MAN AHL DIVERSIFIED I LP - Quarter Report: 2014 March (Form 10-Q)

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Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File number: 000-53043

Man-AHL Diversified I L.P.

(Exact name of registrant as specified in charter)

Delaware

06-1496634

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

c/o Man Investments (USA) Corp.

452 5^th Avenue, 25^th Floor

New York, NY

10018

(Address of principal executive offices)

(Zip Code)

(212) 649-6600

(Registrant’s telephone number, including area code)

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 x No ¨

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.

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

PART I - FINANCIAL INFORMATION

ITEM 1.

Financial Statements.

Man-AHL Diversified I L.P.


STATEMENTS OF FINANCIAL CONDITION (a)			3
STATEMENTS OF OPERATIONS (b)			4
STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (b)			5
STATEMENTS OF CASH FLOWS (b)			6
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)			7

(a)	At March 31, 2014 (unaudited) and December 31, 2013

(b)	For the three months ended March 31, 2014 and 2013 (unaudited)


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


STATEMENTS OF FINANCIAL CONDITION


	March 31, 2014 (Unaudited)		December 31, 2013
ASSETS

Investment in Man-AHL Diversified Trading Company L.P.	$	174,475,357	$	202,881,618
Due from Man-AHL Diversified Trading Company L.P.		8,160,779		12,263,503
Cash		41,000		115,000

Total assets	$	182,677,136	$	215,260,121

LIABILITIES AND PARTNERS’ CAPITAL

LIABILITIES:
Redemptions payable	$	7,305,027	$	11,208,131
Subscriptions received in advance		41,000		115,000
Management fees payable		441,829		521,567
Servicing fees payable		148,451		264,689
Accrued expenses and other liabilities		265,472		269,116

Total liabilities		8,201,779		12,378,503

PARTNERS’ CAPITAL:
General Partner - Class A Series 1 (186.37 unit equivalents outstanding at March 31, 2014 and December 31, 2013)		488,688		504,667
Limited Partners - Class A Series 1 (44,942.86 and 51,137.49 units outstanding at March 31, 2014 and December 31, 2013, respectively)		117,844,229		138,471,344
Limited Partners - Class A Series 2 (5,785.91 and 6,110.49 units outstanding at March 31, 2014 and December 31, 2013, respectively)		16,153,106		17,561,929
Limited Partners - Class B Series 1 (15,157.62 and 16,990.84 units outstanding at March 31, 2014 and December 31, 2013, respectively)		39,744,744		46,008,333
Limited Partners - Class B Series 2 (87.61 and 116.68 units outstanding at March 31, 2014 and December 31, 2013, respectively)		244,590		335,345

Total partners’ capital		174,475,357		202,881,618

Total liabilities and partners’ capital	$	182,677,136	$	215,260,121

NET ASSET VALUE PER OUTSTANDING UNIT OF PARTNERSHIP INTEREST - CLASS A Series 1	$	2,622.09	$	2,707.82

NET ASSET VALUE PER OUTSTANDING UNIT OF PARTNERSHIP INTEREST - CLASS A Series 2	$	2,791.80	$	2,874.06

NET ASSET VALUE PER OUTSTANDING UNIT OF PARTNERSHIP INTEREST - CLASS B Series 1	$	2,622.10	$	2,707.83

NET ASSET VALUE PER OUTSTANDING UNIT OF PARTNERSHIP INTEREST - CLASS B Series 2	$	2,791.84	$	2,874.09

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

MAN-AHL DIVERSIFIED I L.P.

(A Delaware Limited Partnership)

STATEMENTS OF OPERATIONS (UNAUDITED)


	For the three months ended March 31,
	2014			2013
NET INVESTMENT LOSS
ALLOCATED FROM MAN-AHL
DIVERSIFIED TRADING COMPANY L.P.:
Interest income	$	63,785		$	50,637
Brokerage commissions		(179,297	)		(199,495	)
Other expenses		(98,649	)		(133,638	)

Net investment loss allocated from Man-AHL Diversified Trading Company L.P.		(214,161	)		(282,496	)

PARTNERSHIP EXPENSES:
Management fees		1,395,195			2,741,891
Servicing fees		552,230			1,397,026
Administration fees		105,351			121,225
Professional fees		48,333			55,000
Other expenses		37,306			40,183

Total partnership expenses		2,138,415			4,355,325

Net investment loss		(2,352,576	)		(4,637,821	)

REALIZED AND UNREALIZED GAINS (LOSSES) ON TRADING ACTIVITIES ALLOCATED FROM MAN-AHL DIVERSIFIED TRADING COMPANY L.P.:
Net realized trading gains on closed contracts/agreements and foreign currency transactions		1,671,806			16,255,638
Net change in unrealized trading gains (losses) on open contracts/agreeements and translation of foreign currency		(5,424,869	)		(3,121,475	)

Net gains (losses) on trading activities allocated from Man-AHL Diversified Trading Company L.P.		(3,753,063	)		13,134,163

NET INCOME (LOSS)	$	(6,105,639	)	$	8,496,342

NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST (based on weighted average units outstanding during the period)
CLASS A Series 1	$	(85.64	)	$	64.65	*

CLASS A Series 2	$	(81.88	)	$	77.47	*

CLASS B Series 1	$	(85.81	)	$	64.65	*

CLASS B Series 2	$	(79.03	)	$	77.46	*

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING DURING THE PERIOD
CLASS A Series 1		49,008.86

CLASS A Series 2		6,034.84

CLASS B Series 1		16,377.73

CLASS B Series 2		111.47

*	Based on change in net asset value per unit from the beginning of the period to the end of the period.

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

MAN-AHL DIVERSIFIED I L.P.

(A Delaware Limited Partnership)

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013 (UNAUDITED)


	CLASS A Series 1											CLASS A Series 2						CLASS B Series 1						CLASS B Series 2						TOTAL
	Limited Partners						General Partner					Limited Partners						Limited Partners						Limited Partners
	Amount			Units			Amount			Units		Amount			Units			Amount			Units			Amount			Units			Amount			Units
PARTNERS’ CAPITAL January 1, 2014	$	138,471,344			51,138		$	504,667			186	$	17,561,929			6,110		$	46,008,333			16,991		$	335,345			117		$	202,881,618			74,542
Subscriptions		602,600			226			—			—		—			—			188,986			70			—			—			791,586			296
Redemptions		(17,048,447	)		(6,421	)		—			—		(914,671	)		(324	)		(5,047,144	)		(1,903	)		(81,946	)		(29	)		(23,092,208	)		(8,677	)
Net loss		(4,181,268	)		—			(15,979	)		—		(494,152	)		—			(1,405,431	)		—			(8,809	)		—			(6,105,639	)		—

PARTNERS’ CAPITAL March 31, 2014	$	117,844,229			44,943		$	488,688			186	$	16,153,106			5,786		$	39,744,744			15,158		$	244,590			88		$	174,475,357			66,161

PARTNERS’ CAPITAL January 1, 2013	$	258,830,984			89,733		$	537,590			186	$	33,286,088			11,009		$	78,224,406			27,119		$	8,471,919			2,802		$	379,350,987			130,849
Subscriptions		4,079,741			1,401			—			—		—			—			1,125,410			386			—			—			5,205,151			1,787
Redemptions		(28,885,369	)		(9,844	)		—			—		(3,223,406	)		(1,045	)		(6,414,775	)		(2,187	)		(843,379	)		(274	)		(39,366,929	)		(13,350	)
Net income		5,709,088			—			12,049			—		834,356			—			1,730,965			—			209,884			—			8,496,342			—

PARTNERS’ CAPITAL March 31, 2013	$	239,734,444			81,290		$	549,639			186	$	30,897,038			9,964		$	74,666,006			25,318		$	7,838,424			2,528		$	353,685,551			119,286

Units and dollars have been rounded to the nearest whole number.

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

MAN-AHL DIVERSIFIED I L.P.

(A Delaware Limited Partnership)

STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the three months ended March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(6,105,639	)	$	8,496,342
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Purchases of investments in Man-AHL Diversified Trading Company L.P.		(791,586	)		(5,205,151	)
Sales of investments in Man-AHL Diversified Trading Company L.P.		29,333,347			46,955,059
Net gain (loss) on trading activities and net investment loss allocated from investments in Man-AHL Diversified Trading Company L.P.		3,967,224			(12,851,667	)
Changes in assets and liabilities:
Management fees payable		(79,738	)		(69,946	)
Servicing fees payable		(116,238	)		(35,523	)
Accrued expenses and other liabilities		(3,644	)		(41,035	)

Net cash provided by operating activities		26,203,726			37,248,079

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from subscriptions		717,586			4,984,210
Payments on redemptions		(26,995,312	)		(42,498,180	)

Net cash used in financing activities		(26,277,726	)		(37,513,970	)

NET DECREASE IN CASH		(74,000	)		(265,891	)

CASH - Beginning of period		115,000			961,791

CASH - End of period	$	41,000		$	695,900

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

MAN-AHL DIVERSIFIED I L.P.

(A Delaware Limited Partnership)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

The accompanying unaudited financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of Man-AHL Diversified I L.P.’s (a Delaware Limited Partnership) (the “Partnership”) financial condition at March 31, 2014, and the results of its operations for the three months ended March 31, 2014 and 2013. These financial statements present the results of interim periods and do not include all of the disclosures normally provided in annual financial statements. These financial statements should be read in conjunction with the audited financial statements and notes included in the Partnership’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2013. The December 31, 2013 information has been derived from the audited financial statements as of December 31, 2013.

1.	ORGANIZATION OF THE 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 and related instruments. 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 Investments (USA) Corp. (the “General Partner”), a Delaware corporation, serves as the Partnership’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 Partnership. The General Partner is registered with the Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator and is a member of the National Futures Association (“NFA”) in such capacities.

Man-AHL (USA) Limited (the “Advisor”), a limited liability company incorporated in the United Kingdom, acts as trading advisor to the Partnership. 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 trading adviser and is a member of the NFA in such capacities, in addition to registration with the Financial Conduct Authority in the United Kingdom.

Man Investments Holdings Limited, a United Kingdom holding company that is part of Man Group plc, 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.

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, Inc. (“FINRA”).

The Partnership filed a registration statement under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which became effective in March, 2008. The Partnership’s units are not, however, registered for sale through a public offering, and the General Partner does not intend to cause them to be so registered.

The Partnership offers two classes of units of limited partnership interests; Class A units are generally offered and Class B units are offered to retirement plan investors. Within Class A and Class B, units are issued in two separate series. They are Class A Series 1, Class A Series 2, Class B Series 1 and Class B Series 2. Except as described in Note 2 below in respect of fees, the classes of units are identical.

2.	SIGNIFICANT ACCOUNTING POLICIES

The Partnership prepares its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The General Partner has evaluated the structure, objectives and activities of the Partnership and the Trading Company and determined that they meet the characteristics of an investment company. As such, these financial statements have applied the guidance as set forth in Financial Standards Board Topic 946, Financial Services-Investment Companies. The following is a summary of the significant accounting and reporting policies used in preparing the financial statements.

Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP 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 of the Partnership’s proportionate interest in the net assets of the Trading Company. The fair value of the Partnership’s investment in the Trading Company approximates the carrying amounts presented in the statements of financial condition. The Partnership records its proportionate share of the Trading Company’s income, expenses, and realized and unrealized gains and losses. Investment transactions are recorded on a trade-date basis. In addition, the Partnership accrues its own expenses. The performance of the Partnership is directly affected by the performance of the Trading Company. Attached are the financial statements of the Trading Company, including the condensed schedules of investments, which are an integral part of these financial statements. Valuation of investments held by the Trading Company is discussed in the Trading Company’s notes to financial statements.

At March 31, 2014 and December 31, 2013, the Partnership owned 18,170.06 and 20,694.54 units, respectively, of the Trading Company. The Partnership’s aggregate ownership percentage of the Trading Company at March 31, 2014 and December 31, 2013 was 84.21% and 84.82%, respectively.

The Partnership is able to redeem its investment from the Trading Company on a monthly basis. As of March 31, 2014, the Partnership could redeem its investment without restriction at the month-end net asset value of the Trading Company.

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 Series 1 and Class B Series 1 units. The general partner fee is included in management fees in the statements of operations.

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. During the three months ended March 31, 2014 and 2013, no incentive fees were earned by the Advisor.

The Partnership paid a monthly servicing fee to MII, in an amount equal to 0.1250% (1.5% annually) of the month-end Net Asset Value of Class A Series 1 and Class B Series 1 units. The Partnership also paid a monthly servicing fee to MII, in an amount equal to 0.1042% (1.25% annually) of the month-end Net Asset Value of Class A Series 2 and Class B Series 2 units. Effective February 1, 2014, the servicing fee to MII was reduced to 0.8333% (1.00% annually) of the month-end Net Asset Value of Class A Series 1 and Class B Series 1 units and to 0.0625% (0.75% annually) of the month-end Net Asset Value of Class A Series 2 and Class B Series 2 units. For all classes of units, MII serves as the placement agent for the Partnership.

Expenses are recognized on an accrual basis in the period in which they are incurred.

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.

Cash — Cash balances are held with Citibank N.A.

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.

Net Income (Loss) Per Unit — Net income (loss) per unit of Class A Series 1, Class A Series 2, Class B Series 1, or Class B Series 2 partnership interest is equal to the net income (loss) per class divided by the weighted average number of units outstanding per class. Weighted average number of units outstanding is the average of the units outstanding for each day during the period.

Income Taxes — The Partnership is not subject to federal, state, or local income tax. Such taxes are the liabilities of the individual partners and the amounts thereof will vary depending on the individual situation of each partner. Accordingly, there is no provision for income taxes in the accompanying financial statements. Accounting Standard Codification 740, Income Taxes, defines how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements and is applied to all open tax years. The Partnership has evaluated tax positions taken or expected to be taken in the course of preparing the Partnership’s tax returns to determine whether the tax positions are more-likely-than-not to be sustained by the applicable tax authority. Based on this analysis of all significant tax jurisdictions and all open tax years subject to examination, there were no material tax positions not deemed to meet a more-likely-than-not-threshold. Therefore, no tax expense, including interest or penalties, was recorded for the three months ended March 31, 2014 and March 31, 2013. To the extent that the Partnership records interest and penalties, they would be included in interest expense and other expenses, respectively, on the statements of operations.

3.	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.

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. No distributions were declared or paid during the three months ended March 31, 2014 or for the year ended December 31, 2013.

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.

4.	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.

5.	FINANCIAL HIGHLIGHTS

The following represents the ratios to average limited partners’ capital and other supplemental information for the periods ended March 31, 2014 and 2013:


	For the three months ended March 31, 2014												For the three months ended March 31, 2013
	Class A			Class A			Class B			Class B			Class A			Class A			Class B			Class B
	Series 1			Series 2			Series 1			Series 2			Series 1			Series 2			Series 1			Series 2
Per unit operating performance:
Beginning net asset value	$	2,707.82		$	2,874.06		$	2,707.83		$	2,874.09		$	2,884.47		$	3,023.40		$	2,884.48		$	3,023.42

Income (loss) from investment operations:
Net investment loss		(33.83	)		(26.75	)		(33.73	)		(27.24	)		(38.43	)		(30.14	)		(38.04	)		(30.17	)
Net realized and unrealized gains (losses) on trading activities		(51.90	)		(55.51	)		(52.00	)		(55.01	)		103.08			107.61			102.69			107.63

Total income (loss) from investment operations		(85.73	)		(82.26	)		(85.73	)		(82.25	)		64.65			77.47			64.65			77.46

Ending net asset value	$	2,622.09		$	2,791.80		$	2,622.10		$	2,791.84		$	2,949.12		$	3,100.87		$	2,949.13		$	3,100.88

Ratios to average partners’ capital:¹
Expenses other than incentive fees		5.28	%		3.96	%		5.26	%		4.03	%		5.37	%		4.02	%		5.31	%		4.03	%

Total expenses		5.28	%		3.96	%		5.26	%		4.03	%		5.37	%		4.02	%		5.31	%		4.03	%

Net investment loss		(5.14	)%		(3.83	)%		(5.13	)%		(3.89	)%		(5.31	)%		(3.97	)%		(5.26	)%		(3.97	)%

Total return:²
Total return before incentive fees		(3.17	)%		(2.86	)%		(3.17	)%		(2.86	)%		2.24	%		2.56	%		2.24	%		2.56	%

Total return after incentive fees		(3.17	)%		(2.86	)%		(3.17	)%		(2.86	)%		2.24	%		2.56	%		2.24	%		2.56	%

¹	Includes amounts allocated from the Trading Company. Ratios have been annualized.

²	Total return is for the period indicated and has not been annualized.

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

6.	SUBSEQUENT EVENTS

The Partnership accepts initial or additional subscriptions for limited partnership interests generally as of the first day of the month and redemption requests from limited partners as of the last business day of each calendar month. For the period subsequent to March 31, 2014 through the date of filing, limited partner subscriptions totaled $14,000, and there were no limited partner redemptions.

The General Partner has evaluated the impact of subsequent events on the Partnership through the date of filing these financial statements, and noted no subsequent events that require adjustment to or disclosure in these financial statements, except as noted above.

Man-AHL Diversified Trading Company L.P.

Financial Statements


STATEMENTS OF FINANCIAL CONDITION (a)			12
CONDENSED SCHEDULES OF INVESTMENTS (a)			13
STATEMENTS OF OPERATIONS (b)			15
STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (b)			16
STATEMENTS OF CASH FLOWS (b)			17
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)			18

(a)	At March 31, 2014 (unaudited) and December 31, 2013

(b)	For the three months ended March 31, 2014 and 2013 (unaudited)

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

STATEMENTS OF FINANCIAL CONDITION


	March 31, 2014 (Unaudited)		December 31, 2013
ASSETS

Equity in trading accounts:
Net unrealized trading gains on open futures contracts	$	1,829,887	$	9,757,518
Net unrealized trading gains on open forward contracts		1,558,671		885,769
Net unrealized trading gains on open swap agreements		12,099,098		12,520,347
Net premiums paid on credit default swap agreements		2,221,187		3,357,116
Due from brokers		43,237,880		43,649,109

Total equity in trading accounts		60,946,723		70,169,859
Cash and cash equivalents		171,719,927		200,653,548
Interest receivable		29,712		31,670

Total assets	$	232,696,362	$	270,855,077

LIABILITIES AND PARTNERS’ CAPITAL

LIABILITIES:
Net unrealized trading losses on open futures contracts	$	303,722	$	—
Net unrealized trading losses on open forward contracts		773,515		—
Net unrealized trading losses on open swap agreements		6,910,749		8,936,971
Net premiums received on credit default swap agreements		6,519,498		5,175,526
Redemptions payable		10,865,869		17,453,462
Accrued expenses and other liabilities		129,098		103,473

Total liabilities		25,502,451		31,669,432

PARTNERS’ CAPITAL:
Limited Partners (21,577.41 and 24,397.67 units outstanding at March 31, 2014 and December 31, 2013, respectively)		207,193,911		239,185,645

Total partners’ capital		207,193,911		239,185,645

Total liabilities and partners’ capital	$	232,696,362	$	270,855,077

NET ASSET VALUE PER OUTSTANDING UNIT OF PARTNERSHIP INTEREST	$	9,602.35	$	9,803.63

See notes to financial statements.

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

CONDENSED SCHEDULES OF INVESTMENTS


	March 31, 2014 (Unaudited)						December 31, 2013
	Fair Value			Percent of Partners’ Capital			Fair Value			Percent of Partners’ Capital
FUTURES CONTRACTS - Long:
Agricultural	$	1,422,010			0.7	%	$	(378,972	)		(0.2	)%
Currencies		(46,770	)		(0.0	)		(250,642	)		(0.1	)
Energy		153,642			0.1			180,567			0.1
Indices		494,680			0.2			7,850,513			3.3
Interest Rates		131,110			0.0			(1,418,192	)		(0.6	)
Metals		(16,725	)		(0.0	)		(18,266	)		0.0

Total futures contracts - long		2,137,947			1.0			5,965,008			2.5

FUTURES CONTRACTS - Short:
Agricultural		(1,120,473	)		(0.6	)		1,409,672			0.6
Currencies		(46,358	)		(0.0	)		27,532			0.0
Energy		621,882			0.3			75,410			0.0
Indices		389,649			0.2			1,216,943			0.5
Interest Rates		(11,173	)		(0.0	)		609,658			0.3
Metals		(445,309	)		(0.2	)		453,295			0.2

Total futures contracts - short		(611,782	)		(0.3	)		3,792,510			1.6

NET UNREALIZED TRADING GAINS ON OPEN FUTURES CONTRACTS	$	1,526,165			0.7	%	$	9,757,518			4.1	%

FORWARD CONTRACTS - Long:
Australian dollars	$	2,206,876			1.1	%	$	(639,768	)		(0.2	)%
British pounds		293,550			0.1			1,005,261			0.4
Euro		(529,332	)		(0.3	)		323,916			0.1
Gold bullion		(241,893	)		(0.1	)		5,336			0.0
Japanese yen		(1,463,993	)		(0.7	)		(1,521,183	)		(0.6	)
New Zealand dollars		1,149,532			0.6			(141,605	)		(0.1	)
Other		3,340,960			1.6			(184,265	)		(0.1	)

Total forward contracts - long		4,755,700			2.3			(1,152,308	)		(0.5	)

FORWARD CONTRACTS - Short:
Australian dollars		(1,492,695	)		(0.7	)		619,919			0.3
British pounds		(448,799	)		(0.2	)		(849,091	)		(0.3	)
Euro		380,297			0.2			(275,708	)		(0.1	)
Gold bullion		102,471			0.0			449,803			0.2
Japanese yen		1,487,450			0.7			2,678,558			1.1
New Zealand dollars		(302,708	)		(0.1	)		79,803			0.0
Other		(3,696,560	)		(1.8	)		(665,207	)		(0.3	)

Total forward contracts - short		(3,970,544	)		(1.9	)		2,038,077			0.9

NET UNREALIZED TRADING GAINS ON OPEN FORWARD CONTRACTS	$	785,156			0.4	%	$	885,769			0.4	%

SWAP AGREEMENTS - Long:
Credit default swaps - centrally cleared (upfront premiums received $35,516,564 and $20,241,913, respectively)	$	(33,158,972	)		(16.0	)%	$	(26,328,625	)		(11.0	)%
Interest rate swaps		7,634,870			3.7			15,877,039			6.6

Total swap agreements - long		(25,524,102	)		(12.3	)		(10,451,586	)		(4.4	)

SWAP AGREEMENTS - Short:
Credit default swaps - centrally cleared (upfront premiums paid $31,218,253 and $18,423,503, respectively)	$	42,756,355			20.6			37,081,732			15.5
Interest rate swaps		(12,043,904	)		(5.8	)		(23,046,770	)		(9.6	)

Total swap agreements - short		30,712,451			14.8			14,034,962			5.9

NET UNREALIZED TRADING GAINS ON OPEN SWAP AGREEMENTS	$	5,188,349			2.5	%	$	3,583,376			1.5	%

NET UNREALIZED TRADING GAINS ON OPEN CONTRACTS/AGREEMENTS	$	7,499,670			3.6	%	$	14,226,663			6.0	%

See notes to financial statements.

