MAN AHL DIVERSIFIED I LP - Annual Report: 2010 (Form 10-K)

efc11-257_10k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: December 31, 2010

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-53043

Man-AHL Diversified I L.P.

(Exact name of registrant as specified in its charter)

Delaware		06-1496634
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

c/o Man Investments (USA) Corp.
123 North Wacker Drive
28th Floor
Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (312) 881-6800

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]		Accelerated Filer [ ]
Non-accelerated filer [ ]		Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Not applicable.

Documents Incorporated by Reference

The report of the independent registered public accounting firm and the financial statements of the Registrant for the year ended December 31, 2010 are included herewith as exhibit 13.1 and are incorporated by reference into Item 8 of this Annual Report on Form 10-K.

PART I

Item 1. Business

(a) General development of business

Man-AHL Diversified I L.P., a Delaware limited partnership (the “Partnership”), was organized in September 1997 under the Delaware Revised Uniform Limited Partnership Act and commenced trading operations on April 3, 1998, for the purpose of engaging in the speculative trading of physical commodities, futures and forward contracts and related instruments. The Partnership was formerly named AHL Diversified (USA) L.P., but was renamed in February 2002. The Partnership is a “feeder” fund in a “master-feeder” structure, whereby the Partnership invests substantially all of its assets in Man AHL Diversified Trading Company L.P. (the “Trading Company”). Man-AHL (USA) Limited (the “ Trading Advisor”), a United Kingdom company, is the Partnership’s and the Trading Company’s trading advisor. Man Investments (USA) Corp. (the “General Partner”), a Delaware corporation and a registered commodity pool operator under the Commodity Exchange Act, as amended, is the Partnership’s general partner and commodity pool operator. The Trading Advisor is an affiliate of the General Partner. Man Investments Holdings Limited, a United Kingdom holding company that is part of Man Group plc, a United Kingdom public limited company, is the sole shareholder of the Trading Advisor, and Man Investments Holdings Inc., a Delaware corporation that is part of Man Group plc, is the sole shareholder of the General Partner.

On January 28, 2008, the Partnership filed a registration statement under the Securities Exchange Act of 1934, which registration statement was subsequently amended. The registration statement became effective on or about March 28, 2008. The Partnership offers two classes of units of limited partnership interest in the Partnership (“Units”): Class A Units are generally offered; Class B Units are offered to employee benefit plans, IRAs and other retirement plans and accounts. The two Classes of Units are identical to each other except that Class B Units may be purchased, transferred, held and redeemed in a minimum amount of $10,000. On April 1, 2009, the Partnership added two new series of Units: Class A Series 2 Units (“Class A-2”) and Class B Series 2 Units (“Class B-2”). Except as described in section (c) below, Class A-2 and Class B-2 units are identical to Class A and B units, respectfully.

Although the Partnership uses the term “class” to distinguish between certain interests in the Partnership, the Partnership does not believe that the differences between such interests are sufficient to make them separate “classes” under Section 12(g) of the Securities Exchange Act of 1934, as all the interests in the Partnership, regardless of “class,” are of substantially similar character and the holders of which enjoy substantially similar rights and privileges. The holders of interests in the Partnership (regardless of “class”) share pro rata in the Partnership’s profits and losses, enjoying no preferences over one another during the life of the Partnership or upon dissolution and otherwise have identical rights under the Limited Partnership Agreement, the only differences among the “classes” relating to fees and minimum investment.

The General Partner became the general partner of the Partnership as of April 1, 2005 when Man-AHL (USA) Corp., the Partnership's original general partner and trading advisor (“Man-AHL”), appointed it as such. In addition to the appointment of the General Partner, Man-AHL appointed the Trading Advisor to serve as the trading advisor to the Partnership commencing as of April 1, 2005. Following the appointments of the General Partner as a general partner and the Trading Advisor as the trading advisor, Man-AHL resigned as a general partner and trading advisor of the Partnership. The General Partner agreed to continue the Partnership without interruption or change. The General Partner controls and manages the business of the Partnership. Purchasers of Units, as the Partnership’s “Limited Partners,” have no right to participate in management or control of the Partnership. The offices of the Partnership, where its books and records are kept, are located at the office of the General Partner: 123 North Wacker Drive, 28th Floor, Chicago, Illinois 60606; telephone (312) 881-6800.

(b) Financial information about segments

The Partnership’s business constitutes only one segment, i.e., a speculative commodity pool. The Partnership does not engage in sales of goods and services. Financial information regarding the Partnership’s business is set forth in the Partnership’s Financial Statements incorporated into Item 8 hereof and attached as Exhibit 13.1 hereto.

The Partnership engages in speculative trading of physical commodities, futures and forward contracts and related instruments, directly and indirectly through an investment in the Trading Company, pursuant to the trading strategies employed by the Trading Advisor. The Partnership invests substantially all of its assets in the Trading Company.

The investment objective of the Trading Advisor's futures trading program (referred to herein as the "AHL Diversified Program") is to deliver substantial capital growth over time, independent of the movement of the stock and bond markets, through the speculative trading, directly and indirectly, of physical commodities, futures contracts, spot and forward contracts, options on the foregoing, exchanges of futures for physical transactions and other investments (sometimes hereinafter referred to as ‘futures’) on domestic and international exchanges and markets (including the interbank and over-the-counter markets).

The AHL Diversified Program employs a systematic, statistically based investment strategy that is designed to identify and capitalize on inefficiencies in markets around the world. A stable and robust trading and implementation infrastructure is then employed to capitalize on these trading opportunities. The trading systems are quantitative and primarily directional in nature, meaning that investment decisions are entirely driven by mathematical models based on market trends and other historic relationships. Trading signals are always generated systematically; thus the Trading Advisor does not engage in discretionary trading during drawdowns or at other times. Trading takes place around-the-clock and real-time price information is used to respond to price moves across a diverse range of global markets. The trade execution team operates alongside the investment management team in London. It operates 24 hours a day on a rotational eight-hour shift structure.

The trading process is the product of continuing research and development performed by the Trading Advisor (inclusive of its affiliates) since 1987. Although the underlying investment methodology is proprietary and the precise details confidential, the guiding principles have remained unchanged through the years: diversification, discipline, efficiency, rigorous risk management and ongoing research.

The AHL Diversified Program invests in a diversified portfolio of instruments which may include futures, options and forward contracts, swaps and other financial derivative instruments both on and off exchange. The AHL Diversified Program trades globally in several market sectors, including, without limitation, currencies, bonds, energies, stock indices, interest rates, metals and agriculture.

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. In aggregate, the systems run more than 3,000 price samples each day spread across the 100 or so markets traded. The trading algorithms aim mainly to capture price trends and close out positions when there is a high probability of a different trend developing, although the AHL Diversified Program may also include algorithmic systems based on quantitative fundamental data that can be captured efficiently, such as interest rate data. Another aspect of diversification is the fact that the various systems generate signals across different time frames, ranging from two to three days to several months, which helps to reduce the risk of the AHL Diversified Program.

In line with the principle of diversification, the approach to portfolio construction and asset allocation is premised on the importance of deploying investment capital across the full range of sectors and markets. Particular attention is paid to correlation of markets and sectors, expected returns, trading costs and market liquidity. Portfolios are regularly reviewed and, when necessary, adjusted to reflect changes in these factors. The Trading Advisor also has a process for adjusting market risk exposure in real time to reflect changes in the volatility of individual markets.

The integrity of the AHL Diversified Program's defined investment style is ensured by adherence to a rigorous control process. All the strategies and systems applied by the Trading Advisor are designed to target defined volatility levels rather than returns, and the investment process is underpinned by computer-supported analytical instruments, disciplined real-time risk control and management information systems. As risk control is integral to each part of the investment process, risk management consists primarily of monitoring risk measures and

ensuring the systems remain within prescribed limits. A proprietary risk measurement method similar to the industry standard “value-at-risk” helps ensure that the rule-based decisions that drive the investment process remain within predefined risk parameters. Margin-to-equity ratios are monitored daily, and the level of exposure in each market is quantifiable at any time and is adjusted in accordance with market volatility. Market correlation is closely monitored to prevent over-concentration of risk and ensure optimal portfolio weightings. Market liquidity is examined with the objective of ensuring that the Trading Company will be able to initiate and close out trades as indicated by AHL Diversified Program’s systems at market prices, while brokerage selection and trade execution are continually monitored with the objective of ensuring quality market access.

As the success of the AHL Diversified Program is largely dependent on its systems, the Trading Advisor is committed to investing in leading computer technology. The Trading Advisor (inclusive of affiliates) also maintains a disaster recovery site where a back-up trading system runs permanently and in parallel with the main system.

The AHL Diversified Program uses margin and considerable leverage to reach model allocations.

The AHL Diversified Program is supported by a dedicated team of investment specialists that continually seek to extend the range and versatility of the original investment techniques. As such, The Trading Advisor may increase the number and diversity of markets, strategies and instruments traded directly or indirectly by the AHL Diversified Program.

The Trading Advisor is paid a monthly management fee, payable in arrears, in an amount equal to 0.1667% of the month-end Net Asset Value of the Partnership (as defined in the Partnership’s Sixth Amended and Restated Limited Partnership Agreement, as the same may be amended or supplemented from time to time (the “Agreement”)) whether or not the Partnership is profitable (approximately 2% annually). The General Partner is paid a monthly general partner administrative fee in an amount equal to 0.0833% of the month-end Net Asset Value of the Partnership whether or not the Partnership is profitable (approximately 1% annually). The Trading Advisor may pay a portion of its management fee to the General Partner, and the General Partner may share a portion of its administrative fee with the Placement Agent (as defined below).

The Partnership will pay the Trading Advisor an incentive fee equal to 20% of the Net New Appreciation (as defined in the Agreement), if any, achieved by the Partnership as of the end of such calendar month. Net New Appreciation achieved during a calendar month means the excess, if any, of (a) the Net Asset Value of the Partnership as of the end of a calendar month (without reduction for any incentive fees accrued or paid to the Trading Advisor for the calendar month or for any redemptions or distributions effected during or as of the end of such calendar month and without increase for any additional capital contributions effected during or as of the end of such calendar month) over (b) the Net Asset Value of the Partnership as of the end of the most recent prior calendar month for which an incentive fee was accrued or paid to the Trading Advisor, with clause (b) reduced by the amount of the incentive fee accrued or paid for such prior calendar month and also reduced by any redemptions or distributions, and increased by any contributions, effected as of or subsequent to the end of such prior calendar month through the first day of the calendar month referred to in clause (a), above.

Man Investments Inc., an affiliate of the General Partner and Trading Advisor, is the lead placement agent for the Partnership (the “Placement Agent”). In connection with various services provided by the Placement Agent to the Partnership related to the offer and sale of interests in the Partnership and the ongoing servicing of its investors, the Partnership will pay the Placement Agent a servicing fee equal to, in respect to Class A Units and Class B Units, 0.1250% of the month-end Net Asset Value of such Units (approximately 1.5% annually), and in respect of Class A-2 Units and Class B-2 Units, 0.1042% of the month-end Net Asset Value of such Units (approximately 1.25% annually), whether or not the Partnership is profitable as of the end of each month. The Placement Agent may pass all or a portion of the servicing fee on to certain other selling and services agents. In addition, Units purchased through such selling and services agents may be subject to the payment of an additional upfront selling commission of up to 3% of the purchase price of the Units.

