series 2 ltd - investors trust...altis partners (jersey) limited long‑term trend follower 12.0 %...

Series 2 Ltd100% capital protected bonds

Non‑capital protected income bonds

Introduction

Man Directional Series 2 Ltd (the ‘Fund’) offers investors access to a selection of industry‑leading directional investment managers, combined in an actively managed and flexible portfolio. Fund’s return objective is double‑digit returns with an annualised volatility objective of around 15%1.

1. The volatility figure quoted is a target and is based over the term of the bonds on the performance projections of the investment strategies with the targeted investment exposures and market interest rates at the time of modelling and therefore may change. 2. Credit rating AAA (S&P) as at the date of the Offering Memorandum. Credit ratings are assigned by independent companies known as rating agencies. Companies are rated from AAA (most secure/best) to D (most risky/worst) by Standard & Poor’s. An obligor rated AAA by Standard & Poor’s has extremely strong capacity to meet its financial commitments. Please note that credit ratings are reviewed regularly. 3. Subject to the terms and conditions of the security trust deed. As more fully described in the offering memorandum (the ‘Offering Memorandum’), the amount payable under the capital protection is subject to a number of terms and conditions. See the section 4 entitled ‘The capital protection and the Coupon Collateral’ for further details. 4. Man Directional Series 2 Ltd (the ‘Company’) will pay a coupon to the holders of income bonds amounting to 7% of the face value of the bonds per annum payable in two equal semi‑annual instalments of 3.5% on two coupon dates. The first coupon date will be 31 October 2010 and the last coupon date will be 30 April 2015.

Man Directional Series 2 Ltd will be open for investment from 25 January 2010 to 22 March 2010 with the potential for extension.

Proposed key attributes of Man Directional Series 2 LtdPerformance

n Access to a selection of industry‑leading directional managers with the potential to profit in a wide variety of market conditions

n The potential to enhance the risk/return profile of a traditional portfolio

An actively managed portfolio

n The flexibility to adapt to evolving market conditions

n Active portfolio management and monitoring implemented by Man Investments’ multi‑manager business

n Initially, the majority of managers will be accessed through managed accounts, improving transparency and control of assets

Choice of structure

n 100% capital protection through AAA2 rated US Treasury zero coupon bonds secured with BNY Corporate Trustee Services Limited3

n Non‑capital protected income bonds that offer assurance of a coupon of 7% p.a.4

Please refer to the ‘Important considerations’ for risks associated with making an investment.

Important considerationsInvestors should carefully consider the risks associated with investing in the bonds, whether the bonds are a suitable investment for them and whether they have sufficient resources to be able to bear any losses which may result from an investment in the bonds. Investors should only invest in the bonds if they understand the terms on which the bonds are offered and should, where appropriate, seek advice from their independent financial adviser before making an investment: (i) speculative investment; there can be no assurance that the Company will achieve its investment objective in respect of the bonds. The investments which the trading subsidiaries propose to make are speculative; (ii) underlying funds; the underlying managers may employ complex trading systems/programmes or rely on analytical models to trade sophisticated financial instruments. Such trading systems/programmes and analytical models may be fallible which could result in losses; (iii) performance; there can be no assurance that information provided on past performance will be indicative of how the bonds will perform (either in terms of profitability or low correlation with other investments) in the future; and (iv) the capital protection; the income bonds are not capital protected. While the capital protected bonds have the benefit of capital protection, the capital protected amount is unlikely to have the same value as the amount initially invested, due to likely effects of inflation and the time value of money.

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Bullish or bearish?

Managed futures

Global macro

World stocks

Total return 570.0 % 1,272.0 % 77.3 %

Annualised return 10.0 % 14.1 % 2.9 %

Annualised volatility 9.4 % 7.8 % 14.7 %

Worst drawdown ‑10.7 % ‑10.7 % ‑51.9 %

Sharpe ratio2 0.60 1.18 n/a

2008 return 17.8 % 4.8 % ‑39.9 %

Correlation to world stocks

‑0.14 0.39 1.00

Source: Bloomberg. Managed futures: CISDM CTA Asset Weighted Index. Global macro: HFRI Macro (total) Index. World stocks: MSCI World Index hedged to USD (price return). Please note that the HFRI data over the past four months may be subject to change. There is no guarantee of trading performance and past or projected performance is not a reliable indicator for future performance. Latest data available at the time of production. Returns may increase or decrease as a result of currency fluctuations. 1. The periods selected are exceptional and these results do not reflect typical performance. As a consequence they give no indication of likely performance. 2. The Sharpe ratio is calculated using the risk‑free rate in the appropriate currency over the period analysed. Where an investment has underperformed the risk‑free rate, the Sharpe ratio will be negative. Because the Sharpe ratio is an absolute measure of risk‑adjusted return, negative Sharpe ratios are shown as n/a, as they can be misleading.