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

CONDENSED SCHEDULES OF INVESTMENTS (continued)

The following is a schedule of the investments in which the fair value of the investment is greater than 5% of partners’ capital.

As of March 31, 2014 (Unaudited):


Swap Agreements	Maturity Date	Fair Value			Percent of Partners’ Capital
Credit default swaps - centrally cleared - Long
iTraxx Crossover Index (upfront premiums received $16,735,593)	6/20/18-12/20/18	$	(15,744,526	)		(7.6	)%
iTraxx Europe Index (upfront premiums received $5,167,468)	6/20/18-12/20/18		(11,220,203	)		(5.4	)

Credit default swaps - centrally cleared - Short
iTraxx Crossover Index (upfront premiums paid $13,931,907)	6/20/18-6/20/19		20,610,992			9.9
iTraxx Europe Index (upfront premiums paid $1,732,961)	6/20/18-6/20/19		15,593,762			7.5
As of December 31, 2013:
Swap Agreements	Maturity Date	Fair Value			Percent of Partners’ Capital
Credit default swaps - centrally cleared - Short
iTraxx Crossover Index (upfront premiums paid $7,775,832)	6/20/18-12/20/18	$	15,365,485			6.4	%
iTraxx Europe Index (upfront premiums received $1,002,207)	6/20/18-12/20/18		14,842,610			6.2

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

STATEMENTS OF OPERATIONS (UNAUDITED)


	For the three months ended March 31,
	2014			2013
NET INVESTMENT INCOME:
Interest income	$	75,566		$	61,421

EXPENSES

Brokerage commissions		212,958			242,021
Interest expense - brokers		64,976			112,353
Administration fees		2,500			2,500
Professional fees		37,656			37,156
Other expenses		11,852			10,584

Total expenses		329,942			404,614

Net investment loss		(254,376	)		(343,193	)

NET REALIZED AND UNREALIZED GAINS (LOSSES) ON TRADING ACTIVITIES:
Net realized trading gains on closed contracts/agreements and foreign currency transactions		2,024,254			19,717,372
Net change in unrealized gains (losses) on translation of foreign currency		246,898			(727,054	)
Net change in unrealized trading gains (losses) on open contracts/agreements		(6,726,993	)		(3,070,028	)

Net gain (loss) on trading activities		(4,455,841	)		15,920,290

NET INCOME (LOSS)	$	(4,710,217	)	$	15,577,097

NET GAIN (LOSS) PER UNIT OF PARTNERSHIP INTEREST (based on weighted average units outstanding during the period)	$	(200.65	)	$	344.40	*

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING DURING THE PERIOD		23,475.19

*	Based on change in net asset value per unit form the beginning of the period to the end of the period.

See notes to financial statements.

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (UNAUDITED)


	Limited Partners						General Partner				Total
	Amount			Units			Amount		Units		Amount			Units
PARTNERS’ CAPITAL - January 1, 2014	$	239,185,645			24,398		$	—		—	$	239,185,645			24,398

Subscriptions		791,586			82			—		—		791,586			82
Redemptions		(28,073,103	)		(2,903	)		—		—		(28,073,103	)		(2,903	)
Net loss		(4,710,217	)		—			—		—		(4,710,217	)		—

PARTNERS’ CAPITAL - March 31, 2014	$	207,193,911			21,577		$	—		—	$	207,193,911			21,577

PARTNERS’ CAPITAL - January 1, 2013	$	457,308,203			45,937		$	—		—	$	457,308,203			45,937

Subscriptions		6,205,151			616			—		—		6,205,151			616
Redemptions		(51,080,670	)		(4,996	)		—		—		(51,080,670	)		(4,996	)
Net income		15,577,097			—			—		—		15,577,097			—

PARTNERS’ CAPITAL - March 31, 2013	$	428,009,781			41,557		$	—		—	$	428,009,781			41,557

Units and dollars have been rounded to the nearest whole number.

See notes to financial statements.

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the three months ended March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net gain (loss)	$	(4,710,217	)	$	15,577,097
Adjustments to reconcile net gain (loss) to net cash provided by operating activities:
Net change in unrealized trading (gains) losses on open contracts/agreements		6,726,993			3,070,028
Changes in assets and liabilities:
Due from brokers		411,229			6,550,801
Interest receivable		1,958			—
Premiums received on credit default swap agreements		2,479,901			—
Accrued expenses and other liabilities		25,625			(50,515	)

Net cash provided by operating activities		4,935,489			25,147,411

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from subscriptions		791,586			6,205,151
Payments on redemptions		(34,660,696	)		(50,727,453	)

Net cash used in financing activities		(33,869,110	)		(44,522,302	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(28,933,621	)		(19,374,891	)
CASH AND CASH EQUIVALENTS - Beginning of period		200,653,548			372,563,159

CASH AND CASH EQUIVALENTS - End of period	$	171,719,927		$	353,188,268

SUPPLEMENTAL DISCLOSURE OF CASH ACTIVITY:
CASH PAID FOR INTEREST DURING THE PERIOD:	$	64,976		$	112,353

See notes to financial statements.

MAN-AHL DIVERSIFIED TRADING COMPANY L.P.

(A Delaware Limited Partnership)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

The accompanying unaudited financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of Man-AHL Diversified Trading Company L.P.’s (a Delaware Limited Partnership) (the “Trading Company”) financial condition at March 31, 2014, and the results of its operations for the three months ended March 31, 2014 and 2013. These financial statements present the results of interim periods and do not include all the disclosures normally provided in annual financial statements. These financial statements should be read in conjunction with the audited financial statements and notes included in Man-AHL Diversified I L.P.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2013. The December 31, 2013 information has been derived from the audited financial statements as of December 31, 2013.

1.	ORGANIZATION OF THE TRADING COMPANY

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 and related instruments. 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 is a member of the National Futures Association (“NFA”) in such capacities.

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 (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 trading adviser and is a member of the NFA in such capacities, in addition to registration with the Financial Conduct Authority in the United Kingdom. The Trading Company has engaged Man Investments Limited, a company organized under the Laws of the United Kingdom, to manage the foreign currency forward trading 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 forward 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 (“U.S. GAAP”). The General Partner has evaluated the structure, objectives and activities of the Trading Company and determined that it meets the characteristics of an investment company. As such, these financial statements have applied the guidance as set forth in Financial Standards Board Topic 946, Financial Services-Investment Companies. The following is a summary of the significant accounting and reporting policies used in preparing the financial statements.

Due from Brokers — Due from brokers consists of balances due from Credit Suisse (“CS”), JPMorgan Chase (“JPM”), Royal Bank of Scotland (“RBS”), Deutsche Bank (“DB”) and Merrill Lynch (“ML”). In general, the brokers pay the Trading Company interest monthly, based on agreed upon rates, on the Trading Company’s average daily balance.

Amounts due from brokers include cash held at brokers and cash posted as collateral. The amount of cash restricted as collateral held and included in due from brokers on the statements of financial condition is $35,410,717 and $16,906,001 as of March 31, 2014 and December 31, 2013, respectively.

Expenses – Expenses are recognized on an accrual basis in the period in which they are incurred.

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, forwards and swap agreements. 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 independent pricing services, which use market observable inputs in their valuations. Swaps are contractual agreements between two parties to exchange streams of payments over time based on specified notional amounts. The Trading Company’s swap agreements consist of interest rate swaps and credit default swaps. Swap agreements are valued at fair value using independent pricing services, which use market observable inputs in their valuations.

Realized and unrealized changes in fair values are included in realized and unrealized gains and losses on contracts/agreements, respectively, on trading activities in the statements of operations. All trading activities are accounted for on a trade-date basis.

Foreign Currency — All assets and liabilities of the Trading Company denominated in foreign currencies are translated into U.S. dollar amounts at the mean between the bid and ask market rates for such currencies on the date of valuation. Purchases and sales of foreign investments are converted at the prevailing rate of exchange on the respective date of such transactions. The Trading Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the fair value of investments held. Such fluctuations are included with the net realized and unrealized gains or losses on trading activities.

Cash and Cash Equivalents — Cash and cash equivalents include cash, short-term interest-bearing money market accounts, and bank time deposits with original maturities of 90 days or less, held with Citibank N.A., JPMorgan Chase Bank, N.A., Bank of America and BNP Paribas.

Income Taxes — The Trading Company is treated as a partnership for tax purposes and therefore not subject to federal, state, or local income tax. Such taxes are the liabilities of the individual partners and the amounts thereof will vary depending on the individual situation of each partner. Accordingly, there is no provision for income taxes in the accompanying financial statements. Accounting Standard Codification 740, Income Taxes, defines how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements and is applied to all open tax years. The Trading Company has evaluated tax positions taken or expected to be taken in the course of preparing the Trading Company’s tax returns to determine whether the tax positions are more likely than not to be sustained by the applicable tax authority. Based on this analysis of all significant tax jurisdictions and all open tax years subject to examination, there were no material tax positions not deemed to meet a more-likely-than-not-threshold.

Therefore, no tax expense, including interest or penalties, was recorded for the three months ended March 31, 2014 and 2013. To the extent that the Trading Company records interest and penalties, they would be included in interest expense and other expenses, respectively, on the statements of operations.

Net Income (Loss) Per Unit — Net income (loss) per unit of partnership interest is equal to the net income (loss) divided by the weighted average number of units outstanding. Weighted average number of units outstanding is the average of the units outstanding for each day during the period.

3.	PARTNERSHIP AGREEMENT

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

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 three months ended March 31, 2014 and year ended December 31, 2013.

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

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 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 Trading Company’s limited partnership agreement.

4.	FAIR VALUE MEASUREMENTS

The Trading Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date under current market conditions. The fair value of the Trading Company’s assets and liabilities which qualify as financial instruments approximates the carrying amounts presented on the statements of financial condition.

