Jul-03 19.3% 23.0%
30-Aug-03 16.0% 20.9%
29-Sep-03 9.6% 23.0%
30-Oct-03 21.5% 21.9%
29-Nov-03 24.6% 17.5%
30-Dec-03 21.1% 16.2%
30-Jan-04 14.9% 16.5%
27-Feb-04 10.8% 17.1%
30-Mar-04 18.7% 12.4%
29-Apr-04 8.3% 12.5%
30-May-04 -5.9% 12.4%
29-Jun-04 -7.3% 10.5%
30-Jul-04 -6.4% 9.4%
30-Aug-04 -3.3% 8.2%
29-Sep-04 -2.5% 6.0%
30-Oct-04 1.7% 6.4%
29-Nov-04 12.4% 12.4%
30-Dec-04 4.8% 12.9%
30-Jan-05 -3.6% 11.9%
27-Feb-05 -4.0% 15.3%
30-Mar-05 -3.3% 15.3%
29-Apr-05 3.1% 15.3%
30-May-05 10.7% 16.5%
29-Jun-05 23.9% 14.0%
These charts cover the same period of time, but present two different rate
of return cycles. The first chart presents the annualized returns of the AHL
Diversified Program for all periods of 12 consecutive months from [___] to
[___]. The second chart presents the annualized returns of the AHL Diversified
Program for all periods of 36 consecutive months from [___] to [___]. The
percentages in the left-hand column represent the rates of return achieved in
the related period.
The foregoing charts are intended to indicate that longer-term commitments
to the AHL Diversified Program have historically had a lower likelihood of
negative returns than shorter-term commitments. This is typical of
trend-following strategies which will often have sustained periods of loss or
mediocre performance in stagnant markets followed by a brief period of
extraordinary performance as the systems identify and profit from the same price
trends.
The AHL Diversified Program performance information set forth above
presents the composite results of all accounts traded pursuant to the AHL
Diversified Program from December 20, 1990 through June 30, 2005. Combining the
performance of accounts, even those traded pursuant to the same trading program,
has certain inherent and material limitations. For example, the performance of
particular accounts may be significantly impacted by the timing of when they
begin trading as well as the timing of cash flows, factors which are mitigated
by a composite presentation of a number of accounts.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
73
__MAN-GLENWOOD LEXINGTON, LLC
MAN-GLENWOOD(1) PERFORMANCE SUMMARY
(LINE GRAPH)
Date MGL US stocks US bonds
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
29-Apr-05 3190.33 3346.70 2745.69
30-May-05 3201.50 3453.18 2826.74
29-Jun-05 3256.82 3458.08 2866.61
MAN- US US
GLENWOOD(1) STOCKS(2) BONDS(3)
----------- --------- --------
Cumulative return 225.7% 245.8% 186.7%
Compound annual return 9.9% 10.4% 8.8%
Annualized volatility 4.3% 14.5% 7.4%
Largest peak-to-trough (wrost drawdown) -5.3% -44.7% -10.1%
Sharpe ratio(4) 1.27 0.47 0.61
(PIE CHART)
1 Equity Hedge 21.7%
2 Variable Equity 18.9%
3 Event Driven 17.8%
4 Commodity and Trading 15.6%
5 Multi-Strategy 15.0%
6 Cash and equivalents 6.8%
7 Relative Value 4.2%
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 June 30, 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 June 30, 2005. The Fund's
Man-Glenwood investment represents somewhat less than 25% of the Fund's total
market allocations and between 4% and 11% of its total market exposure.
Notes: (1) Man-Glenwood: represented by the performance of (i) the private
fund described on page 65 from January 1, 1993 to December 31, 2002;
(ii) the Portfolio Company described on page 66 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) 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.
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.
74
MAN-GLENWOOD LEXINGTON, LLC
MAN-GLENWOOD(1) PERFORMANCE SUMMARY
JANUARY 2000 - JUNE 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)% (1.5)%
May 2.0% 0.8% 0.7% 0.7% (0.5)% 0.3%
June 0.7% 0.1% (0.5)% 0.4% (0.3)% 1.7%
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 Return 16.5% 7.2% 2.0% 4.3% 1.8% 0.3%*
* 6 Months
MAN-GLENWOOD LEXINGTON TEI, LLC
MAN-GLENWOOD(2) PERFORMANCE SUMMARY
JANUARY 2000 - JUNE 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)% (1.5)%
May 2.0% 0.8% 0.7% 0.7% (0.5)% 0.3%
June 0.7% 0.1% (0.5)% 0.4% (0.3)% 1.7%
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 Return 16.5% 7.2% 2.0% 4.3% 1.8% 0.2%*
* 6 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. The Fund's
Man-Glenwood investment represents somewhat less than 25% of the Fund's total
market allocations and between 4% and 11% of its total market exposure.
Notes: (1) Man-Glenwood Lexington, LLC performance is represented by the
performance of (i) the private fund described on page 65 from
January 1, 2000 to December 31, 2002; (ii) the Portfolio Company
described beginning on page 66 from January 1, 2003 to March 31,
2003; and (iii) Man-Glenwood Lexington, LLC thereafter. (2)
Man-Glenwood Lexington TEI, LLC performance is represented by the
performance of (i) the private fund described on page 65 from
January 1, 2000 to December 31, 2002; (ii) the Portfolio Company
described on page 66 from January 1, 2003 to April 30, 2004; and
(iii) Man-Glenwood Lexington TEI, LLC thereafter.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
75
CORRELATION MATRIX
JANUARY 1, 1993 TO JUNE 30, 2005
AHL Diversified
PRODUCT US bonds(3) US stocks(2) Man-Glenwood(1) Program
- ------- ----------- ------------ --------------- ---------------
AHL Diversified Program 0.34 -0.20 0.17 1.00
Man-Glenwood(1) 0.08 0.30 1.00
US stocks(2) 0.09 1.00
US bonds(3) 1.00
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.
The AHL Diversified Program performance information set forth above
presents the composite results of all accounts of traded pursuant to the AHL
Diversified Program from January 1, 1993 through June 30, 2005. Combining the
performance of accounts, even those traded pursuant to the same trading program,
has certain inherent and material limitations. For example, the performance of
particular accounts may be significantly impacted by the timing of when they
begin trading as well as the timing of cash flows, level of leverage of the
account and the exclusion of certain futures and other derivative contracts that
are included in other accounts, factors which are mitigated by a composite
presentation of a number of accounts.
Notes: (1) Man-Glenwood: represented by the performance of (i) the private
fund described on page 65 from January 1, 1993 to December 31, 2002;
(ii) the Portfolio Company described on page 66 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).
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.
76
Appendix
The following disclosure regarding the principals of Glenwood Capital
Investments, LLC, the potential conflicts of interest with respect to Glenwood
Capital Investments, LLC and the Man-Glenwood investment and the investment
program of Man-Glenwood is excerpted from pages 35-36, 25-26 and 28-34,
respectively, of the Prospectus of Man-Glenwood Lexington, LLC as filed with the
SEC July 26, 2005. Terms capitalized, but not defined in the below excerpt, are
defined in the Defined Terms Index following the excerpt.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
APP-1
(GLENWOOD LOGO) (MAN INVESTMENTS LOGO)
PROSPECTUS
MAN-GLENWOOD LEXINGTON, LLC
Units of Limited Liability Company Interests
Man-Glenwood Lexington, LLC ("Lexington") is a Delaware limited liability
company that is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a closed-end, non-diversified, management investment
company. Lexington invests all of its investable assets in Man-Glenwood
Lexington Associates Portfolio, LLC (the "Portfolio Company"), a separate
closed-end, non-diversified, management investment company with the same
investment objectives as Lexington. Glenwood Capital Investments, L.L.C. serves
as the Portfolio Company's investment adviser (the "Adviser").