1 2 3

Managed futuresGlobal macroWorld stocksPeriods of equity market difficulty1

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

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3000

5000

7000

9000

110001300015000

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Total return over the period Managed futures Global macro World stocks

Russian crisis and LTCM difficulty1 1 Aug 1998 to 30 Sep 1998 8.8 % ‑4.2 % ‑14.2 %

Equity bear market1 1 Apr 2000 to 31 Mar 2003 30.2 % 16.7 % ‑47.8 %

Credit crisis1 1 Jul 2007 to 28 Feb 2009 21.8 % 10.1 % ‑51.0 %

1

2

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As such, an allocation to directional strategies may provide diversification benefits to an investment portfolio of traditional assets and help to protect that portfolio in falling market conditions.

Man Directional Series 2 Ltd offers investors these benefits through access to a selection of the industry’s most sought after directional managers, combined in a flexible and actively managed portfolio.

Directional investment strategies – strategies that look to capitalise on the direction, either up or down, of prices across global markets and asset classes – are not reliant on the upward direction of markets to generate returns and have a long record of producing positive returns throughout a variety of market conditions. Two such directional strategies, managed futures and global macro, illustrate this return potential in the chart below.

1 January 1990 to 30 November 2009

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Undoubtedly economic conditions have improved considerably since January 2009 and markets have rallied significantly. Yet concerns persist that the drivers of this rally are more technical than fundamental, raising the question in most investors’ minds as to whether the upward momentum is sustainable or if in fact we are just witnessing a reflexive rebound within a structural bear market.

Consequently, now, more than ever, it is important for investors to complement their equity exposure with investments in other asset classes to spread market risk and diversify event risk.

Directional strategies long‑term performance1 January 1990 to 30 November 2009

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Key attributes of directional strategies

Directional strategies typically combine various degrees of powerful computerised processes with relevant investment and trading experience to identify and capitalise on persistent price trends. They seek to capture trends across a variety of markets including global bonds, equities and commodities by trading futures and forward instruments on highly regulated, liquid exchanges.

Their long‑term out‑performance over the past 19 years and low correlation to traditional asset classes can be attributed to the following characteristics:

n fl exible and unconstrained investment approaches with the ability to profi t in both rising and falling markets;

n a global opportunity set and the scope to allocate across a broad spectrum of assets; and

n a preference to trade the most liquid instruments on highly regulated exchanges.

Consequently, an allocation to a combination of such highly fl exible strategies in a portfolio has the potential to offer many key benefi ts including:

n a wealth of exploitable opportunities across a broad range of markets and sectors;

n a more stable return stream through the blending of complementary trading strategies; and

n potential to derive additional value from exposure to managers with the specialist skills to profi t in exceptional market conditions.

Managed futuresSeek to profi t from the pursuit of trends and movements in global futures markets

Trading strategies

n Short‑term traders seek to capitalise on rapid market moves and swift price fl uctuations over a short time period ranging from a maximum of ten days to intra‑day

n Long‑term trend followers aim to profi t from long, persistent trends ranging from several days to several months

Global macro Develop views on broad economic themes and seek to implement a strategy to refl ect their stance

Trading strategies

n Encompasses managers that are active in global trading, emerging markets, currencies and commodities, using a variety of instruments

Directional strategies

The proposed Man Directional portfolio

At the start of the offer period, the allocation of the proposedMan Directional portfolio will be to managed futures managers. To refl ect market conditions, the portfolio will be specifi cally constructed to be as fl exible and dynamic as possible. This will allow Man Investments to quickly re‑allocate assets across the directional space as opportunities develop. This is likely to include broadening the manager set into other directional strategies such as global macro.