The inputs used to determine the fair value of the Trading Company’s investments are summarized in the three broad levels listed below:

•

Level 1 — quoted prices in active markets for identical assets or liabilities

•

Level 2 — investments with other significant observable inputs

•

Level 3 — investments with significant unobservable inputs, which may include the Trading Company’s own assumptions in determining the fair value of investments

Futures contracts are valued based on end of day quoted prices from the exchange and are categorized as Level 1 investments in the fair value hierarchy. Forward contracts and swap agreements are valued at fair value using independent pricing services, which use market observable inputs in their valuations, and are categorized as Level 2 investments in the fair value hierarchy. As of March 31, 2014 and December 31, 2013, the Trading Company did not have any positions categorized as Level 3 investments in the fair value hierarchy.

The following is a summary categorization as of March 31, 2014 and December 31, 2013, of the Trading Company’s investments based on the level of inputs utilized in determining the value of such investments:


	Fair Value Measurements
Investments	As of March 31, 2014			Level 1			Level 2			Level 3
Assets
Futures contracts	$	4,695,406		$	4,695,406		$	—		$	—
Forward contracts		10,848,810			—			10,848,810			—
Swap agreements		66,536,470			—			66,536,470			—

Total Assets		82,080,686			4,695,406			77,385,280			—

Liabilities
Futures contracts		(3,169,241	)		(3,169,241	)		—			—
Forward contracts		(10,063,654	)		—			(10,063,654	)		—
Swap agreements		(61,348,121	)		—			(61,348,121	)		—

Total Liabilities		(74,581,016	)		(3,169,241	)		(71,411,775	)		—

Net Fair Value	$	7,499,670		$	1,526,165		$	5,973,505		$	—


	Fair Value Measurements
Investments	As of December 31, 2013			Level 1			Level 2			Level 3
Assets
Futures contracts	$	13,161,532		$	13,161,532		$	—		$	—
Forward contracts		8,431,935			—			8,431,935			—
Swap agreements		62,465,065			—			62,465,065			—

Total Assets		84,058,532			13,161,532			70,897,000			—

Liabilities
Futures contracts		(3,404,014	)		(3,404,014	)		—			—
Forward contracts		(7,546,166	)		—			(7,546,166	)		—
Swap agreements		(58,881,689	)		—			(58,881,689	)		—

Total Liabilities		(69,831,869	)		(3,404,014	)		(66,427,855	)		—

Net Fair Value	$	14,226,663		$	9,757,518		$	4,469,145		$	—

The Trading Company discloses the amounts of transfers and reasons for those transfers between Levels of the fair value hierarchy, based on the Levels assigned under the hierarchy at the reporting period end. There were no transfers between Levels as of March 31, 2014 and 2013 based on the levels assigned at December 31, 2013 and 2012.

5.	DERIVATIVE FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

The Trading Company sought to achieve its investment objective by participation in the AHL Diversified Program directed on behalf of the Trading Company by the Advisor. The AHL Diversified Program is a price trend-following trading system, entirely quantitative in nature, and implements trading positions on the basis of statistical analyses of past price histories. The objective of the AHL Diversified Program 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, through the speculative trading, directly and indirectly, of physical commodities, futures contracts, spot and forward contracts, swaps and options on the foregoing, exchanges of futures for physical transactions and other investments on domestic and international exchanges and markets (including the interbank and over-the-counter markets (“OTC”)). The AHL Diversified Program trades globally in several market sectors, including, without limitation, currencies, bonds, energies, stock 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 pre-defined 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.

Futures contracts, forward contracts and swap agreements are recorded on the trade date. Upon entering into futures contracts, forward contracts and swap agreements, the Trading Company is required to deposit cash or collateral with the brokers. Gains or losses are realized when contracts are matured or closed. Unrealized gains or losses on open contracts (the difference between contract trade price and fair value) are reported in the statements of financial condition.

Interest rate swaps relate to contracts taken out by the Trading Company with major brokers in which the Trading Company either receives or pays a floating rate of interest in return for paying or receiving, respectively, a fixed rate of interest, on the same notional amount for a specified period of time. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Changes in the value of the interest rate swap agreements and amounts received or paid in connection with those changes, are recognized as unrealized trading gains (losses) on open contracts/agreements in the statements of operations. The risks related to trading in interest rate swaps include changes in market value and the possible inability of the counterparty to fulfill its obligations under the agreement.

The Trading Company may enter into credit default swap agreements to provide a measure of protection against the default of an issuer (as buyer of protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). Credit default swaps are agreements in which one party

pays fixed periodic payments to a counterparty in consideration for a guarantee from the counterparty to make a specific payment should a negative credit event take place (e.g. default, bankruptcy, debt restructuring, etc.). The Trading Company may either buy or sell (write) credit default swaps. As a buyer, upon the occurrence of a specified negative credit event, the Trading Company will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising an index or receive a net settlement of cash equal to the notional amount of the swap less the agreed upon recovery value of the security or underlying securities comprising an index. As a seller (writer), upon the occurrence of a specified negative credit event, the Trading Company will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising an index or pay a net settlement of cash equal to the notional amount of the swap less the agreed upon recovery value of the security or underlying securities comprising an index. In the event of default by the counterparty, the Trading Company may recover amounts paid under the agreement either partially or in total by offsetting any payables and/or receivables with collateral held or pledged. The counterparty risk for centrally-cleared credit default swap agreements is generally lower than for credit default swap agreements not centrally-cleared. However, there can be no assurance that the clearing organization, or its members, will satisfy its obligations to the Trading Company.

These periodic payments received or made under swap agreements by the Trading Company are included in net realized trading gains (losses) on closed contracts/agreements in the statements of operations. When the swap is terminated, the Trading Company will record a realized gain (loss) equal to the difference between the proceeds from (or cost of) the closing transaction and the Trading Company’s basis in the contract, if any. Swap transactions involve, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the statements of financial condition. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty or the clearing organization to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

As of March 31, 2014 and December 31, 2013, the total fair value and notional amounts of credit default swaps on indices where the Trading Company is the seller is presented in the following table by contract terms:


	Fair Value and Notional Amounts by Contract Term
	March 31, 2014				December 31, 2013
	1-5 years				1-5 years
Credit spread (in basis points)	Fair Value		Notional Amount		Fair Value		Notional Amount
0-100	$	20,374,405	$	1,979,060,000	$	19,549,532	$	1,558,937,500
101-250		20,429,256		268,515,000		12,453,749		158,044,500
251-350		1,952,694		80,655,000		5,078,451		123,715,000

Total	$	42,756,355	$	2,328,230,000	$	37,081,732	$	1,840,697,000

The notional amount represents the maximum potential pay out that the Trading Company could be required to make if a credit event were to occur under each contract. The credit spread of the underlying indices, derived from the fair value at March 31, 2014 of each credit default swap where the Trading Company is a seller, ranged between 52 basis points and 311 basis points. The credit spread of the underlying indices, derived from the fair value at December 31, 2013 of each credit default swap where the Trading Company is a seller, ranged between 54 basis points and 307 basis points. The credit spread is generally indicative of the status of the underlying risk of default by the applicable reference entity and is likely to be different than the contractual spread on the credit default swap. Higher credit spreads are indicative of a higher likelihood of performance by the Trading Company. As of March 31, 2014 and December 31, 2013, the Trading Company posted cash collateral of $6,982,501 and $4,952,334, respectively, with respective counterparties of these contracts in the normal course of business. As of March 31, 2014, the maturity dates for open credit default swaps on selling protection ranged from June 20, 2018 through June 20, 2019. As of December 31, 2013, the maturity dates for open credit default swaps on selling protection ranged from June 20, 2018 through December 20, 2018.

During the three months ended March 31, 2014, the Trading Company traded 111,722 exchange-traded futures contracts and settled 17,644 forward contracts and 1,084 swap agreements. During the three months ended March 31, 2013, the Trading Company traded 26,727 exchange-traded futures contracts and settled 15,287 forward contracts and 1,386 swap agreements.

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 net change in unrealized trading gains (losses) on open contracts/agreements in the statements of operations. Credit risk arises from the potential inability of counterparties to perform in accordance with the terms of a contract. The credit risk for OTC derivative contracts is limited to the net unrealized gain plus any collateral posted net of unrealized losses or upfront fees posted, if any, for each counterparty for which a netting agreement exists and is included in the statements of financial condition. Upfront fees are listed on the statements of financial condition as net premiums paid/received on credit default swap agreements and are shown net by counterparty for which a netting agreement exists. Counterparty relationships are governed by various contracts. These contracts can be based on industry standard agreements, such as International Swap and Derivatives Association agreements for OTC contracts. These agreements set forth each party’s basic rights, responsibilities, and duties. These agreements also contain information regarding financial terms and conditions, as well as termination and events of default provisions. Certain agreements contain provisions that require the Trading Company to post additional collateral upon the occurrence of specific credit risk related events or upon notice from the counterparty. As the Trading Company’s trading strategies are dependent upon the existence of these agreements, the Trading Company’s counterparties usually have multiple specified events under which they can terminate individual transactions or the entire agreement. These are most commonly related to declines in assets under management and performance below certain thresholds during a specified period. It is not guaranteed that counterparties will move to terminate individual transactions or entire agreements if a “trigger event” were to occur; however, it is their right to do so, and such a move could severely impact the Trading Company’s portfolio. At March 31, 2014, the OTC contracts subject to such trigger events in a net liability position were the interest rate swaps and credit default swaps. The details of the net liability positions by counterparty are disclosed later in this note on the additional disclosures regarding the offsetting of derivative liabilities table. The ultimate amounts that may be required as payment to settle the derivative instruments in connection with the triggering of such credit contingency features as of March 31, 2014, may differ from the net liability amounts recorded as of March 31, 2014, and such differences can be material.

For exchange-traded futures contracts, the clearing organization functions as the central counterparty for each transaction and, therefore, bears the risk of delivery to and from counterparties, which mitigates the credit risk of these instruments.

For centrally cleared swaps, immediately following execution of the swap agreement, the swap agreement is novated to a central clearing counterparty (the “CCP”) and the Trading Company faces the CCP through a broker. Upon entering into a centrally cleared swap, the Trading Company is required to deposit initial margin with the broker in the form of cash in an amount that varies depending on the size and risk profile of the particular swap. With centrally cleared swaps, there is less counterparty credit risk since the exchange or clearinghouse stands between the buyer and seller of the swaps.

