As filed with the Securities and Exchange Commission on July 18, 2008
REGISTRATION NO. 333-126172
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MAN-AHL 130, LLC
(Exact name of registrant as specified in its charter)
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)
UWE EBERLE
C/O MAN INVESTMENTS (USA) CORP.
123 NORTH WACKER DRIVE, 28TH FLOOR
CHICAGO, ILLINOIS 60606
(312) 881-6800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
David R. Sawyier
James B. Biery
Sidley Austin LLP
One South Dearborn Street
Chicago, Illinois 60603
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act") check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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MAN-AHL 130, LLC
UNITS OF LIMITED LIABILITY COMPANY INTEREST
343,433 CLASS A UNITS AND
463,126 CLASS B UNITS
(MAN INVESTMENTS LOGO)
MAN-AHL 130
Man-AHL 130, LLC ("Man-AHL 130") trades in the global futures and forward
markets pursuant to the AHL Diversified Program, a speculative, trend-following
managed futures strategy.
Man-AHL 130 invests approximately 30% of its capital in Man-Glenwood Lexington,
LLC and Man-Glenwood Lexington TEI, LLC (collectively, the "Man-Glenwood
Funds"), 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 the Man-Glenwood Funds.
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 Man-AHL 130.
THE OFFERING
Man Investments Inc. (the "Selling Agent") and other selling agents are offering
the Units on a best efforts, not a "firm commitment," basis.
Units of each Class are continuously offered as of the first business day of
each calendar month without any scheduled termination of the offering, and no
minimum number of Units need be sold as of the beginning of any month for Units
then to be issued.
Units of each Class are offered at their respective Net Asset Value at the end
of the previous month. The minimum investment in Class A Units is $25,000, and
in Class B Units, $10,000; the minimum additional investment in either Class is
$10,000 and may be made in increments of $1,000 for amounts in excess of
$10,000.
As of May 31, 2008, the Net Asset Value of a Class A Series 2 Unit sold on April
1, 2007 for $100 was $137.06; that of a Class A Series 1 Unit sold on July 1,
2007 for $112.32 was $135.51; that of a Class B Series 2 Unit sold on April 1,
2008 for $133.07 was $136.76; and that of a Class B Series 1 Unit sold on April
1, 2008 for $131.84 was $135.22.
"ACCREDITED INVESTORS" ONLY
The Managing Member has determined to limit the persons eligible to invest in
the Units to "Accredited Investors." 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 (including assets held jointly with spouse); or (ii) an entity with a
net worth of $5,000,000.
THE RISKS
- - MAN-AHL 130 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 10. YOU
MAY LOSE ALL OR SUBSTANTIALLY ALL OF YOUR INVESTMENT IN MAN-AHL 130.
- - Man-AHL 130 is a speculative and leveraged managed futures fund. The AHL
Diversified Program will typically hold futures positions with a face
amount equal to approximately 300% to 800% of Man-AHL 130's Net Asset
Value. The Man-Glenwood Funds currently leverage their investments in the
portfolio funds in which they invest to approximately 120% of each of the
Man-Glenwood Funds' net asset value. Leverage magnifies losses as well as
profits.
- - The AHL Diversified Program is dependent for its profitability on there
being sustained price trends of the type that the AHL Diversified Program
is designed to identify.
- - Man-AHL 130's substantial expenses must be offset by investment profits and
interest income for Man-AHL 130 to be profitable. The Managing Member
estimates the annual expenses of Man-AHL 130, irrespective of
profitability, at approximately 5.75% of Class A Series 1 and Class B
Series 1 Units', and 4.50% of Class A Series 2 and Class B Series 2
Units', average Net Asset Value, on a break-even basis.
- - Man-AHL 130 is subject to material conflicts of interest; members of the
Man Group act as the manager of the AHL Diversified Program and as the
manager and selling agent of the Man-Glenwood Funds. The Selling Agent is
also an affiliate.
- - Investors in Man-AHL 130 ("Unitholders") must pay tax every year on any
income attributable to their investment in Man-AHL 130, irrespective of
receiving no distributions from Man-AHL 130.
- - Man-AHL 130 trades to a substantial degree on non-US markets which are not
subject to the same regulations as their US counterparts.
- - Man-AHL 130 is recently formed and has a limited 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 Man-AHL 130'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.
[_______], 2008
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 37 TO
40 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO
RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, ON PAGE 8.
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 10 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.
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PLEASE SEE THE IMPORTANT PRIVACY POLICY ON PAGES 53 TO 54.
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MAN-AHL 130 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 MAN-AHL 130 THEY WILL
NOT HAVE THE BENEFIT OF ANY OF THE NUMEROUS INVESTOR PROTECTION PROVISIONS OF
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
DUE TO MAN-AHL 130'S STATUS AS A "COMMODITY POOL," APPLICABLE CFTC RULES
REQUIRE THAT THIS PROSPECTUS BE ACCOMPANIED BY MAN-AHL 130'S MOST CURRENT
MONTHLY ACCOUNT STATEMENT OR BY SUMMARY PERFORMANCE INFORMATION RELATING TO
MAN-AHL 130, CURRENT WITHIN 60 CALENDAR DAYS OF THE DATE OF THE DELIVERY OF THIS
PROSPECTUS.
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i
THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN
MAN-AHL 130'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.
MAN-AHL 130 FILES 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.
MAN-AHL 130'S REGISTRATION STATEMENT AND REPORT FILINGS WILL ALSO BE POSTED
AT THE SEC WEBSITE AT WWW.SEC.GOV.
THE MAN-GLENWOOD FUNDS ARE PUBLICLY-OFFERED "INVESTMENT COMPANIES,"
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940. INFORMATION REGARDING THE
MAN-GLENWOOD FUNDS 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 MAN-AHL 130"
AT PAGE 43.
THE MANAGING MEMBER, THE SELLING AGENT, AND THE TRADING ADVISOR ARE 100%
OWNED, DIRECTLY OR INDIRECTLY, BY MAN GROUP PLC. MAN GROUP PLC HOLDS A
SIGNIFICANT MINORITY INTEREST IN MF GLOBAL LTD., THE PARENT COMPANY OF MF GLOBAL
INC., ONE OF MAN-AHL 130'S FUTURES BROKERS.
FOR CONVENIENCE, MAN GROUP PLC AND ENTITIES AFFILIATED WITH IT ARE
SOMETIMES COLLECTIVELY REFERRED TO AS "MAN GROUP"
iii
CONTENTS
PART ONE
DISCLOSURE DOCUMENT
SECTION PAGE
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Summary.............................................................. 3
Risk Factors......................................................... 10
You May Lose Your Entire Investment............................... 10
Man-AHL 130 Uses Leverage, Which Increases Risk................... 10
Man-AHL 130 is the First Public Futures Fund Sponsored by the
Managing Member................................................ 10
Man-AHL 130 Has a Limited Operating History....................... 10
"Risk of Ruin".................................................... 10
Man-AHL 130's Performance is Expected to be Volatile.............. 10
Man-AHL 130's Substantial Fees and Expenses Will Cause Losses
Unless Offset by Profits and Interest Income................... 10
An Investment in Man-AHL 130 is not a Liquid Investment........... 11
Substantial Redemptions May Cause Man-AHL 130 to Incur Losses..... 11
Man-AHL 130 is Subject to Conflicts of Interest................... 11
The Managing Member Has Not Established Formal Procedures to
Resolve Conflicts of Interest.................................. 11
Man-AHL 130's Investment in the Man-Glenwood Funds May Incur
Losses......................................................... 12
Market Disruptions................................................ 12
Changes in Regulatory Requirements May be Adverse to Man-AHL 130.. 12
The AHL Incentive Fee Calculation May Not Reflect Your
Investment Experience.......................................... 12
You Will be Taxed Each Year on Your Share of Man-AHL 130
Profits; You Will be Required to Extend the Filing Date of
Your Tax Returns............................................... 13
Man-AHL 130 Could Lose Assets and Have Its Trading Disrupted
Due to the Bankruptcy of a Commodity Broker, Counterparty or
Others......................................................... 13
Trading on Foreign Exchanges Presents Greater Risk Than Trading
on US Exchanges................................................ 13
The Absence of Regulation in Certain Markets Could Expose
Man-AHL 130 to Significant Loss................................ 13
Exchange-Rate Risk................................................ 14
No Independent Experts Representing Investors..................... 14
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......................................................... 14
AHL's Trading Decisions Are Based on Technical Systems, Not on
an Analysis of Economic Factors, and May be Less Responsive
to Continuously Changing Markets............................... 14
Increased Competition Among Trend-Following Traders Could
Reduce AHL's Profitability..................................... 14
AHL Has No Control Over the Market Conditions Which Will
Dominate AHL's Results......................................... 15
Reliance on a Single Futures Trading Strategy Creates Exposure
to the Risk of Obsolescence of That Strategy................... 15
Possible Effects of Speculative Position Limits................... 15
Possible Effects of Daily Price Fluctuation Limits................ 15
Man-AHL 130 is Unlikely to Realize its Potential Except in the
Medium- to Long-Term........................................... 15
Use of Proceeds................................................... 15
Proprietary Performance of Man-AHL 130............................ 20
Management of Man-AHL 130......................................... 28
Net Asset Value................................................... 36
Fees and Expenses Paid by Man-AHL 130............................. 37
Futures Brokers................................................... 40
Redemptions and Transfers of Units................................ 42
Conflicts of Interests; Transactions Between Man Group and
Man-AHL 130.................................................... 43
Summary of the Limited Liability Company Agreement................ 45
Tax Consequences.................................................. 47
Benefit Plan Investors........................................... 49
Plan of Distribution............................................. 51
Reports........................................................... 53
Lawyers; Accountants............................................. 53
Privacy Policy.................................................... 53
Index to Financial Statements..................................... 55
Appendix -- Man-Glenwood Lexington, LLC and Man-Glenwood
Lexington TEI, LLC Appendix.................................... APP-1
1
PART TWO
STATEMENT OF ADDITIONAL
INFORMATION
SECTION PAGE
- ------- --------
Futures Markets and Trading Methods.................................. Pt. II-2
Alternative Investment Strategies in General......................... Pt. II-4
Supplemental Performance Information................................. Pt. II-6
Exhibit A -- Limited Liability Company Agreement..................... A-1
Exhibit B -- Subscription Requirements............................... SR-1
Exhibit C -- Investor Application Forms.............................. IA-1
Execution copies of the Investor Application Forms accompany this Prospectus.
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.
2
SUMMARY
MAN-AHL 130
Man-AHL 130, LLC ("Man-AHL 130") is a limited liability company organized
in 2005 under the laws of Delaware. The fiscal year of Man-AHL 130 ends on March
31, and its taxable year ends on December 31. Man-AHL 130 began trading on April
2, 2007.
Man-AHL 130 is a speculative and leveraged managed futures fund which
trades pursuant to the AHL Diversified Program (the "AHL Diversified Program"),
with the objective of seeking medium- to long-term capital appreciation.
The AHL Diversified Program is a global managed futures program directed on
behalf of Man-AHL 130 by Man-AHL (USA) Limited ("AHL"), a member of the Man
Group, which is registered with the CFTC as a commodity trading advisor ("CTA"),
is a member of the National Futures Association (the "NFA") and is registered in
the United Kingdom with the Financial Services Authority, and, in part, by its
affiliate (and affiliate of the Managing Member), Man Investments Limited
("MIL"), a company organized under the laws of the United Kingdom. As of April
21, 2008, Man-AHL 130 engaged MIL to implement the foreign currency forwards
trading component of the AHL Diversified Program at no additional cost to
Man-AHL 130. The personnel of MIL responsible for implementing the foreign
currency forwards trading component of the AHL Diversified Program on behalf of
Man-AHL 130 are the same as those of AHL who otherwise implement the AHL
Diversified Program. AHL and MIL are collectively referred to in this prospectus
as "AHL" unless the context clearly dictates otherwise.
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 approximately 34 exchanges in 100
different global markets encompassing stock indices, bonds, currencies,
short-term interest rates, metals, energies and soft commodities.
AHL's trading process is the product of sophisticated research and applies
a technical approach that has been operated, with modifications, by Man Group
since 1989. 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 has been operating
in the US since April 1998, although the AHL Diversified Program, as traded on
behalf of non-US clients, 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.
Man-AHL 130 maintains approximately 70% of its capital in cash and cash
equivalents. Man-AHL 130 invests the remainder of its capital -- approximately
30% -- in Man-Glenwood Lexington, LLC and Man-Glenwood Lexington TEI, LLC (the
"Man-Glenwood Funds"), multi-strategy, multi-manager funds of funds which
emphasize efficient allocation of investor capital among hedge funds and other
pooled investment vehicles with a range of investment strategies, managed by
independent investment managers. The 30% investment in the Man-Glenwood Funds is
made by investing approximately 30% of Class A capital in Man-Glenwood
Lexington, LLC and 30% of Class B capital in Class A units of Man-Glenwood
Lexington TEI, LLC, each a registered investment company. The Man-Glenwood
Funds, 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").
Man Investments (USA) Corp. (the "Managing Member") believes that
trend-following CTAs tend to have a low correlation with funds of funds as an
asset class. The Man-Glenwood Funds have historically performed differently from
the AHL Diversified Program. Such low correlation of results can reduce the risk
of Man-AHL 130's overall portfolio, with the potential for Man-Glenwood Funds'
gains to offset AHL Diversified Program losses and vice versa. The Managing
Member will attempt to rebalance Man-AHL 130's portfolio on a quarterly basis so
as to maintain Man-AHL 130's investment in the Man-Glenwood Funds at
approximately 30% of Man-AHL 130 capital. If the Managing Member deems it to be
necessary or
3
advisable, however, the Managing Member will reduce or eliminate its investment
in the Man-Glenwood Funds.
MANAGING MEMBER
Man Investments (USA) Corp. is the Managing Member of Man-AHL 130 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 leading global provider of alternative investment
products and solutions for private and institutional investors worldwide seeking
to deliver absolute returns with a low correlation to equity and bond market
benchmarks. The Man Group has an extensive history of product development and
strategy and an extensive global investor service and distribution network. The
Man Investments division of Man Group plc has launched approximately 500
alternative investment products, including numerous commodity pools, and, as of
March 31, 2008, had over $74.6 billion under management.
AHL and Glenwood Capital Investments, L.L.C. ("Glenwood"), which manage the
AHL Diversified Program for Man-AHL 130 and the Man-Glenwood Funds,
respectively, are members of the Man Group.
Man Investments Inc., the Selling Agent, is a registered broker-dealer and
is an affiliate of the Managing Member. The Selling Agent engages additional
third-party selling agents ("Additional Selling Agents") to assist it with the
placement of Man-AHL 130's Units.
PRINCIPAL OFFICES
Man-AHL 130'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 Man-AHL 130 will be located at the offices of SEI Global
Services, Inc., Man-AHL 130's administrator, located at One Freedom Valley
Drive, Oaks, Pennsylvania 19456.
THE OFFERING
OFFERING
Man-AHL 130 is offering Units of each Class as of the beginning of each
month at their respective Net Asset Value at the end of the previous month.
The Managing Member purchased Class A Series 2 Units as an initial
contribution to Man-AHL 130 in an amount equal to $15 million as of March 30,
2007 (the "Managing Member's Contribution"). The Managing Member may only make
withdrawals from the Managing Member's Contribution to the extent that such
withdrawals are offset, dollar for dollar, by additional subscriptions for Units
of either Class. Such withdrawals may be made taking into account redemptions
and losses of Man-AHL 130 and subject to the terms of Class A Units, the terms
of Man-AHL 130's Limited Liability Company Agreement (the "LLC Agreement") and
the requirement that the Managing Member maintain an investment in Man-AHL 130
equal to at least the greater of $25,000 or 1% of Man-AHL 130's Net Asset Value
(inclusive of the Managing Member's Contribution).
Investors' participation in Man-AHL 130 is determined on the basis of the dollar
amount which they invest.
Units will be issued in fractions calculated to three decimal points.
CLASSES AND SERIES OF UNITS
Man-AHL 130 offers two Classes of Units. These Classes have virtually
identical trading and investment portfolios. Class A Units are offered only to
taxable investors, while Class B Units are offered only to tax-exempt investors.
Class B Units have been structured so as not to cause tax-exempt investors to
recognize "unrelated business taxable income." "Benefit plan investors" (as
defined below) are not eligible to purchase Class A Units.
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
(i) investors participating in
4
selling agent asset-based or fixed-fee investment programs, or in investment
advisors' fee-based advisory programs, or (ii) direct institutional investors,
including, but not limited to, certain tax-exempt employee benefit trusts,
employee benefit plans, deferred compensation plans and individual retirement
accounts that purchase Units through the Selling Agent and are not charged the
Client Servicing Fee.
MINIMUM INVESTMENT
Minimum initial investment: Class A Units, $25,000; Class B Units, $10,000.
Minimum additional investments: $10,000 for either Class of Units and may be
made in increments of $1,000 for amounts in excess of $10,000.
MAJOR RISKS OF MAN-AHL 130
Man-AHL 130 is speculative. You may lose all or substantially all of your
investment in Man-AHL 130.
Man-AHL 130 is recently formed and thus has a limited performance history.
The past performance of Man-AHL 130, the AHL Diversified Program and the
Man-Glenwood Funds is not necessarily indicative of the future results of
Man-AHL 130.
Man-AHL 130 is leveraged. The AHL Diversified Program typically holds
futures positions with a face amount equal to 300% to 800% of Man-AHL 130's Net
Asset Value. The Man-Glenwood Funds currently leverage their indirect
investments in the Sub-Funds in which they invest up to approximately 120% of
each of the Man-Glenwood Funds' net asset value (or approximately 36% of Man-AHL
130's Net Asset Value). Leverage magnifies losses as well as profits.
Man-AHL 130's performance is expected to be volatile. Man-AHL 130 may
suffer sudden and substantial losses from time to time, and the value of the
Units will be variable.
Man-AHL 130 trades to a substantial degree on non-US markets which are not
subject to the same regulations as are their US counterparts.
Man-AHL 130 is subject to substantial fees and expenses. To be profitable,
Man-AHL 130's fees and expenses must be offset by trading profits and interest
income. The Managing Member estimates the annual expenses of Man-AHL 130,
irrespective of profitability, at approximately 5.75% of Class A Series 1 and
Class B Series 1 Units', and 4.50% of Class A Series 2 and Class B Series 2
Units', average Net Asset Value on a break-even basis.
Man-AHL 130 is subject to material conflicts of interest; members of the
Man Group act as the manager of Man AHL 130 as well as the manager of the AHL
Diversified Program and as the manager and selling agent of the Man-Glenwood
Funds. The Selling Agent is also an affiliate, and Man Group plc holds a
significant minority interest in, MF Global Ltd., the parent company of one of
Man-AHL 130's futures brokers.
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 an irrevocable
notice of redemption must be submitted and the redemption date for such Unit.
No more than 15% of Man-AHL 130's total outstanding Units may be redeemed
as of any calendar quarter-end. In the event that Man-AHL 130 receives
redemption requests in excess of such 15% limitation for eight consecutive
quarters, Man-AHL 130 will cease its trading and investment activities, will
terminate as promptly as possible and will distribute its assets to investors.
Investors, other than tax-exempt investors, must pay tax every year on any
income attributable to their investment in Man-AHL 130, irrespective of
receiving no distributions from Man-AHL 130.
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 (including assets held jointly with spouse); or
(ii) an entity with a net worth of $5,000,000. "Accredited Investor" status is
not any assurance that an investment in Man-AHL 130 is suitable for any
prospective investor.
To subscribe, you must complete and sign the Class appropriate Investor
Application Form which accompanies this Prospectus and deliver it to your
selling agent. See Exhibit B -- Subscription
5
Requirements and Exhibit C -- Investor Application Forms. You should review this
entire Prospectus carefully before deciding whether to invest in the Units.
LIMITED LIABILITY
Investors invest with limited liability and cannot lose more than their
investments and unredeemed profits.
POTENTIAL INVESTMENT ADVANTAGES
Man-AHL 130 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 had low correlation to traditional stock and bond
investments provides profit potential in rising and falling markets. There
can be no assurance that the performance of the AHL Diversified Program
will have low correlation to the general equity and debt markets.
- - An investment of 30% of Man-AHL 130's capital in the Man-Glenwood Funds,
potentially increasing overall returns and potentially performing
profitably during certain periods when the AHL Diversified Program is
unprofitable. There can be no assurance that Man-AHL 130's investment in
the Man-Glenwood Funds will be successful.
REDEMPTIONS
You may redeem your Units as of the end of any calendar quarter, upon 45
days' prior written notice to the Managing Member. In order to pay redemption
proceeds, it may be necessary for Man-AHL 130 to tender for repurchase a portion
of its investment in the Man-Glenwood Funds. Man-AHL 130 will attempt to have
such investment repurchased through the Man-Glenwood Funds' quarterly tender
process. Redemption proceeds will generally be paid within 45 days after the
quarter-end of redemption (this delay being required in order for Man-AHL 130 to
tender for repurchase a portion of its investment in the Man-Glenwood Funds).
If quarter-end redemptions are requested for more than 15% of Man-AHL 130's
total then-outstanding Units, each redemption request will be reduced pro rata
so that only 15% of Man-AHL 130'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 Man-AHL 130'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 Man-AHL 130 receives redemption requests in excess of the
15% limitation for eight consecutive quarters, Man-AHL 130 will cease its
trading and investment activities, will terminate as promptly as possible and
distribute its assets to investors.
CHARGES
Man-AHL 130's substantial expenses must be offset by trading gains and
interest income to avoid depletion of Man-AHL 130's capital.
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 be entitled to a Client Servicing Fee equal to 1/12
of 1.25% of the Net Asset Value of 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 be charged against Class A Series
2 and Class B Series 2 Units, which are offered exclusively to (i) investors
participating in selling agent asset-based or fixed-fee investment programs, or
in investment advisors' fee-based advisory programs, or (ii) direct
institutional investors, including, but not limited to, certain tax-exempt
employee benefit trusts, employee benefit plans, deferred compensation plans and
individual retirement accounts that purchase Units through the Selling Agent.
The Selling Agent is subject to the regulatory limitation that it not receive
aggregate selling commissions (i.e., the Client Servicing Fee)
6
in excess of 10% of the sale price of all Units. Once the Selling Agent has
received aggregate Client Servicing Fee payments totaling 10% of the sale price
of a Class A Series 1 or Class B Series 1 Unit, the Client Servicing Fee will
end with respect to such Unit and the Net Asset Value of such Unit will be
recalculated, and the Unit will be redesignated, in terms of Class A Series 2
and Class B Series 2 Units, as applicable, against which the Client Servicing
Fee is not charged, and no further Client Servicing Fee will be charged in
respect of such Unit. The redesignation of Units from Series 1 to Series 2 will
have no impact on the Net Asset Value of an investor's investment in Man-AHL 130
at the time of such redesignation.
ORGANIZATIONAL AND OFFERING AND ADMINISTRATIVE EXPENSES
The Managing Member, or an affiliate, has paid, without reimbursement from
Man-AHL 130, the initial organizational and offering costs of Man-AHL 130.
Man-AHL 130 has entered into an administration agreement with SEI Global
Services, Inc., an independent third party administrator (the "Administrator"),
to provide various services (such as administration, accounting, valuation, tax
reporting and investor services) at competitive rates. Total administrative
expenses of Man-AHL 130 in excess of 1/12 of 0.50% of each month-end Net Asset
Value (approximately 0.50% of Net Asset Value per annum) through March, 2009,
will be paid by, or reimbursed to Man-AHL 130 by, the Managing Member or an
affiliate. Thereafter, expenses in excess of such 0.50% per annum level will be
payable by Man-AHL 130, but may be paid by the Managing Member in its
discretion. Administrative expenses are estimated at 0.50% per annum of Man-AHL
130's average month-end Net Asset Value during a fiscal year (assuming an
average Net Asset Value of $250,000,000).
MANAGEMENT AND INCENTIVE FEES
MAN-AHL 130. The Managing Member will receive 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 Man-AHL 130's AHL
account (a 2% annual rate) -- approximately equal to Man-AHL 130's Net Asset
Value -- calculated and paid as of the end of each calendar month; and (ii) a
monthly incentive fee of 20% of any "new net profit" attributable to Man-AHL
130'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 AHL account (after deduction of monthly
management fees, expenses and brokerage commissions and excluding net interest
income) over the account's highest net asset value as of the end of any
preceding month, adjusted for capital contributions and withdrawals, 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 Man-AHL 130's AHL account, AHL must
earn back such losses (as proportionately reduced in the case of redemptions)
before generating additional incentive fees. Net profits are not reduced for
such purposes by incentive fees previously paid.
THE MAN-GLENWOOD FUNDS. Man-AHL 130's investment in the Man-Glenwood Funds
is subject to annual management, investor servicing and administrative fees and
expenses equal to approximately 3% per annum of the aggregate value of Man-AHL
130's investment in the Man-Glenwood Funds, calculated monthly and paid
quarterly.
The investment managers of the Sub-Funds (the "Sub-Fund Managers")
generally charge their Sub-Funds 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 0% to 3% annually of the net
assets under their management (including Man-AHL 130's investment indirectly
through the Portfolio Company) and the performance or incentive allocations to
the Sub-Fund Managers are generally expected to range from 20% 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 these
fees and/or allocations could be higher.
7
TRANSACTION COSTS
The AHL Diversified Program clears its futures and forward trades through
several futures brokers, including MF Global Inc., the parent company of which
is MF Global Ltd. in which Man Group plc holds a significant minority interest.
The futures commission rates charged to the AHL Diversified Program with respect
to MF Global Inc. have not been negotiated at arm's length and certain of the MF
Global Inc.'s clients may be charged lower rates. However, Man-AHL 130 will be
charged futures brokerage commissions at rates generally available to MF Global
Inc.'s unaffiliated institutional customers. Based on the actual experience of
the AHL Diversified Program, the Managing Member estimates Man-AHL 130's AHL
Diversified Program transaction costs at approximately 1.2% per year of Man-AHL
130's average month-end Net Asset Value during such year. The total brokerage
commissions paid by Man-AHL 130 in any fiscal year are limited to 3% of Man-AHL
130's average month-end Net Asset Value during such fiscal year.
Based on historical trading experience, the Managing Member estimates the
Sub-Funds' annual transaction costs at less than 1% per year of Man-AHL 130's
month-end investment in the Man-Glenwood Funds during such year.
The following Breakeven Table indicates the approximate amount of trading
profit Man-AHL 130 must earn, during the first twelve 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
SERIES 1 CLASS B
DOLLAR SERIES 1
RETURN DOLLAR RETURN
REQUIRED REQUIRED
PERCENTAGE ($25,000 ($10,000
RETURN INITIAL INITIAL
REQUIRED INVESTMENT) INVESTMENT)
FIRST FIRST FIRST
TWELVE TWELVE TWELVE
MONTHS OF MONTHS MONTHS
EXPENSES INVESTMENT OF INVESTMENT OF INVESTMENT
- -------- ---------- ------------- -------------
Management Fee ........................... 0.75% $ 187.50 $ 75.00
Aggregate Administrative Expenses(1) ..... 0.50% $ 125.00 $ 50.00
Client Servicing Fee(2) .................. 1.25% $ 312.50 $ 125.00
AHL Management Fee..... .................. 2.00% $ 500.00 $ 200.00
AHL Incentive Fee(3)... .................. 0.63% $ 157.50 $ 63.00
AHL Transaction Costs(4) ................. 1.20% $ 300.00 $ 120.00
Man-Glenwood Funds' Manage-ment Fees(5) .. 0.90% $ 225.00 $ 90.00
Sub-Fund Expenses(5)... .................. 0.60% $ 150.00 $ 60.00
Less Interest Income(6) .................. (2.08)% $ (520.00) $(208.00)
TWELVE-MONTH "BREAKEVEN" ................. 5.75% $1,437.50 $ 575.00
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 twelve months after a Class A Series 2 or Class
B Series 2 Unit is sold is 4.50%, 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 $1,125.00 and $450.00, respectively.
- ----------
(1) The Managing Member or an affiliate will assume administrative expenses in
excess of 1/12 of 0.50% of each month-end Net Asset Value (approximately
0.50% of Net Asset Value per annum) through March 2009.
(2) Not applicable to Class A Series 2 Units or Class B Series 2 Units.
(3) The AHL Diversified Program charges a monthly incentive fee equal to 20% of
any "new net profit" attributable to Man-AHL 130's AHL account. This table
assumes a "breakeven" year of trading for the Man-Glenwood Funds such that
they have each returned sufficient profits to cover their own costs, but
not in excess of such costs. A small AHL incentive fee is shown in this
table because the AHL incentive fee will be charged on the amount of
trading profit necessary to offset the costs of Man-AHL 130, other than
those of the Man-Glenwood Funds, after payment of the AHL management fee
and AHL transaction costs.
(4) Estimated; maximum AHL transaction costs are capped at 3%.
(5) Estimated; Man-Glenwood Funds' investment estimated at 30% of Man-AHL 130
assets. Sub-Fund expenses include the Sub-Fund management fees, Sub-Fund
performance fees and Sub-Fund transaction costs. However, this table
assumes a "breakeven" year of trading for the Sub-Funds such that each has
returned sufficient profits to cover the costs of such Sub-Fund, but not in
excess of such costs. No Sub-Fund performance fee is shown in this table
because the Sub-Fund performance fees are charged only after payment of the
Sub-Fund management fees and Sub-Fund transaction costs. Because each
Sub-Fund charges its own performance fee, Sub-Fund performance fees may
still be charged in a year when the Sub-Funds as a group have a breakeven
or losing year.
(6) Interest income estimated on the basis of 70% of Man-AHL 130 assets at
blended overnight rates earned by Man-AHL 130 on cash held on deposit (for
margin or otherwise) at financial institutions or brokers, as reduced by
any debit balances at the brokers. The twelve-month "breakeven" provided is
dependent on interest income of 2.08%. If interest income earned is less,
Man-AHL 130 will have to earn profits in excess of 5.75% to cover its
costs.
8
FEDERAL INCOME TAX ASPECTS
Man-AHL 130 will be treated as a partnership and not as an association
taxable as a corporation or as a "publicly-traded partnership" for federal
income tax purposes. Thus, you will be taxed each year on Man-AHL 130's income
whether or not you redeem Units from Man-AHL 130 or receive distributions from
Man-AHL 130.
40% of any trading profits on certain US 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, 2010).
Man-AHL 130'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
Man-AHL 130's interest income and ordinary income (in each case, if any), even
though you have lost money on your Units.
Man-AHL 130 will provide estimated federal income tax information in
advance of April 15th each year so Unitholders may make estimated tax payments
on a timely basis. However, definitive tax information will not be available
until approximately September 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 MAN-AHL 130 A SUITABLE INVESTMENT FOR YOU?
Man-AHL 130 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 Man-AHL 130.
THESE ARE SPECULATIVE SECURITIES. YOU MAY LOSE ALL OR SUBSTANTIALLY ALL OF
YOUR INVESTMENT IN MAN-AHL 130.
INVESTORS ARE REQUIRED TO MAKE CERTAIN REPRESENTATIONS AND WARRANTIES IN
CONNECTION WITH THEIR INVESTMENT.
EACH INVESTOR IS ENCOURAGED TO DISCUSS ANY PROPOSED INVESTMENT IN MAN-AHL
130 WITH HIS/HER INDIVIDUAL FINANCIAL, LEGAL AND TAX ADVISERS.
9
RISK FACTORS
THE FOLLOWING ARE THE PRINCIPAL RISKS YOU SHOULD CONSIDER IN MAKING A
DECISION TO INVEST IN MAN-AHL 130. THERE IS NO ASSURANCE THAT MAN-AHL 130
WILL ACHIEVE ITS INVESTMENT OBJECTIVES. SPECULATIVE FUTURES TRADING IS A
HIGH-RISK INVESTMENT.
GENERAL RISKS OF AN INVESTMENT IN MAN-AHL 130
- - YOU MAY LOSE YOUR ENTIRE INVESTMENT. Man-AHL 130 is speculative and
involves a high degree of risk. None of Man-AHL 130's strategies is assured
of being profitable (unlike many traditional investment approaches which
seek to participate in the growth of the economy over time, Man-AHL 130'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 recognize and capitalize on 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 the Man-Glenwood Funds invest, through the Portfolio Company, each
implement strategies subject to different orders of market risk, including
price movements, changes in volatility and interest-rate fluctuations.
Investors must be prepared to lose all or substantially all of their
investment in Man-AHL 130.
- - MAN-AHL 130 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 approximately 300% to 800% of
Man-AHL 130's Net Asset Value. The Man-Glenwood Funds currently leverage
their investment in the Sub-Funds to approximately 120% of each
Man-Glenwood Fund's net assets. Leverage increases the risk of loss as well
as performance volatility and transaction costs (including additional
interest expenses).
- - MAN-AHL 130 IS THE FIRST PUBLIC FUTURES FUND SPONSORED BY THE MANAGING
MEMBER. Man-AHL 130 is the first public futures fund sponsored by the
Managing Member. The past performance of the Man Group's other investment
funds and products is not necessarily indicative of the future success of
Man-AHL 130.
- - MAN-AHL 130 HAS A LIMITED OPERATING HISTORY. Man-AHL 130 is recently-formed
and has a limited operating history. The past performance of Man-AHL 130,
the AHL Diversified Program and the Man-Glenwood Funds 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
traditional "buy and hold") 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 in the course of two
months. Man-AHL 130, in addition to being likely to have volatile
performance, will also be subject to this "risk of ruin."
- - MAN-AHL 130'S PERFORMANCE IS EXPECTED TO BE VOLATILE. Futures and forward
markets are volatile, and Man-AHL 130 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 that even small price movements in Man-AHL 130'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.
- - MAN-AHL 130'S SUBSTANTIAL FEES AND EXPENSES WILL CAUSE LOSSES UNLESS OFFSET
BY PROFITS AND INTEREST INCOME. Man-AHL 130 is subject to substantial fees
and
10
expenses -- estimated, irrespective of profitability, annually at
approximately 5.75% of Class A Series 1 and B Series 1 Units', and
4.50% of Class A Series 2 and Class B Series 2 Units', average Net Asset
Value on a break-even basis. These fees and expenses are "layered": Man-AHL
130, the AHL Diversified Program, the Man-Glenwood Funds 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 Man-AHL 130 due to the
leverage at which it trades. The AHL Diversified Program taking futures
positions at 600% of Man-AHL 130's net equity, for example, results in
correspondingly increased transaction costs as compared to those which
would be incurred were Man-AHL 130 to acquire futures positions equal to
its net equity. The AHL Diversified Program's and the Man-Glenwood Funds'
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 MAN-AHL 130 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 are able to 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 Man-AHL 130's
outstanding Units as of any given calendar quarter-end may not exceed 15%
of the total Units then outstanding). A Unit's redemption price will be its
Net Asset Value on the redemption date, not on the date by which
irrevocable notice of redemption must be given to Man-AHL 130.
Because the Units cannot be readily liquidated, it may be impossible for
investors to limit losses or realize accrued gains.
- - SUBSTANTIAL REDEMPTIONS MAY CAUSE MAN-AHL 130 TO INCUR LOSSES. Substantial
redemptions of Units within a limited period of time, even though limited
to 15% of Man-AHL 130's total outstanding Units as of any calendar
quarter-end, could disrupt Man-AHL 130's portfolio, resulting in losses.
Being required to liquidate positions -- especially in unfavorable market
conditions -- could require Man-AHL 130 to liquidate at disadvantageous
prices positions which AHL would otherwise have maintained, impairing the
future profit potential of Man-AHL 130 as well as perhaps resulting in
immediate losses. In the event that Man-AHL 130 receives redemption
requests in excess of such 15% limitation for eight consecutive quarters,
Man-AHL 130 will cease its trading and investment activities, and will
terminate as promptly as possible and distribute its assets to investors.
- - MAN-AHL 130 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 Man-AHL
130.
Many of the direct and indirect service providers to Man-AHL 130 (excluding
the managers of the Sub-Funds and the Administrator) are members of the Man
Group (or entities in which Man Group plc holds an interest) and will
remain so, even if using other, non-affiliated, service providers might be
better for Man-AHL 130. As a result of the conflicts of interest in members
of the Man Group serving in multiple capacities with respect to Man-AHL
130, AHL and the Man-Glenwood Funds, 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 conflicted parties to resolve their
conflicts equitably. There can be no assurance that conflicts of interest
will not result in losses for Man-AHL 130. For example, the Managing Member
will not replace AHL as the futures manager for Man-AHL 130 nor the Man-
Glenwood Funds as Man-AHL 130's non-cash equivalent reserve asset
investment, even if other such managers or investments might be more
advantageous for Man-AHL 130, and AHL may have an incentive to trade more
frequently through MF Global Inc. than it otherwise would due to Man Group
plc's interest in its parent company, MF Global Ltd.
11
- - MAN-AHL 130'S INVESTMENT IN THE MAN-GLENWOOD FUNDS MAY INCUR LOSSES. The
Sub-Funds may employ speculative trading strategies, including selling
securities short and trading in derivatives, including swaps,
over-the-counter ("OTC") 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 the
Man-Glenwood Funds are designed as multi-manager, multi-strategy fund of
funds investments, under certain market conditions many of the Sub-Funds,
in which the Man-Glenwood Funds invest through the Portfolio Company, could
incur losses at or about the same time. The Man-Glenwood Funds might also
refuse to offer or process repurchase tenders.
- - MARKET DISRUPTIONS. Man-AHL 130 may incur major losses in the event of
disrupted markets and other extraordinary events, which may affect trading
models in a way that is not consistent with historical pricing
relationships. The risk of loss from a deviation from historical prices is
compounded by the fact that in disrupted markets many positions become
illiquid, making it difficult or impossible to close out positions against
which the markets are moving.
Market disruptions and losses in one sector can cause ripple effects in
other sectors; for example, during the "credit crunch" of 2007 many private
investment funds with quantitative-based trading strategies suffered heavy
losses even though they were not necessarily heavily invested in
mortgage-backed securities or similar credit-related investments. Ongoing
volatility in U.S. credit markets and other market sectors in 2008
continues to create an increased risk of substantial investment losses and
of further tightening in the availability of credit for such investment
funds.
A financial exchange may from time to time suspend or limit trading. Such a
suspension could render it difficult or impossible for Man-AHL 130 or a
Sub-Fund to liquidate affected positions and thereby expose it to losses.
There is also no assurance that off-exchange markets will remain liquid
enough for Man-AHL 130 or the Sub-Funds to close out positions.
- - CHANGES IN REGULATORY REQUIREMENTS MAY BE ADVERSE TO MAN-AHL 130. The
regulation of US and non-US futures funds such as Man-AHL 130 has undergone
substantial change in recent years, and such change may continue for the
foreseeable future. In the past there have, for instance, 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 Man-AHL 130,
while impossible to predict, could be substantial and adverse. For example,
certain regulatory changes have made the OTC 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). Furthermore, the SEC, Congress, state
legislatures, state securities administrators, as well as governing bodies
of non-US jurisdictions could seek to impose greater regulation on the
"hedge fund" industry in the future. It is impossible to predict what, if
any, changes in the regulations applicable to Man-AHL 130, the Managing
Member, AHL, Glenwood, the AHL Diversified Program, the Man-Glenwood Funds,
the Sub-Fund Managers, the markets in which they trade and invest or the
counterparties with which they do business may be instituted in the future.
Any such regulation could have a material adverse impact on the profit
potential of Man-AHL 130.
- - THE AHL INCENTIVE FEE CALCULATION MAY NOT REFLECT YOUR INVESTMENT
EXPERIENCE. The incentive fees payable to AHL will be calculated based on
Man-AHL 130's overall investment in the AHL Diversified Program,
irrespective of when individual investors invest in Man-AHL 130.
Consequently, the AHL incentive fees calculated in respect of Man-AHL 130's
AHL Diversified Program account may not be reflective of the investment
experience of certain Unitholders. In addition, the AHL incentive fees will
not be affected by losses on Man-AHL 130's investment in the Man-Glenwood
Funds. Finally, because the AHL incentive fees are calculated on a monthly
12
basis, AHL could receive substantial incentive fees from Man-AHL 130 during
a year even though Man-AHL 130's investment with AHL for such year was
unprofitable.
The Sub-Funds will charge incentive fees based on their individual
performance, irrespective of the overall performance of the Man-Glenwood
Funds.
- - YOU WILL BE TAXED EACH YEAR ON YOUR SHARE OF MAN-AHL 130 PROFITS; YOU WILL
BE REQUIRED TO EXTEND THE FILING DATE OF YOUR TAX RETURNS. Man-AHL 130 is
taxed as a partnership. Consequently, each Class A Unitholder will be
required annually to report and pay tax on such Unitholder's allocable
share of Man-AHL 130's net long-term capital gain or loss, net short-term
capital gain or loss and all items of ordinary income or loss even though
the Managing Member intends that Man-AHL 130 will make no distributions.
Consequently, Unitholders must either redeem Units to pay their taxes with
respect to their investment in Man-AHL 130 or have other assets available
to do so.
Definitive federal income tax information relating to Man-AHL 130 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."
- - MAN-AHL 130 COULD LOSE ASSETS AND HAVE ITS TRADING DISRUPTED DUE TO THE
BANKRUPTCY OF A COMMODITY BROKER, COUNTERPARTY OR OTHERS. Man-AHL 130 is
subject to the risk of futures broker, exchange, clearinghouse, or trading
counterparty insolvency. Especially in AHL's OTC derivatives trading,
Man-AHL 130 will be dealing with substantially unregulated entities and
without the protection of a clearinghouse supporting the obligations of
such counterparties under their respective trades. Man-AHL 130 assets could
be lost or impounded during lengthy bankruptcy proceedings. Were a
substantial portion of Man-AHL 130's assets to be tied up in a bankruptcy,
the Managing Member might suspend or limit the trading activities of
Man-AHL 130, perhaps resulting in missed profit opportunities.
- - TRADING ON FOREIGN EXCHANGES PRESENTS GREATER RISK THAN TRADING ON US
EXCHANGES. Man-AHL 130 trades 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-US 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: (i) the
possible imposition of exchange controls, which could make it difficult or
impossible for Man-AHL 130 to repatriate some or all of its assets held by
non-US counterparties; (ii) possible government confiscation of assets;
(iii) taxation; (iv) possible government disruptions, which could result in
market closures and thus an inability to exit positions and repatriate
Man-AHL 130 assets for sustained periods of time, or even permanently; and
(v) 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 US regulations, and
Man-AHL 130 -- 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 ABSENCE OF REGULATION IN CERTAIN MARKETS COULD EXPOSE MAN-AHL 130 TO
SIGNIFICANT LOSS. Many of AHL's, as well as the Sub-Funds', transactions
will be executed in the OTC, unregulated markets. There is no way to
determine fair pricing or prevent business abuses in unregulated markets.
Furthermore, unlike on exchanges, participants in the OTC markets have no
obligation to make a market in any of the instruments traded. The absence
of regulation in such markets could expose Man-AHL 130 to significant
losses.
13
Various national governments have expressed concern regarding the need to
regulate the "derivatives" markets in general. Future regulatory changes
may limit Man-AHL 130's ability to trade in certain markets.