Proceeds to
Price to Public (1) Sales Load (2) Registrant (3)
------------------- -------------- --------------
Per Unit $ 106.39 $ 3.19 $ 103.20
------------ ---------- ------------
Total $200,000,000 $6,000,000 $194,000,000
============ ========== ============
(1) Units of Lexington are offered at its current net asset value, which has
ranged between $100.00 and $106.39 since inception.
(2) Investments of less than $100,000 are subject to a sales load of 3%,
investments of $100,000 or more and less than $300,000 are subject to a
sales load of 2%, investments of $300,000 or more and less than $500,000
are subject to a sales load of 1%, and investments of $500,000 or more are
not subject to a sales load. Any sales load is computed as a percentage of
the public offering price. Under a right of accumulation offered by
Lexington, the amount of each additional investment in Lexington by a
member of Lexington (a "Member") will be aggregated with the amount of the
Member's initial investment (including investment in Man-Glenwood Lexington
TEI, LLC) and any other additional investments by the Member in determining
the applicable sales load at the time of such investment. No sales load
will be charged to certain types of investors. See "Distribution
Arrangements."
(3) Total proceeds to Registrant assume that all registered Units will be sold
in a continuous offering and the maximum sales load incurred. The proceeds
may differ from that shown if other than the maximum load is paid on
average and/or additional Units are registered.
Man Investments Inc. (the "Distributor") acts as the distributor of units of
limited liability company interests (the "Units") on a best efforts basis,
subject to various conditions. Units may be purchased through the Distributor or
through brokers or dealers that have entered into selling agreements with the
Distributor. Neither the Distributor nor any other broker or dealer is obligated
to buy from Lexington any of the Units. The Distributor (or one of its
affiliates) may pay from its own resources additional compensation, commissions
or promotional incentives, either at the time of sale or on an ongoing basis, to
brokers and dealers for Units sold by such brokers and dealers and to investor
service providers, including investment advisers, for ongoing investor
servicing. Such payments may be made for the provision of sales training,
product education and access to sales staff, the support and conduct of due
diligence, balance maintenance, the provision of information and support
services to clients, inclusion on preferred provider lists and the provision of
other services. The receipt of such payments could create an incentive for the
third party to offer or recommend Lexington instead of similar investments where
such payments are not received. Such payments may be different for different
intermediaries.
In making an investment decision, an investor must rely upon his, her or its own
examination of Lexington and the terms of the offering, including the merits and
risks involved, of the Units described in this prospectus (the "Prospectus").
The Units are subject to substantial restrictions on transferability and resale
and may not be transferred or resold except as permitted under Lexington's
Limited Liability Company Agreement (the "LLC Agreement"), the Securities Act of
1933, as amended (the "1933 Act") and applicable state securities laws, pursuant
to registration or exemption from these provisions.
To provide a limited degree of liquidity to investors, Lexington may from time
to time offer to repurchase Units pursuant to written tenders by investors.
Repurchases will be made at such times, in such amounts, and on such terms as
may be determined by the Board, in its sole discretion. However, investors do
not have the right to require Lexington to redeem any or all of their Units.
July 26, 2005
APP-2
MANAGEMENT OF LEXINGTON AND THE PORTFOLIO COMPANY
The personnel of the Adviser who have primary responsibility for management of
the Portfolio Company, including the selection of Hedge Fund Managers and the
allocation of the Portfolio Company's assets among the Hedge Fund Managers, are:
JOHN B. ROWSELL. Dr. Rowsell, President of the Adviser, joined the Adviser in
2001 as a member of the investment committee. Before joining the Adviser, Dr.
Rowsell managed an internal hedge fund at McKinsey & Company from mid-1998.
Prior to that, he was a managing director in alternative asset management at
Carr Global Advisors, a subsidiary of Credit Agricole Indozuez. Dr. Rowsell had
also been the Director of Research for Credit Agricole Futures. Dr. Rowsell was
an advisor to Goldman Sachs between 1995 and 2001 as a member of the Index
Policy Committee, Goldman Sachs Commodity Index. He was also a Director at the
Chicago Mercantile Exchange and an adjunct professor at the Illinois Institute
of Technology, Stuart School of Business. Dr. Rowsell received a B.Sc. from the
University of Guelph in Canada in 1982 and his M.S. and Ph.D. from Virginia
Polytechnic Institute in 1987 and 1991, respectively.
STEVE F. FREED. Mr. Freed joined the Adviser in 2001 as a member of the
investment committee. Prior to joining the Adviser, Mr. Freed was a Director and
Principal at William M. Mercer Investment Consulting, Inc. Mr. Freed's
responsibilities at Mercer included chairing the firm's Research and Policy
Committee, conducting due diligence on both hedge fund and traditional
investment managers as part of the firm's national Manager Research Group, and
developing asset allocation strategies through the use of asset and liability
modeling. Prior to his employment at Mercer, Mr. Freed was a pension actuary at
Towers Perrin from mid-1990 to early 1996. Mr. Freed received his B.S. in
Actuarial Science from the University of Illinois at Urbana-Champaign in 1990
(Summa Cum Laude) and his M.B.A. with specialization in finance from the
University of Chicago Graduate School of Business in 1997. Mr. Freed is a
Chartered Financial Analyst (CFA) and an Associate of the Society of Actuaries
(ASA).
MICHAEL J. JAWOR. Mr. Jawor joined the Adviser in 2001 as a member of the
investment committee. From mid-1994 until joining the Adviser, he was a
co-portfolio manager of Sirius Partners, L.P., a fund of hedge funds where he
was responsible for all aspects of hedge fund manager evaluation. Mr. Jawor's
prior background also includes eight years as a manager in the First National
Bank of Chicago's global derivatives business. In this role he was responsible
for both product development and market making of over-the-counter portfolios in
interest rate (3 years), commodity (3 years) and equity (2 years) derivatives.
Mr. Jawor received a BBA, Cum Laude, from Loyola University of Chicago in 1981,
an MBA from the University of Chicago in 1986 and is a Chartered Financial
Analyst (CFA).
Included in the SAI is information regarding the individuals listed above,
including the structure and method by which they are compensated, and other
accounts they manage. None of the individuals listed above owns securities in
Lexington.
APP-3
RISK FACTORS
POTENTIAL CONFLICTS OF INTEREST. The Adviser and its affiliates, as well as many
of the Hedge Fund Managers and their respective affiliates, provide investment
advisory and other services to clients other than the Portfolio Company and the
Hedge Funds they manage. In addition, investment professionals associated with
the Adviser or Hedge Fund Managers may carry on investment activities for their
own accounts and the accounts of family members (collectively with other
accounts managed by the Adviser and its affiliates, "Other Accounts"). The
Portfolio Company and Hedge Funds have no interest in these activities. As a
result of the foregoing, the Adviser and Hedge Fund Managers will be engaged in
substantial activities other than on behalf of the Portfolio Company and may
have differing economic interests in respect of such activities and may have
conflicts of interest in allocating investment opportunities, and their time,
between the Portfolio Company and Other Accounts.
There may be circumstances under which the Adviser or a Hedge Fund Manager will
cause one or more Other Accounts to commit a larger percentage of their assets
to an investment opportunity than the percentage of the Portfolio Company's or a
Hedge Fund's assets they commit to such investment. There also may be
circumstances under which the Adviser or a Hedge Fund Manager purchases or sells
an investment for their Other Accounts and does not purchase or sell the same
investment for the Portfolio Company or a Hedge Fund, or purchases or sells an
investment for the Portfolio Company and does not purchase or sell the same
investment for one or more Other Accounts. However, it is the policy of the
Adviser, and generally also the policy of the Hedge Fund Managers, that:
investment decisions for the Portfolio Company, Investment Accounts and Other
Accounts be made based on a consideration of their respective investment
objectives and policies, and other needs and requirements affecting each account
that they manage; and investment transactions and opportunities be fairly
allocated among their clients, including the Portfolio Company and Hedge Funds.