The following table presents the fair value of the Trading Company’s derivative instruments and statements of financial condition location:


	March 31, 2014
	Asset Derivatives			Liability Derivatives
Primary Risk Exposure	Statements of Financial Condition	Fair Value		Statements of Financial Condition	Fair Value
Open forward contracts	Gross unrealized trading gains on open forward contracts			Gross unrealized trading losses on open forward contracts
Currencies		$	10,623,738		$	(9,633,629	)
Metals			225,072			(430,025	)

Total open forward contracts			10,848,810			(10,063,654	)

Open futures contracts	Gross unrealized trading gains on open futures contracts			Gross unrealized trading losses on open futures contracts
Agricultural			1,554,068			(1,252,531	)
Currencies			11,003			(104,131	)
Energy			979,997			(204,473	)
Indices			1,637,791			(753,462	)
Interest rates			500,433			(380,496	)
Metals			12,114			(474,148	)

Total open futures contracts			4,695,406			(3,169,241	)

Open swap agreements	Gross unrealized trading gains on open swap agreements			Gross unrealized trading losses on open swap agreements
Credit			43,022,785			(33,425,402	)
Interest rates			23,513,685			(27,922,719	)

Total open swap agreements			66,536,470			(61,348,121	)

Total Derivatives		$	82,080,686		$	(74,581,016	)


	December 31, 2013
	Asset Derivatives			Liability Derivatives
Primary Risk Exposure	Statements of Financial Condition	Fair Value		Statements of Financial Condition	Fair Value
Open forward contracts	Gross unrealized trading gains on open forward contracts			Gross unrealized trading losses on open forward contracts
Currencies		$	7,958,109		$	(7,473,578	)
Metals			473,826			(72,588	)

Total open forward contracts			8,431,935			(7,546,166	)

Open futures contracts	Gross unrealized trading gains on open futures contracts			Gross unrealized trading losses on open futures contracts
Agricultural			1,981,983			(951,283	)
Currencies			35,616			(258,726	)
Energy			399,933			(143,956	)
Indices			9,124,763			(57,307	)
Interest rates			1,041,240			(1,849,774	)
Metals			577,997			(142,968	)

Total open futures contracts			13,161,532			(3,404,014	)

Open swap agreements	Gross unrealized trading gains on open swap agreements			Gross unrealized trading losses on open swap agreements
Credit			37,243,040			(26,489,933	)
Interest rates			25,222,025			(32,391,756	)

Total open swap agreements			62,465,065			(58,881,689	)

Total Derivatives		$	84,058,532		$	(69,831,869	)

The following table presents the impact of derivative instruments on the statements of operations:


		For the three months ended March 31,
		2014			2013
	Location of loss or gain recognized in income on derivatives	Gain (Loss) on derivatives			Gain (Loss) on derivatives
Forward contracts
Currencies		$	(64,310	)	$	11,265,956
Metals			(1,542,754	)		(360,429	)

	Net realized trading losses on closed contracts/agreements	$	(1,607,064	)	$	10,905,527

Currencies		$	505,578		$	(6,366,503	)
Metals			(606,191	)		1,580,210

	Net change in unrealized trading gaines (losses) on open contracts/agreements	$	(100,613	)	$	(4,786,293	)

Futures contracts
Agricultural		$	821,391		$	545,473
Currencies			1,307,445			(123,171	)
Energy			(1,359,361	)		(3,789,345	)
Indices			1,301,553			24,182,773
Interest rates			4,620,519			(8,623,089	)
Metals			(1,124,028	)		(3,479,674	)

	Net realized trading losses on closed contracts/agreements	$	5,567,519		$	8,712,967

Agricultural		$	(729,163	)	$	(154,619	)
Currencies			129,982			343,702
Energy			519,547			(884,123	)
Indices			(8,183,127	)		(270,155	)
Interest rates			928,471			4,997,790
Metals			(897,063	)		3,720,481

	Net change in unrealized trading gaines (losses) on open contracts/agreements	$	(8,231,353	)	$	7,753,076

Swap agreements
Credit default swaps		$	480,621		$	(1,413,817	)
Interest rate swaps			(2,474,348	)		2,490,372

	Net realized trading losses on closed contracts/agreements	$	(1,993,727	)	$	1,076,555

Credit default swaps		$	(1,155,724	)	$	(729,972	)
Interest rate swaps			2,760,697			(5,306,839	)

	Net change in unrealized trading gaines (losses) on open contracts/agreements	$	1,604,973		$	(6,036,811	)

Amounts in the table above exclude foreign exchange spot contracts.

As described above, the Trading Company may enter into netting agreements with its derivative contract counterparties whereby the Trading Company may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. As of March 31, 2014 and December 31, 2013, the Trading Company was subject to netting agreements that allowed for amounts owed between the Trading Company and its counterparty to be netted. The party that has the larger payable pays the excess of the larger amount over the smaller amount to the other party. The netting agreements do not apply to amounts owed to or from different counterparties. The following table provides additional disclosures regarding the offsetting of derivative assets presented in the statements of financial condition:


	Gross Amounts of Recognized Assets		Gross Amount Offset in the Statements of Financial Condition			Net Amounts of Assets presented in the Statements of Financial Condition		Gross Amounts Not Offset in the Statements of Financial Condition				Net Amount
	Gross Amounts of Recognized Assets							Financial Instruments		Cash Collateral Pledged		Net Amount
As of March 31, 2014
Open futures contracts
Credit Suisse	$	1,556,824	$	(1,556,824	)	$	—	$	—	$	—	$	—
JPMorgan Chase		2,264,391		(904,773	)		1,359,618		—		—		1,359,618
Merrill Lynch		874,191		(403,922	)		470,269		—		—		470,269

Total open futures contracts	$	4,695,406	$	(2,865,519	)	$	1,829,887	$	—	$	—	$	1,829,887

Open forward contracts
Deutsche Bank	$	4,685,276	$	(4,685,276	)	$	—	$	—	$	—	$	—
Royal Bank of Scotland		6,163,534		(4,604,863	)		1,558,671		—		—		1,558,671

Total open forward contracts	$	10,848,810	$	(9,290,139	)	$	1,558,671	$	—	$	—	$	1,558,671

Open swap agreements
Credit Suisse	$	31,738,785	$	(19,639,687	)	$	12,099,098	$	—	$	—	$	12,099,098
JPMorgan Chase		11,284,000		(11,284,000	)		—		—		—		—
Royal Bank of Scotland		23,513,685		(23,513,685	)		—		—		—		—

Total open swap agreements	$	66,536,470	$	(54,437,372	)	$	12,099,098	$	—	$	—	$	12,099,098

As of December 31, 2013
Open futures contracts
Credit Suisse	$	6,395,998	$	(1,480,381	)	$	4,915,617	$	—	$	—	$	4,915,617
JPMorgan Chase		5,281,158		(1,004,751	)		4,276,407		—		—		4,276,407
Merrill Lynch		1,484,376		(918,882	)		565,494		—		—		565,494

Total open futures contracts	$	13,161,532	$	(3,404,014	)	$	9,757,518	$	—	$	—	$	9,757,518

Open forward contracts
Deutsche Bank	$	4,689,157	$	(4,241,771	)	$	447,386	$	—	$	—	$	447,386
Royal Bank of Scotland		3,742,778		(3,304,395	)		438,383		—		—		438,383

Total open forward contracts	$	8,431,935	$	(7,546,166	)	$	885,769	$	—	$	—	$	885,769

Open swap agreements
Credit Suisse	$	25,882,027	$	(13,361,680	)	$	12,520,347	$	—	$	—	$	12,520,347
JPMorgan Chase		11,361,013		(11,361,013	)		—		—		—		—
Royal Bank of Scotland		25,222,025		(25,222,025	)		—		—		—		—

Total open swap agreements	$	62,465,065	$	(49,944,718	)	$	12,520,347	$	—	$	—	$	12,520,347

The following table provides additional disclosures regarding the offsetting of derivative liabilities presented in the statements of financial condition:


	Gross Amounts of Recognized Liabilities		Gross Amount Offset in the Statements of Financial Condition			Net Amounts of Liabilities Presented in the Statements of Financial Condition		Gross Amounts Not Offset in the Statements of Financial Condition				Net Amount
	Gross Amounts of Recognized Liabilities							Financial Instruments		Cash Collateral Pledged		Net Amount
As of March 31, 2014
Open futures contracts
Credit Suisse	$	1,860,546	$	(1,556,824	)	$	303,722	$	—	$	303,722	$	—
JPMorgan Chase		904,773		(904,773	)		—		—		—		—
Merrill Lynch		403,922		(403,922	)		—		—		—		—

Total open futures contracts	$	3,169,241	$	(2,865,519	)	$	303,722	$	—	$	303,722	$	—

Open forward contracts
Deutsche Bank	$	5,458,791	$	(4,685,276	)	$	773,515	$	—	$	773,515	$	—
Royal Bank of Scotland		4,604,863		(4,604,863	)		—		—		—		—

Total open forward contracts	$	10,063,654	$	(9,290,139	)	$	773,515	$	—	$	773,515	$	—

Open swap agreements
Credit Suisse	$	19,639,687	$	(19,639,687	)	$	—	$	—	$	—	$	—
JPMorgan Chase		13,785,715		(11,284,000	)		2,501,715		—		2,501,715		—
Royal Bank of Scotland		27,922,719		(23,513,685	)		4,409,034		—		4,409,034		—

Total open swap agreements	$	61,348,121	$	(54,437,372	)	$	6,910,749	$	—	$	6,910,749	$	—

As of December 31, 2013
Open futures contracts
Credit Suisse	$	1,480,381	$	(1,480,381	)	$	—	$	—	$	—	$	—
JPMorgan Chase		1,004,751		(1,004,751	)		—		—		—		—
Merrill Lynch		918,882		(918,882	)		—		—		—		—

Total open futures contracts	$	3,404,014	$	(3,404,014	)	$	—	$	—	$	—	$	—

Open forward contracts
Deutsche Bank	$	4,241,771	$	(4,241,771	)	$	—	$	—	$	—	$	—
Royal Bank of Scotland		3,304,395		(3,304,395	)		—		—		—		—

Total open forward contracts	$	7,546,166	$	(7,546,166	)	$	—	$	—	$	—	$	—

Open swap agreements
Credit Suisse	$	13,361,680	$	(13,361,680	)	$	—	$	—	$	—	$	—
JPMorgan Chase		13,128,253		(11,361,013	)		1,767,240		—		1,767,240		—
Royal Bank of Scotland		32,391,756		(25,222,025	)		7,169,731		—		7,169,731		—

Total open swap agreements	$	58,881,689	$	(49,944,718	)	$	8,936,971	$	—	$	8,936,971	$	—

Only the amount of the collateral up to the net amount of liabilities presented on the statements of financial condition is disclosed above. The table below lists additional amounts of collateral pledged:


	Additional Collateral Pledged
As of March 31, 2014
Open futures contracts
Credit Suisse	$	17,227,369

Open forward contracts
Deutsche Bank	$	2,939,145

Open swap agreements
JPMorgan Chase	$	2,956,174
Royal Bank of Scotland		4,300,043

As of December 31, 2013
Open swap agreements
JPMorgan Chase	$	2,140,326
Royal Bank of Scotland		5,828,704

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.

7.	FINANCIAL HIGHLIGHTS

The following represents the ratios to average partners’ capital and other supplemental information for the periods ended March 31, 2014 and 2013:


	For the three months ended March 31,
	2014			2013
Per unit operating performance:
Beginning net asset value	$	9,803.63		$	9,955.05
Income (loss) from investment operations:
Net investment loss		(10.93	)		(7.90	)
Net realized and unrealized gains (losses) on trading activities and translation of foreign currency		(190.35	)		352.30

Total income (loss) from investment operations		(201.28	)		344.40

Ending net asset value	$	9,602.35		$	10,299.45

Ratios to average partners’ capital¹:
Expenses		0.59	%		0.37	%

Net investment loss		(0.46	)%		(0.31	)%

Total return²		(2.05	)%		3.46	%

¹	Ratios have been annualized.