The Partnership’s organizational and initial offering fees and expenses were approximately $50,000 (including its pro-rata share of the Trading Company’s organizational fees and expenses) and have been paid by the Partnership. Such organizational fees and expenses (excluding promotional and offering fees and expenses) have

been completely amortized. The Partnership pays all of its expenses incurred in the ordinary course of its business. The Partnership also pays its extraordinary expenses, if any.

The Trading Company utilizes MF Global, Inc. and Credit Suisse, Sydney Branch, to clear its futures trading activity and Royal Bank of Scotland and JPMorgan Chase to clear its forward trading activity (collectively, the “Brokers”). Royal Bank of Scotland also serves as the Trading Company’s foreign exchange prime broker. The Partnership is charged brokerage commissions at institutional rates, inclusive of all applicable National Futures Association (the “NFA”), exchange, clearing and other transaction fees. In connection with trading spot and forward contracts in the interbank foreign currency markets, the Partnership pays clearing fees of between $3.25 and $4.00 per transaction as well as dealer profits, which cannot be quantified, embedded in dealer quotes.

The Partnership invests substantially all of its assets in the Trading Company. Most of the Trading Company’s assets will be held in cash or United States government securities in accounts in the name of the Trading Company at the brokers or a bank, which currently is JP Morgan Chase Bank, N.A. (Chicago, Illinois), and in order to conduct futures trading activities, will be transferred, as necessary, into segregated accounts at the brokers. Approximately 20% to 40% of the Trading Company’s assets will be committed as margin for futures positions. The brokers may receive compensating balance treatment and excess interest income on the Partnership’s assets, through the Trading Company, held at the brokers in the form of cash.

The Trading Company engages in trading on non-U.S. exchanges and markets. In connection with trading on non-U.S. exchanges and markets, the brokers may either maintain Trading Company assets in accordance with the requirements of the Commodity Futures Trading Commission (“CFTC”) Rule 30.7 or may redeposit Trading Company assets with non-U.S. banks and brokers which may not be subject to regulatory schemes comparable to those applicable to the Futures Brokers.

Regulation

Under the Commodity Exchange Act, as amended (the “CEA”), commodity exchanges and futures trading are subject to regulation by the CFTC. The NFA, a “registered futures association” under the CEA, is the only non-exchange self-regulatory organization for futures industry professionals. The CFTC has delegated to NFA responsibility for the registration of “commodity trading advisors,” “commodity pool operators,” “futures commission merchants,” “introducing brokers” and their respective associated persons and “floor brokers” and “floor traders.” The CEA requires commodity pool operators and commodity trading advisors, such as the General Partner and Trading Advisor, respectively, and commodity brokers or futures commission merchants, such as MF Global Inc., to be registered and to comply with various reporting and record keeping requirements. The CFTC may suspend a commodity pool operator's or trading advisor's registration if it finds that its trading practices tend to disrupt orderly market conditions or in certain other situations. In the event that the registration of the General Partner as a commodity pool operator or the Trading Advisor as a commodity trading advisor were terminated or suspended, the General Partner would be unable to continue to manage the business of the Partnership or Trading Advisor would be unable to implement the AHL Diversified Program on behalf of the Partnership. Should the General Partner's or Trading Advisor's registration be suspended, termination of the Partnership might result.

In addition to such registration requirements, the CFTC and certain commodity exchanges have established limits on the maximum net long or net short position which any person may hold or control in particular commodities. Most exchanges also limit the changes in futures contract prices that may occur during a single trading day.

In January 2011, the CFTC proposed a separate position limits regime for 28 so-called “exempt” (i.e. metals and energy) and agricultural futures and options contracts and their economically equivalent swap contracts. Position limits in spot months are proposed to be 25% of the official estimated deliverable supply of the underlying commodity and in a non-spot month a percentage of the average aggregate 12-month rolling open interest in all months (swaps and futures) for each contract. It is possible that, if these position limits are adopted as proposed, the Trading Advisor will be required to modify its trading on behalf of its clients, including the Trading Company, with respect to certain futures contracts which may have an adverse affect the Partnership.

Currency forward contracts are not currently subject to regulation by any United States (“U.S.”) Government agency. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Reform Act”) was enacted in July 2010. The Reform Act includes provisions that comprehensively regulate the over-the-counter derivatives markets for the first time. The Reform Act will mandate that a substantial portion of over-the-counter derivatives must be executed in regulated markets and submitted for clearing to regulated clearinghouses. The mandates imposed by the Reform Act may result in the Trading Company bearing higher upfront and mark-to-market margin, less favorable trade pricing, and the possible imposition of new or increased fees with respect to any swaps entered into by the Trading Company.

The Reform Act also amended the definition of “eligible contract participant,” and the CFTC is interpreting that definition in a such manner that the Trading Company may no longer be permitted to engage in forward currency transactions by directly accessing the interbank market. Rather, when the Reform Act goes into effect in July 2011, the Trading Company may be limited to engaging in “retail forex transactions” which could limit the Trading Company’s potential forward currency counterparties to futures commission merchants and retail foreign exchange dealers. Limiting on the Trading Company’s potential forward currency counterparties in this manner could lead to the Trading Company bearing higher upfront and mark-to-market margin, less favorable trade pricing, and the possible imposition of new or increased fees. The “retail forex” markets could also be significantly less liquid than the interbank market. Moreover, the creditworthiness of the futures commission merchants and retail foreign exchange dealers with which the Trading Company may be required to trade could be significantly weaker than the creditworthiness of the financial institutions with which the Trading Company currently engages for its forward currency transactions. Although the impact of requiring the Trading Company to conduct forward currency transactions in the “retail” market could be substantial, the full scope is currently unknown and the ultimate effect could also be negligible.

Item 1A. Risk Factors.

Not applicable.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

The Partnership does not own or use any physical properties in the conduct of its business. The General Partner and various service providers perform services for the Partnership from their offices.

Item 3. Legal Proceedings.

The General Partner is not aware of any pending legal proceedings to which either the Partnership is a party or to which any of its assets are subject. In addition there are no pending material legal proceedings involving either the General Partner or Trading Advisor.

Item 4. (Removed and Reserved).

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a) Market Information.

There is no trading market for the Units, and none is likely to develop. Units may be redeemed upon 10 days’ written notice to the General Partner at their Net Asset Value as of the last business day of each calendar month; provided, however, that each Limited Partner must maintain a minimum investment of $25,000 and $10,000, respectively of Class A Units (or Class A-2 Units) and Class B Units (or Class B-2 Units), in the Partnership following any redemption initiated by such Limited Partner in order to remain invested in the Partnership.

(b) Holders.

As of December 31, 2010, there were 1,987 holders of Class A Units, 388 holders of Class A-2 Units, 1,245 holders of Class B Units and 132 holders of Class B-2 Units.

No distributions or dividends have been made on the Units, and the General Partner has no present intention to make any.

(d) Securities Authorized for Issuance Under Equity Compensation Plans.

None.

(e) Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities.

Pursuant to the Partnership’s Limited Partnership Agreement, the Partnership may admit additional Limited Partners to the Partnership and permit additional capital contributions to be made to the Partnership as of the last business day of any calendar month or at such other times as the General Partner may determine. On October 31, 2010, November 30, 2010 and December 31, 2010, the Partnership sold Class A Units to existing and new Limited Partners in the amount of $7,145,082, $5,750,230 and $13,128,327, respectively; Class A-2 Units to existing and new Limited Partners in the amount of $390,748, $210,000 and $590,000, respectively; Class B Units to existing and new Limited Partners in the amount of $1,313,000, $1,839,622 and $3,067,724, respectively; and Class B-2 Units to existing and new Limited Partners in the amount of $70,000, $50,000 and $17,000, respectively. There were no underwriting discounts or commissions in connection with the sales of the Units described above.

(f) Issuer Purchases of Equity Securities.

Pursuant to the Partnership’s Limited Partnership Agreement, a Limited Partner may redeem some or all of its Units as of the last business day of each calendar month at the then current month-end Net Asset Value. The redemption of Units has no impact on the value of Units that remain outstanding, and Units are not reissued once redeemed. The following table summarizes the amount of Units redeemed during the three months ended December 31, 2010:

	Class A Units	Class A-2 Units	Class B Units	Class B-2 Units

Date of Redemption:	Amount Redeemed:	Amount Redeemed:	Amount Redeemed:	Amount Redeemed:
October 31, 2010	$4,794,177	$869,936	$491,764	$37,830

November 30, 2010	$1,711,899	$1,080,183	$1,181,466	$152,196

December 31, 2010	$4,428,441	$1,615,184	$414,936	$85,084
TOTAL	$10,934,517	$3,565,303	$2,088,166	$275,110

Item 6. Selected Financial Data

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Reference is made to “Item 8. Financial Statements and Supplementary Data.” The information contained therein is essential to, and should be read in conjunction with, the following analysis.

Capital Resources and Liquidity

Units may be offered for sale as of the first business day, and may be redeemed as of the last business day, of each month.

The Partnership raises additional capital only through the sale of Units and capital is increased through trading profits (if any) and interest income. The Partnership does not engage in borrowing. The Partnership, not being an operating company, does not incur capital expenditures. It functions solely as a passive trading vehicle, investing the substantial majority of its assets in the Trading Company. Its remaining capital resources are used only as assets available to make further investments in the Trading Company and to pay Partnership expenses. Accordingly, the amount of capital raised for the Partnership should not have a significant impact on its operations.

Partnership assets not invested in the Trading Company are maintained in cash and cash equivalents in bank accounts or accounts with the JPMorgan Chase Bank, N.A. and are readily available to the Partnership. The Partnership may redeem any part or all of its limited partnership interest in the Trading Company at any month-end at the net asset value per unit of the Trading Company. The Trading Company’s assets are generally held as cash or cash equivalents which are used to margin futures and provide collateral for forward contracts and other over-the-counter contract positions and are withdrawn, as necessary, to pay redemptions (to the Partnership and other investors in the Trading Company). Other than potential market-imposed limitations on liquidity, due, for example, to limited open interest in certain futures markets or to daily price fluctuation limits, which are inherent in the Trading Company’s futures trading, the Trading Company’s assets are highly liquid and are expected to remain so.

During its operations through December 31, 2010, the Partnership experienced no meaningful periods of illiquidity in any of the numerous markets in which it trades.

Critical Accounting Principles

The Partnership 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 fair value, which is based on the closing settlement price on the exchange where the futures contract is traded by the Partnership on the day with respect to which the Partnership’s Net Asset Value is being determined. Open forward contracts and other derivatives traded on the interbank market are valued at fair value at their settlement price on the day with respect to which the Partnership’s Net Asset Value is being determined. If the General Partner determines the fair value of an investment cannot be accurately determined pursuant to the foregoing methods, such investment shall be assigned such fair value as the General Partner may determine in its sole discretion.

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 the Partnership, the General Partner believes that the estimates utilized in preparing the Partnership’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 General Partner further believes that, based on the nature of the business and operations of the

Partnership, no other reasonable assumptions relating to the application of the Partnership’s critical accounting estimates other than those to be used would likely result in materially different amounts from those reported. The Partnership's significant accounting policies are described in detail in Note 2 to the Financial Statements.

Off-Balance Sheet Arrangements

Neither the Partnership nor the Trading Company engages in off-balance sheet arrangements with other entities.

Contractual Obligations

The Partnership 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. The Partnership’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 and cash equivalents. All of the Partnership’s futures, forward and OTC contracts, other than certain currency forward 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 the Partnership for less than four to six months before being offset or rolled over into new contracts with similar maturities. The Partnership’s annual audited financial statements with the attached Trading Company’s annual audited financial statements, included as Exhibit 13.1 of this report, present a Condensed Schedule of Investments setting forth net unrealized appreciation (depreciation) of the Partnership’s open positions, both long and short, at December 31, 2010 fiscal year-end.