- - EXCHANGE-RATE RISK. Man-AHL 130 is denominated in US dollars. AHL both
trades currencies and trades in other assets denominated in currencies
other than the US dollar. Man-AHL 130 is subject to the general risk of
adverse fluctuations in exchange rates between the currencies being traded
by Man-AHL 130 and the US dollar as well as to the risk that in trading in
assets denominated in currencies other than the US dollar, the value of
Man-AHL 130's positions will be adversely affected by changes in the
exchange rate between the functional currency of such positions and the US
dollar. The Man-Glenwood Funds are also subject to a certain level of
exchange-rate risk on their investments in the Sub-Funds, which may be
denominated in currencies other than US dollars and a number of which trade
currencies or investment assets denominated in currencies other than the US
dollar.
- - NO INDEPENDENT EXPERTS REPRESENTING INVESTORS. The Managing Member has
consulted with counsel, accountants and other experts regarding the
formation and operation of Man-AHL 130. No counsel has been appointed to
represent investors in connection with the offering of the Units.
Accordingly, prospective investors should consult their own financial,
legal and tax advisors regarding the desirability of an investment in
Man-AHL 130.
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, Man-AHL 130
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,
Man-AHL 130 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 Man-AHL 130 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, AND MAY BE LESS RESPONSIVE TO CONTINUOUSLY CHANGING
MARKETS. 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 the positions indicated by its technical systems, which may incur
substantial losses if particular fundamental events occur.
- - 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 assets under the management of
trading systems based on the same general principles increase, an
increasing number of traders may attempt to initiate or liquidate
substantial positions at or about the same time as AHL, or
14
otherwise alter historical trading patterns or affect the execution of
trades, to the significant detriment of Man-AHL 130.
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.
- - AHL HAS NO CONTROL OVER THE MARKET CONDITIONS WHICH 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 Man-AHL 130 -- 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 Man-AHL 130 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 CREATES EXPOSURE TO THE RISK
OF OBSOLESCENCE OF THAT STRATEGY. Man-AHL 130's direct 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 US exchanges --
are subject to speculative position limits restricting the maximum position
which speculative traders (such as Man-AHL 130) may acquire. Furthermore,
these limits will be applied aggregating all AHL accounts, not solely
Man-AHL 130's. In certain circumstances, these speculative position limits
may prohibit AHL from acquiring positions which it would otherwise have
believed to be in the best interest of Man-AHL 130.
- - POSSIBLE EFFECTS OF DAILY PRICE FLUCTUATION LIMITS. Certain futures
contracts traded by AHL -- again, principally agricultural futures
contracts traded on US 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 to the "daily
limit," it may be economically infeasible to close out positions against
which the market is moving, resulting in AHL being unable to limit losses
incurred on certain positions held by Man-AHL 130.
- - MAN-AHL 130 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, indicates that an investor must be prepared to be invested in
Man-AHL 130 for a significant period of time in order to give the
investment a realistic opportunity to achieve its objective. 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 Man-AHL 130 at an inopportune time.
USE OF PROCEEDS
GENERAL
Man-AHL 130 will invest approximately 30% of the proceeds of this offering
in the Man-Glenwood Funds and the remainder will be used by Man-AHL 130 for the
AHL Diversified Program, as reserves to support Man-AHL 130's trading
activities, and to pay expenses as described elsewhere in this Prospectus. Due
to the leverage available in futures trading, Man-AHL 130's investment of 30% of
its assets in the Man-Glenwood Funds should have no effect on Man-AHL 130's
ability to maintain an AHL Diversified Program account on the same basis as if
all of Man-AHL 130's assets were invested in cash and cash equivalents and
15
allocated between the futures brokers and banks or other financial institutions
in order to support AHL's futures trading. Giving consideration to the leverage
employed by the Man-Glenwood Funds (approximately 18% to 20%) and to the fact
that the AHL Diversified Program takes positions on behalf of Man-AHL 130 with a
face amount of between approximately 300% and 800% of Man-AHL 130's total Net
Asset Value, Man-AHL 130's investment in the Man-Glenwood Funds represents
approximately 4% to 11% of Man-AHL 130's total market exposure and the AHL
Diversified Program approximately 89% to 96% of Man-AHL 130's total market
exposure.
Man-AHL 130's capital is maintained on deposit with its futures brokers and
with banks or other financial institutions. Man-AHL 130 capital held with the
futures brokers is maintained in segregated accounts, as required by CFTC
Regulations or other applicable law. Man-AHL 130 capital supporting Man-AHL
130's trading in foreign currency forward contracts contracts is maintained as
collateral with Royal Bank of Scotland plc ("RBS") which maintains accounts with
Man-AHL 130's foreign currency counterparties, possibly including members of the
Man Group, generally in cash upon which Man-AHL 130 may receive an interest
credit. Man-AHL 130 enters into forward transactions with RBS, which in turn,
enters 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.
The Managing Member does not anticipate making any distributions of Man-AHL
130 profits.
THE AHL DIVERSIFIED PROGRAM
The AHL Diversified Program is a global managed futures program directed
for Man-AHL 130 by AHL. The performance of the AHL Diversified Program as
operated on behalf of all US accounts by the Managing Member and its affiliated
CTAs is set forth beginning on pages 33 and 34.
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 approximately 34
exchanges in 100 different global markets encompassing stock indices, bonds,
currencies, short-term interest rates, metals, energies and soft commodities.
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.
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 initiate positions in trending
markets 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 an account, such as Man-AHL 130,
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
16
instruments and real-time risk control and management information systems.
The AHL Diversified Program uses margin and considerable leverage to reach
model allocations. Although there is no limit to the amount of leverage the AHL
Diversified Program may employ, it will typically hold futures positions with a
face amount equal to approximately 300% to 800% of Man-AHL 130's Net Asset Value
and typically employs 12% to 18% of an account's nominal value (i.e., trading
level) to margin such positions.
AHL's investment process is the product of sophisticated research and
applies a technical approach that has been operated, with modifications, by Man
Group since 1989. 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 Man-AHL 130 has been operating in the US since April 1998, although
the AHL Diversified Program, as traded on behalf of non-US clients, 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 Man-AHL 130 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 US Treasury bond futures, AHL can apply
multiple models and allocate evenly between high turnover, short-term trend
models and longer-term trend models. In certain markets, on the other hand, the
liquidity (and hence the availability of positions) is 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
Man-AHL 130 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 AHL Diversified 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.
AHL may continue to increase the number and diversity of markets and
instruments traded directly or indirectly by the AHL Diversified Program.
17
As of May 31, 2008, the composition of the AHL Diversified Program's
portfolio was as follows:
(PIE CHART)
1 Currencies 24.6%
2 Bonds 19.2%
3 Energies 16.8%
4 Stocks 15.8%
5 Interest rates 9.3%
6 Metals 8.8%
7 Agriculturals 5.5%
The sector allocations are designed to reflect the expected long-term risk
exposure to each sector relative to the other sectors in the portfolio.
Allocations are based on estimates of the risk of each sector. The portfolio
structure and constituents are regularly reviewed by the investment management
team and sector allocations are accordingly 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.
Man-AHL 130, directly or indirectly, may receive interest income on margin
and non-margin deposits with the futures brokers and the banks or other
financial institutions with which Man-AHL 130 maintains deposits. Interest
income, once accrued, is subject to the risk of trading losses. Man-AHL 130 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.
AHL may enter into foreign currency forward contracts in connection with
Man-AHL 130's futures trading denominated in currencies other than US dollars to
hedge the exchange-rate risk exposure of the non-US dollar margin deposits
supporting such trading. There can be no assurance that such hedging will be
successful.
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
Diversified Program acquires for an account with 100% of such capital. These low
margin requirements (typical of many managed futures programs) make possible
Man-AHL 130's investment of 30% of its capital in the Man-Glenwood Funds. 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.
The Managing Member believes that, if need be, Man-AHL 130's investment in the
Man-Glenwood Funds can be liquidated through the Man-Glenwood Funds' quarterly
tender process to support Man-AHL 130's AHL Diversified Program trading.
INVESTMENT IN THE MAN-GLENWOOD FUNDS
The Managing Member will invest approximately 30% of Man-AHL 130's capital
in the Man-Glenwood Funds, each a registered investment company, multi-strategy,
multi-manager fund of funds which emphasizes efficient allocation of investor
capital among hedge funds and other pooled investment vehicles with a range of
investment strategies, managed by independent investment managers. This
investment has the potential to generate higher yields than the cash or
cash-equivalent instruments in which Man-AHL 130 will hold the bulk of its
assets (used to support Man-AHL 130's AHL Diversified Program trading) and also
to perform in a manner with substantially low correlation to the AHL Diversified
Program. Historically, the Man-Glenwood Funds have had low correlation to the
AHL Diversified Program (as well as to stocks and bonds). The Managing Member
will attempt to rebalance Man-AHL 130's portfolio on a quarterly basis to
maintain Man-AHL 130's investment in the Man-Glenwood Funds at approximately 30%
of Man-AHL 130 capital.
The Man-Glenwood Funds are described in greater detail in the Appendix
beginning on page APP-1. There can be no assurance that the Man-Glenwood Funds
will be either profitable or perform with low correlation to the AHL Diversified
Program.
18
The Managing Member may at any time, through the Man-Glenwood Funds'
quarterly tender process, reduce or eliminate Man-AHL 130's investment in the
Man-Glenwood Funds if the Managing Member deems doing so to be necessary or
advisable to maintain Man-AHL 130's AHL Diversified Program trading as well as
for regulatory or tax purposes.
[The remainder of this page has been left blank intentionally.]
19
PROPRIETARY PERFORMANCE OF MAN-AHL 130
MAN-AHL 130 LLC -- CLASS A SERIES 1 UNITS MAN-AHL 130 LLC -- CLASS A SERIES 2 UNITS
(JULY 2007 -- MAY 2008) (APRIL 2007 -- MAY 2008)
MAN-AHL 130 LLC -- CLASS B SERIES 1 UNITS MAN-AHL 130 LLC -- CLASS B SERIES 2 UNITS
(APRIL 2008 -- MAY 2008) (APRIL 2008 -- MAY 2008)
The performance set forth below is considered to be "proprietary" because
more than 50% of the beneficial interest in Man-AHL 130 is owned by the Managing
Member through its investment in Class A Series 2 Units. Nevertheless, the
Managing Member's investment is treated the same as any other investment in
Class A Series 2 Units and is subject to the fees and expenses applicable to
Class A Series 2 Units described in this Prospectus.
TYPE OF POOL: Single-Advisor*/Publicly-Offered/No Principal Protection
INCEPTION OF TRADING OF MAN-AHL 130: April 2007
INCEPTION OF TRADING OF CLASS A SERIES 1: July 2007
INCEPTION OF TRADING OF CLASS A SERIES 2: April 2007
INCEPTION OF TRADING OF CLASS B SERIES 1: April 2008
INCEPTION OF TRADING OF CLASS B SERIES 2: April 2008
TOTAL NET ASSET VALUE OF MAN-AHL 130: $26,473,896
TOTAL NET ASSET VALUE ATTRIBUTABLE TO CLASS A UNITS: $21,453,172
TOTAL NET ASSET VALUE ATTRIBUTABLE TO CLASS B UNITS: $5,020,724
LARGEST % MONTHLY DRAWDOWN CLASS A SERIES 1: (5.34)% (8/07)
LARGEST % MONTHLY DRAWDOWN CLASS A SERIES 2: (5.25)% (8/07)
LARGEST % MONTHLY DRAWDOWN CLASS B SERIES 1: (1.80)% (4/08)
LARGEST % MONTHLY DRAWDOWN CLASS B SERIES 2: (1.70)% (4/08)
WORST PEAK-TO-VALLEY DRAWDOWN CLASS A SERIES 1: (7.82)% (7/07-10/07)
WORST PEAK-TO-VALLEY DRAWDOWN CLASS A SERIES 2: (7.63)% (7/07-10/07)
WORST PEAK-TO-VALLEY DRAWDOWN CLASS B SERIES 1: (1.80)% (3/08-5/08)
WORST PEAK-TO-VALLEY DRAWDOWN CLASS B SERIES 2: (1.70)% (3/08-5/08)
AGGREGATE SUBSCRIPTIONS FROM INCEPTION (MAN-AHL 130): $20,700,089
AGGREGATE SUBSCRIPTIONS FROM INCEPTION (CLASS A UNITS): $15,818,416
AGGREGATE SUBSCRIPTIONS FROM INCEPTION (CLASS B UNITS): $4,881,673
MONTHLY RATES OF MONTHLY RATES OF
RETURN--CLASS A UNITS RETURN--CLASS B UNITS
----------------------------- -----------------------------
MONTH 2007 SERIES 1 2007 SERIES 2 2007 SERIES 1 2007 SERIES 2
- ------------------- ------------- ------------- ------------- -------------
January............
February...........
March..............
April.............. 4.55%
May................ 3.96%
June............... 3.34%
July............... (2.61)% (2.51)%
August............. (5.34)% (5.25)%
September.......... 7.68% 7.80%
October............ 6.00% 6.11%
November........... 0.07% 0.16%
December........... (0.26)% (0.15)%
Annual Return...... 5.02% 18.69%
(7 mos) (10 mos)
20
MONTH 2008 SERIES 1 2008 SERIES 2 2008 SERIES 1 2008 SERIES 2
- ------------------- ------------- ------------- ------------- -------------
January............ 4.36% 4.47%
February........... 7.28% 7.39%
March.............. (0.17)% (0.07)%
April.............. (1.59)% (1.48)% (1.80)% (1.70)%
May................ 4.44% 4.55% 4.44% 4.55%
June...............
July...............
August.............
September..........
October............
November...........
December...........
Annual Return...... 14.88% 15.48% 2.56% 2.77%
(5 mos.) (5 mos.) (2 mos.) (2 mos.)
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
MONTHLY RATES OF RETURN are calculated by dividing each month's net
performance by net asset value as of the beginning of such month. 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, incentive fees and any operating expenses. Net
performance is calculated separately for each Series of Units within a Class on
the basis of Man-AHL 130's net asset value attributable to Units of such Series.
COMPOUND ANNUAL RATE OF RETURN represents Monthly Rates 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).
DRAWDOWN is the loss experienced by a Series within a Class of Units over a
specified period.
WORST PEAK-TO-VALLEY DRAWDOWN is the largest decline in month-end net asset
value for a Series within a Class of Units (without adjustment for subscriptions
and withdrawals) without such net asset value being subsequently equaled or
exceeded. For example, if the net asset value dropped (1)% in each of January
and February, rose 1% in March and dropped (2)% in April, the peak-to-valley
drawdown would still be continuing at the end of April in the amount of
approximately (3)%, whereas if the net asset value had risen approximately 2% or
more in March, the peak-to-valley drawdown would have ended as of the end of
February at approximately the (2)% level. The period indicated for the worst
peak-to-valley drawdown is the period beginning with the month when the drawdown
began and ending with the month as of the end of which the lowest net asset
value during the drawdown was reached.
* Man-AHL 130 also invests in the Man-Glenwood Funds, as described in this
Prospectus.
21
SELECTED FINANCIAL INFORMATION
The Selected Financial Information for the fiscal years ended March 31,
2008 and March 31, 2007 and for the period April 14, 2005 (date of inception)
through March 31, 2006 is taken from the audited financial statements of Man-AHL
130.
For the period
April 14, 2005
For the Year Ended March For the Year Ended (date of inception)
31, 2008 March 31, 2007 through March 31, 2006
-------------------------- ------------------ ----------------------
Investment income: $398,431 $ -- --
Net expenses: $2,071,648 -- --
Net investment income (loss): $(1,673,217) $ -- $ --
Realized and unrealized gain (loss) on
investments: $6,681,849 -- --
Net income (loss): $5,008,632 $ -- $ --
Net income (loss) per Unit outstanding: $35.13 (Class A Series 1)
$33.05 (Class A Series 2)
Total assets: $21,807,453 $10,000 $10,000
Total liabilities: $1,398,821
Members' Equity: $20,408,632 $10,000 $10,000
Net Asset Value per Unit: $131.84 (Class A Series 1)
$133.07 (Class A Series 2)
Increase (decrease) in Net $19.52 (Class A Series 1)
Asset Value per Unit: $33.07 (Class A Series 2)
22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF MAN-AHL 130'S OPERATIONS
RESULTS OF OPERATIONS
Man-AHL 130 was organized on April 14, 2005 under the Delaware Limited
Liability Company Act, and its Registration Statement under the Securities Act
of 1933, as amended, became effective on February 1, 2007. Its fiscal year ends
on March 31. Man-AHL 130 commenced trading operations April 2, 2007.
Man-AHL 130 is a speculative managed futures fund which trades pursuant to
the AHL Diversified Program. The AHL Diversified Program is a futures and
forward price trend-following, trading system. The AHL Diversified Program is
entirely quantitative in nature and implements trading positions on the basis of
statistical analyses of past price histories. Like most trend-following systems,
the AHL Diversified Program 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 trades on behalf of Man-AHL 130.
As a speculative futures fund, Man-AHL 130 effectively maintains all of its
capital in reserve. Man-AHL 130 does not "buy" or "sell" futures or forward
contracts in the traditional sense; rather, through taking positions in these
markets, Man-AHL 130 acquires loss/profit exposure and uses its capital to cover
losses and provide margin (which constitutes a good faith deposit towards
Man-AHL 130's obligation to pay such losses) to support its open positions.
Man-AHL 130 maintains most of its capital in cash and cash equivalents.
PERFORMANCE SUMMARY
31-Mar-08 31-Mar-07
Ending Equity $20,408,632 $10,000
Man-AHL 130's net assets increased $20,398,632 for the year ended March 31,
2008. This increase was attributable to aggregate subscriptions of $15,390,000,
including the Managing Member's purchase of Units (Class A Series 2), and net
income from operations of $5,008,632.
Management Fees of $485,023, Incentive Fees of $1,249,061, Client Servicing
Fees (Series 1 Units only) of $2,088 and brokerage commissions of $244,051 were
paid or accrued, and interest of $398,431 was earned or accrued on Man-AHL 130's
cash and cash equivalent investments, for the year ended March 31, 2008.
Man-AHL 130 pays administrative expenses for legal, audit, accounting and
administration services, limited to 1/12 of 0.50% per month of Man-AHL 130's
month-end NAV through March 2009. Administrative and other expenses, paid or
accrued, for the year ended March 31, 2008 were $539,240, which were offset in
part by reimbursement from the Managing Member in the amount of $447,815.
Futures trading programs are proprietary and confidential. As is the case
with any speculative futures fund, it is impossible to predict how Man-AHL 130
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 Man-AHL 130.
There are certain general market conditions in which Man-AHL 130 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 Man-AHL 130 will perform in any given market
conditions.
23
Three months ended March 31, 2008:
During the three month period ended March 31, 2008, Man-AHL 130's trading
within agricultural markets made gains across the majority of contracts, with
corn trading providing the largest contribution. Soy-based products rose to
record highs during February, although March saw a retraction in prices, paring
earlier gains from long positions. Bond trading accrued profits as Japanese
bonds and US Treasuries led the way. Currency trading contributed excellently
during the period. Long positions in various currencies, in particular the euro
and the Swiss franc, against the US dollar proved highly beneficial. Energy
delivered a solid profit for the quarter. Long positions in crude oil were
beneficial, with prices closing at a then record high of US$110.33 per barrel on
March 13, 2008. Long positions in distillate products such as gas oil and
heating oil produced profit. Precious metals trading made a solid profit as long
positions in gold, silver and platinum made gains. Positive trading in copper
offset losses from aluminium. Trading in short-term interest rates posted a firm
gain over the first quarter despite market volatility. Long positions in
Eurodollar and Euribor contracts posted the largest part of gains. However,
these earlier gains were reduced in the latter part of the quarter. Stock market
trading posted a gain over the quarter, with short positions in the Nikkei,
TOPIX and S&P 500 proving particularly fruitful. Short exposure to European
markets such as the Euro Stoxx, CAC40 and Dax also contributed to gains.
However, some profits were reversed as indices rose higher at the end of March
2008.
During the three month period ended March 31, 2008, the Man-Glenwood Funds'
commodity and macro managers posted a profit over the first quarter. Over the
course of the quarter, managers gave back earlier gains. Returns for equity
hedge managers reflected the high levels of dispersion in the equity markets;
ranging from -2.1% in a Japan-focused manager to +9.0% in a US focused
short-only manager. European managers that posted positive returns achieved this
mainly through sector positioning and stock picking (financials and consumer
shorts and longs in resource companies were top gainers). Asia focused managers
that were successful actively traded their portfolios. Notwithstanding some
positives in the quarter, overall performance in this style was negative. During
the fourth quarter of 2007, despite the overall negative performance by event
driven managers, a handful of activist managers did find mild success, and
performance in the relative value style was driven largely by the performance of
one manager that focused on relative value within the residential
mortgage-backed securities (RMBS) space. Variable equity posted a negative
return over the quarter. The first quarter of 2008 proved to be one of the most
turbulent in history for the credit markets, with managers in the distressed &
credit arena largely posting losses for the product. Managers with a net short
bias profited from investors liquidating positions, while long exposure to
leverage loan deals and equities negatively impacted performance. Of note, short
positions in sub-prime mortgages and banks returned strongly, but these gains
were more than offset by indiscriminate selling in various areas of the market.
Three months ended December 31, 2007:
During the three month period ended December 31, 2007, Man-AHL 130's
trading within agricultural markets posted positive returns, with significant
gains recorded from soybeans and corn. In October, agriculturals experienced a
slight loss as long positions in wheat suffered. Strong performance in November
was driven by long trades in soybeans. Strong performance continued in December,
driven by soy products and corn. Trading in bonds made a positive contribution
to Man-AHL 130's performance. US Treasury bonds and Japanese bonds delivered
positive returns, while Eurobonds negatively impacted performance. A general
switch into long positions in US Treasury bonds was costly at first but proved
particularly fruitful in November. Japanese bonds appreciated in similar fashion
over November. Currency trading posted strong returns during the final quarter
of 2007. Strong trends re-emerged following the turmoil of the third quarter,
which Man-AHL 130 was able to capture. Long euro positions versus the US dollar
and British pound performed well during the period. Further profits came from
long Swiss franc positions against the US dollar. Long Canadian dollar trades
versus the US dollar also produced gains. Trading in the energy sector accrued
significant profits. Substantial gains were experienced from long crude oil,
heating oil and gas oil positions. However, in November, crude oil and other
distillate products incurred losses after prices dropped over the final week of
the month. Short positions in natural gas lifted performance in November. In
December, performance was once again positive, with a rise in the price of crude
oil and other distillate products offsetting losses in
24
natural gas. Man-AHL 130's metal trading posted a profit during the period with
long positions in gold making excellent gains. Trading in short-term interest
rates posted a firm gain over the fourth quarter, with Eurodollar and short
Sterling contracts contributed most to profits over the period. Finally, stock
market trading posted a loss over the quarter, with long positions in the Nasdaq
100 and Euro-Stoxx index the leading detractors.
During the three month period ended December 31, 2007, the performance for
the Man-Glenwood Funds' commodity & macro managers was strongly positive. In
October, managers benefited from a sharp decline in the US dollar relative to
most G7 and emerging market currencies. Managers that performed strongly
mid-quarter benefited from tactical oil and metals positions as well as yield
curve steepening trades. Managers largely benefited from the increase in
currency, equity and interest rate volatility as well as from tactical long
positions in oil, gold and agricultural commodities. Equity hedge manager
returns were widely dispersed over the quarter, although the majority of
managers ended in positive territory. The volatile, high dispersion environment
was beneficial for stock pickers, with managers who had a trading component
within their strategy able to generate positive alpha, opportunistically. This
dispersion theme continued in the fourth quarter with event driven managers
generating a wide range of returns, although final returns were positive. A
manager focused on a variety of energy related themes posted strong quarter-end
performance, recovering from mid-quarter losses. Elsewhere, an activist manager
profited from short positions in financials and monolines. In relative value,
significant gains for the quarter were generated by one manager with a
distinctly short-credit bias specializing in lower rated tranches of sub-prime
and other mortgage-related debt. Gains for the quarter were offset by another
manager's December losses, primarily driven by broken merger deals. Quarter
returns for variable equity were negative as performance from long-biased
managers, regardless of the region, offset gains elsewhere. As sub-prime related
write-downs gradually emanated through newswires, long positions in financial
names were affected, while the ensuing flight from risk saw cyclical sector
stocks sold off in preference for defensive stocks, also to the detriment of our
managers. Distressed & credit performance was driven largely by one manager that
took out short positions in financial services companies including
broker-dealers. Finally, additional gains were made from short holdings in
sovereign debt, commercial mortgages and consumer/retailers stocks.
Three months ended September 30, 2007:
During the three month period ended September 30, 2007, trading by the
AHL-Diversified Program in the agricultural sector produced positive returns,
led by strong returns from long positions in wheat. Trading in soy beans and soy
meal added further gains while most other agricultural contracts traded close to
flat over the period. Bond sector trading resulted in losses as bond yields
trended almost uniformly lower over the period. Short positions in Australian
bonds proved costly at the beginning of the period, while a long bias in
Eurobond contracts also struggled towards the end of the quarter. Japanese bond
trading delivered positive results. Trading in currencies was slightly negative
for the quarter. Initially, strong profits accrued as short positions in the US
dollar against a variety of currencies were beneficial. The energy sector
produced solid returns in the quarter. The principal driver behind performance
came from long holdings in crude oil futures contracts. Elsewhere, modest gains
were made in short natural gas and long gas oil positions. The metals complex
was dominated by long positions in gold. Elsewhere, trading in silver and copper
was flat while long nickel positions detracted from performance. Trading in the
short-term interest rate market was profitable and relatively stable throughout
the quarter. Slight losses came from long positions in short sterling and
euribor contracts. Long positions in Eurodollar contracts proved effective.
Trading within the stock sector detracted somewhat from performance over the
quarter as indices saw considerable volatility. Positions in the Japanese Nikkei
225 detracted from performance along with positions in the US markets including
positions in the S&P 500 index. Hong Kong's Hang Seng index rose, benefiting
long positions.
For the three-month period ended September 30, 2007, the commodity & macro
style pursued by the Man-Glenwood Funds posted a positive return despite
difficult market conditions. Key drivers of positive returns were long positions
in equities and commodities toward the end of the period as well as short
positions in US mid-cap equities and long volatility earlier in the period.
Reversals in FX markets and fixed income exposure detracted from performance.
The equity hedge style contributed positively over the period. Long equity
trades, particularly in Asian developing market equities, yielded strong
returns. Some managers showed
25
losses in August, but most were able to pare losses as markets rebounded. The
event driven style produced losses despite a strong finish to the quarter.
Losses were realized primarily during the middle of the period. Merger arbitrage
strategy suffered, but ended the period well. The relative value style generated
positive returns, primarily by short credit biased managers, despite mid-period
losses. Despite gains in September, variable equity managers ended down, posting
negative returns early in July into mid August. Long positions in financials, US
homebuilders and steel as well as Japanese consumer equities were the most
costly. Managers were, however, able to recover later in the quarter. Lastly,
the distressed and credit style was close to flat over the period.
Three months ended June 30, 2007:
During the three month period ended June 30, 2007, performance of the AHL
Diversified Program in the agriculturals sector was relatively flat until the
final few weeks of the period where it made a small loss. Trading performance
was dominated by long positions in soybeans and soy oil. Positions in corn and
wheat performed negatively. Trading in the bond sector made a positive
contribution to Man-AHL 130's performance. The leading trade was a short
position in US Treasuries. Short trades in Euro Bund and UK Gilts also returned
profitably. The currency sector generated excellent returns over the period as a
short position in the Japanese yen against the US dollar powered profits. A long
position in the Canadian dollar against the US dollar performed well. Trading in
the energy sector resulted in a modest loss during the period. Short positions
in crude oil were unprofitable. Natural gas was a positive contributor. The
metals complex posted the largest negative return, albeit a relatively minor
one, as nickel continued its fall from May's record high. Long positions in the
precious metals, gold and silver, generated slight losses. Short-term interest
rate trading was profitable as gains were accrued via a three pronged attack
which featured short trades in Euribor, Short Sterling and Eurodollar contracts.
Finally, trading within the stock sector proved beneficial as indices endured a
rather volatile period but ended up over the three months. Long positions in the
DAX 30 and S&P 500 indices were strong contributors to, while the Japanese Topix
and Nikkei 225 composites slightly detracted from, performance.
During the three month period ended June 30, 2007, the commodity and
trading style pursued by the Man-Glenwood Funds posted a strong return over due
to significant currency moves in the US dollar, euro and British pound.
Strengthening in some metals provided solid opportunities for global macro,
trend following and discretionary trading managers, while short US and European
bond trades proved profitable. The equity hedge style generated a positive
return. In the U.S., specific trades in technology, telecom, financial services
and steel sectors performed well. In Europe, a positive deal environment
generated strong returns in both long and short books across the financials and
technology areas. Emerging market names, particularly in the internet, telecom,
advertising, and software sectors were also positive contributors. The event
driven style generated strong performance early and mid-quarter. In April and
May, merger and acquisition activity surged in both the US and Europe providing
an abundance of opportunities. By quarter end, volatility within the credit
markets spilled over into equities and adversely impacted merger arbitrage
spreads. Relative value style performance was primarily driven by capital
structure arbitrage, credit arbitrage, and multi-strategy managers early in the
second quarter. Towards quarter end, deteriorating conditions within the
sub-prime mortgage market allowed several managers to profit, as they positioned
their portfolios in anticipation of such an event. In the U.S., positions in
steel manufacturers, engineering companies, homebuilders, cyclicals,
transportation, consumer retail, materials, financials and targets of
acquisitions by private equity groups were significant performance drivers for
US variable equity managers. Elsewhere, European, Japanese and Asian ex Japan
managers also contributed to performance. Finally, the distressed and credit
style posted a gain over the quarter. Credit markets performed well early in the
quarter. From mid-quarter through quarter-end, and despite high yield credit
spreads widening, managers benefited from security-specific positions that
traded higher as a result of certain catalysts that were realized.
CAPITAL RESOURCES
Due to the low margins required to support futures and forward trading,
only approximately 10% to 20% of the capital of a managed futures fund such as
Man-AHL 130 is needed to margin its positions. Man-AHL 130 holds most of its
capital in cash and cash equivalents while investing approximately 30% of such
capital in the Man-Glenwood Funds, both for profit potential and
26
diversification purposes. Man-AHL 130's investment in the Man-Glenwood Funds
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 Man-AHL 130's futures trading. There can be no assurance that
Man-AHL 130 will maintain any investment in the Man-Glenwood Funds. The Managing
Member is under no obligation to maintain Man-AHL 130's investment in the
Man-Glenwood Funds, and may reduce or eliminate such investment at any time
through the Man-Glenwood Funds' quarterly tender process.
Man-AHL 130, not being an operating company, does not incur capital
expenditures. It functions solely as a passive trading vehicle, and after its
initial allocation to the AHL Diversified Program and the Man-Glenwood Funds,
its remaining capital resources are used only as assets available to provide
variation margin and pay expenses and trading losses incurred on Man-AHL 130's
AHL Diversified Program account, as well as invest in the Man-Glenwood Funds to
maintain appropriate exposure.
LIQUIDITY
The AHL Diversified Program generally maintains highly liquid positions,
and the assets held by Man-AHL 130 to support AHL's trading are cash or
highly-liquid Treasury bills, deposit accounts or other cash equivalents.
Man-AHL 130 invests a limited portion of its capital in the Man-Glenwood
Funds. Because the Man-Glenwood Funds are closed-end registered investment
companies, members of the Man-Glenwood Funds do not have the right to require
the Man-Glenwood Funds to repurchase any or all of their units. To provide a
limited degree of liquidity to investors, the Man-Glenwood Funds offer quarterly
liquidity through discretionary tender offers for their units pursuant to
written tenders. Repurchases will be made at such times, in such amounts, and on
such terms as may be determined by the Man-Glenwood Funds' boards, in their sole
discretion. Under certain circumstances, such tender offers may not occur as
scheduled or may not be sufficient to satisfy the full amount requested to be
repurchased by Man-AHL 130. However, the Man-Glenwood Funds' component of
Man-AHL 130's portfolio represents an allocation of only 30% of Man-AHL 130's
capital, and the Managing Member believes that any delays in receiving
repurchase payments from the Man-Glenwood Funds are unlikely to adversely affect
Man-AHL 130's operations.
The Managing Member does not anticipate the need for additional sources of
liquidity, given that approximately 70% of Man-AHL 130's capital is held in cash
and highly liquid cash equivalents, and, if necessary, Man-AHL 130 is expected
to be able to liquidate part of its investment in the Man-Glenwood Funds through
the Man-Glenwood Funds' quarterly tender process.
During its operations through March 31, 2008, Man-AHL 130 experienced no
meaningful periods of illiquidity in any of the numerous markets in which it
trades.
ACCOUNTING PRINCIPLES
Man-AHL 130 records its transactions in futures and forward contracts,
including related income and expenses, on a trade-date basis. Open futures
contracts traded on an exchange are valued at market, which is based on the
closing settlement price on the exchange where the futures contract is traded by
Man-AHL 130 on the day with respect to which Man-AHL 130's Net Asset Value is
being determined. Open forward contracts and other derivatives traded on the
interbank market are valued at their settlement price on the day with respect to
which Man-AHL 130's Net Asset Value is being determined.
Man-AHL 130 will value its investment in the Man-Glenwood Funds at its net
asset value, which approximates fair value, as provided by the Man-Glenwood
Funds.
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 engaged in by Man-AHL 130, the
Managing Member believes that the estimates utilized in preparing Man-AHL 130's
financial statements are appropriate and reasonable; however, actual results
could differ from the estimates. The estimates do 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 of Man-AHL 130, no other reasonable assumptions relating to the
application
27
of Man-AHL 130's critical accounting estimates other than those to be used would
likely result in materially different amounts from those reported.
OFF-BALANCE SHEET ARRANGEMENTS
Man-AHL 130 does not engage in off-balance sheet arrangements with other
entities.
CONTRACTUAL OBLIGATIONS
Man-AHL 130 does not enter into contractual obligations or commercial
commitments to make future payments of a type that would be typical for an
operating company or that would affect its liquidity or capital resources.
Man-AHL 130's sole business is 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 its investment in the Man-Glenwood
Funds. It is intended that all of Man-AHL 130's futures, forward and OTC
contracts are settled by offset, not delivery. The substantial majority of such
contracts are for settlement within four to six months of the trade date and the
substantial majority of such contracts are held by Man-AHL 130 for less than
four to six months before being offset or rolled over into new contracts with
similar maturities. Man-AHL 130's annual audited financial statements present a
Condensed Schedule of Investments setting forth net unrealized appreciation
(depreciation) of Man-AHL 130's open positions, both long and short, at March
31, 2008 fiscal year-end.
MANAGEMENT OF MAN-AHL 130
THE MANAGING MEMBER
GENERAL
Man Investments (USA) Corp., a Delaware corporation, serves as Managing
Member with broad oversight over the operations and affairs of Man-AHL 130. The
Managing Member is registered with the CFTC as a commodity pool operator ("CPO")
and CTA and is a member of the NFA. The Managing Member is also registered as an
investment adviser with the SEC. 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 Man-AHL 130,
including but not limited to contracts, agreements or other undertakings with
persons, firms or corporations with which the Managing Member or any other
Unitholder 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 leading global provider of alternative investment
products and solutions for private and institutional investors worldwide seeking
to deliver absolute returns with a low correlation to equity and bond market
benchmarks. The Man Investments division of Man Group plc has launched
approximately 500 alternative investment products, including numerous commodity
pools, and, as of March 31, 2008, had over $74.6 billion under management.
The Managing Member purchased Class A Series 2 Units as an initial
contribution to Man-AHL 130 in an amount of $15 million. The Managing Member may
only make withdrawals from the Managing Member's Contribution to the extent that
such withdrawals are offset, dollar for dollar, by additional subscriptions for
Units of either Class. Such withdrawals may be made taking into account
redemptions and losses of Man-AHL 130 and subject to the terms of Class A Units,
the terms of the LLC Agreement and the requirement that the Managing Member
maintain an investment in Man-AHL 130 equal to at least the greater of $25,000
or 1% of Man-AHL 130's Net Asset Value (inclusive of the Managing Member's
Contribution).
As of May 31, 2008, the value of the Managing Member's Contribution was
approximately $20,559,000.
The Managing Member or any of its principals may trade for their own
accounts; the records of such trading will not be available for review by
investors in Man-AHL 130.
Performance information for the Managing Member is set forth on page 34 of
this Prospectus.
28
PRINCIPALS
The Managing Member's principals are Uwe Eberle, Alicia Derrah and Man
Investments Holdings Inc. The Managing Member is responsible for maintaining the
allocation percentages as established in this Prospectus, but is not responsible
for making trading decisions for Man-AHL 130. The biographies of the officers
and principals of the Managing Member follow. The principals of the Managing
Member do not hold any investments in Man-AHL 130.
Uwe Eberle, born 5/16/65. Mr. Eberle is head of institutional sales for the
Managing Member which is a division of Man Group plc, as well as a member of the
management committee of the Managing Member. Mr. Eberle is a Director and
President of the Managing Member, and he has held these positions since January
2008. From August 2006 until December 2007, Mr. Eberle was Chief Executive
Officer - Institutional Sales of the Selling Agent and a Director since
November 2007. As of January 2008, Mr. Eberle was made President and Chief
Executive Officer of the Selling Agent. Mr. Eberle is registered with the CFTC
as a Principal and an Associated Person of the Managing Member (as of January
2008) and as a Principal and Associated Person (as of January 2008) and Branch
Office Manager (as of February 2008) of the Selling Agent. In addition to the
foregoing, Mr. Eberle was recently made a director and officer of various other
Man companies based in the United States, including, but not limited to, RMF
Investment Management (USA) Corp., a registered Investment Adviser, where he has
been a director since November 2007.
Prior to joining the Selling Agent in August 2006, Mr. Eberle was head of
hedge fund research at RMF Investment Management ("RMF"), a global provider of
alternative investment products and the parent company of RMF Investment
Management (USA) Corp., in Pfaffikon, Switzerland. From February 2002 through
October 2004, Mr. Eberle built up the New Alternative unit at RMF out of New
York, a unit focusing on the search for new alpha opportunities. Prior to that,
he worked on the private equity team at RMF. Before joining RMF in August 2000,
he spent more than 13 years with the HypoVereinsbank Group, one of the largest
banks in Germany, in Frankfurt, Munich, and New York. His most recent position
was a senior fund manager, building up their emerging market fund management
team. From November 1994 until June 1996, Mr. Eberle worked in a small group of
senior people, re-setting the strategic direction of the asset management
business at Vereinsbank. From June 1992 until October 1994, he worked in
research/marketing for Vereinsbank Capital Corp., the U.S. subsidiary of
Vereinsbank, in New York. Prior to that, he worked as an equity trader and
senior options trader for 5 years.
Mr. Eberle received a degree in Banking in addition to a degree in
Economics from the Verwaltungs- and Wirtschaftsakademie (VWA) in Frankfurt,
Germany. He is also a CFA charter holder and a member of the German Association
of Investment Professionals.
Alicia Derrah, born 3/17/58. Ms. Derrah is the Chief Financial Officer of
the Managing Member and of Glenwood. She is also the Principal Financial Officer
of the Man-Glenwood Funds and the Portfolio Company and the FINOP for the
Selling Agent. Ms. Derrah joined the Managing Member in October 2005 and joined
Glenwood 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, bank
holding companies and capital markets institutions.
Prior to joining Arthur Andersen, Ms. Derrah was employed by The Sanwa
Bank, Ltd., in its 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 Man-AHL 130. 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
CTA, is a member of the NFA and is registered in the UK with the
29
Financial Services Authority. The principals of AHL are Timothy Wong, Michael E.
Robinson, Riju Sathyan, Harris Skaliotis and Man Investments Holdings Limited.
Mr. Wong is responsible for the trading decisions of AHL. The biographies of Mr.
Wong, Mr. Robinson, Mr. Sathyan, Mr. Skaliotis and Man Investments Holdings
Limited 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 Man-AHL 130.
Man-AHL 130 has entered into a Trading Advisory Agreement with MIL, a
United Kingdom company and affiliate of the Managing Member and AHL, to
implement the foreign currency forward transactions component of the AHL
Diversified Program. This relationship should have no impact on Man-AHL 130 as
the investment professionals of MIL responsible for implementing such foreign
currency forward transactions are the same as those of AHL who otherwise
implement the AHL Diversified Program on behalf of Man-AHL 130. There is no
additional compensation paid by Man-AHL 130 in connection with this
relationship.
Timothy Wong, born 11/16/67. Mr. Wong is a Director of AHL and is
responsible for AHL's research and investment management operations and 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 responsibility for the day-to-day running of
the research and investment management operations. In addition, Mr. Wong is the
head of AHL trading for MIL 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.
Michael E. Robinson, born 7/29/72. Mike Robinson is head of directional
strategies research. He specializes in modeling financial markets in order to
develop directional trading systems and has further experience in portfolio
construction and risk analysis. He joined the AHL investment management team in
1999, prior to which he held a post-doctoral position in statistics at the
University of Surrey. Dr. Robinson received his PhD in extreme value statistics
from Lancaster University in 1997.
Riju Sathyan, born 1/16/71. Riju Sathyan is the head of investment
operations for AHL with principal responsibility for trade and risk monitoring,
data management and the implementation of changes to the trading system. Prior
to joining AHL in 2003, Mr Sathyan was the head of State Street Analytics-UK for
6 years, where he managed departments in London and Edinburgh to provide
portfolio and fund investment analysis to State Street's institutional and
private clients based in the UK, Scandinavia, Middle East and South Africa. He
began his career at Legal & General Group plc, where he worked within insurance
and pensions actuarial services. He has a BSc in banking and international
finance from City University, London.
Harris Skaliotis, born 6/18/76. Harry Skaliotis is an investment manager
with AHL. Prior to joining AHL in 2005, Mr. Skaliotis was involved in equity
portfolio construction at JPMorgan Fleming Asset Management. He has a BSc in
economics, accounting and finance from the London School of Economics, and an
Mphil in finance from Cambridge University. Mr. Skaliotis is a CFA
charterholder.
Man Investments Holdings Limited, a U.K. holding company, is also a
principal of AHL, but does not participate in making trading decisions for AHL.
Man Investments Holdings Limited is an indirect, wholly-owned subsidiary of Man
Group plc.
Worldwide, AHL manages approximately $24.7 billion as of March 31, 2008.
Performance information for AHL accounts available to US investors is set
forth on pages 33 to 35 of this Prospectus and in Part Two of this Prospectus
beginning on page Pt. II-6.
THE MAN-GLENWOOD FUNDS
Glenwood Capital Investments, L.L.C. ("Glenwood") is an Illinois limited
liability company registered with the CFTC as a CPO and CTA and is a member of
the NFA. Glenwood is also registered with the SEC as an investment adviser.
30
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 the Man-Glenwood
Funds and for the allocation of the Man-Glenwood Funds' assets, through the
Portfolio Company, to various Sub-Funds, subject to policies adopted by the
Board of Managers of the Man-Glenwood Funds. The principals of Glenwood are Dr.
John B. Rowsell, Rhowena B. Blank, Alicia B. Derrah, Patrick J. Kenary, David
Kuenzi and Man-Glenwood Inc. The principals of Glenwood will devote such time to
the ongoing operations of the Man-Glenwood Funds as they deem advisable in order
to implement and monitor the Man-Glenwood Funds' investment programs. The
current members of Glenwood's investment committee are Dr. John B. Rowsell,
Patrick J. Kenary, Michael J. Jawor, Anthony M. Lawler and Lance Donenberg. The
members of Glenwood's investment committee will devote such time to the ongoing
operations of the Man-Glenwood Funds as they deem advisable in order to
implement and monitor the Man-Glenwood Funds' investment programs.