Therefore, the Advisor may not invest the Portfolio Company's assets in certain
Hedge Funds in which Other Accounts may invest or in which the Portfolio Company
may otherwise invest.
The Adviser, Hedge Fund Managers, and their respective affiliates may have
interests in Other Accounts they manage that differ from their interests in the
Portfolio Company and Hedge Funds and may manage such accounts on terms that are
more favorable to them (e.g., may receive higher fees or performance
allocations) than the terms on which they manage the Portfolio Company or Hedge
Funds. In addition, the Adviser and Hedge Fund Managers may charge fees to Other
Accounts and be entitled to receive performance-based incentive allocations from
Other Accounts that are lower than the fees and incentive allocations to which
the Portfolio Company is subject.
The Hedge Fund Managers are unaffiliated with the Adviser, and the Adviser will
have no control over such managers and no ability to detect, prevent or protect
the Fund from their misconduct or bad judgment. Such managers may be subject to
conflicts of interest due to hedge fund incentive fees, which may cause a
manager to favor hedge fund clients over other clients. In addition, such
managers may use conflicting buying and selling strategies for different
accounts under their management. Lack of disclosure relating to the payment of
fees and provision of services by prime brokers to hedge funds also may mask
conflicts.
In addition, the Distributor (or one of its affiliates) may pay from its own
resources additional compensation, commissions or promotional incentives either
at the time of sale or on an ongoing basis, to brokers and dealers for Units
sold by such brokers and dealers, and to Investor Service Providers for ongoing
investor servicing. Such payments may be made for the provision of sales
training, product
APP-4
education and access to sales staff, the support and conduct of due diligence,
balance maintenance, the provision of information and support services to
clients, inclusion on preferred provider lists and the provision of other
services. The receipt of such payments could create an incentive for the third
party to offer or recommend the Fund instead of similar investments where such
payments are not received. Such payments may be different for different
intermediaries.
APP-5
INVESTMENT PROGRAM
INVESTMENT OBJECTIVES
Lexington and the Portfolio Company's investment objectives are:
o preserve capital, regardless of what transpires in the U.S. or global
financial markets.
o generate attractive returns and thereby increase investors' wealth.
o to produce returns which have low correlation with major market indices.
Lexington attempts to achieve its objectives by investing substantially all of
its investable assets in the Portfolio Company, which utilizes a multi-strategy,
multi-manager approach to attain these objectives. The Portfolio Company
emphasizes efficient allocation of investor capital among hedge funds and other
pooled investment vehicles such as limited partnerships (collectively, the
"Hedge Funds") with a range of investment strategies, managed by independent
investment managers (the "Hedge Fund Managers"). The Adviser believes that there
are benefits to be derived from exposure to a broad range of Hedge Funds and
investment strategies and that the fund of funds approach maximizes the
potential for stable, positive returns over a full economic cycle.
The investment objectives of Lexington and the Portfolio Company are
non-fundamental and may be changed by the Board and the Portfolio Company's
Board, respectively. Except as otherwise stated in this Prospectus or in the
SAI, the investment policies and restrictions of Lexington and the Portfolio
Company are not fundamental and may be changed by the Board and the Portfolio
Company's Board, respectively. Lexington's and the Portfolio Company's
fundamental investment policies are listed in the SAI. The Portfolio Company's
principal investment policies and strategies are discussed below.
INVESTMENT POLICIES
Allocation among Hedge Funds and Hedge Fund Managers and their respective
investment strategies is a basic policy of the Adviser designed to give the
Portfolio Company significantly greater stability of return than would be likely
were its capital managed pursuant to a limited number of Hedge Funds or
investment strategies. Different Hedge Funds, investment strategies, and Hedge
Fund Managers may perform well over a complete market cycle, although their
periods of above average and below average performance will not necessarily
coincide.
The Portfolio Company's allocation program is intended to permit it to maintain
substantial upside potential under a wide range of market conditions while
reducing the variability of return. Furthermore, while some of the investment
strategies used by individual Hedge Funds and Hedge Fund Managers involve a high
degree of risk, the Adviser believes that the Portfolio Company's allocation to
a number of different strategies and Hedge Fund Managers will reduce the overall
risk associated with investments in Hedge Funds.
Lexington offers Eligible Investors the following potential advantages:
o Spreading of risk across a number of investment strategies, Hedge Fund
Managers, Hedge Funds, and markets.
o Professional selection and evaluation of investments and Hedge Fund
Managers. The principals of the Adviser have extensive experience in
applying multi-strategy, multi-manager investment approaches.
APP-6
o Ability to invest with Hedge Fund Managers whose minimum account size is
higher than most individual investors would be willing or able to commit.
o Limited liability.
o Administrative convenience.
INVESTMENT STRATEGIES
Investment strategies pursued by Hedge Funds selected for the Portfolio Company
involve a wide range of investment techniques. The following general
descriptions summarize certain investment strategies that may be pursued by
Hedge Funds selected by the Adviser for the Portfolio Company. These
descriptions are not intended to be complete explanations of the strategies
described or a list of all possible investment strategies or methods that may be
used by the Hedge Fund Managers.
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 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.
In addition, the Portfolio Company may make certain direct investments for
hedging purposes.
APP-7
ALLOCATION AMONG INVESTMENT STRATEGIES
The Adviser anticipates that the Portfolio Company will continuously maintain
investments in several different strategies directed by a number of Hedge Fund
Managers. Each investment strategy may be represented in the Portfolio Company's
portfolio by one or more Hedge Funds. In selecting an investment strategy, the
Adviser evaluates the effect of investing in such strategy on the overall asset
allocation of the Portfolio Company. Emphasis is given to the degree to which an
investment strategy's performance is expected to be independent of the
performance of strategies already being used by Hedge Funds represented in the
Portfolio Company.
In anticipation of or in response to adverse market or other conditions, or
atypical circumstances such as unusually large cash inflows or repurchases,
Lexington or the Portfolio Company (or both) may temporarily hold all or a
portion of its assets in cash, cash equivalents or high-quality debt
instruments.
LEVERAGE
In effecting the Portfolio Company's investment strategies, the Portfolio
Company may leverage its investments with Hedge Fund Managers through bank
borrowings in an amount not expected to exceed 20% of gross assets. Lexington
may leverage its investment in the Portfolio Company through bank borrowings in
an amount not expected to exceed 20% of gross assets. In addition, the Portfolio
Company and Lexington may engage in short-term borrowing from a credit line or
other credit facility in order to meet redemption requests, for bridge financing
of investments in Hedge Funds, or for cash management purposes. Lexington and
the Portfolio Company may choose to engage in leveraging of their investments
because they believes it can generate greater returns on such borrowed funds
than the cost of borrowing. However, there is no assurance that returns from
borrowed funds will exceed interest expense. Borrowings will be subject in
aggregate to a 300% asset coverage requirement under the 1940 Act. Borrowings by
Hedge Funds are not subject to this requirement. Short-term borrowings for the
purpose of meeting redemption requests, for bridge financing of investments in
Hedge Funds, or for cash management purposes will not be considered the use of
investment leverage, and will be subject to the above asset coverage
requirement. The Portfolio Company may be required to pledge assets when
borrowing, which, in the event of an uncured default, could affect the Portfolio
Company's operations, including preventing the Portfolio Company from conducting
a repurchase of its interests. In addition, the terms of any borrowing may
impose certain investment restrictions on the Portfolio Company.