²	Total return is for the period indicated and has not been annualized.

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 Trading Company accepts initial or additional subscriptions for limited partnership interests generally as of the first day of the month and redemption requests from limited partners as of the last business day of each calendar month. For the period subsequent to March 31, 2014 through the date of filing, limited partner subscriptions totaled $14,000, and there were no limited partner redemptions.

The General Partner has evaluated the impact of subsequent events on the Trading Company through the date of filing these financial statements, and noted no subsequent events that require adjustment to or disclosure in these financial statements, except as noted above.

ITEM 2.

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

Introduction

Reference is made to Item 1, “Financial Statements.” The information contained therein is essential to, and should be read in conjunction with, the following analysis.

Operational Overview

Man-AHL Diversified I L.P. (the “Partnership”) is a speculative managed futures fund which trades through its investment in Man-AHL Diversified Trading Company L.P. (the “Trading Company”) pursuant to the AHL Diversified Program, directed on behalf of the Trading Company by Man-AHL (USA) Limited (the “Advisor”). 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 AHL Diversified Program is proprietary and confidential, so that substantially the only information that can be furnished regarding the Partnership’s results of operations is contained in the performance record of its trading through the Trading Company. Past performance is not necessarily indicative of its futures results. Man Investments (USA) Corp., the general partner of the Partnership (the “General Partner”) does believe, however, that there are certain market conditions, for example, markets with pronounced price trends, in which the Partnership has a greater likelihood of being profitable than in other market environments.

Capital Resources and Liquidity

Units of limited partnership interests (“Units”) of the Partnership may be offered for sale as of the beginning, and may be redeemed as of the end, 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 level 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 JPMorgan Chase Bank, N.A. and Citibank, 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.

There have been no material changes with respect to the Partnership’s critical accounting policies, off-balance sheet arrangements or disclosure of contractual obligations as reported in the Partnership’s Form 10-K filed March 31, 2014.

Results of Operations

Due to the nature of the Partnership’s trading, the results of operations for the interim period presented should not be considered indicative of the results that may be expected for the entire year.

Period Ended March 31, 2014:


	31-Mar-14
Ending Equity	$	174,475,357

Three months ended March 31, 2014:

Net assets decreased $28,406,261 for the three months ended March 31, 2014. This decrease was attributable to subscriptions in the amount of $791,586, redemptions in the amount of $23,092,208 and a net loss from operations of $6,105,639.

Management Fees of $1,395,195 and servicing fees of $552,230 were paid or accrued, and interest of $63,785 was earned or accrued on the Partnership’s cash and cash equivalent investments and broker balances, for the three months ended March 31, 2014.

The Partnership’s other expenses paid or accrued for the three months ended March 31, 2014 were $190,990.

Poor performance in the equities markets resulted in a net trading loss in January as both the European and U.S. equity markets experienced declines. Jumps in credit premiums and a long exposure to industrial metals further contributed to these losses. On the positive side, renewed demand for developed market bonds brought noteworthy gains. Existing long positions in French and Italian bond futures, as well as Euro-bund and Canadian contracts, provided the most significant returns. Commodity trading also added positive returns as short positions in sugar and wheat benefitted from continued weak demand, a record Canadian wheat harvest, and increased sugar production from Brazil and Thailand.

In February, trading in the bond, commodity, and energy markets generated modest overall performance with long positions in Italian bond futures, soy beans, and natural gas contributing most to the positive returns. Long positions in Italian bonds were particularly profitable as demand increased for such bonds in spite of other key bond yields remaining relatively stagnant. On the commodity side, trading results were mixed. Although an unusually cold winter across the eastern half of North America made long exposure to natural gas profitable, short exposure to wheat and sugar offset these gains. A drought in Brazil increased the price of soft commodities such as sugar, and concerns of lower wheat production on account of the harsh U.S. winter drove up prices for wheat. Trading in the currency markets also provided mixed results. While short positions in the Russian rouble provided positive gains in light of the political turmoil in Ukraine, a slightly weaker U.S. dollar caused losses for the Partnership’s positions in Brazilian real, Korean won and Malaysian ringgit.

Against a backdrop of increased volatility for equities, energies and rates, the Partnership sustained negative returns in March as losses in stocks and fixed income exposures outweighed gains in currency positions. Regarding equities, the Dax Index in Germany experienced sharp market reversals in light of lingering uncertainty from the Russian-Ukrainian political conflict. During this reversal, the Partnership cut positions at the time of sell-off yet did not participate in the return upward swing. Sharp reversals in both the Eurodollar and U.S. Treasury bond markets similarly resulted in negative returns which were offset by gains on long positions in French and Italian government bonds. The losses in the equity and bond markets were further tempered by the Partnership’s currency trading with respect to the Indian rupee and New Zealand dollar, which both yielded positive results.

Period Ended March 31, 2013:


	31-Mar-13
Ending Equity	$	353,685,551

Three months ended March 31, 2013:

Net assets decreased $25,665,436 for the three months ended March 31, 2013. This decrease was attributable to subscriptions in the amount of $5,205,151, redemptions in the amount of $39,366,929 and a net gain from operations of $8,496,342.

Management fees of $2,741,891 and servicing fees of $1,397,026 were paid or accrued, and interest of $50,637 was earned or accrued on the Partnership’s cash and cash equivalent investments and broker balances, for the three months ended March 31, 2013.

The Partnership’s other expenses paid or accrued for the three months ended March 31, 2013 were $216,408.

January began with noteworthy results from long equity exposure across all regions, but particularly in U.S. and European indices. However, this was nullified by losses on long fixed income exposure, with U.S. Treasuries, French bonds, Short Sterling and Eurodollar being the main detractors. Commodity allocations generated a gain, largely due to short electricity contracts as milder, wetter weather drove prices down, but long exposure to oil and oil derivatives and short gold exposure also returned positive numbers. Short exposure to European and U.S. credit default protection captured gains over the past months as the cost of default insurance fell. Currency trading also added positive returns largely by way of short exposure to Japanese yen which fell 6% (on a trade-weighted basis) following the announcement of a stimulus and deflation control.

Commodity and currency trading were major factors in losses in February. Energy trading took a hit in February, with all positions contributing to the loss. Long positions in crude oil and its by-products was the main theme. The story was similar within the metals sector as long exposure to base metals suffered from the pull back in growth sensitive commodities over the month. Currency trading provided mixed performance. Short GBP positions performed well on the back of the UK rating downgrade and prospects for further quantitative easing. However, this was offset by losses from short USD positions as the dollar rose 3.3% on a trade weighted basis. On the positive side, long exposure to both bonds and short term interest rates performed positively over the month, reversing some of the sector’s losses from last month as markets returned to a more cautious state, following the overwhelmingly bullish nature of January. As such safe haven bonds (U.S. Treasuries in particular) returned some of the larger gains, but with further returns coming from emerging market bonds as well. On the interest rate side, long positions in Eurodollar, Euribor and Short Sterling all contributed positive performances as there continued to be no immediate end in sight to the relaxed monetary policies of the major central banks.

Long exposure to rising stock markets generated good performance in March. U.S. equities added the largest contribution with main European indices and Japanese stocks also performing. The only notable negative came from a long exposure to the Korean Kospi. Further positive returns were also added by long holdings of bonds. Yields on most European debt fell, benefitting the portfolio, as investor sought safety in light of Eurozone issues. A small portion of the gain was given back via Italian long dated bonds and U.S. Treasuries. Currency trading had a positive month, due largely to a continuing short exposure to the U.S. dollar. The credit sector detracted as short exposure to the rising cost of European default protection resulted in a loss. The allocation to commodities also delivered negative performance on the whole, driven predominantly by a long exposure to energy markets. Crude oil and its derivatives caused the most pain. AHL was positioned long at the start of the period and suffered as oil prices fell, but reduced this exposure and did not participate in some of the upward movement towards the end of the period.

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk.

Introduction

Past Results Are Not Necessarily Indicative of Future Performance

The Partnership is a speculative commodity pool. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Partnership’s main line of business.

Market movements result in frequent changes in the fair market value of the Partnership’s open positions and, consequently, in its earnings and cash flow. The Partnership’s market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments and contracts, the diversification effects among the Partnership’s open positions and the liquidity of the markets in which it trades.

The Partnership can rapidly acquire and/or liquidate both long and short positions in a wide range of different markets. Consequently, it is not possible to predict how a particular future market scenario will affect performance, and the Partnership’s past performance is not necessarily indicative of its future results.

Value at Risk is a measure of the maximum amount which the Partnership could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Partnership’s speculative trading and the recurrence in the markets traded by the Partnership of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Partnership’s experience to date (i.e., “risk of ruin”). In light of the foregoing as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification included in this section should not be considered to constitute any assurance or representation that the Partnership’s losses in any market sector will be limited to Value at Risk or by the Partnership’s attempts to manage its market risk.

Materiality, as used in this section “Quantitative and Qualitative Disclosures About Market Risk,” is based on an assessment of reasonably possible market movements and the potential losses caused by such movements, taking into account the leverage, optionality and multiplier features of the Partnership’s market sensitive instruments.

Quantifying the Partnership’s Trading Value at Risk

Quantitative Forward-Looking Statements

The following quantitative disclosures regarding the Partnership’s market risk exposures contain “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934). All quantitative disclosures in this section are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact.

The Partnership’s risk exposure in the various market sectors traded by the General Partner is quantified below in terms of Value at Risk. Due to the Partnership’s mark-to-market accounting, any loss in the fair value of the Partnership’s open positions is directly reflected in the Partnership’s earnings (realized or unrealized) and cash flow (at least in the case of exchange-traded contracts in which profits and losses on open positions are settled daily through variation margin).

For regulatory purposes, exchange initial margin requirements have been used by the Partnership as the measure of its Value at Risk. For trading and internal risk monitoring purposes, a different approach based on simulated market movements is used. Initial margin requirements include a credit risk factor and a maintenance margin factor and thus overstate the maximum one-day loss reflected by the maintenance margin requirement by the amount of the credit risk factor used in setting initial margin requirements. Maintenance margin requirements are set by exchanges to equal or exceed 95-99% of the maximum one-day losses in the fair value of any given contract incurred during the time period over which historical price fluctuations are researched for purposes of establishing margin levels. The maintenance margin levels are established by dealers and exchanges using historical price studies as well as an assessment of current market volatility (including the implied volatility of the options on a given futures contract) and economic fundamentals to provide a probabilistic estimate of the maximum expected near-term one-day price fluctuation.

In the case of market sensitive instruments that are not exchange traded (almost exclusively currencies in the case of the Partnership), dealers’ margins have been used as Value at Risk.

The fair value of the Partnership’s futures and forward positions does not have any optionality component. However, the General Partner may also trade commodity options on behalf of the Partnership. The Value at Risk associated with options would be reflected in the margin requirement attributable to the instrument underlying each option.