Man Directional Series 2 Ltd proposed portfolio allocation1

At 25 January 2010

12

3

Trading style Allocation % Managers

1. Long‑term trend following 58.0 % 5

2. Short‑term traders 30.0 % 4

3. Multi‑strategy 12.0 % 1

Total portfolio allocation 100.0 % 10

Access to a complementary selection of sought‑after directional managers

The managers currently included in the proposed Man Directional portfolio specialise in a variety of different futures markets and trade across different time horizons. They have been specifi cally selected to complement each other within a portfolio, improving diversifi cation and potentially strengthening overall performance.

Proposed manager names and trading styles

Proposed manager1 Trading styleProposed

weighting1

AHL Long‑term trend follower 12.0 %

Altis Partners (Jersey) Limited

Long‑term trend follower 12.0 %

BlueCrest Capital Management LLP


Winton Capital Management Limited


TransTrend B.V. Long‑term trend follower 10.0 %

Quantitative Investment Management LLC

Short‑term trader 15.0 %

Quest Partners LLC Short‑term trader 5.0 %

John Locke Investments S.A.


Kaiser Trading Group Pty Limited


Lynx Asset Management AB

Multi‑strategy 12.0 %

Source: Man database. 1. The asset allocation shown represents the portfolio allocations of the portfolio recommended at the time of production and is indicative only. As part of the investment management process, allocations are continually under review and are therefore subject to change based on current recommendation and market conditions from time to time. Actual allocations at the time of production and throughout the term of the portfolio may not necessarily refl ect the allocations set out.

Active portfolio management The portfolio is actively managed by a highly experienced investment team that focuses on directional strategies and is part of Man Investments’ multi‑manager business.

The team reviews the allocations on a continual basis and determines the weightings based on:

n top‑down strategic assessment of macro‑economic scenarios;

n qualitative views of dedicated investment research and strategy teams; and

n quantitative risk/return and correlation expectations.

Additionally, the team will look to bring new managers into the portfolio as and when they can demonstrably improve the offering. This decision will be taken when the investment team

is convinced by the manager’s strategy, performance potential and ability to improve the overall portfolio. The inclusion (or exclusion) of a manager is based on, but not limited to it:

n demonstrating performance characteristics that put them ahead of their peer group; and

n improving the overall risk/return profi le of the portfolio by having low or negative correlation compared to the other managers in the portfolio

This active portfolio management process aims to ensure that the portfolio is well positioned to adapt to, and take advantage of, prevailing market conditions as well as to maintain its long‑term risk/return attributes.

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The allocation to the traditional portfolio has been reduced in the proportion of the percentage allocation to the Man Directional product. THE FOREGOING DOES NOT REPRESENT ANY ACTUAL PORTFOLIO COMPOSITION BUT ONLY THE POSSIBLE RESULTS WHICH MIGHT HAVE OCCURRED HAD A MAN DIRECTIONAL PROGRAM BEEN INCLUDED IN A TRADITIONAL PORTFOLIO DURING THE PERIOD SHOWN. 20% IS ONLY AN EXAMPLE. YOU MUST DETERMINE IF AN ALLOCATION TO A MAN DIRECTIONAL PROGRAMME IS SUITABLE FOR YOUR PORTFOLIO, AND IF SO, THE APPROPRIATE AMOUNT.Source: Man database and Bloomberg. World stocks: MSCI World Index hedged to USD (price return). World bonds: Citigroup World Government Bond Index hedged to USD (total return). Cash: 3 month USD LIBOR rate. There is no guarantee of trading performance and past or projected performance is not a reliable indicator for future performance. Latest data available at the time of production. Returns may increase or decrease as a result of currency fluctuations. *It is a requirement of MiFID to include performance statistics on a 12 month rolling basis. From 30 November 2004 to 30 November 2009, Man Directional pro forma has yielded a total return of 64.8% and an annualised return of 10.5% for an annualised volatility of 11.5%. The Sharpe ratio for this period was 0.62 and the worst drawdown was ‑9.6% with a correlation to world stocks of ‑0.12, and to world bonds of ‑0.07. From 30 November 2004 to 30 November 2009, the enhanced portfolio with a 20% allocation to Man Directional Series 2 Ltd pro forma has yielded a total return of 25.7% and an annualised return of 4.7% for an annualised volatility of 5.7%. The worst drawdown is unchanged. 1. Please see additional important disclosures on the back page. The pro forma return is calculated net of a 1.5% management fee and a 10% performance fee, and there is a deduction of 2% per annum for biases. Both the management fee and the deduction for the biases are charged on investment exposure. The track record shows the hypothetical performance an investor might have obtained had they invested in the manner described and does not represent the results that any investor actually attained. Actual performance results may differ, and may differ substantially from this hypothetical performance. The pro forma return of the Man Directional portfolio is calculated using weights and returns of the funds recommended by Man Investments for inclusion in the portfolio as of the start of the offer period. Weights of the underlying funds have been held constant, and where a fund does not have a return for a given month, its weight has been re‑distributed pro rata across the portfolio. The composition of the portfolio and the trading level of the underlying funds are subject to change. The pro forma return is calculated for a product that is not principal protected and offers a 120% investment exposure. The return therefore does not take into account any costs or fees associated with the product structure. Man Directional Series 2 Ltd will trade a similar portfolio to the Man Directional pro forma. 2. 10 drawdowns occurred within the stated time period. 3. The Sharpe ratio is calculated using the risk‑free rate in the appropriate currency over the period analysed. Where an investment has underperformed the risk‑free rate, the Sharpe ratio will be negative. Because the Sharpe ratio is an absolute measure of risk‑adjusted return, negative Sharpe ratios are shown as n/a, as they can be misleading. 4. Traditional portfolio: 45% world stocks, 45% world bonds and 10% cash. Enhanced portfolio: 80% traditional portfolio and 20% Man Directional pro forma.