The following table is designed to illustrate the effect on the return to a
holder of the Fund's Units of leverage in the amount of 20% of the Fund's gross
assets. The table assumes hypothetical annual returns of the Fund's portfolio of
minus 10% to plus 10%, and an assumed utilization of leverage in the amount of
20% of the Fund's gross assets with a cost of borrowing of approximately 4.75%
payable for such leverage based on market rates as of the date of this
Prospectus. The Fund's actual cost of leverage will be based on market rates at
the time the Fund borrows money for investment leverage, and such actual cost of
leverage may be higher or lower than that assumed in the previous example. As
the table shows, leverage generally increases the return to Unit Shareholders
when portfolio return is positive and greater than the cost of leverage and
decreases the return when the portfolio return is negative or less than the cost
of leverage. The figures appearing in the table are hypothetical and actual
returns may be greater or less than those appearing in the table.
<Table>
Assumed Portfolio Return (net of expenses) ....... (10)% (5)% 0% 5% 10%
---------- ---------- ---------- ---------- ----------
Corresponding Unit Return Assuming 20%
Leverage ......................................... (12.95)% (6.95)% (0.95)% 5.05% 11.05%
</Table>
APP-8
Many Hedge Fund Managers also use leverage in their investment activities
through purchasing securities on margin and through selling securities short.
Hedge Fund Managers may also use leverage by entering into total return swaps or
other derivative contracts as well as repurchase agreements whereby the Hedge
Fund Manager effectively borrows funds on a secured basis by "selling" portfolio
securities to a financial institution for cash and agreeing to "repurchase" such
securities at a specified future date for the sales price paid plus interest at
a negotiated rate. Certain Hedge Fund Managers also trade futures, which
generally involves greater leverage than other investment activities due to the
low margin requirements associated with futures trading.
INVESTMENT SELECTION
The Adviser is responsible for the allocation of assets to various Hedge Funds,
subject to policies adopted by the Board of Managers.
SELECTION OF HEDGE FUND MANAGERS. The Hedge Fund Managers may manage the
Portfolio Company's assets through pooled vehicles such as investment companies,
private limited partnerships and limited liability companies. The Portfolio
Company may, on rare occasions (e.g., to gain access to Hedge Funds that are
closed to new investors), also access Hedge Funds indirectly through structured
notes, swaps, and other derivative contracts whose return is tied to the Hedge
Funds' performance. Hedge Fund Managers are selected with the objective of
obtaining quality management and a broad range of strategies. The compensation
earned by the Hedge Fund Managers can involve fixed fees based on the value of
the assets under management, performance fees based on profits earned by Hedge
Fund Managers (often 15 - 25% of such profits, but which may be higher) or a
combination thereof.
An important element of the Hedge Fund Manager selection process is the
Adviser's subjective assessment of the ability and character of prospective
Hedge Fund Managers. Although many of the Hedge Fund Managers selected are
successful, highly regarded members of their industry, on occasion the Adviser
may select relatively new and unproven Hedge Fund Managers whom it believes
demonstrate unusual potential.
In conducting its due diligence, the Adviser generally visits prospective Hedge
Fund Managers. To the extent that such information is available, the Adviser
considers a prospective Hedge Fund Manager's risk management program; use of
leverage; use of short sales, futures, and options; degree of market exposure;
spreading of risk among various investment positions; and a broad range of other
areas, including organizational and operational criteria. The Adviser also
conducts quantitative evaluations of a prospective Hedge Fund Manager's
performance. In addition, the Adviser considers a variety of factors, including
the following, in selecting prospective Hedge Fund Managers.
o Past performance during favorable and unfavorable market conditions.
o Spreading of risk in relation to other Hedge Fund Managers.
o Amount of assets under management.
o Absence of significant conflicts of interest.
o Overall integrity and reputation.
o Percentage of business time devoted to investment activities.
o Fees charged.
APP-9
The principals of the Adviser have several sources, including the following, for
identifying prospective Hedge Fund Managers.
o Referrals from other advisers, brokers and investors.
o Knowledge obtained through current and past investment activities of
potential Hedge Fund Managers who manage only proprietary capital or who
are employed by other financial entities.
o Articles, publications, and performance measurement services.
PORTFOLIO CONSTRUCTION. Allocation will depend on the Adviser's assessment of
the likely risks and returns of various investment strategies that the Hedge
Funds utilize and the likely correlation among the Hedge Funds under
consideration. The Adviser uses a combination of qualitative and proprietary
quantitative screens to efficiently distill the universe of thousands of
managers down to a shorter list of the "best" prospects, those that the Adviser
believes have the greatest potential to add value to its portfolios. It then
conducts due diligence on these prospects by evaluating the investment processes
and by focusing on each of these Hedge Funds as a small dynamic business. As
part of its due diligence process, the Adviser evaluates the challenges and
potential hurdles it believes each manager might face and its ability to
successfully navigate such hurdles.
ONGOING EVALUATION OF INVESTMENTS. As noted above, unregistered investment funds
typically have greater flexibility than traditional registered investment
companies as to the types of securities the unregistered funds hold, the types
of trading strategies used, and in some cases, the extent to which leverage is
used. The Hedge Fund Managers selected by the Portfolio Company have full
discretion, without the Portfolio Company's input, to purchase and sell
securities and other investments for their respective Hedge Funds consistent
with the relevant investment advisory agreements, partnership agreements, or
other governing documents of the Hedge Funds. The Hedge Funds are generally not
limited in the markets in which they invest, either by location or type, such as
U.S. or non-U.S., large capitalization, or small capitalization, or the
investment discipline that they may employ, such as value or growth or bottom-up
or top-down analysis. These Hedge Funds may invest and trade in a wide range of
securities and other financial instruments and may pursue various investment
strategies and techniques to hedge other holding of the Hedge Funds or for any
other purpose. Although the Hedge Funds will primarily invest and trade in
equity and debt securities, they may also invest and trade in currencies,
financial futures, and equity- and debt-related instruments (i.e., instruments
that may derive all or a portion of their value from equity or debt securities).
The Hedge Funds may also sell securities short, purchase and sell option and
futures contracts and engage in other derivative transactions, subject to
certain limitations described elsewhere in this Prospectus. The use of one or
more of these techniques may be an integral part of the investment program of a
Hedge Fund, and involves certain risks. The Hedge Funds may use leverage, which
also entails risk. See "Risk Factors - Principal Risk Factors Relating to Types
of Investments and Related Risks."
The Adviser will evaluate the risks of the Portfolio Company's portfolio and of
individual Hedge Funds. The primary goal of this process with respect to
individual Hedge Funds is to determine the degree to which the Hedge Funds are
performing as expected and to gain early insight into factors that might call
for an increase or decrease in the allocation of the Portfolio Company's assets
among those Funds. With respect to aggregate portfolio evaluation, the Adviser
will endeavor to monitor the Portfolio Company's aggregate exposures to various
investment strategies and to various aggregate risks.
The Adviser will evaluate the operation and performance of a Hedge Fund as
frequently as the Adviser believes is appropriate in light of the strategy
followed by the Hedge Fund Manager and the prevailing
APP-10
market conditions. The Adviser will solicit such information from the Hedge Fund
Manager and other sources, such as prime brokers, that the Adviser deems
necessary to properly assess the relative success or failure of a Hedge Fund.
The Adviser will conduct reviews with Hedge Fund Managers and the Adviser's
network. The Adviser may make periodic assessments, based on any information
available to it, of the degree to which multiple Hedge Funds are making
substantially similar trades, which might narrow the range of assets in the
Portfolio Company's portfolio. Changes in leverage, personnel, market behavior,
expenses, litigation, capital resources, economic conditions and other factors
may be reviewed, as appropriate and to the extent the information is available
to the Adviser.
To the extent that the Adviser has sufficient historical or contemporaneous
information to do so, the Adviser may periodically adjust the Portfolio
Company's allocations among Hedge Funds based on the Adviser's assessment of a
number of factors, including: (i) the degree to which the Hedge Fund Manager is
pursuing an investment strategy consistent with its stated policy; (ii) whether
and to what degree the focus, incentives and investment strategy of the Hedge
Fund Manager have changed; and (iii) whether the investment strategy employed
remains consistent with the objectives of the Portfolio Company.