Neither Glenwood nor any of its principals hold any investment in Man-AHL
130. Glenwood and its principals may trade for their own accounts and such
records will not be available for review by investors in Man-AHL 130.
The personnel of Glenwood have primary responsibility for the investment
management of the Man-Glenwood Funds, including the selection of Sub-Fund
Managers and the allocation of the Man-Glenwood Funds' assets among the Sub-Fund
Managers.
Descriptions of the business experience of Glenwood and Dr. John B.
Rowsell, Michael J. Jawor, Anthony M. Lawler, Lance Donenberg and Patrick J.
Kenary are set forth in the Appendix to this Prospectus, beginning on page
APP-6. Performance and strategy allocation information for the Man-Glenwood
Funds is set forth in the Appendix, and additional performance information is
set forth in Part Two of this Prospectus on page Pt. II-15.
PERFORMANCE INFORMATION
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. 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, incentive fees and any operating expenses.
COMPOUND ANNUAL RATE OF RETURN represents Monthly Rates 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).
DRAWDOWN is the loss experienced by a pool or account over a specified
period.
WORST PEAK-TO-VALLEY DRAWDOWN is the largest decline in month-end net asset
value (without adjustment for subscriptions and withdrawals) without such net
asset value being subsequently equaled or exceeded. For example, if the net
asset value dropped (1)% in each of January and February, rose 1% in March and
dropped (2)% in April, the peak-to-valley drawdown would still be continuing at
the end of April in the amount of approximately (3)%, whereas if the net asset
value had risen approximately 2% or more in March, the peak-to-valley drawdown
would have ended as of the end of February at approximately the (2)% level. The
period indicated for the worst peak-to-valley drawdown is the period beginning
with the month when the drawdown began and ending with the month as of the end
of which the lowest net asset value during the drawdown was reached.
PURSUANT TO APPLICABLE RULES OF THE CFTC, PERFORMANCE RECORDS ARE PRESENTED
FOR THE PAST FIVE FULL YEARS AND YEAR-TO-DATE RATHER THAN SINCE INCEPTION.
31
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 MAN-AHL 130 THAT THE PRESENTATION OF
THEIR PERFORMANCE IS NOT MATERIAL TO A DECISION WHETHER TO INVEST IN MAN-AHL
130.
32
AHL DIVERSIFIED PROGRAM
JANUARY 2003 -- MAY 2008
PERFORMANCE SUMMARY
The following summary performance information reflects the composite results of
all accounts available to US investors traded pursuant to the AHL Diversified
Program from January 2003 through May 2008. Trading from January 2003 through
December 2004 was carried out exclusively by Man-AHL (USA) Corp. on behalf of
one client. In January 2005, Man-AHL (USA) Limited began to implement the AHL
Diversified Program on behalf of one client. In April 2005, Man-AHL (USA)
Limited began trading the AHL Diversified Program on behalf of two additional
clients, one of which was the lone client for which Man-AHL (USA) Corp. had
previously traded the AHL Diversified Program; subsequently, Man-AHL (USA) Corp.
was dissolved. As of July 1, 2005, April 1, 2006, July 5, 2006, January 1, 2007
and April 2, 2007, Man-AHL (USA) Limited began trading the AHL Diversified
Program on behalf of its fourth, fifth, sixth, seventh and eighth clients,
respectively. Man-AHL (USA) Limited is a wholly-owned CTA subsidiary of Man
Group plc. At May 31, 2008, all 8 of the open accounts were profitable.
NAME OF CTA: Man-AHL (USA) Corp./Man-AHL (USA) Limited
NAME OF PROGRAM: AHL Diversified Program
INCEPTION OF TRADING: April 1, 1998
NUMBER OF OPEN ACCOUNTS: 8
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) OVERALL: $379,381,931
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) OVERALL: $525,427,345
AGGREGATE ASSETS (EXCLUDING "NOTIONAL" EQUITY) IN PROGRAM: $379,381,931
AGGREGATE ASSETS (INCLUDING "NOTIONAL" EQUITY) IN PROGRAM: $525,427,345
LARGEST MONTHLY DRAWDOWN: (8.33)% (March 2003)
WORST PEAK-TO-VALLEY DRAWDOWN: (16.05)% (February 2004 -- July 2005)
NUMBER OF PROFITABLE ACCOUNTS OPENED AND CLOSED DURING THE PERIOD: 0
RANGE OF RETURNS EXPERIENCED BY PROFITABLE ACCOUNTS OPENED AND CLOSED DURING
THE PERIOD: N/A
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 2003 2004 2005 2006 2007 2008
- ------------- ------ ------ ------ ------ ------ --------
January 7.92% 0.76% (4.90)% 3.64% 2.61% 4.49%
February 7.53% 4.71% 2.94% (2.76)% (5.71)% 7.37%
March (8.33)% (2.15)% (0.46)% 3.60% (2.53)% 0.40%
April 1.23% (7.49)% (2.52)% 4.83% 6.82% (1.37)%
May 10.38% (1.78)% 3.73% (4.27)% 3.77% 4.07%
June (4.14)% (5.58)% 3.36% (3.34)% 3.75%
July (0.94)% 0.15% 0.64% (3.71)% (2.60)%
August (0.72)% 1.05% 3.27% 2.25% (5.09)%
September 2.71% 2.85% 3.65% (1.10)% 7.35%
October 1.82% 4.06% (1.20)% 0.33% 5.23%
November (1.40)% 7.85% 5.61% 2.51% (0.41)%
December 6.29% (0.32)% (1.82)% 3.24% (0.07)%
15.63%
Annual Return 22.82% 3.13% 12.38% 4.73% 12.72% (5 MOS.)
See Notes on Pages 31 - 32.
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.
33
ADDITIONAL
MAN-AHL (USA) LIMITED
TRADING PROGRAMS
JANUARY 2003 - OCTOBER 2007(1)
------------------------------
Name of CTA: Man-AHL (USA) Limited
April 2005 -- October 2007(1)
Name of Program: Man-AHL Alpha
Inception of Client Account Trading by CTA: April 2005
Inception of Client Account Trading in Program: September 1998
Number of Open Accounts: 0 (ceased trading 10/31/07)
Actual Assets Overall: $379,381,931
Actual Assets in Program: $0
Worst Monthly Drawdown in an Account: (4.58)%
(February 2007)
Worst Peak-to-Valley Drawdown in an Account: (7.37)%
(April 2006 -- May 2007)
2008 Annual Return: N/A
2007 Annual Return: 10.49%
(10 months)
2006 Annual Return: 5.13%
2005 Annual Return: 12.83%
(9 months)
2004 Annual Return: N/A
2003 Annual Return: N/A
See Notes on Pages 31 - 32.
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.
34
ADDITIONAL MAN INVESTMENTS (USA) CORP. FUNDS
JANUARY 2003 -- MAY 2008
CTA: MAN-AHL (USA) LIMITED
--------------------------------------------------------
Name of Fund: Man-AHL Diversified I LP(1) Man-AHL Diversified LP
Type of Offering Private Private
Inception of Trading April 1998 January 2006
Aggregate Subscriptions: $105,914,461 $41,027,666
Current Capitalization: $105,797,749 $46,115,400
Worst Monthly Drawdown in an Account: (8.33)% (March 2003) (5.23)% (February 2007)
Worst Peak-to-Valley Drawdown in an Account: (16.72)% (02/04 -- 08/05) (10.74)% (04/06 -- 05/07)
2008 Annual Return: 15.51% (5 months) 15.99 (5 months)
2007 Annual Return: 13.24% 14.19%
2006 Annual Return: 4.25% 4.67%
2005 Annual Return: 11.00% N/A
2004 Annual Return: 0.89% N/A
2003 Annual Return: 21.13% N/A
See Notes on Pages 31 - 32.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
- ----------
(1) The CTA for Man-AHL Diversified I LP was Man-AHL (USA) Corp. from Inception
to April 1, 2005 and Man-AHL (USA) Limited from April 1, 2005 to Present.
35
NET ASSET VALUE
The Net Asset Value of Man-AHL 130 is computed as of the close of business
on the last day of each month.
The Net Asset Value of Man-AHL 130 equals its assets less its liabilities,
as determined generally in accordance with accounting principles generally
accepted in the U.S. More specifically, the Net Asset Value of Man-AHL 130
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 value of all other assets of Man-AHL 130 held pursuant to the AHL
Diversified Program, less all liabilities of Man-AHL 130 (including accrued
liabilities, regardless of whether such liabilities are ever paid), in each case
as determined by the Managing Member generally in accordance with accounting
principles generally accepted in the U.S.
The Net Asset Value of the portion of Man-AHL 130's assets invested in the
Man-Glenwood Funds is determined in part 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 values for the
Man-Glenwood Funds computed by the Administrator. All such estimates will be
conclusive for determining Man-AHL 130's quarter-end repurchase values, and any
adjustments of such estimates for the Man-Glenwood Funds will be reflected in
Man-AHL 130's Net Asset Value on a prospective basis only. If a Unitholder
redeems prior to a downward adjustment of Net Asset Value, Man-AHL 130 will bear
the cost of the adjustment with respect to such Unitholder. A Unitholder which
has redeemed prior to an upward adjustment of Net Asset Value will not benefit
from such adjustment.
36
FEES AND EXPENSES PAID BY MAN-AHL 130
The Managing Member believes that you should consider the charges to which
Man-AHL 130 is subject when making your investment decision. Also, please see
the "Breakeven Table" on page 8.
CHARGES PAID BY MAN-AHL 130
RECIPIENT NATURE OF PAYMENT AMOUNT OF PAYMENT
- --------------------------- ------------------------------------ ---------------------------------------------------------------
The Managing Member ....... Management Fee 0.75% per annum of Man-AHL 130'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 selling commissions (including the Client Servicing
Fee) totaling 10% of a Class A Series 1 or Class B Series 1
Unit's initial sale price (or, if earlier, such Unit has been
charged aggregate selling commissions (including the Client
Servicing Fee) totaling 10% of such Unit's initial sale price),
the Client Servicing Fee will end with respect to such Unit and
the Net Asset Value of such Unit will be recalculated, and the
Unit will be redesignated, in terms of Class A Series 2 or
Class B Series 2 Units, as applicable.
The Futures Brokers ....... Brokerage Commissions Approximately $6 to $9 per round-turn trade, inclusive of all
transaction, exchange and regulatory fees. Limited to 3% of
Man-AHL 130's average month-end Net Asset Value for each fiscal
year.
Forward Counterparties .... "Bid-ask" spreads These spreads are not actually fees paid by Man-AHL 130 but are
dealer profit margins incorporated into forward contract
pricing. They are, therefore, unquantifiable. In addition,
Man-AHL 130 will pay RBS clearing fees between $3.25 and $4.00
per transaction for Man-AHL 130's forward transactions. This
clearing fee is included within the 3% cap on Man-AHL 130
brokerage commissions.
Man-AHL (USA) Limited ..... Management Fee 2% per annum of the notional value of Man-AHL 130'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.
The Man-Glenwood Funds .... Management, investor servicing and In total, excluding fees and expenses of the Sub-Funds, 3% per
administrative fees and expenses annum of Man-AHL 130's aggregate investment in the
Man-Glenwood Funds, calculated monthly and paid quarterly.
Others .................... Administrator fees, custody fees, As incurred; not expected to exceed 0.50% of month-end Net
legal, accounting, printing, postage Asset Value annually, assuming average assets of $250,000,000.
and other administrative costs Administrative expenses in excess of 1/12 of 0.50% of each
month-end Net Asset Value (approximately 0.50% of Net Asset
Value per annum) will be paid by, or reimbursed to Man-AHL 130
by, the Managing Member or an affiliate through March 31, 2009.
Thereafter, annual expenses in excess of such 0.50% per annum
level will be the obligation of Man-AHL 130, but may be paid by
the Managing Member in its discretion.
Others .................... Extraordinary charges Actual payments to third parties; expected to be negligible.
37
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 not
receive aggregate selling commissions (including the Client Servicing Fee) in
excess of 10% of the sale price of all Units sold. Once the Selling Agent has
received aggregate selling commissions (i.e., the Client Servicing Fee) totaling
10% of the sale price of a Class A Series 1 or Class B Series 1 Unit, the Client
Servicing Fee will end with respect to such Unit and the Net Asset Value of such
Unit will be recalculated, and the Unit will be redesignated, in terms of Class
A Series 2 or Class B Series 2 Units, as applicable, against which the Client
Servicing Fee is not charged, and no further Client Servicing Fee will be
charged in respect of such Unit. The redesignation of Units from Series 1 to
Series 2 will have no impact on the Net Asset Value of an investor's investment
in Man-AHL 130 at the time of such redesignation.
Class A Series 2 and Class B Series 2 Units are offered exclusively to (i)
investors participating in selling agent asset-based or fixed-fee investment
programs, or in investment advisors' fee-based advisory programs, or (ii) direct
institutional investors, including, but not limited to, certain tax-exempt
employee benefit trusts, employee benefit plans, deferred compensation plans and
individual retirement accounts who purchase Units through the Selling Agent.
ORGANIZATIONAL AND OFFERING COSTS
The Managing Member, or an affiliate, paid, without reimbursement from
Man-AHL 130, the initial organizational and offering costs of Man-AHL 130.
Man-AHL 130 bears the costs related to the ongoing offering of its Units.
MANAGEMENT FEE
Man-AHL 130 pays 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 Man-AHL 130's AHL account (a 2% annual rate),
calculated and paid as of the end of each calendar month. The notional value of
Man-AHL 130's AHL account is approximately equal to Man-AHL 130'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, fees
payable by Man-AHL 130 to the Managing Member or redemptions as of the end of
the month of calculation.
The AHL Diversified Program charges a monthly incentive fee equal to 20% of
any "new net profits" attributable to Man-AHL 130'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 and excluding net interest
income) 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 Man-AHL
130's AHL account, AHL must earn back such losses before generating additional
new net profits on which incentive fees are earned.
Incentive fees paid do not reduce new net profits for purposes of
calculating the incentive fees due to AHL.
38
As an example of the calculation of the AHL Diversified Program incentive
fee, assume that the notional value of Man-AHL 130'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 notional value of such investment would be $25,080,000. If,
in the following month, Man-AHL 130'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 shortfall between the current level of net
profits and the high water mark attributable to Man-AHL 130's AHL Diversified
Program investment is reduced by being multiplied by the fraction the numerator
of which is the Net Asset Value of the redeemed Units and the denominator of
which is the notional value of Man-AHL 130's AHL Diversified Program investment
immediately prior to the redemption.
Because the AHL Diversified Program and Sub-Fund Manager incentive fees are
calculated on the basis of the performance of Man-AHL 130's investment in the
AHL Diversified Program and of the Sub-Funds, respectively, the incentive fee
paid by any given Unitholder's Units may not directly correlate to such
Unitholder's investment experience in Man-AHL 130. For example, an investor may
invest in Man-AHL 130 when Man-AHL 130's investment in the AHL Diversified
Program is below its high water mark. In such circumstances, such investor would
benefit from the loss carryforward existing with respect to Man-AHL 130, 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 Man-AHL 130 is diluted as the loss carryforward sheltering subsequent AHL
Diversified Program profits on their Units from incentive fees is diluted by the
issuance of additional Units.
THE MAN-GLENWOOD FUNDS' FEES
Man-AHL 130's investment in the Man-Glenwood Funds will approximate 30% of
Man-AHL 130's Net Asset Value and may be reduced to significantly below this
level or eliminated entirely.
Man-AHL 130 pays management, investor servicing and administrative fees and
expenses at a rate of approximately 3.0% per annum of the aggregate value of
Man-AHL 130's investment in the Man-Glenwood Funds, as described below.
Each of Man-Glenwood Lexington, LLC and Class A units of Man-Glenwood
Lexington TEI, LLC pay direct investor servicing fees and operating and
administrative services fees and expenses at rates which in aggregate are not
expected to exceed 1% per annum of the aggregate value of the outstanding Units
in the Man-Glenwood Funds, calculated monthly and paid quarterly. In addition,
Man-Glenwood Lexington Associates Portfolio, LLC, a registered investment
company in which the Man-Glenwood Funds invest substantially all of their
assets, pays Glenwood a management fee at a rate of 1.75% per annum of the
aggregate value of the Portfolio Company's outstanding interests, calculated
monthly and paid quarterly. The Portfolio Company also pays administrative fees
and expenses which are not expected to exceed a rate of 0.25 of 1% per annum of
the aggregate value of the Portfolio Company's outstanding interests, 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 0% to 3% 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 20% to 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 the Man-Glenwood Funds, 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
39
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 through
the futures brokers. The futures commission rates charged to the AHL Diversified
Program are approximately $6 to $9 per round-turn trade (inclusive of all
transaction, exchange and regulatory fees). The futures commission rates charged
by MF Global Inc. were not negotiated at arm's length, but are the rates
generally available to MF Global Inc.'s unaffiliated institutional customers,
although other clients of MF Global Inc. may pay lower rates. The Managing
Member has agreed with Man-AHL 130 that the maximum brokerage commissions paid
by Man-AHL 130 in any fiscal year are limited to 3% of Man-AHL 130's average
month-end Net Asset Value for such fiscal year. Any amounts in excess of such 3%
cap will be paid by the Managing Member.
Man-AHL 130 will enter into forward transactions with RBS. RBS will, in
turn, enter, directly or indirectly, into forward transactions with 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. None of AHL, the Managing Member nor
RBS 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 RBS will effect
currency transactions on behalf of Man-AHL 130 at prevailing market prices.
Dealer profit from Man-AHL 130's currency trading may, over time, be
substantial. In addition, Man-AHL 130 will pay RBS clearing fees with respect to
Man-AHL 130's forward transactions, which as of the date of this Prospectus
range between $3.25 and $4.00 per transaction. Clearing fees are subject to
change and this fee could be higher in the future. This clearing fee is included
within the 3% cap on Man-AHL 130's brokerage commissions.
ADMINISTRATIVE SERVICES
SEI Global Services, Inc. acts as Man-AHL 130's administrator. Under the
terms of the administration agreement with Man-AHL 130, the Administrator
provides certain accounting, administration, investor and anti-money laundering
services to Man AHL 130, including, among others: preparing and maintaining
accounting records; calculating Net Asset Value per Unit; processing and
reporting of investor activity; maintaining investor records; and verifying the
identity of all investors and maintaining identification verification and
transactional records in accordance with the requirements of anti-money
laundering regulations. The principal business address of the Administrator is
One Freedom Valley Drive, Oaks, Pennsylvania 19456.
In consideration for these accounting, administrative, investor and
anti-money laundering services provided to Man-AHL 130, Man-AHL 130 pays the
Administrator a quarterly fee which is not expected to exceed an annual rate of
0.25% (the "Accounting and Other Services Fee"), subject to certain minimum
fees, of the aggregate value of outstanding Units determined as of the last day
of each calendar month and paid quarterly, assuming average assets of
$250,000,000.
Man-AHL 130 will pay all its routine legal, audit, printing and similar
costs associated with its operations in addition to the Accounting and Other
Services Fee. The Managing Member anticipates that these costs in total
(including the Accounting and Other Services Fee) will not exceed 0.50% of
Man-AHL 130's month-end Net Asset Value during any fiscal year, assuming average
assets of $250,000,000. Administrative expenses in excess of 1/12 of 0.50% of
each month-end Net Asset Value (approximately 0.50% of Net Asset Value per
annum) through March 31, 2009 will be paid by, or reimbursed to Man-AHL 130 by,
the Managing Member or an affiliate. Thereafter, expenses in excess of such
0.50% per annum level will be the obligation of Man-AHL 130, but may be paid in
whole or in part by the Managing Member in its discretion.
FUTURES BROKERS
MF Global Inc. and Credit Suisse, Sydney Branch ("Credit Suisse Sydney"),
serve as Man-AHL 130's futures brokers, and RBS serves as Man-AHL 130's foreign
exchange contracts prime broker. Man-AHL 130 may replace the futures brokers
and/or foreign exchange prime brokers or use additional futures brokers and/or
foreign exchange prime brokers at any time without prior notice to investors.
Man-AHL 130's futures brokers and foreign exchange prime brokers may be
collectively referred to as the "futures brokers."
40
MF Global Inc., formerly known as Man Financial Inc., is registered under
the Commodity Exchange Act, as amended, as a futures commission merchant and a
CPO, and is a member of the National Futures Association. The change of name was
effected on July 19, 2007. MF Global Inc. is a member of all major US futures
exchanges. MF Global Inc.'s main office is located at 717 Fifth Avenue, 9th
Floor, New York, New York 10022-8101. MF Global Inc.'s telephone number at such
location is (212) 589-6200. Pursuant to the commodity brokerage agreement
between MF Global Inc. and Man-AHL 130, Man-AHL 130 has agreed to indemnify and
hold harmless MF Global Inc. and its affiliates from and against any liability,
damage, cost or expense any of them may incur or be subjected to with respect to
Man-AHL 130 or any transaction or position therein, or as a result of Man-AHL
130's violation of any representations, agreements or obligations under the
commodity brokerage agreement. MF Global Inc. will only be liable to Man-AHL 130
for actions or inactions which amount to negligence or misconduct.
At any given time, MF Global Inc. 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 Man-AHL 130.
Except as noted below, there have been no administrative, civil or criminal
proceedings pending, on appeal or concluded against MF Global Inc. or its
principals within the five years preceding the date of this Prospectus that MF
Global Inc. would deem material for purposes of Part 4 of the Regulations of the
CFTC.
In May, 2006, Man Financial Inc. was sued by the Receiver for Philadelphia
Alternate Asset Fund ("PAAF") and associated entities for common law negligence,
common law fraud, violations of the Commodity Exchange Act and Racketeer
Influenced and Corrupt Organizations ("RICO") violations (the "Litigation"). In
December, 2007, without admitting any liability of any party to the Litigation
to any other party to the Litigation, the Litigation was settled with Man
Financial Inc. agreeing to pay $69 million, plus $6 million of legal expenses,
to the Receiver, in exchange for releases from all applicable parties and the
dismissal of the Litigation with prejudice. In a related action, Man Financial
Inc. settled a CFTC administrative proceeding (In the Matter of MF Global, f/k/a
Man Financial Inc., and Thomas Gilmartin) brought by the CFTC against Man
Financial Inc. and one of its employees for failure to supervise and
recordkeeping violations. Without admitting or denying the allegations, Man
Financial Inc. agreed to pay a civil monetary penalty of $2 million and accepted
a cease and desist order. MF Global Inc. has informed the Managing Member, the
trading advisor and the Selling Agent that the settlements referenced above will
not materially affect MF Global Inc. or its ability to perform as a futures
broker.
On February 20, 2007, Man Financial Inc. also settled a CFTC administrative
proceeding (In the Matter of Steven M. Camp and Man Financial Inc., CFTC Docket
No. 07-04) in which Man Financial Inc. was alleged to have failed to supervise
one of its former associated persons who was charged with fraudulently
soliciting customers to open accounts at Man Financial Inc.. The CFTC alleged
that the former associated person misrepresented the profitability of a
web-based trading system and of a purported trading system to be traded by a
commodity trading advisor. Without admitting or denying the allegation, Man
Financial Inc. agreed to pay restitution to customers amounting to $196,900.44
and a civil monetary penalty of $120,000. Man Financial Inc. also agreed to a
cease and desist order and to strengthen its supervisory system for overseeing
sales solicitations by employees in connection with accounts to be traded under
letters of direction in favor of third party system providers.
On March 6, 2008, and thereafter, 5 virtually identical proposed class
action securities suits were filed against MF Global Inc.'s parent, MF Global
Ltd., certain of its officers and directors, and Man Group plc. These suits have
now been consolidated into a single action. The complaints seek to hold
defendants liable under ss.ss. 11, 12, and 15 of the 1933 Act by alleging that
the registration statement and prospectus issued in connection with MF Global
Ltd.'s initial public offering in July 2007, were materially false and
misleading to the extent that representations were made regarding MF Global
Ltd.'s risk management policies, procedures and systems. The allegations are
based upon MF Global Ltd.'s disclosure of $141.5 million in trading losses
incurred in a single day by an associated person in his personal trading
account, which losses MF Global Inc. was responsible to pay as an exchange
clearing member.
In connection with the incident involving the trading losses referenced
above, the CFTC issued a formal order of investigation naming MF Global Inc. and
the associated person. The CFTC, in coordination with the Chicago Mercantile
Exchange ("CME"), has been collecting documentation and taking depositions of MF
Global Inc. employees. This investigation is ongoing and it is not yet certain
what actions the CFTC and/or the CME might take. MF Global Ltd. has established
an accrual of $10.0 million to cover potential CFTC civil monetary penalties in
this matter and the two CFTC matters referred to below. This is MF Global Ltd.'s
best estimate at this time and there is no assurance that the $10.0 million
accrual will be sufficient for these purposes or that the CFTC will not require
remedial measures. No accrual has been made for the CME matter.
In May 2007, MF Global Inc. and two of its employees received what is
commonly referred to as a "Wells notice" from the staff of the Division of
Enforcement of the CFTC. The notice relates to two trades MF Global Inc.
executed in 2004 for a customer and reported to NYMEX. The notice indicates that
the Division of Enforcement is considering recommending to the CFTC that a civil
proceeding be commenced against MF Global Inc. and the two employees, in which
the CFTC would assert that MF Global Inc. and the two employees violated Section
9(a)(4) of the Commodity Exchange Act, which generally prohibits any person from
willfully making any false, fictitious, or fraudulent statements or
representations, or making or using any false writing or document knowing the
same to contain any false, fictitious, or fraudulent statement to a board of
trade. The Division of Enforcement staff contends that MF Global Inc. and the
individuals presented or participated in the submission of information to NYMEX
that falsely represented the dates on which the trades in question occurred. MF
Global Inc. and the individuals dispute these contentions. It is not yet certain
what action the CFTC will take, but see the reference to a $10.0 million accrual
above.
Additionally, MF Global Ltd. is currently cooperating in an investigation
conducted by a New York County Grand Jury in conjunction with the U.S. Attorneys
Office in the Southern District of New York, with which the CFTC and the SEC are
also involved. The investigation centers around trading by a market making
energy trader at Bank of Montreal ("BMO") who allegedly mismarked his book. An
MF Global Inc. broker did business with the BMO trader, and used bid and offer
prices for forward OTC trades the BMO trader sent to him as a basis for prices
which the MF Global Inc. broker disseminated to MF Global Inc.'s customers,
including BMO, as price indications that reflected a consensus. MF Global Inc.
has been told that neither MF Global Inc. nor the broker are targets of the
Grand Jury investigation. In connection with this investigation, MF Global Inc.
has been served by the CFTC with a Wells notice in anticipation of civil charges
against the broker under the anti-fraud provisions of CFTC Regulation 33.10 and
MF Global Inc. with derivative liability for the broker's actions. It is not yet
certain what action the CFTC may take against MF Global Inc. or the broker, but
see the reference to a $10.0 million accrual above.
Credit Suisse Sydney, a branch of Credit Suisse, is a member of the Sydney
Futures Exchange. Credit Suisse Sydney acts as a futures broker for Man-AHL 130,
executing and clearing a portion of Man-AHL 130's futures and futures options
transactions, and is regulated by the Australian Prudential Regulation
Association, the Australian Securities and Investments Commission, and the
Sydney Futures Exchange. Credit Suisse Sydney's principal office is located at
Level 31, Gateway, 1 Macquarie Place, Sydney, NSW 2000 Australia. Credit Suisse
Sydney's telephone number at such location is +61 2 8205 4400.
There have been no material administrative, civil or criminal proceedings
pending, on appeal or concluded against Credit Suisse Sydney or its principals
within the past five years.
RBS has entered into certain agreements with Man-AHL 130 for the purposes
of providing foreign exchange prime brokerage services to Man-AHL 130. RBS is a
subsidiary of The Royal Bank of Scotland Group plc ("RBSG").
41
RBSG is a public limited company incorporated in Scotland with registration
number 45551. RBSG was incorporated under Scots law on 25 March 1968 under the
name "National and Commercial Banking Group Limited" and its name was changed to
"The Royal Bank of Scotland Group Limited" by Special Resolution passed on 4
July 1979. By Resolution of the Directors passed on 28 January 1982, pursuant to
section 8 of the Companies Act, 1980, the name of RBSG was changed to "The Royal
Bank of Scotland Group public limited company". RBSG's operations are conducted
principally through RBS and its subsidiaries including National Westminster Bank
Plc ("NatWest") other than the general insurance business (primarily Direct Line
Group, Churchill Insurance and Privilege). RBS is a public limited company
incorporated in Scotland with registration number 90312, having been
incorporated under Scots law on 31 October 1984. Both RBS and NatWest are major
UK clearing banks whose origins go back over 275 years. RBSG has a large and
diversified customer base and provides a wide range of products and services to
personal, commercial and large corporate and institutional customers.
RBSG had total assets of approximately L1.9 trillion as of December
31, 2007.
RBS is authorised and regulated by the UK Financial Services Authority
(FSA) and is an Approved Bank as defined within the rules of the FSA. RBS is
entered in the FSA's Register and its Register number is 121882. RBS' registered
office is located at 36 St. Andrew Square, Edinburgh, EHY 2YB, Great Britain and
its principal office is at 135 Bishopsgate, London, EC2M 3UR. RBS' telephone
number at such location is 020 7085 5000.
The futures brokers act only as brokers for the futures accounts to be
traded pursuant to this Prospectus and as such are paid commissions for
executing and clearing trades. The futures brokers have not passed upon the
adequacy or accuracy of this Memorandum and will not act in any supervisory
capacity with respect to the Managing Member, Man-AHL 130 or AHL, as the case
may be, nor participate in the management of the Managing Member, Man-AHL 130 or
AHL. Therefore, prospective investors should not rely on the futures brokers in
deciding whether or not to participate in Man-AHL 130.
REDEMPTIONS AND TRANSFERS OF UNITS
REDEMPTION PROCEDURES
Subject to the limitation described in the following paragraph, a
Unitholder may redeem all or any portion of such Unitholder'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,
except as set forth below. The Managing Member may, in unusual circumstances,
permit redemptions as of a date other than a quarter-end.
No more than 15% of Man-AHL 130'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
Man-AHL 130's total then outstanding Units, each redemption request will be pro
rated so that no more than 15% of Man-AHL 130'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 any additional Units, including those Units that were not
redeemed due to the reduction. Units not redeemed due to the reduction of a
redemption request will remain subject to increase or decrease in value as a
result of Man-AHL 130's trading activities. Managing Member requests for
redemption will not be considered to the extent that giving consideration
thereto would reduce, or further reduce, the redemption requests of other
Unitholders.
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 Man-AHL 130 receives redemption requests in excess of the
15% limitation for eight consecutive quarters, Man-AHL 130 will cease its
trading and investment 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 values for the Man-Glenwood
Funds. All such estimates will be
42
conclusive for determining Man-AHL 130's quarter-end redemption values, and any
adjustments of such estimates for the Man-Glenwood Funds will be reflected in
Man-AHL 130'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.
Man-AHL 130 generally will pay the redemption proceeds within 45 days of the
calendar quarter-end of redemption.
Man-AHL 130's AHL Diversified Program managed account is highly liquid.
Man-AHL 130's ability to have its investment in the Man-Glenwood Funds
repurchased is dependent on the liquidity of the Sub-Funds and the Man-Glenwood
Funds' Board of Managers. Certain of such Sub-Funds may from time to time
suspend or delay redemptions, which could, in time, cause the Man-Glenwood Funds
to do so as well. Similarly, the Board of the Man-Glenwood Funds may determine
not to make a quarterly tender offer for the Man-Glenwood Funds' Units, or a
tender offer may not be sufficient in amount to satisfy Man-AHL 130's repurchase
request. However, the Managing Member believes that any adverse effect to
Man-AHL 130 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 Man-AHL 130's limited investment in the Man-Glenwood Funds.
Each Man-Glenwood Fund generally withholds 5% of the proceeds of a total
repurchase from such Man-Glenwood Fund until the completion of the Man-Glenwood
Fund's annual audit. The amount withheld from a total repurchase by Man-AHL 130
from the Man-Glenwood Funds will be approximately 1.5% of a Unitholder's total
investment. Rather than withhold redemption proceeds from Unitholders redeeming
Units, however, the Managing Member intends to pay the full redemption amount
due to redeeming Unitholders and the amount subsequently paid to Man-AHL 130 by
the Man-Glenwood Funds from the amount withheld will be a general asset of
Man-AHL 130.
TRANSFERS OF UNITS
Units may be assigned on the same time frame 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 Unitholders 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 Class
appropriate form of Man-AHL 130's Investor Application Form.
UNITS MAY ONLY BE ASSIGNED (EXCEPT BY WAY OF GIFT) TO ACCREDITED INVESTORS.
CONFLICTS OF INTEREST; TRANSACTIONS BETWEEN MAN GROUP AND MAN-AHL 130
GENERAL
Neither the Managing Member nor Man-AHL 130 has established any formal
procedures to resolve the following conflicts of interest. Consequently, there
is no independent control on how the Managing Member or Man-AHL 130 resolves
these conflicts which can be relied upon by investors as ensuring that Man-AHL
130 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 Man-AHL 130 losses.
The value of a Unitholder'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 Man-AHL 130 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 consider such terms in making
investment decisions.
43
THE MAN GROUP
The Managing Member organized and controls Man-AHL 130. The Managing Member
and its affiliates are primary service providers to Man-AHL 130 and will remain
so, even if using other firms might be better for Man-AHL 130. Futures and
alternative strategy trading is highly competitive. None of the fees paid by
Man-AHL 130 to the Managing Member or 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
Man-AHL 130 despite providing services at non-competitive fees, Man-AHL 130'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 or 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 Man-AHL 130 in order to increase the
Managing Member's income from Man-AHL 130 or decrease its costs in sponsoring
Man-AHL 130. Also, because the Managing Member does not have to compete with
third parties to provide services to Man-AHL 130, there is no independent check
on the quality of such services.
MAN-AHL 130'S INVESTMENT IN THE AHL DIVERSIFIED PROGRAM
The AHL Diversified Program is operated by members of the Man Group, which
receive substantial compensation for doing so. Man-AHL 130 does not expect to
allocate its capital to any other managed futures program, even if doing so
would be in the best interests of Man-AHL 130.
FUTURES BROKERS
Man-AHL 130 pays substantial brokerage commissions to MF Global Inc., the
parent company of which is MF Global Ltd. in which Man Group plc holds a
significant minority interest. Although certain of MF Global Inc.'s clients may
pay lower brokerage rates than Man-AHL 130, the brokerage commission rates
charged by MF Global Inc. to Man-AHL 130 are those generally available to MF
Global Inc.'s unaffiliated institutional customers.
The futures brokers may execute trades for multiple clients in the same
markets at the same time. Other clients may receive better prices than Man-AHL
130 on such trades.
The futures brokers must allocate their resources among many different
clients. Because the futures brokers' clients may be charged different rates and
fees, the futures brokers may have financial incentives to favor certain
accounts over Man-AHL 130. Because of the competitive nature of the markets in
which Man-AHL 130 trades, to the extent that a futures broker prefers other
clients over Man-AHL 130, Man-AHL 130 may incur losses.
Man-AHL 130's expected annual brokerage commissions as a percentage of
average Net Asset Value are approximately 1.2%. The Managing Member has agreed
to pay Man-AHL 130's commodity brokerage commissions that exceed 3% of Man-AHL
130's average month-end Net Asset Value during each fiscal year. However, this
limitation does not assure that the brokerage rates charged to Man-AHL 130 are
competitive.
MAN-AHL 130'S INVESTMENT IN THE MAN-GLENWOOD FUNDS
The Man-Glenwood Funds are operated by members of the Man Group, which
receive substantial compensation for doing so. Man-AHL 130 does not expect to
allocate any portion of its capital to any other fund of funds, even if doing so
44
would be in the best interests of Man-AHL 130. The Selling Agent receives an
investor servicing fee of 0.50% of net assets per annum for the provision of
investor services to the Man-Glenwood Funds, calculated monthly and paid
quarterly.
Glenwood and its affiliates, as well as many of the Sub-Fund Managers and
their respective affiliates, provide investment advisory and other services to
clients other than the Man-Glenwood Funds, the Portfolio Company and the
Sub-Funds they manage. In addition, investment professionals associated with
Glenwood or the Sub-Fund Managers may carry on investment activities for their
own accounts and the accounts of family members. The Man-Glenwood Funds, the
Portfolio Company and the Sub-Funds have no interest in these activities. As a
result of the foregoing, Glenwood and the Sub-Fund Managers will be engaged in
substantial activities other than on behalf of the Man-Glenwood Funds, the
Portfolio Company or the Sub-Funds 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 the
other accounts managed by Glenwood or its affiliates.
THE MAN-GLENWOOD FUNDS' BROKERS AND DEALERS
The brokers and dealers used by the Sub-Funds are generally selected by
each Sub-Fund Manager individually. These Sub-Fund 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 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 Managers.
The Man-Glenwood Funds may trade options and other derivatives for hedging
purposes and will also select brokers. In general, the Man-Glenwood Funds do not
select brokers affiliated with the Man Group for such purposes.
SELLING AGENTS
The Selling Agent and Additional Selling Agents 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 Man-AHL 130.
The Selling Agent and Additional Selling Agents receive ongoing Client
Servicing Fees, as described herein. As the Selling Agent is an affiliate of the
Managing Member, the Client Servicing Fees paid to the Selling Agent were not
negotiated at arm's length. These commissions increase the overall costs to
which Series 1 Units of Class A and Class B are subject, to the detriment of
investors in such Series. The Selling Agent and Additional Selling Agents will
have a conflict of interest in that if a client redeems, the Selling Agent or
the Additional Selling Agent will no longer receive ongoing Client Servicing
Fees in respect of the capital invested by such client.
Because the Selling Agent's affiliates will receive advisory fees in
respect of Man-AHL 130's trading activities, the Selling Agent may have
incentives to solicit investments for Units that a selling agent without any
affiliation to the management of Man-AHL 130 would not have. The Selling Agent
may have similar incentives due to Man Group plc's indirect interest in MF
Global Inc.
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 Sub-Fund Managers are eligible to receive incentive
compensation from the Sub-Funds, Sub-Fund Managers may have an incentive to
trade the Sub-Funds in a more speculative manner than they otherwise would.
SUMMARY OF THE LIMITED LIABILITY COMPANY AGREEMENT
The LLC Agreement effectively gives the Managing Member full control over
the management of Man-AHL 130. Unitholders have no voice in its operations.
Although, as Unitholders, investors have no right to participate in the
control or management of Man-AHL 130, they are entitled to: (i) vote on a
variety of different matters; (ii) receive annual audited
45
financial statements, unaudited monthly reports and timely tax information
sufficient to permit investors to pay estimated taxes (and eventually final
taxes); (iii) inspect Man-AHL 130's books and records in the manner described
below; (iv) redeem Units; and (v) not have the business terms of Man-AHL 130
changed in a manner which increases the compensation received by the Managing
Member or its affiliates without the unanimous consent of each affected Series.
Unitholders' voting rights extend to any proposed change in the LLC
Agreement which would adversely affect them, as well as to their right to
terminate Man-AHL 130's contracts with affiliates of the Managing Member.
Unitholders also have the right to call meetings of Man-AHL 130 in order to
permit Unitholders to vote on any matter on which they are entitled to vote,
including the removal of the Managing Member as managing member of Man-AHL 130.
Unitholders or their duly authorized representatives may inspect Man-AHL
130's books and records, for any purpose reasonably related to their status as
Unitholders of Man-AHL 130, 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
Unitholders represent that the inspection and/or copies of such records will not
be for commercial purposes or for purposes unrelated to such Unitholders'
interest in Man-AHL 130.
FINANCIAL AND TAX ALLOCATIONS
The LLC Agreement provides for the economic and tax allocations of Man-AHL
130's profit and loss. Economic allocations are based on Unitholders' 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
Unitholders who redeem at a profit.
NET ASSET VALUE
Net Asset Values are determined in accordance with accounting principles
generally accepted in the United States of America and include unrealized
profits as well as unrealized losses on Man-AHL 130's investments on open
commodity positions. Net Asset Value includes the sum of all cash, Treasury
bills or other fixed-income instruments, generally valued at cost plus accrued
interest, the liquidating value, or cost of liquidation, of all futures, forward
and options positions and the fair market value of all other assets, less all
liabilities, of Man-AHL 130, including any accrued liabilities, irrespective of
whether such liabilities, may, in fact, never be paid. If a futures contract
cannot be liquidated on a day with respect to which Net Asset Value is 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 other value as the Managing Member may deem fair and
reasonable.
The Man-Glenwood Funds will provide Man-AHL 130 with a net asset value for
Man-AHL 130's investment in the Man-Glenwood Funds as of the last business day
of each calendar month.
STANDARD OF LIABILITY; INDEMNIFICATION
The Managing Member in its operation of Man-AHL 130 is specifically
authorized to engage in the transactions described herein (including those
involving affiliates of the Managing Member), and is exculpated and indemnified
by Man-AHL 130 against claims sustained in connection with Man-AHL 130, provided
that such claims were not the result of negligence or misconduct and that the
Managing Member determined that such conduct was in the best interests of
Man-AHL 130. Indemnification by Man-AHL 130 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
(including the litigation 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.
46
AMENDMENTS
The Managing Member may amend the LLC Agreement in any manner not adverse
to the Unitholders without need of obtaining their consent. These amendments can
be for clarification of inaccuracies or ambiguities, modifications in response
to changes in the 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.
TAX CONSEQUENCES
Based upon certain representations made by the Managing Member, in the
opinion of Sidley Austin LLP, Man-AHL 130 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, Man-AHL 130 will not pay any
federal income tax.
The opinion of Sidley Austin 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 Man-AHL 130 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 LLP the following summary of the tax
consequences to an individual United States taxpayer who invests in Man-AHL 130
is materially correct.
Sidley Austin LLP's opinion is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The following discussion assumes that Man-AHL 130 will be treated as a
partnership for federal income tax purposes.
TAXATION OF UNITHOLDERS
Each Unitholder will be required to report on its federal income tax return
such Unitholder's allocable share of Man-AHL 130's income, gains, losses,
deductions, credits and other items for Man-AHL 130's taxable year ending with
or within the Unitholder's taxable year, whether or not any distribution of cash
or other property is made to the Unitholder in that year.
At the end of each taxable year, items of Man-AHL 130 income, expense,
gain, loss and deduction, as determined for federal income tax purposes, will be
allocated among the Unitholders which held Units during such taxable year. A
Unitholder'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 Unitholders' Units. Under the LLC Agreement, tax
allocations are generally made in a manner consistent with the financial
allocations made to the Unitholders' capital accounts and therefore either
should have substantial economic effect or should be in accordance with the
Unitholders' Units.
LIMITATIONS ON DEDUCTIBILITY OF MAN-AHL 130 LOSSES BY UNITHOLDERS
The amount of any Man-AHL 130 loss that a Unitholder is entitled to include
on its income tax return is limited to such Unitholder's adjusted tax basis for
its Units as of the end of Man-AHL 130's taxable year in which such loss
occurred. Generally, a Unitholder's adjusted tax basis for its Units is the
amount paid for such Units reduced (but not below zero) by such Unitholder's
share of losses and expenses, and any distributions made to such Unitholder, and
increased by such Unitholder's share of Man-AHL 130's income, including gains.