Results of Operations

Due to the nature of the Partnership’s trading, the Partnership's income or loss from operations may vary widely from period to period. Management cannot predict whether the Partnership's future Net Asset Value per Unit will increase or experience a decline. The Partnership was organized in September 1997 under the Delaware Revised Uniform Limited Partnership Act and commenced operations on April 3, 1998.

Performance Summary

The Partnership is a speculative managed futures fund which trades pursuant to the AHL Diversified Program, indirectly through its investment in the Trading Company. 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. The AHL Diversified Program, like most trend-following systems, is designed in the anticipation that most of its trades will be unprofitable; the objective of overall profitability depending on the system identifying certain major trends which occur and recognizing significant profits from participating in such trends.

The past performance of the AHL Diversified Program is not necessarily indicative of its future results. This is the case with all speculative trading strategies. Moreover, the markets in which the AHL Diversified Program is active have seen major changes in recent years, including the influx of entirely different classes of market participants. These changed circumstances may mean that the markets in which the Trading Advisor has previously traded on behalf of the Trading Company are not necessarily representative of those in which it trades on behalf of the Trading Company currently.

As a speculative futures fund, the Partnership (through the Trading Company) effectively maintains all of its capital in reserve. The Trading Company does not "buy" or "sell" futures or forward contracts in the traditional sense; rather, through taking positions in these markets, the Trading Company, and thus the Partnership indirectly, acquires loss/profit exposure and uses its capital to cover losses and provide margin (which constitutes a good faith deposit towards the Trading Company's (but not the Partnership's) obligation to pay such losses) to support its open positions. Each of the Partnership and the Trading Company maintains most of its capital in cash and cash equivalents.

Futures trading programs are proprietary and confidential. As is the case with any speculative futures fund, it is impossible to predict how the Partnership will perform. It is not possible, as it is in the case of an operating business, to predict performance trends, analyze future market conditions or evaluate the likely success or failure of the Partnership.

There are certain general market conditions in which the Partnership 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 Trading Program. However, because of the continually changing population of market participants as well as supply and demand characteristics, it cannot be predicted how the AHL Diversified Program, and thus the Partnership, will perform in any given market conditions.

	2010		2009

	31-Dec -10		31-Dec -09
Ending Equity		$456,218,363		$334,508,316

Net assets increased $121,710,047 for the year ended December 31, 2010. This increase was attributable to subscriptions in the amount of $143,217,881, redemptions in the amount of $76,802,295 and net income from operations of $55,294,461.

For the year ended December 31, 2010, the Partnership accrued or paid total expenses of $18,217,094, including $6,045,761 in servicing fees, $11,764,805 in General Partner administrative fees and Trading Advisor management fees, and $406,528 in other expenses. Interest of $423,755 was earned or accrued on the Partnership’s cash and cash equivalent investments.

The Net Asset Value of a Class A Unit increased by $418.22 to $3,471.25. The Net Asset Value of a Class B Unit increased by $418.22 to $3,471.26. The Net Asset Value of a Class A-2 Unit increased by $466.40 to 3,548.32. The Net Asset Value of a Class B-2 Unit increased by 466.40 to 3,548.33.

One of the key themes of 2010 was a whipsawing in investor ‘risk off’ trading environment. Another was the escalating European sovereign debt crisis, which dominated headlines for the majority of the year. Countries such as Greece, Ireland, Spain and Portugal took centre stage as investors grew increasingly concerned that they would struggle to service their vast amounts of public debt over the coming years. Bailouts of Greece in May and then Ireland in November went some way to calming fears of a sovereign default. However, subsequent tough austerity measures led to worries over the future outlook for European economic growth and question marks remained as to whether more eurozone nations would need bailouts in 2011.

However, towards the second half of 2010, risk appetite rebounded sharply as the US Federal Reserve embarked on a further round of quantitative easing, coined ‘QE2’, in order to stimulate domestic growth and fend off deflation. Investors also shrugged off worries over eurozone sovereign debt and focused on a flurry of positive Q3 corporate earnings and some surprisingly positive economic data which raised optimism over the outlook for 2011.

A general long exposure to fixed income markets, particularly those based in Europe, the US and Japan, dominated the AHL Diversified Program’s gains. Prices surged on a broad ‘flight-to-safety’ theme, triggered by the onset of the eurozone sovereign debt crisis, and a prolonged low interest rate environment theme.

Long positions in US Treasuries accrued standout returns over the year as the Federal Reserve issued a cautious outlook on the US economy and economic releases early in 2010 proved disappointing. Additional support was given towards the second half of the year as rising speculation and then confirmation of an additional round of quantitative easing pushed prices higher. European bonds also secured notable gains as prices rose on news that the European Central Bank had started to buy eurozone government bonds in an attempt to stabilise nervous markets. Signs of economic weakness across the eurozone pushed prices higher as investors grew concerned over the future outlook for economic growth in the region. Elsewhere, UK Gilts received a boost from rumours that the Bank of

England would also implement a further round of monetary easing to support economic growth and fend off the prospect of a double-dip recession. Equally important to bond sector returns was the systematic decrease in bond position sizes towards the end of the year as trends started to reverse.

In the short-term interest rate sector, it was predominantly long Eurodollar positions that drove performance. Prices surged after investors increasingly speculated that interest rates in the US would be held at record low rates for a prolonged period of time, in light of stubbornly high unemployment and news of another round of monetary easing.

Further positive performance was accrued from long positions in Short Sterling as prices pushed higher on worries that Britain’s emergency budget, which proposed deep cuts to public spending, would pose a threat to the UK’s economic recovery.

Lingering concerns over sovereign debt also benefited the currency sector. Short EUR positions generated strong gains as investors grew concerned over the stability of the region and the prospect of contagion across the eurozone. Traders increasingly shied away from the European single currency as concerns intensified that tough austerity measures to reign in eurozone debt would hinder longer-term economic growth prospects. As a result, the euro fell -9.0% on a trade- weighted basis over the year.

During the second half of the year, a number of short USD positions contributed to performance as the US dollar weakened 7.4% on a trade-weighed basis. Notable gains included long positions in commodity-linked currencies such as AUD and ZAR against USD. Both rallied 14.0% and 11.6% respectively as a rise in underlying raw materials and an increase in risk appetite provided support. Long AUD versus USD positions secured particularly strong gains as the Australian dollar was given a further boost by a number of solid domestic economic data releases combined and a succession of interest rate rises by the Reserve Bank of Australia.

Exposure to metals and agriculturals added to performance over the course of the year. Long positions in precious metals such as gold and silver accrued the largest gains in the metal sector. Both rallied strongly, 29.5% and 83.2% respectively, as demand for their perceived ‘safe-haven’ status surged in light of the increased market uncertainty. On the agricultural front, profits were particularly strong given the programme’s relatively low allocation to the sector. A generally long exposure to the sector proved beneficial as the S&P GSCI Agricultural Index rose 44.5% in 2010 after supply issues and strong demand caused prices to surge. Notable performers included long cotton trades as prices jumped 91.5% over the period.

On the negative side, both energies and stocks detracted from performance. In energies, both long and short positions in crude oil & other related products weighed on returns. Despite the WTI crude oil index rising 15.1%, conflicting supply and demand issues whipsawed prices throughout the year. Elsewhere, stock markets suffered significant sell offs in January and April hurting established long positions. Fluctuating economic data then led to ‘risk on’/’risk off’ conditions which caused a whipsawing of positions. While markets pushed higher at year end, leading to good gains from long positions, this was not enough to wipe out previous losses.

2009

Net assets increased $115,266,556 for the year ended December 31, 2009. This increase was attributable to subscriptions in the amount of $225,207,688, redemptions in the amount of $59,656,050 and net loss from operations of $50,285,082.

For the year ended December 31, 2009, the Partnership accrued or paid total expenses of $14,344,741, including $905,474 in brokerage commissions, $4,338,823 in servicing fees, $8,632,961 in General Partner administrative fees and Trading Advisor management fees, $0 in Trading Advisor incentive fees, and $467,483 in other expenses. Interest of $524,175 was earned or accrued on the Partnership’s cash and cash equivalent investments.

The Net Asset Value of a Class A Unit decreased by $612.18 to $3,053.03. The Net Asset Value of a Class B Unit decreased by $612.18 to $3,053.04. Class A-2 Units and Class B-2 Units were not issued prior to 2009 and ended the year with a Net Asset Value per Unit of $3,081.92 and $3.081.93, respectively.

At the beginning of 2009, financial markets found themselves crest-fallen in the wake of the Lehman Brothers collapse over three months previously. The subprime crisis had struck the financial system with its heaviest blow and, in turn, sent the global economy on a downward spiral. However, late in the first quarter markets reversed course as banks were off to a profitable start to the year, China boasted strong economic figures and government officials were united in pushing for a coordinated response to the global crisis. Indeed, 2009 would end strewn with examples of government intervention across a range of sectors and markets.

As the year unraveled, governments took stakes in listed banks while central banks all purchased from bond markets in order to maintain yields at low levels. Despite record breaking bond issuances and high budget deficit projections, yields on US, UK and European government bonds stayed within a tight range. Rising equity markets, benign government borrowing costs and a steady flow of positive economic news helped to stabilize markets. However, the fall in volatility, as measured by the CBOE VIX Index, succeeded in masking some strong reversals in asset classes. From mid-March until the end of the year, the primary trade had become a general risk on/risk off option, exemplified by the movements in equities and the safe-haven US dollar, which itself had become the borrowing currency of choice for risky carry trades. As a result, correlations between asset classes strengthened.

In this extraordinary market environment, the AHL Diversified Program experienced a difficult period as sudden trend reversals, whipsawing price movements and strongly correlated market movements heavily impacted the trend following trading system.

Trades in the bond sector weighed particularly heavily on the AHL Diversified Program’s performance as a number of positions suffered from somewhat directionless movements during 2009. Trading in US Treasuries, Euro-Bunds and Japanese bonds detracted the most from returns as positions whipsawed. The relatively large price swings were caused by a number of factors including central bank intervention, yo-yoing concerns between deflation and inflation, record government bond issuance and surprisingly strong US economic data.

Positions in the currency market also impacted the AHL Diversified Program’s performance in 2009 as the US dollar reversed sharply in March on the back of renewed risk appetite. The US dollar had appreciated strongly in the final quarter of 2008 as investors fled to its perceived safe haven status. As a result, long US dollar positions that had been profitable in late 2008 incurred losses as trends began to reverse. For many of the major currency markets, this initial trend reversal was then followed by a period of range-bound price activity as the economic outlook for their respective economies remained uncertain, for example GBP/USD and EUR/JPY.

Idiosyncratic events also affected returns over the period. In particular, long positions in the Swiss franc against the euro incurred losses as the Swiss government’s intervention during March saw a steady trend quickly reverse. News that the Swiss National Bank (SNB) would look to depreciate its own currency and cut interest rates by 25bps led the franc to shed -3.1% on 12 March, the largest one-day fall since the euro’s inception. After the event, the currency reverted to its previous upward trend and appreciated gradually until mid-June, at which time traders saw that the Bank of International Settlements was active in selling the Swiss franc on behalf of the SNB as the franc looked set to breach the 0.67 euro level. Consequently, the currency duly lost -1.9% on 24 June. In a final twist at the end of the year, optimism rose that the SNB would not look to intervene in the currency’s upward progress, sparking a jolt in the exchange rate.