Performance potential

The performance potential of Man Directional Series 2 Ltd in a variety of market conditions is demonstrated by the pro forma track record below.

Man Directional pro forma performance1

1 January 2004 to 30 November 2009*

Man Directional pro forma1

Worldstocks

World bonds

Total return 77.3 % 6.3 % 33.8 %

Annualised return 10.2 % 1.0 % 5.0 %

Annualised volatility 11.7 % 14.6 % 2.9 %

Worst drawdown2 ‑12.6 % ‑51.9 % ‑2.3 %

Date of worst drawdown Feb 04 to

Aug 04Oct 07 to

presentMar 08 to

Jun 08

Months to recovery 10 n/a 3

Sharpe ratio3 0.61 n/a 0.58

Correlation to Man Directional pro forma1

1.00 ‑0.07 0.02

Diversification

As the charts below demonstrate, a 20% allocation of the Man Directional pro forma to a traditional portfolio of world stocks, world bonds and cash could have led to an 9.8% improvement in the total return of the portfolio and a reduction in overall investment risk over the period analysed.

Man Directional in a traditional portfolio

Traditional portfolio4

Worldstocks45 %

Worldbonds45 %

Cash10 %

Enhanced portfolio4

ManDirectionalpro forma1

20 %


80 %

Worst drawdown


Enhanced portfolio4

Total return Annualised return Annualised volatility

0 %

10 %

20 %

30 %

40 %

21.6 %

32.3 %

0 %

1 %

2 %

3 %

4 %

5 %

3.4 %

4.8 %

0 %

2 %

4 %

6 %

8 %6.5 %

5.5 %

-25 %

-20 %

-15 %

-10 %

-5 %

0 %

-23.9 %

-15.2 %

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Man Directional pro forma1

World stocksWorld bonds

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2004 2005 2006 2007 2008 2009

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1400

1600

1800

2000

2200

1 January 2004 to 30 November 2009*

Man Investments

n USD 44 billion under management1

n More than 1,500 employees2

n Part of Man Group plc, a constituent of the FTSE 100 Index

Man Investments’ multi‑manager business

Man Investments’ multi‑manager business provides access to a broad range of alternative investment strategies. The business is able, by virtue of its long‑standing industry presence, to access many of the best performing managers from around the world, including scarce capacity, and to structure portfolios engineered to maximise risk‑adjusted performance.

Key parties

In applying a flexible, but disciplined, investment approach, Man Investments aims to realise attractive long‑term performance with controlled downside deviation through the delivery of investment returns that are:

n skill based;

n robust in changing market environments; and

n a true alternative to systematic (beta) exposures.