In quantifying the Partnership’s Value at Risk, 100% positive correlation in the different positions held in each market risk category has been assumed. Consequently, the margin requirements applicable to the open contracts have simply been aggregated to determine each trading category’s aggregate Value at Risk. The diversification effects resulting from the fact that the Partnership’s positions are rarely, if ever, 100% positively correlated have not been reflected.

The Partnership’s Trading Value at Risk in Different Market Sectors

The following table indicates the amount of trading Value at Risk associated with the Partnership’s open positions by market category as of the period ended March 31, 2014. As of March 31, 2014, the Partnership’s average capitalization was $174,475,357.


Quarter-Ended March 31, 2014
Market Sector	Average Value at Risk		% of Average Capitalization			Highest Value at Risk		Lowest Value at Risk
Agriculturals	$	2,755,357		1.58	%	$	2,755,357	$	2,755,357
Bonds	$	6,509,766		3.73	%	$	6,509,766	$	6,509,766
Credit	$	7,124,706		4.08	%	$	7,124,706	$	7,124,706
Currencies	$	4,842,023		2.78	%	$	4,842,023	$	4,842,023
Energies	$	2,848,646		1.63	%	$	2,848,646	$	2,848,646
Interest rates	$	3,602,167		2.06	%	$	3,602,167	$	3,602,167
Metals	$	1,674,554		0.96	%	$	1,674,554	$	1,674,554
Stock indices	$	7,531,497		4.32	%	$	7,531,497	$	7,531,497

Total	$	36,888,716		21.14	%	$	36,888,716	$	36,888,716

Average, highest and lowest Value at Risk amounts relate to the quarter-end amounts for the three months ended March 31, 2014. Average capitalization is the Partnership’s capitalization at the end of the three months ended March 31, 2014.

Material Limitations on Value at Risk as an Assessment of Market Risk

The face value of the market sector instruments held by the Partnership is typically many times the applicable initial or maintenance margin requirement (maintenance margin requirements generally ranging between approximately 1% and 10% of contract face value) as well as many times the capitalization of the Partnership. The magnitude of the Partnership’s open positions creates a “risk of ruin” not typically found in most other investment vehicles. Because of the size of its positions, certain market conditions — unusual, but historically recurring from time to time — could cause the Partnership to incur severe losses over a short period of time. The foregoing Value at Risk table — as well as the past performance of the Partnership — gives no indication of this “risk of ruin.”

Non-Trading Risk

The Partnership has non-trading market risk on its foreign cash balances not needed for margin. However, these balances (as well as any market risk they represent) are immaterial.

The Partnership also has non-trading cash flow risk as a result of holding a substantial portion (over 80%) of its assets in deposits, an AAA - rated Money Market Fund and interest-bearing bank accounts. This cash is placed with highly rated counterparties with a priority placed on preservation of capital and reputation (i.e., appropriate level of credit risk, market risk and reputation risk) and liquidity (i.e., appropriate level of liquidity risk).

Qualitative Disclosures Regarding Primary Trading Risk Exposures

The following qualitative disclosures regarding the Partnership’s market risk exposures — except for (i) those disclosures that are statements of historical fact and (ii) the descriptions of how the General Partner manages the Partnership’s primary market risk exposures — constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. The Partnership’s primary market risk exposures as well as the strategies used and to be used by the General Partner for managing such exposures are subject to numerous uncertainties, contingencies and risks, any one of which could cause the actual results of the Partnership’s risk controls to differ materially from the objectives of such strategies. Government interventions, defaults and

expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures and the risk management strategies of the Partnership. There can be no assurance that the Partnership’s current market exposure and/or risk management strategies will not change materially or that any such strategies will be effective in either the short- or long-term. Investors must be prepared to lose all or substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the Partnership as of March 31, 2014, by market sector.

Financial Instruments. Interest rate movements directly affect the price of the sovereign bond futures positions held by the Partnership and indirectly the value of its stock index and currency positions. Interest rate movements in one country as well as relative interest rate movements between countries may materially impact the Partnership’s profitability. The Partnership’s primary interest rate exposure is to interest rate fluctuations in the United States, Germany, the UK, Australia and Japan. However, the Partnership also may take positions in futures contracts on the government debt of smaller nations. The General Partner anticipates that G-7 interest rates, both long-term and short-term, will remain the primary market exposure of the Partnership for the foreseeable future.

Currencies. Exchange rate risk is the principal market exposure of the Partnership. The Partnership’s currency exposure is to exchange rate fluctuations, primarily fluctuations which disrupt the historical pricing relationships between different currencies and currency pairs. These fluctuations are influenced by interest rate changes as well as political and general economic conditions. The Partnership trades in a large number of currencies, including cross-rates — i.e., positions between two currencies other than the U.S. dollar. As of March 31, 2014 the Partnership’s primary currency exposures were in the U.S. dollar versus the Euro, UK Sterling, Brazilian Real, Mexican Peso and Singapore Dollar. The primary exposures in the currency crosses were in the Euro versus Australian Dollar, Euro versus UK Sterling, UK Sterling versus Australian Dollar, Euro versus Swedish krona and Australian Dollar versus Yen.

Stock Indices. The Partnership’s primary equity exposure, through stock index futures, is to equity price risk in the G-7 countries. As of March 31, 2014, the Partnership’s primary exposures were in the Dax, Nikkei, Korean Kospi, S&P 500 and Hang Seng. The Partnership is primarily exposed to the risk of adverse price trends or static markets in the major U.S., European and Asian indices. (Static markets would not cause major market changes but could make it difficult for the Partnership to avoid numerous small losses.)

Metals. The Diversified Portfolio used for the Partnership trades precious and base metals. As of March 31, 2014, the Partnership’s primary metals market exposures were in aluminum, gold, silver, copper, nickel and zinc.

Agricultural. The Partnership’s primary commodities exposure is to agricultural price movements, which are often directly affected by severe or unexpected weather conditions. Wheat, coffee, soybeans, cotton and corn accounted for the substantial bulk of the Partnership’s commodities exposure as of March 31, 2014.

Energy. The Partnership’s primary energy market exposure is to gas and oil price movements, often resulting from political developments in the Middle East and economic conditions worldwide. Energy prices are volatile and substantial profits and losses have been and are expected to continue to be experienced in this market. As of March 31, 2014, the main exposures were in crude oil, heating oil, gasoline, natural gas and gas oil.

Qualitative Disclosures Regarding Non-Trading Risk Exposure

The following were the only non-trading risk exposures of the Partnership as of March 31, 2014.

Foreign Currency Balances. The Partnership’s primary foreign currency balances are in Euro, Australian dollar, British pounds, Swedish krona and Japanese yen. The Partnership controls the non-trading risk of these balances by regularly converting these balances back into U.S. dollars (no less frequently than twice a month).

Cash Positions. The Partnership’s only market exposure in instruments held other than for trading is in its cash portfolio. The Partnership holds only cash in deposits, an AAA rated Money Market Fund and interest-bearing bank accounts. This cash is placed with highly rated counterparties with a priority placed on preservation of capital and reputation (i.e. appropriate level of credit risk, market risk and reputation risk) and liquidity (i.e. appropriate level of liquidity risk) with durations no longer than 1 year.

Qualitative Disclosures Regarding Means of Managing Risk Exposure

Risk management is an essential component of AHL’s investment management process. AHL has put in place a risk management framework which is designed to identify, monitor and mitigate the portfolio, operational and outsourcing risks relevant to its operations. AHL’s risk management framework is part of, and is supported by, the overarching risk management framework of its parent company, Man Group plc. Key principles of AHL’s risk management framework include the segregation of functions and duties where material conflicts of interest may arise and having an appropriate degree of independent and senior management oversight of business activities. As part of this independent oversight, AHL’s activities are subject to regular review by an internal audit function.

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. 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. Portfolio risk management consists primarily of monitoring risk measures and ensuring the systems remain within prescribed limits. The major risk monitoring measures and focus areas include value-at-risk, stress testing, implied volatility, leverage, margin-to-equity ratios and net exposures to sectors and different currencies.

Diversification is also a key feature of AHL’s risk management, as well as its investment, process. The AHL Diversified Program is diversified across over 100 markets covering a wide range of sectors including, without limitation, currencies, bonds, energies, stock indices, interest rates, metals and agriculturals. As well as emphasizing sector and market diversification, the AHL Diversified Program has been constructed to achieve diversification by combining various systems driven by powerful computerized trading algorithms, most of which work by sampling prices in real time and measuring price momentum and breakouts. Another important aspect of diversification is the fact that the various systems generate signals across different timeframes, 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. AHL also has a process for adjusting its market risk exposure in real time to reflect changes in the volatility, a measure of risk, of individual markets.

ITEM 4.

Controls and Procedures.

The General Partner, with the participation of the General Partner’s Chief Executive Officer and Chief Financial Officer with respect to the Partnership, has evaluated the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2014. Based on such evaluation, the Partnership’s Chief Executive Officer and Principal Financial Officer with respect to the Partnership have concluded that the Partnership’s disclosure controls and procedures were effective as of the fiscal quarter ended March 31, 2014.

Changes in Internal Control over Financial Reporting

There were no significant changes in the Partnership’s internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Risk of Loss. Investing in the Partnership is speculative and involves substantial risks. You should not invest unless you can afford to lose your entire investment.

General. The transactions in which the Advisor generally will engage in on behalf of the Partnership involve significant risks. Growing competition may limit the Advisor’s ability to take advantage of trading opportunities in rapidly changing markets. No assurance can be given that investors will realize a profit on their investment. Moreover, investors may lose all or some of their investment. Because of the nature of the trading activities, the results of the Partnership’s operations may fluctuate from month to month and from period to period. Accordingly, investors should understand that the results of a particular period will not necessarily be indicative of results in future periods.

Markets Are Volatile and Difficult to Predict. Trading in futures is a speculative activity. Futures prices may be highly volatile. Market prices are difficult to predict and are influenced by many factors, including: changes in interest rates; governmental, agricultural, trade, fiscal, monetary and exchange control programs and policies; weather and climate conditions; changing supply and demand relationships; national and international political and economic events; and the changing philosophies and emotions of market participants. In addition, governments intervene in particular markets from time to time, both directly and by regulation, often with the intent to influence prices. The effects of government intervention may be particularly significant in the financial instrument and currency markets, and may cause such markets to move rapidly.

Trading Is Highly Leveraged. The low margin deposits normally required in futures trading permit an extremely high degree of leverage. A relatively small movement in the price of a futures contract may result in immediate and substantial loss or gain to a trader holding a position in such contract. For example, if at the time of purchase 10% of the price of a futures contract is deposited as margin, a 10% decrease in the price of the futures contract would, if the contract were then closed out, result in a total loss of the margin deposit before any deduction for brokerage commissions. Consequently, like other leveraged investments, a futures trade may result in losses in excess of the amount invested. Forward contracts involve similar leverage and also may require deposits of margin as collateral. Swaps and OTC derivative instruments are also highly leveraged transactions.

Markets May Be Illiquid. At times, it may not be possible for the Advisor to obtain execution of a buy or sell order at the desired price or to liquidate an open position, either due to market conditions on exchanges or due to the operation of “daily price fluctuation limits” or “circuit breakers.” For example, most U.S. commodity exchanges limit fluctuations in most futures contract prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” During a single trading day, no trades may be executed at prices beyond the daily limit. Futures contract prices occasionally have moved to the daily limit for several consecutive days with little or no trading.