Commodities also proved difficult to trade during 2009, particularly crude oil and other oil related products, as trend reversals and whipsawing movements impacted performance. Prices bottomed out at the end of 2008 and began to rise at the beginning of 2009 as investors became more confident over the economic outlook, particularly in China. As a result, short crude oil positions incurred losses as trends began to reverse before further losses were experienced as prices proved highly volatile for the remainder of the year.

While the AHL Diversified Program suffered over 2009, there were a number of key profits of note that helped to offset losses. As mentioned earlier, the beginning of March saw news flow improve dramatically, prompting the establishment of a number of key directional trends, with the most prominent linked to commodities

and emerging markets. Expectations of increased global demand and renewed signs of decoupling saw an increase in appetite for these risky themes. Long positions in commodity-linked currencies such as the Australian dollar, South African rand and Brazilian real all secured gains as they appreciated strongly against the US dollar. Long positions in AUD/USD proved particularly profitable as Australia’s economy showed its resilience. Contractions in GDP levels were less than feared before economic growth returned strongly before the end of 2009, forcing the country’s central bank to raise interest rates; the first such G20 country to do so since the financial crisis began. Elsewhere, long positions in gold also accrued notable returns. The precious metal rallied strongly over the second half of the year as fears rose that inflation was set to surge in 2010. Further strong gains were realized in the stocks sector. Long positions in US, European and Asian equity indices benefitted from early March onwards as improving economic data, positive earnings surprises and low bond yields drew investors into stocks.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8. Financial Statements and Supplementary Data.

Financial statements meeting the requirements of Regulation S-X are listed following this report as Exhibit 13.1 and are incorporated by reference into this Item 8.

Because the Partnership is a Smaller Reporting Company, as defined by Rule 229.10(f)(1), the supplementary financial information required by Item 302 of Regulation S-K is not applicable.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

The General Partner, with the participation of the General Partner's principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures with respect to the Partnership as of the end of the fiscal year for which this Annual Report on Form 10-K is being filed and, based on its evaluation, has concluded that these disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

Section 404 of the Sarbanes-Oxley Act of 2002 requires the General Partner to evaluate annually the effectiveness of its internal controls over financial reporting as of the end of each fiscal year, and to include a management report assessing the effectiveness of its internal control over financial reporting in all annual reports. There were no significant changes in the General Partner’s internal control over financial reporting during the three-month period ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

The General Partner is responsible for establishing and maintaining adequate internal control over the financial reporting of the Partnership. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the accounting principles generally accepted in the United States of America. The General Partner’s internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Partnership;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements of the Partnership in accordance with the accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Partnership are being made only in accordance with authorizations of management and directors of the General Partner; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’s assets that could have a material effect on its financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The management of the General Partner assessed the effectiveness of its internal control over financial reporting with respect to the Partnership as of December 31, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on its assessment, management has concluded that, as of December 31, 2010, the General Partner’s internal control over financial reporting with respect to the Partnership is effective based on those criteria.

There were no significant changes in the General Partner’s internal controls with respect to the Partnership or in other factors applicable to the Partnership that could significantly affect these controls subsequent to the date of their evaluation.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

(a, b) Identification of Directors and Executive Officers

(i) As a limited partnership, the Partnership itself has no directors or executive officers. The Partnership’s affairs are managed by the General Partner. Man Investments (USA) Corp., a Delaware corporation, is the general partner of the Partnership.

The principals and senior officers of the General Partner as of December 31, 2010 are as follows:

John Barbo, age 44, is the President, Chief Executive Officer and Chief Operating Officer of the General Partner. In addition to his affiliation with the General Partner, Mr. Barbo is also the President and Chief Operating Officer of the Placement Agent. Mr. Barbo joined the General Partner in October 2009, and is responsible for overall supervision of the General Partner’s and the Placement Agent’s activities in the U.S. He is based in New York and runs the Placement Agent’s private client business, which includes banking and intermediary relationships. Mr. Barbo is registered as an associated person of the General Partner as of November 23, 2009 and is listed as a principal of the General Partner as of November 5, 2010.

Prior to joining the General Partner in 2009, Mr. Barbo was Executive Director of Alternative Investments, National Sales & Marketing at Morgan Stanley & Co. Inc./Morgan Stanley Smith Barney LLC, a broker-dealer and wealth management firm, establishing Morgan Stanley’s first hedge fund platforms across multiple client segment strata and leading the sales effort, from March 2007 to September 2009. Prior to joining Morgan Stanley, he was the Director of Alternative Investments, National Distribution at Merrill Lynch Pierce Fenner & Smith, a broker-dealer and wealth management firm, where he was instrumental in launching a number of industry leading platforms such as HedgeAccess/FutureAccess, from October 1994 to February 2007 and withdrawn as an associated person on March 21, 2007.

John earned a B.A. in marketing from Michigan State University and an M.B.A. from Columbia University. He holds his FINRA Series 7, 24, 63 and NFA Series 3 licenses.

Alicia Borst Derrah, born March 17, 1958, is the Head of Finance of the General Partner and Placement Agent. In addition to her affiliation with the General Partner, Ms. Derrah has been the Chief Financial Officer of the General Partner as well as Man Investments (USA) LLC (“MI USA”) since 1993. She is also the Principal Financial Officer of the Placement Agent. Ms. Derrah joined the General Partner in October 2005 and joined MI USA in September 1992. Ms. Derrah is registered as an associated person of the General Partner and is listed as a principal of the General Partner as of November 16 and November 17, 2005, respectively. 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 GCI, 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 from April 1981 to December 1987. 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 CPA and received a B.A. from Mundelein College.

Man Investments Holdings Inc., a Delaware corporation, is also a principal of the General Partner, but does not participate in making trading or operational decisions for the Partnership. Man Investments Holdings Inc. is an indirect, wholly-owned subsidiary of Man Group.

None.

(d) Family Relationships

None.

(e) Business Experience

See Item 10 (a, b) above.

(f) Involvement in Certain Legal Proceedings

None.

(g) Promoters and Control Persons

Not applicable.

(h) Section 16(a) Beneficial Ownership Reporting Compliance

Mr. John Barbo became Chief Executive Officer of the General Partner in October 2010 and has not filed a Form 3 with respect to the Partnership but will do so promptly. Mr. Barbo does not own and has not owned any Units so the number of transactions to be reported untimely is 0.

(h) Code of Ethics

The Partnership has no employees, officers or directors and is controlled by the General Partner. The General Partner has adopted an Executive Code of Ethics that applies to its principal executive officers, principal financial officer and principal accounting officer. A copy of this Executive Code of Ethics may be obtained at no charge by written request to Man Investments (USA) Corp., 123 N. Wacker Drive, 28th Floor, Chicago, Illinois 60606 or by calling: (312) 881-6800 (ask for the Chief Legal Officer).

(i) Audit Committee Financial Expert

Because the Partnership has no employees or directors, the Partnership has no audit committee. The Partnership is managed by the General Partner. Ms. Alicia Derrah serves as the General Partner’s “audit committee financial expert.” Ms. Derrah is not independent of the management of the General Partner. The General Partner is not required to have, and does not have, independent directors.

Item 11. Executive Compensation.

The Partnership itself has no officers, directors or employees. None of the principals, officers or employees of the General Partner receive compensation from the Partnership. The General Partner invests all or substantially all of the Partnership's assets in the Trading Company. The Trading Advisor makes all trading decisions for the Trading Company. The General Partner receives a monthly general partner administrative fee from the Partnership in an amount equal to 0.0833% of the month-end Net Asset Value of the Partnership (approximately a 1% annually). The Partnership pays the Trading Advisor, an affiliate of the General Partner, a monthly management fee in an amount equal to 0.1667% of the Partnership's month-end Net Asset Value (approximately 2% annually) and 20% of any Net New Appreciation, described above under Item 1, achieved by the Partnership as of the end of each calendar month. The Trading Advisor may pay a portion of its management fees to the General Partner.

The officers of the General Partner and Trading Advisor are compensated by the General Partner and Trading Advisor in their respective positions. These officers receive no other compensation from the Partnership. The Partnership has no compensation plans or arrangements relating to a change in control of either the Partnership, the General Partner or the Trading Advisor.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

(a) Securities authorized for issuance under equity compensation plans

None.

(b) Security Ownership of Certain Beneficial Owners

The General Partner knows of no persons who own beneficially more than 5% of the Partnership's Units. All of the Partnership's general partner interest is held by the General Partner.

The Partnership has no officers or directors. Under the terms of the Limited Partnership Agreement, the Partnership's affairs are managed by the General Partner. As of December 31, 2010, the General Partner's interest in the Partnership was valued at $646,951 which constituted 0.14% of total partners' capital.

As of December 31, 2010, no director, executive officer or member of the General Partner beneficially owned Units in the Partnership.

(d) Changes in Control

There are no arrangements known to the Partnership or General Partner the operation of which would result in a change in control of the Partnership; provided, however, that pursuant to the Partnership's Limited Partnership Agreement, the General Partner may admit additional or substitute general partners and may withdraw as general partner of the Partnership.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The Partnership paid the General Partner and Trading Advisor aggregate administrative and management fees of $11,764,805 for the year ended December 31, 2010. The Partnership paid the Trading Advisor $0 in incentive fees for the year ended December 31, 2010. The Partnership paid Man Investments Inc., an affiliate of the General Partner and Trading Advisor that serves as the lead placement agent for the Partnership, $6,045,761 in servicing fees for the year ended December 31, 2010. The General Partner's interest in the Partnership earned net income of $77,946 for year ended December 31, 2010.

The Partnership has not and does not make any loans to the General Partner, its affiliates, their respective officers, directors or employees or the immediate family members of any of the foregoing, or to any entity, trust or other estate in which any of the foregoing has any interest, or to any other person (provided that the purchase of U.S. government instruments and the deposit of Partnership assets with banks, futures brokers and foreign exchange counterparties in connection with the trading operations of the Partnership are not considered to be loans).

None of the General Partner, its affiliates, their respective officers, directors and employees or the immediate family members of any of the foregoing, or any entity trust or other estate in which any of the foregoing has any interest has, to date, sold any asset, directly or indirectly, to the Partnership.

The Partnership has no directors, officers or employees and is managed by the General Partner. The General Partner is managed by its principals, none of whom is independent of the General Partner.

Item 14. Principal Accountant Fees and Services

(1) Audit Fees

The aggregate fees for professional services provided by Deloitte & Touche LLP, the Partnership’s independent registered public accounting firm, for the audit of the Partnership’s annual financial statements and review of financial statements included in the Partnership’s quarterly reports for the years ended December 31, 2010 and 2009 were approximately $171,702 and $146,600, respectively.

(2) Audit-Related Fees

There were no fees for assurance and related services rendered by Deloitte & Touche LLP for the years ended December 31, 2010 and 2009.

(3) Tax Fees

The aggregate fees for services rendered by Ernst & Young LLP for tax compliance, advice and planning services for the years ended December 31, 2010 and 2009 were approximately $80,000 and $54,000, respectively.

(4) All Other Fees

None.

(5) Pre-Approval Policies

Neither the Partnership nor the General Partner has an audit committee to pre-approve accountant and auditor fees and services. In lieu of an audit committee, the principals of the General Partner pre-approve all billings prior to the commencement of services.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements

The financial statements required by this Item are included herewith as Exhibit 13.1.

(a)(2) Financial Statement Schedules

All Schedules are omitted for the reason that they are not required or are not applicable because equivalent information has been included in the financial statements or the notes thereto.

(a)(3) Exhibits as required by Item 601 of Regulation S-K

The following exhibits are included herewith.

