SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
OR
[ ] 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 ____333-61217______
Atlas Futures Fund, Limited Partnership
---------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 51-0380494
- ------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5916 N. 300 West, Fremont, IN 46737
- ---------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (260) 833-1505
- ------------------------------------------------------------------------
Former Name, Address and Fiscal Year, if Changed, Since Last Report
No such changes occurred
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
and Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Part 1 - FINANCIAL INFORMATION
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The reviewed financial statements for the Registrant for the nine months
ended September 30, 2004, and audited results for the calendar year 2003 are
attached hereto and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
During the past quarter and in the future, Registrant, did and will, pursuant
to the terms of the Limited Partnership Agreement, engage in the business of
speculative trading of commodity futures and options markets through the
services of its commodity trading advisor, Clarke Capital Management, Inc.
The Units are sold issuer direct by the General Partner at the Net Asset
Value per Unit as of the close of business on the last day of the month in
which subscriptions are received by the General Partner.
The Registrant will continue to offer Units for sale to the public via its
fully amended and restated prospectus dated July 2, 2004 until the total
amount of registered securities, $15,000,000, is sold or the offering
terminates.
To obtain a return of invested capital or appreciation, if any, purchasers of
Units must look solely to the redemption feature of the Partnership or to the
General Partner, in its sole judgment, to elect to make distributions. There
is no current market for the Units sold and none is expected to develop nor
is the General Partner expected to make distributions.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the
period ended September 30, 2004, to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant: Atlas Futures Fund, Limited Partnership
By Ashley Capital Management, Incorporated
Its General Partner
By: /s/ Michael P. Pacult
Mr. Michael Pacult
Sole Director, Sole Shareholder,
President, and Treasurer of the
General Partner
Date: November 15, 2004
ATLAS FUTURES FUND,
LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
Page
Accountants' Review Report F-2
Financial Statements
Balance Sheets as of September 30, 2004 and
December 31, 2003 F-3
Schedules of Investments as of September 30, 2004 and
December 31, 2003 F-4 - F-7
Statements of Operations for the Three and Nine Months
Ended September 30, 2004 and 2003 F-8
Statements of Partners' Equity for the Nine Months
Ended September 30, 2004 and 2003 F-9
Statements of Cash Flows for the Nine Months Ended
September 30, 2004 and 2003 F-10
Notes to Financial Statements F-11 - F-17
Frank L. Sassetti & Co.
Certified Public Accountants
To The Partners
Atlas Futures Fund, Limited Partnership
Dover, Kent County, Delaware
We have reviewed the balance sheet, including
the schedule of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of
September 30, 2004 and the related statements of operations for the three and
nine months ended September 30, 2004 and 2003, and the statements of
partners' equity and cash flows for the nine months ended September 30, 2004
and 2003. These financial statements are the responsibility of the
Partnership's management.
We conducted our review in accordance with
standards established by the American Institute of Certified Public
Accountants. A review of interim financial information consists principally
of applying analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
auditing standards generally accepted in the United States, the objective of
which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review we are not aware of any
material modifications that should be made to the financial statements
referred to above for them to be in conformity with accounting principles
generally accepted in the United States.
We have previously audited, in accordance with
auditing standards generally accepted in the United States, the balance
sheet, including the schedule of investments, of ATLAS FUTURES FUND, LIMITED
PARTNERSHIP as of December 31, 2003 and the related statements of operations,
partner's equity and cash flows for the year then ended (not presented
herein); and in our report dated February 20, 2004, we expressed an
unqualified opinion on these financial statements. In our opinion, the
information set forth in the accompanying balance sheet as of December 31,
2003 is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.
/s/ Frank L. Sassetti & Co.
November 9, 2004
Oak Park, Illinois
6611 W. North Avenue * Oak Park, Illinois 60302
* Phone (708) 386-1433 * Fax (708) 386-0139
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
ASSETS
September 30,
2004 December 31,
(A Review) 2003
Investments
Equity in Commodity Futures Trading Accounts -
Cash and cash equivalents $9,676,933 $6,930,523
Net unrealized gain on open commodity
futures contracts 923,835 694,260
10,600,768 7,624,783
Cash 28,656 37,775
Accrued interest receivable 9,822 6,936
Prepaid incentive fees - 94,433
$10,639,246 $7,763,927
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Partner redemptions payable $ 13,454 $ 46,267
Accrued trading commissions payable 8,056 487
Incentive fees payable 805,046 -
Front end load payable 60 376
Other accrued liabilities 7,000 27,000
Total Liabilities 833,616 74,130
PARTNERS' EQUITY
Limited partners - (3,978.48 and 4,393.05 units) 9,805,630 7,689,797
General partner - (0 units) - -
Total Partners' Equity 9,805,630 7,689,797
$10,639,246 $7,763,927
The accompanying notes are an integral part of the financial statements.