EVALUATION OF HEDGE FUND MANAGERS AND INVESTMENTS
The Adviser evaluates the performance of the Portfolio Company's Hedge Fund
Managers on a regular basis. Hedge Fund Managers are also contacted by the
Adviser for their analysis of significant events as they relate to their
investment strategies and influence their investment decisions. The Adviser also
makes periodic comparative evaluations of Hedge Fund Managers and other managers
utilizing similar investment strategies.
If a Hedge Fund Manager's relative performance is poor or if significant changes
occur in a Hedge Fund Manager's approach or investments or for other reasons,
the capital allocation to that Hedge Fund Manager may be reduced or withdrawn.
The allocations of the Portfolio Company's assets among different investment
strategies and Hedge Fund Managers are adjusted from time to time to reflect the
Adviser's analysis of which strategies and Hedge Fund Managers are best suited
to current market conditions.
APP-11
DEFINED TERMS INDEX
"BOARD" means Man-Glenwood Lexington, LLC's Board of Managers.
"HEDGE FUND MANAGERS" means the independent investment managers who manage the
Hedge Funds.
"PORTFOLIO COMPANY'S BOARD" means Man-Glenwood Lexington Associates Portfolio,
LLC's Board of Managers.
"SAI" means the Portfolio Company's statement of additional information filed in
correlation with its prospectus.
"SERVICE PROVIDERS" means broker-dealers and certain financial advisers that
have agreed to provide ongoing investor services and account maintenance
services to investors in Lexington that are their customers.
APP-12
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.................................................... 1
ARTICLE II ORGANIZATION; ADMISSION OF MEMBERS............................ 4
Section 2.1 Formation of Limited Liability Company.................... 4
Section 2.2 Name...................................................... 5
Section 2.3 Principal and Registered Office........................... 5
Section 2.4 Duration.................................................. 5
Section 2.5 Business of the Fund...................................... 5
Section 2.6 Members................................................... 6
Section 2.7 Limited Liability......................................... 6
ARTICLE III NET WORTH OF MANAGING MEMBER................................. 6
ARTICLE IV CAPITAL CONTRIBUTIONS; UNITS.................................. 6
ARTICLE V ALLOCATION OF PROFITS AND LOSSES............................... 7
Section 5.1 Capital Accounts and Allocations.......................... 7
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....... 10
Section 5.6 Limited Liability of Members.............................. 10
Section 5.7 Return of Capital Contributions........................... 10
ARTICLE VI MANAGEMENT OF THE FUND........................................ 10
Section 6.1 Management of the Fund.................................... 10
Section 6.2 Compliance with the NASAA Guidelines...................... 11
ARTICLE VII AUDITS AND REPORTS TO MEMBERS................................ 12
Section 7.1 Audits and Reports to Members............................. 12
ARTICLE VIII ASSIGNABILITY OF UNITS...................................... 12
Section 8.1 Assignability of Units.................................... 12
A-i
ARTICLE IX REDEMPTIONS................................................... 13
Section 9.1 Redemptions............................................... 13
ARTICLE X OFFERING OF UNITS.............................................. 14
Section 10.1 Continuous Offering of Units.............................. 14
ARTICLE XI ADDITIONAL OFFERINGS; DIFFERENT BUSINESS TERMS................ 14
Section 11.1 Additional Offerings...................................... 14
Section 11.2 Different Business Terms.................................. 15
ARTICLE XII SPECIAL POWER OF ATTORNEY.................................... 15
Section 12.1 Special Power of Attorney................................. 15
ARTICLE XIII WITHDRAWAL OF A MEMBER...................................... 15
Section 13.1 Withdrawal of a Member.................................... 15
ARTICLE XIV STANDARD OF LIABILITY; INDEMNIFICATION....................... 16
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................ 18
ARTICLE XV AMENDMENTS; MEETINGS.......................................... 18
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............................ 19
Section 15.4 Opportunity to Redeem..................................... 19
ARTICLE XVI GOVERNING LAW................................................ 19
Section 16.1 Governing Law............................................. 19
ARTICLE XVII MISCELLANEOUS............................................... 19
Section 17.1 Notices................................................... 19
Section 17.2 Binding Effect............................................ 20
Section 17.3 Captions.................................................. 20
A-ii
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 April 14,
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 SEI Investments 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.
A-1
"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 A Class and B Class initially authorized invest in the same AHL
Diversified Program and cash and cash equivalents, however, the Class B Units
invest a limited portion of their capital in Man-Glenwood Lexington TEI, LLC
while the Class A 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.
"INVESTMENT COMPANY ACT" -- The Investment Company Act of 1940, as amended.
A-2
"MAJORITY IN INTEREST" -- Members whose Units, when aggregated, exceed 50% of
the aggregate Unit NAV of all outstanding Units.
"MAN-GLENWOOD" -- In the case of the Class A 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 B 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 employs a
corporation as an "unrelated business taxable income" ("UBTI") blocker and thus
receives no UBTI for federal income tax purposes. As a result, Class B Units,
which invest a limited portion of their capital in Man-Glenwood Lexington TEI,
LLC, will not recognize UBTI 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, as may be amended
from time to time.
"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.
A-3
"SELLING AGENT" -- Man Investments Inc. or such additional or successor selling
agents for the Units as may be designated from time to time.
"SERIES" -- Within each Class of Units, a separate series of Units subject to
the terms and conditions for such Series as described in the Prospectus and set
forth herein. Initially, the Fund shall have four Series of Units: Class A
Series 1, Class A Series 2, Class B Series 1 and Class B Series 2. The only
difference between the Series 1 and Series 2 Units within each Class is that
Series 2 Units are not charged a Client Servicing Fee and are available
exclusively to investors participating in Selling Agent asset-based or fixed fee
investment programs or in investment advisor fee based advisory programs.
"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 Series, divided by the
number of Units of such Series outstanding at the date of determination. The
initial Unit NAV of each Series 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.
A-4
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 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
A-5
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 initially offer two 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 Series 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 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). 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.
A-6
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.
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(b)(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
A-7
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).
(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(b)(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
A-8
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.
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 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.
(c) The Selling Agent shall be entitled to receive an annual Client Servicing
Fee equal to 1.25% of the average month-end Unit NAV of each Class A Series
1 and Class B Series 1 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 Class A Series 2 or Class B Series 2 Unit, or the
appropriate fraction thereof, as applicable, at the then current Unit NAV
for Class A Series 2 or Class B Series 2 Units, and no further Client
Servicing Fee shall be charged to such Unit. For example, and for the
avoidance of doubt, if, at the time of a redesignation of a Class A Series
1 Unit, the Unit NAV of Class A Series 1 Units is $160 and the Unit NAV of
Class A Series 2 Units is $200, the Class A Series 1 Unit would be
redesignated as 0.80 of a Class A Series 2 Unit.
(d) The AHL Diversified Program and Man-Glenwood shall be subject to the fees
and expenses described in the Prospectus.
(e) The Fund shall bear all expenses incurred in connection with its investment
in cash and cash equivalents.
(f) 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.
A-9
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.
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
A-10
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 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 swap 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.
A-11
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.
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
A-12
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 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, (iii) if quarter-end redemptions are requested for more than 15% of
the Fund's total 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 total outstanding Units are redeemed and (iv) in the
event that the Fund receives redemption requests in excess of such 15%
limitation for eight consecutive quarters, the Fund will cease its trading and
investment activities and will terminate as promptly as possible. 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 Series has decreased to 50% or less of the
previous month-end Unit NAV 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
A-13
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 Series with the lowest Unit NAV is in excess 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 Series 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.
A-14
SECTION 11.2 DIFFERENT BUSINESS TERMS
The Fund may offer different Series of Units within each Class of Units having
different economic terms than previously offered Series of Units; provided that
the issuance of such a new Series of Units shall in no respect adversely affect
the holders of outstanding Units.