Designation Description

13.1

Report of Independent Registered Public Accounting Firm

31.1

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2

Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1

Section 1350 Certification of Principal Executive Officer

32.2

Section 1350 Certification of Principal Financial Officer

The following exhibits are incorporated by reference herein from the exhibits of the same description and number filed on January 28, 2008 with the Partnership's Registration Statement on Form 10 (Reg. No. 000-53043).

3.1

Certificate of Limited Partnership of Man-AHL Diversified I L.P.

10.1

Form of Customer Agreement between E D & F Man International Inc. and Man-AHL Diversified Trading Company L.P.

10.2

Form of Trading Advisor Agreement between Man-AHL Diversified I L.P., Man Investments (USA) Corp. and Man-AHL (USA) Limited.

10.3

Form of Selling Agreement between Man Investments (USA) Corp. and Man Investments Inc.

The following exhibits are incorporated by reference herein from the exhibits of the same description and number filed on March 31, 2010 with the Partnership's Annual Report on Form 10-K.

4.2

Sixth Amended Limited Partnership Agreement of Man-AHL Diversified I L.P.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 31, 2011.

	Man-AHL Diversified I L.P. (Registrant)

	By: Man Investments (USA) Corp. General Partner

	By:	/s/ John Barbo

		President and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Alicia Derrah

		Vice President, Chief Financial Officer and Secretary (Principal Financial and Chief Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the General Partner of the Registrant in the capacities and on the date indicated.

	Title with
Signature	General Partner	Date


/s/ John Barbo	President and Chief Executive Officer	March 31, 2011
John Barbo	(Principal Executive Officer)


/s/ Alicia Derrah	Vice President, Chief Financial Officer
Alicia Derrah	and Secretary	March 31, 2011
	(Principal Financial and Chief Accounting Officer)

(Being the principal executive officer, the principal financial officer and chief accounting officer of Man Investments (USA) Corp.)

Man Investments (USA) Corp.

General Partner of Registrant

March 31, 2011

By /s/ John Barbo

John Barbo

President and Chief Executive Officer

INDEX TO FINANCIAL STATEMENTS

Man-AHL Diversified I L.P.
Financial Statements

Report of Independent Registered Public Accounting Firm	F-2
Statements of Financial Condition as of December 31, 2010 and 2009	F-3
Statements of Operations For the Years Ended December 31, 2010 and 2009	F-5
Statements of Changes in Partner’s Capital
For the Years Ended December 31, 2010 and 2009	F-6
Statements of Cash Flows For the Years Ended December 31, 2010 and 2009	F-7
Notes to Financial Statements	F-8


Man-AHL Diversified Trading Company L.P.
Financial Statements

Report of Independent Registered Public Accounting Firm	F-14
Statements of Financial Condition as of December 31, 2010 and 2009	F-15
Condensed Schedules of Investments as of December 31, 2010 and 2009	F-16
Statements of Operations For the Years Ended December 31, 2010 and 2009	F-17
Statements of Changes in Partner’s Capital
For the Years Ended December 31, 2010 and 2009	F-18
Statements of Cash Flows For the Years Ended December 31, 2010 and 2009	F-19
Notes to Financial Statements	F- 20



		Man-AHL Diversified I L.P. (A Delaware Limited Partnership) Financial Statements as of and for the Years Ended December 31, 2010 and 2009, and Independent Auditors’ Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Man-AHL Diversified I L.P.:

We have audited the accompanying statements of financial condition of Man-AHL Diversified I L.P. (a Delaware Limited Partnership) (the “Partnership”) as of December 31, 2010 and 2009, and the related statements of operations, changes in partners’ capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the financial statements 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 are free of material misstatement. The Partnership 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 Partnership'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 present fairly, in all material respects, the financial position of Man-AHL Diversified I L.P. as of December 31, 2010 and 2009, and the results of its operations, changes in its partners’ capital and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE, LLP

Chicago, IL

February 18, 2011

F-2

MAN-AHL DIVERSIFIED I L.P.
(A Delaware Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31, 2010 AND 2009


	2010		2009
ASSETS

CASH AND CASH EQUIVALENTS	$	17,978,871	$	8,321,635

INVESTMENT IN MAN-AHL DIVERSIFIED
TRADING COMPANY L.P.		456,318,413		334,568,212

DUE FROM MAN-AHL DIVERSIFIED
TRADING COMPANY L.P.		8,322,471		9,251,843

OTHER ASSETS		-		295

TOTAL	$	482,619,755	$	352,141,985


LIABILITIES AND PARTNERS’ CAPITAL

LIABILITIES:
Redemptions payable	$	6,443,299	$	7,829,165
Subscriptions received in advance		17,828,921		8,381,824
Management fees payable		1,105,525		842,617
Servicing fees payable		566,652		425,445
Accrued expenses		206,995		154,618
Payable to Man-AHL Diversified II L.P.		250,000		-

Total liabilities		26,401,392		17,633,669

PARTNERS’ CAPITAL:
General Partner - Class A (186 unit equivalents outstanding
at December 31, 2010 and 2009, respectively)		646,951		569,005
Limited Partners - Class A (89,273.39 and 82,984.62
units outstanding at December 31, 2010 and 2009, respectively)		309,889,356		253,353,412
Limited Partners - Class A Series 2 (14,736.53 and 4,857.29
units outstanding at December 31, 2010 and 2009, respectively)		52,289,913		14,969,780
Limited Partners - Class B (23,302.68 and 20,210.95
units outstanding at December 31, 2010 and 2009, respectively)		80,889,762		61,704,853
Limited Partners - Class B Series 2 (3,523.45 and 1,269.10
units outstanding at December 31, 2010 and 2009, respectively)		12,502,381		3,911,266

Total partners’ capital		456,218,363		334,508,316

TOTAL	$	482,619,755	$	352,141,985

			(continued)

F-3

MAN-AHL DIVERSIFIED I L.P.
(A Delaware Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31, 2010 AND 2009 (CONTINUED)	2010		2009


NET ASSET VALUE PER OUTSTANDING UNIT OF
PARTNERSHIP INTEREST - CLASS A	$	3,471.25	$	3,053.03

NET ASSET VALUE PER OUTSTANDING UNIT OF
PARTNERSHIP INTEREST - CLASS A Series 2	$	3,548.32	$	3,081.92

NET ASSET VALUE PER OUTSTANDING UNIT OF
PARTNERSHIP INTEREST - CLASS B	$	3,471.26	$	3,053.04

NET ASSET VALUE PER OUTSTANDING UNIT OF
PARTNERSHIP INTEREST - CLASS B Series 2	$	3,548.33	$	3,081.93

See accompanying notes and attached financial statements
of Man-AHL Diversified Trading Company L.P.

F-4

MAN-AHL DIVERSIFIED I L.P.
(A Delaware Limited Partnership)

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

	2010			2009
NET INVESTMENT INCOME (LOSS)
ALLOCATED FROM MAN-AHL
DIVERSIFIED TRADING COMPANY L.P.:
Interest income	$	423,755		$	524,175
Other expenses		(125,622	)		-
Brokerage commissions		(1,680,903	)		-

Net investment (loss) income allocated from
Man-AHL Diversified Trading Company L.P.		(1,382,770	)		524,175

PARTNERSHIP EXPENSES:
Brokerage commissions		-			905,474
Management fees		11,764,805			8,632,961
Servicing fees		6,045,761			4,338,823
Other expenses		406,528			467,483

Total expenses		18,217,094			14,344,741

Net investment loss		(19,599,864	)		(13,820,566	)

REALIZED AND UNREALIZED GAINS
(LOSSES) ON TRADING ACTIVITIES
ALLOCATED FROM MAN-AHL
DIVERSIFIED TRADING COMPANY L.P.:
Net realized trading gains (losses)
on closed contracts		52,599,805			(27,527,879	)
Net change in unrealized trading gains (losses)
on open contracts		22,294,520			(8,936,637	)

Net gains (losses) on trading activities allocated
from Man-AHL Diversified Trading Company L.P.		74,894,325			(36,464,516	)

NET INCOME (LOSS)	$	55,294,461		$	(50,285,082	)


NET INCOME (LOSS) PER UNIT OF
PARTNERSHIP INTEREST - CLASS A	$	418.22		$	(612.18	)

NET INCOME (LOSS) PER UNIT OF
PARTNERSHIP INTEREST - CLASS A Series 2	$	466.40		$	(310.71	)

NET INCOME (LOSS) PER UNIT OF
PARTNERSHIP INTEREST - CLASS B	$	418.22		$	(612.18	)

NET INCOME (LOSS) PER UNIT OF
PARTNERSHIP INTEREST - CLASS B Series 2	$	466.40		$	(310.71	)

See accompanying notes and attached financial statements
of Man-AHL Diversified Trading Company L.P.

F-5

MAN-AHL DIVERSIFIED I L.P.
(A Delaware Limited Partnership)

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


	CLASS A											CLASS A Series 2						CLASS B						CLASS B Series 2						TOTAL

	Limited						General					Limited						Limited						Limited
	Partners						Partner					Partners						Partners						Partners

	Amount			Units			Amount			Units		Amount			Units			Amount			Units			Amount			Units			Amount			Units
PARTNERS’ CAPITAL
January 1, 2010	$	253,353,412			82,985		$	569,005			186	$	14,969,780			4,857		$	61,704,853			20,211		$	3,911,266			1,269		$	334,508,316			109,508

Subscriptions		68,286,137			21,518			-			-		47,186,805			15,246			18,601,451			5,860			9,143,488			2,953			143,217,881			45,577
Redemptions		(48,584,783	)		(15,230	)		-			-		(17,252,455	)		(5,366	)		(8,795,578	)		(2,768	)		(2,169,479	)		(699	)		(76,802,295	)		(24,063	)
Net income		36,834,590			-			77,946			-		7,385,783			-			9,379,036			-			1,617,106			-			55,294,461			-

PARTNERS’ CAPITAL
December 31, 2010	$	309,889,356			89,273		$	646,951			186	$	52,289,913			14,737		$	80,889,762			23,303		$	12,502,381			3,523		$	456,218,363			131,022

PARTNERS’ CAPITAL
January 1, 2009	$	190,432,028			51,957		$	683,098			186	$	-			-		$	28,126,634			7,674		$	-			-		$	219,241,760			59,817

Subscriptions		155,087,978			46,690			-			-		16,360,659			5,049			49,088,551			14,889			4,670,500			1,430			225,207,688			68,058
Redemptions		(50,828,042	)		(15,662	)		-			-		(599,492	)		(192	)		(7,731,891	)		(2,352	)		(496,625	)		(161	)		(59,656,050	)		(18,367	)
Net loss		(41,338,552	)		-			(114,093	)		-		(791,387	)		-			(7,778,441	)		-			(262,609	)		-			(50,285,082	)		-

PARTNERS’ CAPITAL
December 31, 2009	$	253,353,412			82,985		$	569,005			186	$	14,969,780			4,857		$	61,704,853			20,211		$	3,911,266			1,269		$	334,508,316			109,508


See accompanying notes and attached financial statements
of Man-AHL Diversified Trading Company L.P.