F-3
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2004
(A Review)
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
120 Dec '04 CMX Copper $236,313 2.23%
120 Nov '04 NMX Unleaded Gas 39,144 0.37
40 Oct '04 IPE Gas Oil 128,000 1.21
80 Nov '04 IPE Brent Crude 92,000 0.87
40 Dec '04 IMM Swiss Francs 6,500 0.06
40 Dec '04 CBT 2yr T Notes 8,750 0.08
80 Nov '04 NMX Heating Oil 45,696 0.43
120 Nov '04 NMX Light Sweet Crude 120,800 1.14
Total United States Commodity Futures Positions 677,203 6.39
Japanese Commodity Futures Positions, Held Long:
40 Aug '05 TCE Gold 6,169 0.06
80 Aug '05 TCE Platinum 7,602 0.07
Total Japanese Commodity Futures Positions 13,771 0.13
British Commodity Futures Positions, Held Long:
80 Dec '04 LIFFE Long Gilt 108,570 1.02
Total British Commodity Futures Positions 108,570 1.02
Australian Commodity Futures Positions, Held Long:
40 Dec '04 SFE Aussie 90 Day Bk Bill (696) -
40 Dec '04 SFE 3yr T Bond (8,051)(0.08)
Total Australian Commodity Futures Positions (8,747)(0.08)
Total Commodity Futures Positions 790,797 7.46
The accompanying notes are an integral part of the financial statements.
F-4
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2004
(A Review)
Contracts/
Amount Value Percent
United States Commodity Futures Positions, Sold Short:
40 Dec '04 NBT Cotton $ 9,000 0.08%
40 Dec '04 CBT Wheat 27,500 0.26
40 Dec '04 CBT Corn 37,000 0.35
40 Dec '04 CBT Soybean Meal 15,200 0.14
40 Nov '04 CBT Soy Beans 32,000 0.30
Total United States Commodity Futures Positions 120,700 1.13
Japanese Commodity Futures Positions, Sold Short:
80 Sep '05 TGE Corn 12,338 0.12
Total Commodity Futures Positions, Sold Short 133,038 1.25
Net Commodity Futures Positions 923,835 8.71
Open Forward Positions:
5,000,000 Oct '04 Swiss Francs, Long (4,174)(0.04)
5,000,000 Oct '04 Swiss Francs, Short 4,174 0.04
Net Forward Positions - -
Cash and Cash Equivalents in Trading Accounts:
Dec '04 United States Treasury Bills
($8,000,000 Face Value) 7,968,080 75.17
United States Markets 1,840,954 17.37
Euro Markets (19,218)(0.18)
British Pound Markets (206,595) (1.95)
Australian Dollar Markets (30,722) (0.29)
Japanese Yen Markets 124,434 1.17
Total Cash and Cash Equivalents
in Trading Accounts 9,676,933 91.29
Total Investments $10,600,768 100.00%
The accompanying notes are an integral part of the financial statements.
F-5
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2003
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
27 Feb '04 Crude Oil $ (18,900)(0.25)%
54 Feb '04 Unleaded Gas 54,205 0.71
27 Mar '04 Soybeans 10,800 0.14
27 Mar '04 Soybean Meal 32,670 0.43
104 Mar '04 Euro FX 401,700 5.27
52 Mar '04 British Pound 142,675 1.87
53 Mar '04 Swiss Franc 22,025 0.29
27 Jan '04 Gas Oil 25,650 0.34
27 Feb '04 Brent Crude 5,940 0.08
Total United States Commodity Futures Positions 676,765 8.88
European Commodity Futures Positions, Held Long:
27 Mar '04 5 Year Euro Bobl (340)(0.00)
Japanese Commodity Futures Positions, Held Long:
27 Oct '04 Gold 1,010 0.01
53 Oct '04 Platinum 16,195 0.21
Total Japanese Commodity Futures Positions 17,205 0.22
Total Commodity Futures Positions 693,630 9.10
The accompanying notes are an integral part of the financial statements.