CASH DISTRIBUTIONS
Cash received from Man-AHL 130 by a Unitholder as a distribution generally
is not reportable as taxable income by such Unitholder, except to the extent
such distribution exceeds a Unitholder's adjusted tax basis for its Units. Any
such excess is taxable to such Unitholder as gain from the sale or exchange of
such Units. Allocations of Man-AHL 130 income increase the tax basis for a
Unitholder's Units at the end of the taxable year. Cash distributions during the
taxable year could result in taxable gain to a Unitholder even though no gain
would result if the same cash distributions were made following Man-AHL 130's
allocation of income at the end of the taxable year.
A cash distribution in withdrawal or in redemption of all of a Unitholder'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
47
difference between the amount of such distribution and the Unitholder's adjusted
tax basis for such Units (including such Unitholder's distributive share of
Man-AHL 130's income or loss for the year of such distribution).
GAIN OR LOSS ON SECTION 1256 CONTRACTS
Man-AHL 130'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.
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 currently 1.2% 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 Man-AHL 130 (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 Unitholder's share of the amounts so
characterized would be subject to the foregoing limitations on deductibility.
SYNDICATION FEES
Neither Man-AHL 130 nor the Unitholders 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 Unitholder for purposes of determining capital
gain or loss upon redemption of its Units in Man-AHL 130.
LIMITATION ON DEDUCTIBILITY OF INTEREST ON INVESTMENT INDEBTEDNESS
Non-corporate Unitholders 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, 2010, is subject to tax at a 15% rate. Generally, qualified dividend income
is dividends received from US 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 Man-AHL 130 do not constitute a "passive
activity," with the result that losses resulting from a Unitholder's "passive
activities" cannot be offset against Man-AHL 130'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
48
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 US tax purposes. Such entity itself may,
however, be subject to withholding tax on any portion of its income deemed to be
effectively connected to a US trade or business engaged in by one or more
Sub-Funds.
STATE AND LOCAL TAXES
In certain cases, Man-AHL 130 may be subject to entity-level state and
local taxes in states in which the profits of Man-AHL 130 are deemed to be
sourced. Each Unitholder may be required to report and pay state and local tax
on such Unitholder's distributive share of the profits of Man-AHL 130 in the
state and municipality in which the Unitholder resides and/or other
jurisdictions in which income is earned by Man-AHL 130.
MAN-AHL 130 AUDITS
The tax treatment of Man-AHL 130 items is determined at the Man-AHL 130
level rather than at the Unitholder level. The Managing Member is the "Tax
Matters Partner" of Man-AHL 130 with the authority to determine Man-AHL 130's
response to an audit. The limitations period for assessment of deficiencies and
claims for refunds with respect to items related to Man-AHL 130 is generally
three years after Man-AHL 130'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 Unitholders. Certain tax positions which the Managing Member
may elect to take on behalf of Man-AHL 130 may increase the chance that Man-AHL
130's return will be audited. If an audit results in an adjustment, all
Unitholders may be required to pay additional tax, interest and, possibly,
penalties. There can be no assurance that Man-AHL 130'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
the fiduciary responsibility provisions of, 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 Man-AHL 130
(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 Man-AHL 130, including the
role that an investment in Man-AHL 130 plays in the Plan's overall investment
portfolio. In addition, each Plan Fiduciary, before deciding to invest in
Man-AHL 130, must be satisfied that investment in Man-AHL 130 is a prudent
investment for the Plan, that the investments of the Plan, including the
investment in Man-AHL 130, are diversified so as to minimize the risk of large
losses and that an investment in Man-AHL 130 complies with the terms of the Plan
and the related trust.
EACH PLAN FIDUCIARY CONSIDERING ACQUIRING UNITS MUST CONSULT ITS OWN LEGAL
AND TAX ADVISORS BEFORE DOING SO.
"PLAN ASSETS"
The purchase of Units by a Plan raises the issue of whether that purchase
will cause, for purposes of Title I of ERISA and Section 4975 of the Code, the
underlying assets of Man-AHL 130 to constitute
49
assets of such Plan. ERISA and regulations issued thereunder (the "ERISA
Regulation") contain 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 Exception"). Another exception that may apply is the exception set
forth in Section 3(42) of ERISA (the "25% Exception").
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 25% Exception applies with respect to an entity if less than 25% of the
total value of each class of equity interests of the entity are held by "benefit
plan investors" (determined by not including the investments of persons with
discretionary authority or control over the assets of such entity, of any person
who provides investment advice for a fee (direct or indirect) with respect to
such assets, and "affiliates" (as defined in the ERISA Regulation) of such
persons; provided, however, that under no circumstances are investments by
benefit plan investors excluded from such calculation). The term "benefit plan
investors" includes all Plans (i.e., all "employee benefit plans" as defined in,
and subject to the fiduciary responsibility provisions of, ERISA and all "plans"
as defined in and subject to Section 4975 of the Code) and all entities that
hold "plan assets" (each, a "Plan Assets Entity") due to investments made in
such entities by already described benefit plan investors. ERISA provides that a
Plan Assets Entity is considered to hold plan assets only to the extent of the
percentage of the Plan Assets Entity's equity interests held by benefit plan
investors. In addition, all or a portion of an investment made by an insurance
company using assets from its general account may be treated as a benefit plan
investor.
During such time, if any, that Class B Units are held by more than 100
independent investors, it is expected that the Publicly-Offered Security
Exception should apply to Class B Units pursuant to the rules described above.
During such time, as any, that the Publicly-Offered Security Exception does not
apply to Class B Units, as determined by the Managing Member, Man-AHL 130
intends to comply with the 25% Exception. This may require Man-AHL 130 to
restrict investments by benefit plan investors and to force redemptions of
existing benefit plan investors in the event that other investors redeem. Any
such rejection of subscriptions or mandatory redemptions will be effected in
such manner as Man-AHL 130, in its sole discretion, determines. In order to
enable Man-AHL 130 to monitor the level of investment by benefit plan investors
for purposes of the 25% Exception, each investor will be required to provide
representations regarding whether it is a benefit plan investor.
50
INELIGIBLE PURCHASERS
In general, Units may not be purchased with the assets of a Plan if the
Managing Member, any wholesaler, the Selling Agent, any Additional Selling
Agent, the Administrator, any Sub-Fund Manager, MF Global Ltd., the futures
brokers, AHL, Glenwood, RBS, or any of their respective affiliates or any of
their respective agents or employees: (i) has investment discretion with respect
to the investment of such plan assets; (ii) 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 (iii) 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 (i) or (ii) of the preceding sentence is a fiduciary under
ERISA and the Code with respect to the Plan, and any such purchase might result
in a "prohibited transaction" under ERISA and the Code.
Except as otherwise set forth, the foregoing statements regarding the
consequences under ERISA and the Code of an investment in Man-AHL 130 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 MAN-AHL 130, THE MANAGING MEMBER, THE SELLING AGENT, ANY
ADDITIONAL SELLING AGENT OR ANY OTHER PARTY RELATED TO MAN-AHL 130 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
MAN-AHL 130 IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR PLAN, ERISA AND
CURRENT TAX LAW.
PLAN OF DISTRIBUTION
SUBSCRIPTION PROCEDURE
The Units are offered as of the beginning of each month.
The Selling Agent has not made any firm commitment to acquire or sell any
specified dollar amount of Units of any Class.
Class A Units and Class B Units are substantially the same. Class A Units
access the Portfolio Company by investing in Man-Glenwood Lexington, LLC while
Class B Units -- offered only to tax-exempt investors -- do so by investing in
Class A Units of Man-Glenwood Lexington TEI, LLC, thereby avoiding being subject
to "unrelated business taxable income" (which is taxable to otherwise tax-exempt
investors) on Class B Unitholders' investment in Man-AHL 130. The eligibility to
invest in Class A Series 1 or Class B Series 1 Units, on the one hand, or Class
A Series 2 or Class B Series 2 Units, on the other, is based entirely on whether
the investor is investing in Man-AHL 130 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 or whether the investor is a direct institutional investor
purchasing Units through the Selling Agent.
Units of each Series within each Class are issued at their respective Net
Asset Values at the end of the previous month.
In order to purchase Units, you must complete, sign and deliver to the
Selling Agent or an Additional Selling Agent an original of the Class
appropriate Investor Application Form which accompanies this Prospectus,
together with a wire transfer or check in the amount of your subscription
pursuant to the instructions provided in the Class appropriate Investor
Application Form.
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 Man-AHL 130.
51
Subscriptions will be received directly by Man-AHL 130 in a subscription
account, however, no fees will apply to subscriptions held pending investment in
Man-AHL 130's trading account.
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 Man-AHL 130 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 Unitholders
in Man-AHL 130 through information received on the Class appropriate Investor
Application Form. Generally, the Managing Member or its designee must receive
subscription documents by the sixth business day 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
Investor Application Form to Man-AHL 130.
Subscription funds received in respect of Units of each Class, if rejected,
will be returned without interest.
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 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,
subject to the following. In compliance with the limitations of NASD Rule
2810(b)(4)(B)(i) of the Financial Industry Regulatory Authority, selling
commissions (including the Client Servicing Fee) paid in respect of the Units
will not exceed 10% of the issuance price of all Units sold. 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 aggregate selling commissions
(including the Client Servicing Fee) 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
aggregate selling commissions (including the Client Servicing Fee) totaling 10%
of the sale price of such Unit), the Client Servicing Fee will end with respect
to such Unit and the Net Asset Value of such Unit will be recalculated, and the
Unit will be redesignated, in terms of Class A Series 2 or Class B Series 2
Units, as applicable, against which the Client Servicing Fee is not charged, 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 (i) participants in selling agent asset-based or fixed-fee
investment programs and registered investment advisor fee-based advisory
programs and (ii) direct institutional investors, including, but not limited to,
certain tax-exempt employee benefit trusts, employee benefit plans, deferred
compensation plans and individual retirement accounts which purchase Units
through the Selling Agent, are not charged the Client Servicing Fee.
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 Man-AHL 130, will compensate such Additional Selling
Agents subject to the limitations of NASD Rule 2810(b)(4)(B)(i) pertaining to
maximum allowable selling commissions.
The Selling Agent may pay, from its own resources, brokers and dealers and
investor service providers for ongoing investor servicing, including for
custodian services. 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. However, any such amounts paid to Additional Selling Agents,
when aggregated with
52
the Client Servicing Fee paid in connection with the sale of the Units, shall
not exceed 10% of the gross proceeds of the 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 or may be
compensated directly by the Selling Agent.
Pursuant to the General Distributor's Agreement among Man-AHL 130, the
Managing Member and the Selling Agent, the Managing Member, not Man-AHL 130, 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 Man-AHL 130. The Selling Agent will only be liable to Man-AHL 130 for
losses resulting from the negligence or misconduct on its part in the
performance of its 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 account statements
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.
If, at the close of business, as determined by the Managing Member, on any
day, the Unit Net Asset Value of the Units of any Series has decreased to 50% or
less of the previous month-end Unit Net Asset Value of such Units, the Managing
Member will declare a "special redemption date" and notify the Unitholders. Any
such notice will contain a description of the Unitholders' voting rights.
LAWYERS; ACCOUNTANTS
Sidley Austin LLP, New York, New York and Chicago, Illinois, served as
legal counsel to the Managing Member in connection with the organization of
Man-AHL 130 and the preparation of this Prospectus. Sidley Austin LLP may
continue to serve in such capacity in the future, but has not assumed any
obligation to update this Prospectus. Sidley Austin LLP may advise the Managing
Member in matters relating to the operation of Man-AHL 130 -- including, without
limitation, on matters relating to its fiduciary obligations -- on an ongoing
basis. Sidley Austin LLP does not represent and has not represented the
prospective investors or Man-AHL 130 in the course of the organization of
Man-AHL 130, the negotiation of its business terms, the offering of the Units or
in respect of its ongoing operations. Prospective investors must recognize that,
as they have had no representation in the organization process, the terms of
Man-AHL 130 relating to themselves and the Units have not been negotiated at
arm's length.
Sidley Austin LLP's engagement by the Managing Member in respect of Man-AHL
130 is limited to the specific matters as to which it is consulted by the
Managing Member and, therefore, there may exist facts or circumstances which
could have a bearing on Man-AHL 130's (or the Managing Member's) financial
condition or operations with respect to which Sidley Austin LLP has not been
consulted and for which Sidley Austin LLP expressly disclaims any
responsibility.
The Financial Statements of Man-AHL 130, LLC as of March 31, 2008 and 2007,
and for the years ended March 31, 2008 and 2007 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.
The Man Investments (USA) Corp. Statement of Financial Condition as of
March 31, 2008 included in this Prospectus have been included herein in reliance
on the report of PricewaterhouseCoopers LLP, an independent auditor, given on
the authority of that firm as experts in auditing and accounting.
PRIVACY POLICY
Our Commitment to Your Privacy. The Managing Member and Man-AHL 130 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 Man-AHL 130'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
53
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 Class appropriate Investor
Application Form 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; and
- - 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 US or other
applicable law;
- - provide information to protect against fraud;
- - share information with your prior consent;
- - share information with service providers that perform administrative or
marketing services on our behalf including, without limitation, the Selling
Agent and the Additional Selling Agents; 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 advisors, CPOs and CTAs.
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: (i) those employees who need to know that
information to provide products or services to you; and (ii) 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 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.
54
INDEX TO FINANCIAL STATEMENTS
PAGE
----
MAN-AHL 130, LLC
Report of Independent Registered Public Accounting Firm............... 56
Condensed Schedules of Investments at March 31, 2008 and
March 31, 2007..................................................... 57
Statements of Financial Condition at at March 31, 2008 and
March 31, 2007..................................................... 59
Statements of Operations at March 31, 2008 and March 31, 2007......... 60
Statements of Changes in Member's Equity for the years ended
March 31, 2008 and 2007............................................ 61
Statements of Cash Flows for the years ended March 31, 2008 and 2007.. 62
Financial Highlights for the years ended March 31, 2008 and 2007...... 63
Notes to the Financial Statements..................................... 64
MAN INVESTMENTS (USA) CORP.
Report of Independent Auditors........................................ 71
Consolidated Statement of Financial Condition as of March 31, 2008.... 72
Notes to Consolidated Statement of Financial Condition as of
March 31, 2008..................................................... 73
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.
----------
55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members of MAN-AHL 130, LLC:
We have audited the statements of financial condition of MAN-AHL 130, LLC (the
"Company"), including the condensed schedules of investments, as of March 31,
2008 and 2007, and the related statements of operations, changes in members'
equity, cash flows, and the financial highlights for each of the two years then
ended. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial highlights based on our
audits.
We conducted our audits 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
statements and financial highlights are 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 audits 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 statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MAN-AHL 130, LLC as
of March 31, 2008 and 2007, and the results of its operations, its cash flows
and its financial highlights for each of the two years then ended, in conformity
with accounting principles generally accepted in the United States of America.
As discussed in Note 2 to the financial statements, the Company held investments
valued at $5,701,675 (26.1% of the Company's total assets) as of March 31, 2008,
whose values have been estimated by management in the absence of readily
determinable fair values. Management's estimates are based on information
provided by the ultimate underlying investment advisors of the respective
underlying investment funds.
DELOITTE & TOUCHE LLP
Chicago, IL
June 25, 2008
56
MAN-AHL 130, LLC
CONDENSED SCHEDULES OF INVESTMENTS
AS OF MARCH 31, 2008 AND 2007
2008 2007
------------------- ----------------
% OF % OF
FAIR MEMBERS' FAIR MEMBERS'
VALUE EQUITY* VALUE EQUITY
-------- -------- ----- --------
FUTURES CONTRACTS -- LONG:
Currency $153,351 0.75% $-- --%
Energy 83,205 0.41% -- --
United States Bonds 189,722 0.93% -- --
Non-United States Bonds 241,290 1.18% -- --
Other 1,910 0.01% -- --
-------- ------ --- ---
TOTAL FUTURES CONTRACTS -- LONG 669,478 3.28% -- --
-------- ------ --- ---
FUTURES CONTRACTS -- SHORT:
Agricultural 39,623 0.19% -- --
Metals (23,940) (0.12)% -- --
Non-United States Bonds 5,656 0.03% -- --
Other 4 0.00% -- --
-------- ------ --- ---
TOTAL FUTURES CONTRACTS -- SHORT 21,343 0.10% -- --
-------- ------ --- ---
FORWARD CONTRACTS -- LONG:
Australian Dollar (13,044) (0.06)% -- --
Brazilian Real (26,632) (0.13)% -- --
British Pound (22,509) (0.11)% -- --
Canadian Dollar (14,614) (0.07)% -- --
Czech Koruna 8,545 0.04% -- --
European Euro 29,520 0.14% -- --
Mexican Peso 11,766 0.06% -- --
New Zealand Dollar (16,287) (0.08)% -- --
Polish Zloty 14,210 0.07% -- --
Singapore Dollar 6,843 0.04% -- --
Swiss Franc 96,697 0.47% -- --
Other (4,074) (0.02)% -- --
-------- ------ --- ---
TOTAL FORWARD CONTRACTS -- LONG 70,421 0.35% -- --
-------- ------ --- ---
57
MAN-AHL 130, LLC
CONDENSED SCHEDULES OF INVESTMENTS (CONTINUED)
AS OF MARCH 31, 2008 AND 2007
2008 2007
------------------- ----------------
% OF % OF
FAIR MEMBERS' FAIR MEMBERS'
VALUE EQUITY* VALUE EQUITY
-------- -------- ----- --------
FORWARD CONTRACTS -- SHORT:
Australian Dollar $ 7,881 0.04% $-- --%
Brazilian Real 16,317 0.08% -- --
British Pound 6,742 0.03% -- --
Canadian Dollar 7,362 0.04% -- --
Mexican Peso (7,515) (0.04)% -- --
New Zealand Dollar 7,537 0.04% -- --
Norwegian Krone 1,129 0.01% -- --
Polish Zloty (5,954) (0.03)% -- --
Singapore Dollar (4,912) (0.03)% -- --
South African Rand 3,286 0.02% -- --
Swiss Franc (33,909) (0.17)% -- --
Other 591 0.00% -- --
-------- ----- --- ---
TOTAL FORWARD CONTRACTS -- SHORT (1,445) (0.01)% -- --
-------- ----- --- ---
Net unrealized trading gains
on open derivative contracts $759,797 3.72% $-- --%
======== ===== === ===
* Percentages are based on Members' Equity of $20,408,632.
See notes to financial statements.
58
MAN-AHL 130, LLC
STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 2008 MARCH 31, 2007
-------------- --------------
ASSETS:
Equity in commodity futures and forwards trading accounts:
Net unrealized trading gains on open
derivatives contracts $ 759,797 $ --
Due from broker 944,647 --
Investment in Man-Glenwood Lexington, LLC,
at fair value (cost $5,839,245) 5,701,675 --
Cash and cash equivalents 13,883,114 10,000
Advance subscription to Man-Glenwood
Lexington, LLC 238,357 --
Redemption receivable from Man-Glenwood
Lexington, LLC 160,000 --
Expense reimbursement receivable 114,090 --
Interest receivable 5,773 --
----------- -------
TOTAL $21,807,453 $10,000
=========== =======
LIABILITIES & MEMBERS' EQUITY:
Subscriptions received in advance $ 290,416 $ --
Management fees payable 136,793 --
Client servicing fees payable 1,044 --
Incentive fees payable 598,100 --
Brokerage commission payable 98,588 --
Accrued professional fees payable 173,409 --
Accrued administrative fees payable 98,871 --
Other liabilities 1,600 --
----------- -------
Total liabilities 1,398,821 --
----------- -------
MEMBERS' EQUITY:
Class A Series 1 Members
(2,647.132 and 0 units outstanding, respectively) 348,997 --
Class A Series 2 Member
(150,751.032 and 0 units outstanding, respectively) 20,059,635 10,000
----------- -------
Total Members' equity 20,408,632 10,000
----------- -------
TOTAL $21,807,453 $10,000
=========== =======
NET ASSET VALUE PER UNIT OUTSTANDING -
CLASS A SERIES 1 MEMBERS $ 131.84 $ --
=========== =======
NET ASSET VALUE PER UNIT OUTSTANDING -
CLASS A SERIES 2 MEMBER $ 133.07 $ --
=========== =======
See notes to financial statements.
59
MAN-AHL 130, LLC
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED FOR THE YEAR ENDED
MARCH 31, 2008 MARCH 31, 2007
------------------ ------------------
INVESTMENT INCOME:
Interest income $ 398,431 $--
EXPENSES:
Management fees 485,023 --
Incentive fees 1,249,061 --
Client servicing fees 2,088 --
Brokerage commissions 244,051 --
Professional fees 355,000 --
Administrative fees 173,871 --
Other 10,369 --
----------- ---
TOTAL EXPENSES 2,519,463 --
Less reimbursed expenses (447,815) --
----------- ---
Net expenses 2,071,648 --
----------- ---
NET INVESTMENT LOSS (1,673,217) --
----------- ---
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized trading gains on closed derivatives
contracts and foreign currency transactions 6,064,135 --
Net change in unrealized trading gains on open
derivatives contracts and translation of assets
and liabilities denominated in foreign currencies 759,797 --
Net realized losses on investment in Man-Glenwood
Lexington, LLC (4,513) --
Net change in unrealized depreciation on investment
in Man-Glenwood Lexington, LLC (137,570) --
----------- ---
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
AND FOREIGN CURRENCY 6,681,849 --
----------- ---
Net income $ 5,008,632 $--
=========== ===
Net income per unit outstanding - Class A Series 1 $ 35.13 $--
=========== ===
Net income per unit outstanding - Class A Series 2 $ 33.05 $--
=========== ===
See notes to financial statements.
60
MAN-AHL 130, LLC
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 2008
CLASS A SERIES 1* CLASS A SERIES 2* TOTAL
-------------------- ------------------------- -------------------------
Amount Units Amount Units Amount Units
-------- --------- ----------- ----------- ----------- -----------
Member's equity at April 1, 2007 $ -- -- $ 10,000 -- $ 10,000 --
Subscriptions 300,000 2,647.132 15,090,000 150,751.032 15,390,000 153,398.164
Redemptions -- -- -- -- -- --
Net income 48,997 -- 4,959,635 -- 5,008,632 --
-------- --------- ----------- ----------- ----------- -----------
Members' equity at March 31, 2008 $348,997 2,647.132 $20,059,635 150,751.032 $20,408,632 153,398.164
======== ========= =========== =========== =========== ===========
NET ASSET VALUE PER UNIT OUTSTANDING
AT MARCH 31, 2008 $ 131.84 $ 133.07
FOR THE YEAR ENDED MARCH 31, 2007
CLASS A SERIES 1 CLASS A SERIES 2 TOTAL
---------------- ---------------- ---------------
Amount Units Amount Units Amount Units
------ ----- ------- ----- ------- -----
Member's equity at April 1, 2006 $-- -- $10,000 -- $10,000 --
Subscriptions -- -- -- -- -- --
Redemptions -- -- -- -- -- --
Net income -- -- -- -- -- --
--- --- ------- --- ------- ---
Member's equity at March 31, 2007 $-- -- $10,000 -- $10,000 --
=== === ======= === ======= ===
* Series 1 and Series 2 commenced trading on July 1, 2007 and April 2, 2007,
respectively.
See notes to financial statements.
61
MAN-AHL 130, LLC
STATEMENTS OF CASH FLOWS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2008 MARCH 31, 2007
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,008,632 $ --
Adjustments to reconcile net income to net cash used in operating
activities:
Net change in unrealized trading gains on open derivative contracts
and translation of assets and liabilities denominated in
foreign currencies (759,797) --
Purchase of investment in Man-Glenwood Lexington, LLC (6,764,793) --
Sale of investment in Man-Glenwood Lexington, LLC 522,678 --
Net realized losses on investment in Man-Glenwood Lexington, LLC 4,513 --
Net change in unrealized depreciation on investment in
Man-Glenwood Lexington, LLC 137,570 --
Changes in:
Due from broker (944,647) --
Expense reimbursement receivable (114,090) --
Interest receivable (5,773) --
Management fees payable 136,793 --
Incentive fees payable 598,100 --
Brokerage commissions payable 98,588 --
Accrued professional fees payable 173,409 --
Accrued administrative fees payable 98,871 --
Client servicing fees payable 1,044 --
Other liabilities 1,600 --
----------- -------
Net cash used in operating activities (1,807,302) --
----------- -------
FINANCING ACTIVITIES:
Capital subscriptions 15,680,416 --
----------- -------
Net cash provided by financing activities 15,680,416 --
----------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 13,873,114 --
CASH AND CASH EQUIVALENTS - Beginning of year 10,000 10,000
----------- -------
CASH AND CASH EQUIVALENTS - End of year $13,883,114 $10,000
=========== =======
See notes to financial statements.
62
MAN-AHL 130, LLC
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED MARCH 31, 2008
Class A Class A
Series 1* Series 2*
--------- -----------
Net asset value, beginning of period $ 112.32 $ 100.00
Net realized and unrealized gains on investments and foreign currency 42.04 52.33
Net investment loss (1) (22.52) (19.26)
-------- -----------
Total from operations 19.52 33.07
-------- -----------
Net asset value, end of period $ 131.84 $ 133.07
======== ===========
Net assets, end of period $348,997 $20,059,635
-------- -----------
Ratio of investment loss to average net assets(2)(3) (9.22)% (9.47)%
======== ===========
Ratio of expenses to average net assets (excluding incentive fee)(3) 5.55% 4.65%
Incentive fee 5.62% 7.08%
-------- -----------
Ratio of expenses to average net assets (2) 11.17% 11.73%
======== ===========
Total return (prior to incentive fee) 25.46% 41.31%
Incentive fee (8.08)% (8.24)%
-------- -----------
Total return 17.38% 33.07%
======== ===========
FOR THE YEAR ENDED MARCH 31, 2007
Class A Class A
Series 1 Series 2
-------- --------
Net asset value, beginning of period $-- $--
Net realized and unrealized gain/(loss) -- --
Net investment income -- --
--- ---
Total from operations -- --
--- ---
Net asset value, end of period $-- $--
=== ===
Net assets, end of period $-- $--
=== ===
Ratio of net investment income to average net assets --% --%
=== ===
Ratio of expenses to average net assets (excluding incentive fee) --% --%
Incentive fee --% --%
--- ---
Ratio of expenses to average net assets --% --%
=== ===
Total return (prior to incentive fee) --% --%
Incentive fee --% --%
--- ---
Total return --% --%
=== ===
* Series 1 and Series 2 commenced trading on July 1, 2007 and April 2, 2007,
respectively.
(1) Includes incentive fee.
(2) If expenses had not been contractually reimbursed by the Adviser, the
ratios of net investment loss and expenses to average net assets would be
(11.62)% and 13.57%, respectively for Class A, Series 1 and (12.02)% and
14.29%, respectively for Class A, Series 2.
(3) Annualized for periods less than a year.
See notes to financial statements.
63
MAN-AHL 130, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2008 AND 2007
1. ORGANIZATION
Man-AHL 130, LLC (the "Company") is a limited liability company organized
under the laws of Delaware structured as a managed futures product which
offers investors enhanced yield and diversification benefits. The Company
was formed on April 14, 2005 and funded with an initial $10,000 investment
from its managing member, Man Investments (USA) Corp. ("MI USA" or the
"Managing Member"), a Delaware corporation, on May 10, 2005. The Company
commenced trading on April 2, 2007 and operates as a commodity investment
pool. Beginning July 1, 2007, Class A Series 1 units were issued at the
current net asset value of Managing Member units of $112.32. The Managing
Member's investment was designated as Class A Series 2 upon commencement of
trading.
On June 28, 2005, the Company filed a registration statement under the
Securities Act of 1933 (the "1933 Act"), which registration statement was
subsequently amended. On February 1, 2007, the Company's registration
statement was declared effective by the Securities and Exchange Commission
(the "SEC").
The Company invests 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 invests approximately thirty percent of its
capital in Man-Glenwood Lexington, LLC, a registered investment company
("MGL").
MI USA is registered with the Commodity Futures Trading Commission (the
"CFTC") as a commodity pool operator. Man-AHL (USA) Limited, a limited
liability company incorporated in the United Kingdom, manages the AHL
Diversified Program. Man-AHL (USA) Limited is an affiliate of the Managing
Member. Both MI USA and Man-AHL (USA) Limited are subsidiaries of Man Group
plc. Man-AHL (USA) Limited is registered with the CFTC as a commodity
trading adviser, and is a member of the National Futures Association (the
"NFA"), in addition to registration with the Financial Services Authority
in the United Kingdom. The Company executes its futures trades exclusively
through MF Global Inc. ("MFG"), formerly known as Man Financial Inc. (Man),
and forward trades exclusively through MF Global UK Ltd., formerly known as
Man Financial Ltd. As of March 31, 2008, Man Group plc has an 18.6%
interest in MFG. Man and Man Financial Ltd. were previously a wholly owned
subsidiary of Man Group plc.
Glenwood Capital Investments, L.L.C. ("GCI") acts as an administrator to
MGL. GCI is an Illinois limited liability company and is registered with
the CFTC as a commodity pool operator and with the SEC as an investment
adviser. GCI is an affiliate of the Managing Member, Man-AHL (USA) Limited
and is a subsidiary of Man Group plc.
MGL achieves its investment objective through an investment in Man-Glenwood
Lexington Associates Portfolio, LLC (the "Portfolio Company" or "MGLAP"),
which allocates its capital among a series of underlying funds. GCI acts as
an investment adviser to the Portfolio Company in addition to the services
it provides to MGL.
64
Man Investments Inc. ("MII"), an affiliate of MI USA, Man-AHL (USA) Limited
and is a subsidiary of Man Group plc, acts as the Company's selling agent.
The Company pays 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 pays Man-AHL (USA) Limited a management
fee of 2% per annum on the notional value of Company's allocation to the
AHL Diversified Program (the "AHL Account"), which approximates the
Company's net asset value, calculated and paid monthly. In addition,
Man-AHL (USA) Limited is 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 MGL,
calculated monthly and paid quarterly.
MII receives an investor servicing fee of 0.50% of net assets per annum for
the provision of investor services to MGL, calculated monthly and paid
quarterly.
Class A Series 1 units are subject to a 1.25% per annum client servicing
fee payable to MII, calculated monthly and paid quarterly in arrears, on
the month-end net asset value of Class A Series 1 units, subject to a
maximum aggregate commission receipt to MII of 10% of the subscription
price of all units.
SEI Global Services Inc. ("SEI") acts as the Company's fund accounting
agent, transfer agent and registrar.
Units are offered on the first day of each month. Redemptions are 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 accompanying financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America.
The following are significant accounting policies adopted by the Company.
USE OF ESTIMATES -- 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 income and expenses during the period. Actual results could
differ from those estimates.
INVESTMENT IN MAN-GLENWOOD LEXINGTON, LLC -- The Company values its
investment in MGL at its net asset value, which approximates fair value, as
provided by MGL. MGL invests all or substantially all of its investable
assets through an investment in MGLAP. MGL values its investments in MGLAP
at its pro rata interest in the net assets of that entity. Investments held
by
65
MGLAP are limited partnerships and other pooled vehicles (collectively, the
"investment funds") and are valued at prices which approximate fair value.
The fair value of certain of the investments in the underlying investment
funds, which may include private placements and other securities for which
values are not readily available, are determined in good faith by the
investment advisers of the respective underlying investment funds. The
estimated fair values may differ significantly from the values that would
have been used had a ready market existed for these investments, and these
differences could be material. Net asset valuations are provided monthly or
quarterly by these investment funds. Distributions received by MGLAP, which
are identified by the underlying investment funds as a return of capital,
whether in the form of cash or securities, are applied as a reduction of
the investment's carrying value.
DERIVATIVE CONTRACTS -- The Company enters into derivative contracts
("derivatives") for trading purposes. Derivatives include futures contracts
and forward contracts. The Company records derivatives at fair value.
Futures contracts which are traded on a national exchange are valued at the
close price as of the valuation day, or if no sale occurred on such day, at
the close price on the most recent date on which a sale occurred. Forward
contracts, which are not traded on a national exchange, are valued at fair
value using current market quotations provided by brokers.
Realized and unrealized changes in fair values are included in realized and
unrealized gains and losses on investments and foreign currency
transactions in the statements of operations. All trading activities are
accounted for on a trade-date basis.
OFFERING COSTS -- MI USA, or an affiliate, assumed organizational and
offering costs of $55,000 and $462,785, respectively for the year ended
March 31, 2007. There were no organizational and offering costs for the
year ended March 31, 2008.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash and
short-term interest bearing money market instruments with original
maturities of 90 days or less, held with JPMorgan Chase, N.A.
INTEREST INCOME AND EXPENSES - Interest income and expenses are recorded on
an accrual basis.
DUE FROM BROKER - Due from broker represents cash required to meet margin
requirements and excess funds not required for margin due from MFG and MF
Global UK Ltd.
BROKERAGE COMMISSION EXPENSE - Brokerage commission expense on futures
contracts is recognized in the period of the transaction and is reflected
on the statements of operations. The futures commission rates charged to
the Company have not been negotiated at arm's-length and certain other
clients may be charged lower rates. Brokerage commissions represent the
cost of the transactions and are capped at 3% of the Company's average
month-end net asset value per annum. For the year ended March 31, 2008, the
Company paid $244,051 to MFG and MF Global UK Ltd. in commissions, which
represents the cost of the transactions.
FOREIGN CURRENCY - All assets and liabilities of the Company denominated in
foreign currencies are translated into U.S. dollar amounts at the mean
between the bid and ask market rates for such currencies on the date of
valuation. Purchases and sales of foreign investments are converted at the
prevailing rate of exchange on the respective date of such transactions.
The Company does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in the fair value of investments held.
Such fluctuations are included with the net realized and unrealized gains
or losses from investments.
66
Net realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains, or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of interest recorded on the Company's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the fair value of assets
and liabilities, other than investments in securities at year end,
resulting from changes in exchange rates.
CALCULATION OF NET INCOME PER UNIT - The Company's net income or loss is
allocated monthly on a pro-rata basis over the number of units outstanding
at the beginning of each month. The net income per unit outstanding on the
statement of operations is based on the weighted average units outstanding
for the period.
EXPENSES -- The Company is responsible for paying its own operating
expenses, including professional fees, administrative fees and custody
fees. Operating expenses in excess of 0.50% per annum of each month-end net
asset values will be reimbursed by the Managing Member or an affiliate for
the first 24 months of the Company's operations.
3. DERIVATIVE FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
The Company trades derivative financial instruments that involve varying
degrees of market and credit risk. Market risks may arise from unfavorable
changes in interest rates, foreign exchange rates, or the market values of
the instruments underlying the contracts. All contracts are stated at fair
value, and changes in those values are reflected in the net change in
unrealized gains (losses) on open contracts in the statements of
operations.
Credit risk arises from the potential inability of counterparties to
perform in accordance with the terms of the contract. The credit risk from
counterparty nonperformance associated with these instruments is the net
unrealized gain, if any, included in the statements of financial condition.
Forward contracts are entered into on an arm's-length basis with MFG and MF
Global UK Ltd. Estimated credit risk with regard to forward contracts is
estimated at $68,976 as of March 31, 2008.
For exchange-traded contracts, the clearing organization functions as the
counterparty of specific transactions and, therefore, bears the risk of
delivery to and from counterparties to specific positions which mitigates
the credit risk of these contracts. The Company trades in exchange-traded
futures contracts on various underlying commodities, foreign currencies,
and financial instruments, as well as forward contracts on foreign
currencies. Fair values of futures and forward contracts are reflected net
by counterparty or clearing broker in the statements of financial
condition.
The Company's funds held by, and cleared through, MFG are required to be
held in segregated accounts under rules of the CFTC. These funds are used
to meet minimum margin requirements for all of the Company's open futures
positions as set by the exchange where each contract is traded. These
requirements are adjusted, as needed, due to daily fluctuations in the
values of the underlying positions. Certain positions may be liquidated, if
necessary, to satisfy resulting changes in margin requirements.
The Company may have indirect exposure to derivative financial instruments
that arise from the investment in MGL and through positions held by other
investment funds in which MGL invests. However, as a limited partner, the
Company's risk is limited to the current value of its investment, which is
reflected in the statements of financial condition.
67
4. INCOME TAXES
As of July 1, 2007, a subscription for an investor other than the Managing
Member was accepted into the Company. As a result, the Company is now
treated as a partnership for federal income tax purposes. As such, members
are individually liable for the taxes on their share of the Company's
taxable income, if any.
In July 2006, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 48 ("FIN 48") entitled Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement No. 109. FIN 48
prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken
or expected to be taken by an entity before being measured and recognized
in the financial statements. The implementation of FIN 48 had no impact on
the Company's financial statements. The 2007 tax year remains subject to
examination by Federal and State jurisdictions, including those States
where investors reside or States where the Company is subject to other
filing requirements.
5. CAPITAL STRUCTURE
Details of the number of units issued, redeemed and outstanding for the
years ended March 31, 2008 and 2007 are as follows:
FOR THE YEAR ENDED FOR THE YEAR ENDED
MARCH 31, 2008 MARCH 31, 2007
----------------------- -------------------
CLASS A CLASS A CLASS A CLASS A
SERIES 1 SERIES 2 SERIES 1 SERIES 2
--------- ----------- -------- --------
Beginning units -- -- -- --
Units issued 2,647.132 150,751.032 -- --
Units redeemed -- -- -- --
--------- ----------- --- ---
Ending units 2,647.132 150,751.032 -- --
6. NEW ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued Statement on Financial Accounting
Standards ("SFAS") No. 157, Fair Value Measurements. This standard
establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures
about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No.
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and interim periods within those fiscal years. The
changes to current generally accepted accounting principles from the
application of SFAS No. 157 relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of March 31, 2008, the Company does not believe the
adoption of SFAS No. 157 will impact the amounts reported in the financial
statements, however, additional disclosures may be required about the
inputs used to develop the measurements and the effect of certain of the
measurements reported on the statements of operations for a fiscal period.
SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities was issued on March 19, 2008. SFAS No. 161 expands the
disclosures required by SFAS No. 133, Accounting for Derivatives and
Hedging Activities about an entity's derivative instruments and hedging
activities. SFAS No. 161 is effective for fiscal years and interim periods
beginning after November 15, 2008.
68
The Company is currently evaluating the provisions of SFAS No. 161 and
their impact on the Company's financial statements.
7. SUBSEQUENT EVENTS
Subsequent to March 31, 2008, the Company issued 12,832.453 Units of Class
B Series 1 at $131.84 per Unit and 20,814.930 Units of Class B Series 2 at
$133.07 per Unit. Class A and Class B units have substantially identical
trading portfolios except that Class A units are offered to taxable
investors and invest in MGL and Class B units are offered to tax-exempt
investors and invest in Man-Glenwood Lexington TEI, LLC, a registered
investment company. Man-Glenwood Lexington TEI, LLC achieves its investment
objective through an investment in the Portfolio Company.
Effective April 22, 2008, the Company began utilizing Royal Bank of
Scotland plc to clear its forwards business.
Effective April 22, 2008, the Company began utilizing Credit Suisse Sydney
Branch, to execute and clear a portion of the Company's futures and futures
options transactions.
Effective April 21, 2008, the Company engaged Man Investments Limited, a
company organized under the Laws of the United Kingdom, to manage the
foreign currency forward component of the AHL Diversified Program, at no
additional cost to the Company. The personnel of Man Investments Limited
responsible for implementing the foreign currency forwards trading
component of the AHL Diversified Program on behalf of Man-AHL 130 are the
same as those of Man-AHL (USA) Limited who implement the AHL Diversified
Program.
*******
69
MAN-AHL 130, LLC
AFFIRMATION OF MAN INVESTMENTS (USA) CORP
To the best of my knowledge and belief, the information contained in the above
report is accurate and complete.
/s/ Alicia B. Derrah
- -------------------------------------
Chief Financial Officer
Man Investments (USA) Corp,
Commodity Pool Operator of Man AHL-130, LLC
70
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholder of
Man Investments (USA) Corp.
In our opinion, the accompanying consolidated statement of financial condition,
including the condensed schedule of investments, presents fairly, in all
material respects, the financial position of Man Investments (USA) Corp. (the
"Company") at March 31, 2008, 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 financial statement
is free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We
believe that our audit of the consolidated statement of financial condition
provides a reasonable basis for our opinion.
June 17, 2008
71
Man Investments (USA) Corp.
Consolidated Statement of Financial Condition
March 31, 2008
ASSETS
Cash and cash equivalents
Cash $14,111,463
Deposite with affiliate 9,419,450
Due from broker 944,647
Net unrealized appreciation on open forward contracts 690,821
Net unrealized appreciation on open futures contracts 68,976
Management and incentive fees receivable 828,354
Investment in limited partnerships 7,124,783
Subscriptions made in advance 238,357
Receivables from affiliates 297,160
Other assets 1,444,051
-----------
Total assets $35,168,062
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Subscriptions received in advance $ 290,416
Management fees payable 99,286
Incentive fees payable 598,101
Brokerage commission payable 98,589
Professional fees payable 175,009
Administrative and other fees payable 99,915
Payables to affiliates 539,710
Accrued expenses and other liabilities 913,816
Income taxes payable 4,768,471
-----------
Total liabilities 7,583,313
MINORITY INTEREST IN AHL-130 461,735
Common shares 6
Additional paid in capital 21,250,994
Retained earnings 5,872,014
-----------
Total stockholder's equity 27,123,014
-----------
Total liabilities and stockholder's equity $35,168,062
===========
The accompanying notes are an integral part of this consolidated statement of
financial condition
72
Man Investments (USA) Corp.
Notes to Consolidated Statement of Financial Condition
March 31, 2008
1. ORGANIZATION
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 "Parent"). 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.
The Company is also registered as an investment adviser with the Securities and
Exchange Commission.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated statement of financial condition has been prepared
in conformity with accounting principles generally accepted in the United States
of America. The following are significant accounting policies adopted by the
Company.
CONSOLIDATION
The accounting method used for the Company's equity investments is generally
dependent upon the influence the Company has over its investee. For investments
where the Company can exert control over the financial and operating policies of
the investee, which generally exists if there is a 50% or greater voting
interest, the investee is consolidated into the Company's financial statements.
For certain investments where the risks and rewards of ownership are not
directly linked to voting interests ("variable interest entities" or "VIEs"), an
investee may be consolidated if the Company, with its related parties, is
considered the primary beneficiary of the investee. The primary beneficiary
determination will consider not only the Company's equity interest, but the
benefits and risks associated with non-equity components of the Company's
relationship with the investee, including debt, investment advisory and other
similar arrangements, in accordance with Financial Accounting Standards Board
("FASB") Interpretation ("FIN") No. 46(R), Consolidation of Variable Interest
Entities. When the Company no longer controls these investees due to reduced
ownership percentage or other reasons, the investees are deconsolidated and
accounted for under another accounting method.
As of March 31, 2008, the Company serves as the managing member of Man-AHL 130,
LLC ("AHL-130") an investment partnership that engages primarily in speculative
trading in futures, options and forward markets, and which also invests a
portion of its assets in Man-Glenwood Lexington, LLC, a registered hedge fund of
funds which is advised by Glenwood Capital Investments, LLC, an affiliate of the
Company. The Company also serves as the managing member of Man Global Macro
Growth & Income Fund ("Man Global") and Man Dual Absolute Return Fund ("Man
Dual"). Neither Man Global nor Man Dual have commenced trading operations as of
March 31, 2008. At March 31, 2008, the Company has an investment in AHL 130, Man
Global and Man Dual of $19,946,897, $100,000 and $10,000, respectively, which
represents substantially all the members' equity of AHL-130, Man Global and Man
Dual, respectively. The Company has determined that it is the primary
beneficiary of each of these entities. Therefore, the financial information of
AHL-130, Man Global and Man Dual is consolidated into the statement of financial
condition of the Company. All inter-company balances have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes interest-bearing deposits, short-term
interest bearing money market instruments with original maturities of 90 days or
less, and cash held at a bank. Due from broker amounts represent cash held at MF
Global Ltd. ("MFG"), the parent company of one of AHL-130's futures brokers,
required to meet margin requirements and excess funds not required for margin.