F-6

MAN-AHL DIVERSIFIED I L.P.
(A Delaware Limited Partnership)

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


	2010			2009

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)	$	55,294,461		$	(50,285,082	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Purchases of investment in Man-AHL Diversified Trading Company L.P.		(143,112,910	)		(225,207,688	)
Sales of investment in Man-AHL Diversified Trading Company L.P.		95,803,636			72,264,333
Net change in (appreciation) depreciation of investment in
Man-AHL Diversified Trading Company L.P.		(73,511,555	)		35,940,341
Changes in assets and liabilities:
Other assets		295			-
Management fees payable		262,908			275,897
Incentive fees payable		-			(2,079,483	)
Servicing fees payable		141,207			142,085
Accrued expenses		52,377			25,345
Payable to Man AHL Diversified II L.P.		250,000			-

Net cash used in operating activities		(64,819,581	)		(168,924,252	)

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from subscriptions		152,664,978			224,859,972
Payments on redemptions		(78,188,161	)		(56,343,625	)

Net cash provided by financing activities		74,476,817			168,516,347

NET INCREASE (DECREASE) IN CASH		9,657,236			(407,905	)

CASH AND CASH EQUIVALENTS - Beginning of year		8,321,635			8,729,540

CASH AND CASH EQUIVALENTS - End of year	$	17,978,871		$	8,321,635

SUPPLEMENTAL DISCLOSURE OF
NON-CASH TRANSACTIONS:
Non-cash transfers between sub-classes	$	44,782		$	-

Non-cash transfers between sub-classes	$	145,127		$	-


See accompanying notes and attached financial
statements of Man-AHL Diversified Trading Company L.P.

F-7

MAN-AHL DIVERSIFIED I L.P.

(A Delaware Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

1.	ORGANIZATION OF THE PARTNERSHIP

Man-AHL Diversified I L.P. (a Delaware Limited Partnership) (the “Partnership”) was organized in September 1997 under the Delaware Revised Uniform Limited Partnership Act and commenced operations on April 3, 1998, for the purpose of engaging in the speculative trading of futures and forward contracts. The Partnership is a “feeder” fund in a “master-feeder” structure, whereby the Partnership invests substantially all of its assets in Man-AHL Diversified Trading Company L.P. (the “Trading Company”). Man-AHL (USA) Limited (the “Advisor”), a United Kingdom company, is the Partnership’s trading advisor. Man Investments (USA) Corp. (the “General Partner”), a Delaware corporation and a registered commodity pool operator under the Commodity Exchange Act, as amended, is the Partnership’s commodity pool operator and general partner. Man Investments Holdings Limited, a United Kingdom holding company that is part of Man Group plc, a United Kingdom public limited company, is the sole shareholder of the Advisor, and Man Investments Holdings Inc., a Delaware corporation that is part of Man Group plc, is the sole shareholder of the General Partner.

On January 28, 2008, the Partnership filed a registration statement on Form 10 with the Securities and Exchange Commission to register the Partnership’s units of limited partnership interests as required by Section 12(g) of the Securities Exchange Act of 1934, as amended.

The Partnership’s units are distributed through the Partnership or other selling agents, including Man Investments Inc. (“MII”), an affiliate of the Advisor and General Partner. MII is a registered broker-dealer and a member of the Financial Industry Regulatory Authority (“FINRA”).

Effective July 1, 2008, the Partnership issued a new class of units of limited partnership interests, Class B. Class B was created solely for retirement plan investors. The fee structure is identical to Class A.

On April 1, 2009, the Partnership added two new series of units: Class A Series 2 (“Class A-2”) and Class B Series 2 units (“Class B-2”). Except as described in Footnote 4 below, Class A-2 and Class B-2 units are identical to Class A and B units, respectively.

2.	SIGNIFICANT ACCOUNTING POLICIES

The Partnership prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. The following is a summary of the significant accounting and reporting policies used in preparing the financial statements.

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.

Brokerage Commissions Expense — Brokerage commission expense on futures and forward contracts traded in the Trading Company is charged at institutional rates based on trading volume.

F-8

Income Taxes — Income taxes are not provided for by the Partnership because taxable income or loss of the Partnership is includable in the income tax returns of the individual partners. Tax years 2007, 2008 and 2009 remain subject to examination by federal and state jurisdictions, including those states where investors reside or states where the Partnership is subject to other filing requirements. The Partnership has no uncertain tax positions that require recognition in the financial statements.

Net Income (Loss) Per Unit — Net income (loss) per unit of Class A or Class B partnership interest is equal to the change in net asset value per unit of the respective classes, from the beginning of the year to the end of the year. Unit amounts are rounded to whole numbers for financial statement presentation.

Subscriptions Received in Advance — Subscriptions received in advance are comprised of cash received prior to the statements of financial condition date for which units were issued on the first day of the following month. Subscriptions received in advance do not participate in the earnings of the Partnership until the related units are issued.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the General Partner to make estimates and assumptions that affect the reported amounts of assets and liabilities (and disclosure of contingent assets and liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Investment in Man-AHL Diversified Trading Company L.P. — The Partnership’s investment in the Trading Company is valued at fair value at the Partnership’s proportionate interest in the net assets of the Trading Company. Investment transactions are recorded on a trade-date basis. The performance of the Partnership is directly affected by the performance of the Trading Company. Attached are the financial statements of the Trading Company, which are an integral part of these financial statements. Valuation of investments held by the Trading Company as well as the classification of such investments within the fair value hierarchy is discussed in the notes to the Trading Company’s financial statements.

At December 31, 2010 and 2009, the Partnership owned 41,849 and 36,545 units, respectively, of the Trading Company. The Partnership’s aggregate ownership percentage of the Trading Company at December 31, 2010 and 2009, was 74.22% and 68.10%, respectively.

The Partnership is able to redeem its investment from the Trading Company on a monthly basis. As of December 31, 2010 and 2009, the Partnership could redeem its investment without restriction at the month-end net asset value of the Trading Company that had been determined in accordance with Accounting Standards Codification (“ASC”) 946, Financial Services – Investment Companies. As a result, in accordance with Accounting Standard Update No. 2009-12 Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent) “ASU 2009-12”, the Partnership classified its investment in the Trading Company as a Level 2 investment as of December 31, 2009. The categorization of investments held by the Trading Company has been disclosed in the attached financial statements.

Expenses — The Advisor earns a monthly management fee in an amount equal to 0.1667% (2% annually) of the Partnership’s month-end Net Asset Value, as defined in the Limited Partnership Agreement (the “Agreement”). In addition, the General Partner earns a monthly general partner fee in an amount equal to 0.0833% (1% annually) of the month-end Net Asset Value of Class A and Class B units. The general partner fee is included in management fees in the statements of operations.

F-9

The Advisor also earns a monthly incentive fee equal to 20% of any Net New Appreciation, as defined in the Agreement, achieved by the Partnership. The incentive fee is retained by the Advisor even if subsequent losses are incurred; however, no subsequent incentive fees will be paid to the Advisor until any such trading losses are recouped by the Partnership.

The Partnership pays a monthly servicing fee to MII, as described in the supplement to the Agreement dated July 15, 2008, in an amount equal to 0.1250% (1.5% annually) of the month-end Net Asset Value of Class A and Class B units. The Partnership also pays a monthly servicing fee to MII, as described in the supplement to the Agreement, dated January 2, 2009, in an amount equal to 0.1042% (1.25% annually) of the month-end Net Asset Value of Class A-2 and Class B-2 units. For all classes of units, MII serves as the placement agent for the Partnership.

Derivative Contracts — The Partnership’s operating activities involve trading, indirectly through its investment in the Trading Company, in derivative contracts that involve varying degrees of market and credit risk. With respect to the Partnership’s investment in the Trading Company, the Partnership has limited liability, and, therefore, its maximum exposure to either market or credit loss is limited to the carrying value of its investment in the Trading Company, as set forth in the statements of financial condition.

The Trading Company utilizes MF Global, Inc. (“MFG”) and Credit Suisse to clear its futures trading activity. The Trading Company utilizes Royal Bank of Scotland (“RBS”) and JPMorgan Chase (“JPM”) to clear its forward trading activity.

3.	RECENT ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2010, the Partnership has adopted the provisions of the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements ("ASU 2010-06") to add new requirements for disclosures about transfers into and out of Level 1 and Level 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The adoption of ASU 2010-06 only affected financial statement disclosures at the Trading Company for which there was no impact on the financial position, results of operations, or cash flows. See the Trading Company financial statements for detailed fair value measurement disclosures.

4.	LIMITED PARTNERSHIP AGREEMENT

The General Partner and each limited partner share in the profits and losses of the Partnership in proportion to the number of units or unit equivalents held by each partner. However, no limited partner is liable for obligations of the Partnership in excess of its capital subscription and net profits or losses, if any.

The Partnership’s units are continuously offered as of the first business day of each month at net asset value, as defined in the Agreement. Limited Partners may redeem any or all of their units as of the end of any month at net asset value per unit on 10 days prior written notice to the General Partner. The Partnership will be dissolved on December 31, 2037, or upon the occurrence of certain events, as specified in the Agreement.

F-10

The General Partner is required to make and maintain a general partner investment in the Partnership in an aggregate amount equal to the lesser of 1.01 % of the net aggregate capital subscriptions of all partners, or $500,000.

Distributions (other than redemptions of units), if any, are made on a pro rata basis at the sole discretion of the General Partner.

Under the terms of the Agreement, the Partnership is liable for all costs associated with executing its business strategy. These costs include, but are not limited to, expenses associated with operations of the partnership, such as, management and incentive fees and other operating expenses, such as legal, audit, and tax return preparation fees.

5.	FINANCIAL GUARANTEES

The Partnership enters into administrative and other professional service contracts that contain a variety of indemnifications. The Partnership’s maximum exposure under these arrangements is not known; however, the Partnership has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

6.	FINANCIAL HIGHLIGHTS

The following represents the ratios to average partners’ capital and other supplemental information for the years ended December 31, 2010 and 2009:

	Class A			Class A-2			Class B			Class B-2			Class A			*** Class A-2			Class B			*** Class B-2
	2010			2010			2010			2010			2009			2009			2009			2009

Per unit operating performance:
Beginning net asset value	$	3,053.03		$	3,081.92		$	3,053.04		$	3,081.93		$	3,665.21		$	3,392.63		$	3,665.22		$	3,392.64

Income (loss) from investment operations:
Net investment loss		(161.77	)		(130.52	)		(161.85	)		(128.94	)		(162.93	)		(86.13	)		(163.96	)		(87.18	)
Net realized and unrealized gains (losses)
on trading activities		579.99			596.92			580.07			595.34			(449.25	)		(224.58	)		(448.22	)		(223.53	)

Total income (loss) from investment operations		418.22			466.40			418.22			466.40			(612.18	)		(310.71	)		(612.18	)		(310.71	)

Ending net asset value	$	3,471.25		$	3,548.32		$	3,471.26		$	3,548.33		$	3,053.03		$	3,081.92		$	3,053.04		$	3,081.93

Ratios to average partners' capital: 1
Expenses other than incentive fees		5.16	%		4.12	%		5.15	%		4.06	%		5.15	%		3.77	% **		5.22	%		3.80	% **

Total expenses		5.16	%		4.12	%		5.15	%		4.06	%		5.15	%		3.77	%		5.22	%		3.80	%

Net investment loss		(5.05	)%		(4.01	)%		(5.05	)%		(3.95	)%		(4.96	)%		(2.70	)%		(5.03	)%		(3.62	)%

Total return:
Total return before incentive fees		13.70	%		15.13	%		13.70	%		15.13	%		(16.70	)%		(9.16	)%		(16.70	)%		(9.16	)%

Total return after incentive fees		13.70	%		15.13	%		13.70	%		15.13	%		(16.70	)%		(9.16	)%		(16.70	)%		(9.16	)%

** Annualized (other than incentive fee)
*** April 1, 2009 Inception Date
1 Includes amounts allocated from the Trading Company

Financial highlights are calculated for limited partners taken as a whole for each class. An individual partner’s return and ratios may vary from these returns and ratios based on the timing of capital transactions.