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 liability company formation or qualification 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.
A-15
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, the Member's 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 such Member's death, the Member waives on
behalf of the Member and the Member's estate, and directs the legal
representatives of the Member's 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 such
Member's 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 paragraph
and Section 14.1, 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.
A-16
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.
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 assets 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 assets 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.
Various securities laws may impose liability even when the Managing Member acted
in good faith. 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.
A-17
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.
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 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, (viii) to designate additional
Series of Units within any Class of Units and describe the terms thereof
pursuant to Section 11.2 hereof, and (ix) 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; 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
A-18
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
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.
A-19
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.
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.
----------
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
By: executed in favor of, and delivered to,
--------------------------------- the Managing Member.
John M. Kelly
President and Director MAN INVESTMENTS (USA) CORP.
By:
------------------------------------
John M. Kelly
President and Director
A-20
EXHIBIT B
MAN-AHL 130, LLC
SUBSCRIPTION REQUIREMENTS
General
By submitting a Subscription Agreement and Power of Attorney 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 funds and (iii) agree to the terms of the
Limited Liability Company Agreement.
Investor Suitability
ONLY "ACCREDITED INVESTORS" MAY INVEST IN THE FUND.
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.
Investors from the following states must also meet certain income and/or
net worth minimums to be deemed suitable investors. In each case, net worth is
to be calculated excluding the value of your home, furnishings and automobiles:
Arizona: (a) a net worth of at least $225,000 or (b) a net worth of at
least $60,000 and an annual -- income of at least $60,000.
YOU SHOULD NOT INVEST MORE THAN 10% OF YOUR READILY MARKETABLE ASSETS
(EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) 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.
SR-1
EXHIBIT C
Man-AHL 130, LLC
Subscription Agreement and Power of Attorney
BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY, INVESTORS ARE
NOT WAIVING ANY RIGHTS UNDER ANY FEDERAL OR STATE SECURITIES LAWS.
Instructions
- - PLEASE PRINT CLEARLY IN ALL CAPITAL LETTERS AND EITHER BLUE OR BLACK INK TO
FILL OUT THIS APPLICATION.
- - BE SURE TO READ THE PROSPECTUS AND LIMITED LIABILITY COMPANY AGREEMENT OF
MAN-AHL-130, LLC (THE "FUND").
- - FOR HELP WITH THIS APPLICATION PLEASE CALL (T.B.D.).
- - PLEASE SEE PAGE __ FOR MAILING AND PAYMENT OPTIONS.
- - FOR IRAS AND KEOGH PLANS, PLEASE NOTE THAT THE CUSTODIAN'S NAME AND TAX ID
NUMBER MUST ALSO BE INCLUDED BELOW IN THE SPECIFIC AREAS PROVIDED FOR THAT
PURPOSE, AND THE CUSTODIAN MUST ALSO SIGN THIS AGREEMENT.
- - SUBSCRIPTIONS ARE REVOCABLE FOR FIVE BUSINESS DAYS AFTER SUBMISSION OF THIS
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY TO YOUR SELLING AGENT.
1. Investment Amount / Unit Class and Series Selection / Tax Status
Certification
Four Series of Units are being offered: Class A Series 1 and Series 2 Units to
taxable investors; Class B Series 1 and Series 2 Units (structured so as not to
cause investors to recognize "unrelated business taxable income" on their
investment in the Fund) to tax-exempt and tax-deferred investors Investors only.
Class A Series 2 and B Series 2 Units are offered exclusively to participants in
selling agent or investment adviser fixed fee or asset-based fee investment
programs (together, "fee based").
TAXABLE INVESTORS
A minimum initial investment of $25,000 is required.
Investment Amount $ __________________
Select one Series of Class A Units
Series 1 [ ] (Client Servicing Fee applies)
Series 2 [ ] (fee based accounts only)
TAX-EXEMPT AND TAX-DEFERRED INVESTORS ONLY
A minimum initial investment of $10,000 is required.
Investment Amount $ __________________
Select one Series of Class B Units
Series 1 [ ] (Client Servicing Fee applies)
Series 2 [ ] (fee based accounts only)
I hereby certify that I am:
an eligible tax-exempt investor [ ]
an eligible tax-deferred investor [ ]
Note: If you cannot make either certification, you likely should be completing
the "Taxable Investors" portion of this section - please consult with your
financial adviser.
2. Account Ownership/Investor Information (To be completed by the investor
and/or their Trustee or Custodian.)
TAXABLE INVESTORS (CHECK ONE)
[ ] Individual Joint (specify type) __________________* [ ] Trust
[ ] Corporation (attach corporate resolution) [ ] LLC
[ ] Partnership [ ] LLP [ ] Other (specify type) __________________*
* See page 4 for other choices
TAX-EXEMPT AND TAX-DEFERRED INVESTORS ONLY (CHECK ONE)
[ ] Traditional IRA [ ] Roth IRA [ ] Keogh [ ] Foundation
[ ] Employee Benefit Plan [ ] Employee Benefit Plan Trust
[ ] Other (specify type) _________________________*
* See page 4 for other choices
SA-1
ALL INVESTORS
Name of investor _________________________________
___________________________________________
Social Security or Taxpayer ID # _________________ Date of birth ___________
(Joint Owners: Please provide _________________ Date of birth ___________
Tax ID and Birth Date for each.)
Note: Please provide below your legal/registered address. This may not be a P.O.
Box. If you would like your statements mailed elsewhere, see Section 3.
Investors Street address _________________________
City, State and Zip ______________________________
If an individual, are you a US citizen? [ ] Yes [ ] No
If no, country or citizenship ____________________
If a Trust, Trustee's Name _______________________
Trustee's Social Security # ______________________
Date of birth of Trustee ___________
If an entity, incorporation/formation Date ___________ Place __________________
If an IRA/Keogh, Custodian's Name _______________________
Custodian's Tax ID _______________________ Contact# _______________________
Custodian's address ______________________________
If an IRA/Keogh Plan, the Custodian must specify, by checking the appropriate
box, as to where primary copies of confirmations and statements are to be
mailed: [ ] to the Custodian or [ ] to the IRA investor's mailing address
Note: For IRAs, the standard practice is for the Custodian's Tax ID # to be used
when registering a holding in the Fund.
3. Interested Party("IP") or Alternate Mailing ("AM") Address
If you would like duplicate copies of your statements sent to a third party
(other than your broker or financial adviser), or if you would like your
statements sent to an alternate mailing address, please provide the necessary
information:
IP [ ] AM [ ] Name _______________________________
Street address ___________________________________
City, State and Zip ______________________________
4. Investor Certifications
FOR AN INDIVIDUAL OR JOINT ACCOUNT, OR, FOR AN IRA, PLEASE CHECK ONE (OR MORE)
OF THE FOLLOWING BOXES DESCRIBING YOUR STATUS AS AN "ACCREDITED INVESTOR":
[ ] A natural person who had an income in excess of $200,000 in each of the two
most recent years (or joint income with your spouse in excess of $300,000 in
each of those years) and who has a reasonable expectation of reaching the same
income level in the current year;
[ ] A natural person who has a net worth1 (or joint net worth with your spouse)
in excess of $1,000,000 (net worth for this purpose means total assets in excess
of total liabilities);
FOR A TRUST, CORPORATION, KEOGH PLAN OR OTHER ENTITY, PLEASE CHECK ONE (OR MORE)
OF THE FOLLOWING BOXES DESCRIBING YOUR STATUS AS AN "ACCREDITED INVESTOR":
[ ] A trust (i) with total assets in excess of $5,000,000, (ii) that was not
formed for the purpose of investing in the Fund, and (iii) of which the person
responsible for directing the investment of assets in the Fund has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of the prospective investment;
[ ] An entity with total assets in excess of $5,000,000 that was not formed for
the purpose of investing in the Fund and that is one of the following: (i) a
corporation; (ii) a partnership; (iii) a limited liability company; (iv) a
Massachusetts or similar business trust; or (v) an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended;
[ ] An entity licensed, or subject to supervision, by U.S. federal or state
examining authorities as a "bank," "savings and loan association," "insurance
company," or "small business investment company" (within the meaning of 17
C.F.R. Sections 230.501(a)) or an account for which a bank or savings and loan
association is subscribing in a fiduciary capacity;
[ ] A broker or dealer registered with the SEC under the Securities Exchange Act
of 1934, as amended (the "Exchange Act");
[ ] An investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act");
[ ] An entity that has elected to be treated or qualifies as a "business
development company" within the meaning of Section 2(a)(48) of the 1940 Act or
Section 202(a)(22) of the Advisers Act;
[ ] An insurance company as defined in Section 2(13) of the Securities Act of
1933, as amended ("1933 Act");
[ ] A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958, as amended;
SA-2
[ ] A plan established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of $5,000,000;
[ ] An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000, or, if a selfdirected plan, with investment decisions made solely
by persons that are "accredited investors" (as defined in Regulation D under the
1933 Act); or
[ ] An entity in which all of the equity owners are "accredited investors" (as
described above).