The accompanying notes are an integral part of this consolidated statement of
financial condition.
73
Man Investments (USA) Corp.
Notes to Consolidated Statement of Financial Condition (continued)
March 31, 2008
DERIVATIVE CONTRACTS
AHL-130 enters into derivative contracts ("derivatives") for trading purposes.
Derivatives include futures contracts and forward contracts. AHL-130 records
derivatives at fair value. Fair values of futures and forward contracts are
reflected net by counterparty or clearing broker in the consolidated statement
of financial condition.
FOREIGN CURRENCY
All assets and liabilities of AHL-130 denominated in foreign currencies are
translated into U.S. dollars at the mean between the bid and ask market rates
for such currencies on the date of valuation. Net unrealized foreign exchange
gains and losses arise from changes in fair value of assets and liabilities,
resulting from changes in exchange rates.
INVESTMENTS
The Company serves as the general partner of Man-AHL Diversified Trading Company
LP, ("AHL Trading Co."), Man-AHL Diversified LP ("Diversified"), Man-AHL
Diversified I LP ("Diversified I"), and Man-AHL Diversified II LP ("Diversified
II") (collectively, the "AHL Limited Partnerships"). Under the terms of the
limited partnership agreements of AHL Trading Co., Diversified I, and
Diversified II, 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, or as advised by counsel. The Company
values its investments in the AHL Limited Partnerships at the Company's pro rata
interest in the net assets of these entities, as provided by the AHL Limited
Partnerships as well as annual audited financial statements. At March 31, 2008,
the Company has investments in Diversified I and Diversified II of $611,569 and
$743,613, respectively. The Company is required to maintain a minimum capital
contribution in Diversified as required by law. At March 31, 2008, the Company
has an investment in Diversified of $67,929.
The Company serves as the manager of Man AB Strategies, LLC - Series 1, Man AB
Strategies, LLC-Series 2 (collectively, the "AB Strategies Series Funds") and
Man AB Strategies AHL Trading, LLC ("AB Trading"). Under the terms of the AB
Strategies Series Funds and the AB Trading operating agreements, the Company
shall make a contribution as determined under the Internal Revenue Code. At
March 31, 2008, the Company had no direct investment in either AB Trading or in
AB Strategies Series Funds.
The Company also serves as managing member for Man IP 220 Private, LLC, Man IP
220 Private (Series 2), LLC, Man IP 220 Private (Series 3), LLC, Man IP 220
Private (Series 4), LLC, Man IP 220 Private (Series 5), LLC (collectively, the
"IP 220 Funds") and Man AB Strategies (Series 1), LLC and Man AB Strategies
(Series 2), LLC (collectively the "AB Funds"). Under the terms of the IP 220
Funds and AB Funds' operating agreement, the Company is not required to maintain
a capital investment in each fund.
The Company or an affiliate is contractually obligated to bear the
administrative expenses of AHL-130 in excess of 0.50% of its month-end net asset
value during the first two fiscal years of AHL-130, which began on April 1,
2007. Thereafter, expenses in excess of 0.50% of AHL-130's month-end net asset
value will be paid by AHL-130, but may be paid by the Company or an affiliate at
the Company's discretion. The Company or an affiliate is currently bearing
administrative expenses of AB Trading and the AB Strategies Series Funds in
excess of 1.00% of each fund's month-end net asset value but may discontinue
this at its discretion.
74
Man Investments (USA) Corp.
Notes to Consolidated Statement of Financial Condition (continued)
March 31, 2008
The condensed unaudited financial information of the funds in which the Company
has an investment in at March 31, 2008 is as follows:
Diversified Diversified I Diversified II
------------ -------------- ---------------
Assets:
Cash and cash equivalents 3,975,000 8,957,066 7,645,718
Trading portfolio 39,332,387 89,691,914 202,428,822
Other assets 658,396 601,225 4,234,205
Total Assets 43,965,783 99,250,205 214,308,745
Liabilities (4,756,245) (9,888,961) (12,529,065)
Net assets 39,209,538 89,361,244 201,779,680
---------- ---------- -----------
The Company's Investment in
Fund at March 31, 2008 67,929 611,568 743,613
========== ========== ===========
AHL-130 values its investment in Man-Glenwood Lexington, LLC (the "Fund) at its
net asset value, which approximates fair value, as provided by the Fund. At
March 31, 2008, AHL-130 recorded an investment in the Fund of $5,701,673.
MANAGEMENT AND INCENTIVE FEES
The Company earns a general partner fee equal to 1/12 of 1% on the net asset
value of Diversified I, determined as of the end of each month before the
deduction of that month's management fee, incentive fee, and capital
withdrawals. The management fee is paid monthly in arrears.
Diversified and Diversified II pay a management fee equal to 1/12 of 2% on the
net asset values of each fund to Man-AHL (USA) Ltd., (the "Adviser") an
affiliate of the Company, determined as of the end of each month before the
deduction of that month's management fee, incentive fee and capital withdrawals.
The management fee is paid monthly in arrears. The Adviser pays the Company 25
basis points of the 2% management fees collected from Diversified and
Diversified II, monthly in arrears.
The Company earns a management fee equal to 1/12 of 1% on the net asset value of
each of the IP 220 Funds and the AB Funds, determined as of the end of each
month before the deduction of that month's management fee and capital
withdrawals. The management fee is paid quarterly in arrears.
AHL-130 pays a 2% p.a. management fee and a monthly incentive fee of 20% to the
Adviser.
BROKERAGE COMMISSION PAYABLE
Brokerage commission expense on futures contracts is recognized in the period of
the transaction and is reflected on the consolidated statement of financial
condition. The futures commission rates charged to AHL-130 have not been
negotiated at arm's length and other clients may be charged lower rates.
Brokerage commissions represent the cost of the transactions and are capped at
3% of AHL-130's month-end net asset value per annum. Accrued expenses and other
liabilities consist primarily of legal expenses and bonus expense.
PAYABLES TO AFFILIATES
Payables to affiliates represent reimbursements due for the Company's share of
expenses incurred during the year.
75
Man Investments (USA) Corp.
Notes to Consolidated Statement of Financial Condition (continued)
March 31, 2008
USE OF ESTIMATES
The preparation of the consolidated 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 consolidated statement of financial
condition. Actual results could differ from those estimates.
CONTINGENCIES
In the normal course of business, the Company enters into contracts that contain
a variety of representations and warranties and which provide general
indemnifications. The Company's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Company that have not yet occurred. However, based on experience, management
expects the risk of loss to be remote.
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.
3. INCOME TAXES
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 Investments USA Holdings Inc. Federal income taxes are determined
on a separate return basis pursuant to a tax sharing agreement between the
Company and Man Group USA Inc. The Company accounts for income taxes under the
liability method. Under this method, deferred taxes are provided for the
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when these differences are expected to reverse.
4. STOCK-BASED COMPENSATION PLANS
Certain employees of the Company participate in stock-based incentive plans
sponsored by Man Group plc. In December 2004, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards No. 123(R)
("SFAS No. 123(R)"). SFAS No. 123(R) requires compensation costs related to
share-based transactions to be recognized in the financial statements based on
fair value. SFAS No. 123(R) revises Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation as amended,and supersedes APB
No. 25, Accounting for Stock Issued to Employees.
CO-INVESTMENT PLAN
The Co-Investment Plan (the "Plan") allows selected employees to use a portion
of their cash bonus to purchase Man Group stock for investment within the Plan.
Participants can also purchase shares by taking out a non-interest bearing loan
with Man Group to further invest in the Plan. Shares held as investment within
the Plan for at least three years are matched by four shares of Man Group stock.
Participants vest into the matching Man Group shares after one additional year.
For the year ended March 31, 2008, shares were purchased by participants for
additional investment in the plan. For the year ended March 31, 2008, Man Group
issued 10,221 matching share awards with a weighted-average grant date fair
value of $11.00. The total fair value of matching awards distributed to
participants at March 31, 2008 was $112,431.
76
Man Investments (USA) Corp.
Notes to Consolidated Statement of Financial Condition (continued)
March 31, 2008
A summary of the activity of performance share awards and matching co-investment
plan shares as of March 31, 2008 and changes during the year then ended is
presented below:
CO-INVESTMENT PLAN
--------------------------
WEIGHTED-
AVERAGE GRANT
DATE FAIR VALUE
AWARDS (PER AWARD) (1)
-------- ---------------
Nonvested shares as of April 1, 2007 17,422 L3.59
Granted 10,221 L5.48
Vested (916) L4.36
Forfeited (1,088) L4.17
-------- -----
Nonvested shares as of March 31, 2008 25,639 L4.48
Total unrecognized compensation expense remaining $127,484
Weighted-average years expected to be recognized over 3.0
(1) As Man Group plc shares trade in Pound Sterling, all exercise price
information has been translated into U.S. dollars, using the relevant
exchange rate during the year.
5. DERIVATIVE FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
AHL-130 trades derivative instruments that involve varying degrees of market and
credit risk. Market risks may arise from unfavorable changes in interest rates,
foreign exchange rates, or the market values of the instruments underlying the
contracts.
Credit risk arises from the potential inability of counterparties to perform in
accordance with the terms of the contract. The credit risk from counterparty
nonperformance associated with these instruments is the net unrealized gain
included in the consolidated statement of financial condition.
For exchange-traded contracts, the clearing organization acts as the
counterparty of specific transactions and, therefore, bears the risk of delivery
to and from counterparties to specific positions, which mitigates the credit
risk of these contracts. AHL-130- trades in exchange traded futures contracts on
various underlying commodities, foreign currencies, and financial instruments,
as well as forward contracts on foreign currencies. The fair value of open
futures and forward contracts at March 31, 2008 is reflected net by the
counterparty of clearing broker in the consolidated statement of financial
condition.
AHL-130 may have indirect exposure to derivative financial instruments that
arise from its investment in the Fund, through positions held by other
investment funds in which the Fund invests. However, as an investor with limited
liability, AHL-130's risk is limited to the current value of its investment,
which is reflected in the consolidated statement of financial condition.
AHL-130's funds held by, and cleared through, MFG are required to be held in
segregated accounts under the rules of the CFTC. These funds are used to meet
minimum requirements for all of AHL-130's open futures positions as set by the
exchange where each contract is traded. These requirements are adjusted, as
needed, due to daily fluctuation in the values of the underlying positions.
Certain positions may be liquidated, if necessary, to satisfy resulting changes
in margin requirements.
6. RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 161, Disclosures about
Derivative Instruments and Hedging Activities ("SFAS No. 161"), was issued on
March 19, 2008. SFAS No. 161 expands the disclosures required by SFAS No. 133,
Accounting for Derivatives and Hedging Activities, about an entity's derivative
instruments and hedging activities. SFAS No. 161 is effective for fiscal years
and interim periods beginning after November 15, 2008. The Company is currently
evaluating the provisions of SFAS No. 161 and its impact on the Company's
financial statements.
In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157 Fair Value Measurements ("SFAS No. 157"). This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and requires additional disclosures about fair value
measurements. SFAS No. 157 applies to fair value measurements already required
or permitted by existing standards. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. The changes to current generally
accepted accounting principles from the application of this standard relate to
the definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements. At March 31, 2008,
management does not believe the adoption of SFAS No. 157 will impact the
financial statement amounts; however, additional disclosures may be required.
77
Man Investments (USA) Corp.
Notes to Consolidated Statement of Financial Condition (continued)
March 31, 2008
In July 2006, the FASB issued FASB Interpretation 48 Accounting for Uncertainty
in Income Taxes ("FIN 48"). FIN 48 provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the
financial statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing the Fund's tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax benefit or expense in
the current year. Adoption of FIN 48 is required for fiscal years beginning
after December 15, 2007 and is to be applied to all open tax years as of the
effective date. At March 31, 2008, the Company has not evaluated the impact that
will result from adopting FIN 48.
As AHL-130 is a partnership for tax purposes and does not record tax provisions,
the application of FIN 48 has no impact on AHL-130.
78
APPENDIX
MAN-GLENWOOD LEXINGTON, LLC AND
MAN-GLENWOOD LEXINGTON TEI, LLC APPENDIX
The following appendix provides performance capsules for Man-Glenwood Lexington,
LLC and Man-Glenwood Lexington TEI, LLC as well as 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
Funds' investment and the investment program of the Man-Glenwood Funds. Such
disclosure is excerpted from the cover page and pages 30-31, 20-21 and 23-29,
respectively, of the Prospectus of Man-Glenwood Lexington, LLC as filed with the
SEC June 7, 2008 and effective August , 2008 and from the cover page and
pages 33-34, 23-24 and 26-32, respectively, of the Prospectus of Man-Glenwood
Lexington TEI, LLC as filed with the SEC June 7, 2008 and effective August ,
2008. Terms capitalized, but not defined in the below excerpts, are defined in
each excerpt's respective Defined Terms Index following each excerpt.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
APP-1
MAN-GLENWOOD LEXINGTON, LLC
MAN-GLENWOOD PERFORMANCE SUMMARY
JANUARY 2003 -- MAY 2008
Type of Offering: Public
Inception of Trading: January 1, 1993 (through a predecessor)(1)
Aggregate Subscriptions: $160,689,593
Current Capitalization: $69,959,213
Worst Monthly Drawdown in an Account: (3.6)% May 2006
Worst Peak-to-Valley Drawdown in an Account: (8.9)% April 2006 to April 2007
MONTH 2003 2004 2005 2006 2007 2008
- ----- ---- ---- ---- ---- ---- ----
January 0.3% 0.8% (0.4)% 5.1% 1.1% (1.5)%
February (0.1)% 0.3% 0.7% (0.1)% 0.1% (0.4)%
March (0.1)% 0.0% (0.5)% 2.3% 1.7% (2.9)%
April 0.7% (0.2)% (1.5)% 2.5% 1.4% 0.8%
May 0.7% (0.5)% 0.3% (3.6)% 2.0% 1.5%
June 0.4% (0.3)% 1.7% (1.3)% 0.2%
July 0.4% (1.0)% 1.5% (1.6)% (0.5)%
August 0.2% (0.2)% 0.5% 0.6% (2.3)%
September 0.2% 0.2% 0.9% (3.4)% 0.8%
October 0.9% 0.5% (1.9)% 1.6% 3.0%
November 0.3% 1.2% 1.9% 2.3% (0.7)%
December 0.2% 1.1% 2.1% 1.3% 0.6%
Annual Return 4.3% 1.9% 5.4% 5.6% 7.6% (2.6)%(5 MOS.)
- ----------
(1) Man-Glenwood. This past performance capsule presents past performance of
the Portfolio Company described on page Pt. II-6 from January 1, 2003 to
March 31, 2003 and Man-Glenwood Lexington, LLC thereafter.
APP-2
CLASS A UNITS OF MAN-GLENWOOD LEXINGTON TEI, LLC
MAN-GLENWOOD PERFORMANCE SUMMARY
JANUARY 2003 -- MAY 2008
Type of Offering: Public
Inception of Trading: January 1, 1993 (through a predecessor)(2)
Aggregate Subscriptions: $117,339,860
Current Capitalization: $83,774,647
Worst Monthly Drawdown in an Account: (3.6)% May 2006
Worst Peak-to-Valley Drawdown in an Account: (9.0)% April 2006 to May 2007
MONTH 2003 2004 2005 2006 2007 2008
- ----- ---- ---- ---- ---- ---- ----
January 0.3% 0.8% (0.4)% 5.1% 1.1% (1.5)%
February (0.1)% 0.3% 0.7% (0.1)% 0.1% (0.4)%
March (0.1)% 0.0% (0.6)% 2.2% 1.5% (2.9)%
April 0.7% (0.2)% (1.5)% 2.5% 1.4% 0.7%
May 0.7% (0.5)% 0.3% (3.6)% 1.9% 1.5%
June 0.4% (0.3)% 1.7% (1.3)% 0.1%
July 0.4% (1.0)% 1.5% (1.6)% (0.5)%
August 0.2% (0.2)% 0.5% 0.6% (2.3)%
September 0.2% 0.2% 0.9% (3.4)% 0.8%
October 0.9% 0.5% (1.9)% 1.6% 3.0%
November 0.3% 1.2% 1.9% 2.3% (0.7)%
December 0.2% 1.1% 2.1% 1.3% 0.5%
Annual Return 4.3% 1.9% 5.2% 5.3% 7.0% (2.7)%(5 MOS.)
(2) Man-Glenwood. This past performance capsule presents past performance of
the Portfolio Company described on page Pt. II-6 from January 1, 2003 to
April 30, 2004 and Class A units of Man-Glenwood Lexington TEI, LLC
thereafter.
Man-AHL 130 allocates approximately 30% of its capital to Man-Glenwood
Lexington, LLC and Man-Glenwood Lexington TEI, LLC in an attempt to enhance the
yield Man-AHL 130 would otherwise earn on such capital in Man-AHL 130's account
at the commodity broker. Pursuant to a two-part reorganization transaction
completed on January 2, 2003, the private fund, described on page Pt. II-6, 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. The performance shown,
however, is not necessarily indicative of how the Portfolio Company,
Man-Glenwood Lexington, LLC, or Man-Glenwood Lexington TEI, LLC will perform in
the future. In particular, the private fund's performance is not necessarily an
indication of how the Portfolio Company, Man-Glenwood Lexington, LLC or
Man-Glenwood Lexington TEI, LLC will perform in the future, as the private fund
was not subject to investment limitations and other restrictions imposed on
registered investment companies by the Investment Company Act of 1940.
Glenwood Capital Investments, L.L.C. is the investment advisor to the
Portfolio Company, and is the investment advisor 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,
APP-3
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 substantially all of their investable
assets in the Portfolio Company, the Man-Glenwood Funds receive substantially
similar investment management to that Glenwood Capital Investments, L.L.C.
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 the Man-Glenwood Funds, including
the 3% annualized expense limit, plus certain private fund expenses.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
APP-4
(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 substantially 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").
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 advisors, 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 of Managers of Lexington, in its sole discretion. However,
investors do not have the right to require Lexington to repurchase any or all of
their Units.
August , 2008
APP-5
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, and a Manager and
President of Lexington and the Portfolio Company 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 Indosuez. Dr. Rowsell had also been
the Director of Research for Credit Agricole Futures. Dr. Rowsell was an adviser
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.
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).
ANTHONY M. LAWLER. Mr. Lawler joined the Adviser in 2002 and became a member of
the investment committee in 2005. Mr. Lawler has a broad investment analysis
background and has spent time in sell-side research, M&A investment banking, and
venture capital. Prior to joining the Adviser, Mr. Lawler was a sell-side equity
research analyst at Prudential Securities from 2001 to 2002, publishing both
company and industry research regarding application software. Prior to
Prudential, Mr. Lawler was a manager at a venture capital firm (Castling Group
from 1999 to 2001) with responsibilities for sourcing, evaluating and
structuring investment opportunities. Mr. Lawler began his career as a mergers
and acquisitions investment banking analyst at Merrill Lynch from 1998 to 1999.
Mr. Lawler has served on the board of directors of a private company. Mr. Lawler
earned a BS in Finance (Highest Honors) from the University of Illinois in 1998
and an MBA in Economics and Finance from the University of Chicago in 2005.
LANCE DONENBERG. Mr. Donenberg joined the Adviser in 2006 as a member of the
investment committee. From 1999 until joining the Adviser, he was a founding
principal with Balyasny Asset Management ("BAM"), a multi-strategy hedge fund.
His responsibilities at BAM included allocating proprietary capital to external
managers. Prior to BAM, Mr. Donenberg worked at Schonfeld Securities where he
was a Portfolio Manager for a fund of hedge funds. Mr. Donenberg's prior
experience includes Deloitte Consulting from 1997 to 1999 and Ernst & Young from
1993 to 1994. Mr. Donenberg received a BCom (Finance) from University of
Witwatersrand in 1991, BCom Honors (Economics) from UNISA (University of South
Africa) in 1993, and an MBA from the Kellogg Graduate School of Management,
Northwestern University in 1997.
PATRICK KENARY. Mr. Kenary, Head of Portfolio Strategy, joined the Adviser in
August 2005 as Head of Research and Product Development, North America. In his
current position, which he has held since November 2006, Mr. Kenary focuses on
market research, portfolio strategy, and product development for the Adviser and
is the primary liaison between the Adviser's Investment Committee and the North
American market. From November 2002 to July 2005, Mr. Kenary was the Senior
Portfolio Manager for HFR Asset Management's active portfolios. From July 2000
to October 2002, Mr. Kenary was Head of Business Development for Surefoods, Inc.
a startup venture to provide a business transaction platform to the foodservice
industry and President of a sister company Liquidity Partners, LLC, which
provided
APP-6
platform structuring advice to industry transaction exchanges. From
September 1998 to July 2000, Mr. Kenary was a trader and risk manager for
Sheridan Investments, an options-focused CTA. From January 1997 to September
1998, Mr. Kenary was an independent trader. From September 1991 to December
1996, Mr. Kenary was a proprietary trader and analyst for Tudor Investment
Corporation. From July 1990 to September 1991, Mr. Kenary was an analyst in the
mergers and acquisitions group at Smith Barney. From February 1989 to May 1990,
Mr. Kenary was a special assistant in legislative affairs at the White House
Office of Management and Budget. From November 1988 to February 1989, Mr. Kenary
was the editor of the after action report at the Office of the Presidential
Transition. From June 1998 to November 1988 Mr. Kenary worked in various
capacities in the George Bush Presidential campaign. Mr. Kenary received an A.B.
in History from Harvard University.
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-7
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 are 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, there may be situations where the Adviser does 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 has
no control over such managers and no ability to detect, prevent or protect the
Portfolio Company 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, from its own
resources, make payments to broker-dealers and investor service providers 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.
APP-8
INVESTMENT PROGRAM
INVESTMENT OBJECTIVES
Lexington and the Portfolio Company's investment objectives are:
- - To preserve capital, regardless of what transpires in the U.S. or global
financial markets.
- - To generate attractive returns and thereby increase investors' wealth.
- - 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:
- - Spreading of risk across a number of investment strategies, Hedge Fund
Managers, Hedge Funds, and markets.
- - 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.
- - Ability to invest with Hedge Fund Managers whose minimum account size is
higher than most individual investors would be willing or able to commit.
APP-9
- - Limited liability.
- - 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 managers investing in U.S. and
international equity markets with a strong commitment to running portfolios on a
highly hedged basis. Portfolios may be run either on a purely balanced exposure
or within tight bands of net exposure to the equity markets traded. In addition,
some portion of equity hedge managers may run short only or short biased
exposures. Returns can be driven by fundamental or quantitative security
selection, both within or across sectors, but without a significant beta
exposure in the portfolio. As a result, with the exception of short only or
short biased exposures, net long or short market exposure generally is not a
driver of returns.
The managers that are selected in this sector must be highly skilled with
respect to security selection, but also possess strong portfolio management
skills in order to reduce or mitigate the impact of sector, style or other
systematic factors on returns. These managers typically use low to moderate
leverage in terms of gross exposure, and tend to focus on highly liquid markets.
Risk in this sector is often characterized by periods of underperformance in
highly directional and momentum-driven markets. These managers tend to
experience sustained periods of underperformance when there is little price
differentiation on either the short or the long side of the market and when
market activity tends to be dominated by beta or momentum within the market
itself.
EVENT-DRIVEN. The event driven style includes managers capitalizing on
opportunities in significant corporate events. Sometimes referred to as
corporate lifecycle investing, these events can include a wide variety of
corporate activities that are typically (though not always) centered on changes
in the balance sheet, capital structure or ownership of a company. The common
theme of this strategy is that the event changes the actual or perceived value
of a company's securities, creating opportunity for astute and specialized
investors. Examples of such events would be:
- mergers and acquisitions;
- spinoffs and/or divestitures of divisions or subsidiaries; and
- recapitalization or changes in balance sheet structure through actions
such as:
1. increasing leverage through increased dividends, share buybacks or
increased borrowings,
2. decreasing leverage through equity issuance or debt paydown,
3. entry into bankruptcy,
4. exit from bankruptcy, and
5. others.
The style consists of two strategies, special situations, and multi-strategy
event.
The special situations strategy includes two main groups of managers. The first
is passive event generalist managers, who will capitalize on opportunities in
mergers, acquisitions, spinoffs, divestitures, recapitalizations and, in some
cases, the (debt or equity) securities of bankrupt, near bankrupt, or
post-bankruptcy companies. The second is activist managers, who try to influence
the value of their investments by taking large stakes in companies and
attempting to persuade managements, boards of directors and shareholders to
implement specific actions. In many cases, the actions that activist managers
advocate are the same corporate events that attract other event-driven managers
to the situation. In addition, some activist managers may advocate operational,
rather than corporate finance, changes as a means of realizing value.
The approaches activist managers use range from quiet cooperation to direct
confrontation, and the degree of control activist mangers seek ranges from
simply convincing companies to complete a one-time event, to gaining effective
control of the company through board seats. Specific tactics range from quietly
and cooperatively making suggestions to management and/or boards of directions
to publicly advocating changes to proxy fights to gain board seats or force
other changes.
The choice of whether to be passive or active often depends on the specific
situation. While managers will choose to emphasize activism to a greater or
lesser degree, managers using passive and active strategies are not mutually
exclusive. Many event generalists will become active in certain situations, and
many activists will make investments where they do not intend to take an active
role.
Multi-strategy event consists of managers who, in addition to special situations
trading also engage in trading in distressed securities. They will tend to
adjust the mix of these strategies as underlying market conditions warrant.
DISTRESSED & CREDIT. Managers in this style will take directional positions in
corporate debt securities. The strategies within this style focus on distressed
debt and credit long/short. Both of these strategies will tend to invest in
corporate debt securities based on fundamental credit analysis of the underlying
companies.
In distressed debt, although managers tend to be long-biased over the cycle,
they will take both long and short positions in the securities of companies who
are in bankruptcy, have the near-term potential to enter bankruptcy, or have
recently emerged from bankruptcy. The potential for excess returns in the
strategy derives from structural impediments to many institutions holding
distressed securities and from the difficulty of evaluating securities and
claims that are subject to bankruptcy proceedings. In credit long/short,
managers will typically take directional long and short positions in corporate
debt securities. Although they will tend to have some directional bias at any
point in time, managers in this strategy will tend to be neutral about the
overall direction of the credit markets over the course of the cycle. In
addition, managers will also take some relative value positions between
different credits and within the capital structure of the same credit. Excess
returns in this strategy come from structural inefficiencies due to the
dominance of these markets by ratings and regulator-driven investors as well as
the ability to construct attractive risk-return positions by virtue of the
option-like characteristics of long and short credit positions.
APP-10
RELATIVE VALUE. Relative value is characterized by the ability to exploit
mispricings within different securities of either the same issuer or of issuers
with similar fundamental characteristics. This strategy can often involve
exploiting the optionality in the market for select securities, particularly for
convertible bonds.
Returns are generated by being long or short the spreads of related securities
and the impact of the tightening or widening of these spreads. While the
strategies within the relative value style tend to be classified as arbitrage
strategies, they are not necessarily market neutral, nor are they necessarily
perfect or realizable arbitrage. Managers often rely on a moderate to higher
level of leverage in order to profit from small pricing discrepancies.
The risks associated with relative value include liquidity risk of the leverage
used in the portfolio and the fundamental illiquidity that can underlie specific
markets in which the manager is invested. Managers are generally invested in
equities, debt and derivative securities. These securities may be listed or
over-the-counter.
VARIABLE EQUITY. Variable equity is characterized by managers who invest in U.S.
and international equity markets in a traditional, trading oriented style.
Managers generally take on larger net exposures than their equity hedge
counterparts. In fact, these portfolios are often characterized by shifts in
gross and net exposures over time as market conditions change, and certain
managers may position their portfolios as either purely net-long or net-short.
Variable equity returns are primarily driven by the managers' individual stock
selection skills and their abilities to identify shifts in market direction.
Variable equity managers generally use little leverage.
Risks generally arise from the managers' stock picking decisions, specifically
investments in individual securities that may move against them. These managers
also can be vulnerable to unexpected and rapid directional shifts in the
markets.
COMMODITY AND MACRO. Commodity and macro managers typically attempt to profit
from directional trading across the spectrum of asset classes. In general,
positions are concentrated in commodities, currencies, interest rates and stock
index futures. However, managers may also take positions in specific equity or
credit securities, but these positions tend to be driven by a more thematic as
opposed to company-specific rationale. In addition, while many macro positions
tend to be directional there may also be a significant amount of exposure to
relative value trades among various commodities, currencies, interest rates and
stock index markets, either within or across countries and geographic regions.
Portfolio Company divides this style into three distinct strategies,
discretionary commodity managers, systematic commodity trading advisors
(`CTAs'), and global macro managers (both systematic and discretionary).
Discretionary commodity managers tend to take directional and relative value
positions in commodities and commodity-related securities. The rationale for
these positions is largely based on fundamental research into the supply and
demand for the commodity, and, in the case of securities, the sensitivity of the
issuing companies to changes in the price of the commodity. Managers are able to
earn attractive returns by successfully gathering and interpreting information
from a variety of sources, both public and proprietary.
Systematic CTAs trade commodities, currencies, interest rates and stock indices
through both the futures and cash markets. Their trades are based on signals
generated by quantitative algorithms that are largely if not exclusively based
on price data. Most managers in this sector use trend-following systems that
attempt to capture price momentum in these markets.
Global macro managers attempt to profit from large directional or relative value
moves in any of the major asset classes, but unlike systematic CTAs, tend to be
more reliant on fundamental as opposed to price data. These managers can be
either systematic, applying quantitative algorithms to economic data, or
fundamental, applying the manager's judgment to whatever the manager believes is
the pertinent data for the particular asset class being traded. In general,
these managers benefit from large changes in the absolute or relative prices
within or across asset classes. Global macro managers are largely unconstrained
in terms of asset class and are potentially able to earn excess returns by
correctly predicting price moves in a wide range of instruments and generally
benefit from inefficiencies and price distortions that arise when more
constrained investors (e.g., central banks, corporate foreign exchange hedgers,
etc.) are forced to make less economically optimal trading decisions. Most
commodity and global macro managers have an expected volatility higher than
those of other hedge fund styles represented in other Man Group portfolios.
However, due to their strong diversification characteristics as compared to
other hedge fund strategies, commodity and global macro funds can serve to
protect portfolio capital during difficult market conditions.
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, in the case of the Portfolio Company, or for cash
management purposes. Lexington and the Portfolio Company may choose to engage in
such leveraging of their investments because they believe 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 are subject 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 are not
considered the use of investment leverage, and are 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 Lexington's Units of leverage in the amount of 20% of Lexington's
gross assets. The table assumes hypothetical annual returns of Lexington's
portfolio of minus 10% to plus 10%, and an assumed utilization of leverage in
the amount of 20% of Lexington's gross assets with a cost of borrowing of
approximately 3.60% payable for such leverage based on market rates as of the
date of this Prospectus. Lexington's actual cost of leverage will be based on
market rates at the time Lexington 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
Members when portfolio return is positive and greater than the cost of leverage
and decreases the return when the portfolio return is negative or less
APP-11
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.
Assumed Portfolio Return (net of expenses)......... (10)% (5)% 0% 5% 10%
Corresponding Unit Return Assuming 20% Leverage.... (12.83)% (6.83)% (0.83)% 5.17% 11.17%
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 Portfolio Company's Board.
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.
- - Past performance during favorable and unfavorable market conditions.
- - Spreading of risk in relation to other Hedge Fund Managers.
- - Amount of assets under management.
- - Absence of significant conflicts of interest.
- - Overall integrity and reputation.
- - Percentage of business time devoted to investment activities.
APP-12
- - Fees charged.
The principals of the Adviser have several sources, including the following, for
identifying prospective Hedge Fund Managers.
- - Referrals from other advisers, brokers and investors.
- - 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.
- - 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 holdings 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 evaluates 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
endeavors to monitor the Portfolio Company's aggregate exposures to various
investment strategies and to various aggregate risks.
The Adviser evaluates 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 market conditions. The
Adviser solicits 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 conducts reviews with
Hedge Fund Managers and the Adviser's network. The Adviser may make periodic
assessments, based on any information available to it,
APP-13
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-14
DEFINED TERMS INDEX
"BOARD" means Man-Glenwood Lexington, LLC's Board of Managers.
"ELIGIBLE INVESTORS." Eligible Investors includes a person who is: (i) A natural
person whose individual net worth, or joint net worth with that person's spouse,
immediately prior to the time of purchase exceeds $1,000,000, (ii) A natural
person who had an individual income in excess of $200,000 in each of the two
most recent years, or joint income with that person's spouse in excess of
$300,000 in each of those years, and has a reasonable expectation of reaching
the same income level in the current year, or (iii) An individual or entity that
has an account managed by an investment advisor registered under the Advisers
Act and the advisor is subscribing for Units in a fiduciary capacity on behalf
of the account.
"MEMBER" means a member of Man-Glenwood Lexington, LLC.
"PORTFOLIO COMPANY'S BOARD" means Man-Glenwood Lexington Associates Portfolio,
LLC's Board of Managers.
"SAI" means Man-Glenwood Lexington, LLC's statement of additional information
filed in correlation with its Prospectus.
APP-15
(GLENWOOD LOGO) (MAN INVESTMENTS LOGO)
PROSPECTUS
MAN-GLENWOOD LEXINGTON TEI, LLC
CLASS A AND CLASS I UNITS OF LIMITED LIABILITY COMPANY INTERESTS
Man-Glenwood Lexington TEI, LLC ("TEI") 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.
TEI indirectly invests substantially 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 TEI. Glenwood Capital Investments, L.L.C. serves
as the Portfolio Company's investment adviser (the "Adviser"). TEI is designed
solely for investment by tax exempt and tax deferred investors.
Man Investments Inc. (the "Distributor") acts as the distributor of units of
limited liability company interests ("Units") in two separate classes designated
as Class A ("Class A Units") and Class I ("Class I Units") on a best efforts
basis, subject to various conditions. All Units issued in a single class prior
to August 1, 2006 were automatically converted to, and designated as, Class A
Units on August 1, 2006. 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 TEI 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 advisors, 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 TEI 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 TEI and the terms of the offering, including the merits and risks
involved and the fees and expenses of Class A Units and Class I Units, as
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 TEI'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, TEI 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 of
Managers of TEI, in its sole discretion. However, investors do not have the
right to require TEI to repurchase any or all of their Units.
The Units have not been approved or disapproved by the Securities and Exchange
Commission (the "SEC") or any other U.S. federal or state governmental agency or
regulatory authority or any national securities exchange. No agency, authority,
or exchange has passed upon the accuracy or adequacy of this Prospectus or the
merits of an investment in the Units. Any representation to the contrary is a
criminal offense.
APP-16
TEI's investment objectives are:
- - To preserve capital, regardless of what transpires in the U.S. or global
financial markets.
- - To generate attractive returns and thereby increase investors' wealth.
- - To produce returns which have low correlation with major market indices.
August , 2008
APP-17
MANAGEMENT OF TEI, THE OFFSHORE FUND 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, and a Manager and
President of Lexington and the Portfolio Company 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 Indosuez. Dr. Rowsell had also been
the Director of Research for Credit Agricole Futures. Dr. Rowsell was an adviser
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.
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).
ANTHONY M. LAWLER. Mr. Lawler joined the Adviser in 2002 and became a member of
the investment committee in 2005. Mr. Lawler has a broad investment analysis
background and has spent time in sell-side research, M&A investment banking, and
venture capital. Prior to joining the Adviser, Mr. Lawler was a sell-side equity
research analyst at Prudential Securities from 2001 to 2002, publishing both
company and industry research regarding application software. Prior to
Prudential, Mr. Lawler was a manager at a venture capital firm (Castling Group
from 1999 to 2001) with responsibilities for sourcing, evaluating and
structuring investment opportunities. Mr. Lawler began his career as a mergers
and acquisitions investment banking analyst at Merrill Lynch from 1998 to 1999.
Mr. Lawler has served on the board of directors of a private company. Mr. Lawler
earned a BS in Finance (Highest Honors) from the University of Illinois in 1998
and an MBA in Economics and Finance from the University of Chicago in 2005.
LANCE DONENBERG. Mr. Donenberg joined the Adviser in 2006 as a member of the
investment committee. From 1999 until joining the Adviser, he was a founding
principal with Balyasny Asset Management ("BAM"), a multi-strategy hedge fund.
His responsibilities at BAM included allocating proprietary capital to external
managers. Prior to BAM, Mr. Donenberg worked at Schonfeld Securities where he
was a Portfolio Manager for a fund of hedge funds. Mr. Donenberg's prior
experience includes Deloitte Consulting from 1997 to 1999 and Ernst & Young from
1993 to 1994. Mr. Donenberg received a BCom (Finance) from University of
Witwatersrand in 1991, BCom Honors (Economics) from UNISA (University of South
Africa) in 1993, and an MBA from the Kellogg Graduate School of Management,
Northwestern University in 1997.
PATRICK KENARY. Mr. Kenary, Head of Portfolio Strategy, joined the Adviser in
August 2005 as Head of Research and Product Development, North America. In his
current position, which he has held since November 2006, Mr. Kenary focuses on
market research, portfolio strategy, and product development for the Adviser and
is the primary liaison between the Adviser's Investment Committee and the North
American market. From November 2002 to July 2005, Mr. Kenary was the Senior
Portfolio Manager for HFR Asset Management's active portfolios. From July 2000
to October 2002, Mr. Kenary was Head of Business Development for Surefoods, Inc.
a startup venture to provide a business transaction platform to the foodservice
industry and President of a sister company Liquidity Partners, LLC, which
provided
APP-18
platform structuring advice to industry transaction exchanges. From September
1998 to July 2000, Mr. Kenary was a trader and risk manager for Sheridan
Investments, an options-focused CTA. From January 1997 to September 1998, Mr.
Kenary was an independent trader. From September 1991 to December 1996, Mr.
Kenary was a proprietary trader and analyst for Tudor Investment Corporation.
From July 1990 to September 1991, Mr. Kenary was an analyst in the mergers and
acquisitions group at Smith Barney. From February 1989 to May 1990, Mr. Kenary
was a special assistant in legislative affairs at the White House Office of
Management and Budget. From November 1988 to February 1989, Mr. Kenary was the
editor of the after action report at the Office of the Presidential Transition.
From June 1998 to November 1988 Mr. Kenary worked in various capacities in the
George Bush Presidential campaign. Mr. Kenary received an A.B. in History from
Harvard University.
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
TEI.
APP-19
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 are 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, there may be situations where the Adviser does 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 has
no control over such managers and no ability to detect, prevent or protect the
Portfolio Company 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, from its own
resources, make payments to broker-dealers and investor service providers 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 TEI instead of
similar investments where such payments are not received. Such payments may be
different for different intermediaries.
APP-20
INVESTMENT PROGRAM
INVESTMENT OBJECTIVES
TEI, the Offshore Fund's and the Portfolio Company's investment objectives are:
- - To preserve capital, regardless of what transpires in the U.S. or global
financial markets.
- - To generate attractive returns and thereby increase investors' wealth.
- - To produce returns which have low correlation with major market indices.
TEI attempts to achieve its objectives by investing substantially all of its
investable assets in the Offshore Fund, which has the same investment objectives
as TEI. The Offshore Fund in turn invests 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 TEI, the Offshore Fund and the Portfolio Company
are non-fundamental and may be changed by the Board (also acting for the
Offshore Fund) and the Portfolio Company's Board, respectively. Except as
otherwise stated in this Prospectus or in the SAI, the investment policies and
restrictions of TEI, the Offshore Fund and the Portfolio Company are not
fundamental and may be changed by the Board (also acting for the Offshore Fund)
and the Portfolio Company's Board, respectively. TEI's, the Offshore Fund'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.
TEI offers Eligible Investors the following potential advantages:
- - Spreading of risk across a number of investment strategies, Hedge Fund
Managers, Hedge Funds, and markets.
- - 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-21
- - Ability to invest with Hedge Fund Managers whose minimum account size is
higher than most individual investors would be willing or able to commit.
- - Limited liability.
- - Not incurring UBTI, which would be taxable income to otherwise tax-deferred
or tax-exempt entities.
- - 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 managers investing in U.S. and
international equity markets with a strong commitment to running portfolios on a
highly hedged basis. Portfolios may be run either on a purely balanced exposure
or within tight bands of net exposure to the equity markets traded. In addition,
some portion of Equity Hedge managers may run short only or short biased
exposures. Returns can be driven by fundamental or quantitative security
selection, both within or across sectors, but without a significant beta
exposure in the portfolio. As a result, with the exception of short only or
short biased exposures, net long or short market exposure generally is not a
driver of returns.
The managers that are selected in this sector must be highly skilled with
respect to security selection, but also possess strong portfolio management
skills in order to reduce or mitigate the impact of sector, style or other
systematic factors on returns. These managers typically use low to moderate
leverage in terms of gross exposure, and tend to focus on highly liquid markets.
Risk in this sector is often characterized by periods of underperformance in
highly directional and momentum-driven markets. These managers tend to
experience sustained periods of underperformance when there is little price
differentiation on either the short or the long side of the market and when
market activity tends to be dominated by beta or momentum within the market
itself.
EVENT-DRIVEN. The event driven style includes managers capitalizing on
opportunities in significant corporate events. Sometimes referred to as
corporate lifecycle investing, these events can include a wide variety of
corporate activities that are typically (though not always) centered on changes
in the balance sheet, capital structure or ownership of a company. The common
theme of this strategy is that the event changes the actual or perceived value
of a company's securities, creating opportunity for astute and specialized
investors. Examples of such events would be:
- - mergers and acquisitions;
- - spinoffs and/or divestitures of divisions or subsidiaries; and
- - recapitalization or changes in balance sheet structure through actions such
as:
1. increasing leverage through increased dividends, share buybacks or
increased borrowings,
2. decreasing leverage through equity issuance or debt paydown,
3. entry into bankruptcy,
4. exit from bankruptcy, and
5. others.
The style consists of two strategies, special situations, and multi-strategy
event.
The special situations strategy includes two main groups of managers. The first
is passive event generalist managers, who will capitalize on opportunities in
mergers, acquisitions, spinoffs, divestitures, recapitalizations and, in some
cases, the (debt or equity) securities of bankrupt, near bankrupt, or
post-bankruptcy companies. The second is activist managers, who try to influence
the value of their investments by taking large stakes in companies and
attempting to persuade managements, boards of directors and shareholders to
implement specific actions. In many cases, the actions that activist managers
advocate are the same corporate events that attract other event-driven managers
to the situation. In addition, some activist managers may advocate operational,
rather than corporate finance, changes as a means of realizing value.
The approaches activist managers use range from quiet cooperation to direct
confrontation, and the degree of control activist mangers seek ranges from
simply convincing companies to complete a one-time event, to gaining effective
control of the company through board seats. Specific tactics range from quietly
and cooperatively making suggestions to management and/or boards of directions
to publicly advocating changes to proxy fights to gain board seats or force
other changes.