F-6
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2003
Contracts Value Percent
United States Commodity Futures Positions, Held Long:
120 Dec '04 CMX Copper $236,313 2.23%
Contracts Value Percent
Japanese Commodity Futures Positions, Sold Short:
27 Nov '04 Arabica Coffee $ 630 0.01%
Net Commodity Futures Positions 694,260 9.11
Cash and Cash Equivalents in Trading Accounts:
Mar '04 United States Treasury Bills
($5,000,000 Face Value) 4,973,700 65.23
United States Markets 1,940,209 25.44
Euro Markets (54,581)(0.72)
British Pound Markets (32,377)(0.42)
Japanese Yen Markets 103,572 1.36
Total Cash and Cash Equivalents in
Trading Accounts 6,930,523 90.89
Total Investments $7,624,783 100.00%
The accompanying notes are an integral part of the financial statements.
F-7
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(A Review)
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
INVESTMENT AND OTHER INCOME
Interest income $ 28,910 $ 14,886 $ 64,815 $ 51,622
Redemption penalty 148 14,537
Total Income 28,910 15,034 64,815 66,159
EXPENSES
Commissions 267,594 167,901 587,692 488,869
Management fees - 38,210 - 106,720
Continuing service fee - 131,711
Incentive fees 465,910 - 1,066,170 597,100
Professional accounting and legal
fees 33,017 24,589 90,802 74,196
Other operating and administrative
expenses 2,241 642 22,504 2,009
Total Expenses 768,763 231,342 1,898,879 1,268,894
Net Investment Loss (739,853)(216,308)(1,834,064)(1,202,735)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from trading
in futures 1,162,778 (554,809) 4,625,908 3,519,865
Realized gain (loss) on exchange
rate fluctuation (1,603) 10,076 (3,113) 76,997
Changes in unrealized gains
(losses) on open commodity
open futures contracts 970,061 542,223 229,575 (671,107)
Total Realized and Unrealized
Gain (Loss) on Investments 2,131,236 (2,510) 4,852,371 2,925,755
NET INCOME (LOSS) $1,391,383$(218,818)$3,018,307 $1,723,020
NET INCOME (LOSS) -
Limited partnership unit $ 352.29 $ (48.46) $ 717.01 $ 388.81
General partnership unit $ $ $ $
The accompanying notes are an integral part of the financial statements.
F-8
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(A Review)
2004 2003
Amount Units Amount Units
Beginning balance-
December 31, $7,689,797 4,393.05 $6,200,090 4,727.47
Partner additions 714,331 349.30 1,114,348 649.40
Syndication costs (12,429) (5,860) -
Partner withdrawals (1,604,376) (763.87) (1,468,381) (933.04)
Net Income 3,018,307 1,723,020 -
Balance at September 30, $9,805,630 3,978.48 $7,563,217 4,443.83
2004 2003
Value per unit $2,464.67 $1,701.96
Total partnership units 3,978.48 4,443.83
The accompanying notes are an integral part of the financial statements.
F-9
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(A Review)
2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $3,018,307 $1,723,020
Adjustments to reconcile net income to net
cash provided by operating activities -
Changes in unrealized gains (229,575)
671,107
Changes in operating assets and liabilities -
Accrued interest receivable (2,886) 219
Accrued/ prepaid commissions 7,569 (2,066)
Accrued management and incentive fees 805,046 -
Prepaid incentive fees 94,433 -
Other payables and accruals (20,316) (500)
Net Cash Provided By
Operating Activities 3,672,578 2,391,780
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of units, net
of sales commissions 714,331 1,104,347
Syndication costs (12,429) (5,860)
Partner redemptions (1,637,189) (1,373,069)
Net Cash Used In
Financing Activities (935,287) (274,582)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 2,737,291 2,117,198
CASH AND CASH EQUIVALENTS
Beginning of period 6,968,298 5,088,099
End of period $9,705,589 $7,205,297
End of period cash and cash equivalents consists of:
Cash and cash equivalents in broker
trading accounts $9,676,933 $7,197,085
Cash 28,656 8,212
$9,705,589 $7,205,297
The accompanying notes are an integral part of the financial statements.