Even when futures prices have not moved to the daily limit, the Advisor might not be able to obtain execution of trades at favorable prices if little trading in the contracts which the Advisor wishes to trade is taking place. Also, an exchange or governmental authority may suspend or restrict trading on an exchange (or in particular futures traded on an exchange) or order the immediate settlement of a particular instrument.

Options trading may be restricted in the event that trading in the underlying instrument becomes restricted. Options trading also may be illiquid at times regardless of the condition of the market in the underlying instrument. In either event, it will be difficult for the Advisor to realize gain or limit losses on option positions by offsetting them or to change positions in the market.

Trading in OTC derivative instruments is conducted with individual counterparties rather than on organized exchanges. There have been periods during which forward contract dealers have refused to quote prices for forward contracts or have quoted prices with an unusually wide spread between the bid and asked price.

Speculative Position Limits May Restrict Futures Trading. Speculative position limits prescribe the maximum net long or short futures contract and options positions which any person or group may hold or control in particular futures contracts. All futures contracts and options on futures contracts traded on commodity exchanges located in the United States, with the exception of contracts on certain major non-U.S. currencies, are subject to speculative position limits established either by the CFTC or the relevant exchange.

All trading accounts owned or managed by the Advisor and its principals will be combined for the purposes of speculative position limits. Such limits could adversely affect the profitability of the Trading Company and, consequently, of the Partnership. For example, the Advisor could be required to liquidate futures positions at an unfavorable time in order to comply with such limits. However, the Advisor does not believe that existing speculative position limits will materially adversely affect its ability to manage the Trading Company’s account.

Cash Flow. Futures contract gains and losses are marked-to-market daily for purposes of determining margin requirements. Option positions generally are not, although short option positions will require additional margin if the market moves against the position. Due to these differences in margin treatment between futures and options, there may be periods in which positions on both sides must be closed down prematurely due to short term cash flow needs. If this were to occur during an adverse move in a spread or straddle relationship, a substantial loss could occur.

Decisions Based on Trends and Technical Analysis. The trading decisions of the Advisor will be based in part on trading strategies which utilize mathematical analyses of technical factors relating to past market performance. The buy and sell signals generated by a technical, trend-following trading strategy are based upon a study of actual daily, weekly and monthly price fluctuations, volume variations and changes in open interest in the markets. The profitability of any technical, trend-following trading strategy depends upon the occurrence in the future of significant, sustained price moves in some of the markets traded. The Trading Company and, consequently, the Partnership may incur substantial trading losses:

•

during periods when markets are dominated by fundamental factors that are not reflected in the technical data analyzed by the program;

•

during prolonged periods without sustained moves in one or more of the markets traded; or

•

during “whip-saw” markets, in which potential price trends start to develop but reverse before actual trends are realized.

In the past there have been prolonged periods without sustained price moves in various markets. Presumably, such periods will recur. A series of volatile reverses in price trends may generate repeated entry and exit signals in trend-following systems, resulting in unprofitable transactions and increased brokerage commission expenses. Technical, trend-following trading systems are used by many other traders. At times, the use of such systems may:

•

result in traders attempting to initiate or liquidate substantial positions in a market at or about the same time;

•

alter historical trading patterns;

•

obscure developing price trends; or

•

affect the execution of trades.

Trading in OTC Markets Will Expose the Partnership to Risks Not Applicable to Trading on Organized Exchanges. The Partnership, through the Trading Company, may engage in OTC derivative transactions, such as: currency forward contracts traded in the interbank market; options on currency forward contracts; and swap transactions.

In general, there is much less governmental regulation and supervision of transactions in the OTC markets than of transactions entered into on organized exchanges. Most of the protections afforded to participants on U.S. and certain non-U.S. exchanges, such as daily price fluctuation limits and the performance guarantee of an exchange clearinghouse, will not be available in connection with OTC transactions. Consequently, the Partnership will be exposed to greater risk of loss through default than if it confined its trading to organized exchanges.

A portion of the Partnership’s assets may be traded in forward contracts. Such forward contracts are not traded on exchanges and are executed directly through forward contract dealers. There is no limitation on the daily price moves of forward contracts, and a dealer is not required to continue to make markets in such contracts. There have been periods during which forward contract dealers have refused to quote prices for forward contracts or have quoted prices with an unusually wide spread between the bid and asked price. Arrangements to trade forward contracts may therefore experience liquidity problems. The Partnership therefore will be subject to the risk of credit failure or the inability of or refusal of a forward contract dealer to perform with respect to its forward contracts.

When trading currency forward contracts, the Trading Company may hedge the foreign currencies in order to limit the Trading Company’s exposure to fluctuations in exchange rates. However, there is no guarantee that such hedging will be successful.

Exchanges for Physicals/Swaps/Risk. While not a regular practice for the Trading Company, it may in rare instances engage in transactions known as exchanges for physicals (“EFP”), exchanges for swaps (“EFS”), or exchanges for risk/over-the-counter derivatives (“EFR”). An EFP/EFS/EFR is a purchase or sale of a spot commodity/swap/derivative, as applicable, in conjunction with an offsetting sale or purchase of a corresponding futures contract involving the same or equivalent underlying commodity or instrument, without making an open and competitive trade for the futures contract on the exchange. EFPs, EFSs and EFRs are a permitted exception to the general requirement of the CEA that all futures contracts must be competitively executed on an exchange. They are permitted pursuant to the rules of the relevant exchanges, which vary from exchange to exchange. If the EFP, EFS or EFR does not comply with specific exchange requirements, particularly regarding possessing documentation evidencing possession of the underlying commodity or instrument, then the CFTC or the exchange may deem the transaction to be an illegal off-exchange futures contract. In addition, every EFP, EFS or EFR involves the transfer of an underlying commodity or entry into a swap or derivative on a bilateral basis, as applicable, with a counterparty in exchange for a related cleared futures contract. There is, therefore, counterparty credit risk if the counterparty or its clearing member on the futures leg fails to perform. Unlike other futures contracts that are deemed cleared by the clearinghouse upon trade matching or at the end of the business day, futures contracts arising out of EFPs, EFSs or EFRs may, under various clearinghouse rules, not be deemed accepted by the clearinghouse until the next business day.

Options on Futures Contracts Are More Volatile Than Futures Contracts. The Advisor may trade options on futures contracts. Options are speculative in nature and are highly leveraged. The purchaser of an option risks losing the entire purchase price of the option. The seller (writer) of an option risks losing the difference between the premium received for the option and the price of the underlying futures contract that the writer must purchase upon exercise of the option. Additionally, the seller and writer of the options lose any commissions and fees associated with such transactions. This could subject the writer to unlimited risk in the event of an increase in the price of the contract to be purchased or delivered. Successful trading of options on futures contracts requires a trader to accurately determine near-term market volatility because it often has an immediate impact on the price of outstanding options. Accurate determination of near-term volatility is more important to successful options trading than it is to long-term futures contract trading strategies because such volatility generally does not have as significant an effect on the prices of futures contracts.

Trading on Non-U.S. Exchanges and Markets Will Expose the Partnership to Risks Not Applicable to Trading on U.S. Exchanges and Markets. The Partnership, through the Trading Company, may engage in trading on non-U.S. exchanges and markets. The Partnership will be subject to the risk of fluctuations in the currency exchange rate between the local currency and the U.S. dollar and to the possibility of exchange controls. Trading on such exchanges and markets generally involves other risks not applicable to trading on U.S. exchanges and markets.

For example, such exchanges and markets:

•

may not provide the same assurances of the integrity (financial and otherwise) of the marketplace and its participants as do U.S. exchanges and markets;

•

may exercise less regulatory oversight and supervision over transactions and participants in transactions;

•

may not afford all participants an equal opportunity to execute trades;

•

may be subject to a variety of political influences and the possibility of direct governmental intervention;

•

may have different clearance and settlement procedures for transactions than U.S. exchanges and markets. There have been times when settlement procedures have been unable to keep pace with the volume of transactions on certain exchanges and markets, making it difficult to conduct trades; and

•

may be “principals’ markets” in which performance is the responsibility only of the member with whom the trader has dealt (the counterparty) rather than the responsibility of an exchange or clearing association. Each transaction on such an exchange or market may subject the Partnership to the risk of the counterparty’s credit failure or inability or refusal to perform its obligations.

Institutional Risks. Institutions, such as the brokers, will have custody of the assets of the Partnership. These firms may encounter financial difficulties that impair the operating capabilities or the capital position of the Partnership, the Trading Company or the General Partner. The General Partner and Advisor will attempt to limit its transactions to well-capitalized and established brokers in an effort to mitigate such risks.

Counterparty Risk. The Partnership will be subject to the risk of the inability of counterparties to perform with respect to transactions, whether due to insolvency, bankruptcy or other causes, which could subject the Partnership to substantial losses. In an effort to mitigate such risks, the General Partner and Advisor will attempt to limit transactions to counterparties, which are established, well-capitalized and creditworthy.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Pursuant to the Partnership’s Limited Partnership Agreement, the Partnership may sell Units of Limited Partnership Interests (“Units”) as of the last business day of any calendar month or at such other times as the General Partner may determine. On January 31, 2014, February 28, 2014 and March 31, 2014, the Partnership sold Class A Series 1 Units, exclusive of non-cash transfers, to existing and new Limited Partners in the amount of $62,000, $540,600 and $0, respectively. On January 31, 2014, February 28, 2014 and March 31, 2014, the Partnership sold Class A Series 2 Units, exclusive of non-cash transfers, to existing and new Limited Partners in the amount of $0, $0 and $0, respectively. On January 31, 2014, February 28, 2014 and March 31, 2014, the Partnership sold Class B Series 1 Units, exclusive of non-cash transfers, to existing and new Limited Partners in the amount of $90,000, $57,750 and $41,236, respectively. On January 31, 2014, February 28, 2014 and March 31, 2014, the Partnership sold Class B Series 2 Units, exclusive of non-cash transfers, to existing and new Limited Partners in the amount of $0, $0 and $0, respectively. There were no underwriting discounts or commissions in connection with the sales of the Units described above.

(b) Not applicable.

(c) 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, exclusive of non-cash transfers, during the three months ended March 2014:


	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:
January 31, 2014	$	7,196,719	$	131,854	$	1,995,456	$	—
February 28, 2014	$	4,885,380	$	343,162	$	1,194,263	$	40,347
March 31, 2014	$	4,966,348	$	439,655	$	1,857,425	$	41,599
TOTAL	$	17,048,447	$	914,671	$	5,047,144	$	81,946

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are included herewith:


Designation		Description

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.

10.2		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, 2011, for the year ended December 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 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 May 14, 2014.

Man-AHL Diversified I L.P.

(Registrant)

By: Man Investments (USA) Corp.

General Partner

By: /s/ Eric Burl

President and Chief Executive Officer

By: /s/ Daniel Borenstein

As Principal Financial Officer

EXHIBIT INDEX


Exhibit Number		Description of Document

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

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document