The choice of whether to be passive or active often depends on the specific
situation. While managers will choose to emphasize activism to a greater or
lesser degree, managers using passive and active strategies are not mutually
exclusive. Many event generalists will become active in certain situations, and
many activists will make investments where they do not intend to take an active
role.
Multi-strategy event consists of managers who, in addition to special situations
trading also engage in trading in distressed securities. They will tend to
adjust the mix of these strategies as underlying market conditions warrant.
DISTRESSED & CREDIT. Managers in this style will take directional positions in
corporate debt securities. The strategies within this style focus on distressed
debt and credit long/short. Both of these strategies will tend to invest in
corporate debt securities based on fundamental credit analysis of the underlying
companies.
In distressed debt, although managers tend to be long-biased over the cycle,
they will take both long and short positions in the securities of companies who
are in bankruptcy, have the near-term potential to enter bankruptcy, or have
recently emerged from bankruptcy. The potential for excess returns in the
strategy derives from structural impediments to many institutions holding
distressed securities and from the difficulty of evaluating securities and
claims that are subject to bankruptcy proceedings. In credit long/short,
managers will typically take directional long and short positions in corporate
debt securities. Although they will tend to have some directional bias at any
point in time, managers in this strategy will tend to be neutral about the
overall direction of the credit markets over the course of the cycle. In
addition, managers will also take some relative value positions between
different credits and within the capital structure of the same credit. Excess
returns in this strategy come from structural inefficiencies due to the
dominance of these markets by ratings and regulator-driven investors as well as
the ability to construct attractive risk-return positions by virtue of the
option-like characteristics of long and short credit positions.
APP-22
RELATIVE VALUE. Relative value is characterized by the ability to exploit
mispricings within different securities of either the same issuer or of issuers
with similar fundamental characteristics. This strategy can often involve
exploiting the optionality in the market for select securities, particularly for
convertible bonds.
Returns are generated by being long or short the spreads of related securities
and the impact of the tightening or widening of these spreads. While the
strategies within the relative value style tend to be classified as arbitrage
strategies, they are not necessarily market neutral, nor are they necessarily
perfect or realizable arbitrage. Managers often rely on a moderate to higher
level of leverage in order to profit from small pricing discrepancies.
The risks associated with relative value include liquidity risk of the leverage
used in the portfolio and the fundamental illiquidity that can underlie specific
markets in which the manager is invested. Managers are generally invested in
equities, debt and derivative securities. These securities may be listed or
over-the-counter.
VARIABLE EQUITY. Variable equity is characterized by managers who invest in U.S.
and international equity markets in a traditional, trading oriented style.
Managers generally take on larger net exposures than their equity hedge
counterparts. In fact, these portfolios are often characterized by shifts in
gross and net exposures over time as market conditions change, and certain
managers may position their portfolios as either purely net-long or net-short.
Variable equity returns are primarily driven by the managers' individual stock
selection skills and their abilities to identify shifts in market direction.
Variable equity managers generally use little leverage.
Risks generally arise from the managers' stock picking decisions, specifically
investments in individual securities that may move against them. These managers
also can be vulnerable to unexpected and rapid directional shifts in the
markets.
COMMODITY AND MACRO. Commodity and macro managers typically attempt to profit
from directional trading across the spectrum of asset classes. In general,
positions are concentrated in commodities, currencies, interest rates and stock
index futures. However, managers may also take positions in specific equity or
credit securities, but these positions tend to be driven by a more thematic as
opposed to company-specific rationale. In addition, while many macro positions
tend to be directional there may also be a significant amount of exposure to
relative value trades among various commodities, currencies, interest rates and
stock index markets, either within or across countries and geographic regions.
Glenwood divides this style into three distinct strategies, discretionary
commodity managers, systematic commodity trading advisors (`CTAs'), and global
macro managers (both systematic and discretionary).
Discretionary commodity managers tend to take directional and relative value
positions in commodities and commodity-related securities. The rationale for
these positions is largely based on fundamental research into the supply and
demand for the commodity, and, in the case of securities, the sensitivity of the
issuing companies to changes in the price of the commodity. Managers are able to
earn attractive returns by successfully gathering and interpreting information
from a variety of sources, both public and proprietary.
Systematic CTAs trade commodities, currencies, interest rates and stock indices
through both the futures and cash markets. Their trades are based on signals
generated by quantitative algorithms that are largely if not exclusively based
on price data. Most managers in this sector use trend-following systems that
attempt to capture price momentum in these markets.
Global macro managers attempt to profit from large directional or relative value
moves in any of the major asset classes, but unlike systematic CTAs, tend to be
more reliant on fundamental as opposed to price data. These managers can be
either systematic, applying quantitative algorithms to economic data, or
fundamental, applying the manager's judgment to whatever the manager believes is
the pertinent data for the particular asset class being traded. In general,
these managers benefit from large changes in the absolute or relative prices
within or across asset classes. Global macro managers are largely unconstrained
in terms of asset class and are potentially able to earn excess returns by
correctly predicting price moves in a wide range of instruments and generally
benefit from inefficiencies and price distortions that arise when more
constrained investors (e.g., central banks, corporate foreign exchange hedgers,
etc.) are forced to make less economically optimal trading decisions.
Most commodity and global macro managers have an expected volatility higher than
those of other hedge fund styles represented in the Glenwood portfolios.
However, due to their strong diversification characteristics as compared to
other hedge fund strategies, commodity and global macro funds can serve to
protect portfolio capital during difficult market conditions.
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, TEI
(through the Offshore Fund) may temporarily hold all or a portion of its assets
in cash, and the Portfolio Company 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. In addition,
the Portfolio Company and TEI 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, in the case of the Portfolio Company,
or for cash management purposes. The Portfolio Company may choose to engage in
such leveraging of its investments because it 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 are subject 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 are not
considered the use of investment leverage, and are 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 each class of TEI's Units of leverage in the amount of 20% of TEI's
gross assets. The table assumes hypothetical annual returns of TEI's portfolio
of minus 10% to plus 10%, and an assumed utilization of leverage in the amount
of 20% of TEI's gross assets with a cost of borrowing of approximately 3.60%
payable for such leverage based on market rates as of the date of this
Prospectus. TEI's actual cost of leverage will be based on market rates at the
time TEI 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
APP-23
the return to Members 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.
Assumed Portfolio Return (net of expenses) ....... (10)% (5)% 0% 5% 10%
Corresponding Unit Return Assuming 20% Leverage .. (12.83)% (6.83)% (0.83)% 5.17% 11.17%
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 Portfolio Company's Board.
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.
- - Past performance during favorable and unfavorable market conditions.
- - Spreading of risk in relation to other Hedge Fund Managers.
- - Amount of assets under management.
- - Absence of significant conflicts of interest.
- - Overall integrity and reputation.
APP-24
- - Percentage of business time devoted to investment activities.
- - Fees charged.
The principals of the Adviser have several sources, including the following, for
identifying prospective Hedge Fund Managers.
- - Referrals from other advisers, brokers and investors.
- - 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.
- - 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 holdings 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 evaluates 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
endeavors to monitor the Portfolio Company's aggregate exposures to various
investment strategies and to various aggregate risks.
The Adviser evaluates 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 market conditions. The
Adviser solicits such information from the Hedge Fund Manager and other
APP-25
sources, such as prime brokers, that the Adviser deems necessary to properly
assess the relative success or failure of a Hedge Fund. The Adviser conducts
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.
DEFINED TERMS INDEX
"BOARD" means Man-Glenwood Lexington TEI, LLC's Board of Managers.
"ELIGIBLE INVESTORS." Eligible Investors include: (1) pension, profit-sharing,
or other employee benefit trusts that are exempt from taxation under Section
501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), by reason
of qualification under Section 401 of the Code; (2) employee benefit plans or
other programs established pursuant to Sections 403(b), 408(k) and 457 of the
Code; (3) certain deferred compensation plans established by corporations,
partnerships, non-profit entities or state and local governments, or
government-sponsored programs; (4) certain foundations, endowments and other
exempt organizations under Section 501(c) of the Code (other than organizations
exempt under Section 501(c)(1)); (5) individual retirement accounts ("IRAs")
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs and
rollover IRAs) and 403(b)(7) Plans; and (6) state colleges and universities.
"MEMBER" means a member of Man-Glenwood Lexington TEI, LLC.
"OFFSHORE FUND" means Man-Glenwood Lexington TEI, LDC (the "Offshore Fund"), a
Cayman Islands limited duration company with the same investment objectives as
TEI.
"PORTFOLIO COMPANY'S BOARD" means Man-Glenwood Lexington Associates Portfolio,
LLC's Board of Managers.
"SAI" means Man-Glenwood Lexington TEI, LLC's statement of additional
information filed in correlation with its Prospectus.
"UBTI" means unrelated business taxable income.
APP-26
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.
MAN-AHL 130, LLC
PART TWO
STATEMENT OF ADDITIONAL INFORMATION
INDEX TO STATEMENT OF ADDITIONAL INFORMATION
SECTION PAGE
- ------- --------
Futures Markets and Trading Methods.................................. Pt. II-2
Alternative Investment Strategies in General......................... Pt. II-4
Supplemental Performance Information................................. Pt. II-6
Exhibit A -- Limited Liability Company Agreement..................... A-1
Exhibit B -- Subscription Requirements............................... SR-1
Exhibit C -- Investor Application Forms.............................. IA-1
Pt. II-1
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 OTC forward contracts and other derivatives.
The nature of futures trading results in substantially all of a futures
fund's capital being held in reserve. No capital is expended 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 futures
fund acquires exposure. The margin required to open a particular futures
position constitutes a good faith deposit against the futures fund's potential
obligation to pay such losses.
It is because substantially all of its capital would otherwise be held in
reserve that Man-AHL 130 is able to allocate 30% of such capital to the
Man-Glenwood Funds without in any respect reducing Man-AHL 130'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 lowly 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 low 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.
****
MAN-AHL 130 IS A SPECULATIVE, HIGHLY LEVERAGED INVESTMENT AND IS NOT
APPROPRIATE FOR EVERYONE. THERE CAN BE NO ASSURANCE THAT AN INVESTMENT IN
MAN-AHL 130 WILL BE PROFITABLE OR LOWLY 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 MAN-AHL 130.
THE FUTURES AND FORWARD MARKETS
FUTURES AND FORWARD CONTRACTS
Futures contracts are traded on exchanges and call for the future delivery
of various commodities. These contractual obligations may be satisfied either by
taking or making physical delivery or by making an offsetting sale or purchase
of a futures contract on the same exchange.
Forward currency contracts are traded off-exchange through banks or
dealers. In such instances, the bank or dealer generally acts as principal in
the transaction and charges "bid-ask" spreads.
Futures and forward trading is a "zero-sum," risk transfer economic
activity. For every gain there is an equal and offsetting loss.
Man-AHL 130 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 Man-AHL 130's counterparties' performance under their
open positions.
HEDGERS AND SPECULATORS
The two broad classifications of persons who trade futures and forwards 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 or
Pt. II-2
forward 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 Man-AHL 130, have no "core business" involvement with any commodity and
rarely take delivery of the physical commodities underlying any of the futures
or forward contracts, but rather close out their futures or forward positions
through offsetting futures or forward 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 futures 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.
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 Man-AHL
130, its 30% investment in the Man-Glenwood Funds). 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 exposures to risk and
potential profits.
Many futures funds maintain all of their assets in cash and cash-equivalent
instruments, but some -- such as Man-AHL 130 -- invest a portion of such capital
in other investments -- in the case of Man-AHL 130, the Man-Glenwood Funds -- in
an effort to achieve higher returns or reduce the overall volatility of the
investment.
Although Man-AHL 130's assets consist entirely of cash and cash-equivalent
instruments as well as its investment in the Man-Glenwood Funds, Man-AHL 130's
primary profit potential as well as risk of loss derives from its participating
in the AHL Diversified Program. Man-AHL 130's market exposure through this
Program will typically equal between 300% and 800% of Man-AHL 130's Net Asset
Value. The results of such market exposure are reflected in increases or
decreases in Man-AHL 130's Net Asset Value as the fluctuation in the value of
Man-AHL 130's futures positions are settled by the payment or receipt of funds
(generally on a daily basis). While Man-AHL 130's assets at any given time will
be almost exclusively its investment in the Man-Glenwood Funds, US 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.
Pt. II-3
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 unexpected factors (not incorporated into the
systems) 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 which 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 incur material
losses.
RISK CONTROL TECHNIQUES
Trading advisors often adopt risk management principles. Such principles
typically restrict the size of positions taken as well as establish stop-loss
points at which losing positions must be liquidated. However, no risk control
technique can assure that significant 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 traders is whether to execute trades as a
single order or as a series of different orders.
ALTERNATIVE INVESTMENT STRATEGIES IN GENERAL
Man-AHL 130's investment of a limited portion of its capital in the
Man-Glenwood Funds is intended both for yield and diversification purposes. The
Man-Glenwood Funds invest in a diversified group of alternative investment
strategies.
INVESTMENT STRATEGIES
"Alternative investment strategies" is a generic term used to refer to
strategies other than traditional "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.
Pt. II-4
EQUITY HEDGE. Equity hedge is characterized by managers investing in U.S.
and international equity markets with a strong commitment to running portfolios
on a highly hedged basis. Portfolios may be run either on a purely balanced
exposure or within tight bands of net exposure to the equity markets traded. In
addition, some portion of equity hedge managers may run short only or short
biased exposures. Returns can be driven by fundamental or quantitative security
selection, both within or across sectors, but without a significant beta
exposure in the portfolio. As a result, with the exception of short only or
short biased exposures, net long or short market exposure generally is not a
driver of returns.
The managers that are selected in this sector must be highly skilled with
respect to security selection, but also possess strong portfolio management
skills in order to reduce or mitigate the impact of sector, style or other
systematic factors on returns. These managers typically use low to moderate
leverage in terms of gross exposure, and tend to focus on highly liquid markets.
Risk in this sector is often characterized by periods of underperformance
in highly directional and momentum-driven markets. These managers tend to
experience sustained periods of underperformance when there is little price
differentiation on either the short or the long side of the market and when
market activity tends to be dominated by beta or momentum within the market
itself.
EVENT-DRIVEN. The event driven style includes managers capitalizing on
opportunities in significant corporate events. Sometimes referred to as
corporate lifecycle investing, these events can include a wide variety of
corporate activities that are typically (though not always) centered on changes
in the balance sheet, capital structure or ownership of a company. The common
theme of this strategy is that the event changes the actual or perceived value
of a company's securities, creating opportunity for astute and specialized
investors. Examples of such events would be: (i) mergers and acquisitions; (ii)
spinoffs and/or divestitures of divisions or subsidiaries; and (iii)
recapitalization or changes in balance sheet structure through actions such as:
(a) increasing leverage through increased dividends, share buybacks or increased
borrowings; (b) decreasing leverage through equity issuance or debt paydown; (c)
entry into bankruptcy; (d) exit from bankruptcy: and (e) others.
The style consists of two strategies, special situations, and
multi-strategy event.
The special situations strategy includes two main groups of managers. The
first is passive event generalist managers, who will capitalize on opportunities
in mergers, acquisitions, spinoffs, divestitures, recapitalizations and, in some
cases, the (debt or equity) securities of bankrupt, near bankrupt, or
post-bankruptcy companies. The second is activist managers, who try to influence
the value of their investments by taking large stakes in companies and
attempting to persuade managements, boards of directors and shareholders to
implement specific actions. In many cases, the actions that activist managers
advocate are the same corporate events that attract other event-driven managers
to the situation. In addition, some activist managers may advocate operational,
rather than corporate finance, changes as a means of realizing value.
The approaches activist managers use range from quiet cooperation to
direct confrontation, and the degree of control activist mangers seek ranges
from simply convincing companies to complete a one-time event, to gaining
effective control of the company through board seats. Specific tactics range
from quietly and cooperatively making suggestions to management and/or boards of
directions to publicly advocating changes to proxy fights to gain board seats or
force other changes.
The choice of whether to be passive or active often depends on the
specific situation. While managers will choose to emphasize activism to a
greater or lesser degree, managers using passive and active strategies are not
mutually exclusive. Many event generalists will become active in certain
situations, and many activists will make investments where they do not intend to
take an active role.
Multi-strategy event consists of managers who, in addition to special
situations trading also engage in trading in distressed securities. They will
tend to adjust the mix of these strategies as underlying market conditions
warrant.
DISTRESSED & CREDIT. Managers in this style will take directional
positions in corporate debt securities. The strategies within this style focus
on distressed debt and credit long/short. Both of these strategies will tend to
invest in corporate debt securities based on fundamental credit analysis of the
underlying companies.
In distressed debt, although managers tend to be long-biased over the
cycle, they will take both long and short positions in the securities of
companies who are in bankruptcy, have the near-term potential to enter
bankruptcy, or have recently emerged from bankruptcy. The potential for excess
returns in the strategy derives from structural impediments to many institutions
holding distressed securities and from the difficulty of evaluating securities
and claims that are subject to bankruptcy proceedings. In credit long/short,
managers will typically take directional long and short positions in corporate
debt securities. Although they will tend to have some directional bias at any
point in time, managers in this strategy will tend to be neutral about the
overall direction of the credit markets over the course of the cycle. In
addition, managers will also take some relative value positions between
different credits and within the capital structure of the same credit. Excess
returns in this strategy come from structural inefficiencies due to the
dominance of these markets by ratings and regulator-driven investors as well as
the ability to construct attractive risk-return positions by virtue of the
option-like characteristics of long and short credit positions.
RELATIVE VALUE. Relative value is characterized by the ability to exploit
mispricings within different securities of either the same issuer or of issuers
with similar fundamental characteristics. This strategy can often involve
exploiting the optionality in the market for select securities, particularly for
convertible bonds.
Returns are generated by being long or short the spreads of related
securities and the impact of the tightening or widening of these spreads. While
the strategies within the relative value style tend to be classified as
arbitrage strategies, they are not necessarily market neutral, nor are they
necessarily perfect or realizable arbitrage. Managers often rely on a moderate
to higher level of leverage in order to profit from small pricing discrepancies.
The risks associated with relative value include liquidity risk of the
leverage used in the portfolio and the fundamental illiquidity that can underlie
specific markets in which the manager is invested. Managers are generally
invested in equities, debt and derivative securities. These securities may be
listed or over-the-counter.
VARIABLE EQUITY. Variable equity is characterized by managers who invest
in U.S. and international equity markets in a traditional, trading oriented
style. Managers generally take on larger net exposures than their equity hedge
counterparts. In fact, these portfolios are often characterized by shifts in
gross and net exposures over time as market conditions change, and certain
managers may position their portfolios as either purely net-long or net-short.
Variable equity returns are primarily driven by the managers' individual
stock selection skills and their abilities to identify shifts in market
direction. Variable equity managers generally use little leverage.
Risks generally arise from the managers' stock picking decisions,
specifically investments in individual securities that may move against them.
These managers also can be vulnerable to unexpected and rapid directional shifts
in the markets.
COMMODITY AND MACRO. Commodity and macro managers typically attempt to
profit from directional trading across the spectrum of asset classes. In
general, positions are concentrated in commodities, currencies, interest rates
and stock index futures. However, managers may also take positions in specific
equity or credit securities, but these positions tend to be driven by a more
thematic as opposed to company-specific rationale. In addition, while many macro
positions tend to be directional there may also be a significant amount of
exposure to relative value trades among various commodities, currencies,
interest rates and stock index markets, either within or across countries and
geographic regions.
The Man-Glenwood Funds divide this style into three distinct strategies,
discretionary commodity managers, systematic commodity trading advisors
('CTAs'), and global macro managers (both systematic and discretionary).
Discretionary commodity managers tend to take directional and relative
value positions in commodities and commodity-related securities. The rationale
for these positions is largely based on fundamental research into the supply and
demand for the commodity, and, in the case of securities, the sensitivity of the
issuing companies to changes in the price of the commodity. Managers are able to
earn attractive returns by successfully gathering and interpreting information
from a variety of sources, both public and proprietary.
Systematic CTAs trade commodities, currencies, interest rates and stock
indices through both the futures and cash markets. Their trades are based on
signals generated by quantitative algorithms that are largely if not exclusively
based on price data. Most managers in this sector use trend-following systems
that attempt to capture price momentum in these markets.
Global macro managers attempt to profit from large directional or relative
value moves in any of the major asset classes, but unlike systematic CTAs, tend
to be more reliant on fundamental as opposed to price data. These managers can
be either systematic, applying quantitative algorithms to economic data, or
fundamental, applying the manager's judgment to whatever the manager believes is
the pertinent data for the particular asset class being traded. In general,
these managers benefit from large changes in the absolute or relative prices
within or across asset classes. Global macro managers are largely unconstrained
in terms of asset class and are potentially able to earn excess returns by
correctly predicting price moves in a wide range of instruments and generally
benefit from inefficiencies and price distortions that arise when more
constrained investors (e.g., central banks, corporate foreign exchange hedgers,
etc.) are forced to make less economically optimal trading decisions. Most
commodity and global macro managers have an expected volatility higher than
those of other hedge fund styles represented in other Man Group portfolios.
However, due to their strong diversification characteristics as compared to
other hedge fund strategies, commodity and global macro funds can serve to
protect portfolio capital during difficult market conditions.
Pt. II-5
SUPPLEMENTAL PERFORMANCE INFORMATION
Man-AHL 130 trades in the futures, forward currency and OTC derivatives
markets pursuant to the AHL Diversified Program. AHL's trading process is the
product of sophisticated research and applies a technical approach that has been
operated, with modifications, by Man Group since 1989. The AHL Diversified
Program to be traded on behalf of Man-AHL 130 has been operating in the US since
April 1998.
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 available to US
investors traded pursuant to the AHL Diversified Portfolio.
Man-AHL 130 allocates approximately 30% of its capital to the Man-Glenwood
Funds in an attempt to enhance the yield Man-AHL 130 would otherwise earn on
such capital in Man-AHL 130's account at the commodity broker. The performance
information for the Man-Glenwood Funds set forth below and on pages APP-2 and
APP-3 of this Prospectus represents the past performance of (i) a private fund
that utilized a multi-manager, multi-strategy investment approach 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 Class A units of Man-Glenwood
Lexington TEI, LLC and (iii) Man-Glenwood Lexington, LLC or Class A units of
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. The performance
shown, however, is not necessarily indicative of how the Portfolio Company,
Man-Glenwood Lexington, LLC, or Man-Glenwood Lexington TEI, LLC will perform in
the future. In particular, the private fund's performance is not necessarily an
indication of how the Portfolio Company, Man-Glenwood Lexington, LLC or
Man-Glenwood Lexington TEI, LLC will perform in the future, as the private fund
was not subject to investment limitations and other restrictions imposed on
registered investment companies by the Investment Company Act of 1940.
Glenwood Capital Investments, L.L.C. ("Glenwood") is the investment advisor
to the Portfolio Company, and is the investment advisor to the private fund. The
private fund, the Portfolio Company, and the Man-Glenwood Funds have
substantially similar investment objectives, policies and strategies. Glenwood
manages the Portfolio Company substantially similarly to the private fund.
Accordingly, by the Man-Glenwood Funds investing all of their investable assets
in the Portfolio Company, the Man-Glenwood Funds receive substantially similar
investment management to that Glenwood renders to the Portfolio Company and
previously rendered to the private fund.
The performance of the private fund and Portfolio Company has been adjusted
in the following supplemental performance information to reflect the fees and
expenses of the Man-Glenwood Funds, 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 PROGRAM AND OF THE MAN-GLENWOOD
FUNDS IS NOT NECESSARILY INDICATIVE OF THE FUTURE RESULTS OF MAN-AHL 130. THERE
CAN BE NO ASSURANCE THAT MAN-AHL 130 WILL TRADE PROFITABLY OR NOT INCUR LOSSES.
Pt. II-6
MAN-AHL 130, LLC
APRIL 1, 2007 -- MAY 31, 2008
(PERFORMANCE GRAPH)
Man
AHL Citigroup
130 High
LLC Grade
Class A Corp
Series 2 (Illegible) Bond TR
-------- ----------- ---------
31-Mar-O7 1000.00 1000.00 1000.00
30-Apr-07 1045.52 1044.30 1014.05
31-May-07 1086.95 1080.74 996.02
30-Jun-07 1123.23 1062.78 981.24
31-Jul-07 1095.01 1029.83 978.08
31-Aug-07 1037.57 1045.27 992.93
30-Sep-07 1118.45 1084.36 1006.38
31-Oct-07 1186.80 1101.61 1015.21
30-Nov-07 1188.68 1055.55 1023.19
31-Dec-07 1186.85 1048.23 1026.09
31-Jan-08 1239.86 985.36 1027.82
29-Feb-08 1331.52 953.35 1020.53
31-Mar-08 1330.65 949.23 1014.52
30-Apr-08 1310.89 995.46 1023.75
31-May-08 1370.58 1008.35 995.36
MAN-AHL 130, LLC(1) US STOCKS(2) US BONDS(3)
------------------- ---------------- ---------------
Total return 37.1% 0.8% -0.5%
Annualized return 31.0% 0.7% -0.4%
Annualized volatility(4) 13.6% 11.9% 4.6%
Sharpe ratio(5) 1.75 N/A N/A
Largest peak-to-valley loss (worst drawdown) -7.6% -13.8% -3.5%
Period of largest peak-to valley loss (worst drawdown) Jun 07 to Aug 07 Oct 07 to Present Apr 07 to Jul 07
Months to recovery 2 N/A 3
The chart above represents the pre-tax growth of a theoretical $1,000
investment in the Class A Series 2 units of Man-AHL 130, in the US stock market
and in the US bond market.
SHORT TRACK RECORDS ARE STATISTICALLY INSIGNIFICANT.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. Please see the Prospectus and 'Certain risks of investing in
Man-AHL 130, LLC' included in this document. There are inherent
limitations in any comparison between a managed portfolio and a passive
index. Each index is unmanaged and does not incur management fees,
transaction costs or other expenses associated with a managed portfolio.
(1)Actual results of Man AHL 130, LLC Class A - Series 2 since its
inception. The returns for 2008 are estimated, unaudited and subject to
change. (2)US stocks: S&P 500 Total Return Index (dividends reinvested).
(3)US bonds: Citigroup High Grade Corporate Bond Index (total return).
(4)Annualized volatility is standard deviation on a yearly basis.
Standard deviation is a widely used measurement of risk, representing
volatility derived by calculating the square root of the variance of the
returns of an investment from their arithmetic mean. (5)Sharpe ratio is
calculated using the 3 month USD LIBOR Index risk-free rate over the
period analyzed. Where an investment has underperformed the risk-free
rate, the Sharpe ratio will be negative. Because the Sharpe ratio is an
absolute measure of risk-adjusted return, negative Sharpe ratios are
shown as N/A, as they can be misleading. Financial statistics that assume
a normal distribution of returns from an investment strategy, such as
standard deviation, correlation and Sharpe ratio, may underrepresent the
risk of sizeable rapid losses from such investment strategy.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Pt. II-7
AHL DIVERSIFIED PROGRAM
APRIL 3, 1998 -- MAY 31, 2008
THIS GRAPH REPRESENTS THE PERFORMANCE OF ONLY THE AHL DIVERSIFIED PROGRAM.
MAN-AHL 130 ALSO INVESTS IN THE MAN-GLENWOOD FUNDS.
(PERFORMANCE GRAPH)
AHL Citigroup
Diversified High
Programme Grade Corp
Composite 2 (Illegible) Bond TR
----------- ----------- ----------
31-Mar-98 1000.00 1000.00 1000.00
30-Apr-98 967.22 1010.06 1005.28
31-May-98 1011.76 992.70 1022.04
30-Jun-98 1020.51 1033.02 1033.75
31-Jul-98 1041.27 1022.02 1027.97
31-Aug-98 1191.62 874.26 1037.08
30-Sep-98 1218.95 930.27 1079.90
31-Oct-98 1196.98 1005.94 1059.42
30-Nov-98 1222.16 1066.90 1088.04
31-Dec-98 1275.39 1128.38 1089.17
31-Jan-99 1207.79 1175.57 1102.52
28-Feb-99 1246.17 1139.03 1058.34
31-Mar-99 1182.95 1184.61 1058.60
30-Apr-99 1273.24 1230.48 1056.04
31-May-99 1204.82 1201.42 1037.47
30-Jun-99 1197.79 1268.10 1020.87
31-Jul-99 1203.13 1228.50 1009.33
31-Aug-99 1213.45 1222.43 1006.67
30-Sep-99 1226.74 1188.91 1016.05
31-Oct-99 1134.36 1264.15 1020.86
30-Nov-99 1225.90 1289.85 1018.44
31-Dec-99 1288.35 1365.81 1008.07
31-Jan-00 1287.73 1297.19 1005.95
29-Feb-00 1295.65 1272.64 1015.21
31-Mar-00 1263.28 1397.14 1032.41
30-Apr-00 1235.19 1355.10 1020.57
31-May-00 1269.90 1327.30 1004.17
30-Jun-00 1223.38 1360.02 1036.90
31-Jul-00 1190.03 1338.76 1055.48
31-Aug-00 1235.62 1421.92 1069.74
30-Sep-00 1208.08 1346.85 1074.72
31-Oct-00 1249.43 1341.15 1079.55
30-Nov-00 1361.69 1235.42 1107.90
31-Dec-00 1503.73 1241.47 1137.78
31-Jan-01 1522.87 1285.51 1178.62
28-Feb-01 1553.87 1168.30 1193.63
31-Mar-01 1707.34 1094.28 1190.15
30-Apr-01 1565.15 1179.32 1174.87
31-May-01 1534.79 1187.22 1190.41
30-Jun-01 1518.55 1158.33 1197.00
31-Jul-01 1571.75 1146.92 1240.19
31-Aug-01 1672.24 1075.13 1259.60
30-Sep-01 1805.38 988.31 1240.44
31-Oct-01 1878.51 1007.15 1294.68
30-Nov-01 1733.68 1084.41 1270.34
31-Dec-01 1722.75 1093.91 1258.93
31-Jan-02 1651.65 1077.94 1280.94
28-Feb-02 1573.51 1057.15 1297.64
31-Mar-02 1575.14 1096.91 1259.39
30-Apr-02 1541.22 1030.41 1291.26
31-May-02 1578.12 1022.82 1305.86
30-Jun-02 1786.35 949.96 1315.38
31-Jul-02 1883.64 875.91 1327.69
31-Aug-02 1898.89 881.66 1387.70
30-Sep-02 2028.61 785.84 1433.47
31-Oct-02 1838.41 855.01 1399.10
30-Nov-02 1735.13 905.33 1413.52
31-Dec-02 1919.87 852.15 1464.56
31-Jan-03 2072.01 829.82 1467.60
28-Feb-03 2228.12 817.37 1506.28
31-Mar-03 2042.62 825.31 1494.25
30-Apr-03 2067.73 893.29 1528.54
31-May-03 2282.30 940.36 1600.49
30-Jun-03 2187.79 952.35 1577.59
31-Jul-03 2167.21 969.14 1438.56
31-Aug-03 2151.55 988.04 1470.03
30-Sep-03 2209.92 977.55 1544.00
31-Oct-03 2250.07 1032.85 1512.72
30-Nov-03 2218.48 1041.94 1520.56
31-Dec-03 2357.94 1096.58 1541.69
31-Jan-04 2375.85 1116.71 1570.48
29-Feb-04 2487.72 1132.23 1598.49
31-Mar-04 2434.26 1115.15 1617.29
30-Apr-04 2251.91 1097.64 1530.89
31-May-04 2211.72 1112.71 1519.97
30-Jun-04 2088.40 1134.34 1534.17
31-Jul-04 2091.63 1096.80 1562.45
31-Aug-04 2113.66 1101.24 1624.16
30-Sep-04 2173.82 1113.16 1640.56
31-Oct-04 2262.00 1130.17 1667.43
30-Nov-04 2439.51 1175.90 1634.10
31-Dec-04 2431.81 1215.91 1676.15
31-Jan-05 2312.64 1186.28 1722.51
28-Feb-05 2380.68 1211.24 1703.28
31-Mar-05 2369.72 1189.79 1682.08
30-Apr-05 2309.88 1167.23 1737.02
31-May-05 2396.14 1204.37 1788.29
30-Jun-05 2476.69 1206.07 1813.52
31-Jul-05 2492.42 1250.93 1769.26
31-Aug-05 2574.04 1239.51 1810.45
30-Sep-05 2668.04 1249.55 1754.24
31-Oct-05 2635.91 1228.72 1718.45
30-Nov-05 2783.76 1275.19 1735.43
31-Dec-05 2732.97 1275.64 1774.54
31-Jan-06 2832.57 1309.41 1758.11
28-Feb-06 2754.27 1312.97 1780.58
31-Mar-06 2853.53 1329.31 1708.59
30-Apr-06 2991.30 1347.16 1670.34
31-May-06 2863.66 1308.39 1666.94
30-Jun-06 2768.06 1310.16 1673.42
31-Jul-06 2665.46 1318.24 1713.13
31-Aug-06 2725.37 1349.61 1774.91
30-Sep-06 2695.48 1384.39 1807.47
31-Oct-06 2704.29 1429.50 1830.45
30-Nov-06 2772.00 1456.68 1875.54
31-Dec-06 2861.92 1477.12 1832.09
31-Jan-07 2936.68 1499.46 1822.75
28-Feb-07 2768.97 1470.13 1875.13
31-Mar-07 2699.03 1486.57 1831.89
30-Apr-07 2883.05 1552.42 1857.62
31-May-07 2991.78 1606.59 1824.61
30-Jun-07 3104.06 1579.90 1797.52
31-Jul-07 3023.23 1530.92 1791.74
31-Aug-07 2869.44 1553.86 1818.94
30-Sep-07 3080.41 1611.98 1843.58
31-Oct-07 3241.38 1637.62 1859.75
30-Nov-07 3228.15 1569.15 1874.36
31-Dec-07 3225.88 1558.27 1879.68
31-Jan-08 3370.87 1464.80 1882.85
29-Feb-08 3619.44 1417.22 1869.49
31-Mar-08 3633.80 1411.10 1858.48
30-Apr-08 3584.15 1479.82 1875.41
31-May-08 3730.06 1498.99 1823.39
AHL DIVERSIFIED US US
PROGRAM(1) STOCKS(2) BONDS(3)
---------------- --------------- ---------------
Total return 273.0% 49.9% 82.3%
Annualized return 13.8% 4.1% 6.1%
Annualized volatility(4) 16.4% 14.6% 7.6%
Sharpe ratio(5) 0.64 0.08% 0.30%
Largest peak-to-valley loss (worst drawdown) -18.0% -44.7% -10.1%
Period of largest peak-to valley loss (worst drawdown) Oct 01 to Apr 02 Aug 00 to Sep 02 May 03 to Jul 03
Months to recovery 3 49 8
The chart above represents the pre-tax growth of a theoretical $1,000
investment in the AHL Diversified Program, in the US stock market and in the US
bond market.
(1) The AHL Diversified Program performance information set forth above
represents the unaudited composite results of all accounts available to US
investors traded pursuant to the AHL Diversified Program from April 3, 1998
through May 31, 2008. Creating a composite of 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. The returns
for 2008 are estimated, unaudited and subject to change.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. This performance does not represent the performance of Man-AHL
130. There are inherent limitations in any comparison between a managed
portfolio and a passive index. Each index is unmanaged and does not incur
management fees, transaction costs or other expenses associated with a
managed portfolio. (2)US stocks: S&P 500 Total Return Index (dividends
reinvested). (3)US bonds: Citigroup High Grade Corporate Bond Index
(total return). (4)Annualized volatility is standard deviation on a
yearly basis. Standard deviation is a widely used measurement of risk,
representing volatility derived by calculating the square root of the
variance of the returns of an investment from their arithmetic mean.
(5)Sharpe ratio is calculated using the 3 month USD LIBOR Index risk-free
rate over the period analyzed. Where an investment has underperformed the
risk-free rate, the Sharpe ratio will be negative. Because the Sharpe
ratio is an absolute measure of risk-adjusted return, negative Sharpe
ratios are shown as N/A, as they can be misleading. Financial statistics
that assume a normal distribution of returns from an investment strategy,
such as standard deviation, correlation and Sharpe ratio, may
underrepresent the risk of sizeable rapid losses from such investment
strategy.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Pt. II-8
AHL DIVERSIFIED PROGRAM
APRIL 3, 1998 THROUGH MAY 31, 2008
THIS GRAPH REPRESENTS THE PERFORMANCE OF ONLY THE AHL DIVERSIFIED PROGRAM.
MAN-AHL 130 ALSO INVESTS IN THE MAN-GLENWOOD FUNDS.
(PERFORMANCE GRAPH)
1 year to 5 years to Since inception to
May 31, 2007 May 31, 2008 May 31, 2008
------------ ------------ ------------------
AHL Diversified Program(1) 24.7% 10.3% 13.8%
U.S. stocks(2) -6.7% 9.8% 4.1%
U.S. bonds(3) -0.1% 2.6% 6.1%
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 April 1998 compared to the performance of US stocks and US bonds.
Index returns are shown for comparison purposes. There are inherent limitations
in any comparison between a managed portfolio and a passive index. Each index is
unmanaged and does not incur management fees, transaction costs or other
expenses associated with a managed portfolio.
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.
(1) The AHL Diversified Program performance information set forth above
represents the unaudited composite results of all accounts available to US
investors traded pursuant to the AHL Diversified Program from April 3, 1998
through May 31, 2008. Creating a composite of 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. The returns
for 2008 are estimated, unaudited and subject to change.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. This performance does not represent the performance of Man-AHL
130.
(2) US stocks: S&P 500 Total Return Index (dividends reinvested).
(3) US bonds: Citigroup High Grade Corporate Bond Index (total return).
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Pt. II-9
AHL DIVERSIFIED PROGRAM
APRIL 3, 1998 TO MAY 31,2008
TRADITIONAL PORTFOLIO(5) AND RETURN
(PIE CHART)
U.S. BONDS(3) 60%
U.S. STOCKS(2) 30%
CASH(4) 10%
ENHANCED PORTFOLIO(6) AND RETURN
(PIE CHART)
TRADITIONAL PORTFOLIO(5) 90%
AHL DIVERSIFIED PROGRAM(1) 10%
Note: 10% is only an example. You must determine the appropriate allocation to
alternative investments generally, and if suitable, to AHL Diversified
Program(1), as a portion of the alternative investments included in a
diversified portfolio.
TRADITIONAL PORTFOLIO ENHANCED PORTFOLIO
- --------------------- ------------------
Annualized return 5.0% Annualized return 6.1% Increase of 1.1%
Annualized volatility(7) 8.9% Annualized volatility(7) 7.8% Reduced by 1.1%
Largest peak-to-valley loss (worst
drawdown)(8) -21.9% Largest peak-to-valley loss (worst drawdown)(8) -15.3% Improvement of 6.6%
Sharpe ratio(9) 0.16 Sharpe ratio(9) 0.30 Improvement of 0.14
$100,000 invested at inception $100,000 invested at inception would have
would have grown to $164,333 grown to $181,875
(1) The AHL Diversified Program performance information set forth above
represents the unaudited composite results of all accounts available to US
investors traded pursuant to the AHL Diversified Program from April 3, 1998
through May 31, 2008. Creating a composite of 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. The returns
for 2008 are estimated, unaudited and subject to change.
Combining actively managed investments such as the AHL Diversified Program
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 associated with a managed portfolio.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. This performance does not represent the performance of Man-AHL
130. (2)US stocks: S&P 500 Total Return Index (dividends reinvested).
(3)US bonds: Citigroup High Grade Corporate Bond Index (total return).
(4)Cash: 3 month USD LIBOR Index. (5)Traditional portfolio: 60% US
stocks, 30% US bonds, 10% Cash. (6)Enhanced portfolio: 90% traditional
portfolio; 10% AHL Diversified Program. (7)Annualized volatility is
standard deviation on a yearly basis. Standard deviation is a widely used
measurement of risk, representing volatility derived by calculating the
square root of the variance of the returns of an investment from their
arithmetic mean. (8)The period of the largest peak-to-valley loss (worst
drawdown) for the AHL Diversified Program is October 2001 through April
2002. The periods of largest peak-to-valley loss (worst drawdown) for US
stocks and US bonds were August 2000 through September 2002 and May 2003
through July 2003, respectively. (9)Sharpe ratio is calculated using the
3 month USD LIBOR Index risk-free rate over the period analyzed. Where an
investment has underperformed the risk-free rate, the Sharpe ratio will
be negative. Because the Sharpe ratio is an absolute measure of
risk-adjusted return, negative Sharpe ratios are shown as N/A, as they
may be misleading. Financial statistics that assume a normal distribution
of returns from an investment strategy, such as standard deviation,
correlation and Sharpe ratio, may underrepresent the risk of sizeable
rapid losses from such investment strategy. In order for a portfolio
consisting of stocks, bonds, 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.
IF THE AHL DIVERSIFIED PROGRAM IS SUCCESSFUL, IT COULD ADD BENEFICIAL
DIVERSIFICATION TO A PORTFOLIO.
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.
Pt. II-10
AHL DIVERSIFIED PROGRAM
APRIL 3, 1998 TO MAY 31, 2008
THESE GRAPHS REPRESENT THE PERFORMANCE OF ONLY THE AHL DIVERSIFIED PROGRAM.
MAN-AHL 130 ALSO INVESTS IN THE MAN-GLENWOOD FUNDS.
(PERFORMANCE GRAPH)
Average return during Average return during Average return
U.S. stocks up quarters U.S. stocks down quarters during all quarters
----------------------- ------------------------- -------------------
AHL Diversified Program(1) 0.8% 8.2% 3.6%
U.S. stocks(2) 6.2% -7.1% 1.2%
U.S. bonds(3) 0.8% 2.9% 1.6%
(PERFORMANCE GRAPH)
Average return during Average return during Average return
U.S. bonds up quarters U.S. bonds down quarters during all quarters
---------------------- ------------------------ -------------------
AHL Diversified Program(1) 4.4% 2.0% 3.6%
U.S. stocks(2) 0.3% 3.2% 1.2%
U.S. bonds(3) 3.4% -2.1% 1.6%
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.
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
June 1998. 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.
Pt. II-11
Performance used in these charts is for illustrative purposes only and does
not reflect the performance of Man-AHL 130.
(1) The AHL Diversified Program performance information set forth above
represents the unaudited composite results of all accounts available to US
investors traded pursuant to the AHL Diversified Program from April 3, 1998
through May 31, 2008. Creating a composite of 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. The returns
for 2008 are estimated, unaudited and subject to change.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. This performance does not represent the performance of Man-AHL
130. There are inherent limitations in any comparison between a managed
portfolio and a passive index. Each index is unmanaged and does not incur
management fees, transaction costs or other expenses associated with a
managed portfolio. (2)US stocks: S&P 500 Total Return Index (dividends
reinvested). (3)US bonds: Citigroup High Grade Corporate Bond Index
(total return).
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Pt. II-12
AHL DIVERSIFIED PROGRAM
APRIL 3, 1998 TO MAY 31, 2008
THESE GRAPHS REPRESENT THE PERFORMANCE OF ONLY THE AHL DIVERSIFIED PROGRAM.
MAN-AHL 130 ALSO INVESTS IN THE MAN-GLENWOOD FUNDS.