Offer period 25 January 2010 to 22 March 2010 with the potential for extension

Investment manager Man Investments (CH) AG, Guernsey branch

Face value of the bonds USD 1 per bond

Minimum subscription4 USD 50,000

Minimum redemption 20,000 bonds

Minimum holding 50,000 bonds

Maturity date of the 31 October 2022capital protected bonds

Maturity date of 30 April 2015the income bonds

Sales charge None

Dealing frequency Monthly

Expected annualised Around 15 %volatility5

Reporting

Investors can access prices through the following media:

n www.maninvestments.com

n Financial Times and International Herald Tribune

n Bloomberg, Reuters, SIX Telekurs and Standard & Poor’s electronic data services

Proposed key facts3

Monthly redemptions subject to the following fees:

Capital protected bonds

Redemption on or between Redemption fee

the issue date and 30 April 2012 4 % of NAV per bond

1 May 2012 and 30 April 2014 3 % of NAV per bond


on or after 1 May 2016 no redemption fee

Income bonds

Redemption on or between Redemption fee

the issue date and 30 April 2012 4 % of NAV per bond


1 May 2014 and 31 March 2015 1 % of NAV per bond

Source: Man Investments. 1. At 30 September 2009. This represents Man’s aggregated assets under management. 2. At 30 September 2009 (permanent employees). 3. Key facts represent a summary of the key terms set out in the Offering Memorandum. Please refer to the Offering Memorandum for further information. 4. Subject to the selling restrictions in appendix 1 of the Offering Memorandum. As described in detail in the Offering Memorandum and as permitted by and subject to local selling restrictions and additional local regulations that may apply, the directors of Man Directional Series 2 Ltd may in their discretion reduce the minimum subscription amount. 5. The volatility figure quoted is a target and is based over the term of the bonds on the performance projections of the investment strategies with the targeted investment exposures and market interest rates at the time of modelling and therefore may change.

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This material is distributed by Man Investments Inc. (‘Man Investments’), which is registered as a broker‑dealer with the U.S. Securities and Exchange Commission (‘SEC’) and is a member of the Financial Industry Regulatory Authority (‘FINRA’) and the Securities Investor Protection Corporation (‘SIPC’). The registrations and memberships described in the preceding sentence in no way imply that the SEC, FINRA or SIPC have endorsed any of the referenced entities to provide any of the services discussed herein. Man Investments is a member of the Man Investments division of Man Group plc. ‘Man Group’ refers to the group of entities affiliated with Man Group plc.

This preliminary information provides an overview of a new investment vehicle (the ‘Fund’) being proposed by Man Investments Limited (‘MIL’), which will act as the investment manager of the Fund. All information contained herein is subject to revision and completion. This material is being provided for information and discussion purposes only. It is not intended to supplement or replace the confidential offering documents (collectively, the ‘Prospectus’) to be prepared and furnished to prospective investors at a later date, which should be the sole basis for making an investment decision in the Fund.

This document contains highly confidential information consisting of internal work product and cannot be used for any purpose other than to analyze a potential investment.

Past performance is not an indication of future performance and there can be no assurance that the overall portfolio will meet its investment objectives or achieve results in line with those presented in these materials. Future performance may be materially worse than past performance, causing substantial or total loss of investment.

Any statements regarding market events, future events or other similar statements constitute only subjective views, are based upon expectations or beliefs, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond a Fund’s control. Future evidence and actual results could differ materially from those set forth in, contemplated by, or underlying these statements. In light of these risks and uncertainties, there can be no assurance that these statements are now or will prove to be accurate or complete in any way. No representation is made that a Fund’s investment process or investment objectives will or are likely to be successful or achieved.

This material contains hypothetical performance and portfolio information and has been constructed as follows:The information presented represents a model portfolio being created by MIL with proposed allocations to each of the investment strategies. MIL anticipates using this model portfolio as the basis for creating and managing the Fund. The actual Fund portfolio may differ substantially in terms of allocations to the investment strategies, market conditions, and other factors which may materially alter the performance, yield, volatility and other information presented herein. Hypothetical backtested returns and model portfolios have many inherent limitations. Unlike actual performance, it does not represent actual trading or the actual allocations of the portfolio over time to the investment strategies. The hypothetical performance is adjusted to reflect the reinvestment of dividends and, except where indicated, the anticipated fees and expenses of the Fund, including brokerage, advisory and other fees.