F-10
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(A Review)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Atlas Futures Fund, Limited Partnership (the Fund) was formed January
12, 1998 under the laws of the State of Delaware. The Fund is engaged in the
speculative trading of futures contracts in commodities, which commenced in
October, 1999. Ashley Capital Management, Inc.(Ashley) and Michael Pacult
are the General Partners and the commodity pool operators (CPOs) of the Fund.
The commodity trading advisor (CTA) is Clarke Capital Management, Inc. who
has the authority to trade as much of the Fund's equity as is allocated to it
by the General Partner that is currently estimated to be 97% of total equity.
The principal selling agent is Futures Investment Company (Futures), which is
controlled by Michael Pacult and his wife.
Interim Financial Statements - The balance sheet as of September 30,
2004, including the September 30, 2004 schedule of investments, and the
statements of operations for the three and nine months ended September 30,
2004 and 2003, and the statements of partners' equity and cash flows for the
nine months ended September 30, 2004 and 2003 are unaudited. In the opinion
of management, such financial statements reflect all adjustments, which were
of a normal and recurring nature, necessary for a fair presentation of
financial position as of September 30, 2004 and the results of operations and
cash flows for the nine months ended September 30, 2004 and 2003.
Regulation - The Fund is a registrant with the Securities and Exchange
Commission (SEC) pursuant to the Securities and Exchange Act of 1933 (the
Act). The Fund is subject to the regulations of the SEC and the reporting
requirements of the Act. The Fund is also subject to the regulations of the
Commodities Futures Trading Commission (CFTC), an agency of the U.S.
government which regulates most aspects of the commodity futures industry,
the rules of the National Futures Association and the requirements of various
commodity exchanges where the Fund executes transactions. Additionally, the
Fund is subject to the requirements of futures commission merchants and
interbank market makers through which the Fund trades and regulated by
commodity exchanges and by exchange markets that may be traded by the
advisor.
Registration Costs - Costs incurred for the initial filings with the
Securities and Exchange Commission, Commodity Futures Trading Commission,
National Futures Association (the "NFA") and the states where the offering
was made were accumulated, deferred and charged against the gross proceeds of
offering at the initial closing as part of the offering expense. The Fund
remains open to new partners, and incurs costs required to retain the ability
to issue new units. Such costs are treated in a similar manner. Costs of
recurring annual and quarterly filings with regulatory agencies are expensed
as incurred.
Revenue Recognition - Commodity futures contracts are recorded on the
trade date and are reflected in the balance sheet at the difference between
the original contract amount and the market value on the last business day of
the reporting period.
Market value of commodity futures contracts is based upon exchange or
other applicable market best available closing quotations.
F-11
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(A Review)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Use of Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amount
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Income Taxes - The Fund is not required to provide a provision for
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Fund may be subject to state and
local taxes in jurisdictions in which it operates.
Reclassifications - Certain reclassifications have been made to the
2003 financial statements to conform to the 2004 presentation.
Statement of Cash Flows - For purposes of the Statement of Cash Flows,
the Fund considers only cash and money market funds to be cash equivalents.
Net cash provided by operating activities include no cash payments for
interest or income taxes for the periods ended September 30, 2004 and 2003.
Foreign Currency Transactions - The Fund's functional currency is the
U.S. dollar; however, it transacts business in currencies other than the U.S.
dollar. Assets and liabilities denominated in currencies other than U.S.
dollar are translated into U.S. dollars at the rates in effect at the date of
the statement of financial condition. Income and expense items denominated
in currencies other than the U.S. dollar are translated into U.S. dollars at
the rates in effect at each month end. Gains and losses resulting from the
translation to U.S. dollars are reported in income currently.
2. GENERAL PARTNER DUTIES
The responsibilities of the General Partner, in addition to directing
the trading and investment activity of the Fund, include executing and filing
all necessary legal documents, statements and certificates of the Fund,
retaining independent public accountants to audit the Fund, employing
attorneys to represent the Fund, reviewing the brokerage commission rates to
determine reasonableness, maintaining the tax status of the Fund as a limited
partnership, maintaining a current list of names, addresses and numbers of
units owned by each Limited Partner and taking such other actions as deemed
necessary or desirable to manage the business of the Partnership.
If the daily net unit value of the partnership falls to less than 50%
of the highest value earned through trading at the close of any month, then
the General Partner will immediately suspend all trading, provide all limited
partners with notice of the reduction and give all limited partners the
opportunity, for fifteen days after such notice, to redeem partnership
interests. No trading will commence until after the lapse of the fifteen day
period.