1-YEAR CUMULATIVE ROLLING RETURNS ANALYSIS
(PERFORMANCE GRAPH)
12 month
cumulative
rolling
return
----------
31-Mar-98
30-Apr-98
31-May-98
30-Jun-98
31-Jul-98
31-Aug-98
30-Sep-98
31-Oct-98
30-Nov-98
31-Dec-98
31-Jan-99
28-Feb-99
31-Mar-99 18.30%
30-Apr-99 31.64%
31-May-99 19.08%
30-Jun-99 17.37%
31-Jul-99 15.54%
31-Aug-99 1.83%
30-Sep-99 0.64%
31-Oct-99 -5.23%
30-Nov-99 0.31%
31-Dec-99 1.02%
31-Jan-00 6.62%
29-Feb-00 3.97%
31-Mar-00 6.79%
30-Apr-00 -2.99%
31-May-00 5.40%
30-Jun-00 2.14%
31-Jul-00 -1.09%
31-Aug-00 1.83%
30-Sep-00 -1,52%
31-Oct-00 10.14%
30-Nov-00 11.08%
31-Dec-00 16.72%
31-Jan-01 18.26%
28-Feb-01 19.93%
31-Mar-01 35.15%
30-Apr-01 26.71%
31-May-01 20.86%
30-Jun-01 24.13%
31-Jul-01 32.08%
31-Aug-01 35.34%
30-Sep-01 49.44%
31-Oct-01 50.35%
30-Nov-01 27.32%
31-Dec-01 14.56%
31-Jan-02 8.46%
28-Feb-02 1.26%
31-Mar-02 -7.74%
30-Apr-02 -1.53%
31-May-02 2.82%
30-Jun-02 17.64%
31-Jul-02 19.84%
31-Aug-02 13.55%
30-Sep-02 12.36%
31-Oct-02 -2.13%
30-Nov-02 0.08%
31-Dec-02 11.44%
31-Jan-03 25.45%
28-Feb-03 41.60%
31-Mar-03 29.68%
30-Apr-03 34.16%
31-May-03 44.62%
30-Jun-03 22.47%
31-Jul-03 15.05%
31-Aug-03 13.31%
30-Sep-03 8.94%
31-Oct-03 22.39%
30-Nov-03 27.86%
31-Dec-03 22.82%
31-Jan-04 14.66%
29-Feb-04 11.65%
31-Mar-04 19.17%
30-Apr-04 8.91%
31-May-04 -3.09%
30-Jun-04 -4.54%
31-Jul-04 -3.49%
31-Aug-04 -1.76%
30-Sep-04 -1.63%
31-Oct-04 0.53%
30-Nov-04 9.96%
31-Dec-04 3.13%
31-Jan-05 -2.66%
28-Feb-05 -4.30%
31-Mar-05 -2.65%
30-Apr-05 2.57%
31-May-05 8.34%
30-Jun-05 18.59%
31-Jul-05 19.16%
31-Aug-05 21.78%
30-Sep-05 22.74%
31-Oct-05 16.53%
30-Nov-05 14.11%
31-Dec-05 12.38%
31-Jan-06 22.48%
28-Feb-06 15.69%
31-Mar-06 20.42%
30-Apr-06 29.50%
31-May-06 19.51%
30-Jun-06 11.76%
31-Jul-06 6.94%
31-Aug-06 5.88%
30-Sep-06 1.03%
31-Oct-06 2.59%
30-Nov-06 -0.42%
31-Dec-06 4.72%
31-Jan-07 3.68%
28-Feb-07 0.53%
31-Mar-07 -5.41%
30-Apr-07 -3.62%
31-May-07 4.47%
30-Jun-07 12.14%
31-Jul-07 13.42%
31-Aug-07 5.29%
30-Sep-07 14.28%
31-Oct-07 19.86%
30-NOV-07 16.46%
31-Dec-07 12.72%
31-Jan-08 14.79%
29-Feb-08 30.71%
31-Mar-08 34.63%
30-Apr-08 24.32%
31-May-08 24.68%
3-YEAR CUMULATIVE ROLLING RETURNS ANALYSIS
(PERFORMANCE GRAPH)
3 year
cumulative
rolling
return
----------
31-Mar-98
30-Apr-98
31-May-98
30-Jun-98
31-Jul-98
31-Aug-98
30-Sep-98
31-Oct-98
30-Nov-98
31-Dec-98
31-Jan-99
28-Feb-99
31-Mar-99
30-Apr-99
31-May-99
30-Jun-99
31-Jul-99
31-Aug-99
30-Sep-99
31-Oct-99
30-Nov-99
31-Dec-99
31-Jan-00
29-Feb-00
31-Mar-00
30-Apr-00
31-May-00
30-Jun-00
31-Jul-00
31-Aug-00
30-Sep-00
31-Oct-00
30-Nov-00
31-Dec-00
31-Jan-01
28-Feb-01
31-Mar-01 70.73%
30-Apr-01 61.82%
31-May-01 51.70%
30-Jun-01 48.80%
31-Jul-01 50.95%
31-Aug-01 40.33%
30-Sep-01 48.11%
31-Oct-01 56.94%
30-Nov-01 41.85%
31-Dec-01 35.08%
31-Jan-02 36.75%
28-Feb-02 26.27%
31-Mar-02 33.15%
30-Apr-02 21.05%
31-May-02 30.98%
30-Jun-02 49.14%
31-Jul-02 56.56%
31-Aug-02 56.49%
30-Sep-02 65.37%
31-Oct-02 62.07%
30-Nov-02 41.54%
31-Dec-02 49.02%
31-Jan-03 60.90%
28-Feb-03 71.97%
31-Mar-03 61.69%
30-Apr-03 67.40%
31-May-03 79.72%
30-Jun-03 78.83%
31-Jul-03 82.11%
31-Aug-03 74.13%
30-Sep-03 82.93%
31-Oct-03 80.09%
30-Nov-03 62.92%
31-Dec-03 56.81%
31-Jan-04 56.01%
29-Feb-04 60.10%
31-Mar-04 42.58%
30-Apr-04 43.88%
31-May-04 44.11%
30-Jun-04 37.53%
31-Jul-04 33.08%
31-Aug-04 26.40%
30-Sep-04 20.41%
31-Oct-04 20.41%
30-Nov-04 40.71%
31-Dec-04 41.16%
31-Jan-05 40.02%
28-Feb-05 51.30%
31-Mar-05 50.44%
3O-Apr-05 49.87%
31-May-05 51.84%
30-Jun-05 38.65%
31-Jul-05 32.32%
31-Aug-05 35.56%
30-Sep-05 31.52%
31-Oct-05 43.38%
30-Nov-05 60.44%
31-Dec-05 42.35%
31-Jan-06 36.71%
28-Feb-06 23.61%
31-Mar-06 39.70%
30-Apr-06 44.67%
31-May-06 25.47%
30-Jun-06 26.52%
31-Jul-06 22.99%
31-Aug-06 26.67%
30-Sep-06 21.97%
31-Oct-06 20.19%
30-Nov-06 24.95%
31-Dec-06 21.37%
31-Jan-07 23.61%
28-Feb-07 11.31%
31-Mar-07 10.88%
30-Apr-07 28.03%
31-May-07 35.27%
30-Jun-07 48.63%
31-Jul-07 44.54%
31-Aug-07 35.76%
30-Sep-07 41.70%
31-Oct-07 43.30%
30-NOV-07 32.33%
31-Dec-07 32.65%
31-Jan-08 45.76%
29-Feb-08 52.03%
31-Mar-08 53.34%
30-Apr-08 55.17%
31-May-08 55.67%
These charts cover the same period of time, but present two different rate
of return cycles. The first chart presents the cumulative rolling returns of the
AHL Diversified Program for all periods of twelve consecutive months from April
3, 1998 to May 31, 2008. The second chart presents the cumulative rolling
returns of the AHL Diversified Program for all periods of thirty-six consecutive
months from April 3, 1998 to May 31, 2008. 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.
Pt. II-13
The AHL Diversified Program performance information set forth above
represents the unaudited composite results of all accounts available to US
investors traded pursuant to the AHL Diversified Program from April 3, 1998
through May 31, 2008. Creating a composite of 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. The returns for 2008 are estimated, unaudited and subject
to change.
Notes: Source: Man database. There are risks inherent in futures trading
programs and funds of hedge funds, including risks due to the lack of a
secondary trading market, the lack of ability to transfer interests in
the trading programs and in the funds and the use of leverage. This
performance does not represent the performance of Man-AHL 130.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Pt. II-14
MAN-GLENWOOD LEXINGTON, LLC
THIS GRAPH REPRESENTS THE PERFORMANCE OF ONLY THE MAN-GLENWOOD FUNDS.
MAN-AHL 130 ALSO INVESTS IN THE AHL DIVERSIFIED PROGRAM.
Man-Glenwood(1) performance summary as of May 31, 2008
(PERFORMANCE GRAPH)
Citigroup
Man-Glenwood High Grade
Lexington LLC (Illegible) Corp Bond TR
------------- ----------- ------------
31-Dec-92 1000.00 1000.00 1000.00
31-Jan-93 1008.95 1008.36 1025.03
28-Feb-93 1018.52 1022.10 1051.25
31-Mar-93 1047.92 1043.67 1053.90
30-Apr-93 1084.83 1018.44 1059.38
31-May-93 1107.64 1045.69 1061.53
30-Jun-93 1145.17 1048.75 1092.67
31-Jul-93 1162.97 1044.53 1103.58
31-Aug-93 1194.28 1084.16 1135.30
30-Sep-93 1186.95 1075.85 1140.20
31-Oct-93 1206.24 1098.10 1146.01
30-Nov-93 1209.92 1087.64 1124.49
31-Dec-93 1268.80 1100.79 1132.05
31-Jan-94 1291.95 1138.21 1154.97
28-Feb-94 1261.72 1107.32 1121.98
31-Mar-94 1242.19 1059.04 1079.02
30-Apr-94 1231.32 1072.62 1068.58
31-May-94 1251.88 1090.22 1061.91
30-Jun-94 1257.74 1063.50 1053.32
31-Jul-94 1257.71 1098.42 1085.87
31-Aug-94 1261.83 1143.46 1082.52
30-Sep-94 1267.00 1115.50 1053.81
31-Oct-94 1253.44 1140.56 1048.57
30-Nov-94 1233.49 1099.02 1050.49
31-Dec-94 1230.81 1115.32 1067.03
31-Jan-95 1224.90 1144.25 1094.40
28-Feb-95 1224.11 1188.84 1126.03
31-Mar-95 1240.48 1223.92 1136.72
30-Apr-95 1258.98 1259.96 1156.63
31-May-95 1273.77 1310.32 1229.58
30-Jun-95 1273.99 1340.75 1239.26
31-Jul-95 1298.10 1385.22 1226.79
31-Aug-95 1339.59 1388.70 1252.99
30-Sep-95 1352.31 1447.30 1272.12
31-Oct-95 1355.40 1442.13 1295.69
30-Nov-95 1362.12 1505.44 1327.06
31-Dec-95 1384.60 1534.44 1357.28
31-Jan-96 1410.04 1586.66 1359.14
29-Feb-96 1420.47 1601.37 1308.42
31-Mar-96 1444.61 1616.79 1291.35
30-Apr-96 1464.52 1640.62 1270.75
31-May-96 1497.81 1682.93 1271.40
30-Jun-96 1500.51 1689.36 1293.29
31-Jul-96 1464.04 1614.72 1294.54
31-Aug-96 1496.21 1648.78 1285.47
30-Sep-96 1495.54 1741.58 1318.72
31-Oct-96 1513.38 1789.62 1366.39
30-Nov-96 1548.71 1924.89 1402.29
31-Dec-96 1562.71 1886.75 1376.19
31-Jan-97 1603.32 2004.62 1372.28
28-Feb-97 1631.15 2020.33 1376.15
31-Mar-97 1632.27 1937.32 1345.78
30-Apr-97 1612.44 2052.98 1370.49
31-May-97 1661.24 2177.97 1388.07
30-Jun-97 1707.07 2275.54 1414.01
31-Jul-97 1777.23 2456.60 1488.73
31-Aug-97 1794.68 2318.98 1453.01
30-Sep-97 1850.44 2445.98 1485.91
31-Oct-97 1841.19 2364.29 1514.22
30-Nov-97 1845.31 2473.74 1529.56
31-Dec-97 1863.07 2516.23 1554.55
31-Jan-98 1841.64 2544.06 1575.84
28-Feb-98 1875.99 2727.55 1574.73
31-Mar-98 1923.68 2867.22 1580.69
30-Apr-98 1947.21 2896.07 1589.04
31-May-98 1969.12 2846.29 1615.53
30-Jun-98 1963.71 2961.90 1634.03
31-Jul-98 1964.51 2930.37 1624.90
31-Aug-98 1949.83 2506.70 1639.31
30-Sep-98 1916.92 2667.28 1706.98
31-Oct-98 1904.71 2884.24 1674.62
30-Nov-98 1945.94 3059.05 1719.85
31-Dec-98 1978.62 3235.33 1721.64
31-Jan-99 1997.82 3370.62 1742.74
28-Feb-99 2015.30 3265.86 1672.90
31-Mar-99 2032.24 3396.53 1673.32
30-Apr-99 2093.32 3528.06 1669.28
31-May-99 2114.84 3444.75 1639.91
30-Jun-99 2180.16 3635.92 1613.68
31-Jul-99 2201.28 3522.39 1595.44
31-Aug-99 2200.97 3504.97 1591.24
30-Sep-99 2238.56 3408.88 1606.07
31-Oct-99 2260.51 3624.60 1613.67
30-Nov-99 2318.02 3698.28 1609.85
31-Dec-99 2399.09 3916.09 1593.45
31-Jan-00 2429.02 3719.34 1590.09
29-Feb-00 2458.89 3648.93 1604.74
31-Mar-00 2492.32 4005.90 1631.92
30-Apr-00 2503.21 3885.38 1613.21
31-May-00 2552.32 3805.67 1587.29
30-Jun-00 2570.98 3899.49 1639,02
31-Jul-00 2616.59 3838.52 1668.39
31-Aug-00 2659.63 4076.95 1690.93
30-Sep-00 2687.27 3861.71 1698.79
31-Oct-00 2715.54 3845.39 1706.43
30-Nov-00 2747.16 3542.22 1751.24
31-Dec-00 2795.46 3559.56 1798.48
31-Jan-01 2822.12 3685.85 1863.04
28-Feb-01 2858.90 3349.77 1886.76
31-Mar-01 2901.43 3137.56 1881.25
30-Apr-01 2897.91 3381.38 1857.11
31-May-01 2920.19 3404.03 1881.67
30-Jun-01 2923.48 3321.18 1892.09
31-Jul-01 2937.07 3288.49 1960.36
31-Aug-01 2964.33 3082.62 1991.04
30-Sep-01 2971.22 2833.69 1960.75
31-Oct-01 2977.31 2887.73 2046.49
30-Nov-01 2982.36 3109.24 2008.02
31-Dec-01 2995.98 3136.47 1989.98
31-Jan-02 3025.64 3090.70 2024.76
28-Feb-02 3038.37 3031.10 2051.17
31-Mar-02 3044.68 3145.10 1990.71
30-Apr-02 3069.56 2954.41 2041.07
31-May-02 3092.06 2932.65 2064.16
30-Jun-02 3077.98 2723.76 2079.21
31-Jul-02 3015.41 2511.43 2098.67
31-Aug-02 3029.28 2527.92 2193.53
30-Sep-02 3004.67 2253.18 2265.86
31-Oct-02 3009.93 2451.50 2211.55
30-Nov-02 3033.12 2595.79 2234.33
31-Dec-02 3055.95 2443.30 2315.02
31-Jan-03 3066.54 2379.29 2319.82
28-Feb-03 3063.68 2343.59 2380.97
31-Mar-03 3061.43 2366.35 2361.94
3O-Apr-03 3083.81 2561.26 2416.14
31-May-03 3105.11 2696.21 2529.88
30-Jun-03 3116.15 2730.60 2493.68
31-Jul-03 3129.48 2778.75 2273.92
31-Aug-03 3135.84 2832.94 2323.66
30-Sep-03 3143.63 2802.86 2440.58
31-Oct-03 3173.50 2961.41 2391.14
30-Nov-03 3182.18 2987.47 2403.53
31-Dec-03 3188.85 3144.15 2436.94
31-Jan-04 3214.59 3201.86 2482.44
29-Feb-04 3224.69 3246.36 2526.72
31-Mar-04 3224.06 3197.39 2556.44
30-Apr-04 3216.59 3147.19 2419.86
31-May-04 3199.11 3190.38 2402.60
30-Jun-04 3190.17 3252.42 2425.05
31-Jul-04 3158.92 3144.77 2469.75
31-Aug-04 3153.30 3157.49 2567.29
30-Sep-04 3159.75 3191.69 2593.21
31-Oct-04 3174.38 3240.45 2635.69
30-Nov-04 3212.50 3371.56 2583.00
31-Dec-04 3247.30 3486.29 2649.47
31-Jan-05 3234.31 3401.32 2722.75
28-Feb-05 3255.71 3472.89 2692.36
31-Mar-05 3238.58 3411.39 2658.84
30-Apr-05 3190.33 3346.69 2745.69
31-May-05 3201.50 3453.18 2826.74
30-Jun-05 3256.82 3458.08 2866.61
31-Jul-05 3305.78 3586.69 2796.65
31-Aug-05 3322.31 3553.96 2861.76
30-Sep-05 3353.20 3582.74 2772.92
31-Oct-05 3289.16 3523.02 2716.34
30-Nov-05 3350.67 3656.27 2743.18
31-Dec-05 3421.70 3657.54 2804.99
31-Jan-06 3595.18 3754.38 2779.03
28-Feb-06 3592.79 3764.57 2814.55
31-Mar-06 3674.67 3811.43 2700.75
30-Apr-06 3765.14 3862.61 2640.28
31-May-06 3629.41 3751.44 2634.92
30-Jun-06 3583.50 3756.52 2645.16
31-Jul-06 3527.57 3779.69 2707.92
31-Aug-06 3548.66 3869.62 2805.59
30-Sep-06 3429.07 3969.35 2857.05
31-Oct-06 3484.97 4098.69 2893.37
30-Nov-06 3566.17 4176.63 2964.65
31-Dec-06 3613.95 4235.22 2895.97
31-Jan-07 3652.99 4299.27 2881.21
28-Feb-07 3656.64 4215.18 2964.00
31-Mar-07 3718.08 4262.33 2895.65
30-Apr-07 3770.51 4451.13 2936.32
31-May-07 3845.16 4606.45 2884.14
30-Jun-07 3852.85 4529.92 2841.33
31-Jul-07 3833.59 4389.47 2832.18
31-Aug-07 3746.95 4455.27 2875.18
30-Sep-07 3778.05 4621.89 2914.13
31-Oct-07 3892.90 4695.41 2939.68
30-Nov-07 3865.23 4499.11 2962.79
31-Dec-07 3887.29 4467.90 2971.19
31-Jan-08 3829.76 4199.91 2976.21
29-Feb-08 3814.44 4063.47 2955.09
31-Mar-08 3703.82 4045.93 2937.68
30-Apr-08 3731.78 4242.98 2964.43
31-May-08 3786.64 4297.93 2882.22
MAN-GLENWOOD(1) US STOCKS(2) US BONDS(3)
---------------- --------------- ---------------
Total return 278.7% 329.8% 188.2%
Annualized return 9.0% 9.9% 7.1%
Annualized volatility(4) 4.8% 13.6% 7.3%
Sharpe ratio(5) 0.94 0.45 0.39
Largest peak-to-valley loss (worst drawdown) -8.9% -44.7% -10.1%
Period of largest peak-to valley loss (worst drawdown) Apr 06 to Sep 06 Aug 00 to Sep 02 May 03 to Jul 03
Months to recovery 7 49 8
This chart represents the pre-tax growth of a theoretical $1,000 investment
in Man-Glenwood(1) as well as in US stocks and US bonds from January 1, 1993
through May 31, 2008. The performance of Man-Glenwood Lexington TEI, LLC is
substantially similar, as demonstrated by the Performance Summary in the
Appendix to the Prospectus. Man-AHL 130's Man-Glenwood Funds investment
represents somewhat less than 25% Man-AHL 130's total market allocations and
between 4% and 11% of its total market exposure.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. This performance does not represent the performance of Man-AHL
130. There are inherent limitations in any comparison between a managed
portfolio and a passive index. Each index is unmanaged and does not incur
management fees, transaction costs or other expenses associated with a
managed portfolio. (1)Man-Glenwood: these graphs present the past
performance of (i) the private fund described on page Pt. II-6 from
January 1, 1993 to December 31, 2002; (ii) the Portfolio Company
described on page Pt. II-6 from January 1, 2003 to March 31, 2003 and
(iii) Man-Glenwood Lexington, LLC thereafter. Returns for 2008 are
estimated and unaudited. The fees, leverage and exact mix of managers
have varied over time. The performance does not reflect a deduction of
any sales load. There are numerous risks inherent in hedge fund
investing. (2)US stocks: S&P 500 Total Return Index (dividends
reinvested). (3)US bonds: Citigroup High Grade Corporate Bond Index
(total return). (4)Annualized volatility is standard deviation on a
yearly basis. Standard deviation is a widely used measurement of risk,
representing volatility derived by calculating the square root of the
variance of the returns of an investment from their arithmetic mean.
(5)Sharpe ratio is calculated using the 3 month USD LIBOR Index risk-free
rate over the period analyzed. Where an investment has underperformed the
risk-free rate, the Sharpe ratio will be negative. Because the Sharpe
ratio is an absolute measure of risk-adjusted return, negative Sharpe
ratios are shown as N/A, as they can be misleading. Financial statistics
that assume a normal distribution of returns from an investment strategy,
such as standard deviation, correlation and Sharpe ratio, may
underrepresent the risk of sizeable rapid losses from such investment
strategy. Index returns are shown for comparison purposes. There are
inherent limitations in any comparison between a managed portfolio and a
passive index. Each index is unmanaged and does not incur management
fees, transaction costs or other expenses associated with a managed
portfolio.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Pt. II-15
MAN-GLENWOOD LEXINGTON, LLC
MAN-GLENWOOD(1) PORTFOLIO ALLOCATIONS AS OF May 31, 2008
THIS GRAPH REPRESENTS THE PORTFOLIO ALLOCATIONS OF THE MAN-GLENWOOD FUNDS.
MAN-AHL 130 ALSO INVESTS IN THE AHL DIVERSIFIED PROGRAM.
(PIE CHART)
1 Event Driven 26.5%
2 Commodity & Macro 25.8%
3 Equity Hedge 15.4%
4 Variable Equity 14.8%
5 Distressed & Credit 9.4%
6 Relative Value 6.8%
7 Cash and Equivalents 1.4%
This pie chart illustrates the Man-Glenwood Funds' portfolio allocations
among various alternative investment strategies as of May 31, 2008. Man-AHL
130's Man-Glenwood Funds investment represents somewhat less than 25% of Man-AHL
130's total market allocations and between 4% and 11% of its total market
exposure.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. This performance does not represent the performance of Man-AHL
130.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Pt. II-16
CORRELATION MATRIX
CORRELATION OF MONTHLY RETURNS: APRIL 3,1998 TO MAY 31, 2008
AHL Diversified
US bonds(4) US stocks(3) Man-Glenwood(2) Program(1)
----------- ------------ --------------- ---------------
AHL Diversified Program(1) 0.15 -0.31 0.24 1.00
Man-Glenwood(2) -0.12 0.25 1.00
US stocks(3) -0.07 1.00
US bonds(4) 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.
(1) The AHL Diversified Program performance information set forth above
represents the unaudited composite results of all accounts available to US
investors traded pursuant to the AHL Diversified Program from April 3, 1998
through May 31, 2008. Creating a composite of 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. Returns of
the individual accounts for 2008 are estimated, unaudited and subject to
change.
Notes: Source: Man database and Bloomberg. There are risks inherent in futures
trading programs and funds of hedge funds, including risks due to the
lack of a secondary trading market, the lack of ability to transfer
interests in the trading programs and in the funds and the use of
leverage. This performance does not represent the performance of Man-AHL
130. There are inherent limitations in any comparison between a managed
portfolio and a passive index. Each index is unmanaged and does not incur
management fees, transaction costs or other expenses associated with a
managed portfolio.
(2) Man-Glenwood represents the past performance of (i) the private fund
described on page Pt. II-6 from January 1, 1993 to December 31, 2002; (ii)
the Portfolio Company described on page Pt. II-6 from January 1, 2003 to
March 31, 2003 and (ii) Man-Glenwood Lexington, LLC thereafter.
(3) US stocks: S&P 500 Total Return Index (dividends reinvested).
(4) US bonds: Citigroup High Grade Corporate Bond Index (total return).
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
Pt. II-17
MAN-AHL 130, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of
November 1, 2007
MAN INVESTMENTS (USA) CORP.
MANAGING MEMBER
MAN-AHL 130, LLC
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I DEFINITIONS.................................................... A-1
ARTICLE II ORGANIZATION; ADMISSION OF MEMBERS............................ A-4
Section 2.1 Continuation of Limited Liability Company................. A-4
Section 2.2 Name...................................................... A-4
Section 2.3 Principal and Registered Office........................... A-4
Section 2.4 Duration.................................................. A-4
Section 2.5 Business of Man-AHL 130................................... A-5
Section 2.6 Members................................................... A-5
ARTICLE III NET WORTH OF MANAGING MEMBER................................. A-5
ARTICLE IV CAPITAL CONTRIBUTIONS; UNITS.................................. A-6
ARTICLE V ALLOCATION OF PROFITS AND LOSSES............................... A-6
Section 5.1 Capital Accounts and Allocations.......................... A-6
Section 5.2 Allocation of Profit and Loss for Federal Income Tax
Purposes.................................................. A-6
Section 5.3 Organizational and Initial Offering Costs; Operating
Costs; Management and Client Servicing Fees; Costs and
Fees of Underlying Investments............................ A-8
Section 5.4 Taxes..................................................... A-9
Section 5.5 Managing Member Services; Direct Expenses; Reserves....... A-9
Section 5.6 Limited Liability of Members.............................. A-9
Section 5.7 Return of Capital Contributions........................... A-9
ARTICLE VI MANAGEMENT OF MAN-AHL 130..................................... A-10
Section 6.1 Management of Man-AHL 130................................. A-10
Section 6.2 Compliance with the NASAA Guidelines...................... A-10
ARTICLE VII AUDITS AND REPORTS TO MEMBERS................................ A-11
ARTICLE VIII ASSIGNABILITY OF UNITS...................................... A-11
ARTICLE IX REDEMPTIONS................................................... A-12
ARTICLE X OFFERING OF UNITS.............................................. A-13
ARTICLE XI ADDITIONAL OFFERINGS; DIFFERENT BUSINESS TERMS................ A-13
Section 11.1 Additional Offerings...................................... A-13
Section 11.2 Different Business Terms.................................. A-13
ARTICLE XII SPECIAL POWER OF ATTORNEY.................................... A-14
ARTICLE XIII DISSOLUTION................................................. A-14
ARTICLE XIV STANDARD OF LIABILITY; INDEMNIFICATION....................... A-15
Section 14.1 Standard of Liability for the Managing Member............. A-15
Section 14.2 Indemnification of the Managing Member by Man-AHL 130..... A-15
Section 14.3 Indemnification of Man-AHL 130 by the Members............. A-16
ARTICLE XV AMENDMENTS; MEETINGS.......................................... A-16
Section 15.1 Amendments with Consent of the Managing Member............ A-16
Section 15.2 Amendments and Actions without Consent of the Managing
Member.................................................... A-17
Section 15.3 Meetings; Other Voting Matters............................ A-17
Section 15.4 Opportunity to Redeem..................................... A-17
ARTICLE XVI GOVERNING LAW................................................ A-18
ARTICLE XVII MISCELLANEOUS............................................... A-18
Section 17.1 Notices................................................... A-18
Section 17.2 Binding Effect............................................ A-18
Section 17.3 Captions.................................................. A-18
A-i
MAN-AHL 130, LLC
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of Man-AHL
130, LLC ("Man-AHL 130"), dated as of November 1, 2007, by and among Man
Investments (USA) Corp., as the Managing Member, and those Persons admitted and
hereafter admitted as Members.
WITNESSETH:
WHEREAS, Man-AHL 130 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, Man-AHL 130 shall operate subject to the regulations relating to
"commodity pools" as promulgated by the Commodity Futures Trading Commission
("CFTC") and the National Futures Association ("NFA");
WHEREAS, Man-AHL 130 shall trade the AHL Diversified Program (as herein
defined), a highly-leveraged speculative managed futures program; and
WHEREAS, Man-AHL 130 shall invest a limited portion of its capital in the
Man-Glenwood Funds (as herein defined), 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 Man-AHL 130, means SEI Global Services
Inc. or such other entity as the Managing Member may select from time to time to
provide administrative services to Man-AHL 130 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.
"CAPITAL ACCOUNT" -- With respect to each Unit, the Capital Account
established and maintained on behalf of such Unit pursuant to SECTION 5.1. For
tax purposes, each Member shall be deemed to have a single Capital Account, but
the financial allocations of Man-AHL 130 shall be accounted for on a per-Unit
basis.
A-1
"CERTIFICATE" -- The Certificate of Formation of Man-AHL 130 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. Class A and Class B Units initially authorized invest in the
same AHL Diversified Program and cash and cash equivalents; however, Class B
Units invest a limited portion of their capital in Class A units of Man-Glenwood
Lexington TEI, LLC while Class A Units invest in Man-Glenwood Lexington, LLC.
"CLIENT SERVICING FEE"-- See SECTION 5.3(C).
"CLOSING DATE" -- Each date on or as of which Units are issued.
"CODE" -- The Internal Revenue Code of 1986, as amended from time to time,
or any successor law.
"COMMODITY EXCHANGE ACT" -- The Commodity Exchange Act, as amended from
time to time, or any successor law.
"DELAWARE ACT" -- The Delaware Limited Liability Company Act, as 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 successor law.
"FISCAL PERIOD" -- The period commencing on each Closing Date 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 the next succeeding year, unless
and until the Managing Member shall elect another Fiscal Year for Man-AHL 130.
"FUTURES" -- Exchange-traded as well as over-the-counter investments
providing for the future delivery of any form of commodity, currency, other
instruments or the cash value thereof.
"INVESTMENT COMPANY ACT" -- The Investment Company Act of 1940, as amended.
"INVESTOR APPLICATION FORM" -- The Class appropriate agreement submitted by
all Persons wishing to acquire Units. All Investor Application Forms are subject
to acceptance by the Managing Member.
"MAJORITY IN INTEREST" -- Members whose Units, when aggregated, exceed 50%
of the aggregate Unit NAV of all outstanding Units.
"MAN-AHL 130" -- The limited liability company governed hereby, as such
limited liability company may from time to time be constituted.
"MAN-GLENWOOD FUNDS" -- In the case of 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 Class B Units,
Class A units of 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 difference between Man-
A-2
Glenwood Lexington, LLC and Man-Glenwood Lexington TEI, LLC being that 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 Class A units
of Man-Glenwood Lexington TEI, LLC, shall not recognize UBTI on such investment.
"MANAGEMENT FEE" -- See SECTION 5.3(B).
"MANAGING MEMBER" -- Man Investments (USA) Corp. or such additional or
successor Managing Member(s), which shall be Man-AHL 130's manager(s) for
purposes of the Delaware Act, as shall be designated from time to time pursuant
to the provisions of ARTICLE VI.
"MEMBER" -- Any Person who shall have been admitted to Man-AHL 130 as a
member (including any Managing Member in such Person's capacity as a member of
Man-AHL 130 but excluding any Managing Member in such Person's capacity as a
manager of Man-AHL 130 for purposes of the Delaware Act) until Man-AHL 130
redeems all the Units of such Person pursuant to ARTICLE IX or a substituted
member or members are admitted with respect to any such Person's Units pursuant
to ARTICLE IX.
"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 Man-AHL 130, less all
accrued debts, liabilities and obligations of Man-AHL 130, calculated before
giving effect to any redemptions of Units as of the date of determination. The
Net Asset Value of Man-AHL 130 shall 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 a
Series of Class A Units or a Series of Class B Units of Man-AHL 130 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 of such
Series of Class A Units or Class B Units as of the commencement of the same
Fiscal Period. Net Profit or Net Loss should be determined separately for each
Series of Class A Units and Class B Units.
"PERSON" -- Any individual, partnership, corporation, trust or other
entity.
"PROSPECTUS" -- The Prospectus of Man-AHL 130 included in the most recent
effective Registration Statement of Man-AHL 130, or Post-Effective Amendment
thereto, as supplemented from time to time.
"REDEMPTION DATE" -- The date (the last day of a calendar quarter) as of
which Man-AHL 130 values the Units for purposes of determining the price at
which such Units are to be redeemed by Man-AHL 130 pursuant to ARTICLE IX.
"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, Man-AHL 130 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 (i) investors participating in selling agent asset-based or
fixed-fee investment programs, or in investment advisors' fee-based advisory
programs, or (ii) direct institutional investors, including, but not limited to,
certain tax-exempt employee benefit trusts, employee benefit plans, deferred
compensation plans and individual retirement accounts who purchase Units through
the Selling Agent.
A-3
"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 Man-AHL 130.
"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" -- The 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 Class shall be an arbitrarily determined $100.
"UNITS" -- The units of limited liability company interest, each
representing an ownership interest in Man-AHL 130, including the rights and
obligations of a Member under this Agreement and the Delaware Act.
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS
SECTION 2.1 CONTINUATION OF LIMITED LIABILITY COMPANY
Man-AHL 130 was formed, at the direction of the Managing Member, and hereby
continues as a limited liability company. 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 Man-AHL 130 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 Man-AHL 130.
SECTION 2.2 NAME
The Company'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
Man-AHL 130 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.
Man-AHL 130 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 Man-AHL 130 commenced on the filing of the Certificate with the
Secretary of State of Delaware and shall continue until Man-AHL 130 is dissolved
pursuant to ARTICLE XIII.
A-4
SECTION 2.5 BUSINESS OF MAN-AHL 130
The business of Man-AHL 130 is to seek medium- to long-term capital
appreciation. Man-AHL 130 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 the Man-Glenwood Funds. Man-AHL
130 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 Man-AHL 130's objectives and business.
The Managing Member shall attempt to rebalance Man-AHL 130's portfolio
quarterly to maintain Man-AHL 130's investment in the Man-Glenwood Funds at
approximately 30% of Man-AHL 130's capital. The Managing Member shall use
commercially reasonable efforts to ensure that Man-AHL 130 does not invest more
than 30% of its capital (as determined as of the beginning of each calendar
quarter) in the Man-Glenwood Funds. The Managing Member may cause Man-AHL 130 to
invest less than 30% of its capital in the Man-Glenwood Funds if it deems it
necessary to do so in order to obtain margin-eligible assets for Man-AHL 130 or
for regulatory or tax requirements.
In furtherance of Man-AHL 130'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 Man-AHL 130 property;
(b) To do everything necessary, appropriate or desirable for the
accomplishment of any purpose or the attainment of any object or the furtherance
of any power referred to in this Agreement, either alone or in association with
others, and to do every other act or thing incidental to, arising out of or
connected with Man-AHL 130's businesses, purposes, objects or powers.
(c) To open, maintain and close one or more accounts (including bank,
brokerage, margin and clearing accounts).
SECTION 2.6 MEMBERS
Man-AHL 130 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; provided, however, that if Units of one Series are
initially issued after Units of the other Series have been issued, Units of such
Series shall initially be issued at the current Unit NAV of the other Series,
and provided further that if Units of one Class are initially issued after Units
of the other Class, Units of such Class shall initially be issued at the current
Unit NAV of the other Class. Units shall be available for investment as of the
beginning of each month; provided, that Man-AHL 130 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 Man-AHL 130 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 Man-AHL 130 as a Member
subject to the condition that such Person shall execute and deliver an Investor
Application Form 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 Investor Application Form, in whole or in part.
The Managing Member may, in its sole and absolute discretion, suspend or
terminate the offering of the Units at any time.
ARTICLE III
NET WORTH OF MANAGING MEMBER
The Managing Member agrees that as long as it remains Managing Member of
Man-AHL 130, it shall maintain its "Net Worth" (as determined in accordance with
the NASAA Guidelines) at an amount not less than $1,000,000.
A-5
ARTICLE IV
CAPITAL CONTRIBUTIONS; UNITS
The Members' respective capital contributions to Man-AHL 130 shall be as
shown on the books and records of Man-AHL 130.
The Managing Member shall have at all times a Capital Account equal to at
least 1% of the total Capital Accounts of Man-AHL 130 (including the Managing
Member's); provided, however, that the Managing Member's capital contribution to
Man-AHL 130 shall not be less than $25,000. 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; provided, however, that no
such withdrawal shall reduce the Managing Member's Capital Account below
$25,000.
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 shall be
non-voting, and shall not be considered outstanding for purposes of determining
a Majority in Interest.
ARTICLE V
ALLOCATION OF PROFITS AND LOSSES
SECTION 5.1 CAPITAL ACCOUNTS AND ALLOCATIONS
A Capital Account shall be established for each Class A Series 1 Unit,
Class A Series 2 Unit, Class B Series 1 Unit, Class B Series 2 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 respect of Class A Series 1 Units,
Class A Series 2 Units, Class B Series 1 Units, or Class B Series 2 Units in
Man-AHL 130's Net Assets as compared to the last such determination of Net
Assets shall be credited or charged to each such Class A Series 1 Unit, Class A
Series 2 Unit, Class B Series 1 Unit, or Class B Series 2 Unit pro rata (on a
Series by Series basis) 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, Man-AHL 130's income and expense and
capital gain or loss shall be separately determined for Members holding Class A
Series 1 Units, Class A Series 2 Units, Class B Series 1 Units, or Class B
Series 2 Units and shall be allocated among the Members holding Class A Series 1
Units, Class A Series 2 Units, Class B Series 1 Units, or Class B Series 2 Units
pursuant to the following provisions of this SECTION 5.2 for federal income tax
purposes.
(a) First, items of ordinary income and expense, determined separately for
each Series of Units, shall be allocated pro rata (on a Series by
Series basis) among Class A Series 1 Units, Class A Series 2 Units,
Class B Series 1 Units, and Class B Series 2 Units outstanding as of
the end of each month in which the items of ordinary income and
expense accrue.
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(b) Second, capital gain or loss shall be allocated as follows:
(i) There shall be established a tax account with respect to each
outstanding Class A Unit and Class B Unit. The balance of each
tax account shall be the amount paid to Man-AHL 130 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 Class A Unit and Class B 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 Class A Unit and Class B 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
Class A Units and Class B 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 Class A Unit or Class B 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 (a
"Redeemed Excess"), if any, up to the amount of the excess, if
any, of the amount received in respect of the Unit so redeemed
over the sum of the tax account (determined after making the
allocation described in SECTION 5.2(A) but prior to making the
allocations described in this SECTION 5.2(B)(II) and 5.2(B)(III))
attributable to such Unit. 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 Members in the
ratio which each such Member's Redeemed Excess bears to the
aggregate Redeemed 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 Class A
Units or Class B 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 (a "Continuing 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 Continuing Excess
bears to the aggregate Continuing 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 Class A Unit or Class B 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 (a "Redeemed Excess")
of the tax account (determined after making the allocations
described in SECTION 5.2(A), but prior to making the allocations
described in this SECTION 5.2(B)(IV) or SECTION 5.2(B)(V))
allocable to such Unit over the amount received in respect of
such Unit. 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
Redeemed Deficit bears to the aggregate Redeemed Deficit 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
(a "Continuing Deficit") of their Capital Accounts (determined
after making the allocations described in SECTION 5.2(A) with
respect to such Units in the ratio that each such Member's
Continuing Deficit bears to the aggregate
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Continuing Deficit of all such Members). Capital Loss remaining
after the allocation described in the preceding sentence shall be
allocated among all Members described in such sentence in
proportion to their holdings of such Units (taking into account
the different Net Asset Value of different Units).
(vi) For purposes of this SECTION 5.2, "Capital Gain" or "Capital
Loss" shall mean gain or loss characterized as gain or loss from
the sale or exchange of a capital asset, by the Internal Revenue
Code of 1986, as amended, including, but not limited to, gain or
loss required to be taken into account pursuant to Section 1256
thereof.
(vii) The Managing Member may elect, with respect to any given Fiscal
Year, to allocate Capital Gain and Capital Loss on a gross basis
rather than netting such Capital Gains and Capital Losses.
(c) The allocation of profit and loss for federal income tax purposes set
forth herein is intended to allocate taxable profit and loss among
Members generally in the ratio and to the extent that profit and loss
are allocated to the Members so as to eliminate, to the extent
possible, any disparity between each Member's Capital Account and such
Member's tax account, consistent with principles set forth in Section
704 of the 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 shall achieve more equitable allocations
or allocations more consistent with the Code.
(f) For the avoidance of doubt, profit and loss attributable to
investments made with respect to one Class of Units but not the other
shall be allocated solely among the Units of such Class.
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 Man-AHL 130 shall be
paid by the Managing Member or an Affiliate and shall not be borne by
Man-AHL 130.
(b) The Managing Member shall be entitled to receive 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 "Management Fee").
(c) The Selling Agent shall be entitled to receive a Client Servicing Fee
equal to 1/12 of 1.25% of the Unit NAV of each Class A Series 1 and
Class B Series 1 Unit calculated monthly and paid quarterly in arrears
for as long as such Unit remains outstanding; provided, however, that
once the Selling Agent has been paid Client Servicing Fees totaling
10% of such Unit's issue price, such Class A Series 1 or Class B
Series 1 Unit shall be redesignated as a Class A Series 2 or Class B
Series 2 Unit, or the appropriate multiple or 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, Class A Series 1 Unit would be redesignated as 0.80 of
a Class A Series 2 Unit (two such Series 1 Units being redesignated as
1.6 Series 2 Units). The maximum selling compensation payable
(including the Client Servicing Fee and any amounts paid for producer
visits, client seminars and any other compensation deemed to be an
"item of value" pursuant to
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NASD Conduct Rules 2710 and 2810) shall not exceed 10% of the
aggregate initial sales price of all Units sold (including Class A
Series 2 and Class B Series 2 Units).
(d) The AHL Diversified Program and the Man-Glenwood Funds shall be
subject to the fees and expenses described in the Prospectus.
(e) Man-AHL 130 shall bear all expenses incurred in connection with its
investment in cash and cash equivalents.
(f) In the event that Man-AHL 130 invests in any assets (including managed
investment programs) other than the AHL Diversified Program, the
Man-Glenwood Funds and cash or cash equivalents, Man-AHL 130 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
Man-AHL 130 shall bear all of any taxes applicable to it.
SECTION 5.5 MANAGING MEMBER SERVICES; DIRECT EXPENSES; RESERVES
Any goods and services, beyond the Management Fee described in the
Prospectus, provided to Man-AHL 130 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 Man-AHL 130
(including, without limitation, salaries, rent and travel expenses) shall be
charged to Man-AHL 130.
All of the expenses which are for Man-AHL 130's account shall be billed,
directly or indirectly, to Man-AHL 130.
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 non-assessable. Except as
otherwise provided by law, no Member shall be liable for Man-AHL 130 obligations
in excess of the capital contributed by such Member, plus such Member's share of
undistributed profits and assets. Except as provided under the Delaware Act, a
Managing Member shall not be liable for Man-AHL 130's debts, obligations or
liabilities.
SECTION 5.7 RETURN OF CAPITAL CONTRIBUTIONS
No Member or subsequent assignee shall have any right to demand the return
of its capital contribution or any profits added thereto, except through
redeeming Units or upon dissolution of Man-AHL 130, 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.