Past performance is no indication or guarantee of future performance. Portfolio or return targets or objectives are used for illustration, measurement or comparison purposes and only as an aid or guideline for prospective investors to evaluate a particular investment program’s investment strategies and accompanying information. Such targets or objectives reflect subjective determinations by the Fund’s investment manager based on a variety of factors and should not be relied upon as an indication of actual or future performance. A Fund’s actual returns or volatility will depend on a variety of factors including overall market conditions and the ability of the investment adviser to implement the investment objectives and policies of the Fund. There can be no guarantee that the targets or projections set forth herein will be realized by the Fund or any product managed by the investment manager. Any descriptions or information involving investment process or strategies is provided for illustration purposes only, may not be fully indicative of any present or futures investments, may be changed in the discretion of the investment manager and are not intended to reflect performance. Portfolio allocations are selected by, and will vary in the sole discretion of, the Fund’s investment manager and are subject to availability and market conditions among other things.

No representation, warranty, or undertaking, express or implied is given to the accuracy or completeness of the information contained in this material or any other person; no reliance may be placed for any purpose on such information; and no liability is accepted by any person for the accuracy and completeness of any such information.

This material is intended only for institutional investors, investment professionals, market counterparties or intermediate customers and has been furnished upon request, solely for your information and may not be reproduced or otherwise disseminated in whole or in part without our prior written consent.

Hedge fund risks and other disclosuresThe types of transactions engaged in on behalf of Man Directional Series 2 Ltd, the ‘Fund’, involves significant risks. This is only a summary of certain risks of investing in the Fund. The Fund’s Confidential Private Prospectus (‘Prospectus’) contains a more exhaustive discussion of these issues and should be read in its entirety. Unless specified otherwise, the terms used herein have the same meaning as defined in the Fund’s Prospectus.

Potential loss of investment – No guarantee or representation is made that the investment program used by investment manager will be successful. A Fund represents a speculative investment and involves a high degree of risk. An investment in a Fund should be discretionary capital set aside strictly for speculative purposes. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment in a Fund. An investment in a Fund is not suitable for all investors. An investor could lose or a substantial portion of his/her/its investment. Only qualified eligible investors may invest in a Fund. Because of the nature of the trading activities, the results of the Fund’s operations may be volatile from month to month and from period to period. Accordingly, investors should understand that past performance is not indicative of future results. Hedge funds typically represent that their returns have a low correlation to the major market indices. Investors should be aware that hedge funds may incur losses both when major indices are rising and falling.

Use of leverage – Futures trading normally requires low margin requirements which allows for 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 the Fund holding a position in such contract. The Fund may also invest in forward contracts, options, swaps and over‑the‑counter derivative instruments, among others. Like other leveraged investments, trading in these securities may result in losses in excess of the amount invested.

Regulatory risk – The Fund is not registered under the Investment Company Act of 1940. As a result, investors will not receive the protections of the Investment Company Act afforded to investors in registered investment companies (i.e. ‘mutual funds’). A Fund’s offering documents are not reviewed or approved by federal or state regulators and its privately placed interests are not federally or state registered. In addition, the Fund may engage in trading on non‑ U. S. exchanges and markets. These markets and exchanges may exercise less regulatory oversight and supervision over transactions and participants in transactions.

Valuations – The net asset value of a Fund may be determined by its administrator in consultation with its manager or advisor, or based on information from the manager(s) of the underlying Fund(s). Certain portfolio assets may be illiquid and without a readily ascertainable market value and accuracy of valuations of other managers may be difficult to verify. Since the value assigned to portfolio securities affects a manager’s or advisor’s compensation, the manager’s or advisor’s involvement in the valuation process creates a potential conflict of interest. The value assigned to such securities may differ substantially from the value a Fund is able to realize. Instances of mispriced portfolios, due to fraud or negligence, have occurred in the industry.

Fees and expenses – The Fund may be subject to substantial charges for management, advisory and brokerage fees. It may be necessary for those pools that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets. Please refer to the Fund’s Prospectus for a more complete description of risks and a comprehensive description of each expense to be charged this pool.

Limited operating history – A Fund may have little or no operating history or performance and may use performance which may not reflect actual trading of the Fund and should be reviewed carefully. Investors should not place undue reliance on hypothetical, pro forma or predecessor performance. A Fund’s actual performance may differ substantially and may be volatile.

Reliance on key persons – A Fund’s manager or advisor has total trading authority over a Fund and may be subject to various conflicts of interest. The death, disability or departure of the manager or advisor may have a material effect on a Fund.

Concentration – A Fund may use a single advisor or employ a single strategy, which could mean a lack of diversification and higher risk. A Fund of Funds relies on the expertise of its underlying managers.