F-12
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(A Review)
3. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement provides, among other things, that:
Capital Account - A capital account shall be established for each
partner. The initial balance of each partner's capital account shall be the
amount of the initial contributions to the partnership.
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made solely
at the discretion of the General Partners.
Federal Income Tax Allocations - As of the end of each fiscal year, the
Partnership's realized capital gain or loss and ordinary income or loss shall
be allocated among the Partners, after having given effect to the fees and
expenses of the Fund.
Subscriptions - Investors must submit subscription agreements and funds
at least five business days prior to month end. Subscriptions must be
accepted or rejected by the general partner within five business days. The
investor also has five business days to withdraw his subscription. Funds are
deposited into an interest bearing escrow account and will be transferred to
the Fund's account on the first business day of the month after the
subscription is accepted. Interest earned on the escrow funds will accrue to
the account of the investor.
Redemptions - A limited partner may request any or all of his
investment be redeemed at the net asset value as of the end of a month. The
written request must be received by the general partner no less than ten
business days prior to a month end. Redemptions will generally be paid within
twenty days of the effective month end. However, in various circumstances due
to liquidity, etc. the general partner may be unable to comply with the
request on a timely basis. Redemption fees are charged during the first 24
months of investment based on a sliding scale (4% - 0%). Effective January 1,
2004, redemption penalties are no longer charged.
4. FEES
Prior to January 1, 2004, the Fund was charged the following fees:
A monthly management fee of 2% (annual rate) of the Fund's net assets
allocated to the Fund's Corporate General Partner.
F-13
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(A Review)
4. FEES - CONTINUED
An incentive fee of 25% of "new trading profits" is paid to each CTA.
"New trading profits" includes all income earned by each CTA and expense
allocated to his activity. In the event that trading produces a loss, no
incentive fees will be paid and all losses will be carried over to the
following months until profits from trading exceed the loss. It is possible
for one CTA to be paid an incentive fee during a quarter of a year when the
Fund experiences a loss.
The Fund pays a combination of fixed commissions and continuing service
fees of 9% (annual rate) of assets assigned to be traded, payable monthly, to
the Introducing Broker affiliated with the General Partner. The Affiliated
Introducing Broker will pay the costs to clear the trades to the futures
commission merchant and all PIT Brokerage costs which shall include the NFA
and exchange fees.
Effective January 1, 2004, the Fund is charged the following fees:
A monthly commission of 7% (annual rate) of the Fund's assets on
deposit with the futures commission merchant. The Corporate General Partner
is responsible for payments of brokerage commission and fees to the futures
commission merchant.
The quarterly incentive fee of 25% of "new trading profits" paid to
each CTA is unchanged.
A monthly continuing service fee of 4% (annual rate) of the investment
in the Fund (as defined) will be paid to the selling agent.
Effective June 1, 2004, the monthly commission was changed from 7% to
11% and the continuing service fee was eliminated.
The Corporate General Partner reserves the right to change the fee
structure at its sole-discretion.
5. RELATED PARTY TRANSACTIONS
The Fund paid the following expenses to related parties during the nine
months ended September 30, 2004 and 2003.
2004 2003
Commission/Management Fee - Ashley $587,692 $488,869
Commission - Futures $ - $106,720
Continuing Service Fee - Futures $131,711 $ -
F-14
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(A Review)
5. RELATED PARTY TRANSACTIONS- CONTINUED
Financial Accounting Standards Board Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, identifies certain disclosures to be
made by a guarantor in its financial statements about its obligations under
certain guarantees that it has issued. In the normal course of business, the
Fund has provided general indemnifications to the General Partner, its CTA
and others when they act, in good faith, in the best interests of the Fund.
The Fund is unable to develop an estimate for future payments resulting from
unasserted and unknown claims, but expects the risk of having to make any
payments under these indemnifications to be remote.
6. TRADING ACTIVITIES AND RELATED RISKS
The Fund is engaged in speculative trading of U.S. and foreign futures
contracts in commodities. The Fund is exposed to both market risk, the risk
arising from changes in market value of the contracts, and credit risk, the
risk of failure by another party to perform according to the terms of a
contract.
A certain portion of cash and Treasury Bills in trading accounts are
pledged as collateral for commodities trading on margin. Additional deposits
may be necessary for any loss on contract value. The Commodity Exchange Act
requires a broker to segregate all customer transactions and assets from such
broker's proprietary activities.