FOR INVESTORS IN ANY OF THE BELOW STATES:
[ ] If you are an investor from a State listed below, in addition to being an
"accredited investor," you must also meet the minimum net worth or minimum net
worth and minimum annual income standard for your State as described below. In
each case, net worth is to be calculated excluding the value of your home,
furnishings and automobiles:
Arizona: (a) Net worth of at least $225,000 or (b) net worth of at least
$60,000 and an annual income of least $60,000.
BY COMPLETING THE SECTION ABOVE AND SIGNING BELOW YOU FURTHER REPRESENT THAT:
- - You are of legal age and legally competent to execute the Subscription
Agreement and Power of Attorney Signature Page.
- - 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.
- - 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 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.
- - You are not a charitable remainder trust.
- - You are not (A) a non-resident alien or (B) a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in
the Internal Revenue Code of 1986, as amended) for purposes of U.S. Federal
income taxation.
- - If you are a fiduciary executing this Investor Certificate on behalf of a
Plan (the "Fiduciary"), you represent and warrant that you have considered
the following with respect to the Plan's investment in the Fund and have
determined that, in review of such considerations, the investment is
consistent with the Fiduciary's responsibilities under ERISA: (i) the
fiduciary investment standards under ERISA in the context of the Plan's
particular circumstances; (ii) the permissibility of an investment in the
Fund under the documents governing the Plan and the Fiduciary; and (iii)
the risks associated with an investment in the Fund and the fact that
redemptions are permitted only quarterly and are limited to 15% of the
Fund's net asset value as of any quarter end.
- - You understand that it may be a violation of state and federal law for you
to provide this certification if you know that it is not true. You have
received the prospectus of the Fund. You understand that an investment in
the Fund involves a considerable amount of risk and that some or all of the
investment may be lost. You understand that an investment in the Fund is
suitable only for investors who can bear the risk associated with the
limited liquidity of the investment and should be viewed as a long-term
investment.
- - You understand that the Fund and its affiliates are relying on the
certifications and agreements made herein in determining your qualification
and suitability as an investor in the Fund. You understand that an
investment in the Fund is not appropriate for, and may not be acquired by,
any person who cannot make these certifications, and agree to indemnify Man
Investments Inc. and its affiliates and hold them harmless from any
liability that you may incur as a result of this certification being untrue
in any respect.
- - You understand that units of Man-AHL 130, LLC are not deposits or
obligations of any bank, are not guaranteed by any bank, are not insured by
the FDIC or any other agency and involve investment risks, including the
possible loss of the principal amount invested.
- ----------
* As used herein, "net worth" means the excess of total assets at fair market
value, including home, over total liabilities. For the purpose of
determining "net worth", the principal residence owned by an individual
shall be valued at either (A) cost, including the cost of improvements, net
of current encumbrances upon the property, or (B) the appraised value of
the property as determined by an institutional lender, net of current
encumbrances upon the property.
(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
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).
SA-3
5. Financial Account Information
Upon repurchase of your units by the Fund, do you want the proceeds paid to you
by:
[ ] check? (If so, check the box and proceed to Section 6)
[ ] wire transfer? (If so, check the box and provide the information below)
Bank Name ___________________________
ABA Routing Number ___________________________
Credit to: ___________________________
Account Number ___________________________
For further credit to: ___________________________
Name(s) on the Account ___________________________
___________________________
Account Number ___________________________
6. Acknowledgements and Signature
YOU ACKNOWLEDGE AND AGREE AS FOLLOWS:
- - You either are, or not required to be, registered with the Commodity
Futures Trading Commission and a member of the National Futures
Association.
- - If you are signing on behalf of an entity, you are duly authorized to open
this account and to conduct transactions in this account on behalf of that
entity.
- - You are purchasing units for your own account, and not with a view to the
distribution, assignment, transfer or other disposition of the units.
- - You have received the current prospectus for the Fund.
- - You are eligible to invest in the Fund and you have checked the appropriate
box (or boxes) in Section 4 describing your eligibility.
- - All of the information provided herein is true, accurate, and complete.
- - You authorize us to use other sources of information, including obtaining a
credit report or other financial responsibility report about you, at any
time to verify the information provided herein and to determine the
identity of the owners of your account. Upon written request, we will
provide the name and address of the credit reporting agency used.
- - By signing below, you hereby agree to be bound by the terms of the Limited
Liability Company Agreement of the Fund including its Power of Attorney
provisions, as set forth in section 12.1 of the Agreement. To the extent
you believe it necessary, you have consulted with your tax and legal
advisors regarding your investment in the Fund.
You agree that the Fund, the Distributor and their managers, directors, officers
and employees will not be held liable for any loss, liability, damage, or
expense for relying upon this application or any instructions including
telephone instructions they reasonably believe are authentic. If a taxpayer
identification number is not provided and certified, all dividends paid will be
subject to Federal backup withholding.
7. Power of Attorney
- - I irrevocably appoint Man Investments (USA) Corp. (the "Managing Member")
and each officer thereof as my true and lawful Attorney-in-Fact, with full
power of substitution, in my name, place and stead, 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, including the Limited Liability Company Agreement itself.
TAXPAYER IDENTIFICATION NUMBER CERTIFICATION
UNDER PENALTIES OF PERJURY, YOU CERTIFY THAT:
1. THE NUMBER SHOWN ON THIS FORM IS YOUR CORRECT TAXPAYER IDENTIFICATION
NUMBER (OR YOU ARE WAITING FOR A NUMBER TO BE ISSUED TO YOU);
2. YOU ARE NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (A) YOU ARE EXEMPT FROM
BACKUP WITHHOLDING, OR (B) YOU HAVE NOT BEEN NOTIFIED BY THE INTERNAL
REVENUE SERVICE ("IRS") THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING AS A
RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (C) THE IRS HAS
NOTIFIED YOU THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING; AND
3. YOU ARE A U.S. PERSON (INCLUDES A U.S. RESIDENT ALIEN) AND AGREE TO NOTIFY
THE FUND WITHIN 60 DAYS OF THE DATE THAT YOU CEASE TO BE A U.S. PERSON.
YOU MUST CROSS OUT ITEM 2 ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU
ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST
OR DIVIDENDS ON YOUR TAX RETURN. THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE
YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
SA-4
REMINDER FOR IRAS/KEOGH PLANS ONLY: THE CUSTODIAN MUST ALSO SIGN THIS
APPLICATION.
Investor:
Signature Date
------------------------------------- -----------------
Title Date
----------------------------------------- -----------------
Signature Date
------------------------------------- -----------------
Title Date
----------------------------------------- -----------------
Custodian
- -----------------------------------------------
(Name, Authorized Signature)
Checklist
Did you remember to:
- - SIGN THE APPLICATION?