Counterparty and bankruptcy risk – Although the General Partner will attempt to limit its transactions to counterparties which are established, well‑capitalized and creditworthy, the Fund 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 Fund to substantial losses. In addition, if any Futures Commission Merchant (‘FCM’) retained by the Trading Company were to become bankrupt, it is possible that the Fund would be able to recover none or only a portion of its assets held by such FCM.

Limited liquidity – Your ability to redeem (liquidate) your Units will be limited and subject to certain restrictions and conditions under the Fund Agreement. No secondary public market for the sale of the Units exists, nor is one likely to develop. In addition, a transferee of Units may become a substituted Limited Partner only with the consent of the General Partner. All or some of such Units may be redeemed as of the last business day of each calendar month on prior written notice to the General Partner, subject to certain restrictions. The Fund may suspend redemptions under certain circumstances, and will withhold a portion of your redemption proceeds if a reserve has been established. In addition, your Units will not be freely transferable.

Tax risks – Investors in hedge funds such as the Fund are subject to pass‑through tax treatment of their investment. Since profits generally will be reinvested in the Fund rather than distributed to Limited Partners, investors may incur tax liabilities during a year in which they have not received a distribution of any cash from the fund. In addition, it is likely that the general partner will not be able to prepare its tax returns in time for investors to file their returns without requesting an extension of time to file.

Volatile markets – 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, weather conditions, government intervention and changes in national and international political and economic events. Please refer to the Confidential Private Prospectus for a more comprehensive description of volatility factors.

The above summary is not a complete list of the risks, tax considerations and other important disclosures involved in investing in a Fund and is subject to the more complete disclosures in such Fund’s offering documents, which must be reviewed carefully prior to making an investment.

Man Investments Inc.One Rockefeller Plaza, 16th floor, New York, NY 10020 Tel: (646) 452‑9580 123 N. Wacker Drive, 28th floor, Chicago, IL 60606 Tel: (312) 881‑6800 Man Investments Inc., Member FINRA and SIPC

Important information regarding investing in Man Directional Series 2 Ltd (the ‘Company’)This material is communicated by the Company, which is not a member of the Man Group. Information contained herein is provided from the Man database except where otherwise stated. Potential investors should note that investments in financial securities can involve significant risks and may result in losses. There is no guarantee of trading performance and past or projected performance is not a reliable indicator of future performance. Returns may increase or decrease as a result of currency fluctuations. The value of investments may go down as well as up, and investors may not get back the present value of their original investment. Please see the offering memorandum issued by the Company dated 14 December 2009 (the ‘Offering Memorandum’) for a detailed description of the risks and fees in relation to the investment. Additionally, it is recommended that you contact your bank, investment adviser and/or tax adviser. This material is not an invitation to make an investment in the bonds nor does it constitute an offer for sale of bonds to be issued by the Company. Applications for the bonds will only be considered on the terms of the Offering Memorandum. This material is not comprehensive and is indicative only. The detailed terms and conditions of the issue of the bonds are described in the Offering Memorandum. This material must therefore be read in conjunction with the Offering Memorandum. Distribution of this material and the offer of the bonds may be restricted in certain jurisdictions and in other jurisdictions (for example, EEA member states, Hong Kong, Saudi Arabia and Singapore) the minimum subscription amount permitted may be higher than elsewhere. The attention of potential investors is specifically drawn to appendix 1 entitled ‘Selling restrictions’ in the Offering Memorandum which clarifies the persons to whom this material is intended to be communicated and section 6 entitled ‘Key risks’ which sets out some of the risks associated with acquiring and holding the bonds. Man Investments (CH) AG, Guernsey branch and/or any of its associates may invest from time to time in the Company. The investor services agent, marketing adviser, investment manager and/or the relevant local Man Investments office all retain the right to record any telephone calls made to them.

Important information regarding the product’s pro forma performanceThe performance results provided herein were not achieved from the actual management of the portfolio, but are instead simulated results. This approach has inherent limitations, including that results may not reflect the impact that material economic and market factors might have had on the investment manager’s decision making if the investment manager actually had been managing client money. Please see the Offering Memorandum issued by the Company for a detailed description of the risks and fees in relation to the investment. A copy of the Offering Memorandum is available free of charge from Man Investments (CH) AG, Guernsey branch (First Floor, Suite 1, Albert House, South Esplanade, St Peter Port, Guernsey GY1 1AJ, Channel Islands) and can be downloaded at www.maninvestments.com.

This material is not suitable for US persons.

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