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ARTICLE VI
MANAGEMENT OF MAN-AHL 130
SECTION 6.1 MANAGEMENT OF MAN-AHL 130
The Managing Member, to the exclusion of all Members, shall control,
conduct and manage the business of Man-AHL 130. 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 Man-AHL 130 and the Members
pursuant to powers of attorney and supervise the liquidation of Man-AHL 130 if
an event causing dissolution of Man-AHL 130 occurs.
The Managing Member is hereby designated as the Tax Matters Member of
Man-AHL 130 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 Man-AHL 130 as
the Managing Member deems necessary or desirable to manage the business of
Man-AHL 130.
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 Man-AHL 130. Members may similarly engage in any such other business
activities. The Managing Member shall devote to Man-AHL 130 such time as the
Managing Member may deem advisable to conduct Man-AHL 130's business and
affairs.
SECTION 6.2 COMPLIANCE WITH THE NASAA GUIDELINES
The Managing Member may engage, and compensate on behalf of Man-AHL 130
from funds of Man-AHL 130, 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 Affiliate, as the Managing Member in its
sole judgment shall deem advisable for the conduct and operation of the business
of Man-AHL 130, provided, that no such arrangement shall allow brokerage
commissions paid by Man-AHL 130 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 Man-AHL 130'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 Man-AHL 130 in the best interests of Man-AHL 130. The Members shall 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 Man-AHL 130 and the use thereof for the benefit of Man-AHL 130. 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 Man-AHL 130 and in resolving conflicts of interest. Man-AHL 130's brokerage
arrangements shall be non-exclusive, and the brokerage commissions paid by
Man-AHL 130 shall be competitive. Man-AHL 130 shall seek the best price and
services available for its Futures transactions.
Man-AHL 130 shall make no loans to any party, and the funds of Man-AHL 130
shall 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
Man-AHL 130, unless approved by the Members in accordance with SECTION 15.1 of
this Agreement.
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If the Managing Member makes a loan to Man-AHL 130, 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 Man-AHL
130 (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 Man-AHL 130 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 Man-AHL 130, except for the various provisions of any selling
agreement which survive each closing of the sales of the Units, shall not exceed
one year. Any material change in Man-AHL 130's basic investment policies or
structure shall require the approval of a Majority in Interest. Any agreements
between Man-AHL 130 and the Managing Member or any Affiliate of the Managing
Member shall be terminable by Man-AHL 130 upon no more than 60 days' written
notice.
Man-AHL 130 is prohibited from employing the trading technique commonly
known as pyramiding. A trading manager or advisor of Man-AHL 130 taking into
account Man-AHL 130's open trade equity on existing positions in determining
generally whether to acquire additional Futures positions on behalf of Man-AHL
130 shall not be considered to be engaging in pyramiding.
ARTICLE VII
AUDITS AND REPORTS TO MEMBERS
Man-AHL 130's books shall be audited annually by an independent certified
public accountant. Man-AHL 130 shall 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 Man-AHL 130 for the Fiscal Year then ended, (ii) such
tax information relating to their investment in Man-AHL 130 as is necessary for
a Member to determine such Member's estimated tax liability in advance of April
15th of each year and (iii) such other annual and monthly information as the
CFTC may by regulation require. Definitive tax information shall not be
available until approximately August 15th of each year and Members shall be
required to request extensions to file their tax returns.
Members or their duly authorized representatives may inspect Man-AHL 130's
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 shall
not be for commercial purposes unrelated to such Member's interest as a Member
in Man-AHL 130.
The Managing Member shall calculate the approximate Net Asset Value per
Unit on a monthly basis and furnish such information upon request to any Member.
The Managing Member shall maintain and preserve all Man-AHL 130 records for
a period of not less than six (6) years.
ARTICLE VIII
ASSIGNABILITY OF UNITS
Each Member expressly agrees that it will not assign, transfer or dispose
of, by gift or otherwise, any of its Units or any part or all of its right,
title and interest in the capital or profits of Man-AHL 130 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 its right, title and interest
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in the capital or profits of Man-AHL 130 shall be effective against Man-AHL 130
or the Managing Member until the Managing Member receives the written notice of
the assignment; the Managing Member shall not be required to give any assignee
any rights hereunder prior to receipt of such notice. The Managing Member may,
in its sole discretion, waive any such notice. No such assignee, except with the
consent of the Managing Member, may become a substituted Member, nor shall the
estate or any beneficiary of a deceased Member or assignee have any right to
redeem Units from Man-AHL 130 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 Man-AHL 130 receive an opinion of counsel to the Managing Member that
such admission will not adversely affect the classification of Man-AHL 130 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 its assignor would otherwise have been entitled. No
assignment, transfer or disposition of Units shall be effective against Man-AHL
130 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
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
its 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 Man-AHL 130 (including Man-AHL 130's allocable share
of the liabilities, contingent or otherwise, of any entities in which Man-AHL
130 invests), except any liability to Members on account of their capital
contributions, have been paid or there remains property of Man-AHL 130
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 Man-AHL 130's total outstanding Units at any quarter-end (in
aggregate, not on a Class-by-Class basis), each redemption request shall be pro
rated so that no more than 15% of Man-AHL 130's total outstanding Units are
redeemed and (iv) in the event that Man-AHL 130 receives redemption requests in
excess of such 15% limitation for eight consecutive quarters, Man-AHL 130 shall
cease its trading and investment activities and shall 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,
Man-AHL 130 shall liquidate all open positions as expeditiously as possible and
suspend trading. Within seven business days after the date of suspension of
trading, the Managing Member (and any other Managing Members of Man-AHL 130)
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
Man-AHL 130, 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 (together with a description of Members' voting rights) by first-class
mail, postage prepaid, not later than seven business days prior to such Special
Redemption Date, together with instructions as to the procedure such Member or
assignee must follow to have its interest (only entire, not partial, interests
may be so redeemed unless otherwise determined by the Managing Member) in
Man-AHL 130 redeemed on such date. Upon redemption pursuant to a Special
Redemption Date, a Member or any other assignee of whom the Managing Member has
received written notice as described above, shall receive from Man-AHL 130 an
amount equal to the Net Asset Value of its interest in Man-AHL 130 (subject to
the liquidity of Man-AHL 130's investment in the Man-Glenwood Funds), determined
as of the close of business (as determined by
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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 Man-AHL 130 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, Man-AHL 130 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 Man-AHL 130 from commodity
brokers, banks or other persons or entities, Man-AHL 130 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 Man-AHL 130's aggregate Net Asset Value represented by the
sums which are the subject of such default or delay.
Only whole Units may be redeemed, except when a Member is redeeming in
full, 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 Man-AHL 130.
ARTICLE X
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
Man-AHL 130 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 Man-AHL 130.
No Member shall have any preemptive, preferential or other rights with
respect to the issuance or sale of any additional Units, other than as set forth
in the preceding sentence.
SECTION 11.2 DIFFERENT BUSINESS TERMS
Man-AHL 130 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.
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ARTICLE XII
SPECIAL POWER OF ATTORNEY
Each Member by its 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 its true and lawful attorney-in-fact, in
its name, place and stead, to execute, acknowledge, swear to (and deliver as may
be appropriate) on its 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 Man-AHL 130; (iii) all
conveyances and other instruments which the Managing Member deems appropriate to
qualify or continue Man-AHL 130 in the State of Delaware and the jurisdictions
in which Man-AHL 130 may conduct business, or which may be required to be filed
by Man-AHL 130 or the Members under the laws of any jurisdiction or under any
amendments or successor statutes to the Delaware Act, to reflect the dissolution
or termination of Man-AHL 130 or Man-AHL 130 being governed by any amendments or
successor statutes to the Delaware Act or to reorganize or refile Man-AHL 130 in
a different jurisdiction; and (iv) to file, prosecute, defend, settle or
compromise litigation, claims or arbitrations on behalf of Man-AHL 130. 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
DISSOLUTION
Man-AHL 130 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 Man-AHL 130, 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
Man-AHL 130'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 Man-AHL 130 (other than to an Affiliate) without the consent of a
Majority in Interest.
The Managing Member shall 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 Man-AHL 130
shall not terminate or dissolve Man-AHL 130, and a Member, the Member's estate,
custodian or personal representative shall have no right to redeem or value such
Member's interest in Man-AHL 130 except as provided in ARTICLE IX 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
Man-AHL 130 and any right to an audit or examination of the books of Man-AHL
130. 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 Man-AHL 130 or to
redeem or transfer Units.
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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 Man-AHL 130 or to any Member for any loss suffered by Man-AHL 130
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 Man-AHL 130 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 MAN-AHL 130
To the fullest extent permitted by law, subject to this SECTION 14.2, the
Managing Member and its Affiliates shall be indemnified by Man-AHL 130 against
any losses, judgments, liabilities, expenses and amounts paid in settlement of
any claims sustained by them in connection with Man-AHL 130; 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 Man-AHL 130; 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 (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee, or (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee, or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular indemnitee and finds
that indemnification of the settlement and related costs should be made.
In the case of clause (iii) in the immediately preceding paragraph, 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.
Man-AHL 130 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 who: (i) directly or indirectly controls, is controlled by, or is under
common control with the Managing Member; or (ii) owns or controls 10% or more of
the outstanding voting securities of the Managing Member; or (iii) is an officer
or director of the Managing Member; or (iv) 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 Man-AHL 130 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 Man-AHL 130 assets to the Managing Member and its Affiliates
for legal expenses and other costs incurred as a result of a legal action shall
be made only if the following three conditions are satisfied: (i) the legal
action relates to the performance of duties or services by the Managing Member
or
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its Affiliates on behalf of Man-AHL 130; (ii) the legal action is initiated by a
third party who is not a Member; and (iii) the Managing Member or its Affiliates
undertake to repay the advanced funds, with interest from the date of such
advance, to Man-AHL 130 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 Man-AHL 130 unless all provisions of this SECTION 14.2 for the payment
of indemnification have been complied with in all respects. Furthermore, it
shall be a precondition of any such indemnification that Man-AHL 130 receive a
determination of qualified independent legal counsel that the party which seeks
to be indemnified hereunder has met the applicable standard of conduct set forth
herein. Receipt of any such determination shall not, however, in itself, entitle
any such party to indemnification unless indemnification is otherwise proper
hereunder. Any indemnification payable by Man-AHL 130 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
Man-AHL 130 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
Man-AHL 130 or of any Member of any rights of Man-AHL 130 or the Members under
federal and state securities laws or purport to exculpate or indemnify the
Managing Member where such exculpation or indemnification is inconsistent with
such laws.
SECTION 14.3 INDEMNIFICATION OF MAN-AHL 130 BY THE MEMBERS
In the event Man-AHL 130 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
Man-AHL 130's business, such Member (other than the Managing Member) shall
indemnify and reimburse Man-AHL 130 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 Man-AHL 130 the Managing Member shall
deem it necessary or desirable to amend this Agreement, the Managing Member may
proceed to do so, provided that (i) such amendment meets the requirements of
this SECTION 15.1 or (ii) such amendment is 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 Man-AHL 130 is not treated as an association taxable as a
corporation for federal income tax purposes, (iv) to attempt to ensure that
Man-AHL 130 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 Man-AHL 130 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
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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 Man-AHL 130 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 ARTICLE XV; 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) Man-AHL 130 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 Man-AHL 130; (v) the sale of all or substantially all of the
assets of Man-AHL 130 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 and is requested solely for a purpose reasonably
related to a Member's interest as a Member of Man-AHL 130.
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
Man-AHL 130 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 Man-AHL 130. 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 shall not become effective
prior to all Members having an opportunity to redeem their Units.
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ARTICLE XVI
GOVERNING LAW
The validity and construction of this Agreement shall be determined and
governed by the laws of the State of Delaware without regard to principles of
conflicts of law; provided, that the foregoing choice of law shall not restrict
the application of any state's securities laws to the sale of Units to its
residents or within such state.
ARTICLE XVII
MISCELLANEOUS
SECTION 17.1 NOTICES
All notices under this Agreement shall be in writing and shall be effective
upon personal delivery, or if sent by first class mail, postage prepaid,
addressed to the last known address of the party to whom such notice is to be
given, upon the deposit of such notice in the United States mail.
SECTION 17.2 BINDING EFFECT
This Agreement shall inure to and be binding upon all of the parties, all
parties indemnified under ARTICLE XIV hereof, and their respective successors
and assigns, custodians, estates, heirs and personal representatives. For
purposes of determining the rights of any Member or assignee hereunder, Man-AHL
130 and the Managing Member may rely upon Man-AHL 130 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.
----------
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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 Man-AHL 130 pursuant to
Powers of Attorney now or hereafter
By: /s/ John m. Kelly executed in favor of, and delivered to,
--------------------------------- the Managing Member.
John M. Kelly
President and Director
MAN INVESTMENTS (USA) CORP.
By: /s/ John M. Kelly
------------------------------------
John M. Kelly
President and Director
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EXHIBIT B
MAN-AHL 130, LLC
SUBSCRIPTION REQUIREMENTS
General
By submitting an Investor Application Form and Power of Attorney, you (i)
subscribe to purchase Units, (ii) authorize your 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 MAN-AHL 130.
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 Man-AHL 130 is suitable for
any prospective investor.
Investors from the following state must also meet certain income and/or net
worth minimums to be deemed eligible 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 $250,000 or (b) a net worth of at
least $70,000 and an annual income of at least $70,000.
YOU SHOULD NOT INVEST MORE THAN 10% OF YOUR READILY MARKETABLE ASSETS
(EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) IN MAN-AHL 130.
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 CLASS
APPROPRIATE INVESTOR APPLICATION FORM AND POWER OF ATTORNEY OR IN THE LIMITED
LIABILITY COMPANY AGREEMENT.
YOU MAY REVOKE YOUR SUBSCRIPTION AT ANY TIME WITHIN 5 BUSINESS DAYS OF
SUBMITTING YOUR INVESTOR APPLICATION FORM AND POWER OF ATTORNEY TO YOUR SELLING
AGENT.
PLEASE COMPLETE THE CLASS APPROPRIATE EXECUTION COPY OF THE INVESTOR
APPLICATION FORM AND POWER OF ATTORNEY ACCOMPANYING THIS PROSPECTUS.
SR-1
EXHIBIT C
AHL130-A
Man-AHL 130, LLC
Class A Investor Application Form (This is a specimen copy. Do not complete.See
accompanying execution copy.)
BY EXECUTING THIS INVESTOR APPLICATION FORM AND POWER OF ATTORNEY, INVESTORS ARE
NOT WAIVING ANY RIGHTS UNDER ANY FEDERAL OR STATE SECURITIES LAWS.
An investment in Man-AHL 130, LLC ("Man-AHL 130") involves a considerable amount
of risk and some or all of the investment may be lost. An investment in Man-AHL
130 is suitable only for investors who can bear the risk associated with the
limited liquidity of the investment, as redemptions are permitted only quarterly
and are limited to 15% of Man-AHL 130's net asset value as of any quarter-end,
and should be viewed as a long-term investment.
Instructions
- - PLEASE PRINT CLEARLY IN ALL CAPITAL LETTERS AND USE EITHER BLUE OR BLACK
INK TO FILL OUT THIS INVESTOR APPLICATION FORM ("APPLICATION").
- - BE SURE TO READ THE PROSPECTUS AND LIMITED LIABILITY COMPANY AGREEMENT OF
MAN-AHL 130.
- - FOR HELP WITH THIS APPLICATION PLEASE CALL YOUR FINANCIAL ADVISOR OR CALL
US AT 800-838-0232.
- - PLEASE SEE PAGE 4 FOR MAILING AND PAYMENT OPTIONS.
- - SUBSCRIPTIONS ARE REVOCABLE BY YOU FOR FIVE BUSINESS DAYS AFTER YOUR
SUBMISSION OF THIS APPLICATION.
1. Investment Amount (A MINIMUM INITIAL INVESTMENT OF
$25,000 IS REQUIRED) $_______________________
I hereby certify that I am: [ ] an eligible taxable investor
(Note: If you are not an eligible taxable investor, please consult with your
financial advisor as to whether you should be completing the Investor
Application Form for Man-AHL 130, LLC Class B)
2. Unit Series Selection (see "Fees and Expenses Paid by Man AHL 130 -- Client
Servicing Fee, Selling Compensation" in the Man-AHL 130 Prospectus)
Select one Series of Class A Units ("Units"):
Series 1 [ ] (Client Servicing Fee applies)
Series 2 [ ] (fee-based accounts only)
3. Investor Certifications
FOR AN INDIVIDUAL OR JOINT ACCOUNT, 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 worth(1) (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);
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FOR A TRUST, CORPORATION 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 Man-AHL 130 and (iii) of which the
person responsible for directing the investment of assets in Man-AHL 130
has such knowledge and experience in financial and business matters that he
or she is capable of evaluating the merits and risks of such investment;
[ ] An entity with total assets in excess of $5,000,000 that was not formed for
the purpose of investing in Man-AHL 130 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 (the "Code");
[ ] An entity licensed, or subject to supervision, by US 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;
[ ] An investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act");
(1) 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.
[ ] 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 Investment Advisers Act of 1940, as amended;
[ ] An insurance company as defined in Section 2(13) of the Securities Act of
1933, as amended;
[ ] 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; or
[ ] An entity in which all of the equity owners are "accredited investors" (as
described above).
FOR INDIVIDUAL OR JOINT ACCOUNT 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 $250,000 or (b) net worth of at least
$70,000 and an annual income of least $70,000.
BY COMPLETING THIS APPLICATION ABOVE AND SIGNING BELOW YOU FURTHER REPRESENT,
AGREE AND ACKNOWLEDGE THAT:
- - You are of legal age and legally competent to execute the Application 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.
- - You are not a charitable remainder trust.
- - You are not (A) a non-resident alien, (B) a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in
the Code) for purposes of US federal income taxation or (C) an "employee
benefit plan" as defined in, and subject to the fiduciary responsibility
provisions of, the Employee Retirement Income Security Act of 1974, as
amended, a "plan" as defined in and subject to Section 4975 of the Code, or
an entity that holds "plan assets" of any such employee benefit plan or
plan.
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- - You understand that Units of Man-AHL 130 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.
- - 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, or (iv)
"a senior foreign political figure(2)", "an immediate family member(3)" or
"close associate(4)" of a senior foreign political figure within the
meaning of the USA PATRIOT Act of 2001(5). 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 Man
Investments (USA) Corp. (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 Man-AHL 130 in connection with this Application
is true and correct, and you agree to provide any information the Managing
Member or its agents deem necessary to comply with Man-AHL 130's anti-money
laundering program and related responsibilities from time to time. If you
have indicated in this Application that you are an intermediary subscribing
to Man-AHL 130 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 understand that it may be a violation of state and federal law for you
to provide these certifications if you know that they are not true.
- - You understand that Man-AHL 130 and its affiliates are relying on the
certifications and agreements made herein in determining your qualification
and suitability as an investor in Man-AHL 130. You understand that an
investment in Man-AHL 130 is not appropriate for, and may not be acquired
by, any person who cannot make these certifications. You agree to indemnify
the Managing Member, Man Investments Inc. (the "Selling Agent") and their
affiliates and hold them harmless from any liability that you may incur as
a result of these certifications being untrue in any respect.
(2) A "senior foreign political figure" is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
non-US government (whether elected or not), a senior official of a major
non-US political party, or a senior executive of a non-US 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.
(3) "Immediate family" of a senior foreign political figure typically includes
the figure's parents, siblings, spouse, children and in-laws.
(4) 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.
(5) 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).
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4. Account Ownership/Investor Information (To be completed by the investor
and/or its trustee.)
[ ] Individual [ ] Joint (specify type) ____________ LLC [ ] Partnership [ ] LLP
[ ] Trust [ ] Other (specify type) [ ] Corporation
Name of investor _______________________________________________
Social Security or Taxpayer ID # _______________________________________________
Date of birth _______________________________________________
Joint owner or trustee name _______________________________________________
Joint owner's Social Security # _______________________________________________
Date of birth of joint owner _______________________________________________
Trustee's Social Security # _______________________________________________
Date of birth of trustee _______________________________________________
Street address (No P.O. Box) _______________________________________________
City _______________________________________________
State _____
Zip __________
Daytime phone number _______________________________________________
Fax number _______________________________________________
E-mail address _______________________________________________
If an individual, are you a US citizen?
[ ] Yes [ ] No If no, country of citizenship ___________________________________
Are you an employee of the Selling Agent or a participating
broker-dealer? [ ] Yes [ ] No
If an entity, date of incorporation, formation etc. __________________
Place of incorporation, formation etc. ____________________________
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 advisor), 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 _____
Zip __________
UPON REDEMPTION OF YOUR UNITS FROM MAN-AHL 130, DO YOU WANT THE PROCEEDS PAID TO
YOU BY:
[ ] check? (If so, check the box and go to Section 5)
[ ] wire transfer? (If so, check the box and provide the instructions below)
Bank Name _______________________________________________
ABA Routing Number _______________________________________________
Credit to: _______________________________________________
Account Number _______________________________________________
For Further Credit to: _______________________________________________
Name(s) on the Account _______________________________________________
Account Number _______________________________________________
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5. ACKNOWLEDGEMENTS
YOU ACKNOWLEDGE AND AGREE AS FOLLOWS:
- - You either are, or are 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 make
this investment and to conduct transactions in Man-AHL 130 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 Man-AHL 130.
- - You are eligible to invest in Man-AHL 130 and you have checked the
appropriate box (or boxes) in Section 3 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 Units. 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 Man-AHL 130 (the "Agreement") including its
Power of Attorney provisions, as set forth in Article XII of the Agreement.
To the extent you believe it necessary, you have consulted with your tax
and legal advisors regarding your investment in Man-AHL 130.
You agree that Man-AHL 130, the Managing Member, the Selling Agent 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.
6. Power of Attorney and Signature
- - I irrevocably appoint 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 Agreement, including the 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
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3. You are a US person (includes a US resident alien) and agree to notify
Man-AHL 130 within 60 days of the date that you cease to be a US 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 APPLICATION OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
Investor:
Signature ___________________________ Signature ______________________________
Title ___________________________ Title ______________________________
Date ___________________________ Date ______________________________
Checklist
Did you remember to:
[ ] SIGN THIS APPLICATION?
[ ] FILL OUT THE DOLLAR AMOUNT OF THE INVESTMENT?
[ ] FILL OUT ALL APPLICABLE SECTIONS OF THIS APPLICATION?
[ ] ATTACH YOUR CHECK OR ISSUE PROPER WIRE INSTRUCTIONS?
7. Financial Adviser/Dealer Information (To be completed by the Financial
Adviser/Dealer.)
I hereby authorize the Selling Agent to act as my agent in connection with
transactions under this authorization form and confirm the Unit Series selection
made in Section 2. 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 3.
I hereby certify that I have informed the investor of all pertinent facts with
respect to an investment in the Units, as set forth in Man-AHL 130's Prospectus,
including: risks; tax consequences; liquidity and marketability; and management
and control of the Managing Member. 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
Man-AHL 130 is suitable for such investor in light of his/her financial
position, net worth and other suitability characteristics.
The Registered Representative and Principal/Branch Office Manager MUST sign
below in order to substantiate compliance with NASD Conduct Rule 2810.
Representative's name __________________________________________________________
Adviser/Dealer name __________________________________________________________
Branch office address __________________________________________________________
City __________________________________________________________
State __________________________________________________________
Zip __________________________________________________________
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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 as both "Authorized Representative"
and "Principal/Branch Office Manager".)
Principal/Branch Office Manager's signature ______________________
Date ______________________
Principal/Branch Office Manager's name _________________________________________
Name for Account Registration __________________________________________________
Account Number __________________________________________________
Clearing firm name/number __________________________________________________
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INVESTMENT DATES ARE EXPECTED TO BE AS OF THE FIRST BUSINESS DAY OF EACH
CALENDAR MONTH. YOUR FINANCIAL ADVISER MAY REQUIRE DELIVERY DATES AND
INSTRUCTIONS OTHER THAN THOSE LISTED BELOW.
Applications for investment at the next investment date must be received at
least six 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, c/o Citigroup Fund Services
Two Portland Square, Portland, ME 04101
207-879-1900
ADVANCE COPIES (WITH ORIGINALS TO FOLLOW)
- - IF BY FAX, TO:
Man-AHL 130, LLC
207-879-6206
- - IF BY US POSTAL SERVICE, TO:
Man-AHL 130, LLC
P.O. Box 446
Portland, ME 04112
- - IF BY SCAN .PDF FILE VIA E-MAIL, TO:
cfsta.ai@citigroup.com
Funds to be invested at the next investment date should be forwarded as follows:
- - IF BY FEDERAL FUNDS WIRE, PLEASE TRANSMIT FOR RECEIPT SIX BUSINESS DAYS
PRIOR TO THE NEXT INVESTMENT DATE, TO:
WIRE INSTRUCTIONS ARE PROVIDED IN THE EXECUTION COPY OF THE INVESTOR APPLICATION
FORM.
- - 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 -- MAN-AHL 130 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, MAN-AHL 130 DOES NOT ACCEPT
THIRD-PARTY CHECKS OR CREDIT CARD CONVENIENCE CHECKS.
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AHL130-B
Man-AHL 130, LLC
Class B Investor Application Form (This is a specimen copy. Do not complete. See
accompanying execution copy.)
BY EXECUTING THIS INVESTOR APPLICATION FORM AND POWER OF ATTORNEY, INVESTORS ARE
NOT WAIVING ANY RIGHTS UNDER ANY FEDERAL OR STATE SECURITIES LAWS.
An investment in Man-AHL 130, LLC ("Man-AHL 130") involves a considerable amount
of risk and some or all of the investment may be lost. An investment in Man-AHL
130 is suitable only for investors who can bear the risk associated with the
limited liquidity of the investment, as redemptions are permitted only quarterly
and are limited to 15% of Man-AHL 130's net asset value as of any quarter-end,
and should be viewed as a long-term investment.
Instructions
- - PLEASE PRINT CLEARLY IN ALL CAPITAL LETTERS AND USE EITHER BLUE OR BLACK
INK TO FILL OUT THIS INVESTOR APPLICATION FORM ("APPLICATION").
- - BE SURE TO READ THE PROSPECTUS AND LIMITED LIABILITY COMPANY AGREEMENT OF
MAN-AHL 130.
- - FOR HELP WITH THIS APPLICATION PLEASE CALL YOUR FINANCIAL ADVISOR OR CALL
US AT 800-838-0232.
- - FOR IRAS AND KEOGH PLANS, PLEASE NOTE THAT THE CUSTODIAN MUST ALSO SIGN
THIS AGREEMENT ON PAGE 4.
- - SUBSCRIPTIONS ARE REVOCABLE BY YOU FOR FIVE BUSINESS DAYS AFTER YOUR
SUBMISSION OF THIS APPLICATION.
1. Investment Amount (A MINIMUM INITIAL INVESTMENT OF $10,000 IS REQUIRED)
$_____________________
I hereby certify that I am: [ ] an eligible tax-exempt investor [ ] an eligible
tax-deferred investor
(Note: If you are not an eligible tax-exempt or tax-deferred investor, please
consult with your financial advisor as to whether you should be completing the
Application for Man-AHL 130, LLC Class A)
2. Unit Series Selection (see "Fees and Expenses Paid by Man-AHL 130 -- Client
Servicing Fee, Selling Compensation" in the Man-AHL 130 Prospectus)
Select one Series of Class B Units ("Units"):
Series 1 [ ] (Client Servicing Fee applies)
Series 2 [ ] (fee-based accounts only)
3. Investor Certifications
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 worth(1) (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);
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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 Man-AHL 130 and (iii) of which the
person responsible for directing the investment of assets in Man-AHL 130
has such knowledge and experience in financial and business matters that he
or she is capable of evaluating the merits and risks of such investment;
[ ] An entity with total assets in excess of $5,000,000 that was not formed for
the purpose of investing in Man-AHL 130 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 Code;
[ ] An entity licensed, or subject to supervision, by US 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 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 ERISA, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
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 self-directed plan, with
investment decisions made solely by persons that are "accredited investors"
(as defined in Regulation D under the Securities Act of 1933, as amended);
or
[ ] An entity in which all of the equity owners are "accredited investors" (as
described above).
(1) 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.
FOR AN IRA 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 THIS APPLICATION AND SIGNING BELOW YOU FURTHER REPRESENT, AGREE
AND ACKNOWLEDGE THAT:
- - You are of legal age and legally competent to execute the Application 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.
- - 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 Code) for purposes of US federal income taxation.
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- - If you are a fiduciary executing this Investor Certificate on behalf of an
"employee benefit plan" as defined in, and subject to the fiduciary
responsibility provisions of ERISA or a "plan" as defined in and subject to
Section 4975 of the Code (each, a "Plan") (the "Fiduciary"), you represent
and warrant that you have considered the following with respect to the
Plan's investment in Man-AHL 130 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 Man-AHL 130 under the documents
governing the Plan and the Fiduciary; and (iii) the risks associated with
an investment in Man-AHL 130 and the fact that redemptions are permitted
only quarterly and are limited to 15% of Man-AHL 130's net asset value as
of any quarter-end.
- - You understand that Units of Man-AHL 130 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.
- - 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, or (iv)
"a senior foreign political figure(2)", "an immediate family member(3)" or
"close associate(4)" of a senior foreign political figure within the
meaning of the USA PATRIOT Act of 2001(5). You agree to promptly notify the
Man Investments (USA) Corp. (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 Man-AHL 130 in connection with this Application is true and
correct, and you agree to provide any information the Managing Member or
its agents deem necessary to comply with Man-AHL 130's anti-money
laundering program and related responsibilities from time to time. If you
have indicated in this Application that you are an intermediary subscribing
to Man-AHL 130 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 understand that it may be a violation of state and federal law for you
to provide these certifications if you know that they are not true.
- - You understand that Man-AHL 130 and its affiliates are relying on the
certifications and agreements made herein in determining your qualification
and suitability as an investor in Man-AHL 130. You understand that an
investment in Man-AHL 130 is not appropriate for, and may not be acquired
by, any person who cannot make these certifications. You agree to indemnify
the Managing Member, Man Investments Inc. (the "Selling Agent") and their
affiliates and hold them harmless from any liability that you may incur as
a result of these certifications being untrue in any respect.
4. Account Ownership/Investor Information (To be completed by the investor
and/or its trustee or custodian.)
[ ] Traditional IRA [ ] Roth [ ] Keogh [ ] Foundation
[ ] Employee Benefit Plan [ ] Employee Benefit Plan Trust
[ ] Other (specify type) _________________________________
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Name of investor _______________________________________________
Social Security or Taxpayer ID # _______________________________________________
Date of birth _______________________________________________
(2) A "senior foreign political figure" is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
non-US government (whether elected or not), a senior official of a major
non-US political party, or a senior executive of a non-US 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.
(3) "Immediate family" of a senior foreign political figure typically includes
the figure's parents, siblings, spouse, children and in-laws.
(4) 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.
(5) 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).
Trustee name _______________________________________________
Trustee's Social Security # _______________________________________________
Date of birth of trustee _______________________________________________
Trustee's Social Security # _______________________________________________
Date of birth of trustee _______________________________________________
Street address (No P.O. Box) _______________________________________________
City _______________________________________________
State _______________________________________________
Zip _______________________________________________
Daytime phone number _______________________________________________
Fax number _______________________________________________
E-mail address _______________________________________________
If an individual, are you a US citizen? [ ] Yes [ ] No If no, country of
citizenship ____________________
Are you an employee of the Selling Agent or a participating broker-dealer?
[ ] Yes [ ] No
If an entity, date of incorporation, formation etc. ____________________________
Place of incorporation, formation etc. _________________________________________
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 would like your statements sent to an
alternate mailing address, please provide the necessary information:
[ ] IP [ ] AM Name _________________________________________________________
Street address _________________________________________________________
City _________________________________________________________
State _________________________________________________________
Zip _________________________________________________________
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UPON REDEMPTION OF YOUR UNITS FROM MAN-AHL 130, DO YOU WANT THE PROCEEDS PAID TO
YOU BY:
[ ] check? (If so, check the box and proceed to Section 5)
[ ] wire transfer? (If so, check the box and provide the information below)
Bank Name _________________________________________________________
ABA Routing Number _________________________________________________________
Credit to: _________________________________________________________
For Further Credit to: _________________________________________________________
Name(s) on the Account _________________________________________________________
Account Number _________________________________________________________
5. Acknowledgements
YOU ACKNOWLEDGE AND AGREE AS FOLLOWS:
- - You either are, or are 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 make
this investment and to conduct transactions in Man-AHL 130 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 Man-AHL 130.
- - You are eligible to invest in Man-AHL 130 and you have checked the
appropriate box (or boxes) in Section 3 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 Units. 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 Man-AHL 130 (the "Agreement") including its
Power of Attorney provisions, as set forth in Article XII of the Agreement.
To the extent you believe it necessary, you have consulted with your tax
and legal advisors regarding your investment in Man-AHL 130.
You agree that Man-AHL 130, the Managing Member, the Selling Agent 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.
6. Benefit Plan Investor Status
I hereby certify that I am [ ]/am not [ ] a benefit plan investor (which means
(a) a "plan" as defined in and subject to Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code") (such as an individual retirement account
("IRA"), a "simplified employee pension plan", and a Keogh plan for
self-employed individuals (including partners)), (b) an "employee benefit plan"
as defined in, and subject to the fiduciary responsibility provisions of, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (such as a
401(k) plan, a defined benefit plan, a money purchase pension plan, a cash
balance
IA-13
pension plan, a profit-sharing plan, and a health benefit plan, in each case,
which is maintained by a private employer (e.g., a corporation) primarily for
the benefit of United States resident employees), or (c) an entity ("Plan Assets
Entity") that holds "plan assets" of any such employee benefit plan or plan
(such as a fund of funds in which benefit plan investors own 25% or more of the
total value of any class of equity interests). If you checked "am not" above,
please proceed to Section 7.
If I checked that I am a benefit plan investor, I certify that I am [ ]/am not
[ ] a Plan Assets Entity (check "am not" and please proceed to Section 7, if you
are a "plan" or an "employee benefit plan" as described in (a) or (b) of the
first sentence of the preceding paragraph). If I am a Plan Assets Entity, I
represent that the percentage of my equity interests held by benefit plan
investors does not exceed the percentage set forth below. To ease the
administrative burden related to monitoring and updating this percentage,
Man-AHL 130 recommends that you build in some cushion so that you will not have
to notify Man-AHL 130 if the percentage changes slightly. ____%
You agree to immediately notify Man-AHL 130 upon any change to the foregoing
representations.
7. Power of Attorney and Signature
I irrevocably appoint 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
Agreement, including the 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 US person (includes a US resident alien) and agree to notify
Man-AHL 130 within 60 days of the date that you cease to be a US 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 APPLICATION OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
REMINDER FOR IRAS/KEOGH PLANS ONLY: THE CUSTODIAN MUST ALSO SIGN THIS
APPLICATION.
Investor: ___________________________
Signature ___________________________ Signature ______________________________
Title _______________________________ Title __________________________________
Date ________________________________ Date ___________________________________
Custodian
_____________________________________
(Name, Authorized Signature)
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Checklist -- Did you remember to:
[ ] FILL OUT THE DOLLAR AMOUNT OF THE INVESTMENT?
[ ] FILL OUT ALL APPLICABLE SECTIONS OF THIS APPLICATION?
[ ] SIGN THIS APPLICATION?
8. Financial Adviser/Dealer Information (To be completed by the Financial
Adviser/Dealer.)
I hereby authorize the Selling Agent to act as my agent in connection with
transactions under this authorization form and confirm the Unit Series selection
made in Section 2. 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 3.
I hereby certify that I have informed the investor of all pertinent facts with
respect to an investment in the Units, as set forth in Man-AHL 130's Prospectus,
including: risks; tax consequences; liquidity and marketability; and management
and control of the Managing Member. 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
Man-AHL 130 is suitable for such investor in light of his/her financial
position, net worth and other suitability characteristics.
The Registered Representative and Principal/Branch Office Manager MUST sign
below in order to substantiate compliance with NASD Conduct Rule 2810
Representative's name ________________________________________________
Adviser/Dealer name ________________________________________________
Branch office address ________________________________________________
City ________________________________________________
State ________________________________________________
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 as both "Authorized Representative"
and "Principal/Branch Office Manager".)
Principal/Branch Office Manager's signature ____________________
Date ____________________
Principal/Branch Office Manager's name _________________________________________
Name for Account Registration _________________________________________
Account Number _________________________________________
Clearing firm name/number _________________________________________
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FOR INSTRUCTIONS ON WHERE TO SEND THIS APPLICATION AND HOW TO MAKE PAYMENT,
PLEASE CALL (866) 436-2512.
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, MAN-AHL 130 DOES NOT ACCEPT THIRD-PARTY CHECKS OR
CREDIT CARD CONVENIENCE CHECKS.
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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 MAN-AHL 130, THE MANAGING MEMBER, MAN
INVESTMENTS INC. (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.
ALL SELLING AGENTS MUST DELIVER TO PROSPECTIVE INVESTORS ANY SUPPLEMENTED
OR AMENDED PROSPECTUS ISSUED BY MAN-AHL 130 DURING BOTH THE INITIAL AND THE
ONGOING OFFERING PERIODS.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an estimate of the costs of preparing, filing and
distributing this Amended Registration Statement and the Prospectus which it
includes.
Approximate
Amount
-----------
Securities and Exchange Commission Registration Fee ....... $ 0
Financial Industry Regulatory Authority, Inc. Filing Fee .. 0
Printing Expenses ......................................... 29,000
Fees of Certified Public Accountants ...................... 4,500
Blue Sky Expenses (Excluding Legal Fees) .................. 150
Fees of Counsel ........................................... 85,000
Advertising and Sales Literature .......................... 4,500
Miscellaneous Offering Costs .............................. 0
-------
Total ..................................................... $[____]
----------
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 Amended 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 Man-AHL 130 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 Amended Registration Statement:
Exhibit
Number Description of Document
- --------- -----------------------
3.02 Limited Liability Company Agreement of the Registrant (included as
(amended) Exhibit A to the Prospectus).
II-1
10.05 Form of Application and Power of Attorney (included with the
Prospectus).
10.06 Form of Trading Advisory Agreement between the Registrant and Man
Investments Limited.
23.01 Consent of Sidley Austin LLP.
23.02 Consent of Deloitte & Touche LLP.
23.03 Consent of PricewaterhouseCoopers LLP.
99.06 Post-Effective Amendment on Form N-2 of Man-Glenwood Lexington LLC
filed with the Securities and Exchange Commission on June 27, 2008,
Registration No. 333-118854, is incorporated herein by reference.
99.07 Post-Effective Amendment on Form N-2 of Man-Glenwood Lexington TEI,
LLC filed with the Securities and Exchange Commission on June 27,
2008, Registration No. 333-120945, is incorporated herein by
reference.
- ----------
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on June 28, 2005 with
Registrant's Registration Statement on Form S-1 (Reg. No. 333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
3.01(i) Certificate of Formation of the Registrant.
10.02 Form of Customer Agreement between the Registrant and Man Financial
Inc.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on October 11, 2005 with
Amendment No. 1 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
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.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on April 17, 2006 with
Amendment No. 3 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
1.02 Form Selling Agreement between Man Investments Inc. and Additional
Selling Agents.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on November 29, 2006 with
Amendment No. 5 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
10.01 Form of Administration Agreement between Man-AHL 130 and the
Administrator.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on January 18, 2007 with
Amendment No. 6 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
1.01 Form of General Distributor's Agreement between the Registrant, Man
Investments (USA) Corp. and Man Investments Inc.
10.02(a) Addendum to the 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 Managing Member
and the Escrow Agent.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on January 30, 2007 with
Amendment No. 7 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
5.01 Opinion of Sidley Austin LLP relating to the legality of the Units.
8.01 Opinion of Sidley Austin LLP with respect to federal income tax
consequences.
The following exhibit is incorporated by reference herein from the exhibit
of the same description and number filed on October 16, 2007 with Post-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
10.03(a) Amendment to the Form of Trading Advisory Agreement between
Registrant and Man-AHL (USA) Ltd.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) (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) 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 initial 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.
(4) That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other
than prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date it is
first used after effectiveness.
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule
424;
(ii) Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant;
and
(iv) Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
(c) Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or otherwise,
the Registrant had 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 a director, officer or
controlling person of the Registrant in the successful defense of any such
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Managing
Member of the Registrant has duly caused this Amended Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in The
City of Chicago in the State of Illinois on the 18th day of July, 2008.
MAN-AHL 130, LLC
By: MAN INVESTMENTS (USA) CORP.
MANAGING MEMBER
By: /s/ Uwe Eberle
---------------------------------
Uwe Eberle
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amended
Registration Statement 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/ Uwe Eberle President and Chief Executive July 18, 2008
- --------------------------------- Officer
Uwe Eberle (Principal Executive Officer)
/s/ Alicia Derrah Vice President, Secretary and July 18, 2008
- --------------------------------- Head of Finance (Principal
Alicia Derrah Financial and Accounting
Officer)
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/ Uwe Eberle July 18, 2008
-----------------------------------
Uwe Eberle
President and Chief Executive
Officer
As filed with the Securities and Exchange Commission on July 18, 2008
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
EXHIBITS
To
POST-EFFECTIVE AMENDMENT NO. 2 TO
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
- --------- -----------------------
3.02 Limited Liability Company Agreement of the Registrant
(amended) (included as Exhibit A to the Prospectus).
10.05 Form of Application and Power of Attorney (included with the
Prospectus).
10.06 Form of Trading Advisory Agreement between the Registrant and Man
Investments Limited.
23.01 Consent of Sidley Austin LLP.
23.02 Consent of Deloitte & Touche LLP.
23.03 Consent of PricewaterhouseCoopers LLP.
99.06 Post - Effective Amendment on Form N-2 of Man-Glenwood Lexington LLC
filed with the Securities and Exchange Commission on June 27, 2008,
Registration No. 333-118854, is incorporated herein by reference.
99.07 Post - Effective Amendment on Form N-2 of Man-Glenwood Lexington
TEI, LLC filed with the Securities and Exchange Commission on June
27, 2008, Registration No. 333-120945, is incorporated herein by
reference.
- ----------
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on June 28, 2005 with
Registrant's Registration Statement on Form S-1 (Reg. No. 333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
3.01(i) Certificate of Formation of the Registrant.
10.02 Form of Customer Agreement between the Registrant and Man Financial
Inc.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on October 11, 2005 with
Amendment No. 1 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
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.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on April 17, 2006 with
Amendment No. 3 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
1.02 Form Selling Agreement between Man Investments Inc. and Additional
Selling Agents.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on November 29, 2006 with
Amendment No. 5 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
10.01 Form of Administration Agreement between Man-AHL 130 and the
Administrator.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on January 18, 2007 with
Amendment No. 6 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
1.01 Form of General Distributor's Agreement between the Registrant, Man
Investments (USA) Corp. and Man Investments Inc.
10.02(a) Addendum to the 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 Managing Member
and the Escrow Agent.
The following exhibits are incorporated by reference herein from the
exhibits of the same description and number filed on January 30, 2007 with
Amendment No. 7 to Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
5.01 Opinion of Sidley Austin LLP relating to the legality of the Units.
8.01 Opinion of Sidley Austin LLP with respect to federal income tax
consequences.
The following exhibit is incorporated by reference herein from the exhibit
of the same description and number filed on October 16, 2007 with Post-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form S-1 (Reg. No.
333-126172).
Exhibit
Number Description of Document
- --------- -----------------------
10.03(a) Amendment to the Form of Trading Advisory Agreement between
Registrant and Man-AHL (USA) Ltd.