F-11

7.	SUBSEQUENT EVENTS

The General Partner has evaluated the impact of subsequent events on the Partnership through the date of financial statement issuance, and noted no subsequent events that require adjustment to or disclosure in these financial statements other than as follows:

Beginning in 2011, the General Partner has contracted with Citi Fund Services Ohio, Inc., a subsidiary of Citibank, N.A., to provide accounting, administration and investor services to the Partnership.

* * * * * *

F-12

Man-AHL Diversified Trading Company L.P.

(A Delaware Limited Partnership)

Financial Statements as of and for the

Years Ended December 31, 2010 and 2009, and

Independent Auditors’ Report

F-13

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Man-AHL Diversified Trading Company L.P.:

We have audited the accompanying statements of financial condition, including the condensed schedules of investments, of Man-AHL Diversified Trading Company L.P. (a Delaware Limited Partnership) (the “Partnership”) as of December 31, 2010 and 2009, and the related statements of operations, changes in partners’ capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the financial statements based on our audits.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Man-AHL Diversified Trading Company L.P. as of December 31, 2010 and 2009, and the results of its operations, changes in its partners’ capital and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE, LLP

Chicago, IL

February 18, 2011

F-14

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.
(A Delaware Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31, 2010 AND 2009


	2010		2009
ASSETS

Equity in futures and forwards
trading accounts:
Net unrealized trading gains on open futures contracts	$	9,571,147	$	7,542,562
Net unrealized trading gains on open forward contracts		21,364,480		247,019
Due from brokers		58,686,001		80,534,233
		89,621,628		88,323,814

Cash and cash equivalents		540,475,018		497,103,543

Interest receivable		36,230		16,750

TOTAL	$	630,132,876	$	585,444,107


LIABILITIES AND PARTNERS’ CAPITAL

LIABILITIES —
Redemptions payable	$	14,543,323	$	85,988,365
Accrued expenses		177,744		-
Net unrealized trading losses on open forward contracts		-		8,180,762
Net unrealized trading losses on open future contracts		689,356		-

Total liabilities	$	15,410,423	$	94,169,127

PARTNERS’ CAPITAL:
Limited Partners (56,391.50 and 53,661.82 units outstanding at
December 31, 2010 and 2009, respectively)		614,722,453		491,274,980

Total partners’ capital		614,722,453		491,274,980

TOTAL	$	630,132,876	$	585,444,107

NET ASSET VALUE PER OUTSTANDING UNIT OF
PARTNERSHIP INTEREST	$	10,900.98	$	9,155.02


See notes to financial statements.

F-15

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.
(A Delaware Limited Partnership)

CONDENSED SCHEDULES OF INVESTMENTS
AS OF DECEMBER 31, 2010 AND 2009

	2010						2009
	Fair Value			Percent of Partners' Capital			Fair Value			Percent of Partners' Capital
FUTURES CONTRACTS - Long:
Agricultural	$	5,626,475			0.9	%	$	518,842			0.1	%
Currencies		638,070			0.1			133,337			0.0
Energy		1,699,258			0.3			1,422,218			0.3
Indices		95,256			-			5,899,617			1.2
Interest rates		1,236,385			0.2			(2,356,137	)		(0.5	)
Metals		5,808,889			0.9			1,509,514			0.3
Total futures contracts - long		15,104,333			2.4			7,127,391			1.4

FUTURES CONTRACTS - Short:
Agricultural		(932,741	)		(0.2	)		(363,107	)		(0.1	)
Currencies		(379,596	)		(0.1	)		207,712			-
Energy		(2,084,102	)		(0.3	)		6,674			-
Indices		11,028			-			(60,534	)		-
Interest rates		(1,523,235	)		(0.2	)		810,858			0.2
Metals		(1,313,896	)		(0.2	)		(186,432	)		-
Total futures contracts - short		(6,222,542	)		(1.0	)		415,171			0.1

NET UNREALIZED TRADING GAINS
ON OPEN FUTURES CONTRACTS	$	8,881,791			1.4	%	$	7,542,562			1.5	%

FORWARD CONTRACTS - Long:
Australian dollars	$	10,399,197			1.7	%	$	(2,205,340	)		(0.4	) %
British pounds		(2,320,050	)		(0.4	)		(63,197	)		-
Euro		(2,149,012	)		(0.3	)		768,737			0.2
Japanese yen		5,081,396			0.8			(51,963	)		-
U.S. dollars		-			-			957,592			0.2
Gold bullion		696,099			0.1			(1,352,669	)		(0.3	)
Other		19,196,259			3.1			(306,665	)		(0.1	)
Total forward contracts - long		30,903,889			5.0			(2,253,505	)		(0.4	)

FORWARD CONTRACTS - Short:
Australian dollars		(6,271,270	)		(1.0	)		566,214			0.1
British pounds		4,960,113			0.8			(734,855	)		(0.1	)
Euro		7,075,561			1.2			(283,926	)		(0.1	)
Japanese yen		(4,104,581	)		(0.7	)		186,231			-
New Zealand dollars		(722,218	)		(0.1	)		(116,860	)		-
U.S. dollars		-			-			(5,266,747	)		(1.1	)
Other		(10,477,014	)		(1.7	)		(30,295	)		-
Total forward contracts - short		(9,539,409	)		(1.5	)		(5,680,238	)		(1.2	)

NET UNREALIZED TRADING GAINS (LOSSES)
ON OPEN FORWARD CONTRACTS	$	21,364,480			3.5	%	$	(7,933,743	)		(1.6	) %

NET UNREALIZED TRADING GAINS (LOSSES)
ON OPEN CONTRACTS	$	30,246,271			4.9	%	$	(391,181	)		(0.01	) %

See notes to financial statements.

F-16

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.
(A Delaware Limited Partnership)

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


	2010			2009

NET INVESTMENT INCOME:
Interest income	$	583,771		$	999,293

TOTAL INVESTMENT INCOME		583,771			999,293

EXPENSES
Brokerage commissions		2,312,011			-
Other expenses		177,744			-
Total expenses		2,489,755			-

NET INVESTMENT (LOSS) INCOME		(1,905,984	)		999,293

NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON TRADING
ACTIVITIES:
Net realized trading gains (losses) on
closed contracts		71,805,742			(54,287,511	)
Net change in unrealized trading gains
(losses) on open contracts		30,637,452			(17,806,092	)

NET GAIN (LOSS) ON TRADING
ACTIVITIES		102,443,194			(72,093,603	)

NET INCOME (LOSS)	$	100,537,210		$	(71,094,310	)


NET INCOME (LOSS) FOR A UNIT
OF PARTNERSHIP INTEREST	$	1,745.96		$	(1,301.99	)

See notes to financial statements.

F-17

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.
(A Delaware Limited Partnership)

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


	Limited			General
	Partners			Partner		Total

PARTNERS’ CAPITAL — January 1, 2010	$	491,274,980		$	-	$	491,274,980

Issuance of 15,851 units of limited
partnership interest		151,020,912			-		151,020,912
Redemption of 13,121 units of limited
partnership interest		(128,110,649	)		-		(128,110,649	)
Net income		100,537,210			-		100,537,210

PARTNERS’ CAPITAL — December 31, 2010	$	614,722,453		$	-	$	614,722,453

PARTNERS’ CAPITAL — January 1, 2009	$	503,016,088		$	-	$	503,016,088

Issuance of 29,577 units of limited
partnership interest		285,815,871			-		285,815,871
Redemption of 23,958 units of limited
partnership interest		(226,462,669	)		-		(226,462,669	)
Net loss		(71,094,310	)		-		(71,094,310	)

PARTNERS’ CAPITAL — December 31, 2009	$	491,274,980		$	-	$	491,274,980

See notes to financial statements.

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MAN-AHL DIVERSIFIED TRADING COMPANY L.P.
(A Delaware Limited Partnership)

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


	2010			2009
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)	$	100,537,210		$	(71,094,310	)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Net change in unrealized trading (losses) gains on open contracts		(30,637,452	)		17,806,092
Changes in assets and liabilities:
Due from brokers		21,848,232			(54,833,511	)
Interest receivable		(19,480	)		73,741
Accrued expenses		177,744			-

Net cash provided by (used in)
operating activities		91,906,254			(108,047,988	)

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from subscriptions		151,020,912			285,815,871
Payments on redemptions		(199,555,691	)		(165,257,971	)

Net cash (used in) provided by
financing activities		(48,534,779	)		120,557,900

NET INCREASE IN CASH
AND CASH EQUIVALENTS		43,371,475			12,509,912

CASH AND CASH EQUIVALENTS - Beginning of year		497,103,543			484,593,631

CASH AND CASH EQUIVALENTS - End of year	$	540,475,018		$	497,103,543

See notes to financial statements.

F-19

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

1.	ORGANIZATION OF THE TRADING COMPANY

Man-AHL Diversified Trading Company L.P. (a Delaware Limited Partnership) (the “Trading Company”) was organized in November 1997 under the Delaware Revised Uniform Limited Partnership Act and commenced operations on April 3, 1998, for the purpose of engaging in the speculative trading of futures and forward contracts. Man Investments (USA) Corp. (the “General Partner”), a Delaware corporation, serves as the Trading Company’s general partner. The General Partner is a subsidiary of Man Group plc, a United Kingdom public limited company that is listed on the London Stock Exchange. The General Partner oversees the operations and management of the Trading Company. The General Partner is registered with the Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator and commodity trading advisor and is a member of the National Futures Association (“NFA”).

The Trading Company was formed to serve as a trading vehicle for certain limited partnerships sponsored by the General Partner in a “master-feeder” structure. The limited partners, Man-AHL Diversified I L.P. and Man-AHL Diversified II L.P. are limited partnerships whose general partner is the General Partner. Man-AHL Diversified L.P., formerly a limited partner, fully redeemed from the Trading Company as of December 31, 2009 and transferred a portion of the assets to Man-AHL Diversified I L.P. on January 1, 2010.

Man-AHL (USA) Limited (the “Advisor”), a limited liability company incorporated in the United Kingdom, acts as trading advisor to the Trading Company. The Advisor is an affiliate of the General Partner and a subsidiary of Man Group plc. The Advisor is registered with the CFTC as a commodity pool operator and commodity trading advisor, and is a member of the NFA, in addition to being registered with the Financial Services Authority in the United Kingdom. On April 21, 2008, the Trading 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 Trading Company. The personnel of Man Investments Limited responsible for implementing the foreign currency forwards trading component of the AHL Diversified Program on behalf of the Trading Company are the same as those of the Advisor who implement the AHL Diversified Program.

2.	SIGNIFICANT ACCOUNTING POLICIES

The Trading Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. The following is a summary of the significant accounting and reporting policies used in preparing the financial statements.

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Due from Brokers — Due from brokers consists of balances due from MF Global, Inc. (“MFG”), Credit Suisse, and Royal Bank of Scotland (“RBS”). In general, the brokers pay the Trading Company interest monthly, based on agreed-upon rates, on the Trading Company’s average daily balance.

MFG is registered with the CFTC as a futures commission merchant and is a member of the NFA.

Amounts due from brokers include cash held at brokers and cash posted as collateral. Included in due from broker on the statements of financial condition is $11,382,084 and $32,588,852 of cash restricted as collateral held as of December 31, 2010 and December 31, 2009, respectively.

Derivative Contracts — In the normal course of business, the Trading Company enters into derivative contracts (“derivatives”) for trading purposes. Derivatives traded by the Trading Company include futures contracts and forward contracts. The Trading 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, using available market inputs such as the forward curve.