- - FILL OUT ALL APPLICABLE SECTIONS OF THE APPLICATION?
- - FILL OUT THE DOLLAR AMOUNT OF THE INVESTMENT?
- - ATTACH YOUR CHECK OR ISSUE PROPER WIRE INSTRUCTIONS?
8. Financial Adviser/Dealer Information (To be completed by the Financial
Adviser/Dealer.)
I hereby authorize Man Investments Inc. (the "Selling Agent") to act as my agent
in connection with transactions under this authorization form and confirm the
Unit Class selection made in Section 1. I guarantee the signatures on this
application and the legal capacity of the signers. Further, I have confirmed the
eligibility certifications appearing above under Sections 1 and 4.
I hereby certify that I have informed the investor of all pertinent facts
relating to the: risks; tax consequences; liquidity and marketability;
management; and control of the Managing Member with respect to an investment in
the Units, as set forth in the Fund's Prospectus. I have also informed the
investor of the unlikelihood of a public trading market developing for the
Units. I do not have discretionary authority over the account of the investor
or I have prior written approval to exercise discretion with respect to the
investor's investment in the Units (copy attached hereto).
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 an investment in
the Fund is suitable for such investor in light of his/her financial position,
net worth and other suitability characteristics.
The Registered Representative MUST sign below in order to substantiate
compliance with Rule 2810 of the NASD's Conduct Rules.
Representative's name ____________________________
Adviser/Dealer name ______________________________
Branch office address ____________________________
City, State and ZIP ______________________________
Representative's E-mail address __________________
Branch number ________________ Representative's number _________________________
Branch phone number ________________ Fax number ________________________________
- ----------------------------------------------- ----------------
Authorized Representative's signature Date
(Note: The same individual should not sign in both places).
- ----------------------------------------------- ----------------
Principal/Branch Office Manager's signature Date
Principal/Branch Office Manager's name ____________________________________
Name for Account Registration ____________________________________
Account Number ___________________________________
Clearing firm name/number ____________________________________
Investment dates are expected to be as of the first business day of each
calendar month.
Your Financial Adviser may require earlier alternate delivery instructions other
than those listed below.
Applications for investment at the next investment date must be received at
least five business days prior to that date.
Please forward this application as follows:
ORIGINAL COPIES
- - IF BY OVERNIGHT COURIER (FEDEX, ETC.), TO:
Man-AHL 130, LLC
T.B.D
- - IF BY U.S. POSTAL SERVICE, TO:
Man-AHL 130, LLC
T.B.D.
SA-5
ADVANCE COPIES (WITH ORIGINALS TO FOLLOW)
- - IF BY FAX, TO:
Man-AHL 130, LLC
T.B.D.
- - IF BY SCAN.PDF FILE VIA E-MAIL, TO:
T.B.D
Funds to be invested at the next investment date should be forwarded as follows:
- - IF BY FUND/SERV (THROUGH YOUR FINANCIAL ADVISER/DEALER), PLEASE TRANSMIT NO
LATER THAN FIVE BUSINESS DAYS PRIOR TO THE NEXT INVESTMENT DATE.
- - IF BY FEDERAL FUNDS WIRE, PLEASE TRANSMIT FOR RECEIPT FIVE BUSINESS DAYS
PRIOR TO THE NEXT INVESTMENT DATE, TO:
T.B.D.
T.B.D.
ABA Number T.B.D.
Account name - Man-AHL 130, LLC
Account Number - T.B.D.
Ref: (Name of Account Owner)
- - IF BY CHECK, PLEASE MAKE PAYABLE TO THE ORDER OF "MAN-AHL 130, LLC" AND
MAIL OR COURIER (SEE ADDRESSES ABOVE) IN TIME TO ALLOW RECEIPT BY NO LATER
THAN 14 CALENDAR DAYS PRIOR TO THE NEXT INVESTMENT DATE.
- - NO CASH POLICY - THE FUND DOES NOT ACCEPT CASH. `CASH' FOR THE PURPOSES OF
THIS POLICY INCLUDES CURRENCY, CASHIER'S CHECKS, BANK DRAFTS, TRAVELERS
CHECKS AND MONEY ORDERS. IN ADDITION, THE FUND DOES NOT ACCEPT THIRD PARTY
CHECKS OR CREDIT CARD CONVENIENCE CHECKS.
INVESTOR TYPES - NOTES/OTHER CHOICES:
JOINT ACCOUNTS: "Tenants in Common", "Joint Tenants with Rights of
Survivorship", "Community Property", "Tenancy by the Entirety" - Joint owners
will be considered to be Joint Tenants with Rights of Survivorship unless you
indicate otherwise or if that registration is not available in your state.
OTHER: "Gift to Minor", "Foundation", "Exempt Organization", "Association",
"Insurance Company - General Account", "Insurance Company - Separate Account",
"Employee Benefit Plan", "Employee Benefit Plan Trust", or if other than the
above, please specify on page 1.
SA-6
[PAGE LEFT BLANK INTENTIONALLY]
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........... $ 1,770*
National Association of Securities Dealers, Inc. Filing Fee... 1,500*
Printing Expenses............................................. 75,000
Fees of Certified Public Accountants.......................... 28,000
Blue Sky Expenses (Excluding Legal Fees)...................... 30,000
Fees of Counsel............................................... 280,000
Advertising and Sales Literature.............................. 25,000
Miscellaneous Offering Costs.................................. 19,730
--------
Total......................................................... $461,000
- ----------
* Fees marked with an asterisk are exact rather than estimated and
approximate.
+ All of the foregoing fees will be paid by the Managing Member, not the
Fund, and without reimbursement by the Fund.
----------
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.
The Managing Member invested $10,000 of "seed capital" in the
Registrant on May 26, 2005.
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
(amended) 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
(amended) 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).
23.06 Consent of Sidley Austin Brown & Wood LLP.
23.07 Consent of Deloitte & Touche LLP.
23.08 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).
II-2
99.03* North American Securities Administrators Association, Inc.
Guidelines for the Registration of Commodity Pool Programs.
99.04 Prospectus of Man-Glenwood Lexington LLC filed with the Securities
and Exchange Commission on August 11, 2005, Registration No.
333-118854, is incorporated herein by reference.
99.05 Prospectus of Man-Glenwood Lexington TEI, LLC filed with the
Securities and Exchange Commission on August 11, 2005, Registration
No. 333-120945, is incorporated herein by reference.
- ----------
* Previously filed.
** 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
II-3
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-4
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 21st day of October, 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 October 21, 2005
- ----------------------------------- (Principal Executive
John M. Kelly Officer)
/s/ ALICIA DERRAH Chief Financial October 21, 2005
- ----------------------------------- Office
Alicia Derrah
/s/ MICHAEL LOZOWSKI Vice President and October 21, 2005
- ----------------------------------- Director
Michael Lozowski
/s/ STEVEN ZORIC Vice President, October 21, 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 October 21, 2005
--------------------------------
John M. Kelly
President and Director
II-5
As filed with the Securities and Exchange Commission on October 21, 2005
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
EXHIBITS
To
AMENDMENT NO. 2
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------
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
(amended) 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
(amended) 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).
23.06 Consent of Sidley Austin Brown & Wood LLP.
23.07 Consent of Deloitte & Touche LLP.
23.08 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 of Man-Glenwood Lexington LLC filed with the Securities
and Exchange Commission on August 11, 2005, Registration No.
333-118854, is incorporated herein by reference.
99.05 Prospectus of Man-Glenwood Lexington TEI, LLC filed with the
Securities and Exchange Commission on August 11, 2005, Registration
No. 333-120945, is incorporated herein by reference.
- ----------
* Previously filed.
** To be filed by amendment.