Each U.S. commodity exchange, with the approval of the CFTC, and the
futures commission merchant establish minimum margin requirements for each
traded contract. The futures commission merchant may increase the margin
requirements above these minimums for any or all contracts. In general, the
amount of required margin should never fall below 10% of the Net Asset Value.
The cash deposited in trading accounts at September 30, 2004 and December 31,
2003 was $1,708,853 and $1,956,823, respectively, which equals approximately
17% and 25% of Net Asset Value, respectively. The Fund also purchases United
States Treasury bills as a form of margin. At September 30, 2004 and
December 31, 2003, $7,968,080 and $4,973,700, respectively, was invested in
U.S. Treasury Bills, which approximates 81% and 65% of Net Asset Value,
respectively.
F-15
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(A Review)
6. TRADING ACTIVITIES AND RELATED RISKS- CONTINUED
Trading in futures contracts involves entering into contractual
commitments to purchase or sell a particular commodity at a specified date
and price. The gross or face amount of the contract, which is typically many
times that of the Fund's net assets being traded, significantly exceeds the
Fund's future cash requirements since the Fund intends to close out its open
positions prior to settlement. As a result, the Fund is generally subject
only to the risk of loss arising from the change in the value of the
contracts.
The market risk is limited to the gross or face amount of the contracts
held of $87,912,509 and $38,468,967 on long positions at September 30, 2004
and December 31, 2003, respectively. However, when the Fund enters into a
contractual commitment to sell commodities, it must make delivery of the
underlying commodity at the contract price and then repurchase the contract
at prevailing market prices or settle in cash. Since the repurchase price to
which a commodity can rise is unlimited, entering into commitments to sell
commodities exposes the Fund to unlimited potential risk.
Market risk is influenced by a wide variety of factors including
government programs and policies, political and economic events, the level
and volatility of interest rates, foreign currency exchange rates, the
diversification effects among the derivative instruments the Fund holds and
the liquidity and inherent volatility of the markets in which the Fund
trades.
The unrealized gains on open commodity futures contracts at September
30, 2004 and December 31, 2003 were $923,835 and $694,260, respectively.
Open contracts generally mature within three months. As of September
30, 2004, the latest maturity date for open futures contracts is September,
2005. However, the Fund intends to close all contracts prior to maturity.
Credit risk is the possibility that a loss may occur due to the failure
of a counter party to perform according to the terms of a contract. The Fund
has a substantial portion of its assets on deposit with financial
institutions. In the event of a financial institution's insolvency, recovery
of Fund deposits may be limited to account insurance or other protection
afforded deposits.
The Fund has established procedures to actively monitor market risk and
minimize credit risk although there can be no assurance that it will succeed.
The basic market risk control procedures consist of continuously monitoring
open positions, diversification of the portfolio and maintenance of a
desirable margin-to-equity ratio. The Fund seeks to minimize credit risk
primarily by depositing and maintaining its assets at financial institutions
and brokers which it believes to be creditworthy.
F-16
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(A Review)
7. FINANCIAL HIGHLIGHTS
Performance per Unit (5)
Net unit value, beginning of
period $2,120.72 $1,751.89 $1,750.45 $1,311.50
Net realized and unrealized
gains/losses on commodity
transactions 531.28 (2.02) 1,149.90 666.18
Investment and other income 7.32 3.33 15.40 15.17
Expenses (1) (194.65) (51.24) (451.08) (290.89)
Net increase (decrease) for the
period 343.95 (49.93) 714.22 390.46
Net unit value, end of period $2,464.67 $1,701.96 $2,464.67 $1,701.96
Net assets, end of period (000) $9,805 $7,563 $9,805 $ 7,563
Total return (3) 16.22% -2.85% 40.80% 29.77%
Ratio to average net assets (4)
Investment and other income 1.25% .78% 1.00% 1.25%
Expenses (2) (21.62)% (14.74)% (20.14)% (13.58)%
(1) Includes brokerage commissions
(2) Excludes brokerage commissions
(3) Not annualized
(4) Annualized for all periods
(5) Investment and other income and expenses is calculated using average
number of units outstanding during the year. Net realized and unrealized
gains/losses on commodity transactions is a balancing amount necessary to
reconcile the change in net unit value.
F-17