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.

Income Recognition — Realized and unrealized trading gains and losses on futures and forward contracts, which represent the difference between cost and selling price or fair value, are recognized currently in the statements of operations. All trading activities are accounted for on a trade-date basis. Interest income is recorded on an accrual basis.

Foreign Currency Translation — Assets, liabilities, gains, and losses denominated in foreign currencies are translated at exchange rates at the date of valuation. The resulting net realized and unrealized foreign exchange gains and losses are recorded in net realized and unrealized gains (losses) on trading activities in the statements of operations.

Income Taxes — Income taxes are not provided for by the Partnership because taxable income or loss of the Partnership is includable in the income tax returns of the partners. Tax years 2007, 2008 and 2009 remain subject to examination by federal and state jurisdictions, including those states where investors reside or states where the Trading Company is subject to other filing requirements. The Partnership has no uncertain tax positions that require recognition in the financial statements.

Net Income (Loss) Per Unit — Net income (loss) per unit of partnership interest is equal to the change in net asset value per unit from the beginning of the year to the end of the year. Unit amounts are rounded to whole numbers for financial statement presentation.

3.	PARTNERSHIP AGREEMENT

The Advisor is the sole trading advisor to the Trading Company.

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The General Partner and limited partners share in the profits and losses of the Trading Company in proportion to the number of units or unit equivalents held by each partner. However, no limited partner is liable for obligations of the Trading Company in excess of its capital contribution and net profits or losses, if any. The General Partner owned no direct interest in the Trading Company during the years ended December 31, 2010 and 2009.

Distributions (other than redemption of units), if any, are made on a pro rata basis at the sole discretion of the General Partner.

Prior to July 1, 2010, expenses incurred by the Trading Company were not reflected in the financial reporting of the trading partnership level but were allocated pro rata among the investors in the trading partnership and reflected directly in the financial reporting of the limited partners. These expenses included, but were not limited to, all costs relating to trading activity, such as brokerage commissions, management and incentive fees, continuing offering expenses and legal, audit, and tax return preparation fees. Effective July 1, 2010, expenses incurred by the Trading Company are reflected in the financial reporting of the Trading Company. Prior to this date, expense payments were funded through limited partner redemptions. As a result, there was no impact on partners’ capital at the Trading Company as a result of the change in presentation.

Partner contributions occur as of the first day of any month at the opening net asset value. Limited partners may redeem any or all of their units as of the end of any month at net asset value per unit on 10 days prior written notice to the General Partner. The General Partner may suspend redemptions of units of the Trading Company’s investments that are illiquid only if the Trading Company’s ability to withdraw capital from any investment is restricted. The Trading Company will be dissolved on December 31, 2037, or upon the occurrence of certain events, as specified in the limited partnership agreement (the “Agreement”).

4.	FAIR VALUE MEASUREMENTS

The Trading Company segregates its investments into three levels based upon the inputs used to derive the fair value. “Level 1” investments use inputs from unadjusted quoted prices from active markets. “Level 2” investments reflect inputs other-than-quoted prices, but use observable market data. “Level 3” investments are valued using unobservable inputs. These unobservable inputs for “Level 3” investments reflect the Trading Company’s assumption about the assumptions market participants would use in pricing the investments. As of December 31, 2010 and 2009, the Trading Company did not have any positions in “Level 3”.

F-22

				Fair Value Measurments

				Quoted Prices in			Significant Other		Significant Other
	Fair Value			Active Markets for			Observable		Unobservable
	as of			Identical Assets			Inputs		Inputs
Description	December 31, 2010			(Level 1)			(Level 2)		(Level 3)

Net unrealized trading gains on open futures contracts	$	9,571,147		$	9,571,147		$	-	$	-

Net unrealized trading losses on open futures contracts		(689,356	)		(689,356	)		-		-

Net unrealized trading gains on open forward contracts		21,364,480			-			21,364,480		-

Total	$	30,246,271		$	8,881,791		$	21,364,480	$	-

				Fair Value Measurments

				Quoted Prices in		Significant Other			Significant Other
	Fair Value			Active Markets for		Observable			Unobservable
	as of			Identical Assets		Inputs			Inputs
Description	December 31, 2009			(Level 1)		(Level 2)			(Level 3)

Net unrealized trading gains on open futures contracts	$	7,542,562		$	7,542,562	$	-		$	-

Net unrealized trading losses on open forward contracts		(7,933,743	)		-		(7,933,743	)		-

Total	$	(391,181	)	$	7,542,562	$	(7,933,743	)	$	-

Effective January 1, 2010, the Trading Company has adopted the provisions of the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements ("ASU 2010-06") requiring new disclosures about transfers into and out of Level 1 and Level 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. ASU 2010-06 also clarified existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The adoption of ASU 2010-06 only affected financial statement disclosures and had no impact on the financial position, results of operations, or cash flows of the Trading Company.

5.	DERIVATIVE TRANSACTIONS

The investment objective of the Trading Company is achieved by participation in the AHL Diversified Program directed on behalf of the Trading Company by Man-AHL (USA) Limited. The AHL Diversified Program is a futures and forward price trend-following trading system, entirely quantitative in nature, and implements trading positions on the basis of statistical analyses of past price histories. The Trading Company is to deliver substantial capital growth for commensurate levels of volatility over the medium term, independent of the movement of the stock and bond markets,

F-23

through the speculative trading, directly and indirectly, of physical commodities, futures contracts, spot and forward contracts, options on the foregoing, exchanges of futures for physical transactions and other investments on domestic and international exchanges and markets (including the interbank and OTC markets). The AHL Diversified Program trades globally in several market sectors, including, without limitation, currencies, bonds, energies, stocks indices, interest rates, metals and agriculture.

All the strategies and systems of the AHL Diversified Program are designed to target defined volatility levels rather than returns, and the investment process is underpinned by computer-supported analytical instruments and disciplined real-time risk and management information systems. A proprietary risk measurement method similar to the industry standard “value-at-risk” helps ensure that the rule-based decisions that drive the investment process remain within predefined risk parameters. Margin-to-equity ratios are monitored daily, and the level of exposure in each market is quantifiable at any time and is adjusted in accordance with market volatility. Market correlation is closely monitored to prevent over-concentration of risk and ensure optimal portfolio weightings. Market liquidity is examined with the objective of ensuring that the Trading Company will be able to initiate and close out trades as indicated by AHL Diversified Program’s systems at market prices, while brokerage selection and trade execution are continually monitored with the objective of ensuring quality market access.

During the year ended December 31, 2010, the Trading Company traded 479,452 exchange-traded future contracts and settled 228,228 OTC forward contracts. During the year ended December 31, 2009, the Trading Company traded 274,592 exchange-traded future contracts and settled 110,047 OTC forward contracts.

The Trading 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 fair values of the instruments underlying the contracts. All contracts are stated at fair value, and changes in those values are reflected in the change in net unrealized trading 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 non-performance associated with these instruments is the net unrealized trading gain, if any, included in the statements of financial condition. Forward contracts are entered into on an arm’s-length basis with RBS and JPMorgan Chase. As required by the Derivatives and Hedging Topic of the FASB Accounting Standards Codification, the Trading Company’s accounting policy is such that open contracts with the same counterparty are netted at the account level, in accordance with master netting arrangements in place with each party, as applicable. Netting is effective across products and cash collateral when so specified in the applicable netting agreement. At December 31, 2010 and December 31, 2009, estimated credit risk with regard to forward contracts was $21,364,480 and $247,019, respectively.

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 instruments.

F-24

The following table presents the fair value of the Trading Company’s derivative instruments and statement of financial condition location for 2010 and 2009, respectively.

Derivatives not designated as hedging instruments	Asset Derivatives			Liability Derivatives
	December 31, 2010			December 31, 2010
	Statement of Financial Condition	Fair Value **		Statement of Financial Condition	Fair Value **
Open forward contracts	Net unrealized trading gains on open forward contracts	$	62,605,106	Net unrealized trading losses on open forward contracts	$	(41,240,626	)
Open futures contracts	Net unrealized trading gains on open futures contracts		17,407,051	Net unrealized trading losses on open futures contracts		(8,525,260	)
Total Derivatives		$	80,012,157		$	(49,765,886	)

Derivatives not designated as hedging instruments	Asset Derivatives		Liability Derivatives
	December 31, 2009		December 31, 2009
	Statement of Financial Condition	Fair Value **	Statement of Financial Condition	Fair Value **

Open forward contracts	Net unrealized trading gains on open forward contracts	$	13,990,855	Net unrealized trading losses on open forward contracts	$	(21,924,598	)
Open futures contracts	Net unrealized trading gains on open futures contracts		13,469,655	Net unrealized trading losses on open futures contracts		(5,927,093	)
Total Derivatives		$	27,460,510		$	(27,851,691	)

** Open forward and future contracts are presented on the gross basis for the purposes of the tables above. Net unrealized trading gains and losses are netted by counterparty are presented in the statements of financial condition in accordance with generally accepted accounting principles related to the right of offset under FASB ASC 210, Balance Sheet.

The following table presents the impact of derivative instruments on the statements of operations. The Trading Company did not designate any derivatives as hedging instruments for the years ended December 31, 2010 and 2009.

F-25

		For the Year Ended December 31, 2010
Derivatives not designated as hedging instruments	Location of gain recognized in income on Derivatives	Gain on Derivatives

Forward contracts	Net realized trading gains on closed contracts	$	32,402,097
	Net change in unrealized trading gains on open contracts		29,298,223

Futures contracts	Net realized trading gains on closed contracts		39,403,645
	Net change in unrealized trading gains on open contracts		1,339,229
Net Gain on Derivatives		$	102,443,194

		For the Year Ended December 31, 2009
Derivatives not designated as hedging instruments	Location of loss recognized in income on Derivatives	Loss on Derivatives

Forward contracts	Net realized trading losses on closed contracts	$	(14,195,777	)
	Net change in unrealized trading losses on open contracts		(9,461,635	)

Futures contracts	Net realized trading losses on closed contracts		(40,091,734	)
	Net change in unrealized trading losses on open contracts		(8,344,457	)
Net Loss on Derivatives		$	(72,093,603	)

6.	FINANCIAL GUARANTEES

The Trading Company enters into administrative and other professional service contracts that contain a variety of indemnifications. The Trading Company’s maximum exposure under these arrangements is not known; however, the Trading Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

F-26

7.	FINANCIAL HIGHLIGHTS

The following represents the ratios to average partners’ capital and other supplemental information for the years ended December 31, 2010 and 2009:

	2010			2009

Per unit operating performance:
Beginning net asset value	$	9,155.02		$	10,457.01

Income from investment operations:
Net investment income (loss)		(33.83	)		18.26
Net realized and unrealized gains (losses) on trading activities		1,779.79			(1,320.25	)

Total income (loss) from investment operations		1,745.96			(1,301.99	)

Ending net asset value	$	10,900.98		$	9,155.02

Ratios to average partners’ capital:
Expenses		(0.45	)%		-	%
Net investment income (loss)		(0.34	)%		0.19	%

Total return		19.07	%		(12.45	)%

Financial highlights are calculated for all partners taken as a whole. An individual partner’s return and ratios may vary from these returns and ratios based on the timing of capital transactions.

8.	SUBSEQUENT EVENTS

The General Partner has evaluated the impact of all subsequent events on the Trading Company through the date of financial statement issuance, and has determined that there were no subsequent events other than as follows:

Beginning in 2011, the Trading Company has added JP Morgan Futures, Inc. as a futures trading counterparty.

******

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